Nov 22, 2019

It's every carmaker for itself

The once monolithic automotive industry is splintering over a range of issues, as companies scramble to cope with unprecedented technological disruption and business challenges.

The big picture: Although fiercely competitive in the showroom, automakers have long presented a united front on shared interests like trade policy, government regulations and labor relations. That's all gone out the window lately; now it's every man for himself.

What's happening: General Motors' unprecedented racketeering lawsuit this week against Fiat Chrysler Automobiles is the latest example of automakers turning on one another.

  • GM accuses its crosstown rival of inflicting billions of dollars in damages by bribing United Automobile Workers leaders for competitive advantages that the union denied to GM.
  • They say the injuries compounded between 2009 and 2015 in the form of higher labor costs and lost investment initiatives.
  • GM said former FCA CEO Sergio Marchionne, who died in 2018, conspired with former UAW president Dennis Williams to try to weaken GM and force it into a merger with FCA in 2015.

FCA vigorously denies the charges, and says GM is trying to undermine current merger negotiations with Peugeot parent Groupe PSA and ongoing labor talks with the UAW.

  • "If arguments both sides are making against each other are true — that Marchionne was using the UAW to bully GM's Mary Barra, and that she's now trying to undercut Fiat Chrysler's combination with PSA — the chess moves will go down as among the most dramatic by Detroit executives in decades," writes Bloomberg.
  • On Thursday, JPMorgan analysts estimated that GM is likely to seek at least $6 billion in damages, and as much as $15 billion.

Another big split occurred recently in the war over tailpipe emissions rules.

  • Ford, Volkswagen, BMW and Honda have lined up behind California, whose right to set its own pollution standards was revoked by the Trump administration.
  • GM, FCA, Toyota and others, meanwhile, are siding with Trump, who wants to roll back tough Obama-era standards.
  • Where they line up depends mostly on their sunk investments in future powertrains and how they think consumer demand will evolve.
  • Two decades ago, Detroit automakers fought shoulder-to-shoulder against California's clean car initiatives.

What to watch: Shifts in trade policy could further divide the industry as the interests of foreign and domestic automakers diverge.

The bottom line: Faced with falling global sales and a potential transformation of the business, "the always-competitive auto industry has become even more dog-eat-dog," says Cox Automotive analyst Michelle Krebs.

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General Motors sues Fiat Chrysler alleging union bribes

General Motors' world headquarters. Photo: Paul Hennessy/SOPA Images/LightRocket via Getty Images

General Motors filed a lawsuit on Wednesday against Fiat Chrysler Automobiles, alleging its competitor was involved in racketeering by paying millions of dollars in bribes to corrupt the bargaining process with the United Auto Workers union, likely costing GM billions of dollars.

The big picture: The suit, filed in U.S. District Court in Detroit, aligns with the ongoing federal probe into corruption among some of UAW's top people and FCA's involvement. GM's accusation also comes as FCA and UAW are negotiating a contract fresh off a six-week strike at GM. Meanwhile, FCA is working on a planned merger with French automaker PSA.

Go deeperArrowNov 20, 2019

Auto workers union and Fiat Chrysler reach tentative deal

United Auto Workers on week six of a national strike against General Motors on Oct. 23 in Flint, Michigan. Photo: Bill Pugliano/Getty Images

The United Auto Workers reached a tentative four-year labor agreement with Fiat Chrysler on Saturday, CNBC reports.

The big picture: UAW reached tentative deals with Ford and General Motors in October after weeks of labor strikes, reducing GM's 2019 earnings by nearly $3 billion. The auto workers' deal at Ford came quickly, without any labor disruption.

Go deeperArrowNov 30, 2019

California won't buy from automakers who side with Trump on emissions

Traffic backs up at the San Francisco-Oakland Bay Bridge toll plaza along Interstate 80 in July. Photo: Justin Sullivan/Getty Images

California confirmed Monday that it won't buy new government vehicles from automakers who backed President Trump in his carbon emissions war with the state, the New York Times reports. GM, Fiat Chrysler and Toyota are among those set to be affected by the move.

Driving the news: The three big automakers and others announced in October that they were joining the Trump administration's side in litigation over its move to stop California from imposing emissions rules and, by proxy, mileage requirements that are tougher than federal standards, per Axios' Ben Geman.

Go deeperArrowNov 19, 2019