The legendary Mitsubishi Pajero is getting the axe as Mitsubishi looks to cut costs. GM is continuing with its EV plans despite coronavirus setbacks. Ford dealers are apparently having issues getting repair parts. The VW ID.3 is getting some love. All that and more in The Morning Shift for July 27, 2020.
Mitsubishi, the third component of the Renault-Nissan-Mitsubishi alliance, has been going through some tough times. Sales in the U.S. have been up a bit in recent years, but they’re still unimpressive, and on a company level, Mitsubishi Motors Corp just isn’t thriving.
Reuters makes this clear in its recent report about Mitsubishi’s predicted financial performance through spring of next year. Considering the company’s CEO uses the term “crisis,” it’s safe to say that things aren’t good. From the story:
Japan’s No. 6 automaker anticipates an operating loss of 140 billion yen ($1.33 billion) for the year ending March 2021 just as it embarks on a plan to shrink its workforce and production, and close unprofitable dealerships to cut 20% of fixed costs in two years.
This would be Mitsubishi’s biggest loss in at least 18 years according to company financial records dating back to 2002.
“To pave the way to recovery, the top priority of all executives is to share a sense of crisis with employees to execute cost reductions,” Chief Executive Takeo Kato told reporters.
The call for cost cuts is a result of waning sales in Mitsubishi’s largest market of Southeast Asia and China, combined with coronavirus complications. Among Mitsubishi’s cuts will be ending production of the Mitsubishi Pajero, a powerhouse that has dominated the off-road world for decades, particularly in the world of rally. From Reuters:
As part of its restructuring plan, Mitsubishi, a junior member of the Nissan-Renault automaking group, said it would stop making the Pajero SUV crossover model next year, and close the plant in Japan which makes the vehicle.
The maker of the Outlander SUV said it would reduce its presence in Europe and North America and focus on growing in Asia.
Per the Nikkei Asian Review, Pajero sales haven’t been great, with the business journal writing:
The Pajero Manufacturing plant, which is based in the Gifu Prefecture town of Sakahogi, has produced cars such as the Pajero sports utility vehicle, but its output rate has been mired in the doldrums due to slumping sales.
Mitsubishi Motors will also cease production of Pajero cars, which it has so far continued for export, around 2021. These plans will be included in the automaker’s new mid-term management plan to be announced on July 27, the sources said.
Jalopnik wrote last April that Pajero sales in Japan were coming to an end; now it seems that all other markets will experience the same sad, Pajero-less fate.
You may wonder how a struggling economy resulting from a worldwide pandemic will affect America’s transition to electric cars. After all, EVs still tend to cost more than ICEs for automakers and consumers, both of whom are struggling financially right now, so it’d make sense for there to be a bit of a delay in the transition.
Indeed, on some level, EV adoption—along with just car sales in general—slowed as a result of the pandemic, but whether this will represent a major setback or just a blip on the radar, we don’t know, though it’s worth noting that EV proliferation depends on a number of factors outside of just economics (regulations and incentives tend to play a major role). In any case, it looks like GM is still pushing full-steam-ahead on its EV plans. From Automotive News:
General Motors has started retooling a former sedan factory here into its first electric vehicle production hub. But the automaker’s ambitious goal to launch 20 EVs by 2023 will require a much bigger manufacturing footprint that’s likely to include other assembly plants in Michigan and at least one in Mexico.
That means planning for costly, time-consuming renovations — in order to build vehicles with uncertain consumer demand and profit margins — as the industry works to pull itself out of a recession during a pandemic. In spite of that, GM executives say they’re moving full speed ahead on a $20 billion push into EVs and autonomous vehicles.
Executives acknowledge that widespread adoption of EVs will take years, but the automaker is determined to lead the industry into the EV era. It’s developing proprietary batteries through a $2.3 billion joint venture with LG Chem aimed at making EVs cheaper to build and able to drive farther between charges.
The story quotes the vice president of data and analytics at J.D. Power, Tyson Jominy, who voices his opinion that EVs took a significant hit from this pandemic. But shortly thereafter, the article quotes Cadillac boss Steve Carlisle, who make it clear that none of this will stop GM from moving forward with its big EV push:
“The best way to convert the industry and any particular automaker to EVs and plug-ins is to have [the automakers] extremely strong coming out of the COVID period and have enough cash to fund the R&D to get there profitably,” Jominy said. The pandemic “probably set the industry back at least a year or two until we can get everyone back on their feet. A healthy industry will be a better industry to transition to EVs.”
Despite the setbacks, GM remains committed to an electric future, even if that means making cuts elsewhere.
“We are pretty convinced that we need to be launching [EVs] sooner versus later,” Carlisle said. “I think the question will be more of what does the transition look like? How long does the transition take?”
There’s been a lot of discussion about how the coronavirus has affected the automotive industry in terms of vehicle production and consumer demand. But one angle that hasn’t received much attention is the effect the pandemic, and resulting closures, have had on vehicle service. After all, replacement parts, just like new OEM components used to assemble vehicles, come from factories, and factories have been struggling with maintaining output due to supply-chain restrictions and government-mandated social distancing requirements.
Automotive News writes about this topic in the context of a Ford technical service bulletin—one that calls for the replacement of Ford Escape engine blocks (yes, that’s a major repair). From the story:
The backlog has affected a number of Ford Motor Co. dealers who say they’re waiting weeks, and in some cases more than a month, for parts needed to fix older-model Escape crossovers and Fusion sedans.
In April, Ford issued a technical service bulletin for coolant leaks into the cylinder head of 1.5-liter EcoBoost engines in 2017-19 Escapes and 2014-19 Fusions. The automaker instructed retailers to replace the short block and gasket head.
Ford told the news site that it isn’t aware of any remaining parts bottlenecks, but the article mentions a service manager who doesn’t agree:
“There were disruptions in parts supply in early May due to supplier closures caused by COVID-19,” Ford said. “Upon reopening, parts production and delivery was expedited, resolving shortages by late June. Ford is not aware of any significant parts delays currently impacting dealer ability to repair these engines.”
But some dealers say the issue hasn’t gone away.
One service manager, who asked not to be identified discussing internal matters, called the situation a “nightmare” and said the store has a half-dozen Escapes sitting in the shop awaiting repairs. A second dealership official said enough customers had come in with the problem that the person raised it on a 20-group virtual meeting and heard similar responses from peers. An employee at a third dealership said the store cut a five-figure check in June to a rental company so that affected customers could have temporary transportation while waiting for a fix.
Rory Gamble, the United Auto Workers Union’s president, wants to make sure that any program hoping to incentivize workers to leave their jobs early as a way for automakers to cut costs includes provisions for extended mental health care and financial advisement. That’s because, as Gamble notes from his experience, folks who take buyouts sometimes struggle. From the Detroit Free Press:
Gamble has been around long enough to see what happens when workers exit a job ahead of retirement age without a “defined path” for the future and the financial acumen to stay solvent.
“They get hit with major disappointment when that package money runs out,” Gamble told the Free Press. “Reality sets in and they lose their health care and that leads to declining health, declining mental health and then you combine that with the mental shock and here we are, we get high incidents of folks committing suicide and dying early.”
Gamble may have a point. The Detroit Free Press’s story describes a study called “Suicide, overdose and worker exit in a cohort of Michigan autoworkers,” published in the Journal of Epidemiology and Community Health last month. “...researchers at the University of California, Berkeley, found that autoworkers who left their jobs had a higher risk of suicide or overdose than those who continued to work,” the news site writes of the study. Check out the Free Press’s full story for more details on that study (whose lead author, it’s worth noting, admits it was based on data with significant limitations).
A few years ago, I had a chance to look at the Volkswagen MEB platform set to underpin tens of millions of electric cars over the coming years, and I was impressed. Volkswagen has clearly invested lots of time and money into EV bones flexible enough to serve as a foundation for a variety of different vehicle types. This modularity, along with VW’s tremendous market reach and supply chain makes the MEB platform one of the most promising developments in the EV space, and should do a lot to bring the technology further into the mainstream.
The first MEB-platform VW is the ID.3 hatchback. I’ve sat in it, and can say it’s a simple, but nice little hatchback with decent interior volume and just enough interior tech/weirdness to make it feel a bit more special than a Golf. A recent Financial Times article talks about how the public has received ID.3; apparently, the EV hatchback is attracting younger people who don’t already own VWs. From the story:
Volkswagen’s first purpose-built electric car, the ID.3, has attracted tens of thousands of pre-orders from younger customers new to the VW brand as its plan to overtake market pioneer Tesla picks up pace.
About 85 per cent of the 37,000 people who have paid to reserve an ID.3 had not bought VWs before. In contrast, 85 per cent of sales of the German carmaker’s popular Golf hatchback are to repeat customers.
“The ID.3 is igniting with a population that is about 10 years younger than the average profile [of our customers], which is around 58 in Europe,” Jürgen Stackmann, sales boss for the VW brand, told the Financial Times. Deliveries of the ID.3, which was delayed by software problems, are due to begin in September
The VW ID.3, which has been ordered overwhelmingly by men, Stackmann was disappointed to see, will join its ID.4 SUV sibling in helping VW try to build 100,000 MEB-platform vehicles this year.
Philip W. Pratt demonstrates the very first American electric tricycle.
The vehicle’s 10 lead-acid cells pushed about 20 volts to a 0.5-horsepower DC motor. The whole setup weighed about 300 pounds.
The driver sat above the battery assemblage. Top speed: 8 mph.
It’s an interesting topic. Before this year, the public really was focusing heavily on climate change and vehicle electrification, but there are other, more pressing problems facing us all right now. Will EV adoption see a significant delay as a result?