Recalls lead list of 2014's Top 5 auto stories
When it came to bumps in the road, the auto industry had its share in 2014.
In the end, though, it was all about sales — and on that note, the year couldn't have been better.
Barring some last-minute disaster, the industry will finish the year with sales above 16 million new vehicles for the first time since 2007. And in those days many makers were saddled with workforce and factory capacity in excess of true demand as the the economy went sour, forcing them to offer steep, profit-killing discounts to lure motorists to trade in their jalopies.
These days, factories are humming at near-capacity. Automakers have dramatically lowered costs, and most are showing profits. Among U.S. makers. General Motors reported profits of $1.4 billion in the most recent quarter, and Ford earned $835 million. But against some of the troubles of the year, it wasn't a cakewalk.
Here are our top five auto stories of the year.
1. GM's ignition swtich recall. Despite its financial success, General Motors was all year in a crisis of its own making — faulty ignition switches in older sedans and crossovers that can move from the "run" to the "accessory" position on their own. When they do, they cut off the car's air bags, power steering and brakes.
GM eventually recalled millions of vehicles due to the problem, has agreed so far to pay out compensation for more than 40 deaths from a victims fund it set up and still faces numerous lawsuits. It also took a $2.5 billion charge against earnings for recall costs in the first half of the year.
CEO Mary Barra appeared before congressional committees investigating the corporation, admitting to both safety and quality lapses. The company paid a maximum $35 million in fines in May after a National Highway Traffic Safety Administration probe. And it remains the subject of a Justice Department criminal probe.
Barra also started a companywide effort to resolve any other pending safety questions, setting off a cascade of 80 recalls this year through Dec. 15 covering more than 26.8 million vehicles in the U.S.
2. Takata's defective air bags. The even bigger ongoing safety issue of the year has been the spreading recalls by 10 automakers for potentially faulty air bags made by Japan's Takata. The canisters that activate the air bags can explode with too much force and throw metal and plastic bits that can injure or kill passengers in a crash.
As many as five deaths are believed to be linked to the problem, and recalls have grown to about 11 million cars in the U.S. and more than 20 million worldwide.
So far many of the U.S. recalls have been regional, limited to high-humidity states where chances of failure are considered highest. Government regulators are pushing Takata, however, to make a nationwide recall, and some automakers — including Honda, the hardest-hit — have already expanded their recalls.
3. Fiat and Chrysler unite and go public in the U.S. . Italy's takeover of Chrysler became complete, with the newly merged parent company renamed Fiat Chrysler Automobiles (FCA), listed on the New York Stock Exchange and incorporated in the Netherlands. The Chrysler and Fiat company names officially disappeared and they became units of the new company under the names FCA US and FCA Italy.
It is a dramatic change for a vaunted name in automaking that had a near-death experience during the recession before its government supervised bankruptcy that gave control to Fiat. U.S. sales are up 15.7% through the first 11 months of the year vs. the period a year earlier, Autodata reports, highest growth of any Top 10 automaker.
4. Revenge of the SUV. Sport utility vehicles — written off a few years ago as gas-guzzling dinosaurs — are back. Only now they come in many more styles and sizes and are based on car designs, not trucks.
Lower gas prices have made a difference in sales, but the new ones also are light and more fuel efficient. And automakers can't introduce new ones fast enough to satisfy a nation of SUV buyers.
The latest are a batch of small SUVs carving out a whole new market segment in the U.S.: city-size SUVs for people with more money that parking space room. New entries are just on sale or are due soon in 2015 from Honda, Fiat, Mazda, Jeep and Chevrolet. The segment, which aims for younger, urban customers, is filling up fast.
5. Cheap gas! The national average approached $2.52 a gallon this week, down from $3.23 a gallon a year ago, according to AAA's Fuel Gauge Report.
The extra money in consumers' pockets has helped fuel the strong sales year for just about every type of vehicles except hybrids, where the price premium vs. gas savings equation looked less appealing.
But it spurred sales of performance vehicles and SUVs, as well as individual and commercial sales of pickups. And that's good news for the industry, which has higher profit margins on such vehicles.