THE FOOLS ON THE HILL.

By Peter M. De Lorenzo

Detroit. The noise you heard rattling around the industry last week was a mix of smirking and snide off-the-record conversations filled with head-scratching incredulity and outright guffaws. Why? Because FCA Chairman and Fiat heir John Elkann and his Best Boy, Sergio “I am the G.O.A.T.” Marchionne were at it again with their plaintive pleas for somebody, make that anybody, who would be willing to come along and save their collective asses.

After promising the sun, the moon and the stars about the future of FCA to anyone who would listen based on the efficacy of his brilliance alone, Marchionne has finally woken up to the grim reality that the whole FCA House of Cards is about to come tumbling down if they are unable to find a partner or a benefactor, like yesterday.

It turns out riding the backs of the talented True Believers out in Auburn Hills worked out just fine – at least for a while – but selling Jeeps and Ram trucks by the bushel full with monster amounts of cash on the hoods and pushing enough subprime financing to choke a prairie full of wild horses isn’t generating enough cash flow or enough dough-re-me to make a damn bit of difference.

Certainly not enough to float his grandiose “vision” (cough, hack) for the resurrection of Alfa Romeo, which has become just another embarrassment in his quiver full of empty promises, and certainly not enough to ease the growing nervousness of Elkann and the other Fiat heirs on the dole, which is now of paramount concern.

Thus the two of them, The Flying Pasta Brothers, were banging the drum loudly last week, reaffirming Sergio’s brilliant scenario for a “merger” that would save everyone involved a bunch of money while – sotto voce – saving their bacon.

Elkann actually had the temerity to suggest to reporters last week at the company annual meeting that, "What (Marchionne) envisaged with the 'Confessions of a Capital Junkie' a year ago is unchanged and still actual." And of course, Sergio, always one who insists on having the last word, reiterated, "One year after, $10 billion of capital that could have been saved has been wasted."

If either of these two industry “titans” were honest for even a fleeting millisecond, they would have said the following: “Let’s face it, kids, we’re one year closer to being flat broke and busted and a smoldering hunk by the side of the road. If we don’t find a sucker, err, partner, in the next year we will be toast.”

As if that weren’t enough, Marchionne insisted that Ford, Toyota and the VW Group would be likely merger candidates for FCA. Cue the laughter and the backroom guffaws, folks, because not one of these companies wants anything to do with Marchionne or FCA. Ford even went so far as to release a statement saying, "As we consistently have said, Ford has no plan or interest other than to continue to accelerate our One Ford plan."

Why is that, you might wonder? Why do companies avoid Sergio like the plague? Because both people and corporate entities find him ferociously unpalatable, utterly loathsome and flat-out untrustworthy. Now, this doesn’t necessarily mean that some corporate entity won’t make a deal with him, but it will never be on Marchionne’s terms, not in this lifetime at any rate.

And the funny-sad thing in all of this is that Marchionne’s massive, aircraft carrier-sized ego simply won’t allow him to understand this reality; he serenely shuffles along to the dulcet tones of his own thought balloons, absolutely convinced that he can force his will on anybody and come out smelling like a bountiful Italian garden in spring. The hubris of this carpetbagging mercenary knows no bounds. (I wouldn’t be surprised if, after he shuffles off to his post-FCA riches, he forms a new religious order solely based around the concept of hubris – known as the order of Hubrissiani Marchionnes - so he can sit around all day and regale his acolytes with stories of his brilliance. No vow of poverty required.)

At this point Elkann’s seemingly fleeting grip on reality has to be brought into question as well. I get the fact that without Marchionne he and his family minions would be mindlessly wandering around Italian café society talking about the way things used to be, but if he isn’t careful he is going to watch Sergio fly the entire FCA thing into the ground (jumping off with a golden parachute at the last moment, of course).

What are the options for the two biggest industry Fools on the Hill, at this juncture?

Well, let’s see, with not enough cash flow or profitability, and burdened with aggressive, capital-intensive product plans that they have no realistic hope of financing, the FCA “miracle” is simply untenable for much more than another twelve months, if that. Add to that the biggest roadblock, the fact that FCA has no advanced technical capability (electrification, hybrids, etc.), as in zero – and this is where Marchionne’s loathsome reputation is absolutely killing them – and no corporate entity interested in the least in offering them access to the latest technology or bailing them out, for obvious reasons, and you have a doomsday scenario that Elkann and Marchionne are simply powerless to do anything about.

The short story? There are no willing partners for FCA, period. Despite Marchionne’s relentless caterwauling, and his thinly veiled references to the rampant stupidity of everyone else in the industry for not seeing the “brilliance” of his plan, Elkann and his “Best Boy” are, in the parlance of our time, shit out of luck.

So what happens next? In desperation, Marchionne – with Elkann’s blessing – will begin talks to “part out” the worthwhile assets of FCA, which means 1. Jeep, and 2. Ram Truck. The likely candidates? Any number of companies would love to get their hands on Jeep, which is, next to Porsche, the most desirable automotive brand in the world. And the Koreans could always use a truck entry. But beyond that, it’s anyone’s guess.

I am quite certain of one thing, however, and that is that Marchionne won’t enter any negotiations in a position of strength, far from it, in fact. Instead, he will enter the room as a glorified accountant dressed in an ugly-ass sweater formerly known as “The Great Sergio,” just there trying to get the best deal for his boss.

And an entire industry will be licking its chops, looking forward to the day when the Unctuous Prick and his minions are forced to leave the stage, for good.

And that’s the High-Octane Truth for this week.

(Read more about Sergio and the ongoing train wreck in Cadillac marketing in this week’s “On The Table” –WG)