Brexit may formally be a done deal but there’s still a lot to work out, and Coronavirus is wreaking havoc all over the world. All that and really a lot more about Coronavirus in the Morning Shift for March 4, 2020.
The United Kingdom may have officially left the European Union already, but there’s still a ton to be worked out. For the life of me, I can’t remember where I heard it (maybe you do?), but the most succinct way I heard the issue described would be to build a whole building out of Legos, and then deciding you wanted to take only the yellow ones out. It’s just a mess.
The issue is especially pressing for companies that are technically British in spirit, I guess, but pan-European in practice, like Bentley. Bentley’s a “British” car company, owned by a German conglomerate, with parts sourced from all over Europe, and with much of the final assembly done in England. That’s all fine if everything can move freely across borders, but it quickly becomes an issue once there are trade barriers in place.
Both American president Donald Trump and British prime minister Boris Johnson have said that Brexit won’t be a problem, because while the UK leaves those silly Europeans behind, it will cozy up to the United States, and that will all be perfect, definitely no problems anywhere, no sir, as the New York Times reports:
Mr. Trump has not dialed back his tone about the deal’s potential — it would be “magnificent,” he promised when the two men met at the United Nations last September — but Mr. Johnson certainly has, a reflection of both economic and political reality.
As his government laid out its objectives for the negotiations with Washington on Monday, Mr. Johnson emphasized instead the points Britain would not give up in a negotiation — chief among them, food safety and the sanctity of the country’s National Health Service. He did not play up the Texas-size windfall from a deal, as he once did when he sold it as a lucrative fringe benefit of Brexit.
“We’re going to drive a hard bargain to boost British industry,” Mr. Johnson said. “Trading Scottish smoked salmon for Stetson hats, we will deliver lower prices and more choice for our shoppers.”
The rest of the article from the Times does a great job of laying out why even the hope of a UK-U.S. trade deal anytime soon is nuts, but the problem for companies like Bentley doesn’t even go that far. Bentley can’t just hold out hope that a trade agreement with the U.S. would be better, because Bentleys aren’t made out of Stetson hats.
They’re made out of Volkswagen parts. And those come from Germany. Which is not an American state.
Here’s Reuters elucidating the issue:
“As a luxury player with 24% of our sales in the EU and 90% of our parts purchases ... from the EU, it would help us greatly if we didn’t have to pay more for them or get less margin back for the products that we finish and send,” Chief Executive Adrian Hallmark told Reuters.
“When we look at the current model, where we just bring in built bodies and then do everything else here, it may be that we do more outside of the UK and then do the rest here. It may shift the balance but we’re a long, long way from those discussions.”
Hallmark is implying, essentially, that British Bentleys will just become German Bentleys. And while that probably won’t make a huge difference in the way a Bentley feels, it’d be a bit silly to festoon everything in British flags when the damn thing is entirely built in Zuffenhausen.
Bentley’s not alone here, as almost the entirety of the British car industry is owned by non-British interests, and the U.K.’s deep integration with the E.U. means that virtually every car produced on the isles has a large proportion of parts from the continent.
The end result may be a final injury, if not a death knell, for what remains of the British car industry.
The Coronavirus spreading around the world, known as COVID-19, appears to have had its first victims in or near the Chinese city of Wuhan. Over 80,000 cases have been confirmed in the country alone and reports indicate that large parts of communal life in China have ground to a halt. People are still going about their day for needed things, sure, but just going to a large place to make some non-critical purchases, like buying a car, is just out of the question. Usually people think about buying a car for a while, judge what works about the vehicle and what doesn’t, and then make a decision. Most people don’t NEED a car RIGHT THIS SECOND.
And that means car buying in China has ground to a halt, Bloomberg reports:
China’s car sales had the biggest monthly plunge on record as the coronavirus kept shoppers away, intensifying the pressure on automakers already battling an unprecedented slump before the outbreak.
Sales fell 80% in February, according to preliminary numbers from the China Passenger Car Association released Wednesday. Average daily sales improved toward the end of the month compared with the first three weeks, PCA said.
The outbreak has paralyzed the industry just as it was looking to gradually halt a two-year decline, with manufacturers now left with little visibility into when sales might recover.
But the way things are going globally, it appears as if the outbreak may get worse before it gets better. China seems to have had some success in slowing the fatality rate, but it remains to be seen if that progress will hold as the virus spreads in other countries.
Even without a higher fatality rate, both societal panic and rational prevention methods involve people staying home and not doing things like buying cars, so this may be a harbinger of things to come in other markets.
Or not! We’re all onboard this wild ride called Planet Earth, and there ain’t no gettin’ off!!!
Seeing everything going on in countries with large numbers of infections like China, Iran, and Italy, Ford is wigging out, and has taken the proactive decision to ban all “non-essential” air travel entirely. Here’s Automotive News:
Ford Motor Co. told employees Tuesday it’s banning all nonessential domestic and international air travel at least until March 27 as cases of the coronavirus spread around the world.
Ford also confirmed two employees in China have been diagnosed with the coronavirus and are getting better, Reuters reported.
The automaker has been prohibiting travel to and from China but is extending the ban to all flights within the U.S. and internationally. A spokesman, citing the health and safety of Ford’s employees, said there may be some exceptions, but they’d likely be rare.
It’s unclear how effective a flight ban would be in stopping the spread of the outbreak considering that local person-to-person transmission has been confirmed in multiple American states including Oregon and New York, but better safe than sorry.
For the record, Jalopnik’s parent company, G/O Media, has also halted international travel. Our own Erik Shilling decided he wanted to go to Las Vegas for the Mint 400 on his own regardless and technically that’s domestic travel, but that’s on him. My man likes trucks.
It’s not just the car industry feeling the effects of Coronavirus, but the aerospace industry, too. The Financial Times says that Airbus and others are deferring deliveries and slashing guidance:
Airbus is reviewing its 2020 delivery targets, issued barely three weeks ago, as the global spread of coronavirus in recent days through Europe and into the US pushes the aviation industry into crisis mode.
Passenger demand plunged sharply at the weekend, forcing carriers around the world to freeze hiring and slash the number of flights, including on lucrative transatlantic routes. Iata, the airline trade body, will on Thursday significantly increase its estimate of the hit to global sales as a result of the virus.
Just 12 days ago it estimated a near-$30bn impact, based largely on the reduction in flights to and from China. Current data show a 2.8 per cent fall in global aircraft capacity this year, according to aviation data consultancy, Ascend, against Iata’s expectations late last year for growth of 4.7 per cent in 2020.
In the grand scheme of things, none of this matters. People are dying.
The New York International Auto Show is coming up in a few weeks! Cool, great! Remember how I was just saying earlier that the most effective way to stop Coronavirus’ transmission is stop gathering in communal spaces, and there is confirmation of ongoing person-to-person infection in New York?
Doesn’t matter! Unlike the canceled Geneva Motor Show, the big communal space with all the people and cars in New York is still happening, the organizers say (via Bloomberg):
In true Broadway style, the organizers of New York’s annual auto expo are doing what they can to ensure that the show goes on despite the spread of the coronavirus.
Five weeks before the New York International Auto Show is scheduled to open, the Greater New York Automobile Dealers Association said Tuesday it has already installed 70 hand-sanitizing stations throughout the convention center where carmakers are expected to unveil more than 50 new models. The show coordinator also said it will set standards for car-detailing companies to disinfect vehicles on the floor more frequently than usual.
While the CDC is basically recommending that if you can’t wash your hands, you should rub pure grain alcohol on them, it might just be easier and safer (though less lucrative) for everyone involved to just stay home.
Reverse: Hell Yeah That’s A Car
The Daimler “benzin motor carriage” made its first test run in Esslingen and Cannstatt, Germany. It was Gottlieb Daimler’s first four-wheel motor vehicle.
I would argue that it is not. Discuss.