The Truth About Cars » sergio marchionne The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 16 Apr 2014 05:18:32 +0000 en-US hourly 1 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 (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 Marchionne: No Money In Small Diesel Cars Tue, 08 Apr 2014 12:15:51 +0000 sergio-marchionne

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 Wed, 02 Apr 2014 14:00:40 +0000 marchionne

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 Mon, 17 Mar 2014 13:01:27 +0000 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 Thu, 06 Mar 2014 13:45:29 +0000 Maserati_Kubang_front

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 Tue, 04 Mar 2014 17:24:31 +0000 windsor_assembly

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 Tue, 25 Feb 2014 12:00:32 +0000 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 Wed, 19 Feb 2014 17:17:22 +0000 front-450x333

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 Tue, 18 Feb 2014 15:29:11 +0000 2011_Chrysler_Town_&_Country_--_03-24-2011 (2)

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 Thu, 13 Feb 2014 14:07:37 +0000 Dodge-Challenger-production

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 Tue, 04 Feb 2014 11:00:15 +0000 rampickups

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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Marchionne’s Choice of Fiat-Chrysler HQ Weighs Political Realities Against Lower Taxes Wed, 29 Jan 2014 15:55:25 +0000 19e1m34hoia1ojpg

Now that Sergio Marchionne has succeeded in joining Fiat and Chrysler together, for his next act he’s planning on moving Fiat’s headquarters out of Italy. While such a move has tax advantages, it would present a political and public relations challenge for Fiat and Marchionne in their home country. According to Reuters, the new entity, dubbed Fiat Chrysler Automobiles, will be a Dutch-based company with a UK tax domicile, while shares are listed on the NYSE with a secondary listing in Milan.

Marchionne is aware that locating the headquarters outside of Italy, where Fiat has operated for 115 years and has received government funding, or outside the United States, where Chrysler was bailed out by the federal government, could make waves and there is the possibility that the Italian government might intervene. “I’ve seen weirder things happen,” Marchionne said to journalists at the recent Detroit auto show. “So I sincerely hope they don’t create obstacles.”

The deal for Fiat to take complete control of Chrysler after buying the UAW retiree health benefits trust’s stake in the Auburn Hills based automaker was consummated last week and the result is the world’s 7th largest automaker, holding brands that include ,Alfa Romeo, Dodge, Ferrari, Jeep and Maserati along with the two corporate brands.

Marchionne is emulating what he did when he spun off CNH Industrial from Fiat: register the group in the Netherlands with a UK tax domicile. Marchionne has previously said that CNH Industrial will be used as “one of the technical blueprints” for Fiat-Chrysler. CNH is registered in the Netherlands, tax-resident in Britain and traded primarily on the New York Stock Exchange, with a secondary listing in Milan.

Marchionne, who trained as a tax accountant before attending law school by training, will present his plans to the Fiat board of directors today. Publicly he has insisted that moving the HQ and listing on the NYSE reflect “access to funding” more than tax considerations, saying that profits are taxed where they are made with “no impact” on the Italian government’s tax revenue. Because of tax credits for previous years’ losses, Fiat will not have to pay domestic Italian taxes for years to come. Still, to reduce tax burden, manufacturers can adjust the amounts of total profit attributed to the production, export or sale of each vehicle in different countries.


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Fiat Completes Acquisition of Chrysler, Marchionne Open to Other Partners Wed, 22 Jan 2014 13:00:42 +0000 chryfiat

Fiat announced that it has completed the acquisition of all remaining shares in Chrysler Group that it did not own. The United Auto Workers’ retiree healthcare trust, known as a voluntary employee beneficiary association or VEBA, received $3.65 billion in cash for its 41.46% stake in the Auburn Hills based automaker, $1.9 billion of which came from Chrysler and $1.75 billion from Fiat. The total deal is worth $4.35 billion, with Chrysler committed to pay the trust the remaining $700 million in four annual equal payments, the first of which was made when the deal was consummated.

The closing of the deal took place after a year and a half of negotiations, lawsuits and the threat of an initial public offering of Chrysler stock, but Sergio Marchionne has finally realized his ambition to combine Fiat and Chrysler. That gives Fiat access to Chrysler’s profits, needed to shore up the Italian automaker which is overexposed to the weak European market. Fiat projects spending as much as 9 billion euros ($12 billion) on investments in its Italian factories revamping its aging product lineup.

Fiat chairman John Elkann told reporters at the Detroit auto show last week that Marchionne, 61, will remain CEO through at least 2016 to manage what will now be the world’s 7th largest car company. The two companies sold about 4.4 million vehicles combined last year.

Fiat’s board of directors will meet at the end of January work out the details of the merger, including how the joint corporation will be organized, where the headquarters will be, and on which stock exchange the company will list its main stock listing, Elkann said. He also said that the merged company’s name will include both Fiat and Chrysler. At the Detroit show last week Marchionne said that the U.S. has a “large claim” as the location of the future headquarters, and that he prefers the New York Stock Exchange as the primary listing for the group. Marchionne also said that once the merger is complete, he would be open to additional partnerships with other automakers, such as PSA Peugeot Citroen and Suzuki though there is less urgency now that the merged company has “the credentials to be at the table” with top global automakers.

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Jeep Aiming For 1 Million Units Sold in 2014 Thu, 16 Jan 2014 17:05:39 +0000 2014-Jeep-Cherokee-front-closeup-1024x640

Chrysler Group LLC CEO Sergio Marchionne threw down the gauntlet for Jeep during an interview on Detroit’s WJR-AM at the 2014 Detroit Auto Show, proclaiming that the Rubicon-rated brand will move 1 million units onto the trails and highways by the end of this year.

Global sales of the iconic off-road brand rose 4 percent in 2013 for the fourth consecutive year, topping out at a record 731,565 units moved. Though Marchionne is confident Jeep will make his stated sales goal, brand president Mike Manley is taking a more conservative stand, stating that the figure might come by 2015 rather than 2014.

However, Manley believes the new Cherokee could bring the remaining 300,000 or so units to the table by the end of the year should the SUV do well at home and abroad. Sales of the Cherokee in the United States, in spite of its face, are 15 percent to 20 percent ahead of Chrysler’s expectations after only two months in the market; total U.S. sales account for 67 percent of Jeep’s overall global sales.

As far as the rest of the world is concerned, Fiat has plans to build a subcompact Jeep in Italy for sale in Europe in 2014, with arrival in the U.S. due sometime in 2015. The parent automaker also plans to expand production in America, as well as in China and Brazil.

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Fiat Resumes Negotiations to Buy Rest of Chrysler from UAW VEBA Mon, 23 Dec 2013 12:30:14 +0000

Bloomberg is reporting that Fiat CEO Sergio Marchionne has resumed talks with the UAW’s retiree health care trust (aka VEBA) to buy the 41.5% of Chrysler that the Italian automaker doesn’t yet own. Fiat executives met last week with the trust’s representatives. The proposed initial public offering of Chrysler stock has been delayed for tax reasons until next year, creating a window of opportunity for a deal. Differing valuations on the stock prompted VEBA’s demand for the IPO, which would establish a market price for the stock, most likely more than Marchionne and the Agnelli family that controls Fiat want to pay.

Fiat recently upped its offer, the first it has made since August. That offer was rejected but apparently the parties are close enough that negotiations have resumed. According to Bloomberg’s sources, advisers to the IPO estimated a market valuation of approximately $10 billion for Chrysler. Based on those estimates, Fiat is said to be offering about $4.2 billion, while the trust wants at least $5 billion. While $800 million is still a lot of money, the two parties are closer than ever before. Fiat does have the right to buy the remaining stake for about $6 billion so it’s not as though a corporate raider is going to swoop in and snatch the rest of Chrysler from Marchionne’s grasp, but the Fiat CEO doesn’t want to overpay.

Marchionne wants to merge Fiat and Chrysler to be able to compete with larger global rivals, and also so that Fiat can access Chrysler’s profits to help them weather the weakness of Fiat’s core market in Europe and develop replacements for their aging product line there. The more Fiat pays for the remaining share of Chrysler the less cash the merged company will have for product development on both sides of the Atlantic Ocean.

On the other side of the negotiating table, the health care trust is holding out for a maximum payout, particularly since a recent analysis says that their anticipated costs to provide health care to Chrysler UAW retirees will still exceed VEBA’s current assets including the 41.5% stake in Chrysler by more than $3 billion.

Representatives for Fiat and Chrysler officially declined to comment.

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Marchionne To Reveal Yet Another Relaunch Plan for Alfa Romeo Tue, 03 Dec 2013 12:00:18 +0000 800px-'_2012_Geneva_Motor_Show_-_Disco_Volante

For the fourth time since 2004 Fiat CEO Sergio Marchionne is reported to have devised a new plan to revive the Alfa Romeo brand, this one focused on premium vehicles made in Italy for export to the world. Alfa hasn’t made a profit in the nine years since Marchionne took the reigns at Fiat.

Marchionne’s latest plan for Alfa will be based on a new rear wheel drive architecture (with all wheel drive variants) that will be developed by a dedicated group of engineers at Maserati in Modena, headed by Philippe Krieff. Krieff reports directly to Harald Wester, Fiat-Chrysler chief technical officer and CEO of Alfa and Maserati. The new platform is seen as needed to compete with BMW and Mercedes-Benz. With sales of 101,000 units last year Alfa Romeo doesn’t really have the kind of volume to support dedicated platforms so the architecture will like be used by Chrysler and Dodge as well. Sources say it could be ultimately used for the Chrysler 300 and Dodge’s Charger and Challenger.

Right now Alfa is hampered by two factors: the brand’s primary market is Europe, where auto sales continue to be soft; and a lack of product. Currently the only models Alfa dealers offer are the MiTo subcompact, Giulietta compact and the 4C sports coupe.

The new architecture will help flesh out the Alfa lineup and be the basis of at least four new models: the Giulia mid-sized sedan and a wagon variant, a large flagship sedan and a mid-sized SUV. The first is set to launch by early 2016 and all will be sold in the United States, where Marchionne has been trying revive the Alfa Romeo brand.

Marchionne has lowered his expectations for Alfa worldwide sales from 500,000 units by 2014, to 400,000 units and last October he said the goal would be “more than 300,000 units.”

Some analysts are skeptical that Marchionne can find the cash to simultaneously regrow Alfa Romeo and buy the 41.%% of Chrysler that it needs to buy to take full control of the Auburn Hills automaker so Fiat can have access to the profits Chrysler is currently generating. Marchionne is in a bit of a Catch-22. He needs Chrysler’s cash to turn around Alfa but Fiat’s current capital structure doesn’t have enough cash to buy the rest of Chrysler to get access to that cash.

One analyst, though, Richard Hilgert, at Morningstar in Chicago, thinks that before trying to buy the rest of Chrysler Marchionne will set up a new capital structure for the Fiat group. Hilgert believes that this would let Marchionne fund the relaunch of Alfa; support new product development for Fiat in Europe; and fund the Chrysler purchase. “I think the company could negotiate a financing package prior to closing on a Chrysler deal with the VEBA [the trade union pension trust that is Chrysler's minority owner],” Hilgert said.

Maserati sales are booming and Marchionne hopes to reproduce that success with the eventual goal of exporting lots of Alfa Romeos from the group’s currently underutilized Italian plants.

“We will focus on Alfa Romeo and Maserati to access the higher end of what we consider to be a permanently polarized market,” Marchionne said in October, reiterating that Fiat would not close any Italian plants. The combined capacity of the Cassino, Melfi, Mirafiori and Pomigliano plants is more than 1 million units. Last year their combined output dropped by 18 percent to 394,620 units, ~40% of capacity, about half the utilization needed to break even.

Marchionne’s precise plan is a secret until its expected announcement next spring but the Automotive News, based on industry and supplier sources, makes the the following predictions.

Giulia: Originally planned to share the FWD bones of the upcoming redesigned Chrysler 200 and due next year, the Giulia will be switched to the new RWD/AWD architecture and launch at the earliest in late 2015. The new Giulia may be built at the Cassino plant in central Italy.

Large sedan: It was going to be derived from the Maserati Ghibli and launched by 2014 but the Maserati platform was judged to be too expensive to use so it will share the new RWD/AWD platfrom and debut at that same time as the Giulia.

Mid-sized coupe: A BMW 4 Series competitor based on the new architecture.

Large coupe: This would go up against the BMW 6 Series and may share a platform with the next Maserati GranTurismo coupe scheduled for 2016.

Roadster: Due in 2015, Mazda will build a two seat roadster for Alfa based on the next generation MX-5/Miata. It will use an uprated version of Fiat’s 1.4-liter MultiAir turbo direct injected gasoline engine.

4C coupe: European deliveries started in October. Asia will follow in Q1 of 2014 and North America in the second quarter of the year.

4C Spider: Alfa plans a version of the 4C with a removable carbon fiber roof, expected to be revealed in Geneva next March.

Compact crossover: Everyone today has to have a compact crossover. Alfa’s will be derived from the replacement for the Jeep Compass and Patriot.

Mid-sized SUV: Alfa had been considering building an Alfa variant of the new Jeep Cherokee at Jeep’s Toledo, Ohio plant but the latest reports say that it might be switched to the new RWD/AWD architecture and built in Cassino.

Large SUV: This would be based on the Maserati Levante premium large SUV that is due in early 2015 and will be built at Fiat’s Mirafiori plant in Turin.

MiTo: Alfa canceled plans for a five-door variant of the three-door MiTo. The MiTo is only sold in Europe and with the weak market there, a business case couldn’t be made for the five-door.

Giulietta: Due for a complete redesign in 2016, Alfa’s best-selling model was just face-lifted and given new electronic features.

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Fiat Says No Chrysler IPO Before 2014 Tue, 26 Nov 2013 11:30:54 +0000 fiat-and-chrysler-logos_100193029_m

Though Chrysler-Fiat CEO Sergio Marchionne had previously said that an initial public offering of Chrysler stock could take place by the end of 2013, the Italian automaker announced that stock sale will not take place before the new year. ”The Board of Directors of Chrysler Group … has determined that it will not be practicable for Chrysler Group to launch and complete an initial public offering prior to the end of 2013,” Fiat said in a statement.


The sale could help resolve the dispute between Fiat and the UAW’s health benefits trust, which owns 41.% of Chrysler, over the valuation of that stake, but a delay in the IPO could also delay Fiat’s full acquisition of the Auburn Hills based automaker. Marchionne would like to merge Fiat and Chrysler to create the world’s 7th largest auto firm and give Fiat access to Chrysler’s profits. Chrysler had initially filed paperwork for an IPO in late September.

The Wall Street Journal reports that Chrysler would raise between 1.5 and 2 billion dollars with the IPO. That would give the company a market valuation of 9 to 12 billion dollars. Fiat declined to comment on the report.

Marchionne wants to merge the Fiat and Chrysler to create the world’s seventh-largest carmaker. Fiat has been hurt by the weak European market. The company’s plan to reduce losses in Europe depends on sharing technology, cash and dealer networks with Chrysler. The merger would also give Marchionne access to Chrysler’s profits and allow him to use that cash to shore up Fiat and expand its product offerings. The companies, while managed by the same people, must currently keep their finances separate.

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Marchionne Presents Yet Another Turnaround Plan Thu, 31 Oct 2013 18:03:43 +0000 2013-03-05_Geneva_Motor_Show_8286

Another day, another turnaround strategy from Sergio Marchionne. The plan, which won’t be revealed until April, reportedly includes a rear-wheel drive architecture as a key element, with enough flexibility to be used in everything from Alfa to Dodge vehicles.

Although Alfa Romeo is said to be a key factor in Fiat’s overall future growth, it currently fields just two small hatchbacks and the low volume 4C sports car. Most of its sales happen in Europe, where the new car market is weak. Alfa badly needs this new architecture to flesh out its product line with larger sedans, station wagons and SUVs, but nothing is expected to bear fruit until 2016 at the earliest.

Previous plans have called for Alfa to sell 500,000 units by 2014, a goal that was established in 2010. Since then, there has been a constant lowering of volume targets while the date itself is pushed back further and further into the future. The return of Alfa Romeo to America is a bit of a running joke amongst car enthusiasts, but at this point, it’s a matter of global survival for the brand, and each delay only makes the situation increasingly precarious.

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Marchionne: No Deal Yet For VEBA Shares, Chrysler IPO Would Delay Fiat Merger Mon, 16 Sep 2013 11:00:46 +0000 CHRYSLER_HOUSE_01 (1)

On Friday, Sergio Marchionne, who heads Fiat and Chrysler, told reporters in Milan, Italy that he hasn’t gotten any closer to making a deal with the UAW’s retiree health care trust for Fiat to purchase the VEBA’s shares in Chrysler and take full ownership of the Auburn Hills automaker. The UAW health care trust owns 41.5% of Chrysler and the two parties have not been able to agree on a price. The trust is demanding $5 billion for its shares. Marchionne told the LaPresse news agency, concerning the UAW trust’s suggested price, “They should buy a lottery ticket.”

Marchionne said that though an initial public offering of Chrysler stock could delay a merger with Fiat, his team was preparing for such an IPO in order to comply with a request from the VEBA, which has the legal right to ask for an IPO. The filings with the U.S. Securities and Exchange Commission will be ready by the end of the month. Marchionne said that an IPO for Chrysler could be ready by the end of the year but that he thought that financial markets would be more receptive in the first quarter of 2014.

The Fiat CEO would rather buy the trust’s shares in a block rather than have to buy them back piecemeal from the public should the trust sell them on the open market.

After a July court ruling siding with Fiat over the VEBA concerning the price of a smaller tranche of Chrysler shares, the two sides have failed to agree on a price for the trust’s remaining stake.

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Maserati SUV Will Not Be Imported From Detroit Wed, 04 Sep 2013 16:48:00 +0000 Maserati_Kubang_rear

Another day, another flip-flop on future product plans over at Casa di Marchionne. The latest news comes from Italian unions, who claim that the Maserati Levante will be built at the Mirafiori plant in Italy, rather than at Jeep’s plant in Detroit.

Fiat will invest $1 billion in the plant and add upscale models from Maserati and Alfa Romeo in exchange for concessions from labor unions such as temporary layoffs. The plant will also undergo a lengthy re-tooling. The shift to Italian production for the Levante isn’t exactly news, but it is a great symbol of how quickly Chrysler-Fiat has been able to turn on a dime when adjusting their rhetoric.

The Detroit production of the Levante was supposed to be symbolic of the union of the two companies and the capability of American manufacturing. But a stumbling car market, overcapacity and an angry workforce in Europe changed that calculus, and suddenly, Marchionne found himself in the position of having to throw a bone to Fiat workers. Moving the Levante to Italy is a rather low stakes move on our shores, but one that will pay dividends back in Italy.

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Chrysler Changes Product Plans Again, Extends “Sell-By Date” Of Avenger, Caravan, Wrangler Thu, 25 Jul 2013 12:46:06 +0000 Jeep_Wrangler_X_--_10-06-2010

Chrysler CEO Sergio Marchionne may not be fond of changing up his outfits, but he certainly has no problem mixing up product plans. The latest news out of Auburn Hills suggests that Chrysler will be extending the lifespan of some key products for up to another 5 years.

Under the new regime, the Dodge Avenger, one of Chrysler’s main fleet queens and the key cannibalizer of Dart sales, gets a stay of execution until 2015. The Dodge Grand Caravan will run until 2017, an extension of two years past its planned replacement date, while the Jeep Wrangler, which is said to be undergoing a radical redesign, will stay on the market in its current form until 2018.

Chrysler has good reasons to keep all three vehicles going. The Avenger’s platform-twin, the Chrysler 200, will be replaced next year in a major redesign, and by keeping the Avenger around, Chrysler will have a cheap sedan to sell to fleets (and presumably, less-than-qualified buyers).

The Grand Caravan can also fill that role in minivan form, while a redesigned Chrysler Town & Country will apparently be introduced to consolidate Chrysler’s minivan position. But the popularity of the Grand Caravan among fleet buyers and in the Canadian market has been said to give Chrysler pause about killing it off entirely. For some time, plans have called for one brand to get a minivan and one brand to get two crossovers. Automotive News seems to think that Chrysler will get the van and presumably Dodge will have a redesigned Journey – and a Grand Caravan too.

The decision to keep the Wrangler kicking around is seemingly more transparent. By extending its lifespan another two years, Jeep can get more capacity at its Toledo, Ohio plant, which is said to be running flat-out. In addition to a whole bunch of brand new features like aluminum body panels and an air suspension, the Wrangler will apparently get a diesel engine and a pickup variant. Right now, Jeep is selling Wranglers, particularly the 4-door Unlimited model, as fast as they can, with special edition variants not lasting long on dealer lots. Presumably, Chrysler will keep pumping them out for another few years to keep Jeep buyers satiated.


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How Jeep Ended Up With A GM Diesel Thu, 18 Jul 2013 13:00:45 +0000 V6-diesel

The new diesel engine that is expected to arrive in the Dodge Ram 1500 and Jeep Grand Cherokee (which, we hear, has been pushed back a few times already) has had an interesting life. The 3.0L twin-turbo diesel engine never was intended for Chrysler or Fiat products, but rather, Cadillac.

As Automotive News tells it, the engine was born when GM bought 50 percent of Italian firm VM Motori in 2007. They quickly began work on a 2.9L diesel engine intended for the European market Cadillac CTS, with GM financing the venture. Cadillac’s struggling sales in Europe along with GM’s bankruptcy conspired to prevent the VM diesel from ever appearing in a GM product.

Where it did end up is with Fiat, after the firm bought 50 percent of VM Motori in 2011. The engine was reworked for use in Chrysler products, but VM is apparently free to sell it to other auto makers as well. All in all a shrewd move by Sergio Marchionne – a man who was once able to make GM pay $2 billion to Fiat for the privilege of not entering into an alliance.

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Analysis: Why Buy A Dart When You Can Buy An Avenger? Fri, 05 Jul 2013 17:26:39 +0000 450x304xavenger1-450x304.jpg.pagespeed.ic.1nTRaiGDPU

In the compact segment, GM and Ford are having no trouble moving metal. The Cruze is coming off of a record month, and the Focus is slightly ahead of the Cruze year-to-date. So what about the Dodge Dart? Sales of the Dart have been incredibly weak; in a segment where the top sellers can move between 20,000 and 30,000 units monthly, the Dart has barely cracked 8,000 units per month. Not a good sign when Sergio Marchionne himself said “if you’re a serious car maker, and you can’t make it into this segment, you’re doomed.”

The Dart’s biggest competitor may not even be in the compact segment, but in the the very same showroom it lives in.

The Dart is not a bad car – far from it. I didn’t like the powertrain of the 2.0L SXT model I had - the engine felt coarse and the gearbox could not have been slower to respond -,but there were plenty of other things I found appealing; it handled well, the UConnect system was far better than the MyLink, SYNC or other competitive infotainment systems I’ve used, and everything seemed to be pretty well put together. On paper, the Dart should be pretty competitive, right?

The biggest problem standing in the Dart’s way is the Dodge Avenger. For $17,390 (including the $2,500 “cash allowance”) you can step up to a base model Avenger, which is a “bigger car” in the eyes of the average consumer, with a 2.4L engine. An SE V6, with a 283 horsepower Pentastar, is $20,090 when the “cash allowance” is taken into account, while an SXT package is another $300. Most importantly for the sub-prime market, there is currently 0 percent financing for 72 months and no payments for 90 days. This is big stuff for a car that is one of the darlings of the sub-prime market.

Open up the payment calculator and the rationale for moving up to the Avenger is even greater. A Dart SXT with the 2.0L engine (no options for simplicity’s sake, since configuring a car opens up a whole other can of worms) is $236 per month for 72 months with $3,000 down at 3.59% APR. An Avenger SE V6, with the same down payment and APR is $29 more per month.

As far as a dealer upsell goes, it’s a no brainer, and customers agree. Year to date, Dodge has sold nearly 30 percent more Avengers than Darts. Inventory data via shows 16105 Darts for sale, versus just 10832 Avengers (in terms of days of supply, Automotive News quotes 94 days worth of Darts on June 1, and just 36 days worth of Avengers). Nearly half of the examples on are V6 models, and of those, 80 percent can be had for less than $25,000. Depending on options, it’s possible to get them for around $20,000 flat. That may be one of the most aggressive performance/dollar propositions on sale today.

I think it’s possible to make a good case that the biggest threat to the Dart is the Avenger itself, and the aggressive manner in which Dodge and its dealers (and Chrysler Capital/Santander) are pushing this car. No wonder there are constant rumors of it being killed off. It’s tough to beat from a value proposition – and if you believe Jack Baruth, it’s not actually a bad car, despite the auto press dumping on it consistently as the worst car on sale today. Speaking of which, how much love would the Dart have gotten with a Fiat or an Alfa badge on the hood. I’m sure the same faults that many were willing to criticize would have been glossed over as “character” – but we won’t know until someone translates the Mandarin language reviews of the Fiat Viaggio.

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Latest Rumors Out Of Windsor Point To Dodge Grand Caravan’s Demise Wed, 19 Jun 2013 16:26:30 +0000 2011_Chrysler_Town_&_Country_--_03-24-2011 (1)

It appears that the Chrysler Town & Country has won the minivan Hunger Games, as the latest report from the Windsor Star claims that the T&C will be the lone minivan offering from Chrysler when the next generation van goes on sale in 2015.

The subject of which van would survive has been a constant source of speculation for industry watchers. Chrysler CEO Sergio Marchionne has issued a number of conflicting statements, stating one brand would get a new larger crossover. It turns out that Chrysler will be getting a van, and a crossover, while Windsor’s assembly plant will some new product as well

Chrysler has not said publicly which of the two vans would be discontinued or when a new van would be launched. However, CEO Sergio Marchionne has said that the plant will get a new global platform, capable of producing a variety of vehicles, including a sedan as well as a small van for international export.

The new crossover is said to be reminiscent of the Chrysler Pacifica in that it’s a large crossover ostensibly with three rows. There’s been talk of Dodge axing the Durango, and a Chrysler crossover would give dealers a way to retain Durango customers, while also beefing up the brand’s current 4-vehicle lineup. The loss of the Durango and Caravan would hurt Dodge in the short-term, but the two don’t exactly fit with the brand’s “sporty” image. Then again, neither does the Journey, but that doesn’t appear to be going anywhere either. One market that would feel the sting of the Grand Caravan’s demise is of course, Canada. The Caravan is a perennial best-seller in The Great White North, and the T&C would have to dip a lot lower in its pricing range to fill the void left by budget entries like the $18,995 Caravan Canada Value Package and better equipped mid-level trim ranges (for comparison, the T&C starts at just over $30k in Canada).

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Italy To Fiat: Please, Please, Please Don’t Go, I’m Beggin You To Stay, I Love You So Fri, 24 May 2013 11:04:46 +0000

Says Reuters:

“Italian Industry Minister Flavio Zanonato said he asked automaker Fiat to stay in Italy after its planned merger with Chrysler, which has led labor unions to fear it plans to move its headquarters to the United States.”

Zanonato said earlier this week he would seek a meeting with Fiat Chief Executive Sergio Marchionne: “I’ve spoken to Marchionne. It was a friendly phone conversation and I told him what I will tell him when we meet face to face: I will ask him for Fiat to stay in Italy and continue being an Italian company,” Zanonato said on Thursday on the sidelines of an annual meeting of business lobby Confindustria.”

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Jeep Compass’ Segment-Leading Capability vs Jeep Patriot’s Segment-Leading Capability Sat, 23 Feb 2013 12:02:44 +0000 2014 Jeep Compass Limited Chrysler Photo

The decision by former Chrysler design chief Trevor Creed, approved by the company’s product planners and subsequently reaffirmed by Sergio Marchionne and his team of Fiat managers, to produce two compact Jeep SUVs, the Compass and the Patriot, has always confused me. Why spend money developing two different cars based on the same platform for the same market segment? Wouldn’t it make more sense to make one good car instead of two not quite as good cars?

Of course in the corporate mind at Chrysler, the Compass and the Patriot were not really supposed to compete with each other. The Patriot was supposed to be a compact Jeep for traditional Jeep owners, with styling derived from the XJ Cherokee. The Compass was supposed to be the compact Jeep for women people who’d never consider buying a Jeep. It had rounder, softer shapes, and was the first Jeep to be sold that could not be bought in a configuration that would earn it Jeep’s coveted “Trail Rated” branding.

2014 Jeep Patriot Chrysler Photo

Both Jeeplets have gotten their poorly received original interiors upgraded as Chrysler has renewed its product line coming out of its bankruptcy and just last month at the 2013 NAIAS Chrysler introduced the restyled 2014 Compass, touting it as “the Most Capable Compact SUV” having “Segment-leading capability”. So where does that leave the Patriot? I guess the product planners and marketers in Auburn Hills are slicing the marketing segment salami paper thin because at the same time that Chrysler was publishing the press release about the new Compass, it was also releasing one about the 2014 Jeep Patriot, with “Benchmark Compact-SUV Capability” with ”Segment-leading capability”.

Does that mean that the Compass is more “capable” than the Patriot? Is the Patriot the “benchmark” for the Compass? And just which segments are each of them leading. Both cars feature a new six-speed automatic, both cars are now available with Jeep’s Freedom Drive I 4×4 package and both can be equipped in Trail Rated form with Jeep’s Freedom Drive II 4×4 Off-road Package. The Compass’ original raison d’etre was selling Jeeps to people that would never take them off pavement. Now that both cars are equally capable, and segment-leading capable at that, what’s the point of selling both of them? Sergio’s no dummy so selling both cars may make more money than just one of them, but I still can’t help but think what a Patriot with twice the development money behind it would be like.

Ya think there’s some cutting and pasting going on in Auburn Hills?Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS

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