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: A Merger Offer From Sergio Is A One-Time Offer, Baby
Fiat Chrysler CEO Sergio Marchionne makes it well-known that he thinks merging his company with another large conglomerate is key to cutting costs and future growth. Problem is, nobody wants to take him up on that idea. He pitched it to General Motors’ Mary Barra earlier this year, and she and her board were like “Thanks, but no thanks.”
So will Marchionne ask GM again? According to the New York Times, he can take a hint:
“I was rebuffed once, and I won’t go back to get my nose bloodied a second time,” Mr. Marchionne said after participating in the ceremonial opening of contract talks between Fiat Chrysler and the United Automobile Workers union.
Mr. Marchionne has not backed off on his belief that automakers should join forces to maximize their capital investments in new technology. But he said Fiat Chrysler was not actively seeking a merger partner and can afford to wait until the right opportunity arises.
“The pitch is that there is a better to way to run this business,” he said. “I’ll wait, and we’ll get it done.”
You hear that, GM? Sergio didn’t really even want to go to the prom— I mean, merge with you anyway, so you go have fun with stupid Brad the quarterback, he’s gonna stay home that night with his buddies and drink Mountain Dew and play Halo and not think about you at all. So there.
2nd Gear: No More Two-Tier Wages?
Now onto the actual news from Marchionne’s UAW chat yesterday: he’d like to see an end to the two-tier wage system that pays veteran workers at a much higher rate than new hourly hires. From The Detroit News, here’s how that system works:
The two-tier structure was introduced in 2007 as a way to help Detroit automakers be more competitive with their foreign competition and help them during the economic downturn. Veteran tier-one workers earn about $28 an hour. New hires — so-called tier-two workers — top out at $19.28 for doing the same work.
Admittedly it’s pretty unfair, but Fiat Chrysler has benefitted the most from it with a higher level of second-tier workers than GM or Ford. But Marchionne wants to see it end.
Marchionne said it is a “huge obligation” for the automaker and UAW to eliminate two-tier wages, which both sides on Tuesday said is unsustainable and creates a divide in the workforce. He reiterated there are better ways for the company and union to help one another, such as profit-sharing.
UAW President Dennis Williams said during the event, “It’s essential to the long viability of the corporation to have employees that feel valued, and they aren’t.”
3rd Gear: Don’t Expect Iran To Open Up Right Away
Before the revolution, Iran was a western-friendly country with an affinity for western brands. And through purchases made in free trade zones in neighboring countries, they’ve been big in recent months on American-made cars like the Chevrolet Camaro. For the auto industry in general, Iran is seen as a market that is potentially very lucrative.
So with this pending nuclear treaty, is there a possibility of the Islamic Republic (and its 80 million residents, most of whom are under 30) to open up to official sales from Chevrolet, not to mention Apple and other giants? Via The Wall Street Journal, that may take a while:
The restrictions don’t end right away. American and European businesses can move in only after Iran implements the deal. That sets up an uncertain timeline for the actual lifting of sanctions, stretching out perhaps until the end of the year, or beyond, say analysts.
It could be a slow process to modernize Iran’s business environment. Though it has had business and political relations with Europe, the Islamic ideology of Iran’s leadership has always kept Western countries at arm’s length.
In recent years, hard-liners have come to play a key role in some of the country’s biggest industries, like energy and telecommunications. The Revolutionary Guard, the arm of Iran’s military charged with protecting its Islamic system, is likely to remain under sanctions for alleged terrorism and human-rights violations.
That whole story is worth a read.
4th Gear: The Tacoma Comes With A GoPro Mount
Toyota makes some damn good trucks (in Texas!) but their sales remain a drop in the bucket compared to the giants from GM, Ford and Ram. So what are they doing to be different? With the 2016 Tacoma, the answer is the industry’s first standard GoPro mount inside. From Automotive News:
For Toyota, the partnership is a low-cost way to appeal to buyers who drive through muddy Texas trails or Utah desert canyons. It’s also a notable win for GoPro as Japanese camera makers such as Sony Corp. try to crack the $2 billion action-camera market.
“These true off-roaders are out there, and they all have GoPros on their trucks,” said Michael Sweers, Tacoma’s chief engineer and a GoPro camera owner. “Whether they’re fishing, off-roading, camping and so on, they’re all recording their adventures.”
You still have to shell out for your own camera, though, which strikes me as a missed opportunity.
5th Gear: Not Cool, Honda
American Honda Finance Corporation will pay $24 million in restitution, according to Reuters, after the U.S. Consumer Financial Protection Bureau and Department of Justice said their lending practices caused minorities to pay more than white borrowers:
According to the complaint, Honda charged thousands of African-American, Hispanic and Asian/Pacific Island auto loan borrowers higher interest rates solely because of their race.
The average African-American borrower paid about $250 more during the course of the loan, the regulators said.
As part of the agreement, the company has agreed to limit car dealers’ interest rate markups on Honda loans to between 1 and 1.25 percentage points.
Reverse: But Not Their Last
On this day in 1903, the newly formed Ford Motor Company takes its first order from Chicago dentist Ernst Pfenning: an $850 two-cylinder Model A automobile with a tonneau (or backseat). The car, produced at Ford’s plant on Mack Street (now Mack Avenue) in Detroit, was delivered to Dr. Pfenning just over a week later.
Neutral: Will The Merger Talk Die?
Whatever happened to those activist investors Sergio wanted to push into a GM merger? Does no one but him want this to happen?
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