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Fiat Chrysler dumped 40,000 unordered vehicles on dealers

In a move that echoes recent history, Fiat Chrysler has been making more cars and trucks than dealers in the U.S. are willing to accept, with Bloomberg reporting that at one point the automaker had built up a glut of around 40,000 unordered vehicles. That’s led some dealers to accuse FCA of reviving the dreaded “sales bank” accounting practice of obscuring inventory to improve the balance sheet. The company reportedly began building up its inventory of unordered cars this summer despite an industrywide slowdown in sales and an eagerness by some dealers to thin their inventories because rising interest rates are making it more expensive to hold unsold cars. The inventory build-up also coincided with Fiat ChryslerÂ’s efforts to find a merger partner, first with Renault, which fell through, then last monthÂ’s announcement that it will merge with FranceÂ’s PSA Group. FCA denies any such scheme and tells Bloomberg the rising inventory is down to a new predictive analytics system designed to better square supply with demand from dealers that is helping the company save money and narrow the numbers of unsold vehicles. The company recently agreed to pay a $40 million civil penalty to the U.S. Securities and Exchange Commission to settle a complaint that it paid dealers to report fake sales figures over a span of five years. While no one is suggesting that FCA is in dire financial straits — the company saw higher than expected earnings in the third quarter and record profits in North America — the practice has strong historical precedent by Chrysler, which built up bloated inventories in the run-up to its two federal bailouts, in 1980 and 2009. It was also common at GM and Ford during the 2000s, when all three Detroit automakers struggled with excess manufacturing capacity and plummeting sales in the lead-up to the Great Recession. Back in 2012, CFO Magazine wrote about a report that explained automakersÂ’ rationale for the practice and how it works: Say fixed costs for a given factory are $100, and that the factory can make 50 cars. Consumers, however, demand only 10. Under absorption costing, if the company makes all 50 cars, its cost-per-car is $2. If it makes only up to demand, or 10 cars, the cost-per-car is $10. Although each car adds variable costs for steel and other parts, if those costs are low, the company still has an incentive to make more cars to keep the cost-per-car down.

Germany threatens to ban FCA vehicles over diesel emissions dispute

Germany is threatening to ban sales of FCA products over diesel emissions. According to the newspaper Bild Am Sonntag, Germany's Federal Motor Transport Authority found evidence of a so-called defeat device that shuts down certain emissions controls after running for 22 minutes. A standard diesel emissions test in the European Union reportedly takes 20 minutes to complete. FCA denies the allegations. "We believe all our vehicles respect EU emissions standards and we believe Italian regulators are the competent authority to evaluate this," the company said in a statement. The latter part of that statement drew ire from German authorities, especially after FCA declined to meet with German transport minister Alexander Dobrindt to discuss the issue. Graziano Delrio, the Italian Minister of Infrastructure and Transport, vowed to work with German authorities on behalf of FCA. According to EU law, FCA is required to homologate its vehicles in Italy because that's where its regional operations are based. When will the diesel-scented soap opera end? We wish we knew, but our Magic 8 Ball is covered in soot. Related Video: News Source: Financial TimesImage Credit: Giuseppe Aresu/Bloomberg via Getty Government/Legal Green Chrysler Dodge Fiat Jeep RAM Emissions Diesel Vehicles FCA

Next Dodge Challenger to be electrified, says FCA boss

Dodge is the last of Detroit's Big Three to truly keep the muscle car purpose and heritage alive with the Challenger and Charger. As the Mustang and Camaro have transitioned to sports car-like experiences, the high-horsepower Dodges have stuck to their guns as straight-line behemoths with little intention of competing with the others in corner carving. People still dig the old-school-cool of cars like the Challenger, as sales actually went up while Mustang and Camaro sales took a hit in 2018. That said, new FCA boss Mike Manley said things will be changing in an electric way for the next generation, in a report by The Detroit News. "The reality is those platforms and that technology we used does need to move on. They can't exist as you get into the middle-2020s. New technology is going to drive a load of weight out, so we can think of the powertrains in a different way. And we can use electrification to really supplement those vehicles." News of electrified muscle cars is nothing new at this point. Ford says it's going to reveal a Mustang Hybrid in 2020. And with Al Oppenheiser (former chief engineer for the Camaro) moving to GM's electric division, you better believe Chevrolet is working on an electrified version of the Camaro. This, however, is the first solid evidence we have that FCA and Dodge are making such a move. What Manley said next is something we all know to be true, but a bit heartbreaking nonetheless. "I think that electrification will certainly be part of the formula that says what is American muscle in the future. What it isn't going to be is a V8, supercharged, 700-horsepower engine," Manley says. Even if it's a bit silly, we all love the Hellcat for its 707 horsepower V8. Clearly, plenty of other people do, too, because Dodge keeps cranking out more insane versions of the car with the Redeye and Demon. As for how much electrification Dodge's muscle car will receive, Manley wouldn't go into detail. Though he does say that electrification "can't be the dominant part." This should provide some solace to all those worried the gasoline engine could disappear from the American muscle car. Just as Dodge is reluctant to stray from the original intent of the muscle car, it's not hard to imagine the Challenger/Charger being the last to go full-electric. Gas engines supplemented by 48-volt systems or plug-in hybrids will most likely be the end result when we first see electrified Challengers.