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: Trump Trumped
One thing you can pretty faithfully count on is that people in the auto industry who make large political donations, whether they be car dealers or executives, tend to skew Republican. Low taxes and pro-business and all that jazz.
Citing a report from the nonpartisan Center for Responsive Politics, Automotive News writes that in past elections, candidates like Mitt Romney, John McCain and George W. Bush have raised millions from auto business donors. But Donald Trump? Only about $308,331 so far, the center says.
That doesn’t mean these donors have flocked to Hillary Clinton, however. Clinton has raised about $431,000, a little less than Barack Obama in 2012 and about $200,000 less than Obama pulled in 2008.
Who are the top industry donors? South Florida auto dealer Norman Braman is the largest by far, at $7 million in this election cycle (most of it toward Marco Rubio’s SuperPAC) followed by the National Automobile Dealers Association and then General Motors. And Republican candidates for Congress significantly out-raised Democrats from auto industry sources.
Guess they just don’t like Trump very much!
2nd Gear: Ford’s ‘Limited Support’ For Small Cars
As far as cars are concerned, Trump made headlines for his war of words with Ford over whether U.S. jobs would be lost as the automaker switches small car production to Mexico. Trump says yes; Ford says no, because the former American small car plant will now make trucks without losing jobs.
But it definitely shows where Ford, like Fiat Chrysler, is putting its emphasis on what’s selling right now: trucks, SUVs and crossovers. Via Automotive News:
“At the end of the day, we have to make sure that as a business we are providing compelling products for customers at the right value that provide a good return for the company, so we can then reinvest in the products, in the people, in the facilities,” [Ford CEO Mark] Fields said. “With these exciting products that we’re bringing in, it’s actually a net win for the UAW.”
It’s a major reversal of course for Ford, which converted Michigan Assembly from hulking SUVs to small cars after gasoline prices soared heading into the recession. Fields’ predecessor, Alan Mulally, told USA Today in 2008 that the dramatic shift away from big gas guzzlers “is going to be permanent.”
Now, Fields said Ford is keeping that experience in mind even as it heads in the opposite direction, promising four new SUV nameplates by 2020. He said the “small-car offensive” Ford announced in 2008 — which Fields executed as president of the Americas — wasn’t a misstep because it gave the company’s car lineup a sorely needed overhaul, even if the assumptions underpinning it were mistaken.
No one wants to buy the small cars.
3rd Gear: Volvo’s Lynk & Co. Has No Love For Dealers
And speaking of dealers, Geely/Volvo’s new mainstream brand Lynk & Co.—which our Jason Torchinsky covered in Europe last week—aims to revamp the way cars are sold on several fronts. It debuts in China, Europe and the U.S. by 2018, and when it does, it wants to do retail dealer sales, direct sales via the internet like Tesla, and service through Volvo or independent chains.
Why should automakers be required to go through franchised dealers, a model that’s a century old and not especially prepared for the future? Once more from Automotive News:
[Lynk Senior Vice President Alain] Visser said the business model of selling and servicing cars has not changed much in the past 100 years while consumer expectations now are totally different from just 10 years ago.
Lynk wants to own its dealerships to reduce distribution costs and ultimately prices for the customer while keeping full control of its relationship with the customer.
“The current car distribution model is broken,” Visser said. In his view, automakers design, engineer and build cars but then “outsource” their sales to dealers, losing their grip on the portion of the distribution process crucial for brand-building as well as for margins.
4th Gear: Sales Expected To Drop In October
And while we’re talking about sales, once again new car sales in the U.S. are expected to slide this month. Via Reuters:
U.S. auto sales are forecast to drop more than 7 percent in October from the same period in 2015, the sixth monthly decline so far this year, as automakers offer steep discounts and adjust production to manage inventories, J.D. Power and LMC Automotive said on Friday.
The two auto industry consultants said October U.S. new vehicle sales will number 1.347 million, down 7.3 percent from 1.453 million units a year earlier. The seasonally adjusted annualized rate for October will be 17.7 million vehicles, down from 18.1 million on the same basis a year earlier. This October has two fewer auto sales days than October of 2015.
The U.S. auto industry has experienced several years of robust sales and has not experienced six months of declines since before the Great Recession.
“Although automotive sales are expected to remain near the all-time high, they are still expected to contract slightly this year, as well as in 2017,” Jeff Schuster, LMC Automotive’s senior vice president of forecasting said in a statement.
Sales are still good, just not what they were.
5th Gear: Detroit Goes To Mars
Here’s a nice story of an established company finding a new groove from The Detroit News: the NASA crewed ship to Mars will be partially built in Michigan by a former Ford supplier.
The government agency’s new Space Launch System — a rocket set to ferry humans to the red planet in the 2030s — relies on dozens of Michigan suppliers that build everything from steering to components covers for harnesses and cables. But the most vital contributor from the Great Lakes state has a history rooted in the automotive industry.
Warren-based Futuramic Tool & Engineering once made tooling that checked tolerances of body stampings for every single car in Ford Motor Co.’s lineup. But after the Dearborn automaker outsourced that work to Mexico about 15 years ago, the supplier was forced to diversify to the aerospace industry. It now makes tooling and hardware for the Mars-bound rocket.
“They’re working on every major component that’s being assembled,” said Chad Bryant, the Space Launch System’s propulsion manager. “You can’t walk though the plant without seeing Futuramic all around you.”
Futuramic has manufacturing plants in Detroit and Warren that build the parts. It ships those parts to NASA’s Michoud Assembly Facility in New Orleans, where the rocket is being built. Futuramic works directly for Boeing, NASA’s prime supplier for the SLS — and for Lockheed Martin, NASA’s prime supplier for the Orion capsule, the part of the rocket that will hold the astronauts.
Reverse: Good Bridge
Neutral: Are Auto Dealers Needed In The 21st Century?
And how can they adjust their business model to a more modern one?