2005 Chrysler Sebring Touring on 2040-cars

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Auto Mergers and Acquisitions: Suicide or salvation?

We love the Moses figure. A savior riding in from stage right with the ideas, the smarts, and the scrappiness to put things right. Alan Mullaly. Carroll Shelby. Lee Iacocca. Andrew Carnegie. Steve Jobs. Elon Musk. Bart Simpson. Sergio Marchionne does not likely view himself with Moses-like optics, but the CEO of Fiat Chrysler Automobiles recently gave a remarkable, perhaps prophetic interview with Automotive News about his interest and the inevitability of merging with a potential automotive partner like General Motors. Marchionne has been overtly public about his notion that GM must merge with FCA. For a bit of context, GM sold 9.9 million vehicles in 2014, posting $2.8 billion in net income, while FCA sold 4.75 million units and earned $2.4 billion in net income, painting a very rosy FCA earnings-to-sales picture. But that's not the entire picture. Most people in the auto industry still remember the trainwreck that was the DaimlerChrysler "merger" written in what turned out to be sand in 1998. It proved to be a master class in how not to fuse two companies, two cultures, two continents, and two management teams. Oh, it worked for the two individuals at both helms pre-merger. They got silly rich. And the industry itself was in a misty romance at the time with mergers and acquisitions. BMW bought Rolls-Royce. Volkswagen Group bought Bentley, Bugatti, and Lamborghini, putting all three brands into their rightful place in both products and positioning. No marriages there, so no false pretense. Finally, Nissan and Renault got married in 1999. A successful marriage requires several rare elements in this atmosphere of gas fumes and power lust. But a successful marriage requires several rare elements in this atmosphere of gas fumes and power lust, the principle part being honesty. Daimler and Chrysler lied to each other. The heads of each unit, the product planners, and finance all presented their then-current and long-range forecasts to each other with less-than-forthright accuracy. Daimler was the far greater equal and no one from the Chrysler side enjoyed that. The cultures were entirely different, too, and little was done to bridge that gap. Which brings me back to the present overtures by Marchionne to GM. "There are varying degrees of hugs," Marchionne stated in the Automotive News piece. "I can hug you nicely, I can hug you tightly, I can hug you like a bear, I can really hug you." Seriously?

Fiat Chrysler and the UAW reach tentative labor deal

DETROIT — Fiat Chrysler Automobiles and the United Auto Workers (UAW) union on Saturday announced a tentative agreement for a four-year labor contract, a boost for the automaker as it works to merge with France's Groupe PSA. Italian-American Fiat Chrysler and PSA, the maker of Peugeot and Citroen, last month announced a planned $50 billion merger to create the world's fourth-largest automaker. The tentative agreement with Fiat Chrysler, which is subject to ratification by the union members, follows contracts that the UAW already concluded with Ford Motor Co and General Motors Co. The deal with GM followed a 40-day strike in the United States that virtually shuttered GM's North American operations and cost the automaker $3 billion. The UAW on Saturday said the contract with Fiat Chrysler included a commitment from FCA to invest $9 billion, creating 7,900 new jobs over the course of the four-year contract. Of the $9 billion, $4.5 billion was announced earlier this year, to be invested in five plants and creating 6,500 jobs. Detailed terms of the tentative agreement were not released, but they are expected to echo those under the new contracts with GM and Ford, as the UAW typically uses the first deal as a pattern for the others. "FCA has been a great American success story thanks to the hard work of our members," UAW acting President Rory Gamble said in a statement. "We have achieved substantial gains and job security provisions for the fastest growing auto company in the United States." Ratification is not a sure thing. Rank-and-file UAW members at FCA in 2015 rejected the first version of a contract. In addition, a lawsuit related to a federal corruption probe could also raise doubts among union members about the terms agreed. The federal corruption led GM to file a racketeering lawsuit against FCA, alleging that its rival bribed union officials over many years to corrupt the bargaining process and gain advantages, costing GM billions of dollars. FCA has brushed off the lawsuit as groundless. Under the UAW's deal with GM, the automaker agreed to invest $9 billion in the United States, including $7.7 billion directly in its plants, and to create or retain 9,000 UAW jobs. Ford's contract included commitments to invest more than $6 billion in its U.S. plants and to create or retain more than 8,500 UAW jobs. The deals with GM and Ford also created a pathway to full-time employment for temporary workers and left healthcare insurance coverage unchanged.

America was the unexpected theme at the 2017 Detroit Auto Show thanks to Trump

President-elect Donald Trump was not in attendance at this year's Detroit Auto Show, but it sure seemed like he was the target audience for many of the press conferences and announcements surrounding the event. Several manufacturers chose to play up existing and future commitments to the US in general and American jobs specifically in their presentations to the press, and we're pretty sure that has everything to do with Trump's recent targeting of automakers on Twitter. To us, it seemed automakers were going on the offensive to try and preempt any future tweet-shaming for investing in auto manufacturing anywhere but the US. The pro-America sentiment started the week prior to the auto show, with Ford announcing that it would build several future electrified vehicles at its Flat Rock Assembly Plant in Michigan and also cancel a $1.6 billion factory planned for Mexico. Ford announced the two items on the same day, but the reality is that they likely have no relation to each other; the Mexican plant is being skipped because the company doesn't need the extra capacity to build the Ford Focus right now. Trump was still happy to share the news on Twitter. Then, on Sunday, FCA announced it would invest $1 billion in manufacturing plants in Ohio and Michigan to produce the new Jeep Wagoneer, Grand Wagoneer, and Wrangler-based pickup. It's not as though those potential new jobs were on their way out of the US, necessarily, but FCA took the opportunity to mention that plant upgrades at the Warren Truck Plant would allow the company to build Ram heavy duty trucks, which are currently assembled in Mexico, there. CEO Sergio Marchionne confirmed that Trump and his proposed tariffs had nothing to do with the decision. We certainly believe that, but we also have to believe that the timing of the release, positive outcome for America, and zero gain for Mexico were all orchestrated. Again, Trump sent out a victory tweet as if this had been his doing. Ford then used its press conference at the show on Monday to reiterate the plans for Flat Rock and also confirm that the Ford Bronco and Ranger nameplates will be returning to the US market, and that both will be built at a plant in Michigan. Announcements of manufacturing locations are usually aimed at the UAW, which certainly has a stake in these things, but again this one was broadcast to the auto show crowd in general.