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: "We'll either change the people or we'll change the people"
Tough talk from Mary Barra this week as she tries to convince people at the company that, despite years of saying they're going to change and then conspicuously not changing that... this time they're going to change and then actually stay changed.
This info we get from a roundtable discussion she had with reporters, brought to you by David Shepardson:
In mid-September, Barra met with the company's top 300 global executives at a warehouse in Detroit and pressed the need for reform.
She sent a tough message: Executives shouldn't stay at the automaker if they aren't in agreement with her plans to reform GM.
"If you don't believe in this plan, then you clearly have other things you could do. And please do so, because the task is hard enough if we all are aligned — and if we're not, it will be even more difficult," Barra said. "If you believe there is a different strategy, there's probably some company you can go work at and execute what you think is right. ... The conversation's not even hard, because why would you want to be here if you don't believe in where we're headed or you don't believe we're taking the right steps?"
"You are not really being nice if you don't say the truth in the meeting and you say it behind someone's back later. I think we just have to get candid," Barra said, saying she wants employees to be accountable and drive for results. "This is not a company of best efforts. It's got to be a company, if you say you are going to do something, get it done."
Totally. It's hard to say if she's doing all the right things, but I think Barra is finally saying the right things. Change is slow, change is hard, and I'm more inclined than ever to give GM a chance. We've seen Toyota internalize a lot of their own shortcomings and start to repair them and GM seems like they want to be next.
It's just the reality of being a huge company.
2nd Gear: Profit Sharing Checks To Take A Hit At GM Quite fairly, the profit-sharing checks sent to workers at GM as part of a plan to incentivize everyone in the company to aim for profitability (and protect the bottom line in case of losses) will be impacted by the recalls, although Brent Snavely reports that it's not clear if they'll be any lower than last year.
While she did not say profit-sharing checks will be smaller next year, GM has recorded more than $2.5 billion so far this year in costs related to the recall of cars with potentially defective ignition switches and other recalls. There was no recall-related charge in the third quarter. A strong fourth-quarter profit in North America could offset the impact of the recall charges.
"I think we are a business and costs are real," Barra said. "It's a company and it's based on business results and the business results are what the business results are."
Mary Barra, master of tautology.
3rd Gear: Tesla Sales Are Slowing, Maybe, Sort Of
How is Tesla doing? There's this WSJ article that starts with a nice description of their new lease program — which will cut lease payments by about 25% a month — but transitions into the news we really care about:
Through September, Tesla sold 10,335 Model S sedans in its home market, down 26% compared with the same period in 2013. The U.S. decline has come even as the company’s U.S. production increased 10% during the same period, according to WardsAuto.
Tesla doesn’t disclose sales volumes by region, but has said it expects half of its sales to be outside the U.S. by the end of 2014. With a goal of selling 35,000 cars this year, Tesla would have to sell about 17,500 models in the U.S. At its current sales pace, the auto maker will miss that target by a wide margin—and will have to double its sales pace to hit its goal.
“There still is extremely high demand for the car,” a Tesla spokeswoman said, declining to confirm WardsAuto’s data. The auto maker has said it needed to divert some production from its Fremont, Calif., factory to Asia as it ramped up sales in China in April.
Is this really terrible news? I mean, at some point demand for such an expensive product has to level off and people are looking forward to the Model X and Model 3.
4th Gear: How Much Shit Are Automakers Willing To Eat?
Being a large company means eating some shit. It's just part of the job. But there's only so much shit a big company is willing to eat before it finds a new partner.
For instance, automakers are dealing with recalls related to Takata-designed airbags but they're still eating huge bowlfulls of shit. Why? Let's let Reuters explain:
Takata has a strong enough cash position to weather the crisis so far, and there is no sign that carmakers would, or could, quickly abandon the company, industry officials say. Air bags are built into a car's design and can't simply be replaced by another make. Vetting the safety of a new air bag design is time-consuming and costly.
"There's no alternative inflator producer with enough idle capacity to replace Takata quickly," said a person with knowledge of the matter. "Over the shorter term, no automaker would be able to do that without causing huge disruptions in production."
Here's another business lesson: Be irreplaceable.
5th Gear: Honda Is Not Irreplaceable In China And Japan
Honda is going to experience its first profit decline in three years, because China and Japan. From Bloomberg:
Honda cut its China sales target by 100,000 units to 800,000 this year as demand shrank for key models such as the Accord sedan and CR-V sport utility vehicle. In Japan, repeated recalls of the automaker’s best-selling model — the Fit compact car — and an increase in consumption tax since April are setting Honda back in its plan of boosting sales by 21 percent this fiscal year.
“The sales volumes are behind what they planned in regions including Japan, China and Thailand,” said Kota Yuzawa, a Tokyo-based analyst at Goldman Sachs Group Inc. “If it were not for the weaker yen, it would have been a tough quarter.”
Oh, and of course, there's all that Takata bizness.
Reverse: America's Worst Interstate?
On this day, Duluth, Minnesota mayor Gary Doty cuts the ribbon at the mouth of the brand-new, 1,480-foot–long Leif Erickson Tunnel on Interstate 35. With the opening of the tunnel, that highway—which stretches 1,593 miles, from Mexico all the way to Canada—was finished at last. As a result, the federal government announced, the Interstate Highway System itself was 99.7 percent complete.
Neutral: Is Barra Doing The Right Thing? Can she be successful? Do you work at GM? How is it there now?
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