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: So Many New Cars And Trucks
Throughout 2016, analysts predicted an overall drop in new car sales compared to 2015's record 17.47 million cars, citing an end to all that pent-up post-recession demand and a “plateauing” market. But! It turns out America needed more cars, couldn’t get enough cars. And on the strength of end-of-year deals and incentives in December, we ended up at about 17.54 million in 2016. That is a lot of cars.
Here’s some of the data from Automotive News:
The December results among major automakers topped many forecasts. GM sales were predicted to rise 4.4 percent, based on the average analyst estimate compiled by Bloomberg. Deliveries at Fiat Chrysler, which has discontinued compact and midsize sedans, were projected to drop 14 percent. Volumes at Ford, Toyota, Honda and Nissan were all forecast to slip less than 3 percent.
Among other brands, Infiniti, Kia, Land Rover, Mercedes-Benz, Hyundai, Subaru, Audi and Porsche also set annual U.S. sales records in 2016.
Light trucks, led by crossovers, continue to drive the market and accounted for a record 60.7 percent of all light-vehicle deliveries in 2016. For the year, car demand skidded 8.9 percent while light-truck deliveries advanced 7.4 percent.
“Key economic indicators, especially consumer confidence, continue to reflect optimism about the U.S. economy and strong customer demand continues to drive a very healthy U.S. auto industry,” Mustafa Mohatarem, GM’s chief economist, said today. “We believe the U.S. auto industry remains well-positioned for sales to continue at or near record levels in 2017.”
How many more new cars can we possibly buy?
2nd Gear: But Why?
Also over at Automotive News, a breakdown of how and why sales were so strong in 2016. Among other reasons:
Lots of automakers, brands and even models were close enough to rivals, or to internal goals, to warrant year-end sales pushes: Toyota and Chevrolet for No. 2 U.S. brand; Mercedes, Lexus and BMW for top U.S. luxury brand; and Camry, Corolla, Civic and Accord for top-selling car.
Some brands mounted December sales drives to reduce their overall losses for the year: notably Toyota, Chevrolet and Volkswagen.
Fleet sales rose more than retail.
Americans swung big time to light trucks, which surged 7.4 percent last year, which was more than enough to offset an 8.9 percent swoon in passenger cars.
Throw in cheap fuel, low interest rates, easily available credit, a late-year surge in U.S. equity markets to improve buyers’ moods and a surge of attractive new models on the market, and it added up to a new volume record.
Again, it will be interesting to see what happens this year, but you know automakers will try for another record.
3rd Gear: More Dieselgate Lawsuits Coming
This time from investors. It never ends. Via Reuters:
Volkswagen AG (VOWG_p.DE) and former Chief Executive Officer Martin Winterkorn must defend an investor lawsuit in California over the company’s diesel emissions cheating scandal, a U.S. judge has ruled.
The plaintiffs, mostly U.S. municipal pension funds, have accused VW of not having informed the market in a timely fashion about the issue as well as understating possible financial liabilities, according to the 41-court document seen by Reuters.
The pension funds include those representing Arkansas State Highway Employees and Miami Police. The lawsuits said VW’s market capitalization fell by $63 billion after the diesel cheating scandal became public in September 2015.
4th Gear: You People Are So Damn Boring
All the new cars are gray! Or silver! Or white! DuPont’s former automotive division, now its own company, is betting big on gray this year. From The Detroit Free Press:
This is the third year that Axalta, which was DuPont’s automotive division until 2013, has picked a color of the year. The company selected gallant gray after studying global preferences and using that data to pick a color that, in part, is a prediction of future trends.
“Color is starting to come back, but for right now, gray is the new silver,” said Nancy Lockhart, Axalta’s global color marketing manager.
In recent years white has been the most popular car color worldwide, followed by black and silver. Silver — a color that became chic in the early 2000s for both cars and high-tech gadgets — was the most popular color for many years.
“Gray is the new silver.” I’m dead inside.
5th Gear: People Don’t Realize How Global The Auto Industry Is
I mentioned this in yesterday’s Morning Shift too, but The Detroit News’ Daniel Howes elaborates on how “Build Cars in America”, which is what President-elect Donald Trump is demanding, is more complicated now than it’s ever been—and more than most people who don’t know the car business probably realize.
Team Trump has its work cut out for it. Its Build America campaign adds a costly footnote to the industry mantra “build where you sell”: if you don’t, the whole process risks becoming a lot more expensive until you do.
In theory, anyway. That’s before the new boss trains his Twitter account on foreigners importing foreign-built vehicles for sale to unsuspecting Americans who just want to drive what they want to drive. Even he might find the complexity mildly exhausting.
Cases in point: Toyota Motor Corp.’s new compact SUV, the CHR, hails from a plant in Turkey. Audi AG’s Q5 SUV comes from Mexico, as do Volkswagen-brand vehicles Jetta, Golf and Beetle. With the exception of GM’s Chevy Sonic, all subcompacts sold to U.S. consumers come from foreign assembly plants.
Germany’s Daimler AG and Renault-Nissan are following rival Audi to Mexico in a partnership to build luxury Mercedes-Benz and Infiniti vehicles there. GM and FCA are expanding production there, joining a list of global players increasingly choosing Mexico over the American South for assembly sites.
Factoring all that in, plus automation, and you get a recipe that’s tough for good-paying U.S. manufacturing jobs.
Reverse: Golden Gate
Neutral: Are You Buying A New Car In 2017?
What’s on the menu for you?