The world’s largest car market just faltered, a diesel cheating scandal nears its end, and y’all are still dumping money into autonomous cars. All that and more in the Morning Shift for January 9, 2019.
1st Gear: This Doesn’t Look Great
I still surprise everyone I talk to at parties when I remind them that China is the world’s largest car market, significantly bigger than what we’ve got here in America. Growth there has kept a lot of random shit afloat, from boutique supercar manufacturers to, uh, Buick. Anyway, with 2018 in the books we can see that it has stumbled, as Bloomberg reports in a wire:
The growth engine for the world’s car industry has been thrown into reverse, with China recording the first annual slump in auto sales in more than two decades and more pain predicted in 2019.
Sales in the world’s biggest market fell 6 percent to 22.7 million units last year, the first annual decline in at least two decades, the China Passenger Car Association said Wednesday.
The unresolved trade war and a slump in Chinese stocks is putting off buyers, signaling more trouble for an industry where warning lights are already flashing worldwide.
Maybe this is just a blip and not a sign of a trend. But if I was Buick, I’d be worried at the moment. Also I would have portholes, which would be weird.
2nd Gear: Fiat Supposedly Close to Closing Up Its Own Diesel Cheating Scandal
The scale of Dieselgate with Volkswagen has been so colossal that it has made us forget some of the other big certifications cheats of the past few years. Remember Mitsubishi goosing numbers with over-inflated tires? Nah? That’s fine.
It had also completely slipped my mind that Fiat Chrysler had gotten sued by the U.S. government about cheat devices on its own diesel vehicles here in the United States in those distant days of 2017. It was a kind of confusing case summarized here, but apparently it’s nearing its end, per another Bloomberg wire report:
Fiat Chrysler Automobiles NV is nearing a settlement with the U.S. Justice Department that would end a two-year criminal investigation into whether it knowingly sold diesel vehicles that violated clean-air rules, according to two people familiar with the matter.
The resolution would include a financial penalty in line with Fiat Chrysler’s guidance to investors, one of the people said. The company is also getting closer to settling related civil litigation over diesel-rigging allegations, a third person said. Fiat Chrysler set aside $810 million in October for expenses related to all diesel probes.
The criminal matter is part of a multi-agency investigation into the sale of diesel-engine vehicles that the government alleges were equipped with software that masked the true carbon emissions of the cars in lab tests.
The Environmental Protection Agency and California Air Resources Board in January 2017 alleged Fiat Chrysler sold 104,000 diesel-powered SUVs and pickups that violated U.S. emissions regulations. The regulators said 3.0-liter diesel engines used on some Jeep Grand Cherokee and Ram 1500 models contained pollution-control software that violated emissions rules.
The final resolution to all of this is that we may just lose diesel cars altogether (FCA promised no more diesels by 2022, for example), which would be weird, but not the weirdest thing to happen in the auto industry.
3rd Gear: GM to Oshawa Union: Nah
Remember when GM announced it was going to close a bunch of plants and everyone freaked out because it seemed to violate GM’s union agreements?
Anyway, the issue has come up again, with the union at Oshawa in Canada asking GM to, you know, not put them abruptly out of work. GM has heard the union’s request... and summarily rejected it, as the Detroit News reports:
After Tuesday’s meeting between GM manufacturing leaders and [Canadian trade union] Unifor officers, the second in less than three weeks, GM released a letter to Unifor president Jerry Dias that rebuffed the union’s pleas to reconsider plans to phase out the products built at the plant in Oshawa, Ontario that employs nearly 3,000 workers.
“Unfortunately, all Unifor’s proposals would involve substantial incremental costs and a further deterioration of GM’s competitive position,” GM’s vice president of manufacturing and labor relations Gerald Johnson and president of GM Canada Travis Hester wrote. “Having completed an analysis of Unifor’s proposals, GM has determined that it cannot pursue them because they would not combat the declining economic and market factors that must be addressed.”
I am sure this will all be fairly and cleanly resolved, with no more drama whatsoever.
4th Gear: Autonomous Car Startup Aurora Expected to Raise $500 Million
I am entranced by the Silicon Valley-ness of this story, which took me a minute to make sure I had straight. It’s news, but also, not? In any case, here’s what was reported first by Recode:
The startup Aurora — which is not yet two years old but has made waves in the autonomous-driving industry with a highly regarded executive team from Tesla, Uber, and Google — is slated to be valued at over $2 billion in a new fundraising round, Recode has learned.
Sequoia Capital is expected to lead a financing round of at least $500 million in the company, according to people familiar with the matter. The investment, which hasn’t closed, is shaping up to be the biggest commitment yet by Sequoia, arguably the most prestigious venture capital firm in Silicon Valley, into the booming, capital-intensive world of self-driving car technology in the US.
“The investment, which hasn’t closed, is shaping up to be” is one of my new favorite phrases to have read in a news report. I don’t know what could be more tech industry than this.
5th Gear: Where Have I Heard This Before?
You’d be forgiven for forgetting that CES is on at the moment, as it’s reportedly a bit of a dud. Rather, it’s reportedly lost a lot of the wildcat enthusiasm for self-driving tech, as the Financial Times reports:
The first wave of driverless car technology is nearly ready to hit the mainstream — but some carmakers and tech companies no longer seem so eager to make the leap.
The change in mood has been evident this week at the Consumer Electronics Show in Las Vegas, which has become an annual showcase for the technologies transforming the auto industry.
The FT highlights Audi, which a few years ago was showing off a “level 3" Audi A8, and now, with still no deployment of that tech, Audi spent the show talking about how it’s talking with regulators about working on road safety. Road safety!
Makes you wonder if autonomous cars will ever happen!
I wonder where I have heard this before!
Reverse: Ok But When Do We Honor The Z3?
Neutral: Is the Car Market Cooling Or Is This Just a Trumpian Blip?
Do you think the rapid expansion of the Chinese auto market is cooling altogether, or do you think this falter is just a temporary blip thanks to Trump tariff issues? That is, if you’re an auto exec, are you still making plans contingent on an expanding Chinese market four or five years from now, or are you staying bullish?