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Chrysler and Fiat offering $1,000 rebates to VW owners as Marchionne gets tough

The throw-down between Fiat CEO Sergio Marchionne and Volkswagen has heated up in earnest. According to Bloomberg, Fiat and Chrysler are now offering current Volkswagen owners in the US $1,000 rebates to trade in their ride. It's the latest in a series of shots Marchionne has taken at his German rival. As you may recall, the Fiat executive entered into a spat with Volkwagen board chairman Ferdinand Piëch and CEO Martin Winterkorn in October after the duo called for Marchionne's resignation from presidency of the European Automotive Manufacturers Association (AECA). At the time, the Volkswagen executives were quoted as saying Fiat would not survive the European economic downturn.
In response, Marchionne called the German executives "reprehensible," and accused Volkswagen of using a pricing strategy that has created created a "bloodbath" in the EU. Volkswagen has taken to steep discounting to carve out ever-larger slices of market share in Europe, but the company has a much smaller foothold in the US. Marchionne may be trying to hit Volkswagen where the manufacturer is weakest with the new Fiat new incentive program.
Late last week, the Fiat executive was voted to a second term as ACEA president.

Rimac inks deal to purchase 55% of Bugatti from VW Group

ZAGREB, Croatia — Croatian electric supercar builder Rimac is taking over the iconic French manufacturer Bugatti in a deal that is reported to be worth millions of euros. Rimac said GermanyÂ’s Volkswagen Group, including the Porsche division — which owns a majority stake in Bugatti — plans to create a new joint venture. The new company will be called Bugatti-Rimac. Rimac Automobili announced Monday that it will be combining forces with Bugatti to “create a new automotive and technological powerhouse.” Rimac has progressed in 10 years from a one-man garage startup to a successful company that produces electric supercars. Mate Rimac, who founded the company in 2009, says the venture is an “exciting moment” and calls the combination of the companies “a perfect match for each other.” Porsche will own 45% of Bugatti-Rimac while Rimac Automobili will hold the remaining 55% stake, according to Croatian media reports. Financial details of the deal were not published. Bugattis will continue to be assembled in eastern France, where the company was established in 1909. The vehicles will use engines developed and made in Croatia. “In an industry evolving at ever-increasing speed, flexibility, innovation and sustainability remain at the very core of RimacÂ’s operations," the company said. “Uniting RimacÂ’s technical expertise and lean operations with BugattiÂ’s 110-year heritage of design and engineering prowess represents a fusion of leading automotive minds." Earnings/Financials Green Bugatti Automakers Porsche Volkswagen Green Automakers Electric Supercars

Russian auto boomtown grinds to halt over Ukraine sanctions

Thousands of auto workers have been furloughed and food prices are soaring as Western sanctions pummel the small Russian city of Kaluga and its flagship foreign carmakers, with more sanctions likely to come. The Kaluga region, 190 kilometers (120 miles) southwest of Moscow, says it has attracted more than 1.3 trillion roubles ($15 billion) in investment, mostly foreign, since 2006. But Western sanctions imposed in recent weeks after Russia sent tens of thousands of troops into Ukraine have exacerbated lingering component shortages and halted production at two flagship car plants, Germany's Volkswagen and Sweden's Volvo. A third, the PSMA Rus plant that is a joint venture between Stellantis and Mitsubishi and employs 2,000, may halt production soon due to a lack of parts, Stellantis' chief executive said last Thursday. "It is not clear what will happen. They don't give us any concrete information," said Pavel Terpugov, a welder at the PSMA Rus plant. Terpugov said he needs twice as much money to buy groceries than before the sanctions. Analysts have forecast Russian inflation could soar to 24% this year, while the economy may shrink to 2009 levels. The United States and Europe are weighing more sanctions against Russia after Ukraine accused Russian forces of civilian killings in northern Ukraine, where a mass grave was found in Bucha, outside Kyiv. Russia calls its actions in Ukraine a "special operation" and the Kremlin categorically denied any accusations related to the murder of civilians, including in Bucha. One source of hope for some in Kaluga, with its 325,000 residents, is the West may be reluctant to hurt its own companies. "Does it make sense to impose sanctions on its own plant and lose money?" said Valery Uglov, an auto mechanic at the Volkswagen plant. "Does it make sense to lose the Russian market?" "We hope to return to work as soon as possible and everyone will have confidence in the future again," Uglov said. Volkswagen, whose factory employs 4,200 people, in early March suspended operations. A spokeswoman said production remained frozen. Volvo Group, which employs over 600 people to build trucks, also suspended production. Even before the sanctions, Russian car sales had contracted from 2.8 million units from when the Volkswagen factory opened in 2007 to 1.67 million units last year, damaged by both sanctions after the 2014 annexation of Crimea and the COVID-19 pandemic.