Good Tuesday morning and welcome back to the Morning Whatever We’re Calling This Now. We’d make a decision on what its final name is, but the site’s cofounder may have decided to permanently live in a U-Haul. It’s unclear at this time. But while we haven’t made a decision there, we will never fail in delivering the news.
Today, that means details on where Ford’s trying to win on efficiency; some more updates on Renault’s return to (North) America; VinFast is already cutting jobs in America; and rental cars are back, baby. Let’s dive in.
Ford (And GM) Go Into Cost-Cutting Mode
Financial results for the major American automakers (I have a hard time counting Stellantis these days since it’s so thoroughly international) for 2022 can be summed up thusly: GM good, and Ford not so good. The former posted a $3.8 billion profit and handed out bonuses to workers, and the latter showed great progress in many areas but was dogged by costs to the tune of a $2.2 billion loss. As I wrote last week, some of that was due to Ford’s investments in Argo AI and Rivian that led to write-downs; some of it was due to high costs, inefficiencies and quality issues that necessitated expensive recalls later.
Agnostic of ’22 profits (or lack thereof), both automakers are planning cost cuts ahead of an uncertain economy, rising interest rates, a still-sometimes-shaky supply chain and investments needed for EVs and hybrids. GM’s aiming for $2 billion in cuts over the next two years with no layoffs planned.
Ford is going to focus on efficiency as well. Here’s a tidbit frustrated CEO Jim Farley offered on the earnings call, per CNN:
“We didn’t know that our wiring harness for Mach-E was 1.6 kilometers longer than it needed to be. We didn’t know it’s 70 pounds heavier and that that’s [cost an extra] $300 a battery,” he said on a call with investors Thursday. “We didn’t know that we underinvested in braking technology to save on the battery size.”
That’s about .99 miles, if you’re like me and still don’t understand the Metric system. Basically, it’s a lot of wires. Ford unfortunately is planning job cuts as part of this plan, and Farley is due to elaborate on his efficiency goals on an upcoming radio show, reports Automotive News:
Ford Motor Co.’s engineering ranks may bear the brunt of additional job cuts the automaker has alluded to in the wake of disappointing earnings, judging from CEO Jim Farley’s latest interview.
“It takes us 25 percent more engineers to do the same work statements as our competitors,” Farley said on “Cars & Culture with Jason Stein,” a SiriusXM radio show that will air the interview on Friday. “I can’t afford to be 25 percent less efficient.”
I’ll give Farley credit here for his candor (and for cutting bonuses for himself and his executives.) There’s no point in sugar-coating the problem, and he seems to be tackling it with an urgency we haven’t always seen before.
Here’s another example: Ford is now the no. 2 EV seller in the U.S. behind Tesla, but its EVs are unprofitable on the whole. Only some Mach-E trims actually make money. Compare this to Tesla, which, for all its other issues, does post ridiculously high profit margins per car. The EV revolution is going to be more than just about “make batteries” and “put those batteries into cars”; the automakers will face many other challenges to get costs down in this war.
Renault Is Back On This Side Of The Pond For The First Time In Decades
As you’ve read here, Nissan and Renault have been working on their weird forced marriage lately and guess what? It’s actually going pretty well. I’m happy for them. Keep love alive, man. It’s been a tough struggle; the Japanese don’t love taking orders from anyone, especially a technically smaller company whose majority shareholder is the French government, thanks to le socialisme. But they’re making it work for the kids! (The kids in this case are the Altima and the Twingo.)
And in their latest reworked deal, the two have big plans for Mexico. That’s a market where Nissan has a gigantic presence, and it’s the gateway to the rest of Latin America, where Renault is a pretty huge deal. But don’t expect a U.S. comeback for Renault anytime soon, per Automotive News. With the exception of Alpine, which could be interesting:
In Mexico, Nissan will produce a new model for Renault, making it the first Renault vehicle produced there in 20 years. Renault Group models were last sold north of the border in the U.S. in the early 1990s, but CEO Luca de Meo said there are no imminent plans to reenter that market.
The repositioning comes despite the French automaker’s recent announcement that it plans to leverage the U.S. market as a key revenue driver for its Alpine sports car brand. The company wants to sell two models in the U.S., including a midsize electric crossover, starting in 2027 or 2028.
Speaking at a joint press conference, de Meo said Renault’s presence in Mexico would focus on bolstering Renault’s business in Latin America, especially in Argentina, Brazil and Colombia.
“It’s actually not in the plan to imagine, let’s say, Mexico as a platform for us to go to the U.S. That’s what Nissan does,” de Meo said. “We’re more looking at a way to use Mexico to kind of balance Latin America so you can play in three or four countries.”
It’s kind of hard to get excited about a U.S. return for Renault anyway, right? Maybe a few years ago, when the Renault Mégane RS was doing to the rest of the European hot hatch market what Napoleon did to Austerlitz. The current lineup? A bunch of crossovers and forthcoming EVs, which, ehh.
I’ll tell you this is really great news for junior alliance partner Mitsubishi, which only has four cars in its U.S. lineup and plans to make use of that Mexican production to expand its offerings here. You just can’t keep Mitsubishi down for long. I’ll give it that.
VinFast Is Already Doing VinLayoffs
Well, that was fast. Vietnamese newcomer VinFast, which is seeking to launch its presence in the U.S. this year, is already cutting jobs stateside, according to Bloomberg (via Yahoo! News.) It’s “only” 80 jobs, but the cuts also include the U.S. chief financial officer. That seems suboptimal, but they say it’s due to a larger reorganization that combined its Canadian and U.S. units:
VinFast, part of Vietnam’s biggest conglomerate and backed by the country’s richest person, said late last month it was consolidating its US and Canadian strategic business and management operations into a single unit called VinFast North America, headquartered in Los Angeles. Van Anh Nguyen was named chief executive officer of the new entity, while maintaining her role as CEO of VinFast US Manufacturing, the company said.
VinFast US CEO Giang Nguyen has been reassigned to be deputy CEO of VinFast North America, according to the people.
In response to questions from Bloomberg News, Vinfast said the restructuring was aimed at better serving customers in the region, and that it has been working with local service providers to improve efficiency. “This also leads to the streamlining of our North American operations and there are certain departments affected by this,” the EV maker said in an email.
VinFast is a massive conglomerate in Vietnam, the group behind entities like VinSmart, VinHomes, VinUniversity, VinMart and even the VinMec hospital. It’s new to carmaking in general but is going hard out of the gate by targeting America first, and with EVs, too; still, those cars have been delayed yet again.
As ever with VinFast, I’ll point you to Kevin Williams’ piece from Jalopnik late last year, which indicates this is still a shakier enterprise than it’s often characterized in the mainstream press. It’s hard to know how seriously to take VinFast so far, but the U.S. car market is the toughest and most competitive one in the world. I’m also deeply unconvinced about what the value proposition even is here, especially since the cars aren’t even eligible for the $7,500 EV tax credits anymore.
Someone reading The Autopian, go buy a VinFast and tell us about it! I’d pay for a long-term road test series on that. (Seriously, if you’re actually buying one of these, get in touch.)
It Don’t Hertz So Bad Anymore
The rental car industry got trashed in the pandemic, first with travel being decimated by the virus itself, then companies having to sell off their cars just to stay afloat, and then not having new cars to buy because they were just as at the mercy of supply chain disruptions as anyone.
But the happier times are here again as we get back to our new version of “normal.” Hertz, which also operates the Dollar and Thrifty brands, posted a better-than-expected Q4 earnings report. Here’s CNBC on that:
Here are the key numbers from Hertz’s fourth-quarter earnings report, compared with Refinitiv consensus estimates:
- Adjusted earnings per share: 50 cents vs. 46 cents expected
- Revenue: $2.035 billion vs. $2.033 billion expected
For the full year, Hertz reported adjusted earnings per share of $3.74 on revenue of $8.7 billion. That profit also beat estimates, as analysts polled by Refinitiv had expected earnings of $3.67 on revenue of $8.7 billion, on average.
As of the end of 2022, Hertz had $2.5 billion of total liquidity available, including $943 million in cash.
Hertz’s CEO indicates a lot of this came down to lowering costs, re-hiring employees it laid off during the pandemic and high demand for travel. Business from corporate travelers was up 31% in 2022 vs. 2021, CNBC notes, and demand from international travelers was up 88%.
I’d say I’m hopeful this means rental car prices will come back down to earth, but as with the rest of inflation, things don’t often work that way.
Back To You
Should anyone take VinFast seriously? What happens if we don’t and we’re wrong?