Bloomberg News

Marchionne Takes VW Rivalry to U.S. With Special Rebates

December 07, 2012

Fiat SpA (F) Chief Executive Officer Sergio Marchionne, who was re-elected today to head Europe’s main carmaking lobby group, is taking his rivalry with Volkswagen AG (VOW) in their home region overseas.

Marchionne, who also runs Chrysler Group LLC, is offering $1,000 rebates to current VW owners in the U.S., where VW is much smaller, to buy a Fiat or Chrysler vehicle.

Marchionne has been in a war of words with VW over auto pricing in Europe, where VW commands 25 percent of the market, suggesting in July that the German automaker was creating a “bloodbath” in the region. Stephan Gruehsem, VW’s chief spokesman, responded that Marchionne wasn’t qualified to lead the ACEA lobby group.

The dispute, which included VW and Turin, Italy-based Fiat each threatening to quit the ACEA, highlighted a growing financial gap between German manufacturers with premium brands and their unprofitable, volume-oriented French and Italian counterparts, which are losing sales with low-margin, mid-range models.

Marchionne and VW CEO Martin Winterkorn faced off at an ACEA meeting at the Paris Motor Show on Sept. 28, a day after VW reiterated its call for the Italian to step down as the organization’s head. The executives emerged from the session shaking hands, with Winterkorn saying that the “good friends” had “settled things” and Marchionne saying ACEA members decided to address overcapacity on their own.

Marchionne today was chosen for a second one-year term as president of the 16-member European Automobile Manufacturers’ Association, the Brussels-based organization said in a statement today. The post rotates yearly, with the position assigned by country for a two-year period.

Conflicting Interests

Marchionne has used his term at the ACEA to call for cooperation among the region’s carmakers, and backing from the EU, to close factories as the vehicle market shrinks for a fifth consecutive year. Wolfsburg-based VW, which controls the Audi and Porsche luxury brands, has been among German carmakers resisting the strategy.

“One of the highest priorities for ACEA next year will be to continue to push for a meaningful and supportive” European Union industrial policy, the lobbying association said.

Volkswagen is Europe’s largest carmaker, with its group 10- month market share rising 1.5 percentage points to 24.8 percent. That compares with a 0.7-point decline to 6.4 percent for Fiat. The ACEA is forecasting that European car sales this year will drop to the lowest level since 1995.

The two automakers are among the top performers in the U.S. market this year. Combined sales of VW, Audi, Bentley and Lamborghini brands rose 31 percent in the first 11 months, boosting VW’s group market share to 4 percent from 3.5 percent, according to Autodata. Chrysler Group sales rose 22 percent, lifting its share to 11.4 percent from 10.5 percent.

The U.S. rebate offer is only for buyers who currently own or lease a VW vehicle, according to Chrysler’s website. Customers don’t even have to give up their VW to qualify.

To contact the reporter on this story: Mathieu Rosemain in Brussels via mrosemain@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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