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: A Smart Move
As we reported last night, Fiat Chrysler is making a big shift toward trucks and SUVs, their main profit generator in 2015, on the assumption that cheap gas prices are permanent. I think that is insane.
What isn’t insane is that people aren’t buying small cars right now, and one reason for that is crossovers have become vastly more fuel efficient than they were even a few years ago. And despite the fact that the Chrysler 200 was the result of a huge investment by the company, it and the Dodge Dart just aren’t selling. So they’re on the way out eventually, reports The Detroit News, to make room for crossovers, trucks and SUVs:
The shift, according to Fiat Chrysler CEO Sergio Marchionne, is due to changing tastes of buyers, who favor pickups, crossovers and SUVs. The company plans to use freed-up plant capacity to build more Ram Truck pickups and Jeeps.
“There has been, in our view, a permanent shift toward (utility vehicles) and pickup trucks,” Marchionne said Wednesday when announcing changes to the company’s 2014-18 business plan. “So one of the things that we’ve decided to do is to essentially de-focus, from a manufacturing standpoint in the U.S. … the passenger car market.”
He said the cars “will run their course” for the company to “withdraw the current 200 and Dodge Dart from the marketplace over a prolonged period of time.”
I do think this is a smart move. Gas won’t stay cheap forever, but the non-luxury sedan is dying. It’s a compromised body style and people prefer the ride height, practicality and pretense of utility they get with crossovers. The RAV4 and CR-V are rapidly catching up to the Camry and Accord these days. The sedan’s days are numbered.
To fill the gaps in the lineup, Chrysler will probably outsource with another automaker, the News reports. More re-badged Mazdas, anyone? They could do a lot worse.
2nd Gear: Ford Makes The Money
Fiat Chrysler isn’t the only car company to make serious bank in 2015 over truck sales thanks to low gas prices. Automotive News reports Ford’s net income was up five times in 2015 over the previous year to to $7.4 billion, especially after a big boost in Q4.
The company earned a fourth-quarter record of $2 billion in North America and its first full-year profit in Europe since 2011. UAW workers will get their largest profit-sharing bonuses ever, averaging $9,300.
Before taxes, Ford earned a profit of $10.8 billion, a company record. It reaffirmed its expectation to match or beat that result this year.
“We promised a breakthrough year in 2015, and we delivered,” Ford CEO Mark Fields said in a statement. “In 2016, we will continue to build on our strengths and accelerate our pace of progress even further, while transforming Ford into both an auto and a mobility company and creating value for all of our stakeholders.”
The company beat Wall Street expectations too.
3rd Gear: You’re A Loose Cannon, Cooper
After the plaintiffs in the first General Motors ignition switch bellwether lawsuit withdrew amid fraud allegations, other attorneys are seeking to have that case’s lead attorney removed from the case. According to Bloomberg’s reports, here is the latest reason why:
A settlement fund for the benefit of more than 1,000 General Motors customers who sued over faulty ignition switches should be re-examined by a judge because the lawyer who negotiated it had a conflict of interest, another plaintiff attorney involved in the cases alleged.
Robert Hilliard may have cut a deal with GM that limits the carmaker’s financial risk at a series of bellwether trials over the defect, according to a filing by Lance Cooper, a Georgia lawyer who represents a number of plaintiffs whose claims are part of the consolidated case in Manhattan federal court.
Cooper previously asked a Manhattan federal judge to remove Hilliard and the two other co-lead lawyers after the first of six so-called bellwether cases went sour on them. In Wednesday’s filing, Cooper urges the judge to reconsider his approval of a settlement fund for more than 1,000 of Hilliard’s clients.
“This latest unsupportable filing by Mr. Cooper satisfies me that he has comfortably settled in to his self-appointed role as official loose cannon to this litigation,” Hilliard said in an e-mail. “His ‘sky is falling’ approach, though unprofessional and self-demeaning, will be addressed in our response.”
This case, man. What a bunch of headaches.
4th Gear: Is Iran Opening Up To Western Cars?
With sanctions being lifted against Iran on the heels of the nuclear deal, Western businesses—especially automakers—are looking to make inroads into the country. Iranian President Hassan Rouhani and his ministers are visiting Paris, so here’s what the French automakers are aiming for, via Reuters:
Four business arrangements were flagged by France’s main industry body Medef, including a joint venture between PSA Peugeot Citroen (PEUP.PA) and Iran Khodro, and plans for Iran to buy over 100 Airbus (AIR.PA) passenger planes to update its aging fleet.
[...] For Peugeot, the Iranian factory tie up is critical. When it suspended sales in Iran in 2012 it lost nearly 10 percent of global deliveries and interrupted a relationship with the country that dates back more than 50 years.
Under Thursday’s deal, set to be finalised in the middle of this year, Peugeot and Iran Khodro plan to modernize a factory near Tehran and be producing cars by mid 2017.
They target an initial 200,000 vehicles a year making Peugeot 208, 2008 and 301 models with a Peugeot investment of 400 million euros ($436 million) over five years.
5th Gear: Automatic Braking Works Really Well
Automatic braking systems, which detect an imminent front collision and apply the brakes for the driver in emergency situations, will eventually be standard equipment on all new cars. That’s because, according to IIHS data reported by Automotive News, they are very effective in crash reduction:
Automatic braking systems were shown in a new study to reduce rear-end crashes by about 40 percent on average, handing added momentum to a push by safety groups, regulators and some automakers to equip all new cars with the technology.
The study by the Insurance Institute for Highway Safety found that vehicles with both automatic braking and forward collision warning systems had a 39 percent lower incidence of rear-end crashes. Forward collision warning systems alone reduced rear-end collisions by 23 percent, the study found.
The combination of crash-prevention technologies cut the incidence of rear-end crashes involving injuries by 42 percent, but the study’s authors found that collision warning alone had little effect in reducing injury accidents.
Reverse: Shuttin’ Down Detroit