AD #2708 – Ford & UAW Reach Tentative Deal, Daimler Offers Pay As You Go Leasing, Baojun Launches Stylish Crossover

This is Autoline Daily reporting on all aspects of the global automotive industry.

FORD & UAW REACH TENTATIVE DEAL
Well that didn’t take long. Ford and the UAW already reached a tentative labor agreement. It’s clear that the UAW and Ford continued to negotiate all aspects of a new contract while the union held a month long strike against GM. Ford has always had a more proactive relationship with the UAW so it’s not surprising that it was able to reach a settlement fairly quickly. Now the question is what will happen at FCA. Four years ago UAW workers at Fiat-Chrysler rejected the contract and forced their bargainers back to the table. Moreover, all the corruption charges against the UAW started at the training center at Chrysler. So the negotiating at FCA may not go as smoothly as it did at Ford.

FCA EARNINGS SHOW WHY IT WANTS A MERGER
Speaking of FCA it reported its third quarter earnings and they clearly show why the company wants to merge with PSA. FCA sold 1 million vehicles in the last three months, down 9% from a year ago. It raked in revenue of 27 billion euros, down 1%. It posted an operating loss, but thanks to tax adjustments it posted a net profit of 1.2 billion euros. In North America, FCA posted all time record earnings of 2 billion euros, delivering a 10.6% profit margin, which is exceptionally good in today’s market. FCA posted a modest profit in South America, but lost money in China and Europe. And its problems in Europe are exactly where the merger with PSA could produce the most significant results. Peugeot is profitable in Europe and if it can work the same magic on FCA, it’s going to plug a major leak.

PEUGEOT ONCE BOUGHT CHRYSLER EUROPE
A bit of a history lesson here. This is not the first time that Peugeot bought Chrysler, or at least a part of Chrysler. In the 1960’s Chrysler tried to catch up to General Motors and Ford in Europe. It bought Simca in France, Rootes in England, and Barrieros in Spain and lumped them together into an operation it called Chrysler Europe. But it didn’t work. And when Lee Iacocca took over at Chrysler in 1978 when the company was teetering on the brink of bankruptcy, one of the first things he did was sell Chrysler Europe to Peugeot for the princely sum of one dollar.

COMMERCIAL TRUCK SALES DECLINING
As everyone is painfully aware of, passenger car sales are slowing on a global basis. And now the numbers show the same thing is happening with commercial trucks. LMC Automotive reports that preliminary third quarter medium and heavy-duty truck sales were down 10%, compared to a year ago. The drop was mainly due to weaker demand in China. LMC expects big truck sales to remain soft and forecasts the segment will decline 5% this year and next. Truck sales in North America, Europe, China and Japan are expected to drop due to economic slowdown, trade tensions and uncertainty impacting investments. But not all regions are expected to suffer. Medium and heavy-duty truck demand is strong in Brazil and India is expected to rebound after a big recession in the truck market.

DAIMLER OFFERS PAY AS YOU GO LEASE FOR BIG TRUCKS
Speaking of heavy-duty trucks, Daimler is launching a new leasing program in the U.S. that may attract new customers. Rather than guess the miles that will be driven when signing up, Daimler Trucks, which owns Freightliner, is offering a pay-as-you-drive leasing program. That way a customer doesn’t have to worry about going under or over their allotted miles. If the customer consents, mileage data will be sent back to Daimler via the truck’s connectivity system and then they’re charged at the end of each month. There’s also an additional standard fee. Daimler will launch the service in the first quarter of next year with the Freightliner Cascadia.

APTIV EARNINGS GROW IN SLUMPING CHINA
Even though car sales in China dropped for 15 out of the last 16 months, the supplier Aptiv reported its third quarter earnings increased 6% in China. That’s because the company is focusing on electric and autonomous technology and while that segment is also weak, Aptiv managed to land a lot more new business. It also realigned its supply chain to avoid any tariffs from the U.S.-China trade war. As a result, its stock is up 47% so far this year, pushing its market value to nearly $23 billion.

GM GIVES MARK REUSS MORE RESPONSIBILITY
General Motors is giving more responsibility to President Mark Reuss. He now oversees all of North America, South America, China and GM’s International operations. The company also promoted the head of its Autonomous and Electric Vehicle programs, Doug Parks, becomes executive vice president leading Global Product Development, Purchasing and Supply Chain. And Steve Kiefer, the head of Purchasing and Supply Chain is being named senior vice president and president of GM’s South American and International operations.

BAOJUN LAUNCHES STYLISH CROSSOVER
GM’s Chinese brand Baojun introduced a new compact crossover called the RS-3. It’s powered by a 1.5L naturally aspirated engine that can be mated to a CVT or a six-speed manual transmission. It also features a Level-2 driver assistance system from Bosch, over-the-air updates and certain functions, like turning on the air conditioning or lock and unlocking the vehicle, can be controlled with a smartphone. The Baojun RS-3 is available now in China with a starting price just over $10,000.

NEW PORSCHE 911 FINALLY GETS A MANUAL
For some, the Porsche 911 is the Gold Standard of sports cars, but up until now the new version hasn’t been available with a manual transmission. Thankfully that’s changed with a 7-speed unit that will be offered on the S versions of all the models in the 911 lineup. Exact performance numbers for the manual were not revealed, but Porsche says the Carrera S will do 0 to 60 in around 4-seconds and have a top speed of over 190 miles-per-hour. The manual is also 84-pounds lighter than the PDK and it has a mechanical limited slip differential, rather than an electronic one. Pricing for manual versions are the same as the PDK, but it also comes standard with the Sport Chrono package, which adds a number of extra goodies.

And don’t forget to join us for Autoline After Hours this afternoon. John and Gary will be joined by Lindsay Brooke from SAE Engineering and Michelle Krebs from Cox Automotive, to dissect the latest news in the global automotive industry. If you have a question you want answered just send it our way to viewermail@autoline.tv or hit us up on social media. That’s today at 3PM eastern time on our website, Autoline.tv.

But that wraps up today’s show, thanks for watching and have a Happy Halloween!