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: That Was Kind Of A Mess Anyway
There are plenty of eyebrow-raising things in President Trump’s dramatically more austere proposed budget, even if it’s unlikely to pass in its current form. But in the world of cars, one thing it kills off—deservedly so, probably—is the Advanced Technology Vehicle Manufacturing loan program, which gave “green loans” that helped modernize Ford and save Tesla from extinction, but also funded losers like Fisker. We wrote about this program extensively back in the day and to say it was a mixed bag was quite charitable. The money still exists, but new loans haven’t been funded in six years.
The White House would also eliminate a U.S. Energy Department clean vehicle loan program that boosted Tesla Inc., Nissan Motor Co. and Ford Motor Co. during the last industry downturn, but has not funded a new project in six years.
The program was first funded in 2008 and used to help provide critical liquidity to some automakers.
The $25 billion Advanced Technology Vehicle Manufacturing loan program made low-cost loans to Ford ($5.9 billion in 2009), Nissan ($1.45 billion in 2010) and Tesla ($465 million in 2010). It last completed a loan in March 2011.
The program backed two losers. Startup automaker Fisker Automotive Inc. and Michigan-based Vehicle Program Group shut down despite government support. Taxpayers lost $139 million on loans to Fisker and the Vehicle Program Group, which planned to build wheelchair-accessible vehicles.
I never thought ATVM was a bad idea in principle, especially because I don’t believe the auto market should be entirely closed off to ambitious new players—especially ones who were big on sustainable energy—but it clearly had trouble picking winners. Fisker wasn’t even a U.S. company! The cars were built in Finland!
2nd Gear: How Things Work
Speaking of Trump, we’ve written extensively about how the new president, with his “America First” everything and frequent targeting of car companies, doesn’t seem to get how globalized the auto industry is or how much “foreign” car companies produce domestically. Or how many parts are sourced from other markets. Or how tariffs probably mean automakers will stop making some cars entirely rather than pay to shift production here. Anyway!
Trump is set to meet with German Chancellor Angela Merkel next week at the White House, and joining them is BMW CEO Harald Krueger, who Reuters reports hopes to instill in the new president just how interconnected everything is:
Faced with Trump’s “America First” policy and threats to impose tariffs on imported goods, Krueger and the heads of supplier Schaeffler and industrial giant Siemens are expected to stress how many U.S. jobs are tied to “Deutschland AG.”
BMW’s South Carolina plant is its largest factory in the world. The carmaker is expanding the plant to have the capacity to build 450,000 vehicles annually, with 70 percent for export.
Germany’s $54 billion trade surplus with the U.S. has been a source of tension between Washington and Berlin.
Trump has warned that the U.S. will impose a border tax of 35 percent on cars that BMW plans to build at a new plant in Mexico and export to the U.S. market. BMW expects to invest $2.2 billion in Mexico by 2019. Mexico’s lower labor costs and unique free trade position mean it now accounts for a fifth of all vehicle production in North America.
As I’ve said before, surely the elected representatives in states with automakers like BMW, Hyundai, Toyota and the rest realize this too and are prepared to fight these tariffs.
3rd Gear: Buick And Lexus Reign Again
What service departments are owners most happy with? According to a new J.D. Power survey, it’s Buick and Lexus, again. Via Automotive News:
Buick lifted its score to 860 on a 1,000-point scale in the 2017 U.S. Customer Service Index Study, released today. (See tables below.) It marked Buick’s third title in four years among mass-market brands and helped keep parent General Motors a top performer in the annual study.
Lexus returned to No. 1 for luxury brands after a three-year absence. Before that, Toyota’s luxury brand had a five-year win streak. Lexus’ CSI score was 874, up five points from a year earlier.
The results marked the seventh time in the last eight years that the overall industry score rose, with the only drop occurring in 2015. In the latest survey, J.D. Power pointed to improvements in overall service quality and the performance of service advisers while noting that franchised dealers’ service departments far exceeded the ratings of independent service shops.
I’d be satisfied with that new Regal wagon, that’s for damn sure.
4th Gear: Someone Buy This Fucking Car Company
Fiat Chrysler boss Sergio Marchionne is desperate to merge with someone, anyone, at this point, in order to bring their skyrocketing costs and debt down. General Motors wasn’t interested, and when Volkswagen seemed at least inclined to talk, he backed off immediately. Over at The Detroit News, this story points out why a VW/FCA merger could make sense, but also why FCA has no takers in the game:
Executing the theory of the deal is far harder than conceiving it, as old Chrysler hands can attest. They lived the mendaciously named Daimler-Chrysler “merger of equals,” its peddling to the New York sharpies from Cerberus Capital Management LP, the collapse into bankruptcy and its rescue by the feds and Marchionne.
Creating and holding value has proven more difficult than architects of those deals probably ever imagined — lessons not lost in the c-suites occupied by the likes of Barra and Ghosn, Mueller and Ford Motor Co. CEO Mark Fields.
If you’re looking for reasons the industry brass isn’t keen to buy what Marchionne keeps trying to sell, the past 20 years of Chrysler history would be a decent place to start.
5th Gear: Who Even Knows
When will cars become fully self-driving? See, no one agrees on that. Not the automakers, the tech companies, the suppliers, the regulators, and even within those groups opinions diverge. Your guess is as good as mine. Via Reuters:
Automakers and suppliers gave widely differing timelines for the introduction of self-driving vehicles on Thursday, showing the uncertainties surrounding the technology as well as a split between cautious established players and bullish new entrants.
Chipmaker Nvidia, facing direct competition with the world’s top chipmaker after Intel’s $15 billion deal to buy autonomous driving technology firm Mobileye this week, gave the most optimistic predictions.
[...] Germany’s Bosch, however, the world’s biggest automotive supplier, gave a timetable as much as six years longer to get to the final stage before fully autonomous vehicles, and declined even to forecast when a totally self-driving car might take to the streets.
Reverse: Speaking Of Daimler