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The Chrysler brand could be axed under Stellantis management

MILAN — While running NissanÂ’s North American operations from 2009 to 2011, Carlos Tavares had a reputation for closely watching costs with little tolerance for vehicles or ventures that didnÂ’t make money. Experts say that means Tavares, currently the head of PSA Group, is likely to follow that blueprint when he becomes leader of a merged PSA and Fiat Chrysler Automobiles. The low-performing Chrysler brand might get the axe as could slow-selling cars, SUVs or trucks that lack potential. Already the companies are talking about consolidating vehicle platforms — the underpinnings and powertrains — to save billions in engineering and manufacturing costs. That could mean job losses in Italy, Germany and Michigan as PSA Peugeot technology is integrated into North American and Italian vehicles. “You canÂ’t be cost efficient if you keep the entire scale of both companies,” said Karl Brauer, executive analyst for the iSeeCars.com auto website. “WeÂ’ve seen this show before, and weÂ’re going to see it again where they economize these platforms across continents, across multiple markets.” Shareholders of both companies are to meet Monday to vote on the merger to form the worldÂ’s fourth-largest automaker, to be called Stellantis. The deal received EU regulatory approval just before Christmas. Tavares, who for years has wanted to sell PSA vehicles in the U.S., wonÂ’t take full control of the merged companies until the end of January at the earliest. He likely will target Europe for consolidation first, because thatÂ’s where Fiat vehicles overlap extensively with PSAÂ’s, said IHS Markit Principal Auto Analyst Stephanie Brinley. Europe has been a money-loser for FCA, and factories in Italy are operating way below capacity — a concern for unions, given FiatÂ’s role as the largest private sector employer in the country. “We are at a crossroads,Â’Â’ said Michele De Palma of the FIOM CGIL metalworkersÂ’ union. “Either there is a relaunch, or there is a slow agonizing closure of industry, in particular the auto industry, in Italy.” ItalyÂ’s hopes lie with the luxury Maserati and sporty Alfa Romeo brands, but De Palma said investments are needed to bring hybrid and electric technology up to speed. FiatÂ’s Italian capacity stands at 1.5 million vehicles, but only a few hundred thousand are being produced each year. Most factories were on rolling short-term layoffs due to lack of demand, even before the pandemic.

Detroit 3 and UAW set for showdown over tiered wages

This week, thousands of United Auto Workers will converge on Cobo Center in Detroit for the Special Convention on Collective Bargaining, an every-four-year event that lets members tell UAW leaders what the negotiating priorities should be during contract negotiations. This is where a lot of sand and a lot of lines start coming together in preparation for contract negotiations between the UAW and the Detroit 3 automakers, which will happen later this year. Number one on the UAW agenda is the end of the two-tier wage system created in 2007 to help the automakers get through bankruptcy; veteran workers are paid the Tier 1 rate of around $29.00 per hour, new hires are paid the Tier 2 rate of between $15 and $20 and get about half the benefits of Tier 1. Tier 2 hiring has been an undoubted success for the automakers, allowing them to keep factories in the US and hire more workers. By agreement, it is capped at a certain percentage of each automaker's workforce, and while the union's ultimate position is to get rid of the dual-scale system entirely; one leader said Ford could easily afford the $335 million it would take to convert all its workers to Tier 1 out of its $6.9 billion in 2014 North American profit, and General Motors could do the same out of the $5 billion it is handing to investors through the (admittedly forced) share buyback. Other delegates say that at the very least they'd be happy with enforcement of the current caps in the new contract. The automakers, conversely, would welcome expansion of the Tier 2 ranks. Including benefits, import automakers pay workers "in the high $40 range" per hour, according to an analyst, while Ford and GM pay about $59 in wages and benefits per hour. More Tier 2 workers on the rolls would let those two companies get labor cost parity with the competition. Fiat-Chrysler pays wages closer to the imports because of special exceptions in its UAW contract that allow unlimited Tier 2 hiring; those exceptions will end on September 14 and bring FCA into line with the other domestics, unless the new contract maintains them. FCA CEO Sergio Marchionne is opposed to the two-tier system, having called it "almost offensive." One analyst says the UAW might win a sizable pay raise for Tier 2 and a small increase for Tier 1, but the keystone issue will be how the hiring matrix can help the automakers keep overall wages in line with the imports.

More Ram trucks recalled over tailgate issue

Almost a year ago Fiat Chrysler recalled roughly 1.6 million Ram trucks over an issue with the locking power tailgate. The actuator limiter tab for the power locking mechanism could fracture, which would permit the actuator's lock-rod control to move beyond its limits. That would pull the locking rods open, thereby allowing the tailgate to open at any time. The 2018 recall covered Ram 1500, 2500, and 3500 pickups from the 2015 to 2017 model years, with the five-foot-seven and six-foot-four beds and the power locking tailgate option. Trucks with eight-foot beds, and those with manual-locking tailgates, were excluded. The trucks with eight-foot beds have been added to the recall as of earlier this month, putting 410,351 more trucks in the pool. According to Consumer Reports, Ram redesigned the locking assembly on the other two shorter bed sizes for trucks built after August 2, 2017, which was the end of the 2017 model year. But the eight-foot long-bed trucks didn't get the redesigned part until April 2, 2018 for some reason, making all eight-foot-bed pickups from the 2015 model year to April 1, 2018 part of the recall equation. FCA says it's not aware of any accidents or injuries because of the issue. The company plans to notify owners on June 28. The paperwork filed with the National Highway Traffic Safety Administration doesn't advise owners to stop driving the trucks, but nor does it instruct owners on how to address the problem in the meantime. Sounds like bungee cords might be the go. The fix is estimated to take 30 minutes at the dealer and entails removing the tailgate cover and installing a stop block to prevent the locking actuator's pivot arm from traveling too far. FCA says it will reimburse owners for any other repairs made to address the problem. Meanwhile, owners can contact Fiat Chrysler Automobiles customer service at 800-853-1403, and refer to FCA's number for this recall, V44. The NHTSA campaign number is 19V-347. Last year's recall comes under FCA number U74, and NHTSA campaign number 18V-486. Ram's not alone on this field. The NHTSA continues to investigate the 2017 Ford Super Duty pickups for a similar issue.