This is Autoline Daily, reporting on the global automotive industry.
VALUE OF CONTENT COMPARISON
Merrill Lynch came out with an interesting study comparing the value of all the parts and components in an ICE car, a battery electric car and a Level 4 and 5 autonomous car. It says the average U.S. car with an internal combustion engine has about $14,500 worth of content, but this does not include the cost of final assembly or profits. By the same measure, a BEV has $33,600 worth of content. And a Level 4 and 5 AV has $150,000 to $200,000 worth, of which three-quarters is hardware and one-quarter software. It also includes R&D costs, which is a key reason why the cost is so high.
DEALER INVENTORY EXPENSIVE
Car dealerships in the U.S. have parking lots jam packed with new cars and trucks. Dealers love having a lot of inventory so they can sell customers the vehicle they want. But all that inventory is expensive. Car dealers have to finance and buy and insure those vehicles. That costs about $37 a day. Insurance alone runs $150-300 a month. Dealers have to sell those cars within 60 days if they want to make a profit. And in a time of shrinking margins dealers need to focus on turning their inventory over more than they ever have before.
From the company that revealed the secrets of the Tesla Model 3, Munro & Associates will host an Electric Vehicle Conference on Friday, June 21st at its headquarters in Auburn Hills, Michigan. Munro will provide a deep dive into the Motors, Batteries, and Electronics of the Tesla Model 3, BMW i3, Chevy Bolt and Jaguar I-PACE. Purchase tickets on Eventbrite or at leandesign.com. Hurry, only 100 spots are available.
NISSAN ADOPTS GT-R PRODUCTION TECHNIQUE FOR ALTIMA
A unique manufacturing technique that has mostly been reserved for sports cars, like the GT-R and Mustang GT500, is now making its way into the Nissan Altima. The cylinder walls of the Altima’s 2.5L 4-cylinder engine are undergoing a process called plasma transferred wire arc thermal spraying. High-powered electricity is used to liquefy metal wire, which is then blown into the cylinder with a gas, coating its walls up to 0.2 millimeters thick. The coating is then machined to a mirror finish with a diamond encrusted drill bit. The process helps improve engine efficiency and eliminates the need for cylinder liners.
NEW MATERIAL REVEALS WHAT’S BEHIND IT
We always like to show you the innovative technology that suppliers are developing, because what they’re showing off now will likely end up in cars in 3 to 5 years time. Check out this new material called Reveal that’s been developed by the supplier CGT. It’s a synthetic leather that lets light through to illuminate functions on the instrument panel or center console. It also allows for physical or capacitive switches to be placed under the material. The key to making it work is with the right materials and manufacturing process to prevent reflection and light scattering. CGT is working with Jaguar to develop a bicycle detector that lights up the top of the door trim and A-pillar when a bicyclist is next to the car. It also shows how this Reveal material could be used to get rid of physical switches on the door to control the seat. And there are applications that go well beyond the auto industry, such as making the screen on your smartphone look like it’s made of carbon fiber.
WHICH CARMAKERS WILL DO BEST BETWEEN NOW & 2023?
Which automakers will do the best between now and 2023? Merrill Lynch looked at the new cars and trucks that automakers have coming between now and then and came to these conclusions:
- 70% of the new vehicles coming out will be trucks, and 45% of them will be CUVs. Only 24% will be passenger cars.
- GM is below the industry replacement rate, but it has new full-size SUVs and heavy duty pickups coming that will raise profits.
- Ford has the highest replacement rate, and 96% of its new lineup will be trucks and CUVs.
- FCA’s replacement rate is below the industry average.
- Amongst the Japanese, Honda has the highest replacement rate, Toyota is strong, but Nissan is sputtering.
- Hyundai and Kia are above the industry replacement rate, but are a bit heavy on passenger cars.
- European automakers are below the industry replacement rate, but Daimler is higher than the rest while BMW and VW are at the bottom of the list.
New products in showrooms always help boost sales and profits, so this list can help forecast which car companies will do the best over the next three years.
C-CLAMP DESIGN CUE MAKES PICKUPS LOOK TOUGH
Designers like to incorporate design cues that convey what a vehicle is all about. And for full-size pickups they’ve designed the headlamps to kind of look like a c-clamp, or a vise. Ford was the first to come out with a c-clamp design, on the 2015 F-150, and now Chevrolet and Ram have picked up on it. But Chevy and Ram wouldn’t be caught dead copying Ford, so they have their own design variations on it. The whole idea is to convey that these are tough work trucks, and incorporating a vise or a c-clamp into the design does exactly that. One more point, Toyota and Nissan don’t use this on their trucks, and their sales have never gone anywhere. Who knows? Maybe people don’t think their trucks look tough enough.
But that’s it for today, thanks for watching.
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Comments (39)
June 19th, 2019 at 12:12 pm
I seriously doubt that headlamp design sways a buyer one way or the other on a 50K purchase. Especially when each of the big three truck manufacturers has their version of the design. Yeah it might look good or even tough but I’m pretty sure truck buyers are more concerned with features, capability, towing and value. The “tough” look can easily be achieved with wheels, tires, fender flares, push bars, aftermarket lighting and so on. Sorry Sean I’m not buying it and Toyota/Nissan sales are more a reflection of their overall truck not the headlights.
June 19th, 2019 at 12:13 pm
Wait a minute… Am I experiencing Deja-Vu, or was today’s A.D. just one huge mashup of previously aired clips and data?
I could swear I’ve seen about 85% of today’s show content before.
June 19th, 2019 at 12:21 pm
As for Merrill Lynch’s BS, it is not worth the paper it is written on, like most forecasts. As for its cost estimates, they are way too lazy to not make them apples and oranges, so also utterly Useless.
June 19th, 2019 at 12:24 pm
2 MJB
My thoughts exactly. I was thinking I had ESP, or Deja-vu but if they weren’t rehashed news they sure were very similar (to previous).
June 19th, 2019 at 12:26 pm
“Dealers have to sell those cars within 60 days if they want to make a profit.”
I am so sick and tired of this unscienfic, unproven “old wives tale”. I have so many times showed you that this is OBSOLETE, that makers make HARDLY ANY profits with 60 day inventories any more. It has been 30 YEARS or more since TOYOTA invented “LEAN” (or adopted it in its production, and other efficient makers copied it), making a TON of profits by keeping its inventories NOT at 60 days, but at 20, 30 and 40. ESPECIALLY for luxury car makers, none of them views 60 days as some kind of voo doo “optimal” level.
Let’s hope that you will, even at this very late time, join the LEAN revolution!
June 19th, 2019 at 12:33 pm
Will Munro answer questions in his conference? I am overseas but even if I was in the area I would not be going (maybe the groundhog day daily drumbeat had something to do with it, 2 and 4).
But Bob Wilson told us he will be going, despite the 700 miles (one way!) he will have to drive. So I suggest he grills Munro, if allowed, to tell us if he still stands behind his claim that Tesla is making 30% profit on the Model 3, and, if not, what were his assumptions to reach that figure when he said it? Let’s get precise here, please!
June 19th, 2019 at 12:41 pm
:”(
June 19th, 2019 at 12:54 pm
2&4 Have to agree the only part of todays show that seem to be new content was the Merrill Lynch forecast which I think is about as accurate as the 2016 election forecasts.
Oh and if dealers are paying $150 to $300 a month to insure a vehicle to sit in their parking lot for a month. Then I’m starting an insurance business.
June 19th, 2019 at 12:56 pm
Waiting for the eventual implementation of masculine genitalia-evocative styling cues for pickups as this all escalates. Todger tail lamps, perhaps?
June 19th, 2019 at 1:05 pm
1 As far as pickup truck purchases, there is still a lot of brand loyalty with “Detroit Three” trucks, more so than with other vehicle segments. As far as Toyota, they have the top selling “mid size” pickup with the aging Tacoma, but the Tundra doesn’t sell well. That might be partly because they don’t have nearly as many option, trim level, and powertrain choices as Ford, Chevy, and Ram. As far as Titan, everyone from CR to the enthusiast publications says it is worst-in-class, so no wonder it doesn’t sell well.
June 19th, 2019 at 1:09 pm
9 In the ’50s, some car companies used styling cues inspired by female body parts.
https://upload.wikimedia.org/wikipedia/commons/thumb/1/19/1951_Ford_Custom_Deluxe_Sedan.jpg/1200px-1951_Ford_Custom_Deluxe_Sedan.jpg
June 19th, 2019 at 1:14 pm
Ford is using the spray plasma technology on their 5.0 Coyote engines for the F-150 and Mustang GTs starting in 2018. I have one and hope that it is durable in the long run.
June 19th, 2019 at 1:17 pm
9,11
Yeah, Dagmar’s (Virginia Ruth) of the fifties; also seen on others, Cadillac for one.
June 19th, 2019 at 1:51 pm
12 It appears to be durable however if you score a cylinder wall not sure if Ford has made any arrangements to re-spray and machine cylinder walls through service or if you’ll need to buy a whole new block. I’m not sure if they can be sleeved.
June 19th, 2019 at 1:54 pm
#5 Slow down a little Larry. You are confusing dealerships and manufacturers. The story was about how long dealers keep vehicles on their lot and how that impacts the dealer’s profitability. Nobody said anything about the manufacturer’s profits and how that relates or doesn’t relate to days supply at the dealership. Floorplan financing and insurance are expensive. Manufacturers often assist dealers by offering 30 or 45 days of free floorplan financing so the dealers order more vehicles. And, conversely, this is why you sometimes see “17% off the MSRP” sales events. By selling the oldest inventory that is at “full juice” as the dealers say, it encourages dealers to replace those units with new units that are just starting their “free days”.
June 19th, 2019 at 2:05 pm
With that Thermal Spraying if it is machined to a mirror finish how do they get the piston rings to seal properly ? I thought that was the reason behind honing cylinders to a cross-hatch finish to make them seal.
June 19th, 2019 at 2:14 pm
Kit , I think the only reason Toyota leads the midsize truck market is because Ford was stupid enough to ignore it when the compacts went upsize. This “new” Ranger looks very much like the one they sold everywhere else ,but here since 2011 or 12. The whole argument they made didn’t make sense. They said it was too close in size to the F150 ,but the F150 wasn’t wanted else where in the world. It sounded like a big pile of BS. So Toyota went upsize as did GM & Chevy , proved there is a market for them and they have made the full size trucks even bigger since 2011. The new Ranger is bigger than my 1998 F150 Standard cab /short box truck. The new F150s make mine look like a Courier.
June 19th, 2019 at 2:19 pm
… and this is one reason why it is best to shop at the end of the month. The other is the salesman monthly sales quota. That one car might elevate him/her at a higher bonus level.
June 19th, 2019 at 2:25 pm
16 Wasn’t the cross hatch honing partly to help rings “break in” so their entire outer surface contacted the cylinder walls? John/Sean, maybe you could have someone on AAH to discuss the obsolescence of of break in, why today’s engines go 10K miles without using even a cup of oil, and related advances in engine tech.
June 19th, 2019 at 2:35 pm
17 The Tacoma continued to lead by a fairly wide margin, at least for the first quarter of 2019, but maybe the new Ranger wasn’t at full production at the beginning of the quarter. Also, not everyone wants a turbo four. It will be interesting to see how this all sorts out after a few more quarters, and after Gladiator gets up to full production.
https://pickuptrucktalk.com/2019/04/2019-q1-sales-results-full-size-and-mid-size-pickups/
June 19th, 2019 at 2:40 pm
If everyone factory ordered their cars, as I sometimes do, there would be day-by-day layoffs, depending on how many cars were ordered that day or week. While the huge inventories are expensive in interest and insurance costs, they function as a “buffer,” allowing the manufactures to operate more efficiently.
June 19th, 2019 at 2:55 pm
19 Crosshatching of the cylinder walls was to help keep the oil on the walls. Optimal crosshatch was 45 deg. If the crosshatch was too steep or parallel to the direction of the stroke the oil would run off too fast causing a dry cylinder condition. Too shallow and you get excessive oil and a hydroplaning condition that will result in excessive oil burn. Cylinders are now much harder and with modern honing practices they accommodate rings that are much thinner, lighter, and lower in tension—often with exotic coatings.
In addition, lubricating oils have been modified significantly to reduce friction and viscosity. 10w 40 was a common oil and now 0W 20 is being used. All of this has contributed to new power generated by the engine block, but to take advantage of it, new honing procedures have to be adopted. The techniques employed for the past twenty years are rapidly becoming unsustainable.
The tolerances are tighter on bearing surfaces. In fact putting the wrong thicker oil in todays engines can starve a bearing surface and ruin an engine. So the crosshatching is being obsoleted by the design and oil being used.
June 19th, 2019 at 2:58 pm
Hey Sean
Synthetic Leather = PLASTIC I have a lot of synthetic leather in my Prius Prime and it doesn’t compare with real leather.
Your evaluation of C-Clamp headlight is a very subjective so subjective to of little real value. What you consider “tough” someone else might consider soft.
Merrill Lynch’s forecast is as useless as most other information they put out. I used to us them as my broker until I found out they issued BS reports to get me to buy more stock so they earned more commissions. Is it a slow news day today? What happened to the news of the auto world?
June 19th, 2019 at 3:02 pm
21 Technically if everyone ordered their car the plants would continue to operate much like they do today. Just the builds would be for a known sold vehicle rather than dealership inventory. They would likely push delivery dates out to make sure the plant was always running at an optimal rate. Your wait would depend on how many orders were coming in.
June 19th, 2019 at 3:24 pm
24 I’d think they’d get “caught up” in times of year the fewer people buy cars. It doesn’t matter, because few people order cars anyway, and with most mainstream cars, there’d be no reason to, because you don’t have any option choice anyway.
June 19th, 2019 at 3:34 pm
22 There’s now 0w16 oil. That’s what Toyota says to use in four cylinder Camry, and Camry hybrid.
June 19th, 2019 at 3:40 pm
I agree with Lambo, for the most part, but there are few exceptions when honing is not necessary; Chromed walls are one, because of the molecular structure. But even then, they require a break in period usually without using a HD oil.
If the boring is too small/large or if the DIY’s hone with disregards to spec’s, compression could suffer or “coking” could ocure if too tight. But the hone only insures even oil film within the cylinder.
The only reason todays vehicles do not require warm up is because of the less viscous oils used and harder materials. If you think about it, the rings should never be in contact with the cyl. wall; It’s the oil film on the correct dimensioned wall that creates the highest compression.
If it’s an engine… it will need honed.
June 19th, 2019 at 3:59 pm
27 Yes I should have said the old traditional crosshatching is being obsoleted. Not all crosshatching. Which is why I stated NEW honing procedures are being adopted. The surface roughness has changed and the ring break-in is a lot less prevalent.
While working at Ford I was in the global engine group and have watched the spray-in liner process. (wasn’t the program I was on) So I don’t know what they have established for a repair as dealerships or machine shops will not have these machines to do this Heller process. I also don’t know if they even offer the ability to send the manufacturer a block and have a cylinder re-sprayed. I doubt it.
June 19th, 2019 at 4:14 pm
I don’t like fords C clamp headlights as a truck coming at me with 4 headlights on about blinds me since some lights aren’t aimed properly. Seems like a lot of people in my town are driving with hi beams on and don’t it cause they never look at there dash to see the indicator.
June 19th, 2019 at 4:19 pm
A buddy of mine does headlamp “WORK” (to be vague), on Fords, including these lights.
June 19th, 2019 at 4:29 pm
Many years ago, I was taught how to spray weld. I forget the correct name for the process but the end results were unbelievable! The only weld that came close was TIG stainless… with a lot of practice. If the Heller process is like what I have experienced, I doubt any dealer would be dumb enough to invest in the shop space, machines, training, ect. to make it worth while. I forget the rod I used so harness is an unknown, but 2 mm is not a lot of cushion. Agree? I expect no initial problems, but as the engine wears, the cyls ovate on the return stroke.
I am a retired tradesman with an ME degree and have worked in unison with many engrs on the molecular side for over 15 years. I flaked/scraped, bored/honed more than my liking in my early days.
If you find out the benefits of using the Heller process, please let me know. I think the benefits are geared more towards the boring and ability to add a harder wall material .
June 19th, 2019 at 4:32 pm
29,30 Doesn’t the entire thing light up, even on low beam?
June 19th, 2019 at 7:50 pm
Yes, it is a mashup, including an article of cylinder coating at Nissan. I hope they do a better job than Chevrolet did in 1970 with the 2.3 liter aluminum engine with silica bore coating, which didn’t do well, and caused a lot of engine failures.
June 19th, 2019 at 8:26 pm
33 I had a BMW bike that had, I think, the same “nikasil” process as the Vega engine, and it did fine. The Vega’s problems were either process problems on the cylinder bores, or some other problem with cooling, or something.
June 20th, 2019 at 8:31 am
15 Let’s not make a simple issue complicated. I remember when I brought up the issue of devastatingly high inventories (and the billions and billions they cost), I am told it is not the automaker but the dealer that suffers etc etc.
It does not really matter. Whenever an automaker’s vehicles (and usually it is a Detroit maker, or some niche loser like Fiat or Mitsu or whatever, and seldom or never Toyota, Honda, or the German Luxomakers), they lose billions and billions. Whether the automaker is the one who loses them, or the dealer, it is the consumer who will pay the ultimate price, as well as the workers who make these vehicles and are frequently laid off.
June 20th, 2019 at 9:42 am
15,35 Should all of the factories just shut down for a couple months? Wouldn’t that have negative effects too?
June 20th, 2019 at 10:34 am
36 ask why doesn’t Toyota or Honda or M-B or BMW or Porsche and esp Subaru have such billion $ losses. They act BEFORE the problem. If some prefer not to plan ahead, and close the plants couple months, there will be a ton of negative effects, for all concerned (but not for their competition). An ounce of prevention is worth a pound of cure.
June 20th, 2019 at 10:42 am
35 PS and of course the shareholders, who were not a bunch of millionaires but many were middle class and working class owners, in the case of GM and Chrysler in 2008, lost ALL their $.
June 20th, 2019 at 1:06 pm
If you want the *best* deal, hit the dealership during the last two hours of the last day of the Quarter and buy the last prior model year unit on the lot. I thought they were gonna cry…