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: VW Dealers Seek Reparations
It’s often hard to feel sorry for car dealers, but Volkswagen’s dealers in the U.S. are suffering hard under a shitstorm that was entirely not their fault. The company’s sales are tanking from the stigma of Dieselgate, and VW dealers can’t even sell their TDI models until a fix is found.
Dealers have lost a lot of money from this scandal, and they want the mothership to pay, Automotive News reports:
Three of VW’s U.S. dealers proposed the reparations during a meeting with senior VW AG executives in Germany last week about the company’s U.S. strategy.
Alan Brown, chairman of VW’s U.S. dealer council, attended the meeting and toldAutomotive News that it was too early to discuss the size of any settlement so soon after pitching the proposal.
VW executives at the meeting, including VW’s global brand chief, Herbert Diess, and Hinrich Woebcken, the VW brand’s new North America chief, did not commit to any reparations, Brown said.
“I encouraged Volkswagen to think of a strategy for how they’re going to approach the dealer network on franchise damages,” Brown said. “Obviously, that’s the pink elephant in the room.”
VW has about 650 dealers in the U.S. and they’ve lost some 20 percent of sales volume without the diesels. VW of America has wired tens of thousands of dollars to those dealers each month since the scandal hit, AN reports, but now dealers want more.
2nd Gear: BMW Plays Catch-Up
For years BMW was the “cool” upstart brand while Mercedes-Benz was staid and boring, AMG land-missiles aside. But these days Benz has moved ahead quite a bit, and BMW announced a strategy in Munich recently on how they plan to catch up: a new X7 mega-SUV, a luxury flagship above even the 7 Series, and more M models.
But that fell a bit flat, Automotive News reports. For example, why do we have to wait until 2021 or 2022 for the next i-car?
As for BMW, its strategy day last week was not only long on buzzwords and short on details, key planks seemed to borrow heavily from its competitor. All the way down to the Maultaschen served at lunch — a specialty harking from Mercedes’ home of Swabia — it felt like an homage to BMW’s archrival.
After months of work, BMW’s new chief executive, Harald Krueger, presented his plans to lead the world’s largest premium carmaker into the next decade — its first new strategy since 2007 and perhaps its most critical given the tectonic shifts facing the industry.
[...] Now, Mercedes is on a roll. The brand’s worldwide volume grew 16 percent in the first two months to roughly 284,600 vehicles, thanks in part to its BMW X1 rival, the Mercedes GLA crossover. By comparison, BMW sales rose 8.3 percent to 277,300 vehicles.
Last year, BMW brand sales increased 5.2 percent to 1.91 million, while Mercedes increased 13 percent to 1.87 million. Mercedes also bested its rivals in profitability last year, its operating margin expanding to 9.5 percent from 8 percent in 2014. BMW’s core auto business dropped to 9.2 percent from 9.6 percent in 2014.
How does BMW get ahead?
3rd Gear: Tesla Not Worried About Cheap Gas
EV and hybrid sales have suffered under super cheap gasoline as American buyers default to big SUVs and trucks. But that hasn’t been an issue for Tesla, which has technology, performance, and the “cool” factor on its side. Bloomberg doesn’t think cheap gas will be an issue for the Model 3 either.
But in the entry-level luxury market, cheap gasoline shouldn’t be much of an obstacle. The Model 3 will be one of the most affordable cars in the class, even before accounting for government incentives for purchasing electric cars and savings on gasoline. If the $35,000 Model 3 retains some of the performance and design thrills that have become Tesla’s trademark, gasoline savings will be just another perk for the brochure. We’ll soon know more.
The Model S sedan redefined electric cars for the American consumer. The car rockets from 0 to 60 miles per hour in as little as 2.6 seconds—faster than most of the world’s priciest supercars, including Lamborghinis, Ferraris, Porsches, and McLarens.
[...] There’s also the possibility that Tesla’s industry-leading autopilot features will be extended to the masses in the Model 3.
4th Gear: The Autobahn Is Crumbling Too
Hey, what does America have in common with Germany, besides an occasional penchant for fascist-leaning politicians? Shit infrastructure, it turns out. Via Bloomberg:
Germany has dropped to No. 7 in the World Economic Forum’s ranking of 140 nations on infrastructure, from third in 2013. About 15 percent of its 70,000 local bridges are deemed to be in “critical” condition and half are substandard, according to the German Institute of Urban Affairs, a publicly funded researcher in Berlin. With road conditions deteriorating, the number of traffic jams jumped 20 percent last year, to 568,000, according to ADAC, the national auto club. The government is underfunding the system by at least 10 billion euros ($11.3 billion) annually, said Marcel Fratzscher, president of the DIW Institute for Economic Research in Berlin.
“We can see the economic damage” from shoddy roads and bridges, Fratzscher said. “Companies say bad transport infrastructure makes Germany a less attractive place to invest.”
They’re still better than we are, but the bar for that is really low.
5th Gear: Crossovers Rule, Kill Me
What’s hot at the New York Auto Show this year? Crossovers and SUVs, just like how crossovers and SUVs were hot at the Detroit Auto Show too! Via The Detroit Free Press:
Whether it’s Maserati with the Levante — the first SUV ever built by the Italian brand — promising the finest leather and Italian silk for about $73,000, or a special blacked-out version of the GMC Terrain called Nightfall, there should be an SUV or crossover for everybody.
Buick is planning to reveal an updated version of the Encore, its most popular model, while Acura will reveal its redesigned MDX seven-passenger crossover, its most popular vehicle. And Japan’s No. 1 automaker won’t be left out of the SUV party. Toyota will reveal an update of its popular Highlander SUV with a new engine, transmission and a more aggressive grille.
Lincoln and Jeep also plan to reveal new crossovers or SUVs this week.
The plethora of crossovers and SUVs is driven by low gas prices as well as the good looks, functionality and improved fuel economy of vehicles automakers have been developing.
Neutral: Do VW Dealers Deserve Reparations?
Or is this just the cost of doing business sometimes?