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0:06 GM Earnings Upside Surprise
0:45 Daimler Finally Drops Smart in North America
1:18 Cadillac Says Bye-Bye to Its Best-Selling Car
1:57 April Sales Are Anyone’s Guess
2:46 Toyota Surrenders on DSRC
3:33 Earn Cryptocurrency Driving Your Jag
4:10 FCA Flies into The Cloud
5:12 Tesla’s Retail Blunder
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This is Autoline Daily reporting on the global automotive industry.
GM EARNINGS UPSIDE SURPRISE
General Motors announced its first quarter earnings this morning and while the results are mixed, GM smashed through analyst’s expectations. Even though the company sold fewer vehicles, and brought in less revenue, it cut costs nearly 9% and dropped another billion dollars to the bottom line and more than doubled its profit. Wall Street was expecting GM to post $1.11 per share in earnings, but GM earned $1.41 per share. And that kind of upside surprise almost always pushes the stock up. So far this year, GM stock is already up 19%.
|GM EARNINGS Q1 2019|
|Operating Profit||$1.2 B||+135%|
|Net Profit||$2.1 B||+106%|
DAIMLER FINALLY DROPS SMART IN NORTH AMERICA
Daimler announced that it is pulling the smart brand out of the U.S. and Canadian markets. And all we can say is, what took you so long? The car has been a sales disaster from the first day it rolled off the assembly line. Last year smart sold fewer than 1,300 cars in the U.S. and so far this year they’ve only moved 230. Last month Daimler agreed to essentially hand the brand over to Geely, make it electric and move production to China.
CADILLAC SAYS BYE-BYE TO ITS BEST-SELLING CAR
Speaking of dropping models, Autoforecast Solutions reports that the Cadillac XTS, the best-selling passenger car in Cadillac’s lineup, will go out of production in September. Cadillac always felt the XTS was wrong for the brand because it brought in older buyers. But dealers wanted the car because it easily outsold the ATS, CTS, and CT6. But GM is closing the assembly plant in Oshawa that makes the XTS, so they’re giving it the heave-ho. The Chevrolet Impala will also go out of production then because it too is made in that plant.
APRIL SALES ARE ANYONE’S GUESS
Automakers in the US will announce their April sales tomorrow and the experts are a little bit mystified about what the results will be. Sales could be down, they could be flat or maybe they’ll be up. Here’s the problem. March sales came in far stronger than any analysts expected, so they’re not sure what the underlying demand really is. Ward’s is forecasting that automakers will sell 1.3 million vehicles, with the SAAR coming in at 16.9 million.
TOYOTA SURRENDERS ON DSRC
Last year, Toyota announced plans to equip its vehicles in the U.S. with Dedicated Short Range Communication or DSRC. The connected car technology was supposed to start in 2021. But now it’s ditching those plans, because more support is needed from other automakers and from the government to support the 5.9 GHz spectrum for DSRC. The rest of the industry is headed to 5G and cellular V2X technology. Here’s another issue. States, counties and municipalities would have to build up the DSRC infrastructure, while the Telco’s will pay for 5G and cellular because they can make money off that technology.
EARN CRYPTOCURRENCY DRIVING YOUR JAG
If you drive a Jaguar or Land Rover you can earn cryptocurrency while driving. JLR wants drivers to share info about road conditions, traffic jams or potholes, which will be automatically provided to navigation providers or local authorities with JLR’s “Smart Wallet” technology. Drivers will earn credits which can be used to automatically pay for tolls, parking or electric charging. With so much data being created by new vehicles, automakers are trying to find ways to monetize it, and it could be worth a fortune.
FCA FLIES INTO THE CLOUD
FCA is partnering with Google Technologies and HARMAN, which is a part of Samsung, to create a new connected vehicle ecosystem. FCA’s Uconnect infotainment system will use a new cloud-based platform from HARMAN to power connectivity and offer a number of services. Uconnect will also be powered by Android, which will provide new content with over-the-air updates. The new platform will offer 4G connectivity, is homologated for all regions and will integrate with any service provider around the world. The new platform launches the second half of this year and will be offered in all FCA vehicles worldwide by 2022.
Coming up next, I’ll give you 166 million reasons why Tesla’s retail model is flawed.
TESLA’S RETAIL BLUNDER
Tesla made a strategic blunder in by passing franchised dealers and selling directly to customers. As a result, twelve states banned sales of Tesla’s and nine other states greatly limited how many company stores Tesla can have, usually five or less. And there’s a bigger problem. Tesla has saturated the markets where it can sell cars. Anyone who lives in California or travels there will tell you the state is literally crawling with them. They’re everywhere. That’s why Tesla desperately needs to open up its market in those 20 states that have banned sales or limited how many stores it can have. Collectively those states have a population of 166 million people who buy more than 8 million new cars a year. That’s a huge chunk of the market that Tesla is largely missing. No doubt embracing the franchised dealer system would be a bitter pill for Elon Musk to swallow. He wants Tesla to be a disruptive and different kind of car company. But wouldn’t it be better to simply swallow your pride and double the size of your home market?
And don’t forget to join us for Autoline After Hours on Thursday afternoon. Gary Vasilash is hosting a who’s who roundtable of auto analysts, including Stephanie Brinley from IHS Markit, Brett Smith from the Center for Automotive Research and the one and only Autoextremist, Peter DeLorenzo. It should be a great show, so mark your calendars for 3PM eastern time this Thursday.
But that wraps up today’s report, thanks for watching and we’ll see you again tomorrow.
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John McElroy is an influential thought leader in the automotive industry. He is a journalist, lecturer, commentator and entrepreneur. He created “Autoline Daily,” the first industry webcast of industry news and analysis.