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As it did with Ferrari, Fiat Chrysler spinning off Magneti Marelli

MILAN — Fiat Chrysler said on Thursday its board had tasked management to proceed with spinning off Magneti Marelli and distributing shares in a new holding for the 99-year old parts business to FCA investors. The spinoff is part of a plan by FCA Chief Executive Sergio Marchionne to "purify" the Italian-American carmaker's portfolio and to unlock value at Magneti Marelli, which sits within FCA's components unit alongside robotics specialist Comau and castings firm Teksid, and which analysts say could be worth between 3.6 and 5 billion euros ($4.4-6.1 billion). "The separation will deliver value to FCA shareholders, while providing the operational flexibility necessary for Magneti Marelli's strategic growth in the coming years," Marchionne said in a statement. Magneti Marelli, which employs around 43,000 people and operates in 19 countries, is a diversified components supplier specialized in lighting, powertrain and electronics, and its spinoff is part of a five-year business plan FCA is due to present on June 1. "The spinoff will also allow FCA to further focus on its core portfolio while at the same time improving its capital position," Marchionne added. Marchionne has a long history of such moves. The 65-year-old was behind the spinoff and listing of trucks and tractor maker CNH Industrial and supercar brand Ferrari. The Magneti Marelli separation is expected to be completed by the end of this year or early 2019, with shares in the company expected to be listed on the Milan stock exchange. FCA's advisers initially looked at a possible initial public offering for the business to raise cash to cut FCA's debt, but the Agnelli family - FCA's main shareholder - were put off by low industry valuations and did not want their stake in Magneti Marelli to be diluted, three sources close to the matter told Reuters last month. Magneti Marelli has often been touted as a takeover target and FCA has fielded interest from various rivals and private equity firms over the years. South Korea's Samsung Electronics made a bid approach in 2016 but negotiations fell through as it was only interested in parts of the business, other sources have said. The spinoff is subject to regulatory approvals, tax and legal considerations and a final approval by the FCA board. The carmaker may modify or call off the transaction at any time and for any reason, it added.

Ram trucks lead 2021 J.D. Power Initial Quality Study

For the first time ever, Ram leads in J.D. Power's annual Initial Quality Study with a score of 128 PP100, or problems experienced per 100 vehicles in the first 90 days of ownership. Ram was in third place in last year's rankings. Coming in second place is Dodge (139 PP100), a sister division to Ram under the Stellantis umbrella, followed by Lexus (144 PP100), this year's highest-ranked premium automaker, in third. These findings reinforce an overall trend over the last few decades where mass-market brands have outperformed premium brands that tend to introduce bleeding-edge technologies that can confuse owners or fail to work entirely. Genesis (148 PP100) is the only other premium automaker to perform better than average. At the bottom of the official rankings is Chrysler (251 PP100), which seems to make little sense considering most of its technologies are shared with Dodge and many with Ram until you consider that Chrysler only offers two platforms and one of them is the Pacifica/Voyager minivan twins that are unique to the brand. The next worst are Audi (240 PP100) and Volkswagen (213 PP100). Tesla would fall in between VW and Audi with its score of 231PP100, but because the electric car manufacturer doesn't provide access to J.D. Power in every state, it's not officially included. Interestingly, J.D. Power said on a followup call that the problems that Tesla owners report most often are more traditional issues, such as panel fitment, interior noises or paint problems instead of problems with the car's electronics. According to J.D. Power, the industry averaged a score of 162 PP100. That is four points higher than the overall score in 2020, and 20 of 32 brands improved their quality scores over the last year. That's a two percent increase in quality in 2021, which is good but slightly lower than the average rate of improvement over the last decade. On a car-by-car basis, the Nissan Maxima leads the overall field with a score of 85 PP100. Issues with infotainment systems — and in particular problems pairing smartphones with in-car technologies — continue to be the top-reported problems. Headaches connecting Apple CarPlay and Android Auto dominate the complaints. "Owners want wireless connectivity, and the industry has responded," according to Dave Sargent, vice president of automotive quality at J.D. Power. "However, this has created a bigger technical challenge for both automakers and tech companies.

EU starts legal action against Italy over Fiat Chrysler emissions

BRUSSELS/ROME - The European Commission launched legal action against Italy on Wednesday for failing to respond to allegations of emission-test cheating by Fiat Chrysler, in a procedure that could lead to the country being taken to court. The Commission said Italy had failed to convince it that devices used to modulate emissions on Fiat Chrysler vehicles outside of narrow testing conditions were justified. "The Commission is now formally asking Italy to respond to its concerns that the manufacturer has not sufficiently justified the technical necessity – and thus the legality – of the defeat device used," the Commission said in a statement. Italy has two months to respond to the Commission's request and may be eventually taken to the European Court of Justice if the answer is found to be unconvincing. Italy had asked the European Union to postpone its plan to launch legal action against Rome over emissions at Fiat Chrysler, Transport Minister Graziano Delrio said. "Considering that after the end of the mediation process, we did not receive any request for further information ... we ask that you delay starting the infringement procedure while we await a letter asking for clarification on issues raised by your relevant offices," Delrio told EU Industry Commissioner Elzbieta Bienkowska, according to the ministry's statement. The European Commission has been mediating a dispute between Rome and Berlin after Germany accused Fiat Chrysler of using an illegal device in its Fiat 500X, Fiat Doblo and Jeep Renegade models. That mediation ended without fanfare in March. EU officials have become increasingly frustrated with what they see as governments colluding with the powerful car industry and the legal move is the biggest stick the European Commission has available to force nations to clamp down on diesel cars that spew out polluting nitrogen oxide (NOx). Delrio, however, said the material Italy had sent to the Commission during the mediation process showed that the vehicles' approval process was correctly performed. Under the current system, which the Commission is trying to overhaul, national regulators approve new cars and alone have the power to police manufacturers. But once a vehicle is approved in one country, it can be sold throughout the bloc. Last December, the Commission launched cases against five nations, including Germany, Britain and Spain, for failing to police the car industry adequately.