AD #2401 – ZF Fights Motion Sickness, Rental Companies Face Existential Crisis, Detroit Automakers Report Lower Profits
July 27th, 2018 at 11:49am
Runtime: 7:37
0:32 FCA Denies Knowledge of Marchionne’s Health
1:06 Hyundai’s Union Eases Up on Demands
1:50 Rental Companies Face Existential Crisis
3:07 Detroit Automakers Report Lower Profits
4:01 Ford Transit Skeletal Chassis Cab Updates
4:32 ZF Fights Motion Sickness
5:54 New Technology Investment Helping Suppliers
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On today’s show…FCA denies knowledge of Sergio Marchionne’s health issues…the Detroit automakers are blaming high material costs for profit drops last quarter…and rental car companies face an existential crisis from the booming ride hailing business. All that and more coming right up on Autoline Daily.
This is Autoline Daily the show for enthusiasts of the automotive industry.
FCA DENIES KNOWLEDGE OF MARCHIONNE’S HEALTH
More details on what happened to Sergio Marchionne. The Swiss hospital that was treating him says he was ill for more than a year before he died. FCA denies it had any knowledge of this due to medical privacy. FCA says it first found out about his condition last Friday, when Marchionne’s family members told the company he would be unable to return to work. Reports say that even Marchionne was not sure if this operation was going to cure him. He suffered a blood clot and stroke during the operation to remove the cancer in his shoulder.
HYUNDAI’S UNION EASES UP ON DEMANDS
Korean automakers seem to have the worst labor relations in the world. Hyundai’s union has staged a strike in 26 of the last 30 years. And it’s not as if they’re poorly paid. Most of them make around $82,000. Profits are falling at Hyundai. It just reported its second-worst quarterly net profit since 2012. The union worries that what happened at GM Korea could happen to Hyundai, and so they’re easing up a bit. It recently went on strike, seeking a 5.3% wage increase, but settled for 2.1%. And it reached an agreement in just 2 days, not the 24 it took last year.
RENTAL COMPANIES FACE EXISTENTIAL CRISIS
The ride sharing business is booming and a survey from the consulting company AlixPartners says this could drive the car rental companies out of business. It found that people who rent cars or use ride hailing services, rate the ride hailing experience much better. What they don’t like about renting cars is the laborious process, all the add-on fees, and the limited choice of cars. What they like about ride hailing is the ease of use through an app. AlixPartners says the daily rental companies are facing an existential crisis. It says in the last 12 months alone, 35% of people who rent cars have switched over to ride hailing. This could have a big effect on automakers. In the U.S. market alone, the daily rental companies buy 2 million new cars and trucks a year.
GM sells more cars than Ford, but Ford earns more revenue than GM. And that is coming up next.
DETROIT AUTOMAKERS REPORT LOWER PROFITS
GM, Ford and FCA all posted their second quarter earnings and they all reported a drop in profits. What is interesting though, is that from a revenue standpoint these companies are not too different in size. FCA posted $33.7 billion in revenue. Ford posted $38.9 billion and GM posted $36.7 billion. Notice that Ford brought in more revenue than GM, even though it sold half a million fewer vehicles. For the most part they’re all blaming the drop in profits on higher materials prices, notably steel. And they’re all worried about an anti-American backlash in China because of President Trump’s trade war. That could cripple their car sales there, just like what happened to Japanese and Korean automakers when the Chinese government turned against them.
FORD TRANSIT SKELETAL CHASSIS CAB UPDATES
The Ford Transit skeletal chassis cab has received some significant improvement in Europe and it’s mainly got to do with lowering the floor height. For front wheel drive models, the chassis cab is 100 mm lower, which will aid loading and removes the need for a separate tail lift. There are three separate wheelbase lengths to choose from and are available with a 2.0-liter diesel engine paired to a manual or automatic transmission. The skeletal chassis cab is now available to order in Europe.
ZF FIGHTS MOTION SICKNESS
There’s a concern that people who ride in autonomous vehicles will get motion sickness because they’re more aware of vehicle movement. On an Autoline After Hours earlier this year, Steve Miller, then CEO of interior supplier IAC, said they were looking at how scents and smells might affect passengers. But ZF is taking a different approach. It uses electro-hydraulically controlled dampers to keep the vehicle as level and as still as possible. The system is connected to cameras and sensors on the car, so it can detect road imperfections ahead of time. And each wheel is individually controlled to make sure the passengers feel as little as possible. The road data the vehicle collects can also be sent to the cloud and distributed to other connected vehicles on the road.
As automakers pour billions of dollars into electric and autonomous cars, they don’t want to invest as much in traditional components and that is really helping suppliers. We’ll tell you how right after this.
NEW TECHNOLOGY INVESTMENT HELPING SUPPLIERS
Automakers are investing billions of dollars into developing electric and autonomous vehicles, that means they’re not spending money on components they traditionally built. On Autoline This Week, we’re joined by Bob Pyle, the President of the supplier Dana’s Light Vehicle Driveline, who says that investment in new technology is helping grow his business.
(The ATW preview is only available in the video version of today’s show.)
For more about Dana and its electric driveline business, you can watch that entire discussion right now on our website, Autoline.tv or on our YouTube channel.
But that’s it for today, thanks for watching and have a great weekend.
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July 27th, 2018 at 12:09 pm
The car rental companies have lost my business to Uber for the reasons mentioned above, along with the following:
Using Uber, Lyft, or a taxi is much more convenient than renting a car when your main need is to get between an airport and a hotel in a city. You don’t have to drive in an unfamiliar area, and you don’t have to park a car. Even if you need to make a couple “extra” trips from the hotel, ride sharing is much easier than doing more driving in an unfamiliar area, and the overall cost is usually less than renting a car.
July 27th, 2018 at 12:15 pm
I’d think the future of traditional car rental might be renting a large, gas vehicle once or twice a year for vacations, while using a plug-in car most of the time for commuting.
July 27th, 2018 at 12:23 pm
Yea rental car companies should probably get on the ball and develop an app that makes car rental as easy as the likes of Uber.
I do however rent a car almost every week for work as I drive 300 miles away. Cannot use Uber for that.
I also wonder how this will affect manufacturers as I know that when they discover a small defect like poor color match or orange peel paint. They will often designate those cars for fleet sales rather than fix a group of cars that may require a complete re-paint.
July 27th, 2018 at 12:29 pm
Ford skeletal vans should be a nice improvement but I’m not sure why they dont just go with an airbag suspension on the rear and then you could drop the chassis inches from the ground to load.
July 27th, 2018 at 12:30 pm
Sounds like the Korean Union members understand having a job that pays a little less is better than no job. Is that dollar figure stated what they make in US dollars? If so they are not doing too badly depending on inflation there. They had better look at your report yesterday that if the Chinese start selling cars in the US that it is their sales that will feel it first.
July 27th, 2018 at 12:34 pm
3, When I was working, my employer never rented cars for 300 mile trips. We used company cars, or if there was a “shortage” of company cars, they paid us to use our own cars, at a rate/mile that was a good deal for us. I’m surprised whoever you work for would routinely use rental cars for 600 mile round trips.
July 27th, 2018 at 12:48 pm
If all of the Ford Transit vans are truly related, that must be one of the most versatile platforms around, given that they make both RWD and FWD versions. They sell only RWD versions in the U.S., maybe as a favor to FCA which sells the FWD Promaster.
July 27th, 2018 at 1:06 pm
That ZF anti-motion sickness tech may have a good second use. Sounds like it’d be just the thing to help lesser mfrs produce soft, cushy rides in their would-be entry level luxury vehicles.
July 27th, 2018 at 1:58 pm
I would compare the experiences of “Ride Sharing versus Renting a Vehicle” to “Leasing a Vehicle versus Purchasing a Vehicle”. In the first instance Ride Sharing and Vehicle Leasing do not require the same large capital and time investments/restrictions as does Renting a Car or Purchasing a Vehicle.
I wonder what has been the impact on “Zip-Car” with the advent of Uber, Lift and others?
July 27th, 2018 at 2:00 pm
I now want to wish Mike Manley great success and good fortune as he takes the helm of FCA!
July 27th, 2018 at 3:16 pm
#6 It makes more financial sense for the company to have us use rental cars when traveling 600 mile round trip. 2 days rental is like $90 vs the 52 cents a mile would be $312.
Which made my wonder about the ride sharing app that was mentions this week. If someone rents your personal car and takes off for three or four days. Guess you need to know the duration before they take your car.
July 27th, 2018 at 3:38 pm
11 Yeah, using rental cars would be a good deal for the company, especially if there are a lot of miles, and not many days.
I can’t imagine there would be many people wanting to rent their personal car, sans driver. I certainly wouldn’t want to.
9 I haven’t heard much about Zipcar lately, but I ran across an article saying it is generally not a good deal, compared to regular rental cars. It would seem that Uber et. al. might be a better alternative for many urban, and college campus Zipcar users.