And here's what former BorgWarner Inc. CEO Tim Manganello had to say about Marchionne's criticism that the auto industry fails to generate returns that cover its cost of capital.
"If your return is less than your cost of capital, you are destroying shareholder value," Manganello said, adding: "There aren't too many companies in the auto sector at the OEM level that basically return their cost of capital."
The unusual bluntness with which Marchionne sized up his own industry has backfired on him in a way. It has invited closer scrutiny of FCA's particular shortcomings -- its lack of presence in China, for example, and its slight electrification portfolio -- rather than putting the industry itself under the microscope.
But regardless of whether his capital-junkie manifesto was a thinly veiled overture to potential merger partners, the cerebral Marchionne has been thinking about industry consolidation for years. He told Automotive News Europe in 2008 that he expected only a half-dozen automakers to survive long term.
Seemingly lost in the wake of his April analysis was some tough-to-ignore evidence of the industry's bottom-feeding status among other sectors when it comes to making efficient use of capital:
- An automaker will spend the equivalent of its enterprise value -- essentially what an acquirer would pay for the business -- on product-development costs every four years. It takes aerospace and defense companies nearly 20 years to spend that much, the FCA analysis shows.
- Mainstream automakers had enterprise values of four times their pretax profits in 2014 -- paltry compared with aerospace and defense (average enterprise value of nine times pretax profit), building-materials companies (11 times) and pharmaceuticals (13 times).
- Capital spending by mainstream automakers, including product-development costs, grew 12 percent annually from 2010 to 2014.
OK, fine, some industry veterans say. The business has always been low-margin and capital-intensive, which is why Wall Street generally values automakers at a discount to companies in those other sectors. That's old news.
The problem, Marchionne and some of his peers say, is a coming investment crunch to develop autonomous driving, connected-car technology, alternative powertrains and shared-mobility solutions, which threaten to overwhelm many automakers unless they better leverage their capital dollars.
Those trends will require "significant, incremental investments ... likely at the same time growth slows," consulting firm AlixPartners said in a June research report. It added: "Few players have the scale to support" adequate investments in each of those realms.
Cadillac President Johan de Nysschen says earmarking capital for technologies such as autonomous driving "definitely brings along incremental challenges and incremental resource demands." Those development costs "are layered" atop an already big investment in new-vehicle programs that he and GM are making to elevate the brand.