Marchionne: Auto Future Holds More Mergers, Higher Prices

Jan 14, 2015 10:42 AM EST | Jordan Ecarma

More mergers and an evolving relationship with federal regulators are what's ahead for the auto industry, according to the CEO of Fiat Chrysler Automobiles.

Carmakers have been freely spending capital, but the "drinking binge" will stop as the industry becomes more consolidated, Sergio Marchionne said in remarks at the 2015 Automotive News World Congress.   

Stricter regulations for fuel economy will shift the relationship between automakers and the National Highway Traffic Safety Administration and mean industry-wide higher prices for cars, he said.

"We have learned a lot since the dark days of 2008 and 2009, and the price of these technologies is going to affect the price of these vehicles going forward," Marchionne told Automotive News. "You cannot have your margins decimated by technology solutions.

"All of us are phenomenally worried about the cost of price increases," he continued. But "if it's industry wide ... you can't be afraid of the bogeyman forever."

FCA's leader described the relationship between car companies and NHTSA as undergoing a "paradigm shift." Earlier this week, Marchionne said 2014's record of 63 million recalled vehicles may have reflected an "overreaction" from safety regulators.

"I think NHTSA is experimenting with the exercise and scope of their authority, and the industry is getting used to responding to that," he said.

That tension could get interesting especially when NHTSA leader Mark Rosekind is on a mission to increase safety in vehicles and recently hinted at a potential government-mandated standard for semiautonomous technologies such as forward collision warning and automatic braking.

Fiat Chrysler's Marchionne made sure to note where he believes government authority is appropriate, saying that targets for better fuel economy and lower emissions were proper, but a federal mandate on how those standards should be achieved would be over the line.  

"Tell me what you want," he said. "Don't tell me how to get there."

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