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China-FCA merger could be a win-win for everyone but politicians

NEW YORK — Fiat Chrysler boss Sergio Marchionne has said the car industry needs to come together, cut costs and stop incinerating capital. So far, his words have mostly fallen on deaf ears among competitors in Europe and North America. But it appears Marchionne has finally found a receptive audience — in China. FCA shares soared Monday after trade publication Automotive News reported the $18 billion Italian-American conglomerate controlled by the Agnelli family rebuffed a takeover from an unidentified carmaker from the Chinese mainland. As ugly as the politics of such a combination may appear at first blush, a transaction could stack up industrially, and perhaps even financially. A Sino-U.S.-European merger would create the first truly global auto group. That could push consolidation to the next level elsewhere. Moreover, China is the world's top market for the SUVs that Jeep effectively invented, so it might benefit FCA financially. A combo would certainly help upgrade the domestic manufacturer; Chinese carmakers have gotten better at making cars, but struggle to build global brands, and they need to develop export markets. Though frivolous overseas shopping excursions by Chinese enterprises are being reined in by Beijing, acquisitions that support the modernization and transformation of strategic industries still receive support, and the government considers the automotive industry to be strategic. A purchase of FCA by Guangzhou Automobile, Great Wall or Dongfeng Motors would probably get the same stamp of approval ChemChina was given for its $43 billion takeover of Syngenta. What's standing in the way? Apart from price (Automotive News said FCA's board deemed the offer insufficient) there's the not-insignificant matter of politics. Even as FCA shares soared, President Donald Trump interrupted his vacation to instruct the U.S. Trade Representative to look into whether to investigate China's trade policies on intellectual property. Seeing storied Detroit brands like Jeep, Chrysler, Ram and Dodge handed off to a Chinese company would provoke howls among Trump's economic-nationalist supporters. It might not play well in Italy, either, to see Alfa Romeo and Maserati answering to Wuhan instead of Turin — though Automotive News said they might be spun off separately. Yet, as Morgan Stanley observes, "cars don't ship across oceans easily," and political considerations increasingly demand local manufacture of valuable products.

Marchionne says no offers are on the table for Fiat Chrysler

MONZA, Italy (Reuters) - Fiat Chrysler (FCA) has not received any offer for the company nor is the world's seventh-largest carmaker working on any "big deal", Chief Executive Sergio Marchionne said on Saturday. Speaking on the sidelines of the Italian Formula One Grand Prix, Marchionne said the focus remained on executing the company's business plan to 2018. Asked whether FCA had been approached by someone or whether there was an offer on the table, he simply said: "No." The company's share price jumped to record highs last month after reports of interest for the group or some of its brands from China. China's Great Wall Motor Co Ltd openly said it was interested in FCA, but had not held talks or signed a deal with executives at the Italian-American automaker. The stock move was also helped by expectations that the company might separate from some of its units. Marchionne reiterated on Saturday that FCA was working on a plan to "purify" its portfolio and that units, such as the components businesses, would be separated from the group. He hopes to complete that process by the end of 2018. "There are activities within the group that do not belong to a car manufacturer, for example the components businesses. The group needs to be cleared of those things," he told journalists. Asked whether an announcement could come this year, Marchionne said it was up to the board to decide and that it would next meet at the end of September. He said the time was not right for a spin-off of luxury brand Maserati and premium Alfa Romeo and the two brands needed to become self-sustainable entities first and "have the muscle to stand on their feet, make sufficient cash". "The way we see it now, it's almost impossible, if not impossible, to see a spin-off of Alfa Romeo/Maserati, these are two entities that are immature and in a development phase," he said. "It's the wrong moment, we are not in a condition to do it." He said the concept of separating the two brands from FCA's mass market business made sense and did not rule out this happening in future, but not under his tenure, which lasts until April 2019. "If there is an opportunity in future, it would certainly happen after I'm gone. It won't happen while Marchionne is around," he said.

Alfa Romeo Giulia, Stelvio Quadrifoglio get louder and — literally — greener

Alfa Romeo made several small improvements to the Quadrifoglio variants of the Giulia and the Stelvio as part of its 110th birthday celebrations. The changes make both models safer, more stylish, and quite a bit louder. Outside, the design tweaks are largely limited to new-look LED rear lights with darker lenses and 21-inch alloy wheels for the Stelvio. The color palette grows with the addition of three new hues called 6C Villa d'Este Red, GT Junior Ocra, and Montreal Green, respectively. They're heritage-laced colors that dyed-in-the-wool Alfisti will immediately recognize; the green is a tribute to the V8-powered Montreal released in 1970, for example. Step aboard, and you'll notice there's a redesigned center console that stylists carved additional storage space into, a new steering wheel, plus additional upholstery choices. Sparco sport seats built around a carbon fiber shell are waiting on the list of options along with red and green seatbelts. The updated infotainment system we've already experienced in the standard Giulia has found its way to the Quadrifoglio, too. It's displayed on an 8.8-inch touchscreen and Alfa Romeo added a feature called Performance Pages that shows a wealth of drivetrain-related parameters like the turbo pressure, the amount of power generated in real-time, and a chronometer. If these digital features sound familiar, it's likely because some Dodge models — including the Challenger — are already available with the Performance Pages app. We like it there, and we'll certainly enjoy Alfa's spin on it. Bosch helped Alfa Romeo add a panoply of electronic driving aids to the Giulia and Stelvio. The list includes lane-keeping assist, adaptive cruise control, active blind spot assist, traffic sign recognition, and traffic jam assist. The suite corresponds to level two on the SAE scale so it doesn't turn either model into an autonomous car. There are no mechanical changes to report, meaning power still comes from a 2.9-liter V6 that relies on a pair of beefy turbochargers to make 505 horsepower and 443 pound-feet of torque. It spins the rear wheels via an eight-speed automatic transmission, and pelts the Giulia from zero to 60 mph in 3.8 seconds before sending it to a 191-mph top speed. The same six powers the bigger, heavier Stelvio, but it channels its power to the four wheels. Enthusiasts who want to be heard before they're seen are in luck.