Car Sales Are Down In China Oh God Everybody Panic

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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.



No! Not you, China! You were supposed to be the golden goose for automakers! You were supposed to produce an endless supply of millionaires who would buy new cars like the end of the world was coming! What happened? Why have you abandoned us?

As the country enters a stock market bust that has erased some $3.2 trillion in value, new car sales are declining fast for the first time in two years, reports Bloomberg:

Carmakers including Volkswagen AG and General Motors Co., which count China as their largest market, have cut prices to defend market share as demand slows and domestic rivals lure increasingly value-conscious customers with cheaper sport-utility vehicles. A record rally in China’s stocks turned into a rout last month, with the benchmark Shanghai Composite Index plunging more than 30 percent since June 12.

“Judging from the momentum, the second half is not looking too optimistic,” said John Zeng, Shanghai-based managing director at researcher LMC Automotive. “The growth slowdown will continue. Automakers will be more cautious in terms of production.”

We’re all doomed.

2nd Gear: But Automakers Aren’t Giving Up

To say that Western and Eastern car companies have put their eggs in the China basket would be the understatement of the sum total of human existence. So what are they gonna do with sales slowing down? Some are cutting prices, while others, like Ford, are betting on new models. From Reuters:

“We expect to see a stronger second half as new products we’ve been launching continue to build momentum and as we launch additional products,” Ford China CEO John Lawler said in a written statement.

Those new models include revamped versions of the Taurus, Everest, Explorer, Focus and Focus ST.


3rd Gear: Maserati Is The New Ferrari

With Ferrari getting spun off from Fiat Chrysler later this year, the conglomerate loses its top luxury brand. It’s a huge profit-maker and prestige generator. So what will Fiat Chrysler do without Ferrari? It’s simple, Sergio Marchionne says to Bloomberg: Maserati will step up.

Ferrari’s power, prestige and profits have helped bankroll the more pedestrian Dodges, Jeeps, Fiats and Chryslers that account for most of Fiat Chrysler Automobiles NV’s revenue. Betting that Maserati can play a similar role, Marchionne is adding an SUV and coupe to the model lineup and opening plush U.S. dealerships from Westport, Connecticut, to San Jose, California.

“Maserati is very important,” Marchionne said in an interview. After the Ferrari spinoff, “Maserati becomes the most coveted, exclusive brand that we have.”


The whole article is worth a read, but here’s the important stuff:

Boosting profit is crucial if Marchionne is to generate sufficient cash to develop the next generation of vehicles and technologies. His only other option is to share the costs by merging with another automaker, which seems unlikely in the short term despite his efforts to cut a deal.

Marchionne has pledged to boost Maserati margins to 15 percent and almost double global sales to 75,000 by 2018 — a tall order, analysts say. IHS Automotive forecasts Maserati registrations of about 54,000 by then.


Good luck.

4th Gear: Harry Wilson Isn’t Hot For A GM-Fiat Chrysler Merger

Speaking of Fiat Chrysler, remember Harry Wilson? He was the former bailout task force member turned General Motors activist investor who forced them to buy back $5 billion of their own stock this year. How would he feel about the much-talked about potential merger between Fiat Chrysler and GM?


Nah, bro, according to the Detroit Free Press:

Asked Tuesday morning on CNBC whether a merger or acquisition between the two automakers that went through taxpayer-funded bankruptcies should happen, Wilson said, “I don’t think so.”

“I have no disrespect for Sergio Marchionne (CEO of FCA). He’s a really smart guy,” Wilson said. “It’s true that there’s a lot of misspent capital in the auto industry, but that is only part of the equation. The complexities of an auto merger are massive; historically, they have not had very good results.”


This is all correct.

5th Gear: They’re Blowing Up In Japan Too

I feel like it’s been a hot minute since The Morning Shift heard from our old friends at Takata. What are they up to these days? Exploding in new and exciting places, like Japan for the first time, reports Reuters:

Nissan Motor Co (7201.T) on Wednesday said an air bag made by Takata Corp (7312.T) installed in one of its cars had deployed with too much force and caused a fire in a light crash in Japan, marking the automaker’s first such case in the country.

Nissan and several rivals have recalled millions of cars globally because of a defect making Takata-made inflators explode and spray shrapnel. Regulators have been unable to determine the cause but have linked the defect to eight deaths. The latest case involved the passenger-side inflator in an X-Trail sports utility vehicle made in August 2001 and recalled in April 2013, a Nissan spokesman said.


The driver suffered from light facial burns, which is better than a lot of people in Takata-equipped cars have fared.


Reverse: Boy Was That A Mess

On July 8, 2004, Suzuki Motor Corporation and Consumers Union, publisher of Consumer Reports magazine, agree to a settlement in an eight-year-long lawsuit in which the automaker accused Consumer Reports of damaging its reputation with claims that its Samurai sport utility vehicle (SUV) was prone to rolling over.


Neutral: How Can Maserati Replace Ferrari?

We could talk about China’s troubles but I think this is the more interesting story. Can Maserati really step up to take the place of Ferrari? They’d have to be much more of a luxury competitor than they are now, taking on BMW and Mercedes and the exotics in a way they’ve never really done. But where does that leave Alfa Romeo? Won’t there be some overlap there?


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Neutral: How Can Maserati Replace Ferrari?

1. Moar power

2. Sexy designs.

3. Exhaust notes engineered to symphonic perfection.

4. A knuckle-dragging Luddite as CEO

5. Music video, television, and movie product placement

6. A fuckton of branded caps, key chains, windbreakers, coffee mugs, the occasional laptop, spanx, pasties...

7. A shady, overpriced “leasing” program for their experimental track-only models

(Nah but srsly, 1 through 3 should do it)