Ford Will Pause F-150 Lightning Plant For Seven Weeks Due to Weak Demand

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. Here are the essential tales it’s good to know.

1st Gear: F-150 Lightning Plant To Idle In Mid-November

We’re beginning off with some unhealthy information for Ford. The Blue Oval says it plans to cease constructing the electrical F-150 Lightning pickup truck from mid-November via the tip of the yr. 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 standard week-long vacation break, and manufacturing will restart once more on January 6 (if Mike Pence has the braveness.) The information acquired out when Ford notified suppliers and plant officers of the plan. From Automotive News:

“We continue to adjust production for an optimal mix of sales growth and profitability,” Ford mentioned in an announcement.

The prolonged hiatus in Lightning output marks the most recent downshift for a once-hot product whose significance CEO Jim Farley and Executive Chair Bill Ford have likened to that of the Model T.

Ford began the yr by reducing in half deliberate Lightning manufacturing targets and slashing two-thirds of the roles on the Rouge Electric Vehicle Center 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 subject halted shipments of the truck for greater than 9 weeks, though manufacturing continued.

Sales of the F-150 Lightning are literally up 86 % to 22,807 vehicles this yr via September. That might sound fairly good, and it’s, but it surely additionally means the Lightning misplaced its title as the U.S.’s best-selling electrical pickup to the Tesla Cybertruck.

Cox Automotive mentioned 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’ value of the Mustang Mach-E and sufficient E-Transit vans to final 128 days, Cox mentioned.

Farley, on Ford’s Oct. 28 third-quarter earnings name, cited the “slow uptake of EVs” as a problem however mentioned he was happy with the energy of Ford’s general electrical automobile technique, “which I wouldn’t trade for any of our competitors.”

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 yr mentioned it could 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, mentioned the corporate has lowered EV prices by $1 billion this yr and trimmed capability by 35 %.

[…]

Farley mentioned Ford expects to “improve the trajectory of Model e’s business through cost scaling” in 2025, though it has not but supplied monetary steerage. Morgan Stanley analyst Adam Jonas, in an Oct. 29 investor observe, estimated Ford’s EV loss would shrink to $4.4 billion in 2025.

Ford was capable of cut back the losses it suffered from its Model e EV enterprise within the third quarter to $1.2 billion. However, it nonetheless expects the unit to lose about $5 billion in 2024. Ouch.

2nd Gear: VW Plans To Cut Workers’ Pay By 10 Percent

Volkswagen says it must rapidly minimize prices after reporting dismal third-quarter earnings. It’s blaming a tough financial setting, disappointing demand for EVs, sturdy competitors from Chinese automakers and a expensive home manufacturing footprint for the downturn.

During talks with labor representatives, VW pitched a plan to chop employees’ pay by 10 %. On its face, that’s not going to go over effectively, but it surely will get even worse once you notice the union has been asking for a increase. It’s an actual mess. From the Wall Street Journal:

Earlier this week, Volkswagen’s prime labor chief mentioned the corporate was aiming to close no less than three factories in Germany, lay off tens of hundreds of employees and minimize employee’s wages by 10% as a part of a cost-cutting drive.

[VW CFO Arno] Antlitz mentioned Wednesday that Volkswagen wanted to discover a compromise that shrinks its price base whereas additionally permitting the corporate to put money into new autos and enhance its revenue margin. Rising power, supplies and personnel prices imply a few of Volkswagen’s German crops are twice as costly as its rivals, the corporate has mentioned.

“I’m confident that we’ll reach an agreement…but of course, I cannot rule out strikes,” Antlitz mentioned.

Worker teams have vowed to battle 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 automotive deliveries on yr. Deliveries in China fell 15%.

Here’s how Volkswagen’s third quarter went general. Spoiler: it wasn’t good:

Volkswagen mentioned third-quarter after-tax revenue fell 64% to 1.58 billion euros, equal to round $1.71 billion. Revenue fell 0.5% to 78.48 billion euros. Both measures barely beat analyst forecasts.

The firm’s working margin for the quarter fell to three.6% from 6.2%. Restructuring prices, increased fastened prices and bills associated to new merchandise have all hit profitability thus far this yr, it mentioned.

The namesake Volkswagen model reported an working margin of simply 2% within the yr so far. “This highlights the urgent need for significant cost reductions and efficiency gains,” Antlitz mentioned.

[…]

Volkswagen final month slashed its gross sales and profitability forecasts for the total yr, anticipating gross sales of round 320 billion euros in 2024 in contrast with 322.3 billion euros final yr. It expects to ship about 9 million autos this yr, under the 9.24 million items 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 increased volumes and higher gross sales on its extra worthwhile vehicles. It actually wants it.

third Gear: Fain Says UAW To Save Stellantis ‘From Itself’

United Auto Workers union members rallied on October 30 in Detroit over Stellantis’ funding commitments to the east aspect of town. UAW President Shawn Fain, a staunch critic of Stellantis CEO Carlos Tavares, instructed the gang, “It’s up to the membership to save the company from itself.” He made the feedback as layoffs and furloughs change 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 firm has struggled to handle stock, has seen its gross sales drop within the United States, and is preventing with the UAW, suppliers, sellers and even shareholders. CEO Carlos Tavares has additionally introduced plans to retire in 2026.

[…]

He accused Stellantis of making an attempt 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 mentioned the corporate’s cost-cutting is a “pathway to a dead end.”

Despite the problems that Stellantis faces, he asserted that “a strike will cripple this company,” and that the corporate is scared, which is why it’s preventing exhausting to forestall one.

olkswThe union has hosted comparable rallies within the final couple of months in Trenton, Warren and Sterling Heights, and several other locals have handed strike authorization votes because the union has threatened a possible strike. Three have voted in favor, however this week, Local 1166 in Kokomo, Indiana, didn’t get the mandatory two-thirds vote in favor of strike authorization.

Kevin Gotinsky, who heads the UAW’s Stellantis Department, described the Local 1166 vote as a low-turnout election, with about 61% voting in favor. He mentioned the union is assured it could possibly get “everybody moving together” going ahead, with a extra aligned method over the following three months.

Of course, 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 kind of leverage over it.

Here’s what Stellantis mentioned of the rally and the scenario it finds itself in with the union:

Stellantis […] mentioned the contract with the union ”clearly states that each one deliberate investments are topic to enterprise issue contingencies together with market situations and shopper demand, and firm approval. The investments and timelines are usually not absolute ensures.”

The assertion famous, “There is indisputable volatility in the market, especially as the industry transitions to an electrified future. Over the past year, numerous companies across the industry have announced investment and product delays as well as outright product cancelations. This is information that the company has repeatedly shared with the UAW and that they have acknowledged.”

This might get actual messy, of us.

4th Gear: Carvana Is Having A Really Good 2024

Carvana simply posted a internet revenue of $148 million for the third quarter of 2024. That quantity represents positive factors over the primary two quarters of the yr, but it surely’s nonetheless down 80 % from the $741 million it reported in Q3 of 2023. Of course, that quantity comes with an asterisk as a result of a achieve on debt discount enabled it.

The Tempe, Arizona-based on-line used automotive retailer bought 108,651 autos within the third quarter. That’s up 34 % from the identical time a yr in the past. It was additionally up 7.1 % from the second quarter of this yr. From Automotive News:

Net revenue: $148 million, down 80 % from the identical time final yr and up 208 % from the earlier quarter. Carvana’s reported internet revenue of $741 million within the third quarter of 2023 factored in a one-time achieve of $878 million on debt discount.

Revenue: $3.7 billion, up 32 % yr over yr.

Vehicle gross sales: 108,651 used autos, up 34 % yr over yr.

Operating revenue: $337 million, up 602 % year-over-year and a report for the corporate.

Total gross revenue per automobile: $7,427, up 25 % year-over-year.

Retail gross revenue per automobile: $3,497, up 30 % year-over-year. Carvana in a letter to shareholders mentioned progress in third-quarter retail gross revenue per automobile was primarily pushed by increased 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. Revenue additionally surpassed consensus estimates of $3.46 billion.

Looking towards the fourth quarter, Carvana expects its optimistic development to proceed. Its year-over-year progress charge in retail autos bought is about to extend as soon as once more in This autumn. This is de facto fairly the turnaround from the place Carvana was just some years in the past.

Reverse: On Halloween? Spooky