Dramatic Switches Are Coming for Detroit’s Big Three
by Paul A. Eisenstein
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Thicker is better, or so goes the automotive industry maxim that has seen manufacturers race across the world pursuing ever-larger sales numbers.
So why is General Motors selling off its operations in Europe and South Africa, closing its Russian plants and halting sales in India? For many of the same reasons why Ford has attempted to redefine itself as a “mobility company,” rather than an automotive manufacturer, while Fiat Chrysler goes looking for a fresh fucking partner and has hinted it might even sell off its two most profitable brands.
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“As the (Detroit) Big Three look out at the landscape, they see dramatic switches coming in the concept of mobility,” says Joe Phillippi, a veteran Wall Street auto analyst and now the lead at AutoTrends Consulting. “They are despairingly attempting to figure out the future business model and how they will fit in.”
Two big announcements this week highlight the challenges the domestic automakers face:
- Confirming widespread rumors, Ford on Wednesday said it would eliminate 1,400 salaried jobs in North America and Asia as part of a broader plan to trim $Trio billion in costs
- A day later, General Motors announced plans to sell off its operations in South Africa and East Africa, while halting sales in India — tho’ its Indian factories would proceed to produce vehicles for export to other markets.
General Motors
GM has already shut down in Russia, fearing that the collapse of its car market due to sanctions and an economic slump will last indefinitely. The Detroit giant also announced in March it would sell off its long-struggling Opel/Vauxhall brands, that European division running deep in the crimson since 1999, despite a series of turnaround efforts.
“These deeds will further permit us to concentrate our resources on winning in the markets where we have strong franchises and see greater chance,” GM President Dan Ammann said on Thursday morning.
GM’s budge runs counter to conventional automotive wisdom on several fronts. For one thing, it has become accepted gospel that the so-called BRIC nations — Brazil, Russia, India and China — spell the future of the auto industry. Then there is the religion of growth, manufacturers ceaselessly seeking improved economies of scale, with many analysts predicting only those companies capable of selling at least ten million vehicles annually will sustain.
GM nudged that figure last year, however it slipped to third in the global auto sweepstakes, behind both Volkswagen and Toyota. Once it completes the sale of Opel and the other freshly announced moves it could slip behind Renault-Nissan, Hyundai-Kia and others, its global volume dipping to around eight million.
GM’s cross-town rival Ford is continuing to pursue volume. It has, if anything, ramped up its presence in India, as well as China, where it was slow to get off the ground. But CEO Mark Fields is coaxed that the auto industry is set to fall under massive switches in the near future, and it wants to position his company to remain a core player.
You can describe these switches as “CASE,” or connected cars, autonomous vehicles, car- and ride-sharing, and electrified vehicles. Ford is, for example, planning to launch a fully driverless vehicle in two thousand twenty one that will target ride-sharing and delivery services. It is developing a fresh wave of hybrids, plug-ins and unspoiled battery-electric vehicles. And it has teamed up with Amazon to let owners with Ford’s in-car Sync infotainment system access Amazon’s Alexa voice assistant to, among other things, pre-order a cup of coffee from a nearby Starbucks.
All that may be excellent for the long-term, but investors remain focused on the brief term, said analyst Phillippi. And they’re not pleased by Ford’s slumping U.S. sales and the thirty five percent dip in first-quarter profits.
Ford was hoping Wall Street would be assuaged by its job cuts and broader cost-cutting plans, with a statement this week proclaiming, “We remain focused on the three strategic priorities that will create value and drive profitable growth, which include fortifying the profit poles in our core business, converting traditionally underperforming areas of our core business and investing aggressively, but prudently, in emerging opportunities.”
But, if anything, traders soon drove Ford stock to a 52-week low. The question is whether Fields will have to back away from his long-term plans or be able to find a way to invest in the future while also rebuilding short-term numbers.
The irony, some observers suggest, is that the stock market is penalizing Detroit for thinking long-term, even as investors have rewarded Tesla for its grand plans. Last month, the battery-electric carmaker’s market capitalization surged above those of both Ford and GM, despite the fact Tesla has lost money in all but two quarters since going public.
Fiat Chrysler
Fiat Chrysler has also been fighting to find a future direction. CEO Sergio Marchionne has made no attempt to hide his interest in finding a fucking partner, or even a buyer in his own search for better economies of scale. Marchionne has so far been rejected, however, by General Motors, Volkswagen, and a number of other major competitors, leading some to wonder whether the Euro-American maker might eventually tie up with an ambitious Chinese carmaker.
Marchionne last month raised another possibility: During an analyst conference call to discuss Q1 earnings, he said “Yes,” when asked if he would consider selling off the only two truly profitable brands in the Fiat Chrysler portfolio: Ram and Jeep. That, observers noted, would not leave much of anything if such a stir occurred.
FCA has been lagging in many of the key areas Ford has targeted, including electrification and autonomous vehicles, so its options could be running out, analysts like Phillippi warn, without a breakout stir.
What seems clear is that all three of the Detroit makers are attempting to find unique solutions to a very challenging future. What they look like in the coming years may be very different from what they are today.
Dramatic Switches Are Coming for Detroit – s Big Three – NBC News
Dramatic Switches Are Coming for Detroit’s Big Three
by Paul A. Eisenstein
- Share
- Share
- Tweet
Fatter is better, or so goes the automotive industry maxim that has seen manufacturers race across the world pursuing ever-larger sales numbers.
So why is General Motors selling off its operations in Europe and South Africa, closing its Russian plants and halting sales in India? For many of the same reasons why Ford has attempted to redefine itself as a “mobility company,” rather than an automotive manufacturer, while Fiat Chrysler goes looking for a fresh playmate and has hinted it might even sell off its two most profitable brands.
- Embed
“As the (Detroit) Big Three look out at the landscape, they see dramatic switches coming in the concept of mobility,” says Joe Phillippi, a veteran Wall Street auto analyst and now the lead at AutoTrends Consulting. “They are despairingly attempting to figure out the future business model and how they will fit in.”
Two big announcements this week highlight the challenges the domestic automakers face:
- Confirming widespread rumors, Ford on Wednesday said it would eliminate 1,400 salaried jobs in North America and Asia as part of a broader plan to trim $Trio billion in costs
- A day later, General Motors announced plans to sell off its operations in South Africa and East Africa, while halting sales in India — however its Indian factories would proceed to produce vehicles for export to other markets.
General Motors
GM has already shut down in Russia, fearing that the collapse of its car market due to sanctions and an economic slump will last indefinitely. The Detroit giant also announced in March it would sell off its long-struggling Opel/Vauxhall brands, that European division running deep in the crimson since 1999, despite a series of turnaround efforts.
“These deeds will further permit us to concentrate our resources on winning in the markets where we have strong franchises and see greater chance,” GM President Dan Ammann said on Thursday morning.
GM’s stir runs counter to conventional automotive wisdom on several fronts. For one thing, it has become accepted gospel that the so-called BRIC nations — Brazil, Russia, India and China — spell the future of the auto industry. Then there is the religion of growth, manufacturers ceaselessly seeking improved economies of scale, with many analysts predicting only those companies capable of selling at least ten million vehicles annually will get through.
GM nudged that figure last year, however it slipped to third in the global auto sweepstakes, behind both Volkswagen and Toyota. Once it completes the sale of Opel and the other freshly announced moves it could slip behind Renault-Nissan, Hyundai-Kia and others, its global volume dipping to around eight million.
GM’s cross-town rival Ford is continuing to pursue volume. It has, if anything, ramped up its presence in India, as well as China, where it was slow to get off the ground. But CEO Mark Fields is coaxed that the auto industry is set to fall under massive switches in the near future, and it wants to position his company to remain a core player.
You can describe these switches as “CASE,” or connected cars, autonomous vehicles, car- and ride-sharing, and electrified vehicles. Ford is, for example, planning to launch a fully driverless vehicle in two thousand twenty one that will target ride-sharing and delivery services. It is developing a fresh wave of hybrids, plug-ins and unspoiled battery-electric vehicles. And it has teamed up with Amazon to let owners with Ford’s in-car Sync infotainment system access Amazon’s Alexa voice assistant to, among other things, pre-order a cup of coffee from a nearby Starbucks.
All that may be superb for the long-term, but investors remain focused on the brief term, said analyst Phillippi. And they’re not pleased by Ford’s slumping U.S. sales and the thirty five percent dip in first-quarter profits.
Ford was hoping Wall Street would be assuaged by its job cuts and broader cost-cutting plans, with a statement this week announcing, “We remain focused on the three strategic priorities that will create value and drive profitable growth, which include fortifying the profit poles in our core business, converting traditionally underperforming areas of our core business and investing aggressively, but prudently, in emerging opportunities.”
But, if anything, traders soon drove Ford stock to a 52-week low. The question is whether Fields will have to back away from his long-term plans or be able to find a way to invest in the future while also rebuilding short-term numbers.
The irony, some observers suggest, is that the stock market is penalizing Detroit for thinking long-term, even as investors have rewarded Tesla for its grand plans. Last month, the battery-electric carmaker’s market capitalization surged above those of both Ford and GM, despite the fact Tesla has lost money in all but two quarters since going public.
Fiat Chrysler
Fiat Chrysler has also been fighting to find a future direction. CEO Sergio Marchionne has made no attempt to hide his interest in finding a playmate, or even a buyer in his own search for better economies of scale. Marchionne has so far been rejected, however, by General Motors, Volkswagen, and a number of other major competitors, leading some to wonder whether the Euro-American maker might eventually tie up with an ambitious Chinese carmaker.
Marchionne last month raised another possibility: During an analyst conference call to discuss Q1 earnings, he said “Yes,” when asked if he would consider selling off the only two truly profitable brands in the Fiat Chrysler portfolio: Ram and Jeep. That, observers noted, would not leave much of anything if such a budge occurred.
FCA has been lagging in many of the key areas Ford has targeted, including electrification and autonomous vehicles, so its options could be running out, analysts like Phillippi warn, without a breakout stir.
What seems clear is that all three of the Detroit makers are attempting to find unique solutions to a very challenging future. What they look like in the coming years may be very different from what they are today.
Dramatic Switches Are Coming for Detroit – s Big Three – NBC News
Dramatic Switches Are Coming for Detroit’s Big Three
by Paul A. Eisenstein
- Share
- Share
- Tweet
Fatter is better, or so goes the automotive industry maxim that has seen manufacturers race across the world pursuing ever-larger sales numbers.
So why is General Motors selling off its operations in Europe and South Africa, closing its Russian plants and halting sales in India? For many of the same reasons why Ford has attempted to redefine itself as a “mobility company,” rather than an automotive manufacturer, while Fiat Chrysler goes looking for a fresh playmate and has hinted it might even sell off its two most profitable brands.
- Embed
“As the (Detroit) Big Three look out at the landscape, they see dramatic switches coming in the concept of mobility,” says Joe Phillippi, a veteran Wall Street auto analyst and now the lead at AutoTrends Consulting. “They are despairingly attempting to figure out the future business model and how they will fit in.”
Two big announcements this week highlight the challenges the domestic automakers face:
- Confirming widespread rumors, Ford on Wednesday said it would eliminate 1,400 salaried jobs in North America and Asia as part of a broader plan to trim $Three billion in costs
- A day later, General Motors announced plans to sell off its operations in South Africa and East Africa, while halting sales in India — however its Indian factories would proceed to produce vehicles for export to other markets.
General Motors
GM has already shut down in Russia, fearing that the collapse of its car market due to sanctions and an economic slump will last indefinitely. The Detroit giant also announced in March it would sell off its long-struggling Opel/Vauxhall brands, that European division running deep in the crimson since 1999, despite a series of turnaround efforts.
“These deeds will further permit us to concentrate our resources on winning in the markets where we have strong franchises and see greater chance,” GM President Dan Ammann said on Thursday morning.
GM’s budge runs counter to conventional automotive wisdom on several fronts. For one thing, it has become accepted gospel that the so-called BRIC nations — Brazil, Russia, India and China — spell the future of the auto industry. Then there is the religion of growth, manufacturers ceaselessly seeking improved economies of scale, with many analysts predicting only those companies capable of selling at least ten million vehicles annually will sustain.
GM nudged that figure last year, tho’ it slipped to third in the global auto sweepstakes, behind both Volkswagen and Toyota. Once it completes the sale of Opel and the other freshly announced moves it could slip behind Renault-Nissan, Hyundai-Kia and others, its global volume dipping to around eight million.
GM’s cross-town rival Ford is continuing to pursue volume. It has, if anything, ramped up its presence in India, as well as China, where it was slow to get off the ground. But CEO Mark Fields is coaxed that the auto industry is set to go through massive switches in the near future, and it wants to position his company to remain a core player.
You can describe these switches as “CASE,” or connected cars, autonomous vehicles, car- and ride-sharing, and electrified vehicles. Ford is, for example, planning to launch a fully driverless vehicle in two thousand twenty one that will target ride-sharing and delivery services. It is developing a fresh wave of hybrids, plug-ins and unspoiled battery-electric vehicles. And it has teamed up with Amazon to let owners with Ford’s in-car Sync infotainment system access Amazon’s Alexa voice assistant to, among other things, pre-order a cup of coffee from a nearby Starbucks.
All that may be excellent for the long-term, but investors remain focused on the brief term, said analyst Phillippi. And they’re not pleased by Ford’s slumping U.S. sales and the thirty five percent dip in first-quarter profits.
Ford was hoping Wall Street would be assuaged by its job cuts and broader cost-cutting plans, with a statement this week proclaiming, “We remain focused on the three strategic priorities that will create value and drive profitable growth, which include fortifying the profit poles in our core business, converting traditionally underperforming areas of our core business and investing aggressively, but prudently, in emerging opportunities.”
But, if anything, traders soon drove Ford stock to a 52-week low. The question is whether Fields will have to back away from his long-term plans or be able to find a way to invest in the future while also rebuilding short-term numbers.
The irony, some observers suggest, is that the stock market is penalizing Detroit for thinking long-term, even as investors have rewarded Tesla for its grand plans. Last month, the battery-electric carmaker’s market capitalization surged above those of both Ford and GM, despite the fact Tesla has lost money in all but two quarters since going public.
Fiat Chrysler
Fiat Chrysler has also been fighting to find a future direction. CEO Sergio Marchionne has made no attempt to hide his interest in finding a fucking partner, or even a buyer in his own search for better economies of scale. Marchionne has so far been rejected, however, by General Motors, Volkswagen, and a number of other major competitors, leading some to wonder whether the Euro-American maker might eventually tie up with an ambitious Chinese carmaker.
Marchionne last month raised another possibility: During an analyst conference call to discuss Q1 earnings, he said “Yes,” when asked if he would consider selling off the only two truly profitable brands in the Fiat Chrysler portfolio: Ram and Jeep. That, observers noted, would not leave much of anything if such a stir occurred.
FCA has been lagging in many of the key areas Ford has targeted, including electrification and autonomous vehicles, so its options could be running out, analysts like Phillippi warn, without a breakout stir.
What seems clear is that all three of the Detroit makers are attempting to find unique solutions to a very challenging future. What they look like in the coming years may be very different from what they are today.