Bill to cancel Beer Store contract passes; province announces more LCBO-run stores - CityNews

Legislation to cancel the Ontario government’s contract with the Beer Store passed at Queen’s Park on Thursday.

The bill received Royal Assent but has not yet become law because it has to be proclaimed by the government.

#BREAKING – Premier Ford heads to the Lieutenant governor’s office to give Royal assent to a number of bills including the one that dissolved the Beer Store deal (though it has not been proclaimed law) Ford mum on questions. #onpoli pic.twitter.com/eqLnBJlV1b

— Richard Southern (@richard680news) June 6, 2019

Earlier in the day, speaking with OMNI TV, Premier Doug Ford said corner stores need to be able to make more money and that mom-and-pop shops will be saved by sales of alcohol.

“I have friends that come up from the U.S. and Quebec and they want to know why they can’t buy beer at the store,” Ford said.

“It’s a monopoly, that’s why.”

The contract cancellation is not without controversy. The U.S. Chamber of Commerce said Ontario’s decision to scrap the 10-year contract to allow alcohol sales in corner stores sends a negative signal to American businesses and investors.

There’s been a similar warning from the Ontario Chamber of Commerce.

The province also announced plans for more alcohol sales at LCBO-run stores, and grocery stores.

Finance Minister Vic Fedeli says the number of LCBO agency stores in under-serviced areas will rise to 60 in August, and to 200 by spring 2020.

The new locations will be called LCBO Convenience Outlets.

Another 87 grocery stores will also be allowed to sell alcohol starting in September, bringing the total to 450 across the province.

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June 06, 2019 at 08:59PM

Canadian dollar rises as trade data boosts economic outlook - The Globe and Mail

The Canadian dollar edged higher against its U.S. counterpart on Thursday as the greenback broadly declined, while domestic data showed Canada’s smallest trade deficit in six months.

Rising exports and falling imports helped shrink Canada’s trade deficit in goods in April to C$966 million, Statistics Canada said, in the latest sign the economy is recovering from a slowdown. April’s trade deficit was the smallest since October last year.

The U.S. dollar , which has been pressured this week by speculation that the Federal Reserve would cut interest rates, lost ground against a basket of major currencies. The decline for the greenback came as the ECB refrained from hinting at an interest rate cut, boosting the euro .

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At 9:06 a.m., the Canadian dollar was trading 0.1 per cent higher at 1.3396 to the greenback, or 74.65 U.S. cents. The currency, which on Wednesday touched its strongest in two weeks at 1.3363, traded in a range of 1.3390 to 1.3431.

Despite recent upbeat domestic data, including a record jobs gain in April, money markets expect the Bank of Canada to cut interest rates by the end of the year.

The Canadian dollar is likely to strengthen less than previously expected against its U.S. counterpart over the coming year, because of more attractive valuations and better prospects for return in other currencies, a Reuters poll showed.

Mexican and U.S. officials are set to resume talks in Washington on Thursday aimed at heading off punitive tariffs on Mexican goods after President Donald Trump said more needed to be done to curb migration at the southern U.S. border.

Investors worry that the tariffs could undermine chances of a new North American trade deal coming into force. Canada sends about 75 per cent of its exports, including oil, to the United States.

The price of oil held near a five-month low due to rising U.S. supply and a stalling global economy. U.S. crude oil futures were down 0.2 per cent at $51.59 a barrel.

Canadian government bond prices were higher across a flatter yield curve, with the two-year up 2 cents to yield 1.333 per cent and the 10-year rising 12 cents to yield 1.435 per cent.

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On Wednesday, the 10-year yield touched its lowest intraday since June 2017 at 1.410 per cent.

Canada’s jobs report for May is due on Friday.

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June 06, 2019 at 08:40PM

Gold Trades to a High Just Below Yearly High - Kitco News

Editor's Note: Get caught up in minutes with our speedy summary of today's must-read news stories and expert opinions that moved the precious metals and financial markets. Sign up here!

On an extremely volatile day gold has traded within one dollar of its highest price year to date for 2019. On a closing basis, gold hit an apex or the highest closing price on February 20. Although it traded to a high that day of approximately $1350, gold closed at $1347. That closing price is below the ceiling achieved over the prior two years which was approximately $1370.

Even though gold futures had an intraday high of $1340.90, current pricing is well below that with the August 2019 futures contract currently fixed at $1335.60. The intraday high occurred in overseas trading last night with a large portion of that move being related to U.S. dollar weakness. However as of 4:10 PM EDT the dollar is currently back into positive territory, with gains of almost 3/10 of a percent, and is currently fixed at 97.28. Dollar weakness in the overseas markets took the index to 96.655 before recovering.

Recent statements by Jerome Powell, chairman of the Federal Reserve, as well as James Bullard, CEO and President of the Federal Reserve Bank of St. Louis have revealed a major tipping point in the Federal Reserve’s monetary policy. The tone has once again become much more accommodative and dovish. On Monday James Bullard said that a rate cut may be “warranted soon”. On Tuesday the Federal Reserve Chairman said that the central bank was prepared to facilitate and sustain the economic expansion of the United States.

The current trade war between the United States and China has slowed the economy of both superpowers. In reference to that slowdown as well as the addition of a 5% tariff on Mexico beginning on June 10 Powell said, “We do not know how or when these issues will be resolved … We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective.”

The recent parabolic rise in gold prices have been factoring in a rate cut and a more accommodative Fed.

The next G20 meeting scheduled to begin on June 28 in Japan will be watched closely for any significant changes in current trade negotiations between the Chinese and the United States. Then in July the Federal Reserve will hold its next FOMC meeting were market participants will listen not only to language but more importantly to any announcements about rate cuts.

These two upcoming events will certainly frame and influence the price of gold as well as the value of the dollar index and shape the global economic forecast through the remainder of the year.

For those who would like more information, simply use this link.

Wishing you as always, good trading,

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June 06, 2019 at 05:28AM

The Car Industry Is Under Siege and in Survival Mode - The New York Times

FRANKFURT — It’s a scary time to be in the car business.

The internal combustion engine is under attack from electric challengers. Car ownership is becoming optional in the age of Uber. Regulators around the world are fining companies that don’t do enough to cut CO2 emissions, even as buyers demand gas-guzzling S.U.V.s. Global auto sales are slipping for the first time in a decade, disrupted by President Trump’s escalating trade war.

With so much bearing down on them simultaneously, it’s little wonder that companies like Fiat Chrysler and Renault were considering joining forces to survive. Fiat Chrysler’s decision Wednesday night to withdraw its offer to merge with Renault, citing government demands in France, was another reminder that change is complicated for traditional carmakers.

The aborted proposal to create the world’s third-largest automaker was a response to the disruption threatening an industry that accounts for many of the world’s factory jobs and is crucial to the economic fortunes of the United States, Japan and Europe.

New technology has unraveled industries like entertainment, media, telecommunications and retailing, weakening the job security of millions of workers and helping to fuel populism. Carmakers, clearly, are next.

“It’s going to be the biggest change we’ve seen in the last 100 years and it’s going to be really expensive even for the biggest companies,” said Erik Gordon, a professor at the University of Michigan Ross School of Business.

The major auto companies will spend well over $400 billion during the next five years developing electric cars equipped with technology that automates much of the task of driving, according to AlixPartners, a consulting firm. They must retool factories, retrain workers, reorganize their supplier networks and rethink the whole idea of car ownership.

Image

A Volkswagen factory in Wolfsburg, Germany. Carmakers globally are among the last employers that operate vast, bustling plants.CreditSean Gallup/Getty Images

For the auto manufacturers, this upfront investment is a matter of survival. If they don’t adapt, they could become obsolete. Yet no one is even sure whether customers are really willing to pay for the technology and whether it will ever earn a profit.

Investors have already signaled who they think will come out ahead of this transformation. The electric carmaker Tesla, despite all its problems, is still worth more on the stock market than either Fiat Chrysler or Renault. Uber is worth much more than the two combined, even after reporting a $1 billion quarterly loss.

[Read more about how the Fiat Chrysler talks with Renault fell apart.]

The stakes for society from this industrial realignment are high. Car companies like Volkswagen, General Motors or Toyota are among the last employers that operate vast factories where thousands of workers pour in and out of the gates at shift changes.

Worldwide, eight million people work directly for auto manufacturers, and many times more work for companies that supply brakes, tires, sensors and other components.

Those jobs are threatened. Last year global car sales declined for the first time since 2009. Though small, the decrease may signal the onset of a global recession because the auto industry is such an important economic catalyst, analysts at Fitch Ratings said in a recent report.

The immediate cause of the dip in sales was President Trump’s tariffs on Chinese goods last year, which hurt the Chinese economy and brought sales growth there, the world’s largest car market, to a standstill. American carmakers suffered too. Ford’s sales in China plunged 36 percent in the first three months of 2019, to 136,000 vehicles, because of the tariffs, the company said. But there are also ominous long-term trends at work.

Image

European carmakers are well behind on achieving emissions goals, in part because European consumers have developed a taste for thirsty S.U.V.s.CreditCarlos Osorio/Associated Press

China increasingly rules the global auto market and determines its course. In recent years, China’s voracious appetite for vehicles has accounted for almost all of the growth in global sales. Chinese consumers bought 24 million cars last year, far more than any other nation. Americans were a distant second with 17 million cars. General Motors sells far more cars in Asia — 947,000 in the first three months of this year — than it does in the United States.

Auto sales in America and Europe are stagnant and the growth in potential drivers is not encouraging. The number of young Americans acquiring driver’s licenses has been falling since the 1980s, according to research by Michael Sivak, a former professor at the University of Michigan.

Increasingly car ownership is a luxury rather than a necessity. In urban areas, where more and more of the population lives, people can avoid parking costs and the expense of insurance by relying on ride services like Uber or Lyft or hourly rentals with services like Zipcar.

The wavering relationship between consumers and cars has been hastened by the emergence of climate change as a potent political issue, as well as worsening air quality in major cities. Transportation accounts for about one-fifth of carbon dioxide emissions worldwide, according to the World Bank. Policymakers, responding to public opinion, have been forcing auto companies to improve fuel efficiency and reduce emissions. Carmakers’ ability to push back has been weakened since emissions cheating scandals were uncovered at Volkswagen and other carmakers including Fiat Chrysler.

In the European Union, carmakers must achieve average fuel economy equivalent to about 57 miles per gallon by 2021 or pay substantial fines. But European carmakers are behind on achieving the goals, in part because European consumers, like people in the United States and Asia, have developed a taste for thirsty S.U.V.s. As a result, the car companies face penalties of 34 billion euros, or about $37 billion, the research firm JATO Dynamics estimates.

The potential fines were one of the reasons that Fiat Chrysler sought a merger with Renault, which already has a longtime (if lately troubled) alliance with the Japanese carmaker Nissan. The French company offers battery-powered cars like the subcompact Zoe that would have made it easier for Fiat to hit the emissions targets.

Image

Renault’s battery-powered cars, like the subcompact Zoe, helped make the French automaker an attractive merger partner with Fiat.CreditSamuel Zeller for The New York Times

The Trump administration has been rolling back air quality regulations, but even in the United States carmakers are under pressure. California and nine other states are requiring manufacturers to meet quotas for zero-emission car sales.

Regulators and a growing segment of environmentally conscious car buyers are pushing the internal combustion engine toward obsolescence. China, Britain and France lead a list of countries aiming to phase out cars that burn gasoline or diesel by 2040. Norway is trying to convert entirely to electric vehicles by 2025.

Auto executives in Detroit, Stuttgart, Yokohama and other carmaking capitals foresaw these seismic shifts years ago and have been preparing.

BMW has been selling an electric car, the i3, since 2013. Nissan introduced the battery-powered Leaf in 2010. Traditional carmakers like G.M., Daimler, BMW and Volkswagen responded to the decline in car ownership with their own ride-sharing services, albeit with mixed success.

But despite their size, automakers like Fiat Chrysler, Ford or Volkswagen are at a disadvantage to newcomers like Uber or Dyson, the vacuum cleaner maker that is developing an electric car. The old-line carmakers still get almost all of their revenue from cars with internal combustion engines, and must maintain factory networks that quickly become a financial drain when not running at capacity.

China is emerging as a new competitor — and it is battling saturation even in its domestic market. China is absorbing only half the cars that Chinese plants churn out each year. Big producers like Guangzhou Auto had been preparing to enter the United States until President Trump imposed 25 percent tariffs on Chinese cars.

Image

China is another looming precipice. Its domestic market is absorbing only half the cars that Chinese assembly plants churn out each year.CreditLam Yik Fei for The New York Times

So far Chinese automakers have made some inroads to European markets. Zhejiang Geely Holding Group has a foothold after buying the Swedish carmaker Volvo from Ford in 2010. Geely also owns the British sports car maker Lotus and the company that makes London taxi cabs, while its chairman, Li Shufu, owns about 10 percent of Daimler, the maker of Mercedes-Benz cars.

The shifting balance of power in the auto industry is already squeezing the lives of thousands of workers. General Motors, girding for a possible downturn, shut down its plant in Lordstown, Ohio, in March, one of four factories in the United States that it plans to mothball by the end of this year, eliminating more than 10,000 factory and white-collar jobs. Volkswagen said Wednesday it would create 2,000 new jobs in digital technologies while gradually cutting 4,000 jobs that would no longer be necessary because of automation.

By some estimates, half of all auto industry jobs in Germany are at risk. Battery-powered cars have far fewer parts than cars reliant on gasoline or diesel, endangering suppliers of valves, pistons and other parts in conventional engines. The most important part of an electric car, the battery cells, usually comes from Asia.

Mergers as big as Fiat Chrysler and Renault may prove too difficult to pull off but carmakers are already forming dozens of smaller alliances. This year, Ford and Volkswagen agreed to develop new commercial vans and pickups together to go to market by 2022 and cooperate on technologies like electric cars and autonomous driving. BMW and Jaguar said Wednesday they would cooperate to develop drive systems for electric cars.

These partnerships can be difficult to manage, as Renault’s recent experience with Nissan shows. The alliance of those carmakers survived for nearly two decades but is wobbly after the arrest in November of Carlos Ghosn, its chairman, on charges of financial wrongdoing. Mr. Ghosn denies the accusations.

Mr. Ghosn was keenly aware of the need for automakers to combine forces and, in part, his fervor undid his relationship with Nissan. In many ways John Elkann, the Fiat Chrysler chairman, and Jean-Dominique Senard, the chairman of Renault, were attempting to take his vision a big step further.

Large-scale alliances are essential “to have a path for success in this transformative era,” said Jim Press, former deputy chief executive of Chrysler.

“The companies aren’t going to do it alone.”

Let's block ads! (Why?)

https://www.nytimes.com/2019/06/06/business/auto-industry-fiat-renault.html

2019-06-06 17:38:17Z
52780307348417

The Car Industry Is Under Siege and in Survival Mode - The New York Times

FRANKFURT — It’s a scary time to be in the car business.

The internal combustion engine is under attack from electric challengers. Car ownership is becoming optional in the age of Uber. Regulators around the world are fining companies that don’t do enough to cut CO2 emissions, even as buyers demand gas-guzzling S.U.V.s. Global auto sales are slipping for the first time in a decade, disrupted by President Trump’s escalating trade war.

With so much bearing down on them simultaneously, it’s little wonder that companies like Fiat Chrysler and Renault were considering joining forces to survive. Fiat Chrysler’s decision Wednesday night to withdraw its offer to merge with Renault, citing government demands in France, was another reminder that change is complicated for traditional carmakers.

The aborted proposal to create the world’s third-largest automaker was a response to the disruption threatening an industry that accounts for many of the world’s factory jobs and is crucial to the economic fortunes of the United States, Japan and Europe.

New technology has unraveled industries like entertainment, media, telecommunications and retailing, weakening the job security of millions of workers and helping to fuel populism. Carmakers, clearly, are next.

“It’s going to be the biggest change we’ve seen in the last 100 years and it’s going to be really expensive even for the biggest companies,” said Erik Gordon, a professor at the University of Michigan Ross School of Business.

The major auto companies will spend well over $400 billion during the next five years developing electric cars equipped with technology that automates much of the task of driving, according to AlixPartners, a consulting firm. They must retool factories, retrain workers, reorganize their supplier networks and rethink the whole idea of car ownership.

Image

A Volkswagen factory in Wolfsburg, Germany. Carmakers globally are among the last employers that operate vast, bustling plants.CreditSean Gallup/Getty Images

For the auto manufacturers, this upfront investment is a matter of survival. If they don’t adapt, they could become obsolete. Yet no one is even sure whether customers are really willing to pay for the technology and whether it will ever earn a profit.

Investors have already signaled who they think will come out ahead of this transformation. The electric carmaker Tesla, despite all its problems, is still worth more on the stock market than either Fiat Chrysler or Renault. Uber is worth much more than the two combined, even after reporting a $1 billion quarterly loss.

[Read more about how the Fiat Chrysler talks with Renault fell apart.]

The stakes for society from this industrial realignment are high. Car companies like Volkswagen, General Motors or Toyota are among the last employers that operate vast factories where thousands of workers pour in and out of the gates at shift changes.

Worldwide, eight million people work directly for auto manufacturers, and many times more work for companies that supply brakes, tires, sensors and other components.

Those jobs are threatened. Last year global car sales declined for the first time since 2009. Though small, the decrease may signal the onset of a global recession because the auto industry is such an important economic catalyst, analysts at Fitch Ratings said in a recent report.

The immediate cause of the dip in sales was President Trump’s tariffs on Chinese goods last year, which hurt the Chinese economy and brought sales growth there, the world’s largest car market, to a standstill. American carmakers suffered too. Ford’s sales in China plunged 36 percent in the first three months of 2019, to 136,000 vehicles, because of the tariffs, the company said. But there are also ominous long-term trends at work.

Image

European carmakers are well behind on achieving emissions goals, in part because European consumers have developed a taste for thirsty S.U.V.s.CreditCarlos Osorio/Associated Press

China increasingly rules the global auto market and determines its course. In recent years, China’s voracious appetite for vehicles has accounted for almost all of the growth in global sales. Chinese consumers bought 24 million cars last year, far more than any other nation. Americans were a distant second with 17 million cars. General Motors sells far more cars in Asia — 947,000 in the first three months of this year — than it does in the United States.

Auto sales in America and Europe are stagnant and the growth in potential drivers is not encouraging. The number of young Americans acquiring driver’s licenses has been falling since the 1980s, according to research by Michael Sivak, a former professor at the University of Michigan.

Increasingly car ownership is a luxury rather than a necessity. In urban areas, where more and more of the population lives, people can avoid parking costs and the expense of insurance by relying on ride services like Uber or Lyft or hourly rentals with services like Zipcar.

The wavering relationship between consumers and cars has been hastened by the emergence of climate change as a potent political issue, as well as worsening air quality in major cities. Transportation accounts for about one-fifth of carbon dioxide emissions worldwide, according to the World Bank. Policymakers, responding to public opinion, have been forcing auto companies to improve fuel efficiency and reduce emissions. Carmakers’ ability to push back has been weakened since emissions cheating scandals were uncovered at Volkswagen and other carmakers including Fiat Chrysler.

In the European Union, carmakers must achieve average fuel economy equivalent to about 57 miles per gallon by 2021 or pay substantial fines. But European carmakers are behind on achieving the goals, in part because European consumers, like people in the United States and Asia, have developed a taste for thirsty S.U.V.s. As a result, the car companies face penalties of 34 billion euros, or about $37 billion, the research firm JATO Dynamics estimates.

The potential fines were one of the reasons that Fiat Chrysler sought a merger with Renault, which already has a longtime (if lately troubled) alliance with the Japanese carmaker Nissan. The French company offers battery-powered cars like the subcompact Zoe that would have made it easier for Fiat to hit the emissions targets.

Image

Renault’s battery-powered cars, like the subcompact Zoe, helped make the French automaker an attractive merger partner with Fiat.CreditSamuel Zeller for The New York Times

The Trump administration has been rolling back air quality regulations, but even in the United States carmakers are under pressure. California and nine other states are requiring manufacturers to meet quotas for zero-emission car sales.

Regulators and a growing segment of environmentally conscious car buyers are pushing the internal combustion engine toward obsolescence. China, Britain and France lead a list of countries aiming to phase out cars that burn gasoline or diesel by 2040. Norway is trying to convert entirely to electric vehicles by 2025.

Auto executives in Detroit, Stuttgart, Yokohama and other carmaking capitals foresaw these seismic shifts years ago and have been preparing.

BMW has been selling an electric car, the i3, since 2013. Nissan introduced the battery-powered Leaf in 2010. Traditional carmakers like G.M., Daimler, BMW and Volkswagen responded to the decline in car ownership with their own ride-sharing services, albeit with mixed success.

But despite their size, automakers like Fiat Chrysler, Ford or Volkswagen are at a disadvantage to newcomers like Uber or Dyson, the vacuum cleaner maker that is developing an electric car. The old-line carmakers still get almost all of their revenue from cars with internal combustion engines, and must maintain factory networks that quickly become a financial drain when not running at capacity.

China is emerging as a new competitor — and it is battling saturation even in its domestic market. China is absorbing only half the cars that Chinese plants churn out each year. Big producers like Guangzhou Auto had been preparing to enter the United States until President Trump imposed 25 percent tariffs on Chinese cars.

Image

China is another looming precipice. Its domestic market is absorbing only half the cars that Chinese assembly plants churn out each year.CreditLam Yik Fei for The New York Times

So far Chinese automakers have made some inroads to European markets. Zhejiang Geely Holding Group has a foothold after buying the Swedish carmaker Volvo from Ford in 2010. Geely also owns the British sports car maker Lotus and the company that makes London taxi cabs, while its chairman, Li Shufu, owns about 10 percent of Daimler, the maker of Mercedes-Benz cars.

The shifting balance of power in the auto industry is already squeezing the lives of thousands of workers. General Motors, girding for a possible downturn, shut down its plant in Lordstown, Ohio, in March, one of four factories in the United States that it plans to mothball by the end of this year, eliminating more than 10,000 factory and white-collar jobs. Volkswagen said Wednesday it would create 2,000 new jobs in digital technologies while gradually cutting 4,000 jobs that would no longer be necessary because of automation.

By some estimates, half of all auto industry jobs in Germany are at risk. Battery-powered cars have far fewer parts than cars reliant on gasoline or diesel, endangering suppliers of valves, pistons and other parts in conventional engines. The most important part of an electric car, the battery cells, usually comes from Asia.

Mergers as big as Fiat Chrysler and Renault may prove too difficult to pull off but carmakers are already forming dozens of smaller alliances. This year, Ford and Volkswagen agreed to develop new commercial vans and pickups together to go to market by 2022 and cooperate on technologies like electric cars and autonomous driving. BMW and Jaguar said Wednesday they would cooperate to develop drive systems for electric cars.

These partnerships can be difficult to manage, as Renault’s recent experience with Nissan shows. The alliance of those carmakers survived for nearly two decades but is wobbly after the arrest in November of Carlos Ghosn, its chairman, on charges of financial wrongdoing. Mr. Ghosn denies the accusations.

Mr. Ghosn was keenly aware of the need for automakers to combine forces and, in part, his fervor undid his relationship with Nissan. In many ways John Elkann, the Fiat Chrysler chairman, and Jean-Dominique Senard, the chairman of Renault, were attempting to take his vision a big step further.

Large-scale alliances are essential “to have a path for success in this transformative era,” said Jim Press, former deputy chief executive of Chrysler.

“The companies aren’t going to do it alone.”

Let's block ads! (Why?)

https://www.nytimes.com/2019/06/06/business/auto-industry-fiat-renault.html

2019-06-06 17:08:09Z
52780307348417

The Car Industry Is Under Siege and in Survival Mode - The New York Times

FRANKFURT — It’s a scary time to be in the car business.

The internal combustion engine is under attack from electric challengers. Car ownership is becoming optional in the age of Uber. Regulators around the world are fining companies that don’t do enough to cut CO2 emissions, even as buyers demand gas-guzzling S.U.V.s. Global auto sales are slipping for the first time in a decade, disrupted by President Trump’s escalating trade war.

With so much bearing down on them simultaneously, it’s little wonder that companies like Fiat Chrysler and Renault were considering joining forces to survive. Fiat Chrysler’s decision Wednesday night to withdraw its offer to merge with Renault, citing government demands in France, was another reminder that change is complicated for traditional carmakers.

The aborted proposal to create the world’s third-largest automaker was a response to the disruption threatening an industry that accounts for many of the world’s factory jobs and is crucial to the economic fortunes of the United States, Japan and Europe.

New technology has unraveled industries like entertainment, media, telecommunications and retailing, weakening the job security of millions of workers and helping to fuel populism. Carmakers, clearly, are next.

“It’s going to be the biggest change we’ve seen in the last 100 years and it’s going to be really expensive even for the biggest companies,” said Erik Gordon, a professor at the University of Michigan Ross School of Business.

The major auto companies will spend well over $400 billion during the next five years developing electric cars equipped with technology that automates much of the task of driving, according to AlixPartners, a consulting firm. They must retool factories, retrain workers, reorganize their supplier networks and rethink the whole idea of car ownership.

Image

A Volkswagen factory in Wolfsburg, Germany. Carmakers globally are among the last employers that operate vast, bustling plants.CreditSean Gallup/Getty Images

For the auto manufacturers, this upfront investment is a matter of survival. If they don’t adapt, they could become obsolete. Yet no one is even sure whether customers are really willing to pay for the technology and whether it will ever earn a profit.

Investors have already signaled who they think will come out ahead of this transformation. The electric carmaker Tesla, despite all its problems, is still worth more on the stock market than either Fiat Chrysler or Renault. Uber is worth much more than the two combined, even after reporting a $1 billion quarterly loss.

[Read more about how the Fiat Chrysler talks with Renault fell apart.]

The stakes for society from this industrial realignment are high. Car companies like Volkswagen, General Motors or Toyota are among the last employers that operate vast factories where thousands of workers pour in and out of the gates at shift changes.

Worldwide, eight million people work directly for auto manufacturers, and many times more work for companies that supply brakes, tires, sensors and other components.

Those jobs are threatened. Last year global car sales declined for the first time since 2009. Though small, the decrease may signal the onset of a global recession because the auto industry is such an important economic catalyst, analysts at Fitch Ratings said in a recent report.

The immediate cause of the dip in sales was President Trump’s tariffs on Chinese goods last year, which hurt the Chinese economy and brought sales growth there, the world’s largest car market, to a standstill. American carmakers suffered too. Ford’s sales in China plunged 36 percent in the first three months of 2019, to 136,000 vehicles, because of the tariffs, the company said. But there are also ominous long-term trends at work.

Image

European carmakers are well behind on achieving emissions goals, in part because European consumers have developed a taste for thirsty S.U.V.s.CreditCarlos Osorio/Associated Press

China increasingly rules the global auto market and determines its course. In recent years, China’s voracious appetite for vehicles has accounted for almost all of the growth in global sales. Chinese consumers bought 24 million cars last year, far more than any other nation. Americans were a distant second with 17 million cars. General Motors sells far more cars in Asia — 947,000 in the first three months of this year — than it does in the United States.

Auto sales in America and Europe are stagnant and the growth in potential drivers is not encouraging. The number of young Americans acquiring driver’s licenses has been falling since the 1980s, according to research by Michael Sivak, a former professor at the University of Michigan.

Increasingly car ownership is a luxury rather than a necessity. In urban areas, where more and more of the population lives, people can avoid parking costs and the expense of insurance by relying on ride services like Uber or Lyft or hourly rentals with services like Zipcar.

The wavering relationship between consumers and cars has been hastened by the emergence of climate change as a potent political issue, as well as worsening air quality in major cities. Transportation accounts for about one-fifth of carbon dioxide emissions worldwide, according to the World Bank. Policymakers, responding to public opinion, have been forcing auto companies to improve fuel efficiency and reduce emissions. Carmakers’ ability to push back has been weakened since emissions cheating scandals were uncovered at Volkswagen and other carmakers including Fiat Chrysler.

In the European Union, carmakers must achieve average fuel economy equivalent to about 57 miles per gallon by 2021 or pay substantial fines. But European carmakers are behind on achieving the goals, in part because European consumers, like people in the United States and Asia, have developed a taste for thirsty S.U.V.s. As a result, the car companies face penalties of 34 billion euros, or about $37 billion, the research firm JATO Dynamics estimates.

The potential fines were one of the reasons that Fiat Chrysler sought a merger with Renault, which already has a longtime (if lately troubled) alliance with the Japanese carmaker Nissan. The French company offers battery-powered cars like the subcompact Zoe that would have made it easier for Fiat to hit the emissions targets.

Image

Renault’s battery-powered cars, like the subcompact Zoe, helped make the French automaker an attractive merger partner with Fiat.CreditSamuel Zeller for The New York Times

The Trump administration has been rolling back air quality regulations, but even in the United States carmakers are under pressure. California and nine other states are requiring manufacturers to meet quotas for zero-emission car sales.

Regulators and a growing segment of environmentally conscious car buyers are pushing the internal combustion engine toward obsolescence. China, Britain and France lead a list of countries aiming to phase out cars that burn gasoline or diesel by 2040. Norway is trying to convert entirely to electric vehicles by 2025.

Auto executives in Detroit, Stuttgart, Yokohama and other carmaking capitals foresaw these seismic shifts years ago and have been preparing.

BMW has been selling an electric car, the i3, since 2013. Nissan introduced the battery-powered Leaf in 2010. Traditional carmakers like G.M., Daimler, BMW and Volkswagen responded to the decline in car ownership with their own ride-sharing services, albeit with mixed success.

But despite their size, automakers like Fiat Chrysler, Ford or Volkswagen are at a disadvantage to newcomers like Uber or Dyson, the vacuum cleaner maker that is developing an electric car. The old-line carmakers still get almost all of their revenue from cars with internal combustion engines, and must maintain factory networks that quickly become a financial drain when not running at capacity.

China is emerging as a new competitor — and it is battling saturation even in its domestic market. China is absorbing only half the cars that Chinese plants churn out each year. Big producers like Guangzhou Auto had been preparing to enter the United States until President Trump imposed 25 percent tariffs on Chinese cars.

Image

China is another looming precipice. Its domestic market is absorbing only half the cars that Chinese assembly plants churn out each year.CreditLam Yik Fei for The New York Times

So far Chinese automakers have made some inroads to European markets. Zhejiang Geely Holding Group has a foothold after buying the Swedish carmaker Volvo from Ford in 2010. Geely also owns the British sports car maker Lotus and the company that makes London taxi cabs, while its chairman, Li Shufu, owns about 10 percent of Daimler, the maker of Mercedes-Benz cars.

The shifting balance of power in the auto industry is already squeezing the lives of thousands of workers. General Motors, girding for a possible downturn, shut down its plant in Lordstown, Ohio, in March, one of four factories in the United States that it plans to mothball by the end of this year, eliminating more than 10,000 factory and white-collar jobs. Volkswagen said Wednesday it would create 2,000 new jobs in digital technologies while gradually cutting 4,000 jobs that would no longer be necessary because of automation.

By some estimates, half of all auto industry jobs in Germany are at risk. Battery-powered cars have far fewer parts than cars reliant on gasoline or diesel, endangering suppliers of valves, pistons and other parts in conventional engines. The most important part of an electric car, the battery cells, usually comes from Asia.

Mergers as big as Fiat Chrysler and Renault may prove too difficult to pull off but carmakers are already forming dozens of smaller alliances. This year, Ford and Volkswagen agreed to develop new commercial vans and pickups together to go to market by 2022 and cooperate on technologies like electric cars and autonomous driving. BMW and Jaguar said Wednesday they would cooperate to develop drive systems for electric cars.

These partnerships can be difficult to manage, as Renault’s recent experience with Nissan shows. The alliance of those carmakers survived for nearly two decades but is wobbly after the arrest in November of Carlos Ghosn, its chairman, on charges of financial wrongdoing. Mr. Ghosn denies the accusations.

Mr. Ghosn was keenly aware of the need for automakers to combine forces and, in part, his fervor undid his relationship with Nissan. In many ways John Elkann, the Fiat Chrysler chairman, and Jean-Dominique Senard, the chairman of Renault, were attempting to take his vision a big step further.

Large-scale alliances are essential “to have a path for success in this transformative era,” said Jim Press, former deputy chief executive of Chrysler.

“The companies aren’t going to do it alone.”

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https://www.nytimes.com/2019/06/06/business/auto-industry-fiat-renault.html

2019-06-06 16:58:05Z
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Carmakers Turn to Survival Tactics With Industry Under Siege - The New York Times

FRANKFURT — It’s a scary time to be in the car business.

The internal combustion engine is under attack from electric challengers. Car ownership is becoming optional in the age of Uber. Regulators around the world are fining companies that don’t do enough to cut CO2 emissions, even as buyers demand gas-guzzling S.U.V.s. Global auto sales are slipping for the first time in a decade, disrupted by President Trump’s escalating trade war.

With so much bearing down on them simultaneously, it’s little wonder that companies like Fiat Chrysler and Renault were considering joining forces to survive. Fiat Chrysler’s decision Wednesday night to withdraw its offer to merge with Renault, citing government demands in France, was another reminder that change is complicated for traditional carmakers.

The aborted proposal to create the world’s third-largest automaker was a response to the disruption threatening an industry that accounts for many of the world’s factory jobs and is crucial to the economic fortunes of the United States, Japan and Europe.

New technology has unraveled industries like entertainment, media, telecommunications and retailing, weakening the job security of millions of workers and helping to fuel populism. Carmakers, clearly, are next.

“It’s going to be the biggest change we’ve seen in the last 100 years and it’s going to be really expensive even for the biggest companies,” said Erik Gordon, a professor at the University of Michigan Ross School of Business.

The major auto companies will spend well over $400 billion during the next five years developing electric cars equipped with technology that automates much of the task of driving, according to AlixPartners, a consulting firm. They must retool factories, retrain workers, reorganize their supplier networks and rethink the whole idea of car ownership.

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A Volkswagen factory in Wolfsburg, Germany. Carmakers globally are among the last employers that operate vast, bustling plants.CreditSean Gallup/Getty Images

For the auto manufacturers, this upfront investment is a matter of survival. If they don’t adapt, they could become obsolete. Yet no one is even sure whether customers are really willing to pay for the technology and whether it will ever earn a profit.

Investors have already signaled who they think will come out ahead of this transformation. The electric carmaker Tesla, despite all its problems, is still worth more on the stock market than either Fiat Chrysler or Renault. Uber is worth much more than the two combined, even after reporting a $1 billion quarterly loss.

[Read more about how the Fiat Chrysler talks with Renault fell apart.]

The stakes for society from this industrial realignment are high. Car companies like Volkswagen, General Motors or Toyota are among the last employers that operate vast factories where thousands of workers pour in and out of the gates at shift changes.

Worldwide, eight million people work directly for auto manufacturers, and many times more work for companies that supply brakes, tires, sensors and other components.

Those jobs are threatened. Last year global car sales declined for the first time since 2009. Though small, the decrease may signal the onset of a global recession because the auto industry is such an important economic catalyst, analysts at Fitch Ratings said in a recent report.

The immediate cause of the dip in sales was President Trump’s tariffs on Chinese goods last year, which hurt the Chinese economy and brought sales growth there, the world’s largest car market, to a standstill. American carmakers suffered too. Ford’s sales in China plunged 36 percent in the first three months of 2019, to 136,000 vehicles, because of the tariffs, the company said. But there are also ominous long-term trends at work.

Image

European carmakers are well behind on achieving emissions goals, in part because European consumers have developed a taste for thirsty S.U.V.s.CreditCarlos Osorio/Associated Press

China increasingly rules the global auto market and determines its course. In recent years, China’s voracious appetite for vehicles has accounted for almost all of the growth in global sales. Chinese consumers bought 24 million cars last year, far more than any other nation. Americans were a distant second with 17 million cars. General Motors sells far more cars in Asia — 947,000 in the first three months of this year — than it does in the United States.

Auto sales in America and Europe are stagnant and the growth in potential drivers is not encouraging. The number of young Americans acquiring driver’s licenses has been falling since the 1980s, according to research by Michael Sivak, a former professor at the University of Michigan.

Increasingly car ownership is a luxury rather than a necessity. In urban areas, where more and more of the population lives, people can avoid parking costs and the expense of insurance by relying on ride services like Uber or Lyft or hourly rentals with services like Zipcar.

The wavering relationship between consumers and cars has been hastened by the emergence of climate change as a potent political issue, as well as worsening air quality in major cities. Transportation accounts for about one-fifth of carbon dioxide emissions worldwide, according to the World Bank. Policymakers, responding to public opinion, have been forcing auto companies to improve fuel efficiency and reduce emissions. Carmakers’ ability to push back has been weakened since emissions cheating scandals were uncovered at Volkswagen and other carmakers including Fiat Chrysler.

In the European Union, carmakers must achieve average fuel economy equivalent to about 57 miles per gallon by 2021 or pay substantial fines. But European carmakers are behind on achieving the goals, in part because European consumers, like people in the United States and Asia, have developed a taste for thirsty S.U.V.s. As a result, the car companies face penalties of 34 billion euros, or about $37 billion, the research firm JATO Dynamics estimates.

The potential fines were one of the reasons that Fiat Chrysler sought a merger with Renault, which already has a longtime (if lately troubled) alliance with the Japanese carmaker Nissan. The French company offers battery-powered cars like the subcompact Zoe that would have made it easier for Fiat to hit the emissions targets.

Image

Renault’s battery-powered cars, like the subcompact Zoe, helped make the French automaker an attractive merger partner with Fiat.CreditSamuel Zeller for The New York Times

The Trump administration has been rolling back air quality regulations, but even in the United States carmakers are under pressure. California and nine other states are requiring manufacturers to meet quotas for zero-emission car sales.

Regulators and a growing segment of environmentally conscious car buyers are pushing the internal combustion engine toward obsolescence. China, Britain and France lead a list of countries aiming to phase out cars that burn gasoline or diesel by 2040. Norway is trying to convert entirely to electric vehicles by 2025.

Auto executives in Detroit, Stuttgart, Yokohama and other carmaking capitals foresaw these seismic shifts years ago and have been preparing.

BMW has been selling an electric car, the i3, since 2013. Nissan introduced the battery-powered Leaf in 2010. Traditional carmakers like G.M., Daimler, BMW and Volkswagen responded to the decline in car ownership with their own ride-sharing services, albeit with mixed success.

But despite their size, automakers like Fiat Chrysler, Ford or Volkswagen are at a disadvantage to newcomers like Uber or Dyson, the vacuum cleaner maker that is developing an electric car. The old-line carmakers still get almost all of their revenue from cars with internal combustion engines, and must maintain factory networks that quickly become a financial drain when not running at capacity.

China is emerging as a new competitor — and it is battling saturation even in its domestic market. China is absorbing only half the cars that Chinese plants churn out each year. Big producers like Guangzhou Auto had been preparing to enter the United States until President Trump imposed 25 percent tariffs on Chinese cars.

Image

China is another looming precipice. Its domestic market is absorbing only half the cars that Chinese assembly plants churn out each year.CreditLam Yik Fei for The New York Times

So far Chinese automakers have made some inroads to European markets. Zhejiang Geely Holding Group has a foothold after buying the Swedish carmaker Volvo from Ford in 2010. Geely also owns the British sports car maker Lotus and the company that makes London taxi cabs, while its chairman, Li Shufu, owns about 10 percent of Daimler, the maker of Mercedes-Benz cars.

The shifting balance of power in the auto industry is already squeezing the lives of thousands of workers. General Motors, girding for a possible downturn, shut down its plant in Lordstown, Ohio, in March, one of four factories in the United States that it plans to mothball by the end of this year, eliminating more than 10,000 factory and white-collar jobs. Volkswagen said Wednesday it would create 2,000 new jobs in digital technologies while gradually cutting 4,000 jobs that would no longer be necessary because of automation.

By some estimates, half of all auto industry jobs in Germany are at risk. Battery-powered cars have far fewer parts than cars reliant on gasoline or diesel, endangering suppliers of valves, pistons and other parts in conventional engines. The most important part of an electric car, the battery cells, usually comes from Asia.

Mergers as big as Fiat Chrysler and Renault may prove too difficult to pull off but carmakers are already forming dozens of smaller alliances. This year, Ford and Volkswagen agreed to develop new commercial vans and pickups together to go to market by 2022 and cooperate on technologies like electric cars and autonomous driving. BMW and Jaguar said Wednesday they would cooperate to develop drive systems for electric cars.

These partnerships can be difficult to manage, as Renault’s recent experience with Nissan shows. The alliance of those carmakers survived for nearly two decades but is wobbly after the arrest in November of Carlos Ghosn, its chairman, on charges of financial wrongdoing. Mr. Ghosn denies the accusations.

Mr. Ghosn was keenly aware of the need for automakers to combine forces and, in part, his fervor undid his relationship with Nissan. In many ways John Elkann, the Fiat Chrysler chairman, and Jean-Dominique Senard, the chairman of Renault, were attempting to take his vision a big step further.

Large-scale alliances are essential “to have a path for success in this transformative era,” said Jim Press, former deputy chief executive of Chrysler.

“The companies aren’t going to do it alone.”

Let's block ads! (Why?)

https://www.nytimes.com/2019/06/06/business/auto-industry-fiat-renault.html

2019-06-06 15:28:20Z
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