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Rising aluminum costs cut into Ford's profit

When Ford reports fourth-quarter results on Wednesday afternoon, it is expected to fret that rising metals costs have cut into profits, even as rivals say they have the problem under control. Aluminum prices have risen 20 percent in the last year and nearly 11 percent since Dec. 11. Steel prices have risen just over 9 percent in the last year. Ford uses more aluminum in its vehicles than its rivals. Aluminum is lighter but far more expensive than steel, closing at $2,229 per tonne on Tuesday. U.S. steel futures closed at $677 per ton (0.91 metric tonnes). Republican U.S. President Donald Trump's administration is weighing whether to impose tariffs on imported steel and aluminum, which could push prices even higher. Ford gave a disappointing earnings estimate for 2017 and 2018 last week, saying the higher costs for steel, aluminum and other metals, as well as currency volatility, could cost the company $1.6 billion in 2018. Ford shares took a dive after the announcement. Ford Chief Financial Officer Bob Shanks told analysts at a conference in Detroit last week that while the company benefited from low commodity prices in 2016, rising steel prices were now the main cause of higher costs, followed by aluminum. Shanks said the automaker at times relies on foreign currencies as a "natural hedge" for some commodities but those are now going in the opposite direction, so they are not working. A Ford spokesman added that the automaker also uses a mix of contracts, hedges and indexed buying. Industry analysts point to the spike in aluminum versus steel prices as a plausible reason for Ford's problems, especially since it uses far more of the expensive metal than other major automakers. "When you look at Ford in the context of the other automakers, aluminum drives a lot of their volume and I think that is the cause" of their rising costs, said Jeff Schuster, senior vice president of forecasting at auto consultancy LMC Automotive. Other major automakers say rising commodity costs are not much of a problem. At last week's Detroit auto show, Fiat Chrysler Automobiles NV's Chief Executive Officer Sergio Marchionne reiterated its earnings guidance for 2018 and held forth on a number of topics, but did not mention metals prices. General Motors Co gave a well-received profit outlook last week and did not mention the subject. "We view changes in raw material costs as something that is manageable," a GM spokesman said in an email.

Will the Dodge Charger keep a gas engine? It's always been a possibility

The automotive rumormill has been working at a frenetic pace ever since images of what's thought to be the upcoming Dodge Charger Daytona body-in-white hit the internet a week or so ago. When we initially posted the pictures, which had been uploaded to various social media channels and web forums, we took immediate note of the presence of an unmistakable transmission tunnel. We wondered out loud (virtually, at least) "if there have been some changes to battery and component layout, or if this is to allow for an internal-combustion powertrain option early on." Well, if you believe a report from "a source connected to a supplier with firsthand information of Dodge's production plans" who reportedly "agreed to speak about the next-gen Charger program in exchange for anonymity" to The Drive, that transmission tunnel is for — you guessed it! — a transmission. An upcoming and updated version of the eight-speed automatic currently in use in any number of Chrysler, Dodge, Jeep and Ram vehicles, to be specific, hooked up to the Hurricane-branded inline-six-cylinder engine that debuted under the hood of the Jeep Wagoneer. That engine is destined to replace the Hemi-branded V8 engines that have admirably served across the Stellantis portfolio for just about as long as anyone can remember. Here's where things get tricky. There's actually zero reason to be surprised that there's a transmission tunnel buried inside the Dodge Charger Daytona. Dodge boss Tim Kuniskis basically said there would be a transmission tunnel a year ago. "I've been very transparent that our next cars are built on the STLA Large platform, and the STLA Large is a multi-energy platform," he said. He further reinforced the point, adding, "I can put an ICE engine in there. Doesn't mean we're going to. We're certainly not launching with anything like that." Removing all further doubt about the matter, Kuniskis concluded, "We're launching with full battery-electric and we think that by the time we get to that point the offering we're going to have is going to be really attractive in the marketplace. If some day we want to add ICE to that car, could we? It's totally [possible], but maybe we'll never get there." Is there any way to reconcile the information anonymously provided to The Drive with the statements made earlier by Dodge honchos? Sure. It's entirely possible that we don't know all the vehicles, or the names of those vehicles, that will be built atop the STLA Large platform.

Fiat Chrysler cuts 2018 outlook, shares tumble on weaker quarterly profit

MILAN — The news of former Fiat Chrysler chief executive Sergio Marchionne's death arrived Wednesday moments before the group reported a surprisingly heavy drop in profit. The death of one of the auto industry's most tenacious and respected CEOs overshadowed a big selloff in Fiat Chrysler shares. FCA's scheduled second-quarter earnings presentation, led by Marchionne's successor and former lieutenant Mike Manley, began on Wednesday afternoon with a moment of silence. As eulogies flooded in, FCA shares fell as much as 10 percent as investors digested an unexpected 35 percent fall in net profit, well below market forecasts. Marchionne rescued Fiat and Chrysler from bankruptcy after taking the wheel of the Italian carmaker in 2004 and he multiplied Fiat's value 11 times through 14 years of canny dealmaking. He was due to step down at FCA in April next year. "The best way to honor his memory is to build on the legacy he left us, continuing to develop the human values of responsibility and openness of which he was the most ardent champion," Chairman John Elkann added. On Saturday, FCA named Jeep division head Mike Manley, 54, as head of the world's seventh-largest carmaker, saying the Briton would execute a strategy that Marchionne had outlined in June. FCA has said Manley will work to ensure a "strong and independent" future for the group. Underlining the task facing Manley, FCA cut its full-year earnings outlook after the weaker-than-expected quarterly earnings. Having to deliver the bad news four days into his new job, Manley blamed the result on a weaker performance in China, a market that represents one of new CEO's immediate headaches. "The biggest challenges we face and frankly we're going to continue to face ... are all focused in China," Manley said. FCA has yet to make any significant inroads in China. In Marchionne's June plan, FCA pledged to boost production of sport utility vehicles and invest in electric and hybrid cars to double operating profit by 2022. It unveiled bold targets for Jeep, FCA's profit engine. FCA said adjusted earnings before interest and tax (EBIT) for the April-June period fell 11 percent to 1.7 billion euros ($1.99 billion), compared with 2 billion euros in a Reuters poll of analysts. Chinese demand slumped in the quarter ahead of a July cut in import duties, resulting in higher incentive spending and an increase in unsold vehicle stocks that "particularly affected Maserati," Manley said.