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: Demographics
Small and medium-sized crossover sales are killing the sedan market, and a big part of that is younger female buyers—often ones without families.
Women have made most of the car-buying decisions for the past few years, and this growing market is the one that’s blowing up the most. From Bloomberg:
From 2010 to 2015, mainstream small SUV sales to women rose 34 percent, compared with a 22 percent rise for men, according to research firm MaritzCX. In the same period, premium small SUVs, though smaller in raw numbers, saw 177 percent growth in sales to women. And among female vehicle buyers overall, a full 40 percent aren’t married.
[...] Increasing income and education as well as a general delay in marriage and child-bearing combine to create a growing number of single women buying cars, Mulcrone said. More than two-thirds of female buyers reported their 2015 purchase decision as “entirely up to me,” and the appeal of SUVs, with ample cargo room and improving fuel economy, is widespread.
Those trends are compelling to automakers, whose SUVs and other light trucks are outstripping sedan and coupe sales even as May deliveries announced Wednesday are projected to decline for all of the largest names, attributable to having one fewer weekend compared with last May, according to a Bloomberg survey.
And yet the story leads with an anecdote about salespeople who only talks to the buyer’s boyfriend. When are car dealers going to get it?
2nd Gear: Volkswagen Somehow Made A Q1 Profit Despite Dieselgate
Surprise! Despite a record loss last year, the Volkswagen Group eked out a Q1 operating profit increase, albeit a small one, reports Reuters:
Operating profit rose to 3.4 billion euros ($3.8 billion) from 3.3 billion a year earlier, including 300 million euros of “currency-related adjustments” to provisions for the emissions crisis, VW said on Tuesday.
Even excluding the special items, profit came in at the high-end forecast of 3.15 billion euros in a Reuters poll of analysts. The poll’s consensus forecast was for underlying earnings to plunge 17 percent to 2.75 billion euros.
“Safeguarding the Volkswagen Group’s robust financial strength for the long term remains a top priority in light of the expected effects of the diesel issue,” finance chief Frank Witter said in a statement.
A deal with U.S. regulators to fix the cheating diesel cars is coming next month, which is what I feel like we were saying in April, and in February, and in November...
3rd Gear: Thank Porsche And Audi For That
From that same story, part of the reason the VW Group is holding steady is flat-but-decent sales at Audi and surging sales at Porsche.
Once again, the luxury brands are propping everybody up:
Group results at the 12-brand company were supported by broadly flat sales at flagship luxury brand Audi and a big rise in both sales and profits at sports car maker Porsche.
Higher demand in western Europe and the Asia-Pacific also helped to offset declines in South America and eastern Europe.
However, Volkswagen reported a 25 percent plunge in operating profit at its two Chinese joint ventures - which are not included in quarterly results.
Analysts have said heightened competition in China has led the company to step up incentives for buyers ahead of the expiry of tax breaks for smaller cars at the end of this year.
4th Gear: Takata Says It Won’t Pursue Bankruptcy
Takata, maker of all the airbags that need to be recalled, ruled out bankruptcy as a way of managing its liabilities in the wake of the scandal, reports The Detroit News:
Lazard Ltd., Takata’s financial adviser, will meet manufacturers as well as financial firms with the aim to find buyers by the fall, according to the person, who asked not to be named because the discussions are private.Takata’s plan is to remain listed and maintain its core seat-belt, air-bag and steering-wheel businesses, while selling off non-core operations, the person said.Takata spokeswoman Akiko Watanabe declined to comment.
Any Takata suitor will be betting it can still make a return even after resolving claims from automakers, which until now have shouldered the vast majority of the costs of replacing air bags tied to the auto industry’s unprecedented safety crisis. Recalls of the devices, which can deploy with too much force and spray metal and plastic at passengers, are expanding by as much as 40 million units in the U.S., after 13 fatalities worldwide.
5th Gear: Jaguar Land Rover Is A Success For Tata (Duh)
Years ago when India’s Tata Motors bought Jaguar Land Rover, critics and market analysts called it crazy, an experiment doomed to fail. So how’d that turn out?
Wrong on almost every count. Jaguar Land Rover now accounts for more than half of Tata Motors’ unit sales, overtaking the trucks and passenger cars produced by Tata Motors India in the past two quarters, according to annual results released Monday.
Helped by a weakening rupee, Jaguar Land Rover’s British-pound-denominated sales have risen more than fivefold since the takeover to 2.24 trillion rupees ($33.3 billion) in the year through March, according to data compiled by Bloomberg. Tata Motors India’s are up a relatively modest 74 percent.
Jaguar Land Rover is also more profitable, even after one-time costs of 224 million pounds ($329 million) during the fourth quarter related to Takata’s airbags recall and damage from the 2015 Tianjin chemicals explosions. Operating margins averaged 11 percent over the past five years, versus 1 percent in the domestic business.
It brought us the F-Type, so at least I’m happy.
Reverse: Any Color You Want As Long As It’s Red
Neutral: How Can Dealers Get Better About Selling To Women?
Every woman I know, including my wife, has a shitty car buying story that’s somehow directly tied to them being a woman and thus being treated differently than a male buyer. Some dealers get it right, of course, but if women are driving car sales this much how can they all get their shit together?