Ford is still undergoing a massive shift, Volkswagen still can’t get its pollution under control, and the Chinese automotive industry is a mess. This is The Morning Shift.
1st Gear: The Transformation Continues
Ford is undergoing a massive change as we speak, getting rid of every single car it sells in the United States (except for the Mustang) in favor of SUVs, presumably because it saw the massive success Isuzu had 20 years ago and the desire to replicate it cannot be sated. But that sort of strange decision-making isn’t just limited to our golden American shores, it’s a global phenomenon.
The bloodletting and shift over to SUVs is about to begin in Europe as well, the Sunday Times reports (via Bloomberg via Automotive News):
The carmaker lost $73 million in Europe between April and June, hurt by declining diesel sales and weak car offerings, the newspaper said. Ford faces additional uncertainty from Brexit, which could lead to tariffs on cars and parts traded between the U.K. and continental Europe, the Times said.
Morgan Stanley analysts estimate Ford will shed 12 percent of its 202,000 workers, mainly in its European operations, the Times reported. Ford has about 12,000 workers in the U.K. in factories, r&d, administration and dealerships, according to the newspaper. Ford is likely to end production of the Mondeo, Galaxy and S-Max people carriers in favor of more profitable crossovers and SUVs, the Times said, citing unnamed people familiar the plans. The sources said Ford may also cut its amount of dealerships.
Ford, meanwhile, issued a non-denial “denial,” via Autocar:
We currently have our strongest-ever vehicle range in Europe. While we regularly evaluate our future product plans based on customer preferences and trends, there are no changes at this time. Mondeo remains a core part of our product line-up in Europe. We have upgrades coming for Mondeo later this year, which will see new powertrains as well as exterior and interior updates as well as enhancements to the Mondeo Hybrid range.
“The number of job losses quoted by a number of media is pure speculation and we would not comment on that. As we said in our second quarter earnings [statement] in July, our Europe business requires a major redesign to deliver our longer-term target of 6% EBIT margin.
“There are no changes at this time,” though tomorrow, who knows!
This strategy will work. That America has become festooned with nothing but Isuzu dealerships is a testament to that.
2nd Gear: Lyft Is Probably Going to File For an IPO
Lyft is probably going to file for an initial public offering, meaning you and everybody else can soon buy shares in it, Bloomberg (via the Detroit News) says:
Lyft Inc., the second-biggest U.S. ride-hailing company, has started the process for an initial public offering in an effort to beat Uber Technologies Inc. to the public markets, people familiar with the matter said.
Lyft has hired IPO adviser Class V Group LLC to work closely with management as they embark on the process, said people familiar with the discussions who asked not to be identified because the matter is private. The company plans to begin taking pitches from banks as soon as September, targeting March or April for the listing, the people said.
The timing hasn’t been finalized and could change, the people said.
This probably won’t affect your life very much, so much as it’ll make a select few of Lyft’s already-existing investors even wealthier than they were before.
3rd Gear: There Are Too Many Chinese Car Companies
Quick! Name a Chinese car company. Any Chinese car company. If you’re an average American schmo, you can probably name zero. If you read your favorite internet blog, Car-Website.Fun (go on, visit it, see what you get), you can probably name a few more. Geely, Hong Qi, maybe even Great Wall if you’re really a connoisseur.
But depending on how you count them, China may have more than 80 car brands. That’s too many, the Chinese government has decreed, according to Reuters:
Some automakers in China are alarmed by proposed government restrictions on investing in new manufacturing capacity and the ways in which Beijing is trying to trigger consolidation of the country’s flabby auto industry through mergers and strategic cooperation.
China’s National Development and Reform Commission, seeking to address mounting excess auto manufacturing capacity, wants to restrict ways automakers can invest in new capacity to manufacture traditional gasoline-fueled cars as well as electric battery cars, according to a draft of the policy which has made public.
To be allowed to invest in greenfield developments such as new factories, automakers would need to have healthy, above-industry-average capacity utilization and R&D investment, and a commitment to green cars and exports, among other conditions.
Industry players are alarmed by the prospects because they say very few automakers would be able to meet the conditions fully if the proposed policy took effect as drafted.
This is probably fine. For the first twenty or so years of its life, the American auto industry featured dozens and dozens of carmakers. Now we have three (General Motors, Ford, and Tesla. Sorry, Fiat Chrysler, I have decreed that you are Italian now).
I’m not sure three automakers is better than dozens and dozens, but like I said, it’s probably fine.
4th Gear: C’mon Volkswagen
Remember Dieselgate? Hard to believe, but it started way back in 2015, which was 27 years ago. Volkswagen says that despite the sands of time, half of its cars are still not compliant with new European regulations, Reuters reports:
German carmaker Volkswagen said only half of its VW branded passenger car models in Germany are compliant with a new pollution standard, thanks to a much tougher emissions testing regime.
Cars in the European Union must comply with the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) from September, but Volkswagen has only gained regulatory clearance for seven of its 14 main model lines.
“The new tests are more cumbersome and take two to three times longer than in the past, even limited edition models need to be tested separately,” Volkswagen’s Thomas Zahn said in a call with journalists on Thursday.
I do not feel any pity whatsoever for Volkswagen.
5th Gear: Audi’s First All-Electric SUV Has Already Begun Production
You guys excited for Audi’s first-ever all-electric SUV?????????????
I will assume, based on the silence I’m hearing beyond the clicking of my keyboard as I type this, that the cheers will not be forthcoming. But you’ll be forgiven for your lack of enthusiasm, considering that you haven’t even seen the thing yet. But that hasn’t stopped Audi from pressing full-steam ahead, already beginning mass production on it, Ars Technica reports:
The company won’t reveal the production-version of the Audi e-tron SUV until Sept. 17, in a what promises to be a splashy event in San Francisco.
Audi, which is owned by Volkswagen Group, has been working towards mass production of the e-tron quattro for years now, offering periodic updates and teasers on the pricing, range, and interior design. The Audi e-tron is being produced at Audi’s factory in Brussels, which has been undergoing an extensive renovation since 2016 to prepare for the new vehicle. The Brussels factor[y] has become the cornerstone of Volkswagen Group’s electric vehicle plans.
Audi, and by extension all of Volkswagen, hasn’t built a vast network of fast-charging stations, a la Tesla. My grand prediction that will almost certainly be proven dumb is that these things won’t sell that well because of that, and then VW (and really, every other carmaker, let’s not single anyone out) will just be all “oooohhh lookee here I guess Americans DON’T LIKE ELECTRIC CARS. Oh well, back to the silly horsepower wars for enormous crossovers that are really just minivans.”
Reverse: Bring It Back
On September 4, 1957–“E-Day,” according to its advertising campaign–the Ford Motor Company unveils the Edsel, the first new automobile brand produced by one of the Big Three car companies since 1938. (Although many people call it the “Ford Edsel,” in fact Edsel was a division all its own, like Lincoln or Mercury.) Thirteen hundred independent Edsel dealers offered four models for sale: the smaller Pacer and Ranger and the larger Citation and Corsair.
Neutral: How Many Fiesta STs Are You Hoarding?
Bring A Trailer in 2037 is gonna be sikkkkkk.