This is The Morning Shift, our one-stop daily roundup of all the auto news that's actually important — all in one place every weekday morning. Or, you could spend all day waiting for other sites to parse it out to you one story at a time. Isn't your time more important?
1st Gear: Grab Some Coffee, This Is Going To Take A Minute
As gas prices continue to drop there have been a lot of happy people (who don't own energy companies or run states largely dependent on petrobucks) able to spend a little extra discretionary income on what they want.
My initial take on this was that lower gas prices are bad for you because we're going to miss a chance to reform the gas tax, which is something we need to do. That's the conventional un-conventional wisdom. The Slate take. But there was something about this whole line of reasoning that was bothering me and I alluded to it a bit in the original piece:
There's the environmental factor, with more people deciding to drive when they don't need and buying cars that are less efficient than alternatives — although because new SUVS and trucks are so much more efficient than their predecessors that the impact will be minimized.
Ok, great, cool, awesome. This came up yesterday in a Twitter conversation with The Guardian's Heidi Moore who was, essentially, trumpeting the conventional wisdom that we didn't learn our lesson from the last time gas was really cheap and the economy was growing:
This is what's supposed to happen and it's supposed to drive oil demand up but this isn't happening and I'll let this strong Bloomberg article lay out what's different this time before I lay out what it means:
Here’s an easier way to see how Americans are relying less on oil: 1,178 barrels were consumed a day for every $1 billion of GDP in September, down 33 percent from 1,760 barrels a day 20 years ago.
That's a huge difference and it has a huge meaning. Just ten years ago when we saw an oil slump and strong wages and strong GDP people became consumption machines, buying inexpensive cars, driving everywhere, buying big ass stupid houses they didn't need and couldn't afford.
Not anymore. You can give credit to people learning from their experiences or automakers striving to meet government-mandated economy standards, or some mixture of a lot of things, but the "SUVs" that people are suddenly buying are probably as efficient as that car they should have bought instead ten years ago.
What's the best-selling SUV? The Honda CRV, followed by the Ford Escape, Toyota RAV4 and Chevy Equinox. You have to go down to the Jeep Grand Cherokee to find anything even remotely like a gas guzzler. And let's look at that Jeep Grand Cherokee.
The most fuel efficient version of the Grand Cherokee ten years ago returned 19 mpg highway on its best day. The most fuel efficient (EcoDiesel) 2015 Grand Cherokee returns 30 mpg. That's a massive increase in just ten years and it's pretty much par for the course. People aren't buying super gas-guzzling SUVs. That's a myth. That's a lie we tell because we want to tell the story that Americans are stupid. You have to get down to #20 on the list before you get to the Chevy Tahoe, which was like the poster child of mid-2000s excess.
Nope, people are buying fuel efficient hatchback crossovers that people call SUVs because it's a nice marketing exercise, but what's really happening is people are eating their vegetables but because we sprinkled a little goat cheese on it and called it "Broccoli & Cheese" people don't mind.
So here comes the turn. Here goes the thing that made perfect sense to me when I read it and kind of blew my fuckin' mind:
And then there’s this twist in the energy independence story — lower crude prices could paradoxically weaken demand. The argument goes like this: Declining oil will give consumers more disposable income that they can use to purchase more efficient vehicles, energy economist Philip Verleger said Dec. 8 by phone from Carbondale, Colorado. Likewise, airlines will reinvest profits made possible by cheaper fuel into new planes with more economic engines, he said.
“Consumers are doing their best to get themselves out of buying petroleum products,” Verleger said. “The fall in oil prices is going to accelerate the fuel’s own demise.”
Let that sink in for a second, because what this dude is saying is that the low price of oil, rather than create great demand (because it feels like people are just giving gasoline away), is actually going to kill the fuel altogether. Low gas prices will be, for the first time probably ever, reinvested in more fuel efficient cars thus accelerating the decline in fuel demand.
This doesn't mean that fuel prices will stay down forever. Nor does it mean that demand won't rise (we're still introducing a ton of consumers in places like China, et cetera), but it does make a weird sort of sense.
2nd Gear: More Takata Recalls
It's only getting worse for Takata as three of the major Japanese automakers (Honda, Nissan, and Mitsubishi) are joining Toyota in recalling more of their cars globally after a defective airbag in a car blew up as the vehicle was being scrapped.
The explosion that sparked the recall for passenger side air bags occurred in November in a scrapyard in Gifu Prefecture, central Japan, in a Toyota vehicle.
Japan’s transport ministry said Thursday there were six earlier instances when Takata air bags exploded during scrapping, two in Toyota vehicles and four in Honda vehicles. They all occurred in 2012.
In Japan, air bags are deliberately deployed during scrapping. Toyota recalled 185,000 vehicles in Japan and 5,000 in China for possibly defective passenger-side air bags Dec. 4.
We don't think about it often, but there are essentially little explosive devices placed all over our cars.
3rd Gear: Why VW Is Struggling Even As It Sells More Cars
You go to the war with the army you have, not the army you want... right? A lesson that VW Group CEO Martin Winterkorn is having to deal with now.
Yes, Volkswagen is selling more cars than they've ever sold before. They bested GM and are rapidly catching up with Toyota. But at what cost? They're not making that much more money as they do it.
Part of the problem, critics say, is that VW makes too many components internally—even brake parts and pedals. Extreme integration lowers productivity, drains capital and cuts profits, said the Center for Automotive Research at the University of Duisburg-Essen, in a recent study.
“The problem is that VW simply has far too many employees,” says research center director Ferdinand Dudenhöffer. “And the high level of integration adds labor costs and means VW cannot generate as much profit.”
VW component-factory employees earn autoworker wages, up to 35% higher than wages at big suppliers. VW’s second-largest German plant, in Kassel, employs 16,000 people and doesn’t make cars. A similar component plant in Braunschweig employs more than 6,000 people.
This is actually the part of Volkswagen that I like. They used to make interesting cars that were uniquely them. Then came the de-contented Jetta and the big, boring Passat. I'm not sure if the result is more vehicles like that, or fewer, but if you want to be a huge company and you want to make a lot of money then something has to give.
4th Gear: It's Going To Be A Big Year In Detroit
Say what you will about Detroit as a city or going anywhere in Michigan in freaking January, but there's nothing as important the Detroit Auto Show for carmakers anywhere in the world. It's just the biggest.
Automakers from around the world are planning to reveal at least 40 never-before-seen cars and trucks at the North American International Auto Show in January, underscoring Detroit’s position as one of the top automotive shows in the world.
An additional five new vehicles will be shown for the first time in North America.
“All of the automakers realize they have to bring the biggest and best reveals to this show,” said Scott LaRiche, co-chairman of the auto show.
LaRiche said one of the Detroit show’s biggest selling points is the volume of media it attracts from around the world, which is why the automakers send their top executives to debut some of their most important vehicles in Detroit.
It's true, on any given day in the Detroit Auto Show media center you'll hear people arguing over seats and complaining about free food that was brought directly to them in Mandarin, French, Italian, Korean...
5th Gear: Mahindra To Buy Saab?
There's a report out saying that everyone's favorite Indian truckmaker was going to buy what's left of Saab from struggling Chinese-Swedish venture.
Mr Mahindra's flagship auto group Mahindra & Mahindra, India's leading sport utility vehicle maker by sales, plans to buy a majority stake in the parent company that owns Saab's brand, according to documents filed in a court in Sweden and seen by the FT, report James Crabtree and Richard Milne.
We sort of doubt that, but we'll see.
Reverse: Thank God It Didn't Happen
On December 11, 1962, the New York City Board of Estimate unanimously votes against a plan for a $100 million elevated expressway across the bottom of Manhattan. The road, known as the Lower Manhattan Expressway, had been in the works since 1941. It was supposed to link the Holland Tunnel on the city's West Side with the Williamsburg and Manhattan Bridges on the east side, slicing right through the neighborhoods now known as TriBeCa and SoHo.
Neutral: Will cheap gas accelerate the demise of gasoline? Or is this just wishful thinking?
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