The Truth About Cars » sergio marchionne http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Sat, 18 Oct 2014 16:29:41 +0000 en-US hourly 1 http://wordpress.org/?v=4.0 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » sergio marchionne http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Marchionne: New No. 1 Manufacturer Could Arise From Mergers http://www.thetruthaboutcars.com/2014/10/marchionne-new-1-manufacturer-arise-mergers/ http://www.thetruthaboutcars.com/2014/10/marchionne-new-1-manufacturer-arise-mergers/#comments Thu, 09 Oct 2014 14:00:34 +0000 http://www.thetruthaboutcars.com/?p=928018 Fiat Chrysler Automobiles CEO Sergio Marchionne — who will be retiring from the company after the next five-year plan runs its course after 2018 — believes mergers between automakers will one day result in a new No. 1 automaker. According to Bloomberg, the driving factor in creating an automaker above Toyota on the global manufacturer […]

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Fiat Chrysler Automobiles CEO Sergio Marchionne — who will be retiring from the company after the next five-year plan runs its course after 2018 — believes mergers between automakers will one day result in a new No. 1 automaker.

According to Bloomberg, the driving factor in creating an automaker above Toyota on the global manufacturer podium will come down to money and competition, as automakers will likely need more of the former to develop and produce new vehicles while also fending off all comers, merging with potential partners as needed.

As far as FCA is concerned, chair John Elkann says the company would be ready to consolidate resources with another within the next five to 10 years “if it makes sense” to do so. The company would look outside of Europe for a partner if and when the time comes.

For now, FCA plans to take sixth place by expanding sales on the strength of new models, such as the upcoming Jeep Renegade and the reintroduction of Alfa Romeo to the United States market. The automaker aims to deliver 7 million units in 2018, compared with 4.4 million in 2013.

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European Auto Execs Warn Too Stringent CO2 Regs Could Kill Local Industry http://www.thetruthaboutcars.com/2014/10/european-auto-execs-warn-stringent-co2-regs-kill-local-industry/ http://www.thetruthaboutcars.com/2014/10/european-auto-execs-warn-stringent-co2-regs-kill-local-industry/#comments Wed, 08 Oct 2014 11:00:56 +0000 http://www.thetruthaboutcars.com/?p=927626 While hot hatches and hypercar hybrids caught the attention of everyone at the 2014 Paris Auto Show, senior executives for some of Europe’s major automakers warned all who would listen that potentially stronger greenhouse-gas regs could prove “fatal” to the European auto industry. The Detroit Bureau reports European Union legislatures are considering issuing targets of […]

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While hot hatches and hypercar hybrids caught the attention of everyone at the 2014 Paris Auto Show, senior executives for some of Europe’s major automakers warned all who would listen that potentially stronger greenhouse-gas regs could prove “fatal” to the European auto industry.

The Detroit Bureau reports European Union legislatures are considering issuing targets of 65 grams of carbon dioxide per kilometer driven by 2025, a 30-gram drop from the target of 95 grams/km in 2021. The drop would be the equivalent of a vehicle in the United States netting 84 mpg, nearly 30 miles per gallon more than the CAFE target of 54.5 mpg set for the U.S. market at the same time as the 65-gram/km mandate would go into effect.

To make this a possibility, senior execs, like Volkswagen’s Martin Winterkorn and Fiat Chrysler Automobile’s Sergio Marchionne, claim significant investments would need to be made to meet the mandate. Winterkorn specifically stated that for every gram of CO2 cut to meet the target, his company must spend €100 million ($140 million USD) “without knowing when these investments pay off.” Observers also claim that while bigger automakers can handle the investment, smaller ones would likely be crippled if not die-off in doing the same.

On the other side, critics proclaim that automakers have been obsessed with the apocalypse of their industry since the 1970s, when the first clear air bills became law. Every time, the industry has been able to meet the challenges before it, and continue to do so today with the use of turbos, direct injection and advanced transmissions.

Marchionne acknowledged those statements, but added that it would ultimately be put on the backs and wallets of the consumers who want the latest and greatest, emphasizing that it would be delusional to think otherwise.

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Next-Gen Chrysler Town & Country PHEV Debuting A Year Early http://www.thetruthaboutcars.com/2014/10/next-gen-chrysler-town-country-phev-debuting-year-early/ http://www.thetruthaboutcars.com/2014/10/next-gen-chrysler-town-country-phev-debuting-year-early/#comments Tue, 07 Oct 2014 10:00:50 +0000 http://www.thetruthaboutcars.com/?p=927345 Minivan shoppers will have a new option to consider in 2015, as Fiat Chrysler Automobiles CEO Sergio Marchionne revealed plans to introduce a PHEV variant of the Chrysler Town & Country late into the coming year. Automotive News reports the PHEV will be based on the next-generation Town & Country, originally scheduled for arrival in […]

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Minivan shoppers will have a new option to consider in 2015, as Fiat Chrysler Automobiles CEO Sergio Marchionne revealed plans to introduce a PHEV variant of the Chrysler Town & Country late into the coming year.

Automotive News reports the PHEV will be based on the next-generation Town & Country, originally scheduled for arrival in 2016 as stated by Marchionne during FCA’s investor day back in May. Other PHEVs are also in the works, including a full-size crossover for Chrysler. That said, Marchionne warns that electrification can’t fix everything:

I think you need to be very, very careful if you think that electrification, given its inherent limitations on range, especially in markets like the U.S., will effectively displace combustion. It will never provide the travel distance that you require, especially based on what we know today about the storage capabilities of batteries.

I keep on running into this fundamental economic obstacle of overcoming the cost equation of electrification. You can’t. You can’t unless there is a wholesale change and a fundamental shift in the pricing structure of cars.

The new PHEV, powered by a gasoline/battery pack combo, might outgun the Toyota Prius in the fuel economy game, according to Chrysler brand chief Al Gardner. The ur-hybrid in PHEV form for 2015 nets 95 mpg in electric-only mode, and 50 mpg combined in hybrid mode.

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Ferrari’s Annual Output To Increase Under Marchionne http://www.thetruthaboutcars.com/2014/09/ferraris-annual-output-increase-marchionne/ http://www.thetruthaboutcars.com/2014/09/ferraris-annual-output-increase-marchionne/#comments Fri, 12 Sep 2014 12:00:14 +0000 http://www.thetruthaboutcars.com/?p=911081 With the departure of Luca Cordero di Montezemolo from Ferrari, Fiat Chrysler Automobiles CEO Sergio Marchionne will become the premium brand’s chair next month, with the first order of business being to increase output to satisfy more demand. Bloomberg reports Marchionne will gradually increase annual output from 7,000 to a potential 10,000 units, proclaiming that […]

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With the departure of Luca Cordero di Montezemolo from Ferrari, Fiat Chrysler Automobiles CEO Sergio Marchionne will become the premium brand’s chair next month, with the first order of business being to increase output to satisfy more demand.

Bloomberg reports Marchionne will gradually increase annual output from 7,000 to a potential 10,000 units, proclaiming that by doing so, they would be able to match pace with the desires of Ferrari’s customer base, lest its waiting list grows too long “and people get tired.” For this year, deliveries are expected to rise 5 percent.

On the same day Marchionne becomes Ferrari’s new chair, FCA will begin trading in New York. While Ferrari is linked to the company — and is considered a defining brand for FCA — he says it won’t be a key brand over the long term.

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Ferrari Boss Steps Down As Marchionne Takes Control http://www.thetruthaboutcars.com/2014/09/ferrari-boss-steps-marchionne-takes-control/ http://www.thetruthaboutcars.com/2014/09/ferrari-boss-steps-marchionne-takes-control/#comments Wed, 10 Sep 2014 15:30:29 +0000 http://www.thetruthaboutcars.com/?p=910106 Luca di Montezemolo, who has headed up Ferrari for over two decades and presided over record profits, has stepped down amid in-fighting with Fiat head Sergio Marchionne. After joining Ferrari in the early 1990’s, di Montezemolo led a campaign to revitalize Ferrari, bringing in a lineup of vastly improved products and putting their Formula 1 […]

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Luca di Montezemolo, who has headed up Ferrari for over two decades and presided over record profits, has stepped down amid in-fighting with Fiat head Sergio Marchionne.

After joining Ferrari in the early 1990’s, di Montezemolo led a campaign to revitalize Ferrari, bringing in a lineup of vastly improved products and putting their Formula 1 team back on the road to success. Under his stewardship, Ferrari dominated the latter half of the 1990’s and early 2000’s, with Michael Schumacher, Ross Brawn, Rory Byrne and other motorsports all-stars working as one of the most dominant Formula 1 outfits in history.

In addition to their on-track success, Ferrari also found great financial success in the now ubiquitous merchandise licensing deals that were spearheaded by di Montezemolo, which has allowed Ferrari to maintain a lucrative revenue stream despite capping production of the cars at 7,000 units annually.

But that wasn’t enough for Marchionne, who publicly criticized di Montezemolo’s performance in Formula 1 this past week. Speculation is rife that Marchionne wants to expand Ferrari’s production volumes to help it compete with Lamborghini, which many fear would dilute the brand’s exclusivity.

On the other hand, the departure of di Montezemolo, who is credited with introducing milestone vehicles like the 355 (which replaced the dreadful 348), is being seen as a turning point in the brand’s history. Marchionne has never had experience running any premium brands, and Ferrari is one of FCA’s few profit centers. But many fear that this delicate balance will be permanently disrupted.

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Marchionne: Alfa Romeo Still Not For Sale http://www.thetruthaboutcars.com/2014/07/jaguar-reveals-face-2016-xe/ http://www.thetruthaboutcars.com/2014/07/jaguar-reveals-face-2016-xe/#comments Thu, 31 Jul 2014 12:00:53 +0000 http://www.thetruthaboutcars.com/?p=876841 Fiat Chrysler Automobiles CEO Sergio Marchionne is open to forming new alliance with other automakers as far as cost-savings are concerned, but he maintains that Alfa Romeo is not for sale. Automotive News Europe reports Marchionne said as much during a conference call regarding Fiat’s Q2 2014 earnings, reaffirming the parent company’s commitment to Alfa […]

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Fiat Chrysler Automobiles CEO Sergio Marchionne is open to forming new alliance with other automakers as far as cost-savings are concerned, but he maintains that Alfa Romeo is not for sale.

Automotive News Europe reports Marchionne said as much during a conference call regarding Fiat’s Q2 2014 earnings, reaffirming the parent company’s commitment to Alfa Romeo and proclaiming his company is not “in the business of brand-trading.”

Said commitment includes a €5 billion ($6.7 billion USD) investment to help the premium brand become a sought-after global brand of eight new models — underpinned by the upcoming Giorgio RWD/AWD platform — with annual sales of 400,000 by 2018, up from 74,000 in 2013.

As for alliances, Marchionne is open to the idea, though nothing is on the table as of this writing.

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Lancia Languishing On Life Support, Down To One Model http://www.thetruthaboutcars.com/2014/05/lancia-languishing-on-life-support-one-model/ http://www.thetruthaboutcars.com/2014/05/lancia-languishing-on-life-support-one-model/#comments Fri, 23 May 2014 16:15:47 +0000 http://www.thetruthaboutcars.com/?p=829538 Notably absent from FCA’s 5-year plan was Lancia. The Italian brand known for iconic models like the Aurelia, Fulvia and Delta Integrale will be pared down to one model that will be sold in Italy only. Lancia currently offers the Ypsilon subcompact, the Delta hatchback, the Thema (based on the Chrysler 300), and the Voyager […]

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Notably absent from FCA’s 5-year plan was Lancia. The Italian brand known for iconic models like the Aurelia, Fulvia and Delta Integrale will be pared down to one model that will be sold in Italy only.

Lancia currently offers the Ypsilon subcompact, the Delta hatchback, the Thema (based on the Chrysler 300), and the Voyager (based on the Chrysler fans). A report by Bloomberg confirms that after this year, only the Ypsilon will remain. Lack of demand, a weak car market in Europe and intense competition from a record number of brands all conspired to bring about Lancia’s downfall – not to mention an odd, ill-defined lineup that failed to establish a rock solid identity or any semblance of a value proposition.

That identity has so far kept Alfa Romeo from the same fate as Lancia – even though they arguably suffer from the same external forces. But that’s allowed Alfa Romeo to establish a tenuous foothold in global markets, while Lancia’s appeal is confined only to its home country.

 

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QOTD: Skin In The Game http://www.thetruthaboutcars.com/2014/05/qotd-skin-in-the-game/ http://www.thetruthaboutcars.com/2014/05/qotd-skin-in-the-game/#comments Thu, 22 May 2014 14:07:07 +0000 http://www.thetruthaboutcars.com/?p=828754 With negotiations between the UAW and the Big Three set to open next year, FCA head Sergio Marchionne has already fired the first shots, calling for an end to the two-tier wage system and a new pay structure, tied to profit-sharing. Speaking to Reuters, Marchionne discussed his plan to eliminate the two-tier structure, replacing it […]

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With negotiations between the UAW and the Big Three set to open next year, FCA head Sergio Marchionne has already fired the first shots, calling for an end to the two-tier wage system and a new pay structure, tied to profit-sharing.

Speaking to Reuters, Marchionne discussed his plan to eliminate the two-tier structure, replacing it with a yet-untested system

“The way you do this is you grandfather the Tier 1s,” Marchionne said of the veteran workers. “You make them a dying class and you build a Tier 2 structure that sets the wage mechanism for the next generation.

“When you have a bumper year, you pay them as much as a Tier 1 would make if not more,” he added of the lower-tier wage scale. “But if I’m in the toilet because the markets are down or GM is successful, or Ford, and then we go down in earnings, then I think at the end of the day you share the pain with the company.”

While the UAW did not comment on Marchionne’s proposal, the UAW has historically been against two-tier wages as well. In my view, Marchionne’s proposal is interesting, in that it lets the hourly workers have some “skin in the game” when it comes to their own financial success, as well as a feeling of pride and accomplishment when FCA succeeds. Given that FCA’s American units like Jeep and Ram are practically carrying the company, the intangible elements would be a strong motivator – of course, it also leaves workers exposed to managerial incompetence, the prospect of other business units dragging down overall performance or both. Let us know what you think in the comments.

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Endless GM Recall Parade Sign Of Industry-Wide Action To Come http://www.thetruthaboutcars.com/2014/05/endless-gm-recall-parade-sign-of-industry-wide-action-to-come/ http://www.thetruthaboutcars.com/2014/05/endless-gm-recall-parade-sign-of-industry-wide-action-to-come/#comments Thu, 22 May 2014 10:00:56 +0000 http://www.thetruthaboutcars.com/?p=828562 Detroit Free Press posits the endless recall parade General Motors has been leading since late February 2014 may be doing more harm than good for public perception or its bottom line. Though spokesman Greg Martin claimed the recalls were an effort to make his employer “a first-class safety organization” by focusing hard upon the consumer, […]

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Detroit Free Press posits the endless recall parade General Motors has been leading since late February 2014 may be doing more harm than good for public perception or its bottom line. Though spokesman Greg Martin claimed the recalls were an effort to make his employer “a first-class safety organization” by focusing hard upon the consumer, a survey by AutoTrader found 51 percent of auto consumers were less confident in the industry’s overall safety record as a result of the actions by GM, up from 44 percent who thought the same five days’ earlier. In addition, the automaker will take a $400 million charge in Q2 2014 for the recalls since April 1 as of this writing, while its current stock price of $33.07 per share is a few cents above its IPO price from November 2010.

Autoblog continues on this thread, proclaiming what GM is doing is the beginning of an industry-wide shift toward issuing full recalls for any flaw in a given product, all under heightened scrutiny from the public and government regulators. For the first months of this year alone, all automakers have recalled a total of 22.4 million vehicles, the bulk of which belong to GM. Kelly Blue Book analyst Akshay Anand says the parade is a double-edge sword, particularly for the General; while such recalls are a sign automakers are being proactive in ensuring their products are as safe as they can be, consumers may perceive the effort as a sign automakers are failing to do their job well in the first place.

Automotive News follows with Fiat Chrysler Automobiles CEO Sergio Marchionne, who stated in a panel discussion at the Brookings Institute this week what else might occur when the GM-led parade becomes a permanent fixture in the industry:

If effectively this frequency of recalls becomes a norm, if everybody starts doing this, then I think you will see this cost being shifted to the consumer. It will transfer itself over onto the selling price of the vehicle.

Marchionne adds automakers, in turn, will act more sensibly in handling potential defects in product, noting punitive actions — such as paying $35 million in fines to the National Highway Traffic Safety Administration — will have little in the way of such handling when reputation is the bigger issue for the industry as a whole.

Speaking of the main parade itself, Autoblog reports 218,000 2004 through 2008 Chevrolet Aveos have been recalled due to the daytime running light module in the instrument panel possibly overheating, melting and setting the vehicle ablaze. According to spokesman Alan Adler, the automaker is “aware of some fires” so far, and is working on a fix for the module. Adler adds that while he doesn’t know when the fix will come, GM will send a second notice to owners when the time comes to schedule repair work.

Detroit Free Press concludes by explaining why GM continues to issue recalls as it combs through its records to avoid another decade-long delay in taking such action:

  • The government has ordered the automaker to meet with the NHTSA monthly on investigations and recalls as part of the former’s $35 million settlement with the latter
  • GM CEO Mary Barra’s appointment of Jeff Boyer to global quality chief — with the mandate to report directly to her if necessary — means anything deemed dangerous or otherwise unknown, including previously unreported defects — are up for attention
  • The automaker’s investors prefer to get the bad news out of the way and accept whatever potential pain awaits in as few quarters as possible, even if no one is happy about swallowing such medicine in the first place

The Freep also provided a list of every recall from January through this week, minus the latest recall issued Wednesday; total recall to date is 18,666,842.

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On the sales front, Automotive News reports dealers won’t be able to sell any of the 2009 through 2014 Chevrolet Traverse, Buick Enclave and GMC Acadia crossovers thanks to a stop-sale order issued in a recall involving the front seat belt cable in the vehicles. The order comes during one of the biggest sales weekends of the year, putting a damper on potential Memorial Day promotions. Though dealers could still close on sales without actually allowing the vehicle to leave the lot, no test drives can be carried out in affected demonstrators, making such sales more difficult. GM is offering an end-of-month incentive to maintain May sales momentum, but that may not be enough to offset the extra floorplanning costs if few vehicles can be sold until the affected units are repaired.

Back in the Beltway, Barra met with U.S. Senator Claire McCaskill of Missouri and other members of Congress to discuss recent findings in the February 2014 ignition switch recall. Though spokesman Greg Martin confirmed the meetings did take place, he did not give details on all that was said between Congress and the CEO.

Meanwhile, members of the Obama administration who helped assemble the rescue packages for both Chrysler and GM said they knew nothing about the out-of-spec switch at the heart of the recall maelstrom when said packages were crafted between them and the automaker’s senior execs. One member, Harry Wilson, stated that even if the task force asked GM point-blank about the switch, he doubted they would ever get a straight answer. Lead adviser Steven Rattner added that as far as he knew, the execs before him then didn’t know about the problem; therefore, neither could his task force.

Over in Texas, Bloomberg both GM and supplier Delphi have asked the Texas Supreme Court to combine four suits linked to the switch into one state case. The claim is fighting each one separately would cost the duo time and money, while combining the four and rolling subsequent cases going forward into a single case would “eliminate duplicative discovery, void conflicting pretrial rulings, conserve judicial resources, be more convenient for the parties and witnesses and otherwise promote a more just and efficient conduct of this litigation.” The cases mention involve wrongful injury and death.

With GM’s cadre of lawyers coming under the gun now, Detroit Free Press reports the automaker’s general counsel Michael Millikin has named attorney Lucy Clark Doughtery to advise Boyer and product development chief Mark Reuss. Millikin is also working with independent lawyer Anton Valukas on the internal investigation into why GM handled the recall the way it had. The general counsel’s own future with the company has been called into question, though GM claims Millikin has no “current plans to retire” at this time.

In financial news, Automotive News says GM Financial is preparing to go under its own test of scrutiny of loans originated by its dealership network in an effort to avoid punitive action by the Consumer Financial Protection Bureau based on allegations of discrimination in lending rates among minority consumers. The lender’s chief compliance officer, Dan Bickmore, says his role is to help reorganize the company into compliance with the CFPB, going as far as to establish a new compliance department and boosting the lender’s complaint management process and fair lending areas. He also aims to help educate dealerships on appropriate lending policies to prevent discrimination of protected classes when drafting a loan or lease contract.

On the design front, global design chief Ed Welburn says that with GM’s line of vehicles sharing the same technology and functionality with each other, styling will be needed to help differentiate each unit. He goes on to say the automaker has committed a few design sins in the past, favoring functionality over style and charm, as well as decontenting interiors when a product was overbudget. Welburn concludes that the new guard leading GM “really cares about interiors now, and it shows,” such as the interiors in the 2014 Chevrolet Corvette and Cadillac ELR.

Finally, The Detroit News says the 2015 GMC Sierra All Terrain HD will go on sale this summer. The pickup will be available in 2500 and 3500 weight classes with double and crew cab options, with trim lines to include SLE, SLT and Z71. Power is expected to come from a standard 6-liter gasoline engine, with a twin-turbo Duramax diesel on the options list.

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QOTD: Marchionne Says Government Made Him Sell Fiat 500 http://www.thetruthaboutcars.com/2014/05/qotd-marchionne-says-government-made-him-sell-fiat-500/ http://www.thetruthaboutcars.com/2014/05/qotd-marchionne-says-government-made-him-sell-fiat-500/#comments Wed, 21 May 2014 16:38:29 +0000 http://www.thetruthaboutcars.com/?p=828290 An event held at Washington D.C’s Brookings Institute saw FCA CEO Sergio Marchionne and former National Economic Council head Larry Summers discuss the auto bailout on its five-year anniversary. As always, Marchionne had some colorful commentary, with a one interesting nugget about Fiat. According to Christina Rogers of the Wall Street Journal, Marchionne claimed that […]

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An event held at Washington D.C’s Brookings Institute saw FCA CEO Sergio Marchionne and former National Economic Council head Larry Summers discuss the auto bailout on its five-year anniversary. As always, Marchionne had some colorful commentary, with a one interesting nugget about Fiat.

According to Christina Rogers of the Wall Street Journal, Marchionne claimed that the Fiat 500 was only imported to the United States due to the government’s hand, with Marchionne stating

“It was a condition assigned to the [bailout] deal”

This has previously never been stated in any bailout related discussion – only the Dodge Dart and its 40 mpg capability has been highlighted as a specific requirement of the bailout, in terms of product.

If this is indeed correct, it would add some context to Fiat’s confusing position in the marketplace. For Fiat to thrive in America, it would make sense to add more product that is better aligned to American tastes. All we’ve gotten are the 500 and 500L, which are both unsuited to the vast majority of American tastes and driving conditions.

So far, Fiat’s American arrival has been an expensive endeavor that has not exactly fared well. The costs of homologating the cars, building the 500 in a new factory in the NAFTA zone, establishing a dealer network and marketing the car is certain to be a $1-billion dollar expenditure. Perhaps this is just a bit of bluster by Sergio to obfuscate the fact that Fiat isn’t burning up the sales charts in America. I am sure that Fiat dealers would like a more lucid answer.

 

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Marchionne: Hybrids Will Help Chrysler Group Meet 2025 54.5 MPG Mandate http://www.thetruthaboutcars.com/2014/05/marchionne-hybrids-will-help-chrysler-group-meet-2025-54-5-mpg-mandate/ http://www.thetruthaboutcars.com/2014/05/marchionne-hybrids-will-help-chrysler-group-meet-2025-54-5-mpg-mandate/#comments Wed, 14 May 2014 11:00:21 +0000 http://www.thetruthaboutcars.com/?p=820346 With the 2025 industry-wide fuel economy target of 54.5 mpg a decade away, Fiat Chrysler Automobiles CEO Sergio Marchionne believes “the house will make it” as far as all under the Chrysler Group umbrella are concerned, with a little help from hybridization of a number of models. Automotive News reports Marchionne believes hybrids will “become […]

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With the 2025 industry-wide fuel economy target of 54.5 mpg a decade away, Fiat Chrysler Automobiles CEO Sergio Marchionne believes “the house will make it” as far as all under the Chrysler Group umbrella are concerned, with a little help from hybridization of a number of models.

Automotive News reports Marchionne believes hybrids will “become a very large component” of the fleet going forward, stating that without them, meeting the mandate would be “impossible” for FCA’s Pentastar offerings.

Part of that plan may come through Chrysler Group’s new nine-speed automatic transmission, which will be used throughout the division’s line of FWD vehicles, starting with the 2014 Jeep Cherokee and 2015 Chrysler 200; the latter, released to dealers earlier this month, provides up to 36 mpg on the highway with the transmission delivering power to the front wheels.

Licensed from ZF Friedrichshafen and manufactured in FCA’s Kokomo, Ind. plant, the nine-speed transmission will see additional production at the formerly idle Tipton County, Ind. transmission factory. The $162 million refurbished plant will employ 850 by 2015, and will produce 800,000 transmissions annually at full capacity.

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Marchionne: Aluminium Better Used In Wrangler Over Ram 1500 http://www.thetruthaboutcars.com/2014/05/marchionne-aluminium-better-used-in-wrangler-over-ram-1500/ http://www.thetruthaboutcars.com/2014/05/marchionne-aluminium-better-used-in-wrangler-over-ram-1500/#comments Tue, 13 May 2014 13:00:50 +0000 http://www.thetruthaboutcars.com/?p=819721 Fiat Chrysler Automobiles CEO Sergio Marchionne may be watching Ford experiment aluminium-bodied pickups from afar, but as far as the 2018 Jeep Wrangler is concerned, the lightweight metal may wind up on the iconic vehicle before the Ram 1500 considers taking the plunge. Automotive News reports Jeep’s engineers and designers are already at work finalizing […]

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2014 Jeep Wrangler

Fiat Chrysler Automobiles CEO Sergio Marchionne may be watching Ford experiment aluminium-bodied pickups from afar, but as far as the 2018 Jeep Wrangler is concerned, the lightweight metal may wind up on the iconic vehicle before the Ram 1500 considers taking the plunge.

Automotive News reports Jeep’s engineers and designers are already at work finalizing design work for the next-gen Wrangler, set to enter production in 2017. Based on recent job postings, the brand as an eye on dropping weight for the vehicle as part of its plan to meet ever-tightening CAFE goals. The current Wrangler holds an average of 17 city/21 highway while weighing anywhere from 3,785 to 4,340 pounds depending on trim, while the new Cherokee 4×4 — based on a lighter foundation — pulls 19 city/25 highway at a weight of 4,044 pounds.

Other key components of the plan on the table include an eight-speed automatic and an expanded lineup of fuel-efficient gasoline and diesel powerplants.

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Marchionne’s Grand Vision For FCA Faces Hard Financial Road To Success http://www.thetruthaboutcars.com/2014/05/marchionnes-grand-vision-for-fca-faces-hard-financial-road-to-success/ http://www.thetruthaboutcars.com/2014/05/marchionnes-grand-vision-for-fca-faces-hard-financial-road-to-success/#comments Thu, 08 May 2014 12:00:11 +0000 http://www.thetruthaboutcars.com/?p=817858 Though Fiat Chrysler Automobiles CEO Sergio Marchionne’s five-year plan announced this week may be ambitious, analysts are raising questions about how the plan will be funded — and how much will be needed — if it is to be successful, let alone live up to Marchionne’s vision. Automotive News Europe reports a large part of […]

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Sergio Marchionne - FCA

Though Fiat Chrysler Automobiles CEO Sergio Marchionne’s five-year plan announced this week may be ambitious, analysts are raising questions about how the plan will be funded — and how much will be needed — if it is to be successful, let alone live up to Marchionne’s vision.

Automotive News Europe reports a large part of the problem for the plan, according to Bernstein Research analyst Max Warburton, is debt:

Much as we admire the ambition and think elements are achievable… it is hard to find conviction on the financing of the plan. Fiat is weighed down with huge debt, burdened by financing costs and is only thinly profitable. It’s (sic) cost of capital is huge.

Warburton adds FCA’s grand plan and its potential capital expenditure and R&D appear to be unaffordable and not prudent for investors, stating the company would need “a capital raise” for any part of the plan to pan out.

Aside from its debt, FCA also faces sales challenges from markets that are peaking or slowing down, with the European market being the biggest drag upon the automaker. However, independent analyst Marianne Keller said that with the recovery now taking place in Europe, paired with North American profits and a strong Jeep brand, Marchionne could “pull it off”; Marchionne himself announced during the five-year plan’s unveiling that he was considering a mandatory convertible bond to bring the needed financing for the plan.

Finally, FCA’s Q1 2014 results — a net loss of 319 million euros compared to a net profit of 31 million euros the year before — serve as a sign for both the company and its investors that FCA has more hard road ahead, a view best summed up by Macquarie Group analyst Jens Schattner:

If it was so easy just to launch new products to be successful in this industry, why wouldn’t everybody do exactly the same.

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Analysis: The Definitive Guide To The Fiat Chrysler 5-Year Plan http://www.thetruthaboutcars.com/2014/05/analysis-the-definitive-guide-to-the-fiat-chrysler-5-year-plan/ http://www.thetruthaboutcars.com/2014/05/analysis-the-definitive-guide-to-the-fiat-chrysler-5-year-plan/#comments Tue, 06 May 2014 22:34:32 +0000 http://www.thetruthaboutcars.com/?p=816249 Wednesday marks the 16th anniversary of the Daimler-Chrysler merger. One day prior to this milestone, Fiat Chrysler has unveiled their business plan for the next 5 years. While the industry norm is to keep future product plans, brand strategies and sales targets as a closely guarded secret, FCA took the unusual step of making it […]

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Wednesday marks the 16th anniversary of the Daimler-Chrysler merger. One day prior to this milestone, Fiat Chrysler has unveiled their business plan for the next 5 years. While the industry norm is to keep future product plans, brand strategies and sales targets as a closely guarded secret, FCA took the unusual step of making it all public, with FCA CEO Sergio Marchionne headlining the event (billed as a conference for investors) at an event in Auburn Hills, Michigan. Each of FCA’s brands and subsidiaries was given the chance to present their strategy through 2018, with healthy helpings of new vehicles, future technology and corporate strategy being revealed.

ChryslerCurrently, the Chrysler brand is arguably the weakest in FCA’s portfolio, with just three offerings – the D-segment Chrysler 200, the E-segment Chrysler 300 and the Town and Country minivan. Combined, those account for just 350,000 units globally, a tiny number in the context of a 16 or 17 million unit market in the United States alone. As part of its growth plan, Chrysler will shift away from being a pseudo-premium brand to a mainstream line, aiming to compete with brands like Ford, Hyundai, Chevrolet, Toyota and Honda. The brand will add a new compact sedan, and two new crossovers, as well as hybrid capability on the larger CUV and the Town & Country minivan. Chrysler is aiming to increase sales to 800,000 units globally by 2018, equal to its best years ever in America, in the middle of the last decade – but Chrysler will be relying on stronger global sales to reach this number.

  • The Chrysler 100 sedan will debut in 2016, ostensibly as a sister car to the Dodge Dart. While details were not revealed, we can expect both the 1.4L Turbo 4-cylinder engine, as well as the 2.4L 4-cylinder paired to a 9-speed automatic. Although the latter combination was promised for the Dart long ago, it has failed to materialize. The Dart is scheduled for a 2016 refresh, and the 2.4L/9-speed could appear at that time.
  • The Chrysler 300 will receive a refresh later this year, while the 200 will get one in 2017.
  • A larger crossover, sized to compete with the Toyota Highlander and Chevrolet Traverse, launches in 2017. This will likely share a platform with the Chrysler Town & Country minivan, due to its footprint and its plug-in hybrid capability.
  • A mid-size crossover, comparable to the Hyundai Santa Fe or Ford Edge, bows in 2018. This will likely share the CUSW underpinnings of the Chrysler 200 and Jeep Cherokee.
  • The Chrysler Town & Country will be the sole minivan in FCA’s portfolio, bowing in 2016. It will be available as a plug-in hybrid to help meet regulatory requirements for ZEVs.

Dodge: In the “internal turf war” for mainstream volume offerings, Dodge is the clear loser. The upshot for enthusiasts is that Dodge will transition to being a more emotional and performance oriented brand, while still retaining its price point as a mainstream value brand. As part of Chrysler’s consolidation and push for “brand purity”, the Grand Caravan and Avenger will disappear, with the former departing in 2016. Dodge sales are expected to stay flat, with 600,000 units targeted in 2018 – Dodge sold roughly 596,000 units in 2013, and is expected to see lower volumes in the intermittent years.

  • A new B-segment Dodge will debut in 2018, offering both sedan and hatchback bodystyles, as well as undisclosed turbocharged engines. Previous rumors have suggested that a small Dodge would carry the Hornet name.
  • The Dart will soldier on until 2016, with FCA planning to market the car with aggressive leases and better content. 2016 will bring cosmetic changes as well as improvements to the driving dynamics and powertrains. A Dart SRT, with a high-performance turbocharged engine and all-wheel drive, will bow at the end of 2016.
  • A replacement for the Dodge Journey – including an SRT version – will bow in mid-2016.
  • All-new versions of the Dodge Charger and Challenger will bow in 2018 (alongside a new Chrysler 300), with SRT versions arriving at the end of 2018.
  • The Dodge Durango will continue through 2018, though it may disappear to make room for a three-row Jeep Grand Wagoneer.
  • The SRT Viper will become a Dodge again, and carry on through 2018.

FerrariFCA CEO Sergio Marchionne presented Ferrari’s outline, which was light on product plans. Ferrari will cap production at 7,000 units per year, introducing one new model every year. There are provisions to increase capacity to 10,000 units annually, and each model will be on a four year cycle, with updated variants (think 458 Speciale) launched as well. While Marchionne stressed that “Ferrari is not for sale”.

With a volume of 10,000 units, EBITDA (earnings before interest, taxes, depreciation and amortization) is estimated to be around $1 billion for Ferrari alone, thanks to its three custom car lines (which presumably generates huge margins) and the extremely lucrative revenue stream built into the brand – its merchandising and licensing business. Ferrari licenses its brand to everything from laptops to athletic apparel to model cars, and these are frequently sold as luxury goods. By comparison, Marchionne noted that conventional luxury good companies are often valued at 9x-12x EBITDA – and his presentation made explicit mention of Ferrari’s target of 15 percent gross margin, and an apparent valuation of between 3.3 and 5.4 billion euros.

FiatFiat’s presentation was the most confusing, with the brand eschewing the unidirectional approach taken by the other marques in FCA’s portfolio. A more apt-description is that Fiat is the exact opposite of “One Ford”, with the brand offering distinct product for NAFTA, Latin America, Europe and Asia.

  • Fiat will dump the Suzuki SX4-based Sedici (replaced by the Fiat 500L) and the C-segment Fiat Bravo (replaced by the Fiat 500/Panda).
  • Future product will straddle the line between functional, mainstream transportation with a “cool” bent (mostly in Europe and other developed world markets) and a novel, European brand (NAFTA). This dichotomy was presented in the form of the Fiat 124 and 124 Sport (a family car and a sports car) and the smaller Uno being sold alongside the dramatic, performance oriented Fiat Coupe of the mid-1990s.
  • In Brazil and Latin America, Fiat will shed many of its legacy nameplates, including the Palio, Siena and Linea. They will be replaced with a new A-segment car, a new Uno, a Punto/Palio replacement, a new Grand Siena, a new compact CUV and a new pickup, as well as the Strada small pickup.
  • Fiat will bring the Renegade-based 500X crossover to North America, as well as a “Speciality” product, presumed to be a Fiat/Abarth branded sports car, based off the next Mazda MX-5.

JeepJeep is one of FCA’s profit centers, and the SUV brand will undergo a major re-orientation from a NAFTA-centric maker of rough-and-ready SUVs to a global brand composed of both crossovers and traditional off-road vehicles. Jeep will transofrm from a brand of 800,000 American-made vehicles to one with manufacturing facilities in the USA, Brazil, India, China and the EU, with sales projections of 1.9 million units globally. Jeep will gain 9 new plants in 5 new countries .

  • Jeep will introduce a new replacement for the Compass and Patriot in 2016, consolidated under one nameplate.
  • The Grand Wagoneer will return in 2018 as a three-row vehicle, potentially replacing the Dodge Durango.
  • A new Wrangler and Grand Cherokee will bow in 2017.

MaseratiAlong with Alfa Romeo, Maserati will be positioned as a premium performance brand, with new product offerings. Although the Levante SUV is still on, more details were released about the Alfieri Coupe and Convertible. Maserati is aiming to increase sales from 15,000 to 75,000 units.

  • The Alfieri will offer turbocharged V6 (410, 450 and 520 horsepower), and all-wheel drive. Rear drive will be available only on the lower output V6 model.
  • The Levante will offer 350 and 425 horsepower V6 engines and a 560 horsepower V8 as well as a range of diesels.

Alfa Romeo: After nearly a decade of broken promises, we have yet another Alfa Romeo product plant that is being presented as the savoir of this once hallowed brand. Alfa Romeo’s narrative has always been grander than its financial success, but things are particularly dismal, with sales below 200,000 units and a lineup of just two small, front-drive hatchbacks and a low volume sports car.

As part of Alfa’s latest revival attempt, the brand has been transformed into what it dubs a “skunk works”, akin to what Chrysler wanted to do with SRT – create an independent workshop that is conducive to experimentation and creativity, free from bureaucracy and rigid corporate processes. Alfa’s top bosses are two Ferrari engineers, with a staff of 200 hand-picked individuals, which FCA hopes to expand to 600 by 2015.

  • Alfa is aiming to launch 8 new products by 2018, with a range of 4 and 6-cylinder gasoline and diesel engines. Alfas will be exclusively rear or all-wheel drive.
  • The first new vehicle, a mid-size sedan, will bow in 2015. From there, a full-size sedan, two CUVs and a new “speciality” car will debut by 2018.
  • The Mito and Giulietta compacts will die.
  • FCA is aiming for 400,000 units by 2018, including 150,000 units in the United States.

RamAs one of FCA’s other big profit centers, Ram is a key brand for the company, but exists largely in the NAFTA region. The half-ton trucks will see a refresh in 2015, along with a redesign in 2017, with heavy-duty trucks getting freshened in alternate years. Aluminum will likely not be a part of the new trucks, as Ram feels that the diesel half-ton truck is competitive against Ford’s aluminum RAM, and has been downplaying the durability and cost-effectiveness of the aluminum F-150. On the commercial vehicle front, a small Ram ProMaster City, based on the Fiat Doblo, bows this year.

Powertrains and Architectures:

While auto makers like Volkswagen, Toyota and Nissan are moving to radical solutions for platform consolidation, FCA’s plan showed little evidence of any move to substantially combine existing product architectures. Currently, FCA has 18 vehicle architectures, with the top 4 platforms accounting for just under half of total volume, 12 architectures representing 95 percent of volume. By 2018, this number will shrink to just 15 architectures, with the top for accounting for 70 percent of volume, and 9 architectures accounting for 95 percent of volume.

Proportionally, this is not much of a reduction, and it lags far behind Volkswagen’s strategy of just 4 modular “kits”. FCA also lacks the level of scale and volume that VW has, which would make it easier to absorb the costs and inefficiencies that come with having so many different architectures. FCA discussed its goals of bringing down costs via better purchasing practices, more shared components (like lighting, HVAC systems and interior pieces), but their plan for increasing efficiencies via shared architectures was markedly less sophisticated than much of the competition. Given the importance of achieving significant economies of scale in the future (a topic that Sergio Marchionne frequently expounds on), it was surprising to see FCA unveil a plan that is already behind the times relative to the larger OEMs that it must compete with.

On the powertrain front, FCA is downplaying the importance of fuel cell and EV powertrains, introducing EVs for regulatory compliance in the USA. Plug-in hybrids will trickle into the lineup in future, as will mild-hybrid technology like start-stop systems and Belt Starter Generators. FCA dismissed fuel cells as a non-viable alternative, and said that CNG and diesel will play a role in world markets more than in NAFTA. FCA will continue to buy emissions credits in the interim.

FinanceWhile much of the presentation material was focused on global issues, two things stood out.

  • FCA will continue to use Santander as its captive arm, and will not start a new one.
  • The overall tone regarding subprime financing was bullish, with executives dismissive suggestions of any systemic issues.

Sales and Global Markets: Separate presentations were conducted for Asia, Latin America, Europe and NAFTA regions.

  • In the NAFTA region, FCA sold 2.1 million units in 2013, and is projecting a steady increase in the U.S. SAAR, rising to 17 million units by 2018.  By that time, FCA is looking to sell another 1 million units in the NAFTA zone and increase exports by 33 percent to 380,000 units. However, no capacity increases were discussed for NAFTA, and Marchionne commented on his distaste for two-tier wages in the UAW, suggesting that profit sharing was an option in the future. Difficulties negotiating with organized labor could spell trouble for FCA’s plans.
  • In Europe, FCA has seen sales decline by over half since 2010, while capacity utilization has declined from over 100 percent to around 67 percent – a dangerously low level for a volume auto maker. Fiat’s home market of Italy was among the hardest hit, and Europe’s 13.8 million vehicle market in 2013 is at its lowest levels since 2007. FCA now has to reposition Fiat not just as an Italian mainstream brand, but one that fits the current paradigm where “cool” budget brands like Dacia and premium brands like Audi are stealing market share with their offerings that encroach on the turf of volume vehicles. Higher margin brands like Jeep, Alfa Romeo and certain Fiat products (like the 500) are their weapons of choice, as FCA aims for an increase from 1.1 million in 2013 to 1.5 million units by 2018.
  • In Latin America, FCA is well established in Brazil and Argentina, with multiple assembly plants in the two countries running at over 100 percent capacity. FCA expects the market to grow from 5.9 million units this year to 6.9 million units in 2018, with most of that growth coming from Brazil, a country where Fiat is the closest thing to a national brand. Jeep is also expected to be a strong player, with Brazilian production of the Renegade expected to start in 2015. FCA is planning to increase sales from 900,000 units this year to 1.3 million units in 2018. Fiat is expected to account for 1.1 million units, Jeep for 200,000 units and other brands making up the remainder.
  • Asia, India, Australia and other Pacific markets are also being given increasing attention by FCA, with China remaining the dominant market at 28 million units. FCA expects India to overtake Japan as its second largest market by 2018, with 5 million units annually. While FCA projects an increase from 200,000 units in 2013 to 1.1 million units by 2018, on the back of strong sales of Jeep crossovers in India and China, as well as a wide new range of Fiat product. The only question is – how will they pay for all this new product?

Conclusion:

FCA’s day-long meeting was an anomaly in the industry, providing car enthusiasts with a detailed look at future product offerings, and intense discussions of FCA’s various brands and their respective visions. No other OEM is so candid with their upcoming debuts, and FCA deserves praise for setting a positive example for other OEMs.

But dig a little deeper, and many important questions remain answered.

  • FCA CEO Sergio Marchionne is one of the biggest advocates for the necessity of economics of scale via increasing volumes, yet his plan for reducing the number of architectures looks amateur compared to the extremely aggressive plans laid out by archrival Volkswagen. While VWs global volume was 9.7 million units in 2013, it is paring down its architectures to just 4. Meanwhile, FCA, which sold 1.5 million units globally in 2013, will have 15 architectures and volumes of 5.7 million units worldwide. Compared to VW, Nissan, Toyota and even General Motors (which has a sophisticated set of architectures for its global products), FCA’s strategy seems bloated, if not obsolete, from Day 1.
  • FCA is all-in on the internal combustion engine, and is only just dipping its toe into the water of plug-in vehicles, with a plug-in hybrid. EVs are solely produced to appease regulators, and fuel cell vehicles are not in the cards. Even long-time advocates of the internal combustion engine have some kind of ZEV program (such as Hyundai, which has a fuel-cell program). This is a risky gambit, with significant upside and downside potential. Many EV programs aren’t going as well as OEMs had hoped, but FCA could be left in the dust in terms of R&D.
  •  FCA is dangerously reliant on both Jeep and RAM for their profits. A 2008-like combination of spiking gas prices and a downturn in the economy (especially housing starts, which are a key driver of pickup sales) could leave FCA exposed to both falling demand for gas-guzzling trucks and have a severe impact on the high numbers of FCA vehicles financed via subprime rates. These less credit-worthy borrowers would likely be the first to default on their payments, and a mass repossession of FCA vehicles could be another blow at an inopportune time.
  • There has been no mention of how the substantial increase in NAFTA sales will come without any additional NAFTA capacity (something Sergio Marchionne has previously sworn off). Jeeps imported from Italy and Brazil (and even China) could be an option, but booming sales of Ram trucks couldn’t be built anywhere else. Marchionne’s comments about his distaste for two-tier wages could also spell trouble for his hourly workforce when it’s time to negotiate their contracts in 2016.
  • Who is financing all of the(mostly Fiat) new product earmarked for Asia? And why all this talk of Ferrari’s value if the company is not for sale?
  • Is Alfa really going to sell 150,000 units (volumes comparable to Audi) in America? Even the most dewey-eyed Alfa diehards in the industry find that to be a bit of a stretch.

Marchionne and FCA have been known to say one thing and then completely change direction, miss deadlines and dodge questions about missing deliverables (the 9-speed Dart is the automotive world’s Jimmy Hoffa). But they’ve also presented an admirable turnaround for a once-ailing car maker, even when the rest of the world was prepared to write them off. Yes, one may argue that Marchionne and Fiat bought Chrysler’s assets for a song, and that the road has at times been rocky. But a decade ago, plans for Jeep’s global expansion, Ram’s possible conquest of GM trucks and a thriving line of Chrysler and Dodge products would have been the stuff of only the most zealous Mopar fan. It’s now a very real possibility.

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FCA Unveils 5-Year Plan On Tuesday http://www.thetruthaboutcars.com/2014/05/fca-unveils-5-year-plan-on-tuesday/ http://www.thetruthaboutcars.com/2014/05/fca-unveils-5-year-plan-on-tuesday/#comments Mon, 05 May 2014 15:22:29 +0000 http://www.thetruthaboutcars.com/?p=815570   Today is Cinco de Mayo, a Mexican holiday used as an excuse by Americans to drink margaritas and eat bad Tex-Mex. But tomorrow, Fiat Chrysler will unveil their next five-year plan, which should clarify the many contradictory product plans being touted by both FCA execs and the media. Among the areas expected to be […]

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Today is Cinco de Mayo, a Mexican holiday used as an excuse by Americans to drink margaritas and eat bad Tex-Mex. But tomorrow, Fiat Chrysler will unveil their next five-year plan, which should clarify the many contradictory product plans being touted by both FCA execs and the media.

Among the areas expected to be clarified tomorrow:

  • Which of the two minivans will survive FCA’s nameplate consolidation. The smart money is on the Chrysler Town & Country, with the Grand Caravan’s replacement taking the form of a three-row crossover
  • Alfa Romeo’s return to the United States beyond the low volume 4C sports car
  • The future direction of the Chrysler and Dodge brands. FCA has been taking steps to eliminate overlap between the two brands (for example, redesigning the Chrysler 200 while axing its Dodge Avenger sister car), but both lack a strong identity. Chrysler is a mainstream pseudo-upscale brand, while Dodge is a mainstream pseudo-performance brand. Dodge’s customer base skews much younger, but its raison d’etre is flimsy enough that there has been talk of axing it now that the high-performance SRT brand has been spun off of it.
  • Jeep is making an aggressive push in world markets, with a view to doubling sales by 2018 to 1.5 million units.
  • Ram trucks have been a major profit center for Chrysler, but the aluminum Ford F-150 will present a real challenge to Ram’s new diesel half-ton truck.
  • Hybrids and alternative powertrains are expected to be discussed. Although Jeep and Ram have a diesel powertrain through VM Motori (a Fiat owned company) and Ram has a long relationship with Cummins, FCA lacks any sort of hybrid technology, and is lagging in the Corporate Average Fuel Economy rankings. FCA is also reliant on Jeep and Ram for much of their financial success, putting them at a further disadvantage. The only announcement regarding hybrid cars was a brief one about a next-generation hybrid minivan sometime later in the decade.

We’ll have full coverage of the event tomorrow.

 

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Marchionne: No Money In Small Diesel Cars http://www.thetruthaboutcars.com/2014/04/marchionne-no-money-in-small-diesel-cars/ http://www.thetruthaboutcars.com/2014/04/marchionne-no-money-in-small-diesel-cars/#comments Tue, 08 Apr 2014 12:15:51 +0000 http://www.thetruthaboutcars.com/?p=790097 Bucking a trend that has been gathering steam beyond its traditional European stronghold, FCA head Sergio Marchionne said that FCA’s upcoming product plan, due to be revealed in May, would be light on diesel engines for B and C-segment cars. Automotive News reports that Marchionne sees no money in placing a clean diesel powertrain into […]

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Bucking a trend that has been gathering steam beyond its traditional European stronghold, FCA head Sergio Marchionne said that FCA’s upcoming product plan, due to be revealed in May, would be light on diesel engines for B and C-segment cars.

Automotive News reports that Marchionne sees no money in placing a clean diesel powertrain into a compact car if it would prevent the compact offering from being “economically viable”:

You can do this on a larger vehicle because of the costs associated with those vehicles. It’s much more difficult to join with a car like [the Chrysler 200 sedan] and keep the margins above normal. Other manufacturers are making the cars. The question of whether they’re making money is a question you should ask them specifically.

FCA has V8 diesels under the hoods of Ram’s heavy-duty pickups, and V6 oil-burners in the Ram 1500 and Jeep Grand Cherokee. But in Europe, diesels are prominent in Fiat and Alfa Romeo vehicles, particularly in countries where the fuel is subsidized (and gasoline prices are rather high). It would be difficult to imagine these smaller diesels going away entirely, but the oil-burning powertrains will certainly not make it to North America.

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Marchionne’s FCA Looks To Sell 6 Million Units http://www.thetruthaboutcars.com/2014/04/marchionnes-fca-looks-to-sell-6-million-units/ http://www.thetruthaboutcars.com/2014/04/marchionnes-fca-looks-to-sell-6-million-units/#comments Wed, 02 Apr 2014 14:00:40 +0000 http://www.thetruthaboutcars.com/?p=786433 Should Sergio Marchionne’s Fiat Chrysler Automobiles be able to deliver on his expectations, the merged automaker will be able to move 6 million units annually, enabling FCA to become a player on the global stage. The Detroit News reports Marchionne met before Fiat’s shareholders in the final meeting at the automaker’s Turin, Italy headquarters before […]

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Should Sergio Marchionne’s Fiat Chrysler Automobiles be able to deliver on his expectations, the merged automaker will be able to move 6 million units annually, enabling FCA to become a player on the global stage.

The Detroit News reports Marchionne met before Fiat’s shareholders in the final meeting at the automaker’s Turin, Italy headquarters before FCA relocates to the Netherlands, stating what he expects out of FCA in the post-merger years to come:

By 2018, Fiat will be able to make more than 6 million cars. I don’t want to give any details of the plan, but we are going in that direction.

For 2014, Marchionne stated FCA aims to sell between 4.5 million and 4.6 million units on the strength of United States and Asia markets, collecting some $128 billion in revenues, and between $828.6 million and $1.1 billion in net profit. The goal of selling 6 million units has been an oft-mentioned one by Marchionne, who believes that the volumes necessary to achieve scale will only increase in the future.

Until then, his current goal is to have Chrysler and Fiat completely merged by the end of 2014, with a multi-year business plan to be presented in Detroit by May. Marchionne believes the new plan can be run “by purely financing on debt.”

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Marchionne Closes Chapter On Canadian Minivan Plant http://www.thetruthaboutcars.com/2014/03/marchionne-closes-chapter-on-canadian-minivan-plant/ http://www.thetruthaboutcars.com/2014/03/marchionne-closes-chapter-on-canadian-minivan-plant/#comments Mon, 17 Mar 2014 13:01:27 +0000 http://www.thetruthaboutcars.com/?p=773825 While celebrating the successful turnaround for Fiat Chrysler Automobile’s Sterling Heights, Mich. plant, CEO Sergio Marchionne proclaimed the issue of upgrades made to the Windsor, Ont. plant with help from Canadian federal and provincial governments one no longer worth discussing. Automotive News reports FCA pulled out of discussions with Canada over a $2 billion upgrade […]

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Chrysler Windsor Assembly

While celebrating the successful turnaround for Fiat Chrysler Automobile’s Sterling Heights, Mich. plant, CEO Sergio Marchionne proclaimed the issue of upgrades made to the Windsor, Ont. plant with help from Canadian federal and provincial governments one no longer worth discussing.

Automotive News reports FCA pulled out of discussions with Canada over a $2 billion upgrade incentive package that would secure the long-term future of the plant after politicians referred to the request as “ransom” and “corporate welfare,” according to Marchionne:

Chrysler is not in the business of accepting handouts. And if provincial and federal authorities in Canada think that’s the way to attract foreign investment, I think they are in for a big shock.

It doesn’t matter. It’s gone. That chapter is closed. Fiat-Chrysler has moved on. The agenda, from my standpoint, is complete.

Regarding Sterling Heights, where the Chrysler 200 will go into production this week, the plant’s upgrade as “an apt symbol of how far Chrysler has come because of the courage and resilience of [its] people,” Marchionne explained. The plant was due to close in 2010, only to return to life through a $1 billion investment made in light of the success behind the restyled and renamed compact, and the capacity needed to fulfill demand.

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FCA Beginning Maserati SUV Production In 2015 http://www.thetruthaboutcars.com/2014/03/fca-beginning-maserati-suv-production-in-2015/ http://www.thetruthaboutcars.com/2014/03/fca-beginning-maserati-suv-production-in-2015/#comments Thu, 06 Mar 2014 13:45:29 +0000 http://www.thetruthaboutcars.com/?p=766289 Fiat Chrysler Automobiles CEO Sergio Marchionne announced this week production of the Maserati Levante SUV will begin at the automaker’s Mirafiori plant in Turin, Italy beginning in 2015. Reuters reports Marchionne also proclaimed the Alfieri introduced at the 2014 Geneva Auto Show could go into production within 28 months if FCA wanted to make it […]

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Fiat Chrysler Automobiles CEO Sergio Marchionne announced this week production of the Maserati Levante SUV will begin at the automaker’s Mirafiori plant in Turin, Italy beginning in 2015.

Reuters reports Marchionne also proclaimed the Alfieri introduced at the 2014 Geneva Auto Show could go into production within 28 months if FCA wanted to make it so, noting that “the platforms and motors are there” for the grand tourer, though no word was given on whether the Alfieri will join the Levante at Mirafiori should plans come to pass.

Regarding the financial health of Maserati, Marchionne remained optimistic for what the future holds, stating the Alfieri was “an indication of things to come” for the luxury brand. Maserati’s increased profits also signal a sea change for FCA overall as they prepare for Alfa Romeo’s re-introduction into the United States this summer.

However, an uphill battle still waits for FCA; while Maserati moved 15,400 units last year, the figure is far short of the brand’s goal of 50,000 units for 2015. The brand must also contend with the likes of Audi and BMW, emulating their successes with more affordable vehicles while also avoiding potential damage to its image.

Along with the aforementioned re-introduction, FCA is crossing its fingers that their two-prong strategy will pay off big by bringing the Italo-American automaker back in the black by 2016, surviving the economic storm in Europe that has all but battered the auto industry as a whole.

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Editorial: Marchionne Settles On Minivan Plant Location http://www.thetruthaboutcars.com/2014/03/editorial-marchionne-settles-on-minivan-plant-location/ http://www.thetruthaboutcars.com/2014/03/editorial-marchionne-settles-on-minivan-plant-location/#comments Tue, 04 Mar 2014 17:24:31 +0000 http://www.thetruthaboutcars.com/?p=763545 UPDATE: Mere minutes after our prior editorial was published  Chrysler announced that they will be withdrawing their request for funding from the Canadian government, and “…confirmed its intention to begin to allocate to our Windsor, Ontario plant the development and industrialization of the next “people carrier” architecture (the so-called next minivan and derivatives)”  We are […]

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UPDATE: Mere minutes after our prior editorial was published  Chrysler announced that they will be withdrawing their request for funding from the Canadian government, and

“…confirmed its intention to begin to allocate to our Windsor, Ontario plant the development and industrialization of the next “people carrier” architecture (the so-called next minivan and derivatives)”

 We are awaiting a call from Chrysler to discuss the matter. In the mean time, you can read the official announcement here.

The biggest news for North America’s auto industry was announced at Geneva, and it wasn’t a new product debut. According to Automotive News, FCA CEO Sergio Marchionne has decided on a location for the next assembly plant, and things aren’t looking great for the current plant in Windsor, Ontario.

Claiming that the merger between Fiat and Chrysler “flattened the world out completely”, Marchionne reportedly dismissed the idea of national loyalty (Marchionne is a naturalized Canadian), telling reporters

“…it will become evident over the next 24 to 48 hours that we have taken a position, and life will go on. I think the decision has been made. We’re in the position of finalizing the choice. We’re pretty well done.”

Marchionne has been lobbying both the Ontario and Canadian federal government for a reported $700 million in funds, the single largest amount aside from Chrysler’s 2009 bailout package. Marchionne said that countries competing for auto production have an “…obligation to match and effectively equal what the competition is offering” in terms of subsidies, suggesting that both levels of government ought to offer competitive subsidies to keep the minivans in Windsor.

For a country f 35 million people, this is unrealistic. Canada simply cannot compete with the handouts being offered by the United States and Mexico, which are de rigueur for any auto maker looking to set up a plant (or re-tool an existing one). A relatively high Canadian dollar also contributes to high labor costs, something that can easily be remedied by moving production to the southern United States (where it will be reduced to $14-$16 per hour, or roughly half of what it costs in Canada), or Mexico, where workers would earn just a few dollars per hour.

Labor costs aside, Mexico is looking like the most appealing choice for the new vans. FCA has the capacity in Mexico to build the new vans, thanks to the Dodge Journey’s move to the Sterling Heights, Michigan plant, and the Fiat 500’s move to Poland. Along with NAFTA, Mexico has a free trade agreement with the European Union, allowing FCA to export cars to a broad range of markets. And with planned upgrades to a flexible line, this could mean anything from the new minivans to a crossover to a new sedan. The timing of the van’s launch also coincides with the end of Chrysler’s contract with Unifor (formerly the CAW), allowing them to make a clean break from Windsor.

Assuming Chrysler does leave Windsor, it will herald the start of a painful, Australia-style exodus from Southern Ontario for the Detroit Three. GM’s Oshawa plant is almost certainly the next plant to close, which will devastate the working-class town that has built itself around GM. That will leave just one plant for each American OEM- the GM CAMI plant in Ingersoll, the Ford plant in Oakville and the FCA plant in Brampton as the sole remnants of Detroit’s Canadian automotive assembly sector. On the other hand, Ontario’s three non-unionized transplants, operated by Honda and Toyota, don’t appear to be going anywhere.

 

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Only Select Fiat Dealers Will Get Alfa Romeo Franchises http://www.thetruthaboutcars.com/2014/02/only-select-fiat-dealers-will-get-alfa-romeo-franchises/ http://www.thetruthaboutcars.com/2014/02/only-select-fiat-dealers-will-get-alfa-romeo-franchises/#comments Tue, 25 Feb 2014 12:00:32 +0000 http://www.thetruthaboutcars.com/?p=753569 Fiat Chrysler Automobiles is set to bring Alfa Romeo back into the United States market after a two-decade absence with the 4C, but only the best-performing Fiat dealerships will be selected to sell the first new Alfas when the lighweight $60,000 sports car rolls off the dock in June. The Detroit News reports the majority […]

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Alfa Romeo 4C

Fiat Chrysler Automobiles is set to bring Alfa Romeo back into the United States market after a two-decade absence with the 4C, but only the best-performing Fiat dealerships will be selected to sell the first new Alfas when the lighweight $60,000 sports car rolls off the dock in June.

The Detroit News reports the majority of Fiat dealerships who were promised an Alfa wing will not be along for the ride in 2014. FCA CEO Sergio Marchionne stated that his company would only allow “the best-performing Fiat dealers to participate” based on “simple dealer metrics” and efficacy in representing Fiat. Though he also added that said dealers knew who they were, FCA spokesman Rick Deneau countered his boss’s statement, saying that those dealers “have not been identified yet.”

While the 4C will be the only Alfa offering available this year, it will be joined in 2015 by the Giulia, Giulietta and a new Spider co-developed with Mazda, which will also underpin the latter’s new MX-5 roadster. The 4C is motivated by a turbocharged four-pot driving 240 horses out of the back gate, pushing the 1875-pound sports car from naught to 60 in 4.5 seconds.

However, follow-through hasn’t been FCA’s strong suit regarding Alfa’s return, with the brand originally promised to Fiat dealers in 2012, then last year before settling upon June 2014. The return was also promised to come with a full lineup to display in showrooms, but only the 4C will be setting the pace this year as it goes up against the Porsche Cayman and Chevrolet Corvette Stingray.

According to IHS Automotive, selected Fiat dealers will move 500 4Cs in 2014, with 8,400 more in 2015 once more dealers join the fray. IHS also expects Alfa to move 28,000 units in the U.S. by the end of 2016.

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Editorial: A Radical Solution To Canada’s Auto Industry Investment Problem http://www.thetruthaboutcars.com/2014/02/editorial-a-radical-solution-to-canadas-auto-industry-investment-problem/ http://www.thetruthaboutcars.com/2014/02/editorial-a-radical-solution-to-canadas-auto-industry-investment-problem/#comments Wed, 19 Feb 2014 17:17:22 +0000 http://www.thetruthaboutcars.com/?p=748889 FCA CEO Sergio Marchionne took to The Globe and Mail‘s editorial pages to make his case for government investment in Chrysler’s assembly plants in Canada. Marchionne is seeking government funds to upgrade the Brampton plant (which builds Chrysler’s rear-drive cars) and the Windsor plant (which builds minivans, and would be upgraded as a flexible plant) as […]

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FCA CEO Sergio Marchionne took to The Globe and Mail‘s editorial pages to make his case for government investment in Chrysler’s assembly plants in Canada. Marchionne is seeking government funds to upgrade the Brampton plant (which builds Chrysler’s rear-drive cars) and the Windsor plant (which builds minivans, and would be upgraded as a flexible plant) as part of a $3.6 billion investment.

For readers of TTACthe facts and figures will be familiar. Marchionne correctly asserts that of the $42 billion in recent automotive investment in the NAFTA zone over the past 5 years, just $2.4 billion has come to Canada. According to Marchionne, this new Chrysler investment would be larger than anything Canada has seen in recent years, securing thousands of jobs and the future of both plants for years to come. All it will cost is a reported $700 million.

Marchionne is correct in asserting that “every global automotive jurisdiction around the world” is giving significant handouts to auto makers, Canada is a small player globally, and cannot afford to keep pace with the United States and Mexico, which foot as much as 50 percent of the bill for new auto plants.

At one time, building cars in Canada made sense. Legacy plants left from the pre-Auto Pact era cranked out cars in an era of Detroit 3 dominance and a relatively low Canadian dollar. Health care costs, long a bugbear of the auto makers and the UAW, were covered by the government, eliminating a major financial sore point.

Now, times have changed. NAFTA has superseded the Auto Pact, and that means auto makers can set up shop in Mexico, where workers are content to build cars for mere dollars per hour, or in the South, at $14-$16 per hour, versus the $32 per hour figure that some estimate it costs in Canada. Marchionne could even utilize capacity in Europe, thanks to a Canada-EU free trade deal and minimal tariffs in the United States, to import Chrysler vehicles if he so chose to, though that’s a far-out scenario.

The question is whether Canada can afford to play the subsidy game, with its ever-increasing stakes. The prevailing view among many pundits is a firm “no”. The $700-million figure seems outsized in relation to the 10,000 or so jobs it might save in Ontario, and there is a strong sentiment against “corporate welfare” for an industry that constantly has its hand out looking for assistance.

There is simply no assurance that upon receipt of government funds, Chrysler or any other auto maker will make a long-term commitment to Canada, rather than simply hit up the government in a few years time looking for more money. And the fact that the CAW failed to secure any product investment during the last round of contract negotiations (unlike Ford and GM) only serves to leave Marchionne in a stronger position to pick up and leave when the contract expires in 2016 (coincidentally, the same time as the new minivans are set to debut).

But one proposal, being floated by media and finance types (as well as a couple of industry figures, off the record) and others I have spoken to in the past, involves receiving equity in an auto maker in exchange for government funding – an “investment” in the truest sense. From a free market standpoint, I find the notion of “Government Motors” rather troublesome. But we live in the real world, where ideology must take a back seat to what is happening on the ground right now.

And in this world, Canada cannot compete with Mexico and other low-cost jurisdictions, let alone the United States. A loan, tax credits or other forms of “investment” provide minimal upside with plenty of downside risk. Canada has no leverage, but is effectively funding FCA as an auto maker.

At least with some equity (such as preferred stock, like the bailout-era TARP program), the government can benefit from the upside in share price and have a seat on the board of directors. If FCA threatened to leave Canada, then the government could do something like threaten to sell their stake to a Carl Ichan or a Bill Ackman, the kind of activist investor that no company would actively court. Again, such a scenario is hypothetical, but it demonstrates the leverage that equity gives.

Viewed through that lens, the alternatives – continuing to act as an ATM for the auto industry, or telling FCA to get lost and risk losing a giant chunk of Canda’s auto industry – somehow seem less palatable.

 

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Next-Gen Chrysler Minivans To Get 9-Speed Automatic, All-Wheel Drive http://www.thetruthaboutcars.com/2014/02/next-gen-chrysler-minivans-to-get-9-speed-automatic-all-wheel-drive/ http://www.thetruthaboutcars.com/2014/02/next-gen-chrysler-minivans-to-get-9-speed-automatic-all-wheel-drive/#comments Tue, 18 Feb 2014 15:29:11 +0000 http://www.thetruthaboutcars.com/?p=746033 Much of the news surrounding the next-generation Chrysler minivans has involved the location of their assembly, with Chrysler CEO Sergio Marchionne looking to secure government funds for the new vans. The latest report from Automotive News manages to dredge up some product details on the vans themselves. Judging by the AN report, the new minivans will employ Chrysler […]

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Much of the news surrounding the next-generation Chrysler minivans has involved the location of their assembly, with Chrysler CEO Sergio Marchionne looking to secure government funds for the new vans. The latest report from Automotive News manages to dredge up some product details on the vans themselves.

Judging by the AN report, the new minivans will employ Chrysler mainstays like the 9-speed automatic transmission, the UConnect infotainment system and a revised Stow ‘N Go seating system. For the first time in roughly a decade, all-wheel drive will return, presumably the same system shared with the Chrysler 200 and Jeep Cherokee.

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Canadian Government Funds Would Safeguard Windsor For 30 Years http://www.thetruthaboutcars.com/2014/02/canadian-government-funds-would-safeguard-windsor-for-30-years/ http://www.thetruthaboutcars.com/2014/02/canadian-government-funds-would-safeguard-windsor-for-30-years/#comments Thu, 13 Feb 2014 14:07:37 +0000 http://www.thetruthaboutcars.com/?p=740633 On the heels of reports that put a $3.6 billion pricetag on Chrysler’s investment at two Canadian plants, another Canadian outlet is reporting that the money would ensure the future of the two plants for decades to come. The Windsor Star, citing well-placed sources, claims that the Brampton Assembly Plant that builds the Chrysler 300 […]

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On the heels of reports that put a $3.6 billion pricetag on Chrysler’s investment at two Canadian plants, another Canadian outlet is reporting that the money would ensure the future of the two plants for decades to come.

The Windsor Star, citing well-placed sources, claims that the Brampton Assembly Plant that builds the Chrysler 300 and Dodge Charger/Challenger would receive substantial upgrades that would hold the plant over for another decade. By contrast, the complete re-tooling of the Windsor plant to build a sedan, crossover, the next generation Chrysler minivan and a heretofore-unannounced “small minivan for international export”, would apparently safeguard Windsor’s future for thirty years.

The tradeoff for the Canadian government would be a substantial sum, which The Star claims may even be higher than the previously reported $700 million figure. The figure sought by Chrysler, which was not disclosed, is said to be the largest “ask” since the 2009 bailout, when Chrysler received just under $3 billion from both the Ontario and federal governments.

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Chrysler Weighs Third Pickup Plant Marchionne Doesn’t Really Want http://www.thetruthaboutcars.com/2014/02/chrysler-weighs-third-pickup-plant-marchionne-doesnt-really-want/ http://www.thetruthaboutcars.com/2014/02/chrysler-weighs-third-pickup-plant-marchionne-doesnt-really-want/#comments Tue, 04 Feb 2014 11:00:15 +0000 http://www.thetruthaboutcars.com/?p=732618 Automotive News is reporting that last week’s conference call on Chrysler’s quarterly financials and the structure of the newly merged Fiat Chrysler Automobiles, CEO Sergio Marchionne said that Fiat Chrysler managers were considering whether or not to build a third pickup truck assembly plant to cope with high demand for Ram light and heavy duty […]

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Automotive News is reporting that last week’s conference call on Chrysler’s quarterly financials and the structure of the newly merged Fiat Chrysler Automobiles, CEO Sergio Marchionne said that Fiat Chrysler managers were considering whether or not to build a third pickup truck assembly plant to cope with high demand for Ram light and heavy duty trucks. Marchionne had earlier vowed to never build another assembly plant in North America and in the conference call he reiterated his preference to run existing pickup plants in Warren, Mich., and Saltillo, Mexico, “flat-out.”

Marchionne said he believes Chrysler can increase pickup truck production by 15-20% without requiring an additional factory, placing the odds of building a new plant “under 50 percent.”

Sales of Ram pickups, which were redesigned for 2013, out performed the market last year. Ram pickups were Chrysler’s best selling vehicle, up 21% in 2013 to 355,673, compared to the pickup market in general, which was up 17% over 2012 figures.

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