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The Big Two?

Thursday, February 16, 2017 4:47
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Automobiles, Motorcycles and Libertarian Politics

What’s the first thing that happens after a bad relationship ends?

A new relationship begins.

Sometimes, not quite before the old/bad one has entirely ended.

Often, without much though about the consequences of decisions made in the heat of the moment.

It’s interesting to think about all that as word arrives about GM’s apparent decision to dump its European Opel subsidiary (which appears to be having a down-low affair with Peugot) in order to refocus its declining vigor on the U.S. market, where it continues to bleed market share like an old tire with a slow leak.

GM CEO Marry Barra talks about the need for GM to “disrupt ourselves,” which is her way of saying – crap, we are in trouble!

Right now, GM’s combined market share in the United States is less than what Chevrolet’s market share was in 1970. Things have not been good for years, especially the years after the bankruptcy in ’09  and the cashiering of Pontiac, Oldsmobile, Saturn and Hummer.

Consolidation into just Chevy, GMC, Buick and Cadillac hasn’t helped.

That’s still four full-line divisions vying for a slice of the pie that Chevy alone once had all to itself.

GM’s U.S. market share is still in the low 20s and stock prices (despite a recent uptick) hover in the low $40s – about the same as when the much-touted First Woman CEO took over the helm of the world’s once-upon-a-time Number One in the world automaker.

She has made “ROI” – return on investment” – the new GM mantra. It is why the company is shifting to a rent-by-the-hour business model (more here) and it may explain the odd decision to headquarter GM’s Cadillac and Chevrolet media/press relations offices in Noo York City – a place unfriendly to real journalists who actually drive cars but very friendly to the metrosexual hipster types GM is courting.


The divorce from Opel (after committing more than $1 billion toward “marriage therapy”/restructuring efforts since 2012 alone) would allow GM to refocus on things other than being the world’s Number One automaker.

Like being Number One . . . in America.

Maybe by getting under the sheets with FiatChrysler?

Fiat – which is yuge in Europe – hasn’t been able to make much headway in America. The Italian combine bought the clapped-out wreck that was Chrysler and became FiatChrysler, or FCA – with the idea that Fiat could use Chrysler’s established dealer network to gain instant access to American car buyers for its cars, while also making use of whatever remaining parts of the Chrysler product portfolio still had a pulse (like Jeep, for one).

But the marriage of convenience hasn’t turned out well.

The Chrysler side of things is becoming noticeably peri-menopausal and crow-footed. Aging models like the 300 – and the Dodges that are kin to it, the Charger and Challenger – have clearly been abandoned.

There is nothing new on deck, car-wise.

A clear sign that Fiat wants out.

Does GM want in?

The sale of Opel to Peugot would give GM the cash to take over the FCA operation stateside and – voila – at a stroke, the new combine would be the dominant player in the U.S. market, with Ford the only domestic rival remaining.     

The ego trip of regaining market share – even if only temporarily – might prove hard to resist. The car business is known for such ego-tripping.

And FCA is practically showing tit to lure GM into the honey trap.   

FCA has shed debt – and shed going-nowhere models like the Chrysler 200 sedan and the Dodge Dart. Arrivederci! They spun off Ram trucks from Dodge (a crystal clear sign that the Dodge brand is doomed) and put money into the Jeep brand – which does make money and not just in the United States. Jeeps are sold in Europe and other export markets – and that is no doubt alluring to GM.

GM might be just dumb enough to think with its proverbial dick.

But what a debacle it would be. The automotive industry equivalent of Arnold Schwarzennegger’s tryst with his maid. GM would inherit a stable of old cars – and new liabilities.

Regardless, put money on The End of Chrysler – and of Dodge, too. No matter what happens to Opel, no matter what Peugot does – no matter what GM does – Fiat is going to dump them. There is no doubt. It is merely a matter of when.

If you own FCA stock, sell it. Or prepare to paper your birdcage with it.

Even if GM shacks up with FCA, the Dodge and Chrysler brands are still probably over. GM would have to commit immense sums to rehab the entire Chrysler-Dodge product portfolio in order not just to update them but to make them compliant with the pending slew of federal fatwas, especially the 54.5 MPG CAFE fatwa that is scheduled to go into effect a few years from now. And to do that, cars like the rear-drive-based (and V6 and V8 powered) 300 and Charger and Challenger would need to be completely re-engineered into completely new cars.

Huge money.

Which is why that is not likely going to happen. What is much more likely to happen is the liquidation of Chrysler and Dodge and all the UAW jobs attending.

See above again in re the Schwarzennegger/maid imbroglio.

But Jeep …  now that’s is a tempting little number. There might be “ROI” in that. GM loves “ROI.”

And Fiat’s European operations have appeal, too.

However it all goes down, though, big changes are coming.

Love triangles are always messy… .

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The post The Big Two? appeared first on EPautos – Libertarian Car Talk.


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