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: The Sedanocalypse Marches On
We’ve covered the huge decline in sales of the midsize sedan before, and August saw yet another month where similarly-priced crossovers and SUVs eviscerated this once-pivotal segment. As Automotive News reports, the usual trick—offering cash discounts—isn’t even working anymore.
The segment is fading faster with each passing month. Midsize car sales fell 3.4 percent in the first quarter, 13 percent in the second quarter and 21 percent so far in the third, compared with last year.
In August alone, sales of the Nissan Altima, Ford Fusion, Hyundai Sonata and Kia Optima all plunged more than 30 percent. Chrysler 200 sales fell by two thirds. Across all 16 midsize nameplates, the declines averaged 27 percent, a loss of more than 60,000 units.
Meanwhile, sales of compact and smaller cars fell just 3.6 percent last month, in line with the industry’s overall decline of 3.5 percent, showing that the market’s shift away from sedans isn’t across the board. Some high-volume small cars, including the Chevrolet Cruze and Honda Civic, posted gains in August.
“That larger sedan buyer just sees more value in the SUVs or CUVs,” said Mike DeSilva, co-owner of Liberty Hyundai in Mahwah, N.J. “That’s just where the activity is. And heading into the end of summer and going into winter, we’re really going to get into SUV season.”
There’s an SUV “season” now! I would have guessed based on these sales trends that every season was SUV season the past few years, but here we are.
In some ways it’s hard to mourn the death of the family sedan. For every one truly worthy contender in that segment like the Accord or the Mazda 6, there seems to be many more snoozemobiles like the Camry or duds like the Chrysler 200. It’s not like the crossovers are taking these great, legendary driver’s cars off our roads.
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2nd Gear: GM Settles Final Two Ignition Switch Bellwether Cases
Over the past year, General Motors has faced several “bellwether” trials that served to set the tone and possible outcomes for the hundreds of ignition switch defect cases out there. Today, the automaker said it settled the last two of those cases in federal court. Via the AP:
GM settled the cases for an undisclosed amount, plaintiffs’ attorney Bob Hilliard said Monday. In both cases, the plaintiffs said they sustained serious injuries when the air bags in their vehicles didn’t deploy. GM has acknowledged that ignition switches in older cars could fall out of position without warning and shut off the engine and air bags.
The cases are among several so-called “bellwether” trials that are testing the legal boundaries of hundreds of claims against GM. So far this year, one federal bellwether case was dropped before trial, GM won two, and three have been settled.
As that story notes, this is not the end to all ignition switch litigation:
In addition to the cases already scheduled, GM could be facing lawsuits from victims whose alleged injuries occurred before GM’s 2009 bankruptcy. In July, a U.S. appeals court ruled that GM’s bankruptcy can’t shield the company from those lawsuits. GM is appealing that ruling. Hilliard said at least 133 pre-bankruptcy cases could be brought against the automaker.
3rd Gear: GM Recall Survivors Post Billboard In Detroit
GM Recall Survivors is a group of people whose family members were killed or injured in ignition switch-related crashes, and a new billboard from them in Detroit aims to make sure no one forgets what happened. Via the AP:
A group associated with victims of General Motors Co.’s faulty ignition switches is putting up a billboard in Detroit aimed at reminding the company about its promise to improve its safety record.
The billboard paid for by GM Recall Survivors is scheduled to go up Monday along Interstate 75 and reads: “Let’s make sure they never forget.” The billboard shows six people who died in crashes.
In 2014, GM recalled 2.6 million cars worldwide to replace the faulty switches and ordered a record 84 recalls.
4th Gear: VW, Which Still Has Money?, Buys Stake In Navistar
Dieselgate-strapped Volkswagen scrounged up some loose change from its couch cushions to purchase a stake in heavy trucking company Navistar.
The automaker already owns Scania and MAN, so it could help struggling Navistar become more profitable. Via Bloomberg:
VW will pay $256 million for a 16.6 percent holding and assume two board seats as part of a deal that includes technology sharing and joint purchasing, the two companies said Tuesday. The Wolfsburg-based automaker will pay $15.76 per share, 12 percent more than Navistar’s closing price on Friday, the most recent trading day in the U.S. The holding puts Volkswagen on par with the largest shareholders, activist investors Carl Icahn and Mark Rachesky.
“Closer collaboration among our existing brands was a top priority for our commercial vehicles business and we are well on track in this context,” Andreas Renschler, head of the German carmaker’s Volkswagen Truck & Bus division, said in the statement. “We are now taking the next step on our way to becoming a global champion in the commercial-vehicles industry.”
Gaining traction in the U.S. heavy-truck market, dominated by Daimler AG, Volvo AB and Paccar Inc., is key to VW’s plan to forge a global commercial-vehicle operation with higher profit margins than rivals.
5th Gear: Elon Rallies The Troops
“Hey, let’s look like we’re making some money this quarter,” is basically the message from Elon Musk to Tesla’s employees this quarter. The nascent automaker is doing some incredible things, but posting great financial results is not often one of them. Via Bloomberg:
Elon Musk sent an e-mail to employees at Tesla Motors Inc. urging them to cut costs and deliver “every car we possibly can” in a push to show positive cash flow in the third quarter.
The chief executive officer of the electric-car company said it would be his last chance to show improved financial numbers before he tries to raise more money. The third quarter is crucial to Tesla’s future because the company is trying to acquire SolarCity Corp. and preparing to roll out the Model 3, its lower-priced sedan, late next year.
“The simple reality of it is that we will be in a far better position to convince potential investors to bet on us if the headline is not Tesla Loses Money Again,’ but rather Tesla Defies All Expectations and Achieves Profitability.’” Musk wrote in an Aug. 29 e-mail obtained by Bloomberg on Friday. “That would be amazing!”
That would be amazing.
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Neutral: Can The Family Sedan Be Saved?
The segment is truly unlikely to die off completely, but in terms of sales, it’s a shadow of its former self. With crossovers boasting similar fuel economy and prices, and at least the pretense of more utility, is the Sedanocalypse a permanent trend?