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How GM ended up suing its crosstown rival Fiat Chrysler

DETROIT — Automakers sue each other on occasion, but no one in Detroit can remember one accusing another of bribing union officials to get an unfair labor cost advantage. Yet thatÂ’s what happened Wednesday when General Motors filed a federal racketeering lawsuit against Fiat Chrysler Automobiles. ItÂ’s based on a widening federal investigation into corruption involving officials of the United Auto Workers union, and shortly after the lawsuit was filed, the unionÂ’s president Gary Jones stepped down. The 95-page complaint could affect ongoing contract talks between the union and Fiat Chrysler, the lone automaker of DetroitÂ’s big three thatÂ’s still in negotiations. It also could cause jitters with French automaker PSA Peugeot, which has reached an agreement to merge with the Italian-American automaker. Here are some questions and answers about the lawsuit and its impact: Why did GM sue? GM alleges that Fiat Chrysler senior executives, including now-deceased CEO Sergio Marchionne, paid $1.5 million in bribes to UAW officials for nearly a decade and corrupted the bargaining process with the union in the 2009, 2011 and 2015 contracts to gain advantages over General Motors. The lawsuit says that because of the bribes, which were funneled through a joint UAW-Fiat Chrysler training center, the union allowed Fiat Chrysler to use more lower-paid temporary workers. Also, FCA in 2015 did not have to limit the number of newly hired workers who make less and get lower-cost benefits than older workers hired before 2007. GM contends it couldnÂ’t negotiate similar union concessions that FCA was able to get through bribery. GM could only hire a limited number of temporary and lower-paid new workers, called “second tier” workers, which unfairly increased its labor costs by billions of dollars. It alleges the higher labor costs had another purpose — to force GM into a merger with FCA that Marchionne wanted. GM did wind up with higher labor costs, which until the lawsuit had not been linked to the federal corruption probe. Before contract talks with all three automakers began last summer, the Center for Automotive Research, an industry think tank, determined Fiat ChryslerÂ’s total hourly labor costs including wages and benefits were about $55 per hour, $8 less per hour than GM and $6 lower than Ford. At a Wall Street conference in New York on Thursday, GM CEO Mary Barra said her company can compete on a level playing field.

Fiat Chrysler, Peugeot announce merger as world's No. 4 carmaker

MILAN  — Fiat Chrysler and France's PSA Peugeot said Thursday they have agreed to merge to create the world's fourth-largest automaker with enough scale to confront big shifts in the industry, including a race to develop electric cars and driverless technologies. Italian-American Fiat Chrysler brings with it a strong footprint in North America, where it makes at least two-thirds of its profits, while Peugeot is the No. 2 automaker in Europe. Both lag in China, however, despite the participation of Peugeot's Chinese shareholder, Dongfeng, and are playing catching up in developing electric vehicles. Fiat Chrysler shares were trading up 9% at 14 euros in Milan, while PSA Peugeot shares were down 3.2% to 22.84 euros. The 50-50 merger is expected to offer savings of 3.7 billion euros ($4 billion), which the automakers expect to achieve without any factory closures — a concern of unions in both France and Italy where the carmakers have more overlap. Fiat Chrysler's strongest brands are Jeep SUVs and Ram trucks and it is focusing on relaunching its premium and luxury brands, Alfa Romeo and Maserati, with a focus on hybrid engines. It still makes smaller cars under the Fiat marquee, mostly for the European and Latin American markets. PSA Peugeot makes mostly small, city-friendly cars, family sedans and SUVs under the nameplates of Peugeot, Citroen and Germany-based Opel, which it bought in 2017. That is where the companies can expect to have the most overlap. The new company would be worth $50 billion, with revenue of 170 billion euros ($189 billion). It would produce 8.7 million cars a year — still behind Toyota, Volkswagen and the Renault-Nissan alliance, which make over 10 million each. Once a merger is finalized, PSA Peugeot CEO Carlos Tavares will be chief executive of the new company, with Fiat Chrysler Chairman John Elkann becoming chairman. Fiat Chrysler CEO Mike Manley will have a senior executive role. "This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity," Tavares said in a statement. Manley called it "an industry-changing combination," and noted the long history of cooperation with Peugeot in industrial vehicles in Europe. The 11-member board will be made up of five members from each company plus Tavares, who is locked in as CEO for five years.

Autoblog Minute: UAW and FCA avoid strike, Clarkson teases new show

FCA avoids a worker strike, a former Top Gear host teases us with a picture from Amazon's new car show, and Toyota predicts autonomous cars by 2020. Autoblog senior editor Greg Migliore reports on this edition of Autoblog Minute Weekly Recap. Show full video transcript text [00:00:00] FCA avoids a worker strike, a former Top Gear host teases us with a picture from Amazon's new car show, and Toyota predicts autonomous cars by 2020. I'm senior editor Greg Migliore and this is your Autoblog Minute Weekly Recap. A UAW strike of FCA was avoided thanks to a zero-hour tentative agreement reached this week. Worker concerns that were renegotiated in the new [00:00:30] deal include adjustments to the two-tier wage scale, health care costs, and production outsourcing. Now check-in with Autoblog as we update our reports on this evolving story. Shooting began on Amazon Prime's new automotive show starring the former Top Gear crew. That's Jeremy Clarkson, Richard Hammond, and James May. Now Clarkson threw out a tweet from day one of filming on location at Algarve Motor Park in Portugal. The picture features the show's [00:01:00] three stars and crew posing with the holy trinity of hyper cars. That's a McLaren P1, a Ferrari LaFerrari, and a Porsche 918 Spyder. This Prime show is being called Gear Knobs though the name is unofficial. Now if a tweet is any indication of what we can expect, who cares what it's called this is gonna be awesome. (Eds Note: Clarkson tweeted Friday that the show will not be called Gear Knobs.) Toyota predicts drivers could be obsolete on highways as early as 2020, with technology dubbed the Toyota Highway Teammate or THT. Toyota is using a modified [00:01:30] Lexus GS to show what this is capable of. THT is already able to create a driverless freeway car that's capable of changing lanes, making passes and taking curves. Plus, it can keep safe distances from other vehicles. Toyota is currently testing this on Tokyo's Shuto Expressway. Those are the highlights from the week that was. Be sure to check out my full recap this Saturday. And I'll have some added insight on the BMW M4 GTS. For Autoblog, I'm Greg Migliore. [00:02:00] Show Logo Autoblog Minute is a short-form video news series reporting on all things automotive. Each segment offers a quick and clear picture of what's happening in the automotive industry from the perspective of Autoblog's expert editorial staff, auto executives, and industry professionals.