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China-FCA merger could be a win-win for everyone but politicians

NEW YORK — Fiat Chrysler boss Sergio Marchionne has said the car industry needs to come together, cut costs and stop incinerating capital. So far, his words have mostly fallen on deaf ears among competitors in Europe and North America. But it appears Marchionne has finally found a receptive audience — in China. FCA shares soared Monday after trade publication Automotive News reported the $18 billion Italian-American conglomerate controlled by the Agnelli family rebuffed a takeover from an unidentified carmaker from the Chinese mainland. As ugly as the politics of such a combination may appear at first blush, a transaction could stack up industrially, and perhaps even financially. A Sino-U.S.-European merger would create the first truly global auto group. That could push consolidation to the next level elsewhere. Moreover, China is the world's top market for the SUVs that Jeep effectively invented, so it might benefit FCA financially. A combo would certainly help upgrade the domestic manufacturer; Chinese carmakers have gotten better at making cars, but struggle to build global brands, and they need to develop export markets. Though frivolous overseas shopping excursions by Chinese enterprises are being reined in by Beijing, acquisitions that support the modernization and transformation of strategic industries still receive support, and the government considers the automotive industry to be strategic. A purchase of FCA by Guangzhou Automobile, Great Wall or Dongfeng Motors would probably get the same stamp of approval ChemChina was given for its $43 billion takeover of Syngenta. What's standing in the way? Apart from price (Automotive News said FCA's board deemed the offer insufficient) there's the not-insignificant matter of politics. Even as FCA shares soared, President Donald Trump interrupted his vacation to instruct the U.S. Trade Representative to look into whether to investigate China's trade policies on intellectual property. Seeing storied Detroit brands like Jeep, Chrysler, Ram and Dodge handed off to a Chinese company would provoke howls among Trump's economic-nationalist supporters. It might not play well in Italy, either, to see Alfa Romeo and Maserati answering to Wuhan instead of Turin — though Automotive News said they might be spun off separately. Yet, as Morgan Stanley observes, "cars don't ship across oceans easily," and political considerations increasingly demand local manufacture of valuable products.

FCA's UAW workers to get $8,010 profit-sharing payout

UAW workers at FCA will soon be receiving $8,010 checks, which represent profit-sharing based on the company's 2020 performance. Although FCA's profit margins in 2020 were slimmer than the year prior, the union-employee payouts are slightly larger, due to a change in the formula that was negotiated in 2019 and has now gone into effect. Employees are now paid $900 for every 1% of profit margin FCA achieves in its North American operations. For 2020, the company enjoyed an 8.9% profit margin, and although that was down slightly from 9.1% in 2019, the checks are larger than last year's $7,280 payout. Still, FCA employees didn't fare quite as well as their counterparts at GM, who stand to receive profit-sharing checks of up to $9,000. GM workers did even better last year, netting $10,000. UAW workers at Ford had less to celebrate. They'll receive $3,525, based on the company's 2020 performance. That's a steep drop from last year's $6,600. FCA earned $6.472 billion in North America in 2020. The company is expecting an improved financial performance in 2021, as it's expected to avoid another coronavirus-related shutdown. It's also expected to benefit from the launch of the three-row Grand Cherokee L, as well as the Jeep Wagoneer and Grand Wagoneer, all of which are high-margin products. Related video: This content is hosted by a third party. To view it, please update your privacy preferences. Manage Settings.

Georgia sheriff buys Dodge Charger Hellcat, and the feds want a refund

A sheriffs office in Georgia recently purchased a new 2018 Dodge Charger SRT Hellcat. It's currently being used and driven by Gwinnett County Sheriff Butch Conway. Now the U.S. Department of Justice wants its money back. All $70,000 of it. According to The Atlanta Journal-Constitution, the DOJ described the purchase as extravagant. The purchase was originally approved by the DOJ, with the money coming from asset forfeitures. The government has since questioned whether the car is being used for its intended and stated purpose — undercover and covert operations as well as the Gwinnett County Beat the Heat program. The Beat the Heat program is a nonprofit meant to "to educate drivers about the dangers of distracted driving and illegal street racing" by holding drag nights at local tracks. The Hellcat — along with a 1996 Chevy Impala SS, a 1990 Chevy Corvette and 2004 Volkswagen GLI — are all featured on the Beat the Heat website. All but the Hellcat are privately owned and funded. The DOJ prohibits the use of taxpayer money for "extravagant expenditures" and says the "the vehicle in question is a high-performance vehicle not typically purchased as part of a traditional fleet of law enforcement vehicles." The sheriff's office defended the purchase, stating that Sheriff Conway uses it to commute and "when he participates in field operations, covert and otherwise, with our deputies" and that "Conway maintains that this vehicle is an appropriate purchase, especially for an agency with a $92 million budget and the opportunity this vehicle provides in making our roadways safer." The DOJ has given the sheriff's department until July 31 to repay the money. Gwinnett County intends to comply with the reimbursement. Related Video: This content is hosted by a third party. To view it, please update your privacy preferences. Manage Settings.