Foley Automotive Report

Analysis by Julie Dautermann, Competitive Intelligence Analyst

This report helps automotive suppliers inform their legal and operational decisions to help address challenges and opportunities. Contact your Foley relationship partner, or John R. Trentacosta or Ann Marie Uetz, to follow up.

Key Developments

• The third installment in Foley & Lardner’s Supply Chain Disruption Series provides a number of strategies to protect supply chains and mitigate risks against financially distressed customers and suppliers. Click here to subscribe to the series.
• The North American International Auto Show announced all tickets began sales on Monday, July 11.The indoor and outdoor event will be held September 14-25, 2022 at Huntington Place, Hart Plaza and throughout downtown Detroit. Foley & Lardner’s Auto Show Program will be held in Detroit on September 14, 2022 and details will be provided in an upcoming post.
• According to data from LMC Automotive, U.S. new light-vehicle sales reached an estimated 6.78 million units in the first half of 2022, representing a decline of 1.5 million units from the same period last year. In response to H1 results, LMC revised its full-year 2022 U.S. light-vehicle sales forecast from 15 million units to 14.3 million units.
• The National Automobile Dealers Association estimates U.S. new light-vehicle sales reached a SAAR of 13.4 million units in the second quarter, following the first quarter’s SAAR of 14.1 million units.
• The Federal Trade Commission released a proposed Motor Vehicle Dealers Trade Regulation Rule addressing certain aspects of car dealership trade practices, including price advertising and product financing disclosures.
• The U.S. Transportation Department’s Federal Highway Administration announced a new proposed rule that would require state transportation departments to establish greenhouse gas emissions targets for vehicles and report on progress.
• A U.S. District Court judge again postponed a ruling in a case concerning Massachusetts’ “right-to-repair” law pertaining to whether automakers will have to allow independent repair shops access to vehicles’ electronic data systems.
• Electric vehicles and low emissions technology:
  • The annual Car Wars study from Bank of America Merrill Lynch projects 60% of new models launched over the next four years will be either electric or hybrid. The report also predicts GM and Ford will surpass Tesla in U.S. EV sales by mid-decade.
  • Tesla delivered 254,695 vehicles in the second quarter of 2022, compared to 201,250 deliveries in the same period last year, and down from 310,048 deliveries in the first quarter of 2022.
  • Hyundai-Kia and Ford were the top two challengers to Tesla based on U.S. EV market share for the first five months of this year.
  • Volkswagen will invest €20 billion this decade with partners on battery cell production through a newly created company called PowerCo.
  • After selling its 200,000^th plug-in electric vehicle during the second quarter, Toyota became the third automaker to reach the cap resulting in the phase-out of a $7,500 U.S. federal tax credit.

Market Trends and Regulatory

• The J.D. Power 2022 Initial Quality Study found vehicle quality problems experienced a record-high increase of 11% compared to results in the 2021 edition. Infotainment represented 6 of the top 10 consumer concerns in the study. David Amodeo, director of global automotive at J.D. Power, noted “In general, initial quality has shown steady improvement throughout the history of this study, so the decline this year is disappointing—yet understandable. Automakers continue to launch vehicles that are more and more technologically complex in an era in which there have been many shortages of critical components to support them.”[Press release only, no access to full report]
• Semiconductor lead times averaged 27 weeks in June, compared to 27.1 weeks in May and 27 weeks in April, according to analysis excerpted in Bloomberg. Analysts quoted in Bloomberg also noted “supply constraints are not being felt equally,” and certain industries may be vulnerable to oversupply, while the automotive industry is still recovering from shortages.

OEMs/Suppliers

• GM was unable to deliver nearly 100,000 light vehicles in the second quarter due to shortages of microchips and other parts. Most recently, GM temporarily stopped production last week at its pickup plant in Fort Wayne, Indiana, due to the semiconductor shortage.
• Stellantis will temporarily stop production at its minivan plant in Windsor, Ontario this week for an unspecified reason. The plant had its annual summer shutdown last week.
• Ford reported a 31.5% sales increase for June 2022 compared to the same period last year, outperforming the market amid double-digit sales declines experienced by several competing automakers.

Connected/Autonomous Vehicles and Mobility Services

• Nearly three dozen autonomous vehicle developers asked California Governor Gavin Newsom to lift the state’s prohibition on testing autonomous semi-trucks and delivery vehicles weighing more than 10,001 pounds on public roads.

Electric Vehicles and Low Emissions Technology

• A new survey from Consumer Reports found 14% of U.S. respondents would “definitely” buy or lease an electric-only vehicle, up from 4% in the 2020 edition of the survey, while 22% would “seriously consider” an EV, and 35% “might” consider an EV.
• Michigan lawmakers approved $130 million to fund a new center for electric vehicle technology and workforce development at the University of Michigan’s Ann Arbor campus. The Michigan Electric Vehicle Center is in the planning stages and construction details were not provided.
• The Wall Street Journal reports GM has a waiting list of approximately 77,000 for its new GMC Hummer electric pickup truck, and the automaker is producing an estimated 12 per day at its Factory Zero in Detroit.