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: It Must Be Broken Before It Can Be Built Back Up
China’s economy was considered “superheated” for many years, by many economic experts. The staggering rate of growth wasn’t backed by solid economic fundamentals, and was heavily reliant on new construction and exports. China’s leaders knew that the market needed to be slowed for more stable growth, and adjusted the value of the country’s currency, the yuan, accordingly. Since last Friday, we’ve seen the inevitable (short-term) result of those corrective actions. The Chinese stock market has continued its free-fall, via the New York Times:
■ In China, the benchmark Shanghai composite index closed 7.6 percent lower.
■ Chinese officials responded by cutting interest rates and easing banks’ requirements.
That’s on top of paper losses worth hundreds of billions of dollars already.
2nd Gear: But Maybe We’re All A Little Less Connected Than We Thought?
Over the past two decades or so, every Tom-Friedman-In-A-Taxicab wanted to talk about “globalization,” because we’re all connected to one other in the economy of Planet Earth, and what happens in China will inevitably affect the United States and Europe. And that’s still true!
But it looks like we’re actually finding the limits of how true that is, as it stands from where we sit on this beautiful Tuesday morning, and that’s because while the Chinese economy is plummeting, for now it seems to be mostly limited to the Chinese economy alone. Sure, there were massive erratic swings in the American stock markets yesterday as panicked investors seemingly stumbled around like blind drunks, swinging punches at anything that moved, but signs overnight pointed towards a stabilization as most places around the world realized their own sky wasn’t falling. Again, via the NYT:
■ Most other markets in Asia stabilized or rallied modestly. An exception was Japan, whose stocks closed down 4 percent.
■ European equities rebounded, clawing back some of Monday’s losses. The Euro Stoxx 50 rose 4.1 percent in midday trading. In London, the FTSE 100 rose 3.1 percent.
■ The international and American oil benchmarks rebounded, despite concerns about oversupply.
■ In the United States, where the Standard & Poor’s 500-stock index closed down nearly 4 percent on Monday, futures contracts were pointing to a higher Wall Street opening on Tuesday.
So maybe we should all just keep whistling past that graveyard, ignoring our own fundamental economic problems.
3rd Gear: So How Does It Affect The Auto Industry?
Well after all those platitudes about how you shouldn’t worry too much about the wider global economy as long as markets stabilize, I should probably mention how (potentially) screwed the car industry is. And that’s because the car business, unlike many other businesses, isn’t affected by the Chinese economy peripherally, it’s affected directly. As the Detroit Free Press notes:
GM has sold more vehicles in China than North America for most of this decade. There’s no question that falling sales in China will weaken GM and Ford earnings for the second half. Fiat Chrysler has a much smaller presence in China.
But wait, it gets worse:
Sales of new cars in China have been slowing for several months, and many manufacturers have dropped prices to stimulate demand, with not much success.
For more perspective, consider that China is essentially the only other part of the world where GM and Ford are making a profit.
All of that has resulted in the shares of General Motors and Ford falling a lot more than the rest of the stock market. And if the Chinese economy continues to tank, you can bet you’ll see it have an impact on the American auto manufacturers’ bottom line.
4th Gear: 408,000 Jeep Grand Cherokees Are Under Investigation
Let’s move on from China a bit, and move back to our golden (our streets are still paved with gold, right? Everything’s all fine here?? EVERYTHING’S FINE YOU GUYS) shores.
408,000 Jeep Grand Cherokees, model years 2014 and 2015, are under investigation after complaints that the big SUVs could roll away after being placed in park, the National Highway Traffic Safety Administration announced last night. Remarkably, NHTSA only received 14 complaints about the issue, the Detroit News notes:
NHTSA said it has received 14 complaints, including five reports of crashes and three injuries. Fiat Chrysler Automobiles NV spokesman Eric Mayne said the automaker is cooperating.
One person who was injured was actually run over by their own car after getting out of it. Fiat-Chrysler’s been paying out the nose over failures to initiate recalls, so this one could get interesting.
In unrelated news, we’re still waiting to see what GM does with all of its own NHTSA complaints.
5th Gear: But At Least Lexus Customers Are Happy
Own a Lexus? Then you’re one of the most satisfied drivers around, according to a new report from the American Customer Satisfaction Index, which looks into these things. Lexus drivers are the most satisfied drivers around, actually, with the brand garnering 84 points in the survey to put it on top. Mercedes-Benz was just edged out, but them’s the breaks. But don’t worry, Mercedes, you’re not alone, as Automotive News reports:
The only two nameplates to achieve improvement in customer satisfaction were Acura, up 8 percent to 83, and BMW, up 3 percent to 82.
Of the 27 nameplates the index tracked in the study, 15 saw a decline in customer satisfaction. The other 10 brands were unchanged or their comparisons were not applicable.
Better luck next year, everyone!
Reverse: Michael Schumacher Begins His Real Climb To The Top
The German race car driver Michael Schumacher makes his Formula One (Europe’s top racing circuit) debut in the Belgian Grand Prix at Spa Francorchamps on this day in 1991.
Neutral: Are You Satisfied With Your Car?
Sure, the ASCI survey might be more “thorough” and “scientific,” but what’s more through and scientific than a bunch of random Internet comments? In that vein, are you satisfied with your car? More satisfied than a Lexus owner?
Photo credit: Getty Images