Foley Automotive Update

Analysis by Julie Dautermann, Competitive Intelligence Analyst

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Key Developments

• The Society of Automotive Analysts (SAA) will host Coffee Break with Foley & Lardner: Combating Internal and External IP Leakage on August 21, 2024 at 11:00am (ET). Register here to attend the webinar.
• U.S. new light-vehicle sales in July reached a SAAR of 15.8 million units, representing a decline of 0.8% compared to July 2023.  Retail sales were flat for the month, while fleet sales declined by approximately 11% year-over-year.
• A number of major automakers cautioned about the risk of profit pressures in the second half of 2024 due to factors that include rising inventory, the possibility of higher incentives and the need for more competitive new-vehicle pricing.
• Certain large automotive suppliers recently indicated their financial guidance targets could be impacted by headwinds that include higher expenses and volatility in automakers’ electrification plans.
• The National Highway Traffic Safety Administration on July 31 confirmed its initial decision that certain frontal driver and passenger air bag inflators installed in approximately 49 million U.S. vehicles assembled by 13 automakers contain a safety defect and should not be in use. The agency indicated automakers will have 30 days to respond before it could formally demand recalls.
• The Office of the U.S. Trade Representative will delay the increase of Section 301 tariffs on certain imports from China that include EVs and lithium-ion batteries. The tariffs were previously scheduled to take effect August 1 and the USTR expects to issue a final determination sometime in August.
• The UAW endorsed Vice President Kamala Harris for U.S. President.
• A number of companies are reported to be diverting freight ahead of a possible rail workers’ strike in Canada.
• The Detroit Auto Show, previously called the North American International Auto Show, will be held January 10 to 20, 2025, according to a schedule released by show organizers.

OEMs/Suppliers

• GM, Toyota and Hyundai reported second quarter 2024 revenue and profit increases compared to the same period last year.
• Ford reported warranty repair costs between $1.5 billion and $2 billion in the second quarter 2024, representing an increase of $700 million year-over-year and a jump of $800 million from the first quarter of 2024.  The warranty costs were attributed to quality-related issues for models built in 2021 and earlier. The automaker’s net income fell 5.3% YOY to $1.8 billion in the second quarter, and total revenue rose 6.2% to  $47.8 billion.
• Stellantis reported first-half 2024 net profit of $6.1 billion (€5.6 billion) on net revenue of $92.2 billion (€85.0 billion), representing declines of 48% and 14% respectively, compared to H1 2023. Operating and sales challenges in North America were among the challenges that impacted first-half 2024 performance. In a separate announcement, the automaker will offer voluntary separation packages across numerous divisions for an unspecified portion of its U.S. salaried workforce.
• Nissan’s second quarter 2024 profit fell sharply amid challenges that included higher new-vehicle inventory in the U.S. and increased sales incentives.
• Global automakers continue to lose market share in China amid increased competition from the nation’s domestic automakers, according to a report in Bloomberg.

Electric Vehicles and Low Emissions Technology

• Uber will partner with BYD to add 100,000 EVs on the ride-hailing platform beginning first in Europe and Latin America.
• Mitsubishi joined a partnership between Honda and Nissan to support autonomous driving software research and share specifications for certain EV components.
• China’s BYD is reported to be exploring options to establish operations in Canada.
• The federal grant program for clean school buses lacks sufficient internal controls to ensure eligible recipients are selected, according to a report from the Environmental Protection Agency’s Office of Inspector General.
• The state of Washington will launch an instant rebate program for qualifying low-income residents to lease or purchase EVs.

Automated, Autonomous or Connected Vehicles Technologies

• Alphabet will invest $5 billion in its autonomous driving business unit, Waymo.
• Autonomous trucking company Aurora Innovation raised $483 million in a secondary stock offering.
• Chinese robotaxi operator WeRide filed for an initial public offering in the U.S.
• Kodiak Robotics completed its first autonomous semi-truck delivery to partner and customer Atlas Energy Solutions in Texas.

Market Trends and Regulatory

• California’s Supreme Court upheld a lower-court ruling that allows ride-sharing companies in the state to classify their drivers as independent contractors.
• In a recent letter, two U.S. senators asked the Federal Trade Commission to investigate automakers for sharing customers’ driving data to brokers without obtaining consent.
• The increased prevalence of uninsured drivers in the U.S. has contributed to higher costs for annual full-coverage rates.
• By 2026, automotive import volumes at the Port of Brunswick in Georgia could surpass the Port of Baltimore, which has been the top-ranked U.S. seaport for autos for over a decade.