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: Tesla Seeks Michigan Dealership License
Tesla Motors has long battled with states that, under the thumbs of cash-flush dealership lobbies, restrict or bar their direct sales model. That includes Michigan, where direct sales and Tesla Stores are banned by state law. The nearest store is in Chicago.
But if a dealer license application is approved, Michigan could end up being home to Tesla’s first franchise dealership, which can be run by anyone but the company itself. Via The Detroit News:
Tesla applied for a “Class A” dealership license to sell new and used cars. Under the classification, it also must have a “repair facility as part of their business or have an established relationship with a licensed repair facility,” Woodham said in a Sunday email to The Detroit News.
If the Secretary of State approves the applications, Tesla could begin selling and buying vehicles as long as any local business permits that may be required have been taken care of.
[...] Michigan Information & Research Service Inc., which first reported the Tesla applications, said that based on the Secretary of State applications in general, Tesla could contract with anyone to sell its cars, except itself.
The Lansing-based capital news service argues the company could even send a former employee to open a Tesla dealership with a franchise agreement “in which it mandates the dealership look, act and do business exactly as the Tesla-run stores.”
While the direct sales model has its benefits, it may be hard for Tesla to achieve the volumes it seeks without brick-and-mortar stores—and their repair facilities. In Tesla vs. The Dealers, the automaker may end up joining the other side rather than trying to beat them.
2nd Gear: Fiat Chrysler’s New Small Car Plan Is Either Brilliant Or Crazy
The Dodge Dart and Chrysler 200 are non-starters, so Fiat Chrysler is going to let them run their course and die off in good time. The automaker will still have small cars, just likely outsourced to another car company (I’ll bet you $10 right now it will end up being Mazda.)
In the meantime, Fiat Chrysler will focus on what they do best and what brings in the most cash: trucks, crossovers and SUVs.
Over at Automotive News, Larry Vellequette points out what a huge gamble this is:
If the strategy works — if FCA can right its balance sheet by selling rebadged compact and midsize sedans built by another automaker while concentrating on high-profit Jeeps and pickups — Marchionne may have shown the way for other companies.
If it doesn’t work, a Jeep- and Ram-focused FCA will at least have been transformed into a more attractive merger or takeover candidate, especially for automakers that have been unsuccessful with SUVs and pickups in North America.
One thing is clear: Come 2018, FCA will be a different company than it is today. It will have a new business model that takes into account a market shifting dramatically toward pickups, crossovers and SUVs.
“This is FCA’s diet plan before the wedding to shed unwanted weight and to pad the bank account,” says AutoPacific analyst Dave Sullivan. “It’s not a long-term plan, but more of a ‘Hail Mary’ pass to tidy up their appearance for an imminent tie-up with someone.”
CEO Sergio Marchionne may have given up pursuing General Motors as a merger partner, but not the idea itself. This could shore his company up to be in a better position for that. If it works!
3rd Gear: No Self-Driving Porsches
Want a car that drives itself? You won’t get that from Porsche, or Lamborghini for that matter. The CEO of the former rebuffed the idea to a German newspaper. Via Reuters:
The comments from Porsche Chief Executive Oliver Blume show that some car makers believe their drivers want to remain firmly in control at the wheel.
“One wants to drive a Porsche by oneself,” Blume said in an interview with regional newspaper Westfalen-Blatt published on Monday.
“An iPhone belongs in your pocket, not on the road,” Blume added, saying that Porsche did not need to team up with any big technology companies.
Good to hear.
4th Gear: The Prius Family May Not Stay Together
Toyota had this plan to expand the Prius nameplate to an entire family of vehicles, hence the small Prius C and minivan-like Prius V that have been on the market for several years now. With super-low gas prices, the Prius isn’t the volume-seller darling it once was, and the “family” lineup may not happen again. Via Automotive News:
The Prius family’s best year was 2012, and sales have declined since. The regular liftback’s age shares some of the blame; after some delays a redesigned fourth generation went on sale in January. Lentz expects 2016 sales will be up about 30 percent from their 113,829 total in 2015.
But consumers’ unending appetite for light trucks plus cheap gasoline mean the Prius isn’t the darling of the showroom that it once was. Toyota knows its original goal from 2011 is no longer possible, and it’s recalibrating expectations.
“Given all the changes in consumers’ preferences right now, I don’t think we’re forecasting the Prius to be our top volume seller anymore,” said Bill Fay, Toyota Division general manager.
More likely is the RAV4 Hybrid could take the place of the Prius V.
5th Gear: Fun At Hyundai Brought To You By The Letter ‘N’
One more from Automotive News today: a profile of Albert Biermann, the former head of BMW’s M division, who now works at Hyundai trying to instill performance creds into a brand that has had very little over the decades and also seeks to surge in China, where plush luxury is preferred over corner-carving:
Biermann, who led the development of such spirited sports cars as the M3 and M5 as head of BMW’s M performance division, had just been hired by Hyundai to infuse its vehicles with some of the same driving characteristics as Germany’s finest luxury cars.
But the G90 executive sedan — which would serve as the flagship of South Korea’s first homegrown luxury brand — came with an additional mandate: a rear-seat ride that needed to please buyers in China and South Korea, where many well-heeled customers buy luxury cars to be driven by their chauffeurs.
“I almost spent as much time in the back of the G90 as driving the G90,” Biermann, 58, joked during an interview at the Detroit auto show.
The N brand has three performance-tuned Hyundais on the way, at least two of which should come to the U.S. It will also tune cars for the new Genesis brand.
Reverse: Ford GT!
Neutral: Should Tesla Franchise Dealers Or Keep Trying For Direct Sales?
As Wards Auto reports, Tesla seems to be playing both sides of the fence here. As it seeks a dealership license, it also has lined up a coalition of Republican lawmakers in Michigan to fight the dealer-led (and General Motors-backed) direct sales ban. Is the right strategy to keep fighting, or embrace dealerships?
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