AD #4332 – VW Board Rejects Blume’s Restructuring Plan; DOJ Investigates UAW President Shawn Fain; China Car Sales Continue to Plummet

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

Hello everyone, it’s great to be back after our summer break and we’re recharged and ready to go. Now to the news.

CHINA CAR SALES CONTINUE TO PLUMMET
New car sales in China continue to plummet. They were down 23% in June to 1.6 million vehicles. Even sales of New Energy Vehicles were down 9%, though sales of EVs were up 3.6%. But PHEVs were down 27% and EREVs dropped 32%. For the first half of the year, new car sales were down 20% which is a significant drop. When sales started dropping at the beginning of the year, analysts predicted that things would turn around by the middle of the year. That hasn’t happened. And it shows that Chinese consumers are holding back from making big ticket purchases, even with all the new models and technology coming into the market. What’s keeping the auto industry alive right now is the massive amount of exports to other countries. Even so, it looks like the Chinese auto industry is headed for a full-blown crisis that could trigger the big consolidation that analysts have been predicting for several years.  

GERMAN AUTOMAKERS FACE SHARP CHINA SALES SLUMP
The big drop in China sales is especially hurting German automakers. Their sales are falling much faster than the overall market, with VW, Mercedes and BMW all down more than 30% in the last quarter. And sales are falling even though they’re adding new EVs to their lineups. Of course, it’s really hard to increase sales when the whole market is falling. But VW, Mercedes and BMW aren’t even treading water. They’re sinking. 

VW BOARD REJECTS CEO’S RADICAL RESTRUCTURING PLAN
VW’s CEO Oliver Blume knows his company needs radical restructuring if it’s going to survive. But he can’t convince his board to take the drastic action he feels is necessary to save the company. Blume wants to close 4 assembly plants and cut 100,000 jobs in Germany. He also wants to chop the number of models the group sells in half. But Reuters reports the supervisory board voted his plan down. The majority of the supervisory board represent labor and they want a plan that preserves jobs. VW cut its factory costs by 20% this year, which is pretty impressive. But that was the low hanging fruit. Now comes the hard part. And while the board wants to kick the can down the road, it’s pretty clear that VW will have to take drastic action at some point.  

HYUNDAI WORKERS STRIKE OVER AI JOB SECURITY
Hyundai wants to lead the world with humanoid robots. But its workers in South Korea don’t want their jobs sacrificed to more automation. The union there wants a performance bonus tied to 30% of the company’s net profit and income protection from AI and robots. Even more, the union wants a base pay increase and to boost the retirement age from 60 to 65. Hyundai has a rich history of labor problems in South Korea and these negotiations could really get contentious. 

DOJ INVESTIGATES UAW PRESIDENT SHAWN FAIN
The U.S. Department of Justice opened a grand jury investigation into UAW President Shawn Fain. Last month, the union’s court appointed monitor, Neil Barofsky, accused Fain of stripping UAW Vice President Rich Boyer of his duties as chief negotiator with Stellantis after he refused to approve a bonus for Fain’s fiancée as well as workers comp benefits for her sister. A federal grand jury has now subpoenaed Barosky to investigate the allegations. Fain says the claims are “false” and also accused Rich Boyer of trying to influence the UAW’s upcoming election this fall.

 

HAINAN ISLAND SET TO BAN GAS CARS
While the European Commission backed off its full ban of new ICE vehicles, one area of China is moving forward with its own ban. The Hainan Province, an island off the south of China, announced it will no longer allow new ICE-only vehicles to be sold by 2030. The EU backed off its ban because buyers and the auto industry weren’t ready for the transition, but that doesn’t seem like it will be the case in Hainan. According to CarNewsChina, it ranks first in China for EV market penetration and second in total EV ownership. The province will also expand its charging infrastructure to help support its growing EV market.

CHINESE AUTOMAKERS SHARE TECH TO SLASH COSTS
Chinese automakers continue to collaborate in ways you don’t see in the rest of the auto industry. We’ve talked about how they share common parts, like wiper and window motors, and thanks to new engineering awards that were given out recently, we’re learning even more. BYD, Changan, Geely and Great Wall Motors are cross-developing things like battery management technology, chassis systems and new manufacturing techniques. This is one of the biggest ways Chinese automakers are able to slash costs and bring products to the market faster. Compare that to GM and Ford who are both developing LMR battery technology, yet we haven’t heard anything about the two collaborating or sharing common components.

NISSAN UNVEILS NEW INDIA-BUILT TEKTON SUV
With a population of nearly 1.5 billion people, India could become a massive market for new cars. And we keep seeing automakers test the waters there. Nissan unveiled the all-new Tekton SUV. The model was developed in India with Renault and is based on the new Duster. We think the designers did a good job making the front and rear ends look different from each other, but the interiors are pretty similar. The Tekton will be available with two gas engines, a 1.0L turbo or a 1.3L turbo. It will be manufactured in India and exported to 50 markets in the Middle East and Africa.

But that’s a wrap for today’s show. Thanks for making Autoline a part of your day.