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: GM’s CEO Says Drivers Will Continue To Buy And Operate Their Own Cars For A While At Least
That’s even if, in the future, we won’t all be drivers or possibly even car owners, as driveless taxis, self-driving cars, and subscription services like Volvo’s come to the fore. But those things will mainly be popular in dense urban areas, like New York City, while GM’s biggest markets is pretty much everywhere else. Which is what GM CEO Mary Barra was alluding to in part in a talk with the media yesterday at the Automotive Press Association. Barra says that GM is happy with how it does business since, for them, the future won’t be coming so quickly.
From The Detroit News:
“The owner-driver model will be there for a very long time,” Barra said Monday at an Automotive Press Association event in Detroit. “So far we see (mobility) as additive, but we see it as having potential to grow and be quite substantial.”
The potential for ride-sharing services specifically comes when the cost of autonomous vehicles comes down, Barra said. GM has said it sees a path to bringing the cost-per-mile for a ride-sharing service down to $1 per mile — a key part of achieving profitability.
GM is wrapping up 2017 with a strong run on Wall Street. GM shares have been trading above $40 since September. Much of this success is driven by Barra’s boldness on the future, promising this year to put 20 new electric cars on the road by 2023, a driverless fleet in cities by 2019 and a million EV sales per year worldwide by 2026.
Barra isn’t wrong, of course. Like most automakers, GM is heavily hedging its bets and heavily investing in a future that includes no owner-drivers. Which is smart!
2nd Gear: Barra Also Said A Few Other Newsworthy Things
She said that GM was committed to a “harassment-free” workplace, that she didn’t support eliminating the $7,500 federal tax credit for electric vehicles, as the House version of new tax legislation would, and also that GM wasn’t giving up on Europe. GM sold its European division earlier this year, but Barra said that its self-driving and electric efforts could find a future there. It just won’t look anything like it was in the past.
From Bloomberg:
Instead of selling mass-market cars there, it’s possible the automaker would consider re-entering Europe using its newfound tech chops, like with self-driving vehicle technology or mobility as a service, Chief Executive Officer Mary Barra said in Detroit.
“Nothing keeps us from going back to Europe,” she said at an Automotive Press Association event. It’s “absolutely” possible, she said.
GM sold its money-losing European Opel unit to France’s PSA Group earlier this year as part of a strategy to pull out of weak markets. The withdrawal from Europe comes as the more than century-old automaker tries to reinvent itself as a tech-savvy manufacturer able to compete with the likes Uber Technologies Inc. or Alphabet Inc.’s Waymo. Barra has been investing more in self-driving cars, electric vehicle tech and ride-sharing services, with the push into new mobility areas sending GM shares on a tear in the second half of the year.
3rd Gear: There’s A Big Lawsuit Between Two Auto Giants You Probably Have Never Heard Of
CDK Global, which sells dealer management software, and Cox Automotive, which owns a litany of brands you have heard of, like Kelley Blue Book and Autotrader.com, are in a legal dispute. Cox has sued CDK over what it calls anticompetitive behavior, mainly over the pricing of its software. Cox says that the damage could be in the hundreds of millions of dollars.
From Automotive News:
CDK and Reynolds and Reynolds Co., which Cox called a co-conspirator but is not a party to the suit, have colluded to eliminate competition in dealership data integration, the complaint said.
“Where there was once a robust market for providing data integration services, CDK and Reynolds — through their coordinated conduct — have destroyed that competition. Where CDK and Reynolds once themselves competed in that market, they have now entered into a written covenant not to compete,” the complaint said. “Moreover, where CDK and Reynolds once offered data integration services on a level-playing field, they now place artificial and anticompetitive restrictions on dealer data in order to maintain their dominance over the Dealer Management Systems market, favor their own products and services, and injure competing products and services.”
Vendors under the Cox Automotive umbrella have been directly affected by CDK and Reynolds’ alleged collusion because Cox’s products and services compete with those offered by CDK and Reynolds, the suit contends.
At least the damage doesn’t seem to be felt by the consumer.
“The damage to the automotive industry has been immense,” Cox’s complaint said. “Cox Automotive brings this action to recover those damages, enjoin CDK’s illegal conduct, and stave off further harm to vendors, dealers, and other participants in the automotive industry. The industry and market can no longer endure such abuses.”
4th Gear: Audi Decides To Keep Ducati After All
Earlier this year, Audi, which is owned by the German conglomerate Volkswagen, explored whether or not to sell Ducati, the motorcycle manufacturer based on Bologna, Italy. But on Tuesday, Rupert Stadler, Audi’s chief executive said they would hold on to the company. Audi had been seeking ways to become more financially stable, in addition to focusing more on an electric and self-driving future. Higher sales this year, though, appear to have put a halt to any plans to offload Ducati.
From Reuters:
Steps to reduce costs by 10 billion euros ($11.8 billion), cut red tape and deepen ties with fellow Volkswagen-owned (VOWG_p.DE) brand Porsche are “gradually increasing our financial and organizational leeway for the strategic realignment,” chief executive Rupert Stadler told reporters.
[...]
“I can assure you that Ducati belongs to the Audi family,” said Stadler. “Ducati is the perfect implementation of our premium philosophy in the world of motorbikes.”
The plans had already stalled in the summer when VW’s powerful labor unions, backed by the controlling Porsche-Piech families, opposed the logic and need for asset sales given the group’s financial resilience.
[...]
Audi, which owns Ducati and Italian supercar maker Lamborghini, last month reported higher operating profit and revenue for the first nine months, helped by growing auto demand in the higher-margin western European and U.S. markets.
The Volkswagen Group is so big that, even now, I still have trouble wrapping my head around it. In addition to Audi and Ducati, they own Bentley, Bugatti, Lamborghini, Porsche, SEAT, and Skoda, among other things.
5th Gear: Pepsi Has Placed Orders For 100 Tesla Trucks
It’s the biggest order yet for the trucks, which aren’t even in production yet. Tesla has been riding a wave of mostly good publicity after unveiling the trucks last month, with orders from J.B. Hunt, a trucking company, and Sysco, the food distribution company. Pepsi’s order is large but, as Reuters reports, not that large in the scheme of things. That’s because around 260,000 Class 8 trucks are produced every year in the U.S., while Tesla has only secured 267 orders on its electric semi.
From Reuters:
PepsiCo intends to deploy Tesla Semis for shipments of snack foods and beverages between manufacturing and distribution facilities and direct to retailers within the 500-mile (800-km) range promised by Tesla Chief Executive Elon Musk.
The semi-trucks will complement PepsiCo’s U.S. fleet of nearly 10,000 big rigs and are a key part of its plan to reduce greenhouse gas emissions across its supply chain by a total of at least 20 percent by 2030, said Mike O‘Connell, the senior director of North American supply chain for PepsiCo subsidiary Frito-Lay.
PepsiCo is analyzing what routes are best for its Tesla trucks in North America but sees a wide range of uses for lighter loads like snacks or shorter shipments of heavier beverages, O‘Connell said.
So, one percent of Pepsi’s entire fleet of trucks might be electric if and when the Tesla semi finally rolls off the production line, which is currently slated for 2019. We’ll see.
Reverse: GM Announces They’re Phasing Out Oldsmobile
It was the year 2000. By 2004, it would all be gone. The last Olds was a red Alero. It now sits at the R.E. Olds Transportation Museum in Lansing, Michigan.
From History:
Lansing native Ransom Eli Olds created the Olds Motor Works in 1897. Ten years before (reportedly because he did not like the smell of horses), he had built a steam-powered car. After a factory fire destroyed 10 of his 11 prototypes, Olds focused on trying to perfect–and sell–the only car he had left: the small Curved Dash runabout. He was successful: the runabout soon became the nation’s most popular automobile.
In 1904, the Curved Dash became the first mass-produced car in the United States. That same year, Olds investors ousted the company’s founder. (Ransom Olds wanted to keep on mass-producing inexpensive cars that ordinary people could buy, while the investors wanted to build pricey luxury automobiles.) Four years later, Olds Motor Works merged with Buick to become General Motors. Within GM, Olds was known as the “technology division”: it pioneered V-8 engines in 1915, chrome plating in 1926, the Hydra-Matic automatic transmission in 1937, and the Rocket V-8 in 1949.
Olds (it became Oldsmobile in 1942) was the most middlebrow of the GM “ladder of brands,” squeezed between mass-market Chevrolet and Pontiac and luxury Cadillac and Buick. Despite a new slogan–“This is not your father’s Oldsmobile”–that debuted in the 1980s after the GM reorganization, buyers eventually began to lose interest in the brand’s offerings. The brand was also notoriously slow to react to trends: for instance, it was one of the last American carmakers to add sport utility vehicles–the most popular and profitable cars of the 1990s–to its lineup.
[History]
Neutral: When Do You Think You Will Buy Your Last Car Ever?
I, for one, think I’m getting old enough that I can outlive this whole future thing. The last car I’ll ever buy will probably be something boring and extremely practical. Like a 2049 Honda Fit.