Fiat CEO Sergio Marchionne (Photo credit: Italian Embassy)
The Paris Motor Show has plenty of glitzy cars, but it's also playing host to a nasty feud. For the past week, Volkswagen and Fiat have been taunting each other at a time when Volkswagen is up and Fiat is down.
Now the tension is about to boil over. Bloomberg reports that early Friday morning, Fiat CEO Sergio Marchionne and VW chief executive Martin Winterkorn are set to go mano a mano at a meeting of the European industry's lobbying group, being held on the sidelines of the Paris show.
Fiat and VW have both threatened to quit the ACEA, the Association of European Automotive Contractors, over a war of words the carmakers have had in recent months over the way Marchionne is leading the organization.
Stephan Gruehsem, VW’s chief spokesman, said in July that Marchionne was not qualified to head the ACEA. According to Bloomberg, VW threatened to quit the organization after a New York Times article suggested that Marchionne blamed VW’s pricing strategy for creating a “bloodbath” in Europe.
VW said Wednesday it stood by its call for his resignation, and Marchionne also fired back. “If Volkswagen, through its chief executive, thinks that it needs to do something, tell them to show up” at the meeting, Marchionne told reporters. Fiat will quit ACEA “in protest” if necessary, he said. VW responded that Winterkorn intended to attend today’s gathering.
There's more to it than just a spat over a lobbying group. Fiat has been under intense pressure in Italy, where the market has crumbled, and the company has said it is rethinking its investment plans. On Saturday, Marchionne held a five-hour meeting with Italy's prime minister. Since then, Fiat has confirmed that it wants to build vehicles for the United States and other markets in Italian plants, which will probably mean that Chryslers and Jeeps will be imported from Italy as well as Detroit.
Meanwhile, VW, the richest mass market carmaker in Europe, has waded into Fiat's woes. Earlier this week, the German press agency DPA reported that Marchionne sent a stern message to Volkswagen, which has made rumblings that it's interested in buying Alfa Romeo. VW has made no secret of its desire to elbow Toyota and General Motors out of the way and become the world's biggest carmaker by the end of this decade.
"Alfa Romeo is not for sale," Marchionne said at an industrialists' meeting in Turin, Italy, where Fiat has its headquarters. In a message addressed to Volkswagen chairman Ferdinand Piech, Marchionne added: "Leave it and go somewhere else." The Italian newspaper Corriere della Sera has suggested that Fiat could solve its problems by selling Alfa and one of its Italian plants to its German rival.
But Marchionne responded that "counting on foreigners to act as Italy's saviors is the greatest idiocy I have heard in my life," according to Deutsche Press.
Marchionne also hasn't been too happy with industrialist Diego Della Valle, who owns the luxury footwear company J.P. Tod's, for suggesting that Fiat was suffering from poor sales because it had failed to invest in new models. "What he invests on research and development in a year is not enough for us to even make part of a mudguard. He should stop bugging us," Marchionne said.
Just a few weeks ago, 60 Minutes re-ran its profile of Marchionne, who has seemed to be on top of the world because of the comeback at Chrysler. But the battle with VW seems to be putting a scowl on his face.
