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: It Begins
Volkswagen announced today that it will commence the recall of the first wave of diesel Golfs in Europe, some 15,000 cars in total. The cars being recalled have the 2.0-liter EA189 diesel engine with BlueMotion Technology.
The UK’s Autocar reports that the software fixes that will be implemented during the recalls are not expected to hamper performance or fuel economy; that’s not anticipated to be the case in the U.S., hence why American owners are being offered $5,000 cash and buybacks.
2nd Gear: As VW Loses $144 Million In Q4
Meanwhile, VW’s Q4 2015 results are finally in, and they are not good. The brand posted a loss of $144 million in the final three months of last year, compared to a profit of more than $885 million a year earlier, reports Bloomberg:
“Volkswagen is far more than crisis,” CEO Matthias Mueller said in a speech prepared for a press conference at its Wolfsburg headquarters. “But we can nonetheless hardly avoid saying that the current situation demands everything of us, in every respect — including financially.”
Reviving the VW marque is critical to the carmaker’s recovery from the crisis. The company’s leader in vehicle sales and revenue, which was struggling with weak profitability even before the crisis, has become a battleground as the automaker’s powerful worker representatives balk at restructuring measures pushed by Herbert Diess, the head of the VW brand.
3rd Gear: Great News At Ford
Ford, however, is in the opposite boat. Today the automaker posted the highest quarterly pretax profit in its entire history, and its best-ever results in North America. Via Automotive News:
Ford executives said they believe the strong quarter sets the company up to equal — or beat — last year’s record pretax profit of $10.8 billion.
Before taxes, Ford’s profit for the quarter was $3.8 billion, up from $1.7 billion a year earlier. Total company revenue increased 11 percent to $37.7 billion.
Ford’s first-quarter net income more than doubled to $2.5 billion. It earned $3.1 billion in North America, where it achieved a record operating margin of 12.9 percent. And its European operations earned more in the first quarter than in all of 2015.
4th Gear: GAC Wants In On America Through Fiat Chrysler
So far the Chinese automakers haven’t made much headway getting into the U.S. market, but that seems all but inevitable eventually. And at Guangzhou Automobile Group, aka GAC, a partnership with Fiat Chrysler is seen as the path to America. Via Reuters:
Guangzhou Auto’s own-brand subsidiary GAC Motor declared its intention in 2015 to reach the U.S. market by next year, where it would become the first Chinese passenger car brand sold to American consumers.
“Chrysler’s development in China required our support. Now for GAC Motor’s development in the U.S. we also hope for Chrysler’s support and help,” said GAC Motor General Manager Wu Song on the sidelines of the Beijing auto show, which ends on May 4.
Wu and representatives of GAC Motor did not elaborate on what type of support Fiat Chrysler might offer. A Fiat Chrysler spokesman declined to comment.
5th Gear: Good News And Bad News For The UAW
The Detroit Free Press ponders whether this has been the best month ever for the United Auto Workers union, or the worst. The Big Three American automakers have announced record levels of investment at various plants across the U.S., particularly truck plants.
But then there’s this:
Ford to invest $1.6 billion in Mexico: Earlier this month Ford said it plans to build a new plant in Mexico and create 2,800 jobs there. Why? Because Ford says it can no longer make a profit producing small cars in the U.S.
Ford signaled its intention to discontinue production of the Ford Focus at Michigan Assembly in 2018 even before its contract talks with the UAW began last year. Still, the two events seem connected. The UAW essentially pushed for, and won, the elimination of the two-tier wage classification in its contract with the Detroit Three last fall and that will cause labor costs to increase for Ford in the U.S.
Ford says its commitment to U.S. production has not waned. In fact, Ford made a commitment to spend $9 billion at its U.S. plants and add or retain 8,500 jobs over the next four years. But the new Mexico plant is still a big loss for the UAW.
That, and some Jeep production is moving to Mexico as well.
Neutral: Chinese Automakers In America?
Like I said, that will happen eventually. But when and how?