Art: Jason Torchinsky
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Automakers fighting back against President Donald Trump’s import tariffs, slumping March new car sales, we get some insight into Nissan under Carlos Ghosn and so much more for The Morning Shift of Friday, March 29, 2019.

1st Gear: The Auto Industry Is Fighting Against Trump’s Proposed Import Tariffs on Cars

For at least a year now, Trump has been advocating for a heavy—possibly 25 percent—import tariff on foreign-made cars, and as Bloomberg reports in a new story, much of the auto industry thinks this is a bad idea, and some execs think it could “cripple a sector already facing a slowdown.”

There’s been a ton of pushback from automakers up to this point, but now they’re stepping up their game. From the story:

Groups representing many arms of the industry — automakers, dealers, parts suppliers and aftermarket companies alike — are in lockstep in their opposition of new levies being considered by the White House, a rarity for an industry that often disagrees on major policies.

The news wire spoke with Subaru of American President and CEO Tom Doll, who was one of a number of auto industry representatives who flew to Washington D.C. to lobby against a potential tariff on imported cars and car parts. From Bloomberg:

“I came up here specifically to talk to our Congress people about these tariffs and the impact that they’re potentially having on our entire distribution chain and how that eventually is going to work itself through the distribution chain into our pricing,” Doll said in an interview with Bloomberg TV on Tuesday. “This is something that we’re getting a lot of sympathy with from the Congress folks, so we’re hopeful that this resolves itself.”

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The story discusses what affect proposed tariffs could have on vehicle prices, and not just ones imported from other countries:

A 25 percent tariff on all autos and parts could boost new vehicle prices by an estimated $4,400 on average, according to a 2018 study by the Center for Automotive Research. Imported vehicles prices could rise by $6,875 per vehicle and U.S.-made autos may see a $2,270 bump, according to the report, which estimated more than 700,000 U.S. jobs could be lost as well.

According to the article, Trump will look at the Commerce Department’s recommendations on the matter, and while he technically has until May 18 to respond a decision may take longer. So who knows how or when this whole Car Import Tariff thing will shake out.

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2nd Gear: Trade Tension Could Also Be Hurting Car Sales

Each month, industry analysts report automobile sales figures, and as March comes to a close, it looks like numbers might be down for the third straight month, Automotive News reports. The news site says four forecasters have predicted drops between 1.5 and 7 percent compared with March of last year.

According to an analyst from Cox Automotive, uncertainty in trade policies may be contributing to slumping sales. From Automotive News:

Analysts say the decline stems from an unsettled regulatory environment, as well as concerns that vehicles are becoming less affordable for consumers.

Cox said volatility in the stock market, uncertainty around President Donald Trump’s trade policies and concerns about the potential for an economic slowdown might be scaring off some would-be buyers. It noted that continuing new-vehicle price increases coupled with tepid incentives also could be hampering sales.

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But another interesting factor could be the lower tax returns people have been complaining about this year:

Another factor potentially hampering sales: tax reform. Cox noted that the tax law that took effect last year had positive implications in 2018 but has resulted in lower refunds for some consumers this tax season.

In other words, smaller refunds may dampen new car purchases. Gosh, have I heard lots of complaints about this year’s tax returns.

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3rd Gear: Ghosn’s Nissan Seemed Like a Shitshow

By now, everyone knows about Carlos Ghosn, the ousted former Nissan-Renault boss facing trial in Japan over alleged financial misconduct.

But if you want to read about what corporate culture and tension between Renault and Nissan was like under his rule, the New York Times describes the shitshow in detail, writing:

Mr. Ghosn was, as a critical governance report revealed this week, “deified within Nissan,” a leader whose decisions and activities were “deemed impenetrable territory within the company.” He was known to drive out managers who disagreed with him. He shared authority — and his plans — with only a few loyal executives.

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The story goes on:

Some of the division was fostered by Mr. Ghosn himself, former Nissan executives have said in interviews. The result was a toothless board, internal watchdogs with no authority to investigate top executives and, according to Nissan’s new leaders and former employees, an imperious corporate leader.

The environment was ripe for back-stabbing — and now Mr. Ghosn has said that is exactly what happened to him.

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A key part of the article is the description of tensions between Nissan and Renault—two companies that some thought at one time had been brought together to form a smooth-sailing corporate partnership. It’s complicated further by the French government’s partial ownership of Renault.

Among the tensions, the story describes how some people at Nissan worried about the brand losing its identity by sharing so many parts with Renault:

“The powertrain,” said Tetsuji Isozaki, a former union leader who worked on Nissan’s engine development team and is now a member of the Japanese Parliament, describing how the blurring began. “Then the transmission. Then it was the next thing and then the next thing, until it got to a place where the car’s identity was at stake. Some people started asking: ‘Isn’t that going much too far?’”

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It continues by describing Ghosn’s role at Renault and Nissan:

“He made sure every part of the organization depended on him to function,” said Takeshi Yamagiwa, a business consultant in Tokyo who spent three decades at Nissan, where he led vehicle development. “It got to a point where only a clone of Mr. Ghosn would be able to succeed him.”

But Ghosn’s “strong” leadership was key to holding the Renault-Nissan partnership together, and now the Times refers to that partnership as a “fractured alliance” that both companies are actively trying to bring back from the brink.

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And yet now merger talks are back, and maybe with Fiat Chrysler at the table too. Color us skeptical.

4th Gear: Lyft Valued at $24 Billion in IPO But Company’s Outlook Isn’t Clear

Lyft filed for an Initial Public Offering early this month, and on Friday, it plans to sell for $72 a share, bringing the company’s valuation to about $24 billion.

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But should investors got out and snag shares in droves? Maybe not. The Wall Street Journal describes some of the companies challenges, writing:

Lyft, which was launched in 2012, says its service is now available to over 95% of the U.S. population but that just 1% of miles traveled in the U.S. happen on ride-share networks. This discrepancy could suggest a large market opportunity for Lyft outside of urban areas. However, the fact that the on-demand ride-sharing concept has been available for nearly a decade with so few miles logged isn’t a particularly encouraging sign for its value proposition across the broader market.

With the company losing a distressing amount of money, investors have to hope revenue growth either will become sustainable with less marketing spending or grow enough to offset the hemorrhaging. Neither seems likely in the near-term.

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The story goes on, saying that Lyft and Uber are both spending lots of money on marketing in order to compete with one another, and it ultimately concludes with “the payoff is uncertain.”

More on this from us later today.

5th Gear: Giant Auto Supplier ZF Becomes Even More Giant

ZF Friedrichshafen—the German auto parts supplier that employs 146,000 people around the globe, and makes various driveline and chassis parts including transmissions not just for cars, but also for boats, commercial vehicles, motorcycles, helicopters, and even wind turbines—has just announced its recent $7 billion acquisition of Switzerland-headquarted commercial vehicle safety and connectivity company WABCO.

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Short for Westinghouse Air Brake Company, which was founded in 1869 in the U.S., WABCO is known for its active safety systems on commercial vehicles like automatic emergency braking, as well as for air suspension systems, and transmission automation systems. ZF says in its press release that buying WABCO would bring bring commercial braking expertise into ZF’s portfolio for the first time—a key area for ZF, as it wants to crank up its automated driving game.

From ZF:

ZF expects that automated driving functions will primarily be implemented for commercial vehicles and in areas with low complexity and traffic (e.g. factory sites, airports, agriculture). The combination of both businesses is expected to further accelerate the development of new technologies to enable autonomous commercial vehicle functions, making ZF less dependent on the economic cycle of the passenger car industry.

The planned strategic acquisition of WABCO is consistent with ZF’s goal to develop and deliver technology solutions that make cars and commercial vehicles see, think and act in order to reduce emissions and increase road safety. While ZF already has sensor systems and computing technology for its “see“ and “think” competence, together with WABCO ZF will in future be completing the portfolio for commercial vehicle technologies to offer solutions to allow vehicles to “act”.

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Reverse: General Motors CEO Rick Wagoner Asked to Resign Amid Carpocalypse

Per Michigan news site MLive:

General Motors Corp. Chairman and CEO Rick Wagoner will step down immediately at the request of the White House, administration officials said Sunday. The news comes as President Obama prepares to unveil additional restructuring efforts designed to save the domestic auto industry.The officials asked not to be identified because details of the restructuring plan have not yet been made public. On Monday, Obama is to announce measures to restructure GM and Chrysler LLC in exchange for additional government loans.

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Neutral: Are You Onboard With Tariffs?

When would a car tariff make sense in your eyes?