The auto industry is returning to the well, GM’s contempt for its dealers is evident, and Japan. All of this and more in The morning shift for April 6, 2021.
1st gear: automakers want Joe Biden’s help
The automakers’ relationship with the US federal government is generally quite strained because of regulatory powers of the federal government. Çwhen it comes to government grants that will help support (very profitable) auto industry, however, the auto industry’s message is always clear: Let’s take this.
O global chip shortage it gave automakers another opportunity to call for help.
From Reuters:
The U.S. Department of Commerce is expected to dedicate part of the funding to a bill to expand U.S. semiconductor production to the needs of the automotive sector, the Alliance for Auto Innovation said in written responses to a government-initiated review.
US President Joe Biden in February ordered several actions by the federal agency to deal with the chip crisis and is also seeking $ 37 billion in funding for legislation to boost chip manufacturing in the United States.
Some funding should “be used to build new capacity that will support the auto industry and mitigate the risks to the automotive supply chain as evidenced by the current chip shortage,” wrote the group’s chief executive, John Bozzella.
The group said the US government could specify “a certain percentage – which is reasonably based on the projected needs of the auto industry – to be allocated to facilities that will support the production of automotive grade chips in some way.”
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Alliance for Automotive Innovation is the largest commercial group in the automotive industry in DC, representing virtually all major automakers. ÇWhen he speaks, you can be sure that he is hearing from the horse’s mouth.
2nd gear: Ferrari is falling
This story is from Sunday, so my apologies for the delay, but it is still remarkable. Bloomberg reports This one Flying Ferrari in fact, it is not going very well, and it seems that it is because investors today are all interested in EVs. Ferrari is at the other end of that spectrum, as it said in November that would never be 100 percent electric.
The Italian supercar maker, with the best performance on the Stoxx 600 Automobiles & Parts index in each of the last three years, has fallen 5.6% since the beginning of 2021 and has just suffered its worst quarter since the end of 2018. This is a striking contrast to strong gains from rivals such as Volkswagen AG, owner of luxury brands Porsche, Bugatti and Lamborghini.
Although competitors, especially VW, have gained momentum with the uproar over electric vehicles, the company known for its prancing horse logo has faced setbacks, including a lower than expected profit forecast. Without a clear EV strategy, Ferrari was also hampered by an unsolved search for a new chief executive and a broader rotation of so-called growth names for a company that some investors consider more like a luxury piece.
“Stocks have become very expensive and the profit momentum is waning,” said Arndt Ellinghorst, an analyst at Sanford C. Bernstein, also noting the uncertainty about the CEO’s situation and a “lack of EV vision”.
The story goes on, noting that Ferrari is not really in the same category as a company like Volkswagen, since Ferraris are sold basically only to the idle rich. That one helps explain Ferrari’s strong performance during the pandemic, as the rich got richer. Still, it’s funny to me that there are apparently investors out there who look at Ferrari and are judging it based on their strategy (or lack thereof) for EVs.
3rd gear: the jeep apparently convinced itself that it finally solved Japan
Jeep expects to sell more than 15,000 cars in Japan this year, or five percent more than last year. Jeep says it means you may have turned a corner in Japan. This is presumably based in part on Jeep’s incredible confidence at the Gladiator selling there.
From Bloomberg:
Buyers in Japan often opt for smaller cars with high fuel efficiency, one of the reasons why Ford Motor Co. ended up leaving the country in 2016. But Jeep has managed to maintain a loyal customer base. Now, in the midst of the coronavirus pandemic, more young people are becoming interested in vehicles, attracted by their ability to handle all types of outdoor terrain, which helps to avoid public transport.
“We made efforts to adapt to the Japanese market” by launching cars with a right-hand drive, unlike General Motors and Ford, [Hitoshi Ushikubo, the head of sales at Fiat Chrysler Japan] said. “Young people are looking for cars that will allow them to show a part of their personality,” he said, adding that a strong presence on social networks also helped the brand.
Almost 4.6 million new cars were sold in Japan last year, which means that 15,000 jeeps would account for about 0.3 percent of all new car sales in Japan if 2021 remains at the pace of 2020, or even less than 0.3 percent, a sales of new cars in Japan in 2021 are likely to be higher. Still, many automakers make a lot of money by being a niche in several markets, just ask Volvo. Or Tesla.
4th gear: Subaru will leave a factory inactive in Japan
The plant makes Foresters and Legacys. O damn chip shortage strikes again.
From Reuters:
Subaru will restart all production lines at the Yajima plant in Gunma prefecture on May 10, the company said in a statement on Monday. He added that the impact on the group’s financial results is uncertain. Some operations will resume on April 21, the company said, adding that April 28 to May 9 is a holiday previously scheduled for the plant.
Some 10,000 cars are said to have been affected, which is, to say the least, minimal, although I am sure the Subaru people are not happy.
5th gear: GM is lessening dealer focus with the Hummer EV
Dealers, as we all know, I really don’t have a reason to exist outside state franchise laws, and making sure that lobbyists have their mouths fed. Carmakers know this as well as anyone, although Tesla’s direct sales promotion has accelerated what could be the beginning of the end for dealers as we know them.
The most recent evidence is how GMC is going to sell the Hummer EV. If GM thought the dealership model was working, it would probably simply sell the Hummer EV through dealerships, as it does with its other cars. But you’re not doing that. From the Detroit Free Press:
Consumers who wish to purchase the new GMC Hummer EV pickup or SUV will be doing so online with minimal dealer involvement, directly from General Motors, for at least the next two years.
After that, the retail shopping experience will “evolve” as GM launches more electric vehicles.
The vehicles will eventually arrive at showrooms at GMC dealerships, but even so, the buying process will change, said Phil Brook, vice president of marketing for Buick and GMC.
“There is no doubt about it,” Brook told the Free Press, although he declined to provide further details.
“This vehicle allows us to take a different approach,” said Brook. “The market is evolving and changing and we are changing, but we are working through resellers. We see our resellers as a great competitive advantage for us. ”
It is not hard to imagine this GMC vice president bursting out laughing after saying that GM would do everything possible to avoid using dealers to sell the Hummer EV, insisting then that dealers are important to GM.
Reverse: 2001
Science fiction films have always grossly overestimated how quickly technology would advance, and for decades. I’m not even sure 3001: A Space Odyssey would be accurate.
Neutral: how are you?
I received my first dose of vax on Saturday in Brooklyn. It may have been the biggest anticlimax of my life; the shot lasted about two seconds and was so fast that at first I thought the nurse hadn’t pressed the plunger or anything. Then my left arm started to look like a ton of bricks.
The second round is three weeks from now in Harlem, with two weeks later, May 8th to be more precise, the day when I will be considered fully vaccinated, according to the guidelines. After that: at least nine margaritas in Atlantic City.