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: Oops
If you bought a 2016 Chevrolet Traverse, GMC Acadia or Buick Enclave, good for you! You’re about to get cold, hard cash (in debit card form but still) from General Motors. This is after the automaker screwed up fuel economy labels on nearly 150,000 vehicles, overstating that number by 1-2 MPG. Gas is so cheap right now that most SUV owners may not even care.
But here’s the benefit to those owners as a result, from Market Watch:
Customers who purchased a 2016 Chevrolet Traverse, GMC Acadia or Buick Enclave can choose between a debit card or a 48-month/60,000-mile service protection plan on top of their existing factory warranty, the company said Friday. Those who leased vehicles will be offered the debit card, GM said.
The debit cards are likely to range between $450 and $900, depending on whether customers purchased or leased their vehicles. The type of vehicle and terms of leases will also affect how much customers receive. GM GM, +0.82% alerted dealers to the program Friday, and letters are expected to go out to customers starting May 25.
How much will GM itself be out because of this? About $100 million, according to Reuters. Also, there’s already a class-action lawsuit in the works. That stings.
2nd Gear: America Demands Its Jeeps
Jeep and Ram sales are keeping the lights on these days at Fiat Chrysler, but we’re about to see a bit of a Jeep Cherokee and Grand Cherokee shortage thanks to a Mexican supplier being short on steering wheels, reports Reuters:
Both shifts at an FCA plant in Toledo, Ohio were canceled on Wednesday and Thursday after a few hours were cut from each shift on Tuesday, said an FCA spokeswoman.
She said she did not know whether production would resume on Friday and that production decisions would be made on a “shift-by-shift basis.”
Also, she said, Grand Cherokee production at the Jefferson North Assembly Plant in Detroit was curtailed on Wednesday when both of the shifts there were cut by a few hours. Production of Grand Cherokee SUVs at that plant was back to normal on Thursday, she said.
Hopefully our national nightmare will end soon.
3rd Gear: But Things Were Going So Great At Mitsubishi
Two years ago, the ascension of Mitsubishi Motors lifer Tetsuro Aikawa to the CEO post was seen as a plus for the somewhat troubled carmaker. Now he’s out amid the fuel economy scandal in Japan, and Automotive News says his “downfall is partly a mess of his own making.”
As a longtime head of Mitsubishi’s r&d division, he sat atop a unit that falsified fuel economy tests for 25 years. Regardless of whether Aikawa was oblivious to it or simply turned a blind eye, critics say he holds ultimate responsibility. Indeed, he was a lead engineer on the original eK Wagon minicar, the latest generation of which was flagged for its suspect figures, triggering the scandal.
Last week, the veteran car guy accepted accountability and said he would step down.
“He was in the development section for a long time,” said Takaki Nakanishi, an independent auto analyst in Tokyo, of Aikawa’s departure. “It had a long history of compliance issues. He is a symbolic person.”
Tough times over there.
4th Gear: Musk Doctrine
Tesla Motors’ goal of selling 500,000 cars annually starting in 2018 is, well, insane. And very few industry observers seem to think the nascent automaker can pull it off, even if the Model 3 turns out to be the bee’s knees. But Bloomberg’s Tom Randall posits it’s all part of what he calls the “Musk Doctrine”:
Virtually no one thinks Musk stands a chance of accomplishing his goal (new ammunition: the company revealed 12,200 Model 3 cancellations yesterday), but if he can even come close, the thinking goes, it could be truly disruptive to the automotive industry.
[…] This all fits into the “Musk Doctrine” philosophy that I laid out last week. I posited that Musk, 44, intentionally sets unrealistic goals in order to motivate the most rapid transformation possible for the auto industry. The reason he moved the 2020 goal forward is that he was dangerously close to actually meeting it—which would be a first for Tesla.
Goldman Sachs joined RBC and Robert Baird in brushing aside the new 2018 goal while simultaneously adjusting their expectations for 2020 to a range that’s more consistent with Musk’s original target—one that until recently had mostly been considered fantasy.
Wall Street typically prefers companies that regularly outperform, rather than underperform, their forecasts. But analysts are starting to give Musk some room to play with. “While management was not clear why goals were set so aggressively,” Archambault wrote, “we view the adjustment as a target aimed at motivating employees and suppliers.”
Still, last week Goldman Sachs analysts predicted Tesla will miss its 2018 targets by 66 percent, but they also recommend you buy $TSLA stock anyway.
5th Gear: Harley’s Big With Millennials
The image of Harley-Davidson is often of an old man’s bike, while the youthful thrill-seekers gravitate to the crotch rockets and the hipsters go for Triumphs and Scrambler Ducatis. This is apparently not the case! Harley is big with the youths, reports The Detroit News:
In 2015, for the eighth straight year, Harley was the No. 1 seller of new highway motorcycles in the United States to adults ages 18-34. It was also the top seller of those bikes to women, African-Americans and Hispanics, as well as Caucasian men ages 35-plus, according to motorcycle registration data.
Harley says its strategy to focus on growth among “outreach customers” lines up well with U.S. population trends.
The millennial generation continues to grow as immigration adds to the group. Millennials now number 75.4 million, surpassing the 74.9 million baby boomers (ages 51-69), according to the Pew Research Center.
Neutral: Tesla Will Miss Its Targets
Almost certainly. What will that mean for the company, its stock price and the industry as a whole?