Car sales are bad, the UAW isn’t convinced by Ford, and Sergio Marchionne’s heirs received more money than GM CEO Mary Barra last year. All that and more in The Morning Shift for May 1, 2020.
Hyundai fell 39 percent in April in the U.S. compared to the same month last year, which is terrible but not as terrible as some were expecting, according to Automotive News. The company reported its April results Friday on the heels of several other automakers. April is when things will have bottomed out, or so they think:
Overall, retail sales declined 28 percent and fleet shipments slumped 74 percent, Hyundai said.
While the pandemic significantly disrupted April demand across the industry, Hyundai executives credited the “ingenuity of our dealers” and “robust customer assistance programs” for helping to mitigate the impact.
“Sales varied significantly across regions,” said Randy Parker, vice president of national sales for Hyundai Motor America. “We focused on supporting sales in areas that transitioned from showroom retail to digital and contactless retail sales and service.”
Toyota Motor Corp., America Honda, Kia, Mazda, Subaru and Volvo are also expected to report April sales later Friday or Monday, providing a larger snapshot of how the outbreak has disrupted the market.
The Detroit 3, Nissan Motor, Volkswagen Group, Daimler, BMW Group and other automakers now report sales on a quarterly basis. Analysts believe every company suffered sharply lower April volume.
What’s really striking though is this:
The seasonally adjusted annualized sales rate is expected to tumble to 7.5 million to 7.7 million, according to forecasts. That would be the lowest sales pace in more than 40 years — it hit 8.8 million in December 1981 during a double dip recession, according to Cox. For comparison, during the Great Recession, the SAAR hit a low of 9.05 million in February 2009.
Annual car sales were expected to be just under 17 million for 2020 before all of this hit.
This all seems dangerous and stupid when everything will have to close again because of a second outbreak, but BMW is still forging ahead to reopen next week.
Via The State:
About 11,000 people work at the Spartanburg plant that was shut down March 29. Those workers will be greeted by a variety of deep cleaning and safety measures that BMW implemented during the shutdown.
While the facilities doors were shuttered, equipment across the plant was disinfected, workstations were sanitized, layouts were remodeled to enhance social distancing, and preventative maintenance was completed on equipment, officials said in a news release.
Temperature checks will also be added to protect employees from the spread of COVID-19, according to the release.
Other efforts being taken to improve workplace safety include modified seating for the cafeteria and offices, staggered lunch schedules, and expanded cleaning practices, officials said.
Additionally, any employee unable to maintain the 6-foot social distancing mandate will be required to wear a mask, according to the release.
They got shares in Fiat Chrysler worth $23.5 million in 2019, according to Automotive News. That’s more than what GM CEO Mary Barra got, which was $21.6 million, and it was more than what FCA CEO Mike Manley got, which was $14.4 million.
Marchionne, FCA’s former CEO, died in July 2018.
The shares were awarded “as a result of overachievement of performance objectives for the 2014-2018 performance period,” said FCA’s annual report, which was filed with the U.S. Securities and Exchange Commission on Feb. 25.
The delivery date of the shares was not included in the report, but even at FCA’s lowest 2019 share price of 11.05 euros, they would have been worth 21.56 million euros.
Marchionne’s heirs stand to receive even more money from FCA.
The report said other payments would be made “consistent with obligations set forth in Mr. Marchionne’s employment agreement, including his post-mandate benefit of five times his base compensation.”
No restart date has been announced for the Big Three, in large part because the UAW doesn’t think a restart for now is safe.
Billions of dollars in revenue and profits are riding on how quickly Ford and its U.S. rivals can convince the UAW and Michigan Governor Gretchen Whitmer that it is safe to return to work. The UAW declared that early May was too soon to reopen, and since then has not agreed to a date.
Without Michigan, the Detroit Three and other automakers operating in the United States cannot build vehicles. Ford executives highlighted that the U.S. auto sector accounts for 6% of U.S. economic output.
“It’s just really now getting the clarity from our government leaders because we’re ready,” Ford Chief Operating Officer Jim Farley said on a conference call with reporters.
Farley added he would “absolutely” be comfortable having his family work in a Ford plant given the steps the company has taken to ensure employee safety.
UAW President Rory Gamble said the union is negotiating with the Detroit automakers about safely reopening their U.S. plants. Among the issues on the table are what types of protective gear workers should have, how fast assembly lines should move and how much testing should be done.
Farley should put his money where his mouth is and put his family to work in a Ford plant. You don’t get to just say nonsense like that!
Gas prices are cheap and getting cheaper thanks to a glut of oil, but when the economy restarts (and it will restart eventually) you can expect the demand for oil to come back as well.
That’s according to a column in the Financial Times written by an analyst at an oil and gas consultancy, which normally would give me pause but unfortunately I agree this dour view of the future is probably spot on:
Although global consumption will fall this year by 11m barrels a day according to our estimates, or 11 per cent, from last year’s 100m b/d, there are still a series of factors providing underlying support for oil demand growth despite pressure to act against climate change.
Firstly, air travel is likely to recover. Consumption of jet fuel, the oil product worst affected by the pandemic as travel bans and lockdowns take effect, will rebound once people emerge out of isolation. It may just take a few years, but eventually the current concerns will wear off and the strong relationship between rising incomes and travel ambitions will return.
In the meantime, road transport, which accounts for nearly half of global oil consumption, will prove resilient and may even benefit from the crisis. It is likely that people will use public transport less, given subways, buses and trains have been a major — if not the primary — transmission vector for the virus.
The low oil price environment we are moving into will also incentivise car use, while reducing or even eliminating the fuel cost advantage of electric vehicles. Electrification will lose speed and internal combustion engines will continue to dominate as policymakers will be less forthcoming with the much-needed subsidies for electric cars at a time of economic crisis. There will also be less pressure to push for greater fuel efficiency with global CO2 emissions set to drop substantially in 2020.
I ate a large amount of food yesterday out of boredom: deli meats, canned soup, leftover brisket, some pasta with pesto. At night I drank vodka and danced alone. Things are going great!