AD #2204 – How the Demon Was Kept a Secret, U.S. August SAAR Surges, Ford’s Plan to Cut Costs
October 4th, 2017 at 11:58am
Runtime: 6:59
- U.S. August SAAR Surges
- Most Big OEMs Post Gains
- Rich People Buy Fewer Cars
- Hurricanes Help Sales
- Hyundai’s SEMA Concept Truck
- How the Demon Was Kept a Secret
- Honda to Eliminate Japanese Plant
- How Ford Plans To Hack It
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On today’s show…strong car sales in the American market catch analysts by surprise…Ford’s Hackett gives some guidance on where he wants to take the company…and we’ll tell you how Dodge ran a corporate subterfuge campaign to keep the Demon a secret. All that and more coming right up on Autoline Daily.
This is Autoline Daily the show for enthusiasts of the automotive industry.
U.S. AUGUST SAAR SURGES
Sales in the U.S. market took a turn for the better last month. After falling all year long, sales came in far stronger than anyone was expecting. The SAAR came in at nearly 18.5 million vehicles, compared to 16 million a year ago. Automakers sold 1.5 million cars and trucks, versus 1.4 million. Even though there was one extra selling day this September than there was a year ago, sales were up nearly 2% on a daily selling rate basis.
| U.S. Light Vehicle Sales, September 2017 | |||
|---|---|---|---|
| SAAR | 18.47 M | vs | 16.02 M |
| Sales | 1.51 M | vs | 1.42 M |
| Source: WardsAuto | |||
MOST BIG OEMs POST GAINS
Amongst the largest, full line manufacturers, General Motors posted a 7.5% gain. Toyota had a great month with sales up more than 10%. Ford had a decent month, up more than 4%, but FCA really took it on the chin. Not only were sales down by double digits, Chrysler, Dodge, Ram, Jeep, and Fiat suffered big drops. Honda posted a small gain while Nissan grew much faster than Honda.
| U.S. Light Vehicle Sales, September 2017 | ||
|---|---|---|
| General Motors | 279,230 | +7.5% |
| Toyota | 226,632 | +10.5% |
| Ford | 215,366 | +4.3% |
| FCA | 173,071 | -13.2% |
| Honda | 142,722 | +2.7% |
| Nissan | 139,932 | +5.3% |
| Source: WardsAuto | ||
RICH PEOPLE BUY FEWER CARS
On the luxury side of the ledger we’re continuing to see surprising weakness. Mercedes-Benz sales dropped 5%, while Lexus was down about two and a half percent. BMW continued its year-long slide which is allowing Audi to close the gap. Audi had yet another strong month. Cadillac is another luxury brand in a year long slide, as every vehicle in its line-up lost customers, except the XT5 SUV. And finally, Jaguar Land Rover was on fire. Jag was up 19% and Land Rover was up 9%.
| U.S. Light Vehicle Sales, September 2017 | ||
|---|---|---|
| Mercedes-Benz | 32,096 | -5.0% |
| Lexus | 26,196 | -2.4% |
| BMW | 25,571 | -3.2% |
| Audi | 19,308 | +5.4% |
| Cadillac | 15,530 | -2.8% |
| Jaguar Land Rover | 9,703 | +12.4% |
| Source: WardsAuto | ||
HURRICANES HELP SALES
The strength in the market surprised analysts. They were expecting good sales because of the extra selling day, and because of hurricanes that hit Houston and Florida, which destroyed hundreds of thousands of vehicles, which need to be replaced. But none of them expected a SAAR of 18.5 million. Maybe we’re seeing the market gather some strength. And we will get a clearer picture in another month.
And we’ll be back with more right after this.
HYUNDAI’S SEMA CONCEPT TRUCK
It’s getting close to that time of year again where aftermarket upfitters descend into the Las Vegas Convention Center to show off their latest and greatest. And Hyundai packed as many aftermarket products as it could into a concept truck. As its lengthy name implies, The Rockstar Energy Moab Extreme Off-roader Santa Fe Sport Concept or REMEORSFSC for short is meant to tackle the demands of extreme 4X4-ing in Moab, Utah. Highlights include coil-over suspension, internal bypass shocks, bead-lock wheels with 35” Mickey Thompson tires, skid plates, a Warn winch, big brake kit, nitrous and it even comes with tents to camp out. In all, there are parts and pieces from 20 different aftermarket companies in the concept. The 2017 SEMA show kicks off at the end of the month.
BENNY WITH THE JETS
Before Dodge started its slow rollout of information about the Demon, it went to great lengths to keep its monster engine a secret within the company. Company officials say it would have been logical to give the Demon engine an old war plane name, like Hellcat, but that would have raised red flags. Instead, it got the generic code name, Benny. And to make sure no one caught wind of something special during dynamometer testing, all of the gauges were re-calibrated so that readouts looked like a Hellcat engine was being tested. And it worked too. Only a few dozen people within the company were aware of the Demon project.
Coming up next, automakers in Japan realize they have to deal with a declining population.
HONDA TO ELIMINATE JAPANESE PLANT
Honda is consolidating production of two of its plants in Japan by 2022 to help accommodate EVs and other new technologies. It says this will help it keep up with its competition. However we wonder if this also has to do with the country’s shrinking population which is causing the auto market to contract as well. Japan’s population declined by a million people over the last five years.
HOW FORD PLANS TO HACK IT
Earlier this year Ford fired its CEO Mark Fields, mostly because the investment community wasn’t happy with his results. Yesterday, the new CEO, Jim Hackett, laid out his plans to turn the stock around to analysts in New York. While not divulging very specific information it includes dropping some passenger cars, and five of the 17 engines it builds by 2022. That will help cut costs by $14 billion over the next five years. But Ford also wants to plow savings towards developing SUVs, trucks and electrified vehicles. It’s also more open to acquiring companies and forming partnerships. Hackett also wants to get vehicles to market faster, cut development time and tool-up plants faster. Wall Street was mildly impressed. Ford stock closed up 2% on the news.
Don’t forget to join us for Autoline After Hours tomorrow afternoon. We’ll have Robert Davis from Mazda giving us a behind the scenes story of how they developed Skyactiv technology. That’s tomorrow starting live at 3 pm eastern time.
And that wraps today’s show, thanks for making Autoline a part of your day.
Thanks to our partner for embedding Autoline Daily on its website: WardsAuto.com
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Comments (24)
October 4th, 2017 at 12:29 pm
Ford’s plan is all fluff. Cutting costs and outsourcing to China is certainly not considered to be bold moves.
October 4th, 2017 at 1:05 pm
I think you’ll continue to see all manufacturers cut engine platforms. It’s such a waste to have a 2.7L, 3.0L, 3.5L and 3.7L offered on a platform when the HP differences are negligible. GM has been just as bad offering a turbo 4 with almost the same HP as their small V6 then offering a larger V6 with only 20 more HP. They need to consolidate and build engine plants that will can produce over 1M engines to supply many platforms.
Down side is when they have a engine defect it affects many platforms. Get back to the days when GM put same engine like the 350ci V8 in everything. Which that engine in its various forms I believe has exceeded the 100 Million mark.
October 4th, 2017 at 1:22 pm
How did Hyundai / Kia do in the Sales Department?
October 4th, 2017 at 1:44 pm
Interesting the new management at Ford is again promoting cutting development times. That was the mantra several design cycles ago until quality and durability problems became apparent, then management reversed course to add back time to fix things. Guess the old lessons were not learned and the mistakes will be repeated.
October 4th, 2017 at 1:46 pm
Since high $$ cars are mostly leased thru a company so the payments are tax deductible have anything to do with the drop in sales and the new tax laws that may be put in place ???
October 4th, 2017 at 1:49 pm
Here is a curious question. The car in the Honda story was the Honda Legend, known here as the Acura RLX. The license plate has Japanese script on it and the driver is on the right side, so it sure seems to be a Japan-market car. Why then, is the nameplate Legend in English?
October 4th, 2017 at 1:51 pm
I call BS on the secret Demon story… While the exact numbers may have been kept a secret, you don’t add 100 hp to an engine and keep everyone in the dark on the project. Their are dozens of design engineers and structural analysts who would need to know the design specs in order to do their work, and having worked in a development environment where test cell work is done, “re-calibrating” the instrumentation to hide the numbers is easier said than done without a lot of technicians and support people involved.
October 4th, 2017 at 2:19 pm
#7 I agree, having ran dyno’s before myself. I mean recalibrating the cell to prevent what? The dyno operator from knowing. But then you have a calibration specialist that knows..
More likely these people had to sign confidentiality agreements before being added to the project.
October 4th, 2017 at 2:21 pm
Why is it now so expensive to offer more than one or two engines in a car, when in the 1960′s, you had a choice of about 8 engines in “mid-size” American cars?? Different people just “like” different type engines. I continue to believe that Cadillac would sell a lot more CTS’s and CT6′s if they would offer a plain, old pushrod V-8 in them.
October 4th, 2017 at 2:36 pm
#3.
US August Sales
Hyundai 57,007 -17.7%
Kia 52,468 +2.5%
October 4th, 2017 at 2:46 pm
9) The cost in the engines isn’t the issue so much, it’s the cost of certifying the engines and the vehicle they go in. All the engines have to be certified to pass the emission laws throughout the operating limits of the engines. In addition, the engines are certified in different EPA weight classes so an engine that passes the emissions at 2800 lbs has to be re-certified for a vehicle for a 3001 lb one. This is one of the reason for lack of manuals (plus the lack of demand). It is not worth the investment to certify a combo that may only account for 5% of the volume. Also by eliminating V6s and olny offering 4s, the crash structure is different so you only have to crash one car not one of each.
I’m old school too and I remember having Chevelles with sixes, 283s, 327s, and 396s with three or four variations of each.
October 4th, 2017 at 3:00 pm
9&11) Totally agree with Lisk however the tooling and equipment to run an engine line is in the 60-90 Million dollars so producing 2 engines vs 6 can save the company @300M in conjunction with the savings associated with high volume. Ford can get a better price on say a forged block when they buy 2 million vs buying 30k.
October 4th, 2017 at 3:20 pm
#9) To your point about people just liking different types engines I think that has changed over the years. For one due to complexity and specialized tools there are a lot less backyard mechanics that develop a love for a brand or engine. Secondly they are covered and hidden so very few drivers have looked at their engine or even know what they have. Thirdly they are all pretty quiet with the exception of sports cars. So that unique V8 sound is gone in the family sedan, CUV market.
The only metric that people still know is what they feel when they push down the pedal. So it makes sense to reduce the offerings to the fuel sipper with limited performance, an acceptable powerplant that delivers on par performance and then maybe the HO or sports version.
October 4th, 2017 at 3:22 pm
In the 60′s, multiple engines, like Mopar 361, 383, and 440 “B-Block” shared a lot of tooling, but I agree that it would be cheaper to make 2 million of exactly the same thing, especially if one line with one set of tooling has capacity to make all of them. I suspect it would take more than one set of block molds, machining lines, etc., though, if Ford made only one V-6 engine.
October 4th, 2017 at 3:25 pm
#9) Oh and Kit you can get the Cadillac CTS with a 6.2L Supercharged V8. So if you like 640 HP and 630 lb-ft of TQ that’s the car for you.
October 4th, 2017 at 3:34 pm
#13 Yep, younger drivers don’t much care, but, “on general principals,” quite a few older people don’t want a turbo 4 in an expensive luxury car, no matter how well it works. As far as I know, GM’s turbo 4 works well enough, and I know BMW’s does, having driven them, but Cadillac’s cars aren’t selling well, and 3 series aren’t selling as well as when they had the NA six. Maybe the engine is not a factor in either, though.
October 4th, 2017 at 3:42 pm
#15 What I’d like in a CTS or CT6 would be a naturally aspirated 6.2 like in a base Corvette, or detuned from that a little, if it would help with mpg and quietness, and make it a purely regular gas engine. The 6.2 used in pickups should be good. It’s 420hp, as I remember, and regular is recommended.
October 4th, 2017 at 3:48 pm
On the dropping of engines, for 2018, GM is dropping the 4.8L version of the V8 engine. The engine only saw service in Vans since 2014 and for the most part had few takers in the earlier pickups. Even when the old body Colorado offered a V8, it was the 5.3L not the 4.8. The replacement for the 4.8 will be the 4.3L V6.
October 4th, 2017 at 3:54 pm
17) The 6.2 gets great gas mileage in Corvettes but it is a real guzzler in pickups. The 5.3 will get 22-24 highway mpg while the 6.2 struggles to get 17. It’s all weight and frontal area in the case of the pickups, but I don’t think a CTS would get the mileage near the Corvettes potential. I totally agree with the V8 it would be a lot smoother.
October 4th, 2017 at 4:03 pm
The 4.8 never made much sense in the older pickups, except as a marketing thing, as most people seemed to pay the extra $1000 for the 5.3, which had the same mpg ratings in most applications
The 4.8 being dropped is probably the previous generation Chevy V8. They probably never made a 4.8 version of the new one.
October 4th, 2017 at 4:06 pm
Smaller engines put out less pollution and that is the reason for them. 6 cylinders put out less than 8s and 4s put out less than 6s.
October 4th, 2017 at 4:55 pm
21) Yes less pollution, less parts, less weight and more than adequate power. 300 HP is sufficient for most passenger cars and that can be easily had with many turbo 4s and naturally aspirated V6. The V8 is basically obsolete for passenger car applications.
October 4th, 2017 at 5:07 pm
I certainly agree that turbo 4′s and naturally aspirated V6′s have plenty of power. I have a turbo 4 in my 1989 minivan. I’m just saying that a turbo 4 doesn’t “belong” in a $70K luxury car, especially in the minds of older car nuts.
October 5th, 2017 at 2:52 pm
The 4.8L was made in the newest generation of V8s but being down nearly 50 hp, people anted up the $600 extra. Big advantage of the 4.8L over the 4.3 V6 was the smoothness.