Tag Archive | "Chrysler Group LLC"

Fiat Chairman Says Marchionne to Remain Chief Executive


(Bloomberg) – Fiat SpA (F), the Italian carmaker that controls U.S. auto producer Chrysler Group LLC, will keep Sergio Marchionne as chief executive officer at least three more years to push company growth, Chairman John Elkann said. Marchionne will be responsible for carrying out a new business plan to be presented in May, Elkann said at a briefing at the North American International Auto Show in Detroit. Fiat and Chrysler together offer a good “bench” of eventual successors to the CEO, Elkann said.

The Italian company said on Jan. 1 that it secured full ownership of Auburn Hills, Michigan-based Chrysler in a $4.35 billion deal that will be the biggest in the auto industry since Volkswagen AG agreed to combine with Porsche in 2009. The accord with Chrysler’s other owner was a step in Marchionne’s efforts since taking the helm at Fiat in 2004 to merge the Turin-based company with a competitor to challenge industry leaders Toyota Motor Corp. (7203), General Motors Co. (GM) and VW.

Any successor as CEO “should be an internal one,” Marchionne said at the briefing. Elkann and Marchionne discussed the need for candidates in a conversation yesterday during which they pledged not to repeat the hasty terms of Marchionne’s 2004 appointment, the CEO said.

In May, Elkann named executives such as Richard Tobin, now chief executive officer of Fiat’s truck and tractor affiliate CNH Industrial NV; Lorenzo Sistino, head of CNH’s Iveco trucks unit; Alfredo Altavilla, Fiat’s European chief; Mike Manley, head of the Jeep brand; and Cledorvino Belini, head of Fiat in Brazil, as managers who have been groomed by Marchionne and could eventually run the company.

Fiat rose as much as 1.9 percent and was trading up 0.5 percent at 6.75 euros as of 3:21 p.m. in Milan. The stock has gained 54 percent in the past 12 months, valuing the carmaker at 8.44 billion euros ($11.5 billion).

The merger that Marchionne is seeking for Turin-based Fiat and Chrysler would enable the manufacturers to pool funds and tighten cooperation between the Italian company’s Alfa Romeo, Lancia and Maserati brands and the Chrysler, Dodge and Jeep nameplates. Fiat is open to additional partnerships with other carmakers such as PSA Peugeot Citroen (UG) and Suzuki Motor Corp. (7269), Marchionne said.

Jean-Baptiste Thomas, a spokesman for Paris-based Peugeot, declined to comment.

Marchionne has said he favors a New York listing for the combined entity. Fiat’s board will look at the subject at the end of January during a planned discussion on the company’s structure, and a new listing for the merged manufacturer is technically possible in the second half of this year, he said today, without specifying a location.

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Moody’s Considers Fiat Downgrade After Chrysler Purchase


Milan – Moody’s placed the Ba3 rating of Fiat under review for a possible downgrade to reflect the impact on the Italian car maker’s cash position of its plans to take full control of Chrysler Group LLC.

“The announced acquisition will materially weaken Fiat’s liquidity position at a time when the company is still free cash flow negative,” credit ratings agency Moody’s senior vice president and lead Fiat analyst Falk Frey said in a statement.

On Jan. 1 Fiat struck a $4.35 billion deal to buy the 41.46 percent stake in Chrysler it does not already own from a retiree healthcare trust affiliated with the United Auto Workers union. The deal, which is expected to close on or before Jan. 20, will facilitate further integration of the financial and operating strategies of the two car groups, Moody’s said.

With European car sales suffering, Chrysler is a source of profit for Fiat but the two companies currently are forced to manage their finances separately. But Moody’s said Fiat’s remaining cash, its unused credit facilities and its operating cash flow should be enough to meet its cash needs this year.

Fiat issued a statement saying Moody’s had put its rating under review for a possible downgrade. When called by Reuters, a Fiat spokesman declined to comment further.

Moody’s also said it would be looking at the impact of rising challenges in Latin America on the Italian carmaker’s ability to generate cash.

Fiat’s performance in Brazil, its most profitable foreign market, has worsened considerably since 2011 due to increased competition. “Fiat’s ability to compensate for the sluggish demand in Italy has diminished further,” it said.

On Thursday Fitch Ratings said the deal to buy the Chrysler stake had no immediate impact on Fiat’s ratings, adding that a full rating review would be conducted in early 2014.

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China Urges Chrysler to Address Jeep Wrangler Fire Risk


Shanghai – China urged carmaker Chrysler Group LLC, majority-owned by Italy’s Fiat SpA, to correct possible defects in its Jeep Wrangler, after vehicles imported into the country were found to have an elevated fire risk, China’s quality watchdog said on Monday.

China had banned Jeep Wrangler imports in early 2011 due to serious fire risks associated with defective gearboxes, but lifted the restrictions after Chrysler replaced vehicle parts to address the issue, the General Administration of Quality Supervision, Inspection and Quarantine said in a statement on its website.

Recent inspections by the agency, however, found the car still had relatively high fire risks, the statement said.

Chrysler should “take immediate precautionary measures so as to be responsible to consumers”, the watchdog said. It also advised Wrangler owners to thoroughly check their vehicles and avoid driving in extreme conditions. Chrysler is actively cooperating with the quality watchdog and is also in active discussion on technical issues, a China-based company representative said in response to the agency’s statement.

Beijing is taking a harsher stance towards products, both local and imported, that are deemed substandard amid a spate of scandals involving everything from tainted milk powder to fake donkey meat.

Global automakers including Volkswagen AG, General Motors Co and Ford Motor Co recalled a combined 5.3 million vehicles in China in 2013, a 66 percent increase from a year earlier, according to the official Xinhua News Agency.

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Fiat To Acquire Remaining Chrysler Shares


Detroit – Fiat S.p.A. (Fiat) announced an agreement with the VEBA Trust1, under which its wholly owned subsidiary, Fiat North America LLC (FNA) will acquire all of the VEBA Trust’s equity membership interests in Chrysler Group LLC, representing the 41.4616% of Chrysler Group not currently held by FNA. The transaction is expected to close on or before January 20, 2014.

In consideration for the sale of its membership interests in Chrysler Group, the VEBA Trust will receive aggregate consideration of U.S.$3,650 million consisting of:

  • a special distribution payable by Chrysler Group to its members, in an aggregate amount of approximately $1.900 million (FNA’s portion of the special distribution will be paid by FNA to the VEBA Trust as part of the purchase consideration); and
  • at closing, FNA will pay the remainder of approximately $1.750 million in cash purchase consideration to the VEBA Trust.

Fiat expects to fund the U.S.$1.750 million in cash from available cash on hand. Chrysler Group expects to fund the special distribution from available cash on hand.

Contemporaneously with the transactions described above, Chrysler Group and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) agreed to a memorandum of understanding under Chrysler Group’s existing collective bargaining agreements to provide for additional contributions by Chrysler Group to the VEBA Trust of an aggregate of $700 million in four equal annual installments. The initial payment will be made on closing of the transaction with Fiat, and additional payments will be payable on each of the next three anniversaries of the initial payment. Chrysler Group expects to fund the initial contribution to the VEBA Trust from available cash on hand.

In consideration for these contributions, the UAW will agree to certain commitments to continue to support the industrial operations at Chrysler Group and the further implementation of the Fiat-Chrysler alliance, including to use best efforts to cooperate in the continued roll-out of Fiat-Chrysler World Class Manufacturing programs, actively participate in benchmarking efforts associated with implementation of these programs across all of Fiat-Chrysler manufacturing sites to ensure objective performance assessments and provide for proper application of WCM principles, and actively assist in the achievement of the Group’s long-term business plan.

“I have been looking forward to this day from the very moment that we were chosen to assist in the rebuilding of a vibrant Chrysler back in 2009,” said John Elkann, chairman, Fiat. “The work, commitment and achievement I have witnessed from Chrysler over the past four and a half years is nothing short of exceptional, and I take this opportunity to officially welcome each and every one of the people in the Chrysler organization to the integrated Fiat-Chrysler world.”

Sergio Marchionne, CEO, Fiat and chairman and CEO, Chrysler Group, said, “In the life of every major organization and its people, there are defining moments that go down in the history books. For Fiat and Chrysler, the agreement just reached with the VEBA is clearly one of those moments. I will be forever grateful to the leadership team for the support and unwavering dedication shown to the integration project that today has taken its final shape. The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organization that will ensure all employees a challenging and rewarding environment.”

As part of the transactions, FNA and the VEBA Trust will agree to dismiss with prejudice the current proceedings before the Delaware Court of Chancery with respect to the interpretation of the call option agreement pursuant to which Fiat has, through FNA, exercised three tranches of a call option to acquire membership interests in Chrysler Group held by the VEBA Trust. All of these membership interests will be acquired by FNA in connection with the transactions described above.

Given the funding arrangements for this transaction, it is not envisioned that Fiat will require equity capital to be raised via a rights issue.

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Chrysler Recognizes 30 Green Dealers


AUBURN HILLS – Tim Parker Chrysler Dodge Jeep Ram in Hot Springs, Ark., is one of 30 dealerships that Chrysler Group LLC has recognized for their commitment to environmentally friendly and energy-efficient business practices.

This is the first group of dealers to be recognized under the new Dealer ECO (Environmentally Conscious Operations) Program launched last year by the Chrysler Group Network Development organization and the Corporate Sustainability Office. The new program provides Chrysler Group dealers with the opportunity to demonstrate their commitment to ECO business practices and to be recognized for their efforts, reported F&I and Showroom magazine.

Tim Parker Chrysler, located adjacent to the Hot Springs National Park in central Arkansas, installed a 2,000-square-foot solar panel system on the dealership’s roof, one of the largest, privately owned solar panel systems in the state. More than 100 solar panels enable the dealership to dramatically reduce its electricity usage and carbon dioxide emissions.

Eight of the 30 Chrysler Group dealers implemented one or more major ECO initiatives. For example, Hunter Dodge Chrysler Jeep in Lancaster, Calif., has solar panels on carports that produce energy while providing protective cover for customers’ vehicles in for service. Milosch’s Palace Chrysler Jeep Dodge in Lake Orion, Mich., heats the dealership and separate new body shop with used motor oil from customer oil changes, while Williams Chrysler Dodge Jeep Ram in Stigler, Okla., collects and recycles rainwater.

“The Dealer ECO Program is a vital initiative that supports Chrysler Group’s commitment to creating a sustainable enterprise,” said Peter Grady, Vice President of Network Development & Fleet, Chrysler Group LLC. “We commend these dealerships for their efforts and look forward to sharing their examples with others in order to expand and strengthen our shared commitment to sustainability.”

The 30 Chrysler Group dealerships are located in 19 states, more than a third of them in California, New York and Michigan. To commemorate their achievements, Chrysler Group recently presented each dealership with a bamboo display plaque and dealership employees with flash drives encased in bamboo.

The 30 dealerships were chosen for recognition by Network Development and the Corporate Sustainability Office based on data gleaned from dealership online surveys and in-dealership photos. Seventy-five dealerships entered this inaugural Dealer ECO Program.

Selection was based on a dealership’s major ECO initiatives, energy efficiency, waste recycling, wastewater control, bulk oil containment, vehicle lift maintenance and community relations program.

The 30 dealerships and locations are:

Milosch’s Palace Chrysler Jeep Dodge, Lake Orion, Mich.

Sterling Heights Dodge Chrysler Jeep Ram, Sterling Heights, Mich.

Harold Zeigler Chrysler Dodge Jeep, Grandville, Mich.

Golling Chrysler Dodge Jeep Ram, Bloomfield Hills, Mich.

Wayland Chrysler, Wayland, Mich.

L. T. Begnal Motor Co., Kingston, N.Y.

Lessord Chrysler Products, Sodus, N.Y.

Rockland Chrysler Jeep Dodge, Nanuet, N.Y.

Glendora Chrysler Jeep Dodge, Glendora, Calif.

Swift Chrysler Jeep Dodge Ram, Davis, Calif.

Hunter Dodge Chrysler Jeep, Lancaster, Calif.

Berthod Motors, Glenwood Springs, Colo.

Pro Chrysler Jeep Dodge Ram, Denver, Colo.

Tacoma Dodge Chrysler Jeep, Tacoma, Wash.

Enumclaw Chrysler Jeep Dodge, Enumclaw, Wash.

Westport Chrysler Dodge Jeep Ram, Lawrenceville, Ill.

Cavanaughs’ Motors, Monmouth, Ill.

Tom O’Brien Chrysler Jeep Dodge Ram, Indianapolis, Ind.

Spitzer Motor City, Cleveland, Ohio

Fury Motors Chrysler Jeep Dodge Ram, South St. Paul, Minn.

Jones Chrysler, Bel Air, Md.

Foster Motors, Middlebury, Vt.

Iowa County Chrysler, Barneveld, Wis.

Safford Chrysler Jeep Dodge of Fredericksburg, Fredericksburg, Va.

Deluxe Motors, Miles City, Mont.

Larry H. Miller Chrysler Jeep Dodge Ram, Sandy, Utah

Dadeland Dodge Chrysler Jeep, Miami, Fla.

Tim Parker Chrysler Dodge Jeep Ram, Hot Springs, Ark.

Mack Massey Chrysler Jeep Dodge, El Paso, Texas

Williams Chrysler Dodge Jeep Ram, Stigler, Okla.

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New Dodge Dart to Appear in May


Chrysler Group LLC will begin rolling its new Dodge Dart compact car into North American showrooms in May as the Auburn Hills, Mich., auto maker looks to return to the small car market.

Current plans call for the company to produce 2,000 Darts in May, said Dodge brand chief Reid Bigland. Output will grow to 8,000 for the month of June before hitting 12,000 in December, reported The Wall Street Journal.

The Dart, priced at $15,995, is the first vehicle jointly developed by Chrysler and majority owner Fiat SpA. Both companies need a successful introduction to demonstrate how a melded Chrysler-Fiat can design and build competitive vehicles.

Chrysler has been without a small car offering since 2005 when it ended production of the Dodge Neon.

The Dart will be produced at the Belvidere, Ill., assembly plant and shipped to North American and international markets. It is being built alongside the Compass and Patriot.

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