Behind the Wheel with Phil Lebeau

Marchionne's Warnings Worth Listening

You got to love it when Chrysler CEO Sergio Marchionne walks an auto show. In a world of auto execs often giving bland answers that provide little insight into what's happening in the auto industry and the global economy as a whole, Marchionne is a breath of fresh air.

At theFrankfurt Auto Show, Marchionne said what many are thinking, but few are admitting publicly: The European debt crisis could blow up and make things a lot worse. To be more blunt, Mr. Marchionne told Reuters, "I think there is a possibility, if the wrong steps are taken, that the system goes off the rails."

If you are reading that and saying, "so what?" you need to realize just how fragile the European economy is right now. The more it slides, the more it threatens the economic health of not only Fiat, but all of the automakers.

It hasn't hit the point where the auto industry is getting dinged, but it's not an issue to dismiss. And the implications are not just for European automakers. The entire industry will be impacted the farther Europe's economy slides. Marchionne gets it, just as he gets the implications of a rising Chinese auto industry.

In August he was blunt in assessing the threat of a growing Chinese auto industry. His comments were not suggesting we take a protectionist approach and try to keep the Chinese auto makers from selling cars in the US or Europe.

No, instead, he was saying what many are increasingly realizing: As the Chinese automakers grow and start to export, the North American and European automakers will have to get more competitive if they are going to survive and thrive.

Marchionne told an auto industry gathering in Michigan that automakers "need to continue to work to make our industrial base more competitive, because the day of reckoning is inevitably coming."

Despite a track record of turning around Fiat and now well on the way to pulling Chrysler back from the trash heap, the praise of Marchionne often comes off like a back handed compliment. People will say to me, "Well anyone could have saved Chrysler if it was given to them. Marchionne didn't really risk anything getting Chrysler in a government-backed bankruptcy."

These comments make me chuckle.

As if to say anyone walking off the street could have revived Chrysler sales. And when I point out Marchionne turning around Fiat, I often hear people say, "Big deal, he gutted the unions."

Again, the lack of understanding cracks me up.

Is Marchionne always right? No. He still has a long ways to go rebuilding Chrysler. His portrayal of the Chrysler government loans as having "shyster rates" was ridiculous (hey, he knew the rates when he made the deal. If he didn't like 'em, he could have passed on taking over Chrysler). And while Fiat is strong in Europe and South America, it remains behind the pack in China and southeast Asia, the fastest growing region of the world. So Marchionne has a lot more work to do.

Fortunately, as he keeps going, he'll have plenty of blunt comments.

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