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America’s SUV Obsession Means Luxury Automakers Struggle To Sell Lease-Returns

Image: Jason Torchinsky
Image: Jason Torchinsky
The Morning ShiftAll your daily car news in one convenient place. Isn't your time more important?

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: America’s SUV Obsession Means Luxury Automakers Struggle To Sell Lease-Returns

America is in love with trucks and SUVs, and while luxury automakers have been making a killing by tapping into those segments, the abrupt shift away from sedans means those companies are having a hell of a time selling their lease-returns. Basically, the automakers have a huge glut of newer sedans and coupes from lease turn-ins that they can’t get rid of.


Bloomberg reports

The glut of vehicles being returned after their leases expire disproportionately affects premium lines like Daimler AG’s Mercedes-Benz, BMW AG, Toyota Motor Corp.‘s Lexus and Volkswagen AG’s Audi, because they rely more on leasing than mainstream brands. Sales for luxury manufacturers’ car models have dropped dramatically the last few years, leaving them in a bind with both too much supply and falling demand.

The news site goes on, saying:

The surplus of luxury coupes and sedans returning after leases poses obvious challenges to the used-car market. Significantly more passenger cars were leased a few years ago than there’s appetite for now — SUVs have surged to 56 percent of luxury sales this year through September, compared with just 42 percent three years ago, according to car-shopping website Edmunds.


Since demand for cars hasn’t yet stabilized, Bloomberg writes, vehicles coming back from leases will be “out of step” with the demands of car buyers. This means that either leasing cars will become more expensive (to make up for the depreciation over the term of the lease), or automakers will have to offer heavy incentives.

President of Audi of America Scott Keogh explained it succinctly:

“You’re throwing all these cars into the marketplace a couple years after it has evaporated and jumped into SUVs.”


It’s an issue many haven’t really thought about, but it makes sense. Most Americans just aren’t feeling used Audi A4s and BMW 3 Series right now.

But! You, dear reader, are not most Americans. So if you’re not down with the SUV boom and want a car with actual driving dynamics, now may be a good time to score a great deal.


2nd Gear: Google Shows Off Self-Driving Cars 

Waymo (formerly the Google self-driving car project) recently invited about 40 journalists out to the company’s test site in central California—a 91-acre decommissioned Air Force base—to experience self-driving Chrysler Pacifica minivans. Most of the journalists came away impressed, and convinced that Google really is far ahead of the competition.


The New York Times said about its experience:

Unlike other driverless demos I’ve encountered, there was no human keeping watch at the wheel. To start the trip, a colleague in the back seat pressed a large blue button marked “start ride,” and the van took off on its own. In a 10-minute drive around Castle, it easily handled a series of different on-road situations and obstacles. It encircled a roundabout, waited patiently for pedestrians to cross the street, and dodged traffic cones and bicyclists with ease. It felt slick and polished, and gave the sense that it might be ready for public consumption very soon.


Bloomberg also seemed intrigued, writing:

With no driver behind the wheel and two reporters inside, the minivans smoothly traversed a short route that saw the car encounter pedestrians, bicyclists and other drivers, including one stranded outside his broken-down Hyundai.

Waymo, which moved into its testing site in 2013, also showed how the self-driving technology practiced variations of similar driving scenarios through three “structured tests.” In one, cardboard boxes were thrown in front of the minivan from a moving truck parked to its right while an oncoming vehicle approached, creating a choke point that required the self-driving Waymo car to hit the brakes.


You can read the account from our friends at Gizmodo here.

Bloomberg went on, describing the user interface in Waymo’s self-driving cars, saying there are monitors in the car displaying “a simplified view of the surrounding world picked up by the car’s array of radar, cameras and laser sensors,” and that there’s a small box on the van’s ceiling with buttons that include: begin ride, pull over, lock or unlock the doors, and call customer-service.


The New York Times says that, with over 3.5 million autonomous miles on its test cars, 2.5 billion miles in a simulated “virtual-reality” environment, and access to Google’s cream-of-the-crop engineering talent, Waymo is considered to be closer than anyone to achieving Level 4 autonomy.

And if you ask John Krafcik, Waymo’s CEO, he’ll tell you something similar. He told reporters at the event “It’s safe to say we’re really close...”


3rd Gear: Audi Recalls Nearly 5,000 A8s For Excess Emissions

Audi announced yesterday that it will recall 4,997 European A8s equipped with V8 diesel engines that apparently emit too much nitrogen oxide, Reuters says.


Audi reported its discovery of the vehicle’s excess emissions to Germany’s Federal Motor Transport Authority, KBA, who an Audi spokesperson told Reuters was “pointing to an illegal manipulation of emissions.”

Most of the affected models were built between September of 2013 and August of 2017, and all will receive a software update, likely in the first quarter of 2018.


4th Gear: Germany’s Green Party Wants Car Companies To Make Potentially Expensive Hardware Changes

Right now, the German government is trying to form the “Jamaica Coalition,” named after the colors of its parties, the Christian Democratic Union/Cristian Social Union, the Free Democratic Party and the Greens.


The problem is, the parties involved tend to have significantly differing views on a number of social and economic issues, with the Greens having particularly firm views on environmental conservation.

According to Reuters, the party recently said that any coalition it forms will need to agree to “mechanical changes to engine and exhaust systems to cut toxic emissions,” and not just the software updates mentioned at Germany’s Diesel Summit in August. The news site goes on, quoting the leader of the Greens, Cem Ozdemir, who said:

“We won’t meet our targets of getting cleaner air in city centers with software upgrades alone...There must also be hardware solutions.”


Hardware solutions are likely to be very expensive for Germany’s auto industry, which props up much of the country economically.

5th Gear: Mazda Isn’t Afraid To Show Its “Japaneseness”

Mazda showed off two polarizing design concepts at the Tokyo Motor Show last month. Some loved the designs (I did), some derided them, but either way, they represent Mazda’s commitment to its own Japanese roots.


At least, that’s according to Autoweek, which says Mazda is focusing on “cultivating a loyal customer base” with the brand’s “Japaneseness.”

The news site quotes Mazda’s CEO, Masamichi Kogai, as saying:

“Mazda is a Japanese brand, so we want it to represent the unique Japanese aesthetic of simple beauty...When you see it, it’s simple, without too much decoration.”


I don’t know what “Japaneseness” is, but if that’s what you call the Mazda Vision Coupe and the Mazda Kai Concept, then I’m all for it.

Reverse: The First Japanese Car Rolls Off An American Assembly Line

Image: Honda
Image: Honda

The first Honda Accord rolls off the Marysville Auto Plant’s assembly line in 1982. The Ohio plant was the very first Japanese auto manufacturing facility in the U.S., and continues on today building Accords, Acura ILXs and Acura TLXs for domestic and foreign markets.

Neutral: Has The SUV Boom Left You In The Dust?

We always make fun of America’s obsession with trucks and SUVs, but are our readers just as guilty? Do you all thirst for the large, high ground clearance-having fuel guzzlers? Or do you still dig sedans and coupes?

Sr. Technical Editor, Jalopnik. Always interested in hearing from auto engineers—email me. Cars: Willys CJ-2A ('48), Jeep J10 ('85), Jeep Cherokee ('79, '91, '92, '00), Jeep Grand Cherokee 5spd ('94).

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