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Detroit and Silicon Valley: When cultures collide

Culture is a subject that rarely, if never, gets discussed when traditional auto companies buy — or hugely invest — in Silicon Valley-based companies. The conversation surrounding the investments is usually about how the tech looks appealing and how it's an appropriate step to move the automakers toward autonomy. Culture — the way things are done, the expectations, and the approaches — is something that is overlooked only at one's peril. The potential cultural gap is almost always evident in the obligatory photos of the participants in these deals, with is essentially a photo op of auto execs with their Silicon Valley counterparts. The former — rocking jeans and no ties — look like parochial school kids playing hooky. Don't worry: The regimental outfits will be back in place once they get back in the Eastern time zone. Consider what happened back in 1998 when Daimler bought Chrysler. First of all, there was a denial in Detroit that it happened. It was positioned as a "merger of equals." Which it wasn't. In any corporate situation, when one has more than 50 percent of the business, it owns the whole thing. And the German company was in the proverbial driver's seat. People who were around Auburn Hills back then kept their heads down and their German Made Simple books at hand. Things did not go well. Daimler had had enough by 2007, when it offloaded Chrysler to Cerberus Capital Management — which brought ex-Home Depot CEO Bob Nardelli into the picture, which is a story onto itself. But when you think about the Daimler-Chrysler situation, realize that these were two car companies (at least the Mercedes part of the Daimler organization), so they had that in common, and the language of engineers is something of an Esperanto based on math, so there was that, too. Yet it simply didn't work. It doesn't take too many viewings of HBO's Silicon Valley to know that the business people in that part of the world are far more aggressive than people who ordinarily head and control car companies in Detroit. About 20 years ago, a book came out about the founder of Oracle titled The Difference Between God and Larry Ellison* - and the asterisk on the book jacket leads to: God Doesn't Think He's Larry Ellison. It would be hard to imagine a book about a Detroit executive, even a book that had the decided bias that the tome about Ellison evinces, that would be quite so searing. Sure, there are egos. But they are still perceived to be, overall, "nice" people.

US prepares to sue Fiat Chrysler over diesel emissions testing

NEW YORK - The Justice Department plans to file a civil lawsuit against Fiat Chrysler Automobiles NV over excess diesel emissions as early as this week if no agreement is reached with the Italian-American automaker, two sources briefed on the matter said on Wednesday. The Environmental Protection Agency in January accused FCA of illegally using undisclosed software to allow excess diesel emissions in about 104,000 cars and SUVs, the result of a probe that stemmed from regulators' investigation of rival Volkswagen AG. The EPA and California Air Resources Board have been in talks with FCA about the excess emissions and whether the agencies would approve the sale of 2017 FCA diesel models. A federal judge in California has set a May 24 hearing on a series of lawsuits filed by owners of vehicles against Fiat Chrysler and the Justice Department is expected to file its action by then if no agreement is reached. FCA said on Wednesday it believed that any litigation would be "counterproductive" to ongoing discussions with the EPA and California Air Resources Board. The company added that "in the case of any litigation, FCA US will defend itself vigorously, particularly against any claims that the company deliberately installed defeat devices to cheat U.S. emissions tests." The Justice Department took the same procedural step in early 2016 against Volkswagen, nearly four months after the German company admitted using software to emit excess diesel emissions in nearly 500,000 vehicles. The Justice Department has had an ongoing criminal investigation into FCA's conduct since last year, Reuters reported in January. The probe has turned up internal emails written in Italian and other documents about engine development and emissions issues, sources briefed on the probe said. U.S. regulators said FCA failed to disclose engine management software in 104,000 U.S. 2014-2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks with 3.0-liter diesel engines. The European Commission has launched legal action against Italy for failing to respond to allegations of emission-test cheating by Fiat Chrysler in a procedure that could lead to the country being taken to court. The EPA has said the maximum possible fine against FCA could be $4.6 billion. In February, FCA said it had received requests for information and subpoenas from U.S. federal and state authorities, including the Securities and Exchange Commission, for diesel issues.

Fiat Chrysler halts European production as coronavirus hits demand

MILAN — Fiat Chrysler Automobiles (FCA) is halting production for two weeks at most of its European plants to help protect staff against the coronavirus pandemic and adjust to a slump in demand, the Italian-American carmaker said on Monday. Italy has been the European country worst hit by the crisis and the first to enforce a nationwide lockdown, which has now been replicated by Spain and, to a lesser extent, by France as the virus sweeps through the continent. With all non essential services closed, including car dealers, and people forced home except for strict working needs, many forecast a heavy fall in car sales in March. FCA — which according to analyst estimates produces around 25% of its vehicles in Europe — said the suspensions through March 27 would allow it "to effectively respond to the interruption in market demand by ensuring the optimization of supply." Ferrari, meanwhile, said it closed its two plants until March 27. Ferrari said it had so far ensured production continuity, and it already implemented all the health measures decided by the Italian government at the two sites, in hometown Maranello and in Modena. But it was "now experiencing the first serious supply chain issues, which no longer allow for continued production." Marco Opipari, an analyst at Fidentiis, said a few weeks of closures was not a big problem in an over-supplied European auto industry and lost production could be recovered later on. "The real problem is on the demand side, people are not buying cars now, and sales volumes are expected to be very bad in March, with a real impact on automakers' earnings," he said. FCA said in a statement that production for its FCA Italy and luxury Maserati units would stop for two weeks, extending a temporary closure period already planned for some Italian facilities. Affected plants are Melfi, Pomigliano, Cassino, Mirafiori, Grugliasco and Modena in Italy, Kragujevac in Serbia and Tychy in Poland. The FIOM union said FCA's decision was "necessary". The carmaker said the freeze would help it to resume activity promptly once market conditions allow it. "The group is working with its supply base and business partners to be ready to enable our manufacturing operations to deliver previously planned total levels of production despite the suspension when market demand returns," it said.