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Trucks, SUVs drive U.S. October new vehicle sales

DETROIT — Major automakers posted mixed U.S. new vehicle sales in October on Wednesday, though America's love affair with high-margin pickup trucks and SUVs remained in full bloom as larger, pricier vehicles fared better than passenger cars. Auto industry publication WardsAuto put the seasonally-adjusted annualized rate (SAAR) for light vehicle sales in October at a robust level of 18 million units. But after a long boom cycle, carmakers are still ill-prepared for the slight decline in sales anticipated for full-year 2017 and have taken too few steps to trim production, said Doug Mehl, a partner in consultancy A.T. Kearney's automotive practice. "When you make a new vehicle, you have volume assumptions tagged to it, and who wants to be the guy who says, 'I'm going to make less of this really cool model'?" Mehl said. "But eventually the market is the reality, and it's going to force companies one way or other here." General Motors GM reported a sales drop of 2.2 percent for the month, with consumer sales down 6.6 percent. But sales of high-margin pickup trucks, sport utility vehicles and crossovers all rose. GM also cut its inventory of unsold vehicles — a source of concern for the market — slightly. The automaker has worked to reduce its volume of excess inventory, including through significant production shutdowns in the third quarter. GM had said its inventory would rise in October. "We are heading into the fourth quarter with good momentum, thanks to a strong U.S. economy and very strong pickup and crossover sales," said Kurt McNeil, GM vice president for U.S. sales operations. GM slightly reduced consumer discounts as a percentage of average transaction prices to 13.5 percent, from 13.7 percent in the third quarter. Industry experts believe consumer discounts above 10 percent of the average transaction price are unhealthy as they erode resale values and are unsustainable in the long term. Consultants J.D. Power and LMC said last week that based on preliminary October sales numbers, discounts have exceeded 10 percent in 15 of the past 16 months. Ford The U.S. auto industry posted record sales of 17.55 million vehicles in 2016. New sales received a strong boost in September as consumers replaced vehicles damaged in southeast Texas by Hurricane Harvey the previous month. Full-year 2017 sales are expected to be slightly lower than 2016.

Waymo picks Detroit factory to build self-driving fleet by mid-2019

SAN FRANCISCO — Alphabet Inc's Waymo said on Tuesday it had chosen a factory in Detroit to mass produce self-driving cars, looking to the historical heart of the auto industry to build the vehicles of the future. The company's chief executive, John Krafcik, said in a blog post that Waymo would partner with American Axle & Manufacturing to lease and repurpose an existing Detroit facility that will be operational by mid-2019. The facility belongs to American Axle, next to the GM Hamtramck facility that is at risk of being shuttered, and is across the Detroit River from Windsor, where the Chrysler Pacificas that Waymo uses are built. Presumably Waymo will do the self-driving fitment of Pacificas at the new facility. Waymo said in January it had chosen Michigan for its first production facility, adding it would receive incentives from the public-private partnership agency, the Michigan Economic Development Corporation, and create up to 400 jobs over time exclusively related to self-driving. Krafcik said in his blog post Tuesday that it's the "perfect facility," with up to 200,000 square feet to expand into. He said Waymo will hire the region's auto manufacturing talent. Waymo plans to buy 62,000 Pacificas and 20,000 Jaguars and convert them for autonomous driving. By 2022, it intends to conduct about 1 million trips per day. In a sea of rivals, Waymo is generally thought of as far ahead in the self-driving race. It already operates a robotaxi service in Arizona that it plans to expand geographically over time. Global automakers, large technology companies and startups are all engaged in self-driving efforts, but experts expect it will be years before systems are ready to be rolled out in all areas, with software and regulations among the many challenges. Waymo is competing with rivals General Motors and Uber Technologies to deploy such vehicles for the masses. Tesla CEO Elon Musk has also announced the company plans to launch a robotaxi service in 2020. Waymo, which has been working on self-driving technology for a decade, provided few new details. American Axle, with which Waymo is partnering for its Detroit facility, was formed in 1994 when an investment team purchased five plants that General Motors had put up for sale. GM plans to end output at its last Detroit factory next year, after announcing in November a plan to halt production at five North American assembly plants and cut about 15,000 jobs.

FCA revises Renault merger offer in a bid to persuade French government

PARIS – Fiat Chrysler is discussing a Renault special dividend and stronger job guarantees in a bid to persuade the French government to back its proposed merger between the carmakers, sources close to the discussions said. The improved offer, if formalized and accepted, would also see the combined company's operations headquartered in France and the French state granted a seat on its board, two people with knowledge of the matter told Reuters on Sunday. FCA spokeswoman Shawn Morgan declined to comment. The French government, Renault's biggest shareholder with a 15 percent stake, also declined to comment. A Renault spokesman did not return calls and messages seeking comment. Italian-American FCA is engaged in intensive discussions with Renault and the French government over the $35 billion merger proposal it pitched last Monday to create the world's third-biggest carmaker. The concessions being discussed are not definitive and depend on other aspects of an emerging compromise deal, both sources cautioned. They nonetheless increase the chances that the merger plan will be approved by Renault's board, on which the French state has two seats. The board meets again on Tuesday. Some analysts and French industry leaders had voiced doubts about the 5 billion euros ($5.6 billion) in claimed cost and investment savings, and whether the proposal represents a fair deal for Renault shareholders. A Renault dividend would improve the valuation in their favor, balancing a 2.5 billion euro proposed dividend to FCA shareholders. The sources did not elaborate on the potential size of a Renault payout. The merger plan presented on Monday would see the two carmakers acquired by a listed Dutch holding company whose ownership would be split equally between current FCA and Renault shareholders, after special dividend payments. FCA had proposed locating the combined group's operational head office in a neutral city, most likely London, but has now indicated readiness to base it in the greater Paris area, meeting a key French government demand, both sources said. The French government is also likely to be granted a seat on the board to reflect its 7.5 percent stake in the merged company, the people said. Nissan, whose matching 15 percent stake in its French alliance partner will also be diluted to 7.5 percent of the new group, receives a board seat under the plan unveiled on May 27.