Darwin, meet Stellantis

Greetings from London!

We’re cruising towards the end of another earnings season for the world’s major automakers and the results posted so far have shown the multitude of strains they face.

Factors cited by automakers for disappointing results ranged from a price war in China to supply chain messes at Porsche to warranty problems at Ford, or inventory challenges in the U.S. market. Even General Motors, which raised its profit forecast, saw its shares hit as investors worried about inventories.

Don’t fret, big legacy car companies say, new models are on the way to lift sales, especially new hybrids for those not ready to transition to electric, and more affordable EVs for those who are. Except of course for Tesla, where Elon Musk’s talk of humanoid robots and driverless cars after disappointing results instead of lower-cost electric cars left a big dent in the company’s share price.

Which brings us to today’s Auto File…

Stellantis CEO Carlos Tavares has frequently cited a core phrase to describe the disruption caused to legacy automakers like his by the arrival of Chinese EV makers on the global scene: this, he says, is a Darwinian period.

Charles Darwin said it is not the strong or most intelligent species that survive, but those most adaptable to change. Tavares has warned tough competition from new low-cost rivals will hurt dealers, suppliers, workers and automakers.

But late last week Tavares warned that this Darwinian epoch also applies to the 14 brands in Stellantis’ sprawling portfolio, from Ram to Lancia and Peugeot. Or 15 if you count the recent addition of Leapmotor in which the world’s No. 4 automaker now owns a stake.

As you can read here, after Stellantis’ sales struggled in the first half in the U.S. market where the automaker has made most of its money from big pickup trucks and Jeeps, Tavares warned that if any of those brands “don’t make money, we’ll shut them down.”

In an era of remarkable changes in strategy by automakers, this stands out because Tavares has hitherto indicated that all Stellantis’ brands have a future.

For any now struggling, Tavares’ new message was unambiguous: change or die.

Job worries for Akio Toyoda – REUTERS/File Photo

Embattled Toyota chairman Akio Toyoda survived a shareholder vote last month to stay in his role, but with a marked drop in investor support – 72% versus 85% in 2023.

In an interview streamed live on Toyota’s website, Toyoda now says he may not be reelected as a director if shareholder support for him continues to fall at that pace. The grandson of Toyota’s founder, Toyoda said the result marked the lowest ever support for a director at the Japanese automaker.

The results were stark for a corporate giant in Japan, where executives are usually reelected to boards with overwhelming support. They reflect dissatisfaction particularly among international investors and domestic institutional investors alike over how Toyota has handled a growing scandal at home over certification testing violations.

The latest production numbers released by Toyota merely served to emphasize the scale of Toyoda’s challenge if he wants to keep his job next year.

Global output at Toyota tumbled nearly 13% in June from a year earlier, the fifth consecutive month of declining production, hit by a double whammy of the certification scandal and a fierce price war in China.

Nissan CEO Makoto Uchida: new cars coming — REUTERS/Kim Kyung-Hoon

Just days after Nissan said that its fiscal first quarter profit had been all but wiped out by the need to offer heavy discounts to get vehicles off dealer lots in the all-important U.S. market, Reuters correspondents Maki Shirak and Daniel Leussink reported that the automaker has cut output at its top plant in Japan.

As you can read here, Nissan has slashed planned production by a third at its Kyushu plant in southwest Japan this month. According to sources that means lower output for a flagship crossover model, as Nissan struggles with weak U.S. demand for its range of ageing models.

Unlike rivals Toyota and Honda, Nissan lacks the hybrid models currently in favor with U.S. consumers who are reluctant to make the switch to EVs.

CEO Makoto Uchida has promised that it will work on strengthening its lineup in the U.S. market, including with plug-in hybrids, but would not say when those will arrive.

In the meantime, as one analyst told Reuters, for now Nissan is stuck with no choice but to continue offering discounts to move the metal.

China’s BYD widened its sales lead over Tesla in Singapore in the first half of this year, highlighting the challenge facing Elon Musk’s company as Chinese EV rivals flex their muscles in Southeast Asia.

BYD’s strong growth in Singapore, one of the region’s smallest auto markets, underscores its plans to dominate Southeast Asia, where gasoline car brands from Japan and South Korea are popular and Tesla has yet to make a mark.

BYD has already made early gains in the region. Thailand is its biggest overseas market, where BYD is expanding distribution partnerships with local conglomerates.

BYD has stepped up its marketing efforts in Singapore, a small, wealthy island with a population of 5.9 million where vehicle taxes are among the world’s highest. BYD has even opened two restaurants where consumers can dine on dishes inspired by its car models and book a test drive.

Can we have an order of the Atto 3 Hokkaido Scallops to go, please?

Stellantis’ plans to sell a majority stake in its robotic unit Comau to U.S.-based private equity firm One Equity Partners has drawn scrutiny from Italy’s government, with the industry ministry saying it was assessing whether legislation aimed at shielding strategic assets from foreign investors could be applied to the sale.

Nikkei reports that Toyota plans an EV battery plant to supply a factory producing luxury Lexus brand cars, which would make the island of Kyushu in southwestern Japan a central part of its EV supply chain and an export base for Asia.

U.S. car dealer software firm CDK Global faces a fresh problem a month after a cyberattack hit dealership operations across the country, as a U.S. federal judge said software vendors can band together as a class to sue the technology giant for allegedly restricting access to data and causing them to pay hundreds of millions of dollars in overcharges.

Indian e-scooter maker Ola Electric says it seeks to raise $734 million in the country’s biggest IPO this year, a deal set to lure major foreign investors and highlight growing confidence in India’s financial markets.

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