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: What Do The Dealers Worry About?
Crossovers. Getting enough crossovers, selling them fast enough to meet America’s crack-like addiction to buying gigantic lifted hatchbacks. Right now is the thrilling 2017 National Automobile Dealers Association Conference & Expo, and according to Automotive News, here’s what the dealers have on their minds these days:
Volkswagen dealers faced unique challenges. To remain profitable, said Michael DiFeo, dealer principal at Linden Volkswagen in Roselle, N.J., “we relied a lot on shifting our efforts to used cars.”
Now they’re pinning their hopes on crossovers. “The Atlas is the first time that we’ll be in this large [crossover] segment,” DiFeo said. “Getting the larger Tiguan is huge for us considering the growth of that segment.”
Timothy Kraemer, general manager of BMW Minnetonka in Minnesota, said: “We had too many sedans and not enough SUVs — the X3 and X5. It is a matter of adjusting production and having the right amount of cars at the right time.” Due in part to too many dealerships trying to unload poor-selling sedans at the same time, “there is a declining margin situation where we are fighting for front-end margins.”
It’s going to be “the year of the crossover,” another dealer says. I thought that was 2016? Anyway.
2nd Gear: A Slow January
They gotta move those crossovers while they can! After 2016 eked out a record sales figure in the end, which was not expected, January is expected to be a slower sales month. It often is. Via Automotive News again:
The forecasts show sales declining by no more than 3 percent in January. They call for a seasonally adjusted, annualized selling rate of 17.3 million to 17.7 million, compared with 18.4 million last month and 17.6 million in January 2016.
“January had the potential of being a very slow month at dealerships, given the fact that auto sales shattered records in December,” said Jessica Caldwell, executive director of industry analysis for Edmunds. “But January is shaping up to be a surprisingly healthy month. The economy continues to show signs of strength and consumers are feeling confident, boosting auto sales above initial expectations.”
January has been the weakest month in each of the past eight years. This January has seen few big snowstorms to keep car shoppers at home and rising equity markets to give consumers the confidence needed for a big purchase. The Dow Jones Industrial Average closed above 20,000 points for the first time ever this week.
3rd Gear: A Tough Sell For Cadillac’s Dealers
Cadillac has a solid lineup these days but despite having a ton of dealerships, it only sells a fraction of the cars that Lexus or its German rivals do. Cadillac president Johan de Nysschen is trying to change this with Project Pinnacle, an opt-in program that rewards dealers with tiers based on their size and aims to create a more high-end buying experience. But it’s a tough sell for dealers, reports Automotive News, albeit a necessary one:
Nearly half of Cadillac’s stores sell fewer than 50 new vehicles a year. Many of those smaller retailers view Project Pinnacle — the name for de Nysschen’s incentive program — as a way to ultimately weed them out. Project Pinnacle starts April 1 and requires dealerships in the smallest of five tiers to let customers order vehicles through “virtual showrooms” rather than keeping any inventory on site.
“This is honestly intended as a collaborative program that is designed to improve dealer profitability,” de Nysschen said in an interview this month.
To those resisting Pinnacle, he said: “Does a dealer want to be part of the uplifting of the brand or do they want to be part of pulling it down? That’s the question each dealer must ask themselves. If they want to contribute to the uplifting of the brand, there’s money available.”
4th Gear: VW Prosecution Widens In Germany
Meanwhile in Dieselgate, German prosecutors allege ex-Volkswagen CEO Martin Winterkorn knew more about the cheating than he says he did. Via Reuters:
Former Volkswagen (VOWG_p.DE) Chief Executive Martin Winterkorn may have known sooner than he has admitted that the carmaker was cheating on emissions tests, German prosecutors said on Friday, as they widened an investigation into the scandal.
VW’s acknowledgement in September 2015 that it had used software to manipulate emissions erased billions of euros from its market value, forced Winterkorn’s resignation and sparked investigations and lawsuits across the world.
VW has said its executive board did not learn of the software violations until late August 2015 and formally reported the cheating to U.S. authorities in early September that year, and Winterkorn dismissed last week recurring reports that he knew about the cheating sooner.
5th Gear: Ford Retrofits Cars With WiFi
Got a Ford from the first half of this decade? The automaker can hook you up with in-car wifi if you want, The Detroit News reports.
Ford Motor Co. will offer customers with older model vehicles the connectivity of a new vehicle that includes 4G Wi-Fi through a small device that plugs into the car.
The Dearborn automaker said Friday that the small Ford SmartLink device plugs into the OBD II port below the steering wheel and will give owners of 2010-2016 Ford, Lincoln and some Mercury vehicles without built-in modems the ability to connect on the road. Millions of customers could possibly take advantage of the device, Ford said.
Ford SmartLink will allow customers to use their smartphones and an app to remotely start a car and lock and unlock its doors; have Wi-Fi capability for up to eight devices in their car; and to access vehicle health and safety alerts and vehicle location services such as geo-fencing a certain area. The technology also will allow customers to schedule appointments with dealers.