Japanese Banks Are Abandoning Toyota

Happy Friday! It’s June 7, 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.

1st Gear: Japanese Banks Are Abandoning Toyota

Toyota’s been in a tough spot recently, what with all the cheating and cheating and also the cheating. Now, things are getting worse, with big banks looking to pull their money out of the automaker — though it doesn’t seem the turmoil is to blame. From Reuters:

Japan’s two biggest banks will start divesting their strategic shareholdings in Toyota Motor – worth a combined $8.5 billion – and will seek to sell into the automaker’s planned share buybacks, Bloomberg News reported on Friday, citing sources.

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The unwinding of shareholdings by the banks in Toyota, one of Japan’s most prestigious companies, would underscore how corporate governance reforms are increasingly taking root amid pressure from the government and the Tokyo Stock Exchange.

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The country’s governance code now requires companies to annually assess whether the purpose of a cross-shareholding is appropriate.

The banks’ holdings in Toyota would be sold over a period of several years, Bloomberg said.

Toyota did not immediately respond to a request for comment.

I’m not going to pretend to be an expert in Japanese corporate governance, but the timing here does seem awfully convenient if these banks are looking to preserve their funds from further losses.

2nd Gear: Lawmakers Want To Ban Imports From The Biggest EV Battery Maker

CATL is the biggest name in EV batteries, supplying everyone from Tesla to BMW to Mercedes with cells to run their electric cars. American lawmakers, however, see Chinese manufacturing and appear to enter some sort of bloodlust state — tripping over each other to ban the company from bringing goods into the States. From Reuters:

Chinese battery companies CATL (300750.SZ), opens new tab and Gotion High Tech (002074.SZ), opens new tab should be added immediately to an import ban list, a group of Republican lawmakers said, alleging their supply chains use forced labour, the Wall Street Journal reported.

The lawmakers called for CATL and Gotion, which have ties to Ford and Volkswagen respectively, to be added to what is known as the entity list under the Uyghur Forced Labor Prevention Act, the report said on Thursday.

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Volkswagen Group China has no evidence of human rights violations in connection with its business activities in China, a company spokesperson told Reuters in an emailed statement on Friday.

Volkswagen is also investigating these allegations immediately, “as we have done it in the past”, the spokesperson added.

I think we can all agree that slave labor is bad. No company should be using slave labor. We, in the States, should also give up the practice. Oh, did you forget about that carveout in the 13th amendment, where slavery is explicitly said to be totally kosher “as a punishment for crime whereof the party shall have been duly convicted?”

3rd Gear: Jeep Wants New EVs To Sell To New Buyers

Everyone in the United States loves Jeep, because what’s better than an SUV that fits all your buds and lets you get the wind in your hair? Jeep, however, wants a few more Americans to come to love it — and it sees EVs as the way to make that happen. From Automotive News:

Jeep’s move into electrification isn’t aimed at its current customers.

The adventurous SUV brand already is conquesting in big numbers with its growing roster of plug-in hybrids, and CEO Antonio Filosa thinks the pair of fully electric vehicles that will reach dealerships in the months ahead will attract even more newcomers.

Filosa said 75 percent of people who buy the Wrangler 4xe plug-in hybrid come from other brands, as do half of Grand Cherokee 4xe customers. For the Wagoneer S arriving this fall and the Wrangler-inspired Recon that follows soon afterward, “something like 100 percent will be conquested,” Filosa told Automotive News at the Wagoneer S unveiling here last week. “The brands that we are targeting are mainly Tesla … but there are many others.”

Jeep targeting Tesla owners sounds out-there, given the massive gulf that exists between the former’s boxy brutes and the latter’s sleek aesthetic, but Tesla buyers are probably already used to the kind of ride quality you get in a Wrangler. May as well get a soft top too.

4th Gear: Car Sales Are Up, But Trade Ins Are Getting Older

More people in the United States have been buying cars recently, which is great news for people who sell cars. The reasons behind those sales, though, might not be quite as good: A lack of hope for any kind of price relief in the near future. From Automotive News:

A robust mix of higher incentives and inventories helped push U.S. auto sales in May to their strongest selling rate in 10 months, as leasing penetration rates continued to recover and consumers grabbed fresh deals.

The estimated seasonally adjusted, annualized rate of sales was 16.08 million, according to Motor Intelligence. It was the highest industry SAAR since July 2023 and the first time the selling rate has topped 16 million this year. The SAAR in April was 15.9 million and 15.6 million in May 2023.

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Rising incentives played a key role in the results. Motor Intelligence reported incentives reached an average of $3,274 per vehicle in May, up 69 percent from a year ago, with light-truck incentives up 73 percent to an average of $3,409, while car incentives industrywide were up 49 percent to $2,738.

“What we’re seeing is trade-ins that are older than they have been for the last two years, which means that consumers are getting to the point where they have to come in and bring in their cars on trade,” said Jessica Caldwell, director of insights at Edmunds. “I think people are realizing that it doesn’t look like [affordability] is going to magically get better in two months’ time, so if they’ve got good credit and can afford a new car, they’re ready to buy.”

If buyers are giving up on the idea that prices will get any better before their cars rot out from under them, that doesn’t say great things about the economy writ large. Are we just getting used to greedflation, where companies jack up prices on essentials because no one will stop them, and working it into our budgets in all aspects of life? That’s not fantastic.

Reverse: Good Thing No Modern Supreme Court Decisions Have Explicitly Asked For Attacks Against Griswold So This Can Be Overturned