Americans Will Not Stop Buying Cars
Good morning! It’s Thursday, October 5, 2023, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
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1st Gear: Nothing Can Stop America’s Car Sales Rising
Despite the threat of recession hanging over us and a messed up supply chain leftover from the COVID-19 pandemic, Americans still bought a ton of cars last quarter. According to the latest sales figures covering the three-month period to the end of September 2023, automakers across America posted rising sales almost across the board.
A new report from CNN found that GM, Tesla, and Toyota are all up on their sales versus 12 months ago. Ford, which hasn’t posted its figures just yet, is projected to be up by eight percent compared to the last quarter. In fact, the only major automaker not to be in growth is Stellantis, which saw its sales dip by just one percent. CNN reports:
“For Stellantis, it comes down to affordability,” said Ivan Drury, analyst for sales tracker Edmunds. He said Stellantis’ existing inventory is more fully loaded with options that lift prices.
However, CNN warned that things could be about to change in America’s automotive landscape. Interest rates are on the rise across America, which is piling the dollars onto monthly payments for many car buyers. As it stands, interest rates on new cars are averaging 7.4 percent, while for used models its even higher at 11.2 percent.
Then there’s the strike at Ford, GM, and Stellantis, which kicked off at the tail end of the last quarter. Workers have walked out of facilities run by America’s big three as the United Auto Workers union continues bargaining for a fair contract. The fallout from this work stoppage could hit car sales in the final quarter of the year.
2nd Gear: Ford Layoffs Reach Detroit
And speaking of the UAW strike at America’s big three, Ford is blaming the industrial action for its latest raft of layoffs, which have hit facilities in Detroit. According to Automotive News, the Blue Oval has laid off 400 employees at two sites in Detroit, citing the UAW’s ongoing strike as the cause.
According to the site, workers at the Livonia Transmission plant and the Sterling Axle facility near Detroit have been told not to report to work starting today (October 5). Parts produced at the two sites are used at the Ford Explorer and Lincoln Aviator assembly facility in Chicago, which joined the strike on September 29. Automotive News reports:
Ford said 1,330 workers have been laid off in connection with the strike, which began Sept. 15 and also has halted production at the company’s Michigan Assembly Plant.
As well as the two sites in Detroit, Ford’s temporary layoffs have also hit workers at sites in Wayne, Michigan, where it assembles its Bronco and Ranger models. But Ford isn’t alone in the layoffs, as GM announced its own round of cuts earlier this week that forced more than 150 workers at two of its facilities off the job.
Stellantis has also gotten in on the action, announcing it was laying off 370 workers across three factories in Ohio and Indiana in recent weeks.
3rd Gear: UAW Says It’s Making Progress With Big Three
Despite the dread that layoffs like this might leave you feeling, the United Auto Workers union says it is making progress with America’s big three. In its latest update on the ongoing industrial action, Reuters reports that insiders claim the parties have “narrowed their differences” in talks this week.
According to the site, “really active talks” between Ford and the union mean that they are becoming more aligned on issues like pay. As such, insiders told Reuters that it is now “not clear” whether the UAW will order “a fresh round of walkouts,” or decide that progress is being made and the strike’s expansion could be delayed. Reuters adds:
In addition to Ford, talks with Chrysler parent Stellantis (STLAM.MI) and other automakers and the UAW have been active in recent days, sources said. Stellantis declined to comment.
Ford said on Tuesday it had made a “comprehensive” new offer that included a “more than 20% general wage increase, not compounded” with a double-digit increase in the first year. Ford did not elaborate. That proposal, however, when combined with cost-of-living adjustments previously offered by the automaker, could bring the total wage increase offer close to 30% over the life of the contract, people familiar with the situation said.
UAW president Shawn Fain is expected to update striking workers on the union’s progress on Friday. During last week’s update, Fain expanded the union’s walkout to more sites operated by GM, Stellantis, and Ford.
4th Gear: Rivian’s Latest Cash Grab Kicks Off
Rivian is one of the rare EV startups that’s actually managing to ship cars out to customers across the U.S., but with each one sold it’s losing more than $30,000. As such, it’s burning through cash at an exorbitant rate and needs to find new ways to keep itself afloat.
As such, Reuters reports that the automaker will start offering up green bonds in the company, in the hopes of raising $1.5 billion to keep its factory running and fund the development of its next car, which has been codenamed R2. The site explains:
Electric-vehicle maker Rivian Automotive on Wednesday said it plans to sell convertible green bonds worth $1.5 billion and forecast quarterly revenue to rise in line with estimates.
The Irvine, California-based company’s shares fell nearly 8% in after-hours trading. Convertible bonds can be dilutive when converted into shares and are typically seen negatively by investors when issued. Rivian’s bond will mature in October 2030 and investors will have the option to convert the bonds into cash or shares in the company, it said in a filing.
According to a company spokesperson, the sale of the green bonds will allow Rivian to “de-risk” the upcoming launch of its R2 EV, which will be unveiled in 2024 and could cost around $40,000.
