FCA + PSA

One story that slipped through the media in recent weeks due to the Trump impeachment inquiry is the announcement of a merger between Fiat Chrysler Automobiles (FCA) and Peugeot Société Anonyme (PSA), which would create the fourth largest automaker in the world, after Toyota, Volkswagen, and Hyundai - displacing the current fourth-place automaker, General Motors.  You only need to know all that to see what a game changer this merger will be.

PSA chairman Carlos Tavares (above) has promised that none of the brands sold by either company will be retired, particularly when the whole idea behind the merger is that each company is strong in some parts of the world but not others and they need to shore up each other.  And one big reason Fiat Chrysler and Peugeot need each other is because of the budding electric-vehicle (EV) revolution that's expected to blossom in the 2020s and beyond.  Both firms want to develop electric vehicles to compete with automakers already invested in the EV market, and neither one can do it alone.

Questions about the Peugeot brand's planned return to North America have arisen as a result of this planned merger, with some fearing that such a return was now less likely.  In fact, it now appears that Peugeot may return to the U.S. and Canada sooner than its planned 2026 return.  And that will certainly be good news for people who want more choices in the import-brand market, particularly when it comes to European brands.  It's not clear whether Opel, which PSA bought from General Motors in 2017, would return as well.

With Volkswagen's commitment to offering compact hatchbacks to its loyalist Europhile customers in America in doubt (no more base Golfs for us??) and its push toward more SUVs in America, Peugeot might tempt this VW boy in buying one of its cars, particularly if it were to offer a compact car like the 308 (above),  something I've already indicated before.  Of course, Peugeot would probably emphasize SUVs, too, but who knows - the new-car market could very well change by the middle of the coming decade. And it remains to be seen just what sort of electric vehicles the new company plans to produce, and for which markets.  Add a few unpleasant truths about the Peugeot brand - quality control that makes Fiats look bulletproof, the brand's emphasis on upscale cars rather than small volume cars when it last sold cars in North America - and you start to realize that how the brand will fare in the New World the second time around is anyone's guess.  Just don't expect big changes in the U.S. auto market right away, though; for now, the primary focus of the FCA-PSA merger is to concentrate on technology sharing and corporate integration.  Yet more unknown variables in the whole FCA-PSA equation, to be sure, but variables that will nonetheless keep me interested in the time to come.

And I just might buy a Peugeot car if it turns out that its quality has approached the level of Peugeot bicycles (I've had my Peugeot bike for 25 years).  I'd definitely buy another Peugeot bicycle, if they're ever sold in America again.  

Keep On Truckin'?

I recently finished reading Bill Vlasic's 2011 book "Once Upon a Car," about the the bankruptcies of General Motors and Chrysler and the painful restructuring of Ford in the late two thousand zeroes, and while this blog entry is not a review of that book, I feel compelled to recount some tidbits from it that, though this all happened only a decade or so ago, seem like a much more distant past.

There are accounts of President Obama talking with Ford scion William Clay Ford, Jr. about a future of motoring that envisioned all sorts of electric cars, Robert Lutz of General Motors waxing rhapsodic about the then-all-new Chevrolet Volt, then the most advanced hybrid vehicle in the world, and Fiat's Sergio Marchionne being eager to help Chrysler, which his firm had just absorbed, by designing fuel-efficient Dodges and Chryslers based on Fiat platforms.  All of this looked oh, so promising as the Big Three recovered from near-extinction.

Well, what a difference a decade makes.  Today, the Big Three are back to pushing sport utility vehicles - a strategy that got them into such much trouble in 2009 in the first place.  The Chevrolet Volt is gone, GM and Chrysler have pared their sedans and hatchbacks in North America to one or two, and Ford has pared its sedans and hatchbacks in North America to zero.  Even Sergio Marchionne, who died in 2018, decided to emphasize Fiat Chrysler Automobiles' Jeep brand (earning Donald Trump's admiration) over everything else, while the Fiat brand, which promised an array of small cars with Italian flair, has given us ugly crossovers based on its only car model in the U.S., the Fiat 500 - and, like the crossovers, has proven to be as reliable as the original Fiat 500.  Gasoline, once four dollars a gallon, has gone back down.  And even as Volkswagen plans to start making electric vehicles in Tennessee (not the Golf-sized I.D. 3, alas) while Tesla continues to charge along, Donald Trump, now President, has killed fuel economy standards and is aiming to get rid of electric-car tax credits that promote sales of cars like the Chevrolet Bolt (not to be confused with the Volt, of course) and the Tesla Model 3 (below) to discourage anyone from buying them.  ("Mr. President, Chuck and Dave Koch on line two, still no word on sister Vera!") 

And it's not just Fiat Chrysler, GM, and Ford that have turned their backs on a future of more sensible and practical trucks in favor of mothertruckin' SUVs, crossovers and pickups.  Foreign automakers are riding the SUV gravy train without apology.  I can watch two hours of television at a time and see numerous commercials for SUVs from Chevrolet or Ford and foreign brands like Volvo, Infiniti and Honda and, apart from a BMW commercial, not see one commercial for one of the few sedans remaining tin the U.S. market going into the 2020 model year.  Hatchbacks?  Well, you can still get a Volkswagen Golf, though probably not for much longer.  Also, the Honda Fit is still available, but you'd never know that from Honda's advertising because it keeps pushing its Passport SUV by showing it in a commercial depicting a family going out to the great wilderness to the tune of Wolfmother's "Vagabond."  About the only good thing I can say about this ad is that Wolfmother, an Australian rock band, is getting exposure on the air in America that they otherwise might not get.  Too bad "Vagabond" is from 2005.  

What's going on here? What happened to the new golden age of automobiles we were promised when GM and Chrysler got restructured and when Ford started giving us the exact same sort of cars that Europeans had been buying from Ford and enjoying for decades?  Apart from bringing Alfa Romeo back to the States, what good has the Fiat Group done for us?  Why are we buying more and more crossovers and putting up with their cumbersome handling?  And why do Americans keep falling in love with gas-guzzling SUVs for off-road capabilities they'll never need?  And why do I even bother asking?

 And why are Europeans picking up our disgusting habits?

At least in European countries, though, you still can buy a small car or a sensible sedan if you want to.  Or nothing at all; after all, there are plenty of mass-transit options.  In America, thanks to our pathetic mass-transit network, everyone is expected to own and drive a car whether they like it or not, and your only choice of car style is increasingly either an big ugly wagon or a big brutish truck.  And for someone like me, that's all far more than merely annoying.

Driverless cars?  Please, don't get me started . . ..      

(Update on the Golf: I wrote Volkswagen of America CEO Scott Keogh to beg him to please keep the base Golf model in the U.S.  Soon after that, a VW representative contacted me to acknowledge Keogh's receipt of my letter and to say that no decision has been made about it yet.  More about that later.)  

An International Plot

Late word is that Fiat Chrysler Automobiles is looking into a partnership with the French automaker Renault in an attempt by both companies to find their way through a rapidly changing global auto industry.

Both Fiat Chrysler and Renault are looking for a way to pool their resources to produce greater car sales for both.  Fiat Chrysler is making a killing off trucks and SUVs in North America but its product is less than reliable and it has no respect in Europe.  Renault is a powerhouse in France and the rest of Europe, and it's benefited from its associations with Mitsubishi and Nissan (Renault has a partnership with Nissan; if I ever said on this blog that Renault owned Nissan, I was wrong about that), but it's had no presence in the U.S. since it quit the American market in 1987 (and never had much of a presence here before that!).  The Renault-Nissan-Mitsubishi partnership has taken a turn for the worse lately, with former Nissan CEO Carlos Ghosn having been arrested then fired in November 2018 for underreporting his earnings to Japanese authorities while Nissan had been flagging.  Also, Fiat Chrysler is way behind in producing electric cars, and Fiat Chrysler CEO Mike Manley probably understands that the light-truck craze can't last forever (even if it feels like it can, and has).

While this possible deal likely won't have Renault return to the U.S. market with cars like the snazzy new Clio (above), it means that the two companies are eager and willing to address each other's deficiencies while consolidating their strengths.  Fiat Chrysler and Renault sell enough cars between them to, as a partnership, sell more cars globally than Volkswagen or Toyota, and their sharing of resources will enable them to dominate new and evolving market segments.  This is the new era of the car business; with Volkswagen, which makes great cars but comes up short in producing top-notch trucks, and Ford, which dominates in both light and heavy trucks but is still struggling to stay profitable, apparently agreeing to make vehicles for each other now, it's obvious that automakers will need each other more than compete with each other.  This is due in part to the costs of developing electric and autonomous cars, which are coming whether we like them or not.  As Jessica Caldwell, an industry analyst at Edmunds, told the Washington Post in January 2019, "Automakers aren’t just competing with each other anymore.  They’re under intense pressure from well-funded tech companies who are eager to get in on the future of mobility."

Trump Autotopia

Donald Trump swaggered into Michigan yesterday to talk about the American auto industry - one of many subjects in which he is no way familiar.

He announced that he was going to review and likely roll back corporate average fuel economy (CAFE) standards that sets a benchmark of 54.5 miles a gallon by 2025.  This means less incentive for automakers to develop hybrid vehicles, and electric and fuel-cell models, as well as cars like the Chevrolet Volt (ironically, one of the many cars Trump looked at while in Michigan), and, oh yes, less of an incentive to produce small cars.

My next car may have to be a gas guzzler, because that's all I'll be able to buy.

The domestic automakers are, of course, pleased that the CAFE standards are likely to be reversed, because that means they'll be able to avoid responsibility for making environmentally friendly products and be able to continue making cheap, crude SUVs and pickups and underdeveloped sedans rather than come up with more innovative cars that can compete in the market more effectively.

"There is no more beautiful sight than an American-made car," said Trump, who's obviously never seen a Porsche.  He promised that Detroit would "once again shine with industrial might" and decried the "massive shipments" of foreign cars dumped on American consumers.  Oh yeah, while in Michigan, he'd had a round-table discussion with car company executives that, in addition to General  Motors CEO Mary Barra and Ford CEO Mark Fields, also included Sergio Marchionne, the CEO of the Italian company that owns Chrysler (Fiat Chrysler Automobiles), as well as Nissan North America Chairman Jose Munoz (Nissan - a Japanese company owned by Renault of France) and Jerry Flannery of Hyundai (a South Korean company).  Trump said of the foreign automakers with plants in the United States, "We love them too."  Not too many of them have American facilities in Michigan, though. 

Trump was essentially promising to bring the auto industry in the U.S. back to 1950s levels, even though back then there had been little industrial competition from overseas and looser regulations that discouraged continuous improvement and encouraged flashy, superficial model changes - thus, Detroit ended up using rudimentary technology that persisted will into the 1980s.  He also said that the assault on the American auto industry is over, leading me to wonder what he was talking about.  Because as I recall, it was Barack Obama who saved GM and Chrysler by investing taxpayers' money in them (which got paid back to the government) and helping them through bankruptcy, preserving thousands of auto jobs and many other jobs connected to the auto industry. 

Trump also promised that, under his Presidency, Detroit would become "the car capital of the world again."  Umm, didn't he realize that, again, Chrysler is a subsidiary of an Italian company and that, umm, GM just sold all of its European assets to a car company based in France?  Is that how Detroit becomes the car capital of the world - with Ford being the only U.S.-based car company having something resembling a truly global presence?

One thing is for certain - given Trump's history in business, we should be glad that he never ran a car company.  And I'm sorry Tesla founder Elon Musk - a South African immigrant - can't run for President.  Because he's a CEO I'd vote for! 

An Argument Against Bailing Out Car Companies

Fiat Chrysler Automobiles.

That's it, and that's all.  Considering the money the Obama administration spent to save what was left of Chrysler and helping Fiat buy it out and return to the U.S. market, we were probably better off spending that money on high-speed rail.  

When Fiat took over Chrysler's assets in 2009, it seemed like a dream come true for American enthusiasts of European cars - Alfa Romeo would finally make it back ti the States, the once-popular Fiat brand (it really was popular in the U.S. - back in the mid-seventies, the 128 sedan sold like hotcakes, and someone on my block owned one!) would be reborn in America, and the Dodge and Chrysler brands would be restored to their former glory.  Jeep, meanwhile, would retain its glory.     

Yeah, right.

The new car models put out by the Dodge and Chrysler brands - sold alongside Jeep and Ram (formerly Dodge) trucks in a four-brand dealer network devised by Fiat boss Sergio Marchionne  - got lost in the the U.S. market, maybe because they were overshadowed by all those Cherokees, Compasses and Ram pickups in the same showrooms.  Not to mention by Dodge-branded and Chrysler-branded SUVs as well.  As SUV and light-truck sales have soared, Fiat Chrysler has reduced the passenger-car lineups of the Dodge and Chrysler brands to almost nothing; the 200 sedan (above) is in its last year, having ceased production in December 2016.  The re-imagined Dodge Dart - meant to restore the brand's performance reputation - proved to be little too exotic and too Italian for American car buyers, as its independent multi-link suspension and its sophisticated engines.  Thus, the Dart is also going out of production.  There's a weird irony to this; after all the pseudo-Italian compacts Lee Iaccoca thrust on the American public in the 1980s, including the infamous Chrysler-Maserati TC (which combined Maserati's expertise in inexpensive cars with Chrysler's European-style engineering - yes, that was a joke!), Dodge gives us a car based on Alfa Romeo's Giuletta and it did no better than Iaccoca's decal-engineered insults, like the 1981 Dodge DeTomaso (below), based on - HORRORS! -the Omni.

So the Dodge and Chrysler brands are down to one or two sedans and a sport coupe between them, with minivans and SUVs filling the void.  Fiat, meanwhile, remains a specialty brand in the States, offering little more than the 500 retro car and some really silly crossover offshoots of the retro 500 itself.  Its most interesting model - the 124 Spider - is a cousin of the Mazda Miata.  

Fiat-Chrysler quality remains abysmal, reminding consumers of the all the crappy cars of yore that emanated from both companies before their merger (back in the 1970s, Fiat, whose name is the Italian acronym for Italian Automobile Factory of Turin, was said to stand for, "Fix It Again, Tony!").  And after having been fined by the government for not properly fixing automobiles under recall, which I examined in greater detail back in August 2015, it's under investigation again for the same problem Volkswagen is facing - cheating on diesel emissions!

Marchionne, in responding to the federal government's charges that computer software allowed Jeep SUVs and Ram pickups equipped with diesel engines to skirt emissions standards, insists that the software most likely had been misprogrammed by mistake , saying there was no intent to "break the bloody law."  Maybe.  Given Fiat Chrysler's ineptitude with product in the past eight years, that might very well be the case.   But if incompetent engineering is an alibi, it makes you wonder why Fiat Chrysler is still in business.

Gotta love that Alfa Romeo 4C, though.

Back in 1980, when Chrysler faced its first (but hardly its only) fiscal crisis, then-U.S. Senator Gary Hart voted against a federal bailout, saying he saw no reason to try to save a sinking boat.  What remains of Chrysler is going down for not the third but the fourth time (the second and third times being, respectively, the 1992 slump in the aftermath of the Bush 41 recession and the Cerberus purchase of Chrysler assets from Daimler AG in 2007).  I'm beginning to think Hart had the right idea.