1st Gear: Witness Me, Blood Bags
Things are not great for the midsize sedan segment, and by extension the automakers who have put resources into building them. Trucks, SUVs and crossovers dominate sales these days and companies with sedan-heavy lineups, like BMW for example, are feeling the sting.
This is even more true in the non-luxury segment where buyers are saying “Screw it” and opting out of Camrys and Accords for slightly bigger, roomier, taller vehicles like the RAV4 and CR-V. Can the sedan segment be saved?
Toyota hopes so, and at the Detroit Auto Show next month it plans on unveiling the all-new 2018 Camry. At the same show we’ll see a new Accord and Hyundai Sonata too, reports Bloomberg. These vehicles will attempt to pump some excitement into a segment possibly screaming its death cry into the heavens:
“For years, we’ve had a reputation for high-quality, durable products that were perhaps somewhat conservative in design,” said Bob Carter, head of sales for the Toyota and Lexus brands in the U.S. “We’re looking to hold that position, and to add to it emotional design and fun-to-drive characteristics. ”
At a Thursday reception in Detroit, Toyota executives revealed the plan to show a revamped Camry at the city’s North American International Auto Show in January. The automaker’s new model likely will have some company: Nissan Motor Co., Honda Motor Co. and Hyundai Motor Co. will all be unveiling updated designs for their core midsize sedans at the show, according to the trade journal Automotive News.
“The midsize segment hasn’t had a lot of product news,” Carter said. “But perhaps now we’re going to see some real innovation that should sustain it, and who knows, bring some growth back.’’
“Who knows, bring some growth back,” Carter said with supreme and utter confidence, before hosing his mouth down with silver spray paint and jumping onto an exploding Volkswagen Beetle-turned-big rig.
2nd Gear: Sales Driven By Big Vehicles
On that note it’s time for the same damn thing I report every day on Morning Shift. (No, not Dieselgate, the other one.) We saw surprisingly big advancements in new car sales in November, driven by incentives and deals, and the big sellers were—you guessed it!—SUVs, trucks and crossovers. Via Automotive News:
The discounts were more generous on remaining 2016 car and truck models. GM dangled incentives that topped $10,000 on some Chevrolet Silverado pickups and Suburban SUV models. Some Hyundai dealers cut prices on 2016 car models by 21 percent to nearly 40 percent, and offered a $100 Visa reward card with the purchase of a new model as part of Black Friday deals.
What’s more, November left the industry in a better position to top last year’s 17.47 million tally. Sales through October were 0.3 percent behind their year-earlier pace after three straight monthly declines.
With November in the books, industry sales are running just 6,418 ahead of 2015's pace. If the industry manages to eke out an annual gain, 2016 would mark the first time in a century that U.S. sales topped year-earlier levels for seven straight years. Sales rose every year in a nine-year stretch through 1917.
Analysts now expect sales to close at 17.83 million new cars this year. We’ll see how December shakes out.
3rd Gear: Mexico Wants NAFTA To Stick Around
President-Elect Donald Trump made the North American Free Trade Agreement one of his biggest punching bags during his campaign and promised to renegotiate or kill it in the name of bringing jobs back to the U.S. Obviously, it’s been a boon to Mexico, and Mexico wants to keep it in place. Via Automotive News:
At an event that was to have focused on touting the Mexican industry’s bright future, the executives were peppered with questions about how a Trump presidency might jeopardize their plans. They insisted that the starting point in any negotiation should be that economic integration in the auto sector has been good for all three nations in the trading bloc.
“Mr. Trump has said that he is going to be the president that promotes jobs, and in order to have jobs you have to be competitive,” said Eduardo Solis, president of the Mexican Automotive Industry Association and one of the original negotiators of NAFTA. “The North American region has to be analyzed vs. the other regions of the world, not Mexico vs. the United States.”
Solis said that he hadn’t heard of any plans by automakers to cut their Mexican investment plans as a result of Trump’s election. He noted that Toyota broke ground on a $1 billion Corolla plant in central Mexico just days after the election.
Automakers from across the globe continue full steam with investments there.
4th Gear: The State Of U.S. Manufacturing
Trump’s target as of late has been Indiana-based air conditioning manufacturer Carrier, and he boasts of arranging a tax incentive deal that will keep half of those jobs from going to Mexico.
While this Reuters story isn’t directly car-related, it does speak to the larger issue of the state of domestic manufacturing, which is not what it used to be:
But the author of “The Art of the Deal” will have a lot more dealmaking to do if he wants to stop the steady erosion of manufacturing jobs from the country due to automation and lower costs abroad.
In Indiana alone, employers are eliminating at least 3,660 jobs because they are shifting work to other countries, according to a Reuters analysis of Labor Department filings.
Some 960 workers employed by five companies in Indiana are losing their jobs because their U.S. employers are not able to compete with cheaper imported goods, filings show.
[...] As elsewhere in the United States, factory work in Indiana has lagged as the broader economy has recovered from the 2008-2009 recession. Manufacturing employment is down 7.4 percent from January 2007 levels even as total employment in the state has risen 3 percent since then, according to the U.S. Bureau of Labor Statistics.
Nationwide, manufacturing employment is down 12.5 percent since 2007, according to the bureau.
We will see if the new president and his administration plan on directly intervening with more automakers considering production shifts outside the U.S. With Ford and Lincoln we’ve already seen that, even though the claims made by Trump were dubious at best.
5th Gear: Chrysler 200, Dead
And back to what we were talking about in 1st Gear: the ill-fated Chrysler 200 sedan, a perfectly fine and nice vehicle that nobody bought, ceases production today at Fiat Chrysler’s Sterling Heights Assembly Plant, reports The Detroit News. Here’s what happens to those workers:
Most of the nearly 1,700 hourly workers remaining at the plant following a shift elimination in July are on temporary layoffs – or will be – as the company retools to build the next-generation Ram 1500. The retooling is expected to take much of 2017.
Fiat Chrysler earlier this year told state officials it will add 700 new jobs when production of the pickup begins at the plant. The additional jobs are part of the company’s plans to invest $1.48 billion in Sterling Heights Assembly plant to produce the pickup as well as enhancements, including a paint shop renovation and test track.
State officials, which granted the company millions of dollars in incentives, have said the company would have a base employment of 4,600 at Sterling Heights before the new hires. That would be a substantial increase from the nearly 1,900 employees, including salaried, at the plant as of July.
Tinson on Thursday said the company at this time is not confirming total workforce expected at the plant, because “it is too soon to confirm what total employment will be at SHAP at full production.”
With luck the shift to truck production will secure those jobs and the plant’s future better than the sedan ever could.
Reverse: Mighty Hydrogen
Neutral: Does The Midsize Sedan Have A Future?
Listen, the Camry and Accord probably do. People will be buying those long after humanity is extinct, somehow. Their sales are all but guaranteed. It’s the smaller players in the segment who should be really worried, and reassessing their investments in it.