Good morning! It’s Monday, November 4, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: UAW Wants To Save Stellantis From Itself
Stellantis is in trouble right now, the automaker has seen its sales fall, is facing calls to sell off its historic brands and has launched a search for a new CEO to try and turn things around. Now, the United Auto Workers union has made its thoughts on conditions at the American company clear, saying that the Jeep owner urgently needs to be saved from itself.
The United Auto Workers union has waded into the discussion about the future of Stellantis after the company threatened to backtrack on investments promised for its American facilities, reports the Detroit Free Press. The union accused Stellantis of “attacking our membership” over claims that it was planning to move manufacturing jobs elsewhere, temporarily lay off staff and cut jobs, as the site explains:
The job cuts represent just one of the issues at the automaker that owns the Jeep, Ram, Chrysler, Dodge and Fiat brands. The company has struggled to manage inventory, has seen its sales drop in the United States, and is fighting with the UAW, suppliers, dealers and even shareholders. CEO Carlos Tavares has also announced plans to retire in 2026.
UAW President Shawn Fain, a consistent critic of Tavares, told the crowd, “It’s up to the membership to save the company from itself.”
He accused Stellantis of trying to intimidate union members as they weigh potential strike authorization votes as part of a threatened national strike with robocalls and emails. He called out Tavares for the company’s stated plans to shift work to low-cost countries and said the company’s cost-cutting is a “pathway to a dead end.”
The displeasure between the UAW and Stellantis stems from the Jeep owner’s commitment to invest in manufacturing here in America. The union has accused the automaker of “failing to live up to its investment commitments” as it has not reopened the Belvidere Assembly Plant in Illinois. Workers are also concerned about production of the Dodge Durango, as union members have been led to believe that Stellantis will move production out of Windsor, Ontario.
Usually, the union could turn to industrial action to try and force Stellantis’ hand and turn fortunes around. This might not work right now as Fain added that strike action at Stellantis would “cripple this company.”
That isn’t stopping the union from gaining support for strike action at plants operated by Stellanits. In fact, local groups at Trenton, Warren and Sterling Heights have all passed strike authorization votes in recent weeks.
2nd Gear: BYD Made More Money Than Tesla Last Quarter
As one door closes, another opens, and while it feels like we’re witnessing the downfall of one global automaker we’re definitely watching the rise of another: BYD. The Chinese company has been flying in recent years and now, the EV maker has made more money than Tesla for the first time in its history.
During the third quarter of 2024, BYD posted a higher quarterly revenue than Tesla for the first time, reports the Financial Times. The Chinese carmaker posted revenue of $28.2 billion, compared with the $25.2 billion that Tesla took in sales during the same period. Despite the sky-high earnings, BYD saw margins drop during the period, as the FT explains:
However, the 24 per cent increase in sales reported on Wednesday came at the expense of BYD’s gross margins, which slipped from 22.1 per cent last year to 21.9 per cent. Net income was Rmb11.6bn, rising 11.5 percent from a year earlier.
Instead of directly offering discounts, BYD has in recent months launched longer range models equipped with more advanced features at lower prices than their old versions. The strategy has helped it cement its market leadership amid fierce price competition, but pulled down the group’s net profit per vehicle, analysts said.
A continued price war in the world’s largest car market is eating into the margins of both homegrown brands and foreign carmakers. Volkswagen has warned that operating profit from its Chinese joint ventures could hit the low end of its forecast for 2024, coming at €1.6bn instead of as much as €2bn.
Due to a high level of vertical integration, including controlling production of batteries and computer chips, BYD’s gross margin of 21.9 percent is still far ahead of Tesla’s 17 percent and Chinese rivals Zeekr’s on 14.2 percent and Xpeng’s on 6.4 percent.
BYD sold more than 1.1 million cars in the three-month period to the end of September, which was reportedly bolstered by a new round of Chinese government subsidies for electrified cars. In contrast, Tesla sold less than half that number during its third quarter.
3rd Gear: Volkswagen Has Had Problems ‘For Decades’
Volkswagen has been worrying investors in recent weeks with its falling profits, threats to shut factories and claims that it might only have a few years left. Now, it’s emerged that these concerns aren’t the result of new problems for the automaker, and have instead been caused by “decades” of problems.
The Golf maker announced urgent cost-cutting measures were required if it wanted any hope of survival, and now it’s emerged that steps like laying off staff and shutting plants in Germany are all to make up for “decades of structural problems,” reports Reuters. Company CEO Oliver Blume made the admission in an interview that was published this weekend, where he said high production costs and struggling sales around the world left VW in the tricky situation it’s in now, as Reuters reports:
“The weak market demand in Europe and significantly lower earnings from China reveal decades of structural problems at VW,” Blume told Sunday paper Bild am Sonntag.
The head of Volkswagen’s works council said last Monday that the carmaker plans to shut at least three factories in Germany, lay off tens of thousands of staff and shrink its remaining plants in Europe’s biggest economy as it plots a deeper-than-expected overhaul.
The carmaker has not confirmed those plans but on Wednesday it asked its workers to take a 10% pay cut, arguing it was the only way that Europe’s biggest carmaker could save jobs and remain competitive.
Blume said the cost of operating in Germany was a major drag on Volkswagen’s competitiveness, telling Bild am Sonntag that “our costs in Germany must be massively reduced.”
The company has reportedly set aside $975 million to fund its massive cost-cutting measures, which include asking some employees in Germany to accept a 10 percent pay cut. The automaker is also considering closing “at least” three factories in Germany.
4th Gear: Volvo’s Sales Bolstered By EVs
It’s not all bad news in Europe, however, as Volvo reports that it’s doing OK, actually. The Swedish car maker posted a three percent increase in global sales in October, which it said was as a result of strong demand for EVs in markets such as Europe.
Volvo sold 61,686 cars during the month of October, which was up three percent compared with the same period last year, reports the Wall Street Journal. The Swedish brand attributed much of its growth to electric models, with the automaker adding cars like the EX30 to its range this year, as the WSJ reports:
“Sales in the U.S. and China declined, but the performance of the electrified range was solid,” the company said.
In Europe, sales rose 21% to 30,167 cars, while sales in China fell 10% to 13,502 cars. The company reported a 17% sales drop in the U.S. to 9,360 cars.
Volvo Car’s range of fully-electric and plug-in hybrid models accounted for 48% of all its cars sold globally in October. Fully-electric models accounted for 22% of global sales, the company said.
Volvo has been boisterous on its ambition to go electric in recent years. The EX30 is positioned as an entry-level EV in many markets and, despite some issues, has gone on to sell well for the Swedish company. Next will come the brand’s flagship EV, the EX90. After being plagued with delays, the flagship SUV is set to finally begin rolling out across America in the new year.
