If money is power, Volkswagen says it’s going to use its power for good, Ford adds jobs, and GM shuts down a plant. All that and more in the Morning Shift for December 19, 2019.
1st Gear: What Dieselgate?
Most SUVs are big (shocking, I know), and Volkswagen makes one so big it’s called the Atlas, because it is so large that no man or machine can lift it, only some sort of mythological being. Roadside tire changes can, therefore, get annoying, I’m told. But the largeness of the cars means that Volkswagen’s profits will also be staggeringly huge, thanks to record SUV sales in both the United States and Europe, Reuters reports:
VW’s core brand in 2019 has gained market share and has increased its operating profit substantially, Chief Operating Officer Ralf Brandstaetter said on Wednesday in comments embargoed for Thursday.
He added the division had increased its share of SUVs sold to 42% in the United States and 37% in Europe.
Volkswagen isn’t divulging an exact euro figure just yet, but it did say it expects the profits to be record-setting for the brand. The company reported profits going up by 10 percent for the first half of the year back in July, so while it still says it’s feeling the effects of Dieselgate, it doesn’t seem to be hurting too badly.
The real effect of Dieselgate, then, isn’t so much VW going out of business, as the company saying it’s going to plunge the record profits into electric vehicle development. So while SUVs are generally terrible for driving fun and aesthetics and the planet and everything else, at least the money will be put towards something better?
2nd Gear: It Ain’t Over Until The Regulators Sing
Fiat Chrysler Automobiles and Peugeot have signed a binding agreement to merge, and while you may be thinking “well that’s a done deal then,” not so fast. While it may seem like we’re living in a libertarian capitalist dystopia, there’s still at least the veneer of market regulation, and FCA and Peugeot have to pass some paperwork hurdles before anyone can declare it inevitable. Here’s Reuters:
PSA and FCA expect the deal to close in the next 12 to 15 months and said they would come up with a name over the coming months. In the meantime, they will have to win over regulators in the United States and Europe.
“This is obviously a huge consolidation of the sector that will surely require a considerable effort in securing competition (approval) across a variety of jurisdictions and especially the European Union,” said Jonathan Branton, head of competition at global legal business DWF.
LMC Automotive say PSA and FCA were the third and sixth-largest carmakers in Europe last year by sales volumes, and combined would have just pipped Volkswagen to the top spot.
Reuters goes on to note that both companies will have to realize “savings” in the merger, and that means plant closings. So while I’m sure the executives of both companies will make out just fine, watch out for the workers.
3rd Gear: Mercedes To Toss Leather Bag Full Of Coins To Commoners In Penance For Putting Recall Safety At Risk
Mercedes-Benz, a car company, will pay a fine of $20 million for not conducting its recalls in a timely fashion, the Associated Press reports.
The company posted profits of €2.69 billion (or approximately $3 billion) in just the past quarter alone.
4th Gear: General Motors Closing A Long-Standing Factory
The GM plant in Oshawa, Ontario, which had been making vehicles for over 100 years, assembled its very last car yesterday. Here’s the requiem from Automotive News:
After churning out General Motors vehicles for more than a century, the automaker’s assembly plant in Oshawa, Ontario, has reached the end of the line.
Workers put the finishing touches on the final vehicle — a 2019 GMC Sierra LD pickup — Wednesday, ending auto assembly at the venerable factory for good. The line stopped producing vehicles at approximately 4 p.m. EST, according to tweets that appeared to originate from within the plant.
A GM Canada spokeswoman said she didn’t know the exact time production ceased but confirmed about an hour later that output had stopped earlier in the day.
One of the final trucks assembled — a 2019 GMC Sierra SLE double-cab light-duty pickup — was raffled off among employees, who raised $117,000 for Durham Region Children’s Aid Foundation. It was one last charitable act by union members.
The Oshawa facility won’t be shut down completely, as GM converts it into a stamping site, along with the addition of an autonomous vehicle test lab. But the best part of the Automotive News story is GM’s American workers apparently trolling their Canadian brethren one last time:
Members of the UAW in Indiana sent a message of support along with the frame: “Thanks Sisters and Brothers at Oshawa…All The Best! EH!!!!” read a banner on the rank carrying the frame.
Over 2,000 employees at the plant will be put out of work.
5th Gear: Chinese-Built Teslas Getting Cheaper, Maybe
I’m putting this one as the last gear, because this sort of thing really is quite speculative at the moment, and the speculation really only leads to more speculation, but here goes:
Teslas built in China might be significantly cheaper. Maybe. And it’s unclear if those Chinese-built Teslas will even make it to American shores. Here’s Bloomberg:
Tesla Inc. is considering cutting the price of its China-built Model 3 sedans by 20% or more next year, people familiar with the matter said, betting the move will lure buyers as the world’s biggest electric-vehicle market slows.
Tesla aims to lower costs by using more local components, allowing it to import fewer parts and avoid tariffs, said the people, who asked not to be identified discussing internal deliberations. Prices of the cars, which will be built in a new factory near Shanghai and start at 355,800 yuan ($50,800), will probably be lowered from the second half of 2020, they said.
This sort of thing used to be pretty simple, as car companies have already started sending manufacturing to China in search of cheaper costs. Just build the car in China, ship it to the U.S., and either lower the starting price of the car or pocket the difference, easy peasy. Okay, not so easy, but you get the idea.
But with the future still very unclear for tariffs on Chinese-built everything, who’s to say if these things will ever make it to our shores.
1938: Henry Ford II was elected to the Ford Motor Company Board of Directors.
Neutral: What’s Your Favorite Car You Drove This Year?
Mine was maybe the Acura NSX, but that’s cheating because I have an absurd job.