As we move toward the holidays (and the end of 2022!), it’s time to check in on what the first half of December had in store for the automotive industry. Grab a coffee and settle in – we’ve got the three biggest auto news stories of the month (so far) ready for you.

Ford Doubles Down on EV Mandates – to Some Dealers’ Chagrin

On September 14th, Ford announced that dealers would need to invest in one of two “certified” EV tiers if they wanted to sell Ford EVs. Dealers could either commit an estimated $900,000 to the “Model e Certified Elite” tier, enabling them to sell Ford’s full EV lineup, or make an estimated $500,000 investment into the “Model e Certified” tier for more restricted EV access.  

Ford committed hard to EVs in 2022. The Mustang Mach-E and F-150 Lightning gave us electric takes on some of Ford’s most popular models and made it clear that the automaker is serious about EVs. Further solidifying Ford’s commitment to electrifying their fleet, dealers bought into the Model e Certified and Model e Certified Elite tiers need to implement:

  • Specialized EV sales and ownership teams;
  • Back-of-house infrastructure to support EV maintenance and charging for prospective and current customers;
  • Transparent pricing plans for customers interested in EVs, including the ability to buy online;
  • Remote pickup and delivery for Model e customers;
  • Support for software and subscription services, such as Ford Pass perks.
Image of EV charging stations.
Model e Certified dealers will have a number of charging stations ready for customers.

The Rub? Dealers Weren’t Happy About It

As expected, many of the almost 3,000 dealers in Ford’s dealership network decried the requirements. Many stated that Ford’s end-of-October deadline for dealers to commit to a Model e tier was too quick a turnaround, but that wasn’t the only issue. Dealer associations across over 13 states stated that the requirements placed an “unfair burden” on them. However, Ford remained steadfast, stating that the requirements don’t break any laws, that the company consulted over 400 dealerships when establishing the tiers, and that most dealerships were bought in.

So, where are we at now? Well, Ford did extend the deadline to sign up, giving dealers until December 2nd, 2022. On December 6th, 2022, Ford CEO Jim Farley announced that 1,920 of Ford’s 2,968 dealerships agreed to invest in Model e Certification, an adoption rate of about 65%. The 1,040 dealers who opted out of Model e Certification won’t be able to sell Ford EVs from at least January 1st, 2024, through January 1st, 2027. How that impacts their business, or whether Ford opens more enrollment calls in coming years, remains to be seen. 

The Takeaway: With automakers like Ford committing to EV adoption on a wide scale, legislators should be feeling more confident about deadlines for eliminating the sale of fossil fuel vehicles. Automakers investing heavily in EV production and sales should be good for the end consumer, too – the more EVs get made, and the more companies refine EV production, the faster prices for new and used EVs should fall. 

Multiple U.S. Hyundai & Kia Plants Fall Under Investigation for Child Labor

On December 16th, 2022, Reuters published an investigative auto news report claiming that at least four Hyundai and Kia supply plants used child labor in recent years. Interviews with parents, law enforcement officials, and production engineers revealed that the plants hired migrant minors as young as 13. 

The news follows a July report by Reuters, which found that SMART Alabama LLC, a Hyundai subsidiary, employed workers as young as 12. Reuters reports that underage workers worked dangerous jobs normally reserved for legally aged, skilled workers, such as body component assembly and metal stamping. 

Image of an automotive manufacturing workshop.

According to Reuters, workers fled out the back of an Ajin Industrial Co. plant when state and federal inspectors made an unannounced inspection. Now, over ten supply plants across Alabama are under investigation by state and federal authorities. In two separate stations, Hwashin America Corp. and Ajin Industrial Co., both named in the Reuters report, stated that they hadn’t hired underage workers “to the best of our knowledge.” The companies also announced they would comply with investigators.

Hyundai announced that it would “sever relations” with the investigated suppliers “as soon as possible” and initiate a broader investigation into its entire U.S. supply chain to identify labor law violations.

The Takeaway: Safe to say, most consumers would be surprised to hear about a child labor story rooted in the U.S. Because child labor isn’t as common in the U.S. as some other countries, many legislators and experts consider current child labor laws outdated. This investigation may spark interest in reforming child labor laws.

New Car Demand Moderates, Used Car Prices Continue to Decline

In our October auto news recap, we mentioned how several manufacturers, such as Toyota, Hyundai, and Kia, saw increased new car sales. In November, that trend continued – Cox Automotive forecast a 10.8% year-over-year increase in new car sales. Brands like Hyundai, Kia, Subaru, Toyota, and Mazda continued to see the biggest gains. 

Supply chains have started to recover from shortages induced by the COVID-19 pandemic and environmental disasters (more on that here), allowing automakers to manufacture more vehicles. The more inventory they have, the easier it is for automakers to drive prices down – which, in turn, makes it easier for consumers to justify a purchase. 

Image of a person picking out a car.

Those trends also spill over into the used car market. A report from CNBC found that wholesale used car prices reached their lowest level in over a year. However, while some consumers may be shelling out for new cars they’ve been waiting on for years, that bump in sales isn’t hitting the used car market – used car sales declined yet again. Moreover, record high numbers of consumers are defaulting on auto loans – Cox Automotive reported a 30.8% year-over-year increase in loan delinquency this October.

The Takeaway: Customers who were waiting on sold-out new cars may be willing to buy now that companies are replenishing their inventory, but that doesn’t mean the auto industry is out of the woods yet. Economic uncertainty is still driving down sales for plenty of automakers and continues to impact the used car market. If the Federal Bank can decrease inflation without sparking a recession, however, both the new and used car markets are positioned to benefit from more confident consumers in the next year.

That’s the auto news you need to start your day. For more auto news, tips and tricks, stay tuned!

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