AD #2803 – Automakers Start Announcing Pay Cuts; Magna Shows How to Make Masks; BMW 3 Series PHEV

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

MOST AUTOMAKERS GET DOWNGRADED
And of course we need to start with an update on how the coronavirus crisis is impacting the auto industry. Automakers and suppliers are really hunkering down to deal with an expected credit shock reverberating around the world. Earlier this week Moody’s downgraded Ford’s credit rating. Yesterday it downgraded most major automakers including Toyota, Honda, Nissan, BMW, Daimler, JLR, Renault, Volvo, PSA , Daimler. You name it, they were all downgraded. Even McLaren.

AUTOMAKERS TRY TO SECURE CREDIT
The reason they’re being downgraded is they’re not bringing in much revenue at the same time they’re burning through a lot of cash. Volkswagen is burning through 2 billion euros a week. Daimler is trying to get a 10 billion euro line of credit from its banks. Toyota is trying to get $9 billion. To preserve cash GM told it’s suppliers that it’s halting development of all new product programs except for its full-size SUVs, its EVs and its Ultium battery program.

AUTOMAKERS START TO CUT PAY
Automakers are in a mad rush to slash costs and hoard as much cash as they possibly can. They’re taking drastic measures. General Motors is amassing a war chest of $30 billion, but even that is not enough. It layed off 6,500 workers yesterday and it’s cutting everyone’s pay by 20%, though top executives will take a bigger pay cut. Ford also announced that chairman Bill Ford would give up his base pay and that the top 300 executives in the company will take 20% to 50% pay cuts. No doubt Ford announced this to prepare the rest of its workforce that they too will have to take pay cuts.

WILL DOWNTURN LAST A LONG TIME?
Here’s my Autoline Insight. I knew this crisis would be bad. But nothing scared me as much as the announcement from GM and Ford that they’re forcing everyone to take pay cuts. That shows they’re deeply worried about running out of cash, even though they have tens of billions in the bank. And that tells me they expect that the economic downturn caused by the virus will last a long time, even though the virus will run its course at some point.

MAGNA POSTS INSTRUCTIONS TO MAKE FABRIC MASKS
If you’d like to help fight against the coronavirus or maybe you’re just bored, Magna posted instructions on its website for its employees on how to make fabric masks. One video covers how to make a reusable mask with a pocket. The pocket can fit a filter or it fits over an N95-type mask. The other video covers how to make a reusable mask without a pocket. Both can help support people working in restaurants, grocery stores, gas stations, truck drivers and more.

NASCAR E-RACE GETS OVER 900,000 VIEWERS
This eRacing thing could have some potential. Last Sunday’s NASCAR event was watched by over 900,000 people on live TV. While that’s much less than the typical NASCAR car race in 2019, which had somewhere between 2.5 and 3 million viewers, it did set a record for most watched eSports event in U.S. history. And now IndyCar is joining the eRacing mix. The iRacing Challenge is a 6 race virtual series that fans can vote to start at either Michigan or Watkins Glen race track this Saturday at 4pm ET. It’s a good move, the Indy 500 was just postponed until August. Most major racing series now have their own eRacing efforts and what we like is that you can get both past and up-and-coming drivers and even drivers from other series to participate.

DENNY HAMLIN HAS $125,000 RACE SIMULATOR
And speaking of eRacing, Denny Hamlin won last week’s NASCAR’s virtual race at Homestead. Well, I would hope so. It turns out he has a $125,000 simulator in his house. It’s the APEX6 PRO, which features advanced motion simulation that’s able to mimic roll, pitch, yaw, surge, sway and heave, which allows you to feel terrain changes and acceleration and deceleration. On top of that it comes with three 4K monitors and surround sound. So with that kind of advantage it’s no wonder that he won.

BMW 3 SERIES PHEV SPECS FOR THE U.S.
BMW is adding a plug-in hybrid to the 3 Series lineup, in both rear and all-wheel-drive. Its powertrain consists of a 2.0L turbo engine that’s mated to an 8-speed automatic transmission. Along with its electric motor, the car cranks out 288 horsepower with XtraBoost, a new feature that provides 40 extra horsepower for up to 10 seconds. And its 12-kWh lithium-ion battery provides 22 miles of electric range, 20 with AWD. Its available with Traffic Jam Assist which allows the car to drive itself at speeds up to 37 MPH on limited access highways. The new plug-in hybrid 3 Series is scheduled to go on sale in May with a starting price of $45,500, AWD adds $2,000.

WILL COLLISION SHOPS LOSE BUSINESS DUE TO ADAS?
With all this safety technology coming into cars, a question for any collision shop will be, if cars are getting in less accidents will there be less work to do? On Autoline This Week one of our guests is Sean Carey, the President & CEO of a company called SCG Management Consultants answers that question.

Sean Carey, President & CEO, SCG Management Consultants
“From a strategic perspective, from a landscape of the claims industry, we’re going to see less claims. There’s no question about that because the small end(s of) vehicles, the small bumpers, rear to front bumpers incidents won’t happen. The car simply won’t make that mistake. They’ll take over and not allow those incidents to take place. I think the industry need be less concerned about the number of vehicles available for repair and more concerned about repairing them correctly at this point in time. Although, we’re seeing the onset of reduced frequency, I don’t think it makes its way down to the collision repair shops for a year or two yet. Probably, three or four to be more truthful. And I don’t think it diminishes the size of the market because severity will go up. That’s inevitable. And you can’t do the scanning and diagnostics, you can’t do the calibration and (pulling) repair procedures and repair planning without adding time into the equation. So, less repairs, higher cost per repair, but it’s not a decline in market. I think the market from a dollar and a volume perspective stays the same. I think we’ll see a reduction in jobs, this is going to be a very difficult market for the number of shops we have right now to step up get the training, the staff, the equipment and then stay on top of all these procedures, the skills required. So, it is going to have a big impact. I think we’re a couple of years away.”

We’ve shown you several clips from this show, which is full of great information ADAS repair, and you can watch it right now on our website or YouTube channel.

KIA HIRES NEW VP OF INTERIOR DESIGN
Kia hired Jochen Paesen as its new Vice President of Interior Design. He will be based in South Korea and report to Kia’s head of design, Karim Habib. Before joining Kia, Paesen was the head of interior design at the EV startup NIO. Prior to that, he spent much of his career at BMW where he’s credited with designing the i8 and the 2009 Vision Efficient Dynamics concept. At Kia, Paesen will focus on developing the brand’s future interior design, particularly for electric vehicles.

NASCAR ANNOUNCER PROVIDES COMMENTARY FOR BACKYARD DOG RACE
And for those of you who aren’t interested in virtual racing. Check out this video Mike Bagley posted on twitter of his dogs chasing each other around a pool. Mike’s a NASCAR announcer for the Motor Racing Network and he provides some fine commentary of this race. Hope you enjoyed that and if you have any other fun videos like that, please send them our way.

But that’s it for today, thanks for watching, stay safe and have a great weekend.