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: Wasn’t This Supposed To Cost Uber Billions?
As many as 1.6 million drivers in California got involved in a class action against Uber back in the summer over the eternal issue of the ride-hailing service not treating its drivers like employees, but as contractors instead. It’s a move that lets Uber dodge a lot of modern corporate bullshit, like being responsible or paying fair wages and health care. The lawyers representing the class action claimed this was a multi billion-dollar issue.
Now Uber has reached a settlement that puts about a dollar in the hands of each driver, as Bloomberg reports:
The ride-hailing company, along with the drivers’ lawyer, asked a state judge in Los Angeles Wednesday to approve a $7.75 million agreement to resolve claims stemming from its refusal to give California drivers the protections and benefits of employees. The accord allows Uber to keep classifying the drivers as independent contractors.
The claims by Steven Price, who sought to represent as many as 1.6 million California drivers in a class action, were brought under the state’s so-called bounty hunter law, which gives employees the right to step into the shoes of the state labor secretary to bring enforcement actions. Under the 2004 Private Attorneys General Act, or PAGA, the state keeps 75 percent of any penalties won. The remaining 25 percent is a reward for the workers who bring the case. Thousands of such lawsuits have been filed in the past 12 years.
After attorney fees and administration costs are deducted, the agreement provides for about $1.7 million to paid to drivers and earmarks about $2.9 million in PAGA penalties for California’s Labor and Workforce Development Agency. The amount each driver gets will depend on how many weeks they have actively driven for Uber.
2nd Gear: Cadillac In China Outsells U.S. For The First Time
Cadillac now joins Buick in the Land of Bizarro American Automakers That Sell More In China Than Here. January sales for GM’s brand that zigs were 73% higher in China than they were in America, as The Wall Street Journal reports:
GM said Thursday it delivered 18,011 cars and SUVs in the Chinese market in January, 73% more than the 10,398 Cadillacs sold during the same period by the U.S. unit. GM has been selling Caddys in China for several year, but volumes have accelerated with the recent addition of new models.
GM sells several brands in China, including homegrown nameplates, and the Detroit auto maker sold 3.9 million vehicles in China last year, 25% more than its U.S. total.
Cadillac last year reached a goal of selling 100,000 vehicles in China, with its unit there falling just short of outselling the U.S. division in November. In 2016, Cadillac sold 170,000 vehicles in the U.S. and 116,000 in China.
This is particularly interesting because Buick’s sales in China are a bit misleading; Buick historically has sold a bunch of ordinary hatchbacks in China, which Cadillac is all-luxury over there.
Have I mentioned that the back seat in the new CT6 is very comfortable and quiet? Hm.
3rd Gear: Senate Ditches Oil Disclosures Before Dawn
Now for the fun stuff. The Senate repealed the Security and Exchange Commission’s transparency rule for oil companies before the sun even rose today. The vote was 52-47 to remove regulation that requires oil companies to disclose payments to foreign governments, basically allowing for much more international corruption to go unwatched, as The Hill elaborates:
Sen. Sherrod Brown (D-Ohio), the top Democrat on the Banking Committee, framed the resolution as a vote for corruption.
“The rule they’re trying to repeal protects U.S. citizens and investors from having millions of their dollars vanished into the pockets of corrupt foreign oligarchs,” he said on the floor. “This kind of transparency is essential to combating waste, fraud, corruption and mismanagement.”
The oil industry has made it a priority to lobby against the SEC rule. Exxon Mobil Corp., whose former CEO Rex Tillerson was confirmed this week to be secretary of State, was one of the most outspoken opponents, owing in part to its business operations in scores of countries around the world.
The House, in fact, had voted this bill in the same day the ex-Exxon man took power, as Vox noted the other day. This does not sound shifty as hall. Nah. This is all good and fine.
4th Gear: Oil Prices Rise With Trump/Iran War Of Words
Before Trump took office, everyone figured that having Twitter Fingers on the button would be bad news for international stability, and now we’re getting to see how this plays out directly. Trump put Iran “on notice” late on Wednesday after some missile tests.
Now oil prices have risen with fears of sanctions or God only knows what else, as Reuters reports:
Oil prices edged higher on Friday in response to the possibility of new sanctions on Iran after U.S. President Donald Trump said “nothing is off the table” in dealing with the country after its test launch of a missile.
Comments by Russian energy minister Alexander Novak that oil producers had cut their output as agreed under a deal with OPEC, also helped to support prices, analysts said.
Brent crude futures were up 30 cents to $56.86 a barrel by 1050 GMT, after settling 24 cents lower at $56.56 in the previous session. Brent was on track to gain more than 2 percent on the week, its first significant weekly rise this year.
Front month U.S. West Texas Intermediate crude futures climbed 25 cents to $53.79 a barrel, after ending 34 cents down on Thursday. For the week, the contract is up a little over 1 percent.
Also included in the Reuters report was this choice line:
“The ‘trumperament’ of the new U.S. president is being tested by Iran and soon maybe also by Russia and China,” Olivier Jakob, managing director of consultancy PetroMatrix, said. “And that is adding some geopolitical support to crude oil.”
The influence of Iran in oil prices today is currently being debated within the financial community, so I think the big takeaway is that I’m going to have to start saying Tumperament more often.
5th Gear: Honda’s Profit Up With Recall Done
Last year’s auto news was dominated by the Takata airbag recall, the total failure of one of the car industry’s most critical supplier relationships. Honda was more closely tied to Takata than any other carmaker, and profits faltered. Now operating profit has surged 27 percent up to $1.78 billion in the third quarter (it was $1.40 billion a year ago) helped along by cost cutting and dwindling recall expenditures, as Automotive News reports:
Honda’s operating profit was buoyed by stepped-up cost cutting efforts that added 51.9 billion yen ($444.7 million) to the bottom line in the fiscal third quarter.
Lower outlays for recalled Takata airbags also helped. Lower warranty spending and other quality related expenses chipped in another 86.6 billion yen ($741.9 million).
Reverse: On This Day In 1949, Some Dude Flew A Hoppi-Copter
To put our current world in perspective, I found this picture from February 3rd, 1949 of a guy testing a Hoppi-Copter, a kind of backpack helicopter quickly found to be too nervous and disorienting to fly. Still, look at the sheer optimism here.
Neutral: Does Honda Need To Advertise Anymore?
Also included in that Automotive News report was that Honda hasn’t needed to advertise as much in the U.S., thanks to more redesigns:
Kuraishi said model redesigns not only boost volume but profitability because Honda can cut costs through each model change by introducing more shared parts.
They also require less marketing outlays.
“We have changed the profitability of new models by using common parts and conducting value analysis and value engineering so that we manufacture competitive and attractive cars to boost profitability,” Kuraishi said. “As for new models, we ended up postponing advertisements or using less advertisement expenses than initially estimated.”
A Civic is good now, a CR-V is good now. Everyone knows Honda. Does Honda even need to advertise much anymore?