I would not want to be a car dealer right now, as lockdowns shut things down as weather cools and cases spike. That and more in The Morning Shift for December 4, 2020.
1st Gear: Lockdowns Are Back In The UK And Sales Down By A Quarter
I suppose that this is what we can expect in the coming weeks and months here in the States: new lockdowns in the UK have seen car sales dive as dealerships close up. Car sales in the UK are down 27 percent versus where they were this same time last year, as Bloomberg reports:
Carmakers registered their lowest November sales in the U.K. since 2008 as lockdowns forced dealerships to shut back down.
Registrations slid 27% from a year ago to 113,781 cars, according to data from the Society of Motor Manufacturers and Traders. That’s the steepest decline since a 35% plunge in June.
As you can see, a 27 percent decline isn’t as bad as a 35 percent decline, and the industry is quick to tout this as a victory of some kind:
“Compared with the spring lockdown, manufacturers, dealers and consumers were all better prepared to adjust to constrained trading conditions,” Mike Hawes, SMMT’s chief executive officer, said in a statement. “More positively, with a vaccine now approved, the business and consumer confidence on which this sector depends can only improve, giving the industry more optimism for the turn of the year.”
It’s going to get bad before it gets good again.
2nd Gear: There’s A Weird Trade Secret Fight Brewing In EV Recalls
This is an interesting one: two South Korean battery manufacturers, LG Chem and SK Innovation, are in a fight over whether or not trade secrets are getting revealed in a recall. This is over the recalls of LG Chem batteries in Hyundai and GM cars, as Reuters explains:
Last month, SK asked the ITC to consider that “LG Chem batteries have been involved in a series of fires and explosions, raising substantial public interest concerns.”
In the request, SK said General Motors and Hyundai Motor Co. had each issued recent recalls for EVs with LG Chem batteries. The recalls “raise questions of public safety and underscore the critical need for SK batteries in the United States,” the company said.
It added the fires are “compelling grounds” not to impede SK’s ability to manufacture batteries at its U.S. plant. LG Chem in a response filed Wednesday said the filing was “untimely and irrelevant” and should not factor in the ITC review “because the electric vehicle recalls cited by SKI do not impact future-year battery models and do not impact EVs with batteries manufactured in LG Chem’s Holland, Mich., plant.”
GM said last month it was recalling 68,677 EVs worldwide for high-voltage batteries after five reported fires and two minor injuries. In October, Hyundai recalled nearly 77,000 Kona EVs worldwide, saying possible defects in battery cells increased fire risks.
If it were me, I would simply not make batteries that catch on fire.
3rd Gear: VW Says Chip Supply Is Stifling Auto Production In China
Speaking of tech bottlenecks, VW is saying that auto production in China may get held up over supply shortages in imported chips, as Reuters reports:
The pandemic has hit vehicle and parts production globally, and production in China, the world’s biggest auto market, relies heavily on imported chips for electronic parts such as electronic control units and electronic stability programs.
“The chip supply for certain automotive electronic components has been affected due to uncertainties caused by the pandemic,” a Volkswagen representative told Reuters in an emailed statement.
“This has led to a potential interruption in automotive production, with the situation getting more critical as demand has risen due to the full speed recovery of the Chinese market,” the statement, which refers to China’s overall auto production and not specifically Volkswagen’s, said.
One senior industry official, who declined to be named, told Reuters that he expects the shortage of chips will continue to impact China’s car production for a while and several international and local car companies will face production interruptions in the short-term but at different levels.
The way that Covid manages to get in the way of every aspect of our lives never ceases to surprise me.
4th Gear: Daimler Is In A Software Push
Daimler suddenly woke up to realize that it’s 2008 and it needs to chase after this new “Tesla” company everyone is talking about. What’s happening now is that the giganto-manufacturer is shifting resources away from suppliers and towards software, as the Financial Times reports:
Daimler will cut out traditional parts makers in order to fund a software development push that will involve hiring thousands of coders to build an operating system that rivals Tesla’s.
The Mercedes-Benz owner would buy fewer electronic components and “replace supplier development costs with personnel, building and computing costs”, Ola Kallenius, the company’s chief executive, told the Financial Times.
“Down the road, once we have gotten farther in this endeavour, I believe we could actually operate at a lower fixed cost level,” the Swedish boss added.
“We will pay less money to suppliers and then employ people in other places.”
Shifting things around in terms of the supplier network is no joke in the car world, which is nothing but supplier relationships.
5th Gear: Oil Hits Nine-Month High
Gas is still absurdly cheap here in the States, but that may soon change as crude hit a recent high on the back of an agreement between OPEC and Russia, as the Financial Times explains:
Oil prices hit the highest level since March after major producers agreed to a cautious increase in output that eased fears of oversupply.
Brent crude, the international benchmark, rose 1.4 per cent to $49.39 a barrel. US marker West Texas Intermediate climbed by a similar margin to $46.51.
On Thursday evening, Russia and Opec forged an agreement to boost oil supply by 500,000 barrels a day from January, which was a quarter of what they had agreed to previously.
The FT cited the head of a research fund to caution that prices probably won’t rise much beyond that until midway through 2021, when travel gets back going thanks to vaccines. I’m not holding my breath.
Reverse: This Actually Caused Some Train Crashes It Was So Bad
Neutral: How Are You Staying Sane As Days Grow Shorter And Temperatures Drop?
I bought a heat lamp a few weeks back and it’s the wisest purchase I’ve made in some time.
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