AD #1278 – Aussie Suppliers to Collapse, Lincoln MKC Pricing, Upscale C-Class

December 16th, 2013 at 11:49am

Runtime: 7:03

- Autonomous Ann Arbor
- Aussie Suppliers to Collapse
- Lincoln MKC Pricing
- Upscale C-Class
- Unifor Close to Organizing Toyota
- Autoline Executive of the Year Panel

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Welcome to a brand new week of Autoline Daily. Here are some of the latest developments in the global automotive industry and the back story to why they’re happening.

AUTONOMOUS ANN ARBOR
Ann Arbor, Michigan could become the first city in the world to be the home of a fleet of autonomous cars. That’s the goal of the Mobility Transformation Center, a group run by the University of Michigan, with participation by the U.S. Department of Transportation and a variety of automakers and suppliers. It predicts that by 2020 Ann Arborites will be using smartphones to call self-driving cars to come get them for their morning and evening commutes. Right now the Mobility Transformation Center is testing a fleet of 3,000 connected cars to develop the technology needed to network them together. As an interesting aside, Larry Burns, the former head of R&D at General Motors is deeply involved with this project.

AUSSIE SUPPLIERS TO COLLAPSE
Australia’s auto suppliers are expected to be decimated from Ford and GM’s decision to end production in the country. WardsAuto reports that 75% of supplier companies will close their doors because of GM and Ford’s exit. The country’s Prime Minister says the government will soon announce a plan to help companies and workers transition into other fields. But this sure calls into question how Toyota can continue to build cars in Australia with so many suppliers about to go out of business.

LINCOLN MKC PRICING
Lincoln has a lot riding on its upcoming CUV, the MKC. We just learned the base model will be priced at $34,000, including destination charges. There’s also a mid-level model starting at just over $37,000 and the top model starts at about $41,000. It goes on sale next summer.

UPSCALE C-CLASS
The new CLA just filled the entry level spot in Mercedes-Benz’s lineup that the C-Class once held. So the all-new 2015 C-Class is moving a little more upscale. It’s longer and wider and whether looking at the outside or in, it’s instantly recognizable as the new model. It will initially be powered by 3 engine choices, one diesel and two gas, all with stop/start technology and mated to either a 6-speed manual or a 7-speed automatic transmission. The gas engines and 7-speed auto are the only variants available in North America to start out with. Other engine options will be available in North America and globally shortly after market launch. Prices in Europe will start out a little over 33,000 euros, which is about $46,000, and will range up to about 39,000 euros or $53,000.

UNIFOR CLOSE TO ORGANIZING TOYOTA
We have reported that the UAW is struggling to organize more facilities, but it looks like our neighbors to north are having a little more luck. Unifor, the Canadian auto workers union, says it has received membership card signatures from nearly half of Toyota’s Canadian manufacturing workers. To hold a vote to join a union, Unifor first needed signatures from at least 40% of employees. We’ll keep you updated on how this goes.

NACTOY FINALIST POLL
Last week we asked you to vote on which vehicles you think should be the North American Car and Truck of The Year. We posted the finalists for that award, on the car side, the Chevrolet Corvette, the Cadillac CTS and the Mazda3. On the truck side, it’s the Chevrolet Silverado, the Acura MDX and the Jeep Cherokee. We’ll announce your results tomorrow, but that gives you one more day to vote in case you haven’t. Just go to Autoline Daily, show number 1275 for December 11th, and you’ll see the ballot. Last year the Autoline Daily audience accurately predicted who the winners would be, so please take the time to give us your input.

Last week I told you about who made it to the short list for the Autoline Executive of the Year. Today I want to start to introduce you to the members of the blue ribbon panel who made that selection. That’s coming up next.

AUTOLINE EXECUTIVE OF THE YEAR PANEL
Last week I introduced you to the short list for the Autoline Executive Of The Year. Those executives include Akio Toyoda, Tom Doll from Subaru, Martin Winterkorn from Volkswagen, Alan Mulally from Ford and Mark Reuss from General Motors. Now let me introduce you to the blue ribbon panel that selected these executives. And today I start with Maryann Keller.

I first heard about Maryann in 1979 when she was the first Wall Street analyst to predict that Chrysler was going to go bankrupt. Most other analysts thought this was a ridiculous prediction, not only coming from a rookie analyst, but from a woman at that. Of course, Keller’s analysis was spot on and only a government bailout prevented the bankruptcy.

Maryann went on to become one of the best known automotive analysts in the world, if not the best known. And it wasn’t just her financial insights that set her apart from the rest of the Wall Street crowd. Her expertise has been sought out over her career. The National Academy of Sciences asked for her input while studying the impact of Corporate Average Fuel Economy. She was an advisor to MIT’s Global Motor Vehicle Program, which resulted in the influential book, “The Machine That Changed The World.” She’s also written several books of her own.

Maryann has served on the Board of Directors of a number of companies including the Dollar Thrifty Automotive Group, DriveTime, a major used car retailer, as well as Sonic Automotive, Falcon Financial, and Lithia Motors.

Clearly Maryann Keller is one of the most insightful analysts in the automotive industry and that’s why I’m so pleased to have her on my blue ribbon panel to select the Autoline Executive Of The Year.

Tomorrow I’ll introduce you to another member of the panel, but that wraps up today’s report. Thanks for watching.

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47 Comments to “AD #1278 – Aussie Suppliers to Collapse, Lincoln MKC Pricing, Upscale C-Class”

  1. Chuck Grenci Says:

    The SAAR looks pretty healthy, and is being reported by a lot of factions as healthy, but a disproportional number of sales are being propped up by heavy discounts (even new launches, with few exceptions) are offering incentives. How then do the automotive manufacturers continue to raise prices at such alarming rates and intend to keep sales solvent.

    A lot of the sales for the last couple years are partially attributable to pent up demand; what is to happen when demand begins to wain, jobs continue to remain flat and credit eventually drys up for marginal borrowers. Tread lightly manufacturers; we’re not out of the ‘woods’ yet.

  2. Marshall Says:

    Excuse me for not being up on the Australian auto biz, but why are the auto manufacturers closing up the factories? Are sales still down in Australia since the ’08 recession?

  3. Bradley Says:

    Wow, I’d love to have lunch with Maryann Keller. The book, “The machine that changed the world”, was magnificent. The questions I would ask her.

    It was by pure chance I found that book while in college. It was on a discount shelf and I randomly found it. It captivated me from cover to cover.

  4. Kit Gerhart Says:

    It sounds like the C-Class is almost becoming the new E-Class in size, and price. That being the case, they really need to make the CLA more like a real Benz, in ride quality, quietness, and other luxury traits.

    Many potential CLA buyers don’t know, or care that the CLA is front drive, but they will notice something amiss when they find that their friends’ Camrys and Malibus ride better.

  5. Bradley Says:

    My guess is that since Toyota is the closest to its home field operations, they are integrated. I would guess that Toyota exports a lot from Australia, is that true?

  6. T. Bejma Says:

    #1

    Chuck, if you look at the data, Average Transaction Prices (ATP’s) have been going up and (besides trucks) incentives are staying the same. That equates into more profit, which explains why the data shows margins going up.

  7. Kit Gerhart Says:

    #5,
    About 2/3 of Toyota Australia production is exported, at least in 2011.

    http://www.toyota.com.au/toyota/company/operations/exports

    I wouldn’t have expected that.

  8. T. Bejma Says:

    #1

    The data…

    http://www.prnewswire.com/news-releases/new-car-transaction-prices-down-for-the-first-time-in-three-years-incentives-are-up-according-to-truecarcom-234208081.html

  9. ColoradoKid Says:

    #1 .. Yup … and in fact the Smoke & Mirrors goes even deeper than that ;-)

    ————

    Upscale C- Class …. Yeeesh !!! If they pinch that nose any further it’ll look like a German Edsel ….. yeesh !

    ————-

    JEEP Cherokee – Saw three this morning on the way back from PT . My impressions ? An amalgamation of Lego Blocks haphazardly stacked upon one another with little or no concern of scale or proportions … with a snout only a mother could love tacked on the front . Though I’d bet even the mother’d smack the ___ out of the doctor on first sight as well …

    A hideous travesty masquerading as a JEEP

    —————-

    Cadillac’s ‘ Delusional thinking . So now … despite waning sales and a general lack of interest Cadillac’s actually stupid enough to try and charge MORE than the German for their badge engineered parts bin cars with platforms so old even half the engineers at GM can’t remember what they were derived from ?

    Yeah … that’ll work .

    Seriously ….. what in the ____ are those deluded morons at GM delving into ?

    I mean … I know I keep referencing GM’s stupidity towards possible chemical inducement ….. but errr …. when the entire bunch is THIS deluded … what else can one attribute it to ?

    Mass head injuries ? Noxious fumes in the air impairing mental capabilities ?

    Nahhhh…. gotta be that Kickapoo Joy Juice of one form or another .

    Walter ???? That you hanging ’round GM’s water supply ?

  10. ColoradoKid Says:

    6 – If you ignore the propaganda and take the time to READ the FACTS … you’ll find discounts – excess incentives – sub prime auto loans etc are the overwhelming rule .

    e.g. Oh great master of Business …. y’alls banging out the numbers sales wise …. but ya aint makin nary a dime o’ profit on a single solitary one

    Five years Bejma … or less … till GM and Chrysler come crying back to the US tax payers to bail their smarmy arses out once again …. five years …. wanna take that bet ?

  11. ColoradoKid Says:

    Autonomous Cars

    What ? Again more pie in the sky – technology for technologies sake … answering the question no one is asking .. wishful thinking ?

    A perfect analogy when it comes to the Autonomous Cars delusion ;

    ” The Hunting of the Snark ” by Lewis Carol

    [ which was if you're not aware a political satire on the ludicrousness of futile ventures ... e.g Doing Nothing .. To Accomplish Nothing .. with Nothing as its goal ... but doing it anyway just for the sake of doing it ]

  12. Victor West Says:

    I wonder if the decline in sales by VW in the US is due to all the publicity over the new Golf and GTI. My local dealer has very few of the current models in stock. I would wait for the new model instead of buying the current model. A volume leader is out of the market at present until the new ones arrive later.

  13. Kit Gerhart Says:

    #9,
    GM has certainly made some stupid decisions, like the PSA deal, and earlier, the FIAT deal, but you don’t seem to realize that they have some GOOD PRODUCT, including the ATS and CTS.

    I don’t know how you figure the Cadillacs are “badge engineered,” and have platforms so old the engineers don’t remember what they were derived from. If they are badge engineered, what is the name of the Chevy or Opel that is the same thing as the ATS or CTS? That’s right, there isn’t one.

    A certainly agree, though, that they shouldn’t price the Cadillacs higher than the Germans. Well, the ATS should be priced higher than the CLA, but CLA’s not German, and not a real Benz.

  14. HtG Says:

    Warum so stumm?

    Hey, this Toyota settlement story is a biggie, Autoline. Toyota is in a legal process where it will decide whether to settle hundreds of lawsuits concerning unintended acceleration. That recent case from Oklahoma where Toyota were found liable is the key, because in civil contests you only need a preponderance of the evidence in order to prevail.

    http://www.eetimes.com/document.asp?doc_id=1320395

  15. T. Bejma Says:

    #10

    Oh, it’s 5 years now? Last year it was 3. Maybe next year it will be 7… ;-)

    I don’t need to take your bet, I am already betting my family and my life that GM will be around at least until I retire 20 years from now.

  16. Kit Gerhart Says:

    14, I’m still not worried about my Prius. Two feet on the brake will easily overcome the 130 hp, or whatever it has.

    Yeah, I agree that is a biggie that Toyota is going to negotiate settlements. I’m still not convinced, though, that the cars “took off on their own,” and if they did, i’m not convinced that the drivers planted even one foot firmly on the brake pedal.

  17. HtG Says:

    16 same here, Kit. But from a legal and business angle, that OK case may turn out to be the watershed that EETimes said it was a few weeks ago. And the next trial is going to be in Michigan, so that might elevate the issue even more. Toyota needs this to go away, but what happens when current owners(or a class action law firm) become aware that their Camry is in the set of cars held to have a defect deep within the software Borg?

    Calling ABC’s Brian Ross

  18. XA351GT Says:

    As much as I dislike the POTUS and his lousy decisions, The bailout of GM and Chrysler saved US suppliers and Ford the fate of what is going to happen in Oz. I guess it’s true that even a blind squirrel can find a nut.

  19. RS Says:

    Brakes over horsepower. Always. The OK jury had to have been swayed by something other than fact. Sympathy, Big-&-Rich Company syndrome – whatever. “Unintended” acceleration is driver error. Period.Don’t believe it for a single second. I have No idea why Toyota is rolling over here and playing dead. There simply must be a higher court for an appeal!??

  20. Kit Gerhart Says:

    18,
    The big mistake this POTUS made was to propose Romneycare for all, rather than making a case for Medicare for all. Sorry, I need to avoid politics here.

  21. Kit Gerhart Says:

    21,
    Yeah, brakes overcome horsepower, even when there is a fair amount of horsepower. The one bit of abuse I’ve inflicted on the ’96 Corvette I bought a few months ago was “torqueing it up” by holding the car from moving with the brakes, while applying full throttle. The brakes won, no problem, but the power won over the tires when I released the brake. It was due for new tires anyway.

  22. cwolf Says:

    Already there are a few kinks to iron out. Just glad it isn’t me who has one:

    http://www.autonews.com/article/20131216/RETAIL05/131219890/nissan-recalls-some-infiniti-q50-sedans-with-steer-by-wire-software#axzz2nggr5OPz

  23. HtG Says:

    19 You can appeal a decision of the fact finding trial, which is what OK was about, but you need to argue there was an error in the administration of the law. Toyota can still try that, I guess.

    But can you imagine the meetings where the Toyota lawyers were sitting down with management to decide how to proceed? Think of all the Toyotas on the road right now that have that software. (feeling sick, right now)Will Toyota decide to pay every time this happens in the future? What just happened to resale values?

    Come on John, give Akio the exec of the year award. He needs it.

  24. HtG Says:

    21 Brakes may beat power, but if you don’t get on those brakes HARD, you’ll risk heating up the pads and boiling the fluid, in which case there’s going to be fade. Better hope the gas tank runs dry at that point.

  25. C-Tech Says:

    I suspect the Aussie government may have underestimated the human cost and the loss of tax revenue from the automakers. We will see.

    It will be interesting to see what these Ann Arbor Johnny Cabs will look like. Will they be converted conventional vehicles? Will they be purpose-built?

  26. C-Tech Says:

    I suspect after all the legal scenarios were considered, settlement by Toyota was probably the least expensive.

  27. Kit Gerhart Says:

    24,
    Yeah, if you actually do have untended acceleration, you need to brake hard, and get the speed down quickly. With older cars, turning the key off was a good way to cut power, albeit while losing power steering, but that doesn’t work with many newer cars. The start/stop button in my MINI won’t shut off the engine if I’m rolling, unless I hold it three seconds.

  28. HtG Says:

    Think of the brand damage if the story becomes, ‘all Toyotas of certain years share the same potentially lethal software.’ This is a big deal. Now Autoblog has picked up the story, LATimes had it last week, and the EETimes reporter who initially covered it and read transcripts and spoke to the plaintiff’s hired expert, said the story had legs. We’ll see.

  29. C-Tech Says:

    WOW! Kit I did not think about vehicles with push-button start/stop systems, you can’t just turn the key. Now I wonder about those systems like like Mercedes, Chrysler, and Nissan uses?

  30. C-Tech Says:

    Johnny Cabs, see Total Recall with Arnold Schwarzenegger.

  31. T. Bejma Says:

    #29

    You can still shift to neutral when you have a push button start/stop. You will probably grenade the engine, but at least you will not be accelerating.

  32. Kit Gerhart Says:

    31, You shouldn’t even grenade the engine, since they have rev limiters, but it would sound really ugly. Can these electronic “shifters” be counted on to shift into neutral?

  33. cwolf Says:

    Why not apply the emergency brake?

  34. Kit Gerhart Says:

    The emergency brake doesn’t have much power, working only on two wheels, and by cable. Also, with disk brakes, aren’t emergency brakes usually a little drum thing that is separate from the real brakes? C-Tech, is that the case?

  35. Kit Gerhart Says:

    29, I suspect most start/stop buttons operate like the one in my MINI, and need more than just a tap to stop the engine while the car is moving, so a curious, unrestrained toddler won’t be as likely to shut the engine off while you are passing on a two lane road, etc.

    Maybe cars should have a “kill switch” like motorcycles, that is an actual switch for the fuel and/or the ignition. It should be placed to the left of the steering column, so it wouldn’t get “accidentally” actuated by passengers.

  36. ColoradoKid Says:

    Toyota has a Problem [ with the Tundra ]

    http://www.thetruthaboutcars.com/2013/12/toyota-considers-increasing-capacity-at-san-antonio-truck-plant-as-tundra-sales-climb/

    Seems they can’t build em fast enough ! Look out Silverado/Ram …. the REAL American truck ( higher US sourced content ) .. is nipping at yer heels

    ;-)

  37. ColoradoKid Says:

    35 – A smart idea well worth considering . Damn smart idea in fact !

  38. ColoradoKid Says:

    37 …. cont ….. or alternatively they could simplify the idea by placing the Start/Stop button on the left side out of reach of passengers /children / pets etc

    Why they don’t do that from the get go is beyond me

  39. Kit Gerhart Says:

    The ’50 Plymouth I drove while in high school had the key on the left side of the dash, which was unusual. They did that, presumably, to keep kids from messing with it.

  40. pedro fernandez Says:

    The Daily Caller reports that EV’s are leaving their owners out in the cold, so to speak, by cutting range by as much as 75 miles and slowing down charging time significantly as well. And they don’t do well in the heat either, so everyone move to Northern California!

  41. Kit Gerhart Says:

    Cold weather not only reduces the capacity of batteries, but the heater uses a huge amount of power. If you do stop and go driving with the heater on, you could lose almost all of your range.

  42. pedro fernandez Says:

    I don’t understand, but just about every single Li ion battery device that we own has had their batteries replaced in less than 3 yrs, and this is not in any extreme weather condition at all and without the vibration and bumping that a car get daily, so how are these car batteries supposed to endure for years?

  43. T. Bejma Says:

    #36

    “Toyota could sell 137,000 Tundras next year…”

    Hardly “nipping at yer[sic] heels…”

    Ram Sales through November = 322,268
    GM Trucks sales through Nov = 604,366

  44. Kit Gerhart Says:

    42,
    I’m wondering the same thing. In cars, they try to manage charge cycles to maximize battery lifetime, using only the “middle” part of the charge/discharge cycle, but a car is a tough environment.

    There are a lot of Li batteries in the newer hybrids, and we should soon know how the batteries are doing. There is so few pure EV’s, that good data will be harder to come by. I’m glad my Prius has its “old fashioned” NiMH batteries, that are well proven in hybrids.

  45. Chuck Grenci Says:

    Lithium ion batteries do not like deep discharges; the automobile figures I remember (guesses because my memory isn’t that good) is that they are at zero when around 35% remains and when charging are only charged to about 85% capacity; this supposedly lengthens their length of life to 10 years (approx.). Perhaps tabletop users go deeper into the batteries range (reducing life).

  46. Bradley Says:

    #43

    That is 137,000 fewer highly profitable truck sales that the Detroit names aren’t getting.

    #44
    Just yesterday I spoke with a coworker about her 11 year old gen1 Prius. Here are the highlights:
    How many miles? – 160,000
    Have you had any issues with the batteries? – “No, same batteries.”
    What MPG do you get? 42-52mpg
    Has the MPG changed since you got the car? – “Not really, if anything its better”

  47. Kit Gerhart Says:

    46, re. 44
    That’s pretty good. A friend has had the same experience with an early second generation Prius. It is newer, about 8 years old, but has about 170K miles.