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: Anybody Know What’s Going On?
Something’s afoot at Fiat Chrysler Automobiles, though it’s a bit early to say what it is. We can take a guess, however.
And no, it’s not the wonder of literally some people buying an Alfa Romeo.
FCA head honcho Sergio Marchionne has been trying to sell the company for over a year now, seemingly to literally anyone who wants it. But last we heard, nobody wanted it. Sure, there was a Chinese buyer or two floated here and there, and Sergio talked up everybody from Volkswagen to General Motors as a possible buyer, both of which went nowhere.
And that’s where we left it. No buyer for FCA, and just a sad pipeline of Jeeps, the occasional SUV, and an increasingly desperate ploy to put 707-horsepower V8s into damn near everything (Alfa 4C Hellcat, anyone?).
But then, last week, something strange started happening with FCA’s share price:
It started shooting up. And as the Detroit Free Press notes, that’s definitely weird:
FCA shares rose 5.4% Friday to close at a record high of $21.77. Since Tuesday, the stock has risen 22%. In each of the last three days, more trading volume has ranged between 10.6 million and 14.3 million shares, well above the average daily volume of 3.1 million.
By contrast, Ford and General Motors shares have gained 5.6% and 7.5%, respectively over that period, on light trading.
It’s not like Chrysler has announced big moves in the last week, or released big plans to start churning out Tesla clones.
So what gives? It could be that rumors of an imminent FCA sale – or a piecing out, such as a sale of Jeep – could have something to them. We don’t know anything that would confirm such a rumor right now, but back in the days when I used to cover mergers and acquisitions, traders were always calling up to get an edge. And sometimes, they heard rumblings before the big news broke.
Of course, SEC rules state that the company has to release all relevant information to everyone all at the same time. So it could just be nothing.
Or it could be something.
We don’t know yet. If you do, hit us up at tips [at] jalopnik [dot] com.
2nd Gear: I Guess We’re All Supposed To Buy Weird Crossovers Now?
As usual, people are buying tons and tons of pickups. But after you slog through all the pickup sales, the next car on the list is supposed to be, well, a car. Not anymore, the Detroit News says:
Three full-size pickups were still the best-selling vehicles in the United States last year. But the fourth-place spot was claimed for the first time by an SUV, not a sedan.
In 2017 the Toyota RAV4 sport ute outsold the Toyota Camry sedan, reigning car-sales champ for the last 15 years.
The compact, five-door RAV4 crossover sold 407,594 units last year — a gain of 15.7 percent — eclipsing Camry by 20,513 in sales. The midsize sedan saw an annual sales decline of 0.4 percent. Camry wasn’t even runner-up as another SUV, the Nissan Rogue, gained 22.3 percent to 403,465 units sold.
That’s disappointing for people who like handling and style and fuel economy and speed.
If you embrace death and the endless monotony of suburbia, however, cool.
3rd Gear: Damned If You Do, Damned If You Don’t
Much of the 2016 presidential campaign was focused on the issue of free trade, with the popular consensus right now being that free trade is only good for corporate executives and people who like to occasionally buy things for cheap, and that it’s been terrible for American workers.
But a large component of the pro-free-trade argument is that, fundamentally, free trade ends wars. The whole notion argues that you can’t go out and kill somebody if you’re making money off of them. And the more free trade there is, the more peaceful relations there will be between nations.
Which brings us to the current predicament surrounding Korea, with a bit of background before we get back to the whole free trade thing. The United States isn’t about to go to war with South Korea anytime soon, but with two belligerent and erratic leaders at the heads of both the United States and North Korea, there is a distinct possibility of all out war between those two respective countries.
The American-North Korean relationship is a complicated one, but a large part of it is that the United States is ostensibly the protector of South Korea, the North’s sworn enemy. But if the North and the South patch up their differences on their own – something of which the chances are admittedly remote – where does that leave the U.S.?
Like I said, the chances of the North and South suddenly getting along are remote. But the North has started making overtures to the South, and the South is responding. While that has happened before, it looks like this time the U.S. is being left out of the party. And a new Reuters analysis implies that the reason is because the U.S. is suddenly not in favor of free trade with South Korea:
The talks, led by Assistant U.S. Trade Representative Michael Beeman and Yoo Myung-hee, director general for FTA negotiations at South Korea’s trade ministry, begin at a time of heightened tension with Pyongyang.
The United States had primarily raised the issue of the automobile sector, Yoo told reporters in Washington after the first round of talks, Yonhap News Agency said, but gave no details.
A top priority for the Americans is maintaining a tariff of 25 percent on imports of Korean pickup trucks, which the existing deal envisaged to be phased out from 2019, according to a U.S. official and a South Korean car industry source.
[...]
This week, however, Seoul agreed to high-level talks with the North in response to a New Year’s speech in which the North Korean leader offered an opening to diplomacy.
Pyongyang has a long history of seeking to play off Seoul and Washington as well as Beijing and Moscow in its diplomacy. Washington is wary of separate approaches and there are concerns that disagreements over KORUS could fuel a rift between South Korea and the United States.
At this point, I don’t really care, I just don’t feel like dying in nuclear hellfire.
4th Gear: Used Cars May Be Contributing To The Drop In New Car Sales
With everyone predicting that new car sales will decline in 2018, there’s a bunch of speculation as to why that is. But a big part of the reason could be that there are really good deals on used cars right now, the Wall Street Journal reports:
A major reason for this downturn, despite the strong economy, is increasingly stiff competition from the secondhand market, which is inundated with cars coming off three-year leases. The average gap between new and three-year-old vehicle prices last year was $14,200, up from $10,500 in 2010, according to information provider Edmunds.
You reap what you sow, and if you sow a bunch of cheap leases to goose car sales in a slow economy, you eventually have to pay the piper.
5th Gear: There Will Still Be New Cars
With sales forecast to drop ever-so-slightly, you may be concerned that the automakers have decided to pack it in. “No more cars,” you’re imagining car companies saying, “until everyone buys new cars right this instant.”
Fear not, Automotive News says. There will still be new cars.
Reverse: This Is Sad
On this day in 1916 Rembrandt Bugatti, a sculptor and younger brother of Italian auto designer and manufacturer Ettore Bugatti, commits suicide at the age of 31.
Neutral: Why No Rear-Wheel Drive Crossover?
It seems like every weird crossover-y thingy is either front-wheel drive or all-wheel drive. Sure, there are some rear-wheel drive SUVs, but what if I want a Subaru Outback with power only, well, out back? Am I crazy for thinking that would be fun? We’re all going to have to buy the damn things soon anyway.