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Marchionne's FCA-GM merger might come after Ferrari spinoff

Sergio Marchionne is continuing to rumble about working out a merger with General Motors, but don't expect anything big to happen before at least early next year. That's because Marchionne would likely wait for the Ferrari spin-off to be complete before beginning his next big deal, according to Automotive News. While the Ferrari IPO on the New York Stock Exchange is expected in the coming weeks, that only concerns 10 percent of the shares. The remaining 80 percent of stock is being distributed among shareholders in 2016. Piero Ferrari holds the final 10 percent with no intention to sell. This strategy allows FCA to claim 80 percent of the Prancing Horse's profits in the automaker's 2015 financial results. According to Automotive News, the tactic has other advantages, as well. FCA would be flush with cash by waiting for the spin-off to be complete, and it would keep Ferrari separate if a GM merger actually happens. Marchionne thinks Ferrari could be valued at over $11 billion in the IPO, and it could make FCA $3.3 billion richer when complete. Marchionne believes a combined FCA/GM could sell 17 million vehicles a year globally and rake in $30 billion in earnings. In the CEO's opinion, the two automakers are wasting money by developing components to do the same things on their vehicles. Although, so far the General's top execs are rebuffing all of his advances.

Detroit automakers keep their masks on to keep the factories running

United Auto Workers members leave the Fiat Chrysler Automobiles Warren Truck Plant in May. Fiat Chrysler along with rivals Ford and General Motors Co., restarted the assembly lines after several weeks of coronavirus lockdown. (AP)   DETROIT — When the coronavirus pandemic slammed the United States in March, the Detroit Three automakers shut their plants and brought their North American vehicle production to an unprecedented cold stop. Now, four months after a slow and sometimes bumpy restart in May, many General Motors, Ford and Fiat Chrysler Automobiles  factories are working at close to full speed, chasing a stronger-than-expected recovery in sales. So far, none of the Detroit Three has had a major COVID-19 outbreak since restarting production, even as the coronavirus is surging in Midwestern and Southern communities outside factory walls. "We have people testing positive, but it's not affecting operations," said Ford global manufacturing chief Gary Johnson. Keeping the pandemic at bay has pushed the automakers and 156,000 U.S. factory employees represented by the United Auto Workers into unfamiliar work routines and extraordinary levels of cooperation among the rival automakers that will have to be sustained for months to come. For automakers, the automakers' COVID response has been as much about instilling new habits as relying on new technology. Workers log their symptoms, or lack of them, into smartphone apps and walk past temperature scanners to get to their work stations. But company and union executives said masks, along with physical distancing, are the key to keeping assembly lines rolling. "The mask is the foundation" of protecting workers on the job, said Johnson. Complaints about masks Autoworkers are accustomed to wearing protective gear such as shatterproof glasses and gloves. Masks that cover the mouth and nose, however, were not standard equipment on auto assembly lines, and were a tough sell at first. "The biggest complaint is wearing a mask," United Auto Workers President Rory Gamble told Reuters. "A lot of our members perform physical tasks. Wearing the mask inhibits breathing." Beyond that, Gamble said, masks and distancing make it harder for workers to have conversations on the job or socialize during breaks. "ThatÂ’s pretty much out the window, and it makes for a longer day," he said. Masks make it harder for co-workers to read each other's expressions — often crucial in the noisy environment of a car plant.

Fiat Chrysler cuts 2018 outlook, shares tumble on weaker quarterly profit

MILAN — The news of former Fiat Chrysler chief executive Sergio Marchionne's death arrived Wednesday moments before the group reported a surprisingly heavy drop in profit. The death of one of the auto industry's most tenacious and respected CEOs overshadowed a big selloff in Fiat Chrysler shares. FCA's scheduled second-quarter earnings presentation, led by Marchionne's successor and former lieutenant Mike Manley, began on Wednesday afternoon with a moment of silence. As eulogies flooded in, FCA shares fell as much as 10 percent as investors digested an unexpected 35 percent fall in net profit, well below market forecasts. Marchionne rescued Fiat and Chrysler from bankruptcy after taking the wheel of the Italian carmaker in 2004 and he multiplied Fiat's value 11 times through 14 years of canny dealmaking. He was due to step down at FCA in April next year. "The best way to honor his memory is to build on the legacy he left us, continuing to develop the human values of responsibility and openness of which he was the most ardent champion," Chairman John Elkann added. On Saturday, FCA named Jeep division head Mike Manley, 54, as head of the world's seventh-largest carmaker, saying the Briton would execute a strategy that Marchionne had outlined in June. FCA has said Manley will work to ensure a "strong and independent" future for the group. Underlining the task facing Manley, FCA cut its full-year earnings outlook after the weaker-than-expected quarterly earnings. Having to deliver the bad news four days into his new job, Manley blamed the result on a weaker performance in China, a market that represents one of new CEO's immediate headaches. "The biggest challenges we face and frankly we're going to continue to face ... are all focused in China," Manley said. FCA has yet to make any significant inroads in China. In Marchionne's June plan, FCA pledged to boost production of sport utility vehicles and invest in electric and hybrid cars to double operating profit by 2022. It unveiled bold targets for Jeep, FCA's profit engine. FCA said adjusted earnings before interest and tax (EBIT) for the April-June period fell 11 percent to 1.7 billion euros ($1.99 billion), compared with 2 billion euros in a Reuters poll of analysts. Chinese demand slumped in the quarter ahead of a July cut in import duties, resulting in higher incentive spending and an increase in unsold vehicle stocks that "particularly affected Maserati," Manley said.