AD #2948 – Tight Inventory Helping to Boost Profits; Chevy Will Offer eCrate Package; Tesla Opens More Service Centers

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

VOLKSWAGEN RETURNS TO PROFITABILITY
When the COVID-19 pandemic clobbered the auto industry earlier this year, we thought that 2020 would be a year of record losses for automakers and their suppliers. But Q3 financial results show it’s not turning out that way. At Volkswagen, production fell, sales fell, and revenue fell. But VW returned to profitability after a miserable second quarter and it posted a €2.7 billion net profit.

FORD’S THIRD QUARTER RESULTS
At Ford, the numbers are even more interesting. It sold fewer vehicles globally in the third quarter, but revenue actually went up — I’ll have more on that in a minute. Ford posted a net profit of $2.4 billion, which would be a good number even in a good year. And here’s the number that just jumped off the balance sheet at us. Ford’s cash pile shot up by $6 billion. It now has over $44 billion in cash and securities, and that means it should easily be able to pay off all the money it borrowed earlier this year when it expected doom and destruction.

TIGHT INVENTORY HELPING TO BRING IN PROFITS
So how come automakers, suppliers and dealers have seen their profitability come roaring back? Here’s our Autoline Insight. All around the world, car dealers are running on tight inventory. Cars are selling as fast as they can get them off the truck. So dealers have slashed their floorplan costs. Remember, dealers buy their cars from the car companies, and the faster they sell, the faster dealers can pay off their car loans. That saves them a ton of financing costs. And because inventory is tight, they don’t have to offer sales discounts. That’s why Ford’s revenue went up even though sales went down. We think the auto industry, especially in the U.S. market, is going to re-evaluate why it normally keeps very high levels of inventory. And one more thing. How come automakers, like Ford, are generating so much extra cash? Well, that’s what happens when you shut down for over 40 days and don’t have to pay your suppliers.

It all seems almost too good to be true. And it might be. We’re now seeing a second wave of Covid-19 spreading through the world. Could that cripple the auto industry’s comeback? That’s what John and Gary will be talking about later this afternoon on Autoline After Hours. Their special guest is Charlie Chesbrough, the chief economist for Cox Automotive. Mike Austin from Hemmings will also be on the show. And you are invited to join the action later today at 3 pm eastern time.

TRATON & HINO WILL COLLABORATE ON EV COMMERCIAL TRUCKS
The two largest automakers in the world are partnering up… well sort of, it doesn’t have anything to do with cars. Volkswagen’s and Toyota’s commercial vehicle subsidiaries, Traton and Hino, are going to develop battery electric and fuel cell trucks and components as well as creating common EV platforms, including software and interfaces. Why both BEVs and fuel cells? Well, the companies say they are convinced both will be needed in the future. Traton and Hino will develop the technology in Sweden and Japan. The tie-up will allow them to get products out in the market faster but more importantly they’ll save money on development costs.

MASKS MAKES F&I MANAGERS’ JOB EVEN HARDER
Car dealership Finance & Insurance managers have to be good at picking up on visual cues from customers while they’re selling. But Wards reports the pandemic is making that more difficult. Customers wearing masks or turning off their cameras during a video conference are making it harder to be able to “read” their facial expressions and body language. Since F&I managers are the last person a car buyer sees in the buying process, they have to know how customers feel, so they don’t turn them off and blow the sale.

GENESIS GV70 HAS INTERESTING STYLING DETAILS
We have more details about the new Genesis GV70 crossover. As you can see, the styling of the grille and lighting signatures ties right in with the rest of the lineup. The rear end is interesting. It’s very curved, which creates a unique shape for the rear side window and the dual character lines at the rear makes a stacked effect. Not sure that I’m a fan of it, but it will certainly stand out on the road. The interior stands out too. A long, skinny infotainment screen sits high on a stacked dashboard, the lower half housing the HVAC controls in a long, thin oval that flows past the steering wheel. This fat, two-spoke steering wheel also has some visual interest and it looks as though a number of non-traditional interior colors will be offered as well. Two months of final testing still needs to take place in Korea before the GV70’s official launch.

NIKON IMPROVES ITS LASER RADAR UNITS
Nikon is famous for the cameras it makes, but did you know it also makes laser radar units for inspection systems? Automakers use devices like this to measure the body-in-white of a vehicle after they are welded in the body shop. Nikon calls its device APDIS, or Accurate Precision Distance Scanning. And its newest version is significantly lighter and smaller than before. The laser provides very precise measurement without the use of jigs or fixtures. That allows it to be placed right next to the assembly line, though it can also be used off-line for measuring other assemblies such as doors, hoods and hatches. Nikon got into the measurement business in 2009 when it bought a Belgian company called Metris, and renamed it Nikon Metrology. And metrology, in case you haven’t heard that word before, is the science of measurement.

CHEVY PERFORMANCE WILL OFFER eCRATE PACKAGE
There’s been a rising trend of converting old gas-burners to run on electric power and that’s exactly what Chevrolet is doing for this year’s virtual SEMA show. It gutted the engine, transmission, fuel lines and exhaust from a 1977 K-5 Blazer and stuffed it full of electronic components from a Bolt EV. Those include a 200 horsepower electric motor, all the controllers and wiring harness and a 400-volt battery pack with 60 kWh of usable energy. It’s also equipped with a 4-speed transmission. But the rest of the drivetrain is untouched. And unlike most SEMA show cars, this is not a one-off motor build. Chevy Performance will offer the setup as a eCrate package, which is expected to hit the market in the second half of next year. Pricing was not revealed. But if things go well, Chevy says it’s looking at expanding the eCrate packages, including using its Ultium drive technologies in the future.

2021 FORD EDGE GETS GIANT DISPLAY SCREEN
It used to be the battle of the cup holders. Now it’s the battle of the big screens. So the refreshed 2021 Ford Edge gets a standard vertically mounted 12-inch display, with over-the-air update capabilities. The Edge also offers 9 different styles of wheels, two new paint colors, and new interior trim options, including cloth. The ST model is also sticking around and gets a number of unique touches inside and out.

FORD ANNOUNCES ELECTRIC TRANSIT DEBUT
Speaking of Ford, it announced that the all-electric Transit is going to debut on November 12th. Time or place wasn’t revealed, but you can be sure we’ll cover it right here.

TESLA TO OPEN MORE SERVICE CENTERS
Tesla’s sales are booming and the company has sold more than 1 million cars. But there’s one problem with that success, it doesn’t have enough service centers for all those customers. Over the last 12 months, Tesla’s sales have grown 50% but in the same time it only added 12% more service centers. So to close the gap, Electrek reports the company will add 52 new service centers in 2021, about one a week. Tesla currently has 466 globally and unlike most automakers, the company owns and operates all of its service centers worldwide. As Elon Musk has said in the past, the best way for Tesla to sell more vehicles is to grow its service center and Supercharger network.

FCA CEO CONFIRMS ELECTRIFIED RAM TRUCK
In other EV news, it’s finally official. Ram is going to get an electric pickup. During a third quarter earnings call, FCA CEO Mike Manley confirmed that the automaker will introduce an electric truck but he did not provide any details. Everyone knew Ram would have to jump on the bandwagon. GM and Ford, have already announced plans for EV pickups. So have Tesla, Rivian, Lordstown and Nikola. FCA’s strategy all along has been to wait for the EV market to develop and then bring out its own. And it obviously decided its time has come.

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