TORONTO -- Ontario Premier Kathleen Wynne says a government grant of up
to $85.8 million to Fiat Chrysler to support production of a plug-in
hybrid electric minivan is not "corporate welfare."
Wynne made the announcement today at the Fiat Chrysler Automotive Research and Development Centre in Windsor.
The government says the investment for the Chrysler Pacifica will
safeguard the Windsor assembly plant, where Chrysler added 1,200 new
jobs on top of 4,000 existing positions to produce the minivan.
Economic Development Minister Brad Duguid says Chrysler will have to
submit invoices to the provinces of investments they have made in order
to get the grant money.
Wynne says her government made the decision to "partner" with the auto
industry, a critical sector in Ontario, but that doesn't make it
"corporate welfare."
Ontario's Liberal government has a long history of providing money to
automakers, and teamed up with the federal government in 2009 to
contribute $10.6 billion to Chrysler Canada and GM Canada to keep them
afloat during the recession.
When Ontario sold its GM and Chrysler shares, it gained about $1.1
billion on its original $4.8-billion bailout package to the two
automakers.
Wynne is set to meet later Wednesday in Detroit with Ford Motor Company
executive vice president Joseph Hinrichs and Michigan Gov. Rick Snyder.
Hatchback sales are predicted to significantly increase over the next few years, while demand for sedans will likely slide.The
prediction comes from IHS Automotive, which says hatchbacks will be the
fastest growing body style in the U.S., with a 37-percent jump in sales
from now to 2020. That
means hatchbacks should account for about 1.1 million units in 2020,
approximately 6.6 percent of total vehicle sales in the U.S. (compared
to 4.8 percent in 2015).
Up to now, only a handful of automakers have consistently offered hatchbacks in the U.S. The VW Golf is one, and the Ford Focus is another. But that is about to change with the introduction of the Chevrolet Cruz and the Honda Civic hatch. In an interview with Automotive News,Honda's
general manager Jeff Conrad spoke about the Civic hatch and said "there
is a growing market for that, so we want to be on the forefront."
Conrad said many consumers told the automaker they want something that
"can carry my stuff."
Meanwhile, sedans are headed for a different trajectory.
According to IHS Automotive, sedans accounted for 33.1 percent of total
U.S. car sales in 2015. That number is expected to drop to 29.3 percent
in 2020.
SUVs and crossovers, however, will continue to dominate
sales through 2020. SUVs were responsible for 36.8 percent of vehicles
sales last year and IHS Automotive says that figure should increase to
39.8 percent in 2020.
Nora Patey knew what she wanted when she went car shopping over
Presidents Day weekend: a small SUV, with a backup camera, high carriage
and a reasonable monthly lease payment. Even so, many of the salesmen
made their pitches to her boyfriend.
"He would have to say, 'It's
not my car, don't talk to me, talk to her,'" the 24-year-old recalled.
"Even though I would initiate the introduction and say that I was
looking for the car, and I was buying it, a lot of the conversation
would frequently get directed to him."
Like Patey, who eventually
bought a 2016 Mazda CX-5, a growing number of women are shifting the
gender demographics of vehicle sales and challenging automakers'
long-held assumptions about who drives their cars. In particular, single
women are buying more SUVs, fueling a surge in demand that has 2016 on
pace to top last year's record 17.5 million light-vehicle sales in the
U.S.
From 2010 to 2015,
mainstream small SUV sales to women rose 34 percent, compared to a 22
percent rise for men, according to MaritzCX, a customer-experience
software and research company. In the same period, premium small SUVs,
though smaller in raw numbers, saw 177 percent growth in sales to women.
And among female carbuyers overall, a full 40 percent aren't married.
"There's
a group of single, professional females out there that need vehicles,
and you need to be attentive to them," said James Mulcrone, director of
research services in MaritzCX's Michigan office, who has studied trends
among female car buyers. "They're going to make money, they're going to
make their own decisions, and they can be very loyal consumers."
Increasing
income and education as well as a general delay in marriage and
child-bearing combine to create a growing number of single women buying
cars, Mulcrone said. More than two-thirds of female buyers reported
their 2015 purchase decision as "entirely up to me," and the appeal of
SUVs, with ample cargo room and improving fuel economy, is widespread.
Those
trends are compelling to automakers, whose SUVs and other light trucks
are outstripping sedan and coupe sales even as May deliveries announced
Wednesday are projected to decline for all of the largest names,
attributable to having one fewer weekend compared with last May,
according to a Bloomberg survey. On average, analysts see the annualized
selling rate, adjusted for seasonal trends, slipping to 17.4 million
amid concern that demand is waning. As they roll into the summer sales
season, automakers tend to bank on Memorial Day weekend for a sizable
portion of the month's business.
"It's too soon to say for sure
that auto sales are leveling off," said Jessica Caldwell, director of
industry analysis at Edmunds.com, in a note with estimates. "The summer
months will flush out more incentives from automakers and the urgency
that shoppers show in responding to these incentives will give the
industry a much better sense of how the market is trending."
After
a
14 percent sales decline seen for Volkswagen AG's VW and Audi brands,
General Motors Co. will suffer the steepest drop among the largest
automakers, 13 percent, analysts estimate, as it reduces deliveries to
rental fleets and caters more to retail consumers. Toyota Motor Corp. is
expected to
sell 8 percent fewer vehicles amid supply-related disruptions from
recent earthquakes, along with a 6.1 percent decline for combined sales
from Hyundai Motor Co. and Kia Motors Corp. Fiat Chrysler Automobiles NV
is projected to report a small drop, its first in more than six years.One
way to woo women like Patey is to put more women on the other side of
the counter as well, says Celeste Briggs, director of the Women's Retail
Network at GM. "Dealerships that welcome and invest in women have the
opportunity to create a strategic advantage," she says on the website
for the initiative.
About 60 percent of women who leave a
dealership without buying never return, according to Women-Drivers.com, a
car-dealer review service. What's more, Briggs says, women tend to be
loyal customers.
"If you treat her right, she'll stay," said Briggs in a telephone interview. "And she'll also tell a few friends."
Auto industry, in general, struggling to deal with high-tech problems.
The good news is that automakers are loading up today's vehicles with
more and more high-tech safety, performance and infotainment
technology. The bad news is that these systems are generating more and
more complaints from consumers frustrated by balky and poorly written
software.
Smart, Tesla, Jaguar and Land Rover are three of the brands that are
generating some of the highest number of complaints, according to a new
study by J.D. Power and Associates. According to the research firm, the
number of complaints about vehicle software filed with the National
Highway Traffic Safety Administration have been growing rapidly in
recent years, jumping 22% in 2015 alone.
"Consumer complaints are the canaries in the coal mine for automobile
manufacturers when it comes to anticipating future recalls and
longer-term customer satisfaction," said Renee Stephens, vice president
of U.S. automotive at J.D. Power, in a statement. "Software-related
problems have become much more prevalent and, if not addressed, could
begin to erode consumer trust in new automotive technology."
Between 2011 and 2016, Daimler's Smart brand had the highest number
of software complaints, according to Power, followed by Isuzu - a brand
no longer available in the U.S. - Tesla, Volvo and British siblings
Jaguar and Land Rover.
At the other end of the spectrum, the brands with the least
complaints (on a per 1,000 vehicle basis) were Chevrolet, GMC, Ram,
Toyota, Mazda and Subaru.
The results of the new J.D. Power study immediately generated some
controversy and criticism. A spokesman for Volvo faulted the report's
methodology, raising numerous questions, including the process by which
Power determined which automakers had experienced the most software
complaints. Among other things, said Volvo's Jim Nichols, the Swedish
maker's dealers routinely update onboard software whenever a vehicle is
serviced. But that does not mean there is a glitch or a recall.
The Smart brand had the highest number of complaints in a recent survey.
That said, the study does appear to touch on a growing problem affecting the auto industry at large.
Today's cars routinely pack in more electronic hardware than a
typical home or office. It's not unusual to have 100 million or more
lines of software code operating all those systems, substantially more
than the latest Air Force fighter jets. But separate research by
RedBend, a company that handles over-the-air software updates, finds
that the typical vehicle contains anywhere from five to 20 "flaws" for
every 1,000 lines of code.
And that doesn't even factor in poor design issues that may make it
difficult to understand or use a navigation or voice control system.
If anything, Power warns that software problems could continue to
rise as vehicle technology becomes even more complex. That's all but
certain to happen as automakers move closer and closer to the
introduction of fully self-driving vehicles.
Some of the problems pose potentially serious safety risks. As a
result, there have been 189 recalls linked to software problems over the
past five years, 141 of which could actually cause a crash because of
malfunctioning vehicle or powertrain controls. In several cases, such
glitches could lead to a car stalling out in traffic. Software-related
recalls rose 45% in 2015 alone. In all, according to RedBend, 6.4% of
last year's recalls were "software related," a problem that cost makers
$440 million to fix.
Other malfunctions simply annoy users. Ford Motor Co. sent frustrated
owners of products a memory stick to update a version of its Sync
infotainment system several years ago when it learned the technology
could freeze or reboot on its own. Those uncomfortable with updating the
software on their own had to go to a dealer's service department.
But automakers are beginning to lift a page from the consumer
electronics world, smartphones in particular, using over-the-air, or
OTA, updates that don't require a vehicle owner's intervention.
Tesla has been the most active proponent of the concept, relying on
OTA to not only update faulty software but add new features to vehicles
like the Models S and X. That allowed thousands of owners to begin using
the new AutoPilot, a semi-autonomous driving technology without
visiting a Tesla dealership. Significantly, Tesla used OTA updates to
revise the AutoPilot system after receiving complaints about how some
owners were misusing it.
Not everyone is comfortable with OTA, however. General Motors' global
product chief Mark Reuss prefers to limit over-the-air updates to
non-critical vehicle systems, such as infotainment, to limit the
possibility hackers could use the radio waves to gain control of a
vehicle.
But, one way or the other, automakers will have to find ways to
reduce software flaws and, if they discover glitches, fix them as
quickly and easily as possible to reduce customer frustration.
Autotrader
in the U.S. has come out with its recommendations of reliable and
budget-friendly vehicles for recent school graduates.
The editors at Autotrader came up with nine new and CPO vehicles that
they said would suit a young buyer's lifestyle, factoring in cost to
buy and own, practicality, styling and equipment available. Vehicles
have a starting price under $25,000 with at least 12.7 km/litre, said
Autotrader.
"All of the vehicles we picked for this list are fun, reliable and
thoughtfully designed - perfect choices to fuel the next phase of your
journey," said Brian Moody, executive editor at Autotrader, in a written
release.
Of the vehicles included in the list, three are CPO.
"CPO cars also merit close consideration, as they offer many of the
benefits of a new car, like low mileage and bumper-to-bumper limited
warranties, without the new-car price tag," said Moody.
Here's the list of recommended vehicles:
FIAT 500X
Honda Civic
Kia Soul
Mazda3
Scion iA
Subaru Crosstrek
CPO Chevrolet Equinox
CPO Lexus CT
CPO Hyundai Sonata
The U.S. site also includes tips for young buyers, including information on CPO vehicles, credit scores and test drives.
Ever think about barreling down Interstate 75 at 150 mph and getting to and from work in half the time?
One Wall Street automotive analyst thinks that scenario could play out in a future with fully autonomous cars.
Bank
of America Merrill Lynch analyst John Murphy said Wednesday at an
Automotive Press Association luncheon in Detroit that completely
driverless vehicles wouldn't need speed limits. That would mean quicker
commutes to and from work, and more personal time for errands or other
activities.
"The industry ... remembers its key function is to get
people from A to B quickly. ... If you can get me from A to B at twice
the speed or half the time, I'm going to pay you a lot of money for
that," Murphy said. "The only reason we have speed limits is for safety
reasons. So if all of a sudden you have a fleet of vehicles that can't
crash into each other or crash into other objects, why can't you drive
150 mph? There's no rational reason."
Murphy admitted it's a
pie-in-the-sky scenario that would involve convincing regulators to
change speed limit laws, not to mention actually getting fully
autonomous vehicles on the road in bulk, which could take decades. But
automakers are already introducing semi-autonomous safety features like
lane-keeping assist and automatic emergency braking that are making
vehicles safer and could lead to smoother commutes.
"You could potentially really change the industry," Murphy said.
Increasing
the speed of travel would give back hours a week that people could use
to run errands, spend time with their family or get more work done,
Murphy said.
"That's real utility and that's a stimulus to the economy that is major," he said.
As
automakers aim to keep sales ahead of 2015's record-setting pace,
they're pulling out all the stops to draw in buyers. Virtual reality may
be next in their bag of tricks.
Volkswagen AG's Audi plans to
roll out Oculus Rift headsets in a number of dealerships by the end of
this year. Johan de Nysschen, president of General Motors Co.'s
Cadillac, in February encouraged some of the company's lowest-volume
outlets to go virtual. With dealers from Brazil to Berlin already
experimenting with virtual reality, automakers see twin benefits of the
technology: enhance the customer experience while also shaving off some
of the $2.75 billion U.S. dealers spend annually on interest to keep new
vehicles on their lots.
"You're wearing the glasses and you
really think you're in the car," said Marcus Kuehne, Audi's
virtual-reality project lead. The brand already allows customers to
pre-equip cars in a handful of highly digitized urban dealerships
and sees virtual reality as the next step in letting shoppers see what
they want to buy. "You get a good feeling for the size -- do the rims
fit to the body of the car, do the colors inside the car fit well
together?" he said. "You can judge this much better through this
technology than on a screen."
Letting
customers manipulate models, color schemes and features in a virtual
environment is automakers' latest tool to distinguish themselves in a
slower-growing yet very profitable market. April sales announced on
Tuesday will probably show gains for most of the biggest U.S. and
Japanese automakers, as the annualized selling rate, adjusted for
seasonal trends, rises to 17.5 million, according to a Bloomberg survey.
The pace and the month's total are projected to set April records.
'Robust' Industry
"Top-line
performance of the industry remains robust -- retail demand is strong,
transaction prices are at record levels and consumers will spend more on
new vehicles than in any other April on record," John Humphrey, senior
vice president of the global automotive practice at J.D. Power, said in a
statement. "The slowing rate of growth, shift in consumer demand away
from cars and toward SUVs, and elevated fleet volumes pose significant
challenges to manufacturers as they compete in the marketplace."
General
Motors
expects industrywide sales to rise 5 percent and a seasonally
adjusted annualized pace of 17.5 million vehicles or higher, said Kurt
McNeil, vice president of U.S. sales. While the Ford and others have
increased sales to fleet customers so far this year, GM has reduced
them. As a result, the Detroit-based automaker delivered record North
American profits in the first quarter, even as U.S. sales slipped by a
few hundred. For April, analysts project a 1.7 percent decline for GM.
"The
economic fundamentals are there," McNeil said. "Interest rates are
still low and gasoline prices may be the lowest this summer since 2005."
Nissan
Motor Co.'s sales may rise 11 percent, the biggest increase projected
by the analyst estimates, followed closely by Honda Motor Co., seen
gaining 10 percent. Combined sales of Volkswagen's VW and Audi brands
may fall 1.5 percent as Europe's largest automaker tries to overcome consumer distrust since its diesel-emissions cheating scandal that may cost about $18.2 bilion.
Enticing Visitors
Automakers
already have some experience using virtual reality to promote their
vehicles. In 2014, Fiat Chrysler Automobiles NV touted the 2015 Chrysler
200 sedan by giving viewers a virtual reality tour of its factory.
Volvo Car Group, owned by Zhejiang Geely Holding Group Co., used the
technology to introduce its XC90 SUV to consumers before it became
available in U.S. dealerships less than a year ago. And at this spring's
New York auto show, Toyota Motor Corp. enticed visitors by letting them
use headsets that demonstrated its cars' safety features,
including pedestrian detection.
Virtual reality has blossomed from
a far-out concept to an almost-practical form of delivering
entertainment and information thanks to improvements in image quality,
computer bandwidth, and investment by companies like Facebook
Inc. Oculus VR Inc., which was bought by Facebook for $2 billion in
2014, launched its virtual reality headset for $599, compared with HTC
Corp.'s HTC Vive, priced at $799.
While
the gaming industry will likely account for most of virtual reality's
near-term use, Bloomberg Intelligence analyst Jitendra Waral sees it
becoming a core part of the consumer experience for a number of
industries, including autos, health care and tourism in the next four to
five years. Sales tied to the headsets may top $1 billion this year and
reach $21 billion by 2020, Waral estimates.
"What companies are
doing is they're creating these consumer touch points to differentiate
themselves and be more competitive in terms of the experience," he said
in a phone interview. "It's completely different than the way you do
things right now, so that novelty is what grabs the attention."
TORONTO -- Ontario Premier Kathleen Wynne says a government grant of up
to $85.8 million to Fiat Chrysler to support production of a plug-in
hybrid electric minivan is not "corporate welfare."
