U.S-Mexico-Canada Trade Agreement Impacts

 

U.S-MEXICO-CANADA TRADE AGREEMENT IMPACTS

Mexico’s automotive industry is struggling to cope with the resurgence of demand for new vehicles, the global shortage of microchips and increased steel costs – hitting manufacturers’ bottom line – a key problem for a Mexico-U.S.-oriented export model. It has been a challenging year for Mexican automakers tasked with implementing requirements of the year-old U.S.-Mexico-Canada Trade Agreement (USMCA), including minimum-wage provisions. This has complicated the management of auto parts and supplies shortages, partly caused by a pause in production between March and April 2020 during government-mandated COVID-19-related isolation measures.

Source: WardsAuto

MORE CHIP SHORTAGE CHALLENGES

GM – One step forward, One back

GM hit its production target to finish building and shipping nearly 30,000 Chevrolet Colorado and GMC Canyon midsize pickups, which were awaiting chip parts, to dealers this week. But starting Monday, GM must idle four of its North American plants that build midsize SUVs — including Lansing Delta Township Assembly — for two weeks due to the chips shortage. GM plant workers say there are tens of thousands of midsize SUVs parked, awaiting chips to complete production and ship to dealers, but a GM spokesman declined to comment on specific numbers saying the situation changes daily.

Source: Detroit Free Press

Nissan extends down time

Nissan Motor Co. has extended U.S. production downtime for the Altima until the start of August due to the ongoing global microchip shortage.The mid-sized sedan model has not been built in Canton, Miss., since June 4, which includes the regular two-week summer shutdown. Nissan sold 61,930 units in the first half of the year, down 10 percent from a year earlier. Meanwhile, Nissan said Altima, Titan and Frontier production also will be idle for two days each in the first half of August.

Source: Automotive News

Ford Weighs Shipping Vehicles Missing Chips for Dealerships to Finish

Ford Motor Co. is weighing plans to start shipping partially built vehicles that are awaiting semiconductors or related components to dealerships around the country, a move that, if approved, would place responsibility on its retail network to complete the assembly once the chips are available. The automaker began detailing the plans, which are not final, to some of its dealers this week, according to four people with knowledge of the discussions. Only dealers who would choose to receive the unfinished vehicles would get shipments and service technicians would be trained on how to install the chips, one of the people said. Dealerships would be compensated for slightly less than an hour's worth of labor for each vehicle, the person said.

Source: Automotive News

The Latest Numbers on the Microchip Shortage: Another N.A. Spike

New shortages in microchip supplies have caused a spate of additional cutbacks in North American vehicle production, according to the latest weekly report by AutoForecast Solutions. The past two weeks of moderating production cuts were reversed as North American plants added another 78,000 vehicles to their running tally of chip-related schedule reductions. AFS now reports that global automakers have announced production cuts of 5.16 million vehicles from their production schedules and could lose a total 6.3 million because of the crisis.

Source: Automotive News

Chip Shortage Forces 1-Week Idling of Four GM Plants

Wards Intelligence/LMC Automotive is forecasting production of 4.2 million units in the third quarter, a 5-year high for the quarter. But production could be much higher if the microchip shortage, as well as other disruptions in the supply chain, were not a hindrance.

Source: WardsAuto

BMW Too!

BMW said on Tuesday nearly all its German plants were affected by an ongoing shortage of semiconductors that are currently preventing the luxury carmaker from completing around 10,000 cars. The Munich-based company earlier this month said that the bottleneck, which has affected carmakers around the world, has already led to 30,000 vehicles in lost production so far this year.

Source: Reuters

Daimler Slashes Car-Sales Outlook as Chips Wipe Out Growth

Daimler AG said early-year growth for its main Mercedes-Benz division will be erased by the global semiconductor shortage that the luxury-car maker expects to put a damper on the second half. Mercedes car sales are now expected to be roughly flat this year rather than up significantly from 2020. The lack of chips will have an adverse impact on the business as the year progresses and visibility on how supply will develop is low, Daimler said Wednesday. The automaker’s shares fell 1.4% as of 9:50 a.m. in Frankfurt, paring an earlier decline of a much as 4%. The stock is still up about 19% for the year.

Source: Bloomberg

GM Cuts Truck Production

General Motors Co said Wednesday it will cut some truck production in North America because of the ongoing global semiconductor shortage. The largest U.S. automaker said its Flint Assembly plant that builds the Chevrolet Silverado HD and GMC Sierra HD trucks will operate on one production shift the week of July 26. GM said its Ft. Wayne Assembly plant in Indiana that builds the Chevrolet Silverado 1500 and GMC Sierra 1500 model trucks will be idled next week.

Source: Reuters

J.D. POWER: PANDEMIC REINFORCED OEM BRAND LOYALTY

Here’s another positive development — especially for dealerships — that has surfaced because of the pandemic. J.D. Power said vehicle owners remain vastly loyal to their specific brands, in part due to the effects of pandemic lockdowns. Experts made that assertion as part of the J.D. Power 2021 U.S. Automotive Brand Loyalty Study released on Thursday. With many vehicle shoppers hesitant to venture out to showrooms, J.D. Power vice president of data & analytics Tyson Jominy explained that they often relied on their relationship with their current dealer.

Source: Auto Remarketing

TARIFF THREAT LOOMS OVER USED CARS HEADED TO U.S. FROM CANADA

U.S. retailers urgently looking north for used-vehicle inventory amid the microchip crisis face another potential burden: tariffs. Industry trade groups in the United States and Canada are imploring the Biden administration to back away from a Trump-era interpretation of the United States-Mexico-Canada Agreement that they say could make most used vehicles shipped to the U.S. subject to import duties.

Source: Automotive News

NO MORE BLOATED OUTPUT

U.S. automakers won’t go back to bloated output and bulging dealer lots, even after the global semiconductor shortage ends, according to the chief executive officer of the nation’s biggest chain of car dealers. “The industry has understood that overproduction and excessive inventories as the old model is not where they want to be,” said Mike Jackson, CEO of AutoNation Inc. “I really think there’s a new strategy going forward.” Since automakers book revenue when they ship cars from factories to dealer lots, they have tended to produce more cars than the market demands, then use incentives to wheedle dealers into accepting them. 

Source: Bloomberg

HONDA DITCHES GO-IT-ALONE STRATEGY TO MAKE SAFER MOVE TOWARD EVS

Honda Motor Co. long eschewed big strategic alliances, preferring to go it alone even as many of its carmaking peers banded together to improve economies of scale. That strategy is changing now that the Japanese automaker is shifting more aggressively to electric vehicles. Speaking to Bloomberg News at Honda’s Innovation Lab on the 38th floor of an office building in central Tokyo, Mibe said the company is open to working with others in different industries when it comes to developing software used in EVs.

Source: Bloomberg

AUTOMAKERS POACH TALENT FROM TECHNOLOGY COMPANIES

Automakers General Motors and Stellantis have poached executives from several technology companies, including Amazon and Lyft, as the industries continue to vie for top talent. The automakers announced the hires Tuesday, marking the latest round of talent swaps between the automotive and technology industries as the sectors converge with the emergence of connected, autonomous and electric vehicles. GM is adding four new executives to its BrightDrop EV commercial delivery and logistics business, which the company announced in January. 

Source: CNBC

CAN TODAY’S GRID HANDLE ELECTRIC DELIVERY FLEETS?

Mostly say researchers

Existing grid infrastructure appears ready to handle an influx of electric commercial trucks, according to a new study from the National Renewable Energy Laboratory (NREL). Published in Nature Energy, the study looked at increased electric demand from trucks operating relatively short distances, as this appears to be the most feasible starting point for commercial-truck electrification, Brennan Bourlag, lead author of the study, said in an interview with MIT Technology Review. Researchers modeled the potential demand on electricity substations using data from real-world (diesel) delivery fleets. Of the substations studied, about 80% to 90% could support fleets of up to 100 trucks without the need for significant upgrades, Bourlag said.

That's assuming fleets used the highest-available charging speeds, if they chose lower speeds, the need for infrastructure upgrades would be even less, he said. Getting trucks back on the road quickly will likely require megawatt-scale charging, meaning much greater power demand than current DC fast-charging sites for passenger cars.

The next step is electrifying long-haul semis. And for a mix of longer-distance delivery trucks and long-haul electric trucks, some companies have already begun modeling what the electric truck stop of the future could look like.

Portland General Electric and Daimler Trucks North America opened the first public United States charging site for heavy-duty electric vehicles earlier this year—Electric Island. A group of West Coast utilities have been collaborating to make I-5 an electric highway for commercial trucks.

However, it's still unclear when electric heavy-duty trucks will arrive in large numbers. A 2019 analysis found the the higher initial cost of long-haul electric semis didn't yet work out for fleets.

In June 2020, California mandated that manufacturers start selling electric trucks in 2024, and sell only electric trucks in the state by 2045, while 15 states signed an agreement in July 2020 aiming to make new medium-duty and heavy-duty electric trucks in their jurisdictions electric by 2050. That may help push prices down through economies of scale, possibly spurring adoption.

Source: Green Car Reports

MERCEDES ACCELERATES ELECTRIC-CAR SHIFT WITH $47 BILLION PUSH

Daimler AG’s Mercedes-Benz vowed to spend more than 40 billion euros ($47 billion) this decade to electrify its lineup and defend its position as the world’s best-selling luxury-car maker through a historic industry transformation. The manufacturer plans to launch three new all-electric vehicle platforms in 2025 and set up eight additional battery factories with partners, it said in a strategy update Thursday. Mercedes is betting that the luxury segment will shift faster toward battery-powered products than the mass market because of customers’ greater purchasing power.

Source: Bloomberg

WARNING FROM MAJOR CHIPMAKER ADDS TO WORRIES

Industry Will Produce More Than Demand

Chipmakers from Taiwan to the U.S. are cranking up production to address shortages that have hammered automakers and other customers as they try to emerge from the coronavirus pandemic. Now that unprecedented surge investment is fueling fears the industry will overshoot, adding so much capacity in the years ahead as demand subsides that profits will take a hit. In the latest sign of concern over demand, Texas Instruments Inc., one of the largest makers of chips, warned that revenue for the third quarter could fall short of some analysts’ estimates.

Source: Bloomberg