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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?

Jeep 'trailer hitch' recall repair rates lag amidst reports of new death

The problem with exploding fuel tanks in the 1993-1998 Jeep Grand Cherokee and 2002-2007 Jeep Liberty in some rear collisions continues to be a problem for FCA US, formerly Chrysler. The campaign to fix the utility vehicles was first announced in June 2013 after 51 claimed fatalities, and the fixes reportedly began in January 2014. However, there continue to be new deaths blaming the problem in unrepaired models, according to The Detroit News, citing data from the Center for Auto Safety. The automaker initially refused NHTSA's pressuring to conduct a recall because the models met applicable crash standards when they were manufactured, but eventually, there was a compromise to inspect and fix about 1.56 million Jeeps. With the fuel tank located between the rear axle and bumper, the unusual fix was to install a trailer hitch for extra protection. The National Highway Traffic Safety Administration later agreed that the change would provide added safety in lower to medium speed crashes, but not high-speed crashes. The most recent fatality, according to The Detroit News, occurred on a Michigan freeway in November 2014 when a pregnant woman in a 2003 Liberty was rear-ended when traffic slowed. Her Jeep impacted the vehicle in front, rolled over and a fire resulted. The family reportedly plans to file a lawsuit against FCA. At issue has been the rate at which the vehicles are being fixed. In July 2014, the automaker estimated it could have all of the vehicles repaired by March 2015 thanks to additional hitch supplies. But by November, NHTSA claimed that only three percent of the recalled models had been fixed. FCA says it continues to work to notify owners, though. According to Chrysler spokesperson Eric Mayne to Autoblog, "We are processing approximately 1,200 vehicles per day. Every owner who schedules service is receiving service. As of Jan. 8, that total was 193,490." The company has also mailed out over two million notifications to owners, more than the number officially called in. Given the age of these Jeeps, many of them have had multiple owners, and historically, the older a vehicle is, the less likely the recall fixes are to be carried out. FCA is currently creating a video urging people to have the hitch installed to be released soon. News Source: The Detroit News [1], [2]Image Credit: Jeep Recalls Jeep Safety SUV FCA jeep liberty jeep safety

NHTSA closes investigation into Jeep Liberty fires

The investigation that the National Highway Traffic Safety Administration opened into the Jeep Liberty in October 2013 has been closed. NHTSA received two (!) complaints about fires starting in the driver's door, thought to be caused by the master power window switch. The initial estimate was that 80,000 Libertys could be roped into a possible recall, but according to a report in the Detroit News the agency examined records for 425,000 Chrysler products that used the same window switch, including the Dodge Nitro and Chrysler Town & Country minivan.
After canvassing 265 warranty claims related to the master switches, NHTSA concluded that the rate of fires compared to the "large population of vehicles" was rather low, and that there was no trend pattern behind the few issues it did find. Perhaps with that, and the closure of the trailer hitch investigation, the Liberty can finally rest in peace.