German Automakers Are Quaking In Their Boots Over A Possible Diesel Ban
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.
Today is Presidents' Day in the United States. I think Presidents' Day is a dumb holiday; those guys have enough crap named after them, and people should be working. Hell, most of you probably don't even have the day off. But for some reason we at the Gizmodo Media Group do, and if I don't have to work, I'm not gonna.
Fortunately, while the staff is off thinking about their favorite presidents or whatever, brave weekend man Alex Hevesy is taking time off his busy schedule of haggling over K-car parts online and yelling at birds to get you some car blogs. Be nice to him, he's a sweet boy.
In the meantime, here is the news.
1st Gear: A Possible German Diesel Ban Looms
In the wake of Volkswagen's emissions cheating scandal and ever-tightening regulations, cities like Paris, Mexico City, Madrid and Athens have all pledged to ban diesel cars from their city centers in the coming years. France, Great Britain and California have also planned gasoline car bans by 2040 or so. What we're beginning to see now is an aggressive push away from conventionally powered cars toward electric vehicles for emissions reasons.
That's a long ways out, but in Germany something far scarier for automakers could come sooner. This week a court in Germany will decree whether cities can ban heavily polluting cars, "potentially wiping hundreds of millions of euros off the value of diesel cars on the country's roads," as Reuters puts it.
This is a big deal in Germany, and it's something environmental activists have been fighting for since Dieselgate began. Automakers are obviously worried about sales, as well as residual values on leases.
From the story:
Environmental group DUH has sued Stuttgart in Germany's carmaking heartland, and Duesseldorf over levels of particulate matter exceeding European Union limits after Volkswagen's (VOWG_p.DE) 2015 admission to cheating diesel exhaust tests.
There are around 15 million diesel vehicles on German streets and environmental groups say levels of particulates exceed the EU threshold in at least 90 German towns and cities.
Local courts ordered them to bar diesel cars which did not conform to the latest standards on days when pollution is heavy, startling German carmakers because an outright ban could trigger a fall in vehicle resale prices, and a rise in the cost of leasing contracts, which are priced on assumed residual values.
The German states concerned, where the carmakers and their suppliers have a strong influence, appealed against the decisions, leaving Germany's federal administrative court – the court of last resort for such matters – to rule on whether such bans can legally be imposed at local level.
"The key question is whether bans can already be considered to be legal instruments," said Remo Klinger, a lawyer for DUH. "It's a completely open question of law."
There's also this tidbit, which I find interesting:
Analysts at Bernstein Research have said that diesel bans in Europe would hit French carmaker Peugeot hardest, followed by Renault. Among German carmakers, Daimler's global fleet exposure to diesel is around 38 percent, BMW's 35 percent and VW's (VOWG_p.DE) 26 percent, Bernstein said in a report from 2016.
I bet Volkswagen is so unpopular at parties over there these days.
2nd Gear: Who Will Succeed Sergio?
In an industry where most executives are boring suits with no memorable qualities whatsoever, Fiat Chrysler CEO Sergio Marchionne has been a colorful, fascinating, often bewildering character.
But the sweater-wearing former tax accountant's accomplishments often get lost in his wild pronouncements and dreams of alliances and mergers with other automakers: he cobbled Fiat and the post-bankruptcy remains of Chrysler into something that may not be perfect, but is dynamic and profitable. But he will not be with us forever: Marchionne is set to retire next year, and should name his successor later in 2018.
Automotive News has a rundown of FCA's most likely next CEOs, including Alfredo Altavilla, the head of FCA's Europe, Africa and Middle East region, and Michael Manley, the head of the money-printing Jeep division.
Who will it be? Could it be... you? I hope so. I've always believed in you.
3rd Gear: Not Everyone Gets To Be Astronauts
As it adds new products like the G70 sport sedan, Hyundai is quickly ramping up its launch of Genesis as a standalone luxury brand. This probably should have happened years ago, and its weird rollout has left at least one group feeling burned: the car dealers.
As Automotive News reports, most Hyundai stores will not get the Genesis brand. That also means they lose Genesis products, including the expensive luxury sedan that used to be the Hyundai Genesis or the even pricier Hyundai Equus. Say goodbye to all that money, dealers. They're getting some compensation money in the meantime but many say the deal's still not fair.
From the story:
The Genesis launch has been less than optimal, conceded Andrew DiFeo, chairman of the Hyundai National Dealer Council. It took some back and forth with the automaker to get something close to a fair deal to compensate the disenfranchised dealers, DiFeo said, but some dealers still aren't happy with the outcome.
When the rollout is complete, the vast majority of Hyundai's 850 dealers will lose their right to carry Genesis products, including all of the nearly 500 stores that sell only the Genesis G80, as Genesis trims its network to about 100 stores concentrated in 48 markets.
"We stressed the importance that there needs to be compensation, and the compensation can't just be for buying back cars and parts," DiFeo told Automotive News. "There is a loss of value in that dealer's business personally and professionally, and the numbers they're coming up with have to be commensurate with that. We never said, 'It needs to be this dollar amount.' But we said the calculation needs to factor in all of these things, and I think they got pretty close to that."
Real talk, though: how many of those Hyundai dealers were really up to the task of selling a car that's meant to compete (if not now, then eventually) with Lexus and Mercedes?
4th Gear: South Korea Not Happy About GM's Exit
The writing's on the wall for General Motors' money-losing South Korean operation, where production seems more than likely headed to China at some point. One of four plants is officially closing, and the fate of the other three remains uncertain.
Naturally the government there is worried about the economic impact of losing what was once Daewoo, and it's looking for ways to help the nearly 16,000 workers who may soon be out of work there. From Reuters:
GM announced last week it will shutter the plant in the city of Gunsan, in South Korea's southwest, by May and decide within weeks on the fate of the remaining three plants in the country.
Gunsan employs 2,000 out of GM's 16,000-strong workforce in the Asian nation, with local authorities saying one out of five people in the city were dependent on GM for their livelihood.
"Especially, the decline in employment (at GM) and subcontractors will be difficult to bear for Gunsan City and North Jeolla province," Moon told his aides at a regular meeting, according to a statement released by his office.
Addressing the issue publicly for the first time, Moon asked his administration to look "aggressively" into any possible mitigation measures like designating Gunsan as an "employment crisis area" and called for urgent measures to aid workers affected by pending layoffs.
The Gunsan plant builds the Chevrolet Cruze sedan and Orlando MPV, the latter of which is sold in non-U.S. markets.
5th Gear: Did Your Ancestors Build The Ford Model T?
If so, you are invited to this event at a museum in Detroit, the AP reports:
A museum dedicated to the birthplace of the Model T is seeking descendants of people who worked in the first building operated by Ford Motor Co.
The Ford Piquette Avenue Plant was in Detroit. Piquette Heritage Day will be held on April 8. Organizers say a score of descendants has been found, but they're seeking more as they honor the families' contribution to U.S. auto history.
The plant opened in 1904. It continued as a Studebaker factory after Ford moved to Highland Park in 1910. Children, grandchildren and great-grandchildren of anyone who worked in the building can participate.
You should go.
Reverse: Cedric!
Neutral: How Will History Judge Sergio
Will Marchionne be remembered as a genius, a hero, an iconoclast or a failure—or some mix of those things?