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China-FCA merger could be a win-win for everyone but politicians

NEW YORK — Fiat Chrysler boss Sergio Marchionne has said the car industry needs to come together, cut costs and stop incinerating capital. So far, his words have mostly fallen on deaf ears among competitors in Europe and North America. But it appears Marchionne has finally found a receptive audience — in China. FCA shares soared Monday after trade publication Automotive News reported the $18 billion Italian-American conglomerate controlled by the Agnelli family rebuffed a takeover from an unidentified carmaker from the Chinese mainland. As ugly as the politics of such a combination may appear at first blush, a transaction could stack up industrially, and perhaps even financially. A Sino-U.S.-European merger would create the first truly global auto group. That could push consolidation to the next level elsewhere. Moreover, China is the world's top market for the SUVs that Jeep effectively invented, so it might benefit FCA financially. A combo would certainly help upgrade the domestic manufacturer; Chinese carmakers have gotten better at making cars, but struggle to build global brands, and they need to develop export markets. Though frivolous overseas shopping excursions by Chinese enterprises are being reined in by Beijing, acquisitions that support the modernization and transformation of strategic industries still receive support, and the government considers the automotive industry to be strategic. A purchase of FCA by Guangzhou Automobile, Great Wall or Dongfeng Motors would probably get the same stamp of approval ChemChina was given for its $43 billion takeover of Syngenta. What's standing in the way? Apart from price (Automotive News said FCA's board deemed the offer insufficient) there's the not-insignificant matter of politics. Even as FCA shares soared, President Donald Trump interrupted his vacation to instruct the U.S. Trade Representative to look into whether to investigate China's trade policies on intellectual property. Seeing storied Detroit brands like Jeep, Chrysler, Ram and Dodge handed off to a Chinese company would provoke howls among Trump's economic-nationalist supporters. It might not play well in Italy, either, to see Alfa Romeo and Maserati answering to Wuhan instead of Turin — though Automotive News said they might be spun off separately. Yet, as Morgan Stanley observes, "cars don't ship across oceans easily," and political considerations increasingly demand local manufacture of valuable products.

2.1 million vehicles recalled again over faulty airbags

Fiat Chrysler Automobiles, Honda and Toyota will recall 2.1 million vehicles to fix faulty airbag modules "after the manufacturers' original attempts to fix the defects proved ineffective in some vehicles." These vehicles had all previously been recalled, but the National Highway Traffic Safety Administration found that the airbags could still potentially malfunction. This recall will cover Acura MDX, Dodge Viper, Jeep Grand Cherokee, Honda Odyssey, Pontiac Vibe, Toyota Corolla, Toyota Matrix and Toyota Avalon models made in the early 2000s. NHTSA has reportedly received about 40 reports of airbag deployment in such vehicles, even though the vehicle had not been involved in a crash. Roughly one million of these same vehicles, all from Honda and Toyota, are also subject to recalls due to faulty Takata airbag modules, though this particular recall is for "an electronic component manufactured by TRW" that is separate from the actual airbags from Takata. According to NHTSA Administrator Mark Rosekind: "This is unfortunately a complicated issue for consumers, who may have to return to their dealer more than once. But this is an urgent safety issue, and all consumers with vehicles covered by the previous recalls should have that remedy installed. Even though it's a temporary solution until the new remedy is available, they and their families will be safer if they take the time to learn if their vehicle is covered and follow their manufacturers' instructions. A hassle is much better than a family tragedy." If you're the owner of an affected car, expect to hear more from the official automaker and government channels in short order. In the meantime, we'd suggest getting your car checked and fixed at your local dealer. The official statement and recall information can be found below. Previously Recalled Vehicle Remedies Not Working as Designed; NHTSA Announces Follow up Recall of 2.12 Million Cars and SUVs Saturday, January 31, 2015 Contact: Gordon Trowbridge, 202-366-9550, Public.Affairs@dot.gov WASHINGTON – U.S. Transportation Secretary Anthony Foxx announced today the recall of more than 2.12 million Acura, Dodge, Jeep, Honda, Pontiac, and Toyota vehicles for a defect that may cause airbags to deploy inadvertently. The recalls will provide vehicle owners with a new remedy after the manufacturers' original attempts to fix the defects proved ineffective in some vehicles.

Jeep Grand Cherokee, Dodge Durango still catching fire after recall

Automakers issue recalls all the time. It's part of the cost of doing business. We just assume that once the recall has been carried out, the problem in question has been fixed. But that's not always the case, as this latest investigation being undertaken by the National Highway Traffic Safety Administration goes to show. The problem stems back to a recall issued by Chrysler last summer. It revolved rather the sun visor in the SUVs it makes at its Jefferson North Assembly Plant – specifically, the screw affixing the sun visor could end up rubbing against the wiring for the lamp in the vanity mirror, potentially causing an electrical short and even a fire. 62 such short circuits, 38 fires and three injuries reported, prompting Chrysler to recall nearly 900,000 units of the 2011-2014 Jeep Grand Cherokee and Dodge Durango (over 650,000 of them in the United States). The plastic spacers they installed to rectify the problem, however, may not have done the trick. Eight reports (but none involving injuries) have been filed with the NHTSA regarding the same issue recurring, spurring the government agency to open a new investigation into the matter. If deemed necessary, the NHTSA could ask FCA to issue another recall to fix the issue again, which we may necessitate the installation of a fuze to prevent any such the electric short. Related Video: INVESTIGATION Subject : Headliner Fires Date Investigation Opened: MAY 01, 2015 Date Investigation Closed: Open NHTSA Action Number: RQ15003 Component(s): ELECTRICAL SYSTEM , INTERIOR LIGHTING Manufacturer: Chrysler (FCA US LLC) SUMMARY: On July 1st, 2014 Chrysler (FCA US LLC) issued safety recall 14V-391 to remedy a wiring-related fire hazard on the headliner of approximately 661,888 model year (MY) 2011-2014 Jeep Grand Cherokee and Dodge Durango vehicles manufactured between January 5, 2010 and December 11, 2013. The recall was in response to the Office of Defects Investigation (ODI) investigation EA14-001 during which data provided by Chrysler indicates that the fire is caused by an electrical short in the vanity lamp wiring for either one of the sun visors mounted on the vehicle. The sun visors are mounted to the roof of the vehicle through the headliner with three metal screws.