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FCA-Renault merger faces tall odds delivering on cost-cutting promises

FRANKFURT/DETROIT — Fiat Chrysler Automobiles and Renault promise huge savings from a mega-merger, but such combinations face tall odds because of the industry's long product cycles and problems translating deal blueprints into real world success, industry veterans told Reuters. BMW's 1994 purchase of Rover, and Daimler's 1998 merger with Chrysler both made sense on paper. The companies promised to hike profits by combining vehicle platforms and engine families. Both combinations proved unworkable in reality, and were unwound. Renault and Nissan, which have been in an alliance since 1999 designed to share vehicle components, have only managed to use common vehicle platforms in 35% of Nissan's products despite an original target of 70%, according to Morgan Stanley. FCA and Renault have raised the stakes for themselves by ruling out plant closures. That increases the pressure to achieve more than $5 billion in promised annual savings from pooling procurement and research investments. The two companies have yet to fill in many of the blanks in the merger plan put forward by Fiat Chrysler. Renault's board is expected to act soon to accept the proposal, but that would lead only to a memorandum of understanding to pursue detailed operational and financial plans. A final deal and the legal combination of the two companies could take months to complete if all goes well. Pressure to cut automotive pollution is driving the latest round of consolidation. Automakers are looking at multibillion-dollar bills to develop electric and hybrid cars and cleaner internal combustion engines. Fiat Chrysler and Renault are betting they can design common electric vehicle systems, then sell more of them through their respective brands and dealer networks, cutting the cost per car. Developing all-new electric vehicles can bring more opportunities to share costs from the outset, industry experts said. "With the emergence of connected, autonomous, electric and shared vehicles, carmakers face immediate investments, so new opportunities for sharing costs have emerged," said Elmar Kades, managing director at Alix Partners. However, most electric vehicles lose money. This is a challenge for city car brands in Europe in particular. Both Renault and Fiat rely heavily on this segment for sales.

Trump tells Detroit 3 CEOs he wants more US jobs, calls environmentalists 'out of control'

As expected, President Donald J. Trump met with top executives from FCA, Ford, and General Motors this morning as part of a larger push to generate jobs in America. "I want new plants to be built here for cars sold here!", Trump said in a tweet ahead of the meeting. Not everything said in the meeting was made public, but the President later tweeted that he had a "Great meeting with automobile industry leaders." FCA CEO Sergio Marchionne, Ford chief Mark Fields, and GM's Mary Barra all echoed the positive vibes after the meeting. In a statement, Barra called the discussion "very constructive and wide-ranging," adding that it focused on "policies that support a strong and competitive economy and auto industry," and "that supports the environment and safety." That's noteworthy, because Trump is reported to have said "I am to a large extent an environmentalist. I believe in it, but it's out of control." Fields, speaking to reporters after the meeting, said, "We're excited about working together with the president and his administration on tax policies, on regulation and on trade to really create a renaissance in American manufacturing." The Ford CEO was specifically talking about Trump's withdraw from the Trans-Pacific Partnership. "We've repeatedly said that the mother of all trade barriers is currency manipulation, and TPP failed in meaningfully dealing with that, and we appreciate the president's courage to walk away from a bad trade deal," he said. Marchionne focused on American manufacturing in his statement after the meeting. "I appreciate the President's focus on making the US a great place to do business. We look forward to working with President Trump and members of Congress to strengthen American manufacturing." Perhaps equally as interesting as what was said and who was invited are what wasn't said and who wasn't invited. Trump has been very vocal about his distaste for US automakers' plants in Mexico, but no mention was made of the North American Free Trade Agreement by Trump or any of the Detroit CEOs after the meeting. We also have to wonder if Trump plans to meet with representatives from German, Japanese, and Korean automakers that have made massive investments into American plants and produce a large number of cars in this country. Related Video: News Source: Reuters, General Motors, Fiat Chrysler Automotive, Donald J.

Junkyard Gem: 1983 Chrysler LeBaron Mark Cross Town & Country Convertible

When Lee Iacocca took the helm at the Chrysler Corporation in 1978, the company appeared to be doomed. The company's only modern front-wheel-drive cars either came from Japan or had been developed from Chrysler Europe's Simca operation, inflation was raging, and Middle Eastern conflict a year later sent fuel prices skyrocketing for the second time in the decade. Iacocca secured government loans to keep the company afloat until vehicles based on a brand-new front-drive platform could reach showrooms. Those were the K-Cars, debuting in the 1981 model year, and they saved Chrysler. The LeBaron was the ritziest of the early Ks, and today's Junkyard Gem is an example of the most prestigious LeBaron of 1983, found in a Colorado car graveyard last summer. The cheapest possible 1983 K-Cars were the two-door Plymouth Reliant and Dodge Aries, priced at $6,577 (about $19,959 in 2023 dollars). The 1983 LeBaron Mark Cross Town & Country convertible had an MSRP of way more than twice as much: $15,595, which comes to around $47,327 today. The LeBaron name came from a coachbuilder that Chrysler eventually devoured, and it was applied to the most glamorous Imperial models for decades. The LeBaron didn't become a model name in its own right until the 1977 model year, when a thick coat of bling was slathered onto the midsize Dodge Diplomat. That generation of Chrysler LeBaron stayed in production through the 1981 model year. The Town & Country name goes way back in Chrysler history, too. The very first Town & Country was a woodie wagon—with real wood— that first appeared as a 1941 model. Over the decades that followed, the T&C name was applied to sedans, coupes, wagons and convertibles, some with wood (or "wood") trim and some without, with only wagons getting that designation from 1969 through 1982. Beginning in 1990, the Chrysler Town & Country name went on minivans, and that's where it remained through 2016. The paneling on this car is plastic, but it was more convincing (when new) than most of the fake wood found on Detroit cars of the era. Convertibles made a big comeback for American car companies during the early 1980s, after much wailing and gnashing of teeth over "the last convertible" 1976 Cadillac Eldorado (it wasn't the last convertible you could buy new here, even at the time). The LeBaron convertible went on sale for the 1982 model year, and new drop-top LeBarons remained available all the way through 1995.