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Rising aluminum costs cut into Ford's profit

When Ford reports fourth-quarter results on Wednesday afternoon, it is expected to fret that rising metals costs have cut into profits, even as rivals say they have the problem under control. Aluminum prices have risen 20 percent in the last year and nearly 11 percent since Dec. 11. Steel prices have risen just over 9 percent in the last year. Ford uses more aluminum in its vehicles than its rivals. Aluminum is lighter but far more expensive than steel, closing at $2,229 per tonne on Tuesday. U.S. steel futures closed at $677 per ton (0.91 metric tonnes). Republican U.S. President Donald Trump's administration is weighing whether to impose tariffs on imported steel and aluminum, which could push prices even higher. Ford gave a disappointing earnings estimate for 2017 and 2018 last week, saying the higher costs for steel, aluminum and other metals, as well as currency volatility, could cost the company $1.6 billion in 2018. Ford shares took a dive after the announcement. Ford Chief Financial Officer Bob Shanks told analysts at a conference in Detroit last week that while the company benefited from low commodity prices in 2016, rising steel prices were now the main cause of higher costs, followed by aluminum. Shanks said the automaker at times relies on foreign currencies as a "natural hedge" for some commodities but those are now going in the opposite direction, so they are not working. A Ford spokesman added that the automaker also uses a mix of contracts, hedges and indexed buying. Industry analysts point to the spike in aluminum versus steel prices as a plausible reason for Ford's problems, especially since it uses far more of the expensive metal than other major automakers. "When you look at Ford in the context of the other automakers, aluminum drives a lot of their volume and I think that is the cause" of their rising costs, said Jeff Schuster, senior vice president of forecasting at auto consultancy LMC Automotive. Other major automakers say rising commodity costs are not much of a problem. At last week's Detroit auto show, Fiat Chrysler Automobiles NV's Chief Executive Officer Sergio Marchionne reiterated its earnings guidance for 2018 and held forth on a number of topics, but did not mention metals prices. General Motors Co gave a well-received profit outlook last week and did not mention the subject. "We view changes in raw material costs as something that is manageable," a GM spokesman said in an email.

Is this 1983 Fiat Spider EV conversion worth Porsche 911 GTS money?

$140,000 can buy a lot of car. Nothing about Fiat Spiders built in the 1980s would be described as "a lot," unless you're referring to the quantity of maintenance that is sometimes required just to keep them on the road. In that context, this eBay find, a 1983 Pininfarina Spider America EV conversion, might be a bit of a two-for-one. Not only do you get a lot more power, but you might even get a lot more reliability.  Sure, you could score a brand-new Porsche 911 Carrera GTS for the price of this humble Italian roadster, but the fine folks of Roadster Salon think they might be able to make it worth your while.  This conversion retains the stock five-speed manual transmission, but mates it to a dual-motor electric drive unit that produces an unspecified amount of horsepower and more than 200 pound-feet of torque. Admittedly, those numbers don't really stack up nicely against the brand-new Porsche's, but, hey, at least it's a manual? The power unit itself is supplied by Electric GT, which has carved out a niche for itself developing electric "crate motors" that are as close to plug-and-play as possible, which should be a point in favor of this conversion's overall build quality, as custom fabrication would have been kept to a minimum.  Roadster Salon will also go over the suspension and steering components, updating them to modern standards (and ostensibly to support the extra power from the EV conversion), so you're getting more for your money than just some electron-pumping spinny bits.  So, it's much fancier than your run-of-the-mill 1980s Fiat Spider; you just have to spend a lot more money for the privilege. Like, an astronomical amount. Oh, and the car hasn't actually been built yet; what you're bidding for is a build slot in a forthcoming 2020-21 production allocation.  If you desperately want your own Fiat Pininfarina Spider America EV but can't stomach the $139,995 price tag, we have great news. Roadster Salon will sell you an "EV Junior" variant, which retails for just $89,995 — a bargain! Alternatively, you can wait for Electric GT to finalize its crate Fiat crate EV motors for mass production and just slap one together yourself. How hard can it be?

Weekly Recap: Marchionne's Manifesto again calls for industry consolidation

Sergio Marchionne isn't taking no for an answer. Despite public rebuffs from General Motors and Ford, the leader of Fiat Chrysler Automobiles continues to push for consolidation within the auto industry. His latest assertion came Wednesday when he said a combination of FCA with another automaker could net savings of $5 billion or more annually. No, this isn't about selling his company, he claimed, it's about cutting costs. Put simply, the auto industry wastes money, Marchionne said during FCA's earnings conference call. Companies invest billions to develop basic components that all cars use, but many consumers don't care how they work or recognize the differences. "About half of this is really relevant in terms of positioning the car in the marketplace," he said. "The other half, in our view, is stuff which is neither visible to the consumer nor is it relevant to the consumer." In 2014, top automakers spent more than $100 million on product development, FCA estimated. Marchionne said consolidation could save up to $1 billion on powertrains alone, noting that almost every automaker offers four- and six-cylinder engines. Not everyone has to make their own, he contended. "The consumer could not give a flying leap whose engines we are using because they are irrelevant to the buying decision." That's pretty provocative for enthusiasts, but less so for average consumers. Still, there are major differences in power and efficiency ratings, even among similar engines. Skeptics could argue consolidation would also weaken competition and reduce choices for car buyers. Marchionne stressed his presentation, curiously entitled Confessions of a Capital Junkie, wouldn't require closing factories or dealerships. It's not his final "big deal" as CEO, intent to sell FCA, or a way to elevate his company up the automotive food chain. He claims he wants to fundamentally change the industry and its habit for burning cash. "The horrible part about this, and the thing that I find most offensive, is that the capital consumption rate is duplicative," he said. "It doesn't deliver real value to the consumer and it is in its purest form, economic waste." Other News & Notes Ford Profits dip in first quarter Ford profits fell $65 million to $924 million in the first quarter, hampered by slight dips in revenue and sales.