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Why the Detroit Three should merge their engine operations

GM and FCA should consider a smaller merger that could still save them billions of dollars, and maybe lure Ford into the deal. Fiat-Chrysler CEO Sergio Marchionne would love to see his company merge with General Motors. But GM's board of directors essentially told him to go pound sand. So now what? The boardroom battle started when Mr. Marchionne published a study called Confessions of a Capital Junkie. In it, Sergio detailed the amount of capital the auto industry wastes every year with duplicate investments. And he documented how other industries provide superior returns. He's right, of course. Other industries earn much better returns on their invested capital. And there's a danger that one day the investors will turn their backs on the auto industry and look to other business sectors where they can make more money. But even with powerful arguments Marchionne couldn't convince GM to take over FCA. And while that fight may now be over, GM and FCA should consider a smaller merger that could still save them billions of dollars, and maybe lure Ford into the deal. No doubt this suggestion will send purists into convulsions, but so be it. The Detroit Three should seriously consider merging their powertrain operations, even though that's a sacrilege in an industry that still considers the engine the "heart" of the car. These automakers have built up considerable brand equity in some of their engines. But the vast majority of American car buyers could not tell you what kind of engine they have under the hood. More importantly, most car buyers really don't care what kind of engine or transmission they have as long as it's reliable, durable, and efficient. Combining that production would give the Detroit Three the kind of scale that no one else could match. There are exceptions, of course. Hardcore enthusiasts care deeply about the powertrains in their cars. So do most diesel, plug-in, and hybrid owners. But all of them account for maybe 15 percent of the car-buying public. So that means about 85 percent of car buyers don't care where their engine and transmission came from, just as they don't know or care who supplied the steel, who made the headlamps, or who delivered the seats on a just-in-time basis. It's immaterial to them. And that presents the automakers with an opportunity to achieve a staggering level of manufacturing scale. In the NAFTA market alone, GM, Ford, and FCA will build nearly nine million engines and nine million transmissions this year.

That thing got a Hemi? Mopar engine kits make it easier to say yes

Thanks to a new kit from Mopar, classic car owners will have an easier time dropping Hemis into their muscle cars. The kit works with Mopar's 345 and 392 Hemi engines (5.7 and 6.4 liters respectively) and with cars built before 1975. The kit will run $1,795 and has everything needed to get one of the above engines running. The parts include a power distribution system, engine computer, engine and chassis wiring harnesses, O2 and intake air temperature sensors, ground wiring and a gas pedal. The kit is also designed to work with a manual transmission, but Mopar says a transmission such as the Torqueflite 727 and 904 can be made to work with the system. As for examples of the kit in action, take a look at the Jeep CJ66 and Dodge Challenger Shakedown that Mopar revealed this week at the SEMA show. Mopar also offers a few other parts to help complete the project, including various oil pans to clear subframes, a set of headers, and accessory drives for power steering and air conditioning. All of these parts are extra cost though. You'll also need an engine, and the 345 starts at $6,070, and the 392 runs $9,335. However, if you happen to already have one from 2014 or newer, that will work, too. Muscle car fans are getting more choices for their engine conversions. Chevrolet Performance already sells crate engines with "Connect and Cruise" kits to get its engines working in classic cars. The General also offers it with more engines. However, for people who want to keep a Mopar engine in their classic Chrysler, Dodge, Plymouth, or Jeep, this is a cool new option. Related Video: Featured Gallery Mopar Hemi V8 Engine Swap Kit Image Credit: FCA Aftermarket SEMA Show Chrysler Dodge Performance Classics FCA engine swap SEMA 2016

Why a Renault-FCA merger could be good news for Nissan, Mitsubishi

TOKYO — Nissan's advanced technologies including platforms and electric powertrains could give it leverage in a merger involving Renault and Fiat Chrysler, thanks to a royalty system it has with the former, two people with knowledge of the matter said. A merged Renault-Fiat Chrysler could face an extra hurdle each time it uses technology developed by Nissan or Mitsubishi Motors, while the two Japanese automakers stand to gain a client in Fiat Chrysler (FCA), one of the people said. Both sources declined to be identified because of the sensitivity of the matter. Nissan's technology, particularly in electrification and emissions reduction, could give it some sway in the $35 billion potential tie-up between Renault and FCA, even as its stake in the newly formed company would be diluted. Currently Renault SA pays less for technology developed by Nissan than the Japanese automaker pays for French technology, a third person said. This has long been a sticking point for Nissan, and an area where Nissan could seek more favorable terms. "Whenever Nissan transfers platform, powertrain or other technology to Renault, there is a margin or royalty which Renault has to pay for use of that tech," one of the people said. "In that sense, FCA, if everything went well, would become another 'client' of ours and that's good. More business for us." A Nissan spokesman declined to comment on its royalty system. The potential Renault-FCA deal has complicated the Japanese automaker's already uneasy alliance with Renault. A further deal with Fiat Chrysler looks likely at least in the near term to weaken Nissan's influence in the 20-year-old partnership. Renault owns a 43.4% stake in Nissan and is its top shareholder. Nissan holds a 15% non-voting stake in Renault and would see that diluted to 7.5% after the FCA deal, albeit with voting rights. The imbalance between the two has long rankled Nissan, which is by far the larger company. Alliance imbalance Renault had previously angled for a merger with Nissan but has been rebuffed by CEO Hiroto Saikawa. Securing benefits from the merger deal will be important for Saikawa, who is grappling with poor financial performance while he struggles to right the company after the ouster of former chairman Carlos Ghosn last year.