Did you buy a Mercedes CLA? The company basically thinks that was a mistake at this point. Meanwhile, Lexus outsold the German in the last quarter. All that and more in The Morning Shift for October 7, 2020.
1st Gear: Mercedes Admits That Trying To Sell You A Cheap Car Was A Mistake
Yesterday we discussed that Daimler is in cost-cutting mode, and today we have a bit more clarity on what that means: ultrarich cars are good, small stuff is bad. From Automotive News:
Cars such as the A- and B-Class had helped rejuvenate the brand but would not be the main priority for devoting resources in future, said Ola Kallenius, CEO of Mercedes parent Daimler.
“Maybe we went at a bit too far to cover each and every space into each and every segment. Compact particularly comes to mind,” Kallenius told analysts during on Tuesday during an online strategy presentation.
“This is not where the main thrust should go, we should not become a competitor of the volume makers,” Kallenius said.
The Financial Times explained a bit more about how orienting toward low-cost, high-volume models hurts M-B:
[P]rofits at the Stuttgart-based group have long been weighed down by billions of euros in costs relating to allegations surrounding the carbon emissions of diesel models, and high fixed costs.
[…]
Chief executive Ola Källenius reiterated that the company would cut research and development spending and slim down its product range, in order to reduce its break-even point.
“Our strategy is designed to avoid non-core activities,” he said, emphasising that Mercedes would invest in more profitable, luxury models.
“We’re not chasing volume, we’re targeting profitable growth,” he added, but declined to identify which models would be discontinued.
This is all to say that you’re probably just too poor for Mercedes again. I am sorry.
2nd Gear: Lexus Outsells Germans Restricted By COVID Supply Chains
Meanwhile, Lexus beat the Germans in sales for the first time in a decade, as Bloomberg reports:
Toyota Motor Corp.’s Lexus brand outsold luxury rivals Mercedes and BMW in the latest quarter as inventory shortages triggered by the pandemic hampered the German brands.
Lexus, which hasn’t won the annual U.S. luxury sales race in a decade, grew 2% on the year to 75,285 vehicles in the third quarter. Deliveries at Daimler AG’s premium line declined 9.4% to 69,631 units, and BMW AG suffered a 16% decline to 69,570. Mercedes is still leading the other two carmakers year-to-date by a wide margin.
Lexus has weathered the pandemic better than its German rivals, with the brand’s best-selling RX SUV seeing strong demand in the quarter. Both Mercedes and BMW have been hamstrung by tight inventory as the pandemic idled plants in Europe and the U.S. for weeks. Lexus saw a 31% jump in September alone, led by its RX, NX crossover and ES sedan. That pared declines this year to 13%.
Take your wins how you can get ’em, I guess.
3rd Gear: Dieselgate Lawyers Lay Out Defense: Our Execs Were Morons, Not Crooks
Dieselgate has grown so vast that it now employs contradictory legal defense strategies, as Bloomberg explains:
Lawyers for Rupert Stadler and Wolfgang Hatz began laying out their defense Tuesday after prosecutors started making their case last week in a trial near Audi’s headquarters. Stadler is accused of failing to stop the sale of rigged cars in Europe even after U.S. authorities uncovered the engine-rigging scandal in September 2015, while Hatz is alleged to have known about the cheating as early as 2008.
Gerson Trueg, an attorney for Hatz, said there’s no evidence his client was aware of the cheating and insisted he wouldn’t have tolerated illegal conduct at Audi.
[...]
“No engineer decides about this on his own. This was a strategic decision,” Walter Lechner, a lawyer for one of the lower-level engineers, said Tuesday in Munich, contradicting Stadler and Hatz’s defenses. Everyone within company management — including board members — was aware of the malpractice involved in pushing to make supposedly clean-diesel cars popular in the U.S. and elsewhere, Lechner said.
Only VW could devise a strategy in which it must be wrong to be right.
4th Gear: Ford And UAW Are Ready For The Worst With The F-150 Launch
Ford botched the launch of the Explorer, and executives have been basically in a revolving door since then. A recently leaked memo shows that it’s very much preparing for the worst (but hoping for the best?) with the 2021 F-150, as the Detroit Free Press reports:
Ford Motor Co. is asking its UAW members to be on standby to rapidly respond as part of worst case scenario preparation in case anything goes sideways on production of the 2021 Ford F-150, which is scheduled to arrive in dealerships later this year.
Ford CEO Jim Farley, who assumed leadership of the company Thursday, has said for months that protecting the bestselling F-Series franchise is the company’s top priority. While there is zero indication anything will go wrong, Ford and the UAW are leaving nothing to chance when it comes to the crown jewel in the automaker’s portfolio.
Here’s the memo, leaked by the Freep:
“There have been rumors of us doing repairs for F-150. In the event that the launch for the F-150 doesn’t go well, we are on the list of getting some repair cars. This is all in preparation for the worst case scenario.
Early indications show that the launch will go well, but management is preparing for the worst just in case. There are three plants that are in this plan and we are the third after DTP (Dearborn Truck Plant, which builds the F-150) themselves. I will keep you informed as more develops.”
The Freep notes that an unnamed assembly worker calls the memo “very unusual,” which raises a few questions for me. Has Ford never screwed up this bad, or has it just never cared this much before?
5th Gear: Hummer Will Debut In World Series
Pushing hockey back has all kinds of consequences, I guess, including GM having to stoop to the lower-tier World Series for its big EV truck debut, as the Detroit News reports:
Baseball fans will get a chance to see the GMC Hummer EV for the first time during the first game of the World Series Oct. 20.
General Motors Co. has purchased commercial airtime to show its new electric truck virtually on a variety of platforms including the World Series on Fox and on NBC’s The Voice. The unveiling will also be live at youtube.com/gmc.
Reverse: This Is The Fremont Tesla Plant Now
Via Automotive News:
The first Toyota built in North America — a white Corolla FX16 — is assembled at New United Motor Manufacturing Inc. in Fremont, Calif., on Oct. 7, 1986, following several months of pilot production.
NUMMI was a joint venture formed by Toyota and General Motors Corp. in 1984. Toyota, after decades of steady U.S. sales growth with imports, was eager to learn how to build cars in the U.S. GM wanted to learn how to build world-class vehicles in the country using lean production techniques.
Neutral: What Should The Cheapest Benz Be?
I don’t have a particular problem with Mercedes selling compact cars, just low quality ones. I suppose this is a distinction between “affordable” and “cheap” that could use some hashing out.