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: Make Ford Great Again
Once again the toxic world of the 2016 election (is this over yet?) has waded into the world of cars, and with current GOP frontrunner Donald Trump’s favorite topics: Ford in Mexico.
The automaker yesterday announced it will invest $1.6 billion to build more small cars like the Focus in Mexico, a move that’s been anticipated for months now. This happens as Ford uses domestic production to bolster more lucrative (and currently hot-selling) trucks and SUVs. In other words, small cars in Mexico, trucks at home.
Following the announcement, Trump labeled the move “an absolute disgrace.”
“These ridiculous, job crushing transactions will not happen when I am president,” the real estate billionaire said in a statement released by his headquarters.
Ford stood by comments on the issue made two weeks ago by its chief executive, Mark Fields, who said the company would not back down on its production strategy.
“We are a global, multinational company and we will invest to keep us competitive and we will do what makes sense for the business,” Fields said.
Reuters also pointed out Ford employs fewer Mexican workers than rivals General Motors and Fiat Chrysler.
To be fair, the UAW blasted this deal too, even though it was discussed with them during negotiations last fall. Here’s President Dennis Williams quoted in Bloomberg:
“This is another example of what’s wrong with NAFTA and why the TPP would be a disaster for the citizens of the United States,” Williams said. “Companies continue to run to low-wage countries and import back into the United States. This is a broken system that needs to be fixed.”
2nd Gear: Kia Stalls In Mexico
Speaking of Mexico, Kia’s having a rough go in the state of Nuevo Leon, supposedly the location of a $1 billion factory slated to open next month. But the state’s new governor opposes the massive tax breaks given to the automaker promised by his predecessor. Here’s Bloomberg:
The plant is in the cross hairs of Nuevo Leon Governor Jaime Rodriguez, a former rancher who threw out the ruling party in a landslide last year and says he opposes the deal Kia signed with his predecessor.
The factory already lags five months behind schedule and South Korean President Park Geun Hye appealed to her Mexican counterpart, Enrique Pena Nieto, to intervene in the conflict during a state visit to Mexico City this week. The tiff is a rare snarl for Mexico’s success at using cheaper labor and trade deals to win billions of dollars in foreign investment from the likes of Nissan Motor Co. and Ford Motor Co., which announced plans Tuesday to build a $1.6 billion small-car plant in the state of San Luis Potosi.
“Mexico has a lot to offer the auto industry, that’s a big part of why Nuevo Leon was chosen,” Kia said in an e-mailed response on Tuesday to questions from Bloomberg News. “However, if there is legal uncertainty or the rule of law isn’t respected in the state, then this could obviously have a negative impact on foreign and local investment as well as any other activity.”
Rodriguez, dubbed “El Bronco” for his forceful and populist style, isn’t too onboard with the payroll tax breaks given to Kia, but they could reach an agreement.
3rd Gear: Mercedes Bolsters Profit With The New E
Buyers in every segment may increasingly be turning to trucks and SUVs, but Mercedes-Benz is scoring a big win with the all-new E-Class sedan, which is its most important model. Via Automotive News:
Second-half growth will accelerate as currency-hedging rates improve and as more profitable higher-end models like the E class play a bigger role in deliveries, Daimler said today in a statementin advance of the annual shareholders meeting in Berlin.
The company reiterated a medium-term goal of an average return on sales of 9 percent for its auto units.
“As in previous years, we expect the second half of the year to be significantly better than the first, with the increasing availability of the new E class and more attractive hedging rates,” CEO Dieter Zetsche said in the statement.
4th Gear: Mini Clubman Demand Outstrips Supply
As much as weirdos like me love them, the Mini brand is in trouble right now. Buyers simply aren’t into small cars at the moment with gas so cheap, and Mini’s crossover, the Countryman, is well past its prime and not due for a replacement until next year or so.
But there is one shining ray of hope: the new Clubman, which is a wagon whether Mini will admit it or not. The longer four-door hatch is a hit for the brand and orders outstrip supply, Automotive News reports:
“There were comments on how the Clubman is doing,” said Michael Vadasz, chairman of Mini’s dealer council and general manager at Otto’s Mini in Exton, Pa. “I think we can all agree the Clubman is doing pretty well for us right now.”
There are more orders on the vehicle, which launched earlier this year, than there are vehicles in stock, Vadasz continued.
Many orders have been customized, he said, “which is what Mini is all about, but of course, we like to sell cars in stock, too. And, that is taking place.”
Mini sold 1,695 Clubmans in the first quarter, including 1,037 units in March. It was the only vehicle in Mini’s lineup to post a gain in March. Mini’s overall U.S. sales fell 15 percent to 10,839 vehicles during the first quarter.
I happen to be driving a 2016 Cooper S Clubman with a stick shift at the moment and I’m very pleased with it overall. It’s a car I’d be happy to own.
5th Gear: Volkswagen Could Miss Latest Diesel Fix Deadline
Oh yeah, Dieselgate is still happening, in case you were curious.
The latest is Reuters reports Volkswagen may miss an April 21 court-imposed deadline to announce a fix for the cheating diesel cars. That’s according to the EPA, who say that talks are ongoing.
EPA Administrator Gina McCarthy told reporters that the two sides were in “really robust” ongoing talks but said she did not know if they would agree to a deal by April 21. She declined to say if the administration would accept a partial fix of the polluting vehicles or if it would insist that Volkswagen offer to buy them all back.
VW, Europe’s biggest automaker, faces its biggest crisis in recent memory after it acknowledged in September that it had rigged exhaust emission tests for up to 11 million vehicles worldwide. The company’s chief executive officer abruptly left after the scandal was announced, and the company set aside up to 6.5 billion euros to address the problem but has warned the amount could go higher as investigations continue around the world.
The judge in the case said that if the looming deadline isn’t met he could order a trial to start this summer. We’ll see what happens.
Reverse: He Named It After His Daughter
Neutral: Who’s Right On The Mexico Debate?
Is Trump on the mark here about moving car production to Mexico? Unquestionably, the idea that he can somehow unilaterally stop the deal from happening as president, like he said last fall, is ludicrous. But policy nuance has never really been his thing.