Like its Korean chaebol peers, Samsung once had high ambitions to become a big automotive OEM. It now appears reconciled to a different approach to the automotive value chain. Samsung has reportedly decided to bring the final curtain down on its automotive OEM dream and sell its 19.9% stake in Renault Samsung Motors. The move will end Samsung’s 27-year-old presence in automotive manufacturing. Established in 1994, Samsung ceded ownership of the business to Renault in 2000. Since then, Samsung has been a silent partner and present in the auto business receiving dividends and trademark royalty, without any involvement in the Renault Samsung Motors management. Renault Samsung Motors is presently ranked fourth in South Korea in terms of vehicles sales and follows Hyundai, Kia and Genesis. It sold 95,939 units in 2020, representing a 5.1% market share. The company manufactures passenger cars at its plant located in Busan catering to both domestic demand and exports. While it also imports and sells buses and trucks in the country. Renault Samsung Motors has an annual production capacity of nearly 300,000 vehicles, but in 2020 utilization stood at just 38% with only 114,630 vehicles manufactured at the facility. The divestment follows a trademark contract ending between Samsung Cars and Renault Samsung Motors last year. The latest development sees Samsung selling its 19.9% stake to other investors and an end to the use of the ‘Samsung’ name on the vehicles from 2023.

At VW Group ‘Future Mobility Days’ Nikolai Ardey, head of Volkswagen Group Innovation, discussed long-term technology and societal trends impacting the auto industry. So what are the big underlying themes? The mobility sector, and the automotive industry in particular, is currently undergoing the most radical transformation of its existence. The new ideal of carbon-neutral self-driving mobility is gradually becoming reality – both in megacities and in rural areas. This gives mankind totally new freedoms. In the future, we will be able to use time spent in the car more diversely for social contact, entertainment and relaxation. This will turn the car into something like a time machine. Then we will integrate mobility into everyday life in a completely different way – with benefits for both society and the individual. The “golden age of mobility” is around the corner.

The key trends shaping the tyre industry include electrification, high load capacity, less noise, low rolling resistance, sustainable materials and production. To learn more, we spoke to Andreas Schlenke, tyre developer at Continental.

Tesla halted operations at its Shanghai assembly plant for four days in August due to parts shortages, according to local reports citing unnamed sources close to the company. The US electric vehicle (EV) manufacturer was said to be struggling with shortages of semiconductors which affected mainly production of the Model Y crossover model last month. The source confirmed production had returned to normal following the disruption. Malaysia has emerged as a major bottleneck in the global semiconductor supply chain, after the government imposed strict lockdowns at the beginning of June to slow the spread of the coronavirus.

More chips woe: General Motors will cut production at most North American assembly plants this month because of the ongoing semiconductor chip shortage, hitting its profitable truck and sport utility vehicles. The automaker said it would halt production next week at its Fort Wayne plant in Indiana and its Silao plant in Mexico, both of which build pickup trucks. GM is cutting production at eight North American assembly plants in September. GM would halt production at its Wentzville, Missouri plant, which builds midsize trucks and full-size vans, for two weeks starting 6 September. It would also halt production at the CAMI Assembly in Canada and San Luis Potosi Assembly in Mexico for two additional weeks. The company builds the Equinox SUV at both plants. The automaker is also idling production for two additional weeks at its Lansing Delta Township plant that builds the Chevrolet Traverse and the Buick Enclave. GM’s Spring Hill Tennessee plant, which builds the GMC Acadia, Cadillac XT5 and Cadillac XT6, will cut two weeks of production in September while its Ramos, Mexico plant will take two additional weeks of downtime for Blazer production and Equinox production will be down for the week of 27 September. Production of the Equinox has been down since 16 August.

And so it goes: Daimler is anticipating significantly lower sales at its Mercedes cars unit in the third quarter due to the global semiconductors shortage according to a German media report. CEO Ola Kaellenius told trade publication Automobilwoche plant closings at semiconductor suppliers in Malaysia [see Tesla above] and elsewhere, have made the challenge to maintain production “even greater, so that our sales in the third quarter will probably be noticeably below the second quarter.” Daimler’s warning on the weaker short-term outlook due to semiconductor shortages follow similar warnings at automotive OEMs – and major suppliers – around the world. Analysis by GlobalData suggests the automotive industry – so far this year – is being hit by lost production and revenue worth up to $100bn caused by the chips shortage. “Losses will extend at least into Q3, but are expected to ease in Q4 as chip inventory is backfilled,” said Calum MacRae, automotive analyst at GlobalData. The latest analysis puts the year to date revenue losses incurred by vehicle manufacturers due to suspended production at between $60.9bn and $100.5bn. Worldwide, some 155 plants have suffered shutdowns due to shortages of crucial semiconductor components.

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Stellantis was the only major automaker operating in the US without a captive finance arm. That’s changing: it said it had entered into a definitive agreement to acquire F1 Holdings, parent company of First Investors Financial Services Group, an independent auto finance company in the US, in an all cash transaction for around US$285m. Carlos Tavares, CEO of Stellantis, said: “This transaction marks a significant milestone in our sales finance strategy in the critical US market. First Investors has an outstanding financial and operational platform, underpinned by a strong management team, with vast experience in auto finance. Direct ownership of a finance company in the US is an opportunity which will allow us to provide our customers and dealers a complete range of financing options, including retail loans, leases, and floorplan financing in the near to medium term.” The automaker plans to establish a US captive finance company to support its sales and fully capitalise on its strong market position while creating long term value for shareholders. The acquisition allows it to create a platform from which to grow a full service captive finance organisation. The transaction has significant potential for additional earnings generation and improving customer loyalty. A captive US finance company will enhance the ownership experience and connectivity in the digital age for customers and provide future opportunities to enable emerging business strategies.

Our monthly South Korea sales report is in: Domestic sales by South Korea’s five main automakers combined fell by 4.1% to 106,247 units in August 2021 from 110,835 units a year earlier, according to preliminary data released individually by the companies. The global shortage of semiconductors and high coronavirus infections continued to disrupt vehicle production and sales in the country last month. The government has extended the discounted 3.5% vehicle sales tax rate, down from 5%, until the end of the year to help support the local market.Kia was the only company to report an increase in domestic sales last month, of 6.6% to 41,003 units; while Hyundai sales dropped by 6.5% to 51,034 units, GM Korea was down by almost 20% to 4,745 units, Renault-Samsung by almost 25% to 4,604 units and Ssangyong by over 28% to 4,861 units. Overall domestic sales in the first eight months of the year were down by 6.7% at 982,863 units from 1,055,346 units in the same period of 2020. Global sales by the country’s ‘big-five’ automakers, including vehicles produced overseas by Hyundai and Kia, declined by 4.5% to 544,932 units in August 2021 from weak year earlier sales of 570,601 units, with the global shortage of semiconductors affecting production and sales domestically and overseas. Total vehicle sales in the first eight months of the year were still up by almost 15% at 4,842,121 units from 4,219,638 units previously. Overseas sales fell by 4.6 to 438,685 units last month from 459,766 units a year earlier, while year-to-date volumes were almost 19% higher at 3,866,841 units from 3,251,416 units as demand in key markets such as Europe, South America and Russia rebounded strongly from the depressed year earlier level.

Have a nice weekend.

Graeme Roberts, Deputy Editor,