On today’s show…Tesla fires a big chunk of its workforce…Ferrari commits heresy and offers run-flat tires…and Toyota makes a billion-dollar bet on ride-sharing. All that and more coming right up on Autoline Daily.
This is Autoline Daily the show for enthusiasts of the automotive industry.
TESLA CUTS WORKFORCE
Tesla announced it is firing 3,000 employees, about 9% of its workforce. They are all salaried and none of them work in Tesla’s assembly plant. Here’s my Autoline Insight. That kind of headcount reduction should save at least $300 million a year. This is a desperate move by Tesla to make a profit in the third and fourth quarters of this year. And it shows that Tesla is now acting more like a traditional old-time automaker: fire as many people as you can to make a profit.
PROSECUTORS ALLEGE FCA/UAW CONSPIRACY
Several executives from FCA and the UAW have been convicted of embezzling at least $1.5 million. The CEO of FCA, Sergio Marchionne, and the president of the UAW, Dennis Williams, have said this was done by a rogue group of officials. But the US Justice Department disagrees. It says this was a conspiracy between FCA and the UAW to violate the Labor Relations Management Act. Federal prosecutors say the conspiracy started before 2009 and occurred during the time of three UAW presidents’, Ron Gettelfinger, Bob King and Dennis Williams.
Still to come…Bridgestone develops run-flat tires for Ferrari.
FERRARI TO OFFER BRIDGESTONE RUN-FLAT TIRES
Most enthusiasts hate run-flat tires. They have stiff sidewalls that can adversely affect the handling of a car. But Ferrari just announced its going to make run-flats available on the new Portofino convertible, specifically Bridgestone Potenza S007s. Bridgestone says that despite the added stiffness, these run-flats can handle “high G cornering” because they were developed specifically for the Portofino. The Potenza S007s will be available on all European and North American Ferrari Portofinos.
USED CAR PRICES HIT RECORD HIGH
The used car market in the US is starting to heat up. According to Edmunds, the average transaction price of a used car in the first quarter was $19,657. That’s over 2% higher than last year and an 18% increase from five years ago. It’s due to a growing number of near-new vehicles coming off-lease. And this will help sales of new cars. When people can get more money for their trade-in, it makes it easier to buy a new one.
Don’t forget to join us for Autoline After Hours tomorrow afternoon. We’re going to have Lightning Systems in the studio talking about how they convert Ford Transits into electric vans. So join me and Gary Vasilash for some of the best insights as to what’s going on in the automotive industry.
Coming up next, Volvo gives us some details on its Polestar performance sedan.
TOYOTA MAKES BIG BET ON MOBILITY
Toyota is making a big bet on mobility services and just invested $1 billion in the Asian ride-hailing service Grab. The automaker will also be involved in the management of the company. More and more carmakers are jumping into mobility services because they see a chance to make big money. Ford has its Chariot service, GM has Maven, Daimler has car2go, and VW has MOIA, just to name a few. And we’re likely to see more be added to the list.
VOLVO S60 POLESTAR DETAILS
Volvo gave us some details on its new Polestar engineered S60 sport sedan. It will be Volvo’s first American-built car, will be offered with Polestar Engineered-colored gold brake calipers and gold seatbelts, along with Polestar emblems. The performance option also comes with mutli-link front and rear suspension and adjustable Öhlins shock absorbers, as well as black chrome exhaust tips. ECU tuning will bump power up by 15 horsepower to 415 horsepower, while also improving fuel efficiency and reducing emissions. It will be built in Charleston, South Carolina officially gets unveiled next week.
But that’s it for today, thanks for watching and please join us again tomorrow.
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Comments (17)
June 13th, 2018 at 11:25 am
With regard to increasing used car prices, how does “a growing number of near-new vehicles coming off-lease” push prices up? Doesn’t that generally have the opposite effect?
June 13th, 2018 at 12:05 pm
So, the S60 trim level just below the Polestar trim will have 400 hp next year? That is quite a bump up! The current Polestar S60 offers 362 hp and the R-Design trim level just below that offers 302 hp. Not sure the gold bits and 15 extra ponies will be worth the price premium. In the current model, that premium is $12,500.
June 13th, 2018 at 12:13 pm
#1 I doesn’t seem to make sense to me either. The only factor could be dealers giving higher trade in price to lure buyers to buy a new car. This could lead to used cars averaging higher in price to buyers. I think this would be temporary until these used cars start to back up at dealers because of the very same price inflation.
June 13th, 2018 at 12:29 pm
Some of those off-lease cars also enter the used car segment as CPO (certified pre-owned); that also helps maintain a higher residual (as the guarantee is usually amortized in the price). I, also, don’t see how that raises ‘other’ used car prices (but I don’t think I’d argue against John on this one).
June 13th, 2018 at 12:59 pm
#1 I think what they are saying is that when you add a lot of high value late model cars to the used car fleet, the average cost of a used car, including the new one, rises.
June 13th, 2018 at 1:01 pm
Run Flat tires – Interesting that Ferrari is now using run flats – Chevrolet has been using them on the Corvette for a few years & I don’t have any major complaints on our 2016. The run flat products seem to be improving with each redesign which is what we would hope for. When we have to replace tires we will probably stick with run flats due to the potential risk of requiring a tow truck with standard tires.
June 13th, 2018 at 1:14 pm
@1, 3, 4 – Leasing and rebates over the past 5 years (or so) resulted in people driving more expensive new vehicles (both in terms of series/option content and vehicle segment type). As those vehicles enter the used car market, I’m not surprised they are generating higher revenue. And a growing portion of the population find 2-3 year old vehicles with a year of remaining warranty or CPO to be a good value at 70% of the price of new vehicles.
June 13th, 2018 at 1:34 pm
I’d like to hear JM weigh in on this (#1).
June 13th, 2018 at 1:38 pm
Thr ride sharing mobility service companies that are now the rage for major car manufacturers is nothing more than “poaching” the classic cab company market segment as a group. With individual and group “seating” in a new car.. why “hail a cab”?
June 13th, 2018 at 2:48 pm
I wonder if there are many people who are upside down in their current vehicle but want an SUV or CUV even if it’s used. But if the gap in value is rolled into their new purchase that too would falsely inflate used car prices.
June 13th, 2018 at 2:52 pm
Doesn’t seem like a big deal to me that Tesla is laying off 9%. Every big company I worked for would annually lay off the bottom 10% to clean out the cruft.
June 13th, 2018 at 3:32 pm
One of the hardest decisions is to layoff workers. Since these are not production workers, it sounds as if the designers of future vehicles is being eviscerated. Model Y, Tesla semi, and Tesla pickup are at risk. But in the world of ‘short term’, quarter-by-quarter planning, it doesn’t matter beyond getting Model 3 out for delivery.
In six months, December/January, Tesla can rebuild their design and prototype staff . . . assuming they get 5k/week with acceptable quality. We’ll have to wait and watch.
Bob Wilson
June 13th, 2018 at 4:44 pm
#11 Tom, I think that was Johns point. Tesla which has always been held to a higher standard and gave the impression it’s different than all the other OEs. So it’s not a big deal as just proves it’s operating like all the others at least when it comes to how they treat their salary staff
June 13th, 2018 at 6:58 pm
6) I replaced the original run flat tires on my 2010 Mini with non run flat Pirellis. The ride is somewhat better, and there is less road noise, but the change wasn’t dramatic. I’d like to know how much difference non run flats would make with my Corvette, also a 2016, but I probably won’t find out, not having a spare. The Mini has a spare, and I have no idea why they even used run flats OEM.
June 14th, 2018 at 6:40 am
Run flats on a Ferrari: I would be in glee if a Ferrari were in my garage. Oh, for sure, I’d put some miles on it but I’m thinking I’m going to be just looking/staring and saying, oh boy, it’s in there (my garage) for a lot of my experience. I’m also thinking them run flats will do just fine (more than fine actually).
June 14th, 2018 at 10:00 am
In contrast to Detroit and Paris autoshows losing presenters, there is a big EV show at Silverstone. I don’t know if there will be a second but it appears this show has the enthusiasm missing from the others.
Bob Wilson
June 14th, 2018 at 5:35 pm
When you’ve lost hundreds of millions of dollars, quarter-after-quarter, since day-one at Tesla, there comes a time when eventually you will have to show a profit. Musk surely realizes that time is growing short to turn Tesla around, but I’m surmising that by the time Tesla works out the production problems and gets things on track, he will have a boat-load of competition to stifle production in other ways; sort of too little, too late. But each month, Musk always seems to find a way around the problems by keeping investors and fans off balance with an exciting new introduction. This time he took a more conventional path by laying of excess white-collar employees to save money.