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: Fuel Economy Is Still King
Last week, President Trump promised that he’d “save” the U.S. auto industry by dramatically cutting back on the EPA’s funding and staff and rolling back fuel economy regulations. But this doesn’t necessarily mean automakers will throw carbureted, smoke-belching V8s into all their cars like the good old days.
Trump has long promised to review CO2 and fuel economy requirements set up by the Obama administration in an effort to allow automakers to sell whichever cars are profitable, not just the cars needed to meet the regs. To many, this potential rollback of EPA standards essentially trades environmental damage for profit margins, and prompts visions of the early 2000s when enormous gas-guzzlers like the Hummer H2 lurked on American roads.
But, as The Detroit Free Press points out, automakers aren’t just going to stop building efficient cars. For one, the newspaper says, OEMs and suppliers have already spent billions on research and development, making “reversing course impractical.” More importantly, car companies have major global operations, so just because the U.S. reduces fuel economy requirements, doesn’t get automakers out of the woods. Hyundai-Kia’s director of powertrain, John Juriga told the paper:
We’re all global companies. We have to design our vehicles to be fuel efficient not only in the U.S., but in Europe and Asia.
Director of the Advanced Engine group at auto supplier BorgWarner reiterated that automakers and suppliers will continue to pursue MPGs, telling The Detroit Free Press “there’s no indication there’s going to be any backtracking on this stuff,” in part because of regulations in China, Japan and Europe that require 47 MPG or more by 2020.
Of course, it’d be absurd to think automakers wouldn’t crank up their truck and SUV volumes if given the chance, especially since The Detroit Free Press says those high-volume segments made up 60 percent of all new cars sold last year. But, even if Trump does pull back EPA fuel economy and emissions regulations, automakers aren’t off the hook—not by a long shot. They’ve still got this little hurdle called “the rest of the world” to worry about. Oh, and also California.
And since we know automakers are all about sharing platforms and powertrains across markets, it’s probably safe to say that fuel efficient cars are here to stay.
2nd Gear: VW Exec Tied To Dieselgate Will Remain In Jail For A Long Time
Oliver Schmidt, the former head of U.S. regulatory compliance at Volkswagen who was arrested in January by the FBI for conspiracy to defraud the U.S. remains in custody, and will continue to spend his time behind bars until January of 2018. That’s because a Detroit federal judge denied the German VW exec bond last week.
Judge Sean Cox made the ruling after concluding that there’s really no way to be sure that Schmidt would ever return for trial, The Detroit News reports. The news site says assistant U.S. attorney John Neal told the judge that there was “little to keep [Schmidt] here in the United States” in part, because Germany hadn’t charged him with a crime, and because Germany doesn’t extradite citizens. The attorney said ““If he flees to Germany, we could not get him back.”
The defense, meanwhile, argued that Schmidt couldn’t leave the U.S. if he tried, wanting to allow Schmidt to turn in his passport and stay in his house in Rochester, Michigan with his wife. But no dice. Schmidt will remain in custody until the trial date, which has been moved from April, 2017 to January of next year because Schmidt’s team “needs more time to more adequately prepare its case for trial.”
So he’ll be in jail for a year at least a year, though Reuters says his 11 felony counts mean he could face up to 169 years behind bars.
3rd Gear: Bolts Are Selling For Cheap, Depending Where You Live
The 2017 Chevrolet Bolt is a reasonably fun to drive all-electric hatchback that’s affordable to the masses—it’s a big step forward for electric automobility, and you can get your hands on one real cheap. Sort of.
The reality is that Chevy Bolt prices are all over the board, with Automotive News mentioning a dealer in Souther California selling essentially the same Bolt for over $4,000 less than a dealership just five miles away. The news site says this difference in prices is simply an “old-line retail network” trying to “feel out the market” for a car with, essentially, no competition.
Other dealerships in California, the state that got the Bolt before all others, have been marking Bolts down considerably, with some offering discounts around $3,000—add a $7,500 federal tax incentive and $2,500 rebate from the state of California, and you can pick up a Bolt for only $25 grand. That’s a downright bargain.
Other dealers, though, are asking $5,000 above sticker. These stores, Automotive News says, are mostly in rural areas.
So basically, if you want a Chevy Bolt for dirt cheap, you may want to move to urban California, because $25 grand for an EV with over 200 miles of range is a steal.
4th Gear: PSA Wants To Take Over The World Now That It Has Opel
General Motors sold off its European brands Vauxhall and Opel to France’s PSA Group for $2.3 billion earlier this month, and now the French company has big plans with those brands.
Two members of the Peugeot family (which Reuters says owns over 20 percent of PSA’s voting rights), Jeanne Philippe and Robert, said in an interview of PSA’s acquisition of Opel: “This will allow the group to conquer the rest of the world step by step. This remains an important goal for PSA.”
PSA, which is now the second largest automaker in Europe, says by cranking up sales volumes to above three million in a single market, PSA will see major benefits in economies of scale. Reuters says Robert Peugeot told Welt Am Sonntag: “All large carmakers have a volume of three million cars in one important market.”
He went on, saying “Opel is strong in markets where PSA is not so strong...There is very little cannibalisation between the brands.” This makes a lot of sense, since—as Reuters points out—Vauxhall out-sells PSA significantly in Great Britain, and Opel has traditionally out-sold the French company’s offerings in Germany.
As for the bit about conquering the world step by state, who knows what Jeanne Phillipe Peugeot meant by that. But I’d be down to see more French cars in the U.S.
5th Gear: Porsche Makes The Money
Porsche sold 238,000 cars last year and made an operating profit of $4.1 billion, meaning the company is on pace to make some serious coin on every car it sells—$17,250 to be exact, according to Bloomberg.
Compare that number to $5,000 per car by both Daimler and BMW, and Porsche’s got the profit margin thing down pat. The news site says this big profit figure comes down to the fact that Porsche really doesn’t sell any cheap cars, and that many people buy from the brand because they yearn for the Porsche’s image.
But even more important to that figure are Porsche’s SUV offerings, particularly the Macan, which makes up about 40 percent of Porsche sales. As Bloomberg points out, this vehicle may start under $50,000, but the add-ons like the $5,000 seats and $5,000 optional wheels crank that price up big-time.
Bloomberg says “few people who spring for a Porsche settle for basic—it’d be like going to a steakhouse and skipping the sides.”
Reverse: Creator Of The Finest American Luxury Brand Dies At 64
Neutral: Are Small Cars Dead?
Americans are buying SUVs; the Porsche Macan’s sales numbers make that much clear. What would it take for this demand to shift towards smaller, fuel efficient cars?