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China-FCA merger could be a win-win for everyone but politicians

NEW YORK — Fiat Chrysler boss Sergio Marchionne has said the car industry needs to come together, cut costs and stop incinerating capital. So far, his words have mostly fallen on deaf ears among competitors in Europe and North America. But it appears Marchionne has finally found a receptive audience — in China. FCA shares soared Monday after trade publication Automotive News reported the $18 billion Italian-American conglomerate controlled by the Agnelli family rebuffed a takeover from an unidentified carmaker from the Chinese mainland. As ugly as the politics of such a combination may appear at first blush, a transaction could stack up industrially, and perhaps even financially. A Sino-U.S.-European merger would create the first truly global auto group. That could push consolidation to the next level elsewhere. Moreover, China is the world's top market for the SUVs that Jeep effectively invented, so it might benefit FCA financially. A combo would certainly help upgrade the domestic manufacturer; Chinese carmakers have gotten better at making cars, but struggle to build global brands, and they need to develop export markets. Though frivolous overseas shopping excursions by Chinese enterprises are being reined in by Beijing, acquisitions that support the modernization and transformation of strategic industries still receive support, and the government considers the automotive industry to be strategic. A purchase of FCA by Guangzhou Automobile, Great Wall or Dongfeng Motors would probably get the same stamp of approval ChemChina was given for its $43 billion takeover of Syngenta. What's standing in the way? Apart from price (Automotive News said FCA's board deemed the offer insufficient) there's the not-insignificant matter of politics. Even as FCA shares soared, President Donald Trump interrupted his vacation to instruct the U.S. Trade Representative to look into whether to investigate China's trade policies on intellectual property. Seeing storied Detroit brands like Jeep, Chrysler, Ram and Dodge handed off to a Chinese company would provoke howls among Trump's economic-nationalist supporters. It might not play well in Italy, either, to see Alfa Romeo and Maserati answering to Wuhan instead of Turin — though Automotive News said they might be spun off separately. Yet, as Morgan Stanley observes, "cars don't ship across oceans easily," and political considerations increasingly demand local manufacture of valuable products.

2017 Alfa Romeo Giulia Ti

It is the cover car of the moment for enthusiast publications across the country. And the introduction of the 2017 Alfa Romeo Giulia Quadrifoglio deserves the notice. With it Fiat Chrysler Automobiles marks the real return of Alfa Romeo sales and service to the North American market. Alfa's two-seater – the 4C – preceded it, but the target market for those coupes and roadsters could be fitted into a commuter jet. The new Giulia is aimed at the midsize sport sedan audience currently occupied by the BMW 3 Series, Mercedes-Benz C-Class, and Audi A4. The sales potential is huge and historically underserved by Italian brands. While the Giulia Quadrifoglio, with its 505 horsepower and track-ready suspension gets the ink, we think it's the more pedestrian Giulia sedan that's deserving your attention. And by pedestrian we don't mean prosaic; the Giulia is an exciting sedan built atop a competent platform and propelled by a responsive turbocharged drivetrain. With a base price in real-wheel-drive form (all-wheel drive is optional) of under $40,000, the Giulia is accessible in a way the $72,000 Quadrifoglio is not. On Alfa's Build Your Own site we studied the options, selecting an upgrade with Alfa's Giulia Ti. It constitutes a $2,000-bump over the Giulia's $38,000 base, and gives you 18-inch alloy wheels (vs. the 17-inchers on the standard Giulia). The Ti also provides dark gray oak interior accents and the availability of both Sport and Lusso (luxury) appearance packages. Other adds included the Vesuvio Gray exterior ($600), additional leather interior trim ($995), the Ti Performance package ($1,200) and the Ti 18-inch Sport Package ($1,750). The Sport package adds more aggressive alloy wheels, paddle shifters, and aluminum pedals, while Performance supplied the active suspension and limited slip differential. The end result is a net price of $45,535 including applied offers. We think we'd lease it. In talking with an Alfa dealer in suburban Washington, an advertised lease special on a $44,000-Giulia resulted in 39 payments at just over $500 per month, with roughly $7,500 out of pocket and a residual value of $21,239. At the end of that 39 months you have the option of returning the car to FCA or buying it for the residual. We think the Giulia, with an MSRP of between $40,000 and $50,000, is a screaming deal. And to buy your own 'used' car at the end of three years for $21,000? That's a crazy good deal. Related Video:

Share price falls on skepticism of Chrysler-Fiat five-year plan

Following this week's Fiat Chrysler extravaganza, where the Italian-American manufacturer announced its plans for the next five years, the Autoblog staff was cautiously optimistic of the company's future. Investors? Not so much.
Fiat saw its shares tumble 12 percent in Wednesday's trading, falling from 8.67 euros ($12.06 at today's rates) to 7.44 euros ($10.35) as of this writing, with blame partly going to the Italian half of the FCA marriage, which recorded a pretty significant drop in profits during the first quarter of this year.
The plan, which will cost around $77 billion over the next several years, is facing criticism from investors thanks in part to a 1.4-percent drop in Fiat's first-quarter profits, to 622 million euros ($862 million). That figure is also short of Bloomberg analysts' projections, which predicted $1.18 billion in profits before taxes, interest and one-time items.