1st Gear: Volvo Shifts Gears
Under new Chinese parent company Geely, Volvo has proven to be quite the turnaround artist as of late, with the XC90 crossover and S90 helping to set sales records. But the S90 won’t be a Swedish-built car for much longer, the automaker said today. Soon production will shift from Torslanda to China, including models exported to the U.S. and Europe. (Worth noting Volvo is also building a car plant in South Carolina.)
Volvo’s done this before with a certain S60 model, but now we’re talking about the flagship sedan. The move from Geely is to help establish “a global manufacturing and export hub in China,” writes Automotive News. And that’s just the start.
Volvo CEO Hakan Samuelsson told Automotive News Europe on the sidelines of the event here today that S90 output at the automaker’s plant in Torslanda, near Gothenburg, would be progressively reduced this year. Just a limited number of S90s will be made in Sweden in the future, he added.
Along with the European versions of the S90, which are also referred to as the regular-wheelbase variants of the car, the Daqing plant will build the long-wheelbase S90 for China and export to the U.S. starting this year and produce the S90 Excellence top-of-the-line variant for global export starting next year, the automaker said.
The China-made cars will have their public debut at the Guangzhou auto show on Nov. 18.
Volvo also announced today that current and new-generation 60-series midsize models will be built at its plant in Chengdu, western China, while its new-generation 40 series of compact vehicles will be made at a plant that is currently being built in Luqiao, which is 350km (218 miles) south of Shanghai. The automaker declined to say whether it will export it China-made 60-series and 40-series cars.
We’ve known the U.S. and Europe were destined for Chinese-built cars for some time. It looks like Volvo is poised to be the most high-profile example of that yet.
2nd Gear: ‘Pretty Good’ Is Still Good
Almost across the board, automakers posted U.S. new car sales declines in October, in several cases greater than analysts predicted. Bloomberg reports that overall sales fell 4.4 percent last month to 1.39 million vehicles, which, let’s be very clear here, is still a lot. The new car market is still doing well, it’s just not hitting insane record numbers every month like it was.
But it’s not what investors like to see, which won’t help General Motors and Ford’s struggles with Wall Street:
October’s results help explain why investors have lost enthusiasm for automakers’ shares, even with the possibility still in play that 2016 could mark a record seventh straight year of sales gains. While pickup and sport utility vehicle demand remains strong enough to keep the companies making money, it will be hard for most to wring out better earnings.
“It’s getting tougher to sell cars, but it’s still a pretty good market,” Michelle Krebs, an analyst with Cox Automotive’s Autotrader, said in an interview. “It’s just taking more money to push the sales.”
Some more results:
Toyota missed estimates with an 8.7 percent drop, far exceeding the 4.7 percent decline that analysts predicted, with demand for the Prius gas-electric hybrid falling by almost half. Fiat Chrysler sales fell 10 percent, compared with a 9.8 percent drop predicted in the survey, in part on a rare decline for Jeep SUVs. Nissan slipped 2.2 percent instead of the estimated 1.5 percent.
The only gain among the largest companies came from the combined sales by Korean affiliates Hyundai Motor Co. and Kia Motors Corp., where sales rose 1.3 percent instead of the estimated 4.8 percent drop.
Things are fine. Everything is fine!
3rd Gear: Even Jeep Sales Are Down
Crossovers, especially luxury ones, and trucks continue to rule the day. Yet even Jeep sales are down, an outcome previously thought to be scientifically impossible. Here is Automotive News:
Jeep sales fell for a second consecutive month, falling 6.7 percent. Grand Cherokee and Patriot sales were up, but couldn’t offset declines from the Cherokee, Compass, Renegade and Wrangler.
Fiat brand sales dropped 24 percent in the month. The 500 minicar was the brand’s best-seller in the month, and its 1,276 sales was just 71 units shy of outselling the brand’s other three vehicles combined.
Ram was FCA’s only bright spot in October, with sales climbing 12 percent. Sales of its pickups climbed 6.9 percent in October, while sales of its large ProMaster commercial vans nearly doubled and sales of its smaller ProMaster City van rose 14 percent.
Yeah, people are still buying the Patriot. I’m going back to bed.
4th Gear: People Love That Lexus NX
Toyota and its luxury division were down in October, but their small luxury crossover the NX is a hit. One more from Automotive News:
Lexus car sales were down mostly across the board with the exception of the GS sedan, which rose 7.8 percent. IS sedan sales fell 15 percent in October and sales of the bread-and-butter ES slipped 23 percent.
Sales of the Lexus NX crossover rose 26 percent while the bigger RX posted just a 0.3 percent gain. The big truck-based LX more than doubled sales last month but on very low volume.
“Lexus luxury utility vehicles lead sales volume for the brand, with both the NX and the LUV lineup seeing their best-ever Octobers,” said Jeff Bracken, Lexus Division group vice president and general manager.
5th Gear: Toyota And Mazda Could Team Up For A Lot More
Right now gigantic Toyota and tiny but awesome Mazda are tied up making compact cars together and sharing Toyota’s hybrid tech. That could change to a lot more things, like connected and autonomous cars, and it speaks to the larger trend of consolidation and cooperation across the industry. From Bloomberg:
Toyota Motor Corp. and Mazda Motor Corp. have discussed electric vehicles and connected cars as part of at least 10 potential areas for cooperation, the latest indication Japan’s automakers will join forces to cope with technological trends shaking up their industry.
Mazda is having broad discussions with Toyota, Akira Marumoto, Mazda’s executive vice president, told reporters today at a briefing in Tokyo. He declined to provide more detail on talks the automakers have had since last year on expanding ties beyond their sharing of hybrid systems and compact car production in Mexico.
More joint work between Toyota and Mazda would add to a trend of Japan’s largest automakers consolidating the industry by way of acquisition or alliance. Toyota bought out the rest of minicar maker Daihatsu Motor Co. earlier this year and is exploring a research and development partnership with Suzuki Motor Corp. A fuel economy scandal also led Nissan Motor Co. to buy a stake in Mitsubishi Motors Corp. in a transaction completed last month.
Neutral: Is The Chinese Shift A Good Move For Volvo?
And what does it mean for consumers, if anything?