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Elm Analytics - Automotive Supply Chain Risk Digest #91 - November 2 - 8, 2018

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Automotive Supply Chain Risk Digest

November 9 · Issue #91 · View online
Weekly highlights of the events that impact supply chain risk within the automotive industry.

BANKRUPTCY
South Korea’s Dymco Co. has declared bankruptcy. The company produced LPG valves and gauges. Demand for LPG-powered vehicles has fallen due to hybrid and electric vehicle popularity.
CHANGE IN MANAGEMENT
Tesla has named Australian telecom executive Robyn Denholm as the new Chairwoman of its board of directors. Denholm is taking over the role from Elon Musk, who agreed to step down from the role for three years as part of a deal with the SEC.
EARNING DIP
BMW earnings plunged 40% against a backdrop of Brexit uncertainty, confrontational trade policies, diesel backlash and plunging demand in China.
Car sales in China have declined for a fifth consecutive month. This brings the country closer to its first annual drop in at least two decades.
Nissan’s global operating profit has dropped by 21% in the July-September period. In spite of the drop, the automaker’s North American profit climbed 13% in the most recent quarter.
INDUSTRY DIRECTIONS
GM is closing its Book by Cadillac subscription service in December. Some aspects of the program, such as customer service, may have been more costly than expected.
Volkswagen is planning to sell electric cars for less than $23,000. A source also says that the automaker will convert three existing factories to make the vehicles. 
LITIGATION
Subaru is recalling 100k vehicles in Japan after poor quality inspections on braking systems.
Honda Canada is recalling around 7,500 vehicles over a problem with gas bubbles forming in the brake fluid. The recall notice says the bubbles can lead to “a soft brake pedal feel and a reduction in brake performance”.
MERGERS, VENTURES, ACQUISITIONS
Ford and Volkswagen are in talks to share research to slash costs. The potential partnership may include electric and autonomous vehicles as well as VW using Ford’s Ranger platform.
Chinese technology company Tencent is recruiting driverless car engineers in Silicon Valley. The company’s rival Baidu has been in Silicon Valley since 2011 and already has an autonomous vehicle testing permit.
Ford is buying San Francisco based electric scooter rental company Spin for about $200m. The automaker plans to expand spin from 32 markets to over 100 in North America over the next 18 months.
PLANT CLOSING
Schaeffler is closing its plants in Llanelli and Plymouth, England over Brexit fears. The closures will put 585 employees out of work. 
Michelin is closing it’s 47-year-old small tire plant in Dundee, Scotland by 2020. The tiremaker says that accelerated adoption of larger tires has made the plant’s smaller tire production unsustainable.
Faraday Future is shutting down its EV factory in Hanford, California as it tries to secure funding. Some employees have been laid off, while others have been placed on furlough.
PLANT OPENING
Chinese tire manufacturer Triangle Tire is investing $580m into its first U.S. manufacturing plant in Tarboro, North Carolina. The plant will start production in 2020 and will reach full capacity by 2023, producing around 6 million tires per year.
Continental AG is investing $59m in a new automotive electronics plant in Aguascalientes, Mexico. The plant is start production in 2021 and is expected to generate at least 1,000 new jobs over the next five years.
Toyoda Gosei has opened a new plant in Guajarat, India. The plant will make airbags, steering wheels and weatherstrips.
RAW MATERIALS
Raw materials like copper, nickel and aluminum may soon see a spike in prices. Years with lack of investment, tariff concerns and an industry switch to electric vehicles have investors concerned about tightening supply levels.
REGULATION
In order to meet China’s new, stricter emissions standards, Toyota, FCA, Honda, and Mitsubishi are all going to sell the same vehicle: the Guangzhou GS4 crossover. Each brand will give the car its own logo on the rear of the vehicle, but the look will be the same.
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