Toyota Has Quietly Giving Up On Production Goals: Report

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Toyota is reportedly lowering production targets, Elon Musk thinks NHTSA is too slow for the modern world, and Ford spent a lot of money getting out of Argo. All that and more in The Morning Shift for Thursday, October 27, 2022.

1st Gear: Toyota Reportedly Tells Suppliers It’s Lowering Production Goals

It seems like every month in 2022, we’ve heard the same story: Toyota Misses Production Targets But Swears It’ll Make Up For Lost Time During The Rest Of The Year. Well, the year’s coming to a close, and the trend hasn’t yet changed. It seems even Toyota is getting the hint now. From Reuters:

Toyota Motor Corp has told several of its suppliers it has lowered its global production target for the year to 9.5 million units, two people familiar with the matter told Reuters on Thursday.

The world’s largest automaker by sales said last week it was unlikely to meet its record 9.7 million vehicle production goal for the fiscal year ending in March 2023 due to a scarcity of chips. It did not say by how much the target would be lowered at that time.

The new target of 9.5 million global units would still exceed the previous year’s output by 10%. However, that figure could further be lowered depending on the supply of electromagnetic steel sheets, said one person who spoke on condition of anonymity because the information was not public.

Production gaps aren’t really Toyota’s fault, given the current state of the entire world. It’s probably better to recognize when something’s unfeasible, and change to accommodate it, rather than trying to brute force your way through. Toyota, my therapy rates are very reasonable.

2nd Gear: Elon Musk Thinks NHTSA Is Old And Boring

Many Tesla issues come from software, rather than hardware. This means that they can be fixed with software — specifically, with changes to code that come through over-the-air updates. But when you can fix a car instantly, and remotely, should you still have to notify the owner by mail? From Automotive News:

A few weeks from now, Tesla will notify owners of almost 1.1 million vehicles about a safety issue the electric-car maker already started addressing last month.

The US National Highway Traffic Safety Administration didn’t force the manufacturer to make the fix — Tesla discovered the window glitch through internal testing and determined it warranted a voluntary recall. But the company is required by law to send out letters to each owner’s mailboxes, and deem this a recall, even if it remedied the issue with an over-the-air (OTA) software update.

Elon Musk isn’t the only one who thinks this is anachronistic. Justin DeAmarre, who owns a Model 3 and a Model Y, has at least twice received a letter from Tesla about a problem Tesla had addressed with an OTA update a week or two before.

“It’s confusing for customers,” says DeAmarre, whose YouTube account Bearded Tesla Guy has more than 60,000 followers. “Getting that letter does seem wasteful.”

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Personally, I still like the idea of a letter (or, better, an email notification) about any issues that warrant a recall. Even a notification saying the fix has already been performed would be good for an owner to keep in their records.

3rd Gear: Turns Out It’s Expensive To Kill Companies

Ford recently revealed its third-quarter financials, which included a single big hit: costs associated with killing Argo AI, its AI initiative co-operated by Volkswagen. Those costs ended up in the billions of dollars. From the Detroit Free Press:

Ford Motor Co., the 119-year-old automaker based in Dearborn, reported third-quarter earnings Wednesday that reflected hard hits caused by increasing supplier costs along with exiting its investment in the Argo AI autonomous driving technology company. Argo will “wind down” its operations as Ford plans to absorb engineers and developers while also utilizing Argo facilities, Ford told reporters. Details are still unfolding.

…

Ford said in its news release that the company “concluded” the industry’s advanced driver assistance systems would take longer than expected to commercialize so the company made a “strategic decision” to shift its spending from Argo AI to internal developments. Profitable, fully autonomous vehicles are a long way off, Chief Financial Officer John Lawler said.

“Argo AI had been unable to attract new investors,” Ford said. So, the automaker recorded a $2.7 billion noncash, pretax impairment on its investment in Argo AI, resulting in an $827 million net loss for the third quarter.

$2.7 billion just to shut down a company. At some point, one has to wonder if it’s just cheaper to keep the thing around.

4th Gear: Europe Loves The Model Y, Apparently

Europe seems to be getting the whole EV thing better than we Americans are, according to sales figures. The Tesla Model Y was reportedly the most-registered car for the continent last month, beating out all the Dacias and Peugeots. From Reuters:

Tesla Inc’s (TSLA.O) Model Y topped new vehicle registrations in Europe last month, market research data showed, indicating that the mid-sized SUV from the world’s most valuable automaker is fast-becoming a vehicle of choice in the region.

This is the first time that Tesla’s sports utility vehicle has led the rankings in Europe, London-based JATO Dynamics said on Wednesday as 29,367 Model Y cars were registered last month, up 227% from last year.

Second place for the month went to the Peugeot 208, a car too beautiful and pure to ever see U.S. roads. Please, Europe can have Tesla, just give us more compact hatches.

5th Gear: Turns Out Workers Stick Around When You Don’t Underpay Them

Car dealerships generally have incredibly high staff turnover, because working at a car dealership sucks. But, it seems there’s been a secret method for employee retention this whole time: pay people more. From Automotive News:

Employee turnover at U.S. dealerships in 2021 dropped to its lowest level in at least a decade as average annual compensation for dealership employees soared — appearing to top the $100,000 mark for the first time.

Average industry turnover was 34 percent in 2021 — the lowest level in the 11-year history of the National Automobile Dealers Association’s annual Dealership Workforce Study, the dealer trade association shared with Automotive News. It fell from 2020’s figure of 46 percent, which is where the annual turnover number had been hovering for several years.

Meanwhile, average weekly earnings at dealerships that participated in the study increased 27 percent in 2021, NADA said on its website. The association publicly releases only a handful of highlights, not the full study.

Who would’ve thought! Money, of all things, makes the struggle of dealership life worthwhile. Too bad this doesn’t apply to any other industry, ever.