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Fiat Chrysler's Q3 profit boosted by strong North American earnings

MILAN, Italy — Fiat Chrysler Automobiles (FCA) reported a 17 percent jump in third-quarter adjusted operating profit on Tuesday, helped by a strong performance in its key North American market and improving operations in Europe and Latin America. The world's seventh-largest carmaker still makes the lion's share of its profits in North America, so improving, or at least maintaining, its margins there is a key focus. The carmaker reported an 8 percent adjusted operating profit margin in the region, up from 7.6 percent a year ago, despite a drop in sales and shipments. "FCA's profitability in North America remained strong in the quarter despite a weakening market there," a Milan-based analyst said. FCA's profitability compares with an 8.3 percent North America margin reached in the quarter by bigger U.S. rival GM , showing CEO Sergio Marchionne making progress towards his goal of closing the margin gap with GM and the company's other U.S. rival, Ford, by 2018. The company's confirmation of its full-year outlook also pushed shares higher, a trader added. The stock was up 2.8 percent by 1129 GMT, outperforming a 1 percent rise in the European auto index. FCA has been retooling some U.S. factories to boost output of sport-utility vehicles (SUVs) and trucks while ending production of some unprofitable sedans to strengthen profitability as the U.S. car market comes off its peak. The company said a drop in North America shipments due to lower fleet sales and discontinued models was partially offset by higher deliveries of Ram trucks and two models from the Alfa Romeo stable: the Stelvio sport utility vehicle and Giulia sedan. Profitability also improved in Europe, helped by sales of the Stelvio and the new Jeep Compass, and Latin America, while margins at Maserati remained strong at 13.8 percent due to strong demand for its first SUV, the Levante. In a later conference call, investors are looking for hints on the new strategy to 2022 which the company promised to unveil early next year. Chief Executive Sergio Marchionne said earlier this year that FCA would streamline its portfolio and that components businesses, including Magneti Marelli, would be separated from the group, possibly via a spin-off. While FCA confirmed its targets this year, doubts remain about its exposure to a weakening U.S. market, recall costs and potential fines over emissions after it was targeted by European and U.S.

Fiat Chrysler and Peugeot boards meet to finalize merger

MILAN/PARIS — The boards of Fiat Chrysler Automobiles and Peugeot will meet separately on Tuesday to discuss finalizing an initial agreement for a $50 billion merger to create the world's number four carmaker, sources said. A source close to FCA said the two companies could announce the signing of a binding memorandum early on Wednesday, followed by a conference call to explain further details later in the day. The two mid-sized carmakers announced plans six weeks ago for a tie-up to help them deal with big challenges in the industry, including a global demand downturn and the need to develop costly cleaner cars to meet looming anti-pollution rules. Ahead of the meetings, entities representing the Peugeot family, Etablissements Peugeot Freres (EPF) and FFP, unanimously approved a proposed memorandum of understanding for the planned merger, a source familiar with the situation said. FCA and PSA have said they would seek to finalize a deal by year-end to create a group with 8.7 million in annual vehicle sales. That would put it fourth globally behind Volkswagen, Toyota and the Renault-Nissan alliance. PSA's Carlos Tavares will be chief executive and FCA's John Elkann — the scion of Italy's Agnelli family, which controls FCA through their holding company Exor — chairman of the combined company. The group will include the Fiat, Jeep, Dodge, Ram, Chrysler, Alfa Romeo, Maserati, Peugeot, DS, Opel and Vauxhall brands, allowing it to serve mass and premium passenger car markets as well as those for trucks and light commercial vehicles. Related Video:       Chrysler Dodge Fiat Jeep RAM Citroen Peugeot

The Chrysler brand could be axed under Stellantis management

MILAN — While running NissanÂ’s North American operations from 2009 to 2011, Carlos Tavares had a reputation for closely watching costs with little tolerance for vehicles or ventures that didnÂ’t make money. Experts say that means Tavares, currently the head of PSA Group, is likely to follow that blueprint when he becomes leader of a merged PSA and Fiat Chrysler Automobiles. The low-performing Chrysler brand might get the axe as could slow-selling cars, SUVs or trucks that lack potential. Already the companies are talking about consolidating vehicle platforms — the underpinnings and powertrains — to save billions in engineering and manufacturing costs. That could mean job losses in Italy, Germany and Michigan as PSA Peugeot technology is integrated into North American and Italian vehicles. “You canÂ’t be cost efficient if you keep the entire scale of both companies,” said Karl Brauer, executive analyst for the iSeeCars.com auto website. “WeÂ’ve seen this show before, and weÂ’re going to see it again where they economize these platforms across continents, across multiple markets.” Shareholders of both companies are to meet Monday to vote on the merger to form the worldÂ’s fourth-largest automaker, to be called Stellantis. The deal received EU regulatory approval just before Christmas. Tavares, who for years has wanted to sell PSA vehicles in the U.S., wonÂ’t take full control of the merged companies until the end of January at the earliest. He likely will target Europe for consolidation first, because thatÂ’s where Fiat vehicles overlap extensively with PSAÂ’s, said IHS Markit Principal Auto Analyst Stephanie Brinley. Europe has been a money-loser for FCA, and factories in Italy are operating way below capacity — a concern for unions, given FiatÂ’s role as the largest private sector employer in the country. “We are at a crossroads,Â’Â’ said Michele De Palma of the FIOM CGIL metalworkersÂ’ union. “Either there is a relaunch, or there is a slow agonizing closure of industry, in particular the auto industry, in Italy.” ItalyÂ’s hopes lie with the luxury Maserati and sporty Alfa Romeo brands, but De Palma said investments are needed to bring hybrid and electric technology up to speed. FiatÂ’s Italian capacity stands at 1.5 million vehicles, but only a few hundred thousand are being produced each year. Most factories were on rolling short-term layoffs due to lack of demand, even before the pandemic.