Daimler Cuts Profit Expectations Ahead Of Looming Trade War

A production line of the Mercedes-Benz C-Class in Bremen, Germany.
A production line of the Mercedes-Benz C-Class in Bremen, Germany.
Image: Alexander Koerner (Getty Images)

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 that are your air, that you need to know to live.


1st Gear: Daimler’s Not Kidding Itself About This Potential Trade War

German automakers want to make a deal with the Trump administration to end car tariffs, but Daimler is preparing for the worst amidst this entire trade war—Mercedes-Benz’s parent company cut profit expectations because of tensions between the U.S. and China, according to Bloomberg.

Daimler thinks Chinese customers will buy fewer SUVs, many of which are built in Alabama, after China puts big tariffs on U.S. auto imports, and SUVs are the thing right now. There’s a good chance other companies will follow soon, too, if the outlook stays the same about a potential trade war.

From Bloomberg:

With the rising prospect of an all-out trade war, few industries will be spared and more companies may have to follow Daimler, said Nicholas Smith, a strategist at CLSA Securities in Tokyo. MillerCoors, the maker of Miller Lite and Coors Lite, warned last week that U.S. tariffs on aluminum imports could result in a $40 million hit to its bottom line.

Daimler’s competitors were less eager to draw conclusions, and some analysts suggested its warning might be premature. A Volkswagen AG spokesman said the company’s 2018 profit targets remain unchanged. BMW AG said that while it was monitoring developments, it too stood by its outlook.

The Munich-based company, second to Mercedes among luxury carmakers, last year exported more than 100,000 sport utility vehicles to China from the U.S. While that number will decline this year with BMW moving to produce its X3 SUV in China, it’ll continue to export the high-end X5. BMW is exposed to a potential operating-earnings hit of 100 million euros ($115 million) to 200 million euros, according to analyst Juergen Pieper at Bankhaus Metzler.

Volvo also spoke out about the potential trade war, saying if the administration imposes them, tariffs on foreign cars will threaten jobs at its new U.S. plant. Reuters has more on the Volvo story here, and Bloomberg has more on Daimler’s cut profit outlooks here.

2nd Gear: Audi Gets Approval To Test ‘Flying Cars’ In Germany

Oh, Lord help us all. Attempts at making flying cars have been a thing for a century now, yet companies still act like this is something new and exciting and not at all severely delayed. There will now be even more flying cars in the news and in the sky—at least, in some places—because Germany has given Audi the OK to test its new flying cars in and around the Bavarian city of Ingolstadt.


There’s no timeline for when the testing may start and it may all depend on when the company is fully prepared prototypes ready to fly, according to Engadget. Here’s some of the reasoning behind the move, from Engadget:

Transport Minister Andreas Scheuer saw the autonomous, mixed-mode transports bringing a “new dimension of mobility” and creating a “huge opportunity” for companies exploring flying car tech.

The move comes at a key moment for Airbus and Audi. Uber is ramping upits flying taxi development with a research center in Paris, putting pressure on its German rivals to step up their game. They’re clearly doing just that.


The good thing about Audi’s flying-car project is that, unlike a lot of companies, Audi’s actually trying to make a vehicle that drives and flies.

Crazy, right? You’d think that would be everyone’s goals, but a lot of companies and people toss out the wordflying car” for small, personal and city-oriented aircraft. But the thing that’s made flying cars so difficult to make over the past century is that a flying car is supposed to meet the requirements for both a car and an aircraft, which vary a ton in terms of weight, engineering and materials.


Promotional videos for this Audi aircraft show it operating in the air and then landing on a set of wheels to drive off on the ground—autonomously, it looks like—which is a start. If you’re going to make a flying car, at least do it right.

3rd Gear: You Better Believe Car Paint Colors Are Going To Stay Boring

These days, almost everyone buys a car in either black, silver or white. American roads actually look like a scene from before color television, except with all of the cars replaced by bulky crossovers and sadness.


As if it’s any surprise, that’s not changing anytime soon. Auto paint supplier BASF Coatings expects gray, blue, white and black to be the top car color picks for the 2022 model year, according to Automotive News, and there are apparently 65 BASF colors to choose from. There’s already a 2022 selection because colors are done four to five years ahead of time, Automotive News reports.

Here’s how the world’s rather boring color palette has changed in recent years, which isn’t much, according to Automotive News:

Deep and nonsaturated blues were named top car hues in the coating supplier’s trends report last year, the company said, reflecting changes such as young people migrating to cities, the emerging digital era and a resurging need to connect with nature. Blue was expected to join white and other neutrals among car buyer picks. Czornij said some of these trends have shifted and some have continued to this year.


Go out there and get a purple car. Be bold. Do something. Show the world that you’re more than just an average car-color choice.

4th Gear: Toyota’s Reportedly Cutting Costs To Put More Into R&D

Sources familiar with the matter said Toyota is cutting down its costs, starting with sales and marketing, to funnel more cash into research and development, according to a report from Reuters. The extra cash flow into R&D is to help the company keep up with competitors, the report said.


The sources called the sales operation of Toyota’s business “more wasteful” than its “hyper-efficient factory side,” according to the Reuters report. Toyota is apparently starting the cuts by canceling contracts with the communication and advertising agency its used for a long time in China.

From Reuters:

Toyota President Akio Toyoda and chief financial and risk officer Koji Kobayashi want to follow the example of Tesla, Google and Tencent — all of which rely heavily on cheaper, often more innovative non-traditional marketing.

They say the savings should be plowed into investment in emerging technology such as autonomous vehicles.

“We may be posting record profits, but we don’t think we are keeping up with their pace of investments,” one of the sources, a senior Toyota official, told Reuters.

To do that, Kobayashi wants to tap into money once earmarked for automotive marketing and general expenses, which for the year that ended in March totaled 2.72 trillion yen ($24.66 billion).

The company reported 2.4 trillion yen ($21.68 billion) in operating income in the same period, making Toyota one of the world’s most profitable automakers.


Innovation, right? Reuters has more on the story here.

5th Gear: GM Is Building $65 Million U.S. Warehousing And Logistics Project

General Motors has started on its biggest warehousing and logistics operation in the U.S. in 40 years, according to Automotive News. It’s planning a $65-million processing center north of Detroit, and GM broke ground on the 1.1 million-square-foot center Wednesday.


GM global vice president of customer care and after-sales Tim Turvey told Automotive News that the center is a way to smooth out GM’s operation and give it room to grow its parts operation, once it opens. From the story:

About 720 employees, 666 hourly and 54 salaried, will move to the new center in 2019 after its completion.

Turvey declined to give details on hiring plans or the scope of operations. [...]

“The building will more than double our current facility and give us room for growth,” Turvey told the crowd at the groundbreaking, “because we do plan to have our business grow and Burton will be a part of that growth.”

The center will have six ramp doors and 84 shipping and receiving docks, up from 35 currently, Lisa Veneziano, GM’s executive director of global aftersales supply chain warehousing and logistics, said at the event.


Turvey said the new center will be open in 10 months, according to Automotive News. That’s fast.

Reverse: The First Woman To Parachute From An Airplane

Georgia “Tiny” Broadwick became the first woman to parachute out of an airplane on June 21, 1913, according to the Smithsonian Museum. Broadwick saw an act with high-flying performers in 1907, and approached the owner because she wanted in. Broadwick began jumping from hot-air balloons, and later went up in an airplane.


The U.S. Army brought Broadwick on to demonstrate jumping from a military airplane in 1914, according to the Smithsonian. The museum’s webpage on Broadwish said her last jump was at age 29 in 1922, when ankle problems kept her from doing it any longer. She died in 1978 at age 85.

Neutral: Which Vehicle Buzzword Is Worse, ‘Dynamic’ Or ‘Flying Car’?

Mmm. Hard one.

Staff writer, Jalopnik



Serious question, does Trump have any idea how many “foreign” cars are actually built in the US?

I have read alot of articles about the tariff stuff and haven’t seen anything about him actually having any knowledge about what is actually produced here and by which manufacturers.

Anyone know of any articles that explain his (lack of) knowledge about car production in the US?

(NINJA EDIT: I am assuming he has no idea what is actually going on.)