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Fiat, PSA poised to win EU approval for $38 billion Stellantis merger

BRUSSELS/MILAN — Fiat Chrysler and PSA are set to win EU approval for their $38 billion merger to create the world's No.4 carmaker, people close to the matter said, as they strive to meet the industry's dual challenges of funding cleaner vehicles and the global pandemic. The green light from the European Commission would formalize the creation of Stellantis, a carmaking group that could tap hefty profits from selling Ram pickup trucks and Jeep SUVs to U.S. drivers to fund the expensive development of zero-emission vehicles for sale in Europe and China. The all-share merger announced late last year would unite brands such as Fiat, Jeep, Dodge, Ram and Maserati with the likes of Peugeot, Opel and DS — while targeting annual cost cuts of 5 billion euros ($6 billion) without closing factories. The Commission and Italian-American group Fiat Chrysler Automobiles (FCA) declined to comment. France's PSA did not immediately respond to a request for comment. PSA and FCA shares reversed losses after the Reuters story was published. PSA stock was last up 2% at 16.83 euros, while FCA shares were 1.9% higher at 11.31 euros. To allay EU antitrust concerns, PSA has offered to strengthen Japanese rival Toyota Motor Corp, with which it has a van joint venture, by ramping up production and selling it vans at close to cost price, the people said. FCA and PSA will also allow their dealers in certain cities to repair rival brands. Following feedback from rivals and customers, the carmakers only had to tweak the wording of their concessions, with no changes to the substance, the people said. The companies did not have to use the COVID-19 pandemic to argue for the merger, they added. FCA and PSA have said they hope to complete the merger in the first quarter of 2021. The challenge of switching to electric cars has been complicated by the COVID-19 pandemic. Just last month, FCA and PSA restructured the terms of their deal to conserve cash and raised their targeted cost savings because of the economic fallout from the health crisis. The companies have said about 40% of the savings will come from product-related expenses, 40% from purchasing and 20% from other areas, such as marketing, IT and logistics.

FCA to skip summer shutdowns as automakers rev up U.S. assembly lines

DETROIT — Several of FCA's facilities will skip their usual summer shutdowns to get a jump on rebuilding inventory, the company confirmed early Wednesday.  The plants that will remain open include three in the United States (Jefferson North in Detroit, Toledo Assembly in Ohio, and Sterling Heights Assembly in suburban Detroit), one in Canada (Brampton Assembly in Ontario) and two in Mexico (Saltillo Truck Assembly and Saltillo Van Assembly).  This will allow dealers to address depleted inventory of popular trucks and muscle cars, Automotive News reports. Other facilities not named will observe their normal one- and two-week breaks.  Automakers are speeding up U.S. assembly lines to meet recovering demand, increasingly confident coronavirus safety protocols are working to prevent outbreaks in their plants but wary of the challenges workers face outside. Screening workers for COVID-19 using temperature scans and questionnaires, the automakers have detected some people who reported for work despite being sick. Some plants have been briefly shut down for disinfection, but so far, there has not been a major outbreak within a U.S. auto plant since most reopened May 18, company and United Auto Workers union officials said. The risk of an infection picked up outside a plant spreading along assembly lines remains a prime concern, however. An outbreak could shut down a factory costing a manufacturer millions of dollars a day. The disruption caused by the pandemic is creating other challenges as well. At Ford Motor Co's F-series pickup truck plant in Louisville, Kentucky, the company has given more than 1,000 workers leave related to COVID-19 concerns. It hired temporary workers to fill their jobs as the plant accelerates production of trucks critical to Ford's financial recovery. Demand for pickup trucks helped boost U.S. auto sales in May, and contributed to stronger than expected overall U.S. retail sales for the month. Officials of UAW Local 862, which represents workers at the Louisville plant, said a lack of child care was a significant issue for members. It had led many to stay away from the plant and collect increased unemployment benefits provided under the federal CARES coronavirus relief act. Ford has now begun arranging subsidized child care for UAW workers, Gary Johnson, the automaker's head of manufacturing told Reuters.

Detroit's new emergency city manager worked on Chrysler bankruptcy [w/video]

Kevyn Orr, the new emergency city manager of Detroit, has a history with one of Michigan's most famous residents: Chrysler. Governor Rick Snyder (at right) appointed Orr to the position yesterday with the belief that Detroit needs outside assistance to right the city's mounting financial woes. Orr (at left), a partner with the Jones Day law firm, will begin work on March 25 and receive $275,000 a year for his work. While state officials believe the new city manager will be able to complete his duties in 18 months, the contract is technically open-ended.
The 54-year-old attorney helped steer Chrysler through its 2009 bankruptcy, earning $700 per hour for his efforts. He was also instrumental in convincing the courts to allow Chrysler to shutter 789 dealerships in a single month. Orr says he's aware that his efforts won't have made him any friends in Southern Michigan.