Good Morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.
1st Gear: BMW Comes To Mexico
Even in this explosion of crossovers, the 3 Series remains BMW’s top-selling vehicle and one of the most-purchased luxury cars in the U.S. Right now it’s built in Germany as well as South Africa, but starting in 2019 when the all-new 3 is released, the latter will case so BMW can build the car in Mexico instead, reports Automotive News. The sedans will be built at an all-new plant touted for its technology and environmental friendliness.
U.S., Asian and European manufacturers are increasingly seeing the value of Mexican production.
BMW joins other European manufacturers in building factories in Mexico to take advantage of low-cost labor, a growing supplier network and free-trade pacts. An estimated 70 percent of the vehicles to be produced at the Mexico plant will be sold in the NAFTA region, BMW officials say.
The company, according to media reports in Mexico, received $236 million in local aid in return for a commitment to create 1,500 jobs and invest $1 billion by 2024.
Under the deal, the automaker will not be required to pay state and local taxes for 10 years, Mexican economic development officials said Wednesday at a briefing.
2nd Gear: Mitusbishi Takes A Hit
A hit of 50 billion yen, or about $480 million, over the MitsuTireInflateGate scandal. As it admits to falsifying fuel economy data on nearly all cars over the past 20 years (but only in the Japanese market, it swears), here are some details from Bloomberg:
Mitsubishi will compensate 100,000 yen (almost $1,000) to each minicar owner and will separately pay for the difference in gasoline costs and tax, Chairman Osamu Masuko said at a press briefing in Tokyo Friday. It will also pay 30,000 yen each to owners of five other models for which the carmaker manipulated mileage data, he said.
The payments will be covered by the 50 billion yen charge, while the company assesses compensation to Nissan and suppliers, to be announced together with its business forecasts for this fiscal year, Masuko said.
3rd Gear: Ford Gets Fatter
In a somewhat surprising move, Ford of Europe announced that it is making several changes to its small car lineup. That includes dumping minicars altogether and making cars like the Fiesta and Ka more upscale and luxurious, reports Automotive News. Here’s Roelant de Waard, Ford of Europe’s sales and marketing chief:
“We see a growing group of more affluent customers who want to downsize from larger more expensive cars, but who still expect the premium experience features and technologies they are used to,” he said.
Ford’s challenge is to reposition its B- (small) car portfolio to ensure that the brand appeals to those buyers, as well as customers, such as first-time buyers, who are looking for an affordable model.
Ford will launch European sales of its new Ka in the autumn with a price starting at 9,990 euros ($11,246) in Germany. Called the Ka+, it will be aimed at buyers of budget-priced subcompacts such as the Dacia Sandero, where value, reliability and fuel economy play a bigger role than styling.
4th Gear: Michigan’s Governor Vetoes Aftermarket Parts Bill
In Michigan, Ford and General Motors supported a bill that would have mandated the use of OEM parts on newer cars instead of aftermarket ones. But that bill got vetoed yesterday by Gov. Rick Snyder, who feared its impact on parts makers. Via The Detroit News:
In a letter to state legislators, the Republican governor said he was concerned by the bill’s “effect on market competition” for replacement parts and that it could lead to higher auto insurance prices for Michigan motorists.
While supporters said the proposal would protect consumers and ensure vehicles are safely repaired, Snyder said the bill does not “sufficiently delineate” between parts that are primarily cosmetic, such as fenders, grilles and bumper covers.
“Michigan’s aftermarket auto parts industry is strong because of its competition with OEMs,” Snyder said in his veto letter. “…Enacting a law to prohibit mechanics from providing high quality and safe alternatives for customers is an inappropriate impediment on the competition that has resulted in both high quality OEM and aftermarket parts for Michigan drivers to enjoy.”
The bill would have required cars five years old or newer to use OEM parts or ones “recognized as OEM comparable quality as verified by a national testing agency,” the News reported.
5th Gear: VW Big On Promises But Short On Details
Volkswagen sees its post-Dieselgate future as electric and autonomous, but The Detroit Free Press points out that the plan unveiled in Germany yesterday is a little sparse on details:
VW will invest heavily in other new areas — autonomous vehicles, ride-sharing services, battery technology, while also reducing its annual investment by billions of dollars, Mueller said.
The presentation did not spell out how VW will square the promises of massive new investment with deep reductions in spending.
VW’s core problems remain:
– The Volkswagen brand’s costs are too high; its productivity and profit too low.
– Management in Wolfsburg is unaware of, or unresponsive to, what buyers in other countries — particularly the U.S. and China — want.
– A corporate culture that allowed the world’s largest automaker to break environmental protection laws on a massive scale and is widely viewed as resistant to change.
– A bewildering array of brands and vehicles.
– Management that seems incapable of quick action, even in the face of crisis.
Yeah, that about sums it up.
Reverse: The Chase
Neutral: Do Buyers Care Where Their Cars Are Built?
Maybe car people may raise concerns about production in Mexico or China, but what about your average buyer?