Friday, June 23, 2017

Kia Tops 2017 JD Power Initial Quality Ratings, Tesla Opts Out

After tabulating responses from more than 80,000 new car buyers, JD Power has announced the winners of its 2017 Initial Quality awards. For the second year in a row, Kia came out on top of all the manufacturers who sell cars in the US market. Kia’s corporate cousin, Genesis, came in second. Surprisingly, Hyundai, the parent company of both Kia and Genesis finished down in 8th place. JD Power Initial quality 2017 Kia

“Our back-to-back chart-topping … performances reconfirm Kia’s status as today’s world-class automaker and reflect the exacting standards and craftsmanship our team members instill into every car, crossover and SUV Kia builds,” said Michael Sprague, chief operating officer of Kia Motors America.
When Kia first entered the American market 20 years ago, the quality of its cars was abysmal, but the company dedicated itself to making improvements and that effort has paid off for the company. Consumers place a lot of weight on such surveys and the recent high ratings have helped boost sales in the US. GM. Ford, and Chrysler all saw their ratings in the initial quality survey improve as well.
JD Power says, “An increasing number of consumer-reported problems sounds warning bells for automakers and suppliers,” the study said. Customers complain frequently about voice recognition systems that don’t actually recognize voices and Bluetooth connectivity that fails. Collision avoidance and lane departure systems also come in for a fair amount of criticism. Years ago, people used to complain about leaky sunroofs or trim pieces falling off. Now, dissatisfaction with elements of the digital world head the list of annoyances. Overall, initial quality numbers rose 8% over last year for the industry as a whole.
“The Initial Quality Study continues to demonstrate the critical importance of automakers responding to consumer feedback regarding vehicle quality,” said Dave Sargent, vice president of global automotive at J.D. Power. “Any automaker that stands still will quickly start to fall behind. For consumers, the great news is that significant improvements are occurring in all model segments, meaning that you don’t have to spend a lot of money to get a quality vehicle.”

Where Are The Numbers For Tesla?

Missing from the survey numbers is any information about Tesla. That’s because Tesla declines to share data with JD Power. According to Automotive News, California law allows manufacturers to opt in or opt out of such sharing. Tesla has chosen to opt out, the only company to do so. “I don’t know that they’re hiding anything. They just don’t want to participate,” says Dave Sargent. “They don’t want to play this game. We’re hoping they will come to the party because we’re increasingly getting this question.”
This spring, JD Power did a special report entitled “Tesla: Beyond the Hype.” Based on extensive personal interviews with Tesla owners, JD Power researchers found that owners had many areas of concern but those issues did nothing to dampen their enthusiasm for their cars. They love them anyway, regardless of any faults.
Source: USA Today

Imbalance Between Demand For Trucks, SUVs, and Sedans Leads To Layoffs In Auto Industry

Sales of sedans continue to plummet in the US as customers opt for more and more light trucks and SUVs. Through the first five months of this year, sales of sedans fell 11 percent and truck sales rose 4.7 percent. That means manufacturers in the auto industry are slashing the number of sedans produced and increasing truck and SUV production, leading to layoffs at the factories where those sedans are made.
auto industry sedan sales
Ford just made a corporate decision to stop building its Focus small sedan in America and shift production to China by 2019. The workers who built the Focus will transition to building SUVs instead.
Workers at GM’s Lordstown factory are feeling the pain. Lordstown is where the slow selling Chevy Cruze. Those falling sales caused the company to cancel the third shift on January 20 — the day Donald Trump was inaugurated. “This is about economics, not what Trump says,” said Robert Morales, president of United Auto Workers Local 1714 which represents workers at GM’s Lordstown stamping plant. “Even if Trump went out and bought 10,000 Cruzes a month, he wouldn’t get the third shift back here.”
The auto industry has been responsible for much of America’s productivity gains for the past several years. Mark Muro, of the Brookings Institution, has pulled together information that shows the industry was responsible for most of new US manufacturing jobs in 2015 and 2016.
In the first quarter of 2017, the auto industry accounted for only 2 percent of the 45,000 manufacturing jobs created. “There’s no argument with the idea that auto has been pulling the manufacturing sled up the mountain for the last three or four years,” Muro said. “If you take auto out, you’re left with a very tepid outlook indeed.” The Federal Reserve last week said factory output fell 0.4 percent in May, caused in part by a 2 percent drop in motor vehicles and parts production.
GM will close the Lordstown factory for 5 weeks this summer — three more than usual — in order to reduce dealer inventories of the Chevy Cruze. Some workers may transition to GM’s SUV assembly plant in Arlington, Texas but that means uprooting families, pulling kids out of school, and selling homes — decisions not taken lightly.
At Lordstown, the union and workers are trying to raise their game. The factory recently won an award for local innovation for developing a new part that helps the Chevy Cruze run better. When GM goes looking for factories to build new products, they hope their initiative will help swing new work their way. “We’re working hard to make the best product we can,” said Glenn Johnson, president of UAW Local 1112 at Lordstown, “so we can raise our hands and say to GM ‘look at what we can do.”
The solution is higher gas prices, but with the price of crude oil down and looking to go lower, that’s not likely to happen any time soon. If Congress had any leadership capability at all, it would simply raise the federal gasoline tax to $1.00 a gallon, let the chips fall where they may. $2 dollar a gallon gasoline is just ludicrous if the US has any realistic intention of addressing carbon emissions from the transportation sector. Little chance of that actually happening, though.
Source: Reuters via Autoblog

Wednesday, June 21, 2017

Tesla Close To Announcing New Factory In Shanghai

Rumors of a new Tesla factory in Shanghai, China, have been flying around the internet for months. And just as quickly as they popped up, Tesla batted them away, saying they were just speculation, there was nothing official, it was looking at several locations in China, it had made no decision yet, and things of that nature.
Tesla China plans
Now, according to Bloomberg, an official announcement will come as soon as next week. Unnamed sources say the company has reached an agreement with the city of Shanghai to construct a new factory in the Lingang development zone. Under Chinese law, Tesla will be required to enter into a joint venture with a local Chinese company in order to get permission to build a factory there. The Silicon Valley–based company is anxious to avoid the 25% import duty it currently pays to bring its cars into China.
The reports so far do not reveal who Tesla’s partner might be. Nor do they indicate whether another battery factory will be constructed either at the manufacturing site or at a separate location in the country. Elon Musk said recently that Tesla is considering up to 12 new battery factories in various locations around the world in coming years.
With the Chinese government apparently sticking to its plan requiring all automakers to sell enough “new energy vehicles” to garner credits equal to 8% of total sales starting in 2018, the Chinese market for electric cars, which already dwarfs other electric car markets, could get that much bigger. It’s a business opportunity that Tesla cannot afford to miss. The Chinese new car market is also the largest in the world, with more than 23 million new vehicles sold annually.
Tencent Holdings, China’s biggest internet company, purchased a 5% share in Tesla earlier this year. Having support from such a high-profile Chinese company has to be good news for Tesla in a country where up to 200 companies have expressed interest in building electric cars.