Ford’s plans to cut a bunch of jobs in Europe, upcoming strict emissions regulations in Europe spell trouble for automakers, a new legislative bill designed to help consumers and more await you in The Morning Shift for Thursday, June 27, 2019.
1st Gear: A Lot of Jobs
Haven’t you heard? Ford is a mobility company now, one that is especially concerned with electrification and technology (this is all silly, it’s a car company, it’ll always be a car company). But because profitability slid in 2018 and the money to finance all of this doesn’t just magic out of nowhere, the company has been very gung-ho about slashing costs. In 2017, it said that it would slash costs by $14 billion. And that includes a lot of jobs.
Ford intends to cut 12,000 jobs in Europe by the end of 2020 in an effort to become profitable again, reports Reuters:
Approximately 12,000 jobs will be affected at Ford’s wholly owned facilities and consolidated joint ventures in Europe by the end of 2020, primarily through voluntary separation programs.
Around 2,000 of those are salaried positions, which are included among the 7,000 salaried positions Ford is reducing globally, the carmaker said. The rest are workers on hourly contracts or agency workers.
Ford needs that money to invest in electric, hybrid and autonomous technology while also making sure its regular combustion engines can meet new regulations. The company has stopped production at three Russian plants and is closing other plants in France and Wales, according to the outlet. And shifts have been cut at factories in Spain and Germany.
It’s a really tough time to be working in the auto industry, no matter where you are.
2nd Gear: European Clean Air
While we’re on the topic of Europe, new, stricter emissions regulations are set to start in 2020. That’s good for the environment, but it’s not so good for the automakers, which apparently are totally unprepared to meet the new standards.
The industry is facing penalties of an estimated €34 billion ($39 billion), in addition to vehicle sales declining overall, reports Bloomberg:
Volkswagen AG, the world’s biggest carmaker, faces the largest penalty at about 9 billion euros based on 2018 reported emissions, followed by Peugeot maker PSA Group and Fiat Chrysler Automobiles NV — the company with the single largest gap between actual performance and the new targets. BMW AG and Daimler AG could see earnings drop sharply due to their heavy reliance on high-emission SUVs.
“The top automakers will face trouble as none of them are currently on track to meet the target,” Jato Dynamics said in an April blog post. “The incoming CO2 targets can be seen as the apocalypse of the car industry in Europe.”
It also doesn’t help that Europe is currently locked in a trade war with the United States.
The new regulations, which are set to start on Jan. 1, say that everything but five percent of the European Union’s car fleet can emit no more than 95 grams of carbon dioxide per kilometer driven. After a year, no new car can go over that level. Otherwise, automakers will face fines of €95 ($108) per gram of for each car, which is a lot. All of this, though, will hopefully be an incentive for automakers to hurry the hell up and roll out more electrified cars.
Bloomberg seems to think that some automakers that perhaps don’t have a strong European presence might withdraw from there entirely.
Anyway, it’s tough to feel bad for any of the automakers, since stricter emissions regulations only serve to benefit the planet and everything on it.
3rd Gear: Recalls for Used Cars
It’s already tough enough staying on top of recalls for a car you already own. What about a used car you’re thinking about buying? Who looks after the recalls there? A new senate bill is trying to take care of that.
Democratic Senators Richard Blumenthal and Edward Markey proposed the Used Car Safety Recall Repair Act yesterday, Automotive News says. It would make sure that used vehicles that haven’t had their recall repairs fixed cannot be sold, leased or loaned until they are repaired.
The bill, according to a statement Blumenthal, would make sure that dealers fix defective and potentially dangerous used cars before unsuspecting customers drive them onto public roads, where they can be a risk to other drivers, passengers, pedestrians and bicyclists.
This is a very good thing! It would mean that dealers would be on the hook for selling a defective car to someone, especially in light of the massive and ongoing Takata airbag recall.
4th Gear: Canada Siding with California
The state of California (along with 13 other states) is warring with Donald Trump’s attempts to weaken automotive environmental regulations. And joining the fight now, on the side of California, is Canada.
Yesterday, Canada announced its willingness to publicly align itself with California in the fight against rolling back regulations, reports the New York Times:
“Working with California is a way to move forward and share best practices and align our standards,” said Catherine McKenna, the Canadian environment minister, on a telephone call with reporters. “California has been an inspiration when it comes to clean fuel standards. That is where the world is going.”
Such a move could undercut Mr. Trump’s efforts to weaken environmental policy by creating a much larger market for cleaner cars, thereby making it more economically viable for auto manufacturers to build cars to the higher standards.
Canada has traditionally followed the U.S.’s federal emissions standards, but now it could change to a stricter model, the outlet points out. If that happens, it would just make the North American market that much harder to deal with for automakers. Currently, many models can be legally sold in both the U.S. and Canada. But if Canada and a handful of states all of a sudden change their regulations, it’ll make everything more complicated.
And maybe this will frustrate automakers enough that they’ll put pressure on Trump to just abandon the whole thing altogether. One can hope.
5th Gear: BMW Still Believes in Internal Combustion
Despite the threat of fines over carbon emissions, BMW still appears to be holding firm to internal combustion engines. In fact, the company told Automotive News Europe that it expects “diesels to survive for at least 20 more years and gasoline engines for at least 30 years.”
BMW exec Klaus Froelich is betting on a global trend of favoring internal combustion in the coming years:
“We see areas without a recharging infrastructure such as Russia, the Middle East and the western, internal part of China so they will rely on gasoline engines for another 10 to 15 years,” Froelich said.
The costal part of China and big cities such as Beijing and Shanghai will be battery-electric only in about 10 years, while Europe will be more receptive to plug-in hybrid vehicles, the executive predicted. In the U.S., battery-electric vehicles will sell mainly on the West Coast and on part of the East Coast but will not become mainstream. The U.S. could get more powerful plug-in hybrids from BMW’s sporty M subbrand in order to generate emissions credits.
Despite this, though, the portfolio will shrink.
BMW is axing the 1.5-liter, three-cylinder engine (which is only offered in Europe) because it’s reportedly too costly to get it to comply with the new European standards, the outlet reports. Also, the six-cylinder diesel offered in the 750d won’t be replaced because it’s also too expensive and complicated to build.
And, if you’ve been reading a little website called Jalopnik, you’d also know that the V12 is probably headed out soon as well.
BMW has already said that the hybrid-powered M cars are coming, so at least the performance nuts like us don’t have to be worried.
Reverse: Main Street of America
Neutral: Do You Get Recall Repairs Fixed?
Or are they something you don’t really keep up on checking?