By on June 30, 2018

2019 Ram 1500

Without a functional plan, each episode of the A-Team would have ended with four funerals. For Fiat Chrysler, however, the solution to its problem doesn’t involve welding armor plating to a series of scrapyard vehicles while the guy from Breakfast at Tiffany’s lays down covering fire with a Ruger Mini-14.

FCA’s main concern involves the current occupant of the White House, and what his proclamations could mean for the automaker’s bottom line. A 25-percent tariff on imported vehicles could erase nearly a billion dollars in profit each year.

Don’t worry — FCA’s working on a plan.

A series of plans, actually; the development of which started the moment President Trump took the oath of office, apparently. It’s anyone’s guess what the trade landscape will look like in a year’s time. Certainly, Trump signalled his intentions quite clearly during his campaign, but the likelihood of new tariffs and a diminished or obliterated NAFTA seems more plausible with each passing day.

Speaking to Automotive News Europe, Bob Lee, FCA’s head of engines and electrified powertrains, said nothing’s being left out of the conversation. Lee sits on CEO Sergio Marchionne’s 25-member Group Executive Council.

“It’s contingency planning on a massive scale — supply-based planning, logistics planning, vehicle-build location planning,” Lee said. “This is not trivial, and it’s been going on for awhile.”

As we told you earlier, FCA stands to take a major hit if and when auto tariffs start flying. Some 9 percent of the vehicles it sells in the U.S. have their origins outside the country’s borders. The Jeep Renegade, imported from Italy, is especially vulnerable.

Should Trump impose tariffs only on European Union-built vehicles, FCA has a solution: its Brazil assembly plant, which also builds the Renegade. Should those tariffs be imposed on all foreign-built vehicles, well, FCA’s boned. The automaker would have to consider making the model a less-prominent vehicle in its lineup.

As for moving more production into the U.S., which is what Trump desires, that’s a far more difficult and expensive solution. Assembly plants don’t just spring up out of the ground overnight. The White House could easily have a new occupant by the time a plant nears completion, which is why automakers, both domestic and foreign, are busy playing the wait-and-see game.

For FCA, a company whose domestic production capacity is nicely maxed out, building a new assembly plant would work against its existing goals. The automaker’s profit-boosting, debt-reducing plan is well underway, with the company on track to become cash-positive by the end of the year.

Marchionne wants to retire on a high note. He also hopes to attract the interest of another large automaker with an urge to merge, and you can’t be strapped for dough while courting a suitor. Unplanned expenditures would throw the current plan into disarray, but so too would tariffs.

[Image: © 2018 Matthew Guy]

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47 Comments on “Whatever Trump Decides, Fiat Chrysler’s Prepared for What Comes Next...”


  • avatar
    Sub-600

    FCA just needs to set up some tents.

  • avatar
    HaveNissanWillTravel

    Yes, tents for its upcoming rainy day funeral.

  • avatar
    cliff731

    FCA should develop a domestically made SUV version of their new 2019 Ram pickup… and price the thing noticeably below what Ford’s Expedition and the Chevy/GMC Tahoe/Suburban/Yukon twins sell for. Then FCA can watch the money and profits roll in. Shouldn’t be too difficult to pull off if they can squeeze in a bit more production capability. That’s a “contingency” plan!!!

    • 0 avatar
      TW5

      Interesting idea, but that vehicle would be a monster. Chevy Tahoe/Yukon have a wheelbase of 116″. Expedition is 122″. Suburban/YukonXL are 130″. The shortest crew cab wheelbase for the 2019 RAM 1500 is 144″. That’s over a foot longer than the Suburban, and 7″ longer than the old Ford Excursion.

      Not saying it won’t happen, but the RAM 1500 would be an unwieldy beast with a clamshell over the bed, and an extra 500lbs of seating and interior fitments in the rear. It would probably weigh over 3 tons, and be at least 20 feet long.

  • avatar
    thejohnnycanuck

    “The Jeep Renegade, imported from Italy, is especially vulnerable.”

    Great. If there’s one Jeep model that no one would miss it’s the Renegade and its all but invisible Fiat counterpart. What’s that thing called again?

    • 0 avatar
      JimZ

      “Great. If there’s one Jeep model that no one would miss”

      they’ve sold over 300,000 Renegades in just over three full years of availability.

      Typical Internet Car Person. Blind in one eye, can’t see out of the other.

      • 0 avatar
        deanst

        And it’s most likely the least profitable. Or is there another Jeep you think would be less missed ?

        • 0 avatar
          Lockstops

          Least profitable? First of all I doubt that one of the company’s best functioning platform sharing systems is poor in profit.

          But above all you have to understand this fundamental, extremely important word _entry_ in front of the description of that model. You need to have an entry point into the brand as wide as possible. You need those younger customers who will then repeat their Jeep purchases, and often upgrade to more expensive models. If you lose them to another brand from the beginning, how is that a good thing?

          • 0 avatar
            Lockstops

            I’ll just add this:

            The Renegade is an excellent vehicle and a cool one at that. (Even though SUVs are ridiculous that thing, however, can actually off-road so it has a purpose at least.)

            And it’s not like the customers will go: “Gosh, I can’t buy that affordable Jeep I was going to, so now I guess I’ll just pull another $20K out of my ass and buy a very expensive Grand Cherokee.”

      • 0 avatar
        thejohnnycanuck

        Just goes to prove that right now if you put a 7 slot grille and a Jeep badge on a loaf of bread you couldn’t bake them fast enough. Actually I prefer the looks of the 500X over the Renegade’s.

        By the way Jim, it’s okay to make a flippant remark once in a while. Have a beer and loosen up. Take one of mine if you’d like.

    • 0 avatar
      Guitar man

      <>

      Well no. If tariffs are imposed on the EU then they import from Mexico. If its on everything then everyone imports from China, because the import market becomes an even field and China is much cheaper than everywhere else. US production is just a fantasy.

      BTW 20/25% tariffs are nothing, Australia had 150% tariffs and 100% import duty in the 1970s – the cheapest vehicles were fully imported from Japan.

  • avatar
    TW5

    Relocating production to the United States is not the end game, but it’s an acceptable outcome. The end game is trade liberalization so the US and NAFTA-zone can increase production and exports.

    Everyone is whining at Trump because they know the EU is a trade cartel. That’s why it exists–to thwart imports and subsidize domestic production. The EU is unlikely to liberalize. Trump is trying to counterbalance the EU, and force liberalization by using NAFTA as another trade cartel.

    Imagine our consternation when our “allies” in Ottawa and Mexico City tell us they would rather use NAFTA to the benefit of the EU and the Chinese. Many good people in Canada and Mexico, who deserve prosperity and good vibes, are going to get a ride on the economic pain train, compliments of J Trudeau and P Nieto.

    They had grown accustomed to dealing with the criminal-in-chief, and they expected another 8 years of debauchery. They are struggling to accept reality, and it will cost their people dearly, which is outrageous when you consider the riches possible if we merely follow the underlying concept of NAFTA.

    • 0 avatar
      Sub-600

      The Enfant Terrible is a rock star, Canadians love him. We here in the states know how that movie ends. Obrador will be like Vincente Fox on steroids when takes over in Mexico. He has vowed to “put Trump in his place”, which probably means flooding the border with more pooches and their “mothers”. This is history repeating itself as liberals are once again “useful idiots” for a foreign menace.

      • 0 avatar
        deanst

        Could you clarify what you mean by “pooches and their “mothers””? I can only assume it is some sort of xenophobic reference that does not belong here.

        • 0 avatar
          TW5

          @ deanst

          It means he is going to send (or provide sanctuary) hundreds of thousands of kids and their smugglers to the US border. Some will sneak into the US undetected, and we can only guess what will happen to them. Others will be caught at the border, separated from their smugglers, and then smuggled by K-street criminals at taxpayer expense.

          This border whining is not about human rights of families, it’s about protecting a multi-billion dollar smuggling industry, including taxpayer funded smuggling by resettlement companies and non-profits.

          Kids were being “separated from their parents” long before Trump took office. They are mad at him because he’s trying to send them back home, rather than smuggle them into the US according to the Obama policy.

          • 0 avatar
            Sub-600

            If an American parent, man or woman, breaks the law in the company of their kids, they are separated. For instance; the parent might go to the county lockup and the kids to social services. Children and adults are never sent to jail together to await arraignment. The Kenyan and groups like Catholic Charities have encouraged Mexicans to imperil their children. Words mean things. When you tell people they will be allowed to stay in the U.S. and consume resources for free, they will risk life and limb to come here. “Coyotes” and “mules” won’t be far away either. The pooches are pawns of their own government and the American victim vultures and poverty pimps on the left.

      • 0 avatar
        ra_pro

        Orange Drumpfista, you know how you prove your love of your dear leader? Hear is a hint you suck his c…k

      • 0 avatar
        Lorenzo

        Obrador has already said something like that – as a candidate. As a president, that’s very close to advocating an act of war. Mexico purposely keeps its military small and weak to deter military takeovers.

        If our 2000 mile border is too long, we can always move it south to the Tropic of Cancer. Mexico would lose about 60% of it’s territory in such a war, but only about 22 million of it’s 115 million population. Many of those 22 million along the border, from Tijuana to Matamoros, would be happy to be automatic American Citizens.

        The next President of Mexico has to be very careful. If Obrador is truly committed to opposing the corruption endemic to Mexico, he’ll have his hands full internally without using nationalist fervor to provoke Trump.

    • 0 avatar
      "scarey"

      @TW5- yup, The “EU”‘s original name- the Common Market. = trade cartel.

    • 0 avatar
      deanst

      I really can’t follow the “logic” of your meanderings, but if trump wants to equalize trade, why doesn’t he just start by lowering the tariffs on pickups from 25% to 10%?

      • 0 avatar
        Lorenzo

        The tariff on trucks is a response to the EU tariff on chicken. That’s why it’s called the chicken tax. The EU uses tariffs to protect their farms and industries, but we’re supposed to lower them in the name of “free” trade is one direction only?

        Our economy will survive and prosper without imports because we consume our own production. We gave breaks to others after WW2 and they’ve become dependent on the breaks, setting up barriers to maintain them.

        As with NATO, our “friends and allies” won’t pay their fair share, and they’ve long since rebuilt and now use the trade advantage for a welfare state. 70 years is long enough for their favored entry to the American market.

    • 0 avatar
      Dave M.

      The problem is Trump is trying to play chess when he barely could figure out checkers. This story has a bad ending.

      • 0 avatar
        JohnTaurus

        That must be how he made billions in the private sector. What an idiot!

        • 0 avatar
          HotPotato

          1. No he didn’t; the guy has habitually lied about his wealth.
          2. He’s a lousy businessman. If he had taken the money he got from daddy and parked it in an index fund, he’d be much richer than he is today. And without the trauma of multiple bankruptcies.

          I don’t give a rat’s ass if you like his politics or you don’t (it’s a mix of both for me). But the guy is a colossal fraud as a businessman.

          • 0 avatar
            28-Cars-Later

            “We are what we pretend to be, so we must be careful about what we pretend to be.”

            ― Vonnegut, Mother Night

          • 0 avatar
            crispin001

            HotPotato,

            1. He disagrees with assessments of his wealth and values his name brand much higher than Forbes, etc. It’s a difference of opinion (albeit substantial) and most people just go with the Forbes number.

            2. He’s a businessman. No safety-net and the ability to hide failure like government bureaucrats and never-ending government spending programs. Bankruptcy in the private sector helps preserve viable (parts) of businesses and allows for malivenstment to be purged from the economy. He borrowed money from his father and crossed the river into Manhattan. At least he went out into the world instead of pissing his (eventual) inheritance away like scions of other wealthy families. Eminently experienced families have all taken it on the chin in real estate (e.g. Reichmanns of Canada — Olympia & York — and the Debartolos of shopping mall fame). That’s the nature of business: a daily P&L and failure if you are not creating economic value.

            It’s not fraud to realize that licensing your brand name is just as profitable/more profitable (ergo is endless fight with Forbes at valuing his brand name) than real estate development.

        • 0 avatar
          islander800

          He’s gone bankrupt multiple times, including a casino in Atlantic City, a business guaranteed to print money for its owner as a fundamental aspect of its “business model”. Yet he went broke running one. What kind of business genius manages to pull that off? Oh yea, like you said, an idiot.

  • avatar
    "scarey"

    ^^Sez the guy with a SAAB logo for an avatar…”You’ll SOB with a SAAB”.
    Do you actually drive one of those ?
    WISE CHOICE !…

  • avatar
    Big Al from Oz

    Set up fully robotic factories in countries the US has trade arrangements with……but they seem to become a security threat.

  • avatar
    Big Al from Oz

    I don’t see multinationals investing as much in the US or UK in the near future due to their unreliable and erratic behaviour.

    The US and UK are a greater risk than investing in more stable economies. There are way too many unknown variables to accurately plan risk.

    The author used the term planning incorrectly. Planning occurs after you form a strategy. Planning is a phase in which risk is assessed to reach goals.

    As the situation stands with the US and UK will be a waiting game as a strategy will be hard to construct.

    Planning will uncover too many risks. These risks can be offset by charging (making higher returns to offset risks) but the costs will be too high.

    Maybe some easy production might move back to the US with plans to remove some production offshoe “after Trump” is in prison or exiled to his mate Putin.

    I don’t see much occurring here, as with most of Trump’s accomplishments ( a pattern is forming) other than unnecessary disruption.

    • 0 avatar
      Lockstops

      Yeah you’re so right as always: capitalist countries with leadership paving the way for functioning markets and working for their interests is always a losing choice, whereas socialist unions run by a massive kleptocratic elite has always made markets thrive, had a healthy grassroots small business base, resulted in innovative startuos and above all let business owners get wealthy….

      Sure, everyone’s going to invest in Spain, Greece and the Caliphate of France rather than the USA and Britain. You are such a wise thinker.

      • 0 avatar
        Big Al from Oz

        Um, name the Socialist countries?

        Having lax gun ownership and a protected pickuptruck market, with regulated dairy, protected corn and sugar farmers, exhorbitant insurance and health costs, high infant mortality, lower life expectancy and $2.74 (my niece in NJ waits) is not freedom.

        Do you know what socialism is?

      • 0 avatar
        Big Al from Oz

        The world is bigger than the EU and the countries (as your definition of socialism) you suggested you have little clue.

    • 0 avatar
      "scarey"

      Many politicians could be going to jail, but none of them is Donald Trump. In an earlier post, I asked you why the Australian government gave Hillary Clinton $20 Million.
      I must apologize- I had my facts wrong.
      The Australian government gave Hillary Clinton at least $88 Million. WTF !?!?!? Yes people will be GOING TO JAIL over this stuff. ON YOUR SIDE, though.YOur posts are getting more [email protected] crazy all of the time. Read this:
      https://www.heraldsun.com.au/blogs/andrew-bolt/why-have-we-donated-to-clintons-foundation/news-story/96f87b9c4999e22cd3b022d267129896
      Remove the log in your eye before bitching about the mote in ours.

      • 0 avatar
        ra_pro

        Another Orange Drumpfista, your “dear leader” is a Russian stooge and you’re a willing enabler. Therefore one day they will come for you as a traitor to your country, chew on that on the b..ls of your dear leader when you’re sitting in the same concentration camp created by your dear leader for children of illegal emigrants.

    • 0 avatar
      TW5

      Do you understand how the trade deficit is sustained? By foreign countries investing capital in the United States to prevent currency exchange rates from moving in favor of US exports.

      Foreign countries will continue investing trillions of dollars in the US, if they want exports to the US to remain constant. Donald Trump could punch Shinzo Abe on live TV, and throw him in a koi pond. The Japanese central bank would keep pumping every spare yen into the US economy.

      Obviously, the current trading regime is loved by people on Wall Street. They are the benefactors of the current account deficit. Lower middle class Americans lose their jobs, and Wall Street hedge fund managers become overnight billionaires by managing trillions of of capital account surplus from foreign trading partners.

      How do you think the subprime mortgage crisis happened? Besides nefarious lending practices sponsored by the Congress and executed by mortgage banks, it was caused by foreign capital flooding the US, looking for “safe AAA” investments. That’s how a US bubble becomes big enough to bring the global economy to its knees. This is what Trump is trying to fix. Get out of the way.

      Corporate tax reform effectively eliminated repatriation tax and reduced the statutory tax rate. Why? So private American capital could return to the US, thereby reducing artificial investment by foreign central banks. The Trump admin also tried to eliminate Obamacare, which is healthcare provider insurance at the expense of ordinary Americans. Unfortunately, that objective failed. Phase 2 is reciprocal tariffs or trade liberalization. Phase 3 will probably be welfare reform and public investment in US infrastructure to reduce the federal budget deficit long term.

      Get with the program. We have enough morons in this country.

    • 0 avatar
      "scarey"

      BiGalFromOz— I AM ISSUING A CHALLENGE TO YOU. LETS SEE IF YOU WILL PUT YOUR MONEY WHERE YOUR MOUTH IS—
      If Trump is impeached and removed from office BEFORE either Hillary Clinton, Bill Clinton, or Barak Obama ARE FOUND GUILTY OF A FELONY or KILL THEMSELVES*,
      I will leave this forum and never come back.
      In return, I want you to pledge that if either Hilllary Clinton, Bill Clinton, or Barak Obama is found guilty of a felony OR kills themselves* before Donald Trump is impeached and removed from office, YOU WILL LEAVE THIS FORUM and not come back.

      DO WE HAVE A WAGER ?

      *Or dies under MYSTERIOUS circumstances.

      • 0 avatar
        TW5

        @ “scarey”

        Regardless of what happens in DC, there is room enough for everyone to talk cars. We are merely at an unfortunate juncture, when the auto industry is caught in the meat grinder of global trade rebalancing. BAfO thinks it’s Trump’s fault. Obviously, the president didn’t destabilize the global economy in only 18 months. It’s been growing more imbalanced with each passing year since about 1997.

        America First is a threatening credo to people who don’t understand what is going on, but hopefully it will become more clear in the future.

  • avatar
    Zipster

    Scarey:

    Hillary got shorted, they gave me a $198 million with the stipulation that I give 10% to Sphincter Mouth.

  • avatar
    nlinesk8s

    This used to be a site about cars and the like. It’s increasingly where the trolls roll in the muck, flinging their unsupported and unsourced poo at each other. its been fun until recently, but i didnt sign up for this. See ya.

  • avatar

    In this current climate the Hyundai deal will probably not go through. Maybe Chrysler should start innovating in-house again. I suggest no more rubbish built on Fiat platforms!!

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