Canada: Uber Makes Its Drivers Pay

Last Updated: August 27 2019
Article by Crowe MacKay LLP


Fourteen years ago, it took vision to see the promise of rearview cameras in the auto industry. Regulators hadn't set any requirements regarding rear visibility, and automakers had not yet made cameras an essential part of dashboards. "But we had seen this coming," said Swamy Kotagiri, chief technology officer at Canada's Magna International Inc. The diversified auto supplier was one of the first to provide cameras for vision systems for automakers, with one customer under contract for 350,000 units in 2007. Today, a combination of federal mandates for rearview visibility and the rapid development of a market for advanced driver-assistance systems has entrenched the role of cameras in current and future vehicles, and the global supplier is racing to meet growing demand.

On Wednesday, Magna's electronics division opened a $66.5-million (US$50-million) factory here, near Flint, Mich., that provides 230,000 square feet (21,000 square meters) for manufacturing cameras and vision systems. Kotagiri says the company now makes about 12 million cameras a year for a dozen customers. More than 600 employees will work at the plant, which consolidates work that had been done at three nearby locations and leaves room for growth. The factory is expected to be fully operational by fall 2020. Components will ship to more than 300 global locations.

Magna has produced more than 46 million components for driver-assist systems, and Kotagiri views that experience as a building block toward fully autonomous vehicles. Magna has seen the need for advanced driver-assistance systems rise exponentially, he said. "Our momentum continues as we work to combine cameras with other sensors. ... The path to full autonomy lies in the advanced driver-assist system features that we're making today." In addition to manufacturing cameras and driver-assist components, the plant will house Magna's advanced robotics r&d testing lab, which is allowing the company to build and tailor more efficient robots and production processes at factories around the globe. It will also house a joint venture established with Rohinni last year that aims to bring paper-thin, flexible, micro-LED products to the market.

Overall, Magna has 24 factories in Michigan that employ about 10,000 workers.

Source: Automotive News Canada


For drivers who depend on Uber to make a living, their cars' loss in value is serious. If a driver carries passengers for 40,000 miles a year and incurs depreciation of 29 cents a mile—the average reported by the American Automobile Association in 2018—the annual expense is $11,600, or $967 a month, $223 a week, $5.58 an hour based on 40 hours a week. For Uber, this cost transfer to drivers is worth billions of dollars. Once drivers understand that they are liquidating the value of their vehicles, in effect receiving payday loans with their cars as collateral, the effects may be significant. Companies like Uber, Lyft, Grubhub and DoorDash may find it more difficult to recruit and retain drivers unless they raise prices and pay drivers more.

Source: The Wall Street Journal


Ford Motor Co. is opening its first "smart lab" in North America, in conjunction with Desjardins Auto Collection, at a Quebec City mall. The intention is to test new retail concepts as customers' digital-shopping preferences evolve. Modelled on a successful retail mall concept developed by Ford dealers in Turin, Italy, the smart labs are small retail locations in high-traffic areas near shops, restaurants and entertainment. Les Galeries de la Capitale was chosen because the shopping mall attracts more than 10 million people a year.

These customers, says Ford, seem to embrace a combination of online and in person shopping, can eye its products in an "engaging and relaxing environment," and test-drive vehicles on nearby streets. If they buy, the transaction is handled by the host dealer.

The Quebec City launch follows the opening of a smart lab in Brussels, Belgium, in May. Ford said it plans to open four more by the end of the year.

Source: Automotive News Canada


Planners face the challenge of balancing production cuts against incentives.

U.S. dealers had nearly 3.8 million unsold vehicles in stock at the beginning of August, a 71-day supply that was the highest for the month in nearly three decades. With U.S. auto sales on the decline for only the second time since the Great Recession, automakers are facing some uncomfortable choices: they can raise incentives in hopes of spurring demand while also taking a hit on the bottom line, or they can trim production, a move with its own set of costs and challenges.

It appears they are taking the middle ground, trimming some production while also boosting incentives, according to industry analysts. But that approach could be paying off by starting to bring inventories under control.

In all, dealers began the month with a total of 3,798,400 vehicles in stock, according to the Automotive News Data Center. While a 71-day supply is still a fair bit above the industry's traditional 60 to 65-day target, it's actually the lowest figure in 12 months, the trade publication reported. A closer look at the numbers reveals that there's actually a normal supply of sedans and other passenger cars, at 938,800 or 64-days. But there's a bubble of unsold trucks, the tally of 2,859,600 working out to a 73-day supply. Industry analysts have been warning that the overall U.S. market slowdown, combined with a flood of new light truck models, could create some headaches for the industry in the months ahead, despite the ongoing shift from passenger cars to SUVs, CUVs and pickups.

Significantly, some of the most notable production cuts announced by the industry in recent weeks have targeted utility vehicles. Ford, for example, will be trimming back operations at its Oakville, Ontario plant next month. The factory produces four SUVs, the Ford Flex, Ford Edge, Lincoln MKT and Lincoln Nautilus models. "While people are talking about fabulous SUV sales, the market is getting saturated with them and inventories are building while incentives are growing," said Michelle Krebs, executive analyst with

There have been cutbacks on the car side, of course. GM closed its Chevrolet Cruze plant in Lordstown, Ohio, and will follow with the closure of two other plants producing slow-selling sedans. Honda this month confirmed it is cutting production of its Accord and Civic models at its Marysville, Ohio plant.

But manufacturers are hoping to hold off more drastic cuts. That's especially true for Detroit's Big Three that are in the midst of contract talks with the United Auto Workers union. So, while the production numbers are, on the whole, being pared back, incentives have been creeping up. The average giveback in July was $3,911 per vehicle, according to research by Cox Automotive, a 4% year-over-year climb. On some pickups, meanwhile, the numbers have reached $10,000 or more. The challenge is to be "proactive," said Stephanie Brinley, a principal analyst with IHS Markit, and use a balance of incentives and production cuts to keep sales and inventories in balance, rather than waiting to be "reactive." "This is an industry that remembers quite vividly what happened a decade ago," Brinley said. Leading into the Great Recession, they kept ratcheting up the givebacks "to keep their plants running and production up. But they found there was a point where that eroded profitability to a point that couldn't be sustained."

The fact that inventories declined in August is a positive sign, according to analysts, but it's also a month that typically sees the numbers at their leanest because of plant closures due to model changeovers and vacations in June and July, Automotive News pointed out. So, the real test will come as the industry enters the 2020 model-year – all the more so as trade wars and other economic uncertainties threaten to further weaken the U.S. new car market.

Source: The Detroit Bureau


When Daniel Tijerina decided to trade-up from a Subaru Impreza sedan into a luxury brand, he didn't look at a sporty coupe with speed aplenty or cushy sedans with sleek silhouettes. Instead, he drove home last month in a new Cadillac XT4, a plastic-clad crossover SUV. What it lacks in handling and panache, the squat General Motors Co. sports utility vehicle made up for in attributes the 25-year-old credit analyst wanted: A car-like ride with high seating and touchscreen apps that make it easy to order a pizza en route to his Fort Worth, Texas-area home. Those popular features help explain why SUVs now make up 60% of luxury vehicle sales in the U.S., according to data from Edmunds, pushing aside the once mainstay sedan as the premium ride of choice for well-heeled auto buyers.

Source: Bloomberg


 The heads of General Motors Co., Ford Motor Co. and dozens of other leaders at some of the world's largest companies are abandoning the long-held view that shareholders' interests should come first. The purpose of a corporation is to serve all of its constituents, including employees, customers, investors and society at large, the Business Roundtable said Monday in a statement. Jamie Dimon, the CEO of JPMorgan Chase & Co., heads the group. The 181 signatories include the heads of several Michigan-based companies: GM's Mary Barra; Ford's Jim Hackett; Dow Inc.'s Jim Fitterling; Steelcase Inc.'s James Keane; and Whirlpool Corp.'s Marc Bitzer. The CEOs of the six of the biggest U.S. banks signed the statement.

Source: The Detroit News


They're faster, cleaner and quieter -- and, for the most part, the process is reversible

Is converting a classic car to battery power any different than swapping an engine? I think not, and neither does Richard Morgan at Electric Classic Cars or EV West's Michael Bream, who told the BBC that "our job is to save the car." As more EVs are made, and totaled, more EV power-trains are up for grabs from Tesla, Nissan and the like. And with creative mechanics on the clock, anythingis possible.

The process doesn't just make these cars cleaner and easier to repair -- an electric motor has far less parts than a regular ol' engine -- they're also faster, quieter and, some would say, "better." Morgan does what customizers and hot-rodders have been doing forever: take out the engine and replace it with something more powerful. And if the replacement happens to be cleaner, all the better. In fairness to the old guard, Electric Classic Cars tries to change as little as possible so the process is reversible. He even offers to store the old gasoline engines for clients, but no one has ever asked him to do it.

Morgan was a vintage racer and loved the electric pit bike the team used to get around the track. "I was always amazed by that little thing, how much power was in this little motor the size of your fist," Morgan told the BBC. He made converting gas-powered cars to EVs his full-time job three years ago.

ECC specializes in 1950's to 1980's cars -- one of the most exotic he worked on was a Ferrari 308. The plug-in Ferrari now does the 0-60 sprint in 3.5 seconds, about half the time of the original. It could go even faster, but at that point other components would get more stress. Morgan has also converted old BMWs, Porsches and, of course, Volkswagens.

Electric Classic Cars is joined in this growing trend by the likes of EV West in San Marcos, California. Founder Michael Bream's mantra? "Our job is to save the car." A noble goal, if there ever was one. Every crashed Tesla or Nissan is a potential donor power-train. His advice to would-be customers, according to the BBC, is to choose a car that will stay attractive to buyers, e.g., old Porsches and VWs.

The conversions aren't cheap. ECC sells its cheapest motor for about 3,000 euro (that's about 3,300 American bucks). But as more folks get in the game, prices can only come down. Currently, some conversions cost more than $20,000. Matthew Quitter of London Electric Cars says you should get something like an old Triumph Herald, "a fabulous little car that you can pick up for a couple grand."

Brandon Hollinger at ampRevolt in Pennsylvania wants all-in-one kits. "Imagine an assembly the size of an engine that contains not only the motor, but also the battery and electronics -- and, boom, the labor costs are down," Hollinger told BBC. "I do see this as a promising direction. I could do the expensive builds forever and it's fun, but I would rather crack the code and make this available to more people."

Speaking of fun, remember, it was last year's SEMA Show that introduced us to the two-electric-motor eCOPO drag car Camaro, which recently ran a nine-second pass in the quarter-mile. If these things ever actually become plug-and-play, we'll all benefit ... as long as we can handle the noise. Or lack thereof.

Source: Autoweek


 Dealers on the WardsAuto Dealer 500 remain confident in their overall outlook for the rest of 2019 but are leveraging pre-owned sales and fixed operations as the new-car market softens. General Motors' U.S. sales fell 4% in the first six months of 2019 while Ford and Fiat Chrysler Automobiles slid 2.9% and 2%, respectively. Toyota sales were off 3% through June and Nissan dipped 9.2%. The WardsAuto tally, which ranks the top 500 U.S. dealers by 2018 total operating revenue, reflects this trend.

Source: WardsAuto


Volkswagen AG's namesake brand expects to lift profit margins over the next few years despite an expensive shift to electric cars and growing economic headwinds in Germany and abroad. VW, in the midst of the auto industry's most ambitious electric-car push, is sticking with a target of selling 1 million battery vehicles by 2025, Ralf Brandstaetter, the unit's chief operating officer, told reporters on Thursday. The brand is sticking with a goal of 6% operating-profit margins in 2022, up from 5.2% in the first six months this year.

Source: Bloomberg

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