Elm Analytics - Automotive Supply Chain Risk Digest #76 - July 20 - 26, 2018

CHANGE IN MANAGEMENT

Former FCA CEO Sergio Marchionne has died as a result of complications from a recent shoulder surgery. Marchionne was 66 years old.

Mike Manley, a Jeep executive, has replaced Sergio Marchionne as CEO of Fiat Chrysler Automobile.

Just days after Sergio Marchionne's departure, the head of FCA's Europe, Middle East and Africa business, Alfredo Altavilla has stepped down. Altavilla will work with FCA's new CEO Mike Manley through the end of August to ensure a smooth transition.

EARNING DIP

Automakers are already feeling the impact of Trumps' tariffs as GM, FCA, and Ford all adjusted their full-year outlooks this week as they revealed lower-than-expected second quarter earnings.

HUMAN CAPITAL

Volkswagen will put about 1,000 workers at its Sao Paulo, Brazil factory on unpaid leave due to weak economic growth and slumping exports to Argentina. The leave starts on August 21 and will last for one month.

INDUSTRY DIRECTIONS

GM has officially launched a pilot for their new peer-to-peer car sharing program in Chicago, Detroit, and Ann Arbor, Michigan through its Maven mobility brand. Owners and eligible lessees can rent their 2015 and newer Chevy, Buick, GMC and Cadillac cars to Maven users for cash.

Detroit's North American International Auto Show is moving from January to June starting in 2020. While the foundation of the show will remain in Cobo Hall, new exhibits and experiences will be available in other locations throughout the city to create a more "festival-like experience".

LITIGATION

The Center for Biological Diversity has filed a formal notice of intent to sue Mazda-Toyota Manufacturing over the construction of their new $1.6b assembly plant near Huntsville, Alabama. They say the construction threatens to pollute and degrade the habitat that supports the endangered spring pygmy sunfish.

MERGERS, VENTURES, ACQUISITIONS

German supplier HUF Huelsbeck & Fuerst is planning a new joint venture with Chinese supplier Shanghai Baolong Automotive Corp. The new company will develop and produce tire pressure monitoring systems for both OEMs and the aftermarket.

Daimler is deepening a partnership with China's Baidu on automated driving and vehicle connectivity services. The next step is integrating Baidu's connectivity services into Mercedes-Benz's MBUX infotainment system.

PLANT OPENING

Continental has broken ground on a new electronic components plant in Kaunas, Lithuania. The plant is set to open in the second half of 2019, create around 1,000 jobs and will produce components such as door and seat control units.

Aston Martin has completed the second phase of its new assembly plant in St. Athan, South Wales. The plant will be used for the production of the automaker's first SUV, due to begin in late 2019.

Chinese wheel supplier CITIC Dicastal is investing $307m into two new aluminum car wheel plants in northern Morocco. 

PLANT SHUTDOWN

Tougher emissions testing delays are creating a backlog of 250k vehicles for Volkswagen. Its Wolfsburg and Zwickau factories will shut down a few days a week until the end of September 2018. The automaker is stockpiling the inventory in parking garages, lots and is considering the unopened Berlin-Brandenburg airport.

REGULATION

EU President Juncker and US President Trump agreed to work toward eliminating tariffs and barriers on trade. The agreement seems to lift the threat of new tariffs on EU automakers and suppliers.

Bloomberg: Canadians weigh in on potential responses to US auto tariff threats.

US Trade Representative Robert Lighthizer thinks that NAFTA talks could come to a close in August "...if everybody wants to get it done.".

RISK ANALYTICS

Earlier this month, a security researcher came across tens of thousands of sensitive corporate documents from many automakers and suppliers on the open internet. The leak included data on over 100 companies that had interacted with a small Canadian company called Level One Robotics and Controls.

Tesla has requested a partial refund of previous purchases from some of its suppliers. The company is aiming to sustain operations and hopes this will help it become profitable.