Ford is laying off hundreds and also losing billions of dollars, Volkswagen is considering expanding factories and dealers in the US. All that and more in Morning shift for ThursdayApril 28, 2022.
First gear: Ford says it lost $3.1 billion in the first quarter
That may sound like a big deal, but for a company like Ford, it’s basically a blip. Ford attributed most of the loss to a drop in the price of Rivian stock, which Ford owns a small part of. Ford’s core business of selling cars seems to be doing more or less well.
From Automotive News:
Ford was profitable before accounting for its investment in Rivian, although adjusted earnings fell 41% from a year earlier to $2.3 billion before interest and taxes. Its adjusted margin was 6.7%, down 4.1 percentage points.
Revenue for the latest quarter fell 5% to $34.5 billion, the company reported Wednesday. The value of Ford’s Rivian stock more than halved to $5.1 billion in the quarter. Shares of the EV startup rose from about $102 per share at the start of the year to about $50 on March 31 — and fell even further in April to about $30.
Executives on Wednesday declined to comment on Ford’s plans to take hold of Rivian, although Chief Executive Officer Jim Farley told Automotive News late last year that Ford “loves its future with as a company”. Ford cannot sell any of its roughly 12% stake in the EV startup until the lockdown period for pre-IPO investors ends next month.
Ford said the industry’s ongoing microchip shortages hampered the company’s manufacturing operations in January and February, but March output was higher. Its wholesale shipments fell 9% in the quarter to around 970,000.
“The capabilities of this business are much stronger than we were able to deliver during the quarter,” Chief Financial Officer John Lawler told reporters.
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Ford also said on Wednesday that it was eliminating 580 jobs, a mix of internal and dealer jobs, according to Auto News. This may come as a surprise to those whose jobs are affected, because Ford this week also celebrated the company’s bright future.
The automaker is eliminating about 350 salaried and 230 dealership positions on its US engineering teams, according to a spokesman. Ford warned affected employees earlier on Wednesday.
“We continue to tailor our staff to the critical skills needed to deliver our products, services, and Ford+ plans,” a Ford spokesperson said in a statement. .
Usually, when you lose your job, the writing has been on the wall for a while, or at least that’s been my experience. That sucks, though, and is often accompanied by the same derogatory statement about how uncritical your work is.
2nd gear: Volkswagen Ponders US factory expansion
VW’s US business has been intriguing for some time now, mainly because they haven’t monetized it lately and VW seems to be here only as a branding exercise. However, the automaker has recently found a little more purpose with ID.4 and its other electric ambitions. According to ReutersVW’s ambitions are good enough to be able to expand its factory in Chattanooga, Tennessee.
The move will help the German carmaker increase market share in North America, which it identified in March as the region with the greatest growth potential but is unprofitable for several years before 2021.
In March, Volkswagen said it was shifting production to China and the United States as a result of the war in Ukraine.
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Earlier, on Thursday, the director of Magazin reported that the German automaker is planning to build a second manufacturing plant in the United States, increasing the production capacity there to 600,000 vehicles per year.
Citing stakeholders, the magazine said the new plant could be built next to the existing Chattanooga plant and that the automaker is also considering building a battery plant.
Volkswagen declined to comment.
Volkswagen is the second-largest automaker in the world, or maybe even the largest, depending on how you count, and it’s always been a bit of a mystery to me why modern VWs have trouble. in the US, other than GTI. Maybe it’s their reputation for poor reliability, or maybe it’s just VW’s excessive mediocrity. In its current stability, perhaps only Arteon really wanted.
3rd gear: Volvo made just $607.4 million in the first quarter
The company supply chain problems are to blame.
Operating profit for the first quarter fell to 6 billion crowns ($607.4 million) from 8.4 billion a year ago, the company said in a statement. declare on Thursday. The EBIT margin was 8.1%, down from 12.3% in the same period last year.
The difference in EBIT is because Volvo benefited from two major financings in the first quarter of 2021, adding 3 billion crowns ($304.7 million) to its books, said Volvo CFO Bjorn Annwall says European Automotive News.
If those are excluded, the EBIT margin for the first three months of 2022 would surpass the 2021 figure, he said.
A global shortage of semiconductors forced Volvo to halt production in the first quarter.
The automaker warns that supply problem is expected to continue in the second quarter.
Annwall said Volvo has seen positive signs, including a more stable chip supply, that suggest shortages will improve in the second half of the year.
“The semiconductor shortage has obviously consumed a lot of volume but the industry has improved its pricing discipline due to the shortfall in supply,” he said in an interview.
“Price discipline” is a new rule by which this Volvo man really means “charges consumers more for cars and doesn’t offer many incentives”, it’s really just a rule of thumb. The ancient law of supply and demand is, in fact, the main, you know, capitalism. I’m old enough to remember, early in the pandemic, when Car manufacturers were absolutely desperate to sell cars.
By all means, Financial Times says that Volvo is having supply chain problems also because of China.
Volvo Cars has begun searching for alternatives to Chinese-made parts as coronavirus lockdowns now spread across the country, adding a new supply chain threat to the auto industry. been surrounded by them for the past year.
According to chief executive Jim Rowan, the company has begun dual sourcing acquired in China in an attempt to protect its operations from disruption.
“The longer the pandemic lasts, the more uncertainty there is. We have implemented a strategy of “manufacture where to sell” and “source where we manufacture”.
He added: “We started a program a few months ago to source more components from China so we have dual sourcing, but that doesn’t happen overnight.
Pray for Volvo during this trying time.
4th gear: Michigan senators want to know what happens to self-driving cars
Debbie Stabenow and Gary Peters, both Democrats, wrote a letter to Pete Buttigieg, the Secretary of Transportation, asking what the deal with the US and self-driving cars was.
The senators emphasized the need for technology to make roads safer and more accessible, while staying ahead of countries like China in its development. They say self-driving vehicles represent an opportunity for various jobs in manufacturing as well as logistics, transit and passenger transport.
The Michigan Democrats and their colleagues wrote: “However, we lag in shaping a regulatory framework that will foster this innovation,” “while protecting and promoting all the interests of the United States.” important benefit that we believe autonomous vehicles are capable of providing.”
The senators asked for information on specific actions the department is taking in the near future, which authorities will oversee the development and production of autonomous vehicles, and how it will examines the impact of traffic policy developments, a plan to modernize federal safety standards to account for self-driving vehicles, and what data is needed to create those benchmarks.
The letter seeks information on how the department assesses manufacturers’ claims for exemptions from applicable standards for deploying autonomous vehicles and how it communicates procedures and processes to stakeholders. there. It also seeks clarity on the involvement of state and local governments that will have to deal with federal policies in their territories regarding licensing, liability, and related issues.
The Detroit News left a message with the Department of Transportation press office late Thursday afternoon.
I also want to know what the deal with autonomous vehicles is, and if the federal government will ever regulate them seriously. My guess is “haha no.”
5th gear: Dealer
Speaking of Democratic senators from the Midwest, Sherrod Brown, a senator from Ohio, wants to increase the activity of auto dealers, because they seem to be suffering somewhat.
Prepare to enter the tax law onslaught, via Automotive News:
U.S. Senator Sherrod Brown, D-Ohio, plans to enact legislation on Thursday that would help dealers use a “first-in, first-out” inventory accounting method and have been struggling to maintain maintain inventory levels because of global semiconductor chip shortages.
The measure would make a statutory determination that the qualifying liquidation requirements under Section 473 of the Internal Revenue Code have been met for new vehicle dealers that have experienced a reduction in vehicle numbers. new in LIFO stock. The bailout will give dealers up to three years to restore their inventories to more normal levels.
“Auto dealers continue to face severe and unprecedented inventory shortages as a result of pandemic-related foreign supply chain disruptions and, in the absence of support,,” Brown said. support, recovery can be lengthy and difficult for impacted Ohio local businesses, their employees, and customers.” . “This act will grant much-needed tax relief to auto dealers who are facing unique supply chain challenges.”
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[The National Automobile Dealers Association] and the Alliance for Automotive Innovation – along with several Senate Democrats led by Brown and a bipartisan group of US representatives led by [U.S. Rep. Dan Kildee, D-Mich] – had previously urged the Treasury Department to provide an interim LIFO relief under Section 473.
“The Treasury has shown it is unwilling to do so, and so Congress is moving forward, demonstrating leadership to provide the meaningful relief needed to respond to the supply chain crisis. global and all the problematic consequences it has created,” Paul Metrey, NADA’s Senior Vice President of Legal Affairs, told Automotive News this month.
For some agents, the LIFO recapture resulted in additional taxes of $100,000 to $2 million or more, and those bills were due last week for structured agents. is a money transfer entity or C corporation.
If this sounds like a gift to auto dealers, that’s because it probably is. And if you’re wondering why agents still exist, although generally terrible, it’s because of the silent moves of lawmakers like this, which go unnoticed.
Reverse: Lamborghini
Of course, Lamborghini started making cars, because his Ferrari was terrible.
Neutral: How are you?
I’m moving slowly this morning, probably due to my alcoholic consumption last night, though that doesn’t fully explain it either. It’s because I ran two miles yesterday or I’m old.
