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: Elon Stays Elon
Things are not looking good for Tesla right now. So, of course, its CEO, Elon Musk, has jokes.
Tesla just had its worst month in seven years, according to Bloomberg.
Tesla’s stock fell by 22 percent in March, the steepest monthly drop since December 2010, the year the company went public. Moody’s Investors Service last week to cut Tesla’s credit rating further into junk status and said the company may soon have to raise more than $2 billion, sending its bonds to all-time lows.
And that’s on top of a Tesla owner being killed in an incident involving the company’s semi-autonomous Autopilot system in which the car’s front end was completely ripped off, before catching fire.
Elon had more jokes though on April Fools’ Day, which is truly the worst day for working journalists.
2nd Gear: Someone Died Because Of A Self-Driving Car Less Than Two Weeks Ago, But That Isn’t Stopping Waymo
On March 23, an Uber car that was testing the company’s self-driving system struck and killed a woman in Arizona. Uber, of course, has no damn business testing self-driving cars, but the incident hasn’t stopped Waymo, according to Bloomberg:
It didn’t pull back on tests in the nearby suburb of Chandler, where passengers are already taking rides with no one behind the wheel. Its fleets elsewhere didn’t abandon public streets, a precautionary move made by Toyota.
John Krafcik, chief executive officer of Alphabet Inc.’s Waymo, decided to wait.
“What really brought it home was the Tempe police releasing the video,” he said. He watched the grainy footage of the world’s first self-driving death. Uber’s car barrels down the road, a woman pushing a bicycle crosses into the frame, and neither the autonomous car nor its human monitor acts to slow down. The safety driver appears to be mostly looking away until impact.
Waymo is also close to completing a deal with Honda, following deals with Jaguar Land Rover and Fiat Chrysler. It’s unclear what all three deals will end up looking like, but Krafcik is confident that Waymo will have the tech down. Maybe too confident?
For Krafcik, the crash video validated the philosophy Waymo had been following long before he joined, back when it was still part of Google: Never trust humans in cars.
“That just reinforced it,” he told Bloomberg during an interview on March 24 in Las Vegas. Later that day he took the stage at a car dealer convention and went further: If a Waymo vehicle encountered a similar situation, Krafcik claimed, the car would have avoided the death without human help.
3rd Gear: What Is GM’s Fate In South Korea?
GM has been consolidating its overseas operations, pulling completely out of Europe and, now, possibly (?) anticipating a move out of South Korea as well. The newest sign in South Korea: a proposed suspension of a shift at its plant outside Seoul, Reuters says:
GM Korea said on Monday its domestic sales for March more than halved from a year earlier, deepening a decline in the aftermath of the announcement of planned restructuring of the money-losing operation.
The parent company said in February it would shut down its factory in the southeastern city of Gunsan and decide on the fate of its three remaining plants in South Korea amid mounting losses in the country.
“We have to fight so that the future of the No.2 assembly line (in the city of Bupyeong) does not follow that of the Gunsan factory,” union workers at the assembly line said in the newsletter.
The newsletter showed the proposal to suspend the second shift at one of two factories in Bupyeong was made on Wednesday, during a meeting with union delegates at the plant.
A GM Korea spokesman said the firm is considering changing a shift system at the plant, but has not yet discussed the matter with the union.
4th Gear: People With Bad Credit Aren’t Buying Cars
Something similar happened after the housing bubble ten years ago; banks started learning that extending credit to people with bad credit might, in fact, be bad business. People with bad credit also stopped applying for mortgages. It’s happening now with The Cars, according to Bloomberg, as interest rates and car prices rise.
In the first two months of this year, sales were flat among the highest-rated borrowers, while deliveries to those with subprime scores slumped 9 percent, according to J.D. Power.
The researcher’s data highlights what’s happening beneath the surface of a U.S. auto market in its second year of decline after a historic run of gains. Automakers probably will report sales in March slowed to the most sluggish pace since Hurricane Harvey ravaged dealerships across the Texas Gulf Coast in August, according to Bloomberg’s survey of analyst estimates.
“There’s not a bubble of subprime. But as interest rates rise, it’s going to affect” those customers first, said Dan Mohnke, senior vice president of U.S. sales for Nissan Motor Co. “That’s the part of the market that’s really coming down.’’
When the financial crisis and recession hit the U.S. a decade ago, many Americans who had been affluent enough to buy new vehicles suffered investment and job losses that hurt their credit scores. During the recovery, lenders took chances on consumers with lower FICO scores, partially on the notion that borrowers prioritize car payments ahead of other expenses. Several financial companies started to tighten their standards more than a year ago.
5th Gear: Mitsubishi Is Still Around In North America And Growing
Mark Chaffin, the vice president of fixed operations, service and product support for Mitsubishi Motors North America, gave an interview to Automotive News in which he said that the automaker’s almost practiced nonchalance when it comes to making cars and competing in the US market is working:
Now things are again looking up for the Japanese brand, with five consecutive years of U.S. sales growth in the books and the sale of a 34 percent stake in parent Mitsubishi Motors Corp. to Nissan Motor Co., which promises financial stability for the three-diamond brand. With more than 2 million vehicles in operation on American roads, the company is preparing to improve its fixed operations in anticipation of continued growth.
Q: Mitsubishi’s units in operation have increased for five consecutive years. How is this impacting fixed operations?
A: It’s a great place to be — finally. We are certainly on a path of continued growth. However, we really need to be proactive at preparing for potential capacity constraints in the future. That’s what we are taking a deep look at now with our dealer body.
The Mitsubishi Mirage makes 78 horsepower! 78.
Reverse: Walter Chrysler, Who Founded Chrysler, Is Born
Neutral: What’s The Worst Automotive April Fools Joke?
Just a reminder, the Aztek was not, strictly speaking, a joke.