American Trucks Have Gotten Too Damn Big

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Volkswagen seems to want to give America the small and cheap truck it deserves, China’s trying to avoid an EV market crash, and tensions between Nissan and Renault continue. All this and more in The Morning Shift for Tuesday, June 4, 2019.

1st Gear: VW Is Considering a Small and Efficient Pickup Because American Trucks Have Gotten Too Damn Big

Back in April, after VW announced that it’d bring its South America-bound Tarok pickup to the New York Auto Show, we learned that the company was considering bringing a cheaper pickup truck to a U.S. market filled with expensive offerings.

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That was thanks to a Roadshow interview with head of VW of America, Scott Keogh. But now we’ve got more news on that front thanks to an interview by the Detroit News with VW Senior Vice President for Product Marketing and Stategy, Hein Schafer.

The auto exec told the news site that a reason VW is considering a pickup is that trucks in the U.S. have gotten big (just look at the picture above comparing the new Ranger to the old one) and thirsty, leaving room for VW to swoop in with a small and efficient offering:

“As (midsize) pickups get bigger – to the stage where they are as big as full-size pickups were not so long ago – and more expensive and less fuel-efficient, we are trying to see if there is space for a vehicle with a smaller footprint that potentially is more affordable and gets better gas mileage,” says VW Senior Vice President for Product Marketing Hein Schafer.

The Tarok that the brand brought to the New York Auto Show this year is based on VW’s MQB unibody platform—a type of architecture that’s rare to see in the pickup truck world. The Honda Ridgeline is currently the only unibody pickup available in the U.S., but it’s in the mid-size segment, and it’s likely that VW will try to keep its vehicle significantly smaller, with the Detroit News writing:

“The pickup market is huge, but we have seen that even the biggest of car companies have yet to make much of a dent in the domestic stranglehold on full-size trucks,” says Schafer. “So we wanted to show something a bit different — something that’s a bit more in line with what a potential VW customer might expect.”

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The story goes on to say that a smaller VW like the Tarok would enter a “pickup white space,” and that’s key when it comes to avoiding potential perils brand loyalty, which can be a huge driver of sales in the U.S. truck market.

With smaller trucks, brand loyalty isn’t as strong, per Michelle Krebs, an Autotrader senior analyst. From the article:

“Our research shows there is little brand loyalty in smaller trucks,” she says. “Full-size buyers are the most loyal in the industry; smaller-truck buyers are the least. So the newest player likely has a good chance of conquesting buyers.”

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The Detroit News also spoke with analyst Joe Phillippi, a consultant at AutoTrends Consulting. He says there’s a market in the U.S. among young people who want small trucks, and who don’t want to drop 40 large.

“But it’s a finite number of sales and manufacturers need to make sense of the numbers,” he told the newspaper. Phillippi went on to say he thinks a small pickup could start in the low $20,000 range—$5,000 lower than a typical mid-sizer.

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A low starting price, of course, depends on whether the automaker can avoid tariffs, which is why Schafer told the Detroit Free Press that, if VW were to enter the pickup market, the vehicle would be built in the area encompassed by the United States-Mexico-Canada Agreement.

All I know is: I love the idea of a small truck.

2nd Gear: Auto Sales are Down Again But They’re Not as Bad as Expected

U.S. light vehicle sales numbers are out for May, and while they once again point to a drop compared to a year prior, they actually don’t seem too bad. From Automotive News:

U.S. light-vehicle deliveries slipped 0.3 percent in May, but the robust pace of sales — 17.4 million — offered a sign of hope as the industry barely missed posting its first monthly gain of the year.

The seasonally adjusted, annualized rate of sales in May came in at 17.4 million, well above the 16.9 million forecast. That is up from 17.26 million in May 2018 and April’s 16.41 million pace. The SAAR has slipped below 17 million three months this year, an early sign that the U.S. market continues to cool after four straight years of sales above 17 million units.

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Charlie Chesbrough, an analyst from Cox Automotive, called the May figures a “complete reversal from a slow April,” with Automotive News citing analysts as saying high fleet sales made up for drops in retail sales.

As for brand-specific results, FCA sales were up 2.1 percent compared with May of 2018 thanks to Ram pickups, which made up for a 7.2 percent decline in Jeep sales and a 26 percent drop at Chrysler. Fiat and Alfa were also down by roughly 30 percent, while Dodge was up 2.5.

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Toyota saw sales rise 3.2 percent, and Nissan, Hyundai, and Subaru also saw higher May sales figures. Ford, Honda, and GM, Automotive News reports, didn’t fare so hot, with the former seeing a 4 percent drop at The Blue Oval Brand and 5.8 percent drop at Lincoln. Part of Ford’s performance, according to the news site, had to do with a drop in car sales, even though light-truck sales were up.

Check out Automotive News for further analyses of May sales figures for individual brands.

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3rd Gear: China’s Trying to Avoid a Crash in Its EV Sector

The Chinese market is filled with a whopping 486 “aspiring electric vehicle companies” according to Bloomberg, and that’s got the country taking action to avoid a potential crash. From the news site:

After hundreds of startups rushed into the electric-car business in the past decade, the government wants to prevent a crash akin to that of dot-com companies two decades ago. China’s electric-car makers have raised $18 billion since 2011, BloombergNEF estimates, but the market is in its infancy and foreign competition from the likes of Tesla Inc. is intensifying.

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According to Bloomberg, China’s plan is to raise the barrier of entry into the EV segment in order to “nurture fewer but more competitive players.” And the way the country plans to do this is by restricting the way startups outsource their manufacturing, since outsourcing is a strategy that fledgling companies have been using to crank out models until they can afford to build their own factories in China.

From the article:

According to the planned additions, new-energy vehicle makers that want to tap other companies’ production capacity need to have research-and-development investment in China of at least 4 billion yuan ($580 million) over the past three years, global sales of pure-electric passenger vehicles of at least 15,000 units over the past two years, and paid-in capital of potentially billions of yuan, the people said.

The new rules also call for manufacturing contracts to run for at least three years with annual production of at least 50,000 units at one location, the people said. Startups will be allowed to sign manufacturing agreements with no more than two automakers, they said.

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EV development in China has been intense, but you have to wonder how sustainable it is.

4th Gear: Tensions Continue Between Nissan and Renault As Renault-FCA Merger Proposal Goes up for a Vote

Things have gotten tense between Nissan and Renault, especially after Fiat Chrysler proposed a merger with the latter. Nissan’s current stake in the French automaker sits at only 15 percent, and a merger would give Nissan even less power in the newly formed company.

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The fate of the Nissan-Renault alliance is unclear, but it does appear that Nissan is willing to renegotiate its relationship with Renault, with the Financial Times writing:

The move by FCA has brought a particularly sharp focus on the Restated Alliance Master Agreement — the closely guarded agreement that legally underpins the alliance and which people close to Nissan, Renault and FCA have warned could become central to negotiations as stances towards the deal become more hardline.

On Monday night, in what was effectively his last chance to make a public statement before the Renault board meeting, Nissan chief executive Hiroto Saikawa said that FCA’s proposed deal “would require a fundamental review of the existing relationship between Nissan and Renault”.

Although RAMA was not explicitly mentioned in the statement, people close to the three automakers said that Mr Saikawa’s comments appeared to confirm speculation that Nissan viewed the merger as an opportunity to renegotiate RAMA’s terms.

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Exciting times for the auto industry.

5th Gear: It’s Lit in Detroit?

Back in February, Fiat Chrysler announced that it was pumping some heavy cash into manufacturing in the Detroit area. Among the investments was an facility that will allegedly be “the first new assembly plant to be built in the city of Detroit in nearly three decades,” per FCA.

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And to celebrate this, the automaker is hosting a party on the East Side. From the Detroit Free Press:

The automaker intends to celebrate its massive expansion on the city’s east side with a community tailgate for its Mack/Jefferson North-area neighbors Friday at Southeastern High School.

[...]

Food and family events are planned for the celebration, which will include a pep rally. FCA North America Chief Operating Officer Mark Stewart will take part, along with other company representatives, local officials and members of the business and neighborhood communities “who helped to successfully secure this investment,” according to a news release.

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Reverse: Henry Ford Drives His First Automobile

Via History:

At approximately 4:00 a.m. on June 4, 1896, in the shed behind his home on Bagley Avenue in Detroit, Henry Ford unveils the “Quadricycle,” the first automobile he ever designed or drove.

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Neutral: Do You Want a Small and Cheap Pickup?

Americans love size, so would they be lining up at VW dealerships to buy a small truck, or would they ignore it and stick with their beloved big behemoths?

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About the author

David Tracy

Writer, Jalopnik. 1979 Jeep Cherokee Golden Eagle, 1985 Jeep J10, 1948 Willys CJ-2A, 1995 Jeep Cherokee, 1992 Jeep Cherokee auto, 1991 Jeep Cherokee 5spd, 1976 Jeep DJ-5D, totaled 2003 Kia Rio