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Fiat Chrysler dumped 40,000 unordered vehicles on dealers

In a move that echoes recent history, Fiat Chrysler has been making more cars and trucks than dealers in the U.S. are willing to accept, with Bloomberg reporting that at one point the automaker had built up a glut of around 40,000 unordered vehicles. That’s led some dealers to accuse FCA of reviving the dreaded “sales bank” accounting practice of obscuring inventory to improve the balance sheet. The company reportedly began building up its inventory of unordered cars this summer despite an industrywide slowdown in sales and an eagerness by some dealers to thin their inventories because rising interest rates are making it more expensive to hold unsold cars. The inventory build-up also coincided with Fiat ChryslerÂ’s efforts to find a merger partner, first with Renault, which fell through, then last monthÂ’s announcement that it will merge with FranceÂ’s PSA Group. FCA denies any such scheme and tells Bloomberg the rising inventory is down to a new predictive analytics system designed to better square supply with demand from dealers that is helping the company save money and narrow the numbers of unsold vehicles. The company recently agreed to pay a $40 million civil penalty to the U.S. Securities and Exchange Commission to settle a complaint that it paid dealers to report fake sales figures over a span of five years. While no one is suggesting that FCA is in dire financial straits — the company saw higher than expected earnings in the third quarter and record profits in North America — the practice has strong historical precedent by Chrysler, which built up bloated inventories in the run-up to its two federal bailouts, in 1980 and 2009. It was also common at GM and Ford during the 2000s, when all three Detroit automakers struggled with excess manufacturing capacity and plummeting sales in the lead-up to the Great Recession. Back in 2012, CFO Magazine wrote about a report that explained automakersÂ’ rationale for the practice and how it works: Say fixed costs for a given factory are $100, and that the factory can make 50 cars. Consumers, however, demand only 10. Under absorption costing, if the company makes all 50 cars, its cost-per-car is $2. If it makes only up to demand, or 10 cars, the cost-per-car is $10. Although each car adds variable costs for steel and other parts, if those costs are low, the company still has an incentive to make more cars to keep the cost-per-car down.

Updated 2021 Chrysler Pacifica enters production

The updated 2021 Chrysler Pacifica entered production in Windsor, Ontario, this week, bringing with it the option of all-wheel drive to a Chrysler-branded minivan for the first time since 2004. While Chrysler, or whatever corporate name it was going by at the time, has offered all-wheel drive on minivans in the intervening years, the 2021 Pacifica offers it in combinations not previously available, most notably pairing it with the company's coveted Stow n' Go folding second-row seats. Offering both of these on the same model required re-engineering the Pacifica's exhaust and fuel system to allow room for the Stow ‘nÂ’ Go seats to fold away into the floor. The 2021 Pacifica's interior has some other noteworthy additions, such as a now-standard 10.1-inch infotainment display powered by the fifth generation of the company's Uconnect operating system. The latest infotainment suite includes upgrades to Amazon Alexa integration along with wireless Apple CarPlay and Android Auto. The optional FamCam helps you keep an eye on passengers in the rear seats (joining the Honda Odyssey in offering such a feature).  "FCA invented the minivan segment, and the new-for-2021 Chrysler Pacifica continues to drive our leadership and innovation," said FCA's Tim Kuniskis. "Whether itÂ’s all-weather driving capability with Stow ‘n Go seating or more than 80 MPGe and no range anxiety with the only plug-in hybrid minivan in the segment, the new Chrysler Pacifica gives families what they want and options that best fit their busy lives." New for 2021, all-wheel drive is a long-awaited $2,995 option that brings the Touring's price up to $39,535, while selecting the hybrid model bumps that figure to $41,490. Interestingly, the Touring and Touring L models are the only front-wheel drive, non-electrified variants of the Pacifica. Called Limited and Pinnacle, respectively, the next two are only available with one or the other, and they're priced accordingly. The top-of-the-line all-wheel drive Pinnacle is priced in luxury car territory at $54,885, while the hybrid starts at $52,340.  It's worth mentioning the positioning of the all-wheel drive and hybrid models is reversed as buyers move up in the trim hierarchy. Shop for a Touring L, and you'll pay $1,155 more for a hybrid van than for one equipped with all-wheel drive. Step up to the Pinnacle model, and all-wheel drive costs $2,545 more than the hybrid system.

GM, Ford, Honda winners in 'Car Wars' study as industry growth continues

General Motors' plans to aggressively refresh its product lineup will pay off in the next four years with strong market share and sales, according to an influential report released Tuesday. Ford, Honda, and FCA are all poised to show similar gains as the auto industry is expected to remain healthy through the rest of the decade. The Bank of America Merrill Lynch study, called Car Wars, analyzes automakers' future product plans for the next four model years. By 2020, 88 percent of GM's sales will come from newly launched products, which puts it slightly ahead of Ford's 86-percent estimate. Honda (85 percent) and FCA (84 percent) follow. The industry average is 81 percent. Toyota checks in just below the industry average at 79 percent, with Nissan trailing at 76 percent. Car Wars' premise is: automakers that continually launch new products are in a better position to grow sales and market share, while companies that roll out lightly updated models are vulnerable to shifting consumer tastes. Though Detroit and Honda grade out well in the study, many major automakers are clumped together, which means large market-share swings are less likely in the coming years. Bank of America Merrill Lynch predicts the industry will top out with 20 million sales in 2018 and then taper off, perhaps as much as 30 percent by 2026. Not surprisingly, trucks, sport utility vehicles and crossovers will be the key battlefield in the next few years, Car Wars says. FCA will launch a critical salvo in 2018 with a new Ram 1500, followed by new generations of the Chevy Silverado and GMC Sierra in 2019, and then Ford's F-150 for 2020, according to the study. Bank of America Merrill Lynch analyst John Murphy said the GM trucks could be pulled ahead even earlier to 2018, prompting Ford to respond. "This focus on crossovers and trucks is a great thing for the industry," Murphy said. Cars Wars looks at Korean (76 percent replacement rate) and European companies more vaguely (70 percent), but argues their slower product cadence and lineups with fewer trucks puts them in weaker positions than their competitors through 2020. Related Video: This content is hosted by a third party. To view it, please update your privacy preferences. Manage Settings. Featured Gallery 2016 Chevrolet Silverado View 11 Photos Image Credit: Chevrolet Earnings/Financials Chrysler Fiat Ford GM Honda Nissan Toyota study FCA