Good morning! It’s Thursday, October 31, 2024, and that is The Morning Shift, your day by day roundup of the highest automotive headlines from around the globe, in a single place. Listed here are the necessary tales you could know.
1st Gear: F-150 Lightning Plant To Idle In Mid-November
We’re beginning off with some dangerous information for Ford. The Blue Oval says it plans to cease constructing the electrical F-150 Lightning pickup truck from mid-November by way of the top of the 12 months. The automaker is pointing the finger at lower-than-expected demand for the choice.
The seven-week shutdown is slated to start out on the finish of the day on November 15. It’ll embody the normal week-long vacation break, and manufacturing will restart once more on January 6 (if Mike Pence has the braveness.) The information obtained 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 progress and profitability,” Ford stated in a press release.
The prolonged hiatus in Lightning output marks the newest 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 12 months by slicing 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 at least one day by day shift. In early 2024, a stop-ship order for an undisclosed high quality situation halted shipments of the truck for greater than 9 weeks, though manufacturing continued.
Gross sales of the F-150 Lightning are literally up 86 p.c to 22,807 vans this 12 months by way of September. That will sound fairly good, and it’s, however it additionally means the Lightning misplaced its title as the U.S.’s best-selling electrical pickup to the Tesla Cybertruck.
Cox Automotive stated 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 stated.
Farley, on Ford’s Oct. 28 third-quarter earnings name, cited the “gradual uptake of EVs” as a problem however stated he was happy with the energy of Ford’s total electrical automobile technique, “which I wouldn’t commerce for any of our opponents.”
The automaker has pivoted its focus away from bigger EVs to a low-cost platform that can first underpin a midsize pickup in 2027. Ford final 12 months stated 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, stated the corporate has diminished EV prices by $1 billion this 12 months and trimmed capability by 35 p.c.
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Farley stated Ford expects to “enhance the trajectory of Mannequin e’s enterprise by way of value scaling” in 2025, though it has not but offered monetary steerage. Morgan Stanley analyst Adam Jonas, in an Oct. 29 investor notice, estimated Ford’s EV loss would shrink to $4.4 billion in 2025.
Ford was in a position to cut 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 Minimize Employees’ Pay By 10 P.c
Volkswagen says it must shortly lower prices after reporting dismal third-quarter earnings. It’s blaming a tough financial setting, disappointing demand for EVs, robust competitors from Chinese language automakers and a pricey home manufacturing footprint for the downturn.
Throughout talks with labor representatives, VW pitched a plan to chop employees’ pay by 10 p.c. On its face, that’s not going to go over nicely, however it will get even worse once you understand the union has been asking for a increase. It’s an actual mess. From the Wall Road Journal:
Earlier this week, Volkswagen’s high labor chief stated the corporate was aiming to close not less than three factories in Germany, lay off tens of hundreds of employees and lower employee’s wages by 10% as a part of a cost-cutting drive.
[VW CFO Arno] Antlitz stated Wednesday that Volkswagen wanted to discover a compromise that shrinks its value base whereas additionally permitting the corporate to put money into new autos and enhance its revenue margin. Rising vitality, supplies and personnel prices imply a few of Volkswagen’s German vegetation are twice as costly as its opponents, the corporate has stated.
“I’m assured that we’ll attain an settlement…however in fact, I can’t rule out strikes,” Antlitz stated.
Employee teams have vowed to combat 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 automobile deliveries on 12 months. Deliveries in China fell 15%.
Right here’s how Volkswagen’s third quarter went total. Spoiler: it wasn’t good:
Volkswagen stated 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, greater fastened prices and bills associated to new merchandise have all hit profitability to this point this 12 months, it stated.
The namesake Volkswagen model reported an working margin of simply 2% within the 12 months thus far. “This highlights the pressing want for vital value reductions and effectivity beneficial properties,” Antlitz stated.
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Volkswagen final month slashed its gross sales and profitability forecasts for the total 12 months, anticipating gross sales of round 320 billion euros in 2024 in contrast with 322.3 billion euros final 12 months. It expects to ship about 9 million autos this 12 months, beneath 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 greater volumes and higher gross sales on its extra worthwhile automobiles. It actually wants it.
third Gear: Fain Says UAW To Save Stellantis ‘From Itself’
United Auto Employees union members rallied on October 30 in Detroit over Stellantis’ funding commitments to the east aspect of the town. UAW President Shawn Fain, a staunch critic of Stellantis CEO Carlos Tavares, advised the group, “It’s as much as the membership to save lots of the corporate from itself.” He made the feedback as layoffs and furloughs turn into an enormous drawback for the UAW on the automaker. From the Detroit Free Press:
The job cuts signify 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 combating 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 said plans to shift work to low-cost nations and stated 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 combating onerous to forestall one.
olkswThe union has hosted related rallies within the final couple of months in Trenton, Warren and Sterling Heights, and a number of 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, didn’t 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 stated the union is assured it could get “everyone transferring collectively” going ahead, with a extra aligned strategy over the subsequent three months.
In fact, strike authorization doesn’t assure {that a} strike will occur, however you possibly can relaxation assured that Stellantis doesn’t need the UAW to have that type of leverage over it.
Right here’s what Stellantis stated of the rally and the state of affairs it finds itself in with the union:
Stellantis […] stated the contract with the union ”clearly states that every 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 may be indeniable volatility out there, particularly because the trade transitions to an electrified future. Over the previous 12 months, quite a few corporations throughout the trade have introduced funding and product delays in addition to outright product cancelations. That is info 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 web revenue of $148 million for the third quarter of 2024. That quantity represents beneficial properties over the primary two quarters of the 12 months, however it’s nonetheless down 80 p.c from the $741 million it reported in Q3 of 2023. In fact, that quantity comes with an asterisk as a result of a achieve on debt discount enabled it.
The Tempe, Arizona-based on-line used automobile retailer bought 108,651 autos within the third quarter. That’s up 34 p.c from the identical time a 12 months in the past. It was additionally up 7.1 p.c from the second quarter of this 12 months. From Automotive Information:
Internet revenue: $148 million, down 80 p.c from the identical time final 12 months and up 208 p.c from the earlier quarter. Carvana’s reported web 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 p.c 12 months over 12 months.
Automobile gross sales: 108,651 used autos, up 34 p.c 12 months over 12 months.
Working revenue: $337 million, up 602 p.c year-over-year and a file for the corporate.
Whole gross revenue per automobile: $7,427, up 25 p.c year-over-year.
Retail gross revenue per automobile: $3,497, up 30 p.c year-over-year. Carvana in a letter to shareholders stated progress in third-quarter retail gross revenue per automobile was primarily pushed by greater 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.
Trying towards the fourth quarter, Carvana expects its constructive pattern to proceed. Its year-over-year progress charge in retail autos bought is about to extend as soon as once more in This fall. That is actually fairly the turnaround from the place Carvana was only a few years in the past.
