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: Uh Oh
Here’s a thought: What if every automaker cheated emissions tests?
It’s something I’ve thought about a lot as of late, with Fiat Chrysler back in the news over possibly striking a settlement with the U.S. government for allegations that it installed a defeat device on more than 100,000 vehicles. (Fiat denies the claims). But the fact is, VW’s admission back in 2015 that it lied its ass off, sparking the never-ending news cycle that is Dieselgate, forced regulators to rethink how they look at emissions tests, and it’s something the industry likely won’t escape for some time.
Which brings us to today. Now, according to reports, Daimler’s getting thrown into the mix.
U.S. investigators have been looking into Mercedes-Benz and have since found that it, too, equipped cars with software to help pass diesel emissions tests, according to thew German newspaper Bild am Sonntag.
Here’s Automotive News’ story on the report:
Investigators found an engine management function called “Slipguard” that recognized whether the car was being tested in a laboratory, Bild am Sonntagsaid.
Another function named “Bit 15" switched off emissions cleaning after 26 km (16 miles) of driving, the paper said, citing confidential documents.
The software applications helped to reduce or regulate the application of AdBlue fluid that helps eliminate harmful exhaust gases, Bild am Sonntag said. Their use meant some Mercedes diesels emitted NOx pollutants up to 10 times higher than legally permitted levels, the paper said.
Bild am Sonntag cited emails from the automaker’s engineers questioning whether the software functions were legal.
A Daimler spokesperson declined to comment to Automotive News, only saying it’s cooperating with the U.S. justice department’s probe. It’s definitely pissed off about the report, though.
“The authorities know the documents and no complaint has been filed,” the spokesman told the newspaper. “The documents available to Bild have obviously selectively been released in order to harm Daimler and its 290,000 employees.”
Mercedes started dropping diesels entirely from its U.S. lineup last year, citing lessened demand and an unclear regulatory climate. But even if no more new ones are hitting our roads, the existing ones could face a VW-esque crisis here.
This is going to be interesting to watch unfold.
2nd Gear: What’s Next After The UAW Scandal
The scandal embroiling Fiat and the United Auto Workers—in which several high-ranking employees allegedly spent millions of dollars from one of FCA’s training center on personal items—is particularly troubling for the union. Which makes sense, of course. Automakers have continually opened up factories in the not-so-union-friendly South, weakening the UAW’s standing, while conservative lawmakers have pushed through right-to-work legislation in former union bastions like Michigan.
So, simply put, it really wasn’t the best time for a corruption scandal the likes of which we’re seeing here. The feds have found that executives have purportedly paid off high-ranking union members, and more indictments are likely forthcoming.
You might think UAW members are feeling deterred, but many see it as an opportunity for change, reports Automotive News.
UAW dissidents see the situation — years of funneling money meant to train workers into the pockets of union and company officials instead — as an opportunity for profound change. They’re urging rank-and-file members to “take back” the union from leaders they claim are overly willing to comply with employers’ requests.
“We went away from being trade unionists to company unionists,” said Marty Marcum, a 20-year General Motors-UAW member who is part of Local 440 at the automaker’s Bedford Casting Operations in Indiana and is leading an effort to challenge the leadership-approved slate of candidates in this year’s quadrennial election. “I find it to be the biggest cancer that is bringing our union down.”
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Art Wheaton, a labor expert with the Worker Institute at Cornell University, said he doesn’t think the scandal will lead to the demise of the UAW. But Wheaton expects some restructuring and tightening of the joint training center operations at the center of the federal investigation. He also isn’t counting out dissidents such as Marcum.
“In terms of having the rank and file not being happy and voting in a new slate with a new promise,” said Wheaton, who used to lead joint training and educational courses for company and union officials with GM and Ford Motor Co., “I don’t think you can discount that possibility.”
The entire Automotive News piece is worth a read for an insightful look at the situation. What’s clear is, based on recent reports, there’s still plenty more to come from the fallout.
3rd Gear: GM Tries To Smooth Over South Korea Issue
General Motors bumped heads all last week with South Korea, after news trickled out that it’s likely planning to end its sagging operation there. Expectedly, South Korean leaders weren’t happy, but GM CEO Mary Barra has made it clear that she’s looking to slash costs where it makes sense. (See Opel.)
Now, GM’s offering up a deal to convert $2.2 billion of debt owed by its South Korean operation into equity, so long as Seoul chips in financial support and tax incentives, according to a report from Reuters.
Citing four unnamed sources with direct knowledge of the matter, Reuters said:
The restructuring proposal comes after the Detroit automaker announced last week that it would shut its plant in the city of Gunsan, southwest of Seoul, by May and decide the future of the remaining three plants in the country within weeks.
The debt for equity swap would allow GM’s business in South Korea to continue operating. It was not immediately clear how the deal would affect the interest of the state-run Korea Development Bank, which owns 17 percent of GM Korea.
It’s unclear how much capital GM wants from South Korea, but one source told the news outlet that it wants at least $1 billion to keep the Korean business churning. The automaker’s business there employees 16,000 people, so it’s obvious why the South Korean government’s so intent on trying to keep GM around. It’s just apparently going to cost a hell of a lot.
4th Gear: Car Prices Could Rise If Steel Tariffs Go Into Effect
Last week, the U.S. Commerce Department issued reports that recommended high tariffs on imported steel and aluminum, two very integral supplies to auto manufacturers and suppliers. The upshot? Car prices could shoot up.
From the Detroit Free Press:
Concluding that the U.S. imports nearly four times the steel it exports and that steel employment has dropped by 35% since 2000, [Commerce Secretary Wilbur] Ross recommended a global tariff of least 24% on all steel imports or a tariff of at least 53% on steel imports from China, South Korea, Russia and nine other countries, with a quota on all imported steel equal to last year’s levels.
He also offered another alternative to limit all steel exports to 63% of each country’s 2017 exports to the U.S.
There’s mixed reviews from the auto industry, with some lobby groups saying the tariffs could lead to lower car sales.
In a report to the Commerce Department in May, the American Automotive Policy Council warned any such restrictions could lead to a hike in U.S. steel prices, while depressing the price of steel in foreign markets.
“This would lead to lower sales of domestically built cars and trucks in the highly competitive U.S. auto market, a decrease in U.S. auto exports, and a loss of the jobs that those economic activities support. In the end, that would be a net-negative for the U.S. economy, and potentially the U.S. steel industry – the very sector such restrictions were designed to assist,” the report said.
It’s unclear how soon President Trump plans to decide whether or not to implement the tariffs. CNBC reports he must respond to the reports by mid-April.
5th Gear: Hyundai’s Got A New Fuel Cell Ride
At this year’s CES Confernece, Hyundai teased out its new fuel cell car called Nexo, and it’s packing a whole lotta mileage for a single charge: 378 in total. On Monday, the automaker debuted the hydrogen-powered Nexo in Seoul at the Winter Olympics, highlighting the car’s advanced autonomous capabilities.
The zero-emission hydrogen-powered drivetrain, unveiled here Tuesday, delivers what Hyundai says is the world’s best fuel cell driving range. The autonomous-driving features include a new blind-spot detection system — which Hyundai says is the first of its kind — as well as the automaker’s first application of an auto-steering lane-keep assist.
Wrap all that into a sleek crossover package that taps the red-hot utility segment, and Hyundai is hoping the public sees this tech-savvy green car as a real choice — not just a science project.
The car goes on sale in South Korea later this month and is expected to hit the U.S. in the fourth quarter this year. Hyundai’s expecting to move a small number of units; there’s only so many places you can charge a fuel cell car right now. But! People here bought the Toyota Mirai. Maybe some will find the Nexo equally appealing.
Reverse: Remember This Episode?
An episode of the hit TV sitcom “Seinfeld” titled “The Pothole” airs for the first time on this day in 1997; it includes a story line in which the character Kramer adopts a stretch of the fictional Arthur Burghardt Expressway through the real-life Adopt-a-Highway program.
Neutral: What If Everyone Is Bad
The report on Mercedes is kind of thin, but it’s worth asking once again: Who hasn’t cheated?