Sergio Speaks: FCA CEO on Why Tie-up with Google, Apple Makes Sense
“We build the cars; they build the technology that goes into them”
Fiat Chrysler Automobiles CEO Sergio Marchionne recently opened up to our European correspondent Georg Kacher during a two-hour interview that touched on an array of topics, including the hottest rumor of the moment, a potential tie-up between FCA and Google. Marchionne was candid on the subject, leaving little doubt that he believes a partnership with Google, Apple, or even Uber for that matter would make sense for FCA.
Stay tuned on Monday for our complete interview with Marchionne in which he discusses Tesla, where he thinks FCA must go in the future, and more. Below is an excerpt from the interview where Marchionne discusses the plusses and minuses of partnering up with Google, Apple and Uber:
During our two-hour session, Sergio's phones remain silent. But there is no doubt that digitalization and Big Data play an increasingly important role in the business life of the quick strategic thinker. Apple, Uber, and Google are names that automatically come to mind in this context. Even though he does not want to turn FCA into a mobility service provider, that's exactly the approach Apple, Google, and Uber have chosen to chase the consumer attention and money.
Marchionne keeps emphasizing that "we have no skills to provide such services. But there are partners out there who would love to share their skills. Now this could be a business model that works. To find out, we have to let them in." He pauses for breath, sends one text message, lights a ziggy and pours one more glass of ambrosia. "Google can buy every automaker out of petty cash. And Apple — they made a net profit of $24 billion in one quarter. This is nonsense. What are we defending? What?
"My approach is to be completely open to technology. I think the next paradigm of this business is a paradigm that involves the cooperation for technology with the disruptors. Google is one. Apple is another, even Uber. It's all about access to the complete information on what people do in the car. That's when the consumer has time on hand and the business case blossoms. The key is to find a way in which we can coexist with the disruptors, and bring our set of skills to the table. Speed is essential here. We must establish a link ASAP, must talk to the big players, the newcomers, and the underdogs, everybody. The goal is job sharing on a high level. We build the cars; they build the technology that goes into them. Ideally, I can take this technology and use it across my other brands."
As we wait for the main course, the discussion drifts into the vague undergrowth of ifs, whens, and buts. After all, what the industry is facing is the clash of two worlds. Old vs. new, slow vs. flexible, old-fashioned structures hampered by high fixed costs vs. slim and highly flexible start-ups, single-digit profit margins vs. 50 or 75 percent margins. In a win-win proposal, FCA would integrate the Apple ecosystem into a set of modified vehicles. At the same time, they would make room for Google and its map services, connectivity know-how and software power. On a scale from good to bad, Apple has been described by analysts as Snow White while Uber has more of a Darth Vader touch. Google is somewhere in the middle, plenty of potential tied to numerous possible pitfalls. Does Marchionne see the charm of a scenario in which Apple would, for instance, connect with Jeep, Alfa-Romeo, with Google and Dodge with Uber? "That would be a really nice network," is the answer, accompanied by a broad grin. "It's brand relevance with a strong technology link."
One could perhaps see Fiat Chrysler come to individual agreements with the likes of Apple, but surely only as a junior partner, a production puppet on a string, the Foxconn of car manufacturers. Marchionne ponders this, nods and says: "I have got to be able to find an economic model that allows me to survive the event. My successor has to inherit at least the propensity to absorb, to let these things come in, even nurture them in our environment, then strike a deal. Because they ain't going away."