A nice number of you won’t stop buying crossovers, Aston Martin is preparing for the Brexit apocalypse, and oil’s replacement might bring some similar foibles. All that and more in the Morning Shift for January 7, 2019.
1st Gear: Jeep Leads the SUV Boom
While the strong economy that began nearly 10 years ago continues to enjoy some growth, y’all can’t stop buying SUVs and crossovers. If Ford narrowing its range to become almost entirely an SUV/crossover/pickup company wasn’t enough for you, here’s some hard numbers from Automotive News:
Jeep’s 18 percent surge propelled U.S. light-vehicle volume to 17.3 million, 0.6 percent more than in 2017 and the fourth-highest of all time.
All together, automakers sold about 96,000 more vehicles than the previous year. Jeep alone gained by nearly 145,000.
“Clearly, Jeep’s been killing it,” said Charlie Chesbrough, senior economist at Cox Automotive. Chesbrough said Jeep, a brand synonymous with rugged utility, had the “right portfolio at the right time.”
Subaru, with its all-wheel-drive wagons and crossovers, also hit it big in a year when light trucks accounted for a record 69 percent of the market.
Love those big hulking things. Love ‘em love ‘em love ‘em.
But all is not entirely rosy:
However, rising interest rates and new-vehicle prices have become headwinds. Transaction prices have climbed to all-time highs, and interest rates now average about 6 percent, according to Edmunds.
Jack Hollis, group vice president and Toyota Division general manager at Toyota Motor North America, last week said he also is concerned about uncertainty surrounding trade, such as potential tariffs on foreign vehicles. Analysts have said news stories about tariffs may have caused some consumers to buy a vehicle sooner than planned, pulling ahead sales to 2018 from this year.
In what is surely unrelated news, McLaren posted record global annual sales, selling 4,806 cars in 2018, which was up nearly 44 percent from 2017.
Ford should’ve just switched to selling mid-engine’d V8 supercars.
2nd Gear: Geely’s Prognosticators Looking at Flat Sales
While the global economy is increasingly interconnected with each passing day (despite efforts to the contrary), there might be some warning signs of an economic slow down out of China, Reuters reports. While Geely sales shot up 20 percent in 2018, the company’s analysts are predicting flat sales for 2019:
Geely said in a filing that despite its growth last year, it had missed a sales target of 1.58 million cars by around 5 percent.
Its sales started to slow in the last quarter of 2018, with a 44 percent drop in December alone, according to monthly sales data filings.
Some other domestic and international firms have flagged a sharp drop in demand in China at the end of last year, including Apple Inc (AAPL.O), which cut its global sales forecast due to Chinese weakness.
Reuters notes that Geely’s chairman went so far as to say in a social media post that the company must hunker down for a long winter, “otherwise we may soon face a period of demise.”
If the economy is slowing down in the world’s second most powerful market, what does that portend for the rest of us?
3rd Gear: Aston Martin Is Preparing For the Worst Brexit Possible
Remember Brexit? That’s still happening, for reasons that are still unclear to most of the world. If you’d like to know how it’s going, this is how it’s going:
With the Brexit deal negotiated between the United Kingdom and the European Union likely to be voted down in parliament, the British people will have no bananas, and they’ll be back to eating horrible brown gruel, as is traditional. And while the funniest part about this is that the U.K. has zero actual reason to go through with this suicide pact, and the E.U. has said that British Prime Minister Theresa May can stop the process at literally any point, it’s looking to potentially seriously wound the British economy.
Case in point is Aston Martin. The company has begun to enact its “No Deal” contingency plan, Reuters says:
Britain, the world’s fifth largest economy, is due to leave the European Union in just over 80 days but a negotiated withdrawal agreement looks set to be voted down by UK lawmakers next week, making a “no deal” exit - and disruption to trade - more likely.
Britain’s car industry, which employs over 850,000 people and is one of the country’s rare manufacturing success stories, has warned that leaving the world’s biggest trading bloc without a deal would add costs and could halt output due to snarl-ups.
Aston Martin Chief Executive Andy Palmer said the luxury automaker, which outlined its contingency plans in October, had no choice but to authorize them at a board meeting in December.
Details of Aston’s plan include a stockpile of cars being built up in Germany (that way they can be sold without the pain of E.U. tariffs, since they’re already in the E.U.) and an increased reliance on shipping cars by air, rather than by sea, since Reuters reports that the port of Dover can get backed up with customs snaggles.
But, as Aston CEO Andy Palmer pointed out to Reuters, the British government has said it will prioritize necessities like medicine for air freight over frivolities like Aston Martins. Which could hurt Aston much more than just delayed deliveries, especially if Aston can’t get parts to even build the cars.
The British can survive without bananas, but what about Astons?
4th Gear: Will Lithium Be the New Oil?
Lithium is a primary ingredient in the lithium ion batteries that power most electric cars, and while there’s always talk of technologies on the distant horizon to replace lithium, they’re still years off at best. So while we’re stuck with lithium, companies that are home to big lithium mines are cashing in. Here’s Mining Weekly:
Chile’s exports of lithium carbonate reached $949-million in 2018 compared to $686-million the previous year as demand and prices for the key component in electric vehicle batteries continues to rise, the central bank said on Monday.
That’s a 46 percent increase year-on-year, Mining Weekly points out. And it’s only set to grow as offerings from Volkswagen and Mercedes, among others, hit the market. So while the 20th century had tales of havens for the wealthy sprouting up overnight in the Middle East over oil sales, the 21st century might be full of Atacama Desert lithium barons.
5th Gear: GM Looks to the Future With Mark Reuss
With longtime General Motors executive Mark Reuss’ promotion to company president last week, it looks like GM is plowing even further into the future of electrification and (maybe) autonomy, according to a short profile from Automotive News:
That transformation will continue, if not accelerate, as GM plans to launch at least 20 new battery-electric and fuel cell vehicles globally by 2023. Reuss has said GM is doubling the resources allocated to electric and autonomous vehicle programs in the next two years.
The reorganization has been mirrored across the company with many top lieutenants of Barra and Reuss refocusing on autonomous and electrified vehicles. The efforts are meant to fulfill GM’s “triple zero” vision of a future with zero crashes, zero emissions and zero congestion.
It’ll be interesting to see how Reuss and GM manage an electric and autonomous future, with GM refusing to invest in electric infrastructure on the scale that is necessary, and autonomous cars looking increasingly like they will never happen.
But we’ll see!
What started as a codename for a new small car from General Motors in the mid 1980s ended up becoming a car brand all its own. In June of 1982 discussions of a new compact were heating up in GM and first publicized by Chairman Roger B. Smith in November 1983. Just more than a year later, and on this day in 1985, Saturn Corporation was officially founded.
Neutral: How Bad Will Brexit Be?
Will MG see a revival, desperately trying to sell cars to Americans?