On today’s show… did you know that NAFTA has more car sales than China? Honda is experimenting with an engine with different displacements and why the FCA-Google deal has been blown all out of proportion. All that and more coming right up on Autoline Daily.

This is Autoline Daily, the show where we’re not just car enthusiasts, we’re enthusiasts for the automotive industry.

DEEP DISCOUNTS PROP UP CHINA SALES
Despite all kinds of stories that the economy in China is slowing down, car sales were up strong in April. Sales hit 1.72 million light vehicles, with SUVs up a whopping 36%, while passenger cars were down 4.5%. But in a warning sign for later in the year, the strong sales are coming mainly from deep discounting, not organic growth. In addition to government incentives, dealers are discounting cars by an average of 18%. Bloomberg reports that the Volkswagen Jetta and Polo and Ford Fiesta are discounted by 35%. And all this helps explain why about three quarters of car dealers in China are not profitable. Here’s my Autoline Insight. The Chinese car market is setting itself up for a major correction. The only thing those incentives are doing are pulling sales forward and hastening the day when many dealers go out of business. Remember, you heard it here first. Look for car sales to start dropping in China, probably before the year is out, unless the government resorts to even more incentives.

NAFTA BIGGER THAN CHINA
By the way, did you know that the NAFTA market is actually bigger than the Chinese market? While there were 1.7 million light vehicles sold in China last month, there were 1.8 million sold in NAFTA. I think this is a fair comparison. In the automotive industry automakers and suppliers typically count NAFTA as one market since parts, components and assembled vehicles flow freely between the United States, Canada and Mexico. By the way, the NAFTA market generates far more revenue and profits than the Chinese market. It’s important to keep this perspective because NAFTA offers just as much scale as China does, meaning it’s far more competitive than a lot of people realize.

Still to come, Honda is experimenting with an engine that uses different displacements.

MULTI-DISPLACEMENT ENGINE
We’ve highlighted a number of ways recently in which automakers and suppliers believe there are still big efficiency gains to be had from internal combustion engines. And now Honda is taking a fresh approach. Our colleagues at Autoblog uncovered that the automaker filed a patent for a engine with different cylinder displacements. The bore of the cylinders would be the same. The difference comes from how long the crankshaft throw is, or how far the piston travels in the cylinder. The idea is to optimize cylinder deactivation. The different displacements allow the engine to deliver more power or more efficiency depending on which cylinders are shut down.

WHICH ONE OF THESE IS NOT LIKE THE OTHER?
We knew the EV startups Faraday Future and LeEco are backed by the same Chinese billionaire. But now we find out the two companies are much closer than what we’ve been led to believe. Wards reports a Faraday executive told them “actually, we are the same company.” The two are cooperating on engineering, marketing and Internet connectivity and will even share a variable-platform architecture developed by Faraday. LeEco will develop its car for the mass market, while Faraday will focus on the luxury segment.

LEXUS TURNS TO THE MOTOR CITY
Usually you think of California when it comes to Lexus. But the company is invading the home turf of the domestic automakers and is filming a new commercial in downtown Detroit. The Detroit Free Press reports the commercial promotes the company’s involvement in the IMSA Weather Tech SportsCar Championship and other motorsports events. The ad features a RC F GT3 racecar and the car it’s based on: the RC 350. Detroit is starting to gain international attention as a gritty city that’s starting to make a comeback, and maybe Lexus feels this gives the RC some street cred.

Coming up next, why the deal between FCA and Google to make an autonomous minivan is not the big deal it’s been made out to be.

VOLVO OFFERS PIZZA-LIKE GUARANTEE
Last year Volvo launched its In-car Delivery service, which allows owners to shop online and have items delivered right to their car. The delivery person is given a one-time digital key to access the vehicle for drop-off. And now Volvo teamed up with Swedish company urb-it to expand the service. It’s essentially the same but now the company guarantees your purchase will be delivered to your car within two hours or delivery is free. It also allows you to choose your delivery person and track the process. Volvo is doing a trial run in Stockholm and plans to expand it to other cities in Europe, once urb-it starts operations in those locations.

GOOGLE & FCA DEAL BLOWN OUT OF PROPORTION
OK, here’s the part of the show where I’ve got something to say about developments in the industry. Today let’s look at that deal between Fiat-Chrysler and Google. It’s good to hear that the two companies are working together to develop an autonomous minivan. But honestly, this deal has been blown way out of proportion. Automakers regularly sign agreements with suppliers to develop new technology. But usually it’s kept quiet so the competition doesn’t know what they’re up to. But then FCA let it leak out that it will be working with Google. It made headlines around the world. I’ve never seen an automaker announce a development project with a supplier before. If FCA had announced it was developing autonomous technology with Bosch or Continental or Delphi, or some other supplier it would have never made the news. So we had massive coverage on something that kind of happens every day. Like I said, it’s good that FCA and Google are working together, but this is not as big a deal as it’s been made out to be. And when you hear announcements like this it makes you think it’s more about goosing the stock price than anything else.

Anyway, that’s how I see it. And that brings us to the end of today’s report. Remember, we’ll be right back here again tomorrow.