AD #1806 – Why Takata Airbags Blow Up, Ride Sharing Won’t Hurt Car Sales, PSA Looking for a Merger?
February 24th, 2016 at 11:36am
Runtime: 6:18
To watch this episode on YouTube click here.
- Britain to Exit European Union?
- Root Cause of Takata Airbags Found
- SEAT App Controls Household Items
- 2017 Acura MDX Gets a Fresh Face
- PSA Turns the Corner
- Study Says Car Sharing Won’t Hurt Car Sales
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On today’s show… investigators finally find the root cause of Takata’s exploding airbags, a new study says ride sharing won’t cut down car sales and PSA is recovering faster than expected. All that and more coming right up on Autoline Daily.
This is Autoline Daily for February 24th, 2016.
SHOULD I STAY OR SHOULD I GO?
No doubt you’ve heard all the news that Britain will vote this summer on whether or not to drop out of the European Union. Well Ford and Nissan have made it perfectly clear they want Britain to stay in. Both automakers have plants in Britain and worry that those vehicles could face higher export costs to the continent if there is a Brexit. The CFO of Daimler also came out in favor of Britain remaining part of the EU even though it does not build cars in the country. But we have not heard other automakers building cars in England take a stand on the issue. That includes General Motors, whose Opel subsidiary makes Vauxhall branded vehicles, nor does it include Toyota and BMW, which makes Roll-Royces there.
WHY TAKATA AIRBAGS BLOW UP
Last year a group of 10 automakers hired aerospace company Orbital ATK to investigate the root cause of Takata’s defective airbags. And they’ve just identified the problem. The study found that the bags ruptured because moisture could build up in inflators with ammonium nitrate because they lacked water-absorbing chemicals. Poor design and long exposure in high humidity climates with large differences between day and nighttime temperatures also contributed to the ruptures. Nearly 30 million vehicles have been recalled but they might need to be fixed again if NHTSA decides the ammonium nitrate propellant isn’t safe. But with the new findings the number of recalls could approach 90 million vehicles.
And we’ll be back to show you how Acura has redesigned the MDX.
DON’T WORRY, BE APP-Y
A number of automakers have come out with apps that allow you lock or unlock the car or start the engine with your smartphone. But SEAT, which is part of VW, and Accenture just came out with a concept that takes it a step further. Their app is able to display fuel and oil levels while the car is in use or when it’s parked. Maintenance warnings are sent to the phone along with info about the alert. Drivers can also receive messages from the dealer to remind them about any service that needs to be taken care of. The app even monitors driving habits to provide tips for better performance or improved fuel economy. And finally it allows customers to remotely control household appliances. SEAT is currently testing the app, to see if it’s something customers would enjoy.
ACURA MDX GETS A FRESH FACE
Even though sales of utility vehicles are on fire, Acura’s MDX actually saw its sales fall by more than 13% over the last 6-months in the U.S. But the brand will be showing off a redesigned version at next month’s New York Auto Show. As you can see it looks like the MDX will get more than just mild refresh, but it will also get added comfort and convenience features, and new powertrain technology. The MDX will continue to be built at the company’s Alabama plant and in 2017 it will also be added to its East Liberty, Ohio plant.
Coming up next, now that Peugeot has fixed its finances, could it be looking for a merger?.
PSA TURNS THE CORNER
Good news for Peugeot and Citroen. Its parent company PSA is recovering faster than expected. PSA sold over 1.8 million vehicles globally last year, up nearly 6%. Peugeot accounted for over a million of those sales, Citroen accounted for over 700,000. The company’s revenues were over 54 billion euros, up nearly 6%, it posted an operating profit of nearly 2 billion euros, and a net profit of nearly a billion euros. In 2014 PSA posted a net loss of nearly a billion euros, so that’s quite a turnaround. Here’s our Autoline Insight. Back a year or two ago when there was talk of PSA merging with FCA, Carlos Tavares, PSA’s chairman said it was not the right time. The company was bleeding red ink. We felt Tavares was worried he would have to negotiate from a position of weakness. Now that the company is fully profitable, we wonder if a merger might be back on the table?
| PSA 2015 Earnings | ||
|---|---|---|
| Sales | 1.86 Million | +5.9% |
| Revenue | €54.6 Billion | +5.9% |
| Oper. Profit | €1.97 Billion | +1,492% |
| Net Profit | €951 Million | —- |
CAR SHARING WON’T HURT CAR SALES
We’ve speculated that ride-sharing services like ZipCar and Uber have the potential to dramatically disrupt car sales because if fewer people are driving, less cars will be sold. But a new study from the Boston Consulting Group says that won’t be the case. By 2021, the report estimates car sharing will decrease global sales by about 792,000 vehicles, a big number but only 1% of projected sales. While ride sharing won’t disrupt car sales, the study projects big growth in the segment. Currently those services generate 650 million euros with just under 6 million users globally. By 2021, it estimates 35 million users in Asia, Europe and North America and revenues of 4.7 billion euros.
| Ride Sharing Users | ||
|---|---|---|
| Current | 2021 | |
| Asia-Pacific | 2.3 Million | 15 Million |
| Europe | 2.1 Million | 14 Million |
| N. America | 1.5 Million | 6 Million |
| Revenue | €650 Million | €4.7 Billion |
But that wraps up today’s show, thanks for watching and join us again tomorrow for the latest news in the automotive industry.
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Comments (20)
February 24th, 2016 at 12:06 pm
“BMW, which makes Roll-Royces there.”
BMW makes a lot more MINI’s in the UK.
February 24th, 2016 at 12:08 pm
“BMW, which makes Roll-Royces there.”
BMW makes a lot more MINI’s in the UK.
February 24th, 2016 at 12:18 pm
The Boston study seems much more realistic to me as I said before I think ride sharing will affect the cab industry and car rental companies more than have huge declines in auto sales.
I believe that many people will use services like Uber when they are traveling and in place of catching a cab or car rental. They won’t run out and sell their car.
However the majority of people who already own a car and use them enough to justify a purchase will continue to do so. When the price point of a new car exceeds the cost to rent or share a car that’s when sales will decline. Like when a business decides it makes more sense to own a plane vs just buying their employees tickets.
February 24th, 2016 at 12:40 pm
BMW is contracting the construction of the Mini. My wife’s was made in the Born, Netherlands.
February 24th, 2016 at 12:40 pm
RE: Brexit. Your map of Britain included Ireland?? I seem to recall Ireland exited Britain….. almost 100 years ago.
February 24th, 2016 at 12:51 pm
3 My Mini was made in Oxford, UK. It’s a base 2010 “hardtop.” What model is yours?
February 24th, 2016 at 12:52 pm
4 Norther Ireland is part of the UK. Republic of ireland is not.
February 24th, 2016 at 1:11 pm
I believe that the new Honda Pilot is so good that it has been cannibalizing Acura MDX sales. For the price of a base AWD MDX you can get a Pilot Touring Elite and only have to purchase regular gasoline to power it. I want to give a “Great Job!” shout out to the Honda Pilot Team who worked so hard on bring us the new 2016 Honda Pilot. I currently own two Honda Pilots myself (His and Hers).
February 24th, 2016 at 1:39 pm
As an UBER driver, I find that most of the riders have vehicles but chose not to use them for a reason. The majority of the time it because drinking will be involved, bad weather or not wanting to pay huge sums for parking.
I agree with others that the cab industry will be the only group directly affected.
February 24th, 2016 at 1:45 pm
I agree with Rob; most of the people I know that use ride services do so when they have been drinking or plan to go out and have adult beverages. They would never give up their cars, but it’s nice to not worry about the driving on a random weekend night (sorry cabs).
I also want to thank Autoline for saving Honda some money, and more so, saving me some time & headache. After hearing that no one knew WHY the Takata airbags were failing, we decided to ignore all the recall notices for our Honda until they figured it out. Glad to hear the news today. How long should we give them to come up with a REAL fix now that they know the problem?
February 24th, 2016 at 1:49 pm
8 I never quite understood Honda’s tuning Acura engines for premium, gaining little enough power that almost no one would notice the difference. I guess it must be to make the Acura more “premium,” like a Benz or BMW which all need premium.
I like Cadillac’s approach better, tuning for regular, except for the V models, where absolute performance is the goal.
February 24th, 2016 at 1:50 pm
Sorry, Barry, I started typing before your comment posted. You’ve nailed it! Cabs will feel the biggest loss unless they somehow jump onboard the technology train.
February 24th, 2016 at 1:54 pm
The only times I’ve used taxis in the last two years, were to get to the cruise port about 3.5 miles away. The taxi costs too much, about $20 each way, but about half as much as parking at the port. I hear that Uber operates here, or will soon, so I may try it sometime, unless you have to pay to load the app.
February 24th, 2016 at 2:12 pm
Caught my firsts Autoline blooper
… That short, little video clip played during the opener over which the Takata airbag news was read is playing in reverse (everybody was walking backwards).
Now on to other things. I’m really liking that concept sketch of the new MDX.
Regarding ride sharing, those findings coincide nicely with my own (second-hand) experience with Uber. My wife is a hair stylist and has a client who uses Uber (but only occasionally). Each time this client uses Uber to make her hair appointment, she is late. And I’m not talking 5-min late. Twice, Uber has made her more than 30-min late. Enough that my wife had to cancel the clients appointments.
I’m sure this experience is far from the norm, but it’s got me soured on it already.
February 24th, 2016 at 2:56 pm
I suspect there might be a price war in the future and cabs will have to get on-board with their own app for convenience and be competitively priced. One thing will never compete with is operating outside the major cities. But they could dominate the inner city with an app and similar pricing.
February 24th, 2016 at 2:59 pm
Sorry Should have said one thing cabs will not compete with is outside major cities.
February 24th, 2016 at 3:15 pm
#6 My Mini is a base hard top with the 3 cylinder turbo charged motor. Great build quality, nice mpg’s and has plenty of energy. I love the thing, but can’t get it our of my wife’s hands.
February 24th, 2016 at 5:13 pm
I doubt Honda will let the new Pilot cannibalize MDX sales. First, they make more profits on the MDX, so production priorities will favor Acura dealer inventory. Second, everyone needs to quite gushing over the Pilot – it is no more than a “catch-up” effort and does nothing better than its competitors.
February 24th, 2016 at 5:25 pm
17 I knew Contryman and Paceman were being built by Magna/Stehr in Austria, but I didn’t know about the Dutch deal. I searched it, and found that the Magna deal is ending, and some “big” Mini production is going back to Oxford, and some to the Dutch plant that is already building base hardtops like yours. Articles I found say that BMW employment in the UK is staying the same, and the Netherlands contract is to increase capacity.
February 24th, 2016 at 5:27 pm
17 I drove a car like yours, and really liked the new powertrain, and quieter cabin, but not enough to replace my mint condition, low mileage 2010.