The outlook for China’s vehicle sales in 2020 isn’t great, United Auto Workers ratify contract with Fiat Chrysler, Ferrari’s timeline for a fully electric vehicle, tire recycling in China, and ride sharing at General Motors’ Cruise autonomy arm. All of this and more in The Morning Shift for Thursday, Dec. 12, 2019.
1st Gear: Things Aren’t Looking Much Better For China’s Auto Market
The Chinese car market is a big deal, given that it’s the world’s biggest and that it’s been a constant source of sales for years. But after China’s annual car sales were down for the first time in two decades in 2018, things haven’t gone back on the positive side yet.China’s auto market will slump for the second straight year once 2019 wraps up, and Bloomberg reports that the China Association of Automobile Manufacturers predicts 2020 won’t flip positive, either. The numbers from the association, the story said, are that 2020 sales will drop 2 percent to 25.3 million after a roughly 8-percent drop this year.
From Bloomberg:“There are still no signs of recovery,” Luo Lei, a deputy secretary general of CAAM, said at the group’s event in Changsha, China.
China’s heft means any recovery in the global car market is also in doubt, given Europe and the U.S. are sputtering too. The industry is suffering worldwide as trade tensions and tariffs raise costs, just as competition from ride-hailing services reduces the need for individual car ownership.
After years of growth, global vehicle sales fell last year and are set to decline again in 2019, according to researcher LMC Automotive. The market will grow less than 1% to 92.1 million vehicles next year, the research firm currently predicts.
The global auto market is a wobbly place right now, as evidenced by numbers in China.
2nd Gear: UAW Members Ratify Contract With FCA
United Auto Workers members at Fiat Chrysler voted to ratify a new contract by 71 percent, the union announced Wednesday. That means UAW workers at Ford, General Motors and FCA now have their contracts for the next four years.
The announcement said every full-time production employee at FCA right now will be “at top rate” once those four years are up, and that temporary workers “now have a defined pathway to full time and top pay as well.”
Provisions for both permanent and temporary workers have been major goals in UAW contract negotiations, making it a win that the FCA employees secured it.
Here’s more of what the UAW shared on the contract, via the announcement:
The pattern agreement provides a pathway for temporary and full-time workers to top pay; creates parity on full-time worker health care; adds coverage for prescription drug costs for temporary workers; includes a signing bonus and wages that are consistent with pattern; and adds $4.5 billion in new investment in addition to the previously announced $4.5 billion investment that includes a new Detroit plant.
The ratified contract also includes an economic package of a $9,000 per full-time member signing bonus, performance bonuses, two 3% annual raises and two 4% lump-sum payments and holds the line on out-of-pocket health care costs.
Automotive News notes that the FCA contract was passed with a much higher vote margin by workers than those of GM and Ford, since GM passed with about 54 percent after its 40-day strike and Ford passed with 56 percent. Negotiations also took a lot longer for all three automakers this time around, the story said, taking 88 days to finish. That’s compared to 2015, when discussions with all three were done by Thanksgiving.
3rd Gear: Ferrari Eyes ‘After 2025’ For Full EV
If you were hoping to win the lottery and buy an electric vehicle with a Ferrari emblem on it in the near future, you might want to tailor your expectations (for both). Ferrari CEO Louis Camilleri said the company’s first fully electric vehicle won’t come around until after 2025, Reuters reports, with his reason being that battery technology still needs more development.
Reuters writes that Ferrari has said in the past that a fully electric model would debut after its industry plan ends in 2022, but it seems like it’ll be a while after. Hybrids are the deal for now, Reuters reports:
Camilleri said Ferrari was “certainly” studying a fully electric grand tourer car (GT), but that it would stick to hybrid vehicles for the “current foreseeable future”.
“My sense is the electric will come out after 2025. The battery technology is not where it should be yet,” he told reporters in embargoed comments made during a lunch on Wednesday in the Centro Stile at Ferrari’s Maranello factory.
“There are still significant issues in terms of autonomy, in terms of speed of recharging. So eventually we will come out with one. But it’s post-2025. Not in the short term,” he added.
Perhaps Ferrari will adjust that goal again in the near future. Perhaps it won’t. But either way, you should probably adjust that lottery goal of yours right now.
4th Gear: China Wants To Encourage Tire Recycling
In an attempt to help curb waste, Reuters reports that the industry ministry in China published new draft guidelines around tire recycling on Wednesday. The goal is to expand the business of tire recycling, as well as improve technologies used in the practice and increase the rates of tire retreading.
China also wants to encourage the recycling of tires into rubber powder, Reuters reports. From the story:
The rules, part of China’s efforts to cut pollution and ensure its resources are “comprehensively utilized”, were published by the industry ministry on Wednesday and have been opened to the public for consultation. [...]
China had 340 million cars on its roads by the end of the first half of 2019, according to transport ministry data, and handling spent tyres has become a growing challenge.
According to the China Tyre Recycling Association, China has an accumulated total of more than 300 million used and unrecycled tires, rising by as much as 13 million a year.
5th Gear: GM’s Cruise Wants To Solve All Of Our Problems
The CEO of General Motors’ Cruise autonomy arm, Dan Ammann, published a Medium post on Wednesday echoing what a lot of people are thinking—that, as a whole, “We Need to Move Beyond the Car.”
Ammann’s Medium post is all well and good, discussing how the “status quo of transportation is broken, and that our need to find better solutions grows more urgent every day,” as well as how public transit is a massive investment and the ills of micro-mobility and ride sharing.
But the post doesn’t say much about how Cruise will solve that, other than by offering shared rides “a radically lower cost.” Ambiguity is probably the goal, as hype is half of the battle.
