/The Auto Industry Is Once Again Begging The Government For Help – Jalopnik

The Auto Industry Is Once Again Begging The Government For Help – Jalopnik


Illustration for article titled The Auto Industry Is Once Again Begging The Government For Help

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The Morning ShiftAll your daily car news in one convenient place. Isn’t your time more important?

The auto industry is going back to the well, GM’s contempt for its dealers is plain, and Japan. All that and more in The Morning Shift for April 6, 2021.

1st Gear: Automakers Want Joe Biden’s Help

Automakers’ relationship with the federal government in the U.S. is usually pretty fraught because of the federal government’s regulatory powers. When it comes to government handouts that will help support the (very profitable) auto industry, though, the auto industry’s message is always clear: We’ll take it.

The global chip shortage has given automakers another opportunity to cry for help.

From Reuters:

The U.S. Commerce Department should dedicate a portion of funding in a proposed bill to expand U.S. semiconductor production to auto sector needs, the Alliance for Auto Innovation said in written responses to a government-initiated review.

U.S President Joe Biden in February ordered several Federal agency actions to address the chip crisis and is also seeking $37 billion in funding for legislation to supercharge chip manufacturing in the United States.

Some funding should “be used to build new capacity that will support the auto industry and mitigate the risks to the automotive supply chain evidenced by the current chip shortage,” the group’s chief executive, John Bozzella, wrote.

The group said the U.S. government could specify “a particular percentage – that is reasonably based on the projected needs of the auto industry – be allocated for facilities that will support the production of auto grade chips in some manner.”

The Alliance for Automotive Innovation is the biggest auto industry trade group in DC, representing pretty much every major automaker. When it speaks you can be sure that you’re hearing from the horse’s mouth.

2nd Gear: Ferrari Is Sagging

This story is from Sunday, so my apologies for the tardiness but it is remarkable nonetheless. Bloomberg reports that high-flying Ferrari actually isn’t doing all that great, and it seems to be because investors these days are all in on EVs. Ferrari is on the other end of that spectrum, in that it said in November that it would never go 100 percent electric.

The Italian supercar maker, the top performer in the Stoxx 600 Automobiles & Parts index for each of the last three years, has fallen 5.6% since the start of 2021 and just suffered its worst quarter since the end of 2018. That’s a marked contrast to strong gains by rivals including Volkswagen AG, which owns luxury brands Porsche, Bugatti and Lamborghini.

While competitors, particularly VW, have got a boost from the hullabaloo around electric vehicles, the company known for its Prancing Horse logo has run into setbacks including an underwhelming earnings forecast. Without a clear EV strategy, Ferrari has also been hurt by an unresolved search for a new chief executive, and a broader rotation out of so-called growth names for a company that some investors regard more as a luxury play.

“The stock has become too expensive and earnings momentum is fading,” said Sanford C. Bernstein analyst Arndt Ellinghorst, also noting uncertainty over the CEO situation and a “lack of EV vision.”

The story goes on to note that Ferrari really isn’t in the same category as a company like Volkswagen, since Ferraris are basically only sold to the idle rich. That helps explain Ferrari’s strong performance during the pandemic, given that the rich got richer. Still, it is funny to me that there are apparently investors out there who look at Ferrari and are judging it based on its strategy (or lack thereof) for EVs.

3rd Gear: Jeep Has Apparently Convinced Itself It Has Finally Solved Japan

Jeep expects to sell over 15,000 cars in Japan this year, or five percent more than last year. Jeep says it means that perhaps it has turned a corner in Japan. This is presumably in part based on Jeep’s incredible confidence in the Gladiator selling there.

From Bloomberg:

Shoppers in Japan have typically opted for smaller cars with high fuel efficiency, one reason why Ford Motor Co. ended up quitting the country in 2016. But Jeep has managed to retain a loyal customer base. Now, amid the coronavirus pandemic, more young people are taking an interest in the vehicles, drawn by their ability to handle all sorts of outdoor terrain, which helps with avoiding public transport.

“We’ve made efforts to fit with the Japanese market” by rolling out cars with right-hand drive, unlike General Motors and Ford, [Hitoshi Ushikubo, the head of sales at Fiat Chrysler Japan] said. “Young people are looking for cars that allow them to present a part of their character,” he said, adding that a strong social media presence has also helped the brand.

Almost 4.6 million new cars were sold in Japan last year, meaning that 15,000 Jeeps would account for about 0.3 percent of all new car sales in Japan if 2021 remains on pace with 2020, or even less than 0.3 percent since new car sales in Japan in 2021 will likely be higher. Still, many carmakers make a lot of money being niche in various markets, just ask Volvo. Or Tesla.

4th Gear: Subaru Will Idle A Plant In Japan

The plant makes Foresters and Legacys. The damn chip shortage strikes again.

From Reuters:

Subaru will restart all production lines at the Yajima plant in Gunma Prefecture from May 10, it said in a statement on Monday. It added that the impact on the group’s financial results is uncertain. Some operations will resume April 21, the company said, adding that April 28-May 9 is a previously scheduled holiday break for the plant.

Some 10,000 cars are said to be affected, which is, all told, pretty minimal though I’m sure Subaru people aren’t happy.

5th Gear: GM Is Deemphasizing Dealers With the Hummer EV

Dealers, as we all know, don’t really have a reason to exist outside of state franchise laws, and making sure that lobbyists have their mouths fed. Automakers know this as well as anyone, though Tesla pushing direct sales has sped up what could be the beginning of the end for dealers as we know them.

The latest evidence is how GMC will sell the Hummer EV. If GM thought that the dealership model was working, presumably it would simply sell the Hummer EV through the dealers, as it does its other cars. But it’s not doing that. From the Detroit Free Press:

Consumers looking to buy the new GMC Hummer EV pickup or SUV will be doing it online with minimal dealer involvement, directly from General Motors, for at least the next two years.

After that, the retail shopping experience will “evolve” as GM rolls out more electric vehicles.

The vehicles will make it to GMC dealership showrooms eventually, but even then, the buying process will change, said Phil Brook, vice president of marketing for Buick and GMC.

“There’s no doubt about that,” Brook told the Free Press, though he declined to offer further details.

“This vehicle allows us to take a different approach,” Brook said. “The market is evolving and changing and we’re changing, but we are working through the dealers. We see our dealers as a huge competitive advantage for us.”

It’s not hard to imagine this GMC vice president bursting out in laughter after saying that GM would be doing all it could to avoid using dealers to sell the Hummer EV, then insisting that dealers are important to GM.

Reverse: 2001

Sci-fi movies have always grossly overestimated how quickly technology would advance, and for decades. I’m not even sure if 3001: A Space Odyssey would be accurate.

Neutral: How Are You?

I got my first dose of the vax on Saturday in Brooklyn. It might have been the biggest anticlimax of my life; the shot took about two seconds and was so quick that at first I thought the nurse hadn’t pressed the plunger or something. Then my left arm began to feel like a ton of bricks.

Round two is in three weeks in Harlem, with two weeks after that, May 8 to be precise, the day that I will be considered fully vaccinated, according to the guidelines. After that: at least nine margaritas in Atlantic City.

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