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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.

Ford to build next F-150, outgoing model concurrently?

Ford is rumored to be considering concurrent production for old and new F-150 models in a bid to minimize supply chain disruptions and inventory. Automotive News is reporting that the Blue Oval will build both the current F-150 and its replacement, which we showed you testing just last month, side by side for about half a year before switching over entirely to next-generation production.
As IHS Automotive analyst Mike Jackson told AN, "In order to ramp up, you have to retool...and that means you have to take capacity offline." Building both models alongside could allow Ford to cope with the still strong demand for the current F-150, while populating dealer supplies and working out supply chain kinks for the new model before making a full-time switch.
A loss of capacity when demand is so strong, even for a short period, could spell bad news for Ford, which nets an estimated 90 percent of its global profit on pickups and large SUVs. As AN states, Ford produces the F-150 in both Kansas City, Missouri and Dearborn, Michigan, which allows it to maintain some degree of flexibility in production. The new F-150 is expected to arrive at the 2014 North American International Auto Show as a 2015 model, with a design inspired by the Atlas Concept first shown at the Detroit Auto Show last January.

2020 Ford Explorer nabs IIHS Top Safety Pick+ rating after updates

The 2020 Ford Explorer has been named a Top Safety Pick+ by the Insurance Institute for Highway Safety, the agency's best rating. The redesigned Explorer initially fell short of that mark, however, only making the grade after Ford introduced a running change to the vehicle's design starting in May 2020 — a change made to the 2020 Lincoln Aviator as well. To achieve a Top Safety Pick+ award, a vehicle must have a Good performance rating in all six of the agency's crash tests. It also must have Acceptable or better ratings for all of its available headlamps and must earn Advanced or Superior ratings for its automated collision avoidance systems in tests of their performance against pedestrians and other vehicles. The 2020 Explorer initially achieved only an Acceptable performance in the IIHS's driver's-side small-overlap crash test, as the agency found a risk of injury to the driver's left foot due to intrusion into the footwell. Ford subsequently modified the design of the front subframe in a running change to Explorers and to Lincoln Aviators built after May 2020. The modified Explorer was re-tested, and this time the model achieved a Good performance in the driver's small-overlap test. That, combined with a Superior performance in both tests of the standard collision-avoidance system plus Acceptable ratings for both headlight systems, pushed the 2020 Explorer over the goal line to Top Safety Pick+. The Aviator, which shares the Explorer's platform, has received the same modification and achieves the same crashworthiness ratings. However, its standard headlights are judged Marginal, and therefore the 2020 Aviator achieves only the Top Safety Pick rating (even though its optional curve-adaptive LED headlights are judged Good). Related Video: