It was quite a year for automotive CEOs. Not one but two of them wound up in jail. Another CEO died suddenly. Tesla’s CEO — his name escapes us at the moment — publicly smoked pot and claimed to have “funding secured,” then helped fund the Securities and Exchange Commission’s Christmas party with a $ 20 million fine. General Motors’ CEO may need to disguise herself when traveling in Ohio and Ontario for a while. Yet Ford’s CEO might still be able to show up at some dealerships without being immediately recognized.
Meanwhile, Tariff Man — the self-declared alter ego of mild-mannered President Donald Trump — started trade wars with just about every country he could find. That didn’t stop U.S. auto sales from topping 17 million again, but nobody could agree whether that number was a huge success or a mild disappointment.
Ford bought a train station. We learned more about how Fiat Chrysler bought off some UAW officials. A bunch of sedans bought the farm. And more than 6 million people bought crossovers. (We’re starting to think they just might catch on.)
The staff of Automotive News ranked the top 10 stories from 2018, and the year was so full of news that some rather notable developments didn’t even make the list. Uber’s fatal crash in March seemed to be quickly forgotten as last year’s hype around self-driving vehicles faded a bit. Electric vehicles, last year’s No. 1 story, are starting to hit the market in bigger numbers, but only Tesla is selling them in significant volume. Also, the word “mobility” is nowhere to be found on this page — well, outside of this sentence.
Carlos Ghosn, as much of a rock-star CEO as the auto industry has had in recent memory, was indicted in November on charges that he underreported his income by about $ 82 million and misused company assets for personal gain. Nissan Motor Co. and Mitsubishi Motors quickly ousted him as chairman, but Renault was less eager to part ways with its CEO after his arrest in Japan.
Questions about the accusations swirled as Ghosn sat in a Tokyo jail. The situation has cast a pall of uncertainty over the future of the Renault-Nissan-Mitsubishi alliance, which has held together largely because of Ghosn’s efforts. Without his leadership, a power struggle between the French and Japanese factions could break out. Reports emerged that Ghosn had been planning to replace Nissan CEO Hiroto Saikawa.
Whatever the full story turns out to be, it was a stunning fall.
There wouldn’t be a Fiat Chrysler Automobiles without Sergio Marchionne. Nearly a decade after he began melding the Italian and American automakers in the wake of Chrysler’s bankruptcy — and less than a year before he planned to retire — Marchionne suffered an embolism during surgery for a shoulder sarcoma and died.
His death came as a shock to virtually everyone in the industry, including FCA Chairman John Elkann, from whom Marchionne had hidden the seriousness of his condition. FCA named Mike Manley, who had been head of the lucrative Jeep and Ram brands, to replace Marchionne as CEO.
The month before he died, Marchionne revealed that FCA had achieved one of his longtime promises by eliminating its net debt, and he laid out another five-year plan for the automaker that Manley is now charged with executing.
The auto industry thrives on predictability, and Trump’s insistence on using tariffs to pick a fight with numerous countries created literal boatloads of costly chaos for manufacturers. In some cases, the amount charged to import or export vehicles and parts in various markets was changing by the week, with China adding retaliatory duties of up to 40 percent for a stretch. Toyota said proposed tariffs could add $ 3,000 to the price of a Kentucky-built Camry. Tariffs imposed on imported steel and aluminum even caused prices on U.S.-sourced materials to rise.
At one point, Trump categorized German automakers as a threat to the U.S. economy, warning that he would stop them from selling “millions of cars” in the U.S. (Actually, only about 1.2 million vehicles sold here this year were imported from all European countries combined.)
The Trump administration also capped a year of intense negotiations with Canada and Mexico by reaching a new North American trade pact that the three countries signed in November. The deal allows vehicles built with at least 75 percent North American content to avoid tariffs, up from the previous requirement of 62.5 percent.
Right after Thanksgiving, GM announced its largest round of job cuts and plant shutdowns since the Great Recession. It also plans to eliminate 15 percent of its North American salaried jobs, including 25 percent of executives.
The automaker said five plants would be “unallocated” — introducing an ominous euphemism into the automotive lexicon — after 2019, as the Chevrolet Cruze and five other car nameplates go out of production. Assembly plants in Ohio, Michigan and Ontario are on the chopping block, as are powertrain plants in Michigan and Maryland. UAW contract talks loom next year, and saving the four U.S. plants will be a top priority.
Unlike in 2008, GM is profitable, which made the cuts harder to swallow for many affected and generated widespread criticism from politicians who haven’t forgotten the bailout GM got in 2009. But GM executives say the downsizing will save some $ 6 billion a year and is important to ensuring the company’s future health.
Forecasters warned that 2018 U.S. light-vehicle sales would fall below 17 million for the first time since 2014, but for much of 2018, volume was higher than expected. It’s likely to end up as one of the six best years of all time for the industry. But it never quite felt that way. Plunging demand for sedans kept automakers scrambling to shift their production plans and avoid getting caught with unwanted car inventories, while crossovers, SUVs and pickups gobbled up more share.
Even though the overall economy has remained strong, rising interest rates and falling incentives are making it harder for consumers to afford a new vehicle. But the discipline that automakers are showing, as executives resist their deep-seated temptation to offer enormous discounts when sales start to soften, is keeping profits at robust levels.
Ford Motor Co. stockholders were plenty frustrated under CEO Mark Fields, but Jim Hackett’s tenure has seen the company’s shares sink even lower.
Hackett’s deliberate pace in revealing his vision for the company irked analysts and left many dealers wondering where Ford was headed.
Hackett has gradually laid out more details, including the decision to end sales of all sedans in North America. But many employees are in limbo as they wait to find out if the $ 11 billion restructuring he’s planning will leave them on the sidelines.
CEO Elon Musk had to pay a fine and step down as chairman as part of a settlement with the SEC over misleading tweets about an aborted effort to take Tesla private. But none of the controversy around Musk seems to have shaken the confidence of shareholders or customers, as sales of the troubled Model 3 soared this year.
A frenetic push to increase production, aided by Tesla’s unorthodox tactic of creating an auxiliary assembly line under a tent set up in the parking lot of its assembly plant, helped the company finally post the profit it had been promising.
Whether Musk’s magic is sustainable remains to be seen, but Tesla’s ability to cheat death in 2018 proved both impressive and entertaining.
After accelerating its plans to separate the Genesis retail network from Hyundai’s and shrink it considerably, Genesis had to stop and make a U-turn. Critics blamed the retail strategy turmoil on Hyundai’s plodding, half-hearted moves into the luxury market, on changes in the marketplace that forced a redefinition of the brand, and on a failure by the brand to do its regulatory homework on how to launch a marque.
The confusion made a mess of the first original Genesis model, the G70, delaying its entry into the U.S. and hammering Genesis sales for the year. Hyundai dealers who were cut out of the network ultimately found a way back in, as Genesis was forced to confront its errors.
Year Three of the Volkswagen diesel emissions scandal featured Audi boss Rupert Stadler being jailed in Germany and Volkswagen AG CEO Mattias Mueller retiring after a brief tenure. New CEO Herbert Diess is working to put the automaker’s misdeeds in the past, making an aggressive push toward mass production of electric vehicles, but legal fallout continues to accumulate.
In another scandal that keeps growing, more current and past UAW officials became ensnared in the federal investigation into the misuse of worker-training funds. Ex-Chrysler executive Al Iacobelli and the widow of former UAW Vice President General Holiefield were among the players to enter guilty pleas in 2018.
Iacobelli, as part of his plea deal, explicitly stated that the payoffs were an attempt to influence UAW decisions and the collective bargaining agreements signed in 2011 and 2015. In the midst of all this, the union started building a fancy cabin for retired President Dennis Williams — using nonunion labor.
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