Detroit and Europe

Sentiment is accelerating in Detroit. Ford, yesterday, and GM, today, released Q3 revenues and earnings/share that easily exceeded New York analysts' expectations. 

But these good reports mask a sore point. Both companies' operations in Europe are awful. Each is clearly focused on European turnaround - closing redundant (and old) factories, shedding employees, and advancing new product introduction - to compete in a smaller, ever-more-competitive marketplace. For Ford and GM, it's all about lowering break-even points on the continent, and raising productivity, and doing it now while cash flow in America is so much improved. It will take a few years, company officials think.

And this - Fiat S.p.A., which at this point owns a majority of Michigan-based Chrysler, has just reiterated its desire to buy the remaining 41.5 per cent stake, a portion of which is held by a United Auto Workers healthcare trust for retired Chrysler workers (a so-called VEBA). Not tomorrow, but, as the original 2009 Chrysler bankruptcy agreement allows, by exercising call options for 3.3 per cent of Chrysler stock every six months. The process may be problematic (the VEBA is holding out for a higher price for the first tranche, filed for by Fiat last July). Fiat's intention, however, is clear, and Sergio Marchionne, its CEO, has shown resolve to a degree not unlike that of Alan Mulally's. His biggest challenge is financing the Chrysler stock re-purchases - Fiat in Europe needs fixing first.