The hunger for EVs grows stronger, the Chinese auto market looks weaker, and Carlos Ghosn is still in jail. All that and more in The Morning Shift for Wednesday, Jan. 16, 2018.
1st Gear: Hard Brexit Has British Automakers Tight
If you’re not following how Brexit is going these days, Theresa May’s deal got voted down. Things are shaping up like either they figure out some last minute way to get out of it, or a no-deal break, neither of which sound ideal. If you’re wondering how the British auto industry is taking it, a Bloomberg wire report got quotes and they are too good not to share:
“I’ve done what any sane person would do: I’ve assumed the worst,” Aston Martin CEO Andy Palmer said Tuesday at the Automotive News World Congress, which coincides with the Detroit auto show. “I’ve assumed we’ll crash out of Europe, and in consequence our supply chain will be disrupted.”
Aston Martin Lagonda Global Holdings Plc’s board before this week authorized contingency planning for Brexit that included shipping car components via air freight to allow for the use of ports other than Dover, which faces potential chaos in a no-deal scenario. For the last eight months, Volkswagen AG- owned Bentley has likewise supplied some parts through an alternative port, CEO Adrian Hallmark said at the conference. “I may have to eat these words — we are prepared,” Hallmark said.
Bloomberg described these companies as “bracing for disaster,” which sounds about right.
2nd Gear: Y’All Wanted More From This VW-Ford Deal
The VW-Ford deal looks weaker the more light is shed on it, and investors are pissed, as another Bloomberg wire report under the headline ‘Volkswagen and Ford’s Marriage Leaves Investors Feeling Jilted’ notes:
Wall Street was hoping for a blockbuster deal, such as the billions of dollars General Motors Co. landed for its self- driving unit from Honda and SoftBank Vision Fund last year. There also was some belief Ford would tap into VW’s massive electric-vehicle development program, so the companies could jointly take on Tesla Inc.’s dominance of that segment.
Instead, VW and Ford merely said they’re committed to exploring those areas, and formalized cooperation on commercial vehicles — a project the two companies announced they’d pursue seven months ago. The payoff from joining forces to develop trucks and vans won’t be peanuts: Ford sees the tie-up adding $500 million to its annual pretax profit. But that benefit won’t be felt until 2023.
“This is a toe-in-the-water kind of deal,” said Jeff Schuster, senior vice president of forecasting for researcher LMC Automotive. “It really wasn’t much of an announcement, frankly. There’s nothing beyond what was already anticipated.”
Ford, meanwhile, told the media that it’s personally excited for its upcoming Mustang-inspired EV, which makes at least one of us.
3rd Gear: China’s Light Vehicle Sales Might Be Down 4.1 Percent, But Ford Is Down 37
Here’s another piece of news that caught my eye. Ford is expecting an all-around good 2019, eagerly anticipating the new Bronco for the U.S. and the new Territory SUV for China, as the Detroit News reports. But I still found it interesting that the company’s performance is not just down in China but way down.
Light vehicle sales in China, as we’ve reported before, historically dropped in 2018, the actual figure coming out to 4.1 percent in total (and 16 percent year-over-year for December alone), as Automotive News China noted yesterday. And that makes this other figure from another Automotive News China report stand out:
Ford Motor Co.’s deliveries in China last year plunged 37 percent from a year earlier to 752,243.
Leading the company’s sales slump was its passenger vehicle joint venture in China, Changan Ford, which builds and markets Ford brand sedans and crossovers.
In 2018, Changan Ford’s deliveries tumbled 50 percent to 417,215 as most of its models neared the end of their product cycle, Ford said.
It’s all interesting, particularly if Ford’s rosy outlook holds out. That the company could go through such a slump for 2018 and jump back in ‘19 would give a clear sense of how these companies are, uh, products of their product cycles. That’s a bad turn of phrase. I’m sorry.
4th Gear: Chinese Government Is Pushing Autonomous Tractors Now
If you haven’t heard, optimism in self-driving cars is something that people engaged with in 2018. It’s a new year, with a newfound reality check for cars driving themselves.
But it’s still boom times in farms as far as driver-assistance is concerned. America’s heartland has been going autonomous for some time now, and now the Chinese government is pushing for its own developments in the field, as Reuters reports:
[T]he government [is pushing] firms to develop within 7 years fully-automated machinery capable of planting, fertilizing and harvesting each of China’s staple crops - rice, wheat and corn.
“China is expected to climb the autonomous technology ladder very quickly, mainly because Chinese companies can access the local navigation satellite system, which gives them an advantage over their international peers,” said Alexious Lee, Head of China Industrial Research at Hong Kong brokerage CLSA.
He was referring to China’s ‘Beidou’ homegrown satellite navigation system, a rival to the U.S. Global Positioning System (GPS).
Beijing has included agricultural machinery in its ‘Made in China 2025’ campaign, meaning the vast majority of its farm equipment should be produced at home by that time.
Semi-automated technology is already fairly common on farms in places such as the United States, but fully-automated tractors and combines have yet to be mass-produced anywhere.
I, for one, look forward to our self-driving tractor overlords.
5th Gear: Renault Is Staring at Months Without Ghosn and Is Eyeing a Replacement
Yesterday we reported that Ghosn got denied bail in Japan and is looking at months more in jail. And what does that mean? Renault, which has been doing everything it can to keep Ghosn nominally in charge, is finally giving in, as the Financial Times reports:
Unlike Nissan, which acted swiftly to remove him as chairman, Renault has so far opted to keep Mr Ghosn in position after saying it had not yet gathered sufficient evidence of wrongdoing to act.
However, people close to the company and the French state, have said that Mr Ghosn’s position would have to be reviewed if he is unable to fulfil his duties over the longer term. They have also stressed that such a move would not reflect any presumption of guilt.
Top Renault execs even went to Japan to figure out what happens next, which apparently “caught Tokyo by surprise,” per the FT. I guess nobody thought they’d see this day come.
Reverse: What They Really Mean When They Talk About Dangerous Roads
Neutral: How Bad Is Brexit Looking?
Let’s say you’re an auto exec. You’re running, I don’t know, Lotus. What’s your plan looking like for Brexit? How bad do you think it’s going to get?