Good morning! It’s Wednesday, November 27, 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.
1st Gear: Mexico Tariffs Could Hit 1.2 Million Cars Sold In America
If president elect Donald Trump gets his way when he takes office on January 20, huge tariffs are coming for all kinds of goods imported into America. The convicted felon touted taxes on imports from Canada, China and Mexico during his campaign, and now the true cost of such measures on American consumers is becoming apparent. Shock horror, it doesn’t look great.
After threatening a four-figure tariff on imports from Mexico, Trump soon softened his ideas to “just” 200 percent and now it’s looking like the actual tax on imports coming across the border could be more like 25 percent. If those measures do come into force, it’s likely Mexico will implement taxes of its own on U.S. imports, which will make things more expensive for residents on both sides of the border.
Now, Reuters projects that the impending trade war could make prices rise here in the U.S. In the coming years, you can expect your Tequila to get pricier, your grocery bill may rise and the cost of your next car could go up, as Reuters reports:
U.S. President-elect Donald Trump’s plan to slap a 25% tax on all imports from Mexico and Canada could strike the bottom lines of U.S. automakers, especially General Motors, and raise prices of SUVs and pickup trucks for U.S. consumers.
GM leads the automakers that export cars from Mexico to North America. The top 10 car manufacturers with Mexican plants collectively built 1.4 million vehicles over the first six months of this year, with 90% heading across the border to U.S. buyers, according to the Mexican auto trade association.
Other Detroit manufacturers will likely also feel the pain: Ford and Stellantis are the top U.S. producers in Mexico after GM, whose shares fell on Tuesday, the day after Trump’s tariff announcement.
This year alone, General Motors is projected to import more than 750,000 vehicles into America from Canada and Mexico, including top-sellers like the Chevrolet Silverado pickup. Tariffs on such models would likely be passed onto consumers, which one expert Reuters spoke with said “could hurt the United States,” as the site adds:
“The U.S. would be shooting itself in the foot,” [Kenneth Smith Ramos, Mexico’s former chief negotiator for the USMCA trade pact] said. The impact on Mexico’s auto industry would also be “very negative.”
GM employs 125,000 people in North America; a decline in sales of its Mexico-made cars could hurt its profit for the entire region, potentially putting pressure on payrolls on both sides of the border.
The tariff hikes would also serve as a reminder of the supply chains, which closely bind the three members of the United States-Mexico-Canada Agreement. Mexico and Canada account for more than 50% of all auto parts exported to the United States – sending nearly $100 billion in parts. Imposing the tariffs would increase the costs of all vehicles assembled in the United States.
Trump is envisaging a world where, to bypass the tariffs, automakers bring jobs and manufacturing flooding back to American soil. Maybe they will, but the millions of dollars that have been invested in Mexican and Canadian manufacturing over recent years suggest that maybe they won’t.
2nd Gear: VinFast Losses Narrow As Deliveries On Track To Hit 80,000
Let’s check in with everyone’s favorite Vietnamese automaker: VinFast. After a rough start to its electric vehicle endeavor, with critics widely panning the car, deliveries dropping in the U.S. and the company’s first models even getting a recall, VinFast might be bouncing back. Sort of.
According to the company’s latest financial results, losses at the automaker are beginning to narrow, reports Bloomberg. Revenue at the car maker is starting to rise in line with deliveries, with the automaker on track to hit its 2024 target of 80,000 cars sold:
The Vietnamese electric-vehicle maker reported a net loss of 13.25 trillion dong ($521.3 million) in the third quarter, a decrease of 14.8% from a year ago.
Revenue jumped 49.3% during the same period to 12.33 trillion dong, the company said in a filing to US authorities where it’s listed.
VinFast announced last month that it delivered a total 21,912 cars in the third quarter, up 115% from a year ago. The sales were underpinned by “robust” deliveries in the domestic market, which the company said will play a key role in driving revenue for the remainder of 2024.
Vinfast also delivered around 11,000 cars in its home market last month, which brings its total deliveries in Vietnam for the year up to 51,000 units. The automaker hasn’t released other country-specific sales for October, so there’s no knowing how many of the remaining 10,000 cars sold last month made it into the hands of lucky American buyers.
The number making it over here could rise, though, as VinFast confirmed that construction of a new, larger plant in Vietnam will start soon. The site in the central province of Ha Tinh will produce its VF 3 and VF 5 EVs, with a maximum production output of 300,000 electric vehicles.
3rd Gear: Aston Martin Raises $140 Million To Fund Electrification
British automaker Aston Martin seems to be perpetually on the brink of collapse. Now, the Vanquish manufacturer has launched a funding round that’s aiming to raise more than $140 million to support its future models, including the launch of its first electrified cars.
The British brand, which is heavily supported by Canadian billionaire Lawrence Stroll, revealed this week that earnings were down this year as a result of delivery issues, reports Automotive News. To support cash flow and keep the automaker’s first electric car on track for its 2026 debut, Aston launched a funding round to boost capital:
Aston Martin has raised about 111 million pounds ($139.7 million) in equity at a price of 100 pence per share, a more than 7 percent discount to the stock’s last close.
Its shares closed at 107.9 pence on Nov. 26.
Together with a debt offering of senior secured notes worth 100 million pounds, the company said it had raised about 211 million pounds to help finance its electrification strategy and future investments.
The company has been hit by persistent depressed demand in China and supply disruptions. In February, it said it would delay the launch of its first electric car to 2026.
The automaker’s troubles this year have stemmed from lower demand in markets such as China, as well as delays to deliveries. The British brand will miss its target for deliveries of the range-topping Valiant, with the company admitting that it will only ship around half of the new cars this year.
As a result of the issues, earnings for the company are projected to drop in 2024, with Aston targeting between $340 million and $354 million this year, which is below analysts estimates for 2024.
4th Gear: VW Sells China Plant Following Abuse Allegations
China is all we seem to talk about these days. Whether it’s the use of Chinese tech in American cars, the rapid growth being seen by Chinese automakers or American brands scrambling to increase their presence in the nation. Now instead of expanding in China, German automaker VW has sold off one of its plants in the country after years of backlash.
Volkswagen will sell off its operations in China’s Xinjiang, reports Reuters. The move comes after mounting pressure for the Golf maker to exit the area following allegations of abuse against the Uyghur population:
VW and SAIC will sell their plant in Xinjiang to Shanghai Motor Vehicle Inspection Certification (SMVIC), a unit of state-owned Shanghai Lingang Development Group, which will take on all its employees, they said.
Under the terms of the deal, for which financial details were not disclosed, SMVIC will also take over SAIC/VW’s test tracks in Turpan, Xinjiang, and Anting in Shanghai. Volkswagen will then no longer have a presence in Xinjiang. Beijing has denied any abuses there.
Stakeholders including the state of Lower Saxony, Volkswagen’s second-largest shareholder, welcomed the sale.
VW opened the plant in Xinjiang back in 2013 and it was previously used to assemble its Santana vehicles for sale in China. However, its output dwindled in recent years and jobs at the plant were cut. Despite having capacity to build 50,000 car per year, a new model hasn’t rolled out of the factory since 2019.
The German brand recently faced criticism of its presence in the region over allegations of forced labor practices in the automotive supply chain. Critics argued that verifying labor standards in the area was “impossible,” which could lead to “reputational risks” for the automaker, adds Reuters.