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: GM Rides The Truck Wave And Holds The Line In China
Hooray for cheap gas! It means the Big Three American-ish automakers are able to bank hard with their bread and butter, trucks and SUVs. That includes General Motors, which posted a record 2015 pretax operating profit of $10.8 billion, according to Automotive News. That’s a huge jump from 2014.
Almost all of that profit came from North America, but GM was able to hold on in China even during a sharp market downturn there. Europe wasn’t so lucky:
The company’s International Operations division, which includes China as well as several Asian markets such as Korea and India, posted a 3 percent increase in pretax profit, to $408 million.
That unit would have lost money without China: GM’s fourth-quarter income from its joint-venture partnerships in China rose 12 percent to $572 million, despite shaky economic conditions during the quarter and a steep drop in China’s stock market. GM credited strong demand for its new crop of crossovers, including the Buick Envision.
GM lost $298 million in Europe during the quarter, vs. $393 million a year earlier. The results were hurt by a decline in market share related to the company’s wind-down of operations in Russia. European losses for the year narrowed to $813 million from $1.37 billion in 2014.
2nd Gear: Ford Cuts Jobs In Europe Despite Profit
Speaking of Europe, Ford is cutting scores of jobs in the region despite a strong 2015 profit. Why? It’s seeking “sustainable profitability,” according to Reuters:
Ford (F.N) plans to cut hundreds of white-collar jobs in Europe to reduce costs by $200 million a year and revamp its model line-up as it targets sustainable profitability in the region, the carmaker said on Wednesday.
The U.S. company turned a full-year profit of $259 million in Europe in 2015, its first since 2011, helped by a 10-percent gain in vehicle sales.
It will offer a voluntary redundancy scheme to its 10,300 salaried workers in Europe including severance pay and early retirement, Jim Farley, head of Ford Europe said in an interview on Wednesday, predicting hundreds of takers.
Ford and GM both continue to find ways to get their shit together in Europe, where certain areas continue to suffer with economic stagnation, a weak car market and high production costs. One analyst’s less-than-sunny outlook:
“The consensus on Europe is that it is a market where the auto industry has little hope of making any money, as it is beset with overcapacity, very high structural costs, and is populated by too many automakers all offering technically sophisticated and expensive-to-build vehicles,” Bernstein analyst Max Warburton said in a note last month.
3rd Gear: Kia’s Doing A Sporty Rear-Wheel Drive Sedan
Hey, here’s some neat news! In trying to be hip and young and fun, Kia’s building a car us Jalops might actually care about: a RWD sport sedan about the size of a BMW 4 Series. Once again from Reuters:
The four-door model plans to take on BMW’s 4 series (BMWG.DE) as well as the Audi A5 (BMWG.DE), and will feature 2.0-litre, 2.2-litre and 3.0-litre engine options, one person said, adding that it will be Kia’s second rear-wheel drive car.
[...] The new car, smaller than Hyundai’s mid-sized Genesis Coupe, would be the first compact sports sedan from either firm. It will be made at a Kia factory near Seoul after some production of the lower-margin Rio small car is shifted to Mexico early next year, the sources said.
But carving out its own sporty niche could be tricky for Kia with Hyundai also expected to launch a sports sedan and a new sports coupe under the Genesis brand. Hyundai is also believed to be working on high performance variants of some models from both the Genesis and Hyundai marques in effort led by Albert Biermann, former chief engineer for BMW’s “M” performance car brand.
Keep it affordable and fun, Kia! Maybe it can take the place of Scion, which is probably dead soon.
4th Gear: Scion’s Decline
“While some Scion products were more appealing, and more successful, than others, they were always limited in price and cost to draw in young buyers,” Karl Brauer, senior analyst with Kelley Blue Book said. “For many potential buyers this likely translated into seeing Scions as ‘lesser Toyotas,’ — not the best tagline.”
Since its inception, Scion has sold more than a million vehicles and 70 percent of Scions were purchased by customers new to Toyota and 50 percent were under 35 years old.
Last year, Scion sold 43,465 vehicles, a 25 percent decrease from a year ago. When it launched its iA and iM, executives said the brand was poised to reach the 100,000 sales mark by 2017.
RIP, I guess.
5th Gear: Toyota Out $21.9 Million Over ‘Discriminatory Lending’
Speaking of Toyota, the AP reports a settlement has been reached over their lending practices:
Toyota Motor Credit Corp. will pay $21.9 million to black and Asian borrowers as part of a settlement over alleged discriminatory lending.
The U.S. Department of Justice and the Consumer Financial Protection Bureau announced the settlement Tuesday.
A government investigation found that dealers were marking up interest rates on loans to minority buyers between 2011 and 2016. Under the settlement, Toyota will cap the amount dealers can mark up a loan.
Honda and Ally have reached similar agreements after being accused of lending to minorities at higher interest rates than white buyers.
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