Good morning! It’s Monday, December 23, 2024, and that is The Morning Shift, your each day roundup of the highest automotive headlines from world wide, in a single place. Listed below are the vital tales it is advisable to know.
1st Gear: Honda, Nissan Plan To Merge In 2026
Honda and Nissan becoming a member of forces is basically taking place, people. The 2 Japanese automakers want to finalize their merger settlement as quickly as June of 2025, which is in about six months if you happen to haven’t seen. That fast turnaround means the wedding might be finalized in 2026.
Their merger shall be facilitated by 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 should freak out that Nissan will sully your valuable little automobile firm. From Bloomberg:
The presidents of Honda, Nissan and Mitsubishi Motor Corp. — Nissan’s junior accomplice — had been seen getting 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 dealing with vital challenges, with the latter in dire monetary straits as a deluge of electrical and hybrid automobiles from rivals in China forces legacy manufacturers to pool sources.
Nissan is in better want of a turnaround attributable to cratering gross sales within the US and China, which have pressured it to slash jobs, reduce 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 referred to as Foxconn is pausing its pursuit for now to see how talks between the 2 Japanese corporations unfold, an individual acquainted with the matter stated final week.
An alliance between Honda and Nissan — which might additionally embody Nissan’s junior accomplice Mitsubishi Motors — would successfully cut up Japan’s car trade down the center, pitting the trio towards 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 yr, asserting 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 accordance with CNBC. The 2 corporations would additionally mix for a worth of almost $54 billion, although to be honest, Honda’s market cap contributes about $43 billion to that quantity.
2nd Gear: 35,000 German VW Jobs Lower In Union Deal
Volkswagen is making large cuts to its German operations only a few days earlier than the brand new yr in an effort to avoid wasting itself. Within the close to future, over 35,000 jobs are set to be reduce and capability shall be sharply lowered. Nonetheless, that is by some means higher than no matter VW was initially planning. This deal, whereas brutal, is sweet 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 p.c wage discount. Proper now, there’s no precise phrase on when website closures or layoffs would happen. From Reuters:
Volkswagen has been in talks with union representatives since September over measures it referred to as essential 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 towards cost-cutting plans.
“With the bundle of measures that has been agreed, the corporate has set a decisive course for its future when it comes to prices, capacities and constructions,” Volkswagen Group CEO Oliver Blume stated in a press release.
“We are actually again able 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 vital impression on its 2024 steering. Whereas there have been no rapid closures, VW stated it was trying into choices for its Dresden plant and repurposing the Osnabrueck website, together with searching for a purchaser. Some manufacturing could be shifted to Mexico.
Automobile manufacturing would shut on the Dresden plant by the top 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 lowered.
Manufacturing at VW’s Wolfsburg plant, its largest, shall be reduce to 2 meeting traces from 4.
“No website 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 evening for 5 nights in a row, solely taking breaks to “sleep and gas up on espresso, curried utilization and fruit,” in accordance 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 signify round 1 / 4 of VW’s workforce and are available in tandem with lowering 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 deal with overcapacity and could be carried out in a socially accountable method.
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Prime shareholder Porsche SE welcomed Friday’s deal as a “vital 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’t think about how a lot worse it actually might 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 Advanced 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 will 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 a press release 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, as a result of beforehand introduced shift discount. Staff are anticipated to return to work as scheduled after the brand new yr.”
Numerous 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 chance that that quantity might be lowered additional.
The information marks a optimistic change for staff from latest months, with the automaker beforehand making quite a few job reduce bulletins at its amenities. The preliminary announcement for Toledo had been framed as a part of the corporate’s effort to scale back its stock ranges, certainly one of quite a few points it’s struggled with this yr.
It’s a change because the 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 control of the favored Ram truck model.
The Toledo Meeting Advanced 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 usually stuff like this occurs anymore.
4th Gear: U.S. New Automobile Gross sales Will Begin 2025 Sturdy
Gross sales of latest automobiles within the U.S. are set to complete 2024 off strongly, and that luck for automakers is about to hold on into 2024. Sellers and automobile corporations can thank replenished inventories and strong lease offers for the great fortune. There’s additionally some hypothesis that the upcoming Trump administration, and what it means for automobile shopping for, is spooking some people into shopping for vehicles sooner fairly than later. From Automotive Information:
The U.S. new light-vehicle market is anticipated to finish 2024 with gross sales simply shy of 16 million automobiles, up from 15.6 million final yr. 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 embody a sturdy fourth quarter that benefited from two further promoting days and a slew of year-end reductions drawing clients into showrooms. J.D. Energy and GlobalData estimate December’s seasonally adjusted annual charge will attain 17.2 million automobiles, the very best stage since 2021.
Cox analysts challenge that Basic Motors retains the U.S. gross sales crown in 2024. Honda is anticipated to put up the largest market share good points and overtake Stellantis, which Cox estimated will lose 1.6 p.c of market share with a 15 p.c drop.
“One key query for the market is whether or not the latest gross sales good points replicate true adjustments in shopper car demand, possible from improved car affordability, or is the market 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 car 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 latest 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 beautiful a lot ever have been, and that’s hurting issues.
The typical new-vehicle rate of interest slipped to six.8 p.c in November — the primary time it has dropped under 7 p.c in additional than a yr, stated Jessica Caldwell, head of insights at Edmunds.
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Affordability, nonetheless, stays a problem. Cox knowledge exhibits the most important market-share good points this yr 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 might swing again towards bigger automobiles as rates of interest lower.
Greater transaction costs have pushed many customers out of the new-vehicle market, which is protecting gross sales within the 16 million vary, stated Tyson Jominy, vp of knowledge and analytics at J.D. Energy. Most customers gauge affordability by the month-to-month cost, fairly than whole buy worth.
“Month-to-month funds are actually $740 a month. That’s $15 a month larger than year-ago ranges, and $150-plus larger than 2019, and that’s actually the place customers really feel it,” Jominy stated on Automotive Information’ “Each day Drive” podcast. “All the cash we’re spending on incentives, all of the seller discounting, is simply going actually to clean out the MSRP will increase. And on the identical time, customers 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 p.c from a yr in the past, Auto Information stories. On the identical time, retail purchases are down about 5 p.c.
We’ll see how Trump’s and Elon Musk’s plans for the automaker trade shake all this up. If I needed to guess, it received’t be in a great way.
