Fiat boss disses VW with rebate offer

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IOL mot pic dec10 Sergio Marchionne

REUTERS

Fiat and Chrysler chief executive Sergio Marchionne has been trading insults with VW boss Martin Winterkorn.

Fiat and Chrysler boss Sergio Marchionne, who famously refuses to wear a tie even to an audience with the Pope, has taken his spat with Volkswagen group main man Martin Winterkorn to the next level, by hitting the Germans where it hurts most - in the wallet.

According to a report in the Detroit News, he’s offering a $1000 (R8700) rebate to any VW owner in the United States who buys a Fiat or Chrysler model. You don't have to trade in your Volkswagen to get the discount, he says, just prove you own or lease one.

Marchionne has been the chairman of the 16-member European Automobile Manufacturers' Association for the past year, and he has used that time to campaign for cooperation between rival brands, and backing from the EU for a coordinated programme of plant closures, saying it's the only way for loss-making Italian and French brands - and Germany's Opel - to survive as the European vehicle market shrinks for the fifth consecutive year.

“YOU’RE CREATING A BLOODBATH”

But Winterkorn, whose cars hold 25 percent of that market, and who has a stable of profit-generating luxury brands to prop up his bottom line, has refused to cooperate - in fact he's been saying Marchionne isn't qualified to lead the association and doesn't know what he's talking about, especially after Marchionne accused him of using his big-ticket car sales to subsidise unrealistic prices in the lower-profit, high-volume segments, which other manufacturers cannot afford to match.

In July the Detroit News quoted Marchionne as saying VW was setting up conditions that would bring about a 'bloodbath' among the region's more fragile automakers, and threatening to take the Fiat group out of Acea.

And when Marchionne was elected to a second one-year term as Acea chairman on Friday, it said VW spokesman Stephan Gruehsem had repeated the company's call for him to step down. Which is when Marchionne came up with the rebate offer.

Actually, it's not just gamesmanship; the Fiat boss is apparently hoping it will negate VW's cross-subsidisation advantage long enough to win him some vital North American market share.

But whether or not it works, as a studied insult to his rival, it's a masterstroke.


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