Home / Technology / The success of Subaru in the United States is taking it to its breaking point

The success of Subaru in the United States is taking it to its breaking point



Photo: Carlos Osorio (AP)
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The success of Subaru is depleting its resources, Toyota has an autonomous car under construction and the truck battles are hotter than ever. All this and more in The Morning Shift for Monday, February 11, 2019.

1st gear: the success of Subaru is a double-edged sword

Subaru has recorded record sales in the United States for ten years, and there is no reason to believe that 2019 will be different. But all that success comes with a price to pay, according to Automotive News:

At the end of last month, responding to public accusations that Subaru perpetuates a pressure cooker environment, the automaker acknowledged that some facilities in Japan forced thousands of workers to give up millions of dollars in unpaid wages by working overtime. without schedule

[…]

A series of production problems in Japan has hit Subaru's reputation in the local market, torpedoed its Japanese sales and unleashed corporate turmoil. The problems are now coming to the United States in the form of withdrawals and lost shipments.

"We remain concerned that [Subaru] "It is not making the necessary investments and changes fast enough to ensure that vehicles are produced with the quality that the brand and its customers deserve," wrote the US National Retail Council. UU Japan after last year's launch of the Ascent crossover built by the United States was affected by a recall.

The huge demand for Subarus, and with the next-generation Outback set to make its comeback, is outstripping supply. Quality control is missing, production has stopped, workers are resigning and those who are not obliged to work extraordinary amounts of overtime: 105 hours in a month, in one case

Chief Financial Officer of Subaru, Toshiaki Okada, stated that the company should have "increased our capacity accordingly in terms of management and facilities" to meet the growing demand, but it did not. Now, Subaru is looking for ways to "carefully" begin to expand in the middle of the crisis.

2nd Gear: Toyota will sell a car in a year

At least, that is what the company is currently proposing.

According to Toyota, Japan's largest automaker has much planned, but also a lot of work to be done, according to a report from Automotive News Europe. The idea is only the first step.

[Toyota] You must develop hardware and software for the vehicle, drastically reduce the cost of technology and increase the hiring of software engineers that will make everything happen.

That is the challenge facing James Kuffner, CEO of Toyota Research Institute Advanced Development Inc., or TRI-AD. His Tokyo company was created in March to spearhead Toyota's attempt to close the gap between the investigation and the showroom.

The first milestone occurs in 2020, when Toyota plans to introduce vehicles capable of driving on highways. Kuffner said they would be rolling supercomputers.

"The prototypes and preproduction vehicles that the team is building here at TRI-AD will be … the smartest supercomputer on wheels," Kuffner said at the end of last month at the temporary TRI-AD office near the station. Tokyo. "We've called it the mole of my generation to build this technology and bring it to market."

"Rolling supercomputers". "Moonshot." Those are not phrases one would expect to hear about a technology that is supposed to be available for sale next year. To make this dream come true, Toyota has invested $ 2.8 billion in a partnership with Aisin Seiki and Denso.
to create self-driving software, some of which are not yet in production. They will have to develop a "Silicon Valley mentality," according to Nikos Michalakis, the vice president in charge of the software platform. And they will have to find a way to make this new technology affordable if they are going to attract customers.

3rd Gear: The Truck Wars are heating up

Trucks have proven to be one of the most reliable staples in the current automotive market. Companies like Chevrolet and GM have been offering significant discounts (for example, Ram Truck Month and Silverado Sell Down) in an effort to get people to choose its truck over another automaker. As Automotive News reports:

The battle for pickups is expected to continue, if not increase, this year with GM and Ram launching redesigned trucks for heavy duty against refurbished Ford HD models, and Ford and Jeep re-entering the mid-range to compete against the Chevrolet Colorado and The GM GMC Canyon aged from GM. and the leader in the Toyota Tacoma segment.

GM has sold most of the light trucks (medium, full size and HD) for five consecutive years, and does not plan to leave that title without a fight. He is preparing for a battle with the resurrected Ranger of Ford and the Gladiator that comes from Jeep.

It has been a tough battle to fight. Brand loyalties are deep in the world of trucks, which makes updated models and incentives so popular:

The average incentive expense for the full-size collection segment last year was $ 5,670 per vehicle, according to J.D. Power The incentives for the segment in January were $ 5,560, slightly below last year's average and only $ 81 more than a year ago.

The small increase was partly due to a seasonal setback in incentives in January after the big end-of-year discounts, including the promotion of Chevrolet employee pricing in its outbound pickup and other models in December.

In January, Chevrolet offered an average of approximately $ 4,600 in incentives for Silverado sold, according to the internal data of J.D. Power obtained through external sources, compared to more than $ 6,000 in December. Ford's F-series expenses fell 8.3 percent to $ 4,500 in January, and Ram's collection incentives fell 5.9 percent to $ 5,178.

GM is determined to maintain its control in the light harvesting market this year, but the Ford Ranger and the Jeep Gladiator come to give GM a chance for their money. It's going to be a tremendous battle to watch play this year.

4th Gear: Nissan and Renault prepare for the Ghosn Blowback

This week will really show us what kind of disorder the Carlos Ghosn affair has caused for Nissan, Renault and the automotive industry in general, it is true, all of them. The earnings releases are coming out. Pierre Quemener, analyst at MainFirst Bank AG in Paris, put it quite succinctly: "car manufacturers are starting 2019 with a hangover".

If you want to know a bit what those earnings reports could confirm, Bloomberg It has some projections:

According to analysts polled by Bloomberg, Nissan's operating profit is expected to fall 10 percent to 517.1 billion yen ($ 4.7 billion) in the fiscal year ending March, the lowest in five years. Renault will likely report an 8.8 percent decrease in operating profits last year to 3.47 billion euros ($ 3.93 billion).

[…]

The shares of both companies have fallen sharply since Ghosn's arrest on November 19. Renault had few changes mid-afternoon in Paris on Monday and lost 31 percent in the last year. Nissan fell 1.5 percent earlier in Tokyo and has fallen 19 percent in the last 12 months.

That is a considerable amount to lose, especially because the Chinese Nissan market (which was projected as the largest market of the automaker) bled sales, investments in electrical technology and autonomous became the norm and, of course , the Brexit formed an angry cloud that hovers over the head of Nissan-Renault.

And do you remember the Nissan plant in Mississippi that cut 700 workers? Yes. That's because truck and truck sales have also been declining in the United States. If there has ever been a good time for an internal scandal, it sure is not like that.

5th Gear: UAW Profit sharing highlights market decline

Since 2015, automakers have awarded nearly $ 5 billion in bonuses to the United Automobile Workers union, with only the 2018 profit-sharing check for a total of $ 1.8 billion.

But that sum is not one to start applauding yet. In fact, it highlights the current decline of the automotive market. Automotive news has more:

But the checks for 2018, to be paid in March, represent the lowest total payment since Ford, General Motors and Fiat Chrysler Automobiles ratified their current agreements with the UAW in 2015 and could presage controversial talks, and a possible change, this summer and It falls while the sides forge a new four-year pact.

The industry faces a more uncertain perspective than during the last round of formal negotiations, when Ford and GM were at the peak of record profits and the industry was about to establish a new brand in US sales. Now, GM is in the midst of closing assembly plants and firing salaried employees, Ford is undergoing a global restructuring and FCA is navigating life after the death of CEO Sergio Marchionne, who was instrumental in getting the company out of business. Net debt position Last year for the first time since its bankruptcy.

What do the lower profits of the industry mean for the UAW? Lower the profit-sharing checks or, to put it another way, a more unstable paycheck from one year to the next.
While GM, Ford and FCA project an improvement in net profits in 2019, they are definitely not the exciting numbers that have stimulated the market in 2015.

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Neutral: What truck will the 2019 market take?

Everyone and his brother are drooling over the shiny new trucks projected for next year. Trust me, I'm not a truck person and even I am really in the new tailgate of the Ram. Which manufacturer do you see dominating the truck market in 2019?


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