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: Why Some Automakers Are Skipping The Frankfurt Motor Show
Nine major bands are skipping the Frankfurt Motor Show next month, including Fiat, Alfa Romeo, DS, Infiniti, Jeep, Mitsubishi, Nissan, Peugeot and Volvo, Automotive News Europe reports.
The moves come as automakers begin to shift more towards private events and “more diverse interactive showcases” like the Goodwood Festival of Speed. The news site says automakers are having a tougher time justifying the expense of major auto shows like Frankfurt, citing a principal analyst for IHS Markit, Ian Fletcher, who says:
I would question what the translation rate is between attendance on public days to transactions — I bet most customers now are happier to do research online.
Major auto shows tend to be “hands-off” in nature, and held in crowded convention centers. Outdoor events like the Goodwood Festival of Speed, Automotive News Europe says, are more entertaining, and tend to give automakers great opportunities to share content on social media.
On top of that, many automakers are just holding their own private events; Jaguar has the Art of Performance Tour, Ford has Go Further events, and Audi held its own event in Barcelona to launch hits A8, with an Auto spokesperson saying the event “cuts out the noise of an auto show.”
That later quote is another important reason why Automotive News Europe suspects brands are opting out of car shows: it’s too easy to get lost in the huge crowd of carmakers. Especially if you’re not a German brand at Frankfurt, where VW, BMW and Daimler displays traditionally dominate.
2nd Gear: Car Stocks Are Cheap, But The Future Is Cloudy
Auto industry valuations are low thanks, in part, to the fact that car sales have plateaued. But if you think that means it’s a great time to invest, The Wall Street Journal says you might want to think again. Not only could a downturn like that of 2009 still wipe out carmakers earnings like it did to GM’s and Chrysler’s, but the news site says “the future path of profits is clouded by technological transition.”
What the publication means is that many automakers are spending lots of money developing electric and autonomous cars, and as they continue to do so, they put profits in jeopardy. This translates into risk for an investor, which could get worse as emissions regulations push automakers to keep spending on electrification.
Not to mention, as demand for different technologies changes, new competitors—particularly those with “must-have technology”—could swoop in and nab profits from the current establishment. So, investing in today’s big suppliers, for example, could be a mistake.
This uncertainty in the auto market, driven in large part by the flux of today’s electric-vehicle and self-driving technology, is why The Wall Street Journal thinks it makes sense for investors to be careful with the cheap state of auto stocks, saying:
Faced with such a range of possible outcomes for the industry, long-term investors are sensible to watch and wait for greater clarity—though it probably won’t emerge for years...Overall, though, car stocks are cheap for good reason.
Then again, if you love risk, go for it. Maybe invest in Elio if you really want to feel alive (i.e. crazy).
3rd Gear: Here’s What The Auto Industry Wants Out Of Trump’s NAFTA Renegotiations
The Trump administration begins its North American Free Trade Agreement renegotiation talks on Wednesday. The discussion could last six or seven months, and automakers and suppliers plan to be represented every step of the way.
The Detroit Free Press says trade and labor groups like “the Alliance of Automobile Manufacturers, American Automotive Policy Council, Global Automakers, Motor Equipment Manufacturers Association, Ohio Canada Business Association, the UAW and Unifor.,” have all written position papers describing what they want from the NAFTA talks.
For one, the auto industry wants less red tape when shipping cars and car parts across the border. In addition, the industry is not in favor of heavy tariffs against imported cars and parts, since Mexico is seen as “an essential location for low-cost automotive parts and vehicle production” that allows U.S. automakers to build and price cars competitively.
The news site also says the auto industry wants the Trump administration to leave “rules of origin” alone. As it stands, for a car to be exempt from tariffs, 62.5 percent of its content has to come from the country of assembly. The auto industry wants that to remain the same, with The Auto Alliance saying the standard is “the highest of any U.S. trade agreement.”
On top of all this, automotive trade and labor groups want the administration to focus less on trade deficits, push for Mexico to adopt American auto safety standards, advocate for better worker training programs and labor protection laws, and stop worrying about Mexico acting a “back door” for cheap Chinese parts.
You can read the Detroit Free Press’s full story here to learn more about the Auto industry’s goals for this whole NAFTA renegotiation process.
4th Gear: Center For Auto Safety Appoints A Successor For The Late Clarence Ditlow
Clarence Ditlow, the highly controversial leader of the Center for Automotive Safety who spent 40 years pushing automakers to conduct safety recalls, died last November. And now, nearly a year later, the organization has named consumer protection attorney Jason Levine as the new executive director. And now that Trump is at the helm, the center says, that job just got a whole lot harder.
The organization describes Levine’s qualifications in its press release, saying he was part of the U.S. Consumer Product Safety Commission under the Obama administration for nearly six years, four of which he served as Chief Counsel to Commissioner Robert Adler. Levine was also Chief Counsel at the Federal Election Commission, and later acted as an advisor at the U.S. Department of Health and Human Services.
In 2015, he joined the Office of Personnel Management, becoming the Director of the Office of Congressional, Legislative, and Intergovernmental Affairs. His job, there, was to “lead the agency’s response to Congress in the midst of the highly publicized cyber incidents involving federal employee data.”
Ralph Nader, who—along with Consumers Union— founded of the Center for Auto Safety in 1970, has only good things to say for the new head of C.A.S., saying Levine’s job will be tough now that Trump is president:
The Trump administration’s announced fervor to abandon law and order for corporate misbehavior intensifies the challenges for the Center and the American people. As an attorney, with government experience in dealing successfully with pressured situations, Jason Levine’s known passion for consumer health and safety will serve the public interest well.
Levine’s statement in the press release echoes Nader’s about the Trump administration’s promises for more relaxed regulation, saying:
American consumers expect their government to prevent the false advertising of used cars and protect the environment from auto pollution. Yet, the only momentum we see in Washington is a regulatory rollback that too many in the auto industry are aiding and abetting. The Center’s role as the eyes, ears, and voice of the consumer is more important than ever.
In the past few years, we’ve seen tons of automotive safety and emissions recalls—things like the Takata airbag scandal, dieselgate, the GM ignition switch recall, the Jeep Grand Cherokee transmission shifter recall, and many more.
The Center for Auto Safety is there to push automakers to recall defective products, and now they’ve got a new leader.
5th Gear: If You’re A Dealer With Poor Reviews, Google Is Not Your Friend
If you’re a car dealer with poor customer reviews, your business isn’t just going to hurt because people won’t trust you—potential customers may not actually be able to find you. That’s because, as Wards Auto points out, how high up a dealership is on a Google search depends on how good that dealer’s reviews are. And that can be devastating, with the site saying:
Accordingly, the power of Google can devastate. Dealers who get panned enough times find themselves in the digital equivalent of no-man’s land by appearing deep down on the search results. Showing up on page six or seven of a consumer search result is nearly tantamount to not showing up at all.
As director of social media at Ford Direct told the site, “Google is determining winners and losers, with the winners getting the most 4- and 5-star reviews.”
Maybe get better reviews, then?
Reverse: Ford Quits His Job To Pursue His Dream
Neutral: Are Auto Shows Still Cool?
Are you still into autos shows? Do they do anything to drive you towards buying a car?