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: Buick For America’s Shining Reliable Future
Perhaps you’re the kind of buyer who puts tremendous faith in Consumer Reports’ annual reliability rankings. (Perhaps instead you’re the kind of person looking at a Craigslist Miata that requires a quart of oil every two days and says “This is fine.”) If you’re the first kind, then you may want to put a Buick on your shopping list! The brand ranked third behind Lexus and Toyota, respectively, the first-ever American brand to rank in the top three.
Also, Honda’s out because the new Civic—which I found to be a very good car—has some frustrating interface issues. Take that, Japan! Via Bloomberg:
The survey, a buying bible to car shoppers that has been dominated by Japanese automakers, has more international representation this year. As other automakers catch up to Japan’s manufacturers, both Subaru and Honda tumbled from the top group of “more reliable” brands, with Honda’s Civic compact car losing its longstanding recommendation from Consumer Reports.
Besides GM’s Buick, Volkswagen AG’s Audi luxury line ranked fourth and Kia Motors Corp.’s namesake brand came in fifth. Sedans, selling poorly amid low fuel prices, scored best, while hot-selling SUVs are among the most error-prone models because of their complexity. Dashboard infotainment systems and fuel-saving multispeed transmissions caused the most trouble.
“Certainly, Lexus and Toyota know what they’re doing, but look at the top five: We’ve got America, Germany and South Korea — it’s anybody’s ballgame at the top,” said Jake Fisher, the magazine’s director of automotive testing, in an interview. “GM is making some very good cars today and Buick’s cars are very reliable.”
Also out—the Tesla Model X, thanks to its many issues, although Tesla says most of those have been fixed now.
2nd Gear: GM Makes That Dollar
Today’s a good day for General Motors, then! The automaker said net income for Q3 doubled to $2.77 billion, a post-bankruptcy high. Nice! Via Automotive News:
GM also generated record revenue for any quarter since its 2009 bankruptcy of $42.83 billion, up 10 percent from a year earlier.
“Our record third quarter, led by strong performance in the U.S. and China, reflects our determination to deliver on our commitments,” GM CEO Mary Barra said in a statement. “We will continue executing our plan to deliver earnings that enhance shareholder returns.”
GM posted adjusted earnings before interest and taxes of $3.54 billion, a fifth consecutive quarterly record post-bankruptcy. It earned an adjusted $3.5 billion in North America, up 5.9 percent, while modest losses in Europe and South America canceled out income from international operations and GM Financial.
[...] GM’s adjusted net income, equal to $1.72 a share, was nearly 20 percent better than the estimates from Wall Street analysts.
Maybe this can help with GM’s stock price problem.
3rd Gear: Making A Car Is Hard
“Making a car is hard.” If I could sum up Silicon Valley’s involvement in automaking in 2016, it would be that. Google, Apple and more have stumbled along the way, while the established automakers have caught up or even led the way in the tech game. We can’t all be Tesla. Here’s Bill Ford calling out the Valley on its bullshit in Bloomberg:
“There was this presumption that we were too dumb to get it,” said the Ford Motor Co. executive chairman and great-grandson of auto pioneer Henry Ford. “The conversation has really shifted.”
He’s not kidding. Tech giants Apple Inc. and Alphabet Inc.’s Google, once intent on disrupting, if not destroying, Detroit, have concluded for now that they don’t want to build cars. Sure, they still bank on supplying the autonomous software that will drive robot rides, but the concession that they’re not up to the complex task of mass production tilts the balance of power to traditional automakers.
Vehicle manufacturing is a massive undertaking. There is the metal bending and assembly, a highly evolved process in itself. Car companies also integrate millions of lines of code that control everything from the radio to the radar sensors that will soon allow hands-free driving. Detroit also has deep experience managing the long chain of suppliers that provide roughly 30,000 parts.
All that complexity is “something a lot of I.T. companies getting into the business realized the hard way,” James Kuffner, former head of Google Robotics and now chief technology officer at the Toyota Research Institute, said. “Despite what a venture capitalist tells you, making a car is hard.”
4th Gear: Fiat Chrysler Does Well But Is Dinged By Recall Costs
And here’s how everyone’s favorite Italian-American automaker did in Q3. Via The Detroit News:
Fiat Chrysler Automobiles NV on Tuesday reported a profit of about $659 million (606 million euros) during the third quarter, despite recall costs and lower sales in North America, its largest market.
FCA said its adjusted earnings before interest and taxes rose 29 percent to $1.63 billion (1.5 billion euros). Earnings before interest and taxes for the automaker increased from a year ago to $1.46 million (1.34 million euros).
Adjusted earnings for the second quarter in North America were about $1.39 billion (1.28 billion euros), a slight increase from $1.29 billion (nearly 1.186 billion euro) during the same time from 2015. FCA attributed the increase to positive net pricing.
Shipments of vehicles in North America fell 8 percent, from 685 million in the third quarter of 2015 to 627 million this quarter, thanks in large part to the planned reductions in the Chrysler 200 and Dodge Dart. Net revenue declined 5 percent to $18.30 billion (16.810 billion euros) because of those lower shipments and a higher fleet mix.
5th Gear: Protecting From Car Hackers
On Monday the National Highway Traffic Safety Administration released new goals and guidelines for what automakers need to do to keep cars safe from hacking. Here’s an overview from The Detroit Free Press:
The goals are:
Expand and share auto cybersecurity knowledge.
Set industry-based best practices and voluntary standards.
Develop software that counteracts hacking of vehicles.
Determine feasibility of minimum performance standards.
Gather research data that all businesses and the NHTSA can use to develop policy and enforcement.
“In the constantly changing environment of technology and cybersecurity, no single or static approach is sufficient,” said NHTSA Administrator Mark Rosekind. “Everyone involved must keep moving, adapting and improving to stay ahead of the bad guys.”
As with the guidelines for regulating autonomous vehicles that the NHTSA released last month, the agency is taking an open approach because its staff and engineers who develop new cars and trucks are learning as they go.
There are as many as 100 million lines of software code in many new vehicles. The more these products depend on software for everything from powertrains to infotainment to the partial and full ability to drive themselves, the more opportunity they create for hackers to digitally hijack them.
Reverse: I Was There, It Was Awesome
Does this mean a big win for GM’s most perplexing brand, or will it fail to move the needle much?