Marchionne rips EU charge Fiat Chrysler evaded taxes
New York — Fiat Chrysler CEO Sergio Marchionne angrily rejected the European Commission’s ruling that the Italian-American automaker evaded at least $23 million in taxes, calling it “absolutely ludicrous” and “nonsense.”
Separately, Marchionne — in New York to ring the opening bell for Ferrari NV’s opening of trading — declined to forecast the outcome of the United Auto Workers’ union contract ratification vote at Fiat Chrysler — after workers soundly voted down the first proposed contract.
“I hate making prognostications especially in view of what happened the last time around,” he told reporters.
Asked by The Detroit News if he had a “Plan B” if workers again rejected the four-year contract, Marchionne remained optimistic. “I’m not on that page. Let them vote in favor (first),” Marchionne said.
He told CNBC earlier that he supported sharing the wealth with workers. He also said that it made sense to continue building cars in the United States — even with wage rates as low as $5 an hour in Mexico — because of the “technical skills” of UAW workers.
On Wednesday, the European Commission found that both Starbucks and Fiat Chrysler had improperly used tax avoidance schemes. “To tell you that my blood pressure went through the roof would be an understatement,” Marchionne said when he read the release.
He said the only purpose of Fiat Chrysler’s Luxembourg presence is provide funding for operations across the world and he said the tax structure was with the “total support” of Luxembourg. Fiat Chrysler complies “with all anti-avoidance measures,” he said.
“With the issues the European Union has in front of it you are going to come after us? On the basis of what? What tax arbitrage? Maybe they haven’t read the papers but between 2012 and now, Europe has been at a loss (for FCA). It loses money. There’s nothing to shift profits.... Get some professionals to do this job instead of bothering companies like (us).”
Marchionne called Volkswagen AG’s admission that it installed “defeat devices” in 11 million vehicles worldwide to evade emissions standards in real world driving a “failure in governance” and a “failure” in the leadership, but not “a technology failure” or a suggestion that diesel vehicles are the wrong way to go. “I think the benefits of diesel are relatively well-known,” Marchionne said. “I think we are going to for a period of time pay the price for the anti-diesel movement, but I think it won’t last long.”
Marchionne reiterated that General Motors remains the “most likely, the most beneficial partner” for Fiat Chrysler, but said “it doesn’t exclude the rest.” GM has repeatedly said it has no interest in pursuing a tie-up with Fiat Chrysler. “I don’t want to make this a GM story. It isn’t. It’s an industry wide issue,” Marchionne said, referring to the need for consolidation.
He told CNBC that his written exchange with GM CEO Mary Barra “has come to an end.” He reiterated that he thinks the industry must consolidate to reduce the hefty costs of designing and assembling vehicles. He said there is a “great chance” of consolidation in the next 24 months but wouldn’t speculate on the partners. “But it will happen,” he said.
Fiat Chrysler chairman John Elkann told The Detroit News and another news outlet that “FCA has a very clear path forward, and very clear objectives ahead. Sergio made it very clear with his presentation about the benefits of consolidation for the industry and all of that reasoning and rationale remains,” Elkann said.
Asked if Fiat Chrysler would consider merging with Volkswagen — despite the company’s problems — Elkann said the German automaker has a lot on its plate now.
“VW is a great car company and they have a lot of things to be thinking now,” he said. “I think that the industry will need consolidation and the rational case for consolidation is extremely clear... What that entails and which are the different participants is something that will depend on the specific situation.”
Standing in a massive scrum of reporters around very pricey Ferrari cars on Wall Street, Marchionne warned reporters not to damage the cars — or he vowed to collect from their news organizations. Reporters and camera crews behaved themselves and managed not to damage the vehicles.