GM Is Getting Back Into The Insurance Business

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GM will sell car insurance again, demand for petroleum is down, Rivian outlines its plan for small cars, and Peugeot. All that and more in The Morning Shift for November 19, 2020.


1st Gear: What’s Old Is New Again

GM used to sell insurance before bailing from the industry during the Great Recession and its bankruptcy. It said Wednesday that it will once again be getting back into the insurance market, for customers who can stomach being tracked.

From The Wall Street Journal:

The Detroit-based auto maker will offer insurance plans branded under its OnStar connected-car service, which comes installed on all GM vehicles in North America, the company said Wednesday. Customers who sign up agree to have their driving habits tracked, and those who obey the speed limit, avoid sudden stops and practice other good-driving behavior will be rewarded with cheaper rates, GM said.


“Who knows more about your vehicle than the people who manufactured it?” said Andrew Rose, president of GM’s newly formed OnStar Insurance Services.


GM will begin a pilot this week for its own employees in Arizona and plans to offer it nationwide later in 2021, Mr. Rose said. The company will partner with a subsidiary of American Family Insurance to underwrite the policies.


To start, the company will set rates much like a typical insurer, relying on traditional factors such as ZIP Code or the amount of driving the policyholder does, Mr. Rose said. Eventually, GM will more heavily weigh driving behavior and other variables in determining rates. Eventually, it could even calculate the amount of times safety features such as emergency braking are deployed, he said.

Another example: GM could track whether tires are inflated properly, which improves stopping distance and reduces the risk of crashes, Mr. Rose said.

The Wall Street Journal notes that insurance plans that track driver behavior so-called “usage-based insurance” are becoming more and more of a thing. As someone who once years ago willingly connected a device to my car to get cheaper rates from Progressive, I can’t say I’m all that bothered by it but I can absolutely imagine the objections. We live in a panopticon.

2nd Gear: Gas In The US Will Likely Continue To Be Cheap

Demand is way down because of the pandemic, and will likely stay down thanks to the third wave of coronavirus infections in the US. Also, lots of people won’t be traveling to visit families for Thanksgiving.


Here’s the Financial Times:

US petroleum demand tumbled last week amid surging coronavirus cases, setting the scene for a lacklustre Thanksgiving holiday period where more American motorists opt to stay home.

Petrol demand fell by 6 percent in the seven days to November 13 to 8.3m barrels a day, according to data released by the Energy Information Administration.

“What you’re seeing is, in response to Covid, people are staying closer to home and celebrating with fewer people,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “It’s going to be a quiet Thanksgiving this year.”


That has hit travel patterns over the holiday period. Last year two-thirds of Americans took to the roads to celebrate Thanksgiving with family and friends, according to a GasBuddy survey. This year the figure is set to be less than a third.

Petrol demand was about 10 per cent lower last week compared with the same period last year, according to the EIA data.


3rd Gear: China And Europe Will Get More Good Cars

Rivian says it will eventually sell some small electric cars there. Because here in the US the regulatory structure is such that big SUVs and trucks powered by gas engines are what automakers are incentivized to sell. Not so elsewhere in the world.


From Reuters:

While Rivian plans to begin selling the [its full-size SUV] in Europe in 2022 and China soon after, “what will really drive volume in those markets is the follow-on products” that are smaller and tailored for overseas customers, Rivian founder and CEO R.J. Scaringe told Reuters.

The smaller models, which are expected to share key components with the pickup and SUV, will “fit some of those other markets really well, in particular China,” Scaringe said.

“To really scale in those markets as we bring on follow-on products, having a production footprint outside the U.S. is going to be important,” he said. “That’s a ways off.”

Scaringe added: “We wouldn’t be serious about building a car company if we weren’t thinking about China and Europe as important markets long term.”


4th Gear: Kia Workers In South Korea Are Mad

We’ve been seeing some evidence for some time that the shift to electric cars will mean fewer jobs for auto workers. Unions are hip to this, of course. And Kia’s union in South Korea is firing a shot across the bow ahead of it.


From Reuters:

The union at South Korea’s No.2 automaker has decided to suspend work for a part of the day over Nov. 24-27, [a] union official said, adding Kia’s plan to introduce EV production is one of the thorny issues in the annual wage deal negotiations.

Kia has laid out plans to produce an EV model comparable to its K7 sedan at one of the factories in its Hwaseong plant in South Korea starting July next year, the union official said.

“Building electric cars requires about 30% less labour than building internal combustion cars, because they require fewer parts, resulting in job losses,” a union member at Kia said.

“If the shift to electric cars is inevitable, we are asking the management to ensure longer-term job security by having EV module production lines at our factories,” the member added.


The union at Kia has also asked for a raise in wages and a performance pay, but these have not been accepted by the company, the union official said.

Kia wants to freeze wages but has proposed a bonus and other benefits if the union does not strike, a company official said on condition of anonymity as negotiations are ongoing.


News about unions is always a fairly reliable litmus test.

5th Gear: The Fiat Chrysler And Peugeot Merger Is Moving Right Along

Shareholders of the companies are likely to approve it in January during meetings then. It’s hard to know what the merger of the two companies will mean long-term, but you would assume fewer marques, for starters.


From the Detroit Free Press:

The companies announced Wednesday they would hold general meetings for their respective shareholders on Jan. 4 “in order to approve the merger of their companies to allow the creation of Stellantis, which will become the world’s fourth largest automobile manufacturer by volume.”

Leaders of the companies have previously said they aim to complete the merger by the end of the first quarter.

Regulatory approvals have been moving forward for the effort, most recently in Brazil, and the European Commission is expected to give its blessing.


The combined company, which would be larger than either General Motors or Ford, would bring the Jeep, Ram, Chrysler, Dodge, Fiat, Alfa Romeo and Maserati brands together with Peugeot, Citroen, Opel and Vauxhall, the last two of which were owned by GM until it sold them in 2017.


Reverse: Philippe Adams Born

Here is a long post on Reddit about the former Formula One driver.

Neutral: How Are You?

In the pandemic, I’ve completely tossed any guilt I had about eating too much salt or butter. Give me all of it. The vibe being:

Gif: Inside Edition

News Editor at Jalopnik. 2008 Honda Fit Sport.


First gear: these big brother insurance schemes are multiplying like Kudzu. It sounds fine at first- don’t sign up for these if you aren’t ok with being tracked. But it could get to the point that signing up to be tracked is the only way to avoid paying double or more in car insurance.

That said, it would be sort of fun to take one of these tracking devices on a track day just to see what it comes up with.