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Fiat buying rest of Chrysler in $4.35 billion deal, IPO avoided

Chrysler will now become a wholly owned member of the Fiat family, as it's been announced that the 41.46-percent stake in the Auburn Hills, MI-based manufacturer owned by the United Auto Workers' VEBA trust fund will be sold to the Italian company. Concluding the agreement will mark the closure of a piecemeal purchase process that could have resulted in an initial public offering.
The total cost of the sale will see the VEBA healthcare trust receive $4.35 billion, $3.65 billion of which will come from Fiat. $1.75 billion of that will be cash, while an additional $1.9 billion will be part of a "special distribution." An additional $700 million will be paid over four separate installments according to reports from Automotive News Europe and USA Today, although the shares will belong to Fiat following the first payment. The deal was reportedly initially struck on Sunday (though it is just being announced today), and is being portrayed as particularly good news for Fiat and Chrysler, which have now prevented the remaining shares going to the stock market in a UAW-forced IPO.
"The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organization that will ensure all employees a challenging and rewarding environment," Fiat CEO Sergio Marchionne said in a statement.

Fiat Chrysler chief still says EVs can't make money

Add Sergio Marchionne's insistence that it's impossible to make money on electric vehicle production to death and taxes among things we can all count on. The Fiat Chrysler Automobiles CEO, speaking in an interview with UK's Car Magazine, implied that Tesla Motors was "the iPhone of cars." The metaphor may have been mixed, as iPhones make plenty of cash for Apple, whereas Tesla has never made an annual profit from its electric vehicles. But the implication was that automakers should stick to what they know, and they don't know smartphones. Forget any upcoming presidential debates, we're waiting for one between Marchionne and Tesla chief Elon Musk. As for the development of autonomous-driving features? Those are another story, says Marchionne, and an area where he's far more in line with Musk. That's because the technology required to make a car safely accelerate, brake, and steer on its own is far cheaper than making a car with an electric drivetrain that offers similar range and performance to a car with an internal combustion engine, he says. As opposed to electrification, Fiat Chrysler has been going the route of modifying conventional powertrains via wringing out more power out of progressively smaller engines, and mating them with eight- and nine-speed transmissions. As for EVs, credit Marchionne for his consistency. Fiat Chrysler has been selling the Fiat 500e since 2013. That year, Wards Auto named the 500e motor to its 10 Best Engines list, while the 500e won Road & Track's 2013 award for best electric car. Still, Marchionne has long said that Fiat only makes the vehicle for to satisfy zero-emissions vehicle mandates in California, and that the company loses as much as $10,000 for every 500e that it sells. Related Video: Featured Gallery 2014 Fiat 500e News Source: Car Magazine via Hybrid VehiclesImage Credit: Andrew Harrer/Bloomberg via Getty Images Green Chrysler Fiat Electric Sergio Marchionne

Final Toledo Jeep decision may have nothing to do with city's efforts

Toledo, OH is doing all that it can to keep production of the Jeep Wrangler in its boundaries, but the biggest issue facing the plant may be insurmountable, no matter how desperately the city wants to keep the Wrangler local. The Wrangler is built in a rather interesting manner at the Toledo Supplier Park: Fiat Chrysler only handles the very final assembly of each vehicle, while two other companies, Kuka, a German firm, and Hyundai-Mobis, a member of the sprawling Hyundai empire, produce the body and chassis, respectively. The vehicles are then transferred over to the FCA part of the park, where they're painted and completed. This was, as The Detroit News explains, a convenient arrangement back in 2006 when the supplier park opened. Chrysler, which was still owned by Daimler at the time, arranged for Kuka and Mobis to handle production, saving it a huge sum of money. Both suppliers own their own machinery and buildings and employ their own workers. Now that FCA is a relatively healthy entity, though, there's not a lot of need to be sharing profits with two other companies. "What [FCA boss Sergio Marchionne] would like is to have the advantages of high-capacity utilization, owning that capacity and taking advantage of that for himself versus having a supplier doing some of the things his competitors do internally," David Cole, chairman emeritus at the Ann Arbor, MI-based Center for Automotive Research, told The News. "It really adds another level of complexity to the situation." While Sergio Marchionne is a man that generally gets what he wants, it seems unlikely that either Mobis or Kuka would give up their role quietly. According to Jon Zapf, Mobis North America's chairperson for UAW Local 12, the company "definitely wants to maintain their part of this production process." According to The News, Jeep is likely to announce the location of next-generation Wrangler production in June. Expect to hear much more on this one in the coming months.