The automotive industry in August was marked by everything from production slowdowns overseas to the continued rise of interest in EVs. Here, we’ve boiled down the highlights, so you can get a quick snapshot of what’s happening at home and abroad. Learn more about the trends in automotive industry for this month, and how they can help you prepare for the rest of the year and the start of 2024.
Slowdown in Germany
Recent reports saw Germany’s car production drop by 3.5% from May to June. It was the largest fall across the continent, which suffered an overall hit of 1.5%. This was a higher fall than anyone had predicted, and it leaves Germany vulnerable to a potential recession. In 2019, Germany exported nearly 3.5 million vehicles, accounting for about 10% of the country’s GDP. The industry also employed nearly 810,000 people across the nation.
GM and Volvo Rejected for Tariff Exemptions from China
The Tesla plug deal was not the end of the recent headlines for Volvo. GM and Volvo have both partnered with China to make SUVs abroad. This is a relatively unusual decision, as Chinese-made vehicles represent a small fraction of sales in the US. Both companies asked the US government to be exempted from a 25% tariff on these vehicles and were denied the request. The decision from the government took about a year to make, and as you might expect, the request did draw some degree of criticism from certain groups. However, it’s worth noting that the Swedish company has found a way to avoid paying certain taxes thanks to a US trade program.
Stellantis Is Making Waves
The notorious Fiat-maker is working with the prime minister of Italy to increase production via a new work program. The efforts would include more investment into research and development, a transition to green energy solutions, and stronger worker training. The specifics of this deal are likely to be named by the end of September, and will include the input from local government, unions, and relevant lobby groups. Meanwhile, in Detroit, the United Auto Workers union is in tense contract negotiations, as they seek strong gains in compensation packages, while the company pushes back. These trends in the automotive industry could lead to a potential strike, so the timing of this auto news is interesting between the new ramp up in Italy and the seeming indifference to US workers.
Tesla’s New $25,000 Car
Scaling back the costs of their products yet again, this affordable EV has been the subject of plenty of speculation. With no official name even, details are relatively hard to come by. The rumor is that it’s a compact hatchback, almost a miniature version of the Model Y. EVs that can stand up to city life are in high demand, the EV is expected to go between 250 and 300 miles on a single charge and target a 4 million car production run. They’re expected to run on 4680 batteries, which have five times the energy capacity of previous batteries used in Tesla vehicles — great news for consumers and for sustainable transportation!
Used Car Market May Be Starting Stabilize
On average, used cars are still higher than pre-pandemic pricing, but there has been some degree of leveling out. In fact, the cost of used EVs has fallen by close to 30%. EVs, which can be seen as anything from environmentally friendly to a status symbol, have been driving a lot of the used car market as of late. Rising gas prices brought on a particular surge in prices, because EVs were really in demand and their prices rose even faster than that of traditional cars. The lowered costs from Tesla combined with more competition in the market, has tempered the sticker shock (at least for now).
Steel and Chips: Supply Side Speculations
Around the world, there is still an auto industry chip shortage, and those shortages are expected to result in 18 million fewer vehicles by the end of 2023. It’s also another factor fueling the EV revolution. However, steel prices are currently holding steady, which allow for more predictable pricing, which can improve both consumer trust and dealership profits. It may also help reduce the expected gap in vehicle production before the year closes out.
Auto industry trends in August follow a somewhat similar route as the rest of the summer news. However, the nuances are worth noting, particularly as it pertains to how EVs are driving the other markets. To stay up to date, LINTEC Automotive is here to help.