SERGIO MARCHIONNE

Fab Five

1. UAW Strike Labors On – The UAW, itself embroiled in scandal, went ahead and launched a protracted strike against GM. Originally expected to end within a few days, the strike lasted longer than a month, causing the longest shutdown in the past half-century. GM lost billions of dollars during the strike, agreeing to keep one plant open and save some jobs. We think the labor victory will ultimately prove shallow as it’ll force GM to find additional ways to save money long term, with job loss gradually increasing.

2. Carlos Ghosn Debacle – Is he guilty or not? Former Nissan CEO Carlos Ghosn was jailed in November 2018 for a variety of charges, including fraud. What was shocking wasn’t so much the alleged scandal, but how the Japanese justice system treated the former executive. Ghosn was isolated, often without legal representation, and the charges against him seemed stacked. On the next to the last day of the year, Ghosn flew to Lebanon where he most likely will stay and avoid a return to Japan. The story isn’t over yet nor are the many twists and turns that defined this relationship.

3. FCA-PSA Merger – One year after its Sergio Marchionne died, Fiat Chrysler Automobiles has fulfilled one of the CEO’s important goals: a full merger with another automaker. FCA, the product of a big merger earlier this decade, is set to join forces with France’s PSA Groupe to form the world’s fourth-largest automaker. The deal should conclude by late 2020, but we may not know for a few more years the status of various brands (including the eponymous Chrysler) and certain models (the Dodge Challenger and Charger, for example).

4. Introducing An All-New Corvette – We won’t see a new Corvette for a few months, as production was delayed due to the strike as mentioned in our first story. What’s significant about the Corvette is that GM will finally transition its sports car to a mid-engine layout. As a result, even the base Stringray will immediately become the fastest Corvette ever. Also of note is the base price, as that will come in at under $60,000. Soon after the new model arrives, we should hear about follow-up versions with more powerful engines and the lofty price tags to go with it.

5. Ford Adds an Electric Mustang – Ford’s Mustang is America’s pony car, but it will soon be joined by an all-electric SUV. The Ford Mustang Mach-E is its name, an all-new model built on a separate platform, but sporting the iconic model’s name. With many Mustang styling cues, the EV gives a connection to the coupe, but the resemblance ends there. We dislike Ford’s decision and have followed the anger of Mustang faithful, including some who feel deeply betrayed. There’s still time for Ford to change the name, but we doubt it will.

Honorable Mention

Among the other stories of note for 2019 include Nissan’s drop in market share, the Tesla Cybertruck debut, the expanding financial backing for upstart Rivian Automotive, the electric truck/utility vehicle maker, and the ongoing shift away from cars to crossovers and trucks.

Stories about driverless cars and full electrification dominated; we’re also on the cusp of seeing the first Chinese automotive brand arrive stateside.

Possible Scenarios

Looking ahead, we expect many of the current stories to play out, with perhaps a few twists along the way. Auto Trends expects another blockbuster merger announcement in 2020 with perhaps Volkswagen and Ford tying the knot. A suitor for GM seems possible, but will Hyundai/Kia make the bold move to acquire or will it allow a Chinese company to jump in first? Finally, we’ll continue to see more car models die, but a few will hang on and likely thrive in a smaller market.

Image by Gerd Altmann from Pixabay

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

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.

Will Renault Models Replace Fiat Chrysler Products?

February 3, 2016 by admin Leave a Comment

French automaker Renault may have the solution to FCA’s product needs.

If you want to buy a French-built model in the US, you probably know that Renault, Peugeot and Citroen have no presence in the market. Instead, you’ll only be able to consider the Toyota Yaris, the lone model currently built in France and exported to the US.

2015 Chrysler 200. — The current Chrysler 200 may be replaced by a competitor’s model.

Exit…Stage Right

Both Renault and Peugeot-Citroen once had a presence in the US. Indeed, Renault had controlling interest in American Motors for several years, but exited the market in 1989, two years after selling those assets to the Chrysler Corporation. In 1991, Peugeot made its own exit from the US market, ending Citroen sales too. Some twenty-five years later, few Americans under 40 can recall cars built by French manufacturers and sold in the United States.

Neither manufacturer is poised to return to the US, a market that is immensely profitable, but is also brutally competitive. Beyond domestic manufacturers such as Packard, Checker and Studebaker, a host of foreign makes have thrown in the towel too, including Isuzu, Yugo, Daihatsu, and Suzuki.

However, one of the two French manufacturers could make a return, especially if partnered with a company already present in the US. Renault’s logical partner is Nissan, as both companies own a slice of each other and are jointly led by Carlos Ghosn, the Brazilian-born CEO for the two automakers. Its a successful alliance that has produced numerous cars for the two companies since the confederacy was forged in the late 1990s.

On the other hand, Peugeot-Citroen is not so lucky. A brief partnership forged with GM in 2012 was ended less than two years later as Peugeot sought assistance from Dongfeng, a Chinese manufacturer to support its operation. Of the two French companies, Peugeot’s financial picture is the weakest.

Renault to the Rescue?

Turning back to Renault, this automaker could very well find its way back across the Atlantic, especially if Fiat Chrysler works out an agreement for the French automaker to supply it with vehicles. Indeed, FCA CEO Sergio Marchionne announced last week that his company would no longer build its compact Dodge Dart and midsize Chrysler 200 sedans, choosing instead to devote plant capacity to build more Jeeps and Ram pickup trucks. That move means FCA should become more profitable as well as more attractive to a potential suitor.

At the same time, Marchionne said it would turn to its competitors to supply these models, but the likelihood that a Ford, Toyota or a Hyundai would dilute their own model lines to accommodate FCA seems very unlikely.

Renault may be the most logical supplier for FCA as it has two models — the midsize Latitude and the compact Mégane — that might possibly be rebadged and sold in the US. Both models are underpinned by platforms shared with current Nissan products (Altima and Sentra), but otherwise the cars are all Renault.

The downside in choosing the Mégane is that it isn’t a sedan — Renault builds hatchback, coupe and wagon variants, but no four-door sedan. That said, the hatchback might be a fit for a market that is finally accepting this body style again. Currently, Renault builds the Mégane at four plants scattered across Europe and might be in a position to supply the next generation Dodge Dart.

The second model is the Renault Latitude and this one is already sold in Mexico, where it is known as the Renault Safrane. Interestingly, the Renault Latitude/Safrane is built in Korea by Renault Samsung Motors, a minor car manufacturer operating in a market dominated by Hyundai and Kia.

Busan Plant Capacity

Although the Korean company has built more than 2.4 million cars since its 2000 introduction, its Busan manufacturing plant has the capacity to build 300,000 vehicles annually. Supplying the Latitude as the Chrysler 200 in the US and Canada would keep the Busan factory humming and give Chrysler a much-needed product.

Will Renault respond if Marchionne comes calling? There is a good chance that they would. In 2013, Mitsubishi sought a similar tie up with Renault to supply it with a midsize sedan for the US market, but that deal collapsed. In any case, Mitsubishi is barely hanging on in a market where demand for Renault-supplied vehicles would be much smaller than that of a network composed of Dodge and Chrysler dealers.

At the same time, any Fiat Chrysler and Renault relationship could push out further, perhaps including Nissan and forming at least one kind of a business relationship Marchionne desires.

These are interesting times in the auto industry. Then again, the industry is always fascinating.

Fiat Chrysler: SUVs Trump Small Cars

January 29, 2016 by admin 1 Comment

More Jeeps and pickup trucks. And partners sought to build small cars.

2015 Chrysler 200S — Future Chrysler 200s may be built by a competitor.

Shop for a small Chrysler product in a few years and that Dodge Dart or Chrysler 200 just may be built by one of the automaker’s competitors. Earlier this week Fiat Chrysler announced its revised North American business plan with future production now geared toward producing more SUVs and fewer cars.

Modified Business Plan

The updated business plan, released by Fiat Chrysler on Wednesday, reveals several important changes about the company’s direction in North America, including:

Producing more SUVs and pickup trucks, and fewer small cars.
Outsourcing production of two vehicles — the Chrysler 200 and Dodge Dart sedans — to competitors.
Adjusting its Alfa Romeo plans by concentrating on bringing its Giulietta sedan to the market during the first half of this year and bringing its midsize SUV online by the end of 2017. Other models are still on tap, but will arrive further out in the production planning cycle.

More Trucks and SUVs

Long top-heavy in pickup trucks and sport utility vehicles, Fiat Chrysler plans to tilt further in that direction as it sees increased permanency in the currently low fuel prices. A global glut in fuel availability has driven down prices tremendously and some analysts believe low prices will be around for many years.

FCA CEO Sergio Marchionne says that the company’s two US-built small cars, Dart and 200, will “run their course.” Instead of funding development of new product, the company plans to reach out to its competitors to build these models for them. The manufacturing plants tasked with building the two models will eventually be converted to building Jeep products and pickups.

The company’s Sterling Heights plant in Michigan currently builds the 200 but will be retooled to build the next generation Ram 1500 pickup trucks due out in 2018. A similar transition is in the works for the Belvidere Assembly Plant in Illinois, producer of the Dodge Dart. That plant also produces the Jeep Compass and the Jeep Patriot.

Additional Product Plans

Other important points of the Fiat Chrysler business plan include:

Partnerships are in the offing. Fresh on the heels of partnering with Mazda to build the Fiat 124 Spider, FCA will seek additional partners to help it maintain a presence in the small and midsize car categories. Such collaboration between automakers is nothing new, but this practice has increased steadily over the past several years.

New hybrid models are on the way. FCA will step up its hybrid game by offering more models across multiple platforms. Even the Jeep Wrangler and the Ram 1500 pickup truck will receive hybrid variants.

No new manufacturing plants are planned. FCA plans to maintain its current manufacturing plant count and won’t build an additional plant in Toledo as had been expected. Instead, FCA will utilize its current footprint as it leans toward building more Jeeps and Ram pickup trucks.

Build me a diesel. FCA will also bring a diesel Wrangler Unlimited to the market, but likely not for five years. Even so, a diesel-powered Wrangler would appear a few years before a hybrid variant is released.

Making More Money

Fiat Chrysler’s profitability has always hinged on its North American market. By producing even more Jeeps and pickup trucks and fewer cars, the automaker’s profitability picture should remain robust for several years.

At the same time, its greater commitment to these models could leave the company exposed if consumer tastes suddenly shift following a huge spike in fuel prices. That’s a gamble the automaker is willing to take as consumers flock to a variety of high-profile vehicles.

See Also — X Marks the Spot for GMC Sierra

New Products May Bolster Ram Brand

November 5, 2015 by admin Leave a Comment

Where is Fiat Chrysler Automobile taking the Ram brand? A large SUV is under consideration, what could bring sales and big profits to this truck-based marque.

Ever since Fiat Chrysler Automobiles separated Ram from Dodge to form a distinct brand, enthusiasts have wondered if additional products might eventually join the model line. Well, those products have come in the form of two Fiat-supplied products — the ProMaster Van and the Promaster City — a pair of commercial vehicles accounting for fewer than 1 in 10 Ram models.

The 1500 as well as the 2500/3500 series pickup trucks has essentially been the Ram brand, but other models are under consideration. This past August Auto Trends explored the possibility of a midsize Jeep pickup, one that might also yield a Ram variant, to replace the previous Dodge/Ram Dakota.

Jeep hasn’t committed to re-entering the expanding segment, but as Ford seriously considers returning with an all-new Ranger, the possibility of new models from Fiat Chrysler shouldn’t be quickly dismissed.

A Big Ram SUV?

Last week, Automotive News shared the news that a large SUV based on the Ram 1500 line is a possibility. That model, if built, would compete against the Chevrolet Suburban and Ford Expedition, SUVs derived from each manufacturer’s pickup truck line.

Fiat Chrysler President and CEO Sergio Marchionne sees a segment ripe for the participation and believes that his company has “…a reasonable chance of getting at least part of that market.”

He also believes fuel prices will remain low for the foreseeable future, although it would take several years to ready such a model for the market. Anything can happen in the interim.

Readying a New Ram 1500

The current generation Ram 1500 arrived on the market in 2010 and received an update in 2013. It will receive yet another refresh before the next generation model arrives in 2019. The delay comes as Fiat Chrysler pours money into resurrecting Alfa Romeo. It will also permit time for an expected aluminum-bodied truck to make its debut.

Likely, the big Ram SUV would follow the new pickup trucks by a year, a customary delay that Ford and Chevrolet usually follow with their own models. That means the new model is still four years away and a lot can happen between now and then.

Making Money With Big SUVs

Larger vehicles, including SUVs have some of the highest profit lines in the business. The last time Chrysler fielded such a model was in the two-door Dodge Ramcharger, a full-size SUV built from 1974 to 1994. The Ramcharger was based on Dodge’s earlier D Series line. But, when the all-new Dodge Ram rolled out, it was retired.

Also, instead of continuing with the Ramcharger, Chrysler concentrated on building the Jeep Grand Cherokee and the Dodge Durango, two distinctly different midsize SUVs. Continuing with the Ramcharger would have also adversely affected the manufacturer’s corporate average fuel economy (CAFE) ratings — the company has long been top heavy with less fuel efficient models.

A Three-Row Jeep Grand Wagoneer

Bringing a new SUV to the Ram line would come just as the automaker readies another product, the three-row Jeep Grand Wagoneer. Unlike a potential body-on-frame Ram SUV, the Grand Wagoneer will be of unibody construction. FCA intends to have it compete with the likes of Land Rover, by taking a more upscale approach to the market.

Likely, FCA is looking at other products to expand the Ram line. Beyond a large or midsize SUV, the lower end of the market might also yield a product. However, fuel prices, FCA profitability and market factors can impact these plans, pushing some products back while perhaps bringing a few others to the forefront.

Flagging Fiat Sales: No Easy Answer

October 14, 2015 by admin Leave a Comment

The Fiat brand has this 500X crossover in its portfolio.

It must be tough sitting in a meeting of Fiat Chrysler brand heads, especially if your brand is underperforming. Sixty-eight straight months of year-over-year sales improvements puts an enormous pressure on executives to succeed. Sure, the streak will someday be broken, but the last thing any brand head wants is to be blamed for ending it.

Fiat Chrysler has enjoyed a tremendous rebound over the past six years as two separate and distinctly different companies were merged, Ram was separated from Dodge, and Chrysler was reassigned as a mainstream brand. In addition, the Fiat brand was brought back to the US in 2012 followed two years later by Alfa Romeo. FCA is on a roll and is continuing to gain market share.

Jeep, Ram, and Chrysler are continuing to grow, but Dodge sales are down with most of that loss attributed to a discontinued product, its midsize Avenger sedan. Dodge is right where it is supposed to be as a newly minted performance brand and sales should bottom out by early 2016. As far as the Italian brands go, Alfa Romeo’s gradual roll out will receive a major boost late next year when the gorgeous Giulia compact luxury sedan debuts.

Fiat 500L

Pictured: Fiat 500L.

That leaves one brand we’ve scarcely mentioned, the eponymous Fiat marque.

Certainly, FCA had high hopes for Fiat when the first of its North American 500 models was officially presented at the 2011 North American International Auto Show in Detroit. Many believed that the diminutive vehicle would pull in customers as high fuel prices coupled with Italian enchantment would drive interest in the brand.

Unfortunately, that hasn’t happened even as new models arrived, including the compact 500L followed by the 500X crossover. Under normal market conditions all three models should provide strong sales, however this market is anything but normal as lower gas prices, excellent financing rates, and intense competition has buyers looking elsewhere. Indeed, Fiat brand sales are down 10 percent year-to-date through September and would be off by more than 20 percent without the new-for-2016 500X n the product portfolio.

The Fiat sales drop may not have a tremendous impact on FCA’s overall sales, but it isn’t something that can easily be dismissed. Perhaps that is why the company’s CEO and President Sergio Marchionne decided earlier this month that Fiat brand head Jason Stoicevich should move on.

Indeed, last week, as part of a larger shuffling of brand managers, Stoicevich was reassigned to head of fleet operations and small business sales in the US. However, by the next day Stoicevich resigned and left the company altogether. Notably, no reason has been given for his abrupt departure.

Chrysler brand chief Alistair Gardner also was reassigned, but his sales numbers were sound. Additional management shuffling was also accomplished as Timothy Kuniskis now oversees three brands: Dodge, Chrysler and Fiat.

Alfa Romeo Giulia

Alfa Romeo sales should see a spark turn into a flame when this Giulia sedan
arrives on the market in late 2016.

We might speculate on the reasons why Stoicevich left, but that theorizing would not necessarily be correct. Stoicevich was in charge of Fiat for two years and seven months and may have been disappointed with the reassignment especially with new product on the way. One of those products is the reborn Fiat 124 Spider, a new model that shares its platform with the Mazda MX-5 Miata.

It has been thought by some that the 124 Spider will be shown at an upcoming auto show, with The Detroit Bureau identifying Los Angeles as that venue. The Los Angeles Auto Show kicks off next month just ahead of Thanksgiving and is the first of four important North American shows where automakers roll out new products. Detroit, Chicago and New York follow.

With the 124 Spider in the fold, the Fiat brand should get a fresh look from customers even if its sales are small in number. As for increasing those sales to reach 50,000 units per year, Fiat may need some help in the form of higher fuel prices. Certainly, the 500X and 124 Spider will contribute, but sales of the other two models may continue to decline or at least stabilize at levels far below what FCA management wants, but probably not to the detriment of Kuniskis’ place at the management table.

Fiat photos copyright Auto Trends Magazine; Alfa Romeo photo copyright Fiat Chrysler.

Fiat Chrysler Product Delays Mount

June 30, 2015 by admin Leave a Comment

Product delays will keep several Jeep, Ram, Dodge and Chrysler products from reaching showrooms when originally planned. FCA is pouring its resources into Alfa Romeo, a gambit that might backfire.

Alfa Romeo Guilia — FCA is pinning its hopes on the Alfa Rome Giulia.

Fiat Chrysler Automobiles (FCA) has been in the news a lot lately, mainly due to chief executive Sergio Marchionne’s efforts to find his company a partner. The company itself is a new union of European and North American enterprises, but Marchionne insists that FCA could cut its costs by partnering with another automaker.

For FCA, the automaker is battling two problems: its debt levels are high and profit margins are low, twin threats to a company’s vitality when the economy is good as well as to its viability when the economy takes a downturn. Perhaps seeing that the next downturn is looming, Marchionne has been redoubling his partnership efforts.

Alfa Romeo Guilia

Marchionne is also gambling that Alfa Romeo will make huge inroads as new products come to the market. Last week, Alfa showed the world its midsize Giulia, a luxury sedan that FCA says will lead an eight-car onslaught in a bid to elevate this once moribund marque.

The new model has the looks to be a winner, but executing a flawless introduction is key. Moreover, competitors such as BMW, Jaguar, Cadillac, Lexus, Mercedes-Benz, Lincoln, Infiniti, Audi, and Acura are not about to cede marketshare to Alfa Romeo without putting up a fight.

Pouring billions into propping up Alfa Romeo means that FCA’s other brands will have to make do with less. Or at least wait a bit longer for new products to arrive.

Jeep and Ram Product Postponements

Just last week Automotive News reported that the planned redesign of the Jeep Grand Cherokee for 2017 will be put off until late 2018 or even later. And it isn’t the first product delay noted.

Because of the Grand Cherokee push back, the upcoming Grand Wagoneer flagship will be delayed as well. The new, full size model would essentially complete the product line, giving the brand strong models from top to bottom.

In early June, Reuters reported that FCA’s big profit model, the Ram 1500, would be delayed by several months, missing its mid-2017 debut. Instead, November 2017 has been targeted as a more likely introduction date.

The Jeep Wrangler, initially planned for an early 2017 release, isn’t expected to arrive until July 2017. Two issues may factor in the Wrangler’s delay:

1), a decision to reverse course and stay with a body-on-frame model instead of the earlier proposed unibody design and,

2), FCA hasn’t announced where it will be built. The Wrangler has long been produced in Toledo, Ohio, but production can be moved elsewhere. Likely, it will be part of the UAW’s negotiating strategy when contract talks are held this September.

Additional product delays will likely involve the Chrysler 300.

Additional Product Delays

Delays for higher profit line models follows the postponement of production revamps for several lower cost models, including the compact Dodge Dart sedan and the Dodge Journey crossover. Instead of new models arriving in mid-2016, both vehicles will likely get refreshed and wait an additional three years for revised models.

Other vehicles that may see delays include the Chrysler 300 and Dodge Charger sedans as well as the Dodge Challenger coupe. And the singular replacement model for the Jeep Compass and Patriot due out early next year will be delayed by at least six months.

Saving Money: At What Risk?

The product delays will allow FCA to put off some of its expenditures to later dates, possibly in a bid to see if Alfa Romeo takes off. A promising Alfa Romeo brand could make FCA a more desirable partner, but it comes as a huge gamble, especially if the product delays send customers shopping for newer designs elsewhere.

Meanwhile, FCA’s bid for GM remains in play. Earlier this month the two companies hired financial advisers to assist them. Furthermore, hedge fund Greenlight Capital snapped up more than 9 million shares of GM stock in the first quarter of 2015.

Lastly, John Elkann is chairman of FCA and oversees the Exor fund in Italy. He is the grandson of Gianni Agnelli and has been advising the family on how best to take on GM. His skill as an investment banker included a hostile takeover of a reinsurance company, PartnerRe. USA Today says that Elkhann “has no qualms about becoming an activist investor.”

See Also — Fiat Chrysler Automobiles: No Takers

Fiat Chrysler Automobiles: No Takers

June 10, 2015 by admin 3 Comments

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.

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.

Toyota and Mazda Collaboration Will Lift Both Automakers

May 14, 2015 by admin 2 Comments

And so it begins. Giant Toyota and wee Mazda announced a collaborative agreement this week that will benefit both companies. The agreement allows each automaker to leverage products and technologies from the other, a partnership that does not include Toyota taking a financial stake in its much smaller competitor.

What the agreement effectively does is to expand an earlier arrangement whereby Mazda is supplying Toyota with a small car based on its Mazda 2 subcompact platform. That vehicle, the 2016 Scion iA, debuts this fall. In exchange, Mazda can now tap Toyota’s plug-in hybrid electric vehicle technology.

Symbiotic Task Force

The two companies will establish a joint committee to determine how each automaker can make use of the other’s chief assets. The collaboration will be broad and involve a number of disciplines, including various environmental initiatives and advanced safety technologies.

Toyota President Akio Toyoda and Mazda, President and CEO Masamichi Kogai, held a news conference in Tokyo on Wednesday to announce the accord.

Toyoda pointed to two strong Mazda initiatives that have helped this small car manufacturer succeed in an ultra-competitive global market: its SKYACTIV Technologies and KODO―Soul of Motion design. Both present an enticing edge that Toyota does not have and can most certainly benefit from moving forward.

Said Toyoda, “Mazda has proven that it always thinks of what is coming next for vehicles and technology, while still managing to stay true to its basic carmaking roots. In this way, Mazda very much practices what Toyota holds dear: making ever-better cars.”

One of the earlier collaborations between the two automakers
has turned the Mazda 2 into a 2016 Scion iA.

Toyota Saves the Day

Not mentioned by Toyota’s president is that the provision essentially seals Mazda’s fate. Certainly, ever since the Ford Motor Company severed its three-decade relationship with one of Japan’s smaller automakers, the company has lacked the financial resources, especially the economies of scale, it once had.

For example, the earliest Ford Escape and Mazda Tribute models shared the same bones. Although the Tribute’s replacement, the CX-5, is a superior model, the cash outlay for the compact crossover utility vehicle has been enormous.

Quite frankly, Mazda working alone does not have the resources to keep pace with the big guys. But Mazda and Toyota working cooperatively essentially provides the former with a savior. You can now scratch Mazda off your list of vulnerable automakers.

Speaking on behalf of Mazda, Kogoi said, “Toyota is a company that has shown steadfast resolve in acting responsibly on global environmental issues and the future of manufacturing as a whole. I also have tremendous respect for Toyota’s dedication in its pursuit of ever-better cars through ongoing innovation.”

Toyota will supply Mazda with hybrid technology.
Perhaps a Mazda diesel is in the offing for this Camry.

Hydrogen and Hybrid Technologies

No doubt, Toyota and its 10.2 million per year car building efforts will energize Mazda and its 1.2 million annual output. The two companies are competitors, but the move will enable each one to plug specific product holes.

For Mazda, the company will gain access to Toyota’s hydrogen vehicle technologies and expand its PHEV offerings. It isn’t quite clear how this arrangement will work, but look for a PHEV Mazda CX-5 or Mazda 6 in the future. Most likely both. Rebadging the hydrogen Toyota Mirai as a Mazda doesn’t seem likely, although that chassis might someday power a future Mazda product.

Toyota gains access to Mazda’s SKYACTIV technologies, represented by fuel-efficient gasoline and diesel engines, advanced transmissions and lightweight bodies. Of special interest could be Mazda’s diesel engines, one of the weakest areas for Toyota.

Toyota does have diesel technology, but readying those engines for the American market would be a costly undertaking. Mazda has a twin-turbo 2.2-liter diesel engine in the wings, one that meets both European and US emissions standards. The engine is suitable for the midsize Mazda 6 sedan and might also be made available with the Toyota Camry.

As for the Camry, not everyone wants a hybrid and the Mazda diesel would give Toyota something that does not involve vehicle electrification. And if certain KODO design elements transfer to the Camry and other Toyota models, the world’s largest automaker may suddenly gain a much-need styling edge.

Collaboration Gauntlet Thrown Down

FCA collaboration or suitor

Sergio Marchionne is actively campaigning
to win a suitor for FCA.

The Toyota-Mazda arrangement may prove to be the most comprehensive one amongst automotive manufacturers yet. Beyond outright mergers, acquisitions and stake holding, most relationships today are based on special projects involving complex technologies.

For example, Honda and General Motors are collaborating on hydrogen technology. Mitsubishi and Nissan are working on supplying the former with a midsize sedan for the US market. Daimler, Ford and Renault-Nissan are working on fuel-cell technologies with the first models expected to arrive in 2017. Every manufacturer is working with someone else to share technologies and to mitigate costs.

And beating the drum for ever broadening industry cooperation has been none other than Fiat Chrysler Automobiles (FCA) CEO, Sergio Marchionne. Just this week Marchionne met with Tesla and Apple CEOs, raising speculation that a Silicon Valley partnership may be in the offing. Marchionne has made it known that FCA is looking for a suitor. He has also stated that the global market can only support six major players.

In any case, the Toyota-Mazda joint effort will likely encourage other automakers to boost their efforts. Importantly, the timing for Mazda couldn’t be better as the next economic turn down is approaching, what most certainly will shake out some of the weaker players.

See Also — Auto Industry Buzzword: Collaboration