Auto Outlook: Fiat-Chrysler, Ford No. 1 brand for 4th year, gas prices

By AL SWANSON, UPI Auto Writer
A 2014 Fiat 500L is on display at the 2013 Los Angeles Auto Show held at the Convention Center in Los Angeles, California on November 20, 2013. UPI/Phil McCarten
A 2014 Fiat 500L is on display at the 2013 Los Angeles Auto Show held at the Convention Center in Los Angeles, California on November 20, 2013. UPI/Phil McCarten | License Photo

It took years to work out, but Italy's industrial giant, Fiat, finally reached agreement to buy the 41.5 percent of Chrysler LLC it did not own, a $4.35 billion deal.

The agreement announced New Year's Day provides the United Auto Workers healthcare trust with $1.9 billion in cash plus a second dividend payment of $1.75 billion when the deal closes on Jan. 20. In addition Chrysler -- which has nearly $12 billion in cash -- will pay the UAW Retiree Benefits Trust $700 million in four annual installments.


The UAW has held a substantial portion of the Auburn Hills, Mich., auto company since its 2009 bankruptcy when Fiat acquired 20 percent of the company. The trust, which provides medical benefits for more than 117,000 union retirees, dependents and surviving spouses, received a 55 percent stake in return for concessions. The U.S. Treasury got an 8 percent stake.


Fiat eventually acquired 58.5 percent of Chrysler.

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Since emerging from bankruptcy five years ago, Chrysler has thrived on strong Ram pickup, Jeep and passenger car sales while Fiat has languished because of long-term economic woes in Europe than sent sales to 20-year lows.

Chrysler sales were up 9 percent in 2013 to 1.8 million vehicles, the best performance since 2007.

The Italian automaker would have posted a $1.3 billion loss without Chrysler.

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"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, and a solid and open organization that will ensure all employees a challenging and rewarding environment," Fiat Chrysler Chief Executive Officer Sergio Marchionne said.

Chrysler repaid all its government loans to the U.S. Treasury and Canada in 2011 but the $12.5 billion bailout ended up costing taxpayers $1.3 billion. Chrysler last year filed for an initial public offering but any public stock sale won't happen until the merger is complete.

Change of the guard at Hyundai Motor America.

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John Krafcik, the blue jean wearing chief executive officer of U.S. operations of the South Korean automaker, left the company Tuesday after a decade of astonishing growth at Hyundai America.


When Krafcik joined the team as vice president of product planning in 2004, Hyundai was a marginal player with a 2.5 percent U.S. market share; 10 years later market share had more than doubled before falling back to 4.6 percent.

On the strength of its midsize Sonata and compact Elantra passenger cars and Santa Fe and Tucson sport-utilities, Hyundai couldn't make vehicles fast enough. It limited production to keep quality from declining. But sales took a hit in late 2012 when Hyundai and sister company Kia Motors agreed to restate expected gas mileage for 1.1 million vehicles sold in North America, reducing average fuel economy by 1 mpg to 26 mpg for the 2012 model year and set aside more than $400 million to settle inflated mileage claims in 50 lawsuits.

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Hyundai proposed paying an average $353 cash settlement to some 850,000 vehicle owners and lessees. Kia owners would get about $667 each. Hyundai-Kia owners can also take a dealership credit of 150 percent of the lump sum amount or a 200 percent credit on the purchase of a new Kia or Hyundai.

Krafcik is succeeded by David Zuchowski, who joined Hyundai in 2007 as executive vice president of sales after decades at Mazda and Ford.


"On behalf of Hyundai Motor Company, we sincerely thank John for his visionary leadership and relentless pursuit of customer satisfaction, which has driven Hyundai's record growth over the past five years," said Im Tak, Hyundai executive vice president and chief operating officer.

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"John's forward-looking perspective, commitment to quality and design, and pursuit of innovative new product offerings have elevated the Hyundai brand and introduced our vehicles to a new generation of satisfied and loyal customers."

Ford stays best-selling U.S. automaker for 4th year

As 2014 begins Ford Motor Co., the only one of Detroit's Big Three not to accept a federal bailout during the economic crisis, hopes to remain on top for a fifth year.

Ford sold 2.4 million vehicles in 2013, a 10.8 percent increase, up from 2.24 million in 2012, making the blue oval brand the best-selling U.S. car nameplate for the fourth year in a row.

U.S. consumers bought 15.6 million vehicles last year -- a major turnaround from the 10.4 million sold in recession-wracked 2009.

Ford sold about 400,000 more vehicles in the United States than Toyota -- paced by record sales of its Fiesta subcompact, midsize Fusion and Fusion hybrid, Escape SUV and F-Series pickup. The F-Series remained the best-selling U.S. vehicle, car or truck, for the 32nd straight year.


"The Ford brand has had more retail share growth than any other brand in the country, with our most significant gains coming from import-dominated coastal markets," John Felice, Ford vice president, U.S. marketing, sales and service, said in a statement. "With 16 launches [in 2014], we're looking to keep our sales momentum going."

General Motors, which has four brands to Ford's two, sold more total vehicles domestically. GM sales rose 7 percent in 2013.

"The great news is that we are not overly reliant on any one segment -- we're seeing double-digit sales growth in cars, trucks and utilities," said Felice.

Research firm IHS Automotive said automakers plan to introduce 57 new cars and trucks worldwide this year and global sales should increase 22 percent in the next four years to 100 million by 2018. Automakers will continue to expand production in North American to meet growing world demand.

Automakers gearing up for Detroit auto show

The 26th North American International Auto Show kicks off in mid-January with the presentation of the North American Car and Truck of the Year awards.

Ford and GM are introducing all-new versions of the F-150 pickup and redesigned midsize GMC Canyon pickup in the Motor City. Acura, Audi, Bentley, BMW, Cadillac, Chevrolet, Honda, Hyundai, Infiniti, Kia, Lexus, Mercedes-Benz, Mini, Nissan, Porsche, Subaru, Toyota, VL Automotive, Volkswagen and Volvo all plan to show new offerings among 50 global concept and production vehicles being unveiled.


Honda will introduce the third-generation 2015 Fit subcompact squarely aimed at Toyota's Prius and redesigned Corolla, and Acura will show a prototype for its TLX luxury sedan.

"The all-new model will feature more emotional styling with tidier sports sedan proportions wrapped around two all-new advanced powertrains that provide even more athletic performance," Acura said of the high-end concept.

The California-designed TLX replaces the TL and TSX models in Acura's lineup in mid-2014.

Volvo will debut its concept XC coupe, tipping design cues of the updated 2015 Volvo XC90.

AAA: New Year could bring lower gas prices

Barring unforeseen world events, U.S. motorists could see a 5 cent a gallon decline in average gasoline prices in 2014, AAA said.

The motor club based its prediction on the dramatic increase in domestic crude oil production as a result of widespread use of hydraulic fracking technology and a boost in refinery capacity that insulates U.S. consumers from global supply disruptions.

The federal Energy Information Administration said U.S. crude oil output rose 18 percent last year to its highest level in 25 years.

The average price for a gallon of regular unleaded gasoline in the United States was $3.49 in 2013, compared to $3.60 in 2012.


"Our hope is that prices will continue to fall as cars grow increasingly fuel efficient and refineries expand production to take advantage of the recent boom in North American crude," AAA said in a statement.

However, AAA warned: "It's possible that unexpected events or greater than forecast economic growth could result in higher prices for motorists in 2014."

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