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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.

Reborn Ford Escort could make its way to Europe

The Ford Escort concept just unveiled at the Shanghai Motor Show was created with the Chinese market in mind, but it's got people talking all over the world. Not purely fancy, the point of the Escort concept was to give Chinese buyers a preview of what they could expect to see in a Ford showroom in the near future. If Ford wasn't seriously considering the new Escort for other countries, a report in Auto Express indicates that the concept's reception has changed all that.
No less than the incoming chairman of Ford UK said "it could work in other places," bolstering the comments of "a senior Ford insider" who said the question of bringing the car to Europe to slot in underneath the Focus had been raised. That's a long way from anything of the kind happening, which would require Ford to figure out how to sell it for the right price and not torpedo the company reputation among Euro buyers. In any case, we'd be as intrigued as anyone if an Escort resurrection created the next 'who knew?' market segment of few-frills transportation offered by non-Asian carmakers.

For EV drivers, realities may dampen the electric elation

The Atlantic, a decades-old monthly journal well-regarded for its intelligent essays on international news, American politics and cultural happenings, recently turned its attention to the car world. A piece that ran in The Atlantic in October examined the excesses of the GMC Hummer EV for compromising safety. And now in its latest edition, the magazine ran a compelling story about the challenges of driving an electric vehicle and how those experiences “mythologize the car as the great equalizer.” Titled “The Inconvenient Truth About Electric Vehicles,” the story addresses the economics of EVs, the stresses related to range anxiety, the social effects of owning an electric car — as in, affording one — and the overarching need for places to recharge that car. Basically, author Andrew Moseman says that EV life isn't so rosy: “On the eve of the long-promised electric-vehicle revolution, the myth is due for an update. Americans who take the plunge and buy their first EV will find a lot to love Â… they may also find that electric-vehicle ownership upends notions about driving, cost, and freedom, including how much car your money can buy. "No one spends an extra $5,000 to get a bigger gas tank in a Honda Civic, but with an EV, economic status is suddenly more connected to how much of the world you get to see — and how stressed out or annoyed youÂ’ll feel along the way.” Moseman charts how a basic Ford F-150 Lightning electric truck might start at $55,000, but an extended-range battery, which stretches the distance on a charge from 230 miles to 320, “raises the cost to at least $80,000. The trend holds true with all-electric brands such as Tesla, Rivian, and Lucid, and for many electric offerings from legacy automakers. The bigger battery option can add a four- or five-figure bump to an already accelerating sticker price.” As for the charging issue, the author details his anxiety driving a Telsa in Death Valley, with no charging stations in sight. “For those who never leave the comfort of the city, these concerns sound negligible," he says. "But so many of us want our cars to do everything, go everywhere, ferry us to the boundless life we imagine (or the one weÂ’re promised in car commercials),” he writes. His conclusions may raise some hackles among those of us who value automotive independence — not to mention fun — over practicalities.