Automobile

Shanghai woe continues, Geely future, Ssangyong bid war – the week

Wide-reaching COVID lockdown orders enacted in Shanghai this month have now been extended, signalling further disruption for auto players operating in the city. The move came in response to the infection rate remaining stubbornly high from the Omicron variant and China’s wider commitment to its ‘zero-COVID’ policy. Current indicators suggest that the lockdown has seen factory activity in the city slump to its lowest level for two years, since the pandemic began. The city had enacted its original lockdown plan in two phases. Initially, the restrictions would be applied to areas to the east of Shanghai’s Huangpu River, where most of its factories are located. The expectation was that, from a week ago, Friday 1 April, the lockdown to the east of the river would lift and be shifted over to areas west of the river. However, with infections failing to come down, the eastern lockdown was extended last Thursday. This, combined with the now-locked-down western half of the city, means Shanghai is effectively under full lockdown restrictions. Since we wrote that, nothing has changed and there have been media reports of food shortages and other problems. Tesla had extended its planned shutdown of its Shanghai gigafactory through to 2 April but that has continued, ironically as output at its new Texas and German plants came on stream. Volkswagen’s JV with SAIC has been forced to close a portion of its Shanghai factory in response to difficulty in securing parts supplies and General Motors, also an SAIC JV partner, is also active in the city but had managed to keep its production lines moving by asking workers to sleep on the factory floor to maintain a ‘closed-loop’ facility as instructed by local authorities. Shutdowns have also affected auto suppliers including Aptiv and ThyssenKrupp. Bosch has two plants in Shanghai with both currently operating at reduced staffing levels. Toyota’s Hino Motors also operates an engine plant in Shanghai, which has been forced to pause production in response to lockdown orders. A key difficulty most of these companies are encountering is not just the risk that their factory might be instructed to shut or that they cannot receive parts deliveries but, even if they can physically open the doors, their workers may not be able to leave their residential buildings as lockdown orders evolve. As of today, there’s no sign of anything getting better.

Our new model futurist has been at it again, this time eyeing Volvo Cars owner Geely, China’s top OEM which has added multiple additional brands only to axe each division. Still, the company persists. You gotta love some of the brand names dreamed up for China – Geely currently includes Maple for cheap models, which isn’t doing too well, yet a couple of other relatively new additional names, Geometry and Zeekr, are thriving. So might Jidu Auto when launched in 2023. Read on.

The apparently Never Ending Story of Ssangyong’s bankruptcy took yet another new turn this week with South Korean media reports saying chemicals-to-financial conglomerate KG Group had joined the bidding war with a KRW1.5 trillion (US$1.2 billion) offer. Industry insiders told the Korea Herald KG Group recently submitted its letter of intent to acquire SsangYong Motor to the lead manager of the deal, EY Hanyoung. The report said KG Group was founded in 2003 based on the country’s first fertilizer company Gyeonggi Chemical which was set up in 1985, and now acted as a holding company for the group. Over decades, it had carried out at least 15 mergers and acquisitions including steelmaker Dongbu Steel. KG Group reportedly is forming a consortium to join the bid with private equity Cactus PE which helped it acquire Dongbu Steel in 2019. According to the Korea Herald, market insiders see KG Group as the most feasible candidate to take over SsangYong, considering its stable cash flow, funding capability as well as know-how in managing a diverse business portfolio.

Automakers’ sustainability reports are in. Latest was Tata Motors owned Jaguar Land Rover which said it had committed to reducing greenhouse gas emissions across its operations by 46 percent by 2030.

It would also cut average vehicle emissions across its value chains by 54 percent, including a 60 percent reduction throughout the use phase of its vehicles. The goals, approved by the Science Based Targets initiative (SBTi), confirmed the company’s plans for a 1.5°C emissions reduction in line with the Paris Agreement. “The commitment by Jaguar Land Rover meets the most ambitious goal set in Paris,” the automaker said in a statement. The company set a second decade ambition for net zero emissions across supply chain, product, and operations by 2039.

BYD, which recently announced the end of ICE vehicle production, has claimed a new record for Chinese carmakers after reaching achieved monthly sales of 104,338 “new energy” read: electrified passenger vehicles in March 2022, up 160.9% year on year. In March, BYD sold 50,674 DM PHEV vehicles, a rise of 615.2%. Battery electric model sales rose 229.2% to 53,664 units.

It is shaping up to be a tough year for the global light vehicle market with supply chain disruptions continuing to constrain sales across the globe. The US light vehicle market finished the month of March with 1.25 million units sold, a 22% decline over March 2021 (which was a strong month). The US market continues to be impacted by a parts shortage that is generating extremely low vehicle inventories. The annualised rate of sales (SAAR) as just 13.4 million units in March, according to GlobalData unit, LMC Automotive. March also saw General Motors top the market, although it ended the first quarter behind Toyota. March 2022 was the fifth weakest month for US light vehicle sales since 2000. In Q1, sales totalled 3.29 million units, down by 16% from Q1 2021. Historically, and under normal demand conditions, volume would have been closer to the 4 million mark. Analysts at LMC now predict that supply chain disruptions will last throughout 2022. Global light vehicle sales are now projected to increase by just 1% to 82.6 million units – a forecast that has seen a cut of nearly 3 million units since February.

Hertz has bought Teslas and now Polestar is to go on fleet as the rental car operator buys up to 65,000 electric EVs over five years. Availability is expected to begin in spring 2022 in Europe and late 2022 in North America and Australia. Hertz will initially order the Polestar 2. Hertz said last October it would offer its customers the largest EV rental fleet in North America and one of the largest in the world. In addition to offering the fleet to its business and leisure customers, Hertz is extending EVs to rideshare drivers.

Stellantis has sold its remaining 25% stake in Gefco to the CMA CGM Group, a transport and logistics company. “The sale of this non-strategic asset marks the last step of our exit plan, initiated a decade ago, from the transportation and logistics industry,” said Carlos Tavares, Stellantis CEO. “Moving forward, Stellantis now has an efficient global supply chain with diverse logistics suppliers, among which Gefco continues to play a meaningful role.” CMA CGA said the acquisition will strengthen the range of logistics services that CEVA Logistics, CMA CGM’s logistics subsidiary, provides to its customers, especially in France and the rest of Europe.

Nissan Motor has unveiled a new prototype factory for laminated solid state battery cells which the company aims to sell from 2028 as part of its Ambition 2030 plan. The facility was developed by the automaker’s research centre in Kanagawa Prefecture with the aim of promoting the development of solid state batteries. A pilot production line will be set up at the Yokohama car plant in fiscal 2024 which will allow the carmaker to study and optimise materials, design and manufacturing processes ahead of full production later in the decade.


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