Competition in the automotive industry is as intense as it gets. While many buyers say they shop on price, companies know customers tend toward brand loyalty. Once they get them, they often keep them. So, anything that complicates or tarnishes a brand’s image to the consumer public is cause for concern. Which brings us to the situation in which Fiat Chrysler finds itself.
The company is dealing with two different challenges: labor talks with the UAW and merger negotiations with PSA Group, a French automaker. This alone would be no real cause for a PR alarm. Automakers negotiate with unions all the time, and mergers are already a very public part of Fiat Chrysler’s identity. But these news items pale when compared to the staying power of the following headline: “GM sues Fiat Chrysler for racketeering.”
Media sources are already describing the lawsuit as “unprecedented,” which, from a PR perspective, means the playbook is relatively blank insofar as how to deal with this situation. Sure, Chrysler can borrow from other brands in other industries, but what it really needs is some targeted and creative consumer PR to wade through these potentially treacherous waters.
Exactly how treacherous? The lawsuit alleges that Fiat Chrysler “bribed” union officials to give the company “an unfair cost advantage,” leading to “billions” in losses for GM. Fiat Chrysler, justifiably concerned about how this lawsuit would influence current labor negotiations, fired back, calling the allegations in the suit “meritless” and categorizing the suit as an attempt to damage ongoing union negotiations.
All this is happening even as the potential merger illustrates huge stakes for the somewhat troubled automaker. Combining with PSA Group offers Fiat Chrysler additional resources and infrastructure the company needs to ramp up its electric car initiatives, an area in which American rivals GM and Ford already have a lead and a clear advantage. So far, the lawsuit filed by GM hasn’t hurt negotiations between PSA and Fiat Chrysler, but it’s too early to tell if those talks are immune to the PR related to the allegations in the suit.
For their part, Fiat Chrysler exhibited surprise at the lawsuit, releasing a statement which read, in part: “We are astonished by this filing, both its content and its timing. We can only assume this was intended to disrupt our proposed merger with PSA, as well as ongoing negotiations with the UAW …”
This is a strong stance to take, essentially accusing GM of corporate sabotage. But there’s a bit of a pearl-clutching tone too. Feigned surprise only goes so far. The next step for Fiat Chrysler will likely either be to double-down on a counter accusation or to go on the defensive. It will be interesting to see what it chooses.