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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.

FCA goes all-in on Jeep and Ram brands on cheap gas bet

It's no surprise that as SUV and truck sales remain strong in the wake of unusually cheap gas, Jeep and Ram sales are taking off. What is a surprise is that FCA CEO Sergio Marchionne thinks that cheap gas will be a "permanent condition," and feels strongly enough about it to change up North American manufacturing plans. Jeep appears to be the biggest beneficiary of the product realignment. In addition to increasing the sales estimates for the brand worldwide upwards to 2 million units a year by 2018, the brand will get a flood of investment for new product and powertrains. Consider the Wrangler Pickup to be part of the salvo, as well as the Grand Wagoneer three-row announced in 2014 as part of the original five-year plan. The Wrangler four-door will get at least two new powertrains, a diesel and mild hybrid version, in its next generation. That mild hybrid powertrain may utilize a 48-volt electrical system like the one that's being developed by Delphi and Bosch – which the suppliers think will be worth a 10 to 15 percent fuel economy gain at a minimum. Down the road, in the 2020s, the Wrangler could adopt a full hybrid system. The diesel powertrain is planned for 2019 or 2020. The Ram 1500 is also pegged to receive a mild hybrid system, again potentially based on 48-volt architecture, sometime after 2020. Lastly, Jeep and Ram will take over some of the production capacity of existing plants. The Sterling Heights, MI, plant that builds the Chrysler 200 will now build the Ram 1500; the Belvidere, IL, facility that produces the Dodge Dart will take over Cherokee output; the big Jeep facility in Toledo, OH, will be used for increased Wrangler demand. In 2015, according to FCA's numbers, car and van demand went down by 10 percent, but SUV demand went up 8 percent and truck demand 2 percent. Considering that these are high-margin vehicles, FCA can't ignore the math. FCA also won't build any new factories to supplement production to meet demand, but instead are reshuffling production priorities. Think of it this way: FCA is gambling on cheap gas being a permanent part of our lives, at least into the 2020s. By doubling down on SUVs and trucks, the company stands to win big, unless a spike in gas prices changes the landscape. FCA isn't talking about a Plan B, so they're all in. It'll be interesting to see how this plays out.

2019 Dodge Challenger R/T Scat Pack Widebody Drivers' Notes | Widebody for everybody

The 2019 and soon to be 2020 Dodge Challenger R/T Scat Pack Widebody is another Challenger dart thrown against the wall by Dodge. It takes the desirable Widebody package we’ve seen on Hellcats and applies it to the naturally aspirated Scat Pack with the 6.4-liter V8. This kit includes stiffer adaptive shocks, stiffer springs, larger stabilizer bars, big Brembo brakes, a 3.09 rear axle ratio, 20-inch forged wheels and massive 305 section-width tires on all four corners. Most important of all, you get the special Widebody fender flares that give the car its signature look. The package is $6,000 on top of a regular Scat Pack. That means the cheapest youÂ’ll step into a Scat Pack Widebody is $46,740. The Widebody that rolled through our offices came in at a much-higher $57,295 after a number of options were tacked on. Many of these, you can skip. The 485 horsepower and 475 pound-feet of torque that comes standard is the most important aspect of this big coupe. Several packages costing more than $1,000 each add convenience and driver assistance tech, and the Harman/Kardon system is a hefty $1,595. With such a loud engine and exhaust, itÂ’s hardly worthwhile. Our tester also had the $1,595 eight-speed automatic transmission. ThisÂ’ll let you scare unsuspecting bystanders with the remote start system, but opting for a manual is an easy way to save some cash and increase driver involvement. With all the modern technology like adaptive cruise control, auto high-beams, heated and cooled seats, and blind-spot detection, the Challenger tries its best to keep up with the times. ItÂ’s no technological marvel, but itÂ’s neat to see some of these options available for folks who might want them. Still, tech gizmos are not what the Widebody is about. This Challenger keeps the same personality as all of those before it, but adds a dash of handling and hostility to its outward appearance. Here are our varied experiences with it during a week of testing. Editor-in-Chief, Greg Migliore: Yes, you can put a rear-facing convertible car seat in a Dodge Challenger. I did. It actually wasnÂ’t that hard. Remember, the Challenger is genetically a Mercedes sedan and shares underpinnings with the Dodge Charger. The biggest hurdles are ingress and egress, which is to be expected in any coupe. The roofline is low, but really not that bad. I simply lifted my toddler and maneuvered him into the backseat.  I was able to get him secured and fastened, and then I just stepped out of the car.