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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.

Chrysler Recalls Over 566,000 Trucks, SUVs

Fiat Chrysler is recalling more than 566,000 trucks and SUVs in two recalls for malfunctioning fuel heaters that can cause fires and a software glitch can disable the electronic stability control. The recalls bring the newly merged company's total for the year to 6.4 million vehicles worldwide and 5.1 million in the U.S. as it continues to struggle with reliability problems. It was not immediately clear whether those totals were annual records. On Tuesday, its longtime quality chief abruptly left after Fiat Chrysler performed poorly in Consumer Reports magazine's annual reliability rankings. The largest of two recalls announced Wednesday covers almost 382,000 Ram 2500 and 3500 pickups and Ram 4500 and 5500 chassis cabs from 2010 through 2014. In trucks with 6.7-Liter Cummins diesel engines, corrosion on a fuel heater terminal could cause overheating, fuel leaks and fires. Chrysler is not aware of any fires or injuries. Owners could be warned by an odor of diesel fuel. Customers will be notified by letters starting in December. Dealers will install upgraded terminals and fuel heater housings could be replaced. The second recall covers more than 184,000 Jeep Grand Cherokee and Dodge Durango SUVs from 2014. A debris cover over a circuit board in the steering column control module can disrupt communications and disable the stability control. The problem was discovered when dealers started getting reports from customers that electronic stability control warning lights were coming on. Fiat Chrysler says it knows of no crashes or injuries caused by the problem. Technicians will upgrade software to fix the SUVs, and customers will be notified in December. Fiat Chrysler has issued 33 global recalls and 27 in the U.S. so far this year. Doug Betts, its longtime quality chief, left the company to pursue other options after Consumer Reports' survey-based rankings this year showed four FiatChrysler brands at the bottom of its list. Dodge, Ram, Jeep and Fiat performed worst of 28 brands ranked by the magazine. Company spokesman Eric Mayne said Fiat Chrysler's recalls average fewer than 200,000 vehicles each, below the industry average of 301,000. That means the company is responding quickly to problems, he said, adding that eight of its 27 U.S. recalls were announced before the company received any consumer complaints. Chrysler is not alone with a high number of recalls so far this year.

Dodge designer on yellow plastic splitter guards: 'I wish they would take them off'

About a year ago, Dodge began placing yellow strips of plastic on the leading edge of Charger and Challenger front splitters to prevent damage during transport from plant to dealer. Dodge embossed "To Be Removed By Dealer" into the plastic, but those instructions weren't always followed. By summer of 2018, so many owners had left the tabs on, or reinstalled a discarded set, or bought a set on eBay for $100 or more, that factions broke out. Some thought the protectors looked cool, some thought they looked foolish, some thought it didn't matter either way. Now Dodge and SRT lead designer Mark Trostle has stepped in with his thoughts, those being, "I wish they would take them off."  Trostle made the remarks at the end of a video by Canadian auto scribe Brian Makse that otherwise dove into the design and technology on the 2010 Charger Widebody. Part of the designer's remarks related to aesthetic aspects — designers are paid to be precious about every line they draw, after all. "When we did the sketch for the Charger and Challenger," he said, "it never had yellow strips on it," and, "To me, as a designer, it ruins the lines of the car." He had a functional reason as well, though: "You're just ruining the paint!" The paint issue convinced Tyler Grant, the Internet sales manager at a Dodge dealer, to make a Facebook post in April this year requesting owners remove the splitter guards. Grant wrote that because the guards aren't specifically molded to fit perfectly, dirt and moisture get between the plastic and the splitter and mar the clear coat or paint, illustrated by a scuffed example that had been driven just 18 miles with the protectors on. He ended with, "Please, on behalf of your splitter AND its paint, take off the splitter guards." Despite forum chatter, splitter-shaming Facebook photos, and Facebook groups like "Hey Pal, You Forgot to Take Your Splitter Guards Off," it appears too late for the protector color to curb (get it?) the trend. Owners have already dealt with the dirt issue by putting protective tape on the air dam, others have painted the spilitter guards to match the car, and the owner of a vintage Dodge pickup ran yellow tape across the width of his front bumper in an attempt to join the party.  In the Makse video, Trostle said that the automaker would soon be rolling out a "new fashionable purple color" for the protectors. "We'll see if that one takes off," he said. "I hope it doesn't."