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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.

Junkyard Gem: 1994 Dodge Spirit

Under Lee Iacocca's watch, Chrysler began selling the first of the modern new K-Cars for the 1982 model year, and American sales of Ks and K-derived cars and minivans continued all the way through 1995. While these vehicles saved Chrysler from near-certain doom after the agony of a government bailout in 1979, the platform had become pretty outdated by the middle 1990s (though GM didn't hesitate to sell its similar-vintage J-Cars well into our current century). The Spirit replaced its aging Aries cousin starting in 1989, and has become very tough to find today. Here's a late Spirit with the optional Mitsubishi V6 engine, found in a Denver self-service yard recently. For the 1991 and 1992 model years, the Spirit R/T was the fastest new four-door car you could buy in the United States. With 224 horsepower from a very nervous turbocharged 2.2-liter engine, the Spirit R/T could run the quarter-mile in 14.5 seconds and hit a top speed of 141 mph. Today's Junkyard Gem isn't one of those cars, unfortunately. The base engine in the 1994 Spirit was a 2.5-liter Chrysler straight-four rated at 100 horsepower, but this car has the optional 142-horse Mitsubishi 6G72 V6 engine. The 6G7 family of engines remains in production to this day, 35 years after the first one went into a Galant, and members of this engine family have powered everything from the Diamante to the Sonata. On Chrysler vehicles of all-Mitsubishi design from this era, the engines tended to have big Mitsubishi emblems prominently displayed. For a Chrysler-designed car, though, it made more sense to badge the engine as a Chrysler. Note the British spelling of the unit of displacement here; GM and Ford started that trend back in the 1960s, with the "6.5 litre" Pontiac GTO and "7.0 litre" big Fords. With the big engine plus power windows, decklid luggage rack, and other luxurious (for a Spirit) options, I'm pretty sure this car didn't start life in a fleet. It drove more than 175,000 miles during its time on the road. The resale value of a 26-year-old Detroit sedan with high miles can't be much, even if the interior still looks nice enough, so any mechanical problem (or just a trade-in) spells doom for cars such as this one. The gold insets in the aluminum wheels look very stylish. This content is hosted by a third party. To view it, please update your privacy preferences. Manage Settings. 117 out of 200 Americans preferred the Spirit to the Honda Accord! This content is hosted by a third party.

FCA recalls 894k total vehicles worldwide in two campaigns

FCA is recalling a total of 893,698 vehicles worldwide in two campaigns to fix problems with inadvertent airbag deployment, failure of the anti-lock brakes, and stability control systems in the Jeep Grand Cherokee, Liberty, Dodge Journey, and Fiat Freemont. 559,703 of these vehicles are in the US. The larger recall affects 284,089 examples of the 2003 Jeep Liberty and 2004 Jeep Grand Cherokee, and there are also 13,411 of them in Canada, 6,277 in Mexico, and 48,212 outside the NAFTA region. Because of "electrical noise beyond the tolerance of the airbag electronic control module", part of that component can fail, according to the National Highway Traffic Safety Administration. This can cause the front and side airbags to deploy and the seatbelt pre-tensioners to activate inadvertently. FCA US has seven reports of alleged injuries from this problem. To fix the situation, the Jeeps need their Occupant Restraint Control modules replaced, as well as the front- and side-impact sensors. According to the NHTSA, the replacement parts won't be available until early 2016. Still, FCA US will advise owners about the problem in a letter by the end of December and will send a second notification when the components are ready. The second campaign affects 275,614 examples of the 2012-2015 Dodge Journey in the US; plus 78,148 of them in Canada, 36,471 in Mexico, and 151,476 left-hand drive units outside of NAFTA where it's sold as the Fiat Freemont. On these vehicles, water intrusion can disable the anti-lock brakes and electronic stability control, although a warning light often illuminates when this issue occurs, and the problem doesn't affect regular braking. There are also no reports of injuries or accidents. To fix the issue, dealers will seal the ABS wiring harness and will replace any already affected components as necessary, like the ABS module or the headlamp and dashboard wiring harness. Statement: Occupant Restraint Control Modules October 30, 2015 , Auburn Hills, Mich. - FCA US LLC is voluntarily recalling an estimated 284,089 older-model SUVs in the U.S. to replace their Occupant Restraint Control (ORC) modules and front and/or side-impact sensors, as required. Within this vehicle population, FCA US became aware of seven injuries caused by inadvertent air-bag deployments and advised NHTSA accordingly. The affected vehicles are not equipped with Takata Corp. air-bags. The Company is unaware of any related accidents.