Tesla Buyers Keep Buying Teslas

The Texas-based company is bucking a decline in brand loyalty, and causing issues.

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Tesla’s brand loyalty is an “ominous” trend for the rest of the car industry, Ford’s numerous recent recalls are hurting the automotive giant and nightmare working conditions at a Buick-GMC dealer. All that good stuff and more in The Morning Shift for June 30, 2022.

1st Gear: Tesla Buyers Are Wildly Loyal

Brand loyalty is down across the automotive industry - especially since the start of the inventory shortage issue. Luxury automakers have been hit hardest by this. Porsche is down 8.5 percent and Land Rover is down 9.2 percent. Despite this trend, Tesla isn’t slowing down.

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It was one of just three luxury brands that didn’t have a decline in loyalty, joining Maserati and Genesis. The only caveat to that is Tesla sells far more vehicles than those two companies.

In fact, Tesla stans are so loyal, it’s throwing off the rest of the industry, according to Tom Libby, associate director and loyalty principal at S&P Global Mobility. From Automotive News:

When Tesla is taken out of the calculations, luxury declined by nearly an extra percentage point, landing at a decrease of 5.5 points to an average of 45.4 percent.

“Tesla’s sort of, frankly, hiding a little bit of the luxury decline, which is really twice as much as mainstream,” Libby said during the presentation.

Libby ruled out that Tesla was stealing customers from other brands.

The company’s conquest/defection ratio, which shows how many customers are defecting to Tesla divided by how many are leaving the brand, was low compared with both luxury and mainstream competitors.

“Tesla’s C/D ratio with the other luxury makes, with the exception of Land Rover, was down, which I found surprising. I thought that perhaps they were suffering because of Tesla,” Libby said. “And overall mainstream is down also, which I also found a bit surprising.”

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According to Libby, Tesla’s loyalty rate for March of 2022 was 73.1 percent. That means 73.1 percent of all Tesla buyers already owned a Tesla.

“The story here is that Tesla owners ... they’re coming back to market in increasing numbers,” Libby said. “But just as important, if not more important, they love the brand, and they’re getting another one. So this is an ominous, frankly, ominous trend for the rest of the industry, something that has to be faced, and it has to be acknowledged.”

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2nd Gear: Ford Can’t Get Out Of Its Own Way

Ford is having a string of bad luck when it comes to recent recalls. Issues from spontaneous combustion to loss of power while driving on the highway are putting the Blue Oval at a competitive disadvantage, according to analysts.

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They say it’s essential that not only Ford, but all automakers, focus the money they have on developing new products rather than fixing old mistakes.

According to John McElroy, a longtime industry observer and host of “Autoline After Hours” webcast and podcast, Ford is worst in the industry when it comes to recalls and warranty work. From the Detroit Free Press:

These billions in costs are viewed by financial analysts as unforced errors.

Ford has cited in earnings reports the troubled launches of its 2020 Explorer and Aviator — and the launch of new vehicles, including the award-winning electric Ford Mustang Mach-E and the popular Ford Bronco, have not been without drama.

In recent weeks:

Federal safety regulators opened an investigation into the 2021 Ford Bronco for “catastrophic” engine failure while driving after 32 reported experiences from customers.

Ford stopped delivery of the 2022 Ford Mustang Mach-E in mid-June because of an outstanding recall related to the 2021-22 models losing power while driving. A fix is expected sometime in the third quarter, possibly as early as July.

Owners of the 2021 Ford Expedition and 2021 Lincoln Navigator filed a lawsuit against Ford because their vehicles have been recalled for a defect that may result in spontaneous combustion and the company has not identified a solution yet.

Ford notified regulators that the four-door 2021-22 Ford Bronco may have a defective child safety lock on the passenger side of the back seat, allowing young children to open the door from inside despite indicating otherwise.

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Get ya shit together, FoMoCo. I know you have it in you.

3rd Gear: Nightmare Work Environment At A Buick-GMC Dealer

Robert Brogden’s Olathe Buick-GMC is facing two new lawsuits alleging both a hostile work environment and whistleblower retaliation against former employees.

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The lawsuits come after a former manager sued the dealership for racial discrimination at the end of May.

These new ones were filed separately by former Brogden controller Lynda Cole and HR specialist Brooke Nemechek. They both allege that the general manager created a hostile work environment, and upper management didn’t respond when it was reported. From Automotive News:

Cole had been working at Brogden since 2015, according to her suit, and had worked with the general manager before he assumed the role in 2020. Cole warned the owner of the dealership of some of the general manager’s past behaviors, the suit said. Upon learning of Cole’s report, the general manager became “very confrontational” and belittled her. The lawsuit said the dealership’s upper management witnessed the confrontation but “allowed it to continue unabated.”

According to the suit, Cole witnessed the general manager verbally and emotionally abuse fellow employees, most often Black and female workers. Cole also claimed that the general manager would use illegal substances — including cocaine and marijuana — on company property. Cole reported the abusive behavior and the illegal substances to management, but the lawsuit said management never took action.

The suit also claims Cole “learned first hand” that the general manager was stealing customers’ cash deposits. The general manager would either blame other employees for the missing funds or instruct Cole to “just write it off.” Cole reported this to upper management, but no action was taken, according to the suit.

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Nemecheck made similar allegations in her lawsuit.

According to the suit, Nemechek had worked at Brogden since 2017 and claimed that the same general manager would often call her derogatory names and that when confronted, the general manager laughed. Nemechek reported these instances to upper management, but no corrective action was taken and instead retaliatory measures were taken against her, according to the suit.

Similar to Cole’s allegations, Nemechek said she became aware that the general manager and the financial officer would add provisions to financial statements and forge customer signatures. Like Cole, Nemechek reported the fraud but no action was taken, according to the suit.

Nemechek reported instances of repeated threats and abuse but was told by upper management that it was just “how the general manager was ... with a history of flying off the handle ... common in the car industry,” the suit said.

The lawsuit claims upper management continued to allow the general manager to bully Nemechek with the hopes that she would quit, which she eventually did in November.

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Both women are seeking more than $75,000 in damages for wrongful termination, negligence and whistleblower retaliation, among a myriad of other claims.

4th Gear: General Motors May Have A Strike On Its Hands

GM’s subsidiary employees working at several Michigan plants could go on strike as early as this morning if the company and the United Auto Workers do not come to an agreement.

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According to UAW VP Terry Dittes, the strike deadline is today at 10 a.m. From The Detroit News:

A strike could affect production at Lansing Grand River, Flint Assembly and Orion Assembly plants since Subsystems employees perform vital functions for the assembly process, including material handling. Lansing Grand River makes the Chevrolet Camaro and Cadillac CT4 and CT5. Flint is home to GM’s profit-rich heavy-duty trucks and Orion Assembly recently restarted production of the Chevy Bolt EV and EUV, which was derailed for months amid a battery recall.

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Negotiations have been happening since May of 2021, and they impact about 700 employees.

In a statement, GM spokesman Dan Flores said the company is “continuing to negotiate in good faith and we are hopeful we can reach an agreement that positions our team members and our business for success.”

Dittes wrote in one of his letters that GM employees covered by the GM-UAW national contract “must continue to report to work in the event of a strike by the Subsystems unit. In addition, you may not take part in the picketing that will accompany a strike.”

Another letter is directed at UAW-represented maintenance employees working for Aramark Corp. and other companies who work at the Orion, Flint and Lansing Grand River facilities and at the Factory Zero at Detroit-Hamtramck Assembly Center, which is currently down for a production expansion project.

Dittes tells those members their collective bargaining agreement gives them “the right to honor, an authorized picket line of UAW-represented employees who are involved in a labor dispute at the respective GM site.”

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According to The Detroit News, auto workers were getting more and more concerned about low-paid jobs being added at the subsidiary. Right now, top wages are around $17 per hour, but by the end of the contract in 2023, GM workers covered by the national UAW contract will make just over $32 per hour.

5th Gear: Stellantis And The Expensive EV Doomsday

Stellantis is rightfully worried that if EVs don’t get cheaper, people won’t adopt them in big enough numbers in time for the EU’s ban on internal combustion engines.

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Because of this, the company is looking to cut the cost of making electric vehicles 40 percent by the end of the decade, according to Chief Manufacturing Officer Arnaud Deboeuf. The company plans to manufacture some parts in-house as well as pressure suppliers to cut the price of its products. From Bloomberg:

If EVs don’t get cheaper, “the market will collapse,” Deboeuf said at the company’s Tremery factory in France. “It’s a big challenge.”

Stellantis is planning to introduce more than 75 fully electric models this decade and transform at least some of its French car plants to make EVs. While the company is spending big on the rollout, it’s pledging to maintain strong returns, relying on extra revenue from software and services as well as some premium vehicles.

EV prices are going up quickly. Tesla raised prices as much as $6,000 per car this month, following similar hikes earlier this year from Rivian, Hummer and Ford. Rising raw-materials costs are rendering some battery-powered models unprofitable, Ford Chief Financial Officer John Lawler said at an investor conference earlier this month.

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Stellantis is developing five massive battery factories in North American in Europe that are meant to produce 400 gigawatt-hours of cells by 2030. They company also won’t rule out buying a mine to source raw-material supplies.

Reverse: Lunatic On A Tightrope

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Neutral: I Found My Cat!

Folks, Janet is back home after being gone for nearly two weeks. The little jerk was hiding under my neighbors deck after jumping out of a second story window. She’s got a few bumps and cuts, but she’ll be just fine.

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Thanks so much to everyone who reached out. Your kind words (rare for this site) were greatly appreciated.