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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.

Fiat Chrysler to pay $800M in Jeep, Ram emissions cheating case

WASHINGTON — Fiat Chrysler Automobiles NV has agreed to a settlement worth about $800 million to resolve claims from the U.S. Justice Department and state of California that it used illegal software that produced false results on diesel-emissions tests, but still faces an ongoing criminal probe. The hefty penalty is the latest fallout from the U.S. government's stepped-up enforcement of vehicle emissions rules after Volkswagen AG admitted in September 2015 to intentionally evading emissions rules. The Fiat Chrysler settlement includes $311 million in total civil penalties to U.S. and California regulators, up to $280 million to resolve claims from diesel owners, and extended warranties worth $105 million. It covers 104,000 Fiat Chrysler 2014-16 Ram 1500 and Jeep Grand Cherokee diesels, the Justice Department said. Regulators said Fiat Chrysler used "defeat devices" to cheat emissions tests in real-world driving. Fiat Chrysler said in a statement that "the settlements do not change the Company's position that it did not engage in any deliberate scheme to install defeat devices to cheat emissions tests." The company did not admit liability. "You wouldn't pay $311 million total dollars to the federal government in civil penalties if there were not a serious problem," U.S. assistant attorney general Jeff Clark told a news conference. The settlement also includes $72.5 million for state civil penalties, and $33.5 million in payments to California to offset excess emissions and consumer claims. German auto supplier Robert Bosch GmbH, which provided the emissions control software for the vehicles, also agreed to pay $27.5 million to resolve claims from diesel owners. Owners will receive an average of $2,800 to obtain software updates as part of the emissions recall, Fiat Chrysler said. Elizabeth Cabraser, a lawyer for the owners, said the "substantial cash compensation" will ensure that consumers get the recall fix. Bosch, which also provided diesel emissions software to Volkswagen, also agreed to pay $103.5 million to settle claims with 47 U.S. states that said the supplier "enabled" the cheating and should have known its customers would use the software improperly, the New York Attorney General's Office said.

Editors' Picks January 2022 | Ford Maverick, Jeep Grand Cherokee and more

This month, we awarded Editors' Pick awards to a number of totally redesigned, new models. Most notable of the bunch is the 2022 Ford Maverick. Ford took a chance on a new segment, and its execution is as close to perfect as we could hope for. The Hyundai Santa Cruz is a worthy competitor, though, and was also named an Editors' Pick. Also in this list, we have the redesigned Jeep Grand Cherokee. It's an excellent SUV, and it's only going to get better when the plug-in hybrid 4xe model hits the roads. In case you missed our previous Editors' Picks posts, here’s a quick refresher on whatÂ’s going on here. We rate all the new cars we drive with a 1-10 score. Cars that are exemplary in their respective segments get EditorsÂ’ Pick status. Those are the ones weÂ’d recommend to our friends, family and anybody whoÂ’s curious and asks the question. The list that youÂ’ll find below consists of every car we rated in January that earned an EditorsÂ’ Pick. 2022 Jeep Grand Cherokee Quick take: Jeep's midsize SUV hits it out of the park with the latest generation. We could stand to see some powertrain innovation, but the Grand Cherokee's premium proposition is sound. Score: 8.0 What it competes with: Honda Passport, Hyundai Santa Fe, Ford Edge, Chevrolet Blazer, Nissan Murano Pros: Highly capable, luxurious interior, choices aplenty Cons: Pricey, fuel economy From the editors Associate Editor, Byron Hurd — "Jeep did almost everything right with the redesigned Grand Cherokee. Its powertrain offerings are fairly unremarkable, but the new two-row 4xe will go a long way toward addressing that. It's an otherwise fantastic, modern, luxurious Jeep SUV." In-depth analysis: 2022 Jeep Grand Cherokee First Drive Review | 1 fewer row, 1 more touchscreen   2022 Ford Maverick Quick take: The Ford Maverick offers tremendous value, efficiency, incredibly well-thought-out packaging, plenty of storage, a fairly engaging drive and ease of use, all with the utility of a pickup bed. We like the hybrid, but the EcoBoost engine and FX4 package offer more capability. Score: 8 What it competes with: Hyundai Santa Cruz Pros: Very affordable, Hybrid fuel economy, compact size Cons: Tight backseat, FWD only Hybrid, no cruise control in base trim From the editors: Green, Senior Editor John Beltz Snyder — "The Maverick is simply a dynamite package. It's smart, useful, drivable, efficient, providing affordable utility in the underserved compact pickup segment.