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Runtime: 7:02
0:07 Too Much Production Capacity
0:46 China Sales Expected to Drop In 2019
1:18 California and 4 Automakers Strike MPG Deal
2:21 Insurance COs Not Giving Discounts for ADAS Tech
3:19 Cadillac Refreshes the XT5
4:02 UPS Creates Drone Subsidiary
4:34 Can You Identify This Car?
5:16 When Will We See Fully Autonomous Vehicles?
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This is Autoline Daily reporting on the global automotive industry.
TOO MUCH PRODUCTION CAPACITY
Global automotive sales this year will probably be about 92 million vehicles. And yet automakers have the manufacturing capacity to make 137 million vehicles. According to LMC Automotive, that means there is 45 million units of excess capacity sitting idle, and that’s not good for the industry. What’s even crazier is that automakers will build 52 more assembly plants by the end of next year, adding another 3.6 million units of capacity. Most of those new plants and most of that excess capacity is in China, and that is going to be a drag on the entire Chinese industry.
CHINA SALES EXPECTED TO DROP IN 2019
Making matters worse, sales in China are slowing down. The China Association of Automobile Manufacturers is forecasting that sales will hit nearly 27 million units which is a 5% drop, compared to 2018. It previously forecasted that sales would remain flat this year. It also lowered its outlook for new energy vehicle sales by 100,000 units to 1.5 million this year. And all this will only make that overcapacity look worse.
CALIFORNIA AND 4 AUTOMAKERS STRIKE MPG DEAL
The battle over fuel economy standards is back on the front burner. Ford, Volkswagen, Honda and BMW reached an agreement with the State of California, to voluntarily boost their fleet average fuel economy to nearly 50 MPG by 2026. Last year, the Trump Administration proposed to freeze fuel economy rules enacted by the Obama Administration at 2021 levels. The White House also wants to revoke California’s ability to set its own standards. So this move by these four automakers is like slapping President Trump across the cheek with a glove. And we can only imagine that the next step is going to be the equivalent of 20 paces and pistols.
INSURANCE COs NOT GIVING DISCOUNTS FOR ADAS TECH
The insurance industry has been saying for a very long time that it wants safer vehicles. The Insurance Institute for Highway Safety, which is funded by insurance companies, won’t give cars a Top Safety Pick Plus, unless they have advanced safety technology, like automated emergency braking. And yet, the insurance industry is not willing to give discounts to customers who buy cars with that safety technology. One reason they cite: high repair costs. Even though this technology makes cars safer, if they get in an accident, it costs more to repair them. According to a report in Reuters, carmakers don’t like to provide detailed information on models sold with the safety features, the standards are inconsistent, and how drivers use it is unpredictable. Insurance companies say it could take as long as 5 years before insurance rates reflect the benefit and cost of advanced safety systems.
CADILLAC REFRESHES THE XT5
The Cadillac XT5 only came out a couple of years ago, but it’s already getting a minor refresh, and it needs it. So far this year sales are down 17% while several of its competitors, like the BMW X3, Audi Q5 are growing strong. So the XT5 is getting a new grille, front and rear fascias and standard LED headlamps. The base engine is now the 237 horsepower 2-liter turbo and 9-speed transmission borrowed from the XT4. The 3.6-liter V6 with 310 horsepower is optional. And the engines get hydraulic engine mounts. The refreshed version should be out in a couple of months.
| U.S. LUXURY CUV SALES H1 2019 | ||
|---|---|---|
| Lexus RX | 48,000 | +4% |
| Mercedes GLC | 33,900 | -3.5% |
| BMW X3 | 32,100 | +30% |
| Audi Q5 | 32,000 | +12% |
| Cadillac XT5 | 29,400 | -17% |
| Source: Wards Intelligence | ||
UPS CREATES DRONE SUBSIDIARY
UPS is pushing forward with plans to deliver packages with drones by creating a new subsidiary called UPS Flight Forward. Its applied for certification for multiple drones and pilots with the Federal Aviation Administration, which could be approved as early as this year. UPS currently works with Matternet to make healthcare deliveries with drones in North Carolina. It’s currently in a battle with Amazon and Google’s Alphabet to launch a drone delivery business.
CAN YOU IDENTIFY THIS CAR?
We were sent another picture of a car to identify from Autoline viewer Richard H. But Richard actually knows exactly what this car is, and is challenging you to identify it. I know some of you know this without any clues, but Richard hints it’s very English and pre-WW2. So, come on, let’s show Richard how smart you really are.
WHEN WILL WE SEE FULLY AUTONOMOUS VEHICLES?
Yesterday, GM’s self-driving unit Cruise, announced it’s delaying the launch of its autonomous, ride-hailing service. So when will we see fully self-driving cars out on the road? On Autoline This Week, Jeff Klei, the President of Continental North America gazes into his crystal ball and answers that question.
(The ATW preview is only available in the video version of today’s show.)
You can watch that entire show right now on our website, Autoline.tv or you can find it on our YouTube channel.
But that brings us to the end of today’s show, thanks for watching and have a great weekend.
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John McElroy is an influential thought leader in the automotive industry. He is a journalist, lecturer, commentator and entrepreneur. He created “Autoline Daily,” the first industry webcast of industry news and analysis.
