GM surged up 74% in net income versus last quarter, all the way up to $4 billion in profits. Honestly, I have no idea how this is possible, but let’s try and figure this out together. That and more in The Morning Shift for November 5, 2020.
1st Gear: In This Economy?
I certainly wouldn’t want to be in charge of making money in the midst of a pandemic, with cases on the rise in Europe and every indication we’ll face the same here come the holidays. Still, GM pulled it off, as someone on staff at The Detroit News not busy covering suburbanites trying to wreck shit at Cobo Hall reports:
General Motors Co. booked profits of $4 billion in the third quarter on strong sales of crossovers, pickup and SUVs, the automaker said Thursday, the first quarter when production went uninterrupted by the coronavirus pandemic.
Net income increased 74% from last third quarter, when the automaker reported how a 40-day strike by the United Auto Workers affected its earnings. GM beat Wall Street estimates for the quarter, reporting revenue of $35.5 billion in the third quarter. Pre-tax earnings totaled $5.3 billion. And profit margins soared to 14.9%.
GM CEO Mary Barra said this was a “testament to GM’s resilience.” That and cheap gas prices, I figure.
2nd Gear: VW Likes Biden, But Has Had A Time With EVs And Unions
Volkswagen boss Herbert Diess recently spoke out in half-hearted favor of Biden, or at least in favor of his policies promoting EVs. VW is getting heavily invested in going all-electric, so this makes sense, as Reuters reports:
Volkswagen Group CEO Herbert Diess on Thursday said a victory by Democrat Joe Biden in the U.S. presidential race would better suit the German automaker’s efforts to mass produce electric cars across the globe.
“A Democrat program would be more aligned with our worldwide strategy to fight climate change to go electric,” Diess said on a Bloomberg webcast on Thursday.
This is not to say that the EV path has been an easy one for VW. Diess has had to appease a lot of parties, as the Financial Times detailed in a recent report:
Unions have also bristled at the cost cuts needed to pay for the transition, while shareholders worry that recent missteps have weakened the 62-year-old’s leverage in a highly political organisation.
[...]
[Diess] also dismissed suggestions that troubles may flare as VW’s truck subsidiary, MAN, plans to axe 9,500 roles to fund an expansion into electric technology. When the unit’s management tore up an agreement with unions in September, the head of VW’s works council, Bernd Osterloh, warned that the company would be “well advised to not link restructuring with the spectre of unemployment”.
After the turbulence of the early summer, something of a truce has been achieved.
“It seems [Mr Diess] came to terms with how things are run here at VW,” said a person close to the works council, who added that the executive is much more communicative with union bosses.
Switching to EVs might not be easy, but I don’t know what else the Dieselgate company can do.
3rd Gear: In China, FCA-PSA Merger Means Cutting Models
I don’t know if these plans for China, the world’s largest car market, necessarily have any bearing on us here in America, the world’s second-largest car market, but I still find them interesting and unsurprising, as Automotive News China reports:
The broad outlines of the plans by PSA Group and Fiat Chrysler Automobiles to regain lost ground in China under Stellantis, their future combined company, are starting to emerge: fewer brands, fewer models and fewer factories.
“It’s not reasonable to think that we will continue with so many brands, so many platforms and so many car lines in Stellantis, given the volumes that the combined entities are doing,” PSA CFO Philippe de Rovira told analysts last week.
[...]
China was once PSA’s largest single market, where the automaker sold more than 700,000 vehicles a year as recently as 2014. In 2019 the group sold about 119,000 cars in the country, and this year, it is likely to sell fewer than 50,000. Sales in 2020 through September were 31,239, a 64 percent decrease from the same period in 2019.
FCA now sells only the Jeep brand in China. The automaker builds gasoline and plug-in hybrid variants of the Jeep Grand Commander as well as the gasoline models of the Renegade, Compass and Cherokee at its joint venture with GAC Motor.
4th Gear: FAW Joins Toyota And Invests In Pony.ai Autonomous Vehicle Startup
I’m not one to worry about Chinese investments in tech companies with American bases, but after years of covering Faraday Future, I’m very interested in seeing how this develops.
Pony.ai has roots in Chinese tech giant Baidu, but has a foothold in America with a base in Fremont. China’s FAW (First Auto Works) is investing in the self-driving tech startup, as Bloomberg reports:
Self-driving technology startup Pony.ai struck a funding agreement with automaker FAW Group, calling it the first strategic investment by a Chinese state-owned vehicle manufacturer into an autonomous-technology company.
As part of the pact, Pony.ai technology will be used in a vehicle platform that forms the basis of FAW’s Red Flag-branded electric cars, the startup said Tuesday. Pony.ai will also work with FAW’s Jiefang arm, the first time its technology will be used in trucks. The size of the investment wasn’t disclosed.
Pony.ai, China’s response to General Motors’ Cruise and Alphabet Inc.’s Waymo, develops and operates autonomous-driving fleets in the U.S. and China. It announced a $400 million investment from Toyota Motor Corp. earlier this year that pushed its valuation to more than $3 billion, and has set up its main hub in Fremont, Calif.
5th Gear: Canadian Union Now Has Deals With All Of Big 3
Unifor now has a deal with GM, making it three-for-three with America’s big automakers, as The Detroit Free Press reports from across the river:
“Unifor’s Master Bargaining Committee has reached a tentative agreement that is being unanimously recommended for 1,700 members working at General Motors in St. Catharines, Oshawa and Woodstock, averting a strike this morning,” according to a statement from Unifor.
The news comes after Unifor reached a three-year deal with Ford Motor Co. and Fiat-Chrysler Automobiles that includes wage increases, bonuses and other benefits for its factory workers in Canada.
If GM’s deal follows the pattern at Ford and FCA, it would include 5% hourly wage increases, a $7,250 signing bonus, $4,000 inflation bonus, shift premiums and the restoration of the 20% wage differential for skilled trades,
Reverse: Oh Right, The OSHA Guy
Neutral: Profits Next Quarter?
The auto industry rebounded in the third quarter, but things look ominous come winter. Do you think profits will hold?