AD #2326 – Tesla Misses Model 3 Goals Again, BMW Jumps on Subscription Bandwagon, Sonic & Impala Going Away
April 5th, 2018 at 11:23am
Runtime: 6:08
0:29 Tesla Misses Model 3 Production Goal, Again
1:00 Trade War Brewing with China?
1:59 BMW Jumps on Subscription Bandwagon
2:51 Sonic & Impala on the Chopping Block
4:27 Russian Sales Starting to Rebound
5:14 FCA to Spin Off Magneti Marelli
Visit our sponsors to thank them for their support of Autoline Daily: Bridgestone , Dow Automotive Systems and Lear Corporation.
On today’s show… Tesla misses its production goals yet again… the auto industry is caught in the cross hairs as Trump threatens a trade war with China… and what the heck is going on with all these subscription services? All that and more coming right up on Autoline Daily.
This is Autoline Daily the show for enthusiasts of the automotive industry.
TESLA MISSES MODEL 3 GOALS, AGAIN
Tesla missed its production goals for the Model 3, yet again. Elon Musk promised that the company would be building 2,500 Model 3s a week by the end of March, but it was only making 2,000. And even that number is suspect because it looks like Tesla put in a burst of activity to temporarily boost production, and it probably isn’t sustainable. Mr. Musk says he will now be sleeping in the factory to make sure production keeps growing and the stock jumped up nearly 20% on the news
TRADE WAR BREWING?
China threatened it will retaliate against the United States if President Trump carries through on the tariffs he wants to put on $50 billion worth of Chinese imports, including cars. China says it will put tariffs on $50 billion worth of U.S. imports, including cars. Analysts say this will freeze the plans that Chinese car companies have to start exporting to the U.S. But they also believe that the real reason why Trump Administration is doing this to get the Chinese to the negotiating table.
There is an important new trend emerging in the luxury segment and it seems like everyone is jumping on board, and that is coming up next.
BMW JUMPS ON SUBSCRIPTION BANDWAGON
First it was Cadillac. Then came Porsche. Then Volvo, Lincoln, and Mercedes-Benz followed suit. And now BMW is jumping on board. A new trend is emerging in the luxury segment: subscription services. These programs charge customers a monthly fee that typically includes the car payment, insurance, maintenance, and pickup and delivery. Some of them provide unlimited access to different cars in the brand’s lineup, depending on how much you pay. BMW’s pilot program, which launched yesterday in Nashville, costs between $2,000 and $3,700 a month. Here’s our Autoline Insight. Subscription services are a great way to get wealthy people to pay more every month. Why just lease them a car for $800 a month, when you can get them to pay two or three grand?
SONIC & IMPALA ON THE CHOPPING BLOCK
It looks like more passenger car casualties are right around the corner as consumers continue to choose crossovers and SUVs. The Wall Street Journal reports the Chevrolet Sonic could be gone before the year is out. Barely 30,000 Sonics were sold in the US market last year and sales are down more than 21% so far this year. The Chevy Impala is on the way out, too. Sales are down over 36% this year. Both vehicles are made in Michigan, the Sonic at Orion and the Impala in Hamtramck. We wonder what plans GM has to fill those plants once these models go away.
A programming note here. There will not be an Autoline After Hours this afternoon, due to vacation scheduling. But it will be back next week along with Paul Smith, the chief engineer on the new Jeep Cherokee, which just had a blow-out sales month. Sales shot up a staggering 57%. So if you have questions, shoot an email to viewermail@autoline.tv, then join John and Gary next Thursday for some of the best insights into how the auto industry designs and engineers new vehicles.
Coming up next, despite economic sanctions Russia’s car market is clawing its way back.
RUSSIA CLAWING ITS WAY BACK
After being slapped with sanctions, car sales are rebounding in Russia. According to the Association of European Businesses, automakers sold more than 157,000 passenger cars and light commercial vehicles in March, which is a 14% gain. And first quarter sales are up a whopping 21%. The top automakers are Lada, Kia, Hyundai, Renault and Toyota respectively. And the AEB expects the recovery to continue throughout the year. It’s forecasting sales will hit 1.75 million units, which is a 10% improvement over 2017. But that’s still 1 million cars lower than before economic sanctions were imposed on Russia for its invasion of Crimea.
FCA TO SPIN OFF IN-HOUSE SUPPLIER
FCA just got the official approval to spin off Magneti Marelli, it’s in-house supplier of electrical, lighting and powertrain components. Magneti Marelli has been in business since 1919, does nearly $10 billion in sales, and has 43,000 employees in 19 countries. FCA tried to sell the company to Samsung, but it wouldn’t pay enough money, so it’s getting spun off. Reportedly, Bain Capital and Tenneco are interested in buying the company after the spinoff.
And that wraps up today’s report, thanks for watching and please join us again tomorrow.
Thanks to our partner for embedding Autoline Daily on its website: WardsAuto.com
Share
Permalink
Comments (35)
April 5th, 2018 at 11:47 am
On the trade war it will probably get worse before it gets better but we have been on the losing end of that deal for years. China may not have had tariffs on American made vehicles but they required they have a % of labor and they restrict how many cars can be imported. For example when Cadillac was still making the DTS they could only export 2000 of them a year to china and once there they were dismantled and re-assembled just to have Chinese labor. Yet we allow them to just ship in as much as they can sell. So who really are the dumb ones in this trade deficit? Seems like they have protected themselves pretty well.
April 5th, 2018 at 11:54 am
I’m sorry to see the Impala go, but I understand their dropping it, given the sales. Now, anyone who wants one, will need to pay extra and get a Buick LaCrosse, unless it goes away too.
April 5th, 2018 at 11:56 am
Sean & John, I love the job you do with the reporting of automotive facts. However, I think it’s a bit misleading to use the mainstream media’s terminology of “trade war with China”.
All Trump is doing is trying to level the playing field with China. Most people simply don’t realize that the China is currently shafting the U.S. with a whopping 25% tariff on the cars we sell over there. While our tariff on their auto bought by the good people of America is only 2.5%
For so much of the general public to wine about everybody “paying their fair share”, there sure seems to be a lot of folk who don’t care about China being made to do just that.
https://www.cfr.org/blog/auto-trade-china
April 5th, 2018 at 12:02 pm
There are good and bad affects of trade. Our getting cheap stuff from China helps everyone, especially low income service industry workers, in that we pay less for the things we buy. Obviously, though, there are fewer factory jobs than if more manufacturing was in the U.S.
It seems that Trump hasn’t mentioned enacting tariffs on items that come almost exclusively from China, like consumer electronics. He doesn’t want to be blamed for iPhone prices going up 20%.
April 5th, 2018 at 12:02 pm
With Musk “sleeping” on the assembly floor” you can expect an exodus of experienced auto manufacturing experts and highly experienced personnel as this guy’s ego “stalks” the floor. What does he know about auto manufacturing and de-”Bottle necking” the process? Screaming at people as he does at Space X will get him some temporary “bump” until these people can escape to a better work environment.
April 5th, 2018 at 12:12 pm
Mean while BMW develops new process for Carbon Fibre manufacturing.
http://blog.motorcycle.com/2018/04/03/manufacturers/bmw/bmw-wins-innovation-award-hp4-races-carbon-fiber-swingarm/
April 5th, 2018 at 12:57 pm
It just seems that Mr. Musk is setting up Tesla so that, once all the work is put in, another company (probably Chinese) company can come in and buy it and already have a foothold in the American Market. And with GM no longer having the rear wheel drive patrol cars made off of the SS platform, I just assumed that they would switch to the FWD Impala to support that effort (like Ford did with the Taurus). Now that it seems they are bringing the Impala to its end, I wonder what direction (outside of continuing to use the Tahoes) they might use to support their police market?
April 5th, 2018 at 1:01 pm
Well my man Elon is sleeping on the factory floor till he gets the bottlenecks worked out? I hope he picks a quiet, cozy place to hang out, because I’d find it hard to sleep with all the machine noise going on. I’m sure, in attempt to make full use of the factory, it employs 3 full time shifts?
Why do people keep buying into to his plans and schemes?The rumor is he’s now up to 2,300 model 3s a week, but no absolute word on whether that’s sustainable. Bloomberg’s tracker has Tesla below 1,300 a week so somewhere between the two is the truth. It doesn’t seem to mater what the numbers say, all it matters is what Elon says.
The “trade war with China is going to be with us for a while, and I think we as Americans, are going to be on the losing end again. It doesn’t matter what it costs us as a nation, you take away our ability to buy that 55″ TV for 499-bucks and there’s going to be an uprising.
April 5th, 2018 at 1:05 pm
Re:China The real culprit is short term thinking, maximizing profits, and disregard for quality on the part of the buyer, ie, us westerners. ‘You get what you pay for’. We have the ability to say no, but we don’t want to. Live for the payments! What a disgrace. Nobody’s fault but our own.
April 5th, 2018 at 1:16 pm
Bring on the trade war with china. I would,and do,pay more for all American goods and the internet is a damn good place to find them. Try it and see for yourself. I do what I can to fully support everything American made.
Also,the trade imbalance with china also includes intellectual property that can,and probably has modified for their military use. That has always been a huge red flag for me.
April 5th, 2018 at 1:49 pm
“Subscription Servces:” This approach by the Marketing “LIZARDS” reminds me of the “SERVICE” the bull gives to the COW! Go Figure!!
April 5th, 2018 at 2:02 pm
The “subscription” thing sounds perfect for those with lots of spare money, who want an extended test drive of different expensive cars. If you can get a one month subscription, it might be useful for someone who can’t decide which AMG S-Class to buy.
April 5th, 2018 at 2:11 pm
8&9 Thumbs up!! Things need to change where its no longer an advantage for a US manufacturer to build a car overseas and ship it back into the US. Same goes for Apple. Take away the advantage of assembling phones in China and they’ll make them here in the US.
Americans are just not patriotic anymore, I mean I hear of the real sacrifices people made during WW1 and WW2 and today I honestly believe Americans would rather lose a war than give up metal used in pop cans. So don’t even ask them to pay more for something made in the states. Most just don’t care and are more worried about their bottom line today. Forget about the long term affects.
April 5th, 2018 at 2:24 pm
I think the US should employ a equal trade policy with any country it trades with. Meaning our terms will mimic their terms. Can you imagine the absolute sheer panic in Japan if we limited their brands to only being able sell so many total units here like they do with US cars and motorcycles?
Dropping of more car models will be a mistake I feel in the future. Have Manufacturers ever thought the reason their cars don’t sell is that they are not what the customer wants as far as styling? I know the business model has changed with the popularity of the SUV.CUV and trucks However when cars were king there were several models in each class of cars from the same company to choose from. If you like brand X ,but they offer nothing in that class you like , you either look elsewhere or wait until the next cycle to see if they build something you do like. Not the thinking today.
April 5th, 2018 at 2:26 pm
Chevy sold 3.336 of their Impala in FEB 2018 and it’s going be axed while Cadillac gets to keep it’s CT6 which sold less than 900 units; maybe it’s time to show Mary Barra the door because the numbers just doesn’t work.. especially as Cadillac gets two new engines while Chevy and Buick get pink slips.
April 5th, 2018 at 2:30 pm
FCA spinning off Magneti Marelli. GM did this with Delphi, and Ford with Visteon just to later re-absorb them after cleaning house and re-orgs.
Makes me wonder if they are preparing to sell the Chrysler, Dodge, Jeep from Fiat.
April 5th, 2018 at 2:39 pm
With the vast number of Japanese transplants in the states, the automotive imports aren’t as lopsided as many believe. Fearing quotas in the ’80s, they started building assembly plants state sides. One thing they do to make it better for them is to import the higher priced (Lexus, Infiniti, etc.) and to build the mainstream models in the states, and the really cheap ones on Mexico. A significant number of U.S. produced cars do get exported to other markets as well. Currently there are nearly as many automotive jobs in the states are there were when the UAW killed the car industry in the late 70′s-ear;y ’80s.
April 5th, 2018 at 2:53 pm
13 Japan shouldn’t allow American cars to be imported at all, for road use, except Mustang and maybe Jeep or two. We don’t allow RHD cars, except for mail delivery, and Japan is being “nice” in allowing even one LHD American car for road use.
April 5th, 2018 at 2:54 pm
I would drop the Malibu and Spark before the Impala and Sonic. The Impala is far more handsome a vehicle than the Malibu and the Spark is simply ridiculously tiny for North America.
I would up production of the GMC Terrain and Chevy Equinox since those are probably the best selling CUV’s GM is now offering.
April 5th, 2018 at 2:58 pm
I am glade to hear that the Jeep Cherokee had large sales gains but that was probably because dealers were clearing out 2018 Cherokee models along with sales of the updated 2019 version.
The 2019 Jeep Cherokee with the 2.0 Liter Turbo is on my short list for test drives.
April 5th, 2018 at 3:04 pm
18 Surprisingly, Spark outsells Sonic most months, even though Sonic is sold in two body styles, and is a much better car. Spark offers some colorful interiors, though. Maybe that helps sell it.
April 5th, 2018 at 3:11 pm
#16 Be skeptical of how the data is presented that promotes we have more manufacturing jobs. We do! however Manufacturing jobs have declined as a % of the economy. When US manufacturers had 89% of the US market it was only like 10 Million cars a year.
In 1970 about 25% of US jobs were manufacturing (not just automotive) today that number is around 11%
April 5th, 2018 at 3:15 pm
#17 Kit US automakers do make RHD vehicles for export.
April 5th, 2018 at 3:16 pm
Before I bought my Cruze, I looked seriously at the Sonic but the ride was rougher, and the interior was not of the same quality (not that the Cruze will make you think you’re in an Audi). The Cruze also is rated higher MPG on the highway and was about $100 bucks less. I think Chevy had two overlapping models but gas was higher in 2011 so I’m sure it made sense. As to the Impala, the average transaction price ballooned too high for the previous generation’s buyer. They were buying $29,000 cars for $22-23000 and now the car is $32,000 and the ATP is around $29000. They only time they sold in any real number is when GM was offering 20% off.
April 5th, 2018 at 3:21 pm
21) Sorry, I didn’t mean to imply the number of jobs was the same, just those that are directly related to building cars. In my little town, there are hundreds workplaces that used to employ 100 to 500 jobs with people casting, forging or just assembling things. If it service industry jobs, we’d most likely be at a 50% unemployment rate.
April 5th, 2018 at 3:22 pm
I hate to see the Impala go. I’d rather see it rebranded as the ‘Camaro 4 door’ and have the 2 door Camaro shrink down to somthing that is small enough to be sporty.
April 5th, 2018 at 3:35 pm
#25 Yes a lighter smaller two seater Yenko Camaro..
Id also really hate to see the Impala go. But I guess there thinking is anyone wanting a full size vehicle is going to go the SUV route so only market left for cars will be the econo and maybe a mid-size. but the CUVs seem to be wiping that segment too.
April 5th, 2018 at 3:55 pm
23 A few, but not many, Mustang, and some transplant products, like X5. It seemed like there were RHD Wranglers at one time.
April 5th, 2018 at 4:41 pm
I wish light vehicle sales numbers were not split just between ‘trucks’ and ‘cars’.
I suggest 3 light vehicle categories;
commercial vans and pickups – trucks,
all sedans, coupes and convertibles – cars,
and finally
suv, cuv, etc. and passenger vans as the third group, calling them who knows what. (car-like trucks?)
I think this might help highlight what the real volume changes are.
I do apologize for my previous rant. Way over the top even for me and not fair. I will try to be good.
April 5th, 2018 at 6:47 pm
Maybe vehicles should just be categorized by height. Tall ones, “trucks,” are thirsty at highway speed and ill-handling. Less tall ones handle much better, and even fast, non-tall cars get impressive mpg on the interstate.
April 5th, 2018 at 6:50 pm
29 I like your categories too. The third one could be either “car-like trucks,” or “trucky cars.”
April 5th, 2018 at 11:42 pm
#2….Too bad to see the Impala name go by the wayside. Was it 1958 or ‘59 when Chevrolet introduced the Impala?
I suspect the Buick LaCrosse will last another year or two at the most before it becomes history too.
April 6th, 2018 at 7:19 am
The impala is a sweet ride…it’s just the segment no longer attracts customers…
Who are the leaders in the large sedan market? The Toyota Avalon? Maybe the very inexpensive to buy Dodge Charger?
I doubt it’s the Taurus? Or Chrysler 300 also which is very inexpensive to actually purchase…
People just buy cuvs …
Too bad the impala was a looker and I always smiled when I saw the old Sinatra like commercials..
When I went to look at the new impala one day I did have msrp sticker shock…great value, great looking but the well equipped impala was beyond my expectations on price.,,
April 6th, 2018 at 9:49 am
#32 1958, coupe and convertible only
https://www.hagerty.com/articles-videos/articles/2014/06/17/58-impala
April 8th, 2018 at 2:48 pm
I am 64 years old and have owned two of the latest version Impalas, a 2014 and a 2016. Both had 3.6L engines. Both were completely trouble free with great gas mileage and lots of room and comfort.I have received many remarks from people about how they like the looks of my car.These cars are without a doubt the best design and build cars that GM has ever made and thats saying something because I owned Impalas starting back in 1969.
I compared my last purchase with a Buick LaCrosse and it wasn’t as nice a car as the Impala LTZ and the Buick cost more.
I believe GM is making a mistake, they should make these cars a little more competitive on pricing and I think sales would improve.