Why won't GM play ball with Marchionne?

DETROIT -- Sergio Marchionne's fixation with a General Motors merger says a lot about how he views the prospects of Fiat Chrysler Automobiles as a stand-alone entity.

And GM's reticence to engage the canny FCA chief says a lot about how CEO Mary Barra & Co. view their own.

In short, GM execs feel pretty good about what they've got.

Marchionne's indictment of the auto industry's capital-wasting ways seems to imply that GM is among the chief wasters. With Marchionne at the helm, his argument suggests, the true value of GM's size and scale could be unlocked and monetized.

That implication must rankle some at GM headquarters because in recent years the automaker has been quietly but decisively tackling some of the very problems Marchionne is warning about. It has adopted a more disciplined approach to capital spending, placing bets where it sees growth potential (think Cadillac in China or in-car 4G wireless connections) and taking its chips off the table where it doesn't (exiting Russia and yanking Chevy from Europe).

"It's a much clearer realization that resources are scarce," GM President Dan Ammann told Automotive News in March. That newfound discipline, he said, emanates from an executive team that's "able to have much more clear-eyed discussions about what our real priorities are."

Those priorities clearly do not include a massive merger that could risk throwing GM back into turmoil at a time when it's enjoying a rare period of relative stability.

Even just a few years ago, GM probably had more reasons to consider a tie-up.

Much was still up in the air during the post-bankruptcy tenures of CEOs Ed Whitacre and Dan Akerson. Opel's fate was uncertain. GM's executive suite was a revolving door. One high-level exec said privately in 2013 that GM had the feel of being run by an emergency manager, invoking a term that's used here to describe the third-party administrator dispatched by the state to oversee a broke city's finances.

Today, GM's relatively young executive team believes it's on the right path.

Opel has been restructured and is showing signs of life. Red ink in many overseas markets is being stanched through tough calls to scale back or pull out. A truck strategy that many questioned a few years ago -- bringing back midsize pickups and redesigning its full-size trucks with tried-and-true steel and new push-rod engines -- is propelling profits.

An FCA merger threatens to knock GM off that path. At least that's what Barra's team believes, based on the swift and certain rebuff of Marchionne's overtures. Any such tie-up would carry huge upfront risks, GM executives' thinking goes, with no guarantee that the future payoff would be big enough to justify the cost and disruption.

And GM executives have implied that FCA needs GM far more than the other way around on a number of key fronts:

• China: GM got an early start and is now a leader there, with established brands, while FCA is still struggling for a foothold.
• Vehicle platforms: An example of what Barra meant in June when she said GM is "merging with ourselves," the company is far along on a plan to build hundreds of models from just a few core platforms. GM is playing catch-up to global giants Volkswagen AG and Toyota Motor Corp. on such a modular approach. But melding that plan with FCA's hodgepodge platform mix would further delay the timeline.
• Alternative powertrains: GM's bet on the Chevrolet Volt has been paying dividends as it applies the guts of that plug-in hybrid system to potentially higher-volume entries, such as a hybrid Malibu, set to arrive next spring, and the Bolt all-electric vehicle, due by early 2017.

While FCA's diesel-engine portfolio could help GM, FCA is "basically nowhere" on building out an alternative-powertrain strategy to meet tightening global regulations, says former GM Vice Chairman Bob Lutz, who lobbied hard for a GM-Chrysler marriage as an executive in 2007 and still believes the idea has merit.

"You can put lipstick on the pig for a while by doing things like the Hellcat," the thunderous, 707-hp engine used in the Dodge Charger and Challenger SRT models, Lutz said.

"That's great," he said. "It probably makes a lot of money. But that isn't the future."