Fiat Chrysler is allegedly building too many cars that dealers aren’t asking for, Chinese automakers have big growth plans, Jaguar Land Rover is reportedly looking for a dance partner, and more UAW contract news. All that and more in for Wednesday, Nov. 13, 2019.

Fiat Chrysler is allegedly building significantly more cars than are being ordered by dealers, re-establishing what is known as a “sales bank” of unrequested inventory, and putting pressure on dealers to sell cars they didn’t order, reports.

From the news site’s recent article:

has been manufacturing more cars and trucks than its U.S. dealers are willing to accept, at one point creating a nationwide stock of about 40,000 unordered vehicles and stoking tension with some of its retailers.

Four dealers, two of whom spoke on the condition they not be named, said Fiat Chrysler has revived what’s known in industry circles as a “sales bank.” The practice is decades old and frowned upon by investors and analysts because it can obscure an automaker’s . Dealers don’t like it because it can amp up the pressure companies place on them to take delivery of vehicles they don’t want.

[...]

Auto sales have been slowing industrywide this year, and the Italian-American automaker started building up the bank of unassigned cars this summer. Some dealers were looking to pare back inventory after being burned by rising interest rates that increased the cost of holding cars, and what some say was a lack of incentive support from the company to boost sales of older models.

Bloomberg notes that this high supply of unordered vehicles started coming as Fiat Chrysler was pursuing merger opportunities. For its part, Fiat Chrysler apparently denies instituting a sales bank, instead pointing out a “predictive analytics system” that started early this year and whose goal it is to align manufacturing with “anticipated dealer orders,” Bloomberg writes. More from the news site:

“We’re producing pre-specificationed vehicles against predicted demand so the right vehicles are available when dealers need them,” said Niel Golightly, Fiat Chrysler’s global chief communications officer. The modeling has proven accurate, he said, as Fiat Chrysler has ended quarters with as few as 1,000 vehicles that it’s ordered and been unable to sell to dealers.

The story also notes that Fiat Chrysler CEO Mike Manley said on a call with analysts last month that the company was working with dealers to “maintain discipline with stock levels” and that in North America, “dealer stock is now in line with demand.”

I’ve reached out to Fiat Chrysler to learn more, and I’ll update this story when I hear back. Until then, here’s some fascinating history on “sales banks” at Chrysler, as told from former company boss :

I was horrified to discover that we didn’t have dealer orders to build these cars...This inventory was known as Chrysler’s sales bank, which was nothing more than an excuse to keep the plants running when we didn’t have dealer orders for the cars.

At regular intervals the Manufacturing Division would tell the Sales Division how many and what types of vehicles they were going to produce. Then it would be up to the Sales Division to try to sell them. This was completely ass backwards in my book. The company had recruited bright young college graduates who were sitting in hotel rooms day after day with their fingers stuck in a telephone, trying to peddle iron out of sales banks to the dealers.

[...]

Something had to be done about all those cars, so at the end of every month the zone offices used to “move the iron” by running a fire sale... And the dealers got used to it. They soon learned that if they waited until the last week of the month, somebody from the zone office would call them and try to package ten cars for a special price.

This comes from , a book that I highly recommend all car fans read.

Back in March, we about a report alleging that Tata Motors, the Indian company that owns Jaguar Land Rover, was considering selling part of the British car company or that it was on the hunt for a joint venture partner. These moves, we wrote, were happening as sales in China slowed, diesel demand in Europe waned, Brexit uncertainties loomed, and electric vehicle development costs remained high.

Now has a new report stating that Tata has talked with BMW, with whom it electric drive units, and Chinese company Geely, with whom it could work to improve its position in China, about potential partnerships. , and , just to catch you up.

From Bloomberg:

Tata Group, the owner of Jaguar Land Rover, has approached companies including BMW Group and China’s Zhejiang Geely Holding as it seeks partnerships for the beleaguered U.K. automaker, people with knowledge of the matter told Bloomberg.

Tata has said it’s open to finding partners for JLR to save on costs and share the burden of investing in electric vehicles. The deliberations were at an early stage and Tata could still approach other potential partners, the people said, asking not to be identified because the information is private.

At a time when automakers (like Fiat Chrysler and PSA Group) are pairing up to share development costs, Tata seems down to find partners for JLR, per Bloomberg’s interview with the chairman of Tata’s holding company, Tata Sons, though it apparently does not want to sell JLR.

For its part, Geely told Bloomberg that “there have been no talks with Tata or JLR,” and both BMW and Tata didn’t comment on this partnership concept.

SAIC Motor is the biggest Chinese automaker, with partnerships with both and , and 7 million vehicle sales last year cementing its foothold on just under a quarter of the biggest car market on earth, . But don’t think SAIC is content with those figures, as it apparently still has huge growth plans, particularly overseas. From :

“SAIC’s overseas sales would hit 350,000 units this year and we will strive to sell more than half a million next year,” Yu De, deputy president of SAIC told reporters in Shanghai. “By 2025, we aim to have a market size of 1 million units a year.”

“We will systematically plan our overseas operations, from supply chain to logistics,” said Yu.

Speaking of growing Chinese auto manufacturers, Xiaopeng Motors, or XPeng, recently scored a $400 million investment from parties including electronics company Xiaomi Corp, reports.

XPeng is the same electric vehicle company that, in 2018, got . It’s also the same company that makes .

Reuters describes how XPeng plans to use the new money, writing:

“The signing of the new fundraising, which not only attracted new strategic investors such as Xiaomi Corporation but also received strong support from many of our current shareholders, is a renewed endorsement of our long-term strategy,” XPeng chief executive He said in the statement.

The proceeds will be mainly used for research and development of autonomous driving-related software, mass production of its G3 sport-utility vehicle model and P7 sedan, branding and expanding its retail network, said one of the people, who declined to be identified as the matter was private.

UAW’s Contract Talks With Fiat Chrysler Are Coming Along, But We Don’t Know Much

The United Auto Workers Union was locked into 40-day strike with General Motors earlier this year before both parties managed to

Since then, thanks to a concept known as “pattern bargaining,” the UAW has been using the GM contract as a blueprint for negotiations with other automakers, . Right now, the union and The Blue Oval have a tentative agreement laid out, with a ratification deadline of this Friday. According to , most UAW employees were for the agreement, though not all. From DetNews:

A majority of employees at nearly all UAW locals representing Ford employees, including Kansas City and Flat Rock assembly plants, so far have approved the contract. Only a majority of Chicago Assembly Plant’s production employees have turned it down. The tentative agreement must receive support from a majority of members who cast a ballot to be ratified.

When Ford’s UAW workers ratify the agreement, “the union will focus its efforts on Fiat Chrysler,” The Detroit News writes. As for how talks are going right now with the Auburn Hills-based company? Apparently there’s at least some progress being made, though we don’t know a whole lot:

“We are making progress and if UAW Ford ratifies, Acting UAW President Rory Gamble and the President’s office staff will join us next week and work to finalize the UAW FCA bargaining,” Estrada wrote. “While we intend to press forward to reach an agreement it is impossible to forecast how long this will take.”

From :

If Willys and Ford were to get into the Jeep business, however, they had to produce pilot models for testing. Willys delivered its two “Quad” pilot models to [Camp Holabird in Baltimore, Maryland] on November 13, 1940. Ford followed with its “Pygmy” on November 23.

Times seem tough for a small outfit like JLR, and I can only anticipate them getting tougher as EV development costs rise. What’s it going to take for JLR to thrive? What do you want to see from the company? What advantages do you see out of a tighter JLR-BMW partnership?