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Following a dismal fall in sales in the previous two quarters, Tesla has sacked several dozen employees in stores in Chicago, New York, and Tampa last week according to a report in Bloomberg. These cuts are the latest in a series of cuts to Tesla's retail staff that Tesla had announced earlier in the year. At first, Tesla had announced it would close most of its retail locations and moving to an entirely online retail model. They later changed course and dialed back the reductions with the caveat that some locations would still be closing. Tesla then raised the prices on the more expensive Model 3 trims Most of the cuts came from staff who hold the position of Inside Sales and their managers. Inside sales teams reach out to potential buyers and stimulate interest with test drives. View full article

Ford will exit Russia's passenger car market and focus solely on the light commercial vehicle market says a report from Bloomberg. Alligned with those moves, Ford will cease production in the country at two vehicle assembly plants. Those plants will close by the end of June 2019. Ford produces the Focus, Mondeo, Fiesta, and Ecosport in Russia. These cuts will cause significant job losses for Russia. This move comes after Ford announced as many as 6,000 job cuts in Germany and the UK and cut jobs at a transmission factory in France. Honda, Nissan, and BMW have all recently announced cuts or closures in European operations. Related: View full article

Tesla announced yesterday that it will reduce production hours for the Model S and Model X. This follows news of Tesla cutting seven percent of their workforce and dropping 75D variants of the S and X. “We recently announced that we are no longer taking orders for the 75 kWh version of Model S and X in order to streamline production and provide even more differentiation with Model 3. As a result of this change and because of improving efficiencies in our production lines, we have reduced Model S and X production hours accordingly,” Tesla said in a statement to Bloomberg. According to unnamed current and former employees, Tesla has set "substantially lower daily production targets" on the Model S and X. Tesla declined to comment when asked about the production targets. This is causing concern to grow about the demand for Tesla's more expensive (and profitable) vehicles, as it gears up to get more Model 3s out the door. Source: Bloomberg Hat tip to @balthazar for notifying us about this story. View full article

Ford wasn't the only automaker to announce cuts this week. On Thursday, Jaguar Land Rover announced they would cutting 10 percent of their global workforce (4,500 jobs) as part of a 2.5 billion pound (about $3.2 billion) effort to reduce costs and improve cash flow through 2020. As we reported last month, JLR got hit with a triple whammy of bad news; declining sales in China, falling demand for diesel vehicles, and the looming threat of Brexit. The company reported that retail sales fell 4.6 percent in 2018, mostly due to the uncertainty surrounding Brexit. That pales in comparison to the 22 percent drop in sales seen in the Chinese market - due mostly in part to the trade war. JLR CEO Dr. Ralph Speth said the cuts were a response to “multiple geopolitical and regulatory disruptions as well as technology challenges facing the automotive industry.” The company said the cuts will focus on those in design, engineering, supervisory, and senior management. No cuts are expected to hit those in production. Source: Bloomberg, Jaguar Land Rover JAGUAR LAND ROVER IMPLEMENTS NEXT PHASE OF TRANSFORMATION PROGRAMME Jaguar Land Rover, the UK’s largest vehicle manufacturer, today outlined the next phase of ‘Charge and Accelerate’, the company’s ongoing transformation programme to deliver £2.5bn in cost reductions and cashflow improvements over 18 months as well as long-term strategic operating efficiencies. Next phase of major transformation plan to lay foundations for long-term sustainable profitable growth Creation of leaner, more resilient organisation; reducing global workforce by around 4,500 people. This is in addition to 1,500 people who left the business in 2018 Further investment into electrification with Electric Drive Units to be produced at Wolverhampton Engine Manufacturing Centre and new Battery Assembly Centre to be established at Hams Hall, North Warwickshire CEO Prof. Dr. Ralf Speth: “Decisive action will help deliver resilient long-term growth as Jaguar Land Rover implements cost and profit improvements. This will safeguard our future and enable vital ongoing investment into Autonomous, Connected, Electric Jaguar Land Rover, the UK’s largest vehicle manufacturer, today outlined the next phase of ‘Charge and Accelerate’, the company’s ongoing transformation programme to deliver £2.5bn in cost reductions and cashflow improvements over 18 months as well as long-term strategic operating efficiencies. Jaguar Land Rover is expanding a business-wide organisation review aimed at reducing the size of its global workforce by around 4,500 people. This is in addition to the 1,500 who left the company during 2018. The next phase of this transformation programme will begin with a voluntary redundancy programme in the UK. This strategic review will create a leaner, more resilient organisation with a flatter management structure. We are taking decisive action to help deliver long-term growth, in the face of multiple geopolitical and regulatory disruptions as well as technology challenges facing the automotive industry. The ‘Charge and Accelerate’ programme combines efficiency measures with targeted investment, safeguarding our future and ensuring that we maximise the opportunities created by growing demand for Autonomous, Connected, Electric and Shared technologies. PROF. DR. RALF SPETH CHIEF EXECUTIVE OFFICER OF JAGUAR LAND ROVER So far, the ‘Charge and Accelerate’ programme has identified over £1bn of improvements, with more than £500mn already realised in 2018. The savings and improvements achieved will enable Jaguar Land Rover to fund vital investments into technology to safeguard its future. These investments include today’s announcement that, from later this year, next-generation Electric Drive Units (EDU) will be produced at the company’s Engine Manufacturing Centre in Wolverhampton. These EDUs will be powered by batteries assembled at a new Jaguar Land Rover Battery Assembly Centre located at Hams Hall, North Warwickshire, reinforcing the company’s commitment to the West Midlands and the UK. The Battery Assembly Centre will be one of the largest of its kind in the UK, using new production techniques and technologies to manufacture battery packs for future Jaguar and Land Rover vehicles. The latest investments and the transformation measures aim to build on unprecedented growth achieved by Jaguar Land Rover over the past decade, enabling the company to launch today’s range of award-winning Jaguar and Land Rover vehicles. In the last year alone, the company’s global product portfolio has expanded to include the all-electric Jaguar I-PACE, the Range Rover and Range Rover Sport with PHEV derivatives and, most recently, the new Range Rover Evoque, also with next-generation hybrid technology. In 2018, the company continued its global expansion with the opening of its latest vehicle manufacturing plant in Slovakia as well as investment into specialist engineering hubs in the Republic of Ireland, Hungary and Manchester, UK. In the same year, Jaguar Land Rover also confirmed plans to invest in its Solihull plant to support the introduction of the next generation Range Rover and Range Rover Sport. The next chapter in the story of the Jaguar and Land Rover brands will be the most exciting - and challenging - in our history. Revealing the iconic Defender, investing in cleaner, smarter, more desirable cars and electrifying our facilities to manufacture a future range of British-built electric vehicles will all form part of building a globally competitive and flourishing company. PROF. DR. RALF SPETH CHIEF EXECUTIVE OFFICER OF JAGUAR LAND ROVER View full article

This past year hasn't been good for Jaguar Land Rover. A triple whammy of sales dropping in China, demand for diesel vehicles falling, and the looming threat of Brexit has seen the company report a 90 million pound (about $113,550,300) loss in the third-quarter. S&P Global Ratings recently cut their long-term rating into JLR's parent company, Tata Motors into Junk Status. Because of this, Jaguar Land Rover will be detailing a three-year cost-cutting plan next month. Tata announced the plan back in October that would save 2.5 billion pounds (about $3.2 billion) within the first 18 months. There would be job cuts, but Tata did not say how many. The Financial Times reported this week that JLR is planning to cut 5,000 of its 40,000 workforce in the U.K.- this according to sources. “It’s do or die at the moment,” Robin Zhu, an analyst from Bernstein said. “JLR has been seriously mismanaged in recent years, with cost runaways, products disappointing in the market, and hedging issues costing it billions." “Jaguar Land Rover notes media speculation about the potential impact of its ongoing charge and accelerate transformation programmes. As announced when we published our second-quarter results, these programmes aim to deliver £2.5bn of cost, cash and profit improvements over the next two years. Jaguar Land Rover does not comment on rumours concerning any part of these plans,” JLR said in a statement to The Guardian. Other parts of the plan are said to include a reduction in models and selling off various assets. But Evercore ISI, an investment advisory frim said JLR needs to do more than cut costs. "The company needs to consider whether it’s spreading itself too wide and whether competing with the Germans in the tough premium sedan segment is a viable strategy," it wrote in a note to investors this week. Source: Financial Times (Subscription Required) via The Guardian, Automotive News (Subscription Required) View full article

The Chinese government is considering a proposal to reduce tariffs on U.S.-Built vehicles from the current 40 percent back down to the 15 percent before the trade war broke out between it and the U.S. Sources tell Bloomberg a proposal has been submitted to the cabinet to be reviewed in the coming days. This proposal stems from a trade summit in Buenos Aires where U.S. President Donald Trump and Chinese President Xi Jinping agreed to a 90-day truce on the trade war earlier this month. After the meeting, Trump tweeted out that "China agreed to “reduce and remove” tariffs on imported American-made cars, something China did not confirm at the time." Shares of various automakers including Diamler, Ford, and Tesla rose on the news. The trade war between the U.S. and China has taken a toll on automakers. Both BMW and Dimaler have warned of lower profits as tariffs have forced them to raise prices in China. Others such as Volvo and Ford have made changes to production and vehicle plans. China's Finance Ministry didn't respond to Bloomberg's request for a comment. Source: Bloomberg View full article

This morning, General Motors announced an overhaul of its operations in 2019 which will involve cutting more than 10,000 workers and possibly closing five plants by the end of the year. GM said the cuts should boost cash flow by six billion by the end of 2020. “The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future. We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success,” said GM Chairman and CEO Mary Barra in a statement. The plants up for possible closure are, Detroit-Hamtramck Assembly in Michigan - Home to Buick LaCrosse, Cadillac CT6, Chevrolet Impala, and Chevrolet Volt. Lordstown Assembly in Ohio - Home to Chevrolet Cruze. Oshawa Assembly in Ontario, Canada - Home to Cadillac XTS, Chevrolet Impala, and finishing production of last-generation Chevrolet Silverado and GMC Sierra Baltimore Operations in Maryland (Propulsion) Warren Transmission Operations in Michigan Hints of this announcement came out last night when reports from CTV and The Globe and Mail in Canada reported the closure of Oshawa. The plant closures also mean a number of models being dropped - including the LaCrosse, CT6, Impala, and Volt. The Cruze will be built in Mexico for other markets. It was expected GM was going to make some changes to address the underutilization of its plants. Dara from the Center for Automotive Research says GM represents 1 million of the 3.2 million units of underutilized capacity in the U.S. through October. This announcement comes on the eve of negotiations with the UAW next year and Unifor in 2020. The UAW has announced that it will challenge GM's decision "through every legal, contractual and collective bargaining avenue open to our membership." The announcement has brought pushback from politicians. Canadian Prime Minister Justin Trudeau expressed "deep disappointment" with the decision. U.S. Senator Rob Portman, a Republican from Ohio express frustration with the possible shutdown of Lordstown. One group not disappointed with the news is Wall Street. GM stock rose 6.18 percent to $38.00 per share at the time of this writing. Source: Automotive News (Subscription Required), Bloomberg, Reuters, Twitter, General Motors General Motors Accelerates Transformation Transforming the global enterprise to advance the company’s vision of Zero Crashes, Zero Emissions, Zero Congestion Taking cost actions and optimizing capital expenditures to drive annual run-rate cash savings of approximately $6 billion by year-end 2020 DETROIT – General Motors (NYSE: GM) will accelerate its transformation for the future, building on the comprehensive strategy it laid out in 2015 to strengthen its core business, capitalize on the future of personal mobility and drive significant cost efficiencies. Today, GM is continuing to take proactive steps to improve overall business performance including the reorganization of its global product development staffs, the realignment of its manufacturing capacity and a reduction of salaried workforce. These actions are expected to increase annual adjusted automotive free cash flow by $6 billion by year-end 2020 on a run-rate basis. “The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” said GM Chairman and CEO Mary Barra. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.” Contributing to the cash savings of approximately $6 billion are cost reductions of $4.5 billion and a lower capital expenditure annual run rate of almost $1.5 billion. The actions include: Transforming product development – GM is evolving its global product development workforce and processes to drive world-class levels of engineering in advanced technologies, and to improve quality and speed to market. Resources allocated to electric and autonomous vehicle programs will double in the next two years. Additional actions include: Increasing high-quality component sharing across the portfolio, especially those not visible and perceptible to customers. Expanding the use of virtual tools to lower development time and costs. Integrating its vehicle and propulsion engineering teams. Compressing its global product development campuses. Optimizing product portfolio – GM has recently invested in newer, highly efficient vehicle architectures, especially in trucks, crossovers and SUVs. GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures. As the current vehicle portfolio is optimized, it is expected that more than 75 percent of GM’s global sales volume will come from five vehicle architectures by early next decade. Increasing capacity utilization – In the past four years, GM has refocused capital and resources to support the growth of its crossovers, SUVs and trucks, adding shifts and investing $6.6 billion in U.S. plants that have created or maintained 17,600 jobs. With changing customer preferences in the U.S. and in response to market-related volume declines in cars, future products will be allocated to fewer plants next year. Assembly plants that will be unallocated in 2019 include: Oshawa Assembly in Oshawa, Ontario, Canada. Detroit-Hamtramck Assembly in Detroit. Lordstown Assembly in Warren, Ohio. Propulsion plants that will be unallocated in 2019 include: Baltimore Operations in White Marsh, Maryland. Warren Transmission Operations in Warren, Michigan. In addition to the previously announced closure of the assembly plant in Gunsan, Korea, GM will cease the operations of two additional plants outside North America by the end of 2019. These manufacturing actions are expected to significantly increase capacity utilization. To further enhance business performance, GM will continue working to improve other manufacturing costs, productivity and the competitiveness of wages and benefits. Staffing transformation – The company is transforming its global workforce to ensure it has the right skill sets for today and the future, while driving efficiencies through the utilization of best-in-class tools. Actions are being taken to reduce salaried and salaried contract staff by 15 percent, which includes 25 percent fewer executives to streamline decision making. Barra added, “These actions will increase the long-term profit and cash generation potential of the company and improve resilience through the cycle.” GM expects to fund the restructuring costs through a new credit facility that will further improve the company’s strong liquidity position and enhance its financial flexibility. GM expects to record pre-tax charges of $3.0 billion to $3.8 billion related to these actions, including up to $1.8 billion of non-cash accelerated asset write-downs and pension charges, and up to $2.0 billion of employee-related and other cash-based expenses. The majority of these charges will be considered special for EBIT-adjusted, EPS diluted-adjusted and adjusted automotive free cash flow purposes. The majority of these charges will be incurred in the fourth quarter of 2018 and first quarter of 2019, with some additional costs incurred through the remainder of 2019. View full article

Toyota isn't immune to the falling sales of passenger vehicles as more buyers trend towards trucks and SUVs. In the first ten months of this year, cars are down 11.1 percent. Meanwhile, trucks are up 7.7 percent. This has the Japanese automaker considering dropping some models. "We are taking a hard look at all of the segments that we compete in to make sure we are competing in profitable segments and that products we sell have strategic value," said Jim Lentz, Toyota's North America CEO after the automaker reported an increase in quarterly profits. Unlike Ford which is revamping its lineup to changing consumer tastes, Toyota isn't planning to "abandon passenger cars," instead "scrutinizing offerings in some areas, such as convertibles or coupes." No mention was made of the models on the chopping block, but we have a possible few candidates. Yaris: Sales have dropped 38 percent this year Prius C : Not big a seller and hasn't really been updated aside from the 2018 model Pruis C we reviewed last month. Lexus RC: Sales down 52 percent so far in 2018 Lexus GS: Been long rumored to be heading to the gallows View full article

The One Ford plan brought in by former CEO Alan Mulally helped the automaker weather through some very tough times. A key part of this plan was cutting back on the number of architectures used around the world - from 30 to nine. But Ford is planning to go further with reducing them. Last week, Ford's head of product development and purchasing, Hau Thai-Tang revealed the company will be reducing the number of platforms to just five. "This is not saying One Ford was wrong. This is building on the strategy of One Ford and evolving from it," said Thai-Tang at the 2018 J.P. Morgan Auto Conference in New York. The move to five platforms will help save costs: According to Thai-Tang, 70 percent of a vehicle's value can be managed through modular platforms. It will also improve the efficiency of Ford's suppliers. The five platforms are as followed: RWD/AWD Body-on-Frame FWD/AWD Unibody RWD/AWD Unibody Commercial Van Unibody Electric Vehicle Unibody Source: Automotive News (Subscription Required) View full article

In a staff-wide email sent today, Tesla CEO announced that the company would be laying off nine percent of its staff across the company. The cuts comes as part of "an effort to reduce costs and become profitable.” “Given that Tesla has never made an annual profit in the almost 15 years since we have existed, profit is obviously not what motivates us. What drives us is our mission to accelerate the world’s transition to sustainable, clean energy, but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable. That is a valid and fair criticism of Tesla’s history to date,” wrote Musk. The layoffs will not effect workers on the production, instead focusing on those working in various white-collar positions. Musk stressed this will not affect plans on reaching production targets for the Model 3 in the coming months. “Tesla has grown and evolved rapidly over the past several years, which has resulted in some duplication of roles and some job functions that, while they made sense in the past, are difficult to justify today,” Musk wrote. Those being laid off will get "significant salary and stock vesting" by the company. Source: Bloomberg, Fortune, Roadshow View full article

Last week, Ford shocked the industry by announcing that it would cut most of its passenger car lineup. The only models that would remain are the Mustang and the upcoming Focus Active - due to arrive in 2019. The move has earned a fair amount of ire from various folks, but the company is trying to push back and explain their reasoning. "We're going to feed the healthy part of our business and deal decisively with the parts that destroy value," said Ford CEO Jim Hackett to Automotive News. The "healthy part" are Ford's utilities and trucks. According to Ford CFO Bob Shanks, this part made more than $3 billion in the first quarter of 2018. Ford is projecting that light trucks will make up 90 percent of North American sales in the near future. The car side hasn't been faring as well with sales declining for the past few years. Ford hasn't said how much money they have been hemorrhaging on cars, but UBS analyst Colin Langan estimates Ford is losing $800 million per year on small cars in North America. Automotive News also notes that consumer demand for cars may be even weaker than first thought. Looking registration data from Polk, the outlet reports that a third of Fusions sold last year went to fleet buyers (about 69,874 models). Shanks said there are other items that could be cut, including "most Lincoln products" and chunks of Ford's overseas business. A number of people who hate this idea point out that this could hurt Ford if gas prices spike up like they did in the 2000s. But Jim Farley, Ford's head of global markets points out that the gap in fuel economy between sedans and crossovers has closed up significantly. The 2018 Fusion has a combined fuel economy rating of 27, while the Escape is rated at 26 mpg. Farley also insisted that Ford isn't repeating the mistakes from the mid-2000s with their utility vehicles that almost sent them to the brink. The industry he says has "fundamentally changed" since then. "Customer view and experimentation on the utility side is so much more broad. Utilities are the preferred body style. This wasn't the case before the downturn," said Farley. "We intend to expand our passenger car lineup in the U.S We also intend to serve similar, affordable price points to today. What's changed here is just the format of the vehicle. Our dealers will have just as much opportunity to grow, just with a different portfolio." Still, there are some that are very skeptical about Ford's new strategy. "Eight years ago, Ford Motor Co. announced it was killing Mercury. It assured us not to worry, because there would be no problem taking care of Mercury customers at Ford dealerships — those customers would just buy Tauruses and Fusions," said Chris Lemley, owner of Sentry Auto Group near Boston. Source: Automotive News (Subscription Required) View full article

Jaguar Land Rover is making some cuts to their work staff. Today, the British automaker announced that it would not renew the contracts of 1,000 agency workers at its Solihull factory in the United Kingdom. According to Autocar, JLR is holding meetings with workers to discuss the changes. In a statement, JLR said the decision is due “continuing headwinds” that have forced the company to make "adjustments to production schedules and the number of agency staff”. Those “continuing headwinds” are due to regulatory crackdown on diesel engines and higher taxes being placed on these models. This confirms news late last week about the automaker making cuts to their workforce. JLR also announced that it would be moving 360 workers from the Castle Bromwich to Solihull due to declining car sales. Bromwich is where the company produces most of Jaguar's lineup (F-Type, XE, XF, and XJ). Sales of diesel vehicles have been hit hard due to the Volkswagen diesel emission scandal. Jaguar Land Rover has been hit the hardest in their home country of the United Kingdom. 90 percent of Jaguar Land Rover models sold in the country are diesels, compared to 45 percent globally. According to industry association SMMT, Land Rover saw sales decline 20 percent to 23,815 through March. Jaguar posted a larger 26 percent decline to 9.709. JLR is trying to change that as they get ready to launch the I-Pace EV later this year, and plans on introducing electrified variants of all of their models by 2020. Source: Automotive News (Subscription Required), Autocar View full article

Since last year, we've been hearing various rumors of Ford cutting a number of passenger cars. In October, Ford CEO Jim Hackett said various cuts were incoming, including ones for the vehicle lineup. This would be part of a $7 billion shift of development funds from passenger cars to SUVs/Trucks. At the time, Ford wouldn't say what vehicles would be cut. During Ford's fourth-quarter and 2017 earnings call, Hackett said details about which models would be cut would finally be revealed later this year. Analysts hoping to get an answer were frustrated by this news. Ford has already ended production of the C-Max Energi late last year and is planning to end production of the C-Max Hybrid sometime later this year. Other models that have been rumored to be cut include the Fiesta, Taurus, and recently the Fusion. Source: Automotive News Europe (Subscription Required) View full article