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: How Does BMW Go Electric?
Tesla may have a long way to go before it’s profitable and poised for secure long-term success, but it has shaken up the way the auto industry looks at electric cars. Now Mercedes-Benz and the Volkswagen Group’s brands are planning to go electric in big ways. Where does that leave the other German automaker, BMW?
The i3 and i8 are undoubtedly impressive cars; I’ve driven both quite a bit and I’m a fan. But their considerable hype has faded since launch, and sales have been relatively slow for the i3. What’s more, we’ve heard the i division is shifting away from electrified cars to focus on autonomous vehicles.
Now Reuters reports many of BMW’s executives are skipping the upcoming Paris Motor Show to hammer out an electric strategy.
Norbert Reithofer championed the i3 project while chief executive of the Munich-based carmaker and, in his new role as chairman, is keeping up pressure on new CEO Harald Krueger and BMW management to expand the company’s electric program.
But some other senior executives are unwilling to plough more resources into electric cars until i3 sales improve and there is a clearer business case for such investment, according to one of the four sources, who declined to be named because of the confidential nature of the discussions.
Most of BMW’s eight-strong management board - including the CEO and chief financial officer - traditionally attend the closed-door press and executive days of the biennial Paris Motor Show for one of the biggest industry gatherings of the calendar.
But this year only Ian Robertson, board member for sales and marketing, will be at the show, while the rest will instead attend a company strategy meeting at the end of September, according to the sources. Board members will attempt to reach agreement on the carmaker’s electric car strategy, including whether to build an electric Mini, said the sources.
There’s a lot to this story and it’s worth a read in full. It says some managers want to have an electric Mini ready for 2019, but others fear Mini’s lower sticker prices won’t justify the investment. BMW is also working on an electric crossover, which should do well to compete with Audi, Tesla and others.
2nd Gear: More Volkswagen Indictments May Be On The Way
On Friday the U.S. Justice Department announced that not only had a Volkswagen employee been indicted as a result of Dieselgate, he pled guilty to the fraud charge as well. James Robert Liang, a German national, may not be the only person to get indicted in this case, reports The Detroit News:
Federal prosecutors in Detroit declined to comment on whether other VW employees will be charged or indicted. However, Liang’s cooperation with the ongoing investigation likely indicates “co-conspirators” referenced in the documents could be charged.
“This is important because he’s admitting to a conspiracy, and of course you have to have someone else with you conspire,” said Peter Henning, a Wayne State University law professor and former federal prosecutor. “The interesting question is who in Germany can he identify and testify against.”
[...] Henning said Liang can give prosecutors “a road map” of who was involved in the scandal. The Justice Department last year implemented new guidelines that call for linking individual accountability as part of corporate investigations.
Who’s next?
3rd Gear: The Dodge Dart Was Half-Assed From Day One
Over at Automotive News, Larry Vellequette pens a sad retrospective on the failed Dodge Dart and how it was poorly executed at almost every stage of its existence.
The Dart, he reports, was built on an aged Alfa Romeo platform, created to satisfy the bailout requirement for a 40 MPG U.S.-built car, launched only with a manual gearbox, had super thin profit margins, sold very slowly, and was supposed to spawn five more platform-mates than it eventually did with the Chrysler 200 and Jeep Cherokee.
And when it did get an available dual-dry clutch gearbox, it wasn’t what Americans wanted, even though Sergio Marchionne wanted to teach us all a lesson:
A year after the Dart’s glitzy introduction, Marchionne took the blame for its slow start. It had gone “not as well as I wanted,” he said, saying that the available powertrains were “not the ideal solutions for that car and that segment.”
The dual-dry clutch transmission, popular in Europe, had gone over particularly badly with consumers because it didn’t behave the way drivers expected.
“I decided I was going to put a European transmission into the car because I was going to try to teach Americans how to get [better] fuel mileage,” Marchionne admitted.
Huh.
Now Fiat Chrysler is back to doing what it does best: building gas-guzzling pickup trucks and Jeeps and praying that cheap gasoline lasts forever.
4th Gear: Or They’re Poised For Success
On the other hand, even if the Dart had been some kind of gloriously amazing machine, it likely wouldn’t have done well against current sales trends that favor crossovers, trucks and SUVs. Here’s The Detroit Free Press on why this could set Fiat Chrysler up for long-term success:
Sales of midsize cars have fallen steadily since 2012, but the slide became precipitous this year. They’re on target to fall from 2.4 million last year to 2.2 million this year. That’s roughly the loss of demand for the production of one entire assembly plant in 12 months, and they ain’t comin’ back. Meanwhile, sales of compact and subcompact SUVs have grown from about 1.3 million in 2010 to 3.2 million last year. Compact SUVs replaced midsize cars as the best-selling market segment for the first time in 2014 and they’re 41% ahead of the sedans through August this year, according to Kelley Blue Book.
[...] Fiat Chrysler’s strategic direction illustrates the trend. It’s practically getting out of the car business to concentrate on SUVs. Over the next few months, FCA will stop building the compact Dart and midsize 200 and add a new version of the compact Jeep Compass. We haven’t seen the new Compass yet, but FCA has been very successful with other Jeeps it’s developed.
Again, as long as gas stays cheap.
5th Gear: Your SUV Game Determines Your Success
From that same story, an assessment of other automakers and how their SUV game—or lack thereof—determines how they’re poised to fare in the market moving forward:
Toyota’s SUV lineup is thin and aging, but the compact RAV4 is having a great year. Sales are up 15%. It outsold the Camry midsize sedan for the first time in August. A new RAV4 is expected next year. It could replace the Camry as Toyota’s top-seller for good by 2018. Less promising, a replacement for the larger Highlander is probably two years off, and Toyota has no clear play in the fast-growing subcompact SUV segment. The Toyota C-HR subcompact due later this year is a marginal player, originally intended for Scion, the brand Toyota killed this year. Its quirky looks and small size presage equally small sales.
Honda may be better positioned than Toyota. The subcompact HR-V is a year old and selling strongly. A new version of the compact CR-V should put a charge into sales when it arrives late this year. Honda’s large Pilot SUV is struggling, though, with sales off 7.8% in this, just its second year on the market.
Hyundai and Kia have suffered from an over reliance on cars as buyers increasingly turned to SUVs. They’re adding more SUVs, but may pay a price for being late.
“It’s not good to be last to a trend,” IHS Automotive senior analyst Stephanie Brinley said. “The big, easy volume gains will be over as the growth of the market slows.”
Reverse: Floating Bridge
Neutral: What Should BMW Do With Electric Cars?
What’s the model to follow here?