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: Uber Says It’s As Popular As Ever, Standing By Brazen CEO
Uber typically doesn’t hold press calls, but in a continued effort to reshape its not-so-good public perception, a few company execs hopped on the horn with some reporters yesterday to chat about its current affairs. Yes, its CEO Travis Kalanick—who is 40 and said, after he was caught on camera arguing with an Uber driver, that he needs to “grow up”—has been a problem for the company. But the ride-hailing giant’s board, perhaps remarkably, is standing by him, reports The New York Times:
Of paramount importance, the company stressed, is Uber’s search for a chief operating officer to help Mr. Kalanick. In addition, Uber is overhauling its human resources department, improving its relationships with drivers, and soliciting feedback from concerned employees. The company also plans to release a report on the diversity of its work force this month, and will conclude an investigation into its workplace culture by the end of April.
“The board is confident in Travis, and we are proceeding ahead with the search for the C.O.O.,” [board member Ariana] Huffington said during the call. “Put very simply, change starts at the top.”
It might be simply a business decision to stay with Kalanick, even if he’s the leader of a company that’s accused of fostering an environment of sexual harassment. Recode reports that Uber received more ride requests in the U.S. last week than ever before. That’d mark quite a (quiet) turnaround.
Anyway, Kalanick wasn’t on the call, as he was helping conduct COO interviews. But the unstated point here is that, with the support of Huffington, it’d take an even more extraordinary circumstance for Kalanick’s ouster. Kalanick supporters reportedly make up a majority of Uber’s board of directors, so a scenario that ends with Kalanick’s exist seems unlikely. But who knows, when you’re running a company that’s at the center of an explosive intellectual property lawsuit involving self-driving car designs, I guess anything’s possible.
2nd Gear: British Lawmakers Want More Out Of VW
It’s another day, so that means fresh Dieselgate news. Apparently British lawmakers aren’t exactly jazzed with answers previously given by the German automaker over the never-ending-and-no-it’ll-probably-never-end-really diesel emissions scandal. Reuters says that VW’s British chief, Paul Willis, has spoken before numerous parliamentary committees since the fall of 2015, but it just hasn’t been enough.
The upshot, it seems, is that Britain’s great friend across the Atlantic—i.e., you and me—has received a far-more palatable deal. At least that’s the view of British lawmakers, according to Reuters:
Around 1.2 million cars are affected by the scandal in Britain with fewer than half repaired so far, prompting anger from politicians and drivers who argue it is unfair that they have not received compensation offered to U.S. motorists.
During his most recent appearance before the transport committee last month, Willis was pressed on the nature of the remedy and whether Britain had been fully repaid by VW for the cost of retesting models.
In a letter published on Wednesday, chairwoman Louise Ellman asked Willis to respond to eight points including on whether the firm will look into every complaint that the fix had affected vehicle performance, an issue at the heart of attempts by some law firms to take legal action against the company.
File this under: “Yeah, maybe it would’ve been easier to just make cars that didn’t cheat emissions test.”
3rd Gear: Speaking Of Emissions
It’s not all about VW these days, though. Fiat Chrysler—which, by the way, are you interested in buying?— has warned shareholders of potential fines in the U.S. over an alleged diesel emission cheat. But now the automaker’s the subject of a separate probe across the globe, reports Reuters.
Citing an unnamed judicial source, Reuters says a prosecutor in Paris opened an investigation into “aggravated cheating,” following a referral from the country’s finance ministry.
A Fiat spokesperson told Reuters that its vehicles comply with emissions standards and that it planned to cooperate with authorities. That’s the official line in the U.S., as well, where FCA’s accused of putting a defeat device on 104,000 vehicles.
The company sounded confident at the time news broke of the alleged Clean Air Act violations. “FCA US intends to work with the incoming administration,” the company said. Now look, there might not even be an EPA left to fully-investigate the claims here. Convenient.
4th Gear: EU, Japan Still Talking Trade, Despite Trump
The U.S. is barreling toward a protectionist crouch on trade under President Donald Trump’s administration, but that’s not stopping the European Union and Japan from forging ahead on crafting a deal of their own. Not at all.
Bloomberg reports that the EU president said it wants to cap four years of negotiations “very soon,” which can be translated to a low-key flip of the bird to Trump. From Bloomberg:
The EU has insisted that Japan remove tariffs on European foods such as chocolate, pasta, tomato paste and cheese, scale back non-tariff barriers for cars and open up public procurement in the rail industry.
In exchange, the bloc has been prepared to phase out its 10 percent tariff on autos from Japan and ease access to Europe for Japanese executives. The EU has also said it would refrain from demanding duty-free access to the Japanese market for “sensitive” farm goods such as rice, beef and pork.
“As often in a negotiation, the few remaining issues are the most difficult to solve,” [EU trade negotiator Jean-Claude] Juncker said. “This agreement will give Japan and the European Union the best of both worlds. It opens up a major new market to each other.”
We’ve talked plenty about the impact Trump’s proposed trade policies could have on the auto industry, and now it’s clear he’s fomenting a desire to orchestrate deals elsewhere. Maybe we’re nearing the end of globalism.
5th Gear: Used Vehicles Aren’t Performing So Hot
Ally Financial recently said that profit’s going to diminish in 2017, thanks to aggressive loans and steep discounts, and that forecast looks to be pretty damn accurate, according to Bloomberg. Why buy used when the new car deals are so good?
Earnings may increase as little as 5 percent this year, Ally said Tuesday, after CEO Jeffrey Brown in January predicted growth “shy of 15 percent but still very solid.” The caution raised by the company dragged on shares of rental companies and auto dealer groups including Hertz Global Holdings Inc. and AutoNation Inc.
Concern is mounting over falling used-car values dragging on lenders including Ford Motor Co.’s financial-services unit. Consumers have turned to leasing more than ever to lower their monthly payments on new vehicles that have been selling at record high prices in the U.S. Surging numbers of vehicles coming off leases is fueling a supply glut and dragging down prices.
It goes on:
When companies lease out vehicles, they charge the customer a monthly payment and make an assumption of the car or truck’s value when it’s returned for resale. If autos are depreciating more than expected, losses can pile up. That’s what happened with Ford, which shaved $300 million from its financial-services arm’s 2017 profit forecast last year.
Ally’s projection for earnings-per-share growth in the range of 5 to 15 percent this year compares with an 8 percent increase for 2016.
Maybe it’s just a brief trend, who knows! But here’s a nice quote to cap things off, courtesy of Bloomberg: Jamie Dimon, CEO of JPMorgan Chase, said at a company investor day last month that his institution believes “Auto... is going to slow down because people will stress on credit.”
“You’re going to see some issues there,” he said, “but it’s not systemic.”
Mmm... I’ll take $500 for, “Hey, Maybe It’s A Bubble?”
Reverse: How The Hummer Came To Be
Neutral: Is All This Fuss About Uber Worth It?
Uber’s CEO has been front-and-center throughout the company’s bevy of scandals as the source of its woes. Do you think its worth it for Uber to put up with a 40-year-old man who says he now realizes it’s time for him to “grow up”?