Buick and Cadillac are giving GM some healthy returns in China, some Nissan dealers are very mad at Nissan, and Hyundai is worried about Kona fires. All that and more in The Morning Shift for October 12, 2020.
1st Gear: Cadillac And Buick Up In China
It always feels a little weird to say that Cadillac and Buick are passé in the U.S., but things are a bit different in China. GM said Monday that on the strength of those two brands, its sales in China for the third quarter were up for the first time in a quarter in two years.
From Reuters:
The second-biggest foreign automaker in China by units – after Germany’s Volkswagen AG VOWG_p.DE – said on Monday it delivered 771,400 vehicles in China in the third quarter. That followed a 5% fall in the second quarter, when parts of China were still emerging from virus-busting lockdown measures.
GM has a Shanghai-based joint venture with SAIC Motor Corp Ltd 600104.SS making Buick, Chevrolet and Cadillac vehicles. It has another venture, SGMW, with SAIC and Guangxi Automobile Group, producing no-frills mini-vans and which has started manufacturing higher-end cars.
Sales rose 26% for cars under its mass-market Buick brand in the third quarter versus the same period a year earlier, while those of premium brand Cadillac jumped 28%, GM said in a statement. Sales of its mass-market Chevrolet marque fell 20%.
2nd Gear: Audi, Meanwhile, Wants To Put Its Head In The Sand
Sales will almost certainly be down in 2020 despite some recent recovery, Audi’s chairman said this weekend.
From Reuters:
German carmaker Volkswagen’s Audi unit expects lower sales in 2020 despite strong numbers in the months of July, August and September, Automobilwoche on Sunday cited the head of the division, Markus Duesmann, as saying.
“We will not be able to compensate worldwide the heavy losses of the months of April and May in the full year, despite our distributors doing a really good job,” he said.
I’m sure after all this is over Audi will be … just fine.
3rd Gear: Auction Theory
We have two newly minted Nobel in economic science, in the form of Paul Milgrom and Robert Wilson, both professors at Stanford University. Before you snooze off, consider that their work is about auctions, and I know every one of you spends altogether too much time on Bring a Trailer.
From the Financial Times:
The committee awarding the prize — officially known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel — said the theory they developed had been instrumental in developing new and complex auction formats now used around the world, for purposes ranging from the sale of radio spectrum to allocating airport landing slots and setting up emissions trading systems.
[…]
Mr Wilson, born in Nebraska in 1937, developed a theory for auctions of objects with a common value, which is uncertain beforehand, but the same for everyone. He showed why rational bidders tended to place bids below their own best estimate of the common value: because they were worried about the “winner’s curse” of paying too much and losing out, the committee said.
Mr Milgrom, born in Detroit in 1948, formulated a more general theory of auctions that allowed for calculating both common values and private values that vary from bidder to bidder — for example, where a house has a certain resale value, but suits some buyers better than others.
This showed that the seller would realise a higher price if the auction was conducted in a way that allowed bidders to learn more about each others’ estimated values during the process.
One of the pair’s best-known contributions was their joint work in designing the process for the first US auction of radio frequencies to telecom operators, in the early 1990s. This was a challenge because operators did not know how much the licence for one geographical area was worth to them until licences for all areas were allocated.
Mr Milgrom and Mr Wilson invented a new format known as the Simultaneous Multiple Round Auction which involved offering licences for all geographical areas simultaneously, starting with low prices and allowing repeated bids — a format used by many other countries over the following decades.
4th Gear: Hyundai’s Kona Recall Gets Bigger
The problem is that the fully-electric version of the Kona could go up in flames.
According to Reuters:
Hyundai Motor Co is set to expand number of recalled Kona EVs over battery cell fire risks with plans to recall around 51,000 vehicles in North America, Europe, China and other markets, Yonhap news agency reported Sunday.
The recalls would come after the South Korean automaker announced last week a voluntary recall plan for 25,564 Kona EVs in its home market starting Oct. 16.
Hyundai said in a statement on Monday it “is in the final stages of filing a voluntary recall notice with [NHTSA] for U.S. Kona EVs and will start the process of informing owners of these vehicles.”
Hyundai will recall 37,366 vehicles and 11,137 vehicles in Europe and North America respectively, according to Yonhap.
Seems vaguely exciting, if I’m honest, that a car I’m driving could go up in flames.
5th Gear: Nissan Will Do More Dealer Audits
And dealers are mad. Very mad! You can tell because they got a whole story in Automotive News about the audits. Never forget that the sole audience of Automotive News — aside from me, I read it every morning — is car dealers.
From Auto News:
Dealer audits are a standard procedure in auto retailing, ensuring that a dealership did not mistakenly receive warranty reimbursements from the factory for service work that should not have been covered.
But Nissan’s campaign is stirring up dealer discord.
U.S. dealers say the pace of factory inspections already has picked up. Several dealers interviewed by Automotive News say they have been stung by demands from the manufacturer that they repay amounts ranging from $40,000 to $140,000.
Nissan’s National Dealer Advisory Board has received complaints from frustrated members, who say the audits are not triggered by suspicious sales or warranty claim activity.
One Southeastern dealer said 12 of the 13 Nissan stores in his immediate market have been audited since August.
[…]
But audits also can become a “revenue center” for automakers, said dealer attorney Richard Sox, managing partner at Bass Sox Mercer of Tallahassee, Fla.
“It’s a tremendous transfer of wealth from dealers to the manufacturer,” Sox said. “Auditors have admitted their instructions are to make sure they pay for themselves in regards to their findings. So they have to dig things up.”
A Nissan spokesman told Automotive News, “They are not looking to nickel-and-dime anybody. They are looking for significant policy issues that are often state statutes and safety-related.”
Which, great, it’s hard to pick which dog in this fight to feel less sorry for.
Reverse: John Denver
I remember this day somewhat vividly, though I’m not sure why.
Neutral: How Are You?
My birthday is this Saturday, not at all looking forward to turning 36.
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