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: Everybody Else Is Good We Promise
Fiat Chrysler is recalling 1.4 million vehicles to fix a remote hacking vulnerability discovered by two white hat hackers in their UConnect infotainment system. Fiat Chrysler’s supplier for the system, Harman, started looking into the problem and guess what? They say it’s only with those cars, reports Reuters:
Harman International Industries Inc, which supplies car infotainment systems to Fiat Chrysler Automobiles NV and many other manufacturers, said the hacking risk that led to the recall of 1.4 million Chrysler vehicles last month seemed to be restricted to the Italian-American automaker.
“We do not believe this problem exists in any other car outside of Fiat Chrysler,” Harman Chief Executive Dinesh Paliwal said in an interview with Reuters on Tuesday.
Harman Kardon-branded infotainment products are part of Fiat Chrysler’s Internet-connected Uconnect telematics system, a collection of driver aids and entertainment services.
Okay, guys! You better be right!
2nd Gear: More Than Just Cars Taking A Hit In China
Everyone’s talking about declining car sales in China after last month’s stock meltdown, but no industry exists in a vacuum. It will almost certainly have wider implications, as Bloomberg reports:
With the auto sector second only to real estate as having the largest impact on suppliers, according to Banco Bilbao Vizcaya Argentaria SA, weakness in the industry threatens to worsen a downturn in manufacturing. A purchasing manager index for China’s factories slid in July to a five-month low.
“Declining car sales are definitely a warning sign for the Chinese economy,” said Paul Gao, McKinsey & Co.’s Shanghai-based head of automotive practice in Asia. “It’s a reflection of consumer confidence.”
3rd Gear: GM To Beef Up Truck Plant
General Motors is planning a massive investment, $877 million, in their Flint, Mich. truck plant. It’s one of two truck plants they have in the U.S. and the source of some of their most important and lucrative vehicles, especially now with gas so cheap. Via Automotive News:
GM said the investment in its oldest North American plant will include a new body shop, which will be located close to a nearby metal center that supplies sheet metal for the Chevrolet Silverado and GMC Sierra pickups.
“This investment will allow us to use a more innovative approach to deliver material between two critical facilities, reducing handling and the time it takes to ship parts,” Cathy Clegg, vice president of GM North America manufacturing and labor relations, said today in a statement.
GM said the renovations would be completed in 2018. That timing coincides with the launch of the next-generation of full-size pickups, which is scheduled for a late 2018 or early 2019 debut, sources have told Automotive News.
4th Gear: Truck Prices Up, Cadillac Sales Down
Speaking of truck sales, what’s it done to new vehicle prices? They’ve gone up, according to The Detroit Free Press. And while they’re fantastic sedans, the four-door offerings from Cadillac continue to struggle in the marketplace:
Consider this: The average pickup sold for $45,700 in July, or 4.8% higher than a year earlier, according to Kelley Blue Book. For the first half of the year, two of the 10 best-selling models priced above $50,000 were pickups — Ford F-Series and Ram (1500 through 3500).
Most luxury brands posted big increases as automakers reported July auto sales Monday. For instance, Lexus rose 9.1%, Infiniti rose 22% and Acura jumped 19.5%.
The exception to that trend was Cadillac, which posted a 7% decrease. But the weakness in the ATS sedan (down 38.5%) and CTS sedan (down 25.7%), was partially offset by a 47% increase in sales of the SRX crossover, which at 6,753 is Cadillac’s best-selling vehicle.
5th Gear: What’s Important About Tesla
Today is Tesla’s second quarter earnings call and a loss “is pretty much a given,” says Bloomberg. They say the important thing to pay attention to will be the third quarter delivery forecast:
Tesla needs to sell about 50 percent more autos in the second half than it did in the first to meet this year’s goal of 55,000. So what the Palo Alto, California-based company says about the third quarter is crucial to whether the implied fourth-quarter forecast seems plausible. A swing of just 1,000 vehicles — 13,000 versus 14,000 — determines whether Tesla needs to accelerate deliveries by 70 percent or 50 percent in the final three months of the year. (Like last year’s fourth quarter, this one may also have winter weather as well as holidays that could slow deliveries.)
And what about the Model X?
MODEL X: Tesla is expected to end the year with a big increase in production and sales because it’s doubling its lineup with the long-awaited addition of the Model X sport utility vehicle. It was originally planned to go on sale in 2014, so investors — like would-be customers — are very eager for the larger model that’s expected to be more popular with women. A reveal date for the production version of the SUV and plans for the start of actual deliveries may provide relief or even spur further excitement, if that’s possible.
Reverse: Traffic Signals!
Neutral: Is That Really The Last Of The Car Hacking Problem?
Does anyone really believe this is an isolated issue? I don’t.
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