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Up Next: Ford-Volkswagen Tie-up?

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What a week it has been. More like a half-week, actually.

For it was within that abbreviated timeframe we officially heard that Fiat Chrysler and the PSA Groupe (Peugeot and Citroën) were talking merger. The news spilled out late Monday and by Wednesday the two automakers came to terms. Today, news of the planned merger was announced, setting in place what will become a near $50 billion entity, which currently produces 8.7 passenger vehicles annually.

Merger talk doesn’t take place in a vacuum. Indeed, soon after the FCA broke off talks with Renault to merge in June, rumors of PSA’s interest in FCA came out. All we’ve heard is what was reported this week. But talks have been going on for some time, carried under the cloak of secrecy.

We shouldn’t be surprised that the two automakers are connecting as the entire industry is ripe of consolidation. With the deal nearly certain to pass, it likely will trigger further consolidation with perhaps Ford and Volkswagen following. Yes, these two automakers seem like prime candidates for an alliance or outright merger. There are several reasons why, which we’ll explore here.

Volkswagen and Ford: The Next Tie-up?

1. The two companies forged a global alliance.

In January 2019, Ford and Volkswagen announced that the two companies were forging a global alliance, but without cross-ownership. Pickup trucks and commercial vans were the first vehicles mentioned where collaboration will take place.

2. An EV/AV alliance follows.

In July, Ford and Volkswagen announced that the two automakers would begin sharing electric vehicle (EV) and autonomous vehicle (AV) technology. VW is investing in Argo AI, which is Ford’s self-driving technology, while Ford will build at least one vehicle based on Volkswagen’s Modular Electric Toolkit (MEB) architecture for sale in Europe.

3. Ford cuts back on cars.

The Ford Motor Company still produces cars, but the U.S. market will soon offer only the Mustang, pickup trucks, and lots of utility vehicles. With a VW tie-up, Ford might find it affordable and sensible to sell small cars again in the U.S., especially as the merged entity shaves costs. In any case, if the market suddenly shifts to cars again, Ford will have the platforms in place to build what’s needed.

4. The Rivian factor.

We already know that Ford owns a slice of Rivian, the upstart electric vehicle maker. Rivian will begin producing an SUV and pickup truck by the end of 2020. Ford will have access to Rivian’s skateboard electric vehicle architecture, which is certain to produce at least one model for the Ford brand. Volkswagen wants a pickup too and might utilize Rivian besides tapping the Ford Ranger for its own purpose.

5. Big is better.

When it comes to building passenger vehicles, the bigger you are, the better. Or at least that is the thinking in this industry. Yes, “economies of scale” and “synergies” are realized through smart collaboration. But there is another factor, bragging rights, which the new company led by Volkswagen would claim as sales would top an estimated 14 million units annually, putting the new automaker well in front of the pack.

What About GM?

With FCA and PSA hooking up and Ford and Volkswagen presenting a strong argument for consolidation, what about GM? At one time we might have seen GM go it alone or acquire another automaker, but that’s not going to happen.

Fresh on the heels of a costly labor agreement with the UAW, GM is ripe for the picking. We don’t see Toyota or Hyundai/Kia interested nor is it likely Honda with its independent streak planning to do likewise. There’s a chance GM might find a place in the Renault-Nissan alliance, but we think a Chinese suitor is just as likely.

In any case, the industry is changing and most likely will see additional mergers, acquisitions, and alliances in the months ahead. FCA and PSA triggered the tsunami. Now we’ll witness how other automakers avoid getting consumed by the waves of change.

See Also — Emerging Alliances Point to Further Auto Industry Consolidation

Car Manufacturers: Who Owns What?

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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.

See Also — Emerging Alliances Point to Further Auto Industry Consolidation

Photos copyright Auto Trends Magazine. All rights reserved.

Refreshed Audi A6, Minus Two Diesels

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An updated Audi A6 arrives on the market, but its two diesel engines are not currently available. That said, what’s left is a compelling choice in the competitive midsize luxury sedan segment.

2016 Audi A6.
2016 Audi A6 (copyright Audi of America).

When the Volkswagen diesel scandal erupted last September, the fallout was destined to reach well beyond the eponymous brand. Audi and Porsche were also caught in the crosshairs, two very special marques contained within the vast Volkswagen Group collective.

For Audi, not being able to sell diesel engines put it at a distinct disadvantage to its two top competitors — BMW and Mercedes-Benz — as both German nameplates sell diesels worldwide, including in the US. Two turbo-diesel engines, a four-cylinder displacing at two liters and a V-6 displacing at three liters were pulled from the market. This writer has driven both and has always been quite pleased with the performance as well as with the fuel economy that they offer.

Volkswagen and its consorts cannot sell diesels again until a long-awaited fix is submitted to and accepted by the EPA and California’s Air Resources Board. That “fix” is still pending — no one really knows when it will take place. Audi may find itself sitting out the 2016 model year with not one diesel to offer.

2016 Audi A6 2.0T Quattro

Fortunately, there is also positive news for this luxury brand: fuel prices have drastically fallen, thus the diesel fuel economy advantage isn’t as important when gas prices are below $2 per gallon. The other plus for this automaker is that it already has some exceptional gas-powered models available. Indeed, one such model was a recent weekly driver, the 2016 Audi A6 2.0T Quattro.

As you might guess, the “2.0T” represents a 2.0-liter, turbocharged four-cylinder engine making 252 horsepower and 273 foot-pounds of torque. The other engine choice for 2016 is a supercharged, V-6 engine making 333 horsepower and 325 foot-pounds of torque. All models except the base front-wheel drive grade are paired with an 8-speed automatic transmission. Front-wheel drive models are paired with a 7-speed automatic.

The Audi A6 is a middle of the pack luxury sedan, situated between the Audi A4 and A8 in the brand’s sedan hierarchy. The sedan’s competitors include the Cadillac CTS, BMW 5 Series, Jaguar XF, Mercedes-Benz E-Class, Infiniti Q70, and the Lexus GS. Were it a mainstream model, it would be considered a full-size sedan. And yet this model sits on a 114.6-inch wheelbase, providing 112.1 cubic feet of cabin space, more than enough to seat five adults in comfort.

Audi administers a united visage across its model line. All four sedans — A3, A4, A6 and A8 are virtually indistinguishable upon first glance, giving the consumer who pays $32,000 for a base A3 the same privileged look as the car shopper who plunks down more than $90,000 for an Audi 8L. Yes, there are differences in front fascia sculpting and lighting choices, but those are relatively small.

Fashionable Exterior, Clean Interior

The Audi A6 features a large, open grille with sporty headlamps accented by LED lights. On either side of the lower portion of the grille are distinctive embrasures housing the LED fog lights. A long, creased hood completes this model’s frontal presentation.

Multiple character lines and body sculpting graces this sedan’s profile. Soft arched wheel wells, fashionable alloy wheels and an ever so slightly rising belt line and a gently sloping roof line are also present. From the rear, a trunk lip spoiler, wraparound combination lamps, chrome garnishment, and dual exhaust ports are present.

Inside, the Audi A6 rocks the senses — if that statement sounds dramatic, consider this: the A6 smells pleasant. And not the usual synthetic new car smell — a light and entirely pleasing perfume aroma resides within the cabin and, no, it isn’t something a previous journalist spilled on a seat.

That gentle aroma along with a clean, but elegant dashboard, high quality materials and superb fit and finish are the top attributes for this sedan. All models come equipped with an MMI infotainment system, what acts as the nerve center of sorts for this model. A dash-mounted pop-up screen displays the menus with clarity, even when the sun is shining directly on it. Buttons and knobs located on the center console manage same.

USB Ports and a WiFi Hotspot

One ongoing beef I’ve had with Audi is over its smartphone connectivity, but for 2016 I am happy to report that a pair of proper USB ports are now found in the front seat storage compartment for this model. Previously, Audi supplied cables for connectivity, but those cables were never the right one for my iPhone. Now, all you need to do is bring your own cable and plug in.

Audi also upgraded the MMI system to serve as a 4G LTE mobile WiFi hotspot, providing connectivity for up to eight devices. Google Earth data is now tied in with the navigation system, already one of the better systems on the market.

The driver and front passenger are treated to plush seats, with cosseting the provision. Take that long journey and you’ll have little concern for back fatigue. Rear seating passengers enjoy excellent head, shoulder, hip and legroom. Both outboard seats fold, providing access to the trunk.

On the Road

Step on the gas and this sedan pulls away with confidence, with the turbo providing a near seamless boost early on. You may insist that a much larger engine is under the hood, but in displacing at just two liters this motor provides all the power most buyers will want.

Most Audis reside on a front-wheel drive platform with Quattro all-wheel drive available and the smart choice by far. While some rear-wheel drive purists would never consider an Audi for that reason, the Quattro system may be the best out there. Its a permanent arrangement, meaning it is always at work and for that reason you can navigate the twisty roads with confidence.

Perhaps this model’s only shortcoming is its steering feel — as in disengaged. But that’s something only the most discriminating enthusiasts will see as a demerit. Everywhere else, this luxury sedan shines, from its elegant, yet sporty exterior to its bright and carefully constructed interior. Finally, if optimum power is what you want, then the performance Audi S6 and its 450-horsepower, 4.0-liter V-8 engine is the way to go.

2016 Audi A6 2.0T Quattro

  • Sticker price from $48,400
  • Price as tested: $55,775
  • Seats 5 occupants
  • 2.0-liter four-cylinder turbocharged gasoline engine
  • 252 horsepower @ 5,000 to 6,000 RPM
  • 273 foot-pounds of torque @ 1,600 to 4,500 RPM
  • 3.25 inches bore by 3.65 inches stroke
  • Engine compression ratio: 9.6-to-1
  • Eight-speed automatic transmission
  • Wheelbase: 114.6 inches
  • Length: 194.2 inches
  • Width: 73.8 inches
  • Height: 57.8 inches
  • Passenger volume: NR
  • Storage volume: 14.1 cubic feet
  • Towing capacity: NR
  • EPA: 22 mpg city, 32 mpg highway
  • Premium grade gasoline (recommended)
  • Fuel tank: 19.8 gallons
  • Curb weight: From 3,803 pounds
  • IIHS safety rating: Top safety pick+
  • Limited vehicle warranty: 4 years/50,000 miles
  • Powertrain warranty: 4 years/50,000 miles
  • Corrosion warranty: 12 years/Unlimited miles
  • Vehicle assembly: Neckarsulm, Germany

See Also — Miata and Me: Not Quite a Love Story

Toyota Reigns Supreme Four Years Running

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Volkswagen’s quest to overtake Toyota will have to wait at least another year as the German automaker deals with more than 11 million recalled models.

2016 Toyota Prius
The Prius is just one of many models powering Toyota to world leadership.

Once again, Toyota Motors is the largest producer of passenger and commercial vehicles in the world, edging out the Volkswagen Group and the General Motors Company for that honor reports Automotive News.

At the beginning of the year, it appeared Toyota’s three-year run was in jeopardy as a rapidly expanding Volkswagen seemed to have the momentum to overtake Toyota. But then something else intervened, namely a diesel engine scandal.

That scandal revealed that the German automotive giant had fudged data regarding its “clean diesel” engines, with the California Air Resources Board and the federal Environmental Protection Agency uncovering the truth. Volkswagen’s quest to overtake Toyota was doomed and three years ahead of schedule.

The scandal was brought to light in mid-September, effectively putting a stop to new diesel-powered vehicle sales for the Volkswagen, Audi, and Porsche brands. Those sales, accounting for more than 25 percent of the Volkswagen brand’s US total, assured Toyota its place on top would continue.

In 2015, Toyota sold 10.15 million new vehicles worldwide, falling 0.8 percent over 2014. Toyota counts sales from its subsidiaries, Daihatsu Motors and Hino Motors, in its figure.

Volkswagen sales fell by 2 percent with the automaker moving approximately 9.9 million vehicles. In third place was General Motors, whose seven-plus decade reign as the world’s top automotive producer ended in 2008 when Toyota moved past GM.

In 2011, GM overtook Toyota for one year as the Japanese automaker recovered from a devastating earthquake and tsunami that shook its home country. Last year, GM sales rose slightly by 0.2 percent, finishing just above 9.8 million units.

If Toyota maintains its position for a fifth consecutive year it may be due in part to buying out the 49 percent share of Daihatsu it doesn’t already own, a company with a strong presence in Indonesia and Malaysia.

Toyota also has the next-generation Prius to show for it, but with fuel prices continuing to fall, demand for hybrids is tumbling with it. Nevertheless, Prius is the cornerstone of Toyota’s green efforts, with more than a dozen other hybrid models sold under the Toyota and Lexus marques. Toyota is also introducing its first production fuel cell model, the hydrogen-powered Mirai.

Globally, the world’s automakers produced 89.5 million vehicles in 2014 according to the International Organization of Motor Vehicle Manufacturers; 2015 data is not yet final. Sales in 2014 rose by 3 percent over 2013, but were up 34 percent since 2005. The global auto industry has a rising consumer class to thank for the increased sales, although economic headwinds may show an even smaller increase for 2015.

Boasting about sales may seem counter productive and lead to the same types of cheating Volkswagen is now known for. At the same time manufacturers with strong sales can also point to economies of scale and the attendant savings that come with spreading overhead across more vehicles sold.

See Also — About the 2017 Honda Clarity Fuel Cell Sedan

Crossing Over With the Audi Q3

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Audi has the luxury utility vehicle market sewn up. The German automaker offers three distinct model lines — Q3, Q5 and Q7 — along with the Allroad and the very wagon-like A3 Sportback e-tron, a plug-in hybrid electric vehicle with a very sensible price.

What is missing from the Audi range, at least thus far in the 2016 model year, is its line of turbo-diesel engines. Audi is the major luxury marque for the Volkswagen Group and it is VW that admitted in September to fabricating its emissions testing to circumvent the EPA’s pollution guidelines. As a result, Audi’s 2.0-liter TDI engine is not available in any model. At least not until the automaker presents a fix that is acceptable to the EPA.

2016 Audi Q3 2.0T Quattro Tiptronic

2016 Audi Q3 2.0T Quattro

That leaves just one engine choice in some models, including in the 2016 Audi Q3 2.0T Quattro, a recent weekly visitor and part of my ever changing test fleet. The Q3 is a compact SUV, with the Q5 serving as the midsize model and the Q7 as the full-size SUV. I’ve driven all three vehicles, including a previous Q3 TDI and have always been fascinated by Audi’s styling, build quality and its performance.

Despite not having a diesel under the hood this time, I was impressed by the gas-powered Audi Q3. More about that later, but first let’s take a look at its styling and interior attributes.

Like its larger siblings, the Audi Q3 is marked by a distinct fascia with a large trapezoidal grille featuring the expected four-ring Audi logo. Wraparound headlights and LED daytime running lights as well as large pockets housing the available fog lamps are also present.

Deep creases run along the hood and are repeated along this model’s profile. Body sculpting, an even belt line, aluminum wheels, and rocker panel embellishments are also present. To the rear, this model is equipped with a liftgate spoiler, upper and lower combination lamps, and dual-tipped exhaust pipes.

2016 Audi Q3 2.0T Quattro Tiptronic

Leather and Aluminum Interior

Inside, the Audi Q3 provides room for five. Its compact interior, however, doesn’t skimp on comfort: the front bucket seats provide 12-way power adjustment with lumbar support. The 60-40 split folding rear seat includes a center pass through — a welcome feature when you need to tote something long, such as skis, and you don’t want to miss more than one seating position.

And even if a seating position is absent, the rear seat is best enjoyed by two adults — hip and shoulder room are crowded back there. Further, if you are considering a model of the Q3’s stature and have teenagers, the Audi Q5 may be the superior choice here — rear leg room is tight in the Q3 for anyone remotely close to adult size.

Audi presents interior layouts that are refined, uncomplicated and comfortable. In the Q3 you’ll find leather nearly everywhere with aluminum trim providing rich accents across the dashboard around the center console and on to the door inlays.

The instrument panel features a two-analog dial display — tachometer and speedometer — with a digital driver’s information center in the middle. The information center is controlled by switches found on the face of the steering wheel. On the dashboard just above the center stack is a stand up screen with a multi media interface (MMI).

2016 Audi Q3 2.0T Quattro Tiptronic

Multi Media Interface (MMI)

The MMI arrangement is fairly straightforward — the sharp screen makes everything easy to understand. You can also access secondary hardware switches if preferred — and that’s a fine feature when the touchscreen gesture control doesn’t work out for you. The one big drawback of this system is that there is no USB port included — you must connect your phone to one of the supplied cables, provided that cable is right for your phone.

Below the display screen in the center stack are large vents, followed by audio system and climate control switches and knobs. Dual-zone climate control and heated front seats are standard. All models come equipped with a 10-speaker Bose audio system, SiriusXM satellite radio, and a rear view camera.

Audi prices the Q3 from $33,700 for its Premium Plus edition and $38,600 for the Prestige model. The base model is front-wheel drive; the Prestige is all-wheel drive. Most customers will likely opt for all-wheel drive as it is the preferred handling option of the two.

All models come equipped with a panoramic sunroof, eight beverage holders (including in-door drink holders in each door), 12-volt power outlets, ambient LED lighting, and a rear view camera. Choose the Prestige model and you have the navigation system, Audi side assist safety, a 14-speaker Bose audio system and the S Line appearance package.

For $40,300, the all-wheel drive test model added a rich monsoon gray metallic finish ($575) and a power liftgate ($400) to the option list. That’s an attainable price point for anyone aspiring to own an Audi with its famed quattro system included.

2016 Audi Q3 2.0T Quattro Tiptronic

On the Road

You attain all of 200 horses to move the Q3 as you make your way down the road. It is a turbocharged system, designed to minimize lag while offering optimum power. The suspension system is composed of MacPherson struts up front and a multi-link layout for the rear — both are attached to the SUV’s body by subframes.

A rigid body structure aids in mitigating body roll and this SUV’s agility is apparent when making normal turns as well as handling the twisty roads that always reveal the true capabilities of such models. Its higher ground clearance is not much of a negative attribute — I found the Q3 remains composed under a variety of driving conditions.

Opt for the sport package ($550) and your Q3 brings in Audi drive select, a leather-covered multifunction sports steering wheel with paddle shifters, and front bucket seats. Audi drive select is managed by a button — when activating the system it controls the shift points and throttle mapping. Yes, you can enjoy a more robust driving experience even with an SUV.

2016 Audi Q3 2.0T Quattro Tiptronic

The Chief Competitors

Diesel absence notwithstanding, the gas-powered Audi Q3 should deliver everything shoppers in this segment want. The Q3’s chief competitors are a formidable lot and include the Cadillac SRX, BMW X1, Lexus NX, Land Rover Range Rover Evoque, Mercedes-Benz GLA-Class, and the Lincoln MKC. Like the Audi, each model seats five, but four is always the better choice.

2016 Audi Q3 2.0T Quattro Tiptronic
2016 Audi Q3 2.0T Quattro Tiptronic
2016 Audi Q3 2.0T Quattro Tiptronic

Photos copyright Auto Trends Magazine.

2016 Audi Q3 2.0T Quattro

  • Sticker price from $35,800
  • Price as tested: $40,300
  • Seats 5 occupants
  • 2.0-liter four-cylinder turbocharged gasoline engine
  • 200 horsepower @ 5,100 to 6,000 RPM
  • 207 foot-pounds of torque @ 1,700 to 5,000 RPM
  • 3.19 inches bore by 3.44 inches stroke
  • Engine compression ratio: 9.6-to-1
  • Six-speed automatic transmission
  • Wheelbase: 102.5 inches
  • Length: 172.8 inches
  • Width: 79.5 inches (including mirrors)
  • Height: 62.6 inches
  • Passenger volume: NR
  • Storage volume: 16.71/48.2 cubic feet
  • Towing capacity: NR
  • EPA: 20 mpg city, 28 mpg highway
  • Premium grade gasoline
  • Fuel tank: 16.9 gallons
  • Curb weight: From 3,682 pounds
  • IIHS safety rating: Top safety pick
  • Limited vehicle warranty: 4 years/50,000 miles
  • Powertrain warranty: 4 years/50,000 miles
  • Corrosion warranty: 12 years/Unlimited miles
  • Vehicle assembly: Martorell, Spain

Fiat Chrysler Automobiles: No Takers

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The Fiat Chrysler merger drama continues. The current narrative has boss Sergio Marchionne asking activists to pressure GM to buy FCA.

Fiat Chrysler chief executive Sergio Marchionne has been pressing hard to find a partner for his company. Trouble is, there are no takers and not a whiff of interest has been expressed by a single manufacturer within and without the industry.

That hasn’t stopped Marchionne (pictured, right) from employing tactics that are raising eyebrows everywhere, including at the General Motors Company. Indeed, GM has confirmed that Marchionne reached out to CEO Mary Barra earlier this year in a bid to arrange a meeting to discuss a possible alliance. However, that overture was rebuffed.

Now, Marchionne is appealing to investors in a bid to force GM’s hand. Its part of his personal quest to push for industry consolation, a move that he claims would save manufacturers billions of dollars in start up costs.

Sources, including the Wall Street Journal, claim that Marchionne has been energized by activists at GM who have successfully pushed for the company to raise its stock dividend and buy back billions of dollars in stock. To that end, Marchionne is appealing to these same activists to help move the needle.

But Mary Barra insists that her company won’t and cannot be distracted as GM continues with an internal consolidation that has saved the company billions of dollars and should continue to reap benefits as it seeks to gain a leading position on return of capital. Moreover, the company is eager to bring the ignition switch matter to an end, a debacle that has claimed the lives of at least 111 people to date.

With each pronouncement that Marchionne makes at a press conference, an industry event or elsewhere, reactions are coming from other quarters, including the rank and file that stands to lose the most, if FCA were acquired, as well as from dealers who wonder if the delay in important new product, including the next generation Ram pickup truck will have on its sales.

2016 Alfa Romeo 4C

And then there is the curious stance Marchionne is taking with advancing Alfa Romeo, an upscale vehicle line that has just begun to sell cars in the US after a two decade hiatus.

Alfa Romeo returns to the US market this year and will offer 400 copies of its 4C Spider. But that’s just a tiny slice of the 150,000 Alfa units per year FCA says that the market will sustain by 2018. Its part of a $7 billion investment FCA is making that is supposed to yield 8 new Alfa Romeo models and raise global sales from 74,000 annual units to 400,000 vehicle sales within the space of four years.

See Also — Emerging Alliances Point to Further Auto Industry Consolidation

That ambitious goal has its share of naysayers who doubt that Alfa can muscle into a market dominated by such luxury makes as Mercedes-Benz, BMW and Lexus. In essence, Marchionne is attempting to elevate Alfa within years for what has taken decades for brands such as Acura and Infiniti to find favor amongst discriminating consumers.

Ram ProMaster City

Ram and Jeep are the two most valuable FCA brands.

Industry scuttlebutt has Marchionne talking up a merger with GM to perhaps force another manufacturer’s hand, namely the Volkswagen Group. Volkswagen has expressed interest in buying one or more Fiat brands in the past and could leverage FCA to dramatically heighten the company’s ascendancy in the United States.

Certainly, acquiring FCA would push Volkswagen Group US sales into second place behind GM and ahead of Ford and Toyota, an especially enticing move that would give this German manufacturer an edge it hasn’t been able to realize on its own. Consequently, it would also push VW’s annual sales to about 15 million units or well ahead of Toyota and GM.

Marchionne’s motives regarding securing a suitor may not be clear, but some analysts are sensing his desperation. Whether that worry is authentic or contrived, the best approach here might be for executives to simply wait and see.

See Also — GM Products Are Comprised of More American Parts Than Any Other Manufacturer

Volkswagen Phaeton to Live On

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Cost-cutting Volkswagen may allocate scant resources to keep the Phaeton.

Volkswagen Phaeton

Volkswagen has plans to update this Phaeton luxury sedan.

Do you remember the Volkswagen Phaeton? If you are an American consumer, chances are that you are not familiar with VW’s over-the-top sedan. The Phaeton had a brief tenure in the US market, going on sale in 2003, then pulled just three years later.

The luxurious Phaeton never made it with American consumers who have always perceived Volkswagen as a mainstream brand. The sedan has all the makings of an Audi, but in Volkswagen attire. Guess which brand affluent consumers prefer?

Volkswagen Phaeton Redux

Despite the Phaeton debacle, Volkswagen has a second-generation model in mind. A story published in Automotive News Europe this week stated that the German automotive manufacturer intends to build a new model, even though the original sedan has never matched its 20,000-unit annual sales target.

Volkswagen’s Phaeton plans come as the automaker consolidates platforms, shares more components between models and aims to displace Toyota as the top car manufacturer in the world by 2018. Indeed, Volkswagen appears to be three years ahead of its schedule as it should dethrone its Japanese competitor this year.

The Quest to Cut Costs

Notably, Volkswagen’s ascendancy will not come without much cost cutting, therefore analysts are perplexed why the company will allocate scant resources to build an exorbitantly-priced sedan. The current price of the Phaeton is approximately US$86,000 or nearly double the price of the next most expensive model, the Touareg SUV.

Furthermore, the eponymous Volkswagen brand has been languishing in the US market, even as far smaller competitors, such as Subaru, manage to outsell it. Volkswagen has two strong-selling models — Golf and Jetta — but it has been struggling to find sure footing in every other segment.

Devoting resources to a model that Autoblog says loses $32,000 per vehicle, while models such as the US-built Passat struggle to compete, seems illogical. Regardless, the Phaeton remains a pet project of VW Chairman Ferdinand Piech, who may use the Audi A8’s platform to construct a new model.

Taking on Mercedes-Benz?

Volkswagen may have Mercedes-Benz S-Class owners in mind when designing the next generation Phaeton. Likely, both gasoline and plug-in hybrid variants will be offered, but the model’s ongoing existence will also put it up against the Audi A8.

If Volkswagen is attempting to rip a page out of the Hyundai playbook, then Piech hasn’t read the entire story. In models such as the Genesis and the Equus, Hyundai has taken aim at more expensive vehicles without reaching a stratospheric price point. Thus, while a Hyundai Genesis owner might also shop the BMW 5 Series, the sedan also attracts people who shop the comparatively priced Chrysler 300.

Phaeton detractors point to 5,812 units sold in 2013 as a strong reason for letting the sedan go. An estimated 6,300 should sell this year. Notably, IHS Automotive estimates that the new Phaeton would sell roughly 11,900 copies per year from 2017 to 2020, still well below original projections. Further, IHS says that “projects like the Phaeton send out the opposite signals” and by committing to this model” it will send out conflicting signals about the company’s intent to tackle the VW brand’s profitability crisis.”

US Priorities Misplaced?

With the luxury market booming worldwide, Volkswagen’s quest to gain a piece of that pie is understandable, if not foolhardy. Besides Audi, the Volkswagen Group owns other premium and luxury brands, including Bentley, Bugatti, Lamborghini, and Porsche. Instead, allocating resources to advance the Volkswagen brand stateside should be a priority, especially as the automaker wants to double US sales to 800,000 units by 2018. The Phaeton, in my opinion, should be laid to rest.
Volkswagen Phaeton photo procured from Wikipedia.

Does Volkswagen Need a Budget Brand?

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Volkswagen GTI
Older VW platforms would underpin
any new brands models.

The Volkswagen Group is made up of 12 brands, going beyond its eponymous Volkswagen moniker to include such makes as Audi, Bentley, Porsche and Skoda. Not every brand is fully owned and, in the case of Suzuki, VW’s relationship with this Japanese make is a strained one.

The Volkswagen Collective

Still, the VW empire has enabled this German automaker to lay claim to being one of the top car manufacturers in the world, vying with Toyota and General Motors for the No. 1 position in global vehicle sales. For several years Volkswagen has said that it intends to overtake its competitors, with 2018 the target year. Auto Trends internal data reveals that this prospect is likely to be realized much sooner, occurring no later than 2015 and perhaps as early as this year.

To get there, Volkswagen will continue to target emerging markets, with an eye to reaching more customers in India, Africa and elsewhere. Consumers in those markets, however, may find that even the cheapest-priced Skoda or SEAT model to beyond their budget and will, therefore, consider budget brands such as Tata, Dacia and the soon to reemerge Datsun, a Nissan undertaking. Although VW may not field a model as cheaply priced as the proposed $3,000 Datsun, it is looking at serving a market with a price point below US$8,000.

Brand Dilution

With 12 brands to manage, adding a 13th brand may seem counterintuitive. SEAT and Skoda already serve the bottom of the market, therefore extending the product portfolio of one or the other seems to be a much more plausible approach. Besides, wasn’t multiple branding one of General Motors problems when it went bankrupt in 2009 and cast off Pontiac, Saturn, Saab and Hummer?

To answer the question in the last paragraph first the Volkswagen Group is not General Motors. The structure of the two companies prior to 2009 was far different. GM was held down by legacy costs as well as supporting brands it had no desire to maintain. VW’s collection of brands is mostly that a collection makes that were usually long established before VW bought each one.

SEAT and Skoda could easily fill in the gap, but as the IHS has noted Volkswagen will make use of previous generation platforms for the budget brand while its other brands will employ its modular architecture. Current B- and C-segment platforms, now being phased out, would underpin the budget brand. Importantly, the costs for building these models have already be wrung out, enabling Volkswagen to deliver low-priced cars that won’t compete with its latest technologies.

Budget Branding

Volkswagen’s strategy here is to clearly protect its existing brands while allowing its yet-to-be-named new brand to enter markets where it is looking to expand. China is, of course, a significant market for the new brand and will likely be one place where these vehicles are built according to Autocar. Base development would take place in Germany with Volkswagen hooking up with a local partner to assemble these vehicles in China.

Once established in China, the VW budget brand might have the resources to build locally in Russia, India, Africa and South America. Several things must happen first including the groups continued absorption of its newest brands, stabilization of the auto industry and the establishment of the budget brand in China. Those plans might, however, become unglued if economic instability, war or a natural catastrophe occur, challenges that might affect the entire globe, not just VW’s plans and its desire for global preeminence.

Global Competitors

Just as Volkswagen hatches its own plans to reach new customers, General Motors and Toyota will not be sitting by idly. GM is currently seeking deals in China to expand its own production in a bid to reach 5 million units annually, while Toyota may simply absorb one of its home-grown competitors, perhaps wresting control of Suzuki from Volkswagen or making a play for Mazda.

So, to answer the question posited in the title: No, Volkswagen does not need a budget brand, but it will use that brand to acquire new customers. Its strategy to deploy older vehicle platforms may be a sound one, a cost effective method that may help Volkswagen with its global ascendancy and keep it on top.

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Diesel Hybrid: Volkswagen CrossBlue SUV Concept

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First ever diesel hybrid showcased by VW.

Volkswagen CrossBlue Concept

Since the late 1990s, we have seen a slew of hybrid vehicles enter the market with Honda and Toyota leading the way. Other manufacturers including Ford, GM, Chrysler, Hyundai and Kia have jumped in, while the German companies have chosen to stay out of the market, concentrating on advancing diesel technology instead.

Hybrid Concept

The Volkswagen Group appears ready to open things up, by fielding its own version of a hybrid powertrain. At the 2013 North American International Auto Show in Detroit this month, Volkswagen is displaying its CrossBlue Concept, a six- or seven-passenger SUV that marries diesel and electric technologies.

If built, the CrossBlue would be positioned between the Tiguan and Touareg, its two other SUVs. Occupying the midsize range the Volkswagen CrossBlue might shake things up if it goes into production as a hybrid.

Volkswagen CrossBlue Performance

Under the hood, a 190-horsepower turbo diesel would offer range extending power, kicking in after 14 miles of drive on electric mode only. That engine makes 295 foot-pounds of torque and with the assistance of two electric motors one in the front making 133 foot-pounds and one in the rear making 199 foot pounds of torque this passenger vehicle would serve up a net 516 foot-pounds of torque. Working in tandem with the diesel-electric system is a six-speed dual clutch transmission.

Estimated 0 to 60 mph times are just 7.2 seconds with ample torque on hand to ensure that you and your riders can tackle any open road challenges with ease. To squeeze out more energy, you can also dispense with the raw power and operate this vehicle in Eco mode.

In Eco mode, just one touch of a button on the shift lever the electrical system operates at minimal capacity. You’ll still be able to access the climate control and throttle map, but power will be curtailed. Choose the sport mode and you will have access to full power. Other modes for off-loading, charging and EV-only are also included.

Volkswagen CrossBlue Concept

Volkswagen Design

The Volkswagen CrossBlue Concept has all the design characteristics of the brand, resembling more of a minivan than a crossover. Indeed, with the Volkswagen Routan soon to be discontinued, the Volkswagen CrossBlue or something much like it could fill the void.

The seating layout is 2+2+2, with each passenger sitting on individual seats. An optional seventh place seating position can be gained by swapping out the middle row seats with a three-place bench seat, enabling the CrossBlue to match the standard passenger capacity of todays minivans. Both the second and third row seats can be folded, to provide 83.5 cubic feet of storage capacity.

Fuel Economy

Perhaps the most notable feature of the Volkswagen CrossBlue is its estimated 35 mpg when operating in diesel model and 89 mpge when operating in electric-only mode. With its 18.5-gallon fuel tank, this vehicle has a 661-mile driving range or far enough to travel from El Paso to Dallas without refueling.

Concept Passat

The Volkswagen CrossBlue was joined by another VW concept at the NAIAS. That second vehicle was the Passat Performance Concept, a five-passenger sedan featuring a specially modified version of its 1.8-liter turbocharged gasoline engine, making 250 horsepower and paired with a six-speed automatic transmission. VW says that the engine is already used in European and Asian markets.

The concept Passat sits on upgraded 19-inch wheels and features Bi-Xenon headlights, and advanced front lighting system, LED tail lights carbon style inserts inside. This vehicle offers leather seating and a special suspension system. Expect that this vehicle will go into production, as Volkswagen keeps up with such auto trends as offering a performance midsize sedan to complement other Passat models.

See Also — Big-Time Hit: 2018 Volkswagen Atlas SUV

Volkswagen CrossBlue photos courtesy of Volkswagen of America, Inc.

Michigan Automotive Engineering Internships

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The state of Michigan remains a strong location for U.S. automotive industry jobs as the Great Lake State is home to General Motors, the Ford Motor Company and the Chrysler Group. Other OEMs have a presence in the state and numerous automotive suppliers have manufacturing facilities or offices in Michigan.

Student Interns

smile man faceCollege students majoring in automotive engineering must gain hands-on experience before they finish their education. An automotive engineering internship can provide much experience with numerous opportunities available in Michigan.

Please note that the following companies have posted information about internship opportunities, details that are correct as of publication. Visit the link provided for more information and to apply:

Company: Chrysler Group LLC

Position: Automotive Design Intern Job No. 1001004

Location: Auburn Hills, Mich. at the Design Office Studios

Summary: College students pursuing a bachelors degree in automotive, product or industrial design, who have completed their sophomore year and have at least a 3.0 GPA are invited to apply. Students must be skilled in Microsoft Office, Photoshop, Alias or similar software programs and demonstrate leadership skills and initiative. Students will work in on-site design including clay sculpting, computer support, engineering and fabrication.

Company: Nexteer Automotive

Position: Summer Intern

Location: Saginaw, Mich.

Summary: Nexteer Automotive is a developer of steering and driveline systems. The company offers numerous internship and co-op opportunities for college students, with specific opportunities for students related to their area of study. Students pursuing a degree in computer, electrical, industrial and mechanical engineering as well as computer science, supply chain management and business management are invited to apply. Applicants must be full-time students with a GPA of at least 3.0. Opportunities in various departments are available.

face pretty girlCompany: U.S. Steel Corporation

Position: Intern Product Technology

Location: Troy, Mich.

Summary: Full-time college students majoring in mechanical engineering, metallurgy or material science are invited to apply. Students must be computer literate and possess excellent communication skills. This job entails working on various projects testing steel, lab operations and sample preparation. Students will also be introduced to sheet formality projects.

Company: Nissan North America

Position: Student Intern Virtual Garage

Location: Farmington Hills, Mich.

Summary: Interns will research current and future technologies to discover what digital technologies can benefit Nissan. This position is open to college students pursuing a degree in 3D design, architectural design, computer design, automotive design, mechanical engineering or other related field. Interns will work on projects involving upcoming models, make 3D models using applied technologies, and interact with vendors and Nissan departments.

college students menCompany: Volkswagen Group of America

Position: Environmental Materials Intern Job No. EEO000012

Location: Auburn Hills, Mich.

Summary: College students possessing strong technical research skills and having knowledge of government agencies and rule-making, are desired for this position. Interns will identify current legal requirements and log upcoming laws and regulations pertaining to hazardous materials and other substances. Students will work within Volkswagen and with outside groups including Canadian and American government agencies and various non-governmental groups.

Job Opportunities

Prospective interns should apply as soon as possible for available positions. Follow each company’s application process to apply.

See Also — The Average Salary of Automotive Engineers

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