Factory closures in Europe. Layoffs in America. Sales are plummeting everywhere.
The auto industry is suffering, and we could all suffer the consequences.
The EV woes are also hitting Ford hard. The company plans to shut down operations at its F-150 Lightning EV factory later this month until the end of the year.
Let's start with Volkswagen. The company is proud to be Europe's largest car manufacturer and has never closed a factory in its native Germany.
Until now.
punch buggy blues
At the end of October, the company asked the worker Salaries will be cut by 10% as part of an ongoing campaign to reduce costs across the VW Group. Industry officials say the first domestic plant closure in the company's 87-year history could come next, with up to three factories in Germany potentially closing and more than 100,000 jobs lost. I am concerned that there is.
“Management is taking all this seriously. This is not a dangerous thing to do in collective bargaining,” warned Daniela Cavallo, president of the Volkswagen works council, in a speech to employees.
These job cuts will reduce the number of domestic factories to seven, and reduce the number of employees by one-third.
Factories that remain open will also endure cost-cutting measures that involve downsizing and wage freezes, according to a separate report.
VW aims to save around 10 billion euros (about 10.8 billion USD) by 2026.
Volkswagen brand chief Thomas Schäfer has previously pointed out that German factories are operating at 25% to 50% above target costs. This is mainly due to high energy costs in Europe, which German automakers say are four times more expensive than in China or the United States.
Intensifying competition from Chinese brands and a lack of demand for electric vehicles are exacerbating the problem.
Volkswagen has not commented on the report and has not yet announced any plant closures or job cuts.
Volkswagen had previously considered buying Audi's struggling electric car factory in Brussels. Those plans may change and the factory may close permanently as no other suitable buyer is found.
The outlook for the United States is not so bright either.
GM is feeling the heat
General Motors is laying off about 1,000 software employees worldwide, 600 of them at its technology center in Warren, Michigan.
In a memo to employees obtained by Automotive News, GM said the layoffs will “move faster, pivot where necessary, and prioritize investments where they will have the greatest impact.” He said it was to make it possible.
This is certainly a shift from the past few years, when GM has expanded its software team to support its electrification and autonomous driving efforts. The company predicted that these services could generate $25 billion in revenue by 2030.
General Motors claims these job cuts are targeted at “software and services” employees, but that's not exactly true. The job cuts are from the Ultium division, a sub-EV company created by GM to differentiate it from its gasoline engine division.
We can confirm that Ultium fired a number of thermal engineers without warning. As you can imagine, thermal engineers are essential to thermal management to prevent EV batteries, power electronics systems, and motors from overheating.
Does this indicate that GM is no longer fully committed to electric vehicles and is significantly cutting back on research and development for future EVs?
It certainly looks like that.
ford loser lightning
The EV woes are also hitting Ford hard. The company plans to shut down operations at its F-150 Lightning EV factory later this month until the end of the year.
The much-hyped electric pickup costs the company $40,000 per vehicle sold. That's hardly sustainable, especially considering Ford's third-quarter net income fell 26% and cost issues lowered its full-year adjusted profit forecast to about $10 billion.
Mercedes: Bust in class
The luxury car market is also different than before.
Mercedes-Benz has cut production of its S-Class line in response to falling sales, with production down 13% in China, 19% in the United States and 27% in Europe. These luxury cars have been rolling off the company's state-of-the-art Factory 56 assembly line in Germany since 2020, always running at least two shifts.
For the first time since Mercedes opened what it touts as the world's most modern car factory, one shift is enough.
The factory produces Maybach and AMG models as well as the electric EQS. Mercedes plans to renew the S-Class next year, so the new model could revive demand.
Lamb tough
No wonder Stellantis CEO Carlos Tavares continues to despise his former U.S. management team. Third quarter sales in North America were a disaster, down 20% and 17% for the year.
This is bad news for iconic American brands Jeep, Ram, Dodge, and Chrysler, and investors are heading out.
But times are tough overall for auto conglomerates. Sales in Europe fell by 17%, and even Maserati was relegated to the slow lane with a staggering 60% drop.
Performance in China, India and the Asia-Pacific region was weaker, with sales down 30%.
border run
And in a move sure to infuriate the UAW, Tavares plans to move production of Ram's full-size 1500 pickup truck from the United States to the Saltillo plant in Mexico, which already makes Ram's heavy-duty pickups and vans.
Labor costs are low in Mexico, but this move is no doubt intended to prevent the UAW from shutting down production due to future strikes. We believe it's the same reason why Ford moved some of its heavy-duty truck production to Canada. This is a game of chess, with both Ford and Stellantis working to escape checkmate.
To learn more about the ongoing crisis in the auto industry, watch my video below.
