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: Fake Fake Fake
Over the past few years Fiat Chrysler has posted record new car sales figures every month, but lately all signs point to thousands of those sales being faked. And that’s a big enough deal to cause the automaker to be investigated by the FBI and Securities and Exchange Commission.
Today Automotive News has a nice exclusive on how the sales figure greasing apparently worked, citing sources who spoke about an internal review that occurred last year:
An internal review ordered in mid-2015 by top Fiat Chrysler executives uncovered thousands of vehicle sales reported by FCA brands for which there were no actual buyers, according to two company sources.
[...] They said the sales numbers were inflated in part under pressure to preserve FCA’s streak of U.S. monthly year-over-year sales increases, which now stands at 75 months. One source cited dealer complaints about the practice that reached CEO Sergio Marchionne before Bigland sought to end it. But he added that overstating of sales has crept back into play this year as competitive pressures on FCA’s field staff have increased.
Meanwhile, the other company insider said the employee turnover rate among sales staff in the company’s nine business centers around the country is four times higher than in the rest of the company because of pressure applied from above to meet aggressive sales targets.
Why lie? Because it looked good and made everyone feel good.
The FCA insiders say the company’s streak has driven sales reporting abuses. The current run of 75 consecutive months of year-over-year sales increases in the U.S. is the longest such active streak of any automaker and has been a source of pride as the company rebounded after its 2009 exit from bankruptcy.
The story says U.S. sales head Reid Bigland put a stop to this practice after the inquiry happened. But with two fraud investigations and lawsuits underway, this could soon turn into a huge problem.
2nd Gear: Big Electric Targets At Audi
As the Volkswagen Group pushes past diesel, Audi and Porsche seem to be at the forefront of its planned electric future. And Audi plans to have three electric cars by 2020, with EVs making up as much as 30 percent of sales by 2025, reports Reuters:
Under the plan, which [Chief Executive Rupert] Stadler presented to Audi managers this week, the group will focus more resources on electric cars, digital services and autonomous driving.
Stadler told daily Heilbronner Stimme in an interview published on Saturday that Audi’s offering of electric cars would also include small vehicles in the A-segment.
The company also plans to set up a subsidiary, to be called SDS Company, to develop an autonomous car.
“This is about a robot car that may not even need a steering wheel or pedals, so it’s ideal for urban traffic,” he said, adding Audi was still looking for joint venture partners who would help with the technology.
Ambitious.
3rd Gear: Fuel Economy Targets Under Review
And speaking of targets, U.S. and California environmental regulators have begun a midterm study of fuel economy goals, including the stringent 54.5 MPG goal by 2025.
That goal likely won’t be met now, because nobody anticipated how many SUVs and trucks Americans would buy on the heels of cheap gas.
Via Automotive News:
Agencies hailed the findings of the 1,217-page draft “Technical Assessment Report” as evidence that the industry is ahead of schedule in complying with the Obama administration’s ambitious National Program of harmonized greenhouse gas and fuel economy regulations. The EPA, National Highway Traffic Safety Administration and California Air Resources Board, the groups that issued the report, said the industry has ample technology available to achieve the challenging targets without relying too heavily on full hybrid and electric vehicles.
[...] Other findings of the report show how the industry has rapidly adopted fuel-saving technologies. Some 45 percent of 2015 model year vehicles had gasoline direct injection, up from just 2 percent in the 2008 model year, the baseline used by agencies to track progress.
In the same period, six-speed transmissions jumped to 57 percent from 19 percent of the fleet while gearboxes with seven or more speeds grew to 17 percent from 2 percent. Continuously variable transmissions jumped to 20 percent from 8 percent.
Continuing to make such changes will get tougher in the future, Bienenfeld said.
“As the regulations become more and more stringent, there are fewer technologies that can help us achieve those more ambitious goals,” he said, “and more electrification will be required as we move into the future.”
4th Gear: Mobileye Proves Doubters Wrong
Analysts who were bearish on vision-based automotive tech company Mobileye are backing away from that thinking. Bloomberg reports the Israeli company’s systems are finding its way into more and more cars as autonomous driving looms large on the horizon:
Investors say Mobileye’s pact with BMW shows it has gone beyond advanced driver-assistance systems to establish itself as a key partner for automakers as they step up investment in the race to achieve fully-autonomous driving. The stock’s meteoric rise after a $1 billion initial public offering in 2014 made it a target for short sellers like Citron Research, which argued its valuation implied a quasi-monopoly status for what was essentially an early-to-the-game chipmaker with no moat to fend off competition.
“People were worried they’d be a vision player who would get leap-frogged or commoditized,” said Joseph Fath, who helps oversee about $65 billion at T.Rowe Price in Baltimore, including Mobileye shares. “Autonomous capability driving is going to come faster than expected and this is the purest way to play it.”
Jerusalem-based Mobileye has announced partnerships with General Motors Co., Volkswagen AG and Nissan Motor Co. to develop mapping technology that gathers crowd-sourced real-time data from automakers’ fleets of vehicles, something co-founder Amnon Shashua has called the “missing piece” in the march toward driverless cars.
5th Gear: No One Cares Anyway
To round off what we covered in 1st Gear: do any of these automotive scandals, recalls and investigations actually matter? I say it does for Volkswagen, but for everyone else, the answer is a solid “no” when you look at profits and sales figures. Via The Detroit Free Press:
“The fact of the matter is, there is a plethora of recalls, and after a certain point in time people become numb to them,” said John Humphrey, senior vice president of J.D. Power’s global automotive practice. “We have more recalls now than we have ever had and yet the industry is selling more cars than ever.”
Legendary consumer safety advocate Ralph Nader said the industry has improved, but continues to get away with cutting corners that harm consumers and the environment.
“Today, the cars are much safer, less polluting, modestly more fuel efficient ... but there is still a long way to go,” Nader said Thursday, as he was inducted into the Automotive Hall of Fame. “We’ve ceased to see just carelessness, ignorance and indifference. These are increasingly criminal acts, now prosecuted because there is no criminal penalty in the motor vehicle safety law.”
Reverse: Ford, Pacifist
Neutral: What Penalty Should FCA Face For Greasing Sales Numbers?
Not that it matters, obviously.