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FCA, Hyundai in talks over tech partnership, Marchionne says

Reuters-Bloomberg  /  December 2, 2017

ARESE, Italy -- Fiat Chrysler Automobiles is in talks with Hyundai Motor about a technical partnership, but there are no merger talks between the two, FCA CEO Sergio Marchionne said.

FCA is often the subject of merger speculation, especially after its unsuccessful 2015 attempt to tie up with larger U.S. rival GM, with reports of interest from China's Great Wall and Hyundai.

"We already buy components from [Hyundai] .... let's see if we can agree on other points, especially for the development of transmissions and hydrogen," Marchionne told journalists on Saturday, adding there was "nothing to announce for the moment."

Asked whether this collaboration could turn into a merger, Marchionne said: "I don't believe so."

Marchionne is a vocal proponent of automaker consolidation. Cooperation on hydrogen propulsion would come as rival plug-in electric vehicles emerge as the dominant technology in the emerging post-fossil fuel era.

The 65-year-old chief executive, whose mandate ends in April 2019, is working on a new business plan to 2022, which he said should be presented in the second quarter of next year. As part of that strategy and to simplify its portfolio, FCA is working on separating two of its three components businesses.

Spin-offs

Marchionne said the spin-offs of Magneti Marelli, which makes components for lighting, engines, electronics, suspension and exhausts, and robotics maker Comau would be separate operations, "especially given Comau's potential development in artificial intelligence or robotics."

"Whether it happens as a spin-off or a distribution to shareholders, or whether we will raise some money in the process -- all things to be discussed with the board, we haven’t made up our mind," he said.

These discussions include a potential listing for either company as happened with other units FCA spun off in the past, such as tractor maker CNH Industrial or luxury sports-car maker Ferrari, which are quoted in Milan and New York.

Marchionne said he would like to complete the separations by the end of 2018. The transaction could help boost FCA's finances at a time when it is aiming to become cash-positive by the end of next year.

A separation of castings firm Teksid, the smallest of FCA's parts makers, was not on the table, Marchionne said.

Boosting Alfa

Marchionne was speaking after a presentation on Alfa’s planned Formula One return at the Alfa Romeo Museum in Arese, near Milan.

A spinoff of the Alfa Romeo and Maserati brands is too remote to be discussed at the moment and would not happen "for many years," he said, while highlighting the importance of motor racing in Alfa’s development. A return to F1 could help polish the marque’s image as it seeks to rebuild an upscale reputation.

Marchionne has invested billions of dollars to develop new vehicles after the Alfa line-up shrank and sales collapsed in the last decade. F1’s global appeal will bring wider exposure after previous attempts to expand beyond Europe were delayed.

Asked about possible fines over diesel emissions, Marchionne said he did not believe there was any legal base in recent allegations raised by French authorities. He said separate discussions with U.S. authorities were ongoing and he expects "there will be a cost but it will be something manageable."

Marchionne, who met with U.S. Vice President Mike Pence and other officials at the White House this week to discuss NAFTA concerns, said he doesn’t see Donald Trump’s administration leaving the North America Free Trade Agreement.

“They want to find a solution that somehow re-establishes the American interest being more important,” he said. “They think they gave up too much at the table and they want some of it back. The question is how much and when.”

He confirmed Fiat Chrysler’s financial targets for 2018, including an increase in operating profit to about 9 billion euros ($10.7 billion) and the elimination of debt.

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Dodge highlights technical changes

Rick Weber, Trailer-Body Builders  /  December 7, 2017

Coverage from the recent NTEA Truck Product Conference, a look at the critical details of new and coming-soon equipment from the chassis manufacturers, and what the changes mean for upfitters and truck body builders.

Brock Wienczewski, manager of the Dodge Commercial Truck Team, provided the latest technical updates:

•  Cybersecurity. Ram has added a security gateway module on 2018MY vehicles. It affects Ram truck and ProMaster City vans, isolating any outside unauthenticated communication with the vehicle. Anybody trying to hack into the vehicle through the radio or the diagnostic connecter will be blocked. It doesn’t affect the Vehicle System Interface Module (VSIM), and it allows DTC identification.

•  MVSS 111 rear visibility. CMVSS and FMVSS 111 require rear cameras on all vehicles under 10,000 lbs GVW, which includes these Ram models: all light-duty trucks and ProMaster vans; heavy-duty (DJ) 2500; and chassis cab (DF) 3500. All light-duty and heavy-duty 2500 box-on pickups and carbo vans are shipped compliant from the factory. Incomplete vehicles (IVDs) will require an upfitter to install the camera on the vehicle: heavy-duty (DJ) 2500 box-off and chassis cab (DF) 3500, and ProMaster chassis cabs and cutaways. Mounting instructions are on the Ram Body Builder Guide website and testing instructions are available via the NTEA.

•  ProMaster City upfit connector. It allows ease of upfit by providing access to common electrical circuits. There are two connectors in the package: 15-way (CAN, keyed power, vehicle speed); and two-way power (50-amp circuit). It became available in the fourth quarter.

•  ProMaster headlamp bulb. Addressing concerns that there was premature wear in the bulbs, Ram has added super-long-life bulbs available via Mopar. From a production standpoint, Ram has introduced both hardware and software changes to the body controller for mid-2017MY.

•  Diesel VECI label new for 2018. The location made it difficult for DMVs to read emissions information and some refused to register the vehicle, so this change moves the label to the top of the CCV cover. For the 2017MY and prior, the Ram team provides a certification letter for affected customers. Contact the Ram team for more information.

•  Heavy-duty field box removal camera adapter. This Mopar camera adapter for field removal of pickup boxes/tailgates will allow the Mopar loose ship cable/camera to be connected to the pickup truck wiring. It allows for convenient jumper to hook up the rear camera and the door-lock circuits, with short (10 feet) and long (30 feet) cables available. It can be installed on any HD truck with camera option 2013MY or later and allows a solution for MVSS 111 if the box/tailgate is removed. It is available now through Mopar (PN 82215671).

Adrian Ratza, Ram commercial brand manager of chassis cabs, talked about the 2018 ProMaster and ProMaster City vans, which were officially introduced into the market a few weeks before the Truck Product Conference.

The ProMaster, Ram’s entry into the Class 2 full-size van segment, offers a front-wheel-drive system, reducing weight and complexity by locating all components beneath the cab. This keeps the cargo load floor height and step-in height very low and helps in low-traction surfaces, like snow, since there is always weight on the front wheels to provide traction.

New features for 2018 include:

•  Uconnect 5.0 is now standard equipment with optional navigation.

•  Integrated Voice Command with Bluetooth is now standard along with steering wheel mounted audio controls.

•  Rear backup camera is now standard on all models and backup camera kit with Chassis Cab and Cutaway models.

•  The right and left sliding doors now feature a window grate with fixed glass option.

•  The 2018 Ram ProMaster features the 3.6-liter Pentastar V-6 engine and a torque-laden, 3.0-liter EcoDiesel I-4 engine. The engines are paired, respectively, with a six-speed automatic transmission and an electronically controlled Dual Active Drive six-speed automated manual.

“It’s the fastest-growing Ram vehicle,” Ratza said. “It’s a very versatile vehicle, with all the different configurations available. It offers advantages in areas where customers really need it. We’re putting customers in the best chance to succeed.”

The ProMaster City is Ram Commercial’s Class 1 compact van, with a cargo volume of 131.7 cubic feet and payload capacity of 1883 lbs.

Similar to the full-size van offering, the ProMaster City features Uconnect 5.0 and a standard backup camera. The van also features sliding and back door window grates available in vans without partitions.

Highlights for the 2018 ProMaster City include:

•  Available in two-seat Tradesman cargo van and five-seat passenger wagon configurations in two different trims (Tradesman and SLT).

•  Fuel economy of 28 mpg.

•  178 horsepower and 174 lb-ft of torque mated to an exclusive nine-speed automatic transmission.

•  Cargo width and length: 60.4 inches and 87.2 inches.

•  Distance between wheel wells: 48.4 inches.

•  Wheelbase: 122.4 inches.

•  Cargo area width of 60.4 inches, a cargo area height of 51.8 inches, and a step-in height of 21.5 inches.

“It happens to be America’s most efficient work van,” Ratza said. “That’s due in part to highway fuel economy of 28 mpg. So it has the efficiency. What really excites me about the ProMaster city is not just the efficiency, but its capability. If you match up the efficiency with the payload capability that it has to its cargo capacity, it really is truly the best of both worlds with regards to the small-van segment.”

He said that starting next month, bailment pools and select fleets will be able to order the ProMaster Window van as an incomplete vehicle.

“We’re working on a plan looking toward Q1 for dealer availability,” he said. “There’s been a lot of demand out there.”

He said the Ram Augmented Reality Upfit Configurator is a computer-generated visual program allowing upfitters and dealers to virtually showcase a number of solutions to customers. Prospective buyers have the opportunity to virtually walk around the vehicle and even view inside to assess the various options via computer simulation. Originally offered on the Ram ProMaster full-size van, the configurator has now expanded to the Ram ProMaster City and the entire Ram Chassis Cab line (3500, 4500 and 5500).

Mark Patel, program manager of Q-Pro, gave an update of the program started earlier this year.

It’s a new qualification process for upfitters to certify their product with Ram Engineering. Q-Pro allocates Ram Engineering resources to survey, make recommendations and certify upfitter products. Once certified, the upfitter can use Ram’s Q-Pro co-brand to help market their product, and customers can be assured their new truck and upfit meet the highest standards.

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Fiat Chrysler issues recall for nearly 1.8 million Ram trucks over shifter problem

CBS News  /  December 22, 2017

Fiat Chrysler is recalling nearly 1.8 million Ram trucks mainly in North America because they can be shifted out of park without the driver's foot on the brake or possibly without the key in the ignition.

Included are certain 2010 through 2017 Ram 2500 and 3500 pickups, many 2011 through 2017 Ram 3500, 4500 and 5500 chassis cabs, and 2016 and 2017 Ram 3500 chassis cabs that weigh less than 10,000 pounds. Also covered are some 2009 through 2017 Ram 1500 pickups.

Trucks from 2017 built after Dec. 31, 2016 are not included.

About 1.48 million vehicles subject to the recall are in the U.S.

The company says the brake-transmission shift interlock device can fail due to long-term exposure to high interior temperatures linked to an electrical problem. That can let the shifter move out of park without the brake pedal being pressed or without a key in the ignition. The problem increases the risk of the trucks rolling away accidentally.

Fiat Chrysler says it knows of seven injuries that may be related to the problem, in addition to a small unspecified number of crashes. The company says drivers should always use parking brakes as a safeguard.

Fiat Chrysler is working on a fix. Owners will be notified when service is available. Customers with questions can call (866)-220-6747. You can check if your vehicle is subject to a recall by entering its VIN on the National Highway Traffic Safety Administration's website.

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Fiat Chrysler to recall 1.8 million trucks to fix shifter issue

Automotive News  /  December 22, 2017

Fiat Chrysler Automobiles said on Friday it would recall about 1.8 million Ram trucks in the U.S., Canada, Mexico and some other markets to fix a function that prevents occupants from inadvertently moving the shifter out of the "park" position.

The recall applies to several Ram models from the 2009 to 2017 model years with shifters mounted in the steering column. It does not apply to vehicles with rotary dial or floor-mounted shifters. And it does not apply to 2017 trucks built after Dec. 31, 2016. 

FCA said it is aware of "seven potentially related injuries and a small number of potentially related accidents."

"An FCA US review of field data led to the discovery that Brake Transmission Shift Interlock (BTSI) may not function properly if subject to specific high-temperature conditions for prolonged periods," FCA said in a statement. "The conditions are consistent with those that occur when there is protracted brake-pedal application while a vehicle is idling in park.

"If BTSI becomes disabled, a vehicle’s shifter may be moved out of park without brake-pedal application, or the presence of a key in the ignition. In such circumstances, a vehicle may exhibit inadvertent movement -- if its parking brake has not been set."  

About 1.48 million vehicles are being recalled in the U.S. along with another 249,520 units in Canada. 

"FCA US will restore BTSI function in the vehicles subject to this recall," Tom McCarthy, FCA's head of safety compliance and product analysis, said in the statement. "Nevertheless, as always, we urge customers to use their parking brakes, as recommended, and to ensure that child occupants are not left unattended."

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FCA to shift heavy-duty Ram output to U.S. from Mexico

David Phillips, Automotive News  /  January 11, 2018

Special bonus of $2,000 to 60,000 U.S. employees also planned

FCA will invest more than $1 billion to modernize a Michigan truck plant to produce the next-generation Ram Heavy Duty pickup, which will be shifted from Saltillo, Mexico, starting in 2020.

The investment at the Warren, Mich.., assembly plant follows plans detailed in January 2017 to expand the factory to build all-new Jeep Wagoneer and Grand Wagoneer SUVs.

The company said the Saltillo truck assembly plant will be repurposed to produce future commercial vehicles for global markets. 

FCA said 2,500 new jobs will be created at the Michigan plant, in addition to the jobs detailed in January 2017 when FCA said it would move light-duty Ram truck output from the Warren, Mich., site to a nearby Sterling Heights, Mich., factory.

The company also plans to make a special bonus payment of $2,000 to approximately 60,000 FCA hourly and salaried employees in the U.S., excluding senior leadership.

FCA said Thursday the Michigan plant expansion and special payments were made possible in part by U.S. tax reform passed late last year that will reduce the company's corporate tax bill.

FCA Chief Executive Sergio Marchionne said a year ago the company could shift heavy-truck output from Mexico to Michigan, depending on the outcome of tax reform legislation and proposed changes to the North American Free Trade Agreement.

President Donald Trump has threatened to force the rollback of NAFTA, which enables the free flow of goods across the borders of the United States, Canada and Mexico. Trump says NAFTA has hurt U.S. manufacturing employment and has blasted domestic and foreign automakers for moving jobs and factory investment to Mexico.

Heavy duty pickups are among the most profitable vehicles produced by automakers and are sold mostly in the United States and Canada. Analysts say FCA's decision to move output of the trucks to the U.S. would also mitigate any risk of any unfavorable changes to NAFTA.

The special payment will be made in the second quarter and will be in addition to any profit sharing and salaried performance bonuses that employees are eligible for in 2018, FCA said. The one-time bonus will be paid to all eligible employees at FCA's automotive and components operations in the U.S.

“It is only proper that our employees share in the savings generated by tax reform and that we openly acknowledge the resulting improvement in the U.S. business environment by investing in our industrial footprint accordingly,” Marchionne said in a statement.

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Fiat Chrysler to invest over $1 billion in Ram plant

Trailer-Body Builders  /  January 12, 2018

Fiat Chrysler Automobile (FCA) is planning to invest more than $1 billion to modernize its Warren Truck Assembly Plant in Michigan and create 2,500 additional jobs so it can relocate production of its Ram Heavy Duty pickup truck from Saltillo, Mexico, by 2020.

This investment is on top of the $1 billion the OEM committed to invest in the Warren factory last year to accommodate its Jeep product line, which included building its all-new Jeep Wagoneer and Grand Wagoneer.

FCA said its Saltillo Truck Assembly Plant will be repurposed to produce future commercial vehicles for global distribution.
The company also noted that it has invested some $10 billion in its U.S. manufacturing operations since June 2009, with some $3.5 billion alone focused on Jeep and Ram Truck production realignment that included the addition of 3,700 new jobs.

That $3.5 billion investment and related actions involved production shifts at three plants in Illinois, Ohio and Michigan to gain capacity for the Jeep Cherokee, Jeep Wrangler and Ram Light Duty truck, as well as the introduction of three new Jeep models at plants in Ohio and Michigan. Broken down, those investments include:

• $350 million in the Belvidere Assembly Plant in Illinois to produce the Jeep Cherokee, which moved from Toledo, OH, in 2017. More than 300 new jobs were added to support production.

• $700 million in the Toledo Assembly Complex in Ohio to retool the North plant to produce the next generation Jeep Wrangler. Approximately 700 new jobs will be added to support production, FCA said.

• $1.5 billion in the Sterling Heights Assembly Plant in Michigan to build the next generation Ram 1500 truck. More than 700 new jobs will be added to support production, the company noted.

• $1 billion in the south plant of the Toledo Assembly Complex to prepare the facility to produce an all-new Jeep truck, and in the Warren Truck Assembly Plant to modernize the plant to build the all-new Jeep Wagoneer and Grand Wagoneer. More than 2,000 new jobs will be added at these two plants to support production, FCA pointed out. 

The company is also making a special bonus payment of $2,000 to approximately 60,000 FCA hourly and salaried employees in the U.S., excluding senior leadership.

The payment, which FCA said “recognizes employees for their continued commitment to the company’s success,” will be made in the second quarter of this year and will be in addition to any profit sharing and salaried performance bonuses that employees would otherwise be eligible to receive in 2018.

The special bonus will be paid to all eligible employees of the FCA automotive and components operations in the U.S., the OEM added.

“These announcements reflect our ongoing commitment to our U.S. manufacturing footprint and the dedicated employees who have contributed to FCA’s success,” said Sergio Marchionne, FCA’s CEO, in a statement. “It is only proper that our employees share in the savings generated by tax reform and that we openly acknowledge the resulting improvement in the U.S. business environment by investing in our industrial footprint accordingly.”

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FCA lavishes tech, safety gear on 2019 Ram pickup

Larry Vellequette, Automotive News  /  January 15, 2018

DETROIT -- When FCA US abandoned mainstream compact and midsize sedans in 2016 to focus its limited resources on more profitable utility vehicles and pickups, analysts viewed the shift from cars as risky.

But the redesigned 2019 Ram 1500 -- bowing Monday at the Detroit auto show -- appears to be a major beneficiary of the strategy, sporting a long list of engineering, safety, performance and functional improvements.

The Ram pickup is the automaker's best-selling vehicle and the third-best-selling vehicle in the U.S. behind the Ford F series and Chevrolet Silverado.

Even as it nears the end of its current product cycle, the outgoing Ram managed to chalk up a U.S. sales gain in 2017, topping 500,000 for the first time ever, including the decades when the Ram was part of the Dodge brand.

With the redesigned Ram 1500 going into production this month -- along with the previous model, which will continue to be produced for up to a year -- FCA officials believe the Ram has a shot to knock the Silverado out of second place.

Chevrolet plans a major redesign of the Silverado that is also on display in Detroit and will hit showrooms in the fall. But the new Ram bows in showrooms in the first half of 2017, giving FCA a chance to narrow GM's 85,000 unit sales lead with both a new and outgoing Ram.

The 2019 Ram 1500 is bigger than the previous model, with overall length growing by 9 inches, including 4 additional inches to the cab. The added cab space enables the second-row seats to recline up to 8 degrees.

The redesigned pickup is also stronger than the previous version. The frame is made of 98 percent high-strength steel. Also, a new eTorque mild-hybrid system increases torque by 90 pound-feet on the 3.6-liter V-6 engine, and by 130 pound-feet on the 5.7-liter V-8 engine. The eight-speed automatic transmission has also been improved. Maximum payload increases to 2,200 pounds and maximum trailer towing to 12,700 pounds.

The 2019 Ram also boasts increased efficiency. A belt-drive generator and 48-volt battery are standard, as are short-term torque assist and regenerative braking. Drag coefficient improves to .357, with active grille shutters, raised bed rails, an air dam and air suspension contributing to a more aerodynamic ride. Fuel economy numbers were not yet available, however, and FCA has not yet indicated whether it will keep its 3.0-liter EcoDiesel engine as an option for the 2019 pickup.

Even though it is longer, wider and taller than the previous Ram 1500, engineers were able to trim nearly 225 pounds from the latest model.

Inside the cabin, legroom is increased in the first and second rows, while the reclining second-row seating has new folding center armrests.

A new 12-inch infotainment touch screen dominates the instrument panel, with split-screen capabilities allowing simultaneous operation of up to two functions, such as the climate controls and navigation.

A bird's-eye camera system eases parking, and the pickup gets Sirius XM's new 360L service that allows individualized streaming for subscribers. A 19-speaker, 900-watt Harman Kardon audio system with repositioned door speakers to improve sound quality is optional.

Interior storage space is greatly expanded, including a larger reconfigurable center console that can be transformed into 12 storage combinations. The optional RamBox bed storage boxes include a three-prong 115-volt plug.

The 2019 Ram 1500 will continue to be powered by the 305-hp 3.6-liter V6 engine or an optional 5.7-liter Hemi V-8. But engineers were able to quiet the cabin in the V-8 model by employing frame-mounted "active tuned mass modules," which work electronically to dampen engine noise in the cabin, reducing cabin noise to 67 decibels. Both engines are paired with an updated version of its eight-speed automatic transmission.

In terms of safety, Ram incorporated new wheel blockers into its frame across all trim levels to improve performance in slight offset frontal crash tests.

In addition to expected electronic safety features such as automatic braking and adaptive cruise control, the Ram 1500 will have available adaptive front lighting that illuminates up to an additional 15 degrees in the direction of travel.

Pricing has not been announced. Production of vehicles for sale will begin this month. The previous-generation 2018 Ram 1500 will remain in production for "at least a year," FCA CEO Sergio Marchionne said in October, in part to help guard the new pickup's residual values.

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Iacobelli pleads guilty in latest court appearance

Jackie Charniga, Automotive News  /  January 22, 2018

DETROIT -- Former Fiat Chrysler Automobiles labor relations chief Alphons Iacobelli pleaded guilty Monday to two charges related to a conspiracy to siphon millions from an employee training fund, overturning the not-guilty plea entered on his behalf in August.

Iacobelli pleaded guilty to conspiring to violate the Labor Management Relations Act and for subscribing a false tax return before U.S. District Judge Paul Borman in Detroit.

Sentencing was set for May 29. Iacobelli faces a statutory maximum of eight years in prison, and prosecutors said he will be required to repay $835,000.

Iacobelli is at the center of an ever-expanding federal probe into executives at the automaker and the UAW for allegedly pulling funds slated for employees to line their own pockets.

The probe since has spread to the UAW training centers for Ford Motor Co. and General Motors.  In November, GM and Ford confirmed they were cooperating with the investigation into alleged misspending at UAW union training centers funded by U.S. automakers. GM is conducting an internal investigation into the matter.

Federal investigators also met with FCA CEO Sergio Marchionne more than a year ago, according to reports.

According to a plea agreement made public late on Monday, Iacobelli has agreed to cooperate in an ongoing investigation by the Justice Department into alleged misspending at UAW union training centers funded by U.S. automakers. A lawyer for Iacobelli declined to comment on Monday, Reuters reported.

If Iacobelli chooses to cooperate with prosecutors, it's unclear how effective his testimony would be, according to Peter Henning, a Wayne State University law professor and former federal prosecutor.

"It will depend on whether he has agreed to cooperate, and also what information he could provide. With a defendant at his level, what interactions did he have with senior executives is an open question," he told Automotive News. "He has admitted he's engaged in fraud. That means his testimony wouldn't be all that trustworthy. He would have to be able to provide information that the government could confirm and be able to introduce in court beyond just his word."

Several indictments naming Monica Morgan, widow of UAW Vice President General Holiefield; Virdell King, a retired UAW associate director; and Jerome Durden, a former FCA financial analyst, were released last summer.

Detailed charges

In addition to the counts he pleaded guilty for, the arraignment names Iacobelli for two counts of paying and delivering prohibited money and things of value to a union official, and one count of conspiracy to defraud the United States, according to the 42-page indictment.

Notable among Iacobelli's alleged purchases with money taken from the UAW-Chrysler National Training Center are a 2013 Ferrari 458 Spider and two solid-gold Mont Blanc pens, each valued at $37,500. Reports say Iacobelli sold the sports car when news of the probe emerged.

He also said he knowingly authorized more than $450,000 in credit card charges for jewelry, furniture, electronics and other luxuries for FCA-UAW members. He also admitted to $262,219 in training center funds used to pay off Holiefield’s mortgage.

Both pens are in the possession of the government at this time.

On the tax charge, Iacobelli said he omitted more than $840,000 in income for the calendar year 2014, obtained illegally through FCA funds. Iacobelli was given 14 days to produce accurate tax forms for 2012 through 2015, but his lawyer, attorney David DuMouchel, asked for an extension.

Other charges

Others charged in the case have court appearances scheduled over the next several months, according to public records.

Morgan is scheduled for a another plea hearing Feb. 6, while Durden is to be sentenced in May and King is to be sentenced in June. Durden and King pleaded guilty.

According to the plea deal, Iacobelli's sentencing will not exceed 96 months. Henning said he would be "shocked" if time in federal prison was not recommended.

"This was a substantial abuse of authority, both inside the company and in the union," Henning said. "Sometimes you see crimes of opportunity, where it's a one-time transaction. This was systematic corruption inside the corporation. That's what's likely to lead to a prison sentence."

The UAW said in a statement Monday that it is "appalled at these charges. We have worked with the (national training center) and Fiat Chrysler to implement a range of measures aimed at enhancing transparency and internal controls at the NTC to reduce the risk of any future recurrence of these activities."

Marchionne has said the “deplorable” conduct “had nothing whatsoever to do with the collective bargaining process” and the “egregious acts were neither known to nor sanctioned by (Fiat Chrysler)." The company had no further comment Monday.

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FCA execs paid UAW officials to take company-friendly positions, U.S. says

Michael Wayland, Automotive News  /  January 23, 2018

DETROIT -- Confidential retirement offers and a former union vice president being "scripted" to support company initiatives are among the newest allegations in the UAW-FCA corruption scandal.

The information was released as part of a plea deal between federal officials and former FCA labor relations chief Alphons Iacobelli, who pleaded guilty Monday to two of seven charges related to his role in siphoning more than $4.5 million in training center funds to union and company officials.

The details, for the first time since the investigation was made public in July, show federal officials saying company executives paid UAW officials in an attempt to influence union decisions and collective bargaining agreements, which were ratified in 2011 and 2015.

Iacobelli, 58, according to the plea, admitted he and other FCA executives or employees paid "senior UAW officials" more than $1.5 million in an effort to "obtain benefits, concessions, and advantages for FCA in the negotiation, implementation, and administration" of the agreements.

The investigation started with a training center jointly operated between the union and FCA but has since expanded to similar operations with Ford Motor Co. and General Motors, where Iacobelli was employed following FCA. No union or company officials with GM or Ford have been formally named or charged with any crimes.

Iacobelli has agreed to cooperate in the Justice Department's ongoing investigation into alleged misspending at union training centers funded by U.S. automakers, according to the plea deal.

The alleged payments included paying off a mortgage for $262,219, first-class airline travel, designer clothing, furniture, jewelry and custom-made watches.

Not previously detailed was a $30,000 party for a union official that included "ultra-premium liquor," more than $7,000 worth of cigars and more than $3,000 in wine with custom labels. The party allegedly occurred at an FCA training center in Warren, Mich.

UAW officials, including President Dennis Williams, have contended that the alleged activities could not have impacted negotiations, as union members have the final vote on the contracts, which are bargained between dozens, if not hundreds, of individuals.

The corruption of a few, the union and company have argued, could not influence all of the committees and members.

A UAW spokesman on Monday reiterated that the union is "appalled at these charges" and has taken measures to "reduce the risk of any future recurrence of these activities." He declined to comment directly on the newest allegations, referring to previous statements from Williams.

'Scripted'

The plea agreement details at least two specific occurrences that raise concerns about the alleged payments influencing union business.

The first, feds say, occurred in December 2013. Iacobelli, according to the plea deal, sent an email to another "FCA executive" confirming then-UAW Vice President General Holiefield, now deceased, had been "scripted" ahead of a meeting with other members of the union's International Executive Board.

Iacobelli, in the email, said Holiefield would "create a dialogue pursuant to our outline." At the time, the executive board was considering the terms of a multibillion-dollar offer to purchase equity interest held by the UAW Retiree Medical Benefits Trust, or VEBA, in Chrysler Group, now known as FCA US. The transaction was completed a month later.

The second occurrence allegedly occurred in February and March of 2015. FCA, according to the plea, offered to pay confidential "one-time non-precedent setting" retirement offers to "senior UAW officials."

An unnamed union official allegedly said in an email that his people would "process the transactions to keep them out of the plants."

Things such as "targeted buyouts" are not uncommon, however, they are typically based on job classification, department or years of seniority and not exclusively offered to handpicked senior leaders.

More charges coming?

Iacobelli is one of four people charged in connection with the case. The others are Virdell King, a retired UAW associate director; Jerome Durden, a former FCA financial analyst; and Monica Morgan, Holiefield's widow.

Durden and King pleaded guilty to charges and are scheduled to be sentenced separately this year.

Morgan is scheduled for another plea hearing Feb. 6.

Iacobelli's plea deal adds several unnamed individuals who were not previously mentioned in other court documents, which could mean additional charges are still to come.

"So long as such practices exist, the FBI and its federal partners will continue to aggressively root out corruption in both corporate and labor union boardrooms," David Gelios, special agent in charge, Detroit Division of the FBI, said in a statement.

Iacobelli pleaded guilty to conspiracy to violate the Labor Management Relations Act and subscribing a false tax return. Sentencing is scheduled for May 29. He faces a statutory maximum of eight years in prison, and prosecutors said he will be required to repay $835,000.

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FCA posts $1 billion Q4 profit, predicting 'strong likelihood we'll outperform Ford in 2018'

Larry Vellequette, Automotive News  /  January 25, 2018

Fiat Chrysler Automobiles reiterated its plan to be in a net cash position by midyear and hit aggressive financial targets for 2018 set four years ago -- including nearly $10.9 billion of adjusted earnings before interest and taxes -- as the automaker prepares to transition to a new leader with the coming retirement of CEO Sergio Marchionne.

And in comments to analysts, Marchionne said there is a "strong likelihood we'll outperform Ford in 2018." 

FCA said Thursday its fourth-quarter earnings before interest and taxes rose 22 percent to more than $2.37 billion. Net profit nearly doubled to $1 billion. Total revenue in the quarter fell 3 percent to $36.11 billion.

Improving margins in North America -- which rose half a percentage point to 7.9 percent -- will mean $5,500 profit-sharing checks on average for UAW members, up from $5,000 a year earlier, FCA said. These payouts will be on top of a $2,000 bonus paid to all U.S. workers, except top executives, related to U.S. corporate tax cuts. Changes in U.S. tax law are projected to save the company $1 billion a year.

FCA cut its industrial debt almost in half last year, to 2.39 billion euros ($2.97 billion). Marchionne and CFO Richard Palmer said the company expected to have more cash on hand than debt by midyear, the first time since Fiat S.p.A. acquired the formerly bankrupt Chrysler in 2009.

Shares in FCA rose 0.75 percent to close at $24.32 on Thursday. 

Comments to analysts

In comments to analysts, Marchionne said the automaker would lay out its 2018-22 business plan for analysts at an event June 1 in Balocco, Italy, but would not name his successor until after that event. Marchionne plans to retire early next year after seeing the business plan through 2018 to completion. The CEO, who has run Fiat since 2004, has said his successor will come from the ranks of the automaker's global executive council.

In other comments, Marchionne said:

  • Despite plans to keep the previous-generation Ram 1500 pickup in production for at least a year to answer demand from commercial fleet customers, the CEO said he was "not interested in starting a share war in the United States" with Ford or General Motors in the pickup segment. "That's not the objective," Marchionne said.

  • The FCA board will decide in February whether to spin off or sell off Magneti Marelli and its other components businesses.

  • Since no other automaker expressed interest in forming a partnership with FCA, the company's improved balance sheet will mean "we're going to keep running our business and running our business hard," Marchionne said. "Given the parameters of this industry, FCA is well-positioned to be a top performer, and that's all I care about."

  • While the company will be well short of the 7 million vehicles it projected in 2014 to sell in 2018, the financial targets will be achievable because of unforeseen levels of profitability from Maserati, Jeep and Ram. But, Marchionne warned, much of 2018's performance rests on properly executing the launches of the redesigned Ram 1500 and Jeep Wrangler. "I think the biggest risk ... is that we screw up all those launches and we can't deliver the volumes. That's the real issue -- that we can't make it."

  • Additional manufacturing capacity brought about because of its reindustrialization plan in North America could mean as many as 50,000 additional Ram 1500 pickups and 60,000 Wranglers annually on an ongoing basis, once those recently launched products are fully ramped up. Marchionne said the additional Wrangler capacity would allow FCA to export the vehicle in greater numbers instead of limiting that global distribution to satisfy demand in North America.

  • Both Fiat's and Chrysler's previous dire financial straits embedded fiscal discipline deep into the DNA of the automaker's top management. That should prevent it from spending wildly when times are good. "One of the things that came along with being poor ... is that you learn how to do with less. I have not forgotten, and no one on the leadership team has forgotten, what it was like."

  • Alfa Romeo will again not be profitable in 2018, but it will return to Formula One racing after his retirement as the resurrected brand continues to grow beyond beyond its current lineup. "We're still building the brand, but we need more volume."

Bloomberg contributed to this report.

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Ex-union VP Norwood Jewell implicated in UAW-FCA scandal

Michael Wayland, Automotive News  /  January 31, 2018

DETROIT -- Former UAW Vice President Norwood Jewell, who headed the most recent round of contract negotiations with FCA US, has been implicated in the widening, multimillion-dollar corruption scandal involving the union and Fiat Chrysler.

A plea deal released last week between the U.S. Attorney's Office and former FCA US labor relations chief Alphons Iacobelli does not name Jewell; however, it indirectly identifies him. It also names Jewell's charity as one of several to allegedly receive restricted funds.

Jewell, who abruptly retired at the end of last year, has not been formally named or charged with any crimes.

Attempts to reach Jewell this week were unsuccessful. An unknown individual who answered the Ohio phone number listed for Jewell's charity said he "can't help" with any questions.

A UAW spokesman declined to comment directly on the implications. An FCA spokesperson was not immediately available for comment Wednesday.

Iacobelli, according to the plea deal, admits that he and other FCA executives and employees transferred hundreds of thousands of dollars "in prohibited payments" to tax-exempt organizations controlled by UAW officials, including Jewell's Making Our Children Smile Foundation.

The money was allegedly siphoned through the UAW-Chrysler National Training Center, which is funded by the automaker and jointly operated with the union.

The plea deal also says Iacobelli authorized salary reimbursements, along with "a fraudulent 7 percent administrative fee" as a "political gift to the Vice Presidents of the UAW Chrysler Department" -- a statement that implicates Jewell.

Jewell, who began leading the department in June 2014, is one of only two union vice presidents to hold that position during the focus of the investigation, from January 2009 to July 2015.

Feds have identified Jewell's predecessor, General Holiefield, as being a key figure in the $4.5 million scandal. Holiefield, who died in March 2015, led the department from June 2006 to June 2014.

Holiefield's charity, the Leave the Light on Foundation, was another tax-exempt organization named in Iacobelli's plea deal. It previously had been identified by federal officials as a way of funneling money to union officials and Holiefield's wife, Monica Morgan, one of four charged in the case so far.

The others charged, in addition to Iacobelli, are Virdell King, a retired UAW associate director, and Jerome Durden, a former FCA financial analyst who served as treasurer of Holiefield's charity and as controller of the UAW-Chrysler training center from roughly 2008 to 2015.

All aside from Morgan have pleaded guilty as part of plea deals and await sentencing. She is scheduled for a plea hearing on Feb. 6. in U.S. District Court in Detroit.

Federal officials, according to a source familiar with the investigation, conducted a search of Jewell’s home late last year.

Prosecutors contend FCA employees and executives such as Iacobelli paid union workers through the charities and other methods, including training center credit cards, to influence union business, including collective bargaining negotiations in 2011 and 2015.

The UAW, including President Dennis Williams, has adamantly denied such activities could have influenced the union's bargaining process.

"There's just no truth to the allegation that the terms of the collective bargaining agreement were compromised by Iacobelli's crimes," Williams wrote Friday in a letter to union members. Williams argued, “Iacobelli’s case is one of personal greed, plain and simple.”

Following the investigation being made public, the union made changes to its charity practices, including banning UAW-affiliated nonprofits to take donations from the UAW and the joint program centers. The UAW has not stopped allowing personal charities, however several union officials reportedly have let their state registrations expire.

The UAW announced in November that Jewell, 60, would retire and not seek re-election -- an unusual, if not unprecedented, occurrence. UAW officers younger than the mandatory retirement age of 65 typically seek re-election and step down only at the end of a term, which would have been in June for Jewell.

In August, The Detroit News reported that he received a $2,180 shotgun bought with union training center funds as a birthday present.

The UAW has said Jewell paid for the gun after finding out it was bought with the training funds.

Nancy Johnson, Jewell's top administrative assistant, reportedly instructed King to pay for the gun with a training center credit card.

Making Our Children Smile

Jewell's charity was started in 2014 -- the same year he became a union vice president.

The Making Our Children Smile board initially included Jewell; Johnson, who served as vice president of the nonprofit from 2014 to 2015; and Troy A. Davis, another UAW top administrative assistant. Two additional board members, including another UAW official with the training center, were added in 2015.

The purpose of Making Our Children Smile, according to tax filings, was to raise and distribute funds to "benefit children, veterans, and seniors, as well as the poor, caring for the sick" and to support other philanthropic efforts and organizations.

The charity, according to the filings, received $629,450 from 2014 through 2016, though individual donors are not identified in the filings.

At the end of 2014, the charity reported a balance of $126,803, while donating $30,081 to three organizations: Wayne Elementary School in Detroit ($14,081 in books and clothing); Downtown Outreach Ministry in Flint, Mich. ($10,000); and Child Safe Michigan in Royal Oak, Mich. ($6,000).

Donations, according to the filings, increased five-fold to $152,666, in 2015 before falling to $121,846 the following year.

Davis has been secretary and treasurer of the nonprofit since its inception. According to the filings, he was the sole signer of its tax returns until 2016, when a third party was paid to prepare the document.

Shane Dawes, who was assistant director of the UAW-Chrysler training center under Jewell, was added to the board along with another individual in 2015.

Expanding case

Iacobelli, 58, pleaded guilty to conspiracy to violate the Labor Management Relations Act and subscribing a false tax return.

The investigation started with the UAW-FCA training center but has since expanded to similar operations with Ford Motor Co. and General Motors, where Iacobelli was employed following FCA.

GM and Ford said in November they were cooperating with federal investigators who have subpoenaed information about their training centers with the UAW.

No union or company officials with GM or Ford have been formally named or charged with any crimes.

The Detroit News reported in November that federal officials were "interested" in Joe Ashton, a retired UAW vice president who was appointed to GM's board in 2014, and Cindy Estrada, his successor in charge of the union's GM department.

Estrada remains in her position, while Ashton resigned from the GM board in December. He was designated for nomination by the VEBA, which at the time owned about 140 million GM shares.

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Ram plan brings Detroit ripples

Larry Vellequette, Automotive News  /  February 12, 2018

FCA US' plan to spend $1 billion to move production of its heavy-duty Ram pickup out of Mexico has big economic implications for Detroit.

But it's unclear how far the project's ripples will spread — or when.

Suppliers are typically the biggest generators of jobs in a major plant project, but FCA already has a large number of truck suppliers in the Detroit area, says Mike Robinet, managing director of IHS Markit's automotive global advisory practice.

Last month, the automaker revealed that in 2020 it will move heavy-duty Ram production from Saltillo, Mexico to its Warren, Mich., assembly plant north of Detroit. In discussing the plan with reporters, FCA CEO Sergio Marchionne called moving the pickup to Mexico in 2008 "an error."

The Warren plant already is scheduled for a major capital project, handing off production of the light-duty Ram to a nearby Detroit-area assembly plant with increased capacity, while Warren will be repurposed to build high-end, body-on-frame Jeep SUVs. Adding the heavy-duty Ram will require the automaker to hire 2,500 workers on top of the work force needed for the Jeep plan, FCA said last month.

But unclear is how much additional spending or how many more Detroit-area jobs will be created by suppliers to the pickup.

Many heavy-duty Ram suppliers are also likely to provide parts for the light-duty Ram 1500, which has been moved 10 miles north to FCA's Sterling Heights, Mich., assembly plant.

Robinet believes bringing the heavy-duty Ram to Michigan will shore up some suppliers that might have had production decline in recent years. But other suppliers will need to make new investments and add workers, he said.

The Ram supply chain has received few specifics.

An FCA representative told suppliers in a three-minute conference call on Jan. 26 that they should continue planning to support the launch of the next-generation heavy-duty Ram in Saltillo in January 2019, with their current parts plants, according to one supplier on the call.

The FCA representative said that early builds of the next-generation heavy-duty pickups would be produced in Mexico through April of this year, with preproduction models starting in October, also in Mexico.

That schedule means that suppliers will have to be prepared to meet 2019 production requirements for the truck in Saltillo while preparing to launch parts for the truck 1,800 miles north in Michigan in 2020.

"It's going to be a cost, no question about it," said Julie Fream, CEO of the Original Equipment Suppliers Association, which represents auto suppliers. "Who bears that cost will have to be negotiated between FCA and its suppliers."

Marchionne said the Saltillo plant would be repurposed to build one-ton commercial pickups for export to FCA's Europe/Middle East/Africa, Latin America and Asia Pacific regions.

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On 11/2/2017 at 1:20 PM, Maxidyne said:

One of the things I like about the older vehicles is that once you get familiar with them, you don't need to take your eyes off the road to work the controls.

Absolutely true. My '03 F-350 XLT has three climate control knobs: fan, temp, and position. Simple, efficient, and you don't even have to look at them to know where they are or what they're doing.

By contrast, my parents' 2015 Fusion has 12 different small buttons for climate control. Twelve!

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I've had 5 diesel VW Golfs from 1979 to 2015, and the heater controls have been those same 3 knobs. However, the radio controls have gotten more over complicated with touchscreens and the cruise control started with just a couple switches and now it's a dozen or so switches that take your eyes off the road too long. The gplf's original mandate was to be a simple mass produced "peoples car" to replace the Beetle... VW has forgotten that commitment, for example the rear lights have gone from a pair of simple clusters to three separate light clusters on each side plus the mandated high center brake light.

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Fiat Chrysler to recall 228,508 trucks to fix shifter issue

Reuters  /  February 16, 2018

Fiat Chrysler Automobiles said on Friday it would recall about 228,508 trucks in the United States, Canada, Mexico and some other markets to prevent drivers from unintentionally shifting their vehicles out of "park."

The brake transmission shift interlock (BTSI) may overheat on some vehicles, FCA US LLC said, adding that it would cause the shifter to be repositioned without brake-pedal application, or the presence of a key in the ignition.

The overheating occurs when a driver keeps a foot on the brake while the car is idling in park.

FCA said the recall includes certain 2017-18 Ram 2500 and 3500 pickups; certain 2017-18 Ram 3500, 4500 and 5500 chassis cabs; and 2016-17 Ram 3500 chassis cabs that weigh less than 10,000 pounds. The company also said some 2017-18 Ram 1500 pickups are included in the campaign, "but heavy-duty trucks represent the majority of affected vehicles."

The company said it is unaware of any injuries or accidents related to this recall, which is limited to vehicles equipped with gear shifters on their steering columns.

In December, the company said it would recall about 1.8 million trucks in the United States, Canada, Mexico and some other markets to fix a part that if not operating could allow the driver to shift out of park without depressing the brake pedal. 

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Geely held informal talks with FCA before Daimler stock purchase

Bloomberg  /  February 27, 2018

MILAN -- Zhejiang Geely Holding Group Co. held informal talks about the potential takeover of Fiat Chrysler Automobiles before the Chinese manufacturer turned its attention toward Daimler AG, people familiar with the matter told Bloomberg.

Li Shufu, the Chinese billionaire who controls Geely, approached FCA in the middle of last year as he was scouting for options to expand outside China, said the people, who asked not to be identified as the move wasn’t disclosed. Li opted not to make a formal offer as the two parties had different views on future valuations of Fiat Chrysler after the company’s five-year growth plan through 2018, they said.

Representatives for Geely and Fiat Chrysler refused to comment.

Automotive News reported in August that a Chinese automaker had submitted a bid for FCA, but that the bid was rejected for being too low.

Automotive News did not reveal the identity of the Chinese automaker at the time. After the story ran, other Chinese automakers, including Great Wall, also expressed interest in some or all of FCA’s assets.

Fiat Chrysler said in August it was “not approached” by Great Wall and that the carmaker is "fully committed” to a five-year plan through 2018.

Since the Automotive News story ran on Aug. 14, 2017, FCA’s U.S. stock price more than doubled, before retreating slightly this month. FCA shares were trading midday at $21.69, down 7 cents. Fiat Chrysler has a market value of about $33 billion. 

Daimler stock buy

Having moved on from FCA, Li announced the purchase of a 7.3 billion euro ($9 billion) stake in Daimler AG last week. With that deal, Geely has become the German company’s largest shareholder, while the investment is the biggest by a Chinese company in an international automaker. Geely already owns Volvo Car AB and last year agreed to buy an almost $4 billion stake in truckmaker Volvo AB.

As Geely and other Chinese automakers seek to expand in Europe and the U.S., FCA CEO Sergio Marchionne has been a vocal proponent of consolidation, arguing that the industry wastes money by developing multiple versions of the same technology. However, since General Motors Co. rebuffed his idea for a merger in 2015, the CEO has switched focus to cutting debt and has said the carmaker no longer needs a partner.

FCA is making progress toward a target to almost double profit by the end of this year from 2016, while the stock has also gained on speculation the company was seeking a combination with and was courted by Chinese competitors.  

The size of China’s car market has already surpassed the U.S. It’s one area where local companies like Geely and Great Wall Motor are encouraged by the government to go overseas to secure key technologies and access to resources.

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How China's Geely sought to buy FCA

Luca Ciferri, Automotive News  /  March 5, 2018

GENEVA -- The most-watched name in the global automotive industry, Chinese billionaire Li Shufu, won't attend the auto show here this week.

The founder and chairman of privately owned automaker Zhejiang Geely Holding Group Co., who last month drew a harsh spotlight in Germany by becoming Daimler's largest shareholder, will be keeping his usual distance from the auto world's biggest stages.

Li rarely attends auto shows outside China. His public appearances in Europe -- with a contingent of Chinese politicians, entrepreneurs and media -- are typically at events tied to his growing list of European brands.

He was in Berlin on Oct. 20, 2016, to unveil Lynk & CO, a near-premium brand co-developed by Geely with Volvo Car, which Li had acquired from Ford Motor Co. six years earlier.

He was in England on March 22, 2017, to open the London Taxi Co.'s new facility near Coventry. The 2013 purchase of the legendary black cab maker marked Li's second acquisition in Europe.

And he's planning to attend a Lynk & CO event this month in Amsterdam, says a spokesman, who also confirmed Li's decision to skip Geneva. In Amsterdam, Li is expected to announce that Volvo's plant in Ghent, Belgium, will build Lynk & CO cars for Europe.

And in the midst of such public appearances, there was a trip to Europe last spring that could have dramatically reshaped the global auto industry -- and Li's expanding role in it.

Flight to Turin

In May, Li flew to Turin in a Geely-owned jet for a private meeting with John Elkann, the Agnelli family heir who chairs Exor, the holding company that controls Fiat Chrysler Automobiles, said people involved in the trip and the talks. They asked not to be identified, as the meeting wasn't made public.

A Geely spokesman in China said "it was normal to have business contacts" but declined further comment.

An FCA spokesman deferred any comment to Exor. An Exor spokesman declined to comment.

Li was scouting for options to expand Geely outside China.

FCA is the third-largest automaker in the U.S., the fourth-largest in Europe, a major player in Latin America -- and weak in Asia. It could have been a perfect fit for Geely, and not only geographically.

In a world that is turning to SUVs and premium brands, buying FCA would have given Geely an iconic U.S. marque synonymous with SUV across the world -- Jeep. Geely also would have received such storied sporty brands as Maserati and Alfa Romeo.

On top of that, FCA would have added 4.7 million annual vehicle sales -- under the names Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia, Ram and Maserati -- in more than 150 markets to the growing Geely empire. FCA has 231,000 workers operating in 162 manufacturing facilities and 87 r&d centers, company data show.

In China, Geely's sales were up 45 percent in January, making it the second best-selling automaker. It was No. 5 overall for production, but that ranking includes joint ventures with foreign automakers. Among domestic automakers, it was No. 1.

Last summer, amid Automotive News reports of Chinese suitors, FCA said it had had no contact with Geely. Technically, that was accurate, as Li was not talking with FCA but with its controlling shareholder. Exor owned 29 percent of FCA shares and 42 percent of voting rights as of Jan. 10 this year, Exor data show.

Differences 

After Li's trip to Turin in May, representatives of the suitor and potential seller held discussions in private meetings in London in July and August, three sources told Automotive News Europe.

The initial offer valued FCA at $20 billion. It constituted Geely purchasing Exor's stake as well as a public tender for the 71 percent of shares held by other investors. The offer was rejected.

Geely's emissaries then raised their offer to $22 billion, with no success.

Two sources with direct ties to the discussions gave different views on why a deal didn't happen.

The first source, speaking under condition of anonymity, said the sweetened $22 billion offer was deemed too low. Exor was convinced it could have extracted more value by selling FCA in parts.

Under that scenario, one step would have involved the spinoff or sale of FCA's Magneti Marelli parts business, a move FCA CEO Sergio Marchionne still wants to pull off this year.

Another step would have combined Alfa Romeo and Maserati into a separate company to be sold. A third would have seen the Jeep and Ram brands being sold as a package. Finally, the remaining European, U.S. and Latin American businesses would have been offered to a fourth buyer, possibly a Chinese group.

The second source said FCA was open to accepting a $22 billion deal if Alfa and Maserati were excluded. Geely rejected that idea.

The discussions were over by the end of August.

Not an easy surrender

Li, 54, the son of a farmer from China's eastern Zhejiang province, has been seen as a Chinese remake of Henry Ford, a century later.

He founded Zhejiang Geely Holding Group in 1986, which was at the time focused on refrigerators. He moved into motorbike manufacturing in the 1990s before turning to autos in 1997.

The purchases of Volvo and London Taxi and the creation of Lynk & CO followed the Great Recession.

Last year, he won control of British sports car maker Lotus, acquired a 49.9 percent stake in Malaysian automaker Proton and spent $3.3 billion to become the biggest shareholder of Volvo, the world's second-largest truckmaker.

Then, this year, came the stake in Daimler.

Reports surfaced in late November that Daimler had rebuffed advances from Li, who reportedly was seeking to acquire about 5 to 7 percent. Then, last month, Li disclosed that after a series of stock market purchases, he had acquired a 9.7 percent holding in Daimler through the Geely Group, which is owned by Li and managed by Zhejiang Geely Holding.

Since moving on from FCA last summer, Li has spent more than $12.5 billion in automotive acquisitions. Considering that he was ready to buy FCA for $22 billion, he could have nearly $10 billion handy for further acquisitions.

Getting financial resources seems to be no obstacle. He plays an active political role in China and is a regular delegate to the Chinese People's Political Consultative Conference, a largely ceremonial political advisory body.

His political savvy may have helped get the Daimler investment done smoothly, analysts and local media said, especially amid a crackdown by China on overseas deals.

In announcing the Daimler deal, China's official Xinhua news agency said Geely reflected a wider "bullish" push by local automakers overseas and the overall "rising strength of Chinese automakers."

Li's business ambitions also appear to align with those of China's government, which wants to strengthen the country's high-tech expertise and leapfrog global rivals by becoming a leader in electric vehicles and autonomous driving.

But, for now at least, Li's ambition won't include FCA.

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Rough ramp-up for Ram

Larry Vellequette, Automotive News  /  April 30, 2018

DETROIT — Quality and supply problems plaguing the redesigned Ram 1500 pickup's launch are not enough to make Fiat Chrysler Automobiles CEO Sergio Marchionne spend the night on the factory floor, a la Tesla's Elon Musk.

"I'm not sleeping on the floor," Marchionne said during the company's earnings call last week. "You need to be Elon's age to do that. I'm too old for that crap."

But Marchionne, 65, is not above spending more than $300 million to fix the problems that have put the 2019 truck's ramp-up well behind schedule.

Marchionne conceded that the pickup's launch — key to FCA's strategy to hit aggressive 2018 financial targets — has been fraught with problems. He said FCA's Sterling Heights Assembly plant, which began building the truck in mid-January, is "probably running today at 60 percent of cycle. That's not where we need to be. We allowed enough time in 2017 to get that installation up, but it's proven to be challenging."

Supplier and internal sources at the plant said late last week that the factory was building about 1,000 trucks per day toward a run rate of 1,400 per day. The plant is operating two 10-hour shifts per day, seven days a week, to get the production rate up to speed, the sources said.

A revised production calendar from March shared with Automotive News indicates that FCA plans to run the plant every weekend and every holiday through Labor Day to get production of the new-generation Ram up to speed.

FCA dealers have begun receiving the 2019 pickups, but they have been limited to versions with the 5.7-liter V-8 engine, which are rated at the same 15 mpg city/22 highway/17 combined fuel economy as the previous-generation truck.

As of late last week, neither the 3.6-liter V-6 variant nor the 5.7-liter mild hybrid variant, both with a belt-drive generator and 48-volt battery, had received a fuel economy rating from regulators.

Marchionne told analysts that while the automaker is working out the kinks in the launch, it is relying on the previous-generation Ram 1500, which will continue to be built in the Warren Truck Assembly plant about 10 miles from Sterling Heights at least through 2018 and possibly into 2019.

Still, sales of the previous-generation truck have not been stellar. In fact, FCA this month is offering incentives to U.S. dealers who add new trucks to their service loaner fleets and count them as sales. In March, U.S. sales of the Ram pickup fell 11 percent, and volume is down 13 percent through the first three months.

Sales of the Ford F series increased 7 percent last month and are up 4.3 percent through March. Chevrolet Silverado sales rose 24 percent in March and are up 5.5 percent for the year.

A union source in the plant told Automotive News that suppliers are having difficulty "keeping up" with building two versions of the Ram 1500 simultaneously. The source said the Sterling Heights plant was still undergoing construction, even as workers built new Ram 1500s, and that some workers still lacked proper training.

The source, who spoke on condition of anonymity, said more than 2,500 2019 Ram 1500s were in holding areas near the plant awaiting repairs before they could be shipped. A supplier source indicated that the problem is electrical, but did not elaborate.

Marchionne has said FCA needs the launches of the 2019 Ram 1500 and redesigned Jeep Wrangler to go smoothly to help the company achieve its financial goals for 2018, his last year as CEO.

He and CFO Richard Palmer confirmed the company's 2018 guidance last week that it would end the year with more than 8.7 billion euros ($10.5 billlion) in adjusted earnings before interest and taxes, and with more cash on hand than debt for the first time since Fiat took control of bankrupt Chrysler in 2009. In the first quarter, FCA posted adjusted earnings of 1.61 billion euros ($1.96 billion), an increase of 5 percent, and cut its debt in the quarter by $1.6 billion.

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Marchionne's grand finale entails expanding Jeep, shrinking Fiat and Chrysler

Bloomberg  /  May 30, 2018

MILAN -- Sergio Marchionne's last hurrah as CEO of Fiat Chrysler Automobiles entails betting the carmaker's future on Jeeps and Maserati luxury cars while downsizing its namesake brands, according to people familiar with the matter.

Under the plan, the company is considering ending sales of Fiat cars in North America and China in the coming years, while mostly confining Chrysler to the U.S., said the people, who asked not to be identified before Marchionne unveils the strategy on Friday at the Balocco test track outside Turin. FCA declined to comment ahead of the presentation.

The closely watched briefing will be something of a victory lap for the 65-year-old CEO, who is set to retire next year, taking place at the site where he laid out his survival strategy for Fiat in 2004. The presentation "will be the last major event for Sergio Marchionne as CEO and a potential catalyst for a rerating" of the stock, Giulio Pescatore, an analyst with HSBC in London, said in a note to clients.

Marchionne's successor will be appointed by FCA's general meeting in April 2019.

Expansion will be underpinned by rolling out brawny Jeep and Ram vehicles globally. The carmaker is also considering combining Alfa Romeo and Maserati into a single division in FCA's financial reports, the people said. Combining the upscale Italian brands would be seen by investors as a first step to an eventual spinoff.

14th anniversary

The presentation represents an important signal for the post-Marchionne era and comes on the executive's 14th anniversary at the helm after leading the carmaker back from the brink of bankruptcy and boosting the group's value more than 10 times. After the CEO steps down in 2019, Fiat's controlling shareholders are expected to evaluate long-term strategic options, including a potential merger with a larger rival.

Marchionne's final plan focuses FCA's resources on promising niches rather than competing head-to-head with auto giants such as Volkswagen AG and Toyota Motor Corp. in the mass-market car business. Amid a looming transition in the way vehicles are powered, driven and sold, Marchionne has voiced concerns about the risks of mainstream autos becoming "commoditized." Prioritizing a few sharply defined brands could also make the Italian-American automaker more digestible in the event of a deal.

Jeep -- which accounts for more than 70 percent of profits, according to analysts' estimates -- will increasingly become the focal point of the group. Marchionne is set to target doubling the brand's sales volume by 2022 from about 1.4 million vehicles last year. The growth is based on expanding Jeep's presence in Asia, Brazil and Europe as well as widening its product offering with hybrid variants starting next year. Marchionne has already indicated that he sees chances to double the group's profit in the coming five years on booming Jeep sales.

As part of the strategy, which will include details on a new dividend policy, the carmaker will likely announce its intention to set up its own captive finance unit in the U.S., following similar structures of its American competitors, the people said.

The plan could attract criticism in Italy, just as the carmaker's historical home suffers through a new round of political turmoil. After moving its headquarters outside Italy, the company is ready to abandon making mass-market cars in the country, people familiar with the matter said earlier this month, retooling Western European factories for premium cars with a global appeal, they said.

Union concerns

As a consequence, the Fiat brand is set to be reduced to the 500 and Panda families, with sales limited to Europe, Brazil and some emerging markets. That could mean a withdrawal from the U.S., where it sought to make inroads on the heels of the Chrysler merger. The timing of that process may be complicated by dealer contracts. In China, local Fiat models failed to gain traction and are set to be halted, the people said.

Italian unions have voiced concern about the lack of new models, including a decision to ditch production of no-frills cars in the country. The hard-line Fiom Cgil union will host a "workers day" in downtown Turin on Thursday, a day before the investors meeting.

"The pledge for full employment in Italy is again not respected this year," said Federico Bellono, the union's Turin chief. "We are not convinced that this will happen just by building premium cars in Italy as volumes are lower."

Elkann's tie

Along with shrewd dealmaking and spinoffs, Fiat's shift to crossovers from cars in the U.S. has paid off. The company reported wider profit margins than Ford Motor Co. in the first quarter, and Marchionne has set his sights on surpassing General Motors Co. in profitability before he steps down next year. A successor has yet to be named, but Marchionne has said it will be an internal candidate. CFO Richard Palmer, Europe head Alfredo Altavilla and Jeep chief Mike Manley are seen as the leading candidates.

Marchionne will likely take the stage for his final act with unprecedented ceremony: wearing a tie. The iconoclastic executive has vowed to don neckwear if he's ready to declare victory in his bid to rid Fiat Chrysler of net industrial debt. The goal is key to showing that the carmaker he pulled back from the brink is ready to weather the next crisis. Chairman John Elkann, the head of the Agnelli family that controls the company, has the tie waiting in his drawer.

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