Carlos Ghosn’s great escape, what we all already knew about the planned Trump emissions rollback, Volkswagen’s Dieselgate settlements, Renault and Nissan’s bad year in stocks, and Hyundai and Kia’s low sales. All of this and more in The Morning Shift for Thursday, Jan. 2, 2020.
1st Gear: The Latest On Ghosn
Former Nissan boss Carlos Ghosn has been in a bit of trouble since reports of his arrest over alleged financial misconduct in November 2018, and, like any good plot twist, he has now left house arrest in Japan for Lebanon. We learned this week that Ghosn is rumored to have escaped in an instrument case.
- Ghosn released a statement on Tuesday, confirming that he’d fled house arrest and sharing a few harsh words: “I am now in Lebanon and will no longer be held hostage by a rigged Japanese justice system where guilt is presumed, discrimination is rampant, and basic human rights are denied,” the statement read. “I have not fled justice—I have escaped injustice and political persecution. I can now finally communicate freely with the media, and look forward to starting next week.”
- On that note, Ghosn’s lawyer said he’ll hold a press conference on Jan. 8.
- Reuters reports that sources said Ghosn fled Japan over a trial delay to April 2021 and because he hadn’t been able to talk to his wife.
- A spokesperson for Turkish police said seven people have been detained in an investigation into Ghosn’s escape from Japan, during which he went through Istanbul on the way to Lebanon. Four of those people were pilots.
- Ghosn met with the president of Lebanon, Michel Aoun, after Reuters describes he was “smuggled out of house arrest by a private security company” from Japan. Ghosn was apparently “greeted warmly” by the president.
- Lebanon got an Interpol red notice for Ghosn on Thursday, which is a fancy way of saying it’s an international wanted poster. Reuters describes it as an Interpol “arrest warrant,” but the Interpol website says red notices are not warrants: “A Red Notice is a request to law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender, or similar legal action,” it states. “A Red Notice is not an international arrest warrant.”
Each Reuters link included in the bullet points has more on each specific story.
2nd Gear: Scientists Reiterate: EPA Emissions Rollbacks Are Bad
If you heard about the U.S. emissions rollback that the Trump administration is hellbent on doing for unfounded reasons and thought, “Man, that will be bad for the environment!” then you happen to be correct. Congratulations.
The New York Times reports that scientists on an advisory board for the U.S. Environmental Protection Agency, many of whom were picked by the Trump administration, said the emissions rollbacks (and other decisions made by the administration!) are a bad deal scientifically. From the story:
Draft letters posted online Tuesday by the Environmental Protection Agency’s Scientific Advisory Board, which is responsible for evaluating the scientific integrity of the agency’s regulations, took aim at the Trump administration’s rewrite of an Obama-era regulation of waterways, an Obama-era effort to curb planet-warming vehicle tailpipe emissions and a plan to limit scientific data that can be used to draft health regulations.
In each case, the 41 scientists on a board — many of whom were appointed by Trump administration officials to replace scientists named by the Obama administration — found the regulatory changes flew in the face of science.
On the emissions rollbacks specifically, the New York Times reports that the scientists saw “significant weaknesses in the scientific analysis of the proposed rule,” which was an Obama-era effort against climate change.
But that science wasn’t the only flaw. The economics that predicated the change is also busted, via the New York Times:
Peter Wilcoxen, professor of public administration at Syracuse University, said he took the criticism as a hopeful sign. [...]
Mr. Wilcoxen chaired the working group that reviewed the E.P.A.’s rollback of automobile tailpipe emission standards and said the agency’s analysis had several well-known “core flaws.”One of the primary problems, he said, is that the E.P.A., in an unusual move, used a flawed economic model that had not been reviewed either internally by federal agencies or in the academic literature. That model found what Mr. Wilcoxen described as the “really improbable” results that relaxing Obama-era gas mileage standards would lead to a significantly smaller fleet of vehicles despite the model’s prediction that the vehicles would be cheaper.
That assumption helped drive the Trump administration’s argument that its rule would lead to fewer cars on the road and therefore fewer planet-warming emissions. “They ended up with this result that basically violated introductory economics,” Mr. Wilcoxen said.
The New York Times has more on the scientific evaluation of the emissions rollbacks and other proposals here.
3rd Gear: Volkswagen Begins Settlement Discussions With German Vehicle Owners Over Dieselgate
Volkswagen confirmed to Reuters on Thursday, the second day of 2020, that it’s in talks about a settlement with German car owners over the Dieselgate emissions scandal that became public in 2015. Volkswagen called it a “possible settlement,” and told Reuters that the confidential talks are “at a very early stage, and there is no guarantee that they will result in a settlement.”
From the story:
In 2015 the carmaker admitted to using manipulated engine management software to mask excessive pollution levels in its diesel cars, sparking a raft of prosecutions and lawsuits that have led to at least 30 billion euros in legal costs and fines. [...]
German consumers have had less success than vehicle owners in the United States in securing compensation from VW because German cars did not lose their road worthiness certification in the wake of the diesel scandal.
In Germany VW’s diesel vehicles retained their road worthiness certification if customers agreed to an update of vehicle engine management software, leading VW to take a different approach to compensating consumers.
Dieselgate will never die.
4th Gear: Renault And Nissan Were The Worst Car Stocks Of The Year: Bloomberg
Speaking of Renault and Nissan’s former leader, there’s also some news on Renault and Nissan after Ghosn: Bloomberg reports by its own count that the two automakers had the worst-performing carmaker stocks of 2019, with Renault ahead of Nissan on the list.
The companies are a part of the Renault-Nissan-Mitsubishi alliance, meaning their performance should be at least on the same trajectory. That trajectory was down last year, by a lot. From Bloomberg:
The two were the worst-performing carmakers on the Bloomberg World Auto Manufacturers Index in 2019, falling 23% and 28%, respectively. Ferrari NV, Kia Motors Corp. and Tesla Inc. logged some of the biggest gains. [...]
[Ghosn’s] escape also cast a cloud on the relationship between France and Japan at a moment when the countries are trying to help two of their largest employers shore up a two-decade-long alliance.
While Nissan dismissed its longtime leader in November 2018, Japan’s third-largest carmaker by output is still reeling from the fallout. Last week, its No. 3 executive said he’ll join another company. It was the latest in a string of departures that included Hiroto Saikawa, Ghosn’s successor-turned-accuser, who stepped down as CEO last year amid a scandal over excess compensation.
The exodus has exacerbated the challenge of navigating an industry downturn that’s driven Nissan’s profits to the lowest in a decade and prompted Renault, which ousted its CEO in 2019, to slash its financial guidance in October.
Yikes! Maybe it’s best for business to, you know, avoid scandals and creating a mass exodus at your company. Just a thought.
Bloomberg has more on the story, and the complete graphics, here.
5th Gear: Hyundai, Kia Hit Seven-Year Sales Low
Global car sales at sister companies Hyundai and Kia are down, with Reuters reporting that 2019 marked their lowest sales in seven years. Sales slumps in China led to a fifth-straight missed sales target, and added to profit declines and higher development costs for future technology at Hyundai.
From the story:
“The market environment is very uncertain and internal and external challenges will intensify,” Group heir apparent Euisun Chung said on Thursday. But he reiterated that the Group would continue to focus on profitability and technology investment.
Hyundai and Kia reported a 3% drop in their combined global sales to 7.19 million vehicles for 2019, falling short of their target to sell 7.6 million vehicles.
Their sales have slumped in China, the world’s biggest auto market, offsetting a recovery in the United States where demand for their new sport utility vehicles and a favorable currency exchange rate have helped.
Hyundai and Kia are forecasting better numbers for 2020, at least, according to Reuters. Aren’t we all?
Reverse: 1937 Bugatti Type 57S Atalante Coupe Found, Unrestored, In British Garage
Reports came out about a rare 1937 Bugatti Type 57S Atalante Coupe being found in a garage in England on Jan. 2, 2009, via History. It was one of 17, according to History, and was unrestored.
It had been sitting there for a bit, too. The New York Times reported at the time that the garage had belonged to an orthopedic surgeon who died in 2007 at age 89, who was described as “a recluse in his later years.” Because of that, the Times wrote, “few knew what to expect inside his dusty garage.”
The car sold for $4.4 million the next month at auction, according to History.
Neutral: How Does This Carlos Ghosn Saga End?
Well? Badly? With a lot of “Going, going, Ghosn” jokes?