Chrysler Prodded Dealers to Absorb Glut of 40,000 Unordered Cars
Fiat Chrysler Automobiles NV has been manufacturing more cars and trucks than its U.S. dealers are willing to accept, at one point creating a nationwide glut of about 40,000 unordered vehicles and stoking tension with some of its retailers, reports The Detroit News. Four dealers, two of whom spoke on the condition they not be named, said Fiat Chrysler has revived what’s known in industry circles as a “sales bank.” The practice is decades old and frowned upon by investors and analysts because it can obscure an automaker’s inventory figures. Dealers don’t like it because it can amp up the pressure companies place on them to stock vehicles they don’t want. Chrysler implemented sales banks in the run-up to the two times it needed rescues from the U.S. government, in 1980 and 2009. While the company is nowhere near that sort of trouble – it just reported record quarterly profit – the surging supply of unassigned vehicles coincided with a period when the company was pursuing mergers. Read more here.
Toyota to Add AWD to Camry, Avalon
Toyota will test how much of the consumer shift away from sedans is because of the added security of all-wheel-drive systems found on most crossovers as the Japanese automaker adds an optional fuel-efficient awd system to its Camry and Avalon sedans next year. According to Automotive News, the AWD version of the midsize Camry will be the model's first since 1991, while the large Avalon will get its first optional AWD version ever. Both will use the same Dynamic Torque Control system employed on the redesigned RAV4 compact crossover, Toyota said. The AWD system sends up to half of engine torque to the rear wheels as needed under load if the car detects slippage from the front wheels. When additional traction isn't required, the rear prop shaft is electromagnetically disengaged to boost fuel efficiency, Toyota says. Toyota says awd versions of the sedans weren't originally in its product plans but were a side benefit of its TNGA platform strategy. Read more here.
Daimler Dampens Profit Expectations Ahead of New CEO's Investor Presentation
Mercedes-Benz parent Daimler has discreetly warned financial analysts that CO2 compliance costs and market headwinds for next year would be much larger than previously thought and asked them to reduce their earnings estimates for the automaker by billions of euros. According to Automotive News, four different brokerage houses – two based in Germany and two based in the UK – confirmed they had been contacted in recent weeks ahead of a capital markets presentation in London on Thursday, followed by a meeting with investors in New York on Friday. They were told that the analysts' 2020 consensus estimate of just over 10 billion euros for group operating profit was about a fifth too high because of added costs to electrify Mercedes' passenger car fleet that cannot be passed on to customers and an accelerated slump in demand for heavy commercial vehicles. Read more here.
Tesla to Build European Car Plant in Berlin, Musk Says
Tesla Inc. Chief Executive Elon Musk said the company would build its planned European plant in Germany, where it will assemble electric vehicles and compete with some of the world’s biggest auto makers on their home turf. According to The Wall Street Journal, the facility will be located in the southeast area of Berlin, Mr. Musk said Tuesday at a car awards ceremony in Germany. That will place it close to where a new international airport is being developed, he said. Tesla will also set up an engineering and design center in the area, Mr. Musk said. Tesla previously said it would start making cars in Europe in 2021 and that it would produce its mass-market Model 3 at the European facility, as well as the Model Y compact sport-utility vehicle. Tesla currently makes its electric cars in the U.S. and has started building them in China. Deliveries from the Shanghai facility haven’t begun. Tesla is assembling the Model 3 there now and says it plans to add the Model Y. Read more here (subscription required).
Used-Car Retail SAAR at Highest Rate Since FebruaryThe used market got a bit stronger in October, reports Auto Remarketing. Total used-car sales climbed approximately 1.4% from October 2018, according to Cox Automotive, which estimated the seasonally adjusted annualized rate for used-car sales at 39.6 million for the month. That beats the year-ago reading of 38.1 million, but is down from 39.8 million in September. However, what Cox Automotive dubs the used retail SAAR reached its highest level since February. The used retail SAAR, which only considers sales from franchised and independent dealers, came in at an estimated 20.6 million units for October. That beats the year-ago level of 19.8 million. Read more here.
Around the Web
New Concept Previews Handsome Redesign for Hyundai Tucson [MotorAuthority]
Cars That Depreciate the Least in 5 Years [Autoblog]
McLaren's $1.8M Elva is the First Roadster in the Ultimate Series [Forbes]
