The Electric Cooper SE May Be The Biggest Lifeline Mini Gets For A While
Also on today's Speed Lines: more bad news for Nissan. Yes, more.
Welcome back to Speed Lines, The Drive's morning roundup of what’s most important in the world of cars, technology, mobility, and the global economy. After launching to incredible fanfare and phenomenal success yesterday (a few people on Twitter told me they liked it), we're going to keep it going.
As ever, Speed Lines is here to serve you, the reader, so please let us know if you have any suggestions or ideas I can steal and claim as my own. And now, the news.
Where Does Mini Go From Here?
Let us begin today by turning our eyes to Mini, a brand that makes engaging cars and generally celebrates the manual transmission—two things we respect around here—but has legitimately struggled in the past few years as the new car market has shifted so heavily to crossovers, SUVs and trucks.
Mini, inherently, wasn't equipped to deal with that shift. The Countryman small crossover is the brand's biggest seller but it's not a volume player the way many rivals are. (I'd prefer we not talk about the discontinued Paceman at all, thanks.)
Mini's getting a bit of a boost in the form of the electric Cooper SE, which we found pretty fun to drive despite a 110-mile range that probably won't keep Elon Musk up at night. According to Automotive News, Mini's dealers are excited for the help because they've been pretty product-starved the last couple of years. From the story:
Until then, dealers have been largely getting by on used-car sales, factory incentives — and for most Mini dealers, the strength of their BMW franchises.
"Definitely, Mini buyers are excited" about the 2020 Mini Cooper SE, said Jason Willis, chairman of the Mini National Dealer Council. "We have a very large number of hand-raisers."
Willis, 41, is a rare Mini dealer without a BMW franchise. He is dealer principal of Willis Auto Campus, with a total of five dealerships in Des Moines, Iowa. Besides Mini, Willis Auto Campus has Cadillac, Infiniti, Jaguar, Land Rover, Lexus and Volvo franchises.
"Overall, profitability continues to be the challenge for Mini dealers," he told Automotive News. New-car sales are down, which means dealers aren't seeing as many trade-ins for resale, he said.
Problem is, I think we can assume the EV Cooper will be most popular as a city commuter car, not unlike the BMW i3 it shares components with—not a massive volume-seller for everyone. Mini's sales were down nearly 20 percent year-over-year in 2019 and, as Automotive News notes, a lot of its American dealers are propped up by the BMW store that's usually right next door.
And besides the upcoming John Cooper Works GP, Oxford-based Mini isn't getting much in the way of new products at all thanks to uncertainty over Brexit. Here's an earlier story from Reuters, relevant to our discussion, that says the current Mini platform introduced in the mid-2010s will need to soldier on longer than originally expected:
The current Mini hatch model, which has been on the market since 2014, is built on the company's technological platform called UKL1. "The lifespan of this platform has been extended," BMW spokesman Maximilian Schoeberl told Reuters. "For cost reasons and because of Brexit."
Pressure has risen on carmakers to free up resources so they can shoulder hefty investments to build next generation low emission electric, hybrid and connected vehicles.
The Mini is currently built in Oxford and in Born, the Netherlands, and any next generation car would require investments into the production lines of both factories.
Given the declining sales, Mini's future feels shakier than ever. I always figured that one of its primary purposes was to help BMW lower its average fuel economy, and it probably did when the Germans picked up the brand in 2000 and almost every BMW was a big sedan with an inline-six or a V8. But these days BMW makes all kinds of hybrids, EVs, smaller cars and even front-wheel-drive models. Though some of those are derived from Mini's platform, it may just not need the small-car brand that much anymore.
The Hammer Falls On Nissan
Nissan's growing list of struggles in a post-Carlos Ghosn world is already shaping up to be one of the biggest automotive news stories of 2020. And as we noted yesterday, the embattled Japanese automaker—reeling from that scandal up top, slumping global sales and an aging product lineup—was expected to post less-than-stellar financial results for Q4 2019.
Here they are, along with a revised outlook for 2020, and it is indeed bad. From Automotive News' wire roundup:
Nissan Motor Co. on Thursday cut its full-year operating profit forecast by 43 percent. The dismal outlook comes after the automaker posted a net loss of 26.1 billion yen ($238 million) for the October-December quarter and contrasts sharply with upbeat forecasts from rivals Toyota Motor Corp. and Honda Motor Co.
For its latest quarter, Nissan posted an operating profit of 23 billion yen ($210 million), short of analysts’ average estimate for 59 billion yen. Quarterly sales fell 18 percent to 2.5 trillion yen ($22.8 billion).
Nissan's global vehicle sales tumbled 11 percent during the October-December period. Sales dropped 18 percent in the United States, with once-popular models such as the Rogue crossover and Sentra sedan falling out of favor. In China, sales slipped 0.6 percent.
So what's next? Probably more job cuts, a trimmed lineup and a few manufacturing center shutdowns. Send some positive thoughts to new CEO Makoto Uchida. He needs them.
What Coronavirus Means For Hyundai
The number of deaths in China tied to the coronavirus outbreak rose to more than 1,350 people this week, and it's not yet clear whether the epidemic is slowing down. What is clear is that the virus is already having huge effects on the world's foremost manufacturing powerhouse.
Reuters uses Hyundai as an example in this story. The automaker is extremely dependent on a parts supplier with a footprint in China for its manufacturing hub in South Korea. Here's what happens when that takes a hit:
One of its main suppliers, Kyungshin, which has rapidly boosted capacity in China over the past two decades to capitalize on the country’s lower labor costs and proximity to South Korea, has seen its operations hit hard by the epidemic.
Hundreds of workers failed to turn up for work last week at two of its four plants, in Jiangsu and Qingdao, following a Chinese New Year holiday that was extended due to the outbreak, according to a source familiar with the matter. In Jiangsu, only about 300 of the 600 employees who were due to return showed up, the source said.
Now Kyungshin, which supplies almost half of the wiring harnesses for Hyundai’s auto electrical systems in the carmaker’s South Korean manufacturing hub, is scrambling to make up for production shortfalls.
As that story notes, the virus is revealing the downsides to putting such a heavy emphasis on one country to meet so many manufacturing needs. Hyundai may need to address that somehow, but suppliers depend on low-cost labor, so they have almost no choice but to be in China.
On Our Radar
- Radar, a location data startup, says its ‘big bet’ is on putting privacy first (TechCrunch)
- Hurling Satellites Into Space Seems Crazy—but Might Just Work (Wired)
- Porsche Engineer: Our EV Tech Is Even More Advanced Than Taycan (InsideEVs)
- Lyft touts benefits of self-driving cars, but warns of ‘second order’ effects (Venture Beat)
Read These To Seem Smart And Interesting
- Last town before Mars (Business Insider)
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- Newsrooms Rethink a Crime Reporting Staple: The Mugshot (The Marshall Project)
Where do you see Mini in five years?
As a former owner of two of them (one was reliable, one was... well, not) I'm sad to say I foresee BMW offloading the brand itself, possibly to a Chinese automaker, while keeping the UKL tooling for its compact front- and all-wheel-drive cars. No more British factories and that pesky trade problem. But I could be wrong, and I like Minis, so I hope I am here.