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: The SUVs Were Profitable, Duh
I feel like every time it’s my turn to do The Morning Shift, I invariably end up writing about how well SUVs are selling. Dark times, my friends, dark times. Fiat Chrysler, which offers a number of SUVs, is enjoying a nice surge in profit as a result, reports Bloomberg.
Models like the Jeep Compass and Maserati Levante are doing very well indeed, and that presages how it will plan future products. From the story:
Chief Executive Officer Sergio Marchionne eliminated several passenger cars including the Chrysler 200 so that the Italian-American automaker could better tap robust industrywide demand for roomier and more rugged models. The pivot paid off in the quarter that ended last month, when adjusted earnings increased 17 percent and beat analyst estimates.
“Marchionne’s shift to SUVs is paying off as you see a jump in profit with lower revenue, especially in North America,” said Vincenzo Longo, a strategist at IG Markets in Milan.
The publication notes that this is part of Marchionne’s “profit over sales growth” plan as he gets the company ready for his departure in April 2019. The company wants to make sure that it’s positioned strategically when the industry changes.
For now, the beat of the SUVs still marches on. The new Jeep Wrangler is right around the corner and a fully redesigned Ram 1500 truck is on its way as well. Let’s burn all the oil when it’s still cheap!
2nd Gear: Trump Is A “Risk” For German Automakers
German automakers, well aware of U.S. President Donald Trump’s opposition of the North America Free Trade Agreement and his criticisms of importing cars into the United States, say that he is a risk for business, according to Automotive News Europe. Such strong language! I don’t think Trump can come back from this one.
From the story:
“So far there has been no negative effect on our business,” Daimler CEO Dieter Zetsche said at a conference on Tuesday. “But of course, it is a risk. At the end of the day, it isn’t my call. I am an engineer and not a cartel expert. But I know that it was first and foremost about standards and similar issues that in the end helped customers because it increased efficiencies.”
German automakers benefit especially from NAFTA because Mexico plays such an important part in the production of U.S.-sold German cars.
In the past, Trump has reportedly called Germans “very bad” and vowed to “stop” their sales in the U.S.
3rd Gear: Toyota Cutting Back
Back in August, we learned that Toyota and Mazda would team up to build a $1.6-billion U.S. assembly plant. It would begin operations in 2021 and be capable of producing 300,000 cars a year, making it a coveted get for numerous U.S. states vying for the venture. On the Mexican side of things, Toyota is also shifting resources around.
After the Mazda partnership, Toyota has decreased its investment for a pickup factory in Mexico, according to Automotive News. Originally, it had planned to spend $1 billion. Now, it has cut that amount down to $700 million.
From the story:
Toyota said it will now spend about $700 million on the factory under construction in the central Mexican state of Guanajuato rather the $1 billion it originally budgeted.
“The new investment figure does not change our long-term commitment to Mexico,” a company spokesperson said. “However, change is necessary in order to secure the long-term viability of our facility and our operations.”
Toyota said the decision to cutback initial capacity at the Guanajuato plant was made in order to balance capacity with demand.
The plant was originally meant for the Corolla sedan but will now build the Tacoma pickup.
4th Gear: Speaking Of Maserati
There’s a second Maserati SUV coming, apparently!
The news comes from Automotive News Europe, which reports that the Italian automaker has plans to launch a second SUV model by 2020 with Alfa Romeo underpinnings.
From the story:
The model will be positioned below the Levante, Maserati’s first SUV, and will help the brand to reach 70,000 to 80,000 vehicle sales a year, Marchionne said. Maserati’s volume rose to 36,000 from 23,900 in the first three quarters, helped by full availability of the Levante.
The new SUV will also help Maserati to boost annual earnings to 1 billion euros, Marchionne told financial analysts on a third-quarter earnings call on Tuesday.
The SUV will use Alfa Romeo’s Giorgio rear-wheel-/all-wheel-drive platform that also underpins Alfa’s Stelvio, which went on sale this year, although its powertrain likely will be unique, Marchionne said. The Levante is based on the same platform as the Ghibli sedan.
Awesome. Great. Fantastic. I am sure it will also sell super well.
5th Gear: Bye, Bitch
Lexus is the latest of numerous companies, brands and celebrities publicly distancing themselves from Harvey Weinstein after allegations that he sexually harassed or assaulted women. Lexus was a sponsor of Project Runway, which Weinstein Co. produces.
In an email to Reuters, a Lexus spokesperson wrote,
“Lexus has chosen to terminate its agreements with The Weinstein Company that saw the luxury automaker working with the film studio on certain film and television projects.”
Lexus also will no longer partner with the company for its Lexus Short Film series, which was a program where emerging filmmakers were invited to submit their work for an opportunity for production by Weinstein Co.
Reverse: A Boxer Against A Racer
Neutral: Do You Think This Investment In SUVs Is Sustainable?
It seems pretty precarious to me. As soon as oil prices go up, I’m not sure people will be as keen to buy the big cars as they are now.