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Fiat, PSA poised to win EU approval for $38 billion Stellantis merger

BRUSSELS/MILAN — Fiat Chrysler and PSA are set to win EU approval for their $38 billion merger to create the world's No.4 carmaker, people close to the matter said, as they strive to meet the industry's dual challenges of funding cleaner vehicles and the global pandemic. The green light from the European Commission would formalize the creation of Stellantis, a carmaking group that could tap hefty profits from selling Ram pickup trucks and Jeep SUVs to U.S. drivers to fund the expensive development of zero-emission vehicles for sale in Europe and China. The all-share merger announced late last year would unite brands such as Fiat, Jeep, Dodge, Ram and Maserati with the likes of Peugeot, Opel and DS — while targeting annual cost cuts of 5 billion euros ($6 billion) without closing factories. The Commission and Italian-American group Fiat Chrysler Automobiles (FCA) declined to comment. France's PSA did not immediately respond to a request for comment. PSA and FCA shares reversed losses after the Reuters story was published. PSA stock was last up 2% at 16.83 euros, while FCA shares were 1.9% higher at 11.31 euros. To allay EU antitrust concerns, PSA has offered to strengthen Japanese rival Toyota Motor Corp, with which it has a van joint venture, by ramping up production and selling it vans at close to cost price, the people said. FCA and PSA will also allow their dealers in certain cities to repair rival brands. Following feedback from rivals and customers, the carmakers only had to tweak the wording of their concessions, with no changes to the substance, the people said. The companies did not have to use the COVID-19 pandemic to argue for the merger, they added. FCA and PSA have said they hope to complete the merger in the first quarter of 2021. The challenge of switching to electric cars has been complicated by the COVID-19 pandemic. Just last month, FCA and PSA restructured the terms of their deal to conserve cash and raised their targeted cost savings because of the economic fallout from the health crisis. The companies have said about 40% of the savings will come from product-related expenses, 40% from purchasing and 20% from other areas, such as marketing, IT and logistics.

Autoblog Minute: New car customer satisfaction down according to latest ACSI report

Customers have spoken and automobile satisfaction is down in 2015. Autoblog's Chris McGraw reports on this edition of Autoblog Minute. Show full video transcript text [00:00:00] Customers have spoken and automobile satisfaction is down in 2015. I'm Chris McGraw and this is your Autoblog Minute. The American Customer Satisfaction Index or ACSI released its updated numbers and according to the survey, new car buyer satisfaction is down for the third straight year. According to an ACSI press release, customer satisfaction with new automobiles has fallen 3.7 percent, to 79 on its 100-point scale. The ACSI report is based on over 4,100 customer surveys collected in the second quarter of 2015 Sitting at the top of the industry in customer satisfaction is Toyota's Lexus brand with a score of 84. Which was good enough to dethrone Mercedes-Benz, which fell 3% to a score of 83. Of the Big Three, Ford was the only domestic automaker to maintain overall customer satisfaction with its score of 81. General Motors slipped 3% to 79 and Fiat Chrysler had a 5% drop, registering a score of 75 out the possible 100. What's driving this trend of customer dissatisfaction? ASCI points to the rise in recalls and car prices. Where do you land on customer satisfaction spectrum? Sound off in the comments with your thoughts on the current state of car ownership and brand quality. For Autoblog, I'm Chris McGraw. Autoblog Minute is a short-form video news series reporting on all things automotive. Each segment offers a quick and clear picture of what's happening in the automotive industry from the perspective of Autoblog's expert editorial staff, auto executives, and industry professionals. Chrysler Fiat Ford GM Lexus Mercedes-Benz Car Buying Ownership Autoblog Minute Videos Original Video

Why the Detroit Three should merge their engine operations

GM and FCA should consider a smaller merger that could still save them billions of dollars, and maybe lure Ford into the deal. Fiat-Chrysler CEO Sergio Marchionne would love to see his company merge with General Motors. But GM's board of directors essentially told him to go pound sand. So now what? The boardroom battle started when Mr. Marchionne published a study called Confessions of a Capital Junkie. In it, Sergio detailed the amount of capital the auto industry wastes every year with duplicate investments. And he documented how other industries provide superior returns. He's right, of course. Other industries earn much better returns on their invested capital. And there's a danger that one day the investors will turn their backs on the auto industry and look to other business sectors where they can make more money. But even with powerful arguments Marchionne couldn't convince GM to take over FCA. And while that fight may now be over, GM and FCA should consider a smaller merger that could still save them billions of dollars, and maybe lure Ford into the deal. No doubt this suggestion will send purists into convulsions, but so be it. The Detroit Three should seriously consider merging their powertrain operations, even though that's a sacrilege in an industry that still considers the engine the "heart" of the car. These automakers have built up considerable brand equity in some of their engines. But the vast majority of American car buyers could not tell you what kind of engine they have under the hood. More importantly, most car buyers really don't care what kind of engine or transmission they have as long as it's reliable, durable, and efficient. Combining that production would give the Detroit Three the kind of scale that no one else could match. There are exceptions, of course. Hardcore enthusiasts care deeply about the powertrains in their cars. So do most diesel, plug-in, and hybrid owners. But all of them account for maybe 15 percent of the car-buying public. So that means about 85 percent of car buyers don't care where their engine and transmission came from, just as they don't know or care who supplied the steel, who made the headlamps, or who delivered the seats on a just-in-time basis. It's immaterial to them. And that presents the automakers with an opportunity to achieve a staggering level of manufacturing scale. In the NAFTA market alone, GM, Ford, and FCA will build nearly nine million engines and nine million transmissions this year.