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For his last act, Marchionne will outline an EV/hybrid roadmap this week

MILAN/LONDON — Fiat Chrysler (FCA) boss Sergio Marchionne is expected to outline new plans for electric and hybrid cars in a strategy presentation on Friday, aiming to ensure the world's seventh-largest carmaker remains in the race in the absence of a merger. The 65-year-old will present FCA's strategy to 2022, his final contribution to the company he turned around and multiplied in value through 14 years of canny dealmaking. After failing to secure a tie-up he said was necessary to manage the costs of producing cleaner vehicles, Marchionne needs to show the group can keep churning out profits on its own, even as emissions rules tighten, SUV competition intensifies and worries around his succession abound. Marchionne had long refused to jump on the electrification bandwagon, saying he would only do so if selling battery-powered cars could be done at a profit. He even urged customers not to buy FCA's Fiat 500e, its only battery-powered model, because he was losing money on each sold. But Tesla's success and the need to comply with tougher emissions rules have forced Marchionne to commit to what he calls "most painful" spending. "FCA is way behind rivals in terms of hybrid and electric vehicles and they need to hit the accelerator to convince investors they can close that gap," said Andrea Pastorelli, a fund manager at 8a+ Investimenti. Germany's Volkswagen, Daimler, BMW and U.S. rivals GM and Ford have committed to spending billions of euros each in coming years to try produce profitable cars powered by cleaner fuels. FCA needs to present a clear roadmap, just like Volvo Cars, which ditched diesel from its best-selling XC60 SUV, launched a new electric brand and pledged to shift all brands to hybrid by 2019, a banking source close to FCA said, noting: "The tech divide determines winners and losers in the industry." Marchionne has already said half of the wider FCA fleet will incorporate some elements of electrification by 2022, while luxury marque Maserati will spearhead FCA's electrification drive by making all new models due after 2019 electric. But its plans remain vaguer and less advanced than most big rivals and some investors wonder about the capital required to make vehicles compliant, and what share of spending can go to electrification given FCA's numerous demands.

Dodge closes Caravan order books at the end of this month

After being introduced as the Dodge Caravan in 1983, after debuting a long wheelbase Grand Caravan in 1987, after entering its fifth generation in 2007 and going almost unchanged since then to become the oldest minivan in the segment, after being publicly sent to the slaughterhouse in 2011, again in 2013, and again in 2015 before being pardoned thrice by the automotive governor, this month it's over for good for the best-selling Dodge and best-selling minivan in the U.S. and Canada. At least, according to Mopar Insiders, which credits dealer sources for the news that "the end of the month" will be a car shopper's last chance to order the Dodge Grand Caravan in the states that don't adhere to California emissions. Since the Grand Caravan's 3.6-liter V6 can't clear CARB mandates, Dodge pulled the model from the 13 so-called ZEV states in March this year.  Last summer, an analyst at AutoForecast Solutions told Automotive News that Dodge would cease Grand Caravan production at the Windsor Assembly Plant in Ontario, Canada in May this year. The brief reprieve is said to be related to the coronavirus standstill, Fiat Chrysler not alone in revising its plans to make up for two months of lost production. The new 2020 Chrysler Voyager is the official replacement for the Dodge, being a de-contented Pacifica that returns an old Chrysler nameplate to circulation and is built in the same plant as the Pacifica and Grand Caravan. The Grand Caravan's numbers have come down this year, but Dodge still sold a strong 24,931 units through the first quarter of the year; the kid-hauler has sold less than 100,000 units in a year in the U.S. only twice since 1985, topping six figures for the last four years. In 35 years on sale here, the minivan has hurdled the 200,000-unit marker 19 times. With the order books open until the end of the month and Windsor plant working a single shift and still finding its feet, Grand Caravans will continue to trickle off the lines after May, but not for long. 

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.