Good morning! It’s Monday, December 23, 2024, and that is The Morning Shift, your every day roundup of the highest automotive headlines from all over the world, in a single place. Listed here are the essential tales it’s essential to know.
1st Gear: Honda, Nissan Plan To Merge In 2026
Honda and Nissan becoming a member of forces is basically 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 for those who haven’t seen. That fast turnaround means the wedding might be finalized in 2026.
Their merger will likely 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 must 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 companion — have 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 opponents in China forces legacy manufacturers to pool sources.
Nissan is in larger want of a turnaround as a result of cratering gross sales within the US and China, which have pressured it to slash jobs, minimize manufacturing capability and decrease annual revenue outlook by 70%.
Talks have been initially difficult by Taiwanese producer Hon Hai Precision Business Co., which reportedly expressed an curiosity in buying Nissan. However the iPhone-maker often called Foxconn is pausing its pursuit for now to see how talks between the 2 Japanese firms unfold, an individual conversant in the matter stated final week.
An alliance between Honda and Nissan — which may additionally embody Nissan’s junior companion Mitsubishi Motors — would successfully cut up Japan’s vehicle trade 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, 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, based on CNBC. The 2 firms would additionally mix for a price of practically $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 huge cuts to its German operations only a few days earlier than the brand new 12 months in an effort to save lots of itself. Within the close to future, over 35,000 jobs are set to be minimize and capability will likely be sharply decreased. Nonetheless, that is in some way 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 needed 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 employees have already staged two separate strikes up to now month, the biggest in Volkswagen’s historical past, protesting in opposition to cost-cutting plans.
“With the package deal 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 an announcement.
“We are actually again able to efficiently form our personal future.”
VW stated the deal would permit financial savings of 15 billion euros ($15.6 billion) yearly within the medium time period and noticed no vital affect 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 website, 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 employees won’t get raises underneath a collective wage settlement over the subsequent 4 years, whereas some bonuses will likely be scrapped or decreased.
Manufacturing at VW’s Wolfsburg plant, its largest, will likely be minimize to 2 meeting traces from 4.
“No website will likely be closed, nobody will likely be laid off for operational causes and our firm wage settlement will likely 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 effectively into the night time for 5 nights in a row, solely taking breaks to “sleep and gasoline up on espresso, curried utilization and fruit,” based on Reuters. These Germans actually are one thing, man.
Right here’s extra on the deal and the way the 2 sides obtained 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 however stated the cuts, which might not contain obligatory redundancies, have been a part of an answer to deal with overcapacity and can be carried out in a socially accountable method.
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High 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 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 employees have been first introduced in November when the automaker stated it will be reducing a shift on the plant.
Now, Stellantis is saying employees 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. Because of this, no workers will likely be positioned on indefinite layoff on Jan. 5, 2025, because of the beforehand introduced shift discount. Workers are anticipated to return to work as scheduled after the brand new 12 months.”
Varied Toledo media shops 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 might be decreased additional.
The information marks a optimistic change for employees from latest 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 scale back its stock ranges, one in every of quite a few points it’s struggled with this 12 months.
It’s a change because the resignation on Dec. 1 of CEO Carlos Tavares, who was underneath hearth 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 employees. It’s not too usually stuff like this occurs anymore.
4th Gear: U.S. New Car Gross sales Will Begin 2025 Sturdy
Gross sales of recent automobiles within the U.S. are set to complete 2024 off strongly, and that success for automakers is ready to hold on into 2024. Sellers and automobile firms can thank replenished inventories and stable 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 of us into shopping for automobiles sooner moderately 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 embody a strong fourth quarter that benefited from two additional promoting days and a slew of year-end reductions drawing prospects into showrooms. J.D. Energy and GlobalData estimate December’s seasonally adjusted annual fee will attain 17.2 million automobiles, the best degree since 2021.
Cox analysts venture that Common Motors retains the U.S. gross sales crown in 2024. Honda is predicted to publish the largest market share beneficial properties 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 beneficial properties mirror 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 rapidly? 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 come back 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 automobiles 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 beneath 7 p.c in additional than a 12 months, stated Jessica Caldwell, head of insights at Edmunds.
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Affordability, nonetheless, stays a problem. Cox knowledge reveals the biggest market-share beneficial properties this 12 months have been in subcompact utility automobiles, compact utilities and compact automobiles — three of the lowest-priced segments. Midsize automobiles, midsize utilities and full-size pickups, in distinction, misplaced probably the most market share, Chesbrough stated.
Shoppers could also be selecting smaller variations of the automobiles they actually wish to keep away from busting their budgets, he stated, a pattern that ultimately 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 preserving gross sales within the 16 million vary, stated Tyson Jominy, vice chairman of information and analytics at J.D. Energy. Most shoppers gauge affordability by the month-to-month cost, moderately than whole buy worth.
“Month-to-month funds are actually $740 a month. That’s $15 a month greater than year-ago ranges, and $150-plus greater 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 vendor discounting, is simply going actually to clean out the MSRP will increase. And on the similar 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 automobiles out the door. Lease charges are up 19 p.c from a 12 months in the past, Auto Information studies. On the similar 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 gained’t be in a great way.
