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Friday Fun: Soviet-era ‘classic’ cars, Hyundai’s luxury segment success and Ontario charges up

Finland recently held an auction for Soviet-era cars abandoned near the border by migrants.

By Jeff Sanford

Toronto, Ontario — July 22, 2016 — Some of the interesting overlooked news from the automotive world this week: Fiat Chrysler has its offices raided, a high-end Hyundai is outselling BMW and Ontario insurance rates are rising again.

– Pokemon Go continues to be good for business in the collision repair industry. Among the stranger incidents, a man in Palm Coast, Florida fired a gun at a vehicle occupied by two teenagers playing Pokemon Go. The teens sped away and did not mention the incident to their parents until the shots were spotted on the vehicle’s body, along with the flat tire.

– American Honda is the latest US OEM to issue a position statement noting that any of its vehicles that have been in collisions should be scanned, both pre- and post-repair. The US arms of Nissan, Toyota and FCA have all issued similar statements in recent weeks. We wouldn’t be at all surprised to see the Canadian arms of those organizations release similar statements. 

– Fiat Chrysler US might be in hot water. Automotive News notes that, “Investigators from the FBI and the Securities and Exchange Commission visited Fiat Chrysler Automobiles field staff in their homes and offices this month as part of a coordinated investigation into the automaker’s US sales reporting practices….” The reports note that, earlier this year, “a dealership group in Illinois accused FCA US of civil racketeering in a federal civil lawsuit that alleged FCA paid dealers to improperly inflate sales.”

– Attorney generals for New York, Massachusetts, and Maryland announced Tuesday they are suing Volkswagen for fraud. They claim “Volkswagen’s installation of defeat devices to thwart emissions testing was part of a ‘willful, systemic scheme.’” A report notes that during the period of 2009-2014, when Volkswagen was willfully deceiving regulators, the company was simultaneously marketing its cars as good for the environment.
When the allegations first came out, “Volkswagen said the deceit was the work of ‘rogue’ engineers,” according to a report, “but the attorneys general’s investigation allegedly will show that ‘dozens’ of employees knew about the fraud, including the former CEO, Matthias Müller. According to the New York Times, this is the first suit to connect the executive to the scandal. The report also claims that employees actually went as far as to destroy incriminating documents, and that “Volkswagen worked hard to cover up the existence of defeat devices.”

– An interesting car auction was held in Finland this week according to a report from Reuters. Classic car buffs showed up for an auction of dozens of vintage Soviet-era cars. Finland has a huge border with Russia that represents one of the major frontiers of the European Union’s passport-free “Schengen travel zone.” This border has been used by migrants avoiding the perilous Mediterranean route to the EU. The migrants have been using the vehicles to cross the border and have been abandoning them. The migrants had been using bicycles. Finland banned bicycle crossings to cut down on the flow of immigrants. This past winter, migrants began using whatever old Soviet-era vehicle they could find to cross the border in the winter. All kinds of 1970-era Volgas and Lada’s were to be had at a town near the border. The Volgas went for an average price of about $700. According to an attendee, “There’s rust and few dents on them, but mechanically they’ll last forever. And it’s very easy to find spare parts,” said Rauno Halttunen, a retired mechanic and a Soviet car enthusiast. Prices for the “classic” Soviet models began at about $130.

– Ontario is going ahead with its plan to build 500 electric vehicle charging stations across the province. The plan hopes to address the issue of “range anxiety,” the worry that an EV will run out of juice before arriving at the next charging station. Owners of EVs will be able to travel from Windsor to Ottawa, or from Toronto to North Bay, without worrying about access to a recharging station. There are about 7,000 EVs currently on the road in Ontario.

– It looks like auto insurance premiums are on the rise again in Ontario, despite a government pledge to reduce them an average of 15 percent from 2013 rates. According to a new report from the Financial Services Commission of Ontario, “14 companies representing over 30 per cent of the Ontario market had rate increases averaging 0.33 per cent approved in the second quarter of 2016.” The report also noted that premiums were down an average of about 10 percent since 2013, including a 3.07 per cent decline in the first quarter of 2016.

– A story from Reuters suggested that “Japanese aluminum product makers … are boosting output capacity in the United States in a bid to snare market share as automakers turn to the lighter metal to meet stricter environmental rules.” The report went on to note that, “UACJ, Japan’s biggest rolled-aluminum products maker, began production of sample aluminum sheets for autos last month at a new $150 million plant in Kentucky … ” UACJ is betting aluminum sheet used in passenger vehicles will rise at least ten-fold to a million tonnes by 2025, “after automakers in the United States start adding them to popular sedans from around 2019 or 2020,” according to the report.

– A press release out this week summarized the effect Alberta’s new car and light truck industry has on the province’s economy. The report studied the impact of the province’s 351 new car and truck dealers. The findings: Economic output from the sector “is four times larger than all annual travel and tourism to the Rockies…” The dealerships are responsible for “$16 billion in capital expenditures in 2014 [and] created a chain reaction of economic and social stimulus felt in industries and communities across the province. A press release announcing the report said that, “One of the most striking findings in the report is the systemic injection of 16 billion dollars in operating costs that, put back into the marketplace, acts like gasoline for other industries, keeping the wheels turning on everything from logistics to commercial real estate, to bank financing, legal and media services. This same ‘buoying’ effect can be seen in the full-time employment numbers of over 36,000 full-time employees, making motor dealers one of the largest employers in the province.”

– Hyundai’s high-ticket Genesis G90 is outselling a lot of the competition, including the Porsche Panamera, Audi A8/S8, Jaguar XJ and Maserati Quattroporte. Hyundai is on the verge of delivering 20,000 of the luxury sedan since its release in December.

– The Toronto Star reports this week that “Japanese auto-parts manufacturer Nishikawa Rubber Co. has agreed to plead guilty and pay a $130 million (US) fine for its role in an international bid-rigging scheme that affected car sales in Canada and the US … The company admitted that between January 2000 and September 2012 it conspired with other suppliers to fix and rig bids for the sale of automotive body-sealing products. The BSPs were sold to automakers in the US for cars manufactured there, and cars manufactured in Canada by Toyota and Honda that were then sent to the US for sale. The Antitrust Division included $236 million (US) in sales that were made in Canada in its assessment of the proposed fine.”

– Good news for the towing and recovery industry: A report in Fortune magazine suggests that a “new study by the American Automobile Association found that technology—including maintenance reminders and other safety alerts—hasn’t reduced the number of drivers stranded on the roadside. Breakdowns are actually happening more than ever … AA rescued a record-breaking 32 million drivers in 2015, with more battery, flat tire, and key problems than ever before, according to a study it released Wednesday. The study suggests that sometimes the tech could actually be part of the problem.”

The article quotes an AAA exec as saying that, “Vehicles today are advanced more than ever, yet are still vulnerable to breakdowns … Sleek, low profile tires are highly susceptible to damage, electronic keyless ignitions can zap battery life, and despite advanced warning systems, more than half a million drivers ran out of gas last year.”

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