Good Monday morning and welcome back to Speed Lines, The Drive’s daily roundup of what matters in cars and transportation. I trust you had a restful July 4 weekend. Today we’re talking about the rising number of coronavirus cases at General Motors’ important Arlington, Texas truck plant, when Chinese cars will catch on in America, and how the pickup trucks continue to keep the industry afloat.
UAW ‘On Alert’ Over GM’s Texas Plant
Texas has emerged as one of the hotspots for the coronavirus outbreak in the U.S., with hospitals in the Houston, San Antonio and Dallas areas concerned about running out of beds in the weeks to come. In the latter area, we have GM’s Arlington Assembly plant, which makes the Cadillac Escalade, GMC Yukon, Chevrolet Tahoe and Suburban trucks and apparently the most profitable auto plant in America.
But it’s also a plant that has now seen 22 confirmed cases of the coronavirus since May, according to a report by The Detroit Free Press. The local chapter of the United Auto Workers union has asked GM to halt production there because of the spiking cases, even though like every other car plant in America it now has aggressive safety measures in place.
GM won’t confirm the number of cases and it has not shut down any other plants. It also would, presumably, do so very reluctantly; the large SUVs made there are vital to GM’s profits at a time when everyone is buying big trucks and many dealers worry about inventory running low. Another important GM plant that has had a similar problem is the one in Wentzville, Missouri, which makes the Chevy Colorado, GMC Canyon and the full-sized vans. From the Freep’s story:
At Wentzville, there are 12 confirmed cases since it restarted in mid-May, up from five cases less than a month ago, said a person at the plant familiar with union leadership who has access to that data. The person declined to be named because they are not authorized to speak to the media.
“If we continue to see the number of cases trend upward, the union would have to request a shutdown of the plant again so that it can be cleaned and workers can get tested,” the person said. “It’s a concern.”
[…] The combined population of the two plants is just over 9,000 workers, so the 34 cases is well below 1% of the combined workforce. Still, workers at the facilities who have reached out to the Free Press say they are afraid of contracting the virus because it is so contagious. They worry they could spread it to their families.
This is a trend we’re likely to see at other auto plants, especially in states where cases are on the rise. Even with extreme safety measures inside, automakers can’t control what workers do in their off-hours, and they’re still likely to spread the virus to coworkers when they do clock in.
The Trucks Will Save America
If GM is to have a coronavirus surge at its plants, it would likely prefer it not to be at the ones that make the trucks. New car sales were not great, to put it gently, in Q2, but the one bright spot continues to be sales of pickup trucks and large SUVs. That’s true across the board.
Big trucks are even outselling compact crossovers, which for a number of years were the reigning sales kings of the industry, according to Automotive News. It’s great news for the U.S. automakers in particular:
Including the midsize segment that Jeep and Ford have reentered, one in four vehicles sold by nonluxury brands from April through June was a pickup, according to the Automotive News Data Center.
“Even when the vehicle market goes completely sideways, the truck market stays straight and true,” said Karl Brauer, executive publisher of Kelley Blue Book. “This is particularly good news for domestic brands like Chevrolet, Ford and Ram, all of which rely heavily on high-profit truck sales. This trend will likely continue as the economy recovers and consumers look to start delayed home improvements, relocations and other truck-friendly activities.”
So Ford, for example, can’t get that new F-150 out soon enough.
When Does The Chinese Car Revolution Start In America?
One more from Automotive News that’s really worth a read in full: a story about the various social and economic roadblocks facing Chinese automakers who want to break into the North American market.
It’s kind of surprising that hasn’t happened yet, when you really think about it. The Chinese auto market is the biggest one in the world, and it’s got a pretty robust segment of homegrown automakers that have been for decades now. We buy everything else from China; why not cars? What’s stopping China from following in the footsteps of Japan, Germany and Korea? It’s an expansion effort that has been in the works for 20 years now.
Well, it’s not like anyone hasn’t tried. But trade barriers have been an issue, for starters:
Another challenge: U.S.-China trade friction has raised the stakes on how to operate here, [Michael Dunne, CEO of ZoZo Go consultancy] said. In past decades, foreign automakers entered the U.S. purely as imports, without needing to first build U.S. factories to localize their production. But that option is not viable for Chinese manufacturers, given tensions about U.S.-China trade imbalances.
“The window for exports from China into the United States is closed,” he said. “If they want to sell them in the U.S., they need to build them in the U.S. It’s not good enough to just bring in a model at a 20 percent discount to what the Japanese and Korean brands are offering.”
There are barely a handful of Chinese-made cars for sale in the U.S., including the Buick Envision and Volvo S90. But they face a 27.5 percent tariff, currently. There are also concerns, real or perceived, about quality and reliability.
China’s also a leader in EVs and various startups have tried to become “the next Tesla” over here, including Nio, Byton and Faraday Future. But all of them have struggled with production and financial stability for various reasons, and with the pandemic economy, their future doesn’t look spectacular.
One automaker to keep an eye on may be Vantas, a subsidiary of Chery that aims to build cars in the U.S. starting in 2022. From that story:
Whether Vantas becomes the first major Chinese automaker to break into the U.S. is also up in the air. Other Chinese automakers are waiting in the wings.
“They are either going to differentiate on the low end with internal-combustion vehicles, or they are going to differentiate on the high end with electric cars, autonomous cars, connected cars,” Dunne said. “It’s low price or next-generation technology.”
Brauer, from Autotrader, believes it is just a matter of time.
“At some point, a Chinese company will show up on U.S. soil and it will be sold with a Chinese name,” he said. “But before that, you’ll see more efforts to partner to bring in Chinese models that may or may not have a Chinese name.”