The modern car industry requires an incredible amount of coordination, not just internally but from suppliers, workers, governments, and dealers. Just one car is touched by thousands of people on its journey from an idea to a product you can buy. While all the aforementioned groups work together in order to create a product, they don’t always see eye-to-eye. We should all credit Stellantis for doing the impossible and uniting these forces for a common cause: Kvetching about Stellantis.
I’m starting out today’s Morning Dump with a little hyperbole, but only a little. United Auto Workers President Shawn Fain made a speech in which he talked about a potential strike and drank from a mug labeled “Boss’s Tears,” ended by marveling that all these disparate groups agreed that Stellantis is a mess.
You know who else agrees the company isn’t perfect? Stellantis. Let’s travel to Italy to hear the Stellantis side of it.
All of this is hard, and the uncertainty of what different governments are going to do doesn’t help. German automakers feel this most acutely, and the warning from China that these tariffs aren’t going to help cooperation might make for more sleepless nights in Wolfsburg.
UAW: We Might Strike Stellantis
I’ve embedded this video from Stellantis above because it opens with a slickly produced campaign film for the UAW that looks almost good enough to be an SEC football hype video. It ends with Shawn Fain at Solidarity House in Detroit clowning Stellantis while drinking from this mug:
The message of Fain is that “we have to save [Stellantis] from itself.”
All of this goes to the perceived threat, from the UAW, that Stellantis is going to back down from its plan to build the Dodge Durango at the Jefferson North plant and instead shift production to Windsor Assembly in Ontario, Canada. One of the commitments that Stellantis made during last year’s contract negotiations, according to Fain, was the right to strike over product plans. Specifically, Fain says that Stellantis agreed to $19 billion as the amount of product and investment, with specific plants and products listed in the contract.
According to Fain, Stellantis is trying to push its product plan with deals outside of the current contract, thus causing a need to renegotiate (Basically, Fain is saying that if the agreed upon production plan (i.e. build Durango here in 2026) gets delayed a couple of years, by the time that production would start the contract would be up). What’s Stellantis say?
From the Detroit Free Press:
The company has confirmed no such thing. However, Shawn Fain continues to allege that the company has violated the contract, but to date has provided no data or information to back up his claims. Instead, he continues to willfully damage the reputation of the company with his public attacks which is helpful to no one including his members,” according to the statement provided by [Stellantis] spokeswoman Jodi Tinson. “We would all be better served if these issues were addressed across the table with productive, respectful and forward-looking dialogue. A strike does not benefit anyone — our customers, our dealers, the community and, most importantly, our employees.”
Fain ended by saying that the problem “Isn’t market conditions when it’s your CEO draining the value of the company for short-term gain,” adding that “Carlos Tavares is the problem, and it isn’t just us saying it… Stellantis is being sued by their own shareholders, they’re being sued by their suppliers, they’re facing a national strike action from the UAW, and even the national dealer network is sounding the alarm.”
That last bit is a reference to dealers calling the current condition at Stellantis “a disaster” and pointing the finger at Tavares. Fain ends by pointing out that “It’s not every day that we, the auto workers, are on the same side as the dealers, the same side as the suppliers, and the same side as the shareholders, but today is that day.”
He’s not wrong there. Suppliers are indeed suing Stellantis. Dealers are mad. Shareholders filed a lawsuit last month taking aim at the company for poor performance. The vibes are bad.
Stellantis: Ok, We Are Not Doing A Great Job Advertising Maserati
I had the chance to drive the new Maserati MC20 around Pebble Beach last month and, though it was a brief drive, I thought it was a great product. I need to spend a little more time with it, but my first impression is that this is an attractive and unique alternative to just buying a 911.
This is not a thought shared by consumers, it seems, as there’s been a huge decline in global sales at the brand. In total, shipments dropped to just 6,500 in the first half of the year, down 58% from the more than 15,000 units moved in the first half of 2023.
What’s the deal? The folks over at Motor1 Italy went to an event and got an explanation from Tavares himself:
“With Maserati, we have the right cars and we have the right technologies. We can offer thermal or 100% electric luxury sports cars. If sales are sluggish right now, it is a matter of marketing. We have also improved a lot on the quality front, but now we need to work on marketing. We lack prospects and leads, we need to reach potential customers and deliver the right message for the right positioning.”
I agree with his analysis. I want Maserati to continue to exist and I often like some of the brand’s cars, but I’m not sure what a Maserati buyer is or why someone would make the choice to become a Maserati fan.
Carlos Tavares: The Auto Industry Is In A Survival Mode
At that same event, Carlos Tavares, pictured above, tried to explain to reporters why everything is so hard these days:
“The automotive industry is in a kind of survival mode: we are beyond fear. We cannot complain, we cannot hesitate, we have to concentrate our efforts to stay alive. To stay alive we need to achieve cost parity between electric cars and thermal cars, but another chapter opens here. We operate in a geographical region animated by chaos and it is difficult to make predictions. Governments have decided to reduce purchase incentives and this is holding back the market.”
Again, I don’t entirely disagree with the analysis here, and I love the translation, especially the “animated by chaos” bit. It’s true! Chaos animates everything around us and governments have made it hard to know what happens next, especially with suddenly vanishing incentives that are then coupled with higher trade barriers.
[Ed Note: “Thermal cars” is almost certainly the product of translating from Italian, as I’ve never heard of ICEs called “thermal cars” here in the U.S. -DT].Â
I do not envy anyone who has to decide what to do in these situations. That all being said, I don’t think constantly making your partners mad is necessarily the best way forward. In addition to some shareholders, a lot of workers, dealers, and suppliers, the company always seems to be in a tiff with local governments.
Tavares is entirely correct that all major automakers are in a fight for survival, but I disagree with his apparent belief that this means you have to literally fight with everyone. Annihilation is a strategy that sometimes works, though given the choice I think cooperation is the more successful bet.
China: It Would Be A Shame If We Made It Hard To Import Your BMWs
I’ve explored the back-and-forth between Germany, the rest of Europe, and China before, so I’ll spare you the extensive rehash. Let’s just say that China and Germany have a longstanding relationship that both seem to agree is important.
The large tariffs against Chinese imports by the EU are causing a rift in that relationship and a warning from China.
Per Reuters:
China’s commerce minister said the European Union’s imposition of tariffs on electric vehicles (EV) will “seriously interfere” with trade and investment cooperation and hurt both China and Germany.
In talks on Tuesday with German Vice Chancellor and Economic Minister Robert Habeck, Wang Wentao said he hoped to reach a solution in line with World Trade Organisation rules as soon as possible, and avoid the escalation of China-EU economic and trade frictions, according to a statement released by China’s Ministry of Commerce early on Wednesday.
Germany has the biggest proportional share of votes in the EU so it often can get its way which, in this case, seems to be a softening of anti-Chinese tariffs.
What I’m Listening To While Writing TMD
That’s right it’s “Firestarter” from The Prodigy the way it’s meant to be heard: as an instrumental track on the game Wipeout for Playstation.
The Big Question
Is the Fed gonna cut interest rates 25 or 50 basis points? We’ll talk about it tomorrow so place your guess below.
are car companies really in trouble though?
I see countless new and used cars on the roads everyday..
Car companies are always fighting for survival. Every decade since mass consumption of autos began has seen the rise and fall of various companies. This condition isn’t new or unique this year or decade. Design and build good products. Market them well and provide good customer support. The cars may change, the formula doesn’t.
It looks like the Maserati Ghibli and Quattroporte are only available in 3 colors (white and two dark gray/black colors) and one interior color. Starting at $100k. If there is anything I know about a high end buyer, it is that they love a lack of options.
The Quattroporte competes against the M5 in price, which while the M5 isn’t the prettiest thing in the world, it does come in Isle of Man Green (and like 8 other colors), which instantly makes it more appealing than a white on black Maserati.
Locally, I see there is a 2023 MC20 (in a nice shade of red…guess the MC20 still gets colors) reduced from 271k to 209k. Talk about cash on the hood. Going to crush the hood.
This explains how I can click a couple of options and make a four-banger Rubicon cost $70k, instant cost parity!
If the North American business doesn’t fit into Stellantis’ corporate strategy, nobody is forcing them to keep it. Selling Chrysler, Dodge, Jeep, and Ram to the Chinese or spinning them off to shareholders as a separate company are both viable options.
Yeah, spin them off into a US company. Chrysler becomes the ‘GM’ of the company. Dodge for trucks & car-ish CUV’s. Jeep for truck-like SUV’s. Ram gets folded back into Dodge. No more luxury brands, just trim them to the moon like they already do. Simplify, spend all marketing on just 2 brands, stop developing a billion different models that barely sell and focus on quality.
“Is the Fed gonna cut interest rates 25 or 50 basis points? We’ll talk about it tomorrow so place your guess below.”
Why cut rates at all? The Dow is at or near an all time high, prices of big ticket items are still too damn high. If anything rates should go up.
Cut and paste from an article from The Economist” (because I’m fancy like that) . . . The argument for a half-point cut rests on several pillars. Crucially, the Fed is confident that it is on track to bring inflation under control . . .So the Fed’s worries have shifted to the job market. The unemployment rate of 4.2% is low, but nearly a full percentage point higher than early last year. And companies have pared back their hiring. Jerome Powell, the Fed’s chair, portrayed the rate cut as a recalibration of monetary policy in line with a lessening of inflation risks and an increase in unemployment risks. . . . Mr Powell’s cut is also a form of insurance. It takes months for rate reductions to filter through the economy. Given this lag, and given the expectation that the economy will continue to slow, it makes sense for the Fed to make a bigger move now in order to get ahead of the coming weakness. The central bank was late in raising rates in 2022. This time, it hopes that starting with a bigger cut will steer the economy towards a soft landing, avoiding the recession which many analysts once thought inevitable.
The Economist isn’t exactly an unbiased source.
Well to be fair, Italy specializes in thermal cars… that is, the kind that like to go on fire 😛
Also, Stellantis needs to go POOF! Give Jeep back to AM General and just close the other brands. Seize the millions from the “executives” that brought them down to new lows and give the money to the hourly labor, engineers, and suppliers, and maybe some of the money to AM General.
I don’t think am general ever getting need jeep
AM General never owned Jeep though. AM General was a subsidiary of American Motors at the same time Jeep was a division of American Motors. The corporate successor to American Motors no longer exists, since Old CarCo LLC (formerly known as Chrysler LLC) was dissolved in late 2011/early 2012.
Pre-AMC, AM General was just the Government & Defense Products Division of Kaiser-Jeep, which was also separate from the Jeep Division of Kaiser-Jeep. And that was only for a few years, prior to 1964, the future AM General had been Studebaker General Products (the successor to Studebaker is Eaton Corporation Plc., but they never owned Jeep in any of their forms)
If I recall, Jeep has been knocking it out of the park shipping thermal cars for the past few years.
The bad guy from The Lincoln Lawyer.
I know y’all have to be sort of neutral here with regard to Stellantis but Fain is right. Tavares is just another pillaging corporate raider who sucks at his job. I’ll definitely keep saying it as I have been.
They cut by .50 so maybe the car/home loan rates are going to start coming back down to a reasonable level.
The rates may come down some, but that means home prices will go up.
Correct. Even as a full time RE investor, I’d like to see a longer term ratchet down of both rates and prices. But dammit, my partners and I sure would love a mortgage rate cut right now.
the interest rate loan would only really help Tavares as the sheep of the world would then go back to taking out 7-10 year notes on cars that tend not to last that long, just because the prices are inflated to cover UAW wage hikes as well as shareholders expected 30% profits. Not to mention Carlos’ hefty salary.
Only tools blame the workers.
Nice, I’m stealing that.
I would argue he’s excellent at his job, just that it’s different from the face value of it. Tavares did very well by Tavares.
Stallantis is a hedge-fund takeover group. Their specialty is buying distressed properties and dismantling them for parts and profit. They have very little interest in preserving the whole structure, but extracting the maximum profit from it.
Stellantis represents the largest share of the multigenerational wealth of two major European industrial dynasties, the Peugeots, and the Agnelli/Elkanns, they are definitely motivated by more than simple asset stripping,and are not looking for a quick pump and dump cashout, given that they’ve both been invested in the auto business for over a century at this point, and could have gotten out at any of the peaks in value during that time, if they wanted to. The real problem is they’ve inherited this massive business in North America, which neither of them really wanted in the first place, and which neither of them knows what the hell to do with, so they make decisions that make sense for the European operations and don’t give a shit about what’s happening across the Atlantic, even though its 46% of their total revenue. They don’t understand it, they don’t care to understand it, and, frankly, probably don’t want to, because it would mean confronting the harsh reality of a decade of underinvestment by FCA that will be seriously, almost crippingly, expensive to fix at this point.
True, except the con men got conned first in this case. Now that the jig is up and they’re firing him, he clearly got the best of them and did it first.
Would a strike be a bad thing for Stellantis? They have a year of vehicles sitting on dealer lots, might clear the backlog.
That’s definitely one way to cut production- pick simultaneous fights with suppliers AND your workers.
.25 rate cut.
Leaves room for more cuts. as they will be needed.