AD #1380 – Recalls Hurt OEMs, BMW Plans Mexico Plant, Wanxiang Goes All In With Fisker

May 19th, 2014 at 11:46am

Runtime: 7:55

- Record Recalls Hurt OEMs
- EU Carmakers Ahead of Emission Schedule
- JCI Spins Off Interiors Unit
- Toyota Verso-S Updates
- No Plans for Mercedes Subcompact
- BMW Plans Mexico Plant
- Wanxiang Goes All In with Fisker
- How GM Benefits From Motorsports

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Hello and thanks for joining us for a brand new week of Autoline Daily.

RECORD RECALLS HURT OEMS
General Motors was hit by a $35 million fine from NHTSA for failing to report its ignition switch recall in a timely manner. GM took a $1.3 billion charge in the first quarter, and will take a $200 million charge in the second quarter and so this is starting to get very expensive. But it’s not just impacting GM. Almost all automakers in the American market are issuing record numbers of recalls. For example, Ford took a $400 million charge in the first quarter as well. And FCA’s Sergio Marchionne says that the current recall rate is “not sustainable for anybody.” What’s happening is that all these automakers are trying to avoid what GM got caught up in, so they’re recalling cars that otherwise would have been fixed through service actions.

EU CARMAKERS AHEAD OF SCHEDULE
Automakers in Europe are ahead of schedule in meeting CO2 emission targets. The European Environment Agency says CO2 emissions from new cars sold in Europe in 2013 averaged 127 grams per kilometer, which is below the 2015 target of 130 g/km. The agency did not break out what individual carmakers achieved but it will release a final report this fall.

JCI SPINS OFF INTERIORS UNIT
In a somewhat shocking move, Johnson Controls is spinning off its automotive interiors unit into a joint venture with China’s Yanfeng Automotive Trim Systems. Yanfeng is a subsidiary of Huayu Automotive Systems which is owned by SAIC. Yanfeng will control 70% of the new company while JCI will own the rest. The headquarters will be located in Shanghai with engineering and R&D centers located in the U.S., China, Europe, India and Japan. The transaction is expected to be completed in the first half of 2015. JCI has been one of the biggest and best interior suppliers in the global industry and its a shock to see it spinning off what had been its core business.

TOYOTA VERSO-S
Toyota first introduced its Verso-S, which is based on the Yaris platform, to the European market three years ago and now it’s time for a mid-cycle update. It gets what Toyota calls its Keen Look design language, which includes new front and rear fascias. The headlights have been upgraded with projector technology and LED DRL’s and the rear taillights are now also LEDs. A rear-view camera is standard, a new set of 16-inch wheels are available as is the Toyota Touch 2 infotainment and navigation system. The Verso-S will hit European showrooms this summer.

NO PLANS FOR MERCEDES SUBCOMPACT
Luxury automakers Audi and BMW are already in the subcompact segment, but Mercedes hasn’t entered the field… and it won’t be doing so, either. CEO Dieter Zetsche says that it would be difficult for the brand to be successful there, so why even try? But he says the Smart brand could move up size, much like BMW did with its Mini brand, although that decision has yet to be made.

BMW PLANS MEXICO PLANT
And speaking of BMW, it hopes to gain on Daimler’s sales lead by increasing its production with a new plant in Mexico. This would be the automaker’s first plant in the country and would initially produce as many as 100,000 vehicles a year. The announcement is expected to be made official in July.

WANXIANG GOES ALL IN WITH FISKER
Look out Tesla because here comes Fisker. Lu Guanqiu, the Chinese billionaire who bought the rights to the failed plug-in hybrid maker and who is the owner of China’s largest auto parts manufacturer, Wanxiang says “I’ll put every cent that Wanxiang earns into making electric vehicles… I’ll burn as much cash as it takes to succeed, or until Wanxiang goes bust.” Those are pretty strong words and It’ll be interesting to see if Mr. Guanqiu really puts his money where his mouth is.

Coming up next, GM’s racing chief explains what the company gets out of competing in motorsports.

AUTOLINE AFTER HOURS
On last week’s Autoline After Hours we were joined by Jim Campbell, who’s in charge of GM’s performance and motorsports division. In the following clip Jim explains the benefits the company gets from participating in motorsports.

(Today’s AAH preview is only available in the video version of the show.)

Boy did I pick the wrong week to go on vacation because not only was there a lot of great info about GM’s racing and performance efforts, I missed out on seeing the Corvette C7-R that Jim brought to the studio. So if you haven’t seen that show yet, you can watch it at our website, Autoline.tv, watch it on YouTube, just search for the Autoline Network, or you can download the podcast from iTunes.

And that wraps up today’s report. Thanks for tuning in and please join us again tomorrow.

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30 Comments to “AD #1380 – Recalls Hurt OEMs, BMW Plans Mexico Plant, Wanxiang Goes All In With Fisker”

  1. Mike Says:

    Sometimes the “bean counters” come in for a lot of criticism when it comes to business decisions. Maybe in the case of JCI they are not only right, but really represent an industry trend. Suppliers have been beaten to death with incessant cost downs. If you look at the supplier margins (5-7%) you wonder why anyone would work so hard for almost no return? Then too, all it takes is a disgruntled QC person to reject a shipment to change that plus nothing to a minus a whole lot type of returns.

  2. M360 Says:

    John – Thank you for that report on the Corvette C7-R. It is not obvious what GM gets out of producing the Corvette when you look at all the design and development costs for such a low volume, production product.

  3. Bradley Says:

    More Yaris News…

    I filled the tank on my vintage 2009 Yaris Sedan this AM, and I received 43 mpg last week. All without even trying.

    Over the weekend I received my first recall notice for my Yaris. Toyota doesn’t have a fix yet, but the recall states that if either front seat gets re-positioned frequently there is a chance the locking mechanism may not work correctly in a crash.

    I can count on my fingers the number of times I have re positioned the seat. As my wife refuses to drive manual transmission and I am the only driver. Therefore, I think I am ok until they get an official fix.

  4. G.A.Branigan Says:

    Well my weekend was spent looking for a new vehicle for the wife.She pretty much hates her 08 crv and wants something more efficient.She really likes just two cars,the Nissan Versa Note SV,and the Kia Soul,which she just brought home and I have to go test drive it….sigh.I’ll let you guys know which one she decides on.

  5. pedro fernandez Says:

    GA for mileage I can vouch for the Nissan CVT I was surprised by the mpg’s I got with my recent time with a Sentra, the Altima, not so much, but that is a heavier, more substantial car and most of the driving was around town, even then I got in the mid to upper 20′s

  6. pedro fernandez Says:

    Bradley, I wonder what made you go for the Yaris sedan and not the hatch which is a more useful car for not much more money.

  7. C - Tech Says:

    Interesting information about what GM gets out of racing and the Corvette program. Given the address from FCA about Dodge and SRT it will be interesting to see if they make that kind of commitment.

  8. Bradley Says:

    #6

    The Sedan is longer. I am not sure if the extra space is just in the trunk or backseat too. I know 6′ can sit back there in decent comfort (for an eco car). For 2009, only the sedan had the option for a manual transmission.

  9. pedro fernandez Says:

    Yes the sedan is longer due to its 4 doors, the new 5 door hatch is the same size as the sedan, which I’m surprised Toyota stopped selling since it did sell more than the hatch version.

  10. Danny Turnpaugh Says:

    I’m still waiting for jeep to put a trailer hitch on the jeep liberty I own, checked a few weeks ago, same story as last January, we will notify you when the parts are in.

  11. Bradley Says:

    #9

    IMO dropping the sedan Yaris from the United States is a way to guide “sedan” buyers to a another Toyota Small car. Those buyers that truly want an inexpensive car won’t car if its a hatchback.

    I don’t mind hatchbacks, but the 2009 5-Door looked a little odd, where the sedan actual looks more like a car, just small.

    I didn’t know about the current Yaris in 5-Door being the same length as the sedan.

  12. pedro fernandez Says:

    Bradley, there are plenty of other small sedans to choose from besides Toyota, I think it’s no coincidence that Yaris sales have dropped quite a bit since they eliminated the sedan, even though the new generation Yaris is better than the previous one.

  13. cwolf Says:

    If all OEM’s are hurting over the growing number of recalls it’s their own fault. That’s what they get when you outsource abroad and forfeit QC and proper testing before launch.

  14. Bradley Says:

    #12

    Yea, good point.

    The Wikipedia entry is a bit broken for the Yaris(Belta), but it looks like they stopped producing it. Maybe globally the sedan was dwarfed in sales.

  15. cwolf Says:

    I visited a Ford engr. who was test driving a new Linc. MKC. This is one nice vehicle that could give Linc. a new start! Yes, it has Escape underpinnings, but it is definitely not an Escape. The interior is well planned from my viewing. It’s also a bit wider and lower than the Escape. I was told the std. 2.0 was the same as the ford, but this one had a 2.3l, in place of the 6 cyl. My friend had many praises for the MKC, but shared my view that the column stalks were a parts bit item and very out of sort for a primium car. I was told, with the 2.3, this thing was about $7K over the Escape! It better be that much better or Linc. won’t last much longer.

  16. pedro fernandez Says:

    With the Escape’ recent exemplary reliability record I’m sure buyers will be lined up at their local Lincoln dealer to get one of them. The coffee at the Lincoln service dept is better than Ford’s

  17. C - Tech Says:

    This is going to be a great sales battle, Lincoln MKC vs Buick Encore. A battle of the lightweight luxury 4×4′s

  18. G.A.Branigan Says:

    @ Pedro: In regards to the Versa Note SV,I’ve never had a problem with any cvt so that really didn’t figure into it.But as a whole,the versa being the same price as the Soul,we bought the Soul.Infinitely better in all aspects except the mpg,which is a bit less with the Soul.I took the Soul out this morning for about a 40 minute test drive,both hwy and around town,then out to some less then perfect roads.After that drive it was a no brainer between the two.The fit and finish inside and out was very very good.Hammered it on the hwy into passing gear and you could barely hear the engine.On the Versa,the engine buzz/noise was always present.And I got a veterans discount too.Overall,a good experience with very little dancing.

  19. Kit Gerhart Says:

    Speaking of small cars, I just drove my MINI from Florida to Indiana. It’s a real gas hog compared to my Prius, averaging about 36 mpg on mostly mid grade. They say to use premium. For the same trip, at about the same speed, 75-77 on the interstate, I get about 44 mpg with the Prius.

    Except for being kind of noisy, and the stiff ride being not fun in a few stretches of really crappy road, the car was comfortable for a long trip. The seats fit me well, and I can get a very good driving position with the seat and wheel adjustments available.

    The one section of the trip where I would much rather have had the Prius, or any automatic, was a ~2 hour stretch of !-65 in Kentucky, for “construction.” There was only minimal construction going on, but they had the one one lane open in each direction. I’ll be checking on ways to get from Florida to central Indiana without going through Kentucky.

  20. Kit Gerhart Says:

    18,
    I always liked the looks of the Soul. It’s my second favorite “box on wheels,” after the first generation Scion xB. I’m sure the Soul is a much better car than the xB, though, except maybe city mpg

    G.A., which engine/transmission did you get?

  21. pedro fernandez Says:

    GA I think the Sentra is more inline with the Soul, the Versa is too small.

  22. cwolf Says:

    C-Tech,
    There is no comparison between the Buick and MKC. The Linc. excels in all catagories, esp the power plant. The Buick interior is above par, but the Linc. is layed out much, much better. I’ve driven the Enclave and like it, yet though close to the same price, the Linc. finally has a model to compete with the competition. Ya gotta see this thing; It’s really nice!

  23. cwolf Says:

    You can say what you want about the Escape and the many recalls, but the numbers abound because people like it and the recalls do not hinder the reliability factor. Even with the recalls, Toyo should be so lucky to have an equal as desirable, but they don’t!

  24. Kit Gerhart Says:

    23,
    Isn’t Rav-4 a lot more desirable than Escape, because it does’t have myford touch? Yeah, I know some some people like MFT, or at least don’t mind it.

  25. pedro fernandez Says:

    C wolf depends where you are, my friend, around these parts, it is rare to see an Escape anywhere, while CRV’s and RAV4′s are all over the place, this is a microcosm of California where imports rule the roost. I must have seen well over a hundred new Corollas since they came out.

  26. cwolf Says:

    Around here you can’t blink twice without seeing an Escape. I like the RAV4 and its merits, but the fuel economy is lacking and noise levels are greater, from those I spoke with. Most of these smaller SUV’s are on par with one another for the most part. There are just too many Ford and GM plants in these woods to find other makes in any numbers. However, most of the professional people around me park a Lexus,BMW or Porsche SUV in there driveway. Probably leased.

  27. G.A.Branigan Says:

    @ Kit: It has the 2.0L IL4 and the 6 spd automatic.Although smaller then the crv,it’s a lot more comfortable for both of us,the rare times I will be in it.I still likes my nox ;}>

  28. Anthony Smith Says:

    Yeah. If your spending that much money it should be safe and reliable. OEM $ over morals.

  29. Sara Says:

    At least the Toyotas are not going bad still.

  30. rick Says:

    NAFTA ross was right hear that giant sucking sound ? HEAR IT!