Fiat Chrysler May Be Selling Some Of Its Stuff

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Good Morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.

1st Gear: A Sale Of Magneti Marelli?

Fiat Chrysler is in the middle of some extremely ambitious expansion plans, especially where Alfa Romeo and Maserati are concerned. But they’re also saddled with a lot of debt and are set to lose Ferrari on their balance sheets after an upcoming IPO sale. Where do they get the cash from? According to this Reuters exclusive, some of it may come from selling parts maker Magneti Marelli:

Fiat Chrysler Automobiles (FCA) (FCHA.MI) is considering whether to sell its auto parts maker Magneti Marelli after receiving interest from potential buyers, according to sources familiar with the matter.

At least two U.S. private equity funds are looking to team up with industry players and submit joint bids for Magneti Marelli, which supplies all major carmakers in Europe, the Americas and Asia, three sources told Reuters.

A recent offer, by a group including a U.S. buyout fund and valuing the business at less than 2.5 billion euros ($2.7 billion), was rebuffed in June as FCA would not agree to sell for less than 3 billion euros, one of the sources said.


The official company line is that Magneti Marelli is not for sale, but sources say FCA is considering offers. Magneti Marelli makes numerous components for all major automakers and which employs more than 38,000 people in 19 countries.

2nd Gear: What The Honda Discrimination Settlement Means

Last week the the U.S. Department of Justice settled a case with American Honda Finance Corp. that involved the company charging minority borrowers more for their auto loans than white borrowers. So what does this settlement mean, exactly? Take it away, Automotive News:

In its settlement last week with the Consumer Financial Protection Bureau and the Department of Justice, Honda Finance agreed to cap dealer reserve — the percentage of interest a dealership is allowed to add to an auto loan as a fee for arranging the loan — at 1.25 percentage points for loans of 60 months or less and to 1 percentage point for loans longer than 60 months.


Basically, Honda is limiting dealer markup on the finance side, and it’s being hailed as a progressive move.

Regulators signaled that they hoped other captive-finance arms would follow Honda Finance’s lead. “We hope that Honda’s leadership will spur the rest of the industry to constrain dealer markup to address discriminatory pricing,” Gupta said. But that remains to be seen.


3rd Gear: I Want To Go To There

Details are coming today on the University of Michigan’s testing site for autonomous vehicles, and it sounds like it’s actually a pretty neat place. From The Detroit News:

It’s called Mcity, a 32-acre proving ground in Ann Arbor that could help the Great Lakes State better compete with Silicon Valley in developing driverless car technology.

The manufactured town, to be unwrapped Monday to invited politicians, journalists and others, will include about five miles of roads with intersections, traffic signs and signals, sidewalks, benches, simulated buildings, street lights and obstacles such as construction barriers. Automakers and suppliers can use the test town to test out everything from driverless cars to telematics systems. The site was developed by the University of Michigan and its partners and is operated by the Mobility Transportation Center, a public/private partnership.


More than a dozen companies will test vehicles there, and UM engineering students will have access to the site to work with car companies or on their own projects. They say it will have pretty much every environment an autonomous car could encounter, including “concrete, asphalt, brick and dirt road surfaces; a variety of curves and ramps; roundabouts and tunnels; different lanes and grassy areas.”

4th Gear: A New Chevy Crossover

Crossovers! So hot right now. Killing the midsize sedan like there’s no tomorrow. So Chevrolet plans to unveil a new crossover soon slotted above the smaller Equinox but below the full-size Traverse. The vehicle, set for 2017, would be sized to compete with the Honda Pilot, Toyota Highlander, Nissan Murano and Ford Edge, reports Automotive News:

The coming Chevy model, on the other hand, will be inserted in the middle of the lineup, as a grande plus. And it will require GM to make some adjustments.

Step one will be to downsize the popular Equinox. It will shrink a bit when the next generation appears in early 2017, shifting to the same global compact platform that will underpin the redesigned Chevy Cruze and Opel Astra cars, due out early next year.

That creates more room for the new three-row crossover to slide in between the Equinox and the Traverse, which also is scheduled for a redesign, in mid-2017. The new vehicle will be a short-wheelbase version of the Traverse, the sources said.


5th Gear: Thanks Russia

Speaking of General Motors, they’re set to cut back Opel production on the heels of the plummeting Russian auto market, an effect of Western sanctions, cheaper oil and a weaker currency. Reuters:

Opel, which originally planned to sell more than 80,000 cars in Russia this year, said on Friday it aims to shorten hours at its main plant in Ruesselsheim and at a site in Germany’s eastern town of Eisenach.

“Inventories and related costs will be minimised with this step,” the carmaker said, after first-half Russian sales plunged 73 percent to about 9,000 autos.


That’s just what Opel needs right now. Ouch.


Reverse: Shut Up Nader

On this day in 1972, the results of a two-year study conducted by the National Highway Traffic Administration of the U.S. Department of Transportation are released; the study concludes that 1960-63 Chevrolet Corvair models are at least as safe as comparable models of other cars sold in the same period, directly contradicting charges made by the leading consumer advocate Ralph Nader.


Neutral: Can Fiat Chrysler pull off those expansion plans?

Remember last year when they unveiled their ambitious five-year plan? It all seemed well and good at the time, but with Ferrari’s IPO looming, the weird merger requests and now the possible sale of Magneti Marelli — business as usual or is something else going on?


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