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Fiat Chrysler agrees to plead guilty, pay $30M in UAW probe

DETROIT  — Fiat Chrysler Automobiles US has agreed to plead guilty and pay a $30 million fine for a corruption scandal at the union that represents its factory workers, authorities said Wednesday. Company representatives gave more than $3.5 million in cash and other things of value to senior officials at the United Auto Workers, federal prosecutors in Detroit said as they charged FCA with conspiracy from 2009 to 2016. Details of the payoffs have been public for a few years and acknowledged during guilty pleas by FCA employees and others. FCA spokeswoman Shawn Morgan confirmed the company's planned guilty plea and fine. Al Iacobelli was the head of labor relations at Fiat Chrysler and co-chairman of the UAW-Chrysler National Training Center in Detroit. The government said he signed off on $262,000 to wipe out a mortgage held by UAW vice president General Holiefield, who was the center's other co-chairman. Iacobelli also approved $25,000 from the training center for a party for union vice president Norwood Jewell and the UAW's international executive board, the criminal charge states. Training center credit cards paid for more than $30,000 in meals for UAW officials at various restaurants in Southern California, the government said. “They did that with the hope that the company itself could possibly get more favorable treatment from the unionÂ’s leaders” during labor negotiations, U.S. Attorney Matthew Schneider said Wednesday. Indeed, an indictment returned in 2017 said Iacobelli and others set up a liberal policy for credit cards to keep union officials “fat, dumb and happy." Iacobelli was sentenced to 5 1/2 years in prison in 2018, but the sentence was recently reduced by 18 months due to his cooperation. Holiefield died in 2015; his wife pleaded guilty to a tax crime three years later. The governmentÂ’s investigation began at the training center but stretched to other corrupt acts at the UAW. Eleven officials have been convicted, including two former union presidents. Investigators found that union dues were used to pay for golf, booze and vacation villas in California. The UAW recently agreed to have an independent monitor watch union finances and operations. Fiat Chrysler US is a subsidiary of Stellantis, a company created by the merger of Fiat Chrysler and PSA Peugeot.

Jeep Cherokee faces on-sale delay

A report in The Wall Street Journal looks at some of the obstacles to the 2014 Jeep Cherokee that go beyond its mootable yet "very contemporary" looks, almost all of them based on Fiat's financial position. Starting with that sheetmetal, in defense of it SRT president Ralph Gilles and Jeep design head Mark Allen said they wanted to "make sure the design still looks modern five years from now."
The WSJ piece doesn't cite longevity as a factor, instead saying that its features originated in a design for an Alfa Romeo, the transformation into a Jeep design meant allowing Chrysler get it to market more quickly and save "hundreds of millions of dollars" in engineering.
The need for Fiat to save money while it weathers the European situation has cut budgets for development, engineering and the pace of retooling the Toledo, Ohio plant to build the Cherokee. In a familiar case of snowballing at work, among the effects will be pushing back the Cherokee's volume sales date and delaying updates to some of Chrysler's other products.

Stellantis moves to set up its own lending unit

Stellantis is buying Houston-based auto lender First Investors Financial Services Group to set up its own finance arm in the U.S., a move that should support sales and eventually boost profit. The only major traditional automaker in the U.S. without its own finance company agreed to pay $285 million to a group of investors led by Gallatin Point Capital and Jacobs Asset Management, according to a statement. The transaction is expected to close by year-end. Stellantis was formed via the merger between Fiat Chrysler and PSA Group early this year. Carlos Tavares, the PSA boss who became the combined company’s chief executive officer, called the deal to acquire First Investors a milestone that will increase earnings and enhance customer loyalty. “Direct ownership of a finance company in the U.S. is a white-space opportunity which will allow Stellantis to provide our customers and dealers a complete range of financing options,” Tavares said Wednesday in the statement.  Having an in-house finance company has helped rivals General Motors Co. and Ford Motor Co. pad profits, especially during the global semiconductor shortage that has limited production and crimped sales. GM bought subprime lender AmeriCredit Corp. in 2010 and renamed it GM Financial. The operation generated a $2.76 billion profit in the first half -- roughly a third of the companyÂ’s adjusted earnings before interest and taxes. Trouble for Santander? The First Investors acquisition could spell trouble for Chrysler Capital, the operation that Santander Consumer USA Holdings Inc. and Chrysler set up in 2013 before the U.S. automaker completed its merger with Fiat. In a statement, Santander Consumer said itÂ’s committed to supporting Stellantis through the term of their existing agreement and its transition. Santander Consumer will also have “ongoing conversations with Stellantis about long-term mutually beneficial opportunities beyond 2023,” the company said, adding that its consumer business remains strong and has “delivered solid results for our shareholders.” This, along with support from its parent company, will allow the lender to “pursue additional opportunities as they arise.” The lenderÂ’s U.S.-listed stock fell 1.5% in New York trading Wednesday after Bloomberg reported Stellantis was preparing to announce a new finance partner. Stellantis shares rose as much as 1.3% in Paris trading Thursday.