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The biggest story in domestic auto manufacturing is still the supply chain issues and production delays that do not look like they are going anywhere anytime soon. In a recent meeting I had with one of the major manufacturers, some plants are recycling the parts that are in short supply. Once a vehicle is produced it is parked and the processors and chips are pulled out of the vehicle and are continued to be used to produce new vehicles. This will allow them to quickly get large batches of vehicles shipped when supplies are available.
The Covid-19 vaccine is starting to make its way to the auto manufacturers. Although Rory Gamble, the president of the United Auto Workers Union, does not want the vaccine to be made a condition for employment, he has been talking about the importance of getting vaccinated.
Mercedes fell short of emission regulatory targets in both the US and China. US standards are rated in grams of CO2 per mile and Mercedes missed the mark on their light fleet trucks by 9% and passenger fleet cars by over 20%. Mercedes has stated “We will purchase external credits at short notice in order to close consumption gaps in the fleet’s achievement of the target,” this could mean a price increase for Mercedes fleet vehicle owners in the future.
Limited vehicle inventory has seen many dealerships be able to increase their profit margins. With supply low, they are able to charge a premium and also keep their floor plan and insurance costs down. Sonic Automotive President Jeff Dyke said last month “I suspect that you’re going to see a permanent change in our industry. I do not think that we’ll ever get back to the high, high levels of inventory and slower turn, We’re all pushing for that, including the manufacturers.”
In the industry’s push for electric vehicles, Volvo CEO Hakan Samuelsson announced recently that they want to be an electric only brand by 2030 and expect to sell their last gasoline/diesel vehicles in 2029. Many companies have made similar statements and 2030 seems to be the goal for these companies to make the switch.
Fiat Chrysler pleads guilty this week to one count of conspiring to violate the Labor Management Relations Act in a recent corruption scandal involving the United Auto Workers Union. Chris Pardi, general counsel and corporate secretary for FCA-North America “one or more persons acting in the interests of FCA US agreed to pay and deliver and willfully paid and delivered more than $3.5 million in prohibited payments and things of value to officers and employees of the UAW,”. Fiat Chrysler were able to funnel these payments through a training facility that is jointly operated by FCA and the UAW. They paid for things like meals, parties, trips, golf and even paid off a UAW vice president’s $262,000 mortgage according to the feds. FCA has agreed to pay $30 million and submit to a court appointed monitor for the next 3 years.
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