Good morning! It’s Thursday, October 31, 2024, and that is The Morning Shift, your each day roundup of the highest automotive headlines from world wide, in a single place. Listed here are the essential tales it’s good to know.
1st Gear: F-150 Lightning Plant To Idle In Mid-November
We’re beginning off with some unhealthy information for Ford. The Blue Oval says it plans to cease constructing the electrical F-150 Lightning pickup truck from mid-November by the tip of the yr. The automaker is pointing the finger at lower-than-expected demand for the choice.
The seven-week shutdown is slated to begin on the finish of the day on November 15. It’ll embody the standard week-long vacation break, and manufacturing will restart once more on January 6 (if Mike Pence has the braveness.) The information acquired out when Ford notified suppliers and plant officers of the plan. From Automotive Information:
“We proceed to regulate manufacturing for an optimum mixture of gross sales development and profitability,” Ford mentioned in an announcement.
The prolonged hiatus in Lightning output marks the most recent downshift for a once-hot product whose significance CEO Jim Farley and Govt Chair Invoice Ford have likened to that of the Mannequin T.
Ford began the yr by chopping in half deliberate Lightning manufacturing targets and slashing two-thirds of the roles on the Rouge Electrical Automobile Heart in Dearborn, Mich., dropping it to 1 each day shift. In early 2024, a stop-ship order for an undisclosed high quality difficulty halted shipments of the truck for greater than 9 weeks, though manufacturing continued.
Gross sales of the F-150 Lightning are literally up 86 % to 22,807 vehicles this yr by September. That will sound fairly good, and it’s, but it surely additionally means the Lightning misplaced its title as the U.S.’s best-selling electrical pickup to the Tesla Cybertruck.
Cox Automotive mentioned Ford had a 100-day provide of F-150s on the finish of September, though it didn’t present an estimate particularly for the Lightning. The automaker entered October with 130 days’ price of the Mustang Mach-E and sufficient E-Transit vans to final 128 days, Cox mentioned.
Farley, on Ford’s Oct. 28 third-quarter earnings name, cited the “sluggish uptake of EVs” as a problem however mentioned he was happy with the energy of Ford’s general electrical car technique, “which I wouldn’t commerce for any of our rivals.”
The automaker has pivoted its focus away from bigger EVs to a low-cost platform that may first underpin a midsize pickup in 2027. Ford final yr mentioned it might delay about $12 billion in EV spending and has pushed again the manufacturing timeline for a next-generation full-size electrical pickup.
Farley, on the earnings name, mentioned the corporate has decreased EV prices by $1 billion this yr and trimmed capability by 35 %.
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Farley mentioned Ford expects to “enhance the trajectory of Mannequin e’s enterprise by value scaling” in 2025, though it has not but offered monetary steerage. Morgan Stanley analyst Adam Jonas, in an Oct. 29 investor be aware, estimated Ford’s EV loss would shrink to $4.4 billion in 2025.
Ford was capable of scale back the losses it suffered from its Mannequin e EV enterprise within the third quarter to $1.2 billion. Nonetheless, it nonetheless expects the unit to lose about $5 billion in 2024. Ouch.
2nd Gear: VW Plans To Reduce Staff’ Pay By 10 %
Volkswagen says it must shortly lower prices after reporting dismal third-quarter earnings. It’s blaming a tough financial surroundings, disappointing demand for EVs, robust competitors from Chinese language automakers and a expensive home manufacturing footprint for the downturn.
Throughout talks with labor representatives, VW pitched a plan to chop staff’ pay by 10 %. On its face, that’s not going to go over effectively, but it surely will get even worse whenever you understand the union has been asking for a elevate. It’s an actual mess. From the Wall Avenue Journal:
Earlier this week, Volkswagen’s prime labor chief mentioned the corporate was aiming to close a minimum of three factories in Germany, lay off tens of hundreds of workers and lower employee’s wages by 10% as a part of a cost-cutting drive.
[VW CFO Arno] Antlitz mentioned Wednesday that Volkswagen wanted to discover a compromise that shrinks its value base whereas additionally permitting the corporate to put money into new automobiles and increase its revenue margin. Rising vitality, supplies and personnel prices imply a few of Volkswagen’s German vegetation are twice as costly as its rivals, the corporate has mentioned.
“I’m assured that we’ll attain an settlement…however after all, I can not rule out strikes,” Antlitz mentioned.
Employee teams have vowed to struggle any plant closures in Germany, which might be the primary within the firm’s historical past.
The feedback got here after the corporate, which additionally homes the Audi and Porsche manufacturers, reported a 7.1% drop in third-quarter automotive deliveries on yr. Deliveries in China fell 15%.
Right here’s how Volkswagen’s third quarter went general. Spoiler: it wasn’t good:
Volkswagen mentioned third-quarter after-tax revenue fell 64% to 1.58 billion euros, equal to round $1.71 billion. Income fell 0.5% to 78.48 billion euros. Each measures barely beat analyst forecasts.
The corporate’s working margin for the quarter fell to three.6% from 6.2%. Restructuring prices, increased fastened prices and bills associated to new merchandise have all hit profitability to date this yr, it mentioned.
The namesake Volkswagen model reported an working margin of simply 2% within the yr thus far. “This highlights the pressing want for vital value reductions and effectivity beneficial properties,” Antlitz mentioned.
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Volkswagen final month slashed its gross sales and profitability forecasts for the complete yr, anticipating gross sales of round 320 billion euros in 2024 in contrast with 322.3 billion euros final yr. It expects to ship about 9 million automobiles this yr, under the 9.24 million models delivered in 2023, and now forecasts a full-year working margin of 5.6%.
VW says it expects the fourth quarter to be a bit extra stable, pushed by increased volumes and higher gross sales on its extra worthwhile vehicles. It actually wants it.
third Gear: Fain Says UAW To Save Stellantis ‘From Itself’
United Auto Staff union members rallied on October 30 in Detroit over Stellantis’ funding commitments to the east facet of the town. UAW President Shawn Fain, a staunch critic of Stellantis CEO Carlos Tavares, informed the group, “It’s as much as the membership to avoid wasting the corporate from itself.” He made the feedback as layoffs and furloughs develop into a giant drawback for the UAW on the automaker. From the Detroit Free Press:
The job cuts characterize simply one of many points on the automaker that owns the Jeep, Ram, Chrysler, Dodge and Fiat manufacturers. The corporate has struggled to handle stock, has seen its gross sales drop in the USA, and is preventing with the UAW, suppliers, sellers and even shareholders. CEO Carlos Tavares has additionally introduced plans to retire in 2026.
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He accused Stellantis of attempting to intimidate union members as they weigh potential strike authorization votes as a part of a threatened nationwide strike with robocalls and emails. He referred to as out Tavares for the corporate’s acknowledged plans to shift work to low-cost international locations and mentioned the corporate’s cost-cutting is a “pathway to a lifeless finish.”
Regardless of the problems that Stellantis faces, he asserted that “a strike will cripple this firm,” and that the corporate is scared, which is why it’s preventing onerous to stop one.
olkswThe union has hosted related rallies within the final couple of months in Trenton, Warren and Sterling Heights, and several other locals have handed strike authorization votes because the union has threatened a possible strike. Three have voted in favor, however this week, Native 1166 in Kokomo, Indiana, did not get the required two-thirds vote in favor of strike authorization.
Kevin Gotinsky, who heads the UAW’s Stellantis Division, described the Native 1166 vote as a low-turnout election, with about 61% voting in favor. He mentioned the union is assured it may well get “everyone shifting collectively” going ahead, with a extra aligned method over the subsequent three months.
After all, strike authorization doesn’t assure {that a} strike will occur, however you may relaxation assured that Stellantis doesn’t need the UAW to have that type of leverage over it.
Right here’s what Stellantis mentioned of the rally and the state of affairs it finds itself in with the union:
Stellantis […] mentioned the contract with the union ”clearly states that each one deliberate investments are topic to enterprise issue contingencies together with market situations and client demand, and firm approval. The investments and timelines should not absolute ensures.”
The assertion famous, “There’s indeniable volatility out there, particularly because the business transitions to an electrified future. Over the previous yr, quite a few corporations throughout the business have introduced funding and product delays in addition to outright product cancelations. That is data that the corporate has repeatedly shared with the UAW and that they’ve acknowledged.”
This might get actual messy, of us.
4th Gear: Carvana Is Having A Actually Good 2024
Carvana simply posted a internet revenue of $148 million for the third quarter of 2024. That quantity represents beneficial properties over the primary two quarters of the yr, but it surely’s nonetheless down 80 % from the $741 million it reported in Q3 of 2023. After all, that quantity comes with an asterisk as a result of a achieve on debt discount enabled it.
The Tempe, Arizona-based on-line used automotive retailer bought 108,651 automobiles within the third quarter. That’s up 34 % from the identical time a yr in the past. It was additionally up 7.1 % from the second quarter of this yr. From Automotive Information:
Internet revenue: $148 million, down 80 % from the identical time final yr and up 208 % from the earlier quarter. Carvana’s reported internet revenue of $741 million within the third quarter of 2023 factored in a one-time achieve of $878 million on debt discount.
Income: $3.7 billion, up 32 % yr over yr.
Automobile gross sales: 108,651 used automobiles, up 34 % yr over yr.
Working revenue: $337 million, up 602 % year-over-year and a document for the corporate.
Whole gross revenue per car: $7,427, up 25 % year-over-year.
Retail gross revenue per car: $3,497, up 30 % year-over-year. Carvana in a letter to shareholders mentioned development in third-quarter retail gross revenue per car was primarily pushed by increased spreads between wholesale and retail market costs, decrease retail depreciation charges, decrease common days to sale and reductions in reconditioning and inbound transport prices.
Adjusted EBITDA: Carvana reported $429 million in adjusted earnings earlier than curiosity, taxes, depreciation and amortization, above analysts’ expectations of $326.8 million, Bloomberg reported. Income additionally surpassed consensus estimates of $3.46 billion.
Wanting towards the fourth quarter, Carvana expects its constructive development to proceed. Its year-over-year development fee in retail automobiles bought is about to extend as soon as once more in This autumn. That is actually fairly the turnaround from the place Carvana was only a few years in the past.
