Sky-High Depreciation and Repair Bills Force Hertz to Sell 30k EVs
Good morning! It’s Wednesday, May 1, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
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1st Gear: ‘Substantial Depreciation’ Forces Hertz To Offload EVs
If you’re looking to pick up a used electric car bargain, then your luck may be in as Hertz is about to offload thousands of electric vehicles from its fleet. The rental giant will sell an additional 10,000 EVs that it initially promised as a result of “substantial depreciation” seen by its EVs.
Hertz initially announced plans to sell some of its electric vehicles last year, after it initially pledged to purchase 100,000 Teslas to clean up car rentals after the pandemic. Now, however, it’s found out the hard way that EVs aren’t the solid investments it first thought, so is offloading them at an alarming pace to try and cut its losses, according to Autoweek. As the site explains:
Nominally, Hertz aims to make money on selling its used rental cars after they accumulate a certain mileage. At least, it has generally made money in the past via this business model with internal-combustion vehicles. But the same has not been true for used EVs.
The culprits, once again, have been high maintenance costs and depreciation of EVs it has purchased for its fleets, while on the consumer side the EV charging experience has seen its own issues.
The result has been a loss of $392 million in the first quarter, despite a 2% growth in revenues over the same period in 2023 amid overall revenues of $2.1 billion.
Hertz initially planned to sell 20,000 electric models from its fleet, however an additional $195 million charge last quarter as a result of depreciation across its fleet left it with no choice but to sell even more electric cars.
The 30,000 Hertz is now selling are the latest black spot in its experiment with EVs, which some reports estimate have cost the American rental giant as much as $440 million.
2nd Gear: Aston Martin Losses Grow Due To Low Sales, High Spending
Despite the successful rollout of its first luxury SUV kick starting a sales revolution at Aston martin, and a whole heap of cash being thrown at the brand by Canadian billionaire Lawrence Stroll, the British supercar maker still isn’t out of the woods just yet. Now, the company has posted greater than expected losses for the start of 2024 as a result of slowing sales and higher spending at the company, reports Reuters.
Aston Martin sold just 945 cars in the first three months of the year, which was down on analysts’ average expectations of 1,024. The slowdown was hampered by a drop in sales of the DBX SUV as well as higher costs, reports the Financial Times. As the site explains:
The company had previously flagged that it expected a weaker start to the year but anticipated that a wave of new car launches would help drive sales and profitability in the second half.
The figures, which are worse than expected, demonstrate the scale of the challenge facing Aston’s incoming chief executive, Adrian Hallmark, who has been poached from Volkswagen’s Bentley and will start later this year.
Philippe Houchois, an automotive analyst at Jefferies, said the company was going through a “painful transition”, with a similar performance expected in the coming quarter as well.
The transition for the company is one that’s being felt across the automotive industry and brands make the switch to hybrid power and electrification. For Aston Martin, however, plans to electrify the lineup have been put on hold, with Reuters reporting that the brand’s first EV has been pushed back by a year.
Instead of pivoting to electric power, Aston Martin today announced that a new flagship, V12-powered supercar will hit the market at the end of 2024.
3rd Gear: Carvana Could Be On The Up
While Aston Martin is struggling, cursed sales platform Carvana seems to have finally rid itself of its bad luck and is on the way up. After months of sky-high losses, the automotive retailer might be ready to grow once again.
Carvana was forced to dial back its car retail business last year after it struggled with sale bans in several states, sky-high costs and dwindling sales. Now, the company looks ready to bounce back as it prepares to report its latest financial results, reports Automotive News. As the site explains:
Chris Pierce, a senior research analyst at Needham & Co., said he expects analysts will want more specificity about Carvana’s growth plans — such as whether it plans to ramp up vehicle marketing soon to drive sales — when it holds its first-quarter earnings call Wednesday. Pierce estimated Carvana sold about 83,200 vehicles in the first quarter. In first-quarter 2023, it sold 79,240 vehicles.
“If they do turn on growth, then what does that mean?” Pierce said. “Is it just more marketing or are they going to buy more cars?”
The next question for Carvana will be how does it turn its shrinking loses into profitability? That will all hinge on how many cars it expects to sell this year and what markets it could potentially break into. One thing’s clear though, the tumultuous history for the retailer looks to finally be behind it.
4th Gear: UAW To Vote On Stellantis Strike Action
After historic industrial action saw workers walk out at plants operated by Ford, General Motors and Stellantis last year, the United Auto Workers Union looks to be getting ready for round two. Now, UAW workers at one Stellantis plant in the U.S. are preparing to vote on strike action in the coming weeks.
Employees at Stellantis’ Warren Stamping Plant are preparing to vote on industrial action over health and safety concerns at the site, reports the Detroit Free Press. The results of the vote could have wide-reaching impacts on Stellantis assembly plants everywhere from Windsor, Ontario to Saltillo, Mexico, according to the union. As the Free Press explains:
The union, which said the vote would cover about 1,100 members, listed a range of concerns that it said the company has failed to address, involving ventilation fans, flooding, personal protective equipment, restrooms, oil leaks, sanitation, and basement lighting and flooring.
“We’re standing up for health and safety at Warren Stamping,” UAW Local 869 President Romaine McKinney III said in the release. “When it rains, the facility floods because the ceiling is leaking. We have to fight for every single pair of work gloves, while we handle metal and materials to build world-class vehicles for Stellantis. The list goes on, and we’re putting an end to it. Our union grievance procedure gives us the power to stand up for safety on the job, and we intend to take action if necessary.”
Workers will vote for or against strike action at the site on Monday (May 6). If the strike goes ahead, production of Stellantis models like the Dodge Durango, Chrysler Pacifica and Jeep Gladiator could all be affected.