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Strains between France and Italy risk Renault-FCA merger

PARIS/ROME — Fiat Chrysler's proposed $35 billion merger with Renault has cheered investors, won conditional support from Paris and Rome and even earned cautious backing from trade unions. Beneath this veneer, however, the bold attempt to create the world's third-largest carmaker risks becoming rapidly embroiled in the fraught relationship between France's europhile President Emmanuel Macron and Italy's euroskeptic leaders. For while Deputy Prime Minister Matteo Salvini hailed the proposal as a "brilliant operation," Italy's creaking, state-subsidized Fiat factories are likely to bear the brunt of any production-related cost savings. FCA and Renault said this week that more than 5 billion euros ($5.6 billion) of annual savings would come mainly from combining platforms, consolidating powertrain and electrification investments and the benefits of increased scale. Salvini and France's Finance Minister Bruno Le Maire, who called the deal a "good opportunity" to build a European industrial champion able to compete with China and the United States, have both said they want guarantees on local jobs. "It's not every day that I agree with Salvini," said Le Maire, whose government appears to hold the trump cards. When it comes to where any job cuts fall, France will be helped by its existing 15 percent holding in Renault, whose superior efficiency at its five French plants makes it better placed to handle a supply glut, the demise of the petrol engine and the investments needed for electric and autonomous vehicles. "It will take many, many years to find real savings, and ugly political and operational realities can often swamp the potential of such new entities," Bernstein analyst Max Warburton said of the FCA-Renault plan to rival Japan's Toyota and Germany's Volkswagen. Advantage France? As well as Italy's government having to cope with the aftermath of European elections, which coincided with news of the FCA-Renault plans, political leaders in Rome were only informed shortly before the deal was made public, an FCA source said. This contrasted with the way the French government was treated, with Fiat Chrysler Chairman John Elkann, a fluent French speaker, letting it know of his merger proposal to Renault weeks ago, a French government official said.

Porsche tops J.D. Power quality index as Korean brands soar

While complaints about infotainment systems remain a thorn in the side of automakers for J.D. Power's annual Initial Quality Study, there's a lot to celebrate this year. The average number of problems reported per 100 vehicles fell to 112 in 2015 – a three-percent improvement compared to 116 in 2014. The results of this year's survey are based on the responses of over 84,000 people about problems within the first 90 days of buying or leasing a 2015 model-year vehicle. For the third consecutive year, Porsche tops the rankings with an average of 80 problems per 100 vehicles. Although, that's slightly more than the 74 the German sportscar maker scored in 2014. "While the Japanese automakers continue to make improvements, we're seeing other brands, most notably Korean makes, really accelerating the rate of improvement," Renee Stephens, vice president of US automotive quality at J.D. Power, said in the study's release. In fact, Kia ranks as one of the biggest movers in this year's list. The Korean brand jumped to second place from seventh last year. The company had an average of 86 problems per 100 vehicles, a 20-point improvement. Third place went to Jaguar with an average of 93 problems reported, versus last year's second-place finish with 87 of them. Fourth place was Hyundai, and fifth-place Infiniti also earned a gold star for improvement with 97 issues per 100 vehicles – 31-points better than last year. Fiat still anchored the bottom of the list. However, its 161 problems this year is a lot better than the 206 in 2014. Ranked by nationality, Korean brands (Hyundai and Kia) are now leading the industry in initial quality with an average of 90 problems reported per 100 vehicles. According to J.D. Power, this is the first time Europe's figure beat Japan with 113 and 114 issues, respectively. The American brands also averaged 114. Whereas General Motors dominated last year, the segment awards are spread out in 2015. GM, Hyundai, Nissan, and Volkswagen Group are all tied with four models each earning prizes. For more information, you can also see all of the graphs, here. J.D.

Fiat 500L gets a much needed update for 2018

The Fiat 500L is one of those love-it or hate-it vehicles. Fiat's largest US vehicle has been knocked for questionable styling, poor build quality, and reliability concerns. That's why the new mid-cycle refresh is so important, as the Fiat says 40-percent of the components on the 500L are all new. Styling is much more aggressive, and a new trim level promises some semblance of off-road readiness. The 500L still keeps the general not-quite-a crossover shape, but the front and rear fascias have been redone. The front is more upright, losing that slack-jawed look of the current model. The lower air intake and foglight surrounds are big and wide, with contrasting chrome and black plastic. The lighting is similar to the current model but has been updated with LED accents. Of course, the requisite Fiat badge and mustache are in place. It's a similar story out back. The 500L retains the same general shape, but it's a little more masculine and angular. There are new chrome accents on the bottom of the bumper along with new reverse and rear foglights (for Europe). There are 10 colors available for the 500L, with three options for the roof: body color, gloss black or white, or matte black. All in, Fiat says there are 37 color combinations. Like the exterior, changes to the interior are more refreshed than all-new. Up front, the biggest changes are to the steering wheel, instrument cluster and infotainment system. A speedometer and tachometer flank a 3.5-inch color display. Like the Fiat 500X, the 500L will have a multitude of menus and options to flip through. The infotainment has been updated with the latest version of FCA's excellent UConnect system. That means standard Apple CarPlay and Android Auto. For Europe, there are three basic configurations: the five-passenger Cross, and optional seven-passenger Wagon, and Urban. There are various trim levels within each configuration, though the long-wheelbase seven-passenger versions are unlikely to make it to the US market. The big news is the Cross, which gets a 25mm lift, skid plates, unique front and rear bumpers, and new wheels and tires. While there are new drive modes, Fiat doesn't make any mention of all-wheel drive. Customers with the need can step up to the smaller but more traditional 500X. The 500L has been a slow seller here in the US. It's unclear when the new model will go on sale, but it's good to see Fiat breathing some life into a slim product line.