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: What’s German For ‘Uhhh...’
Over the weekend the California Air Resources Board lobbed another emissions cheating accusation at Audi, this time saying several hundred thousand gasoline and diesel cars equipped with a variant of the ubiquitous ZF8 eight-speed automatic transmissions had a way of circumventing CO2 emissions.
In a brief report in Reuters, Germany’s Transport Ministry said the U.S. had shared no information with them yet on the matter.
“For the moment, we have no information on this issue ... The KBA (motor vehicle authority) is making sure that it will receive information on the issue and as a next step it will make an assessment,” spokesman Sebastian Hille said during a regular government news conference.
The accusation against Audi comes at an especially tough time for the brand and its Volkswagen Group parent company, which is nowhere near close to settling everything related to the TDI diesel cheating mess.
Here’s the latest accusation from CARB, as our Raphael Orlove reported this weekend:
When the Audi starts up, its transmission engages a ‘low CO2' program, shifting gears in such a way as to keep engine revs and emissions artificially low. If the steering wheel is turned more than 15 degrees, the car deactivates the program and shifts in its normal, more pollutant fashion that burns more gas and produces more CO2.
Audi figured that the only time the car would run with the steering wheel never moving would be in a lab, on a test bed. This is a similar philosophy to the classic ‘dyno mode’ cheat that kicked off Dieselgate. It’s so simple, and apparently it was enough to get Audis to pass emissions tests in lab situations they might have never passed in real world conditions.
It will be interesting to see if this one blows up like the TDI mess did or if it’s a non-starter.
2nd Gear: VW’s Board Chairman Under Investigation
But that was only one bit of bad news for Volkswagen this weekend. German authorities also announced that VW’s supervisory board chairman, Hans Dieter Poetsch, was also under investigation for possible market manipulation, reports Bloomberg:
The carmaker on Sunday said public prosecutors in Braunschweig, near its Wolfsburg headquarters, extended its investigation for alleged market manipulation to Poetsch, who becomes the second current board member to be targeted. Poetsch and VW are supporting the inquiry, which relates to his time as chief financial officer, the company said in a statement.
Management “fulfilled its disclosure obligation under German capital markets law,” Volkswagen said. A representative of the company’s largest shareholder, Porsche Automobil Holding SE, voiced support for Poetsch.
[...] Poetsch was CFO of Volkswagen from 2003 to 2015 and also sits on the supervisory boards of the company’s Porsche and Audi units. The market-manipulation investigation by Braunschweig prosecutors is also targeting Winterkorn and VW brand chief Herbert Diess over how they disclosed the scandal to investors.
Rough weekend for sure.
3rd Gear: Americans May End Up Buying 10 Million Trucks This Year
New car sales are down slightly and likely won’t surpass the record-breaking 14.7 million vehicles sold in 2015. But what is truly crazy is the number of SUVs and crossovers that will end up getting sold this year. Via Automotive News:
Automakers are on pace to sell more than 10 million light trucks in a single calendar year for the first time. Meanwhile, car sales are on pace to fall below 7 million this year for the first time since 2011 and only the fourth time since 1962.
So while it’s increasingly unlikely that 2016 will beat last year’s record for total light-vehicle volume, sales of the big vehicles that generate the bulk of many automakers’ profits are at an all-time high. From that perspective, with gasoline prices expected to remain low and SUV sales still rising, 2017 could be even better for the bottom line.
“I think it looks a lot like ‘16 with more movement towards trucks,” AutoNation CEO Mike Jackson said on the group’s third-quarter earnings call. “The only restriction has been installed productive capacity. ... And that is certainly good for the industry overall to have. It’s more profitable for the manufacturers on the truck side than on the car side.”
4th Gear: How Mercedes Got Her Groove Back
This story over at Automotive News is worth a read in full. It’s about how Mercedes-Benz, after a decade of lagging behind BMW and then Audi in sales and profits, has rebounded hard since 2013 on the heels of several strong new products, and also by taking advantage of this SUV boom probably better than everyone:
Mercedes has stormed back because of an aggressive product offensive that includes lucrative models such as the S-class Cabriolet, the flagship’s first convertible in over 40 years. By expanding into new niches and segments with other hot sellers such as the GLA compact crossover and saving $2.22 billion from cost cuts, Mercedes is on track to meet its 10 percent return on sales target.
When asked by Automotive News Europe to name key factors in Mercedes’ turnaround, Zetsche said: “Probably the three most important elements, I think, are design, product portfolio and gaining a better understanding of China.”
Although Mercedes still enjoyed a thriving business in Europe and the U.S., its costly missteps in China meant that it became a distant third in global premium car sales to BMW and Audi. In late 2012, Zetsche took action. First, he installed Hubertus Troska, a senior Daimler Trucks executive, as a new management board member responsible for China to create a reporting line that cut across all operations. He replaced the local sales chief and added hundreds of new sales points to close the gap with BMW and Audi.
5th Gear: Willow Run Becomes An Autonomous Car Testing Site
Willow Run, a historic World War II bomber factory and then a General Motors plant in Ypsilanti, Michigan, is about to get a new lease on life as a site for testing autonomous cars. It is being touted as yet another way the Motor City and the world around it is keeping up with the auto industry as it evolves, reports The Detroit News:
Willow Run, which also was a General Motors powertrain plant, has been bought by developers of the proposed American Center for Mobility for $1.2 million, announced Michigan officials.
The long-anticipated purchase allows American Center for Mobility to proceed with plans to turn the 335-acre site in Ypsilanti Township into a state-of-the-art testing facility for automated vehicles.
The center has already finalized conceptual plan designs and hopes to begin construction later this year, according to state officials. The company anticipates opening for business in December 2017.
“The American Center for Mobility will be the most advanced connected and automated vehicle proving ground in the world,” said John Maddox, president and CEO.
Reverse: 576.553 MPH!
Neutral: Did You Buy An SUV This Year?
If so, what was it?