The auto industry is cautiously optimistic

The auto industry thinks things … could be getting better soon, the Fiat Chrysler-Peugeot merger is moving forward, and Tesla. All that and more in Tomorrow’s turn by June 25, 2020.

1st Gear: The auto industry is trying to convince itself that things could be all right

New car sales for 2020 are now projected to be just under 14 million, which is well below the 17 million that had been projected in Before Times, but better than the 12 million that were feared.

Of The New York Times:

However, automakers and car dealers say they are optimistic that sales of new cars to individuals and families, the industry’s largest customer base, have rebounded strongly.

“There is a backlog of demand,” said Doug Waikem, owner of six new car franchises in Massillon, Ohio. “There are people who were ready to buy, and then the virus hit. They put him on hold, but some are starting to come back. “

Auto manufacturers have lured buyers to dealerships with generous financial incentives. For a time, several companies, including General Motors, Ford Motor, and Fiat Chrysler, offered zero-interest loans for 84 months on most or all of their vehicles. Most automakers have removed those offers, but interest-free loans for up to 72 months are still available on many models.

Many consumers appear to be buying cars with the help of some of the $ 1,200 federal stimulus payments and the money they saved when they cut other expenses in March, April and May, said Pete DeLongchamps, senior vice president of manufacturer relations at Group 1 Automotive. , a large group of dealerships based in Houston.

“It certainly isn’t as bad as we feared at the moment,” he said. “The government put a lot of money on the market, and now people are spending money on cars.”

Also, I will note (delicately) that this New York Times story also contains one of the most obvious sentences ever printed.

A rebound in the auto industry would likely help the economy.

I love to see a completely unnecessary hedge.

2nd gear: Meanwhile, Volkswagen is not so sure

The company is not so sure about the US coronavirus efforts. USA, As peak of cases and fear of a second wave persists, more precisely, a continuation of the first wave.

Of Automotive News:

VW expects a V-shaped recovery from the effects of the coronavirus pandemic that will last until 2022. “The question is how strong is that V” [Christian Dahlheim, Volkswagen Group’s head of sales] he said at an online conference on Tuesday organized by the UK automobile association SMMT.

Dahlheim did not expand on why the US recovery is difficult to forecast. Analysts have previously said the momentum could be stopped by a resurgence of coronavirus infections. “There is a threat that demand will be affected by another wave of the pandemic,” Cox Automotive economist Jonathan Smoke told Automotive News earlier this month.

“The United States is probably the same image as Europe, but it is probably the most difficult to predict,” said Dahlheim.

What’s interesting is how VW rates this country by country. Spoiler alert: The United States has not done very well.

Dahlheim was very optimistic about China, the VW Group’s largest market. “In China, the V has been very pronounced, so we expect China to return to normal levels. It is done [there] right now and will continue to do so, “he said.

Dahlheim predicted a longer recession for South America that could “last until 2023.”

3rd gear: the Peugeot-Fiat Chrysler merger moves slowly

When this is complete it will cover many brands! Peugeot, Citroën, DS, Jeep, Chrysler, Dodge, RAM, Fiat, Alfa Romeo, Vauxhall, Opel, and probably some that I’m forgetting. Ferrari! That is another one. Surely all that redundancy means that one or some of those marques could be dead soon. The companies that will soon merge are already talking about “synergies”.

Of Reuters:

PARIS (Reuters) – PSA Chief Executive Carlos Tavares is confident that a $ 50 billion merger of vehicle manufacturer Peugeot with Fiat Chrysler (FCA) will proceed as planned and offer synergies of at least 3.7 billion euros ($ 4.2 billion).

The deal to create the world’s fourth-largest automaker has become even more vital due to the impact of the coronavirus crisis and to accelerate cost savings, Tavares said at the annual PSA shareholders meeting (PEUP.PA) on Thursday.

“The merger with FCA (FCHA.MI) is the best of the solutions to deal with the crisis and its uncertainties.”

[…]

Tavares also downplayed the European Union’s new antitrust scrutiny over the planned merger, adding that he was confident it would be finalized in the first quarter of 2021 “at the latest.”

“The timing of the merger with FCA is being strictly adhered to,” he said, adding that the projected € 3.7 billion synergies of the deal were a “flat.”

4th Gear: Tesla is preparing battery production

The company has long been an advocate of doing everything internally. Reuters He says the project is called “Roadrunner”, because apparently everything in Tesla must have a silly name. It will be at a facility in Fremont, California, where the Tesla factory is located, sorry “Gigafactory”. It will work 24 hours a day.

The plan signals the efforts of the American electric vehicle (EV) manufacturer to make its own automotive batteries, the most expensive components in electric vehicles.

Tesla, which said it currently has a “small-scale” battery manufacturing operation in Fremont, sought approval from the city government to build an expanded battery operation. Construction of the project, including installation of all manufacturing equipment, is estimated to be completed in about 3 months.

Workers assigned to the facility would total 470, of whom 400 “would work shifts, so there are 100 employees working in manufacturing and production operations anytime, all day, every day.”

5th gear: no more third shift at Cadillac XT5, XT6 and GMC Acadia plants

The Spring Hill, Tennessee plant will see 680 layoffs due to GM’s move, which GM says was due to a drop in demand attributed to the coronavirus.

Of Automotive News:

The layoffs won’t all be from the third shift, Mike Herron, president of UAW Local 1853 store, which represents workers in Spring Hill, told Automotive News.

Older employees can go to the first or second shift, while lower-level workers on those shifts can be fired. The dismissal process will be completed on July 31, Herron said.

“When we went down, there were three changes in production, and the demand was such that there were three changes in demand,” Herron said. “The market simply did not recover quickly enough. We expected it to be a complete rebound to our pre-coronavirus levels, and it simply never materialized. ”

The third shift, which was suspended since GM closed the plants in March to prevent the spread of the coronavirus, was scheduled to return to work on June 21. Last week, GM delayed the return of the third shift indefinitely.

Reverse: RIP

Fun fact: Graham Kozak, formerly of Autoweek, has a truly unhealthy obsession with Packards.