Tag Archive | "Fiat"

Marchionne Says He Doesn’t Plan to Testify at July Hearing

Sergio Marchionne, Fiat Chrysler Automobiles NV’s chief executive officer, said he doesn’t intend to speak at the hearing the U.S. National Highway Traffic Safety Administration set for July 2, reports Bloomberg Business.

“We have a person who is responsible for regulatory compliance,” he said on the sidelines of an event Tuesday evening in Detroit. “He’s much better briefed than I am.”

NHTSA on Monday scheduled a rare public hearing into how Fiat Chrysler is handling 20 recalls, covering about 10 million vehicles. NHTSA Administrator Mark Rosekind said it was a pattern of potential violations, rather than a specific recall, that brought the unusual action.

NHTSA has become more aggressive after being criticized by Congress for failing to be more active before last year’s revelation that about 2.6 million General Motors Co. cars had a known ignition-switch defect that went unrecalled for years. Regarding Fiat Chrysler, the agency said it has had complaints from consumers about the absence of recall notifications, the lack of parts when people schedule repairs and “misinformation from dealers.”

Marchionne said Fiat Chrysler has tried to comply with the recalls but struggles, like all automakers, to get vehicle owners to care.

“We have worked as hard as we could to try and make the recalls work,” he said. “One of the things I cannot do is somehow force customers to come in and bring their cars. I just can’t. And the repair rates of some of these recalls are either at or above industry average.”

The auto industry, he said, will adapt to the new regulatory environment.

New Phase 

“We’re entering a new phase of regulatory oversight,” he said. “We need to work with the agency to determine the proper level of cooperation. The real issue is that the process of adjusting to this new regulatory environment is going to be painful. We’re not used to this.”

Fiat Chrysler shares rose 0.1 percent to $15.62 at 9:38 a.m. New York time. They gained 35 percent this year through yesterday.

FCA US, the Auburn Hills, Michigan-based unit of London-based Fiat Chrysler, owns the Chrysler and Jeep brands. It was given until June 1 to turn over documents about its recall progress and could face fines of $7,000 a day for failing to cooperate with NHTSA’s special order.

“The average completion rate for FCA US LLC recalls exceeds the industry average and all FCA US campaigns are conducted in consultation with NHTSA,” the automaker said Monday in an e-mailed statement. “The company will cooperate fully.”

Rosekind declined to give an industry average after the FCA statement. He said earlier he was unhappy with the completion rate of recall repairs for a fuel tank defect on some Jeeps.

NHTSA rarely schedules public hearings on recalls. The agency usually negotiates with automakers behind the scenes over the scope of a recall, timing and potential remedies. NHTSA’s last such hearing on a recall was in 2012, for a single fix by Wildfire Motors, a small motorcycle importer.

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Fiat Chrysler’s U.S. Unit Redeems Bonds due 2019

The U.S. unit of carmaker Fiat Chrysler Automobiles (FCA)(FCHA.MI) (FCAU.N) has redeemed senior secured notes that mature in 2019 with a total face value of $2.875 billion, a filing with U.S. market regulator SEC showed, reports Reuters.

The notes, which carry a coupon of 8 percent, were redeemed at a price equal to their principal amount plus the applicable premium and any accrued and unpaid interests, according to the filing.

Fiat completed the buyout of its U.S. unit last year but needs to refinance all of Chrysler’s bonds and past credit agreements before it can gain full access to the unit’s cash. After this payment, FCA still has to repay or refinance Chrysler bonds due in 2021 and renegotiate other credit agreements.

Having full access to Chrysler’s money will help FCA carry out an ambitious five-year investment plan that includes spending 48 billion euros ($55 billion) to 2018 to boost sales by 60 percent to 7 million cars and increase net profit five-fold.

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Fiat, Chrysler CEO Sergio Marchionne ‘Done’ After 2018

Sergio Marchionne, CEO of Fiat SpA and Chrysler Group LLC, plans to step down at the end of 2018 after completing a five-year turnaround plan for the new Fiat Chrysler Automobiles NV, reported The Detroit News.

Marchionne, 62, told Bloomberg Businessweek that he will “undoubtedly do something else” after the plan, outlined earlier this year, has run its course.

“I am not going to do any more turnarounds,” he told the weekly business magazine. “I’m done; let some of the young punks do it.”

When presenting the new five-year business plan on May 6, Marchionne said he would remain the CEO through at least 2018.

Since taking control of Fiat in 2004, Marchionne is credited with resurrecting the Italian automaker and orchestrating the complete acquisition and turnaround of Chrysler that led to the creation of Fiat Chrysler Automobiles, which is expected to come to fruition Sunday.

FCA was announced by Marchionne in January following Chrysler becoming a wholly-owned subsidiary of Fiat after a $4.35 billion deal with the United Auto Workers union trust fund that pays health care bills for retirees, which owned a minority stake in Chrysler following the auto bailout.

FCA common shares, as previously announced by Marchionne, are also expected to begin trading on the New York Stock Exchange and the Italian stock market on Monday.

Marchionne, known for his off-the-cuff comments, is the longest-serving CEO of any major European or American automaker.

An heir apparent is not obvious for Marchionne, who came to Fiat as an automotive outsider.

In May, Fiat Chairman John Elkann said a succession plan had been discussed, but was “not a topic” at the time.

Elkann, according to Bloomberg Businessweek, has previously mentioned executives who could eventually replace Marchionne: CNH Industrial CEO Richard Tobin; Jeep CEO and President Mike Manley; Alfredo Altavilla, Fiat’s COO for Europe, Africa and Middle East and head of business development; and Cledorvino Belini, head of Fiat in Brazil.

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Fiat Says Merger into Dutch-Registered FCA Effective October 12

Italian carmaker Fiat said on Tuesday its merger into holding group Fiat Chrysler Automobiles (FCA) would be effective as of Oct. 12 after all conditions for the tie-up were met, reported Reuters.

Fiat completed the full buyout of its U.S. unit Chrysler this year and is now incorporating all its businesses under Dutch-registered FCA, paving the way for a U.S. listing of the world’s seventh-biggest auto group next week.

Fiat hopes the Wall Street listing will help fund an ambitious turnaround plan.

Fiat said no creditors had opposed the merger and the amount of money to be paid to shareholders that chose to sell their shares had not exceeded a 500 million euro ($631 million) cap set by the company.

Shares in FCA will start trading on the New York Stock Exchange on Oct. 13, Fiat said in a statement. The stock will also begin trading on the Milan bourse on the same day, subject to the market regulator’s authorization.

Current Fiat shares will last trade on the Milan bourse on Friday.

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Chrysler Recalls 350,000 Vehicles on Ignition Switch Issues

Chrysler Group LLC, a unit of Fiat SpA, said it will recall about 350,000 vehicles from the 2008 model year because of a condition that may cause the ignition key to get stuck or inadvertently move, reported Reuters.

In some cases, the ignition switch could upon startup not stop at the “on” position and instead go to “accessory” or “off” positions, which could kill the engine and keep the front air bags from working, the company said.

A more likely occurrence in the affected vehicles, Chrysler said, is that the ignition key may not fully return to the “on” position from “start,” which could keep the windshield wipers and defroster from working. Air bags will continue to work if this situation occurs, the company said.

Chrysler said it knows of no injuries or deaths related to the issue in the recalled vehicles, and knows of one reported “minor” crash.

Affected vehicles are the 2008 model year Dodge Charger and Magnum, Chrysler 300 and Jeep’s Grand Cherokee and Commander.

The recall affects about 292,000 vehicles in the United States, 19,000 in Canada, 5,000 in Mexico and 33,300 outside North America.

It is similar to a previous recall of about 890,000 vehicles produced from January 2007 to June 2010 in which the ignition switch could slip from the “run” position to “accessory” position while driving. This shuts the engine and disables the air bags. No injuries were related to this recall, Chrysler said.

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Fiat May Sell Up To $1.04B In Stock With U.S. Listing

Fiat SpA may sell as much as $1.04 billion in shares to reduce debt and gain local investors after the carmaker formed from merging with Chrysler Group LLC lists stock in the U.S., according to Bloomberg News calculations, reported The Detroit News.

The company may have as many as 104.2 million shares available for sale when the newly created Fiat Chrysler Automobiles NV starts New York Stock Exchange trading later this year, based on cash-exit rights investors have exercised and earlier plans to dispose of treasury stock. At the current share price, that would be valued at 801 million euros ($1.04 billion).

Chief Executive Officer Sergio Marchionne is combining Turin, Italy-based Fiat with its U.S. division to establish a manufacturer with the scale to compete with auto-industry leaders such as General Motors Co., Volkswagen AG and Toyota Motor Corp. Marchionne told Bloomberg News on Aug. 30 that stock submitted by shareholders who don’t want to be part of the merged company will probably be sold following the shift to U.S. trading “to create liquidity.”

Investors withdrawing from Fiat prior to the merger submitted 60 million shares, valued at about 463.6 million euros at the exit price of 7.727 euros a share, the company said today.

The stock will be offered to other Fiat shareholders at that price for about a month starting tomorrow, after which the carmaker will buy any shares that are unsold. Investors owning Fiat stock as of Sept. 9 will be eligible to buy one exit-program share for every 19.35 already held, Fiat said in a separate statement.

The buyout value was 7.3 percent less than the 500 million euros that Fiat had budgeted. Fiat’s stock reached a low for this year in early August amid investor concern that the cap would be exceeded, delaying the transaction.

Marchionne said in June that Fiat also plans to sell the stock it holds in treasury. That amounts to a little less than 44.2 million shares, or 3.5 percent of the total.

Fiat rose 1.4 percent to 7.69 euros at the close Thursday in Milan, the highest price since July 25. The stock has gained 29 percent this year, valuing the carmaker at 9.6 billion euros. Fiat declined to comment on the potential stock-sale figure.

Shares in Fiat will be converted on a one-to-one basis to Fiat Chrysler stock when the listing shifts to New York. Marchionne said last week that U.S. trading may begin as early as Oct. 13. Fiat Chrysler will set up its headquarters in London.

The merged company’s new board will meet in late October and evaluate its capital structure, including weighing whether to sell new shares.

Marchionne said last week that he “learned a lot” from the creation of CNH Industrial NV, the truck and tractor company that separated from Fiat in 2011 and moved its listing to New York last year.

“The problem with the U.S. market is that there is no liquidity in CNH, so we need to fix that” for Fiat Chrysler, he said.

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