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: Krafcik To Google
Huge news in the world of autonomous cars this morning: John Krafcik, the widely respected former CEO of Hyundai Motor America during the period where it became a force to be reckoned with in the U.S., is leaving his post at TrueCar to lead Google’s self-driving car program.
Over the past few months we’ve seen tech companies like Google and Apple poach engineers and experts from the car world as they develop autonomous cars, but this is easily the biggest “get” by a tech company yet. Krafcik, who has degrees from Stanford and MIT, is also a veteran of Ford and GM-Toyota’s NUMMI joint venture before that.
According to Automotive News, a Google spokeswoman said it’s still the early days of autonomous cars, and this move is about getting ready for the future.
“This is a great opportunity to help Google develop the enormous potential of self-driving cars,” Krafcik wrote in an email to Automotive News. “This technology can save thousands of lives, give millions of people greater mobility, and free us from a lot of the things we find frustrating about driving today. I can’t wait to get started.”
So does this mean Google is going to start building their own cars? Not now, they’re just getting a guy who’s an expert in building them:
Hohne said Krafcik’s background shouldn’t be interpreted as a sign that Google intends to become a manufacturer. Last year, when Google unveiled its first custom-built prototype, a two-seat pod with a removable steering wheel and pedals, Google procured its parts from traditional automotive suppliers such as Bosch and Continental, and had the finished car assembled by Roush Enterprises in suburban Detroit.
“We’re not going to make cars ourselves,” Hohne said. “We know what we’re good at, and we’ll partner with many different companies to bring this technology into the world safely.”
The spokeswoman also said it’s possible the self-driving car program could become its own Alphabet company, but not yet.
2nd Gear: This Sucks For TrueCar
Naturally you have to wonder what this means for TrueCar, the car pricing service where Krafcik has served as president since last year. They’re in a bit of a tough spot lately and searching for a new CEO. From that same AN story:
When he was recruited by TrueCar founder and CEO Scott Painter in early 2014, the company seemed to have recovered from a near-collapse in 2012 brought on by clashes with regulators and a revolt among the dealers who pay TrueCar for sales leads. Many of those conflicts have since resurfaced in the form of lawsuits by dealers challenging TrueCar’s business practices.
3rd Gear: Fiat Chrysler To Lead UAW Negotiations
The United Auto Workers union has picked Fiat Chrysler over Ford and General Motors to lead contract negotiations, which means Sergio’s operation will set the tone for how these things will go — and could be the target of a strike if they end poorly. From Reuters:
Fiat Chrysler Automobiles (FCHA.MI) (FCAU.N) will get the first shot at setting a pattern for wages and benefits for more than 140,000 unionized factory workers at the Detroit Three automakers, the company and the United Auto Workers union said Sunday.
[...] The selection of FCA is a setback for GM and Ford, but Kristin Dziczek, labor analyst at Center for Automotive Research, said the two larger companies “are not going to choke on a Fiat Chrysler pattern.”
There’s a lot at stake this time around, including the hated two-tier wage system, a possible healthcare collective pool that would get all UAW workers on the same health plan, American jobs moving overseas and more.
4th Gear: Europeans Meh On GM-Fiat Chrysler Merger
The Frankfurt Motor Show kicks off this week and Sergio Marchionne’s pitch for a merger between his company and GM will be a hot topic. But The Detroit News reports business experts in Europe are pretty blasé about that idea:
Professor David Bailey of the Aston Business School thinks Marchionne is barking up the wrong tree.
“Certainly, FCA needs another partner, but it can’t force GM to come and play. And look what went wrong years ago,” Bailey said.
In 2005, GM paid Fiat $1.99 billion to avoid having to take it over. Its alliance deal would have forced GM to buy Fiat.
“I think Marchionne is looking in the wrong direction (for a partner). Perhaps, like Peugeot, there might be a Chinese partner,” Bailey said.
5th Gear: The One-Percenter Car Market Is Doing Great
What’s big in the car market right now? Forget midsize crossovers and pickup trucks, those are for poors. The real money’s in ultra-luxury. A new generation of younger-ish buyers with insane amounts of cash is ready to gobble up new Rolls-Royces, Lambos, the relaunched Maybach, and the McLaren F1s they see at auction. One more from Automotive News:
“We’re in a new era,” Lawrence says. “It’s not Frank Sinatra in 1965 with a gorgeous Cadillac — it’s the new-money guys. It’s the athletes. The guys in the entertainment business, the Wall Street people, the tech company people who are suddenly worth $300 million. They’ve suddenly made a lot of money, and they want to spend it suddenly.”
Lawrence calls the trend in the auction markets and the luxury retail segment “The Instagram Effect.”
It’s not enough to acquire an ultraexpensive car and leave it in your garage, he says. “You’ve got to put it on Instagram or Tweet it. Look at me. Here’s a selfie of me in my garage with my two new Lamborghinis.
“A new car culture is taking over,” Lawrence says. “And if I were planning models for the future, I’d be looking for ways to bottle it up. Have a more over-the-top option list. Don’t be afraid to make a car that’s expensive. There will be enough buyers for it.
Go over the top! People need to spend those dollars!
Reverse: Affectations Can Be Dangerous