September 24, 2022

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How electric will Stellantis US go?, Hon Hai Indonesia plans, global light vehicle outlook- the week

Just how electric will Chrysler, Dodge and Ram’s array of models be in 2025 and beyond, we asked this week. Eyeing the two historic US marques plus the newer Ram division, we learned that, while they’re important, it’s not all about EVs. Had the name not stood for the C in FCA, many had presumed Chrysler would have been phased out in the 2010s. Hardly any new models appeared and the 300, still in production, is 11. And it took the brand’s owner many years to freshen the only other current vehicle, the Pacifica. Even then, the 2021 model year facelift was minor. Stellantis insists that all divisions are guaranteed to survive for a decade, a statement which is curious in the context of no announced timeline for replacement models let alone additional ones. Assuming that the marque will be relaunched, the first new vehicle could be an electric crossover. The Vision Airflow, a concept first seen at CES in early 2020, may evolve into a production model. Dodge CEO Tim Kuniskis has stated an electric Dodge ‘muscle car’ would arrive in 2024. Stellantis’ frame architecture will be compatible with electrification, something it is to share with the three other platforms that the group will have for its main models. A silhouette of a Ram 1500 EV was shared with the media in July 2021, this next generation truck being based on the future STLA (pronounced ‘Stella’) Frame.

Hon Hai Precision Industry said it plans to invest in building manufacturing facilities for electric vehicle (EV) components and other products in Indonesia, a government official confirmed this week. The company, more widely known as Apple’s Taiwanese contract manufacturer Foxconn Technology Group, has been very active in the last two years in establishing a presence in the global EV supply chain. Last year it signed agreements to jointly produce EV platforms and components in partnership with companies in Thailand, China and the US. It has also developed a flexible EV platform, the MIH, and related supply chain which it offers to is clients. The Indonesian government is looking to establish the country as a regional EV and components manufacturing hub, citing the country’s abundance of raw materials such as nickel as its key advantage over other countries in the region. Last year it set up a new state-owned enterprise, called PT Industri Baterai Indonesia (IBI), to drive the establishment of an industry focused on the production of EV batteries and related raw materials and has been active in attracting international strategic investors.

This week came the latest thoughts from our analysts on the short-term outlook for the global light vehicle market. Significant challenges remain for the automotive industry, notably in the form of ongoing supply shortages and the spread of Omicron. In the final few months of 2021, the global Light Vehicle (LV) selling rate crept back above 80m units/year, from the year’s low point of 74m in September. The latest months’ data suggest two things. First, the worst of the sales hit from the supply disruption may have already taken place. Second, market activity remained well below pre-pandemic norms of 90+m a year. As it stands, market volumes are falling well short of underlying demand — inventory remains tight while discounts are lower and transaction prices are higher. Omicron only adds to a complicated picture, with this latest variant of coronavirus proving more transmissible, though as it appears to be leading to a smaller increase in hospitalisations, the disruption is expected to be more muted than with previous virus iterations. That is not to say there is no impact, whether via government measures, increased voluntary social distancing, or absenteeism from work, but the risk of a major economic downturn is more modest. The current base forecast from our partners at Oxford Economics assumes 4%+ global GDP growth for 2022, even if caution around the Q1 performance has increased. That growth will be supported by recovering household spending, itself benefitting from the partial release of accumulated savings built up during the pandemic, even though household budgets are facing generally higher inflation. Yet, despite a supportive backdrop for underlying demand, the shadow cast by the supply shortages, most notably relating to that of semiconductors, will continue to act as a drag through 2022 — Toyota’s recent announcement that it would miss its annual production target because of parts shortages and the pandemic only reinforces that view. And even if the Omicron variant does not knock demand off course, it still poses a further threat to the global supply chain.

We learned this week Stellantis will announce a business plan for China in March, which is understood to include bringing the Opel brand to China. The automaker last week announced plans to increase its stake in its Chinese joint venture with Guangzhou Automobile Company Group (GAC Group) as part of a renewed strategy of expanding its presence in the world’s largest vehicle market. The Netherlands-registered automaker, formed following the merger between French carmaker PSA and Italian-American Fiat Chrysler, said it is looking to take majority control of its GAC-Stellantis partnership by increasing its stake from 50% to 75% as part of its “plan to set a new basis for its business in China”. The joint venture was originally established in 2010 between GAC Group and Fiat, producing vehicles at an assembly plant in the city of Changsha. Chrysler joined the partnership in 2013 following the merger between Fiat and Chrysler, with a new plant built in Guangzhou to produce Chrysler Jeep models. The Changsha plant is now scheduled to be closed in March 2022 after Fiat sales disappointed over many years, leaving just the Guangzhou plant with a production capacity of some 140,000 vehicles per year. Sales of locally-produced Jeeps in China last year are estimated at just under 20,000 units, which is disappointing given the size of the Chinese SUV market. Stellantis also has a joint venture partnership Dongfeng Motor Corporation, called Dongfeng Peugeot Citroën Automobile Company (DPCA), which the company said more than doubled its sales in 2021 to over 100,000 vehicles.

From our ASEAN analyst: Sales of new vehicles in southeast Asia’s six largest markets rebounded by almost 13% to 907,095 units in the fourth quarter of 2021 from 805,184 units in the same period of last year, according to data compiled exclusively for Just Auto. The gain follows a 9% year-on-year decline in the third quarter after most countries in the region introduced new social and business restrictions to slow the fast-spreading covid Delta variant. Lockdown measures were mostly eased in September, resulting in a rebound in economic activity and a recovery in vehicle sales in the fourth quarter. Over the full-year, regional sales increased by 15% to 2.86 million units from 2.49m units in 2020, driven mainly by a sharp rebound in sales in Indonesia from very depressed year-earlier levels. Indonesia was the best performing market in 2021, with sales surging by 67% to 887,202 units – helped to record-low interest rates, tax cuts and a significant number of important new model launches. The country regained its position as the region’s largest vehicle market last year after it was overtaken by Thailand in 2020. Thailand was the worst-performing market last year, with sales falling by 4.2% to 759,119 units after a 21% fall to 792,146 units in 2020, with economic activity held back by weak domestic confidence and restrictions on the all-important international tourism sector.

What’s in a name? Daimler AG this week became Mercedes-Benz Group AG following the successful stock market debut of Daimler Truck so the group’s renewed focus on the automotive business is underlined with a new name. The Mercedes-Benz brand was created in 1926 when the predecessor companies of Carl Benz and Gottlieb Daimler were merged. Renaming also saw the automaker’s stock exchange symbol change from DAI to MBG and shares will remain listed on Germany’s DAX stock index. Chairman Ola Kaellenius said in a statement: “The renaming… underlines our renewed strategic focus. In doing so, we want to make clear where we see the core of our company – building the most desirable cars in the world. The Mercedes star has always been a promise for the future: changing the present in order to improve it. We want to continue this legacy of our founders by taking the lead in electric mobility and vehicle software.”

Charging infrastructure arguably is the biggest challenge of electrification but automakers are showing they’re up for it: Daimler Truck North America, NextEra Energy Resources and BlackRock Renewable Power (BlackRock) announced they had signed a memorandum of understanding (MoU) to lay the foundation for a joint venture (JV) to design, develop, install and operate a high-performance, nationwide US charging network for medium- and heavy-duty battery electric and hydrogen fuel cell vehicles. Start of operations is planned for this year, first sites are set to begin construction in 2023. Initial funding is expected to be comprised of approximately US$650m (EUR580m) divided equally among the three parties. Martin Daum, CEO of Daimler Truck, said in a statement: “The planned joint venture… is another building block in our global partnership strategy to accelerate the infrastructure required for carbon neutral commercial transportation. Whether in the US or in Europe, these kind of collaborations are essential to successfully tackle the urgent need for zero emission vehicles. [We are] paving the way for a nationwide infrastructure for battery electric and hydrogen powered commercial vehicles in the US.” Just imaging taking a big rig US coast to coast on ‘lecky. It’ll happen.

Have a nice weekend.

Graeme Roberts, Deputy Editor, Just Auto

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