Toyota Is Slowing Camry Production Due to Slumping Sedan Sales

Photo: Toyota
Photo: Toyota

Toyota has to scale back sliding sedans, Jaguar’s in a pickle, Tesla needs money for Chinese push, Volkswagen is betting big again on EVs, and Brexit is bothering BMW and Rolls-Royce. That and more on The Morning Shift on Friday, Nov. 16, 2018.


1st Gear: Toyota Slows Production of Best-Selling Car in America

Toyota is throttling back one of its three production lines at its Kentucky assembly plant to adjust for slipping sedan sales, Bloomberg reports. The line builds the Toyota Avalon and the best-selling car in the U.S., the Toyota Camry. Here’s more from Bloomberg:

“The auto industry is cyclical, and our normal process is to proactively plan months in advance for volume adjustments,” Hesterberg said. He declined to give specifics on the extent of the production reduction at the plant in Georgetown, which is Toyota’s largest.

Toyota sold about 289,800 Camrys in the U.S. this year through October, a 6.1 percent drop from a year earlier. Demand has slid even after the company thoroughly redesigned the car last year with all-new parts. Buyers have been abandoning the Camry and other stalwart sedans including the Honda Accord and opting for sport utility vehicles instead.

Back in 2016, sales of Toyota’s Rav4 Crossover overtook its sales of the Camry. That’s how you suddenly get hot Japanese NASCAR sedans.

The Georgetown plant also builds the Camry on its two other lines, alongside the Lexus ES. A Toyota spokesperson claims there will be no cuts to the 1,500 temporary nor 8,000 permanent workers. Let’s hope it can stay that way.

2nd Gear: Jag’s Reliance on Diesels Has Its Shareholders Nervous

Investors are preparing for a rough upcoming year with Jaguar as the brand’s reliance on diesel sales in Europe and a slip in demand in China are expected to really take a hit on its operating performance, Bloomberg reports:

“JLR has an above average exposure to diesel engines which face a very uncertain demand outlook,” said Nicholas Harrison, credit sector strategist at RBC Capital Markets. “JLR has fallen from being widely viewed as a rising star a year and a half ago to now sitting comfortably in BB category.”

Credit-default swaps protecting Jaguar’s debt against non-payment using five year contracts surged to 582 basis points on Thursday, a six-year high. The cost to buy protection on Jaguar bonds was as low as 113 basis points in August of last year.


Jaguar of course does have the all-electric I-Pace crossover and is working on expanding its electric lineup sooner than later, but that involves a lot of credit borrowing and not a lot of results in the present. Meanwhile, 90 percent of Jaguar’s sales in Europe are diesel, which now face an uphill battle with environmentally-conscious consumers as governments look to incentivize electrified options.

That doesn’t even include the trouble Jaguar could be in with Brexit. It seems the world has come together and decided to shit on Jaguar. I feel like that happens to me sometimes, too.


3rd Gear: Tesla May Borrow Big For China Production Push

Tesla has been working hard this year to finally establish a manufacturing foothold in China, and now that it seems to have the real estate to build a new production facility there, it just needs the money to get it all going.


From Bloomberg’s wire service:

About $1.3 billion will be funded by local debt, according to Joe Spak, an RBC Capital Markets analyst. Tesla expects to pay an interest rate of 3 percent to 5 percent, he said, citing a dinner he hosted with Aaron Chew, senior director of investor relations for the electric-car maker.

The remaining $700 million that Tesla anticipates it will need initially to build the plant will be equity investments the company makes over two years, Spak wrote. He rates the shares the equivalent of a hold with a $325 price target.


In Tesla’s latest investor call, it was suggested that once the Chinese factory is up and running, some aspects of Model 3 production may be completed there before shipping to the U.S. for final assembly—though that may all change dependent on the current U.S. government’s brewing trade issues with China.

4th Gear: VW’s Thinking About Those EVs

Volkswagen has already invested billions in research and development for its upcoming lineup of affordable electric cars as it adjusts to its Dieselgate woes, and now it needs a plan for investing in the manufacturing of said cars.


That decision will be made today, Reuters reports:

Volkswagen’s supervisory board is due to vote on a multi-billion euro investment plan on Friday, including steps to retool three German plants to mass produce electric cars and to explore alliances with battery partners and rival carmakers.

Labor unions, who control half the seats on Volkswagen’s supervisory board, need to sign off on the plan to create global production capacity for 1 million electric vehicles by 2025 amid their concerns that assembling battery driven cars will require fewer workers.


Volkswagen’s investment plan includes job guarantees for manufacturing workers through 2028 at its Zwickau, Emden and Hannover plants, which it plans to retool for EV production—the first of which will be the I.D. that’s planned to start assembly next year.

5th Gear: Plane-Parts Rolls-Royce and BMW’s Mini are Side-Eyeing Brexit

Jaguar isn’t the only company stressing over Brexit, as BMW worries the British government could create a worst-case scenario for its Mini brand, and jet-engine manufacturer Rolls-Royce—which is a different company from the automaker of the same name—develops contingency plans.


Here’s more from Reuters:

“This agreement is only a draft,” Chief Executive Warren East told BBC radio on Friday, joining a line of industry captains urging politicians to be pragmatic and not torpedo an agreement that would allow UK-EU trade to keep flowing.

“We are going to continue with our contingency plans and that includes buffer stocks so that we have all the logistical capacity that we need to carry on running our business.”


“The political situation remains uncertain,” German carmaker BMW said late on Thursday, adding that it would continue to prepare for the worst-case scenario, which is what a no-deal Brexit would represent.

BMW’s Mini plant in Oxford accounts for 13 percent of Britain’s total car production, with nearly 220,000 cars built there last year.


Brexits main threat to British-based manufacturers like Rolls-Royce, Mini and Jaguar is the disruption of trade and supply lines, which could suddenly be severed by a Brexit deal that doesn’t account for an easy flow of materials with the European continent. Manufacturing could suddenly be frozen as companies adjust to new supply streams after the motion kicks in at the end of March.

At least the British government still has, what, four months out of the two years they had to make a plan that works?


Reverse: People Were Setting EV Speed Records Before Oklahoma Was a State


tNeutral: What the Hell Is Jag Supposed to Do?

Diesels in Europe aren’t looking good, the I-Pace is selling fine but it needs more EVs, and in the meantime investors just want regular old car sales. Maybe the time is now for, dare I say it, a luxury crossover coupe.

Reviews Editor, Jalopnik


Margin Of Error

Compact SUV’s are the new midsize sedans, and nobody cares, it’s ok.

Go read some old Jalopnik articles from 2007 to as late as of 2015, the FWD midsize was the Antichrist, the worst imaginable car ever made, the type of car that soulless ghouls are driving.

Just like for the minivan and the wagon before, the FWD midsize sedan has become toxic to own. It’s pejorative, it’s a car for losers.

Now that the community of car enthusiasts successfully killed it and had it replaced by something they hate ever more, they cry and want it back.

Play stupid games, win moronic prices.