Good morning! It’s Monday, December 23, 2024, and that is The Morning Shift, your day by day roundup of the highest automotive headlines from world wide, in a single place. Listed here are the vital tales you must know.
1st Gear: Honda, Nissan Plan To Merge In 2026
Honda and Nissan becoming a member of forces is actually taking place, of us. The 2 Japanese automakers wish to finalize their merger settlement as quickly as June of 2025, which is in about six months if you happen to haven’t observed. That fast turnaround means the wedding may very well be finalized in 2026.
Their merger shall be facilitated by way of the creation of a holding firm, and don’t fear Honda fanboys: it’ll be headed by a president picked by Honda. Meaning you actually don’t need to freak out that Nissan will sully your treasured little automobile firm. From Bloomberg:
The presidents of Honda, Nissan and Mitsubishi Motor Corp. — Nissan’s junior companion — had been seen coming into and leaving Japan’s transportation ministry on Monday morning, prone to inform officers of their plans to formally kick off merger talks.
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Honda and Nissan are each going through important challenges, with the latter in dire monetary straits as a deluge of electrical and hybrid automobiles from opponents in China forces legacy manufacturers to pool sources.
Nissan is in better want of a turnaround as a result of cratering gross sales within the US and China, which have compelled it to slash jobs, minimize manufacturing capability and decrease annual revenue outlook by 70%.
Talks had been initially difficult by Taiwanese producer Hon Hai Precision Trade Co., which reportedly expressed an curiosity in buying Nissan. However the iPhone-maker often known as Foxconn is pausing its pursuit for now to see how talks between the 2 Japanese firms unfold, an individual acquainted with the matter stated final week.
An alliance between Honda and Nissan — which may additionally embrace Nissan’s junior companion Mitsubishi Motors — would successfully break up Japan’s vehicle business down the center, pitting the trio in opposition to Toyota Motor Corp. and its partnerships with Mazda Motor Corp., Subaru Corp. and Suzuki Motor Corp.
Honda and Nissan had already begun laying the groundwork for a technical partnership earlier this 12 months, saying plans with Mitsubishi Motors to co-develop batteries, software program and different EV applied sciences.
If this deal actually does undergo, it’ll create the world’s third-largest automaker by gross sales, in line with CNBC. The 2 firms would additionally mix for a worth of almost $54 billion, although to be truthful, Honda’s market cap contributes about $43 billion to that quantity.
2nd Gear: 35,000 German VW Jobs Minimize In Union Deal
Volkswagen is making huge cuts to its German operations only a few days earlier than the brand new 12 months in an effort to avoid wasting itself. Within the close to future, over 35,000 jobs are set to be minimize and capability shall be sharply decreased. Nonetheless, that is in some way higher than no matter VW was initially planning. This deal, whereas brutal, is nice sufficient to avert mass strikes on the automaker.
This “Christmas miracle,” because the union leaders have referred to as it, got here after 70 hours of intense negotiations to keep away from a sweeping 10 % wage discount. Proper now, there’s no precise phrase on when web site closures or layoffs would happen. From Reuters:
Volkswagen has been in talks with union representatives since September over measures it referred to as crucial for it to compete with cheaper Chinese language rivals and deal with lacklustre demand in Europe and slower-than-expected adoption of electrical automobiles.
Round 100,000 staff have already staged two separate strikes up to now month, the most important in Volkswagen’s historical past, protesting in opposition to cost-cutting plans.
“With the bundle of measures that has been agreed, the corporate has set a decisive course for its future by way of prices, capacities and buildings,” Volkswagen Group CEO Oliver Blume stated in an announcement.
“We are actually again ready to efficiently form our personal future.”
VW stated the deal would enable financial savings of 15 billion euros ($15.6 billion) yearly within the medium time period and noticed no important impression on its 2024 steerage. Whereas there have been no rapid closures, VW stated it was wanting into choices for its Dresden plant and repurposing the Osnabrueck web site, together with in search of a purchaser. Some manufacturing can be shifted to Mexico.
Car manufacturing would shut on the Dresden plant by the tip of 2025. VW AG’s workers is not going to get raises underneath a collective wage settlement over the subsequent 4 years, whereas some bonuses shall be scrapped or decreased.
Manufacturing at VW’s Wolfsburg plant, its greatest, shall be minimize to 2 meeting strains from 4.
“No web site shall be closed, nobody shall be laid off for operational causes and our firm wage settlement shall be secured for the long run,” stated works council chief Daniela Cavallo.
This fifth spherical of negotiations was kicked off on December 16, and continued nicely into the night time for 5 nights in a row, solely taking breaks to “sleep and gasoline up on espresso, curried utilization and fruit,” in line with Reuters. These Germans actually are one thing, man.
Right here’s extra on the deal and the way the 2 sides received right here:
The 35,000 future job cuts would characterize round 1 / 4 of VW’s workforce and are available in tandem with decreasing the corporate’s community of German crops by greater than 700,000 automobiles.
IG Metall chief negotiator Thorsten Groeger nonetheless stated the cuts, which might not contain obligatory redundancies, had been a part of an answer to handle overcapacity and can be executed in a socially accountable method.
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Prime shareholder Porsche SE welcomed Friday’s deal as a “important enchancment in Volkswagen’s competitiveness”, including it was now essential to implement the cuts.
Good for the 2 sides for figuring this mess out. Whereas 35,000 job cuts sound like lots (as a result of it’s) I can not think about how a lot worse it actually may have been if VW and IG Metall didn’t come to the desk.
third Gear: Stellantis Reverses Course On Toledo Layoffs
Stellantis is shelving its plans for layoffs at its Toledo Meeting Complicated in Ohio after the abrupt departure of CEO Carlos Tavares. The layoffs of about 1,100 union staff had been first introduced in November when the automaker stated it might be slicing a shift on the plant.
Now, Stellantis is saying staff ought to come to work as scheduled, and that’s some rattling welcome information only a few days earlier than Christmas. From the Detroit Free Press:
In an announcement offered by spokeswoman Jodi Tinson, the corporate stated it’s reassessing its technique:
“As Stellantis continues to reassess its technique in North America, the corporate has determined to increase the WARN discover that was issued in November for the Toledo South Meeting Plant. Consequently, no workers shall be positioned on indefinite layoff on Jan. 5, 2025, because of the beforehand introduced shift discount. Staff are anticipated to return to work as scheduled after the brand new 12 months.”
Varied Toledo media retailers quoted UAW Native 12 President Bruce Baumhower as citing a decrease variety of indefinite layoffs of 125 than initially introduced, with the likelihood that that quantity may very well be decreased additional.
The information marks a optimistic change for staff from current months, with the automaker beforehand making quite a few job minimize bulletins at its services. The preliminary announcement for Toledo had been framed as a part of the corporate’s effort to cut back its stock ranges, one in all quite a few points it’s struggled with this 12 months.
It’s a change for the reason that resignation on Dec. 1 of CEO Carlos Tavares, who was underneath fireplace from Stellantis sellers and the UAW. As well as, the corporate introduced Tim Kuniskis, who retired in June after 32 years with Stellantis and its Chrysler predecessor entities, again to the corporate and put him in command of the favored Ram truck model.
The Toledo Meeting Complicated builds the Jeep Gladiator in its South plant and the Wrangler in its North plant. Of us, I’m simply thrilled for these staff. It’s not too typically stuff like this occurs anymore.
4th Gear: U.S. New Car Gross sales Will Begin 2025 Robust
Gross sales of latest automobiles within the U.S. are set to complete 2024 off strongly, and that luck for automakers is ready to hold on into 2024. Sellers and automobile firms can thank replenished inventories and stable lease offers for the nice fortune. There’s additionally some hypothesis that the upcoming Trump administration, and what it means for automobile shopping for, is spooking some of us into shopping for vehicles sooner somewhat than later. From Automotive Information:
The U.S. new light-vehicle market is predicted to finish 2024 with gross sales simply shy of 16 million automobiles, up from 15.6 million final 12 months. Cox Automotive is projecting a tally of 15.8 million automobiles, whereas J.D. Energy/GlobalData, Edmunds and AutoForecast Options every anticipate greater than 15.9 million.
Analysts say these forecasts embrace a sturdy fourth quarter that benefited from two additional promoting days and a slew of year-end reductions drawing clients into showrooms. J.D. Energy and GlobalData estimate December’s seasonally adjusted annual price will attain 17.2 million automobiles, the best stage since 2021.
Cox analysts mission that Common Motors retains the U.S. gross sales crown in 2024. Honda is predicted to publish the most important market share features and overtake Stellantis, which Cox estimated will lose 1.6 % of market share with a 15 % drop.
“One key query for the market is whether or not the current gross sales features mirror true modifications in client automobile demand, seemingly from improved automobile affordability, or is the market taking a look at a Trump bump — a surge in post-election exercise that can dissipate shortly? Solely time will inform,” stated Charlie Chesbrough, senior economist at Cox.
Rising automobile provides have led to elevated incentives as rates of interest start to return down, serving to to offset transaction costs that stay close to historic highs regardless of some current slight declines. Credit score availability additionally has improved, analysts stated.
Decrease rates of interest are additionally serving to issues alongside, however there’s no denying that vehicles are dearer than they stunning a lot ever have been, and that’s hurting issues.
The typical new-vehicle rate of interest slipped to six.8 % in November — the primary time it has dropped beneath 7 % in additional than a 12 months, stated Jessica Caldwell, head of insights at Edmunds.
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Affordability, nonetheless, stays a problem. Cox information exhibits the most important market-share features this 12 months had been in subcompact utility automobiles, compact utilities and compact vehicles — three of the lowest-priced segments. Midsize vehicles, midsize utilities and full-size pickups, in distinction, misplaced probably the most market share, Chesbrough stated.
Customers could also be selecting smaller variations of the automobiles they actually need to keep away from busting their budgets, he stated, a development that finally may swing again towards bigger automobiles as rates of interest lower.
Increased transaction costs have pushed many shoppers out of the new-vehicle market, which is conserving gross sales within the 16 million vary, stated Tyson Jominy, vp of information and analytics at J.D. Energy. Most shoppers gauge affordability by the month-to-month cost, somewhat than whole buy value.
“Month-to-month funds are actually $740 a month. That’s $15 a month increased than year-ago ranges, and $150-plus increased than 2019, and that’s actually the place shoppers really feel it,” Jominy stated on Automotive Information’ “Every day Drive” podcast. “All the cash we’re spending on incentives, all of the supplier discounting, is simply going actually to clean out the MSRP will increase. And on the identical time, shoppers are getting much less worth for his or her trade-ins, so month-to-month funds proceed to extend.”
Leases have helped automakers get vehicles out the door. Lease charges are up 19 % from a 12 months in the past, Auto Information studies. On the identical time, retail purchases are down about 5 %.
We’ll see how Trump’s and Elon Musk’s plans for the automaker business shake all this up. If I needed to guess, it received’t be in a great way.
