2007 Chrysler Town & Country Touring on 2040-cars

Auto blog

Fiat stock rockets up after word of Chrysler deal

Now that Fiat has finalized a deal to purchase the outstanding shares of Chrysler owned by the United Auto Workers' VEBA retiree heathcare fund without having to file for an IPO, you can count the Italian automaker's stockholders among the happy. The Detroit News reports that Fiat stock closed Thursday with a 12-percent gain for the day on the Borsa Italiana, having been up by as much as 15.8 percent during the day's trading, at prices not seen since mid-2011. One trader reasoned the run was because Fiat "paid less than the market had expected and there will be no capital increase to fund this."
But there are some who worry, including bank analysts and unions. The final price of the stake will be $4.35 billion - $1.9 billion in cash from Chrysler, $1.75 billion from Fiat and extraordinary dividends in the amount of $700 million paid over three years. Adding that sum to its ledger will raise Fiat's debt level to roughly 10 billion euros ($13.8 billion), which Citibank says will make it the most indebted OEM in Europe.
Italian unions are also concerned about what the deal means for the future. Fiat CEO Sergio Marchionne has had an at-times contentious relationship with both unions and the Italian government over the future of Italian manufacturing, a fact that makes headlines because Fiat is Italy's largest private employer. At least two left-leaning unions have publicly called on Fiat to give guarantees and to explain what the deal means for its Italian operations, while a centrist union argues this is "good news for Fiat workers, for the auto industry and for our country."

Are old airbags killers?

Takata airbags may not be the only ones with some very serious problems. A new report from TheDetroitBureau.com claims that the National Highway Traffic Safety Administration has opened its second investigation into bad airbag inflators, and this time, they aren't from Takata. The focus of this latest case is on the airbag inflators in some 500,000 older Chrysler Town and Country minivans and Kia Optima sedans, all of which come from ARC Automotive. While the Takata case looks at problems stemming from the engineering and production process, the ARC investigation focuses on the age of the inflators. As TDB explains, airbag inflators are essentially what the military refers to as shaped charges, sort of like Claymores (for fans of the Call of Duty series). In combat, they blow up in a specific direction, protecting those behind the explosion, although in the case of airbags, the explosion "[creates] a precise rush of hot gases" that inflate the bags. NHTSA's worry is that with the increased average age of today's vehicles, years and years of being bounced, jolted, and shaken about and exposed to often-radical temperature changes have altered the nature of the explosives in these vehicles, causing too big of an explosion. "It may be a reasonable assumption that as these things age they deteriorate." – Analyst George Peterson "It may be a reasonable assumption that as these things age they deteriorate," analyst George Peterson told TheDetroitBureau.com. NHTSA boss Mark Rosekind backed up aging angle. "Cars are lasting on the road a lot longer than ever before," Rosekind told TDB, adding that seals could start breaking down. "Is aging now an issue? That's part of the investigation going on." NHTSA has only identified two "incidents" so far, although according to Center for Auto Safety Director Clarence Ditlow, there's genuine concern that there could be additional unidentified cases. "Could we have missed more? That could be the case," Ditlow told TDB, citing the misidentified deaths in the Takata investigation. Ditlow was quick to point out that, even in older vehicles, airbags are much more likely to protect than harm. "No one is saying you should disable your airbags," the safety advocate told TDB. "You're far more likely to be helped than hurt by one if they go off." At least one automaker, meanwhile, has already been advised of the investigation by NHTSA and is checking its airbags.

Could Chrysler leave Michigan for Tennessee?

Detroit's Big Three could become the Big Two. According to an AP report in The Detroit News, state officials have been lobbying for Fiat-Chrysler CEO Sergio Marchionne to select Tennessee as the location for Fiat's joint headquarters with Chrysler Group LLC.
This weekend, Marchionne met with Tennessee governor Bill Haslam at a ceremony celebrating the expansion of a Fiat subsidiary plant in the city of Pulaski. The AP report does not mention any serious talks about headquarters relocation, only that Tennessee officials have been "working me over pretty well," according to Marchionne.
Fiat hopes to complete its merger with the Auburn Hills-based automaker sometime next year, and earlier reports have stated that the company is seeking $10 billion in financing to buy the remaining bits of Chrysler. If the company were to relocate, it would join Nissan and Volkswagen in having major American automotive operations in Tennessee. Of course, that whole "Imported From Detroit" thing would need to go out the window, as well.