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FCA and PSA sign merger agreement

Confirming an earlier rumor, PSA Group and Fiat-Chrysler Automobiles (FCA) signed a binding merger agreement to create the world's fourth-largest automaker. The partners hope to leverage the benefits of economies of scale as they develop new technologies and expand their global presence. The announcement ends FCA's years-long search for a partner, which nearly ended earlier in 2019 when it came close to merging with Renault, PSA's rival. It brings Fiat, Chrysler, Dodge, Ram, Jeep, Alfa Romeo, Maserati, Lancia, Peugeot, Citroen, DS, and Opel/Vauxhall under the same roof. That's a huge portfolio of brands that often overlap, but executives pledged to keep them all open, as well as all their respective factories as a result of the transaction. They're committed to making this big family of automakers work by building on each one's strengths, whether they're technical or regional. FCA and PSA jointly predicted they'll sell about 8.7 million cars annually around the globe, while posting an ˆ11 billion (about $12.2 million) profit. North America, a strong market for FCA, will provide 43% of its revenues, and 46% will be generated in Europe, where Peugeot's brands are doing better than ever. Together, they plan to achieve ˆ3.7 billion (about $4.1 million) in annual run-rate synergies. They'll notably have the purchasing power to negotiate a better price with suppliers, and they'll merge their research and development efforts where it makes sense to do so. Over two thirds of the group's annual volume will be built on two shared platforms. One will underpin about three million small cars annually, and the other will serve as the foundation for approximately three million compact and mid-sized cars. Details about these architectures haven't been made public yet, but a quick look at both companies' product portfolios reveals the small car will very likely come from Peugeot. Recent additions to its range, like the second-generation 208, are built on a new architecture named Common Modular Platform (CMP) developed with electric powertrains in mind. Meanwhile, Fiat is still making the cheeky 500 on an evolution of the platform found under the second-generation Panda released in 2003. The bigger architecture could come from FCA, however. The group's brands will share engines, transmissions, electric powertrains, infotainment systems, various sensors used to power electronic driving aids, and other components like wiring looms, but each one will retain its own identity.

Weekly Recap: Obama reflects on the auto bailout's legacy

President Obama took a victory lap of sorts this week at the Detroit Auto Show, lauding the industry's progress and reflecting on the decision to bail out General Motors and Chrysler seven years ago. While the rescue was controversial at the time, historians will likely judge the president's actions to help save two of America's industrial symbols in a positive light. Much like Theodore Roosevelt's trust-busting tactics were controversial in the early 20th century, Obama's plan drew fire from critics who argued the free market should be left to its own devices. But providing financial aid and forcing the automakers to restructure had an enduring impact on the US economy. The auto industry has added more than 646,000 jobs since the companies emerged from bankruptcy, including manufacturing and retail positions. Make no mistake, GM and Chrysler were nearly dead in 2009. Now, GM is a powerhouse that's set to capitalize on a market that could see 18 million vehicles sold this year. Chrysler, which was renamed FCA US, survived as part of the Italian-American Fiat Chrysler Automobiles conglomerate. It's also performed well amid the strong industry conditions, though CEO Sergio Marchionne very publicly went looking for alliance partners last year, something from which he's since backed off. While Obama can claim a win, the bailout was actually started by George W. Bush, who provided short-term loans to GM and Chrysler in December 2008. Without that, they might not have made it much past Obama's inauguration. NEWS & ANALYSIS News: Spy Shooters captured the next-gen BMW Z4 during extreme cold weather testing. Analysis: The upcoming Z4 (which might be called the Z5) looks sharp. But the big deal is that BMW's much-anticipated sports-car project with Toyota is coming to fruition. Refresher: BMW and Toyota agreed to work together back in December 2011 and then announced an expansion of that deal to include sports cars in June 2012. Ultimately, it will provide BMW with a new Z4 and Toyota with another sports car, perhaps the Supra replacement. BMW is developing the platform, while Toyota is expected to chip in with hybrid technology. Big picture, this project is a good thing. It's providing enthusiasts with two modern sports cars that Toyota and BMW might not chose to develop on their own. This template has been shown to work, as the Fiat-Mazda alliance produced the MX-5 Miata and 124 Spider. News: The Jeep Grand Cherokee Hellcat was also spied, briefly.

5 reasons why GM is cutting jobs, closing plants in a healthy economy

DETROIT — Even though unemployment is low, the economy is growing and U.S. auto sales are near historic highs, General Motors is cutting thousands of jobs in a major restructuring aimed at generating cash to spend on innovation. It's the new reality for automakers that are faced with the present cost of designing gas-powered cars and trucks that appeal to buyers now while at the same time preparing for a future world of electric and autonomous vehicles. GM announced Monday that it will cut as many as 14,000 workers in North America and put five plants up for possible closure as it abandons many of its car models and restructures to focus more on autonomous and electric vehicles. The reductions could amount to as much as 8 percent of GM's global workforce of 180,000 employees. The cuts mark GM's first major downsizing since shedding thousands of jobs in the Great Recession. The company also said it will stop operating two additional factories outside North America by the end of next year. The move to make GM get leaner before the next downturn likely will be followed by Ford Motor Co., which also has struggled to keep one foot in the present and another in an ambiguous future of new mobility. Ford has been slower to react, but says it will lay off an unspecified number of white-collar workers as it exits much of the car market in favor of trucks and SUVs, some of them powered by batteries. Here's a rundown of the reasons behind the cuts: Coding, not combustion CEO Mary Barra said as cars and trucks become more complex, GM will need more computer coders but fewer engineers who work on internal combustion engines. "The vehicle has become much more software-oriented" with millions of lines of code, she said. "We still need many technical resources in the company." Shedding sedans The restructuring also reflects changing North American auto markets as manufacturers continue to shift away from cars toward SUVs and trucks. In October, almost 65 percent of new vehicles sold in the U.S. were trucks or SUVs. That figure was about 50 percent cars just five years ago. GM is shedding cars largely because it doesn't make money on them, Citi analyst Itay Michaeli wrote in a note to investors. "We estimate sedans operate at a significant loss, hence the need for classic restructuring," he wrote. The reduction includes about 8,000 white-collar employees, or 15 percent of GM's North American white-collar workforce. Some will take buyouts while others will be laid off.