Nissan Takes A Profit Hit After The Inspection And Airbag Scandals

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: Nissan Takes A Profit Hit Amid Takata Lawsuit And Bad Inspections

Nissan has not had a good time lately! The manufacturer's had to deal with a class-action lawsuit against automakers in the U.S. over the use of Takata airbag inflators, which automakers were found to have known were defective. The inflators led to the biggest recall in automotive history.

The company also took a hit when news of its bad inspection process came out, as Nissan's apparently been doing shoddy final vehicle inspections in the Japanese market for decades. And, as Automotive News reports, sales have fallen for Nissan in some of its key North American markets.

With all of that, earnings came out and Nissan's operating profit dropped 22 percent in the last quarter. Here are the numbers, from Automotive News:

Operating profit fell to 128.5 billion yen ($1.14 billion) in fiscal second quarter ended Sept. 30, Japan's second-biggest carmaker said Wednesday. Net income declined 3.1 percent to 141.6 billion yen ($1.26 billion) in the July-September period.

Worldwide revenue advanced 8.5 percent to 2.89 trillion yen ($25.7 billion) in the quarter, as global retail sales increased 4.2 percent to 1.38 million vehicles. ...

Citing the Japan recall costs, Nissan cut its operating profit outlook for the full fiscal year ending March 31, 2018. It now expects operating profit to fall 13 percent to 645.0 billion yen ($5.73 billion) this fiscal year. It had earlier forecast operating profit to retreat just 7.7 percent.

Nissan CEO Hiroto Saikawa said "special charges" took the company off its profit path this quarter, according to Automotive News. The company paid $362.6 million to cover the Takata settlement and to recall its poorly inspected vehicles.

2nd Gear: Well, Actually

A few days ago, President Donald Trump had a plea for Japanese automakers: "Try building your cars in the United States instead of shipping them over. That's not too much to ask. Is that rude to ask?"

The request contradicted other things he was saying, such as that "several Japanese automobile industry firms have been really doing a job" of creating jobs in the U.S. over the years. But it's more than just several, and the hard numbers are staggering when you put them up next to his words.

Here is a great breakdown of Japanese automakers' presences in the U.S., from the Detroit Free Press:

He implied that Japanese manufacturers still ship more vehicles from Japan to the U.S. than they produce here. That is not true.

"Honda, Subaru, Nissan, Mazda and Toyota built 2.4 million vehicles, accounted for one-third of all U.S. auto production in 2016," said Kristin Dziczek, director of the Center for Automotive Research's industrial, labor and economics group. "60% of what they sold in the U.S. was produced in the U.S."

When you add Hyundai, Kia, BMW, Mercedes-Benz and Volkswagen, 48% of all vehicles assembled in the U.S. last year were produced by someone other than Ford, General Motors and Fiat Chrysler, according to the International Organization of Motor Vehicle Manufacturers.

Toyota's largest assembly operation in the world, with about 8,000 employees, is in Georgetown, Ky.

Why, yes, it does sound like they are building cars in the United States.

3rd Gear: Hertz's Role In The Future Of Transportation

Businessperson Carl Icahn thinks that with private car ownership heading out the window, companies like Hertz will benefit. That's a weird take, considering ride hailing seems to be taking over. Bloomberg reports that Icahn has a controlling position in Hertz, though, so it would make sense for him to be optimistic.

But, wait, he doesn't mean Hertz by itself. From Bloomberg:

"If you look at these businesses as single things, I don't think they're that great," he said in a recent interview. But they're positioned as a group to cash in on the new car culture. "There's a secular change happening, which we see as a great opportunity, and it will be good for Icahn Enterprises."

Icahn imagines the next two decades ... of transportation the way a lot of experts do: Americans will ditch personal cars, opting instead for communal rideshares or short-term rentals, some of them self-driving and fueled by electricity. Icahn sees the migration playing into his hands. He's sure enough that he has invested more than $3 billion so far, not counting what he has put into Hertz.

Bloomberg reports that Icahn also thinks since Uber and Lyft don't have interest in taking care of fleets, the 1,900 service centers his company owns will be busy. Hertz, as a company, is also attempting to become a manager of ride-hailing fleets and robotaxis. The future is weird.

4th Gear: Ford Teams Up With Chinese Car Company To Make EVs

Ford and privately owned Chinese car company Anhui Zotye Automobile agreed to team up and put a combined $756 million into building electric passenger cars in China, Reuters reports. The agreement is a 50-50 joint venture that the two companies have been working on for several months.

Zotye, founded in 2003, is one of the companies known for, well, very closely replicating designs of other passenger cars on the market. It came out with a near exact copy of the Porsche Macan SUV a few years ago, at half of the price.

Here are the details of its Ford venture, from Reuters:

The new joint venture, Zotye Ford Automobile Co. Ltd, plans to build a manufacturing plant in Zhejiang province and will sell all-electric vehicles under a new Chinese brand ...

"Zotye Ford will introduce a new brand family of small all-electric vehicles," Ford group vice president Peter Fleet said in the statement. "We will be exploring innovative vehicle connectivity and mobility service solutions for a new generation of young city-dwelling Chinese customers." ...

In addition to the new JV, Ford and Zotye will explore offering mobility services to consumers in China as local demand for such solutions continues to grow, Ford's statement added.

Reuters reports that the deal was signed during President Donald Trump's visit to China, and that many new automakers are launching projects for plug-in cars with the high levels of pollution in Chinese cities.

5th Gear: Competition Is Good And Discounts Are Better

General Motors heard the new Lincoln Navigator SUV isn't all that bad, and as a result of sweet, sweet competition among #brands, is offering $5,000 discounts on its Cadillac Escalade SUVs to dissuade buyers from leaning that way.

But, like always, there's a catch. You probably don't qualify for GM's "Please don't buy the Lincoln" discount. From Bloomberg:

The nationwide deal on GM's Cadillac Escalade sport utility vehicles this month applies to any buyer trading in a 1999 or newer Lincoln model, according to a memo sent to dealers and obtained by Bloomberg News. Jim Cain, a GM spokesman, confirmed its authenticity.

GM is getting off to an aggressive start defending one of its dominant large SUVs as Lincoln rolls outits challenger, the first significantly redesigned Navigator in 15 years. Ford also has updated its Expedition model to try to narrow what a Morgan Stanley analyst estimates is a $2 billion annual pretax profit edge for GM in the lucrative segment. It's packed the $72,055 Navigator with 75 new features including standard wi-fi and a dozen power outlets.

The Escalade starts at $73,995, so you'd still be spending a ton of money on the thing anyway. But $5,000 off would make it cheaper than Lincoln's Navigator, if only by a little.

Those automakers really get you when you need to haul a lot of people, huh?

Reverse: Nigel Mansell Pulls A Felipe Massa

After clinching his first Formula One championship, Nigel Mansell retired from F1 on Nov. 8, 1992. Fox Sports Australia reports that he was back less than two years later on June 28, 1994. Sounds like someone else we know—Felipe Massa—who retired for two months instead of two years at the end of last year.

He promises he's actually retiring this time around.

Neutral: Is $73,000 For An SUV Worth It To You?

If you think about it, that's a decent downpayment on a house in a lot of areas of the United States. So, would you dump that much cash out for a vehicle that's meant to haul people, not give you immense fun on the track or elsewhere?