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<keyword id="21999883" type="General" weightage="20" keywordseo="Passenger-vehicle-retail-sales" source="keywords">Passenger vehicle retail sales</keyword> in India witnessed a 5 per cent on-year decline in August on account of delayed customer purchases, poor consumer sentiment and persistent heavy rains, industry body <keyword id="20108734" type="General" weightage="20" keywordseo="FADA" source="keywords">FADA</keyword> said on Thursday. The overall <keyword id="762866" type="General" weightage="100" keywordseo="Passenger-vehicle" source="Orion">passenger vehicle</keyword> (PV) registrations last month stood at 3,09,053 units, as compared to 3,23,720 units in August 2023. "Even with the arrival of the <keyword id="19894908" type="General" weightage="20" keywordseo="Festive-season" source="keywords">festive season</keyword>, the market remains under significant strain... Inventory levels have reached alarming levels, with stock days now stretching to 70-75 days and inventory totalling 7.8 lakh vehicles, valued at an alarming Rs 77,800 crore," Federation of Automobile Dealers Associations (FADA) President Manish Raj Singhania said in a statement. Rather than responding to the situation, PV Original Equipment Manufacturers (OEMs) continue to increase dispatches to dealers on a month-on-month basis, further exacerbating the issue, he added. "FADA urgently calls upon all banks and NBFCs to intervene and immediately control funding to dealers with excessive inventory," Singhania said, adding that dealers must also act swiftly to stop taking on additional stock to protect their financial health. The OEMs, too, must recalibrate their supply strategies without delay, or the industry faces a potential crisis from this inventory overload, he said. "If this aggressive push of excess stock continues unchecked, the <keyword id="23047448" type="General" weightage="20" keywordseo="auto-retail-ecosystem" source="keywords">auto retail ecosystem</keyword> could face severe disruption," Singhania said. Commercial vehicle registrations saw a 6 per cent year-on-year dip in August, while tractor retail sales also witnessed a drop of 11 per cent as compared to the year-ago period. Two-wheeler sales, however, increased 6 per cent year-on-year to 13,38,237 units in August, as compared to 12,59,140 units in the same month last year, on the back of improved stock availability and the onset of the festive season, Singhania said. Three-wheeler retail sales also increased by 2 per cent to 1,05,478 units last month, as compared to 1,03,782 units in the year-ago period. Overall registrations last month saw an increase of 3 per cent year-on-year at 18,91,499 units, as against 18,38,501 units in August last year. On business outlook in the near term, FADA said it remains cautiously optimistic. While the festive season and improved rural demand present promising opportunities for growth, ongoing weather uncertainties and high inventory levels may temper the overall recovery, it stated. To navigate these challenges, strategic inventory management and targeted marketing initiatives will be crucial in maximising festive sales and mitigating risks from adverse weather conditions, it added.

Passenger vehicle retail sales dip 5% in August 2024; FADA raises alarm over rising inventory level

The <keyword id="23021375" type="General" weightage="20" keywordseo="domestic-passenger-vehicle-industry" source="keywords">domestic passenger vehicle industry</keyword> volumes declined by low single digit in August 2024 as compared with August 2023, because of weak retail demand trends and higher <keyword id="21396778" type="General" weightage="20" keywordseo="inventory-levels" source="keywords">inventory levels</keyword> at the dealerships according to Kotak Institutional Equities. The report suggests that the major reason for the sluggishness in sales of tractors is the uneven spatial distribution of rainfall, particularly in northern and eastern regions. It also highlights that growth will pick up in the coming months on the back of <keyword id="23021373" type="General" weightage="20" keywordseo="improved-monsoon" source="keywords">improved monsoon</keyword> conditions. The upcoming festive season will also improve the situation as traditionally it is a peak period for auto sales. Strong festive demand could help offset some of the losses experienced in the first half of the fiscal year. The weak wholesale figures in August were driven by private vehicles (PV), commercial vehicles (CV) and tractor original equipment manufacturers (OEM). Retail sales declined in single digits (yoy) for most of the companies. The PV segment saw a low single-digit decline in domestic wholesale volumes year-on-year (YoY) in August 2024, driven by weak retail demand and elevated inventory levels at dealerships, which stood at approximately 70 days. The retail sales fell by mid-single digits YoY during the month. Maruti Suzuki India Limited (MSIL), the largest player in the segment, reported a 4 per cent YoY drop in total volumes, including a 5 per cent decline in domestic sales but it was partially offset by a 6 per cent rise in the export volumes. MSIL's wholesale market share is estimated to have slipped by 250 basis points YoY to approximately 40.5-4 per cent says the report. Other major players also faced challenges in sales. Tata Motors recorded a 3 per cent YoY decrease in PV volumes, while Hyundai Motors reported an 8 per cent drop. However, Mahindra &amp; Mahindra (M&amp;M) bucked the trend with a 16 per cent YoY increase in PV volumes, and Toyota India posted a significant 37 per cent YoY growth on low volumes. Kia and MG Motors also experienced an uptick in sales. The two-wheeler (2W) segment showed resilience with high single-digit YoY growth in domestic wholesale volumes, largely driven by channel filling ahead of the festive season. Retail sales of the internal combustion engine (ICE) two-wheelers grew by mid-single digits YoY, while electric two-wheeler (EV 2W) sales surged by 41 per cent YoY, propelled by new mass-market EV launches and attractive discounts. Among the key players, Hero MotoCorp (HMCL) saw a 5 per cent YoY rise in volumes, and TVS Motor reported a robust 14 per cent YoY increase, with growth in both domestic and export segments. Bajaj Auto's volumes grew by 18 per cent YoY, driven primarily by domestic sales. However, Royal Enfield faced a 5 per cent YoY decline in volumes. Going forward, the report highlighted that the Commercial Vehicle (CV) segment underperformed during the month, with domestic volumes declining by low double digits YoY, primarily due to weakness in the Medium and Heavy Commercial Vehicle (MHCV) truck and Light Commercial Vehicle (LCV) segments. Tata Motors experienced a 15 per cent YoY drop in domestic CV volumes, with sharp declines in Small Commercial Vehicle (SCV) cargo (down 23 per cent) and MHCV trucks (down 15 per cent). Ashok Leyland also reported a 7 per cent YoY decline in CV volumes, while VE Commercial Vehicles (VECV) managed a modest 1 per cent YoY increase. In August, the domestic tractor segment remained flat YoY with volumes coming in 5-6 per cent. During this period, M&amp;M's tractor volumes grew by 1 per cent YoY, while Escort Kubota's volumes remained unchanged compared to the same period last year. The report says that strong festive demand could help offset some of the losses experienced in the first half of the fiscal year, particularly if economic conditions and consumer sentiment improve.

Auto Industry sales to surge on the back of improved monsoon, festive season demands: Report

As the month of August comes to an end, <keyword id="46211" type="General" weightage="20" keywordseo="auto-sales" source="Orion">auto sales</keyword> data has started pouring in, giving us an insight about the performance of major automakers in the country. While Maruti Suzuki has reported its best ever sales in August, Tata Motors and <keyword id="6359783" type="General" weightage="20" keywordseo="bajaj-auto" source="Orion">Bajaj Auto</keyword> have reported a decline in sales. <cmsannotation type="cmsannotation" annotationid="Maruti Suzuki reports highest ever sales" comment="subhead" text="Maruti Suzuki reports highest ever sales">Maruti Suzuki reports highest ever sales</cmsannotation> Maruti Suzuki India on Friday reported its highest-ever monthly wholesales at 1,89,082 units in August on the back of robust sales in the SUV segment. The country's largest carmaker became the leading player in the domestic SUV segment in the April-August period on the back of models like Grand Vitara, Brezza and Jimny. The auto major's overall dispatches to dealers last month were 14 % higher as compared to 1,65,173 units in August. The company previously reported its record monthly sales of 1,82,448 units in October 2020. Total domestic passenger vehicle sales were at 1,56,114 units as against 1,34,166 units in the year-ago month, a growth of 16 %. Utility vehicles, consisting of Brezza, Grand Vitara, Jimny, Ertiga and XL6, clocked sales of 58,746 units last month, over two-fold increase as compared to 26,932 units in August last year. <cmsannotation type="cmsannotation" annotationid="Tata Motors reports a decline in global sales" comment="subhead" text="Tata Motors reports a decline in global sales">Tata Motors reports a decline in global sales</cmsannotation> Tata Motors on Friday reported a marginal decline in total global sales at 78,010 units in August. The company posted total global sales of 78,843 units in August 2022. Total domestic sales were also marginally lower at 76,261 units as against 76,479 units in the year-ago month, Tata Motors said in a regulatory filing. Sales of passenger vehicles, including electric vehicles, in the domestic market were down 3.5 % at 45,513 units last month as against 47,166 units in August 2022, it added. Passenger electric vehicle sales, including in international markets, grew by 54.9 % at 6,236 units as compared to 4,026 units in the year-ago month, the company said. Total commercial vehicle sales were at 32,077 units from 31,492 units in the same month last year, up 1.9 %, it added. <cmsannotation type="cmsannotation" annotationid="Mahindra reports 19% increase in sales" comment="subhead" text="Mahindra reports 19% increase in sales">Mahindra reports 19% increase in sales</cmsannotation> Mahindra &amp; Mahindra (M&amp;M) on Friday said its total automotive sales increased by 19 % to 70,350 units in August. The company's total dispatches to dealers stood at 59,049 units in August 2022. The Mumbai-based auto major's passenger vehicle sales in the domestic market rose by 25 % to 37,270 units last month as against 29,852 units in April last year, the auto major said in a statement. <cmsannotation type="cmsannotation" annotationid="TVS Motor reports growth" comment="subhead" text="TVS Motor reports growth">TVS Motor reports growth</cmsannotation> TVS Motor Company on Friday reported a 4 % growth in total sales at 3,45,848 units in August 2023 as compared to 3,33,787 units in the same month last year. Total two-wheelers sales grew 5 % to 3,32,110 units last month as against 3,15,539 units in the year-ago period, TVS Motor Co said in a regulatory filing. Domestic two-wheelers registered a growth of 7 % at 2,56,619 units as against 2,39,325 units in August 2022, it added. The company said motorcycle sales were lower at 1,53,047 units in August 2023 as against 1,57,118 units in the same month last year, while scooter sales increased to 1,42,502 units from 1,21,866 units in the year-ago month. Electric scooter iQube clocked the highest sales of 23,887 units in August 2023 as against 4,418 units in the corresponding month last year, it added. <cmsannotation type="cmsannotation" annotationid="Bajaj Auto" comment="subhead" text="Bajaj Auto">Bajaj Auto</cmsannotation> Bajaj Auto on Friday said its total vehicle sales, including sale of commercial vehicles, declined 15 % to 3,41,648 units in August. The company had reported total sales of 4,01,595 vehicles in August last year. The total domestic sales dropped 20 % to 2,05,100 units in the previous month as compared to 2,56,755 units sold in August 2022, <keyword id="196995" type="General" weightage="80" keywordseo="bajaj-auto-ltd" source="Orion">Bajaj Auto Ltd</keyword> said in a statement. Total vehicle exports fell 6 % year-on-year to 1,36,548 units in August from 1,44,840 units shipped to the overseas markets in the year-ago period, it said. Its total two-wheeler sales declined 20% to 2,85,031 units in the previous month from 3,55,625 units sold in August 2022. Two-wheeler exports, however, increased 2 % to 1,24,211 units in August 2023 as against 1,21,787 units in the same month last year. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/upcoming-new-cars-in-india-in-september-2023/slidelist/103247552.cms">Tata Nexon to Aston Martin DB12 – Cars launching in India this September</a> <a href="https://www.businessinsider.in/business/auto/webstories/hero-karizma-xmr-210-vs-bajaj-pulsar-rs200-which-bike-should-you-buy-under-2-lakh/slidelist/103241906.cms">Karizma vs Pulsar is back – Comparing the XMR 210 and RS200 in the under ₹2 lakh battle</a> <a href="https://www.businessinsider.in/business/auto/news/existing-car-owners-may-upgrade-if-current-bharat-ncap-ratings-are-low-finds-survey/articleshow/103052481.cms">Safety top priority now for Indian car buyers, existing owners may upgrade if ratings are low</a>

Maruti reports highest ever sales in August, Tata Motors and Bajaj Auto decline

<ul><li>Utility vehicle sales increased 34% year-on-year to 1,81,825 units.</li><li>Two-wheeler dispatches increased to 15,66,594 units from 15,57,429 units a year ago.</li><li>Passenger car dispatches on the other hand declined 10% to 1,20,031 units a year ag .</li></ul> Passenger vehicle wholesales in India rose 9% year-on-year in August on the back of strong demand for utility models, industry body SIAM said on Monday. Overall passenger vehicle dispatches to dealers rose to 3,59,228 units last month from 3,28,376 units in August 2022. Utility vehicle sales increased 34% year-on-year to 1,81,825 units. Passenger car dispatches on the other hand declined 10% to 1,20,031 units from 1,33,477 units in August 2022. Van wholesales also dipped to 11,859 units from 12,236 units. "Last month saw the highest ever August month sales for passenger vehicles and three-wheelers," Society of Indian Automobile Manufacturers (SIAM) President <keyword id="230167" type="General" weightage="40" keywordseo="Vinod-Aggarwal" source="Orion">Vinod Aggarwal</keyword> said in a statement. Three-wheeler sales rose to 64,763 units in August as against 38,369 units in the same month last year. Two-wheeler dispatches increased to 15,66,594 units from 15,57,429 units. "<keyword id="163191" type="General" weightage="60" keywordseo="two-wheeler-sales" source="Orion">Two-wheeler sales</keyword> remained at levels similar to a year ago," Aggarwal said adding that the industry also witnessed a good growth in the commercial vehicle segment in August 2023. "Based on the performance of last month, we are even more optimistic for demand to pick up during the festive season, enabled by positive economic outlook and the revival of monsoon after a deficit in August," Aggarwal said. In the passenger vehicle segment, Maruti Suzuki India saw an increase of 16% in dispatches to dealers at 1,56,114 units from 1,34,166 units in August 2022. Rival Hyundai Motor India dispatched 53,830 units to dealers as against 49,510 units in the same month last year.

August auto sales: Powered by utility vehicles, PV dispatches to dealers increase 9%

<ul class="summary-list"><li>Germany's automotive industry is facing an increasingly difficult outlook.</li><li>Volkswagen may close factories in Germany for the first time, and BMW and Mercedes-Benz are struggling.</li></ul>Germany's car giants were once the envy of the world, but now find themselves facing a myriad of threats.BMW and Mercedes-Benz have issued profit warnings in recent weeks amid <a target="_blank" class="" href="https://www.businessinsider.com/ev-sales-europe-slumping-warning-sign-us-2024-9">slumping EV sales in Europe</a> and <a target="_blank" class="" href="https://www.businessinsider.com/chinas-electric-vehicle-market-could-face-a-brutal-reckoning-2024-5">brutal competition in China</a>, while Volkswagen is <a target="_blank" class="" href="https://www.businessinsider.com/volkswagen-considers-closing-factories-germany-job-salary-cuts-autos-2024-10">also facing a reckoning</a>.On Wednesday VW said net profit for the three months to September 30 plunged by almost 64% to 1.57 billion euros, with a 30% decline to 12.8 billion euros for the first nine months of the year. A 4% rise in vehicle sales in North America and 16% growth in South America for the nine months was offset by a 1% decline in western Europe and a 12% slide in China — VW's biggest market outside Europe. It now expects to deliver about nine million vehicles this year, or about 240,000 fewer than 2023.Volkswagen is seeking to cut billions in costs after issuing two profit warnings in three months. On Monday, its top union official said the company was planning factory closures in Germany for the first time, along with pay cuts and layoffs. The Golf and Polo maker is one of Germany's biggest employers with about 300,000 workers.Mercedes-Benz is also <a target="_blank" class="" href="https://www.businessinsider.com/mercedes-benz-sliding-ev-sales-and-weak-demand-in-china-2024-10">pursuing "cost improvements"</a> after last week's lackluster earnings, while BMW stock has been hit by the recall of some <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/bmw-recalls-1-5-mln-vehicles-over-braking-system-issue-1033765005">1.5 million cars over a braking issue</a>.<div type="image" title="New Volkswagen cars at a factory" height="2574" width="4625" msid="114777386" hostid="261" sizebytes="794156"></div><h2 id="58206ab8-4040-4a0f-ac1e-b07e60c53b6a">Fight for survival in China</h2>All three giants face a similar problem: they're no longer selling enough cars in China, the world's largest car market and a one-time cash cow for European automakers. About 21.7 million new vehicles were sold in China last year, per the China Passenger Car Association figures, compared with about 15.6 million in the US and 10.5 million in Europe.Like VW, BMW and <a target="_blank" class="" href="https://www.businessinsider.com/mercedes-benz-sliding-ev-sales-and-weak-demand-in-china-2024-10">Mercedes</a> also reported a slide in sales in China in the third quarter, amid waning demand for luxury vehicles and the growing dominance of Chinese EV makers.<div type="image" title="BYD Yangwang U8" height="4093" width="6140" msid="114777389" hostid="261" sizebytes="1395046"></div>Helena Wisbert, professor of automotive economics at Ostfalia University in Germany, told Business Insider: "BMW and Mercedes are selling fewer cars, because the new players in the market for EVs have become really competitive, especially in China."Wisbert said that German manufacturers have failed to anticipate the changing behavior of Chinese consumers and diversify their product lines. She added that Mercedes, BMW, and Volkswagen offer comparatively few hybrid and <a target="_blank" class="" href="https://www.businessinsider.com/extended-range-electric-vehicles-erev-gas-generator-range-anxiety-2024-8">extended-range vehicles</a> — categories that have proven extremely popular in China.European carmakers are under intense pressure from Chinese rivals such as <a target="_blank" class="" href="https://www.businessinsider.com/ev-electric-vehicle-china-brands-byd-nio-wuling-zeekr-geely-2023-5">BYD, Nio, and Xiaomi</a>, which offer luxurious EVs vehicles with better <a target="_blank" class="" href="https://www.businessinsider.com/chinese-ev-makers-battle-for-market-dominance-with-smart-features-2024-5">software experiences</a> — and all at far lower prices.<div type="image" title="Chinese customers assess the Xiaomi SU7 at a flagship store in Shanghai, China." height="2800" width="4200" msid="114777392" hostid="261" sizebytes="344146"></div>To make matters worse, some Chinese automakers are now eyeing expansion in Europe, even with <a target="_blank" class="" href="https://www.businessinsider.com/chinese-electric-vehicles-european-tariffs-retaliation-vw-bmw-mercedes-tesla-2024-10">the European Union planning tariffs on BYD and its rivals</a>.Wisbert said the brand strength of BMW and Mercedes in Europe gave them a crucial advantage over Chinese interlopers — but added that VW would likely face competition from Chinese brands that can build and sell EVs far more cheaply. "In the long run, it's a big threat, especially for Volkswagen."<h2 id="4b4f7370-2052-4695-8ad7-e34b879663db">Slow sales in Europe</h2>At the same time, Germany's automakers are also dealing with a slowdown in EV sales in Europe.Mercedes said last week that <a target="_blank" class="" href="https://www.businessinsider.com/mercedes-benz-sliding-ev-sales-and-weak-demand-in-china-2024-10">sales of battery-powered cars</a> fell 31% in the third quarter compared with the same period last year, while deliveries of Volkswagen Group EVs in Europe were <a target="_blank" class="" href="https://uploads.vw-mms.de/system/production/files/cws/040/668/file/151d368085a7d93bdc93358b5dc3bc7714ea72d0/20241011_Deliveries_Tables_icl_BEV.pdf?1728635690">down 12% in Q3</a>.Demand for electric vehicles has slowed in Europe amid a lack of affordable options and the end of subsidy schemes in some countries, including Germany, where new EV deliveries <a target="_blank" class="" href="https://www.businessinsider.com/ev-sales-europe-slumping-warning-sign-us-2024-9">plunged by 69% in August</a>."The European market has failed to return to health as quickly as hoped post-Covid," Matthias Schmidt, an independent auto analyst based in Germany, told BI in an email."That is causing an over-capacity and under-utilisation problem leading to the need for restructuring across European operations, alongside new market entrants such as Chinese carmakers and Tesla increasingly eating up market share."<div type="image" title="Union workers rally outside a Volkswagen plant" height="5464" width="8192" msid="114777385" hostid="261" sizebytes="1564854"></div>Wisbert said that despite Volkswagen and BMW starting to sell battery-electric vehicles more than a decade ago, German companies failed to make EVs their "focus" and are now losing out to rivals such as Tesla and BYD that can build and sell electric cars more cheaply."They missed the chance to get the cost for the battery under control. That's the problem because their competitors can sell cars at a really low price level because they have the battery cost under control," Wisbert said.She warned that attempting to save money by scaling back EV plans would render German carmakers even less competitive in the future. Volkswagen and Mercedes have both adjusted their EV strategies and pushed back targets in recent months as sales stagnate."Right now they're cutting their plans for future investment — and that's not the best way to stay competitive in the future," said Wisbert.Investors are also sounding the alarm, sending Mercedes-Benz shares down more than 11% this year, with BMW sliding 28%. VW, meanwhile, is down about a fifth this year, and close to half the stock price of October 2019. Analysts at UBS have a "sell" recommendation on the stock, and the potential cost and disruption that could be sparked by a "major restructuring."VW, Mercedes, and BMW did not respond to requests for comment from BI.

Volkswagen stumbles in China as Germany's auto giants struggle to compete in the EV race

<ul class="summary-list"><li>Car companies are cutting costs heading into the end of the year.</li><li>A price war in China poses a threat to profitability.</li></ul>It's been a busy few days for auto companies.Ford and Volkswagen each pulled back vehicle production plans this week. After the last shift on Friday, November 15, Ford will <a target="_blank" class="" href="https://www.businessinsider.com/ford-pauses-electric-f-150-lightning-production-cuts-manager-bonuses-2024-10">pause F-150 Lightning production</a> until next year, while VW said it is considering historic plant closures in Germany that would lay off hundreds of workers.Meanwhile, Tesla fell behind China's BYD in quarterly revenue for the first time, and GM CEO Mary Barra warned of an unsustainable price war in the Chinese EV market.Amid the flurry of news, two themes stand out: the China threat and <a target="_blank" class="" href="https://www.businessinsider.com/electric-vehicle-misconceptions-about-the-ev-transition-market-sales-2024-5">EV slowdown</a> loom large for automakers.<h2 id="26021238-9d8a-4010-bec4-f6bfd9ac81e2">Another EV price war threatens profitability</h2>In China, the world's largest auto market, EV leaders <a target="_blank" class="" href="https://www.businessinsider.com/why-byd-is-beating-tesla-ev-rivals-china-2024-11">BYD</a> and Tesla are engaged in a bitter price war that initially weighed heavily on BYD's bottom line.But by August, BYD (which also sells hybrid cars) reported its best-ever passenger car sales, driving up revenue 24% in the third quarter to $28.24 billion, topping Tesla for the first time. It's the latest sign that after nearly two years of deflating the value of its cars, <a target="_blank" class="" href="https://www.businessinsider.com/tesla-sales-miss-ev-slowdown-new-wave-customers-2024-4">Tesla is finally starting to feel the pinch</a> of a slowdown in the EV market.The Chinese EV market is more competitive than ever, according the GM's Barra, who <a target="_blank" href="https://www.businessinsider.com/general-motors-gm-ceo-mary-barra-ev-china-not-sustainable-2024-10">questioned the sustainability</a> of a broader price war in the region driven by an uptick in Chinese EV startups selling inexpensive vehicles.Inexpensive Chinese EVs have long threatened the US EV market. They aren't just well-priced; many are also good-looking and well-equipped. Ford CEO Mark Ford said last week that he's been driving the <a target="_blank" class="" href="https://www.businessinsider.com/chinese-ev-xiaomi-su7-driven-by-fords-ceo-faster-model-2024-10">Chinese-made Xiaomi SU7</a> for six months and doesn't want to give it up.Some car companies already sell <a target="_blank" class="" href="https://www.businessinsider.com/cars-imported-from-china-us-ev-tariffs-buick-lincoln-volvo-2024-5">China-built EVs</a> in the US, but Biden Administration bans on Chinese vehicles keep competitors like BYD from entering the market. Europe is also slapping tariffs on Chinese EVs as these cars upend their retail market.<h2 id="8dfa0b70-314e-4d64-b16a-ce59212e9bed">Companies will have to build fewer cars for now</h2>As <a target="_blank" class="" href="https://www.businessinsider.com/germany-auto-giants-volkswagen-bmw-mercedes-struggle-sales-china-evs-2024-10">Volkswagen loses ground</a> to BYD in Europe, the automotive giant is considering massive production pull-backs, including closing three German factories for the first time in its history.In the US, Ford announced its own EV production pull-backs this week, stopping assembly of its electric F-150 Lightning pickup truck until next year in a bid to improve profitability for its money-losing EV segment.Both companies are coupling these production rationalizations with other cost-cutting measures. At Ford, managerial bonuses tied to quality and manufacturing costs will be slashed to 65% of last year's levels. VW has said it plans to lay off workers and may cut wages.Over-production isn't just <a target="_blank" class="" href="https://www.businessinsider.com/ev-pile-up-dealer-lots-deals-discounts-leasing-2024-8">a problem for EVs</a>, though. Overall vehicle inventory levels remained elevated at the end of October, driving up manufacturer-funded discounts, according to JD Power. Dealers ended October with about 2 million units in stock, a 4% increase from September and a 25% increase from the previous year.Some companies are more affected by inventory bloat than others. <a target="_blank" class="" href="https://www.businessinsider.com/stellantis-jeep-ceo-falling-sales-shrinking-profit-margins-dealers-strike-2024-10">Stellantis</a>, which is navigating the toughest year in its short history, is specifically focused on reducing inventory levels in the US, and reported some progress on that effort in the third quarter.

The China threat and the EV slowdown— 2 takeaways from a busy few weeks in auto news

<ul class="summary-list"><li>European car CEOs criticize EU tariffs on Chinese EVs, urging learning from rivals.</li><li>EU plans tariffs up to 35% on Chinese EVs, fearing market disruption by cheap imports.</li></ul>European car bosses have a solution to <a target="_blank" class="" href="https://www.businessinsider.com/chinese-car-companies-europe-expansion-threatens-mercedes-volkswagen-2023-9">the Chinese EV invasion</a> — if you can't beat them, at least learn from them. Speaking at the Paris Motor Show on Tuesday, the bosses of European auto giants such as BMW and Stellantis attacked the EU's proposed tariffs on Chinese EVs, and urged struggling European automakers to learn from the success of their Chinese rivals to kick-start the continent's sluggish EV sales.The European Union <a target="_blank" href="https://www.businessinsider.com/chinese-electric-vehicles-european-tariffs-retaliation-vw-bmw-mercedes-tesla-2024-10">voted to impose tariffs of up to 35% on Chinese EV makers this month</a> amid fears that a wave of cheap, subsidized Chinese electric vehicles could upend the European auto market.The CEOs of BMW and Stellantis attacked the <a target="_blank" class="" href="https://www.businessinsider.com/chinese-electric-vehicles-european-tariffs-retaliation-vw-bmw-mercedes-tesla-2024-10">proposed tariffs</a>, saying they would be ineffective and might backfire on consumers."We should not be so afraid of everything. It is not so easy to sell non-European cars in Europe," BMW CEO Oliver Zipse said at the motor show.He said that the tariffs would "inflict" damage on BMW, which imports cars from China, and harm its European consumers as a result."We shouldn't give up before the race has even started. We don't need protection, we need fair trade rules," he added.The decision to impose tariffs was not unanimous. Several nations are believed to have voted against the move, including Germany, which had been lobbied by automakers such as BMW and Mercedes, fearful that China might retaliate and target their businesses there.It comes as <a target="_blank" class="" href="https://www.businessinsider.com/ev-sales-europe-slumping-warning-sign-us-2024-9">EV sales in Europe plunge</a>, with registrations falling by 44% in August compared to last year. Stagnating demand has led some automakers to pump the brakes on their EV plans, and others to push for the EU to reconsider looming emissions targets that could leave them facing billions in fines.Meanwhile, their Chinese rivals continue to make inroads into the continent despite trade barriers.<h2 id="e971d3c0-847b-41b4-a2d0-29d9cd3054c7">Europe's EV dilemma</h2>Tesla rivals BYD and <a target="_blank" class="" href="https://www.businessinsider.com/chinese-tesla-rival-xpeng-welcomes-competition-from-elon-musk-2024-10">Xpeng</a> both unveiled new models this week at the Paris Motor Show, one of Europe's biggest auto events.Luca de Meo, the CEO of French automaker Renault, said European automakers had a golden opportunity to learn from their Chinese counterparts, who he said were now developing new cars in as little as two years."There is an opportunity that we have no right to miss, and that is to learn from our competitors," de Meo said, speaking at the summit in Paris."This is what Europeans like Fiat, Citroen, and Renault did a century ago in the United States when Henry Ford revolutionized manufacturing, and it's what the Chinese automakers did with us," he added.In an <a target="_blank" href="https://www.bloomberg.com/news/audio/2024-10-14/bloomberg-talks-renault-ceo-luca-de-meo-podcast">interview with Bloomberg</a> on Monday, de Meo declined to comment on the EU's prospective tariffs on Chinese automakers. However, he said that ramping up "electrification" in Europe would be difficult "without good cooperation" with China, given its dominant role in the EV battery and materials market. Stellantis CEO Carlos Tavares said it was "a dream" to believe that tariffs would effectively protect Western auto industries."These short-term actions will have negative mid and long-term implications. The only way to protect ourselves is to compete with the newcomers and raise ourselves to their game," said the boss of the Jeep and Ram maker.Stellantis has partnered with Chinese EV firm Leapmotor, which has given it exclusive rights to sell Leapmotor's EVs outside of China.Tavares said the company had decided that the best way to compete with China was to partner with one of their automakers, and "hop on their train instead of letting it run us over.""We need to understand where the Chinese automakers are strong, and through our investment in Leapmotor we have a perfect transparent understanding of what makes the difference. That is very helpful," said Tavares.BMW, Stellantis, and Renault did not respond to a request for comment from Business Insider, sent outside normal working hours.

We should be learning from Chinese EV players, not shutting them out of Europe — auto bosses say

<ul class="summary-list"><li>Europe's automakers are reeling from plunging EV sales and brutal competition in China.</li><li>Mercedes-Benz became the latest to sound the alarm on Friday, posting a 31% drop in EV sales in its Q3 earnings.</li></ul>Europe's automakers are struggling amid falling demand and increased competition from China, with <a target="_blank" class="" href="https://www.businessinsider.com/mercedes-benz-ev-2030-electric-car-market-trends-2024-2">Mercedes-Benz</a> the latest to sound the alarm over plunging EV sales.The German carmaker said it had seen a 31% drop in sales of battery-powered cars from a year earlier as it reported its third-quarter earnings on Friday.Sales of all Mercedes cars in China also slumped by 10% in the first nine months of the year amid waning demand for luxury vehicles.Mercedes finance chief Harald Wilhelm said the company would pursue "cost improvements" across its business, with Mercedes' return on sales sliding to 4.7% in Q3.The premium automaker is the latest European car giant to run into trouble as <a target="_blank" class="" href="https://www.businessinsider.com/ev-sales-europe-slumping-warning-sign-us-2024-9">the continent struggles with lackluster EV sales</a>.Rivals VW, BMW, and Fiat parent Stellantis have all issued profit warnings in recent weeks, as the European auto industry faces weak demand and competition from Chinese upstarts at home and abroad.Registrations of new EVs in August dropped 44% in Europe and a massive 69% in Mercedes' home market of Germany, industry data shows.Although they <a target="_blank" class="" href="https://www.acea.auto/pc-registrations/new-car-registrations-6-1-in-september-2024-year-to-date-battery-electric-market-sales-5-8/">recovered slightly in September</a>, sales of new electric vehicles this year still remain nearly 6% lower than at the same point in 2023, according to data from the European Automobile Manufacturers' Association.In China, meanwhile, European automakers that once dominated are under increasing pressure from <a target="_blank" class="" href="https://www.businessinsider.com/china-manufacturing-overcapacity-no-benefit-from-cheap-electric-vehicles-bain-2024-6">local rivals pushing inexpensive EVs</a>.They now face the prospect of competing <a target="_blank" class="" href="https://www.businessinsider.com/byd-cheap-ev-seagull-coming-to-europe-china-us-tariffs-2024-5">with the likes of BYD in Europe, too</a>, with Chinese carmakers expanding product lines and setting up manufacturing plants <a target="_blank" class="" href="https://www.businessinsider.com/chinese-electric-vehicles-european-tariffs-retaliation-vw-bmw-mercedes-tesla-2024-10">despite the European Union's mooted tariffs</a>.Mercedes' weak sales in China are in contrast with General Motors, which this week said that <a target="_blank" class="" href="https://www.businessinsider.com/gm-stock-earnings-crushing-it-suvs-trucks-evs-2024-10">sales in the country were up 14% from the second quarter</a>, although the Detroit automaker still lost $137 million in Q3.Mercedes did not immediately respond to a request for comment.

Mercedes-Benz electric car sales plunge by a third as Chinese competition and stuttering demand hit home

<ul class="summary-list"><li>Electric cars have hit a major speed bump in Europe.</li><li>According to industry data, EV sales fell 44% in August as demand cooled across the continent.</li></ul>Europe is facing plunging sales of electric vehicles — and the continent's struggles are a warning sign for the US.Registrations fell by nearly 44% in August compared with the same month last year, according to the European Automobile Manufacturers' Association. The slump was driven by a 69% decline in Germany, Europe's biggest car market and economy.The cooling demand has led to questions over whether European automakers can meet the European Union's ambitious climate goals, which require all new cars to be zero-emission by 2035.It's also put pressure on EV companies and their suppliers. One of Europe's key battery manufacturers, Northvolt, announced on Monday <a target="_blank" class="" href="https://www.businessinsider.com/northvolt-european-battery-startup-cutting-jobs-sweden-ev-tesla-2024-9">it will lay off 1,600 employees</a> and scale back its expansion plans to focus on existing customers.<h2 id="03606594-0832-457a-a25e-b3bc29e8114e">EVs hit a speed bump</h2>Europe's EV industry is suffering from a complex mixture of challenges, auto industry analysts told Business Insider.In Germany, home to a massive Tesla gigafactory and a famous automotive tradition, demand has been hit by a government decision to phase out subsidies for EVs in December 2023.William Roberts, automotive research lead at battery consultancy Rho Motion, described the decision to pull the country's EV subsidies with barely a week's notice as a "shock removal" that, coupled with <a target="_blank" class="" href="https://www.businessinsider.com/us-vs-china-economy-europe-global-decoupling-wall-street-markets-2024-">weak economic conditions,</a> has severely dented consumer sentiment in Germany and the rest of the EU.A lack of affordable electric vehicles has not helped the situation. Although EU customers do have access to some EVs that are <a target="_blank" class="" href="https://www.businessinsider.com/chinese-electric-cars-you-can-buy-in-europe-not-us-2024-9">not available in the US,</a> Roberts said most still fall into the premium category.Dylan Khoo, an analyst at technology intelligence firm ABI Research, told BI: "There are only a handful of models that you could really say are mass market, and even those are quite a bit more expensive than their gasoline counterparts."The lack of affordable models is unlikely to be helped by the EU's proposed tariffs on China-made EVs, which include a <a target="_blank" class="" href="https://ec.europa.eu/commission/presscorner/detail/en/ip_24_4301">17% tariff on BYD vehicles and 9% on Teslas</a> imported from China.Roberts said that's probably not great news for drivers. "If the consumer is just looking for the cheapest possible EV, then at the moment, that would probably be satisfied by an imported Chinese vehicle."<h2 id="f811f30f-e910-4869-9a83-5e59c6307df5">Supply chain struggles</h2>Europe has also faced difficulties in developing its EV supply chain, with many <a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-09-11/vw-s-german-factory-closures-highlight-wider-problems-for-europe-s-carmakers">factories left with under capacity</a> and startups such as Northvolt struggling after the demand slowdown hit their ambitious expansion plans."I think for Northvolt there was a sense of over-optimism and over-ambitiousness, when you compare their plans to where some of the manufacturers are," Khoo said.Roberts said Europe has suffered from a patchwork attempt to encourage EV demand and build out its supply chain."The EU is not a federal government like the US — they can't blanket provide huge incentives and subsidies and have every country take them up," he said."So the supply chain is always going to be a bit more fragmented, and that's going to lead to difficulties when you're all trying to move towards one target as a bloc."<h2 id="62b2ae38-d830-442a-bdde-324e3689eed4">A warning for the US</h2>The struggles faced by Europe provide a warning sign to the US, which lags behind its cross-Atlantic neighbor in EV adoption.Electric cars accounted for 25% of new vehicle sales in Europe last year, compared to just 10% in the US, <a target="_blank" class="" href="https://www.iea.org/reports/global-ev-outlook-2024/trends-in-electric-cars">according to IEA data</a>.Like Europe, few affordable EV models are on sale in the US, which experts have suggested has <a target="_blank" class="" href="https://www.businessinsider.com/electrc-vehicle-demand-problem-affordability-expense-price-cost-2023-10">contributed to a slowdown in demand</a> in recent months.Key EV factories and infrastructure have also been delayed as automakers rethink their EV plans and shift focus to hybrids. Ford is halting production of a new electric pickup at a planned factory in Tennessee, and GM is delaying an EV battery plant in Indiana.<a target="_blank" class="" href="https://www.businessinsider.com/what-trump-presidential-victory-could-mean-for-evs-tesla-musk-2024-7">Consumers face concerns over subsidies with the election</a> looming, too.Trump and his running mate, JD Vance, have cast doubt over whether the $7,500 tax credit for purchasing a new EV, introduced by Joe Biden's Inflation Reduction Act, will continue if they win the presidential election in November.The prospect of crucial subsidies being suddenly removed, as in Germany, could have an equally chilling effect on America's EV industry. However, Roberts said while the US will likely face its own pressures down the line, it has a significant supply chain advantage over the EU."There's a lot more funding available," he said. "If that's used correctly to build out the supply chain, then that can have a much more positive impact than in Europe, where the funding for the supply chain has been a lot more reliant on just the private sector."Still, "I'd argue the US is still in an early adopter phase when it comes to EVs. You'd be silly to not take these warning signs from anyone further ahead of you in the curve," he added.

EV sales in Europe hit a speed bump — and the US should be worried too

<ul class="summary-list"><li>Retail sales held up surprisingly well over the summer in spite of concerns about a sharper slowdown.</li><li>The picture is <a target="_blank" class="" href="https://www.businessinsider.com/retailers-showing-squeezed-us-shoppers-have-two-very-different-realities-2024-8">more complicated among lower-income shoppers</a>, auto parts and dollar store execs say.</li></ul>As the summer comes to a close, it seems that most of the worst-case economic scenarios have been avoided.The relief was apparent during the most recent earnings cycle as <a target="_blank" class="" href="https://www.businessinsider.com/walmart-results-sales-profits-relief-retail-sector-2024-8">retailers reported sales that held up</a> surprisingly well in spite of concerns about a sharper slowdown.Share prices for Walmart and Costco continue to reach all-time highs as inflation-weary consumers flock to value-oriented retailers, and investors largely forgave <a target="_blank" class="" href="https://www.businessinsider.com/home-depot-earnings-americans-in-deferral-mindset-consumer-spending-2024-8">home improvement suppliers</a> for soft sales during the quarter.Given rising home values, strong employment figures, a booming stock market, and cooling inflation, US household finances appear to be in <a target="_blank" class="" href="https://www.businessinsider.com/how-americans-build-wealth-changing-stocks-homes-people-missed-out-2024-8">a remarkably good spot</a>.But Americans are not a monolith, as Jefferies consumer strategist Carey Kaufman pointed out in a note to clients Tuesday."The U.S. consumer is three consumers," he wrote: the top fifth of the income scale, the bottom fifth, and the middle three-fifths.Heading into the autumn, a considerable number of those in the bottom quintile appear to be running on borrowed time.<h2 id="739846fc-9a1d-438a-b3ae-10a6df2e3f47">Telling signs from spending at auto parts and dollar stores</h2>In contrast to the rosy outlook from stores that serve relatively large (and growing) shares of middle- and upper-income customers, auto parts and dollar store retailers are telling a more complicated story among their core customers who have lower household incomes."When times are good, our core customer normally works her 30- to 40-hour a week job, but also has a secondary job that she normally works 15 to 25 hours in. What she told us in Q2 was that is going away or has gone away," Dollar General CEO Ted Vasos said earlier this month at the Goldman Sachs Global Retailing Conference.Vasos said that reduction in earnings, coupled with higher prices from years of inflation, has put <a target="_blank" class="" href="https://www.businessinsider.com/dollar-general-shows-how-bad-economy-is-for-some-shoppers-2024-8">increased pressure on lower-income households</a>. If things continue according to historical trends, those concerns begin to get more serious for middle and upper-income segments as well."When things start to move south in the economy, our core customer feels it first," Vasos said. "We usually see it before most retailers start to feel it."Dollar Tree, which owns Family Dollar, reported similar consumer headwinds during its quarterly earnings this month.Auto parts stores are another retail category that is especially tuned in to what's happening at the lower ends of the economic scale.Much of their consumer-facing business is driven by helping people keep their cars and trucks running smoothly, Mizuho analyst David Bellinger told Business Insider."That's the lower end consumer who works on their car out of economic necessity," he said. "So maybe if they don't have to make a fix, they could delay a few months. That's kind of what's happening now."Advance Auto Parts CFO Ryan Grimsland said during the company's earnings call last month that DIY customers are deferring "maintenance that you would typically want to see," like skipping an oil change or ignoring a check-engine light.That can help extend the household budget for a time, but as Genuine Parts CEO Will Stengel put it earlier this month, "there's only so long you can defer an issue."And repairs aren't the only auto-related expense seeing cut-backs. Ally Financial this week reported worse than expected loan performance in July and August."Our borrower is struggling with high inflation and cost of living, and now more recently, a weakening employment picture," Ally CFO Russell Hutchinson <a target="_blank" class="" href="https://www.reuters.com/business/finance/ally-financial-flags-intensifying-credit-challenges-shares-slump-2024-09-10/">said</a>, according to Reuters.One thing that deferred maintenance and missed payments have in common is they are both problems that get more expensive with time. Nobody wants to be stranded on the side of the road or hounded by collections agents, but more people are finding themselves hoping to make it one day or week at a time.Indeed, as Dollar General's Vasos observed, paychecks aren't going as far as they once did."What we noticed was an even tighter core consumer at the very last week of each of the months in Q2," he said. "While that's always a tighter week of the month for our core consumer, it was by far the weakest."The expected interest rate cut from the Federal Reserve next week won't solve these difficulties overnight, but it could signal that improvement is in sight.Interest rate effects take a while to work through the economy, Bellinger noted, as big purchases are financed, working hours are scheduled, and business activity ticks back up.Still, with any luck, the creeping sense of economic anxiety might begin to subside, not just for the middle class, but for the households that have borne the real brunt of America's war on inflation.

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