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: No More Fiat Chrysler Diesel Cars
Fiat Chrysler will phase out diesel engines from its passenger cars by 2022, due to failing demand and rising costs of production in the wake of the Dieselgate scandal, according to a Financial Times report.
While Fiat Chrysler saw its share of diesel cars in Europe rise last year, it was primarily on the strength of diesel in the Italian market, which accounted for over half of FCA’s European sales. Diesel sales across all automakers in Europe as a whole dropped by 8 percent last year, and many cities are moving to ban diesels entirely.
Trucks, of course, are the notable exception, the Financial Times writes—including some “commercial vehicles” that are commonly bought as daily drivers by Americans:
FCA has decided to pull diesel from all of its passenger cars but is expected to keep diesel options for its commercial vehicles, including a range of its pick-up trucks in the US, such as the popular RAM 1500.
That makes sense, given that we’re expecting a diesel Jeep Wrangler in 2019.
The report cited a four-year plan to gradually ditch diesels that will be unveiled on June 1. FCA, which owns Dodge, Jeep, Ram, Chrysler, Maserati, Alfa Romeo and Fiat, declined to comment on the report to FT.
2nd Gear: Diesel Woes May Force Daimler To Pay Back Loans Early
The European Investment Bank may ask Daimler to pay back its outstanding $2.5 billion research and development loans early in light of the report that Daimler may have cheated on diesel emissions tests, per Reuters. The EIB has loaned Daimler $4.7 billion since 2000, as part of a wider $10 billion in loans made to automakers to develop vehicles with lower carbon dioxide emissions.
The EIB isn’t keen on the idea that their R&D funds went for nefarious purposes, so they are investigating the loans they made to Daimler to ensure they weren’t used to cheat emissions tests. U.S. investigators found software on Daimler’s diesel cars that possibly helped them pass emissions tests, Bild am Sonntag reported last week.
Daimler hasn’t been charged with anything yet, however, although they say they are cooperating with the ongoing investigations into their diesel vehicles, both from the U.S. as well as the EIB.
The EIB won’t make a decision as to whether Mercedes should repay them immediately until after the investigation is over. Mercedes is the second automaker to be investigated by the EIB, as they’re also looking into some $984 billion in EU-backed loans to Renault in the wake of reports that Renault may have some kind of emissions testing workaround on their diesels.
3rd Gear: $9 Billion Daimler Investment Is Getting Complicated
The auto industry is a small world, with businesses connected through deals and such. Naturally, there’s been a tiny bit of fallout after main Geely shareholder Li Shufu purchased a 9.7 percent stake in German automaker Daimler.
Volvo Cars, as we know, is owned by Geely, and Volvo Cars’ CEO has a spot on Volvo Trucks’ board. However, because Volvo Trucks is one of Daimler’s biggest competitors, Volvo Trucks won’t be renewing that Geely-linked CEO’s spot on the board, per Reuters:
Volvo Cars Chief Executive Hakan Samuelsson has been a board member of AB Volvo since 2016. He was the CEO of German truckmaker MAN (MANG.DE) until 2009, and became CEO of Volvo Cars in 2012, two years after Geely bought the company.
“The reason that Hakan Samuelsson is not proposed for re-election is the announcement that Geely Group has become the largest shareholder of the German vehicle manufacturer Daimler, one of the Volvo Group’s major competitors,” the AB Volvo election committee said in a statement on Monday.
Shufu clearly wants Geely to have some access to Daimler’s technology, however, Volvo Trucks doesn’t want any of their tech to get to their competitors.
Meanwhile, Daimler has their own deal with one of Geely’s competitors: BAIC. They’re moving ahead with it, as Daimler and BAIC announced a $1.9 billion joint plan to build a production facility together in China, Bloomberg reports. The facility will crank out Mercedes-Benz products in China including electric vehicles—which is no doubt part of the technology that Geely might be interested in.
4th Gear: Mom-And-Pop Importer Is Suing Nissan Over Gray-Market Parts
A small importer is taking on Nissan North America for claiming that real parts they’d sourced from overseas were fake, reports Automotive News.
AMG Trade & Distribution sourced over 10,000 Nissan parts in 2016 from Nissan’s licensed distributor in Oman for far less than they would from Nissan in America. They were real, but U.S. Customs officers held them up for 15 months on the suspicion that they might be counterfeit, nearly putting AMG out of business and causing stress-related health issues in co-owners Anthony Bachan and Michael Pockhai.
Nissan considers the parts sold to AMG gray-market goods, which can undercut the prices they set for items, as Automotive News explains:
The case sheds light on the murky world of gray-market goods — items that are technically legal but considered unfair by a manufacturer — and automakers’ efforts to stop their dealerships from straying outside official distribution channels for cheaper parts.
The transactions at issue typically involve genuine, brand-name products from a reseller overseas instead of directly from the manufacturer. Merchandise often can be obtained at a substantial discount from a company’s authorized distribution channel.
Sometimes, the goods are genuine but pirated, meaning a contract manufacturer produces more than its customer ordered and funnels the excess through back channels.
However, AMG claims that Nissan’s requirement that importers and the dealerships who buy their parts only go through Nissan North America’s official (read: more expensive) channels unfair:
Bachan, who runs the business, and his attorneys say Nissan is trying to interfere with a competitor’s legitimate business so it can charge higher prices for aftermarket parts.
“They tied up our money,” he said. “We’re a very small company. We depend on one container load to get us through. We sell that and purchase another one. So there was a lot of pain and suffering.”
AMG finally got their parts in 2017, after having to ship 217 back to Oman that Nissan deemed counterfeit. Yet they’re still not happy about it, as the parts dropped in value following the lawsuit and the business nearly folded as a result. AMG isn’t the only importer to have this issue with a manufacturer, and the entire article on how these parts come in to America and the issues importers have with automakers over them is worth the read here.
5th Gear: NAFTA’s Next Big Challenge Is Mexico’s Presidential Election
Andres Manuel Lopez Obrador was selected as the Morena political party’s candidate in the July 1 Mexican presidential election, and he quickly became a front-runner with leftist, populist and nationalist platform. Part of that platform involves renegotiating NAFTA, Automotive News writes:
Lopez Obrador, 64, has been attacked by the business community and NAFTA supporters as a “threat to Mexico” because of his nationalist economic policies and his populist motto: “For the good of all, the poor come first.”
He may share his socialist tendencies with U.S. Sen. Bernie Sanders, but Lopez Obrador shares the love of a good political brawl with Trump, which could put NAFTA in the crossfire if the two skirmish at the presidential level.
The candidate laid out some of his policy proposals last week after accepting the nomination by the Morena party and two smaller ones. They include selling the presidential airplane and putting the government on an austerity footing, promoting domestic and foreign investment, subsidizing farmers through guaranteed prices, and ending gasoline and diesel imports, which come primarily from the U.S.
Lopez Obrador’s advisors claim that his promotion of Mexican self-sufficiency will not lead to protectionist policies, however, but business leaders remain skeptical of his new, more moderate rhetoric.
Reverse: Earthdreams Was A Good Livery
Neutral: What’s diesel’s future look like?
What was once a viable, even environmentally-conscious alternative to gas is now slowly being phased out due to a bad rap. Can we live without diesel? Is there anyway back for the maligned fuel?