Full-Size Pickup Trucks Are King Right Now

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Full-size pickups are now outselling everything, Nissan’s CEO going toe-to-toe with investors, concerns about coronavirus at GM’s bread-and-butter plants, Germany’s slow coronavirus economic recovery. All that and more in The Morning Shift for Monday, July 6, 2020.

1st Gear: Full-Size Pickup Trucks Are King Right Now

By now, we’ve already learned that, even in the middle of a global pandemic, pickup truck sales—particularly among domestic automakers—have remained relatively stable while the rest of the market has fallen off a cliff.


Automotive News has took a look at new second-quarter U.S. vehicle sales reports, and while the truck segment did take a bit of a beating, it apparently just became the best-selling car segment in the U.S., which is pretty wild to think about. From Auto News:

Big pickups outsold compact crossovers, which had been No. 1 every quarter since sedans fell out of favor with consumers in recent years. Including the midsize segment that Jeep and Ford have reentered, one in four vehicles sold by nonluxury brands from April through June was a pickup, according to the Automotive News Data Center.


New car sales, the publication writes, dropped 34 percent in the second quarter. That’s pretty awful. But even though Silverado pickup sales are down 14 percent, Sierra sales are down 5 percent, Ford F-Series sales dropped 23 percent, and Ram sold 35 percent fewer trucks than last quarter, trucks ended up in better shape than the majority of car segments. From Automotive News:

Industry sales suffered as plant shutdowns reduced inventories and many dealerships had to temporarily close or complete transactions online to comply with government restrictions. Pickup volume declined less than most other segments, in part because of the 0 percent financing offers automakers rolled out as the pandemic roiled the economy. Many dealers said they sold the majority of the pickups they had in stock.


The fact that a quarter of all vehicles sold by “nonluxury brands” were pickup trucks—a figure that’s up four percent from this time last year—seems a bit nuts. Ford’s VP of marketing describes why trucks are faring better than other vehicle segments, with Automotive News writing:

Large utilities and pickups are performing better because people need them for work, and affluent consumers who often buy such vehicles have been less affected by the pandemic, said Mark LaNeve, Ford’s vice president of U.S. marketing, sales and service.


It makes sense, but it’s still wild to think that the best selling vehicles in the U.S. are not sedans or crossovers, but body-on-frame pickup trucks.

2nd Gear: Nissan’s CEO Goes Into The Lion’s Den To Defend Recovery Plan

Nissan has been struggling lately. Like, a lot. A lot lot. 

Back in October, the company got a new CEO, Makoto Uchida, who succeeded Yasuhiro Yamauchi, who followed Hiroto Saikawa, who came after Carlos Ghosn (who’s been going through all sorts of weird stuff, including escaping to Lebanon after being arrested in Japan).


Back in February, we wrote about a “rowdy” meeting the new-ish CEO had with shareholders in which Uchida said he had a plan in place, and that, if he couldn’t get things going with Nissan, shareholders could “fire [him] immediately.”

Now there’s been another contentious shareholder meeting, in which the CEO has had to once again assure attendees that he had a plan, and a good one, at that. If you’re wondering how contentious it was, just read this description from Automotive News:

Nissan CEO Makoto Uchida tried selling the automaker’s new revival plan to skeptical shareholders last week amid an angry showdown over everything from his management style and corporate vision to board member pay and the company’s plunging share price.

Some attendees at the June 29 annual shareholders meeting even harked back wistfully to the Carlos Ghosn era: One praised the indicted former chairman’s strong leadership, another blamed his downfall on a conspiracy among Japanese prosecutors and government bureaucrats.


Uchida made it clear: the Nissan turnaround plan is a long-term one, and a recovery is going to take years—probably four. From Automotive News:

In his latest appeal, Uchida pledged that the midterm plan unveiled in May would restore the embattled carmaker to a growth trajectory, but he warned a full rebound still needed time.

One benchmark of recovery, he noted, would be a return to positive free cash flow. He predicted that would happen sometime between October 2021 and March 2022. Nissan, which just posted its first full-year net loss in 11 years, bled ¥641 billion ($5.95 billion) in cash from its core automotive business for the year. But Uchida said the net cash position is still flush enough to get the company through the COVID-19 pandemic thanks to newly secured lines of credit.

Uchida insisted the midterm plan plots a path to full recovery in four years.

3rd Gear: Coronavirus Cases At Two GM Plants Have The UAW Worried

We learned last week that the local union at GM’s Arlington Assembly Plant had asked GM to shut down the facility due to an apparently growing number of COVID-19 cases.


A newer story from the Detroit Free Press mentions coronavirus cases at not only the aforementioned large SUV plant, but also Wentzville, a Missouri facility that pumps out pickup trucks. From the news site:

According to company documents obtained by the Free Press, there have been 22 confirmed cases of coronavirus at Arlington since the plant restarted production in late May. That figure was confirmed by a person familiar with the UAW, who declined to be named because there was no authorization to speak.

At Wentzville, there are 12 confirmed cases since it restarted in mid-May, up from five cases less than a month ago, said a person at the plant familiar with union leadership who has access to that data. The person declined to be named because they are not authorized to speak to the media.


Total cases, the Free Press notes, sit below 1 percent of the total workforce of the two plants, but the UAW is paying close attention. Here’s what the “person familiar with the UAW” told the news site:

“If we continue to see the number of cases trend upward, the union would have to request a shutdown of the plant again so that it can be cleaned and workers can get tested,” the person said. “It’s a concern.”

GM’s policy is to not confirm the number of coronavirus cases in its plants. But a spokesman said production has not been halted at any GM plant due to the virus


Of course, GM is taking a number of measures to keep its workers safe, including:

  • Continued social distancing on the assembly line.
  • Taking body temperatures before workers enter the plant.
  • Changed the plant’s air temperature to keep it cool without having to use fans, which create crosswinds and could blow around germs.
  • Every break table has plexiglass dividers.
  • GM provides face masks to employees.

This is a big deal. Truck and SUV sales sustain GM.

4th Gear: Germany’s COVID-19 Recovery Will Be A Slog

Germany, a country whose economy is propped up, in large part, by the auto sector, is recovering from the economic struggles resulting from COVID-19 lockdowns, but early signs point to a gradual (i.e. slow) return towards “normal.”


Reuters breaks it down:

But data showing that industrial orders had risen by a record 10.4% during a month when restrictions were gradually lifted, almost a third less than forecast in a Reuters poll, dashed hopes of a quick return to pre-crisis business activity.

“The orders data signal that the manufacturing sector recession has overcome its low point,” the Economy Ministry said. “But the low level of orders also shows that the recovery process is far from over.”


Fears of a slow recovery were compounded by an Ifo economic institute survey showing that 21% of firms fear the pandemic could force them to shut down, adding to expectations that mass insolvencies in the coming months will hamstring the economy.


The service industry is hurting bad, especially travel agencies, restaurants, and hotels. And the auto industry and other industries that rely on exports are also not where they need to be. From the story:

The picture is no better for Germany’s export-oriented manufacturers, which had faced declining demand before the pandemic resulting from trade disputes between the United States and China, uncertainties linked to Britain’s departure from the European Union and an automotive sector grappling with an expensive shift to electric vehicles.


Reuters writes that the German government “expects the economy to shrink by 6.3% this year, which would be its deepest recession since World War Two.” Yikes.

5th Gear: Daimler Throws Some Coin Into A Chinese Battery Company

Electric vehicles are a huge deal now, and they’re only going to become more prominent as emissions regs become stricter. A major bottleneck in the EV world, and possibly the one that has the potential to provide the biggest competitive advantage to an automaker who can cleverly solve it, is batteries. So it’s no big surprise that we keep seeing automaker-battery manufacturer tie-ups.


A recent one involves Stuttgart-based automaker Daimler buying a 3 percent state in Chinese battery cell manufacturer Farasis. From the Financial Times:

The Stuttgart-based company said it would invest “a multimillion-euro amount”, subject to regulatory approvals, and will nominate Markus Schäfer, its Mercedes brand chief operating officer, to the Farasis supervisory board. Daimler’s investment in Farasis, which plans to float, comes as European automakers, which are largely reliant on Asian battery manufacturers for their electric car ambitions, seek a foothold in the new auto supply chain.


Daimler described how important the new investment is for the company’s future electric vehicle plans:

“By taking a stake in a Chinese battery cell manufacturer for the first time, we will further leverage the potential of advanced technology partners in the market, enabling us to pursue our electric strategy globally,” said Hubertus Troska, Daimler’s board member responsible for China. “In the future, we will continue to strengthen our activities in research and development, production and purchasing in China,” he added.


Reverse: 1952: London Trams Replaced By Buses

From The Telegraph:

1952 : The last of the trams in London ends it’s journey ending nearly 100 years of trams in London . After the last of these electric trams goes the rails will be pulled up and some of the tunnels will be converted ready for the increased London car traffic.


Neutral: Do You Like Pickup Trucks?

Some folks hate the gas-guzzling nature of a pickup truck, but even though I scored 13 MPG on a 3,000+ mile road trip recently in my Jeep J10, I can’t help but to just love the charm. I recently ate ice cream with an old friend on the tailgate and went on a drive-in movie date there on the bench seat. These were both awesome, pickup-y experiences. Not great for the environment, but awesome.

America loves pickups. Do you get their appeal?