AD #1456 – Why Sergio Sacked Luca, Top Big Truck Makers, Gas Use Rises in U.S.

September 12th, 2014 at 11:54am

Runtime: 7:58

- Why Luca di Montezemolo Was Fired from Ferrari
- Top Heavy-Truck Makers in the U.S.
- Gasoline Consumption Rises in U.S.
- AutoNation and Hennessey Team Up
- Auto Industry Embraces 3D Printing

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In today’s show: why Marchionne fired Montezemolo, how the auto industry is using 3D printing, and watch out, Americans are buying more gasoline than expected.

WHY SERGIO SACKED LUCA
The shock waves from Sergio Marchionne firing Luca di Montezemolo continue to reverberate throughout the auto industry. Publicly, the spin is that Montezemolo was let go because of Ferrari’s poor performance in Formula One for the last several seasons. But no serious industry observers believe that. Here’s my Autoline Insight. Sergio Marchionne has super ambitious targets to hit. He is publicly committed to growing Fiat-Chrysler Group revenues to 132 billion euros by 2018. And he needs to spend 55 billion euros in capital expenditures to meet that goal. Everyone in the analyst community is scratching their heads and asking, “Where is he going to get the money?” Well he’s not going to get it all out of Ferrari, but he can squeeze more out of the prancing horse brand. Montezemolo wanted to cap production levels to 7,000 cars a year to maintain the exclusiveness of the brand. Marchionne, looking at new markets opening up in China, Russia, India and other emerging markets, thinks production can easily be raised to 10,000 cars a year. I’d estimate that could bring in $850 million to $900 million more in revenue each year. They also clashed on whether Maserati would use Ferrari engines. Well, that argument has been settled. Put it all together and I think Sergio wants another billion dollars a year out of Ferrari. And that’s not all. Sergio has said once the FCA 5-year plan is working, he wants to break Ferrari out of the group. Sounds to me like he’s thinking IPO. Who knows? Maybe he could get another billion that way. So make no mistake about it. This change has nothing to do with Formula One and everything to do with “the bidness.”

TOP HEAVY-TRUCK MAKERS
Yesterday we reported on the soaring success of Class 7 and 8 semi trucks in the U.S., but do you know who the biggest players are? Daimler, which owns Freightliner and Western Star, leads all the others with over 9,400 units sold in August. Next up is PACCAR, which owns Kenworth and Peterbilt. It sold just over 6,000 semis. International is in third place at over 4,600. Volvo Trucks, who owns Mack and does not sell Class 7 trucks is hot on International’s heels. Then there’s a big drop off to Ford and Hino (which is part of Toyota) which only sell Class 7 semis, and then come a few others that sell Class 8s. As we said yesterday, economists consider heavy-duty truck sales to be a 6-month leading indicator of where the economy is headed, and booming sales have everyone smiling.

FILL ‘ER UP!
And now we have another sign the economy is picking back up. More people are using more gasoline. The U.S. Energy Information Administration says that Americans are using 135 billion gallons of gasoline a day which is 2 billion gallons more than it forecast last November. The EIA expects gasoline use to go down long term because new more fuel efficient cars will replace older vehicles that aren’t as efficient. But right now, with more people going back to work, gasoline sales are on the rise.

HENNESSEYNATION
Wow! Here’s one we never saw coming. AutoNation, the largest automotive retailer in the U.S., is teaming up with Hennessey Performance Engineering to allow customers to order Hennessey upgrades from its outlets across the country. As a promotion that starts Wednesday in Florida, a Hennessey powered 2015 Chevy Silverado will tow around a Hennessey powered 2015 Corvette to 27 AutoNation Chevrolet outlets. Demonstration rides can even be arranged by contacting any AutoNation store to set up an appointment. But have no fear… the fun doesn’t stop there. Next year a similar plan will roll out, but will involve the new Ford F-150 and Mustang. So, let the burnouts begin.

Coming up next, there’s a tremendous amount of excitement about 3D printing, we’ll look at how the auto industry is jumping on the bandwagon..

AUTOLINE THIS WEEK
3D printing is becoming more and more popular, especially in the auto industry. That’s why we dedicated a whole Autoline This Week to this topic. In the following clip from that show, Brian Levy from Joe Gibbs Racing explains how 3D printing helps the team develop parts.

Brian Levy: A couple of things I have here. This first one is actually a brake pedal that we use in our race cars every single week. This is a good example of one of the things that we can do with a rapid prototyping is, say we want to change the geometry of our brake pedal. Well, it’ll take three or four weeks to produce the metal part, but I want to be able to let my driver sit in the car, see if it feels the way he wants it to. If it’s comfortable to him, if it affects his foot in a certain way so I can produce three or four different versions of this brake pedal. Let him try them out, decide which one he likes the best and then we can go to manufacturing with that. It completely streamlines the process and it saves us cost so that we don’t have to produce five or six metal versions of this part on a typical CNC machine. In the end, we’re only going to use one of them anyway. So, that’s a great use of the technology.

John McElroy: It’s strong enough to test, but maybe not strong enough to stand up in a race or for the rest of the season.

Brian Levy: Exactly. The materials that we have available are certainly robust enough that the driver can sit in the car, try it out, and see if it feels the way he wants it to feel. It’s a brake pedal so he can put some force on to it, really put it through its paces a little bit. Not on a track environment but enough for him to evaluate it as much as he needs to before making that decision to say, “I want option A.”

John McElroy: So, you could slap in different pedals until the driver says, “This is the one I want.”?

Brian Levy: Exactly.

Also joining me for that show is David Darbyshire from DASI Solutions, which sells 3D printers to manufacturers and Bruce Bradshaw, the CEO of Stratasys, which makes 3D printers. There’s a lot of great information about 3D printing in that episode and you can watch it right now on our website, Autoline.tv.

But that wraps up today’s show thanks for watching and have a great weekend.

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15 Comments to “AD #1456 – Why Sergio Sacked Luca, Top Big Truck Makers, Gas Use Rises in U.S.”

  1. G.A.Branigan Says:

    3D printing can also be done in metal now.very exciting stuff.Jay Leno has a 3D machine in his shop.He’s had it for years.

  2. HtG Says:

    Massacre at Maranello

    One wonders what the power logic would be today if Ferrari’s cars were winning in F1. Would Marchionne have been able to dislodge a triumphant Montezemolo? (consider Italy’s politics and the Tifosi)

    It’s quite tragic what’s happening with personell at the race team too; letting go the team principal and the engine boss. I read that the 2014 car was developed under a concept of a very narrow chassis, that in turn forced a smaller less powerful motor. And they hoped to be quicker through this compromise. This year’s homologation rule didn’t allow the team to develop the motor much past a certain date, so Luca was in a tight spot.

    Before the season began, Ferrari made a corny video introducing the car. But they heavily emphasized the absolute need to win. NOW! It struck me odd at the time, and I wonder if Montezemolo saw the writing on the wall for himself and the retail car making operations.

    If Alonso and Kimi were battling for wins like the Merc drivers would Marchionne be running Ferrari?

  3. Chuck Grenci Says:

    John, I think the 135 billions of gasoline is for the year (2 billion more than last year); the 8.xx barrels per day was used as an increased number but they kind of mixed headings on the graph (I think). Correct me if I’m wrong and help me out to better understand the numbers.

  4. HtG Says:

    They are still live streaming vintage racing from Goodwood

    http://www.gpupdate.net/en/f1-news/316072/livestream-goodwood-revival-2014/

  5. John McElroy Says:

    @3. Chuck, the EIA says its 135 billion gallons a day! Here’s the link to the study: http://www.eia.gov/todayinenergy/detail.cfm?id=17911

  6. HtG Says:

    3,5 maybe the confusion comes from the unit on the left side of the graph being in barrels and the right being in gallons.

  7. XA351GT Says:

    Those 3D printers are awesome. I wish I was smart enough to use one. The possibilities are endless. It would be great for my 1/18 model making. Now if they were cheap enough and I was smart enough I’d be in business.

  8. Mike Says:

    Re: Sergio; One man’s attempt to leverage his assets as a part of a global strategy might sound like another man’s attempt to stretch out the soup by adding another can of water. The heart of the question is whether making a few thousand more cars will really hurt the exclusivity of Ferrari brand. In a world, in a market, this large, I don’t think we’ll notice much difference. They will still be out of my price range.

  9. Kit Gerhart Says:

    7, Basic 3D printers are pretty cheap, a few hundred bucks. Different ones are configured for input using different CAD software. The cheaper machines only do basic plastic, and produce parts of ok finish quality. The parts tend not to be as strong as when fabricating the same plastic other ways, like injection molding, but the versatility for making one, or a few intricate parts is amazing.

  10. dwmac71 Says:

    The surge in big truck sale comes from the emissions warranty running out on the 2010=2012 trucks. When trucks were more reliable (pre2002) it was common to keep them till they had 500,000 to 700,000 miles on the clock. But now with EPA mandated emissions it’s more cost effective to trade before the warranty runs out. A local fleet that had been keep it’s trucks to 600,000/5-6 years has started to trade in 2012 trucks in the 320,000 to 400,00 mile range. With repair cost on the DEF DPF EGR systems running in the thousands per incident it’ not unheard of to rack up yearly cost equal to a years payments on a new truck.

  11. Chuck Grenci Says:

    Got up early to watch the first Formula E race this morning; pretty much a snooze fest IMO. Last lap (last turn) crash took out the number 1 and number 2 cars; pretty poor ending to a pretty boring race. Again, JMO.

  12. HtG Says:

    10 I just saw the crash clip. Fantastic action!

    Here’s what to watch, Chuck

    http://www.gpupdate.net/en/f1-news/316073/livestream-goodwood-revival-2014/

  13. Chuck Grenci Says:

    HtG #11

    Thanks for the link; caught the Can-Am race. I enjoyed the heck out of that (my teenage formative years: mid ’60′s race cars).

  14. HtG Says:

    There’s something about the instability of those old cars that makes them exciting to watch moving. The aero and other tech on today’s cars, like radial tires, makes them so stable that they appear to be motionless. I’ve seen guys driving old sedan race cars at Spa, and have to say it was a great treat.

  15. HtG Says:

    Sunday, in the afternoon

    Ah, to drive around while America watches football.