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Fiat seeking $10B in financing to buy Chrysler

As Fiat looks to become the full owner of Chrysler, all it has standing in its way is the retiree trust of the United Auto Workers, which currently holds the remaining 41.5 percent of the company as the result of the Pentastar's bankruptcy deal. The Detroit News is reporting that that Fiat is currently talking to numerous banks in an attempt to raise around $10 billion to fund the purchase of Chrysler's remaining stake with enough left over to refinance the debt of both companies. We've known that Fiat has been working to obtain the capital to buy out Chrysler for some time now, but this is the first time we've seen Fiat tip its hand about how much cash it thinks it will need to close the deal.
The first order of business is a legal dispute over the value of the UAW's stake in Chrysler, which the report indicates could cost Fiat around $3.5 billion. The acquisition of remaining shares could happen by this summer, but it sounds like CEO Sergio Marchionne (above) might not be ready for a full merger until next year.

PSA reportedly ditching its two tiny gasoline city cars ahead of merger

The Peugeot 108.   PARIS — PSA is ending the production of Peugeot and Citroen small city cars, three sources told Reuters, withdrawing from an increasingly unprofitable market as its starts a strategic review ahead of its planned merger with Fiat Chrysler. While PSA had already agreed to sell its stake in its Czech joint venture with Toyota where the Peugeot 108 and Citroen C1 models are made, the decision to stop selling the gasoline cars altogether has just been taken, the sources said. Carmakers are reviewing the production of vehicles with combustion engines as they need to fit costly exhaust filtering systems to meet tighter emissions laws. That's pushing up the cost of some so-called entry-level A segment cars to the point where they are hard to justify economically. "PSA is getting out of both the factory and the A segment business, as it is offered today, and on which manufacturers have arguably lost the most money in Europe," one of the sources familiar with the matter said. PSA declined to comment on the future of the two small cars. It said it was reviewing which products would best meet customer expectations in the A segment and cope with European carbon emissions targets. "This means a reflection with fresh and disruptive ideas," a spokesman for the French carmaker said. The European Commission is planning to tighten its emissions limits for cars under new proposals designed to cut the bloc's greenhouse gas output further by 2030. PSA's merger project with FCA has also increased the options available, two of the sources said, as the Italian-U.S. company has no intention of abandoning its small best-selling Panda and 500 models. Both already have hybrid versions and the 500 is also available in full electric mode. "Current projects could be replaced by new ones made possible by the merger with FCA", another source said. "The merger is turning all the cards around, especially when you consider that the A segment, from the very first 500 to the Panda, is inseparable from Fiat history". FCA declined to comment. PSA and FCA aim to finalize their merger in the first quarter next year to create a new company called Stellantis, which will be the fourth-biggest automaker in the world. Market contraction The European market for frugal city cars has been shrinking for several years.

Chrysler to veer away from 'Imported From Detroit' message?

Claim some ground, control that ground and then expand. Chrysler, wandering the Earth like Kane from Kung-Fu when it came to brand message after the bailouts, pulled off the first two feats in only 120 seconds when its "Imported from Detroit" commercial aired during the 2011 Super Bowl. Two years later and now that the brand has a center in the minds of consumers, the Chrysler Group's head of marketing, Olivier Francois, says it's time to move away from the "Detroit" component of that slogan and express the "Imported" aspect.
It is, more precisely, about positioning Chrysler as genuine competition for imports and not Ford or General Motors, but rather Toyota on quality or Audi on technology. A report in Forbes said that Francois not only "wants to attract import owners to Chrysler vehicles by focusing on quality, technology, fuel economy and style," but to "take back the lead in these four things." That is the new understanding he wants people to infer from the idea of Detroit - that the nation's car capital isn't just a patriotic rallying point but a lively competitor for established giants.
Chrysler has been running ads that no longer refer to Detroit, and recent efforts have linked a specific character to each brand - like Jenny with Jeep and Steven with the Chrysler 300 - to create brand separation. Francois hasn't detailed what he plans to do to bolster Chrysler's upscale pretensions, but his efforts would be helped by CEO Sergio Marchionne loosing the pursestrings and the arrival of strong new product.