Sergio Marchionne calls VW execs 'reprehensible,' singles out Piech

Fiat chairman Sergio Marchionne said Friday he will keep his title of President of the European Automotive Manufacturers Association [ACEA], a day after he excoriated Volkswagen executives for calling for his resignation and suggesting in public that Fiat would not survive the economic recession in Europe without a government rescue.

The ACEA CEOs met at the Paris Motor Show, as they do every year, Friday morning after Marchionne, meeting with reporters Thursday, dared VW executives to call for his resignation in the meeting, in compliance with the lobbying group's governance. Marchionne called "reprehensible" recent actions by VW executives, including supervisory board chairman Ferdinand Piech (right) and CEO Martin Winterkorn (left) for calling for his resignation from ACEA through the VW press office.

Indeed, Stephan Gruehsem, VW's chief spokesman, said in July that Marchionne was not qualified to head the ACEA and threatened that VW would quit the organization after a New York Times article said that Marchionne blamed VW's pricing strategy for creating a "bloodbath" in Europe.
The fracas is one chapter in what has become an unusually (for the auto industry) public war of words between Marchionne and VW officials. Besides calling out VW for aggressive pricing in Europe (in his role as Fiat CEO, not ACEA president), Marchionne has also angered VW by suggesting that plant closures in Europe to cut the over-capacity of factories should be be coordinated centrally with the European Union, not left to the individual companies.

In other words, Marchionne wants the EU to potentially tell VW to close a plant in Germany, which it has not ever done since after World War Two, rather than all the plants being affected in France, Italy, Poland and elsewhere. Marchionne said that was his own view, not one that would ever be adopted by ACEA and taken to the EU.

Marchionne, known for a quiet but blunt style, said Thursday about VW officials' criticism of him:

"I don't know Piech, or his press officer... but I don't give a flying hoot about their opinions... which they can take and stick in their G5."

VW has used steep discounting to drive up its market share in Europe as the economy tanks, inflicting a lot of hurt on Fiat, Peugeot and Renault. General Motors TK Susan Docherty said in her press briefing that no profit can be made in Europe as long as Fiat, VW and Peugeot, she singled out, discount vehicles by as much as 30%.

And then there is VW's public stalking of Alfa Romeo. Winterkorn recently reiterated his pitch this week through the media to Marchionne that VW would still like to buy Fiat's Alfa Romeo brand from the Italian automaker. Winterkorn said on Aug. 31 he still finds the Italian brand owned by Fiat "attractive." Piech first expressed VW's interest in the Italian premium brand two years ago at the Paris Motor Show.

"Mr. Piech drop it, go and sing somewhere else," Marchionne said Wednesday during a speech in Turin. "I am not surprised by the German boasting." It is somewhat surprising that VW should want another brand. It already has two too many in its stable by the reckoning of most analysts with Skoda and Seat in Europe, which not only compete with the VW brand with nearly identical vehicles, but in some cases get better reviews than the Volkswagen versions.

But that's not all. VW's chief financial officer suggested last Wednesday that at least one manufacturer, strongly suggesting Fiat, will not withstand the current slow down in Europe without government aid. "It is unclear if all carmakers will survive without governmental help," VW CFO Hans Dieter Poetsch told reporters on Thursday. "Especially carmakers in southern Europe that produce small cars will be affected."

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