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10 years later, a look back at U.S. auto industry’s near-death experience

The U.S. auto industry this month marks a grim and harrowing milestone: A decade ago, the entire industry was staring into the abyss of total collapse. By 2009, of course, the broader economy was teetering on the brink, with mortgage default rates and foreclosures spiraling and the real estate market in the tank. Both Lehman Brothers and Bear Stearns had collapsed, President George W. Bush had signed the Troubled Asset Relief Program, or TARP, infusing $700 billion of taxpayer money to stabilize Wall Street, and Insurer AIG, stung by huge losses on subprime mortgages, won a federal bailout. Virtually the entire decade had been particularly unkind to the Detroit Three automakers, which were over-reliant on gas-guzzling trucks and SUVs as gasoline prices crept toward the $4 mark, and whose labor costs — especially for health care and retiree pension obligations — were dragging them billions into the red. It was a dreadful, frightening time in Detroit, especially, with reports of plant closures and mass layoffs appearing with alarming regularity. Seeing the federal government's largess with Wall Street, General Motors and Chrysler both went calling for government assistance for themselves. (Ford managed to avoid following suit only by mortgaging all of its assets, including its very brand, years earlier in exchange for billions of dollars in loans.) Yet instead of giving them the "bridge loans" they sought, the incoming Obama administration instead pushed back against GM and Chrysler, eventually guiding them into bankruptcy protection, as the Detroit Free Press recalls in a multimedia story recounting the industry's tumultuous and perilous recent past. The piece uses images of the newspaper's front pages from those days, splashed with what former newsroom colleagues and I would often refer to as "Pearl Harbor font" headlines ("NO DEAL" read the Freep's Dec. 12, 2008, edition). There are also timelines, interactive graphics and snippets of video interviews with two insiders: freshman U.S. Rep. Haley Stevens of Michigan, who served as chief of staff for President Obama's auto task force; and U.S. Rep. Debbie Dingell, the wife of the late longtime U.S. Rep. and industry ally John Dingell, who was then an executive at GM.

FCA CEO Manley says alliances are still possible but aren't necessary

DETROIT — Fiat Chrysler Automobiles Chief Executive has a message for Renault SA and other would-be partners: We are happy to talk, but we can go it alone. "Strategically, we have a solid future and clear plans that are being invested in and are underway now," Mike Manley said during a session with reporters the day after the company released better than expected second-quarter results. "That isn't to say if there is a better future through an alliance or partnership or merger we wouldnÂ’t be open and interested to it." Fiat Chrysler is open to re-starting merger negotiations with French automaker Renault, Manley said, but added the French car maker is not the only potential partner to gain scale or plug gaps in Fiat Chrysler's technology or vehicle lineup. "To say are they the only opportunity, the answer to that question would be a definitive ‘No,Â’" Manley said. Fiat Chrysler in June withdrew a $35 billion merger proposal with Renault after French government officials intervened in the talks and sought to delay a decision on the deal. The Wall Street Journal reported on Friday that Renault and Nissan are trying again to reshape their alliance and resolve disagreements that helped to derail the merger talks with Fiat Chrysler. Fiat Chrysler has a commercial vehicle partnership with French rival Peugeot SA, and the two companies discussed a broader combination before Fiat Chrysler made its offer to Renault, people familiar with the situation have said. Manley said automakers are not the only potential partners. "There are cooperations that can help in specific technologies. There are cooperations as we think about the consumer-car interface," he said. "You could see collaborations that never would be there in the past." Fiat Chrysler's North American business is strong thanks to Ram trucks and Jeep SUVs, but in other markets the automaker faces continued challenges. The company is overhauling its mass-market business in Europe, which is anchored by the Fiat brand. Fiat Chrysler's Europe, Middle East and Africa operations were marginally profitable in the second quarter and achieved 1.8% profit margin in 2018. Manley has set a goal of 3% operating margins, well short of the 10% margins the company forecast for North America.

FCA and PSA sign merger agreement

Confirming an earlier rumor, PSA Group and Fiat-Chrysler Automobiles (FCA) signed a binding merger agreement to create the world's fourth-largest automaker. The partners hope to leverage the benefits of economies of scale as they develop new technologies and expand their global presence. The announcement ends FCA's years-long search for a partner, which nearly ended earlier in 2019 when it came close to merging with Renault, PSA's rival. It brings Fiat, Chrysler, Dodge, Ram, Jeep, Alfa Romeo, Maserati, Lancia, Peugeot, Citroen, DS, and Opel/Vauxhall under the same roof. That's a huge portfolio of brands that often overlap, but executives pledged to keep them all open, as well as all their respective factories as a result of the transaction. They're committed to making this big family of automakers work by building on each one's strengths, whether they're technical or regional. FCA and PSA jointly predicted they'll sell about 8.7 million cars annually around the globe, while posting an ˆ11 billion (about $12.2 million) profit. North America, a strong market for FCA, will provide 43% of its revenues, and 46% will be generated in Europe, where Peugeot's brands are doing better than ever. Together, they plan to achieve ˆ3.7 billion (about $4.1 million) in annual run-rate synergies. They'll notably have the purchasing power to negotiate a better price with suppliers, and they'll merge their research and development efforts where it makes sense to do so. Over two thirds of the group's annual volume will be built on two shared platforms. One will underpin about three million small cars annually, and the other will serve as the foundation for approximately three million compact and mid-sized cars. Details about these architectures haven't been made public yet, but a quick look at both companies' product portfolios reveals the small car will very likely come from Peugeot. Recent additions to its range, like the second-generation 208, are built on a new architecture named Common Modular Platform (CMP) developed with electric powertrains in mind. Meanwhile, Fiat is still making the cheeky 500 on an evolution of the platform found under the second-generation Panda released in 2003. The bigger architecture could come from FCA, however. The group's brands will share engines, transmissions, electric powertrains, infotainment systems, various sensors used to power electronic driving aids, and other components like wiring looms, but each one will retain its own identity.