AD #2326 – Tesla Misses Model 3 Goals Again, BMW Jumps on Subscription Bandwagon, Sonic & Impala Going Away

On today’s show… Tesla misses its production goals yet again… the auto industry is caught in the cross hairs as Trump threatens a trade war with China… and what the heck is going on with all these subscription services? All that and more coming right up on Autoline Daily.

This is Autoline Daily the show for enthusiasts of the automotive industry.

TESLA MISSES MODEL 3 GOALS, AGAIN
Tesla missed its production goals for the Model 3, yet again. Elon Musk promised that the company would be building 2,500 Model 3s a week by the end of March, but it was only making 2,000. And even that number is suspect because it looks like Tesla put in a burst of activity to temporarily boost production, and it probably isn’t sustainable. Mr. Musk says he will now be sleeping in the factory to make sure production keeps growing and the stock jumped up nearly 20% on the news

TRADE WAR BREWING?
China threatened it will retaliate against the United States if President Trump carries through on the tariffs he wants to put on $50 billion worth of Chinese imports, including cars. China says it will put tariffs on $50 billion worth of U.S. imports, including cars. Analysts say this will freeze the plans that Chinese car companies have to start exporting to the U.S. But they also believe that the real reason why Trump Administration is doing this to get the Chinese to the negotiating table.

There is an important new trend emerging in the luxury segment and it seems like everyone is jumping on board, and that is coming up next.

BMW JUMPS ON SUBSCRIPTION BANDWAGON
First it was Cadillac. Then came Porsche. Then Volvo, Lincoln, and Mercedes-Benz followed suit. And now BMW is jumping on board. A new trend is emerging in the luxury segment: subscription services. These programs charge customers a monthly fee that typically includes the car payment, insurance, maintenance, and pickup and delivery. Some of them provide unlimited access to different cars in the brand’s lineup, depending on how much you pay. BMW’s pilot program, which launched yesterday in Nashville, costs between $2,000 and $3,700 a month. Here’s our Autoline Insight. Subscription services are a great way to get wealthy people to pay more every month. Why just lease them a car for $800 a month, when you can get them to pay two or three grand?

SONIC & IMPALA ON THE CHOPPING BLOCK
It looks like more passenger car casualties are right around the corner as consumers continue to choose crossovers and SUVs. The Wall Street Journal reports the Chevrolet Sonic could be gone before the year is out. Barely 30,000 Sonics were sold in the US market last year and sales are down more than 21% so far this year. The Chevy Impala is on the way out, too. Sales are down over 36% this year. Both vehicles are made in Michigan, the Sonic at Orion and the Impala in Hamtramck. We wonder what plans GM has to fill those plants once these models go away.

A programming note here. There will not be an Autoline After Hours this afternoon, due to vacation scheduling. But it will be back next week along with Paul Smith, the chief engineer on the new Jeep Cherokee, which just had a blow-out sales month. Sales shot up a staggering 57%. So if you have questions, shoot an email to viewermail@autoline.tv, then join John and Gary next Thursday for some of the best insights into how the auto industry designs and engineers new vehicles.

Coming up next, despite economic sanctions Russia’s car market is clawing its way back.

RUSSIA CLAWING ITS WAY BACK
After being slapped with sanctions, car sales are rebounding in Russia. According to the Association of European Businesses, automakers sold more than 157,000 passenger cars and light commercial vehicles in March, which is a 14% gain. And first quarter sales are up a whopping 21%. The top automakers are Lada, Kia, Hyundai, Renault and Toyota respectively. And the AEB expects the recovery to continue throughout the year. It’s forecasting sales will hit 1.75 million units, which is a 10% improvement over 2017. But that’s still 1 million cars lower than before economic sanctions were imposed on Russia for its invasion of Crimea.

FCA TO SPIN OFF IN-HOUSE SUPPLIER
FCA just got the official approval to spin off Magneti Marelli, it’s in-house supplier of electrical, lighting and powertrain components. Magneti Marelli has been in business since 1919, does nearly $10 billion in sales, and has 43,000 employees in 19 countries. FCA tried to sell the company to Samsung, but it wouldn’t pay enough money, so it’s getting spun off. Reportedly, Bain Capital and Tenneco are interested in buying the company after the spinoff.

And that wraps up today’s report, thanks for watching and please join us again tomorrow.