SPIEGEL: Mr. Marchionne, shortly before you submitted your rescue plan for Opel in Berlin, you were spotted driving around in a Ferrari, at high speeds
Sergio Marchionne: at 350 kilometers per hour (218 mph), and on a test track, of course. Sometimes I need that -- especially recently.
SPIEGEL: Your driving speed isn't the only reason many are concerned about Opel's independence.
Marchionne: Everyone nowadays is agonizing over who should join forces with Opel. The only thing that counts is the fact that we are in the worst recession since World War II while simultaneously experiencing a deep structural crisis in the automobile industry. We can discuss ways to solve the problem, but not whether it exists.
SPIEGEL: What does your solution look like?
Marchionne: It's quite simple. Fiat currently produces 2 million cars a year. That sounds like a lot, but it isn't enough to enable us to manufacture cars profitably in the future. GM's European subsidiaries produce 1.7 million cars a year, which also isn't enough. For this reason, my proposal is to merge the two carmakers and assemble a joint company which is competitive.
SPIEGEL: When two sick companies merge, the result is by no means a healthy company, says Ferdinand Piëch, the chairman of Volkswagen's supervisory board. Would you disagree with him?
Marchionne: Fiat is not a sick company, but one of the few automakers making money in the current crisis. We are doing well. However the auto industry as a whole is not.
SPIEGEL: What worries you?
Marchionne: The industry built up tremendous excess capacity in the good years, and now, with shrinking demand, that capacity has to be adjusted. Otherwise it could become a threat, even for a healthy manufacturer like us. But it's a question of survival for Opel. Opel is losing money. Things cannot continue like this, partly because the company has a government-backed loan to repay. Opel needs a partner or it will go under.
SPIEGEL: The prevailing view at Opel is that the company would truly run into problems if it entered into an alliance with Fiat, and that jobs would be lost on a large scale. Can you reassure these people, especially those at Opel's plant in Eisenach in the eastern German state of Thuringia who are worried about losing their jobs?
Marchionne: The plant in Eisenach is not just a highly efficient automobile factory, but also a symbol of German unity. However, Eisenach could operate even more profitably by working together with our Fiat plant in the nearby Polish city of Gliwice, instead of with its sister plant in Zaragoza, Spain. No parts supplier or financial investor can offer Opel such advantages, but an industrial partner from within the same sector can. That's why a joint venture with us makes so much sense.
SPIEGEL: The more efficiently you utilize capacity at the plant in Eisenach, the less capacity you need elsewhere. Can you guarantee that you will also keep the plants in Rüsselsheim, Bochum and Kaiserlautern open?
Marchionne: No one can offer guarantees. That would be completely unprofessional. Based on our current plans, however, I can say that we will not have to close any Opel assembly plants in Germany.
SPIEGEL: So how do you propose to reduce the excess capacity you yourself have mentioned?
Marchionne: It's true that not everything can remain unchanged at GM's European subsidiaries. We're not just talking about German plants, but also factories in Spain, Britain and Belgium. We need a European solution.
SPIEGEL: What do the employees get out of it?
Marchionne: They will be part of Europe's second-largest automobile group, with substantial international growth and employment opportunities, especially as a result of the alliance with Chrysler. The engineering talent that is currently restricted to Opel could then be used to a much greater extent internationally.
SPIEGEL: How many jobs do you plan to cut?
Marchionne: I can't say. I have to take a look at the plants first.
SPIEGEL: Earlier Fiat plans mentioned a figure of 18,000 jobs.
Marchionne: We never mentioned that number. According to our initial estimate, far fewer than 10,000 jobs will be lost throughout Europe. The impact on Germany will be much lower.
SPIEGEL: The people at Opel want to see numbers. They want to know what sorts of hardships are ahead for them.
Marchionne: If there are to be hardships, they will be distributed fairly across Europe. We expect roughly a 20 percent reduction in capacity, which doesn't mean 20 percent fewer employees. As an automaker, I can offer solutions for an industrial problem. What I cannot do is create demand. I can't force anyone to buy a car, neither from Fiat nor from Opel. In other words, it makes no sense to produce cars that aren't needed. We at Fiat are very strict when it comes to this issue.
SPIEGEL: Berthold Huber, the head of the powerful German metalworkers' union IG Metall, says that the corporate cultures of Fiat and Opel are not a good fit.
Marchionne: Huber and I have one thing in common: We are both over 50. The nation state dominated political thought when we were growing up. Nowadays, everyone knows that the French, the Italians and the Germans have to work together if they hope to prevail on a global scale. This is exactly what we want to achieve with our plan. We want to create an EU-wide cooperative industrial venture, but without ignoring the various national cultures. On the contrary, we will preserve Opel as a fully independent national brand, with its own production, development and sales organization. At the same time, we would bring down costs enough to make Opel profitable once again.
SPIEGEL: There was a joint venture between Fiat and Opel once before. It was terminated four years ago, because it wasn't working.
Marchionne: I wasn't part of the company at the time. Based on everything I know about it, the main problem was that Fiat was the minority partner, while GM had the say. We couldn't develop transmissions before getting the OK from Detroit. The current state of GM shows just how far-sighted its management was. It was like being in bed with a bear. There was no room left for Fiat.
SPIEGEL: Many at Opel fear that Fiat is now the bear.
Marchionne: I can even understand that. But we leave more room in the bed, enough room, because we know what it takes for a mass producer to manufacture products today: It needs the most cost-effective and efficient production structure possible, while at the same time preserving brand independence. That's the trick, as Volkswagen exemplifies. VW, Audi, Seat, Skoda -- people think they are different brands, but in reality they're all Volkswagen.
SPIEGEL: You don't just want to merge with Opel. You also want to form an alliance with the ailing US carmaker Chrysler. After losing billions, Germany's Daimler Group recently ended its attempt to restructure Chrysler. Why should Fiat be better at it?
Marchionne: Daimler was not a mass producer. It is impossible to develop an identical suspension for a car in the Mercedes S class and an American small car. The worlds remained separate. We also own Ferrari. Ferrari has the best engine in the world. But if I tried to install this brilliant engine into a Fiat Punto, I'd be bankrupt in three months.
'I Don't Beg'
SPIEGEL: Do you need German taxpayer money to pay off the Fiat Group's old debts?
Marchionne: No. We are going into this with Fiat Auto, which is debt-free. Our basis is clear: no cash, no debt.
SPIEGEL: You don't want to pay a single euro for Opel, but in return you are not contributing any new debt?
Marchionne: Yes. Our business will provide cash immediately, and that's more important than a significant lump-sum payment, because it will be sustainable. In 2008, our car business brought in more than €2.5 billion ($3.5 billion) in EBITDA -- earnings before interest, taxes, depreciation and amortization -- which will help finance the joint operating business of Fiat and Opel. We also expect to see synergistic effects of between €1 billion ($1.4 billion) and €1.4 billion ($1.96 billion). Fiat was just hired three major financial institutions to develop a strategy for the new group, so as to separate the auto business from the Fiat Group as efficiently as possible.
SPIEGEL: Your logic is that of mass production. But perhaps that isn't the logic Opel needs at all. The Canadian-Austrian Magna Group, for example, would not contribute any auto production of its own to a merger. Instead, it will open up the enormous Russian market for Opel. Couldn't that be more profitable?
Marchionne: Magna acts as if it had discovered Russia. But we probably know the market there better than they do. Fiat has joint ventures in Russia. Five years ago, we took a look at the factories of Magna's Russian partner Gaz. It wasn't right for us. The Russian auto industry needs to solve its own problems first. You have to learn to walk before you can run. Moreover, the Russian auto market has declined by more than half in the last six months. They couldn't take on Opel's inventory without jeopardizing the domestic industry. If one of my people came to me with such a plan, he would be out of a job the next day.
SPIEGEL: A partnership with Magna could make it easier to export to Russia.
Marchionne: Anyone can export there.
SPIEGEL: There are protectionist hurdles
Marchionne: mainly if you want to produce there. Perhaps that would be easier with Magna. But what good does it do German workers if they produce in Russia?
SPIEGEL: What new markets could there be for Fiat-Opel?
Marchionne: Aside from the markets where Fiat and Opel already have a presence today, there is Latin America, Turkey, India, Russia and China -- all growth markets where we already have stable relationships today.
SPIEGEL: Why are the German unions so enamored of Magna?
Marchionne: It's wishful thinking, because Magna plans to cut 10,000 jobs at Opel, which is more than Fiat would cut. They believe that the Magna plan would not lead to cuts in production. That's what they hope. But I'm afraid that they are deluding themselves -- very much so, unfortunately.
SPIEGEL: The people at Opel are also skeptical about you because the two companies' model ranges and customer bases are similar.
Marchionne: They are not the same customers. Someone who buys an Opel doesn't want a Fiat, and vice versa. An Opel is an Opel, a German brand. It will remain that way.
SPIEGEL: What would Fiat bring into the marriage? It certainly won't be money.
Marchionne: We would contribute the entire production process, that is, everything with which Fiat Auto is now making money. That amounted to a cash flow of just under €3 billion ($4.2 billion) last year. On Wednesday, we submitted our 10-page proposal, on time. It's an honest industrial project which aims at solving a problem. If Opel doesn't want us, I won't get depressed over it. I don't beg.
SPIEGEL: Would you look for another European partner, perhaps in France?
Marchionne: No. Even if Opel doesn't want us, the Opel saga will continue for a while. Then it will be up to the market to solve the problem. But I don't want to be part of that.
SPIEGEL: Would it be easier if there weren't a parliamentary election in Germany this fall?
Marchionne: Of course. And I'd also like to live in an ideal world, where I would sit at a table with reasonable people and make reasonable decisions.
SPIEGEL: When you were in Germany, did you feel that our politicians understood you?
Marchionne: I met with (Economy Minister Karl-Theodor) zu Guttenberg, (Foreign Minister Frank-Walter) Steinmeier, (Rhineland-Palatinate Governor Kurt) Beck, (Hesse Governor Roland) Koch and (North Rhine-Westphalia Governor Jürgen) Rüttgers. And (Thuringia Governor Dieter) Althaus's staff. Everyone asked the right questions. It's clear to everyone that there is a huge problem and that we need a solution. No one said: Let's wait until the election, and then it'll resolve itself. I'm sitting here wearing a sweater because I work all the time. I make cars. In Germany, unfortunately, there is also another agenda. You are electing a new government in the autumn. That will influence the process. It's unfortunate that all of this is happening at the same time. I just hope that there will not be a bad compromise motivated by political reasons. We've seen, in the US, how a problem can be solved.
SPIEGEL: Do you see the US government as being on your side?
Marchionne: President Obama will do what's good for GM. It's his mandate. I understand that. In other words, the American administration cannot be my ally. It needs to protect GM -- but I don't. We had difficult talks over Chrysler with the Treasury Department. But both sides were determined to find a joint solution.
SPIEGEL: How exactly would the close ties between parent company GM and Opel be dissolved?
Marchionne: A clear decision has to be made as to who takes along what in the separation and what remains behind. Opel was a subsidiary, and GM treated it like a child. Things are done differently within a family than with someone from outside the family. The trick is to replace the GM umbilical cord with a Fiat umbilical cord. We can step into GM's shoes right away. That's our advantage. In 36 months, with the 6,500 engineers in Rüsselsheim and our own people, we can completely redesign the Opel architecture.
SPIEGEL: Fiat doesn't exactly enjoy a good reputation when it comes to future-oriented technology. What is the status of hybrid and electric technologies?
Marchionne: We have all of that, or we can buy it. This technology is available in the marketplace -- all it takes is a call to Bosch. The German suppliers are excellent.
SPIEGEL: There was also a last-minute offer from the works councils and the Opel license holders. A desperate move, in your view?
Marchionne: No. I believe that they want to save what they can. But I'm afraid it won't work, because it's not an industrial strategy.
SPIEGEL: Mr. Marchionne, we thank you for this interview.