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Rising aluminum costs cut into Ford's profit

When Ford reports fourth-quarter results on Wednesday afternoon, it is expected to fret that rising metals costs have cut into profits, even as rivals say they have the problem under control. Aluminum prices have risen 20 percent in the last year and nearly 11 percent since Dec. 11. Steel prices have risen just over 9 percent in the last year. Ford uses more aluminum in its vehicles than its rivals. Aluminum is lighter but far more expensive than steel, closing at $2,229 per tonne on Tuesday. U.S. steel futures closed at $677 per ton (0.91 metric tonnes). Republican U.S. President Donald Trump's administration is weighing whether to impose tariffs on imported steel and aluminum, which could push prices even higher. Ford gave a disappointing earnings estimate for 2017 and 2018 last week, saying the higher costs for steel, aluminum and other metals, as well as currency volatility, could cost the company $1.6 billion in 2018. Ford shares took a dive after the announcement. Ford Chief Financial Officer Bob Shanks told analysts at a conference in Detroit last week that while the company benefited from low commodity prices in 2016, rising steel prices were now the main cause of higher costs, followed by aluminum. Shanks said the automaker at times relies on foreign currencies as a "natural hedge" for some commodities but those are now going in the opposite direction, so they are not working. A Ford spokesman added that the automaker also uses a mix of contracts, hedges and indexed buying. Industry analysts point to the spike in aluminum versus steel prices as a plausible reason for Ford's problems, especially since it uses far more of the expensive metal than other major automakers. "When you look at Ford in the context of the other automakers, aluminum drives a lot of their volume and I think that is the cause" of their rising costs, said Jeff Schuster, senior vice president of forecasting at auto consultancy LMC Automotive. Other major automakers say rising commodity costs are not much of a problem. At last week's Detroit auto show, Fiat Chrysler Automobiles NV's Chief Executive Officer Sergio Marchionne reiterated its earnings guidance for 2018 and held forth on a number of topics, but did not mention metals prices. General Motors Co gave a well-received profit outlook last week and did not mention the subject. "We view changes in raw material costs as something that is manageable," a GM spokesman said in an email.

Former Fiat Chrysler VP pleads guilty in UAW corruption probe

Former Fiat Chrysler Automobiles executive Alphons Iacobelli pleaded guilty on Monday in connection to allegations that he made at least $1.5 million in improper payments to senior union officials, the U.S. attorney's office in Detroit said. Iacobelli, 58, a former Fiat Chrysler vice president of employee relations, was charged in July in U.S. District Court in Detroit with taking part in a conspiracy to pay prohibited money and gifts to United Auto Workers union officials. Sentencing was set for May 29. Iacobelli faces a statutory maximum of eight years in prison, and prosecutors said he will be required to repay $835,000. A lawyer for Iacobelli did not immediately comment on Monday. Iacobelli pleaded guilty to conspiracy to violate the Labor Management Relations Act and to filing a false tax return based on his failure to report hundreds of thousands of dollars in income that he illegally diverted, the government said. Iacobelli reportedly made some lavish purchases with money taken from the UAW-Chrysler National Training Center — a 2013 Ferrari 458 Spider and two solid-gold Mont Blanc pens costing $37,500 apiece. He reportedly sold the sports car at a discount when news broke of the investigation. The government said Iacobelli conspired to make illegal payments in an effort to obtain concessions and advantages for Fiat Chrysler "in the negotiation, implementation and administration of the collective bargaining agreements between FCA and the UAW." Monica Morgan, the wife of former UAW Vice President General Holiefield, who died in March 2015, is also expected to plead guilty, Reuters reported last week, citing a person briefed on the matter. She faces a plea hearing on Feb. 6. Morgan was charged with conspiring with Iacobelli to violate federal labor law. Morgan's lawyer, Steve Fishman, declined comment. Jerome Durden, a former Fiat Chrysler official whom the government charged with conspiring to divert over $4.5 million in UAW training center funds, pleaded guilty in August. The Justice Department has a wide-ranging investigation under way. In November, General Motors and Ford confirmed they were cooperating with the investigation into alleged misspending at UAW union training centers funded by U.S. automakers. It was not clear if Iacobelli is cooperating in the ongoing investigation. General Motors is conducting an internal investigation into the matter. The UAW said in a statement Monday that it is "appalled at these charges.

Least favorite vehicles of 2017

The Autoblog staff has driven a lot of vehicles in 2017. This video showcases our least favorite vehicles from this year, along with some thoughts on why they made the list. Wanna read more head over to https://www.autoblog.com/photos/least-favorite-cars-2017/ BMW Fiat Lexus Nissan RAM Toyota Autoblog Minute Videos Original Video nismo nissan sentra fiat 500x Arts and Entertainment 500x bmw m240i rogue

FCA discussing tech partnership with Hyundai, but no merger

Fiat Chrysler Automobiles is in talks with South Korea's Hyundai about a technical partnership, but there are no merger talks between the two, FCA Chief Executive Sergio Marchionne said on Saturday. FCA is often the subject of merger speculation, especially after its unsuccessful 2015 attempt to tie up with larger U.S. rival GM. Its share price jumped to record highs in August after reports of interest from China and Hyundai. "We already buy components from (Hyundai) .... let's see if we can agree on other points, especially for the development of transmissions and hydrogen," Marchionne told journalists, adding there was "nothing to announce for the moment". Asked whether this collaboration could turn into a merger, Marchionne said: "I don't believe so". (Reporting by Agnieszka Flak; editing by Alexander Smith)Related Video: This content is hosted by a third party. To view it, please update your privacy preferences. Manage Settings.

Trucks, SUVs drive U.S. October new vehicle sales

DETROIT — Major automakers posted mixed U.S. new vehicle sales in October on Wednesday, though America's love affair with high-margin pickup trucks and SUVs remained in full bloom as larger, pricier vehicles fared better than passenger cars. Auto industry publication WardsAuto put the seasonally-adjusted annualized rate (SAAR) for light vehicle sales in October at a robust level of 18 million units. But after a long boom cycle, carmakers are still ill-prepared for the slight decline in sales anticipated for full-year 2017 and have taken too few steps to trim production, said Doug Mehl, a partner in consultancy A.T. Kearney's automotive practice. "When you make a new vehicle, you have volume assumptions tagged to it, and who wants to be the guy who says, 'I'm going to make less of this really cool model'?" Mehl said. "But eventually the market is the reality, and it's going to force companies one way or other here." General Motors GM reported a sales drop of 2.2 percent for the month, with consumer sales down 6.6 percent. But sales of high-margin pickup trucks, sport utility vehicles and crossovers all rose. GM also cut its inventory of unsold vehicles — a source of concern for the market — slightly. The automaker has worked to reduce its volume of excess inventory, including through significant production shutdowns in the third quarter. GM had said its inventory would rise in October. "We are heading into the fourth quarter with good momentum, thanks to a strong U.S. economy and very strong pickup and crossover sales," said Kurt McNeil, GM vice president for U.S. sales operations. GM slightly reduced consumer discounts as a percentage of average transaction prices to 13.5 percent, from 13.7 percent in the third quarter. Industry experts believe consumer discounts above 10 percent of the average transaction price are unhealthy as they erode resale values and are unsustainable in the long term. Consultants J.D. Power and LMC said last week that based on preliminary October sales numbers, discounts have exceeded 10 percent in 15 of the past 16 months. Ford The U.S. auto industry posted record sales of 17.55 million vehicles in 2016. New sales received a strong boost in September as consumers replaced vehicles damaged in southeast Texas by Hurricane Harvey the previous month. Full-year 2017 sales are expected to be slightly lower than 2016.

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’s Sergio Marchionne throws more cold water on Tesla, EVs

Fiat Chrysler CEO Sergio Marchionne has once again sounded off on industry upstart Tesla and its wunderkind boss, Elon Musk. In the process, he doubled down on FCA's reluctance to follow its competitors headlong into electrifying its vehicle fleet, saying "we're not betting the bank on going fully electric in the next decade. It won't happen." Marchionne made his comments on Monday during remarks at the New York Stock Exchange, where he was marking the 70th anniversary of Ferrari. They come as Tesla struggles to ramp up production of its Model 3 sedan, its first mass-market offering, and the company continues to hemorrhage money. Here's what he said: "We still don't have a viable model for delivering an electric car. As much as I like Elon Musk, and he's a good friend, and actually he's done a phenomenal job of marketing Telsa, I remain unconvinced of a new economic viability of the model that he's pitching. So I think we need to be careful, because when we embrace electrification, and I made comments on the fact that we lose money on every Fiat 500, the electric that we sell in the U.S. Now that's reflective of the 2011-2010 costs in terms of components. Those costs have come down. If I were to do it again, I would certainly reduce the amount of the loss, but I would not make any money. And you can't run economic entities on losses. It doesn't happen. "So how do we find a convergence of technology bringing prices of components down and allows us to price accordingly — or we need to navigate through this process in a combined way between combustion and electrification to yield at least a minimum of economic returns that allows for our continuity? The last thing you want is me to be successful selling cars for 24 months and then go bust. That's not a good story. Especially in a place like this which rewards economic success. Let's not sit here and design our own future in the tank. Let's try and do it properly. We will do all the right things. We are investing without making a lot of noise on electrification. We will combine it with combustion to yield the right level of CO2. But we're not betting the bank on going fully electric in the next decade. It won't happen." It's not the first time Marchionne has publicly expressed doubts about Tesla's business plan.

2016 Fiat 500X Long-Term Wrap Up | Exceeds expectations

Compact crossovers are on the rise. Most shoppers are young and the competition reflects that. Everything, from our long-term 2016 Fiat 500X to the new Toyota C-HR or the upcoming Hyundai Kona, sells just as much on style as it does on substance. Our time with the 500X shows Fiat's entry into the segment has plenty of both. It's not as compromised as something like the Nissan Juke and not as sterile as the Honda HR-V. It proved to be a solid if occasionally troublesome vehicle. What were those troubles? A few wiring issues within the steering column sent car alarms blazing in the middle of the night. The same issue turned on the wipers when using the turn signal. The issues were fixed after a couple trips to the dealer. So yes, the local Fiat dealer did indeed have to fix it again. We did not confirm if the mechanic was named Tony. Still, it was charming and exceeded most of the Autoblog staff's expectations. Based on previous experiences with Fiats, we weren't sure how the 500X would fare over a year. Not all of our long-term cars leave a lasting impression, but we were sure sorry to see this one leave. Editor-in-Chief Greg Migliore - I always enjoy a night or weekend in the 500X. In fact, it was one of my go-to sign-outs. It's functional. It looks cool inside and out, and it's easy to drive. I dig the small hatchback/crossover vibe. There's room in the trunk for plenty of stuff and the back seat is reasonable for adults. This is the kind of vehicle that could turn Americans on to Fiat. It meets their needs and it's stylishly different. I like driving it. The transmission is a little weird with its shifts, but you get used to it. Sport mode makes the car a lot more responsive and it's a nice feature. The saddle brown interior looks great and held up well, and the exterior is cute with its peering headlights and subtle curves. I actually like driving this car, as opposed to our other recent long-termer, the HR-V, which was dull, slow and lacking in character. You chose the Fiat. You had to take the Honda. Executive Producer Adam Morath - I wanted to love this car, but it just wouldn't let me. First, the good: It's the best looking of the 500 lineup, offers nice utility in a stylish, compact package. The seats aren't going to offer tons of bolstering support, but they are wide and comfortable. Visibility and spacious cabin feel are also pluses. Finally, I love that you can get unique-looking materials to cover the seats.

Marchionne says no offers are on the table for Fiat Chrysler

MONZA, Italy (Reuters) - Fiat Chrysler (FCA) has not received any offer for the company nor is the world's seventh-largest carmaker working on any "big deal", Chief Executive Sergio Marchionne said on Saturday. Speaking on the sidelines of the Italian Formula One Grand Prix, Marchionne said the focus remained on executing the company's business plan to 2018. Asked whether FCA had been approached by someone or whether there was an offer on the table, he simply said: "No." The company's share price jumped to record highs last month after reports of interest for the group or some of its brands from China. China's Great Wall Motor Co Ltd openly said it was interested in FCA, but had not held talks or signed a deal with executives at the Italian-American automaker. The stock move was also helped by expectations that the company might separate from some of its units. Marchionne reiterated on Saturday that FCA was working on a plan to "purify" its portfolio and that units, such as the components businesses, would be separated from the group. He hopes to complete that process by the end of 2018. "There are activities within the group that do not belong to a car manufacturer, for example the components businesses. The group needs to be cleared of those things," he told journalists. Asked whether an announcement could come this year, Marchionne said it was up to the board to decide and that it would next meet at the end of September. He said the time was not right for a spin-off of luxury brand Maserati and premium Alfa Romeo and the two brands needed to become self-sustainable entities first and "have the muscle to stand on their feet, make sufficient cash". "The way we see it now, it's almost impossible, if not impossible, to see a spin-off of Alfa Romeo/Maserati, these are two entities that are immature and in a development phase," he said. "It's the wrong moment, we are not in a condition to do it." He said the concept of separating the two brands from FCA's mass market business made sense and did not rule out this happening in future, but not under his tenure, which lasts until April 2019. "If there is an opportunity in future, it would certainly happen after I'm gone. It won't happen while Marchionne is around," he said.

Automakers, dealers are rushing cars to Houston after Harvey

DETROIT — Houston-area car retailers and automakers are rushing to reopen dealerships and beef up inventory to replace many hundreds of thousands of vehicles damaged in flooding from Hurricane Harvey. Pete DeLongchamps, vice president for manufacturer relations at Group 1 Automotive, the third-largest U.S. auto dealer group, said the company prepared for the storm with a plan designed after Hurricane Katrina in 2005. This included moving moved inventory to higher ground and cleaning roof drains to avoid cave-ins. Group 1 thus lost a "relatively small percentage" of inventory and reopened its roughly 25 dealerships in the Houston and Beaumont area by Thursday. "Things have been moving fast and furious with a large number of tow-ins already," DeLongchamps said. "Our customers have lost a lot of vehicles, we need to help them replace." Harvey brought record flooding to Houston and killed at least 35 people. The storm is expected to briefly depress already slowing U.S. auto sales but could eventually help boost demand as damaged cars are replaced. Automakers report U.S. August sales on Friday. Estimates for the number of Harvey-damaged vehicles needing replacement range up to 500,000. By Thursday, AutoNation, the largest U.S. auto retail chain, had reopened its 17 Houston stores and is moving cars and trucks from other regions, company spokesman Marc Cannon said. The company plans to move 500 to 1,000 used cars to an AutoNation USA used car store and stage a sale Sept. 21-23, when many would-be buyers should have insurance checks to replace destroyed vehicles, Cannon said. AutoNation is still assessing how many vehicles it lost, but it too moved vehicles to higher ground ahead of the storm. General Motors spokesman Jim Cain said the number of damaged vehicles at dealerships "is relatively modest." "But there are still several dealerships that are inaccessible, so the number will increase," he said. GM will move new and used vehicles to Houston, "but it won't be done until the infrastructure and our dealers are ready." Ford is still assessing damage and inventory needs, a spokeswoman said. CarMax, the biggest U.S. used car dealer, will reopen its six Houston area stores on Labor Day, spokeswoman Claire Hunter said. "We are mobilizing additional inventory to the region as we speak," Hunter said. Paul Lips, chief operating officer at ADESA, a unit of KAR Auction Services Inc., which with Manheim dominates the U.S.