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Elm Analytics - Automotive Supply Chain Risk Digest #150 - December 20 - 26, 2019

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Automotive Supply Chain Risk Digest

December 27 · Issue #150 · View online
Weekly highlights of the events that impact supply chain risk within the automotive industry.

CHANGE IN MANAGEMENT
Jun Seki, Nissan’s Vice COO (and its designated turn around the official), is resigning. His departure comes as a blow as many executives have left amid the Ghosn scandal.
Leadership at Mahindra & Mahindra Ltd. will change drastically over the next 15 months through planned retirements and role assignments.
INDUSTRY DIRECTIONS
Two-thirds of PSA / FCA production will put vehicles on just two platforms.
BMW execs say that they will have sold 500,000 EVs worldwide by the end of the year. Chairman of the automaker’s board of management Oliver Zipse says that they are aiming to sell another 500,000 within the next two years.
LABOR DISPUTE
Eight UAW locals voted to hold a convention to address union corruption. Members from Ohio, New York, Kentucky, Michigan, and Illinois are looking to amend the UAW constitution to require “direct referendum elections” of union leaders and increase financial transparency.
LITIGATION
A federal court in Australia has fined Volkswagen $86M for misleading car buyers about emissions. The automaker says they will review the assessment and may appeal it.
Ford will recall over 600K Fusions, Milans, and MKZs built between 2006-2010 over a potential brake pedal problem. The automaker is aware of 15 accidents and two injuries “that may be related” to the problem.
Following a lawsuit from taxi drivers accusing Uber of unfair business practice, Colombia has instructed the ride-sharing company to halt operations in the country immediately. Uber had been operating in a state of legal limbo since 2013 because it was paying taxes while lacking the approval to work there.
A judge in New York state struck down a new rule that would have limited how much time drivers for ride-hailing apps such as Uber and Lyft can spend cruising the streets of Manhattan without passengers. The judge called the city’s cruising cap “arbitrary and capricious.”
MERGERS, VENTURES, ACQUISITIONS
Up and coming EV maker Rivian is closing out the year with a $1.3B investment from T. Rowe Price. This year, the automaker received nearly another $1.5B in investments from the likes of Amazon, Ford, and Cox Automotive.
Fiat Chrysler is selling its Teksid cast iron auto components business to Brazil’s Tupy for $233.4M. The deal is expected to close in the second half of 2020 and does not include Teksid’s aluminum business.
PLANT CLOSING
US Steel is planning to idle “a significant portion” of its iron and steelmaking plant on Zug Island in River Rouge, Michigan, and will layoff 1,545 workers. The iron and steelmaking operations will start to go dark in April 2020, while the hot strip mill rolling facility will be idled before the end of 2020.
PLANT OPENING
Commercial truck maker Navistar is building a new $250M plant near San Antonio, Texas. The new plant will bring about 600 new jobs to the area.
RAW MATERIALS
Scott Williamson, managing director of Australian mineral explorer and mine developer Blackstone Minerals:
“I don’t think they [the automotive industry] understand how critical and difficult it is to get hold of these metals. There’s a disconnect between the amounts of money at the automotive level and what comes down to us. If the money doesn’t come down to the mining level, there will be no EV revolution.”
REGULATION
The Office of the US Trade Representative is expected to remove the exclusion of Chinese plastic injection molds from a 25% tariff granted on Dec. 28, 2018.
Automakers are criticizing the French government for increasing the tax on larger and less efficient vehicles while simultaneously considering reducing cash incentives for the purchase of EVs. Cars emitting CO2 above a certain level will be subject to a nearly $22,240 fine starting in 2020, up from the current penalty of $13,863.
Brazilian President Jair Bolsonaro says that President Trump has assured him that the US will not impose tariffs on the country’s steel and aluminum exports. Trump mentioned the “great call” on his Twitter feed but did not mention the tariffs.
The SEC is investigating BMW for issues with reported sales numbers. “Car punching” is where loaner vehicles delivered to dealerships are reported as purchases to improve figures.
Lawmakers in the US Congress have rejected an idea to expand the federal EV tax credit for automakers to the first 600,000 cars they sell in the US. Currently, the credit exists for the first 200,000 EVs an automaker sells in the US.
SUPPLY CHAIN
Toyota is experimenting with pickup logistics to reduce gas emissions. Parts are collected rather than delivered using fewer lorry drivers.
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