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FCA-Renault merger faces tall odds delivering on cost-cutting promises

FRANKFURT/DETROIT — Fiat Chrysler Automobiles and Renault promise huge savings from a mega-merger, but such combinations face tall odds because of the industry's long product cycles and problems translating deal blueprints into real world success, industry veterans told Reuters. BMW's 1994 purchase of Rover, and Daimler's 1998 merger with Chrysler both made sense on paper. The companies promised to hike profits by combining vehicle platforms and engine families. Both combinations proved unworkable in reality, and were unwound. Renault and Nissan, which have been in an alliance since 1999 designed to share vehicle components, have only managed to use common vehicle platforms in 35% of Nissan's products despite an original target of 70%, according to Morgan Stanley. FCA and Renault have raised the stakes for themselves by ruling out plant closures. That increases the pressure to achieve more than $5 billion in promised annual savings from pooling procurement and research investments. The two companies have yet to fill in many of the blanks in the merger plan put forward by Fiat Chrysler. Renault's board is expected to act soon to accept the proposal, but that would lead only to a memorandum of understanding to pursue detailed operational and financial plans. A final deal and the legal combination of the two companies could take months to complete if all goes well. Pressure to cut automotive pollution is driving the latest round of consolidation. Automakers are looking at multibillion-dollar bills to develop electric and hybrid cars and cleaner internal combustion engines. Fiat Chrysler and Renault are betting they can design common electric vehicle systems, then sell more of them through their respective brands and dealer networks, cutting the cost per car. Developing all-new electric vehicles can bring more opportunities to share costs from the outset, industry experts said. "With the emergence of connected, autonomous, electric and shared vehicles, carmakers face immediate investments, so new opportunities for sharing costs have emerged," said Elmar Kades, managing director at Alix Partners. However, most electric vehicles lose money. This is a challenge for city car brands in Europe in particular. Both Renault and Fiat rely heavily on this segment for sales.

This month's deals on wheels: 3 cars with incentives, rebates

On television, they come at you rapid-fire: truck deals, car deals, SUV deals. You don't have time to read the fine print, and many sound too good to be true. What follows are three deals that are both good and true. And check out our entire list of incentives and rebates. VOLKSWAGEN JETTA: With Dieselgate winding down and VW's all-new three-row SUV – the Atlas – winding up, Volkswagen is selling sedans with incentives. The Jetta remains VW's bestseller in the US. If you're looking for an immodest deal on modest transportation, you can do worse than a lease on the 2017 Jetta S. THE DETAILS: Purchase at 0.9% APR (no down payment required, available on new 2017 Jetta models financed by Volkswagen Credit, participating dealers only). At that rate, you could save $1,600 over the life of a loan. Offer ends May 1, but given the tepid market interest in sedans, incentives will probably continue through the balance of the model year. NISSAN TITAN CREW CAB: While some buyers will wait for Nissan's recently announced Titan King Cab, and commercial users will grab the regular cab and 8-foot bed, we'll recommend a lightly optioned 4X4 crew cab with standard V8 power, California-penned sheetmetal and a made-in-America footprint. Nissan's full-size pickup is finally a credible competitor in the pickup segment. THE DETAILS: With $3,500 cash back, on top of whatever deal you negotiate, Nissan is effectively reducing the window sticker of a Titan S crew cab by almost 10 percent. MITSUBISHI OUTLANDER: Some cars show up on buyers' radar, some don't. Some aren't anywhere near the radar room. Mitsubishi's Outlander is one of those. But that doesn't diminish its basic attractiveness, especially for young families looking for an affordable three-row SUV with responsive power and competitive features. Add one of the industry's longest warranties and a compelling deal, and you suddenly have reason to track down a Mitsubishi dealer. THE DETAILS: It couldn't be simpler – negotiate your best deal on a 2017 Mitsubishi Outlander, and then receive a $2,000 rebate; on a remaining 2016, it's $3,000. We'd select a fully-equipped GT 3.0S – AWC, which hooks Mitsubishi's V6 to a conventional automatic (vs. a CVT on lower-priced models) and all-wheel drive. That's a window sticker of about $34,000, and you can count on an aggressive posture by the dealer to get your business. Mitsubishi Nissan Volkswagen Car Buying Buying Guide Truck SUV Sedan

NA auto output to reach 11-year peak

According to Automotive News, automakers are expected to manufacture 16 million light vehicles in North America in 2013. That's up 500,000 units from last year and marks the largest number since 2002. The prediction comes courtesy of LMC Automotive and IHS Automotive, which point to the improving US economy as a bellwether for total production. LMC Automotive says North America will produce 16 million vehicles while IHS has a slightly more optimistic forecast of 16.1 million units. A total of seven automakers are slated to increase production on the continent this year. Nissan is set to see the largest jump at 20 percent over last year.
Volkswagen, meanwhile, is one of the only manufacturers predicted to scale back production. Analysts expect the German company's output to fall by 23 percent to 170,000 units, thanks in part to slow demand for the Volkswagen Passat and Jetta.