Used-Car Price Tumble Spells Trouble for the U.S. Auto Market

First Up 10/11/19

Used-Car Price Tumble Spells Trouble for the U.S. Auto Market
Falling used-car prices last month were a major contributor to subdued inflation for the U.S. economy. Auto analysts warn this could be a lasting trend with major negative implications for new-vehicle demand, reports Bloomberg. The 1.6% monthly drop in used-car prices last month was the biggest decline in a year, a Labor Department report showed Thursday. The overall core consumer price index increased just 0.1% from the prior month, a smaller gain than expected. The decline in used-car prices is explained in part by rising returns of vehicles that have reached the end of consumer leases, according to Charlie Chesbrough, Cox Automotive’s senior economist. Analysts have warned for years that a glut of off-lease vehicles was coming and would pose a risk to carmakers by making used autos look like better bargains than new ones. “It’s only going to get more competitive for the new side,” Chesbrough said Thursday during a tour a Michigan auto-auction facility run by Manheim, which Cox owns. “If we continue to see used prices decline, it will provide another value option, another buying option for folks who are in the market.” Read more here. 

UAW Promises 'Comprehensive Proposal' is Upcoming; GM Objects to Delay
Tensions between the UAW and General Motors remained high Thursday evening after an exchange of letters from the top negotiators on the two sides. According to The Detroit Free Press, the union letter said it will give the company "a comprehensive proposal" after subcommittees have completed renewed work on outstanding issues.  Terry Dittes, vice president of the union's GM Department and lead negotiator for the union in talks with the automaker, said in the letter to GM labor Vice President Scott Sandefur that after that work is done, the union will answer GM's latest offer, presented Monday. Some 46,000 GM autoworkers represented by the UAW have been on strike since Sept. 16, after their 2015 contract expired two days before that. Read more here. 

BMW Supplier Cites 'Significant Operating Difficulties' at South Carolina Plant
French auto supplier Plastic Omnium SA has experienced "significant operating difficulties" in ramping up production at its plant in Greer, S.C., which is slated to be a flagship operation for the French company. According to Automotive News, the difficulties relate to the size and complexity of the plant along with increased production since this summer, the company said in its third-quarter report on Oct. 8. In March, the supplier announced that it was restructuring its operations in South Carolina. Under the plan, all production at the company's Anderson, S.C., site would be consolidated into its 600,000-square-foot facility in Greer, marking this the "largest industrial project in company history in Greer." Read more here.  

Rise of EVs Will Cost Jobs Across Auto Industry
Early this month, Denmark proposed that the European Union completely ban the sale of gas- and diesel-powered vehicles. According to The Detroit Bureau, closer to home, General Motors is expected to include plans to invest billions of dollars to add production of new battery-cars as part of its eventual contract settlement with the United Auto Workers union. While there are still plenty of skeptics, there’s a growing sense in the auto industry that electric vehicles are the way of the future. That poses plenty of problems for automakers that are investing billions in a technology that has yet to connect with the broad mass of new car buyers. And manufacturers like GM, Ford, Volkswagen, and Honda aren’t the only ones worried about what the push towards electrification will mean. While battery-cars may be good for the environment, they may pose serious concerns for workers, putting “a lot of jobs at risk,” cautions Mark Wakefield, the head of the automotive practice at consultancy AlixPartners. Read more here.

Renault CEO Ouster Marks Fresh Start From Ghosn Era
The shock waves from Carlos Ghosn's arrest last November continued to ripple through the Renault-Nissan alliance this week with the ouster of Renault CEO Thierry Bollore on Friday. His firing comes just days after Nissan named a triumvirate of leaders without deep ties to Ghosn, reports Automotive News. Bollore, Ghosn's handpicked successor, reportedly never developed a rapport with Chairman Jean-Dominique Senard, the respected Michelin CEO brought in by Renault's board of directors and the French government to mend relations with Nissan. Senard dodged questions about any personality clash with Bollore, saying Friday that there was “nothing personal” about the decision, but it was simply that the alliance needs a fresh start, and that required new governance. He also denied that either the French government or Nissan had put pressure on Renault's board. It took just three days to topple Bollore, who only learned of reports that Senard wanted him out when he landed in Paris in the predawn hours on Wednesday after meetings with Nissan in Japan. Read more here. 

Around the Web

Dubai's Ambulances Are Becoming Superstars [MotorAuthority]

The Strange But True History of the Turn Signal [Car Talk]

Boeing and Porsche Team Up to Develop Flying Electric Car [CNN]

Toyota Mirai Goes From Ugly Duckling to Graceful Swan [Autoblog]