A positive turning point in a situation that continues to present many uncertainties. Joseph Bertha, on the eve of the Renault board which on Tuesday should accept the alliance offer coming from Fiat Chrysler, barring disputes on the price, thus promoting the merger between equals agreed by the top management of the two houses which is entering its decisive phase.
John Elkann announces a forthcoming trip to Japan for next week to explain the operation to the top management of Nissan and Mitsubishi and in the meantime, he is already giving spades to those in France asking for a price adjustment for Renault, at its lowest for 5 years: it is thus, word is sent from Turin, because the Paris-Tokyo alliance is not working today. But, judging by the first reactions, Nissan seems more than willing to reopen the dialogue after the arrival of FCA. In short, after the "miracle" of Sergio Marchionne in Detroit, Fiat Chrysler can score a second positive merger, a rare phenomenon in the automotive world where successful marriages are few. In short, the premises are positive. But, warns Berta, the economic historian who boasts the leadership of the Fiat historical archive behind her, the road to ensuring a future worthy of its history for the Italian four-wheeler industry is still uphill.
Professor Berta, how do you judge FCA's wedding with Renault? Are there more lights than shadows or, behind the numbers of the new company, i.e. 8,7 million cars sold in 2018, isn't all that glitters gold?
“It is undoubtedly an excellent operation for Exor, albeit dictated by the weaknesses of the two groups. It is a defensive move, necessary to resist in an increasingly complicated situation. But this is not meant to be a criticism: necessity can be a good glue”.
Were there any alternatives?
“Despite the declarations to the contrary, there wasn't the margin for a future stand alone of the group. The difficult situation of the market in view of the arrival of the recession, probably accelerated by the clash on tariffs, has advised us to anticipate the times of choices. The alternative, therefore, ran between choosing an alliance or a flat sale. Exor has decided to merge".
But who could be interested in FCA?
“The Koreans. Until a couple of years ago one could think of the Chinese. But, these days, it's not even imaginable that Trump would allow China to get its hands on Jeeps that he considers an asset of national interest. There was probably a contact with Hunday, but in the end Renault emerged, dealing with an extremely delicate situation with its Japanese partner after Ghosn's misfortunes”.
There is a strange destiny that unites FCA and Renault. A year ago the two groups were led by the two most charismatic figures in the automotive world, namely Sergio Marchionne and Carlos Ghosn.
“One thing is certain: Marchionne would never have shared a merger with Ghosn. Once, speaking with Marchionne, I had the opportunity to ask him for his opinion on the rival. “Who – he answered – the Sun King? If you stay close to him, you risk getting burned". Today FCA and Renault are similar in finding themselves orphaned by two managers with a very strong personality and a very strong management capacity".
Do not be ungenerous with Manley and with Senard, the two successors.
“They are characters who have a very different story, I don't know how appropriate for such a complex mission. I would not rule out news in the future, in this sense. Senard is already 66 years old and looks back on a life in the ranks of Michelin. I don't think he has the qualities or even the desire to show off the grit of a leader: more than anything else he is a man of order capable of profitably tackling the missions entrusted to him.
Mike Manley, however, has sold FCA shares for 3,5 million dollars in the wake of the deal. Marchionne would have killed him.
“Manley has proven to be a manager of great value both at the wheel of Jeep and Ram, capable of thwarting the recovery attempt in pick-ups launched by GM. But he is a manager. I don't know if he has the qualities of an all-out leader. It is no coincidence that Elkann wanted to support him with the financial director Richard Palmer”.
In short, FCA-Renault is born with excellent volumes, moreover well distributed on a global scale, especially if the axis with Nissan and Mitsubishi continues. However, professor, you don't think it's time to sing victory: why?
“I repeat: the operation is positive. But let's not make the mistake of neglecting the extremely competitive context in which it developed. I allow myself a personal observation. I have just returned from a stay in Detroit, a city in full recovery. Among other things, in front of the GM headquarters is the prototype of the self-driving car that will be launched in a few months. And to finance the operation, Mary Barra did not hesitate to sell the headquarters. In short, they are slowing down car sales but accelerating the efforts of manufacturers. Competition promises to be ruthless, also because the globalization crisis has brought politics back to the fore”.
The policy d'abord, then.
“Trump has been closely following the events of the American car since the day of his election to the White House. It goes without saying that Nissan's decisions towards Renault must take account of Miti, the almighty economy ministry in Tokyo. Ghosn's arrest last November would not have been possible without the help given by the Japanese top management of Nissan to the judicial authorities, who accused the cosmopolitan manager of improper and personal use of company resources. Ghosn's imprisonment was determined by the revolt of the Japanese system against a governance mechanism that valued French hegemony, to the detriment of the performance of Nissan and Mitsubishi”.
And what role will Fiat-Chrysler be able to play?
“First of all, great attention to governance will be necessary. For the rest there are positive premises. FCA brings its strength to the alliance in North and South America, where Renault has its roots in the European market and, today, the presence of electric platforms, which FCA needs. John Elkann, last May 13, announced the start of production of the electric 500 in Italy, a project that will probably remain standing, especially if it can take advantage of Renault's expertise in electric platforms and perhaps those of Nissan. But for our country the situation is complicated”.
In what sense?
“Alfa Romeo and Maserati require substantial investments in order to enrich their range of offers, which must be expanded and renewed. I ask myself: is the new group the entity that can mobilize the resources indispensable for this purpose? Alfa can now practically count on only two strengths, Stelvio and Giulia, which are certainly not brand new. Maserati counts only on the Levante but needs a strong investment in the range and technologies, starting with the plug-in hybrid”.
Italy as Cinderella of the system?
“There is always talk of five billion investments, but while the money arrives in Detroit and Brazil, here it is always evoked but for now it is not seen. Melfi, for now, can count on production destined for the US, on which the ax hangs over Trump's possible tariffs. In the meantime, Italian production, in terms of volumes, has by now fallen to modest values. Seat, the Volkswagen group company led by Luca De Meo, produces in a single plant near Barcelona, almost as much as in all of FCA's Italian plants. Our country today has a reduced production of automobiles, which requires incisive actions to be increased. The system would need initiative in the direction of industrial policy in our country. But, unfortunately, this discourse does not concern only FCA, which has in any case found an outlet for its problems".
