Automotive

How Long Will The Pickup Truck Buying Craze Last?

How Long Will The Pickup Truck Buying Craze Last?

Good Morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.

1st Gear: Peak Pickup?

Thanks cheap gas prices and America’s general love of massive vehicles, automakers like General Motors, Ford and Fiat Chrysler’s Ram brand have been experiencing a boom on strong pickup truck sales over the past year and a half. But Automotive News wonders just how long that streak can last.

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But some industry pundits worry they’ll be ramping up production just as the market is peaking.They point to the slowing growth of the overall market and additional downside risk from weakening demand in Texas and other oil- and gas-producing regions.

“We believe capacity [additions] in a flattish demand environment will pose downside risks to large pickup/SUV” pricing and in turn could sap profits at the Detroit 3, Barclays Capital analyst Brian Johnson wrote in a March research note.

For many months, industry insiders have debated how much longer the record light-vehicle sales run will last. But whether the stout pickup market still has legs probably matters more to GM, Ford and FCA because of its outsize profits. Pickups alone account for 55 to 67 percent of North American operating profit at GM and Ford, according to a Citigroup Inc. report last week.

Building more pickups will pay off only if demand keeps growing, or at least stays steady. If not, those extra trucks could disrupt the Detroit 3’s “oligopolistic” pricing power and cut into profits, Johnson says. He estimates that by the end of next year, GM could face losing $1 billion to $2 billion in annual profit from weaker pricing and market share amid Ford’s and Ram’s production boosts.

For now, at least, the automakers seem more concerned with cashing in than anything else. All three of the American companies are believed to be ramping up truck production, even if they won’t say how much publicly.

2nd Gear: No Chevys In Iran

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I’m a little late on this one, but it’s an interesting story nonetheless. Despite lifted Western sanctions in Iran, and hopes for automakers to expand into that car-starved country, the Islamic Republic last week banned the importation of Chevrolet cars.

Not on the ban list? BMW, Porsche and Hyundai, reports Reuters:

May 3 Iran has banned the import of Chevrolet cars, a week after Supreme Leader Ayatollah Ali Khamenei criticised imports of U.S. autos and asked the government to support domestic production.

The semi-official Mehr news agency quoted an unnamed official in the Ministry of Industry, Mines and Trade as saying on Tuesday that an order of 200 Chevrolet cars, worth $7 million, should be cancelled. Chevrolets are made by General Motors.

[…] Last week, Khamenei denounced the import of foreign products including U.S. cars and said Iranian consumers should support domestic manufacturers instead.

“Even the Americans are not interested in buying such cars because of their weight and high fuel consumption,” Khamenei was quoted by his official website as telling hundreds of workers in Tehran.

How very odd.

3rd Gear: Takata Will Take Hits Again

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File this one under “no shit”: Beleaguered supplier Takata, maker of all the airbags that need to be replaced for their potentially lethal explosive qualities, is expected to take another loss this year. From Bloomberg, via Automotive News:

Takata Corp. said it will probably report a second consecutive annual loss, pointing to the growing financial toll its airbag recalls were having even before the U.S. ordered the supplier to double the number of devices that will be replaced.

The company will probably have a net loss of 13 billion yen ($121 million) for the year ended March 31, compared with an earlier forecast for a 5 billion yen profit, Takata said in a preliminary results filing to the Tokyo stock exchange. The company posted a net loss of 29.6 billion yen a year earlier.

4th Gear: We’re Not Just Making Vans For Google

FCA’s Sergio Marchionne insists his company isn’t just building minivans for Google, but is an active partner in the autonomous vehicle project. Via The Detroit News:

Fiat Chrysler employees aren’t serving just as “metal bashers,” he said at the minivan factory in Windsor, Ontario. Engineers from the two companies are working together to incorporate Google’s autonomous-car technology into the minivan, he said Friday. But where the partnership — and the auto industry — go from here remains to be seen, Marchionne said.

[…] Setting up a partnership with Google is in line with Marchionne’s approach to development. He contends that carmakers waste capital developing multiple versions of the same technology and that the industry should consolidate to become more profitable. He intends to put Fiat Chrysler in a better position for a merger by the time he steps down as the manufacturer’s CEO in 2018.

5th Gear: But Who Owns The Data?

On that same subject, however, Marchionne admitted that FCA and Google haven’t figured out who owns the data collected during testing of the autonomous vans. That… seems like a big deal, and maybe something they should have sorted out by now. Via Reuters:

Marchionne said there are many aspects of the project with Google that have yet to be determined, such as whether the two will develop an open-source software platform that could be shared with others.

Marchionne said what has been agreed so far with Google is limited, but he suggested that the alliance could evolve.

“The objective of this first phase of our collaboration is very targeted,” Marchionne said at a news conference at FCA’s Windsor plant. “It’s designed to take Google technology into the minivan. It’s very, very focused. It has a very clear objective and a very clear timeline. What develops from here, we’ll see.”

Reverse: I Don’t Remember It, But I Remember Liking It

http://www.history.com/this-day-in-hi…

Neutral: Are We Reaching Peak Pickup?

I don’t think we are. Not as long as gas stays cheap.

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