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Weekly Recap: Marchionne's Manifesto again calls for industry consolidation

Sergio Marchionne isn't taking no for an answer. Despite public rebuffs from General Motors and Ford, the leader of Fiat Chrysler Automobiles continues to push for consolidation within the auto industry. His latest assertion came Wednesday when he said a combination of FCA with another automaker could net savings of $5 billion or more annually. No, this isn't about selling his company, he claimed, it's about cutting costs. Put simply, the auto industry wastes money, Marchionne said during FCA's earnings conference call. Companies invest billions to develop basic components that all cars use, but many consumers don't care how they work or recognize the differences. "About half of this is really relevant in terms of positioning the car in the marketplace," he said. "The other half, in our view, is stuff which is neither visible to the consumer nor is it relevant to the consumer." In 2014, top automakers spent more than $100 million on product development, FCA estimated. Marchionne said consolidation could save up to $1 billion on powertrains alone, noting that almost every automaker offers four- and six-cylinder engines. Not everyone has to make their own, he contended. "The consumer could not give a flying leap whose engines we are using because they are irrelevant to the buying decision." That's pretty provocative for enthusiasts, but less so for average consumers. Still, there are major differences in power and efficiency ratings, even among similar engines. Skeptics could argue consolidation would also weaken competition and reduce choices for car buyers. Marchionne stressed his presentation, curiously entitled Confessions of a Capital Junkie, wouldn't require closing factories or dealerships. It's not his final "big deal" as CEO, intent to sell FCA, or a way to elevate his company up the automotive food chain. He claims he wants to fundamentally change the industry and its habit for burning cash. "The horrible part about this, and the thing that I find most offensive, is that the capital consumption rate is duplicative," he said. "It doesn't deliver real value to the consumer and it is in its purest form, economic waste." Other News & Notes Ford Profits dip in first quarter Ford profits fell $65 million to $924 million in the first quarter, hampered by slight dips in revenue and sales.

U.S. automakers unite in opposition to possible Trump vehicle tariffs

WASHINGTON — The U.S. auto industry urged President Donald Trump's administration on Monday not to saddle imported cars and auto parts with steep tariffs, after the U.S. Commerce Department sent a confidential report to the White House late on Sunday with its recommendations for how to proceed. Some trade organizations also blasted the Commerce Department for keeping the details of its "Section 232" national security report shrouded in secrecy, which will make it much harder for the industry to react during the next 90 days Trump will have to review it. "Secrecy around the report only increases the uncertainty and concern across the industry created by the threat of tariffs," the Motor and Equipment Manufacturers Association said in a statement, adding that it was "alarmed and dismayed." "It is critical that our industry have the opportunity to review the recommendations and advise the White House on how proposed tariffs, if they are recommended, will put jobs at risk, impact consumers, and trigger a reduction in U.S. investments that could set us back decades." Representatives from the White House and the Commerce Department could not immediately be reached. The industry has warned that possible tariffs of up to 25 percent on millions of imported cars and parts would add thousands of dollars to vehicle costs and potentially devastate the U.S economy by slashing jobs. Administration officials have said tariff threats on autos are a way to win concessions from Japan and the EU. Last year, Trump agreed not to impose tariffs as long as talks with the two trading partners were proceeding in a productive manner. "We believe the imposition of higher import tariffs on automotive products under Section 232 and the likely retaliatory tariffs against U.S. auto exports would undermine - and not help - the economic and employment contributions that FCA, US, Ford Motor Company and General Motors make to the U.S. economy," said former Missouri Governor Matt Blunt, the president of the American Automotive Policy Council. Some Republican lawmakers have also said they share the industry's concerns. In a statement issued on Monday, Republican Congresswoman Jackie Walorski said she fears the Commerce Department's report could "set the stage for costly tariffs on cars and auto parts." "President Trump is right to seek a level playing field for American businesses and workers, but the best way to do that is with a scalpel, not an axe," she added.

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Autoblog senior editor Greg Migliore gives the highlights from the week in automotive news.