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: VW And GM Gonna Have A Bad Time
The world is still reeling from China’s stock market freefall last week and its after-effects. That’s especially true in the automotive world, where Western and Asian carmakers have spent the last few years looking at China as a golden goose that would somehow magically never stop laying golden eggs.
So who’s left most vulnerable to a Chinese market downturn? According to Reuters, it’s General Motors and Volkswagen, as well as the three big German luxury brands:
Volkswagen depends on China for more than half its net profit and 71 percent of its free cash flow including income from joint ventures and royalties, according to auto industry analysts.
GM made 40 percent of its net income from China equity income and 20-30 percent of its operating cash flow last year, according to Barclays.
[...] VW’s profits have largely depended on its premium brand Audi (NSUG.DE), whose performance in China has worsened over the past seven months, while the VW brand lacks a fresh range of sports utility vehicles, China’s fastest-growing vehicle segment.
On Thursday, Audi said it was reviewing its 2015 Chinese sales target in the latest sign that the downturn is more severe than expected.
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It’s not the apocalypse for anyone yet, but it’s gonna sting — or at least require a more realistic outlook on Chinese growth.
2nd Gear: But Mazda’s Doing Well There, Believe It Or Not
Who’s the winner in China as its market sputters a bit? Mazda, it turns out. One more from Reuters:
Japan’s fifth-biggest automaker has found its sporty design philosophy clicked with an emerging class of drivers who have abandoned copycat buying and the widely held perception that only long-established leaders, notably Volkswagen AG (VOWG_p.DE), make decent cars.
Here’s another interesting tidbit:
But the market has been shaken in recent years as more drivers gain experience of cars from a wider variety of makers, and learn firsthand that German vehicles do not necessarily excel above all others as is commonly believed, analysts say.
An influential annual consumer TV show added to the doubt when it picked on Volkswagen in two of the past three years for issues with quality and service, said Yale Zhang, head of researcher Automotive Foresight. Sales practices at Daimler AG’s (DAIGn.DE) Mercedes-Benz were also targeted.
3rd Gear: People Are Happy With Their GM, Fiat Chrysler And VW Cars
But while the “German myth” is being broken in China, VW leads one customer satisfaction survey in America, along with GM and Fiat Chrysler. That would be Strategic Vision’s Total Quality Index. From Automotive News:
The Chevrolet Colorado led the way in the study’s standard pickup segment, becoming the first domestic model to top the segment in more than a decade. The GMC Sierra 2500/3500 received the highest score in the heavy-duty pickup segment.
Another winner among domestic brands was Ram, nabbing the “best brand” title. Land Rover was named best luxury brand.
4th Gear: Ford Tries To Put Out F-150 Incentives Fire
Everybody’s freaking out over the big incentives being offered on the new 2015 Ford F-150, as much as $10,000 in some cases, as they try to convince buyers to go aluminum and as supplies remain low. But Ford and some analysts say it’s not a huge deal, reports The Detroit News:
“I don’t know if (the incentives are) a huge deal,” Kelley Blue Book analyst Akshay Anand said. “In some cases they’re isolated instances. By and large, it’s not a demand issue across the nation for the F-150. It seems like it may be a marketing thing more than anything.”
Demand appears to be strong for the aluminum-bodied pickup. Ford said the trucks are sitting on dealer lots for an average of 32 days and are selling twice as fast as other vehicles in the segment. Average transaction prices are $44,100, the highest in the half-ton pickup segment and a record for Ford.
5th Gear: People Still Not Nuts About Fully Autonomous Cars
The autonomous cars are on their way, eventually, and the building blocks for them are already in place. Besides sorting out the regulatory angles, which could take eons, the bigger fight may be convincing buyers to trust them.
Another day, another survey that says buyers aren’t ready to adopt fully autonomous cars quite yet, reports CNBC on a new University of Michigan study:
According to the results, 43.8 percent of respondents have no interest in self-driving cars, while 40.6 percent said they prefer models with partial autonomous-drive technology. Just 15.6 percent of those questioned said they would prefer a completely self-driving car.
Among those surveyed, 35 percent said they would be very concerned riding in a fully autonomous-drive vehicle. When asked about riding in a partially self-driving vehicle, however, the amount of people who said they would be very concerned dropped to 14 percent.
Reverse: Happy Birthday And Thanks
Nils Bohlin, the Swedish engineer and inventor responsible for the three-point lap and shoulder seatbelt–considered one of the most important innovations in automobile safety–is born on July 17, 1920 in Härnösand, Sweden.
Neutral: Will China Rebound?
Or are the glory days of endless sales pretty much over?
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