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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.

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.

For thousands of US auto workers, the downturn is already here

LORDSTOWN, Ohio - Wall Street is fretting that the auto industry is heading for a downturn, but for thousands of workers at General Motors factories in the United States, the hard times are already here. Matt Streb, 36, was one of 1,200 workers laid off on Jan. 20 - inauguration day for President Donald Trump - when GM canceled the third shift at its Lordstown small-car factory here. Sales of the Chevrolet Cruze sedan, the only vehicle the plant makes, have nosedived as consumers switch to SUVs and pickup trucks. Streb is looking for another job, but employers are wary because they assume he will quit whenever GM calls him back. "I get it," said Streb, who has a degree in communications, "but it's frustrating." Layoffs at Lordstown and other auto plants point to a broader challenge for the economy in Midwestern manufacturing states and for the Trump administration. "This is about economics, not what Trump says. Even if Trump went out and bought 10,000 Cruzes a month, he wouldn't get the third shift back here." The auto industry's boom from 2010 through last year was a major driver for manufacturing job creation. The fading of that boom threatens prospects for US industrial output and job creation that were central to Trump's victory in Ohio and other manufacturing states. "This is about economics, not what Trump says," said Robert Morales, president of United Auto Workers (UAW) union Local 1714, which represents workers at GM's stamping plant at Lordstown. "Even if Trump went out and bought 10,000 Cruzes a month, he wouldn't get the third shift back here." Last week the Federal Reserve said factory output fell 0.4 percent in May, the second decline in three months, due partly to a 2 percent drop in motor vehicles and parts production. Mark Muro, a senior fellow at the Brookings Institution, has compiled data from government sources that show the auto industry punching higher than its weight in job creation in recent years - accounting for between 60 percent and 80 percent of all US manufacturing jobs added in 2015 and 2016. In the first quarter of this year, the auto industry accounted for less than 2 percent of the 45,000 manufacturing jobs created. "There's no argument with the idea that auto has been pulling the manufacturing sled up the mountain for the last three or four years," Muro said.