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AD #3857 - Auto Industry Has Rough Quarter; Volvo Backs Off EV-Only Mandate; Cariad Can't Keep Up with China

AD #3857 - Auto Industry Has Rough Quarter; Volvo Backs Off EV-Only Mandate; Cariad Can't Keep Up with China

Autoline Daily Jul 25, 2024 11 min
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Automakers faced a challenging quarter with mixed earnings reports: Stellantis and Nissan saw significant profit drops, while Hyundai posted record operating profits despite slight sales declines. Ford struggled with warranty costs, and GM showed some strength. Honda is cutting production in China but investing in new EV plants. Toyota is exploring a four-day workweek to improve employee well-being. Volkswagen’s Cariad unit lags behind Chinese rivals in autonomous tech. Volvo and Cadillac are delaying full EV transitions, keeping hybrids and ICEs longer. Chinese brands like Saic and Geely continue rapid global expansion with increased overseas sales and logistics investments.

Topics: automaker earnings profit declines hybrid and ev strategies production cuts in china autonomous driving technology workforce changes chinese automaker expansion warranty costs volvo ev mandate cariad software delays
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Speaker 1: This is Auderling Daily, the show dedicated to enthusiasts of Speaker 1: the global automotive industry. More automakers are reporting their latest
Speaker 1: earnings and the results are all over the map. Let's
Speaker 1: start with Stilantis. It saw a big drop off in
Speaker 1: the first half of the year, which is the only Speaker 1: thing we have to go by since Stilantis does not Speaker 1: report quarterly results. It delivered two point nine million vehicles worldwide,
Speaker 1: which was ten percent lower than a year ago. That
Speaker 1: generated eighty five billion euros in revenue, down fourteen percent, Speaker 1: and its operating profit plummeted forty percent to eight point Speaker 1: four billion euros. Stilantis has big problems in North America.
Speaker 1: It used to be the most profitable part of the company, Speaker 1: and it's lost a string of top executives. Renault is
Speaker 1: another company that only reports results every six months. It
Speaker 1: sold one point one million vehicles worldwide, up one point Speaker 1: nine percent. That generated almost twenty seven billion euros in revenue,
Speaker 1: up a fraction, but its operating profit dropped by more Speaker 1: than nine percent to one point eight billion euros. One
Speaker 1: reason Renault's profit is down is because it lost four Speaker 1: hundred and forty million euros selling off shares that it Speaker 1: owns a Nissan, which is part of their new agreement Speaker 1: that both companies hold equal shares in each other. Nissan
Speaker 1: had a disastrous quarter. While it sold seven hundred and
Speaker 1: eighty seven thousand vehicles, about the same as a year Speaker 1: ago and its revenue was up two point seven percent, Speaker 1: its operating profit plummeted ninety nine percent to only six Speaker 1: point four million dollars. Even more ominous, Nissans sent a
Speaker 1: warning to shareholders that it's lowering its forecast for this Speaker 1: fiscal year because it expects its vehicle sales and profits Speaker 1: to drop significantly. Meanwhile, Ford sold one point one million
Speaker 1: vehicles worldwide over the last three months, up two percent Speaker 1: from a year ago. That generated forty eight point seven
Speaker 1: billion dollars in revenue, up six point three percent, but Speaker 1: its operating income dropped twenty three percent to one point Speaker 1: eight billion dollars, mainly because it had to set aside Speaker 1: more money for warranty work on its vehicles. If Ford
Speaker 1: can ever get its warranty issues under control, its finances Speaker 1: would look a whole lot better. The Hyundai Motor Company
Speaker 1: had a pretty good second quarter, even though sales dipped Speaker 1: three percent to a million. The company posted thirty two
Speaker 1: point six billion dollars in revenue, up six point six percent, Speaker 1: and its operating profit of three billion dollars, which was Speaker 1: up two point three percent, was a record for the quarter.
Speaker 2: So there you have it.
Speaker 1: Not a very good quarter for the industry so far, Speaker 1: especially considering Tesla's forty five percent drop in pers The Speaker 1: one bright spot is GM, which posted some decent numbers, Speaker 1: But we'll have to wait until more automakers like Volkswagen, Toyota, Mercedes, Speaker 1: and BMW report their earnings to get a better idea Speaker 1: of what's really going on in the industry.
Speaker 3: Michigan is leading the charge in mobility and innovation, and Speaker 3: I can't think of a better state to bm.
Speaker 1: You might have heard us talk about this in the past, Speaker 1: but Honda's E clutch technology for motorcycles that was originally Speaker 1: released in Europe is now making its way to the US, Speaker 1: available on the CB six fifty R and it's sportier Speaker 1: looking sibling, the CBR six fifty R. The rider no
Speaker 1: longer has to pull the clutch lever on the handlebars Speaker 1: to operate the manual transmission. Instead, you just hit the
Speaker 1: foot lever up or down to change the gears. An
Speaker 1: actuator unit on top of the transmission houses two electric Speaker 1: motors that are used to operate the clutch, while the Speaker 1: system also controls ignition, timing and fuel injection to make Speaker 1: the shifts as smooth as possible, or you can just Speaker 1: shut off the system completely for full control. While it's
Speaker 1: only offered on the two bikes, which range in starting Speaker 1: price from about nine four hundred dollars to nearly ten grand, Speaker 1: Honda says the clutch and transmission hardware are not different Speaker 1: from other motorcycles, so there's a lot more applications. And
Speaker 1: speaking of Honda, it's slashing its production output in China Speaker 1: by nearly three hundred thousand units. It currently has the
Speaker 1: capacity to make about one and a half million vehicles, Speaker 1: but it's closing one plant with GAC and is pausing Speaker 1: production at another with dong Fong. However, it might be
Speaker 1: able to make up for that loss production pretty fastn Speaker 1: that is building new EV plants with both GAC and Speaker 1: dong Fung that will have the capacity to make around Speaker 1: two hundred and forty thousand electrics, and the aim is Speaker 1: to have both up and running before the end of Speaker 1: the year. Toyota is considering implementing a four day work
Speaker 1: week for its office employees in Japan. Last year, Toyota
Speaker 1: set sales and production records, but achieving that resulted in Speaker 1: overworked employees, overstretched suppliers, and quality issues at several of Speaker 1: its subsidiaries. So CEO Coogsato ordered a review of Toyota's
Speaker 1: practices to help streamline its workflow, and the four day Speaker 1: work week is one of the ideas it's considering. The
Speaker 1: automaker is currently negotiating with the workers union and the Speaker 1: plan could be implemented by the end of this year, Speaker 1: but it won't apply to production workers and it might Speaker 1: not be as good as it sounds. Employees will have
Speaker 1: to make up that extra day off by adding more Speaker 1: hours somewhere else in the week. And here's why Volkswagen's
Speaker 1: Cariad unit partnered with a Chinese tech company because it Speaker 1: only took Horizon Robotics two years to do what Cariad Speaker 1: couldn't do in five years. The autonomous and software division
Speaker 1: of VW has struggled with development, which has led to Speaker 1: delays of several models and even a new EV platform.
Speaker 1: So in twenty twenty two, VW and Cariad partnered with Speaker 1: China's Horizon Robotics on developing self driving tech, and yesterday Speaker 1: they showed a video of a Vwid four driving autonomously Speaker 1: using Horizon system through the pouring rain on streets in China.
Speaker 1: This is not a production model, but no doubt VW's Speaker 1: working as fast as possible to implement it into future models.
Speaker 1: A lot of automakers have backed off their EV targets Speaker 1: recently because demand is slumping, and now Volvo is the latest.
Speaker 1: The automaker was aiming to be an EV only brand Speaker 1: by the end of the decade, but CEO Jim Rowans Speaker 1: says it's going to take quote time to bridge different Speaker 1: parts of the world for full electrification. He says Volvos
Speaker 1: hybrids and plug in hybrids will be that bridge, so Speaker 1: it will continue to invest in them. Automotive News also
Speaker 1: reports that Volvo's US dealers believe they'll continue selling hybrids Speaker 1: well after twenty thirty, and Cadillac is making a similar Speaker 1: change in its strategy as well. It was also planning
Speaker 1: an EV only era after twenty thirty, but it hinted Speaker 1: that it will keep ices around. It still plans to
Speaker 1: have an all electric version of all of its models Speaker 1: by the end of the decade, but Cadillac says EV's Speaker 1: and ices will quote coexist for a number of years Speaker 1: in its lineup, and circling back to Volvo, the company Speaker 1: says it will no longer share the gross margins for Speaker 1: its vehicles. Volvo began disclose using them two years ago
Speaker 1: to show that it could get price parity with evs Speaker 1: and ICs. In the second quarter of this year, Volvo's
Speaker 1: EVS reached a gross margin of twenty percent compared to Speaker 1: twenty three percent for its ices, But now that it's Speaker 1: introducing more evs to its lineup, Valvo says it won't Speaker 1: reveal its vehicle gross margins because it doesn't want its Speaker 1: competition to have that information. Chinese automakers continue to expand globally.
Speaker 1: Saic announced that it just received its second car carrier ship.
Speaker 1: It can transport seven thousand, six hundred vehicles and is Speaker 1: powered by LNG fuel, which reduces its carbon emissions by Speaker 1: thirty percent. Saic's logistics subsidiary that operates the ship is
Speaker 1: projecting that it will transport a million vehicles overseas a Speaker 1: year by twenty twenty six. Gili is also expanding quickly
Speaker 1: outside of China. The automaker revealed that it hit an
Speaker 1: overseas sales record of more than one hundred and ninety Speaker 1: seven thousand vehicles in the first half of the year, Speaker 1: which was up a whopping sixty seven percent. Because of
Speaker 1: that success, it also raised its full year overseas sales Speaker 1: target by another fifty thousand to three hundred and eighty Speaker 1: thousand vehicles. Jeely now has more than six hundred and
Speaker 1: fifty sales and service outlets and seventy six countries across Speaker 1: the globe. That brings us to the end of this show,
Speaker 1: and thanks for tuning in, but I hope to see Speaker 1: you at three pm Eastern Time for Autuline After Hours.
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