Ford’s COO admits the company is struggling, but he has plans to turn things around. The death knell has come for the iconic Chevy Impala. VW could be on the verge of blowing its most important car launch in decades and a Tesla crash has advocacy groups urging for government safeguards on advanced driver-assist systems. All this and more in The Morning Shift for Thursday, February 27, 2020.
Ford’s incoming Chief Operating Officer, Jim Farley, spoke at the Wolfe Research Global Auto, Auto Tech, and Mobility Conference for investors in New York on Wednesday. Specifically, he discussed how urgently FoMoCo needs to make changes and how The Blue Oval plans to do it.
He admitted that Ford is struggling big time, drawing comparisons to the global financial crisis that sent two of America’s “Big Three” automakers into bankruptcy. From Bloomberg:
Ford Motor Co.’s recently appointed chief operating officer sees the struggling automaker operating with the same sense of urgency and crisis that kept the company out of bankruptcy a decade ago.
“Everyone at Ford knows the situation we’re in,” Jim Farley, who becomes COO on March 1, said Wednesday at a Wolfe Research conference in New York. “I can see it on the faces of my colleagues and it takes me back to about 10 years ago. I’ve seen the look before.”
The story provides some context on Ford’s current woes:
Ford lost $14.8 billion in 2008, the most in its then 105-year history, but was the only automaker in Detroit to avoid the bailouts and bankruptcies that befell General Motors and Chrysler a year later. The tables have turned recently as Ford let its product lineup lapse, posted a string of dismal earnings results and botched the launch of its redesigned Explorer sport utility vehicle. Its stock closed Tuesday at the lowest in more than a decade.
Among the Dearborn automaker’s biggest issues, Farley mentioned, are warranty costs and launch execution, both of which are particularly critical right now as Ford prepares to roll out some of its most important vehicles in years: the company’s first “high-volume” EV, the Ford Mustang Mach-E; the upcoming Ford Bronco; and electrified versions of the top-selling Ford F-150 pickup. Bloomberg quotes Farley, who discusses the issues:
“We need to immediately fix the reliability of our cost performance and especially our launches,” Farley said. “We’re launching very, very expensive products. So the first one is to really fix our execution capability around launches, warranty costs, delivery and revenue. I would say that’s No. 1.”
As for warranty costs, which Farley says totaled $5 billion last year, the COO hopes he can use software as well as new talent to help bring the figure down. From Bloomberg:
Farley sees an opportunity to wipe away much of the $5 billion it spends annually on warranty repairs by harnessing data coming from newly connected cars to head off problems. But that will require Ford to hire new tech talent that can create software solutions for the flood of data coming from its cars, which will all have modems by the end of this year.
Farley seems convinced that Ford works best in a crisis, saying: “When there was a threat, the team comes together, decisions get made quickly at the right level. It’s very natural.” Hopefully he’s right and the new Ford Bronco launches smoothly and ends up being as compelling as it looks.
The Chevrolet Impala, an iconic American sedan, ends production today at Detroit-Hamtramck Assembly, just over one year after GM announced in November of 2018 that it would kill a number of cars off as part of restructuring efforts. To commemorate the last day of production the Detroit News has has a great story honoring a vehicle that, over the years, became not just a smooth-riding American family car for the masses but also a style icon.
Here are a few clips from the story, titled “Chevrolet Impala’s last run: Production to cease Thursday.”:
Introduced in 1958 and produced continuously except for gaps in the 1980s and 1990s, the final Impala will roll down the line at Detroit-Hamtramck Assembly. Seen by many as emblematic of the all-American car, more than 16.8 million have been sold globally (not including the 1994-96 Impala SS, which was counted as a Chevy Caprice).
Impala enthusiasts around the country are sad to see the nameplate hit its expiration date and cherish even more the Impalas they have found and made their own.
“I think I’ll probably have one until the day I die,” said Ferras Sabo, his heavily customized lowrider 1962 Impala resplendent in Viper Red in his Sterling Heights driveway.
He could talk for days about his first love...
The article goes into the history of the Impala in a section of the article titled “American as apple pie”:
The Impala first hit sales floors in 1958 as a high-end Chevrolet Bel Air full-size sedan fit for a family.
From the late 1950s through the 1960s, the Impala struck a chord with buyers. In 1959, GM sold more than 440,000; by 1965 it sold more than 1 million.
“They were affordable and so many people had the opportunity to experience them that they really became very much a part of the American landscape,” said Don Keefe, president of the National Impala Association, which holds an annual rally for Impala enthusiasts. “They were great cars and they looked good.”
The Impala was in “a class of its own,” Chevrolet proclaimed in a 1964 commercial filmed with the car perched on top of the towering 400-foot Castle Rock in Utah. As a camera pans around the car with a female model draped over the seatbacks, the voice-over continues: “No other automobile offers so much of what so many people desire. With styling that brings you back to look and look again, Chevrolet stands alone. Alone in pure dedication to beauty and relaxation.”
Pay your respects to this classic American sedan by checking out the full story at the Detroit News.
3rd Gear: Will Volkswagen Blow The Launch Of Its Most Important Car In Decades Due To Software Problems?
The Volkswagen ID.3—built on a promising new “MEB” platform expected to underpin millions of cars—is undoubtedly the most important car to come from the storied automaker in decades, and could wind up contributing significantly to an inflection point in EV adoption. So this isn’t a launch that VW can afford to screw up. And yet, rumor has it that the automaker is struggling with “massive” software problems that could “threaten summer launch in Europe,” Automobilwoche reports.
The news site has this from German publication Manager Magazin, with Automobilwoche writing:
The software glitches may force [Volkswagen] to abandon the EV’s planned sales launch in Europe this summer, Manager Magazin reported.
The problems stem from the basic architecture of the ID3's software, which was developed “too hastily,” the magazine said, citing VW’s own experts. Many of the system’s elements do not understand each other, leading to dropouts and other difficulties, the report said.
Hundreds of test drivers of the car are reporting up to 300 errors a day, the magazine said.
More than 10,000 technicians are trying to solve the problems, which could delay the ID3's launch by up to a year, the report said.
It’s worth mentioning that as of January VW claimed that the cars would launch in the summer of 2020 as planned. This came after Manager reported in December that over 20,000 ID3s would exit the assembly plant without a full software suite, and that engineers would have to mend those vehicles after production. Here’s what Automotive News Europe wrote in January, quoting a VW spokesperson about potential delays:
“Establishing a powerful new electronics and software architecture is a challenge that can lead to difficulties or delays, which we are currently addressing,” a VW spokesman said. “The time plan remains in place: market launch is scheduled for summer 2020.”
Don’t blow it, VW.
4th Gear: Distractions Linked To Fatal Tesla Autopilot Crash Have Safety Groups Pushing For ADAS Safeguards
Back in March of 2018, a man in California died when his Tesla Model X, with Autopilot engaged, crashed into a barrier. This Tuesday, the National Transportation Safety Board had a public hearing to discuss probable causes for the collision, with Automotive News writing:
The safety board listed three probable causes for the crash, which killed the driver, Walter Huang, a 38-year-old Apple Inc. software engineer. The NTSB determined limitations of the Tesla Autopilot system, Huang’s overreliance on Autopilot and his distraction — “likely from a cellphone game application,” the board said — caused the crash.
The NTSB also cited systematic issues with the California Department of Transportation’s repair of traffic safety hardware in a timely manner and the state’s highway patrol for failure to report previous damage to the concrete highway barrier on U.S. 101 that Huang’s vehicle struck. Investigators at the hearing said Huang “would most likely have survived the collision” had the crash attenuator been repaired and in functional condition.
In light of this hearing, numerous highway safety advocate groups spoke out to appeal for government safeguards related to advanced driver-assistance features. Advocates for Highway and Auto Safety, which Automotive News describes as “a consortium of consumer, medical, public health and safety groups as well as insurance companies,” had this say:
“The U.S. Department of Transportation must prioritize safety by issuing minimum safety performance standards, conducting thorough oversight and requiring industry accountability,” Cathy Chase, president of Advocates, said in a statement.
The Center for Auto Safety, in a statement before the hearing, said for years it has called on the government to “address the obvious risks of misleading terms like ‘Autopilot’ and ‘full self-driving,’ “ which do not replace drivers behind the wheel.
Consumer Reports chimed in, too, saying automakers should be required to include features that get drivers pay attention to the road:
“The evidence is clear, and continuing to pile up, that if a car makes it easier for people to take their attention off the road, they’re going to do so — with potentially deadly consequences,” Ethan Douglas, senior policy analyst for cars and product safety at Consumer Reports, said in a statement.
Federal safety regulators have not done enough to reduce these risks, Douglas said, and the NTSB hearing is clear evidence that NHTSA’s “hands-off approach is far too weak.”
NHTSA is looking at the NTSB’s report, and made this statement after the hearing:
“All commercially available motor vehicles require the human driver to be in control at all times, and all states hold the human driver responsible for vehicle operations,” the agency said. “Distraction-affected crashes are a major concern, including those involving advanced driver-assistance features.”
NHTSA said it will continue to work with states and local partners to curb distracted driving.
Almost exactly a year ago, we wrote “Uncertainty in the Auto Industry Could Spell Doom for the German Economy,”quoting a Bloomberg story about the issue. Bloomberg’s point was that the relative mechanical simplicity of electric vehicles could reduce jobs in Germany’s auto industry. In addition, an industry shift towards autonomous cars, ride-hailing, and electrification could send money away from established German carmakers to newcomers like tech giants Apple, Waymo, and Uber, the story claimed. That could be a big deal for Germany, whose economy relies hugely on the success of VW, Mercedes, and BMW.
Now it’s been a year, and Reuters writes that things aren’t great for Germany’s economy thanks largely to the coronavirus outbreak. From the news site:
Germany’s economy is nearing stagnation in the first quarter due to the coronavirus outbreak, the DIW economic institute said on Wednesday, adding that German industry would be particularly hit if the virus continued to spread worldwide.
DIW said Germany’s gross domestic product in the first quarter would grow by just 0.1% compared to the previous quarter.
Exactly how much of an effect coronavirus is having on the slump is unclear, but this link between novel coronavirus and potential economy turmoil isn’t isolated to Germany; The U.S. is concerned about it, too.
Federal Trade Commission orders that Toledo-based Willys-Overland cannot claim to have invented the Jeep. From the Cease and desist order, Willys-Overland Motors, Inc., et all., Docket 4959, February 27, 1948:
It is ordered, That respondents Willys-Overland Motors, Inc...do forthwith cease and desist from:
Representing, directly or by implication, that respondent Willys-Overland Motors, Inc., either acting alone or in cooperation or collaboration with the United States Army or with any other agency or party, created or designed the automotive vehicle vehicle known as the Jeep; provided, however, that this order shall not prohibit respondents from representing that said respondent participated in and contributed to the developing and perfecting of said vehicle.
It was Butler, PA-based company Bantam Motor Co. that played the biggest role in developing the prototype platform that was used as the basis for the World War II Jeep.
What Is Ford failing to do for you as a consumer, and just in general as a company? What do you think about Farley’s fixes; what more must The Blue oval do?