AD #3857 – Auto Industry Has Rough Quarter; Volvo Backs Off EV-Only Mandate; Cariad Can’t Keep Up with China

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

STELLANTIS FIRST HALF RESULTS
More automakers are reporting their latest earnings and the results are all over the map. Let’s start with Stellantis. It saw a big drop off in the first half of the year, which is the only thing we have to go by since Stella does not report quarterly results. It delivered 2.9 million vehicles worldwide, which was 10% lower than a year ago. That generated €85 billion in revenue, down 14%, and its operating profit plummeted 40% to €8.4 billion. Stellantis has big problems in North America. It used to be the most profitable part of the company, and it’s lost a string of top executives.

RENAULT FIRST HALF RESULTS
Renault is another company that only reports results every 6 months. It sold 1.1 million vehicles worldwide, up 1.9%. That generated almost €27 billion in revenue, up a fraction, but its operating profit dropped by more than 9% to €1.8 billion. One reason Renault’s profit is down is because it lost €440 million selling off shares it owns in Nissan, which is part of their new agreement that both companies hold equal shares in each other.

NISSAN Q2 RESULTS
Nissan had a disastrous quarter. While it sold 787,000 vehicles, about the same as a year ago, and its revenue of $19.4 billion was up 2.7%, its operating profit plummeted 99% to only $6.4 million. Even more ominous, Nissan sent a warning to shareholders that it is lowering its forecast for this fiscal year because it expects its vehicle sales and profits to drop significantly.

FORD Q2 RESULTS
Meanwhile, Ford sold 1.1 million vehicles worldwide over the last three months, up 2% from a year ago. That generated $48.7 billion in revenue, up 6.3%, but its operating income dropped 23% to $1.8 billion mainly because it had to set aside more money for warranty work on its vehicles. If Ford can ever get its warranty issues under control its finances would look whole a lot better.

HYUNDAI Q2 RESULTS
The Hyundai Motor Company had a pretty good second quarter. Even though sales dipped 3% to 1 million, the company posted $32.6 billion in revenue, up 6.6% and its operating profit of $3 billion, which was up 2.3%, was a record for the quarter.

AUTO INDUSTRY HAS ROUGH QUARTER
So there you have it. Not a very good quarter for the industry so far, especially considering Tesla’s 45% drop in profits. The one bright spot is General Motors, which posted some decent numbers, but we’ll have to wait until more automakers, like Volkswagen, Toyota, Mercedes and BMW report their earnings to get a better idea of what’s really going on.

  

HONDA BRINGS E-CLUTCH TECH TO THE U.S.
You may have heard us talk about this in the past, but Honda’s e-clutch technology for motorcycles that was originally released in Europe is now making its way to the U.S. Available on the CB650R and its sportier-looking sibling, the CBR650R, the rider no longer has to pull the clutch lever on the handlebars to operate the manual transmission. Instead you just hit the foot lever up or down to change gears. An actuator unit on top of the transmission houses two electric motors that are used to operate the clutch while the system also controls ignition timing and fuel injection to make shifts as smooth as possible. Or you can shut the system off completely for full control. While it’s only offered on the two bikes, which range in starting price from about $9,400 to nearly $10,000, Honda says the clutch and transmission hardware are not different from other motorcycles, so there’s a lot more applications.

HONDA CUTS PRODUCTION IN CHINA
Speaking of Honda, it’s slashing its production output in China by nearly 300,000 units. It currently has the capacity to make about 1.5 million vehicles, but is closing one plant with GAC and pausing production at another with Dongfeng. However, it might be able to make up for that lost production pretty fast. Honda is building new EV plants with both GAC and Dongfeng that will have the capacity to make around 240,000 electrics and the aim is to have both up and running before the end of the year.

TOYOTA CONSIDERS 4-DAY WORK WEEK IN JAPAN
Toyota is considering implementing a four-day work week for its office employees in Japan. Last year, Toyota set sales and production records but achieving that resulted in overworked employees, overstretched suppliers and quality issues at several of its subsidiaries. So, CEO Koji Sato ordered a review of Toyota’s practices to help streamline its workflow and the four-day work week is one of the ideas it’s considering. The automaker is currently negotiating with the worker’s union and the plan could be implemented by the end of this year. But it won’t apply to production workers. However, it might not be as good as it sounds. Employees will have to make up that extra day off by adding more hours somewhere else in the week.

CARIAD CAN’T KEEP UP WITH CHINA
Here’s why Volkswagen’s Cariad unit partnered with a Chinese tech company. Because it only took Horizon Robotics two years to do what Cariad couldn’t do in 5 years. The autonomous and software division of VW has struggled with development, which has led to delays of several models and even a new EV platform, so in 2022 VW and Cariad partnered with China’s Horizon Robotics to develop self-driving tech. And yesterday they showed video of a VW ID.4 driving autonomously usings Horizon’s system through the pouring rain on streets in China. This is not a production model, but no doubt VW is working as fast as possible to implement it into future models.

VOLVO BACKS OFF EV-ONLY MANDATE
A lot of automakers have backed off their EV targets recently because demand is slumping and now Volvo is the latest. The automaker was aiming to become an EV-only brand by the end of the decade but CEO Jim Rowan says it’s going to “take time to bridge different parts of the world for full electrification.” He says Volvo’s hybrids and plug-in hybrids will be that bridge, so it will continue to invest in them. Automotive News also reports that Volvo’s U.S. dealers believe they’ll continue selling hybrids after 2030. And Cadillac is making a similar change in strategy as well. It was also planning an EV-only era after 2030 but it hinted that it will keep ICEs around. It still plans to have an all-electric version of all of its models by the end of the decade but Cadillac says EVs and ICEs will “coexist for a number of years” in its lineup.

VOLVO TO STOP SHARING VEHICLE MARGINS
And circling back to Volvo, the company says it will no longer share the gross margins for its vehicles. Volvo began disclosing them two years ago to show that it could get price parity with its EVs and ICE vehicles. In the second quarter of this year, Volvo’s EVs reached a gross margin of 20% compared to 23% for its ICE models. But now that it is introducing more EVs in its lineup Volvo says it won’t reveal its vehicle gross margins because it doesn’t want its competition to have that information.

SAIC EXPECTS TO SHIP 1 MILLION CARS A YEAR
Chinese automakers continue to expand globally. SAIC announced that it just received its second car carrier ship. It can transport 7,600 vehicles and is powered by LNG fuel, which reduces its carbon emissions by 30%. SAIC’s logistics subsidiary that operates the ship is projecting that it will transport 1 million vehicles overseas a year by 2026.

GEELY INCREASES OVERSEAS SALES TARGET
Geely is also expanding quickly outside of China. The automaker revealed that it hit an overseas sales record of more than 197,000 vehicles in the first half of the year, which is up a whopping 67%. Because of that success, it also raised its full-year overseas sales target by another 50,000 to 380,000 vehicles. Geely now has more than 650 sales and service outlets in 76 countries across the globe.

That brings us to the end of this show. Thanks for tuning in and I hope to see you at 3PM EST for Autoline After Hours.