Newsflash: Ford wil geen allemansvriend meer zijn


+++ With new and used cars still painfully expensive, Ryan Holdsworth says he plans to keep his 9 year old Chevrolet Cruze for at least 4 more years. Limiting his car payments and his overall debt is a bigger priority for him than having a new vehicle. A 35 year old grocery store worker from Grand Rapids, Michigan, Holdsworth would probably be in the market for a vehicle within a few years, if not for the high cost. For now, it’s out of the question. “You’re not going to get one for a price you can afford”, he said. Holdsworth has plenty of company. AMERICANS ARE KEEPING THEIR CARS LONGER THAN EVER . The average age of a passenger vehicle on the road hit a record 12.5 years this year, according to data gathered by S&P Global Mobility. Sedans like Holdsworth’s Chevrolet Cruze are even older on average: 13.6 years. Blame it mainly on the pandemic, which in 2020 triggered a global shortage of automotive computer chips, the vital component that runs everything from radios to gas pedals to transmissions. The shortage drastically slowed global assembly lines, making new vehicles scarce on dealer lots just when consumers were increasingly eager to buy. Prices reached record highs. And though they’ve eased somewhat, the cost of a vehicle still feels punishingly expensive to many Americans, especially when coupled with now much-higher loan rates. Since the pandemic struck 3 years ago, the average new vehicle has rocketed 24% to nearly $48.000 as of April. Typical loan rates on new-car purchases have ballooned to 7%; a consequence of the Federal Reserve’s aggressive streak of interest rate hikes to fight inflation. It’s all pushed the national average monthly auto loan payment to $729; prohibitively high for many. Experts say a family earning the median U.S. household income can no longer afford the average new car payment and still cover such necessities as housing, food and utilities. Used vehicle prices, on average, have surged even more since the pandemic hit: up 40%, to nearly $29.000. With an average loan rate having reached 11%, the typical monthly used-vehicle payment is now $563. Faced with deciding between making a jumbo payment and keeping their existing vehicles, more owners are choosing to stick with what they have, even if it means spending more on repairs and maintenance. Auto mechanics have been struck by the rising ages and mileages of vehicles that now arrive at the shop in numbers they’d never seen before. “You see cars all the time in here with 400.000 to 500.000 kilometer”, said Jay Nuber, owner of Japanese Auto Professional Service, a repair garage near downtown Ann Arbor, Michigan. “They haven’t been really having major work or anything. They’ve just been doing the routine service”. It doesn’t mean that most owners of older vehicles are necessarily stuck with constant repair bills. One reason people can hold their vehicles for increasingly long periods is that auto manufacturing has improved over time. Engines run longer. Bodies don’t rust as quickly. Components last longer. Yet the cost of buying either a new or used vehicle is leaving more people with essentially no choice but to keep the one they have. “The repair-versus-buy equation changed”, said Todd Campau, an associate director with S&P. Even with rising repair costs, Campau said, it’s still typically more cost-effective to fix an older vehicle than to spring for a purchase. The average vehicle age, which has been edging up since 2019, accelerated this year by a substantial 3 months. And while 12.5 years is the average, Campau noted, more vehicles are staying on the road for 20 years or more, sometimes with 3 or 4 successive owners. In such cases, the third or fourth owner is getting a much older car than they would have in the past. Nearly 122 million vehicles on the road are more than a dozen years old, Campau said. S&P predicts that the number of older vehicles will keep growing until at least 2028. Even with more durable vehicles able to last longer, all of this has created a boom time for auto shops. Through most of last year, Nuber’s Japanese Auto was overwhelmed with customers. It took up to 3 weeks to get an appointment, whether for repairs or the routine maintenance that older vehicles, in particular, require. “The phone just kept ringing and the cars just kept coming”, Nuber said. It’s now at the point where some vehicle owners must decide whether to pay for a repair that costs more than their vehicle is worth. That’s where many of them draw the line, said Dave Weber, manager at Japanese Auto. On Friday, Weber said, one customer needed rear brakes, wheel bearings and exhaust system repairs. The customer decided to do only half the repairs and wait until later to decide whether to sink more money into the aging vehicle. “They patch them up and drive them for however long, until the next major repair”, Weber said. S&P predicts that U.S. new vehicle sales will reach 14.5 million this year, from about 13.8 million last year. A big reason is that the supply at dealerships is finally growing. Automakers have also begun to restore some discounts that had long helped keep a lid on prices. The result is that many people who can afford to buy can now do so. It’s a trend that could slow the advancing age of the U.S. fleet and boost overall sales. Still, no one is predicting a return to pre-pandemic annual sales of around 17 million anytime soon. Even with discounts, new-vehicle prices are likely to stay much higher than pre-pandemic levels for years to come. As for Holdsworth, the Chevrolet Cruze owner, he plans to keep up with the scheduled maintenance on his car, especially routine oil changes. Even if he encountered a major repair, he thinks he’d probably pay for it. Having bought his vehicle 2 years ago, Holdsworth has about 2 years of payments left. So his Cruze, too, may reach the 12.5-year-old national average. “I’ll finish paying it off”, he said, “and drive it for a couple more years”. +++

+++ New model variants and innovations in the areas of electrification and digitalisation are set to further increase the appeal and diversity of the BMW product range from summer 2023. At the pinnacle of the model portfolio, the arrival of a third variant of the all-electric i7 expands the brand’s offering in the luxury segment. At the same time, the Multi-Contract Plug & Charge and Max Range functions will now be available for all i7 and iX model variants, making electric mobility even more convenient. And from August, customers will have the choice of a second, extremely powerful 6-cylinder in-line diesel engine for the new X5 and X6. The highlight as far as digitalisation is concerned is the introduction of the upgraded BMW iDrive featuring QuickSelect and BMW Operating System 8.5 for a large number of current models. The capabilities of the BMW Intelligent Personal Assistant will also be enhanced once again for these models in summer 2023. The new exterior colours and upholstery variants for several of the current models will offer additional scope for customisation. Meanwhile, the M Sport package Pro will be added to the choice of optional extras for the X1 and iX1.

+++ Toyota has found improper crash tests for a model and suspended shipments, in the latest in a series of embarrassing woes plaguing Japan’s top automaker. The latest problem, disclosed late Friday, affects 56.111 Raize hybrid vehicles produced by DAIHATSU , a manufacturer specializing in small models that is wholly owned by Toyota. It also affects 22.329 vehicles sold as the Daihatsu Rocky, according to the automakers. The vehicles were all sold in Japan. In the faulty crash tests, results for a pole used to measure impact on the left side were used for the right, when both sides had to be tested, Daihatsu said. Just a week ago, Toyota acknowledged there had been a data breach at its online Connected service, run by a group company. The breach spanned a decade, meaning that drivers’ information on more than 2 million vehicles had been at risk for leaks. No breaches were reported. Last month, a separate crash test problem for Daihatsu models sold abroad was disclosed, affecting 88.123 vehicles. A further review found wrongdoing in the Japan market as well, according to the automakers. The earlier problem affected the Toyota Yaris Ativ sold in Thailand, Mexico and some Gulf countries, Perodua Axia sold in Malaysia and Toyota Agya in Ecuador. Daihatsu apologized at that time and set up a third-party team to investigate. It did not issue a recall, noting the vehicles were safe to drive, but it expressed deep remorse it had violated inspection standards. The Toyota models were supplied by Daihatsu under the OEM system, common in the industry, in which products manufactured by another company get sold with another nameplate. Toyota, which sells about 10 million vehicles every year, boasts a record for pristine quality, centered around a production system that empowers the individual worker. The latest problems don’t involve recalls. But Toyota went through a period of announcing recall after recall over several years more than a decade ago, covering a wide range of defects, including faulty floor mats, sticky gas pedals and glitches in braking software, affecting millions of vehicles. The recall fiasco in 2009 and 2010 had Toyota paying $48.8 million in fines in the U.S. for its slow response. Toyota officials have repeatedly promised to be quicker and more transparent. Management has renewed its “commitment to manufacturing with integrity”, the company based in Toyota city, central Japan, said in its latest statement. “All our group companies, including Toyota, have begun a thorough review to work toward a complete reaffirmation of our governance system. We will work with Daihatsu to tackle this issue”, it said. +++


+++ FORD boss Jim Farley says his company will stop competing in over-served market segments and instead will place big bets on connected vehicles and digital services. The days of Ford being all things to all people are over, Farley said at the company’s capital markets day event Monday. The company, he said, has been “stuck in a box”, with thin profit margins, weak growth and low stock valuation. Ford, Farley said, will emphasize software and services as well as iconic vehicles such as pick-ups, large SUVs, commercial vehicles and advanced second-generation electric vehicles. He said the company is eliminating waste to close a cost gap with the best in the industry with a “lean disciplined operating system” that reaches into all Ford factories. Ford’s F-Series pickups are the top-selling vehicles in the U.S. and a huge profit center. Farley said by focusing on software, services and Ford’s strengths in products, the company won’t be as vulnerable to a downturn as in the past. He said the company has let complexity “overrun our business as we tried to be all things to all people”. Farley says Ford will be competing differently, going for tailored ownership experiences rather than “jockeying for slivers of market share” with complex vehicles in competitive segments such as 2-row crossover SUVs. He said Ford will go to non-negotiated vehicle prices. Ford has said it will get to a 10% pretax profit margin in 2026. It reiterated 2023 full-year guidance of $9 billion to $11 billion in adjusted pretax profits. Farley said the company has even greater margin ambitions. To get there, Ford says it will cut costs by reducing the number of parts in its vehicles, as well as cutting warranty and recall expenses by boosting quality. But Farley said he doesn’t see reductions in the number of factory employees or among engineers and other office workers. The company predicted it would sell 5.6 million vehicles in 2026 as global sales recover, and it will need workers to design and produce them, Farley said. Ford sold roughly 4.2 million vehicles last year. Farley has long complained about Ford’s high retail and warranty costs, and Kumar Galhotra, president of Ford Blue, the company’s internal combustion unit, said the company is making changes to reduce those to improve profit margins. Rather than testing the new Super Duty pickup to a particular standard, the company tested it until parts and systems failed, he said. Now Ford is finding the eventual weak point and eliminating it, prolonging vehicle life, Galhotra said. Ford also is focusing on reducing the number of vehicle parts, and on the stability of parts supply companies, he said. For example, by the time Ford rolls out a new version of the F-150 pickup this year, it will have cut 2.400 parts from the existing model. “We have some chronically inefficient tier-1 and tier-2 suppliers”, Galhotra said. Some have caused an unstable flow of parts, he said, adding that Ford has worked with 125 key suppliers to stabilize their operations. “If the present supplier is not on a path to a permanent solution, we’re re-sourcing the business”, he said. A study by Plante Moran released Monday showed that Ford’s working relations with parts suppliers has declined dramatically since 2020. Ford also said its new or revamped electric vehicle manufacturing plants will be far more efficient, with nearly 30% less labor overhead than the company’s current large internal combustion vehicle plants. But Farley said that doesn’t mean fewer factory workers because they’ll be needed to make batteries and other EV parts. Ford also said it cut deals with a number of companies to supply its rapidly growing electrical vehicle division, Ford Model e. Ford will get more than 100.000 metric tons of lithium hydroxide from Albemarle, based in Charlotte, North Carolina. Compass Minerals International announced a multiyear deal to supply Ford with up to 40% of the battery-grade lithium carbonate coming from its project in Utah. EnergySource Minerals will supply the carmaker with lithium hydroxide from a new site in Imperial Valley, California, and Nemaska Lithium, a Canadian miner, will supply Ford with 13.000 tons of lithium hydroxide annually for 11 years (per year over 11 years). Because the materials are coming from the U.S. and Canada, it ensures that Ford’s electric vehicles will qualify for new federal tax credits, making them more competitive. Ford has split itself into 3 business units, Ford Blue, Ford Model e for electric vehicles and digital products, and Ford Pro, the company’s commercial vehicle business. “I’m not here to tell you that we’re under valued”, Farley said Monday. “You make your own decision”. Shares of Ford fell 1.2% Monday. +++

+++ HONDA ’s profit for the fiscal year that ended in March dropped 1.7% as sales took a hit from a semiconductor shortage and restrictions in China related to the coronavirus pandemic. But the Japanese automaker said that recovery was on the way, forecasting record sales and operating profitability for the current fiscal year. Net profit for the fiscal year that just ended totaled 695.2 billion yen, as declining auto sales and rising research costs offset the perks of a favorable currency exchange rate. A cheap yen is a plus for Japanese exporters like Honda because it raises the value of overseas revenue when it is converted into yen. Sales for the fiscal year grew 16% to 16.9 trillion yen, lifted by healthy motorcycle sales. Honda projected record sales revenue for the fiscal year ending in March 2024, at 18.2 trillion yen. The 1 trillion yen operating profit projected for the fiscal year, if achieved, would also be a record for the company. The maker of the Civic and CR-V is expecting fiscal year net profit to improve to 800 billion yen. Although auto sales dropped on-year for the fiscal year just ended, they are expected to recover, chief operating officer Shinji Aoyama told reporters. Honda announced it has signed a joint venture agreement with GS Yuasa, which makes batteries for cars and motorcycles, to set up a new company to research and develop batteries for electric vehicles. The company will focus on collaborations in lithium-ion batteries, including coming up with production methods, both sides said. The new company, which is receiving capital of 2 billion yen, is 50% owned by Honda and 50% by GS Yuasa. The move comes as the world’s automakers are scrambling to keep up with a major consumer shift toward EVs, as demand grows especially in China, but also elsewhere like the U.S. and Europe. “The new company will fully leverage the strengths of the two companies and establish a strong presence in the rapidly expanding battery market”, said Koichi Yamamoto, president of the new company. +++

+++ NISSAN reported a 7-fold surge in January-March profit and forecast strong sales for this fiscal year riding on the popularity of its new model offerings. The Japanese automaker’s net profit for the fiscal 4th quarter totaled 106.9 billion yen, up dramatically from 14.2 billion yen a year ago. Quarterly sales jumped 36% to 3.097 trillion yen, amid an easing of the supply shortage of computer chips and other parts, which had been caused by social restrictions related to the coronavirus pandemic. Chief executive Makoto Uchida told reporters the automaker was preparing all-solid-state batteries for its electric models, as the world makes a rapid shift toward green zero-emissions technology. He acknowledged serious challenges remained but promised to boost Nissan’s profitability, especially in key markets like China. A midterm plan will be outlined later this year “to transform Nissan into a truly healthy and resilient company, aiming to achieve both sustainable growth and financial stability”, said Uchida. For the fiscal year through March 2024, Nissan expects 315 billion yen in profit on 12.4 trillion yen ($93 billion) in sales. The sales, if achieved, would be a record for Nissan. That would also mark an improvement over 221.9 billion yen in profit recorded for the fiscal year that just ended in March, which was up 3% from the previous fiscal year. Sales totaled nearly 10.6 trillion yen for the fiscal year ended in March, up nearly 26% on year, according to Nissan, based in the port city of Yokohama. A shutdown in China over Covid-19 hurt the global supply of auto parts, slamming the world’s automakers, including Nissan. That is gradually easing, while automakers also work to find alternative suppliers. Uchida pointed to China as a market that is ahead in EVs where Nissan hoped to appeal to buyers. In the U.S. market, the Rogue (X-Trail in Europa) and Pathfinder SUV models were popular. In China, Nissan’s Sylphy is No. 1 in sedan sales. Nissan is forecasting vehicle sales to grow this fiscal year across regions, including Japan, the U.S., China and Europe. Nissan has been in an alliance with Renault since 1999, when Carlos Ghosn was sent in by Renault to a then-struggling Nissan to lead a turnaround. Ghosn first served as chief executive and later chairman before he was arrested in late 2018 on various financial misconduct charges. The French-Brazilian Ghosn, who says he is innocent, jumped bail in late 2019. He is now in Lebanon, the country of his ancestry, which has no extradition treaty with Japan. +++

+++ The world’s 4th biggest carmaker by sales has warned of a potential existential threat to large parts of the British car industry unless the government moves to alter the terms of its post-Brexit trade deal with the European Union. In a submission to a parliamentary inquiry into the supply of batteries for electric vehicles, STELLANTIS , the parent company of Citroën, Fiat, Peugeot and Opel / Vauxhall, said it may not be able to keep its commitment to manufacture its new fleet of vehicles in the United Kingdom without changes to the terms of the deal. It also urged the government to invest heavily in domestically produced batteries. Stellantis said the deal represented a “threat” to its export business and the “sustainability” of its manufacturing operations. The company employs around 5.000 people in the UK and committed to make electric vehicles in the country 2 years ago. The stark warning is likely to pile pressure on the Conservative government to seek changes to the trade deal that came into force at the start of 2021 when the UK formally left the economic structures of the EU, including the frictionless single market and customs union. Executives from Stellantis are due to meet with Britain’s business secretary, Kemi Badenoch, on Wednesday. Though the trade deal ensured that tariffs would not be slapped on the export of goods from the UK to the EU, an array of often-complex non-tariff barriers has made it more difficult, and often more costly, for British businesses to sell their wares in the 27-nation bloc. Many manufacturers, such as BMW, Ford and Honda, have already scaled back or closed their operations in the UK in recent years. Some of these barriers are being phased in over time. Stellantis said it wanted the current phase-in period to be extended until 2027, a move that would require the trade deal to be revised. The company said cars made in Britain and exported to the EU face an onerous 10% tariff if the rules of origin aren’t met, making them uncompetitive against exports from other major car-producing regions such as Japan and South Korea. “To reinforce the sustainability of our manufacturing plants in the UK, the UK must consider its trading arrangements with Europe”, Stellantis said in its submission. “We need to reinforce the competitiveness of the UK by establishing battery production in the UK”. Car production in the UK remains way below levels before the pandemic at just over 775.000 units in 2022, compared with around 1.3 million in 2019, according to figures from the Society of Motor Manufacturers and Traders. The trade body’s chief executive, Mike Hawes, backed up Stellantis’ warning regarding the rules of origin for batteries, which he said pose “a significant challenge” to manufacturers in the UK and in the EU as higher tariffs could diminish the pace at which consumers transition towards electric vehicles. “At a time when every country is accelerating their transition to zero emission transport, and global competitors are offering billions to attract investment in their industries, a pragmatic solution must be found quickly”, he said. The leader of the main opposition Labour Party, Keir Starmer, said the post-Brexit trade deal needed revision, but insisted he wasn’t calling for the UK to rejoin the EU or its frictionless economic arrangements. “That doesn’t mean reversing the decision and going back into the EU but the deal we’ve got, it was said to be oven-ready. It wasn’t even half-baked”, he told the BBC. In 2016, the UK narrowly voted to leave the EU in a referendum. A general election has to take place by early 2025, with opinion polls suggesting Labour is on course to be the largest party. +++

+++ TOYOTA announced that it expects an operating profit of ¥3 trillion in its consolidated financial results for the fiscal year ending March 2024, based on International Financial Reporting Standards. If the operating profit (a 10.1% increase from the previous year) is realized, it would be the first time for a Japanese company to achieve such figures. The company anticipates growth in both production and sales, assuming an easing of the global semiconductor shortage. Operating revenue is expected to increase 2.3% to a record ¥38 trillion, with net profit also increasing 5.2% to ¥2.58 trillion. Until now, the highest operating profit for a Japanese company was Toyota’s ¥2.9956 trillion in the fiscal year ending in March 2022. With the shortage of semiconductors for vehicles improving, global sales volumes are expected to increase 8.2% to 10.4 million units, with production rising 10.6% to 10.1 million units. This would the first time that both figures have exceeded 10 million units for Toyota alone. The proportion of sales of electrified vehicles, including hybrid vehicles and electric vehicles, is expected to be 37%, or about 3.84 million units. Of these, EVs will account for about 200.000 units, but the company aims to increase this figure to 1.5 million units by 2026. “There are signs of improvement in the supply of semiconductors, etc. We want to increase our earning power and turn it into investment for the future”, Toyota president Koji Sato said at a press conference. The operating revenue for the fiscal year ended in March 2023, which was announced at the same time, was a record high of ¥37.1542 trillion, an increase of 18.4% from the previous year. However, high raw material costs and a shortage of semiconductors weighed on profits, with operating profit decreasing 9.0% to ¥2.725 trillion and net profit decreasing 14.0% to ¥2.4513 trillion, resulting in the first decline in 4 years. Toyota said that its full-year net profit beat expectations and projected better sales and revenue for the year ahead as supply chain disruptions ease. The Japanese firm reported 2.45 trillion yen in net profit for the fiscal year, down 14 percent from a year earlier but still beating its projections of 2.36 trillion yen. The auto titan retained its topselling crown for the third year in a row in 2022, but like much of the industry has battled pandemic headwinds and the effects of a global chip shortage. “In a word, it was a very tough year for us to produce and deliver vehicles to our customers”, Sato told reporters. The company cited everything from natural disasters to the chip crisis for production constraints over the last fiscal year and acknowledged “soaring materials prices” had weighed on the bottom line. It said it managed to beat its forecast in part due to foreign exchange, but also thanks to the efforts of production sites and dealers, which helped increase year-on-year sales volume across all Toyota’s regions. Toyota sold more than 10.5 million cars worldwide in the last financial year, including those made by its subsidiaries like Hino Motors and Daihatsu, and is projecting a massive jump to 11.4 million for the fiscal year ahead. “We expect growth in all regions,” chief financial officer Yoichi Miyazaki said. “For the immediate term, it is not all normal yet. But our ability to manage semiconductor supply has significantly improved”. Increased production capacity suggests “the impact of semiconductor shortages is waning”, Seiji Sugiura, senior analyst at Tokai Tokyo Research Institute, told before the results were announced. Toyota also benefits from having been “very strict” about building a system that is resilient to the impact of natural disasters like earthquakes, added Satoru Takada, an auto analyst at research and consulting firm TIW. Sato said the company was boosting volume to “strengthen our resilience to volatile factors like foreign exchange rates and rising material costs”. This year, Toyota unveiled a surprise shake-up of its leadership, replacing Akio Toyoda, whose grandfather founded the company, with 53-year-old Sato as CEO. Sato has vowed to “accelerate” the development of battery-powered electric vehicles through a “new approach” including the invention of “next-generation” Lexus vehicles by 2026. Toyota pioneered hybrid cars, but some critics say the company has been slow to make the shift to battery-powered engines, even as demand soars for low-emission automobiles. The firm has set a target of boosting annual EV sales to 1.5 million units by 2026; a huge jump from just over 20.000 in 2022. But the delayed focus on EVs by Toyota and other Japanese automakers has left them “unable to assert their presence at all” in the burgeoning market of China, said Takada. China is one of the world’s largest car markets, with about 30 million vehicles sold annually, and it is pivoting rapidly to EVs. That means the question of how Japanese automakers including Toyota will “retake their competitive lead in China” is of “paramount importance”, Takada said. Sato said that Toyota is committed to China’s EV market, while insisting hybrid demand would remain strong. Last month, Toyoda, now serving as chairman of Toyota’s board, was forced to apologize after it emerged Daihatsu rigged crash tests for some of its cars. The issue involved around 88.000 units largely destined for markets including Thailand, the Middle East and Malaysia. Toyoda called the rigging “absolutely unacceptable” and promised a detailed investigation. +++

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