THE AUTOEXTREMIST

October 3, 2012

Debatable issues.

By Peter M. De Lorenzo

(Posted 10/2, 9:15 a.m.) Detroit. With the cool winds of fall blowing into the picture and with the presidential debating season upon us, I thought it might be good to take a hard look at some of the key issues facing the automobile industry right now, from the different perspectives in play.

The issues are easy to spot, but not so easy to discern. After all, even though there might be two completely different points of view on a prevailing issue, that doesn’t mean there are two clear paths to success. One side or the other is going to come up short and be wrong, and “do overs” aren’t acceptable in this business. Ever.

First issue? Let’s take the idea that pure electric cars will ultimately win out. With the foaming at the mouth just beginning over the fact that the Tesla Model S is “a real car” (as if that’s some sort of definitive accomplishment), the debate begins anew on the efficacy of pure electrics. On the one side you have select green-gilled politicians in Washington and Northern California as well as a gaggle of Hollywood swells who are absolutely convinced that pure electrics are The Answer. These people believe that once the development of these vehicles gets further down the road our transportation future will be energized, literally and figuratively, and that the electric vehicle will come to be the new standard. We will then reduce our dependence on foreign oil and our skies will be bluer and our grass will be even greener. These people conveniently ignore where the electricity for these vehicles ultimately comes from, but this is their story and they’re sticking to it.

The other side of the coin in this discussion is the perspective that pure electric vehicles will never replace internal combustion engine vehicles because they can’t survive in a real-world driving environment. The proponents on this side of the issue believe that unless and until people can drive 300 miles on a charge and stop at a refueling station and be fully charged up and ready to go for another 300 miles in five minutes tops – not eight hours or four hours or any “hour” for that matter – the pure electric vehicle will never be anything more than a niche novelty for urban centers.

This debate has pretty much been settled, by both the consumer and the rampant development of hybrid power systems at every price point in the business. Consumers are staying away from pure electrics in droves and every major automobile manufacturer is embracing hybrid or extended-range hybrid technology at a prodigious rate. And that’s why pure electrics will never become widely accepted beyond the glorified urban runabout persona that they currently own.

Next issue? Is GM going to make it, really? If you’re in the Dan Akerson camp the answer is a resounding “yes!” You believe that he is exactly the breath of fresh air that the company has desperately needed for a long, long, time. He is shaking up the system, sweeping out the Old Guard, slashing costs, laying waste to the fetid bureaucracy, bringing fresh telecom-trained eyeballs in to address long-simmering problems, and when he departs in about eighteen months (or less) he and his inner circle will leave GM in tremendous shape, free of government ownership and poised to make huge strides in the global automobile market.

If you’re on the other side of the issue, Akerson is an unmitigated disaster. With none of the background necessary to provide cogent thoughts in order to render meaningful input and judgment in the manufacturing or product arena, Akerson combines that stunning lack of qualification with a blunderbuss of an attitude grounded in a deep-seated paranoia that knows no bounds. He has repeatedly alienated and demoralized the True Believers in the company who actually do the heavy lifting, he has left a trail of pissed-off dealers in his wake who recognize that Akerson not only doesn’t understand their business, even worse, he couldn’t care less that he doesn’t. And he combines a destroyer full of ill-conceived bravado with a miserable vindictive streak, and anyone who gets in his way or musters up the cojones to utter a discouraging word is first ostracized, then exited from his inner circle and ultimately expunged from the company altogether.  

Whether GM ultimately makes it or not is yet to be determined. They are so deeply talented in the car-making disciplines of design, engineering and product development that if the company’s future solely rested on the abilities of the True Believers, GM would be just fine. But unfortunately there’s a festering layer of incompetence and paranoia that begins with a grossly incompetent and ineffective Board of Directors, one that is being led down the primrose path by an Accidental Tourist of a CEO who has no business running a car company. Not even a little bit. And as long as Akerson, GM’s Board, and those Twin Pillars of Malicious Intransigence within GM – the Legal and Financial staffs – are allowed to run rampant and unfettered, GM, despite its undeniable global reach, could be headed down a path to second-tier status, if not ultimate destruction.

And then there’s always the case of Fiat-Chrysler. Sergio Marchionne, the peripatetic CEO, wowed the assembled multitudes of the company’s dealer faithful in Las Vegas recently with an impressive show of products either on the ground, on the way or on the horizon. The gushing praise could be heard all the way back here, with frenzied dealers ready to pay for a statue to be commissioned in his honor that would sit out in front of the Auburn Hills headquarters for all to see. Sergio is a genius, a lifesaver and the greatest thing to happen to Chrysler dealers since Lee Iacocca. He took a downtrodden, moribund collection of auto lifers, resurrected the company, and is now willing it to greatness again. There’s no question about it, Sergio is the G.O.A.T (Greatest Of All Time).

The other side of the coin is a little less sanguine. First of all, auto dealers are probably not exactly a source of clear-eyed objectivity, and they would be the first to admit that. It’s all about “what have you done for me lately” with them, and that’s perfectly understandable. So a Sergio love-in in Las Vegas counts for exactly zero in this discussion.

The real story here is what has happened up until now, how did Fiat-Chrysler get to this point, and where is it going?

I won’t rehash the details here, but suffice to say, calling Sergio Marchionne the Opportunist of the Century is an understatement. U.S. Government operatives were up against the wall with the imminent demise of Chrysler and Sergio had his hand out at exactly the right moment. Fiat-Chrysler minions now loyal to The Great Sergio would like us all to forget that, but there it is. Marchionne was basically gifted Chrysler for a stack of dimes.

And let’s not forget that Sergio wasn’t exactly dealing from strength when he arrived here. That old chestnut that he resurrected Fiat from oblivion counts for exactly nothing now, does it? After all, Fiat has been inconsequential and irrelevant on the global stage for so long that even Italians are sick of it. And now that its perennial built-in problems, combined with the worsening economic tsunami in Europe, have the company reeling yet again, is anyone really surprised?

That Chrysler seems to have rocketed back into relevance under Sergio has pushed too many in the media to assign genius status to him, when in fact it was the True Believers in the trenches who resurrected Chrysler all by themselves. Sergio and his espresso-fueled minions arrived to find a bevy of excellent products that were either finished or near completion, thanks to the hard-working men and women in Auburn Hills who never left their stations. That Marchionne made hay with that cornucopia of product gifts is no surprise; you’d have to be a complete idiot not to be able to accomplish something notable on the backs of the people who were there to begin with and who refused to quit.

But now, as the images from the love-in in Las Vegas begin to fade, where Fiat-Chrysler is going is the real question. Make no mistake, Fiat’s fundamental health as a car company in Europe is in play. The glowing accolades Sergio receives on a daily basis here are juxtaposed with the gathering political firestorm in his own country that sees him responsible for Fiat’s current tailspin. In fairness to Marchionne, Fiat’s brewing calamity is even more exacerbated by the ridiculously dismal economy in Europe.

Just how bad is it? Bad enough that Marchionne went so far as to publicly suggest that the manufacturers get together and agree on production cuts so that all of them can survive instead of just the healthier few. Proposing blatant collusion in public? That is just how desperate a situation Marchionne finds himself in today.

What does that have to do with Fiat-Chrysler’s future? Well, basically everything. No matter how healthy the American arm of the company is, the fact that Fiat is on the ropes – yet again – does not bode well.

As I’ve said from the beginning, Sergio is enough of a futurist that he had to know that this day was coming. He offered to take Chrysler off of the U.S. government operatives’ hands because he knew deep down that Fiat as a company and as a fading Italian icon was not sustainable. Only this time the company may have reached the point of no return, because Marchionne, to his credit, wants to fundamentally change the political-labor system in Italy. (How do you say notgonnahappen in Italian?)

Sergio Marchionne sees the future of his company as revolving around the success or failure of Chrysler. He really doesn’t have a choice now, does he?

But Marchionne’s continued insistence that Alfa Romeo will be a successful global brand – going from zero to 75,000 cars a year in this market alone by 2014-2015 – leaves a gaping hole in his credibility and may in fact be his Waterloo, no matter how good the new products looked in Las Vegas.

I’m sure Marchionne is a student of Italian history, and he’s well aware of Giuseppe Garibaldi, the great Italian general and politician who was referred to as the “Hero of Two Worlds.” And I wouldn’t be surprised if Sergio, given his massive ego, allows himself to dream of that kind of stature as being his final legacy when he decides to wander off and do something else.

Now that would be debatable.

That’s the High-Octane Truth for this week.

See another live episode of "Autoline After Hours" with hosts John McElroy, from Autoline Detroit, and Peter De Lorenzo, The Autoextremist, and guests this Thursday evening, at 7:00PM EDT at www.autolinedetroit.tv.

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