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: Dealers Have No Love For Nissan
As Nissan aggressively pursued market share in a bid to replace Honda as the U.S.’ no. 2 import carmaker, Automotive News reports the company has repeated alienated a key player in that process: its dealers.
Those dealers are constantly being threatened with termination and, according to one lawsuit, not being fair with incentive programs.
Dealers who hold Nissan and other franchises say that by being confrontational rather than collaborative, Nissan has become the hardest automaker to work with. Nissan North America, they say, sets unrealistic sales targets for Nissan dealers and regularly issues letters of default or even termination notices to those dealers who miss objectives.
“My team is so demoralized on the Nissan side, no one wants to work for my Nissan brand,” said a dealer who spoke on the condition of anonymity.
Across town at that very moment, broker Alan Haig, president of Haig Partners, was addressing an audience of retail executives at the Automotive News Retail Forum. He, too, painted Nissan as a troublesome brand.
“Nissan is one where there is a division of opinion,” Haig said. “You’re either in their camp, and they love you, and you can make a lot of money on Nissan stores. Or they’re not happy with you, or you’re not happy with them, and you have to get out because life is not going to be pleasant for you.”
And from one former dealer:
He had owned his Nissan store for more than a decade, often selling more than 1,000 new vehicles a year. Then Nissan added two points to his market area. That diluted his sales, he claimed, bringing them down to about 600 new vehicles a year. But Nissan did not lower the sales target it required him to hit to earn factory incentives, he said.
The former Nissan dealer told Automotive News that he decided he had had “enough brain damage” from Nissan, and last year he sold the store.
2nd Gear: What Fiat Chrysler Needs To Say
Automotive News’ Larry Vellequette puts Fiat Chrysler on blast with this commentary on Fiat Chrysler’s current state of affairs, which shows CEO Sergio Marchionne dumping the Dart and 200 after a substantial investment and appearing desperate for a merger—all after employees worked their asses off to save the company following the bailout.
The CEO declares in April 2015 that nope, he’s looked at it closely, and it’s not going to work. In essence, thanks, but he can’t make enough money here. The business is in a state of “mediocrity.” Not worth the effort. Forget those plans. Your faith is shaken.
Later, he abandons two huge projects — cars built on the very platform he brought to the table in 2009. That $1 billion invested in Sterling Heights three years ago? It’s going to be almost useless before long.
You look around. Your colleagues who left for competitors are making more money. Their careers look secure. You, on the other hand, see products delayed or abandoned altogether.
You watch as the CEO raises wholesale prices without increasing sticker prices, angering the dealers who make the sales that keep you working. You also see the CEO gird up to mount what looks like a hostile takeover of GM — only to sheepishly recant months later as he name drops other automakers who, at least publicly, have no interest at all.
That’s worth a read in full.
3rd Gear: Ford’s Good, Thanks
Speaking of Sergio and his desire for mergers, Ford’s Mark Fields says they’re not interested. Via Reuters:
Ford Motor Co (F.N) is not interested in a tie-up with Fiat Chrysler Automobiles NV (FCHA.MI), Chief Executive Mark Fields said on Saturday, when asked about FCA head Sergio Marchionne’s remark that Ford could be a potential merger candidate.
“I can’t speak to what Sergio or others wake up and want to say,” Fields told reporters ahead of next week’s Beijing motor show.
I dunno, Volkswagen seems to have enough problems on their own at the moment.
4th Gear: Regulators Stepping Up Their Game
At the Beijing Auto Show, which is going on all week, Fields also said that thanks to VW’s diesel cheating, regulators across the world are getting tougher and tougher. That includes China, which is besieged by some of the worst air pollution anywhere. Via Bloomberg:
“The regulatory environment around the world is becoming more and more strict, particularly on things like greenhouse gases and fuel economy,” Fields told reporters Saturday in Beijing, ahead of China’s biggest auto show that opens next week. Going by the rules that are being proposed, China will be the toughest regulatory regime over the next five years “given some of the societal factors around air pollution,” he said.
5th Gear: China’s Dealers Face A Crunch
Despite the downturn that started last year, China’s once-booming car market is slowly recovering. But car dealers are ubiquitous over there and compete heavily on pricing, which means few of them are actually profita
One more from Bloomberg:
Three-in-four dealers were either unprofitable last year or just breaking even, according to the China Automobile Dealers Association. With little sign of improvement in the economy and carmakers pushing too much inventory onto their ever-growing networks of retailers, the situation may worsen this year, said Zhu Kongyuan, secretary general of the China Auto Dealers Chamber of Commerce.
“It’s getting more and more difficult for dealers to stay in business, as new car sales are not making much profit anymore with all the competition on price,” said Zhou Jincheng, an analyst at researcher Fourin Inc. in Nagoya, Japan. “Under this situation, dealerships won’t stay as they are. They’ll be reorganized, and some may be integrated.”
China’s auto industry operates in a Gold Rush-like atmosphere. Manufacturers have raced to fill their lineups and expand their dealer networks to stake their claim of a market that’s grown six-fold in the last decade.