Ford Slips, Stellantis Drives Off A Cliff, GM EV Buybacks, Southwest Assigned Seats

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The dog days of summer are well upon us, and that means a great opportunity to love people more than cars. Today we’re talking about Ford and Stellantis’s Q2 earnings reports, GM’s early EV issues that led to buybacks, and Southwest’s shift to assigned seating.

Show Notes with links

• Not everyone can be GM, as Ford’s income dropped 4.5% to $1.8 billion, despite a revenue increase of 6.4% to $47.8 billion, driven by strong commercial vehicle sales. Meanwhile, Stellantis’s net income plummeted 48% to €5.6 billion in the first half of 2024, with operating margins falling below 10%.
  • Ford’s adjusted earnings before interest and taxes (EBIT) fell 27% to $2.8 billion as CFO John Lawler cited $800 million in increased warranty expenses due to older vehicle recalls.
  • Ford Pro division shined with $2.6 billion earnings and 15.1% profit margins, while the Model e EV unit reported a $1.1 billion loss.
  • Stellantis struggled the most in North America, including an 18% shipment decline and price pressures.
  • CFO Natalie Knight said “There are operational issues we have had in North America where I think we could have performed stronger,” suggesting measures like output and price cuts, inventory reductions, and cost-saving initiatives to address these operational issues.
• GM’s Ultium vehicles have faced significant issues due to build quality and safety concerns, including fire risk, leading to buybacks and now reentry into the used market at steep discounts.
  • Early 2023 and 2024 Chevy Blazer EVs suffered from software issues, leading to a stop sale, and the Cadillac Lyriq has had less publicized issues around problems with build quality, both leading to buybacks
  • Vehicles reacquired by GM in this process do show “Reacquired by Manufacturer” on the vehicle history report.
  • Models like the 2024 Chevy Blazer EV RS and Cadillac Lyriq are now available at significant discounts, sometimes over $20,000 below original MSRP making an impact in the used car market.
• Southwest Airlines is making significant changes by moving away from its 50 year old policy of open seating. The airline will soon introduce assigned seating and premium options with extra legroom, aiming to appeal to a broader range of passengers and enhance profitability.
  • Extensive testing has taken place, including simulations and employee trials, ensured the new boarding process would not slow down operations.
  • The changes come as Southwest faces profitability challenges and competition from rivals with more extensive networks and high-end offerings.
  • CEO Bob Jordan shared he expects it to generate over $1 billion in additional revenue selling extras like those that allow passengers to board sooner.
  • "This is the right change at the right time," stated CEO Bob Jordan, indicating confidence in the new strategy.

Hosts: Paul J Daly and Kyle Mountsier

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