The one carmaker that could do no wrong falters, BMW and Lexus just went nuts, and one country figured out a genius new way to up electric car sales. All that and more in The Morning Shift for Monday, Nov. 5, 2018.
For years, it seemed like Subaru could do no wrong. As America swung towards everyday crossovers, towards all-wheel drive, Subaru was there to mop up big profits. While every other carmaker struggled to give their cars some kind of tough, lifted cred (Toyota even puts body cladding on the Prius C now), Subaru had the right products at the right time.
And on the back of all of us going nuts for Foresters and shit for the past few years, Subaru has still found time to sell us manual STIs and Type RAs and whatnot.
But that golden era may be coming to a close, as Automotive News reports:
The automaker reported an operating loss of 2.5 billion yen ($22 million) in the fiscal second quarter ended Sept. 30, the company said on Monday in its quarterly earnings report. That erased an operating profit of 92.8 billion yen ($816.3 million) in the same quarter a year earlier.
Subaru reported a net loss of 1.2 billion yen ($10.6 million) in the July-September period. The year before, Subaru posted net income of 2.7 billion yen ($23.8 million).
Global revenue declined 2.1 percent to 777.6 billion yen ($6.84 billion) in the three months on a 6 percent slide in global wholesale volume to 244,000 vehicles.
Subaru warned of the downturn. In late October, the automaker halved its operating profit forecast for the fiscal first half, citing higher quality-related costs related to inspection problems.
Indeed, Subaru got its own emissions scandal a few months back, with faked data down to a factory level. On top of that Subaru now is facing recalls on hundreds of thousands of vehicles. Profits are down, and I don’t know when things will get better.
It’s interesting to see, all things considered, that a car company seemingly doing everything “right,” can still struggle.
Here’s my new favorite car law: Starting next year in Austria, in select places where normal cars are allowed to go 100 kph (62 mph), electric cars will be allowed to go 130 kph (81 mph), as Der Spiegel reports:
Some 440 kilometers are reportedly affected. That is about 20 percent of the Austrian motorway and expressway network. For reasons of air safety there is a permanent or frequent 100 kmh limit—so far for all cars. The general speed limit on motorways in Austria is 130 kmh.
“Electric vehicles are emission-free during operation,” the ministry justifies the exception in the emmission control law. The law is intended to protect people from air pollutants such as nitrogen oxides, particulate matter and sulfur dioxide. These arise, for example, when a car engine burns gasoline or diesel .
So it’s not exactly that EVs will now be able to go unusually fast, it’s just that they won’t have their speed throttled by the gov’t in areas where cars are slowed down to save emissions.
You can read the full announcement from the Austrain gov’t here, saying that EVs will soon be in the position to overtake (I guess Austrians like a pun.) This effort to get more EVs on the road does make me think more about whether or not our speed limits could be raised , but that’s a different discussion.
We know that as the car world gets more and more new technologies, research and development gets more and more expensive and otherwise-independent car companies look to pair up to share costs. You saw a bunch of this in the second wave of hybrid cars, when everyone else rushed to catch up with Honda and Toyota. Now you’re seeing it with autonomous vehicles and with electric vehicles.
We’ve been following the pairing of VW and Ford over EVs for a bit now, but VW just gave us a bit more emphasis on what has been mostly speculated upon, as Automotive News reports:
In an expansive, hourlong exclusive interview, Herbert Diess, who took over as CEO of Volkswagen Group in April, also said his company’s ongoing discussions with Ford Motor Co. center on small commercial vehicles for Europe. But Diess said the talks between the two on-again, off-again global partners could go much further, including the possible sharing of VW’s flexible EV platform and the potential use of Ford’s midsize Ranger platform to replace the aging VW Amarok pickup sold outside the U.S.
All in all, this would be kind of interesting to see play out, as both companies kind of seem to produce very similar products in these fields. But Ford has a history of getting along with the Germans, so who knows.
Mini sales have been having a hard time since, uh, gas prices haven’t spiked yet. As such, BMW is worrying about its little front-drivers.
And that might mean that Mini could lose its position of only being at its own dealerships, as Automotive News reports:
To overcome Mini’s meager product pipeline and stem dealer losses, BMW of North America confirms it is considering letting Mini dealers move operations into their BMW stores.
That could help Mini dealers defray operating costs and real estate overhead by sharing backroom expenses. But not every Mini dealer is a BMW dealer.
A decision has not been made, but the change would end Mini’s insistence on a separate high-profile identity.
It might also be a milestone in the struggling brand’s saga. The marque, which expected annual sales of 100,000 cars by 2017, peaked at about 66,500 in 2013. Through the first 10 months of this year, sales totaled just 37,359. That is hardly enough to support the investments of retailers who opened 127 free-standing Mini stores since 2008 at the factory’s request.
It’s funny that there’s always this boom-bust cycle of compact cars here in America, always tied with the economy and gas prices. Somehow we all forget that these cars are good when gas is cheap, then everyone rushes to get back into them when we send the world into a global recession or start dropping kids with guns into the Middle East.
I hope you are all sitting down for this one.
Are you reading this on the subway?
Sit on down. Yes, on the floor if you have to.
The Lexus ES has gone on sale in Japan for the first time.
American Toyota nerds will know that our initial waves of Lexus cars here have been sold as Toyotas back in Japan. Our LS400 was the Celsior over there. Our GS was the Aristo, our IS the Altezza. Lexus’ spiritual home market is here in America. Japan only got the Lexus LS as the Lexus LS in the second Bush term. Now the ES is headed that way, too, per Automotive News:
Lexus launched the redesigned seventh-generation ES here Oct. 24 at its Lexus Meets brand lounge near down-town Tokyo’s glitzy Ginza shopping district. Lexus said it has received 2,000 preorders for the ES, about 70 percent from existing Lexus customers. About half the customers are corporate buyers, Sawa said.
The ES sales target is 350 vehicles per month in Japan and 11,500 a month globally. Lexus’ sales in Japan more than doubled to 33,000 units in the first six months of 2018.
Lexus aims to ramp up marketing efforts to stoke interest in the new sedan. The Lexus Meets lounge, for example, offers hourlong test drives of every Lexus nameplate.
Lexus International President Yoshihiro Sawa reiterated the plan, stating to the press “we are still a young brand.”
Read more about the extraordinary patent troll that defined the early adolescence of the American auto industry here, if you’re curious.
Personally, I feel like Subaru is going to be fine. How could it not be? Winter is coming, and every yahoo is about to buy an Ascent, right? Or is expensive gas going to deliver another knock to the all-wheel drive specialists?