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: Toyota Hit Hard By Quakes
Once again, the Japanese auto industry is being pummeled by earthquakes. Damage from the quakes led several automakers to shut down production, and for Toyota in particular, these work stoppages come at a time when the company is struggling to meet crossover and truck demand in the U.S. Here’s Automotive News:
Deadly earthquakes will shut down virtually all Toyota production in Japan over the next week, torpedoing exports of Lexus products, the Prius hybrid and some trucks at a critical time when Toyota is trying to get more crossovers for the U.S.
Suspended vehicles include the hot-selling Lexus RX and NX crossovers and the Toyota RAV4. Also hit are the Toyota 4Runner and Land Cruiser SUVs and the Lexus GX and LX SUVs.
The stoppage comes as other automakers cut back on output or reassess production plans after the quakes in southwest Japan knocked some suppliers offline. Affected suppliers still had no time line for resuming operations as of late Monday in Japan.
How bad is it? More here:
Only three operations will remain open: One line at a Hino truck plant, a Daihatsu plant and a line that makes the extremely low volume Toyota Century luxury limousine.
All other domestic lines at Toyota will be down, affecting virtually every nameplate exported to the U.S. The list includes the Lexus ES, LS, IS and GS sedans as well as the RC coupe and CT hatchback. Also on hold is production of the Scion tC and xB, as well as the new Mirai hydrogen fuel cell vehicle.
Other automakers and suppliers are halting production as well.
2nd Gear: Now’s A Good Time To Buy... Volkswagen?
Buy low, sell high is what you’re supposed to do when you play the market. But at least a few car dealers see an opportunity to buy low with the deeply troubled Volkswagen. Despite that automaker’s existing dealers struggling with a lack of product and everything else related to Dieselgate, here’s Automotive News on some dealers who want more:
“The pendulum has swung too far,” Kuhn said. “Valuations for VW stores have come down to a point where they are a screaming ‘buy’ for us.”
Kuhn admits: “Volkswagen has work to do to get past the financial issues caused by this crisis, repairing U.S. consumers’ perception of the brand and to rectify the damage done to the brand by the diesel fraud. It won’t be easy.”
But he believes VW will do exactly that, which is why he’s willing to “take the risk to continue to invest our money behind the VW name.”
That risk is mitigated by the fact that Cooley and Kuhn can look beyond new-car sales to make a living. Both are known for their used-car sales savvy — used vehicles outsold new ones 2-to-1 at one of Kuhn’s VW stores last year, for example — and strong service businesses. They view VW stores as moneymakers in those areas until the brand fixes its problems and its new-vehicle sales rebound.
3rd Gear: More VW Discounts
Just not here. The automaker’s sales are down in every market, and in Germany it’s boosting discounts to try and move more metal.
That hasn’t been happening nearly as much as you’d think in the U.S., much to the chagrin of dealers. Here’s Reuters:
Germany’s Automobilwoche said Volkswagen was trying to boost the used car trade by raising discounts to up to 1,681 euros ($1,896.17)in April and May to win over buyers from alternative automakers.
A Volkswagen spokesman said current promotions in Germany were around the same level as competitors. Beyond that, he said discounts were usual measures that allowed the company to react in a flexible way to comparable offers from rivals.
4th Gear: Sure We Could Build A Tesla Model 3 BUT BETTER
So sayeth Sergio Marchionne of Fiat Chrysler, with some Italian swagger you can’t help but admire. Here’s Reuters:
“I am not surprised by the high number of reservations,” Marchionne told journalists following a shareholder meeting in Amsterdam, saying he had great respect for Tesla chief executive Elon Musk. “But then the hard reality comes in ... making cars, selling them and making money doing so.”
Marchionne said he did not understand how the Model 3, Tesla’s first mass-market car, could be sold for 35,000 euros ($39,600) at a profit.
“If he can show me that it can be done, I will do it as well, copy him, add Italian style to it and put it on the market within 12 months,” he added.
5th Gear: GM Going Nuts On Mobility
The Detroit Free Press notes that General Motors is on a spree of acquisitions and investment in outside companies not seen since the 1980s. These include the ride-hailing service Lyft and autonomous startup Cruise Automation. Here’s why they’re doing it, in an interview with Mike Ableson, GM vice president of strategy and global portfolio planning:
Question: What does Cruise give you that GM doesn’t have from its vast ranks of engineers, scientists and information technology workers?
Answer: They pull in very talented people, especially in the software space, that are arguably the best in the world. This isn’t the first company that Kyle (Vogt) has started. So he has a reputation of being very successful. The challenge of autonomous driving and the impact it could have makes it a really interesting area for the smartest software folks out there.
We have quite a few experts, and we spent time reviewing what Cruise had done ... versus what it would have taken us to develop internally. With Cruise we’ve got these very smart software folks, while on our side you’ve got General Motors and all our relationships with suppliers, regulatory agencies and everything else. The combination is very powerful.
That whole story is worth a read.
Reverse: Mark Martin
Neutral: Is Now A Good Time To Buy A VW Dealership?