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Runtime: 10:40
0:00 UAW Makes History w/ 1st Contract at Southern Foreign-Owned Plant
1:13 GM Preparing for An Economic Downturn
2:06 JLR Crippled by Cyber Attack
2:39 Volvo Down as EX90 & ES90 Write-Offs Trigger Big Loss
3:17 NIO Expects to Post Its 1st Profit Ever
3:42 Mercedes, Nissan & VW Forecast Big U.S. Sales Gains
5:49 Once Taboo Salvage Titles Now Fair Game
6:58 BYD Pushes to Be #1 in Brazil
7:55 Changan 1st to Get CATL’s Sodium Battery
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This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.
UAW MAKES HISTORY: FIRST UNION CONTRACT AT FOREIGN-OWNED PLANT IN THE SOUTH
It took nearly two years but the UAW and Volkswagen have finally come to an agreement on a labor contract. In April 2024, nearly three-quarters of the 3,000 workers at VW’s plant in Chattanooga, Tennessee voted to join the union. But talks dragged after that and the UAW even threatened to strike. Now, the two sides have come to an agreement but it still needs to be approved by workers. The contract includes a 20% wage increase over four years, a 20% reduction in health care costs, a $6,550 ratification bonus, $2,250 in annual bonuses plus long-term job security provisions. There was an effort to decertify the union by some workers because the negotiations were going slowly but we think that effort will end if workers vote in favor of the contract. This is a big moment for the UAW, it’s the first time it has organized a foreign-owned car plant in the South.
GM CFO WARNS OF “INEVITABLE” DOWNTURN; SLASHES DEALER INVENTORY TO BOOST CASH FLOW
General Motors is preparing for an economic downturn. GM’s chief financial officer, Paul Jacobson, says “we’re going to see a weak economy at some point. I hope it’s not this year, hope it’s not the year after that. But it’s coming.” In order to minimize the impact, GM is tightening dealer inventory and focusing on free cash flow. GM typically has four-to-six months of vehicles on dealer lots but now it’s aiming to keep that at 50-60 days’ supply, which will help it avoid discounting vehicles if demand is slow. GM is also increasing free cash flow. It historically had about $3 billion, but its free cash flow is now around $10 billion. Jacobson says that “cushion” will help it “absorb short-term shocks to demand.”
Q3 EARNINGS BLOOD BATH: JLR CRIPPLED BY CYBER ATTACK
We’ve got the latest financial numbers from Volvo and Jaguar Land Rover and, for them at least, it’s a blood bath out there. JLR as you know was crippled by a cyber attack in the last quarter and the numbers really reflect that. Sales plummeted 43% and it lost almost £300 million versus a profit of £373 million a year ago. JLR is on a March fiscal cycle which is why you’ll note that last quarter was actually Q3 for the company.
VOLVO STOCK PLUMMETS 27% AS EX90 AND ES90 WRITE-OFFS TRIGGER MASSIVE LOSS
Meanwhile, Volvo saw its sales drop 7%, which dragged revenue down almost 11%. Its operating profit and earnings per share plummeted 98% and it posted a net loss of $333 million. But that also includes a $1.3 billion one-time write-off for the EX90 and ES90 which have been a technological and sales disaster. Its earnings per share dropped 98% and that sent investors running for the exits. Volvo’s stock dropped 27% on the news.
NIO EXPECTS TO POST ITS FIRST PROFIT
NIO announced it expected to post a GAAP operating profit for the last quarter of anywhere from $29 million to $200 million. That’s a pretty wide gap because NIO says this is based on a preliminary estimate that features incomplete and unaudited data. But that was good enough for investors who pushed the stock up almost 6.5% in pre-market trading.
MERCEDES, NISSAN & VW EXPECT BIG U.S. SALES GAINS
Nissan, Volkswagen and Mercedes-Benz are coming off a weak 2025 in the U.S. market. VW saw its sales drop 13%, while Mercedes and Nissan eked out miniscule gains. But hope springs eternal, and all three brands are predicting big jumps in sales this year. Nissan says sales in the U.S. will grow 6% and it expects to be back to selling a million vehicles a year by the end of 2027. Mercedes is predicting that its sales will grow 7% this year to 325,000 units. And it’s targeting 400,000 by the end of the decade. While, VW says its sales will grow 10% this year to about 363,000 vehicles. Here’s our Autoline Insight. Let’s see if these companies can pull this off. Usually, when you add up all the sales predictions of the car companies, the number is bigger than the actual market.
ONCE TABOO SALVAGE TITLES NOW FAIR GAME
Higher new car prices and expensive technology are driving dealers into a part of the business that was once frowned upon, selling salvage, or branded-title vehicles. These can be vehicles that were written off by insurance companies for severe body or frame damage or for being involved in a flood. But increasingly vehicles with minor damage are being written off because the repair requires expensive electronics to be replaced. However, there’s more incentive now to fix those vehicles and sell them on dealer lots. The average new car price has hovered around $50,000 for over a year, which is driving more consumers into the used car market, which is squeezing inventory and pushing up used car prices too. So, finding a used car in the $10,000 – $15,000 range is harder and harder, but that’s where these salvage-title vehicles come in. Insurance companies totaled about 17 million vehicles in the U.S. last year and an estimated 2.5 million of those made it back onto the road with a salvage or branded title.
BYD WANTS TO BE #1 IN BRAZIL
With vehicle inventory piling up in China, many Chinese automakers are expanding around the world as fast as they can. BYD is the biggest exporter out of China and Brazil is one of its most popular destinations. But it’s also started producing its own cars in Brazil and now it wants to source more of its parts in the country. It says by the end of the year it’s aiming to produce and source 50% of its vehicle components in Brazil. BYD is also building stamping, welding and painting facilities nearby so it can transition from making semi-knock down kits that are imported from China. Its plant in Brazil will be able to make an estimated 150,000 cars a year by the end of this year and then it eventually plans to double that capacity. Along with that BYD hopes to be #1 in sales in Brazil by 2030.
CHANGAN 1ST TO GET CATL’S SODIUM BATTERY
The first production model to get CATL’s new sodium-ion battery was officially revealed. Nevo, a brand of Changan, will feature a 45 kWh sodium-ion battery in its A06 sedan. The company says the battery showed exceptional performance in extreme cold and will provide over 400 kilometers of range on the Chinese test cycle, which we estimate would be about 175 EPA miles. However, no word on when the vehicle will go on sale. But Changan says models from three of its other brands will also feature CATL’s sodium-ion battery and CATL says the development of these batteries is progressing really fast and expects to add another 100-200 kilometers of range. One of the reasons we’re seeing a push into sodium batteries is because the price of the material that gets processed to make lithium batteries has shot up 70% in the last three months.
Be sure to tune in to Autoline After Hours today when Ray Scott, the CEO of the Lear Corporation will be our special guest. Ray is one of the savviest executives in the industry and we’re going to get some deep insights as to what’s really going on in the industry today. David Welch from Bloomberg will also be on the show, so join John and Gary when the show starts at 3 pm eastern time.
But that brings us to the end of today’s show. Thanks for tuning in and I hope to see you later today.
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The determination to total a vehicle are often times made by the number of airbags deployed. Blowing side trim apart ripping seat covers and dash components apart. Let alone the cost to replace airbags. So the accident might not actually have been that bad but the restraint systems total the vehicle. So the solution would be 1) implement supplemental safety systems that total the cars interior when deployed. 2) Get the costs of replacement airbags down.
Also raises the question does any state agency that retitles these vehicles with salvage titles inspect for replacement of the airbags? Or can a shady shop just replace the trim and cover up the fact that the airbag is actually missing?
I meant 1) don’t total the cars interior. In my last post.
I love the sellers of salvage title vehicles. They always, always, always say that the damage was minor(lie). They always say that it was state inspected(true). They neglect to inform that the state is not certifying the repair or that it meets the original safety requirements including airbags which these sellers usually tape over the lights or use a black paint to color in the airbag light. The inspections look for things like horns, lights, and brakes are minimally operable. The rest, you are on your own. That of course varies by state to the degree of the inspection but literally zero states determine if the structure is still sound enough for another impact.
These salvage cars are usually held together with tape and a plethora of self tapping sheet metal screws. Electrical issues are the biggest problem with these salvage cars as they all have them due to wires that were either not repaired at all or improperly repaired. Now that I am seeing EVs being sold as salvage title, god help the poor people who buy those. Given that electrical is the key issue with any salvage title and that electrical is the main reason for EV fires….well….1+1 will indeed = 2 with these salvage title cars. Lately these sellers are so emboldened to ask full retail prices for their salvage title junk. I hope that all of them wither and die. There is going to be a series of EV fires blamed on salvage title cars eventually and then a law will have to be made to put an end to repairing salvage title vehicles.
There is another dimension to salvage vehicles. If a pedestrian is killed, the vehicle often is impounded. Insurance companies will “total” the vehicle rather than pay rental car fees for an undefined long period of time of time. Such accidents often have no air bag deployment… just a dented hood, cracked windshield, and/or broken outside mirror… all very fixable with little to no quality risk. But finding such vehicles can be a challenge as insiders gobble up them up.
A lot of why I normally pay extra to buy new cars, is that you never really know what you are buying, even with a non-salvage title, when buying used. That’s especially true after a hurricane floods 10,000 vehicles in Florida or Louisiana.
Kit, I totally agree with buying a new vehicle unless you know the previous owner, with so many different things under the hood that people don’t do timely maintenance on, if you buy a vehicle even low mileage if it hasn’t been maintained you could be buying a time bomb with engine sludge clogged fuel injection problems etc. let alone issues you mentioned about flooded vehicles not every seller is honest.
A number of years ago our daughter was interested in buying a GEO Prism (Corolla) with a salvage title. I told her if she wanted to turn the vehicle over within a few years to stay away. If she was planning in keeping it for a while, oK. She did buy it & drove it from about 60,000 miles to over 220,000 when she sold it. It was still running good. For her it was a good investment.
Does anyone know what Jaguar dealers are selling these days? They currently have no vehicles in production and the last vehicle was built several months ago. The new high-end EV models are still at least a year away. To survive, those dealers are going to have to really tune up their used vehicle departments. Ditto for service departments. Seems like not providing new vehicles for a year or so would void the dealer agreements. A very odd way to run a car company!
The Jaguar dealers I know of also have Land Rover, which helps. One sells Lincoln.
JWH, do you know the reason for the salvage title for your daughter’s car? Just curious.
The other sad side of salvage title vehicles is the vehicle might be in decent condition repaired properly but that title designation really kills the value. So it leaves the consumer with a wide range of risk. Could be a good buy out could be a nightmare. I did a little research on airbag inspections and yea it seems like it’s a required part of the inspection that all safety items are in working order. However airbags can be bypassed and not sure how thorough the inspection is. Could be anywhere from making sure no lights are on to actual visual inspection but either way it could look in order and not be.
Lambo,
That is a key issue. Lack of value. Thusly you find that financing can be tricky as the number of banks willing to provide a loan to a vehicle with poor value is small. The bank does not want to be stuck with a salvage title car that has no resale value in the case that the owners defaults on their loan. So expect very high down payments and you better have very good credit. If you have both, then why are you rolling the dice on a salvage title car?
Insurance can also be kind of tricky with most insurance companies only offering liability on rebuilt title cars. That makes financing impossible as you must have full coverage to finance a vehicle. There are some insurance companies that will provide full coverage insurance on a rebuilt car but that is also a small number. The insurance company is concerned about the low value and don’t want to be stuck with full payouts over further minor incidents. The only way to make a salvage title car a financial benefit is to buy at 50% of retail pricing. Then you can roll the dice. The problem is that most of these salvage title people try to sell at $1-2K below full retail and there are people who are willing to buy thinking that they got a bargain. Only to realize later that in the added finance/insurance/repair expense they did not get a good deal at all.
One thing that I always do on any car is put the vin # into google. Most of these salvage title cars are bought at auctions who post the photos of the car online in the wrecked condition. Those “it was just minor” descriptions suddenly become lies when you see half the car missing on the auction photos. There are times that minor accident truly means minor accident. In my history of looking at cars for sale, which I do daily, I can count on my 1 hand the number of times that has been true. People buying these things are truly rolling the dice. Sometimes they are OK and most times they are not. If it is a $4k beater then OK, roll the dice and hope you don’t get craps. If it is a $50K SUV…I wouldn’t roll that $50K dice as coming up craps on that will be a great way to set your $50K on fire.
Kit – The vehicle had been in an accident with front end damage. Repair work was done by a collision shop in the Dearborn area (Southeast Michigan) who she purchased the vehicle from. Hope this helps.