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Why FCA-PSA merger is no quick fix for their China problem

BEIJING — Fiat Chrysler and Peugeot owner PSA's merger is unlikely to provide a quick fix to their problems in China, as both companies have long struggled to find the right products at the right price for the world's top car market, analysts say. The companies said on Thursday they aimed to reach a binding deal in the coming weeks to create the world's fourth-biggest automaker by production volume. But scale alone will not make Italian-American Fiat Chrysler Automobiles (FCA) and France's PSA Group more competitive in a market where they have been slow to adapt to trends and win over consumers, leading their sales to lag far behind foreign rivals such as Volkswagen and General Motors. PSA does not have enough competitive SUV models, and neither company has enough electric and plug-in hybrid vehicles, or enough cars packed with hi-tech features for Chinese tastes, analysts say. In a market where 28 million cars were bought in 2018, FCA sold just 155,215, while PSA sold 257,723, according to consultancy LMC Automotive. At the end of September, FCA had a market share of 0.5% in China's passenger car market, while PSA's was 0.6%. Analysts say they have been squeezed by Japanese and local brands, which have product line-ups better suited to Chinese tastes at cheaper prices. "Both companies are very home-market centred and have failed to adapt to shifts in Chinese market preferences," said Bill Russo, head of Shanghai-based consultancy Automobility Ltd and a former senior Asia-based Chrysler executive. "Neither company has recognized and delivered on the trends of shared, connected and electric vehicles,” Russo said. That makes them ill-prepared to deal with further shifts in the Chinese market, which saw annual sales contract for the first time since the 1990s last year and is expected to see another drop this year. "China's overall market is experiencing a transmission and adjustment period," said Alan Kang, a Shanghai-based senior analyst at LMC Automotive. "It is very hard for these two companies, which do not have enough competitive up-to-date products, to quickly recover with the merger." FCA has a partnership in China with Guangzhou Automobile Group, which said on Thursday it backed the merger. PSA has been trying to reboot its operations in China.

Stellantis, GM pay $363 million in U.S. fuel economy penalties

WASHINGTON — Stellantis and General Motors paid a total of $363 million in civil penalties for failing to meet U.S. fuel economy requirements for prior model years, documents seen on Friday by Reuters show. The record-setting penalties include $235.5 million for Stellantis for the 2018 and 2019 model years and $128.2 million for GM covering 2016 and 2017, according to the National Highway Traffic Safety Administration (NHTSA), which administers the Corporate Average Fuel Economy (CAFE) program. Stellantis — which also owns Fiat, Peugeot and other marques — said the penalty "reflects past performance recorded before the formation of Stellantis, and is not indicative of the companyÂ’s direction." Stellantis previously paid a total of $156.6 million in penalties for the 2016 and 2017 model years. GM said Friday as "we work towards the goal of a zero-emissions future, we may use a combination of credits from prior model years, expected credits from future model years, credits obtained from other manufacturers, and payment of civil penalties to comply with increasingly stringent CAFE regulations." GM, which sells Chevrolet, Buick, GMC and Cadillac vehicles in the U.S., had not previously paid a fine in the 40-year history of the CAFE program. It had initially planned to use credits to meet its compliance shortfall but opted to pay penalties, NHTSA said. The GM and Stellantis penalties were paid between December and May, according to the records. This is the first time in three years the agency has collected fuel economy penalties. NHTSA in April 2022 said it calculated there would be 11 instances between 2018 and 2021 "where substantial civil penalty payments will have to be made," but did not disclose the automakers involved. The disclosure comes ahead of NHTSA's plan to soon propose more stringent fuel economy standards for 2027 and beyond, after the Environmental Protection Agency in April proposed a 56% reduction in projected fleet average emissions over 2026 requirements by 2032. Sharp increase The EPA said in December Stellantis had the lowest real-world fuel economy among all major automakers, at 21.3 miles per gallon on average in 2021, while GM was second-lowest at 21.6 mpg. In March 2022, NHTSA reinstated a sharp increase in penalties for automakers whose vehicles do not meet fuel efficiency requirements for 2019 and beyond.

FCA and ZF issue recall on nine-speed automatic transmission

After years of complaints, German transmission manufacturer ZF is finally issuing a recall of its much maligned 9HP nine-speed automatic transmission. Although it has been criticized for a number of issues, ZF is issuing the recall to address the possibility of the transmission unexpectedly shifting into neutral. The issue covers 505,000 vehicles in the United States alone. This issue is related to an improper crimp on the transmission wiring harness. Rather than a physical fix, ZF is issuing a software update to remedy the problem. The company doesn't recommend dealers attempt to fix the crimp. Although the transmission can be found in a number of models by various manufacturers, currently only those from FCA are being recalled. This is the second recall in less than a year related to a ZF transmission shifting into neutral. FCA recently recalled more than a million vehicles worldwide because of a poorly designed shifter for ZF's 8HP eight-speed automatic. That issue may have resulted in the death of actor Anton Yelchin in June. Although there are no deaths related to this new recall, NHTSA reports that the issue has resulted in at least 10 injuries. Issues with the transmission have been known for years. A number of software updates have attempted to address various problems, making us wonder if there could be a fundamental hardware issue as the complaints span across a number of automakers. Vehicles equipped with the 9HP include 2014 and newer versions of the V6 Acura TLX, Chrysler 200, Fiat 500X, upper-level Honda Pilots, Jeep Cherokee and Renegade, Land Rover Discovery Sport and Range Rover Evoque, and Ram ProMaster City. Only FCA is issuing a recall and only on 2014 and 2015 models. Related Video: News Source: NHTSA Recalls Chrysler Fiat Jeep Safety FCA nine-speed transmission