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: Volkswagen Hits Record Sales In 2017
Sure, Volkswagen cheated emissions on millions of cars worldwide, but nobody really seemed to care. They’re still buying VW’s cars.
Trust issues, payouts and difficulties with its huge emissions scandal aside, VW had record sales in 2017 at more than 6.2 million cars. That’s an increase of 4.2 percent, which is modest, but it was a sales record nonetheless. That’s better than going the other way, especially with all of VW’s drama.
Reuters reports that VW sales were up in China and the U.S. in 2017 but down in the western European market, which is big on diesels. From Reuters:
Although the emissions test-cheating scandal of September 2015 has cost the German group billions of euros in fines and penalties, it does not seem to have caused major damage to the carmaker’s popularity with consumers.
The carmaker expects to keep growing volume this year.
“Based on economic forecasts and our plans for new models, there is no reason to expect that 2018 should turn worse than 2017,” VW brand sales chief Juergen Stackmann said on Sunday at the Detroit auto show, declining to be more specific.
The year wasn’t all records and cheers, since, like a lot of other companies, VW’s U.S. sales were way down in December. With sinking sedan and hatchback purchases, VW sales were down 19 percent just last month.
Reuters reports that VW will announce deliveries for its automaker group as a whole, which includes Audi and Porsche, on Wednesday.
2nd Gear: The Future of Sedans Is So Bleak
We all know that crossovers and SUVs are making the car market a sad and dreary place. Sales in that segment are so high that everything is turning into a crossover right in front of our eyes, and sedans are not doing well.
But looking at the actual sales numbers, axed sedans and market trends makes it all real. The future of sedans is so, so bleak.
Bloomberg has a big story full of bleak and sad facts about the modern car market and its slow killing off of sedans, and here’s a bit from it:
Ford, already moving production of its Focus compact from Michigan to China, is considering euthanizing the Fusion family car, according to people familiar with the deliberations. The automaker has already notified suppliers it plans to stop building the Fusion in Mexico. The debate among CEO Jim Hackett and his top lieutenants is whether the sedan is worth saving as a more upscale ride sold in low numbers at a higher price, said one of the people, who asked not to be identified revealing internal discussions.
GM is weighing the fate of increasingly irrelevant Buicks, Chevys and Cadillac cars, while boosting its offerings of SUVs and rolling out a big new pickup truck this week in Detroit. And Fiat Chrysler may not be done, with models like the big Chrysler 300 sedan—once the preferred ride of rap stars—now looking vulnerable.
... Ford is moving $7 billion in engineering funding away from cars and into developing SUVs. Nair declined to say whether that will result in the Fusion going away.
LMC Automotive analyst Jeff Schuster told Bloomberg even if gas skyrockets in price, which energy analysts don’t expect to see, customers will probably switch to a smaller SUV with decent mileage instead of abandoning big vehicles. If you favor a little doom on your Tuesday morning, read the full story here.
3rd Gear: More Investments Into Electric Vehicles
Ford announced its plans to up investment into greener transportation—$11 billion into 40 new electrified vehicles by 2022—at the Detroit Auto Show this week. According to a Reuters analysis, that brings the global investment total into electric and electrified vehicles up to about $90 billion.
Electrified vehicles are cars that fall somewhere on the electric range, from mild hybrids that can’t run the car on electric power alone to fully electric cars. They still make up a tiny part of the global car market, but automakers investments are going on up. From Reuters:
Investments in electrified vehicles announced to date include at least $19 billion by automakers in the United States, $21 billion in China and $52 billion in Germany.
But U.S. and German auto executives said in interviews on the sidelines of the Detroit auto show that the bulk of those investments are earmarked for China, where the government has enacted escalating electric-vehicle quotas starting in 2019.
Mainstream automakers also are reacting in part to pressure from regulators in Europe and California to slash carbon emissions from fossil fuels. They are under pressure as well from Tesla’s success in creating electric sedans and SUVs that inspire would-be owners to flood the company with orders.
Not surprisingly, a lot of the talk from the executives at those manufacturers centered around Tesla—whether it was about the competition that company is about to have, or about how they envied Tesla’s ability to make the demand it does for its electric cars.
4th Gear: NAFTA And The New Silverado
A new generation of Chevrolet Silverado trucks is on the way, but things could get a little complicated for General Motors if President Donald Trump gets rid of the North American Free Trade Agreement. Reuters reports that the GM plant in Mexican city Silao put out more than 400,000 trucks last year, and will be a big part of the new Silverado.
...maybe. From Reuters:
If U.S. President Donald Trump follows up on threats to dump the North American Free Trade Agreement, pickup trucks built at Silao and shipped to the United States could be hit with a 25 percent tariff, known in the auto industry as the “chicken tax.”
... It could also potentially jeopardize thousands of jobs on both sides of the border and billions of dollars in investment for automakers.
GM in recent weeks inaugurated a new production line for a 10-speed transmission in the central Mexican city of Silao, and late last year began hiring 600 new staff there, sources said, effectively doubling down on one of the most lucrative offshore production categories for U.S. auto companies.
Reuters reports that people familiar with GM’s plans told the outlet that the company will shift production of some versions of the new Silverado and GMC Sierra to a Flint, Michigan plant. Company CEO Mary Barra didn’t confirm that, according to Reuters, and said GM will “continue to work constructively to get a modernized NAFTA agreement.”
5th Gear: Mercedes-Benz And BMW Lean Toward U.S. Subscription Services
Automakers are getting in on subscription services for cars, in which a person pays a monthly fee for maintenance, insurance, pickup and delivery, and gets to rotate cars so long as they’re available. It’s like Netflix, but a lot more expensive and less on demand. Porsche’s costs $2,000 to $3,000 a month, for example.
Mercedes-Benz and BMW are the latest to look at the idea for the U.S. market, according to Automotive News. Mercedes wants to test its long-term viability, and both companies would start with pilot programs. From Automotive News:
BMW “most likely” is going to test a subscription model at some point this year in a single market in the U.S., BMW of North America CEO Bernhard Kuhnt said in an interview at the auto show. ...
BMW and Mercedes would join other brands such as Cadillac, Porsche, Volvo and Lincoln in testing vehicle subscription services. ...
Mercedes must better understand what Seeger calls a “big threat” to the subscription model: What happens if customers don’t get to switch to the vehicles they want?
“On the weekend, if it’s sunshine outside and if everybody wants to have a cabriolet, and if I apply five times to have a cabriolet and I don’t get it, what does this cause?” Seeger said.
Automotive News reports that neither company has decided the details of its potential pilot programs, such as when and where in the U.S. they’ll happen.
Reverse: U.S. Bombers Take A Trip Around The World
According to the Smithsonian, a group of B-52 bombers set out on a trip around the world without refueling on Jan. 16, 1957 just to show that the U.S. could do it. The flight took more than 45 hours, and, according to the Smithsonian, was “to prove that the United States could drop a nuclear bomb anywhere on Earth.”
Neutral: Will You Miss The Sedans?
And what will be next? Our beloved hatchbacks? What is wrong with this world?