HAIL CAESAR!

5/16/09

Fiat’s CEO Sergio Marchionne said yesterday at a conference in Turin that “We will be able to make an offer (for Opel (and maybe the other components of GM’s European operations, Vauxhall and Saab, but the situation is very fluid)) by May 20.” Given the dearth of other bidders for GM’s European operations, it looks as though Fiat will control Opel. Fiat also, according to the plan outlined late last month, will control Chrysler. Marchionne will wind up being in charge of Opel and, at least nominally (The government will be calling the shots at Chrysler, with its four of the nine board seats despite formally owning less than 10% of the company. Can you imagine how much influence it will have at GM, where it will own something like 50% of the company? See my last post, “WILL THAT BE ALL TONIGHT, SIR?”, 5/15/09.) in charge of Chrysler.

Megalomania is a dangerous thing in life, and it has not been good to the captains of the auto industry, at least not since about 1920. The latest example of overreaching by an individual in the industry is that of Carlos Ghosn, the Renault exec who was sent to Japan to run Nissan. Mr. Ghosn did a tremendous job at Nissan, becoming such a popular and adulated figure that he became the subject of a super hero comic book (okay, graphic novels (O tempora, o mores!)) series in Japan. His success with Nissan led the Renault board to ask him to run Renault, the senior partner in the Renault/Nissan alliance. Mr. Ghosn took the Renault job, but did not relinquish the Nissan job. Both companies have since floundered and Mr. Ghosn’s star has dulled considerably. This was simply a matter of a very talented man putting too much on his plate. And Mr. Marchionne, while having done a superb job at Fiat, largely with the help of a $2 billion check GM issued Fiat a few yeas ago to buy itself out of a put option it wrote on Fiat’s auto operation, he has yet to establish the track record that Mr. Ghosn had established at Nissan. Why should we suspect the outcome will be discernibly different, and perhaps far worse, for Mr. Marchionne?

Meanwhile, both BMW and Honda remain (relatively) small car companies that are amazingly resilient and about as healthy as a car company can be nowadays. Alan Mulally, like Mr. Marchionne, a non-car executive put in charge of a car company with salubrious results, is working not to expand Ford’s, and his, empire but, rather, to pare it back considerably. Notice how much better F is doing than GM or Chrysler?

Mr. Marchionne’s empire building does not bode well for Chrysler, but it might not matter; Chrysler is probably doomed anyway. (See my 5/1/09 post, “CAN THEY MAKE IT? CAN THEY MAKE IT?”)