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: The Volkswagen-Piëch Era Might Be Over
Porsche SE is the group through which the billionaire Porsche and Piëch families control 52.2 percent of the voting shares in Volkswagen (VW), which is still dealing with the effects of its diesel emissions scandal.
The families are in negotiations to buy a substantial part of Ferdinand Piëch’s 14.7 percent stake in Porsche SE, Porsche SE said in a statement on Friday, confirming a report by weekly magazine Der Spiegel.
The Porsche and Piëch families have a right of first refusal on Porsche shares held by Piëch, which are worth just over 1 billion euros ($1.1 billion) based on current market prices.
If this move goes through, it would mark the “end of an era” for Volkswagen. Under Piëch, Volkswagen grew to the enormous global presence that it is today. Audi evolved into a luxury brand and Lamborghini, Bugatti and Bentley joined the VW family.
In April 2015, we learned that there was actually a ton of internal drama leading up to Piëch’s resignation. After the Dieselgate scandal came to light, Piëch agreed with the VW board to support then-CEO Martin Winterkorn in the move forward. Behind the scenes, though, he was trying to get his family together to kick Winterkorn out and replace him with Matthias Müller.
VW’s work council and top shareholder Lower Saxony got wind of the plan and basically told Piëch that he could either resign or get voted out.
This share selling could be a good thing, though! The Reuters story notes that:
Piëch’s withdrawal may also raise investor hopes that the group can finally overcome what many analysts have dubbed a dysfunctional structure, which has seen the group hamstrung by the carmaker’s powerful labor unions and the state of Lower Saxony, which holds a blocking minority with its 20 percent stake.
“Should industrial investors step in, this could create double pressure for change from owners and investors,” said Dudenhoeffer. “For VW, it could be a chance, at last, to free itself from the strangling grip of the unions and Lower Saxony.”
2nd Gear: Trade Tensions
It’s actually quite expensive to buy an import car in China, which isn’t exactly helping trade tensions between the Chinese and American car markets. For example, a Jeep Wrangler can cost $30,000 more in China, reports The New York Times. This is mostly because of the taxes that Beijing puts on every car, minivan and SUV that’s produced abroad and imported to China:
Those taxes on imported cars have become a growing area of friction between the United States and China. American former officials and current advisers to President Trump say that concern about the widening United States deficit in automotive trade has become a pressing issue ahead of the president’s meeting in Florida next month with his Chinese counterpart, Xi Jinping.
Trade has been a domineering focus of the Trump administration. The Times story reports that President Donald Trump has said that “he wants a level playing field and similar terms on both sides.” Because of the high Chinese import taxes, less than five percent of the cars in China are imported, while in the U.S., 25 percent are imported.
On top of that, big Japanese, European and American carmakers have assembly factories in China. This helps them save money on transportation costs and keeps them “close to a vast Chinese supply chain.” And you don’t hear them complaining.
3rd Gear: Buy! More! BMW! SUVs!
Didja hear? Making cars costs money. So, in order to help fund its electric car initiative, BMW plans to achieve record sales this year (despite low recent profits), reports Reuters. How will it do it? By increasing SUV sales! HELL YEAH:
“The fully electric drivetrain will be integrated into our core brands,” Chief Executive Harald Krueger told a news conference on Tuesday.
BMW’s electric cars have until now been built on a separate, low-volume production line.
The group is targeting a slight rise in sales volume, revenues and group pretax profit this year, with a return on sales of 8 to 10 percent in the automotive segment, Krueger said.
You hear that everyone? Buy BMW SUVs like there’s no tomorrow and then—maybe—we’ll be able to create a new tomorrow for ourselves. Filled with fully electric BMWs.
4th Gear: Hard Deadlines
Speaking of EVs, Volkswagen has set some hard deadlines for itself regarding the sale of its electric cars. This is to achieve CO2 reduction targets in Europe and China, according to Automotive News Europe. The order will reportedly be as follows:
Volkswagen must have the first of its ID purpose-built electric cars on sale in 2020... VW plans to approve in August the design of the first vehicle, a Golf-sized hatchback based on the ID concept unveiled at the Paris auto show in October.
The second will be an SUV, planned for after 2020. A concept will debut at the Shanghai show next month. The third, a minibus with self-driving capability, was previewed by the ID Buzz at the Detroit auto show in January and is expected by 2022.
Can this be? The microbus? For real?
VW understands that this is a tight schedule, but it needs to meet those emissions targets, dammit!
5th Gear: NYC’s Yellow Taxis Aren’t Doing So Hot
Thanks to ride-sharing apps like Uber and Lyft, New York City’s yellow taxis aren’t doing as well as they used to. Ridership has dropped almost 30 percent in the past three years, reports Marketplace. And it’s not just the drivers who are hurt, either:
Qudratullah Saberry owns the cab he’s driving and its taxi medallion. He bought it for about $300,000 in 2012. Its value spiked and he borrowed against it. Now, with two kids to support — one in college — plus a mortgage, he said he’s not sure he’ll be able to make his loan payment this month.
Medallions are now selling for as little as $400,000, many in foreclosure sales, far less than their peak value. And a lot of medallion owners aren’t making enough money to pay back their loans.
“They’ve come to us asking for relief,” said Robert Familant, the CEO of Progressive Credit Union. Eighty-five percent of its loans involve taxi medallions. The credit union is allowing some borrowers to pay what they can afford for now. That’ll probably mean taking some losses. “But that’s the economics of our current circumstance, and that’s the best way to keep our members owning the medallions paying on their loans,” Familant said.
On one hand, this is just the free market system at work. On the other, it still sucks for these drivers all the same.
Reverse: A Legend Is Born
Neutral: Will Ride-Hailing Apps Really Kill The Taxi Business?
Uber’s got a ton of problems right now, but even if they go away—or more likely, get bought by some company that will sort their shit out—someone or something will take their place. What does that mean for taxi services?