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: At Least The Dealers Are Doing OK
While much of the attention has turned to Florida and the massive Hurricane Irma, recovery in Texas after Hurricane Harvey will take months and in some cases even years. For now, automakers and their dealers are offering substantial discounts on new cars in parts of Texas affected by the storm.
Automakers were initially worried the storm would dampen car sales. Call it opportunistic if you want, but sales are responding in kind as scores of people are desperate to replace their flood-damaged vehicles just to get around. From Automotive News:
Local dealerships are handling the “abnormal” traffic consumers are bringing to stores as residents look to replace their vehicles, says Steven Wolf, chairman of the Houston Automotive Dealers Association.
Wolf, who is also vice president of Helfman Motors, says he expects sales at his five stores this month to outpace the year-earlier period by 40 to 50 percent because of the post-Harvey rebound. Helfman stores sell Fiat Chrysler Automobiles and Ford Motor Co. vehicles.
Sales activity, he said, went from one extreme to the other in a matter of days.
When Helfman staffers returned to work Aug. 30 — the Wednesday after the storm made landfall the previous weekend — there was little activity. The next day, Wolf said, it felt like the “ice was thawing” as traffic began to trickle in. Then things went bonkers on the Friday ahead of Labor Day, Wolf said. The momentum hasn’t slowed since.
Considering Houston’s sheer size — the metro area is about the size of New Jersey — the sudden sales blast isn’t too surprising. Wolf said people need to get around, so getting back into a vehicle is one of the first orders of business.
“People have moved past the ‘Oh, my God, what am I going to do?’ [stage] to ‘Let’s get a plan; we need to do this, this and this.’ At the top of the list, it is, ‘Let’s get a replacement vehicle,’” Wolf told Automotive News.
Many dealerships in the region managed to move inventory to safer spaces ahead of the storm, the publication reports. But that inventory is now increasingly pinched as people in places like Houston, Beaumont, the Gulf Coast and other areas rush to get new cars.
2nd Gear: Where Are The Flood-Damaged Cars Going? Mexico, Probably
As our man Bozi noted last week, all the flood cars headed to auctioneers when they’re totaled out by insurers, destined for junkyards and parts-stripping. But a good many of them will be sought by exporters who aim to send them to markets with less-tight regulations for that sort of thing. And Mexico is worried about a huge influx of flood cars from the U.S.—it’s happened before. Via Automotive News:
Eduardo Solis, president of the Mexican Automotive Industry Association, put imports of damaged vehicles after Hurricane Katrina in the thousands or tens of thousands.
The auto industry has long complained that shady importers allegedly use bribes to go around regulations that prevent the import of damaged or stolen cars from the U.S. The problem has been tough to contain since Mexico unilaterally opened its market to used cars from the U.S. more than a decade ago.
At the time, it was politically popular to have an ample supply of cheap, older autos from north of the border. Over time, however, the measure contributed to a sharp drop in new-car sales since it distorted the used market, pushing down residual values and making it difficult for owners of locally purchased vehicles to trade up to a new car. Industry officials complained that the imported cars weren’t being inspected for their roadworthiness or the validity of their titles.
3rd Gear: Hyundai, Kia To Shut Down Plants
Meanwhile in other southern states, Hyundai and Kia announced they’ll shut down plants in Alabama and Georgia ahead of Hurricane Irma. It’s only for two days, but as Reuters notes it comes at a less than opportune time for these automakers:
In a statement, Hyundai Motor said it would suspend operation of its Alabama plant for two days between 2:45 p.m. on Monday and 2:45 p.m. on Wednesday, while Kia Motors will stop operation of its Georgia plant for one day, from 6:45 a.m. on Monday to 6:45 a.m. on Tuesday.
The shutdown comes at a time Hyundai’s U.S. sales have fallen more than the market average, and after it recently announced plans to expand its crossover lineup and launch a pickup in the market in an attempt to reverse the slide.
The suspension is expected to result in lost production of about 3,000 vehicles, the Yonhap news agency earlier said on Monday, citing a company spokesman.
4th Gear: Only Ford Is Coming To Frankfurt
This week is the Frankfurt Motor Show, which is the home game for the German automakers, especially the ones that are desperate to move past a certain diesel cheating scandal and show everyone their bright electric future. Don’t, however, expect a huge presence from the U.S. automakers. Of them only Ford is going, and while Opel still uses General Motors stuff for now, it’s since been pawned off on the French. (Suckers.)
It represents a big change in how non-European automakers sell their products around the world these days, focusing on China instead. Via The Detroit Free Press:
Auto shows all over the world are under pressure as carmakers use social media and private events to introduce vehicles. But the situation is particularly dire in Europe, which appears to be retreating from the center of the global auto industry as China and the U.S. offer greater profits and more sales. IHS predicts European car sales will peak next year before settling in around 15.4 million a year.
German automakers remain committed to their home auto show, though. Audi, BMW, Mercedes and Volkswagen will tout plenty of new vehicles and tech.
What can we expect from the show? Electric concepts and big SUVs.
5th Gear: China Will Eventually End Gasoline Car Sales
Speaking of China, they too join the ranks of Britain and France in announcing an eventual end to the sale of gasoline-powered cars. While no date has been set yet, and it’s likely some decades away from happening, this is a big deal as the world’s largest auto market continually sets the tone for the rest of us. From the AP:
China’s industry ministry is developing a timetable to end production and sale of traditional fuel cars and will promote development of electric technology, state media on Sunday cited a Cabinet official as saying.
The reports gave no possible target date, but Beijing is stepping up pressure on automakers to accelerate development of electrics.
China is the biggest auto market by number of vehicles sold, giving any policy changes outsize importance for the global industry.
A deputy industry minister, Xin Guobin, said at an auto industry forum on Saturday his ministry has begun “research on formulating a timetable to stop production and sales of traditional energy vehicles,” according to the Xinhua News Agency and the Communist Party newspaper People’s Daily.
France and Britain announced in July they will stop sales of gasoline and diesel automobiles by 2040 as part of efforts to reduce pollution and carbon emissions that contribute to global warming.
Communist leaders also want to curb China’s growing appetite for imported oil and see electric cars as a promising industry in which their country can take an early lead.
China is also leading the electric push in a big way. It’s the world’s largest market for electric cars as Beijing seeks to mitigate the country’s massive air pollution problems.
Under the proposed quotas, electric and hybrid gasoline-electric vehicles would have to make up 8 percent of each automaker’s output next year, 10 percent in 2019 and 12 percent in 2020. Automakers that fail to meet their target could buy credits from competitors that have a surplus.
Beijing has ordered state-owned Chinese power companies to speed up installation of charging stations to increase the appeal of electrics.
Here’s what the future looks like.
Reverse: By Motor To The Fair
Neutral: Did You Buy A New Car After The Hurricane?
Are you planning to?