Carmakers Are Facing A Harsh New Reality In Post-Shitstorm China

Illustration for article titled Carmakers Are Facing A Harsh New Reality In Post-Shitstorm China
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1st Gear: The 2016 Chevrolet Volt Beats The Crap Out Of The Last One

General Motors was a bit late to the hybrid game with the last Chevrolet Volt, but their effort certainly wasn’t a bad one — far from it. The new 2016 Volt, set to on sale this fall, looks to be even better. It’s EPA rated at 53 electric miles, which beats the outgoing car’s 39 mile electric range by a country mile. (Fourteen country miles, to be exact.) Via Automotive News:

The Volt’s overall range also will increase, to 420 miles from 380 miles on the current car, thanks to a more fuel-efficient gasoline-powered generator. The redesigned Volt will use a 1.5-liter, four-cylinder engine rated at 42 mpg. The outgoing Volt’s 1.4-liter engine has a 37 mpg rating.

Overall, the redesigned Volt’s miles per gallon equivalent (mpge) rating will be 106, vs. 98 for its predecessor.

2nd Gear: Toyota Not Optimistic On China

Are automakers finally taking a realistic stance on China and its prospects in the aftermath of the stock market meltdown? It would appear Toyota is, according to Reuters:

Japanese automakers are widely expected to fare better than rivals due in part to sales of new sports utility vehicles (SUVs). But at Toyota, price competition has particularly hit its RAV4 as car makers seek to capitalize on a vogue for SUVs.

“In April-June, vehicle sales have progressed firmly but as for profitability, we can’t be optimistic,” said Managing Officer Tetsuya Otake.

Spokesman Hiroshi Hashimoto called the market “extremely hard” and added “there isn’t much profitability in China.”

Realism is a good thing.

3rd Gear: BMW Takes A Hint Too

Toyota’s not the only automaker that has decided to be a little more bearish in China lately. BMW, which has already cut production by 16,000 cars in its largest market, may reevaluate their financial goals this year as well, Bloomberg reports:

BMW AG said slowing sales in China may force it to revise this year’s profitability goals, challenging new Chief Executive Officer Harald Krueger as he seeks to defend his lead in the global luxury-car industry.

Earnings before interest and taxes from automaking are still expected at 8 percent to 10 percent of sales, though “if conditions on the Chinese market become more challenging, we cannot rule out a possible effect” on the forecast, the Munich-based manufacturer said Tuesday.


With GM doing better in China than expected, BMW may yet be the biggest loser there.

“BMW has been bitten the most by the Chinese slowdown,” Michael Raab, a Frankfurt-based analyst at Kepler Cheuvreux, said in a note. “BMW missed market expectations on most of its key metrics.”


4th Gear: Hooray For Bad Things Not Happening!

Meanwhile in America, why were auto sales in July so good yet again? Over in the Automotive News opinion pages, Jesse Snyder wondered the same thing, and he found an analyst who said it’s pretty much because “nothing bad happened.” Sounds silly, but it’s not wrong.

But to Wakefield’s point, our auto trip really did make good time today. No tourist traps, quick pit stops and no construction detours. See? Nothing bad happened.

That’s how July auto sales went, too. No geopolitical crisis, no financial panic, no market crash. Nothing to spook would-be new-vehicle buyers. Nothing to distract from the reassuring positive buzz of background info.

As Wakefield notes, consumers are quick to delay auto purchases after bad news, “but it takes time to feel the time is right to buy a car.”

So without alarm bells clanging, buyers can focus on positives like the strong U.S. economy, job growth, steady credit, low auto loan rates and very attractive new vehicles loaded with new technology.


Good things are the best! Bad things are terrible! More good things and less bad things! #hottake

5th Gear: RIP Mel Farr

Detroit Lions running back Mel Farr died Monday at age 70. In addition to his football career, he was one of the nation’s biggest car dealers. From The Detroit News:

In 1974, he retired from football after being traded to Houston. The next year, Farr launched a new career, becoming a partner at Cook-Farr Ford in Oak Park; soon after he’d be known for his “Mel Farr Superstar” television ads with an announcer intoning at the start of the commercial: “Fighting high prices to bring you a Farr better deal.” He pitched the cars wearing a red cape and pretending to fly.

Within three years, Farr had assumed sole ownership of the dealership, and President Jimmy Carter cited him for “outstanding achievement” in business.


Reverse: If You Ain’t First, You’re Last

“Talladega Nights: The Ballad of Ricky Bobby,” an irreverent comedy based in the outlandish (fictionalized) world of American stock car racing, premieres in movie theaters around the United States on this day in 2006.


Neutral: Is The New Volt Poised To Be A Sales Hit?

The 2016 Volt is unquestionably better, but with gas so cheap right now the market hasn’t been great for sedans or electrics and hybrids. Will it be a hit or will it get outpaced by crossovers?


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It would be great to see the tech used for the Volt move onto other body styles and platforms, especially if they go to biofuels or dual fuel motors.