By Peter M. De Lorenzo
AUTOEXTREMIST EXCLUSIVE © 2016 Autoextremist.com, Inc.
Detroit. I’m going to be right up front about the breaking news today, because as you read this Sergio Marchionne’s grand promise of the rejuvenation of the Fiat brand in the U.S is dangling by a thread. Why? The original five-year agreements that dealer principals signed based on the promises put forth by Marchionne back in 2011 are coming up for renewal, and needless to say, there’s big trouble out in Auburn Hills, because a majority of dealers are having none of it.
As a refresher, let me remind readers out there that the dealer agreements in question were solicited by Marchionne, doing his best P.T. Barnum imitation, on the promise that these dealers would be getting in on the ground floor of the next great automotive brand in America, an Italian-American juggernaut that would have dealers start out by selling successful, fuel-efficient Fiat models “built for the times” in the short term, with the promise that they’d be swimming in a seductive array of Alfa Romeo products in the long term. Marchionne in fact repeatedly told the dealers that Alfa would be “the next Audi” by 2018, which turned out to be a flat-out lie.
And, as if that weren’t enough, Marchionne insisted that these dealers commit to brick and mortar for new Fiat-exclusive stores to underscore his “vision,” even though his “vision” would cost the dealers at least $1-$2 million (and for some, much more).
And now, in an Autoextremist exclusive, the news for FCA is not only Not Good, it’s veering toward a Doomsday Scenario, because as you read this there’s an exceedingly ugly realization going on among Fiat dealers across the country that what was promised by Marchionne hasn’t been delivered. Not even close, in fact. And they’re pushing back, hard, telling FCA to go pound sand. And at this very moment Sergio and his espresso-swilling minions are being faced with the very real possibility that a majority of the Fiat dealers are not planning to renew their franchise agreements.
For some Fiat dealers, unfortunately, the expiration of the original five-year dealer agreement with FCA simply doesn’t matter, because they’ve already been forced into bankruptcy by the piss-poor product availability and the impossibly optimistic bill of goods that they allowed Marchionne to sell them. (There are now horror stories of dealers having shut their doors, leaving Fiat customers stranded and forced to drive several hours in order to get their cars serviced. The nightmare is only beginning for Fiat owners. But I digress.)
Regional reps are now fanning across the country in a desperate move to convince Fiat dealers to re-up their agreements with FCA. These reps are armed with the promise of jaw-dropping, unheard-of bonuses if they are able to herd a dealer back into the fold. These bonuses are so huge in fact that there’s a distinct air of finality about the whole exercise because it’s as if no one expects them to be successful. And they are not only meeting stiff resistance, they’re reporting back to Auburn Hills that the dealers are finished and want nothing more to do with the brand. I have talked to two dealers who steadfastly refused to let me use their names, and the gist of my conversations with them? They’re writing off Marchionne and the whole Fiat thing as a very painful lesson learned. And they’re moving on.
If this is the beginning of the end of Fiat in the U.S., I feel sorry for the dealers out there who are now stewing in their gullibility. After all, they are now admitting that they were flimflammed by nothing more than a glorified con man, and they have no one to blame but themselves. And I am also sorry for the people who work at these dealerships who will be out of work because of it. But mostly I am sorry for the consumers out there who bought into the Fiat brand, seduced by advertising orchestrated by Olivier “I’m a genius, just ask me” Francois, Sergio’s personal marketing bagman, and who are now left with cars with diminished prospects – at best – in terms of resale, and for some, service that is hundreds of miles away.
I hate to delve into a bit of “I told you so” perspective, but it’s no secret that I have been on to Sergio Marchionne from the moment he arrived on these shores filled with promises and braggadocio about what he would do with Chrysler. A consummate and acknowledged “brilliant” deal maker, I aimed my withering and relentlessly brutal criticism at Marchionne because I wasn’t bamboozled by his P.T. Barnum act in the least, and his pursuit of glory and riches for his Fiat handlers/heirs - and himself – was there for all to see right from the very beginning, when he was gifted Chrysler’s assets by a desperate Obama administration with nowhere else to turn. (It’s too bad some of my esteemed media colleagues were sucked in by the manufactured aura of Marchionne, too, but that’s another subject for another day.)
When I say “gifted” let me remind you that when Marchionne made the deal with the Obama administration he didn’t expend one dollar of Fiat’s cash until one full year afterward. And by the time the final deal was signed, Fiat paid just under $6 billion for the entire assets of Chrysler when Jeep was worth that alone. It was the deal – and steal – of the century.
Sergio’s bombastic boasts never sat well with me because I saw him for a who he truly was and is: an opportunistic, carpetbagging, deal maker shilling for the remnants of the Fiat “dynasty” who would stop at nothing to line his or his overlords pockets. Even if it meant swindling Fiat dealers, media-types and analysts with equal abandon in the process.
And even before this Fiat crisis, too many in the media wouldn't or couldn't see through Marchionne’s ludicrous, “blue sky” pronouncements of what Alfa Romeo would become for FCA, and it's simply a disgrace. Sergio's boasts about Alfa began seven long and tedious years ago, and continued unabated with endless refrains of “It won’t be long now!” And the promises got more egregiously ridiculous seemingly by the quarter, even though it was just a load of unmitigated bullshit. (Remember, Marchionne is the guy who said, no make that insisted, that FCA would be selling 400,000 Alfa Romeos annually by 2018, even though they sold just 68,000 globally in 2014. And for that boast to include selling 75,000 Alfas here in the U.S. - even though the numbers of 4C sports cars sold here in 2014 barely even registered - was simply off the charts ridiculous, a giant bowl of “as if.”)
For me it was easy to see right through Sergio, just as it was easy to see right through his agenda and his many calculated media manipulations from the moment he landed here. And the fact that Alfa Romeo had less than a snowball’s chance in Hell of ascending to the level of Audi in a handful of years was the most absurdly transparent of all of Sergio’s grandiose fallacies.
I have been writing editorial commentaries about FCA’s Sergio Marchionne, the self-appointed auto CEO of the world, for years now. And every time I do, I get the usual array of hate emails suggesting that I am a “disgrace to my heritage,” “completely misguided and wrong,” “plainly mental” and “how do you sleep at night being the biggest asshole in the business?” etc., etc., etc. And those are just a few highlights from the nicer ones.
Yes, I have relentlessly pounded Marchionne, but he has deserved every single word of my scathing assessments of who he really is and what his true mission in life – as he sees it - is. I have kept my foot down hard on Marchionne because frankly, most everyone else in the business – you pathetic lapdogs in the media know who you are - has given the guy a free pass from the moment he showed up here, gathering at his feet like children around a campfire for story time, letting him exhale his fantasy mind clouds containing his view of the world – both real and imagined - while dutifully reporting every word as if they had just witnessed the return from the mountaintop of the New Savior of the auto business, grasping carbon fiber tablets etched with his personal musings and meanderings designed to save us all.
And we had to suffer through the pontificating, the bombast, and the endless media descriptions of his dress and his personal proclivities, including the ugly sweaters and the smoking, the 30+ direct reports (because no one else was truly bright enough to grasp everything that he does), his espresso-swilling minions and, of course, the unbridled arrogance that was never ending and all encompassing.
And Sergio’s Message? He is always right and everyone else is always wrong. So wrong, in fact, as to be laughable, especially here in the Motor City where he could hardly conceal his utter derision toward the “lesser lights” as he viewed them, toiling away at the other car companies.
And so here we are. Marchionne and his espresso-swilling posse have had a good run. They absconded with Chrysler’s assets for a song and they rode on the backs of the True Believers out in Auburn Hills, turning their tremendous efforts on Jeeps, pickups and a smattering of hot rods into pure gold. But now, Brother Sergio’s Traveling Salvation Show isn’t just out of gas, it’s broke down and busted at the side of the road.
The grim reality behind Marchionne’s egomaniacal bluster never goes away. FCA is bleeding cash despite selling Jeeps and pickups hand-over-fist, and the margins are so razor thin that the whole thing is teetering on the edge of oblivion. And FCA is doing this while writing a large percentage of subprime loans, which means they will leave a devastating financial legacy with consumers for years to come.
Marchionne’s Alfa Romeo ploy was an amazingly disastrous trip down the Boulevard of Broken Dreams, one that was bound to end badly. But as absurd as it was, this chaos unfolding with Fiat could very well be the End Game because it is coming at a most inopportune time, what with Sergio peddling FCA’s wares to any and all prospective suitors.
The dramatic debacle at Fiat is something Marchionne is desperate to keep under wraps, convinced he can talk enough dealers to re-up so he won’t be embarrassed, while keeping the true ramifications of his ruinous strategy from getting exposed.
Well this just in: It’s too late.
This likely will be the denouement for Marchionne and his posse, and it won’t be pretty. A most unwelcome Waterloo, this Fiat fiasco is bound to force Marchionne and his espresso-swilling minions into an inglorious buyout, one not on his terms.
And there’s no amount of Sergio bombast and pontificating out loud to the press that is going to change that fact either.
And that’s the High-Octane Truth for this week.
Check out the latest episode of The High-Octane Truth on AutoextremistTV below. -WG
Note that this week's episode is a two-parter...you can see Part 2, plus all episodes of AETV, here!