Shanghai woe continues, Geely future, Ssangyong bid war – the week
Sweeping COVID lockdown orders issued in Shanghai this month have now been extended, signaling further disruption for automakers operating in the city. The move came in response to the persistently high infection rate from the Omicron variant and China’s broader commitment to its “zero-COVID” policy. Current indicators suggest that the lockdown has caused factory activity in the city to fall to its lowest level in two years since the pandemic began. The city had enacted its original lockdown plan in two phases. First, the restrictions would be applied to areas east of the Huangpu River in Shanghai, where most of the factories are located. The expectation was that a week ago, Friday April 1, lockdown east of the river would be lifted and moved to areas west of the river. However, with infections not receding, the eastern lockdown was extended last Thursday. Combined with the western half of the city now locked down, this means Shanghai is effectively under full lockdown restrictions. Nothing has changed since we wrote this and there have been media reports of food shortages and other issues. Tesla had extended the planned closure of its Gigafactory in Shanghai until April 2, but ironically that has continued as production ramped up at its new plants in Texas and Germany. The Volkswagen joint venture with SAIC has been forced to close part of its Shanghai factory due to difficulties in securing parts supplies, and General Motors, also a SAIC joint venture partner, is also active in the city, but had managed to keep its production lines running by asking workers to sleep on the factory floor by order of local authorities to maintain a closed-loop facility. Auto suppliers like Aptiv and ThyssenKrupp are also affected by closures. Bosch has two plants in Shanghai, both of which are currently operating with reduced staff levels. Toyota’s Hino Motors also operates an engine plant in Shanghai, which was forced to halt production due to lockdown orders. A major difficulty faced by most of these companies is not only the risk that their factory could be ordered to close or that they cannot get parts shipments, but that their workers may not be able to leave their homes even if they do Doors can physically open buildings when locking commands develop. To date there are no signs of improvement.
Our new model futurist was at it again, this time targeting Volvo Cars owner Geely, China’s top OEM, which has added several additional brands only to scrap each division. Nevertheless, the company survives. You’ve got to love some of the brand names that have been dreamed up for China – Geely currently includes Maple for cheap models, which isn’t doing too well, but a few other relatively new additional names, Geometry and Zeekr, are thriving. Maybe Jidu Auto too when it comes out in 2023. Continue reading.
The seemingly never-ending saga of Ssangyong’s bankruptcy took another new turn this week, as South Korean media reports said chemical-to-finance conglomerate KG Group had settled in a KRW 1.5 trillion (US$1.2 billion) bid ) joined the bidding war. That’s what industry insiders said Korea Herald KG Group recently submitted its letter of intent to acquire SsangYong Motor to the lead manager of the transaction, EY Hanyoung. According to the report, KG Group was founded in 2003 on the basis of the country’s first fertilizer company, Gyeonggi Chemical, which was founded in 1985 and now acts as the holding company for the group. Over the decades, it had carried out at least 15 mergers and acquisitions, including steelmaker Dongbu Steel. KG Group is reportedly forming a consortium to join the bid with private equity Cactus PE, which helped it acquire Dongbu Steel in 2019 Korea HeraldMarket insiders see KG Group as the most suitable candidate to acquire SsangYong given its stable cash flow, financing capabilities and expertise in managing a diverse business portfolio.
The sustainability reports of the car manufacturers are there. Most recently, Jaguar Land Rover was owned by Tata Motors, which said it had committed to reducing greenhouse gas emissions at its operations by 46 percent by 2030.
It would also reduce average vehicle emissions across its value chains by 54 percent, including a 60 percent reduction throughout the use phase of its vehicles. The targets approved by the Science Based Targets Initiative (SBTi) validated the company’s plans for a 1.5°C emission reduction in line with the Paris Agreement. “Jaguar Land Rover’s commitment meets the most ambitious goal set in Paris,” the automaker said in a statement. The company has committed to a second decade of achieving net-zero emissions across its supply chain, product and operations by 2039.
BYD, which recently announced the end of ICE vehicle production, has set a new record for Chinese automakers after achieving monthly sales of 104,338 “new energy” readings: electrified passenger cars in March 2022, up 160 .9% compared to the previous year. In March, BYD sold DM 50,674 PHEV vehicles, up 615.2%. Sales of battery-electric models increased by 229.2% to 53,664 units.
It will be a tough year for the global light vehicle market as supply chain disruptions continue to limit global sales. The US light vehicle market ended March with 1.25 million units sold, down 22% from March 2021 (a strong month). The US market continues to be impacted by a parts shortage resulting in extremely low vehicle inventories. The annualized sales rate (SAAR) was just 13.4 million units in March, according to LMC Automotive’s GlobalData unit. General Motors also led the market in March but ended the first quarter behind Toyota. March 2022 was the fifth weakest month for US light vehicle sales since 2000. First quarter sales totaled 3.29 million units, down 16% from the first quarter of 2021. Historically, and under normal demand conditions, the volume would have been closer to the 4 million mark. LMC analysts are now predicting that supply chain disruptions will continue throughout 2022. Global light vehicle sales are expected to rise just 1% to 82.6 million units – a forecast that has seen a drop of almost 3 million units since February.
Hertz has bought Teslas and now Polestar is set to join the 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 that 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 also expanding electric vehicles to include ridesharing.
Stellantis has sold its remaining 25% stake in Gefco to CMA CGM Group, a transportation and logistics company. “The sale of this non-strategic asset marks the final step in our exit plan from the transportation and logistics industry, initiated a decade ago,” said Carlos Tavares, CEO of Stellantis. “Stellantis now has an efficient global supply chain with multiple logistics suppliers, among which Gefco continues to play a significant role.” CMA CGA said the acquisition will strengthen the range of logistics services that CEVA Logistics, CMA CGM’s logistics subsidiary, offers 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 intends to sell from 2028 as part of its “Ambition 2030” plan. The system was developed by the automaker’s research center in Kanagawa Prefecture with the aim of advancing the development of solid-state batteries. A pilot production line will be established at the Yokohama Auto Plant in fiscal 2024, allowing the automaker to study and optimize materials, design and manufacturing processes ahead of full production later in the decade.