Nov 22, 2019

It's every carmaker for itself

The once monolithic automotive industry is splintering over a range of issues, as companies scramble to cope with unprecedented technological disruption and business challenges.

The big picture: Although fiercely competitive in the showroom, automakers have long presented a united front on shared interests like trade policy, government regulations and labor relations. That's all gone out the window lately; now it's every man for himself.

What's happening: General Motors' unprecedented racketeering lawsuit this week against Fiat Chrysler Automobiles is the latest example of automakers turning on one another.

  • GM accuses its crosstown rival of inflicting billions of dollars in damages by bribing United Automobile Workers leaders for competitive advantages that the union denied to GM.
  • They say the injuries compounded between 2009 and 2015 in the form of higher labor costs and lost investment initiatives.
  • GM said former FCA CEO Sergio Marchionne, who died in 2018, conspired with former UAW president Dennis Williams to try to weaken GM and force it into a merger with FCA in 2015.

FCA vigorously denies the charges, and says GM is trying to undermine current merger negotiations with Peugeot parent Groupe PSA and ongoing labor talks with the UAW.

  • "If arguments both sides are making against each other are true — that Marchionne was using the UAW to bully GM's Mary Barra, and that she's now trying to undercut Fiat Chrysler's combination with PSA — the chess moves will go down as among the most dramatic by Detroit executives in decades," writes Bloomberg.
  • On Thursday, JPMorgan analysts estimated that GM is likely to seek at least $6 billion in damages, and as much as $15 billion.

Another big split occurred recently in the war over tailpipe emissions rules.

  • Ford, Volkswagen, BMW and Honda have lined up behind California, whose right to set its own pollution standards was revoked by the Trump administration.
  • GM, FCA, Toyota and others, meanwhile, are siding with Trump, who wants to roll back tough Obama-era standards.
  • Where they line up depends mostly on their sunk investments in future powertrains and how they think consumer demand will evolve.
  • Two decades ago, Detroit automakers fought shoulder-to-shoulder against California's clean car initiatives.

What to watch: Shifts in trade policy could further divide the industry as the interests of foreign and domestic automakers diverge.

The bottom line: Faced with falling global sales and a potential transformation of the business, "the always-competitive auto industry has become even more dog-eat-dog," says Cox Automotive analyst Michelle Krebs.

Go deeper:

Go deeper

What it was like when police used tear gas to clear a path for Trump's walk

President Trump walking back to the White House. Photo: Brendan Smialowski/AFP via Getty Images

Moments before President Trump began his Rose Garden address, a mass of law enforcement suddenly marched forward in Lafayette Park, across Pennsylvania Avenue from the White House.

Why it matters: It was a jarring scene as police in the nation's capital forcefully cleared young men and women gathered legally in a public park on a sunny evening, all of it on live television.

Trump goes full law-and-order

Photo: Tom Brenner/Reuters

President Trump's final decision to speak in the Rose Garden last evening as protests raged outside the gate was made only hours before, reflecting chaos on both sides of the fence.

Why it matters: Trump’s ultimate remarks fell where his instincts always were: blunt, brutal law and order, with extreme demonstrations of militarized “strength” and blustery threats.

Amid racial unrest, a test at the polls

Photo: Stephen Maturen/Getty Images

Eight states plus D.C. are holding primary elections today following a week of intense protests across the country over the brutal police killing of George Floyd.

Why it matters: It's the first major test for voting since the national outcry. Concerns over civil unrest and the police — as well as the coronavirus and expanded absentee voting — could reduce the number of voters showing up in person but heighten tensions for those who do.