Everything Is Sunny All The Time Always, Analysts Say

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This is The Morning Shift, our one-stop daily roundup of all the auto news that's actually important — all in one place every weekday morning. Or, you could spend all day waiting for other sites to parse it out to you one story at a time. Isn't your time more important?

1st Gear: Unexpected New Car Sales Slump In July

2014 has been a great year for new auto sales, with several companies reporting record numbers of deliveries on some months. But that came to a surprising and sudden halt in July, when motor vehicle sales fell 0.2 percent from June.


USA Today says that meant retail sales in general went flat in July. Should you be worried? Of course not! Here's an analyst to tell you why, via Reuters:

"Given the strong gains in labor market activity, along with other indications of strengthening domestic growth momentum, we expect this slowdown to be short-lived and we look for consumer spending to rebound strongly in the coming months," said Millan Mulraine, deputy chief economist at TD Securities in New York.

Yay, everything is awesome!

2nd Gear: Subprime Auto Loans Are Fine, Actually

As we slowly ease our way out of this recession, we are seeing a rise in subprime auto loans with super-high interest rates given out to buyers with less-than-stellar credit. Does this mean we could be headed for a crash like the housing market experienced in the mid-2000s, only on a smaller scale?


Of course not! Here's an analyst to tell you why, via Automotive News:

"The critics' concerns notwithstanding, it is difficult to view the increased availability of credit as a negative," said Cristian deRitis, a senior director at Moody's Analytics in West Chester, Pa.

"Vigilance is needed to protect borrowers, but expanded lending activity with some deterioration in performance may be symptoms of a lending market returning to normal rather than overheating," he said in a written analysis on Tuesday.


Yay, everything is awesome!

3rd Gear: More New Cars Mean More Used Cars

As I mentioned earlier, 2014 has been a good year for new car sales. But when people get rid of their old cars, they don't just drive them off cliffs to scam their insurance companies. They trade them in, and that means an increased supply of used cars on the market.


So with used car prices falling due to increased supply, automakers will have to up their new car selling game by increasing incentives, says Reuters.

Should you be worried that car companies won't be able to move their products without insane discounts that cut into profits? Of course not! Here's an analyst to tell you why:

Pete DeLongchamps, vice president of U.S. dealer Group 1 Automotive Inc, said that while used-car prices would continue to drop, pent-up demand for new cars remained strong because so many people delayed buying during the recession.

"There will be some shift in pricing, but I don't think it's enough to affect the market," he said.


Yay, everything is awesome!

4th Gear: China Is Getting Weird

China just fined Audi $40 million for breaking anti-monopoly laws, and they're cracking down on pricing of General Motors vehicles. Tensions are now running extremely high between the Chinese government and foreign automakers. From Bloomberg:

Business sentiment is deteriorating in China as dozens of foreign companies, including Germany's three biggest luxury carmakers, are being targeted in the country's broadest antitrust investigation since the nation's anti-monopoly law went into effect six years ago. The probes, focusing on the car industry, have also involved Japanese automakers and General Motors Co.

"Foreign companies in China used to enjoy a lot of incentives but there's a sense that this era is gone," said Kelly Liu, a consultant at the law firm of Carroll, Burdick & McDonough LLP in Beijing. "China is still a good investment in the mid-to-long term, versus mature markets, but the rules of the games have changed, and the environment is no longer as loose and incentives-driven as before."


5th Gear: Chrysler Cares About Safety Too, Says Chrysler

While Chrysler hasn't had the massive summer of recalls like GM, they have had some black eyes in the safety department, especially when it comes to that one pesky, fiery Jeep recall. As of July, no Jeeps had been serviced yet under that recall.


So Chrysler is making their own unit focused on vehicle safety. Again from Bloomberg:

Scott Kunselman, a senior vice president, will head the new unit at Chrysler, the third-largest U.S. automaker, according to a statement from the Auburn Hills, Michigan-based company. Kunselman will report directly to Chief Executive Officer Sergio Marchionne, who is also CEO of Turin, Italy-based Fiat SpA, Chrysler's owner. Previously, Chrysler's global engineering group was responsible for vehicle safety and regulatory compliance.

[...] Today's "action will help intensify the company's continuing commitment to vehicle safety and regulatory compliance," Chrysler said.




As part of a yearlong celebration of its 100th anniversary, a redesigned version of the Michelin Man—the corporate symbol of one of the world's largest tire manufacturers, makes an appearance at the Monterey Historic Automobile Races in Monterey, California, beginning on this day in 1998.



Neutral: Should we be worried about subprime auto loans?

Are we failing to learn from old mistakes or will it be a drop in the bucket compared to the housing crisis?

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