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Auto Mergers and Acquisitions: Suicide or salvation?

We love the Moses figure. A savior riding in from stage right with the ideas, the smarts, and the scrappiness to put things right. Alan Mullaly. Carroll Shelby. Lee Iacocca. Andrew Carnegie. Steve Jobs. Elon Musk. Bart Simpson. Sergio Marchionne does not likely view himself with Moses-like optics, but the CEO of Fiat Chrysler Automobiles recently gave a remarkable, perhaps prophetic interview with Automotive News about his interest and the inevitability of merging with a potential automotive partner like General Motors. Marchionne has been overtly public about his notion that GM must merge with FCA. For a bit of context, GM sold 9.9 million vehicles in 2014, posting $2.8 billion in net income, while FCA sold 4.75 million units and earned $2.4 billion in net income, painting a very rosy FCA earnings-to-sales picture. But that's not the entire picture. Most people in the auto industry still remember the trainwreck that was the DaimlerChrysler "merger" written in what turned out to be sand in 1998. It proved to be a master class in how not to fuse two companies, two cultures, two continents, and two management teams. Oh, it worked for the two individuals at both helms pre-merger. They got silly rich. And the industry itself was in a misty romance at the time with mergers and acquisitions. BMW bought Rolls-Royce. Volkswagen Group bought Bentley, Bugatti, and Lamborghini, putting all three brands into their rightful place in both products and positioning. No marriages there, so no false pretense. Finally, Nissan and Renault got married in 1999. A successful marriage requires several rare elements in this atmosphere of gas fumes and power lust. But a successful marriage requires several rare elements in this atmosphere of gas fumes and power lust, the principle part being honesty. Daimler and Chrysler lied to each other. The heads of each unit, the product planners, and finance all presented their then-current and long-range forecasts to each other with less-than-forthright accuracy. Daimler was the far greater equal and no one from the Chrysler side enjoyed that. The cultures were entirely different, too, and little was done to bridge that gap. Which brings me back to the present overtures by Marchionne to GM. "There are varying degrees of hugs," Marchionne stated in the Automotive News piece. "I can hug you nicely, I can hug you tightly, I can hug you like a bear, I can really hug you." Seriously?

Dodge Viper now available in matte finish

The prospect of buying a new Dodge Viper just got that much more enticing with the introduction of matte-finish paint direct from the factory. Available as part of the "1 of 1" customization program, the matte finishes aren't being offered in just a handful of colors like some other automakers do: customers will be able to specify a matte finish on any of the 8,000 colors that are already part of the program's palette. The matte finish option adds yet another step to the exhaustive hand-painting process that Dodge offers on the Viper - a painstaking endeavor that takes upwards of 145 man hours to complete. Specialists start by applying a base coat and a clear finish, followed by the paint and clear coat. The finished body panels are then smoothed with 1,000-grit paper and polished. A second sanding process is required for the matte finish before the application of a matte clear coat. Specify custom stripes (available in five colors or by custom order) and they're applied under the paint, not as decals on top. The availability of the matte finish in conjunction with the stripe options and new satin badging and fuel cap leads to over 50 million combinations. Needless to say, that means no two Vipers need ever leave the Conner Avenue assembly plant the same – though there will surely always be certain favorite combinations, especially on those units ordered from outside the customization program. Related Video: DODGE EXPANDS INDUSTRY-FIRST '1 OF 1' VIPER CUSTOMIZATION PROGRAM WITH NEW MATTE-FINISH PAINT OPTION - New matte-finish exterior paint available on all of Viper '1 of 1' program's 8,000 exterior color options and 24,000 stripe options - Viper's custom '1 of 1' exterior paint options double to 16,000 exterior colors and 48,000 unique strip combinations - Matte finish available in all exclusive '1 of 1' program and standard production colors - In addition to matte-finish exterior paint, Viper customers can choose between satin chrome or satin black badging and fuel filler door for a sinister appearance - Dodge Viper owners can build their one-of-a-kind Viper from more than 50 million unique build configurations for the ultimate in model year exclusivity June 19, 2015 , Auburn Hills, Mich. - The Dodge brand continues to expand the Viper's exclusive production elements like never before.

EV cost burden pushing automakers to their limits, says Stellantis' CEO Tavares

DETROIT — Stellantis CEO Carlos Tavares said external pressure on automakers to quickly shift to electric vehicles potentially threatens jobs and vehicle quality as producers struggle with EVs' higher costs. Governments and investors want car manufacturers to speed up the transition to electric vehicles, but the costs are "beyond the limits" of what the auto industry can sustain, Tavares said in an interview at the Reuters Next conference released Wednesday. "What has been decided is to impose on the automotive industry electrification that brings 50% additional costs against a conventional vehicle," he said. "There is no way we can transfer 50% of additional costs to the final consumer because most parts of the middle class will not be able to pay." Automakers could charge higher prices and sell fewer cars, or accept lower profit margins, Tavares said. Those paths both lead to cutbacks. Union leaders in Europe and North America have warned tens of thousands of jobs could be lost. Automakers need time for testing and ensuring that new technology will work, Tavares said. Pushing to speed that process up "is just going to be counter productive. It will lead to quality problems. It will lead to all sorts of problems," he said. Tavares said Stellantis is aiming to avoid cuts by boosting productivity at a pace far faster than industry norm. "Over the next five years we have to digest 10% productivity a year ... in an industry which is used to delivering 2 to 3% productivity" improvement, he said. "The future will tell us who is going to be able to digest this, and who will fail," Tavares said. "We are putting the industry on the limits." Electric vehicle costs are expected to fall, and analysts project that battery electric vehicles and combustion vehicles could reach cost parity during the second half of this decade. Like other automakers that earn profits from combustion vehicles, Stellantis is under pressure from both establishment automakers such as GM, Ford, VW and Hyundai, as well as start-ups such as Tesla and Rivian. The latter electric vehicle companies are far smaller in terms of vehicle sales and employment. But investors have given Tesla and Rivian higher market valuations than the owner of the highly profitable Jeep and Ram brands. That investor pressure is compounded by government policies aimed at cutting greenhouse gas emissions. The European Union, California and other jurisdictions have set goals to end sales of combustion vehicles by 2035.