FIAT CHRYSLER

U.S. Auto Sales:
A Pandemic Race to the Bottom

April 2, 2020 by admin Leave a Comment

March 2020 U.S. auto sales drop through the floor.

As expected, the U.S. auto sales numbers for March 2020 reflect what we already knew: a substantial correction, resulting almost entirely from the COVID-19 pandemic. Every manufacturer and brand posted losses in March, as the country went through an expanding area of “stay at home” orders covering most of the nation. The full impact of the coronavirus outbreak is not yet known, but consumers are staying away from showrooms.

More than 3 million Americans were suddenly left jobless by the third week of March, effectively removing a source of consumers who might show interest in purchasing a new vehicle. In some states, dealerships shut down, while in others they stayed open under local “essential services” rules.

All three of the major domestics – GM, Ford, and Fiat Chrysler – reported losses. The Big 3, as they are colloquially known – stopped reporting monthly sales figures, choosing to share quarterly data only. With the first quarter done, nearly every brand showed net losses. Ram was the lone exception; Korean make Kia also came out on the plus side.
GM’s quarterly sales fell 7 percent, while Fiat Chrysler slid 10 percent. Ford’s numbers were not available as of this writing, but losses rivaling its chief competitors is in order.

Other automakers reported their March sales, which give a stark picture of what happened last month. Subaru, which has seen a steady increase in sales since the last recession, registered a 47-percent drop in March. The loss snapped a month-over-month streak that spanned more than eight years. Indeed, Subaru is facing the end of 11 consecutive years of growth that have transformed this niche automaker into an important player in the U.S. market.

In no particular order, sales numbers culled from manufacturing data is as follows:

Kia sales fell 22.9 percent for the month, but remain up slightly for the year. Two strong months to begin the year have kept this Korean manufacturer in the black, although we expect that’ll change during the first week of April. Hyundai’s sales fell 43 percent of the month, thus it sold fewer cars than Kia, its sister brand.

Mitsubishi reported a 42-percent sales drop, while Mazda’s sales plunged 42.8-percent. Mazda enjoyed strong sales in January and February, thus it is only down 4.9 percent for the quarter.

Porsche’s quarterly sales dropped 20.2 percent, with every established model registering double-digit losses. Porsche also started delivering its Taycan all-electric model, with 221 units sold in the first quarter.

Volkswagen sales dropped 42 percent for the month and are down 13 percent for the year. The automaker rolled out the new Atlas Cross Sport model during the first quarter.

Toyota sales fell nearly 37 percent for the month and are down 8.8 percent for the first quarter. New models counted during the January-March period include the GR Supra sportscar and the Yaris Hatchback.

Nissan Group sales, inclusive of the Infiniti and Nissan brands, are down nearly 30 percent for the quarter. This automaker had already experienced a significant downturn ahead of the coronavirus crisis with its sales falling the steepest amongst the major manufacturers.

Honda experienced one of the largest month-over-month drops of any manufacturer with March 2020 sales down 48 percent compared to March 2019. For the quarter, Honda sales – inclusive of the Honda and Acura brands – are off 19.2 percent.

Other manufacturers, including Ford, Mercedes-Benz, and BMW will report today or Friday. All three will share substantial losses for March.

Looking Ahead

April 2020 sales will continue to fall as the COVID-19 pandemic worsens across the United States. With various “stay at home” directives in place, consumers won’t be visiting showrooms in many areas. For lessees, opting for an extension may bide them some time, otherwise inventory turnover should be light for the second quarter, perhaps rebounding in the second half of the year as the pandemic eases.

Auto Industry Reacts to Coronavirus Threat

March 30, 2020 by admin Leave a Comment

General Motors and Ventec Life Systems are partnering to convert the GM Kokomo, Indiana ERC building for the production of Ventec ventilators in response to the COVID-19 pandemic. (Photo GM Corp.)

COVID-19 is turning the world upside down, with nearly every country and region reporting cases, including deaths. Business as usual is no longer the case as companies large and small adjust or in some cases shut down.
The auto industry is no exception and has, in fact, seen production stopped at most plants scattered across the United States. We examined the impact earlier this month (see Coronavirus Strikes; Industry Reacts). Today, the picture has changed with the major players doing their part to fight the battle.

Here are the latest updates from key original equipment manufacturers:

GM will build critical care ventilators. GM is not currently building vehicles as its production facilities remain shuttered following the COVID-19 outbreak. But one plant, it’s Kokoma, Indiana, manufacturing facility will soon come back online, as it launches production of critical care ventilators> for Ventec Life Systems. Ventec, based in Bothell, Washington, is unable to meet demand at its lone facility. With GM’s help, the companies will produce the ventilators needed by hospitals in the United States and abroad. A second GM plant, this one in Warren, Michigan, will soon assemble Level 1 masks. Within two weeks, GM should produce 50,000 masks per day, potentially doubling that number.

The 2020 Detroit Auto Show is canceled. The North American International Auto Show was last held in January 2019 and was supposed to move to a late spring/early summer schedule this year. Indeed, journalists marked June 2020 on their calendars, expecting to head to the Motor City for a warm-weather preview of new cars and concepts. The show, however, will not go on as the city will instead turn the host Cobo Center into a temporary hospital for the duration of the coronavirus crisis. The show’s organizers have already updated their page to reflect the next show, which is scheduled for June 11-26, 2021.

Dealerships reel under local “stay-at-home” directives. Tens of thousands of car dealership employees are on furlough as various “stay-at-home” edicts shutter showroom doors. The Penske Corp. has avoided layoffs so far as senior staff accepts pay cuts and Roger Penske and the company’s president, Rob Kurnick, forgo their salaries for the duration of the crisis according, to Autoweek. Dealers throughout the country have reduced hours or temporarily closed down and laid-off employees.

Plant shutdowns extend into April. March 30 was supposed to be the day for manufacturers to resume production, but that isn’t going to happen. GM, Ford, and Fiat Chrysler were among the first companies to shutter their plants and each will stay closed for at least another week. Volkswagen says it’ll restart production on April 5, while Toyota says it’ll bring its plants back online on April 20. These resumption dates, however, will likely change especially as President Trump extended the national pullback through April 30. That said, each state has its unique directives in place.

Manufacturers and lenders give consumers a break. With millions of new unemployment claims filed in March, many consumers are suddenly experiencing financial trouble. With finance and lease payments due, some people are unable to make their next payment. Fortunately, manufacturers are responding through their financing arms to give consumers a break. Depending on the company, payment deferrals and lease payment extensions are in place. That said, in some cases only consumers with top credit ratings are eligible. We’ve surveyed various schemes in place from Ford, Hyundai, Nissan, and others. Auto Trends recommends affected consumers contact their respective lender for guidance. Tell them your story and work out an agreement that’s right for you.

After COVID-19

At some point, the COVID-19 threat will be gone, with businesses returning to a new normal. Most American citizens will see some relief in April as unemployment checks arrive and as the IRS distributes $1,200 to $3,400 to eligible households. The industry will endure a deep sales slump in March and April, with the likely rebound beginning in May. We may see record sales by July as consumers who have delayed their purchases flood dealer showrooms. Again, all this is predicated on how the crisis plays out.

Coronavirus Strikes; Industry Reacts

March 19, 2020 by admin 3 Comments

It was only a matter of time before the U.S. auto industry reacted to the coronavirus pandemic, as both domestic and foreign-based manufacturers announced plans this week to thwart the spread of the contagion. The action taken varies from automaker to automaker, but ultimately a full production shut down ranging from a few days to up to two weeks, perhaps more, is occurring.

Following positive COVID-19 test results from one or more plant workers, companies such as Fiat Chrysler, GM, and Ford are idling their plants for at least 10 days. The companies responded to union pressure to shut down their plants, following Honda’s decision to take a six-day break of its own.

Honda workers are not represented by a union.

The industry-wide shutdown is unprecedented and will go beyond the pullback manufacturers faced in 2008 as a result of a deep recession. Then, all three U.S. manufacturers faced collapse with Chrysler and GM ultimately walking through bankruptcy. After that, Chrysler merged with Fiat, and all three companies restructured and built vast reserves of cash to weather the next cyclical downturn.

After years of anticipation, that downturn is here, driven largely by a pandemic that’s shaken much of the world.

Nissan will shut its plants from March 20 to April 6, while Hyundai closed its Alabama plant and is disinfecting the same following a positive COVID-19 result for one of its workers.

Toyota plans a two-day pause on March 23 and 24 for all its North American locations, allowing for special cleaning as well as to readjust production for lowered demand. The company says it will resume production on March 25.

Mercedes-Benz has yet to announce plans for its Alabama plant, but it is likely to shut it down as part shortages loom. According to Bloomberg, the company is experiencing a parts shortage as the European Union is amid a 30-day closure. Italy, Spain, and France are all hard-hit with virus cases in Germany and other countries increasing sharply. Mercedes imports engines and transmissions from Europe, which power two utility vehicles built stateside.

As of this writing, Kia has no plans to scale back production or temporarily reduce worker headcount at its West Point, Georgia, manufacturing plant. The automaker told the LaGrange Daily News that it has a COVID-19 response team tasked with monitoring the situation and minimizing risks. These include restricting public access and shutting down the facility’s fitness center.

BMW intends to keep its Spartanburg (Greer), SC, plant operational, at least for now. The company ordered many of its office employees to work from home, but it will keep its plant running.

Responding to a Fox Carolina inquiry via Twitter, BMW said, “In regard to closing Plant Spartanburg, we continue to monitor the situation in South Carolina daily and are in close alignment with both state and local government officials. We recognize that we are in a dynamic situation and we are prepared to adjust quickly based on the daily analysis of the current environment. In parallel we have implemented numerous measures to protect the health and safety of our employees.”

Auto Trends has learned that other automakers with a manufacturing or business presence in the U.S. are also responding to the crisis.

For instance, Tesla plans to temporarily reduce its workforce from 10,000 individuals to 2,500, although a timeline hasn’t been announced. The company finds itself in an unusual position as the area is under a mandatory three-week shelter-in-place directive.

But employees who are going to work are violating the edict, which only makes allowance for essential personnel to travel. The Alameda County Sheriff’s Department contends the plant must shut down, although it may permit a smaller workforce to remain for non-production work only.

See Also — 9 Winners and Losers of 2019

Image by Tumisu from Pixabay.

9 Winners and Losers of 2019

January 7, 2020 by admin 2 Comments

Ram Trucks
Ram Truck brand sales topped 700,000 units sold for the first time in 2019.

It’s a wrap: 2019 is in the books. And if you’re thinking we’re a bit late sharing this information, hold on: the U.S. auto industry finished reporting its annual sales on Monday, closing out an extended period of news releases hyping the details.

We’ll cut to the chase and look at the winners and losers for the past year.

Winner: U.S. auto industry. This was supposed to be the year the industry fell below 17 million new light vehicles sold. Indeed, last year was also supposed to fall short. But neither year did. Yes, sales were down slightly year over year, by 1.6-percent, but managed to finish around 17.1 million units sold for the year. That’s five consecutive years of topping the 17 million mark. Importantly, there’s a chance we’ll see a sixth year for 2020.

Loser: American consumers. Stop right there: purchasing a new vehicle isn’t necessarily a bad thing. What’s problematic is the loan terms, which are averaging 68 months. Worse, is the availability of long-term loans of 72 and 84 months, respectively. That means there are a greater number of consumers paying for their new vehicle for seven years. What’s not always apparent are consumers rolling over their loan balances into a new loan. That’s a costly decision and very concerning.

Winner: Ram 1500 pickup truck. Yes, the Ford F-150 is the indisputable pickup truck king for four decades running. Indeed, the Ford F-Series recorded 896,526 units sold, down 1.41-percent versus the year earlier. The big news is the Ram 1500, which notched 633,694 vehicles sold, an increase of 18.01 percent. Not only is the Ram Pickup a big gainer, but it has displaced the Chevrolet Silverado as the number two seller in the U.S. Though Chevrolet has egg on its face by losing its place to Ram, GM still builds more full-size pickup trucks, selling 807,894 units of the Silverado and GMC Sierra combined.

Prius sales are falling, thanks in part to new models such as this Toyota Corolla Hybrid.

Loser: Toyota Prius Family. Hybrid sales continue to fall as fuel prices remain stable and well below historical highs reached in 2012 at $3.64 per gallon. With prices averaging $2.55 per gallon in December, models such as the Toyota Prius continue to lose appeal. Indeed, Prius sales fell by 20.84-percent in 2019 to 69,718 units. That’s less than half the Prius’ sold in 2012 and well below the peak 181K units purchased in 2007. Some of the sales have gone to other Toyota hybrid models as well as to new competitors, such as the Hyundai Ioniq.

Winner: Fiat Chrysler. The deal is all about done. That deal has Fiat Chrysler merging with the PSA Groupe to form the world’s fourth-largest automaker. FCA is a winner as it was the dream of its late CEO Sergio Marchionne to find a partner. The new company will realize economies of scale and be better positioned to work through vehicle electrification and autonomous driving, which are the two largest and costliest technologies of our time. Without a merger, FCA most likely would have been left behind.

Loser: Sedans. Remember when sedans (and coupes and convertibles) ruled the road? Sure, there were some pickup trucks and vans in the mix, but the family vehicle of choice was the sedan as well as its station wagon variant. Well, car sales continue to fall and now represent about one-quarter of the market. We said good-bye to the Chevrolet Cruze, Ford Taurus, and to the Hyundai Azera last year. Other Ford and Chevrolet models are also gone and the Volkswagen Beetle is no more. Likely, car sales will continue to fall for a few years before finally stabilizing. Manufacturers that stay in the segment may find the remaining market too good to ignore.

2019 Nissan Altima SR — Sedan sales are declining but new models such as this Nissan Altima are keeping the segment fresh.

Winner: Carlos Ghosn. The former Nissan and Renault CEO is now a free man. At least he’s freed from Japanese confinement as he snook his way out of the country and found his way to Lebanon. How he got there is a story for the ages and one that isn’t quite clear just yet. Regardless, Mr. Ghosn should stay out of jail as long as Lebanon ignores an international warrant and public opinion aligns with the executive as he tells his story. On the flip side, Nissan may prove the biggest loser, especially if the details of how it all went down raise serious questions.

Loser: UAW. The UAW appears the winner following a protracted strike with GM. Organized labor certainly looked strong as it kept GM plants shut for more than a month, representing the longest strike in nearly 50 years. The settlement yielded several gains for the rank and file, including forging a pathway to permanent employment for temporary workers. Also, GM created a shorter route to top-tier wages, agreed to keep open and transform one assembly plant targeted for closure, and maintained its strong health benefits for employees. So, how is the UAW the loser? The union failed to organize Volkswagen’s Tennessee plant, it remains shut out of Nissan factories in the U.S. and continues to lose members. Then there is the matter of a corruption scandal involving union brass. Several leaders accepted kickbacks from UAW vendors and contractors, enriching themselves at members’ expense. At least 10 individuals were involved, giving the UAW a black eye in the process.

Winner: New models. We like new and updated models. And we show our approval (or disapproval) in the way we carry out our purchase decisions. Several new models enjoyed success in 2019, registering big gains or significant sales as they debuted. Among them were the Audi Q8, BMW Z4, Cadillac XT4, Genesis G70, Nissan Kicks, and the Subaru Ascent. Other winners included the Ford Expedition, Honda Insight, Mercedes-Benz AMG GT, and the Mitsubishi Eclipse Cross.

The Audi Q8 debuted with robust sales to show for it.

2020 Auto Trends

We have a few predictions for 2020 to share, including our guess auto sales will narrowly top 17 million units for an unprecedented sixth consecutive year.

Further, we think the Chevrolet Corvette’s debut will be followed by announcements of even more powerful models. Moreover, Rivian Motors will get its first models to the market before the year closes, Ford and Volkswagen will form an alliance, and GM will not resurrect its Hummer brand. Lastly, Hyundai’s first pickup truck will arrive, Ford will keep the Mustang name on the Mach-E electric crossover, and Jeep will unveil its full-size SUVs.

Car Manufacturers: Who Owns What?

August 31, 2019 by admin 2 Comments

This Buick Regal TourX was developed by Opel. Opel, once owned by GM,
is now a subsidiary of France’s PSA Groupe.

The global auto industry consists of dozens of brand names, but not all are marketed throughout the world. Opel is popular in Europe, but it is not sold in North America. Suzuki cars are no longer sold in the United States, but its Maruti Suzuki brand is a top seller in India. Industry consolidation has united or forged alliances for several car manufacturers and brands, including some owned by rival automakers.

General Motors Company

This Detroit, Mich., company has been around for more than 100 years. For decades, it was the world’s largest manufacturer of passenger vehicles since surpassed by Volkswagen and Toyota. GM’s four core North American brands are Cadillac, Buick, GMC, and Chevrolet. The company used to operate Saturn, Oldsmobile, Saab, Hummer, and Pontiac. Its other subsidiaries include Holden and GM Korea (formerly Daewoo), a joint venture with SAIC Motor, a Chinese company, and partnerships with other Chinese concerns. GM used to own Vauxhall and Opel but sold these two European brands to Groupe PSA in 2017.

Volkswagen Group

Based in Stuttgart, Germany, Volkswagen owns or has a stake in 12 brands including its eponymous Volkswagen moniker. It also owns Audi, Lamborghini, Porsche, Bentley, Bugatti, Skoda, and SEAT. It previously had a stake in Suzuki and joint ventures with two Chinese automakers. Volkswagen also owns Ducati, a motorcycle manufacturer, and MAN, a commercial vehicle brand.

The Plymouth brand is gone, but this 1964 Belvedere reminds us of what once was.

Fiat Chrysler Automobiles

Fiat Chrysler Automobiles represents the merger of two well-established automotive manufacturers. Its North American brands include Chrysler, Dodge, Jeep, Ram, and Mopar. In the US, it also manages the Fiat and Alfa Romeo brands. Chrysler previously owned several other brands, including Plymouth, Imperial, Eagle, and DeSoto. Other FCA properties include Ferrari and Maserati. The automaker has partnerships or stakes in companies based in China, Turkey, and India.

Toyota Motor Corporation

Toyota and Lexus are the two North American brands managed by the Toyota Motor Corporation, a Japanese business. From 2003 to 2016, Toyota also operated the Scion brand. The company is one of the largest conglomerates in the world, an entity with stakes or affiliate agreements with hundreds of companies. Toyota has a controlling interest or a stake in several automotive brands including Daihatsu, Hino Motors, Noble Automotive, Subaru, and Isuzu.

BMW AG

The Germany-based BMW AG entity is best known for producing BMW brand vehicles. It also owns Mini, a British brand it obtained in 1994. In 1998, BMW acquired Rolls-Royce Motor Cars, another British marque. The company also produces motorcycles under the BMW name.

Renault-Nissan-Mitsubishi Alliance

Formerly known as the Renault-Nissan Alliance, the current set up now includes Mitsubishi. Originally established in 1999 whereby Renault and Nissan have investments in each other, Mitsubishi joined in 2017 when Nissan took a stake in it. Today the alliance is a strategic partnership that enables these companies to partner for vehicle development. Besides the three monikers, there are other brands associated with the alliance: Alpine, Dacia, Datsun, Infiniti, Lada, Renault Samsung Motors, and Venucia. The alliance also has stakes in or partnerships with Daimler, AvtoVAZ, and China’s Dongfeng Motor.

This Mini Countryman is a British model built by a German manufacturer.

Ford Motor Company

Besides the Ford brand, this Dearborn, Mich., car manufacturer owns Lincoln and previously had Mercury before shutting down the latter in 2011. The company has shares in Mazda and Aston Martin, and previously owned Jaguar, Land Rover, and Volvo. Other Ford partnerships include with Brazil’s Troller, an SUV manufacturer, China’s Jiangling Motors, and Changan Ford.

Daimler AG

German car manufacturer Daimler’s best-known brand is Mercedes-Benz. The company also produces Smart brand vehicles, Mercedes-AMG performance models, and owns the ultra-luxury Maybach marque. Daimler is heavily invested in commercial vehicles with Freightliner, Mitsubishi Fuso, Thomas Built Buses, and Setra under its control. Daimler also has shares in the Beijing Automotive Group and MV Agusta.

This Infiniti QX30 is the result of a partnership between Nissan and Daimler. The tiny hatchback shares its platform and key components with a Mercedes-Benz model.

Hyundai and Kia

Hyundai and Kia are a pair of South Korean car manufacturers, with both companies comprising the Hyundai Kia Automotive Group. That group formed in 1998 when Hyundai gained a controlling interest in Kia. Hyundai’s share now stands at about 33 percent, but the alliance continues. Hyundai, Kia, and Genesis are the three brands associated with this group.

Cooperation and Collaboration

Apart from outright stakes or full partnerships, car manufacturers will often collaborate to build components or explore new technologies. It’s a cost-saving move that can benefit the consumer through shared expenses spread across more vehicle lines. We’ll see more of this in the coming years, especially as the cost of developing autonomous and electric vehicles become too prohibitive for most manufacturers to undertake alone.

Deal Undone:
Fiat Chrysler Renault Merger

June 7, 2019 by admin 2 Comments

It was a merger of equals, bringing together automakers with a strong presence in Europe and the Americas. The deal seemed to emerge from nowhere and just as quickly it died. Whatever thoughts you had about a Fiat Chrysler Renault tie-up, it isn’t going to happen. At least not in the near future.

Fiat suddenly pulled out of the deal on Wednesday, reportedly weary of the delays it ultimately pinned on the French government. Renault itself was onboard — but the company is also partially owned by the French, thus government involvement was and is an important consideration in the manner the automaker is operated.

Ghosn is Gone

Apparently, the French were waiting on Nissan’s feedback, a company allied with Renault. Although not directly involved in the merger, Nissan would have a significant say in how the alliance would continue after the merger. At first, the Japanese automaker seemed indifferent to the merger, but the French were concerned that the alliance might unravel later. Further, where Carlos Ghosn once held Renault, Nissan, and Mitsubishi together, his leadership is no longer a factor. In fact, Ghosn is in legal trouble with Nissan and that dilemma extends to the Japanese government itself.

Oh, what a tangled web we weave! (When first we practise to deceive!)

Although deception isn’t listed as one of the reasons for the failed merger (with apologies to Sir Walter Scott), a lack of trust certainly was. Indeed, the post-mortem showed much weariness on Fiat’s part in getting the French government’s approval, which again, was based on Nissan’s backing. An initial delay turned into a second delay, which soon morphed into a postponement of at least five days. That last setback was too much, so FCA officially canceled the deal.

Bigland Whistleblower Lawsuit

While all this was happening, another story emerged that might have helped scuttle the deal. On Wednesday, FCA’s head of Ram truck sales, Reid Bigland, filed a whistleblower lawsuit against his employer. This stunning development comes as the federal government continues to review the automaker’s sales figures.

In particular, the SEC noted that the company reported inflated sales, which could have an impact on investors. In his lawsuit, Bigland charged that FCA pinned the blame on him and withheld most of his compensation in 2018, in part to cover fines it attributes to the executive. The executive is seeking to clear his name and regain lost compensation, reportedly in the millions of dollars.

Bigland is also the only FCA executive to sell all his shares in the automaker. That said, CEO Mike Manley sold $3.5 million in company shares immediately after the FCA-Renault merger was announced. Exactly what the sales figures and share selling have to do with the aborted merger isn’t known, although it adds an interesting wrinkle to the story.

FCA: Moving Forward

With the failed merger now in its rearview mirror, FCA will have to address the Bigland suit and settle with the federal government. It is never a good thing when a top executive files suit, especially one from one someone so influential. Bigland is also the CEO of FCA Canada.

Besides the Bigland suit, the company must continue its focus on two core brands: Jeep and Ram. Jeep has become the company’s star player, driving sales and profits to bolster the company. The automaker plans to build a new manufacturing plant in Detroit, where it will produce a pair of full-size and upscale Jeep models.

The Ram brand is also thriving and delivers its own share of the profits. The redesigned Ram 1500 recently nudged the Chevrolet Silverado out of second place among full-size pickup trucks and continues to garner a larger slice of the sales pie.

Finally, FCA will have to plan a future without another automaker, at least not with Renault. Had it merged with Renault, it would have gained access to the French brand’s electric vehicle platform, saving the company billions of dollars. As it now stands, FCA will bear that cost alone along with the added expense of developing autonomous vehicles in-house.

Fiat Chrysler Renault Merger Talk Heightens

May 28, 2019 by admin 5 Comments

A blockbuster merger of automotive manufacturers may produce the world’s largest automaker, especially if two outside automakers are also brought in. Fiat Chrysler, itself the result of a 2014 merger between European and North American manufacturers may soon tie in with Renault, the French automaker.

Renault is currently reviewing an offer from Fiat Chrysler to merge the two companies with each taking a 50 percent stake in the other. FCA produced 4.8 million vehicles last year to Renault’s 3.9 million, for a combined 8.7 million units. However, Renault is worth 10 percent more than FCA, which means the latter will supply more cash to even the transaction. Renault is worth more in part because of its investment in an alliance with Nissan and Mitsubishi.

Marchionne, the Capital Junkie

A Fiat Chrysler merger with another automaker is something the late Sergio Marchionne insisted must happen to ensure FCA’s long-term survival. The former CEO and Chairman of FCA died unexpectedly last year, never seeing his dream fulfilled. However, it was Marchionne who outlined in his seminal 2015 report, “Confessions of a Capital Junkie,” industry consolidation.

Specifically, Marchionne explained that consolidation is the key to remedying the destruction of capital. In particular, he noted that both regulatory- and consumer-driven improvements such as tighter emissions controls, new powertrains, safety upgrades, infotainment services, and the push to autonomous drive, are expenses difficult for manufacturers to bear, especially those with a lower sales threshold. Further, Marchionne indicated manufacturers would need to sell at least 6 million vehicles annually to remain profitable, something they could accomplish through either a merger, acquisition or by means of a partnership, such as an alliance.

With a combined 8.7 million annual units (assuming the combined entity could maintain its momentum), Fiat Chrysler Renault would easily pass Marchionne’s threshold. However, it’ll take years for real cost savings to kick in as the new entity gradually merges platforms, shares powertrains, and utilizes technologies across the affected brands.

Jeep is the big prize FCA brings to a Renault merger.

FCA and Renault Brands

For FCA, the automaker brings with it several brands, including Jeep, Ram, Chrysler, and Dodge, serving North America primarily. Fiat, Alfa Romeo, and Maserati are especially strong in Europe. As for Ferrari, the Italian sports car brand is now a separate entity and would not be included in the deal.

As for the French automaker, it brings the Renault, Dacia, and Lada brands to the merger. It also owns the Alpine sports car marque and has an 80-percent stake in Renault Samsung Motors, a Korean manufacturer.

By default, Nissan and Mitsubishi are also included as Renault has a stake in Nissan, which has a stake in Mitsubishi. However, much friction exists between Renault and Nissan over the firing and legal detention of Carlos Ghosn, who was the CEO of all three firms. Renault had been pushing for a full-blown merger with Nissan, but the Japanese automaker has fiercely resisted that move. With FCA onboard, Nissan’s stake in the new entity will be diluted, which might impact the alliance.

So Much Potential

An FCA-Renault merger brings with it much promise, but also many risks. Although FCA is successful, the previous DaimlerChrysler model was not. The new entity faces challenges, including bringing different cultures together. Further, France and Italy have vested interests in the industry, with France holding a stake in Renault. In any case, it appears the French government favors the merger.

FCA’s strongest brand is Jeep, which it is quickly transforming from a regional player to an international powerhouse. Indeed, the automaker will likely press forward with a plan to build a new manufacturing plant in Detroit to produce the Jeep Wagoneer and Grand Wagoneer, upscale models designed to take on Land Rover (Discovery and Range Rover series). Jeep’s growth is phenomenal and doesn’t appear ready to slow any time soon.

The Ram brand brings big profits to FCA with the large pickup truck adding a half-million sales annually. The new entity may find fresh markets for Ram, including perhaps Russia where Lada rules.

As for the Dodge and Chrysler brands, the survival of these two marques may depend largely on just how far the merged company plans to extend its reach. Both have had a place in the American automotive landscape, with a limited reach beyond. And both have lost several models over the past few years as FCA emphasizes utility vehicles and trucks over cars.

See Also — Fiat Chrysler Automobiles: No Takers

New Arrival: Fiat 124 Spider

June 9, 2016 by admin 3 Comments

All-new roadster adds pizzazz to the Fiat brand.

Fiat’s reintroduction to the US market has been met with a tepid reception. Five years after its return, the Italian marque is struggling, as brand sales are down 18.6 percent through May 2016.

Two of Fiat’s three models are presenting a tremendous drag on sales. Demand for the diminutive Fiat 500 is off by 48 percent; Fiat 500L sales have plunged 62.8 percent. Offsetting some of that loss is the 500X, a subcompact crossover SUV introduced a year ago and sharing its underpinnings with the Jeep Renegade. Fiat 500X sales are set to overtake the 500, but it won’t be nearly enough to stop the loss.

2017 Fiat 124 Spider

This month, a fourth Fiat model arrives — the 124 Spider. The name should be a familiar one to Fiat faithful as this roadster was introduced nearly 50 years ago. For 20 years the 124 Sport Spider soldiered on, receiving several updates along the way.

Coupe and convertible versions were sold in the US beginning in 1968. Production ended in 1985, succeeded a decade later by the Fiat Barchetta before the latter was discontinued in 2005.

Some believe Fiat is well-served with a roadster in its product line. However, the current arrangement for Fiat Chrysler Automobiles doesn’t permit such an expensive investment in a risky segment, but that hasn’t precluded FCA from forging a joint venture with Mazda to obtain one. The first model in that venture is the Fiat 124 Spider, a roadster sharing its underpinnings with the fourth-generation Mazda MX-5 Miata.

2017 Fiat 124 Spider

Italian Design and Heritage

There is some risk here for both automakers. On the one hand, Fiat may not enjoy quite the sales lift it desires. On the other hand, a successful 124 Spider could siphon interest from the MX-5 Miata. No matter, Mazda should come out a winner as it recoups some of the cost of building this roadster.

“Our mission at FIAT is to deliver Italian design and heritage in vehicles that are fun to drive,” said Olivier Francois, Head of FIAT Brand, FCA – Global. “The all-new 2017 Fiat 124 Spider brings these elements together and comes loaded with open-air fun, stunning Italian design and the proven turbocharged MultiAir 1.4-liter engine.”

The 2017 Fiat 124 Spider is powered by a 1.4-liter, turbocharged four-cylinder engine. It comes paired with a 6-speed manual or an available Aisin 6-speed automatic transmission.

Three Trims Available

Three trims are offered — Classica, $24,995; Lusso, $27,495; and Abarth, $28,195. A special introductory Prima Edizione in Azzurro Italia (dynamic blue mica) launch edition with 17-inch, silver-painted premium aluminum wheels will kick things off. Just 124 models will be built with the price pegged at $35,000.

All 124 Spiders are outfitted with 16- or 17-inch wheels. A dual-tip exhaust is standard as is a roll bar, the latter painted in black in the base model. Halogen headlamps and LED taillights are standard. Cloth or leather seats are included, depending on the model.

The Abarth edition receives special exterior colors, front and rear Bilstein sport suspension, quad-tip exhaust, and unique front and rear fascias. This model also gets a very slight boost in performance, 164 horsepower up from the standard 160. All models produce 184 foot-pounds of torque. Available features include a Brembo braking system and Recaro seats.

2017 Fiat 124 Spider

Additional Joint Models Possible?

There is no word on how much FCA paid Mazda to develop the 124 Spider. Nor do we know if the venture will produce other models. But collaboration in the auto industry is rife and small-time Mazda and suitor-seeking FCA should both benefit regardless where this relationship is headed.

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May Sales Tumble, But the End is Not Near

June 2, 2016 by admin Leave a Comment

Sales setback is temporary with some surprises thrown in.

US auto sales fell by 6.1 percent last month, but the end is hardly near. Instead, the industry counted two fewer selling days for May, accounting for much of the loss for the month.

2015 Ford F-150

Ford F-150 sales rose in by 9 percent in May.

US Manufacturers: Only FCA Rises

As expected, Fiat Chrysler sales rose by 1.1 percent, largely on the strength of its Chrysler Town & Country and Dodge Grand Caravan minivan models. Jeep was another positive spot and was the only Fiat Chrysler brand other than Alfa Romeo to post gains for the month.

Some manufacturers such as GM posted larger losses than expected. GM sales fell by 18 percent, while Ford’s drop of 6.1 percent matched the industry’s average. GM blamed much of its decline to a reduction in fleet sales.

Had Ford maintained its sales from last month, it would have topped GM. Instead, it closed the gap to about 5,700 units, while remaining ahead of Toyota. The bright spot for Ford was once again its line of F-Series trucks. In May, Ford sold 67,412 units, up 9 percent for the month.

Hyundai Records a Strong May

Every major manufacturer outside of FCA posted losses last month, but there was a noticeable exception from the Hyundai-Kia Automotive Group — Hyundai sales rose by a robust 11.6 percent; Kia sales edged up by 0.8 percent.

“Our refreshed CUV lineup continues to exhibit strength in this market,” said Derrick Hatami, vice president of national sales for Hyundai Motor America.

2016 Subaru Forester

Forester and Outback sales continue to pace Subaru.

As for the Big 3 Japanese manufacturers, Toyota sales fell by 9.6 percent, Nissan dipped by 1 percent, and Honda sales were off by 4.8 percent. But there were some bright spots here too — Scion sales rose by 38.6 percent as Toyota continues to wind down its youth brand. Infiniti sales were also up, climbing by 3.4 percent.

BMW Group sales fell by 8.7 percent, Daimler was off by 1.9 percent, while Audi sales rose by 1.6 percent. Volkswagen Group sales fell by 9.5 percent, dragged down by Volkswagen’s 17.2 percent plunge.

Jaguar Propels JLR

Jaguar, with two new products to offer, enjoyed a 79.7 percent increase for the month. Meanwhile, Land Rover sales fell by 8 percent. Thus, JLR sales rose by 8 percent based on Jaguar’s strong month.

“We are very pleased that through five months of the year, we have increased our business for both Jaguar and Land Rover brands,” said Joe Eberhardt, President and CEO, Jaguar Land Rover, North America, LLC. “The Land Rover brand continues its momentum from a record setting 2015, and Jaguar has taken off with the expansion of the Jaguar brand into two dynamic new segments with the Jaguar XE and F-PACE which are now on sale.”

Subaru Breaks a Record…Again

While FCA now has 74 consecutive months of month-over-month gains to its credit, Subaru is not too far behind with a 54-month streak of its own in place. Last month, Subaru had its best May ever, with sales topping 50,000 units. Its Forester and Outback models helped this niche automaker realize a 1.1 percent gain for the month.

And not to be overlooked is Volvo. The Swedish automaker is enjoying a strong rebound this year, largely based on its all-new XC90 crossover utility vehicle. Volvo sales rose by 10.2 percent in May.

“Our refreshed CUV lineup continues to exhibit strength in this market,” said Derrick Hatami, vice president of national sales for Hyundai Motor America.

Crossover sales, including this Santa Fe, lifted Hyundai sales.

“With 10 percent growth for May while the overall industry is down, and now eleven months of double digit sales growth, it is a true testament to the transformation of Volvo in the US,” said Lex Kerssemakers, President and CEO, Volvo Car USA.

Mazda sales fell by 4.3 percent, Mitsubishi sales were off by 5.7 percent, and Tesla sales rose an estimated 55.3 percent according to Autodata Corp.

SAAR Still Strong

Despite the sales drop, the all-important SAAR remains strong. SAAR or the Seasonally Adjusted Annual Rate takes into account fluctuations, such as a sales calendar with two fewer selling days. For May, the SAAR remains above 17 million units.

Sales data per Automotive News and the car manufacturers.

Photos copyright Auto Trends Magazine.

On the Horizon: A Front-Wheel Drive Chrysler 300?

May 9, 2016 by admin 2 Comments

What could this mean for the Dodge Charger and Challenger?

2015 Chrysler 300

The next-generation Chrysler 300 may switch to a FWD platform.

The days for the current Chrysler 300 are numbered.

Introduced in 2005, the second-generation 300 bowed in 2011, offering dimensions only slightly longer and wider than the first-generation model. Now in its sixth model year, the current Chrysler 300 is showing its age — plans for its replacement are underway.

What may follow could stun enthusiasts, especially if parent Fiat Chrysler elects to place the large sedan on the same front-wheel drive platform underpinning the all-new Chrysler Pacifica minivan. If FCA utilizes Pacifica architecture to support the third-generation 300, it’ll offer optional all-wheel drive, just as it does today.

News of the 300’s possible successor was shared by FCA Chief Executive Officer Sergio Marchionne with reporters at the company’s manufacturing plant in Windsor, Ontario, on Friday reports Reuters. Marchionne was on hand to thank workers for launching the Chrysler Pacifica, representing a $2.6 billion investment in its minivan line.

That investment may never be recouped unless other models are derived from the platform. One of the models thought possible was a Dodge SUV variant — either to replace the current Durango or to supplement it.

2016 Dodge Dart

A replacement for the current Dodge Dart is still open.

Front-Wheel Drive Architecture

Moving to front-wheel drive architecture aligns with the approach Chrysler’s competitors have long taken, including the Ford Taurus, Chevrolet’s Impala, and the Toyota Avalon. Of the three, only the Taurus offers available all-wheel drive — the possible Chrysler approach is also one Audi takes, but the latter’s market is the luxury segment.

Mention “Chrysler 300” and two other models come to mind: Dodge Charger and Dodge Challenger. The current Dodge sedan and coupe share nearly everything with the Chrysler, including the platform and most major components. One difference is found in the Hellcat lines as these are unique to Dodge and have effectively placed a lucrative halo over each one.

Marchionne’s pronouncements typically provide reporters with enough fodder to keep FCA in the news, while omitting some information about related products, brands, and production facilities.

Chrysler and Dodge Separation?

Although long tied at the hip, there is nothing written in the FCA playbook that the Chrysler 300 and its Dodge cohorts must continue on the same path. Indeed, Chrysler is now a mainstream brand, while Dodge represents its performance brand.

Thus, the next-generation Dodge Charger and Challenger might continue as is or adopt an Alfa-based rear-wheel drive platform as reported by Automotive News last August. The new platform should yield a third Dodge model, Barracuda (‘Cuda), a sport coupe convertible.

Rumors that FCA might eventually kill off Dodge seem like just that — although the Dart in its current form is doomed (as is the slightly large Chrysler 200), other models such as Viper, Charger, Challenger, ‘Cuda, Durango, and the eventual replacement for the Journey should keep this brand relevant.

2015 Chrysler 200

Chrysler 200 production is winding down.

Other FCA Products and News

The 300’s future isn’t the only FCA news of late.

The next-generation Jeep Wrangler may get a twin-turbocharged, four-cylinder engine making 300 horsepower, supplementing the standard 3.6-liter, V-6. Further, production of the all-new Ram 1500 pickup truck will begin by Jan. 2018.

Production of the Dodge Dart will cease by year’s end as the Belvidere, Illinois plant where it is produced is converted to build the Jeep Grand Cherokee, now built in Toledo, Ohio. Ohio production will focus primarily on the next Wrangler as well as a Jeep-based pickup truck. Also, just as the company’s Sterling Heights, Mich., plant loses the Chrysler 200 by early next year, it will be retooled to supplement future Ram 1500 capacity.

As for the Dart and 200, Marchionne is still holding out hope that a partnership with another manufacturer to build replacement models will happen. Those models would be based entirely on a competitor’s technology. For example, Volkswagen Jetta and Passat models might be tapped and rebadged as the Dart and 200 respectively, although there has been no mention VW is even considering such a relationship.

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