Jul 17, 2019

Disruption and scandal set backdrop to auto talks

GM CEO Mary Barra and UAW President Gary Jones open the 2019 GM-UAW contract talks. Photo: Bill Pugliano/Getty Images

Detroit automakers are kicking off negotiations with the United Auto Workers union on new labor contracts this week.

Why it matters: Auto talks are always contentious over issues such as wages and health care benefits, but this year's bargaining is colored by unusual factors and disruptive forces roiling the industry, notes Bloomberg.

  • Auto workers are furious about GM plant closings in Michigan, Ohio and Maryland and the increased use of lower-paid temporary workers.
  • Fiat Chrysler and the UAW are still dealing with the legal fallout of a years-long corruption scheme that federal prosecutors said diverted money from a union training fund to the pockets of former leaders at the company and the union.
  • GM, Ford and FCA have all seen strong profits in recent years, but executives are sweating shrinking sales and risky billion-dollar bets on future electric vehicles and self-driving cars.

What to watch: Everyone was all smiles for this week's ceremonial handshake at each of the Detroit Three, but the tone will get more serious as talks intensify ahead of a mid-September bargaining deadline.

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GM vs. Ford on electrified AVs

Illustration: Lazaro Gamio/Axios

General Motors is laying down huge, simultaneous bets on electric cars and self-driving technology, a strategic gamble based on its belief that future automated vehicles will run only on electricity.

Why it matters: It's a risky bet that few can stomach, especially if EVs and AVs are slow to be accepted by consumers. Other carmakers, like Ford, see near-term limitations to battery-electric AVs and favor a more measured approach.

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Car loans mean banks don't need high interest rates to rake in cash

Illustration: Aïda Amer/Axios

Ally Financial was the latest bank to declare a major profit windfall in its second quarter earnings report, as the U.S. banking industry's largest auto lender reported a profit increase of 67%.

Why it matters: Americans are borrowing record sums to buy new vehicles — and used ones — and they continue to pay relatively high interest rates. Banks are seeing big profits as a result.

Go deeperArrowJul 19, 2019

Autonomous vehicles are taking a back seat to their electric peers

Illustration: Lazaro Gamio/Axios

Automakers are beginning to make strategic tradeoffs between investing in electric vehicles or self-driving car technology because they can't afford to do both.

Why it matters: Investors reward autonomous vehicle developers with higher valuations, but it'll be years — maybe decades — before the technology is ready and it's not clear the public even wants them. People aren't clamoring for electric vehicles, either, but to meet looming emissions standards, carmakers will need them.

Go deeperArrowJul 17, 2019