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Weekly Recap: Marchionne's Manifesto again calls for industry consolidation

Sergio Marchionne isn't taking no for an answer. Despite public rebuffs from General Motors and Ford, the leader of Fiat Chrysler Automobiles continues to push for consolidation within the auto industry. His latest assertion came Wednesday when he said a combination of FCA with another automaker could net savings of $5 billion or more annually. No, this isn't about selling his company, he claimed, it's about cutting costs. Put simply, the auto industry wastes money, Marchionne said during FCA's earnings conference call. Companies invest billions to develop basic components that all cars use, but many consumers don't care how they work or recognize the differences. "About half of this is really relevant in terms of positioning the car in the marketplace," he said. "The other half, in our view, is stuff which is neither visible to the consumer nor is it relevant to the consumer." In 2014, top automakers spent more than $100 million on product development, FCA estimated. Marchionne said consolidation could save up to $1 billion on powertrains alone, noting that almost every automaker offers four- and six-cylinder engines. Not everyone has to make their own, he contended. "The consumer could not give a flying leap whose engines we are using because they are irrelevant to the buying decision." That's pretty provocative for enthusiasts, but less so for average consumers. Still, there are major differences in power and efficiency ratings, even among similar engines. Skeptics could argue consolidation would also weaken competition and reduce choices for car buyers. Marchionne stressed his presentation, curiously entitled Confessions of a Capital Junkie, wouldn't require closing factories or dealerships. It's not his final "big deal" as CEO, intent to sell FCA, or a way to elevate his company up the automotive food chain. He claims he wants to fundamentally change the industry and its habit for burning cash. "The horrible part about this, and the thing that I find most offensive, is that the capital consumption rate is duplicative," he said. "It doesn't deliver real value to the consumer and it is in its purest form, economic waste." Other News & Notes Ford Profits dip in first quarter Ford profits fell $65 million to $924 million in the first quarter, hampered by slight dips in revenue and sales.

Amazon can now deliver packages to some Ford and Lincoln vehicles

Nothing succeeds without complications popping up along the way. Sure, Amazon's Prime delivery services have made shopping more convenient than brushing your teeth, but leaving millions of packages on doorsteps comes with an inherent danger: Thieves might swipe them without anybody knowing. Amazon's solution is called Amazon Key, which allows delivery men and women to enter a customer's house or car to drop off a package. This week, Ford and Lincoln announced they would be partnering with Amazon to integrate the service into some of their vehicles. Ford is following in the footsteps of Volvo and General Motors, as both companies announced their participation about a year ago. That includes Cadillac, Chevrolet, Buick, and GMC. Key will be made available for 2017-and-newer Fords equipped with FordPass Connect, and 2018-and-later Lincolns with Lincoln Connect. Key is not available everywhere, but it can be used in dozens of city throughout the U.S., and the network is expanding. To look for compatibility for your car and city, check on Amazon's dedicated Key website. Like every other tech invention these days, Key requires a smart device application, which requires a one-time setup. The service is available on the Key app or the FordPass and Lincoln Way apps. While ordering on Amazon, customers will then select in-car delivery during checkout. Input a public delivery address, and park the car within two blocks of that address. While the order is in transit, Amazon will provide status updates, another feature that takes away some of the anxiety of waiting for a package to be delivered. The package will be put into the car within a four-hour window, and users will get notifications that the exchange is complete, and the car is again securely locked. Should customers change their minds, they can always cancel the delivery method, and the car will remain locked. In that case, the delivery could go to the building where the car is parked, or be rescheduled. Ford imagines this as the beginning of numerous car-based services in the near future that can be scheduled while the owner is not there, such as car washes.

Automakers tussle over owners of 'orphan' makes

When General Motors put down several of its brands in recent years, it also let loose thousands of brand-loyal customers who will eventually need another car.
R.L. Polk Associates estimates there are more than 18 million cars from 16 discontinued makes on the road today. Those "orphan owners" have sales-hungry competitors seeing dollar signs. GM is offering Saturn owners $1,000 cash toward a Chevy Cruze, Cadillac CTS or a GMC Acadia. Ford is giving its Mercury lease customers a chance to get out of their contracts with no early-termination penalty and offering to waive six remaining payments if they drive off in a Ford or Lincoln.
Edmunds.com research shows the efforts are paying off somewhat for GM, with 39 percent of Pontiac owners, 37 percent of Hummer owners and 31 percent of Saturn owners taking delivery of another GM-branded vehicle. But that leaves as much as 69 percent of owners going elsewhere. Ford, Honda and Toyota seem to be attracting many former GM owners.