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Runtime: 8:39
0:00 Maserati In Deep Trouble, Up for Sale?
1:02 Fewer Americans Getting Driver’s License
1:51 Ford Claims Skunkworks EV Matches China Cost
3:55 U.S. Tariffs Cost German OEM’s Half a Billion/Month
4:36 Audi Talking About Greenfield U.S. Plant
5:15 Stella & Renault Want Looser Small Car Safety Regs
5:59 Renault Forms JV With Geely In Brazil
6:32 Baidu Robotaxis Headed to Singapore, Malaysia
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This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.
MASERATI IN DEEP TROUBLE, UP FOR SALE?
Maserati is in deep trouble. Sales fell 45% last year. Revenues fell more than 50%. There are no signs of anything turning around. And the U.S. ‘s tariffs will likely kill sales in North America. So it comes as no surprise that Stellantis is considering selling off the iconic Italian luxury brand. The company denies the report, but with 14 major car brands as well as additional sub-brands, Stellantis is saddled with a massive investment bill every year to keep them all fresh and competitive. If it does decide to sell Maserati, the most logical buyer would be one of the Chinese automakers trying to make inroads in the European market. Politically, that would generate massive blowback. But it also might be the only way to save the brand and the jobs that go with it.
FEWER AMERICANS GETTING DRIVER’S LICENSE
It looks like younger people are not interested in getting their driver’s license. Alix Partners tracked what percentage of Americans hold a driver’s license, and it did so by age group, over the last 22 years. What it found was that if the same percentage of Americans had a license today compared to the year 2000, there would be 3.7 million more drivers. And there would be 4.5 million more cars. We’ll add this to the mix. When you consider slower population growth, and an aging population, it becomes more and more likely that new car sales will never return to the 2016 record of 17.5 million units. Sales of new cars this year will likely be about 2 million vehicles below that.
FORD CLAIMS SKUNKWORKS EV MATCHES CHINA COST
We’re getting a few more details about Ford’s skunkworks EV program. According to Lisa Drake, Ford’s VP of Technology Platforms and EV Systems, the new platform will match the full system costs of leading Chinese automakers. That includes the pricing for the battery, chassis and thermal systems. There will be up to 8 body styles built on the platform, the first of which will be a mid-size pickup truck that’s expected to look like an electric Ranger. And the vehicle will feature prismatic LFP batteries that were developed with CATL and produced in the U.S. However, Ford’s pricing projections rely on federal tax credits, in part for the new battery plant it’s building in Michigan. And as we reported yesterday, that plant is coming under a lot of political fire and there’s a proposed bill from the U.S. House that would eliminate those tax credits.
U.S. TARIFFS COST GERMAN OEM’S HALF A BILLION/MONTH
Yesterday we reported that AlixPartners calculates that the U.S. tariffs will cost automakers an additional $30 billion a year and German automakers will be responsible for a big chunk of that. According to the industry lobbying group for German automakers, they paid an estimated 500 million euros more on importing cars to the U.S. in April. That’s because all cars and parts coming from the EU now face a 25% tariff, which could get negotiated down, but reports say the U.S. will not go below 10% and that would still be a significant jump over the previous 2.5% import fee.
AUDI TALKING ABOUT GREENFIELD U.S. PLANT
This is probably the reason Audi is considering building a new manufacturing plant in the southern part of the U.S., at least according to reports out of Germany. If this were a move to only appease President Trump, we think Audi could have just announced an investment in VW’s plant in Tennessee or Scout’s new plant in South Carolina. But since it’s considering a new facility, which would cost an estimated 4 billion euros, Audi probably thinks the tariffs are here to stay. And there’s no way that German automakers can afford paying an extra half a billion euros a month on shipments to the U.S.
STELLA & RENAULT WANT LOOSER SMALL CAR SAFETY REGS
Stellantis and Renault say Europe needs its own version of Japan’s kei cars, and they’re lobbying the EU to loosen safety requirements to bring them to the market. Carmakers in Europe have largely given up on the small car segment because regulations make them bigger, heavier and more expensive. And currently, small cars only account for 5% of the market. So Stellantis Chairman John Elkann and former Renault CEO Luca de Meo, have been publicly campaigning for Europe to allow smaller cars with fewer safety features that will be less expensive to build. Automakers are interested in growing the small car segment to help boost sales as well as meet CO2 targets.
RENAULT FORMS JV WITH GEELY IN BRAZIL
And speaking of Renault, we have more details about its partnership with Geely in Brazil. The two automakers formed a joint-venture in February to produce and sell cars in Brazil. And according to a new filing by Geely, Renault will have a 73% stake in the JV and Geely will control the remainder. The joint venture will build and sell vehicles under the Renault and Geely brands and it will produce and distribute light commercial vehicles under the Renault brand. But the deal still needs to get regulatory approval.
BAIDU ROBOTAXIS HEADED TO SINGAPORE, MALAYSIA
Chinese tech giant Baidu currently operates the largest robotaxi fleet in China with more than 1,000 vehicles. But now it wants to expand its robotaxi service outside of the country. Baidu is planning to enter Singapore and Malaysia as early as this year. It’s in discussions to partner with mobility service providers, taxi companies and fleet operators in the two countries. In addition to Southeast Asia, Baidu has announced plans to expand in the Middle East and it’s also looking to operate in Europe and Turkey.
But that brings us to the end of today’s show. Thanks for tuning in and I hope that you have a great weekend.
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Sean: the reduction of Americans getting a driver’s license, while not miniscule, pales in comparison with the number of net new driving age Americans say over the next 10 years. The US is growing at a healthy annual rate (population wise), it is NOT Japan or CHina or Europe. So your prediction that we will never exceed the old car sales (units) record EVER, is absolutely wrong. If you reasoned and DID THE MATH, you would never say that. Oh and PS, the Optimists are always right in the long run, and only an extreme pessimist, aka a journalist, would say what you did.
Ok, show me the math. I’m willing to listen.
With fewer new drivers, cars lasting longer, new cars getting more expensive, and older people like me “shrinking their fleets” and putting like-new used cars on the market, I wouldn’t expect sales to reach 17.5M a year any time soon. It’s hard to say “never,” but by the time the US population reaches 500 million, there might be more alternatives to driving more places in the US.
I think more research is called for. The trends don’t favor higher future new car sales. Consider:
Population growth in the US has been slowing substantially over the last 10 years (hence the proposals from the Trump administration to pay citizens “baby bonuses”.)
The cost of new vehicles, insurance and gasoline have risen at a surprising rate over the last 5 years, making it much more expensive to own and operate a vehicle.
Other transportation options make it easier every year for citizens to decide to save that money and spend less by utilizing public transportation, autonomous ridesharing, Uber, Lyft, etc.
The long-term trend toward work-from-home, despite a recent surge and pullback, is still unfurling, allowing many households to own one car instead of two, or two instead of three.
Deporting millions of immigrants, illegal or not, means fewer large families and further reduces population growth. As Boomers begin to die in ever larger numbers, its possible that US population growth will stagnate for two or three decades.
With robots in every household in the next ten years, there will be even less reason to have a large family. (Think farm families that have famously had large broods to help run the farm).
I think Ferrari is the most likely candidate to take over Maserati. This option retains Agnelli family ownership and places the brand under the management team that clearly understands the luxury and high-performance market and has the operational chops to excel. The brands don’t really compete for the same buyers and it is a much more palatable solution politically in Italy.
I can’t see anyone except an Italian manufacturer wanting Maserati for itself. What you’re buying if you are not Italian is a name. Geely bought MG and has made a success of it in the 1.9 m UK car market. Maybe they could do the same with Maserati in Italy with a 1.8 m car market. Unfortunately, a popular small car can be easily branded MG but would be a hard sell as a Maserati. Geely would probably be better with Fiat for entry level cars.
Cars lasting longer, the gradual move from rural to urban, the increase in parents driving their children everywhere and being available for all their extra curricular activities and the annoyance and extra effort needed to own and operate a car in large cities, mean that it’s not just demographics that result in fewer drivers. Cost has to be a major factor too. American society has shifted so the automobile is not as central to life as it was 20 or more years ago.
Many in the younger generation stay connected with their social circle via electronic tools. Older generations relied on face-to-face… necessitating a driver license or bicycle.
Yeah, kids now “hang out” with their friends via smart phones, rather than at the mall like in the ’60s and ’70s.
GM Veteran, that’s the first that came to my mind,Ferrari take over. Makes a lot of sense.
government motors 2017 chevrolet volt been at dealership 2 months waiting on 5 bolts for battery control module been without a vehicle for 2 months worthless motors or useless motors is more like it make us proud marry barra
and the 1 800 222 1020 telephone number is just as useless as government motors
Other than that, what do you think of GM?
I’ll tell you what *I* think of GM, Kit.
I know of very few other companies that, at their peak, owned over 60% (YES, stop disputing this, it is a FACT, I repeat, over 60%, not just 50%!) of the US market, and in a few decades collapsed worse than the former USSR!
It will be a case study taught at Harvard Business School (and other blah-blah, as opposed to Math Literate, Business Schools around the planet), because it is a huge paradox.
There is theory about industry dominance, and in the US market, GM was not just THE dominant auto company, but far MORE Dominant than any other firm in any other industry. Ordinarily, like in the case of Standard Oil, the Government should invoke the Anti-Trust laws and BREAK IT UP in 7 pieces (exactly as they did with Standard Oil), Chevy, Caddy, GMC, Buick, Olds, Pontiac, Saturn, to PROTECT its competitors.
YET GM WAS SO GODO DAMNED INCOMPETENT, both its inbred management, and its greedy UAW, it needed… rescuing instead!!!
How pathetic is that? It is OFF THE CHARTS PATHETIC. IT SHOULD HAVE NEVER BEEN DONE, TOO!
Capitalism thrives on “CREATIVE DESTRUCTION”, the DARWINIAN Process of the Survival of the Fittest and the Demise of the INCOMPETENT. In 2008-9, the OPPOSITE happened.
Isn’t the people’s republic of America wonderful?
In other news, an update on the tree ‘branch’ that fell on my yard. It was not just a branch. The five-story tall tree broke close to the ground, and the detached huge piece, about 75% of the trunk, is what fell on my yard. This explains why it is so huge, at more than 40-45 feet long and a foot or more thick. Hopefully today the caretaker of the property behind mine (common fence) will finish the job and cut the remaining huge trunk in pieces and get it out of my orchard.
share buy backs rather than taking care of your customers is not a recipe for success get your head out of your rear and run an automobile business
GM market share in the US peaked at 50.7% in 1962. I guess you round that up to 60%.
https://www.curbsideclassic.com/blog/history/chartside-classics-us-market-share-by-manufacturer-1961-2016/
Other sites show the same thing.
They still had 40% in the early ’80s, but between the competition from non-US companies and some crappy products, the slide was mostly continuous for the next 30 years or so. Some of the steepest slide in market share was in the ’80s, when Roger Smith was busy buying EDS and Hughes, and not paying much attention to building cars.
I remember talk of breaking up GM into Chevy and “the rest” in the 1960s.
It sounds like everyone was lucky that the tree didn’t fall on houses. That would have been ugly.