Auto Industry News: September Car Sales Down, Ford & Mahindra Create Official JV, GM–UAW Negotiations Drag On, and IRS Uncovers EV Tax Credit Scam

A busy week in the automotive industry as final tallies for September car sales roll in and—spoiler alert—they don’t look great. Ford and Mahindra make things official with a joint venture while GM and the UAW continue to argue over contract negotiations. And a few 200,000 bad-apple EV owners are found to have duped the IRS into coughing up erroneous tax credits. All that, plus NASCAR highlights from this weekend.

September Car Sales Down, Japan Takes Hit

Q3 sales numbers are in and, frankly, things could be better. This month marks the sixth monthly sales decline in the U.S. and a double-digit slip for Asian automakers.

Among the highlights: Toyota saw a 17% drop (the brand’s biggest slide since 2011 in the wake of an earthquake and tsunami), while Nissan volume dropped 18%, as the brand continues to pull back on fleet sales and incentives amid its restructuring efforts. Honda dipped just shy of 14%, while its luxury division Acura dropped 18%.

An 8.8% decline saw the end to Hyundai’s 13-month winning sales streak. And the indomitable Subaru—a brand that’s had 93 straight months of sales growth—came back down to earth with a 9.4% drop (despite sales incentives being up 49% from last year). The Japanese auto giant blames the dip on low inventory, as well as the coming 2020 Legacy and Outback models set to hit dealers this fall.

The mighty Detroit automakers didn’t escape the September Scaries, either, although they seem to have fared slightly better.

Ford posted a 4.9% dip, with sedan sales plummeting 29% and utility vehicles falling 10.5%. Overall, Ford reported that pickup and van sales rose 8.8%, but its F-series, specifically, saw a 6% tumble as it faces increased competition from new GM and RAM models. And, speaking of the competition, Fiat Chrysler posted flat September car sales, with the RAM badge jumping 15% as Jeep dropped 2%. GM, on the other hand, saw a 6.3% boost, with Silverado/Sierra sales jumping double digits and crossovers increasing 28.3%.

Let’s Put These Numbers in Perspective

There are a few reasons why these September car sales might be painting a slightly dourer picture than necessary. Running just a little bit shorter than last year, this September posted two fewer selling days. Additionally, the highly-profitable Labor Day weekend counted toward August’s sales tally for 2019—a quirk that boosted the summer month’s totals 10%.

In the end, we see this more as a blip on the radar rather than an industry trend, with experts predicting automakers will still finish the year off with a strong 17 million+ vehicle sales.

Ford & Mahindra Make Things Official

The American automaker recently announced a new joint venture in its strategic partnership with India’s Mahindra & Mahindra to introduce both company’s vehicles into emerging markets around the globe.

The new venture, expected to launch mid-2020, will introduce three new vehicles under the Ford brand, starting with a midsize SUV sporting a Mahindra platform and powertrain. The two automakers will also explore electric vehicle collaboration. Mahindra will own a 51% controlling stake in the new deal, with Ford holding 49%.

The partnership will both strengthen Ford’s presence in India—the second most populated nation on the planet and fastest growing trillion-dollar economy in the world—as well as provide support for Mahindra’s exported products.

GM-UAW Negotiations Continue

GM-UAW negotiations enter their fourth week today and they don’t look to be resolved anytime soon.

While the automaker has been pushing workers for higher productivity in the face of the ever-changing global automobile market, UAW workers have taken to the picket line to push for higher wages and clearer benefits.

Both sides have held firm to their convictions while working to negotiate a new deal. And while UAW officials reported “good progress” on Friday, that sentiment seems to have devolved over the weekend. In a letter on Sunday, UAW Vice President Terry Dittes told union members that talks had “taken a turn for the worse,” as GM had “reverted back to their last rejected proposal and made little change.”

While the down-and-dirty details of what each side wants from the deal and what it will take to get the 48,000 UAW workers back on the job are still mostly unclear, we do know a few things. The UAW wants to shorten the current eight-year period required for a new worker to reach full pay at GM (roughly $30/hour). The union is also pushing for a formal process that outlines a temporary worker’s path to full-time employment.

Other points of contention seem to be affordable healthcare, profit sharing, pensions, and job security.

Hitting Them Where It Hurts

As the longest nationwide strike at GM since 1970, the automaker is taking a hit. Stock has dipped 10% since the walkout began and experts estimate the company is losing somewhere between $50 to $100 million per day, costing GM more than $1 billion in the third quarter alone.

No doubt, the UAW is hoping this applies the pressure it needs to come to its desired resolution. But, with fears of an industry downturn and whispers of another recession, plus rising R&D costs of electric and autonomous vehicles, GM (as well as Ford and FCA) will be looking to keep labor costs as low as possible.

EV Tax Credits Scam

Speaking of the future of the automotive industry, it looks like some folks have been taking advantage of the government kickback that comes with owning an EV. According to a report from the U.S. Treasury Department, taxpayers might have received nearly $74 million in EV tax credits they shouldn’t have gotten in the first place. According to the report, investigators discovered that the IRS didn’t have a proper process for vetting erroneous claims.

From Bloomberg: “The questionable claims were found in 16,510 individual tax returns during a five-year period through the 2018 processing year, according to an audit by the Treasury Inspector General for Tax Administration. That compares with more than $1.4 billion paid in credits to almost 240,000 taxpayers over the same period that were reviewed as part of the audit.”

Investigators made four recommendations to help validate eligibility which the IRS has agreed to implement—in addition to launching a comprehensive program to recover falsely awarded credits.

Kinda changes the appeal on a fancy new EV if you’re getting audited by the IRS over it, huh?

NASCAR Results

Monster Energy Series

Kyle Larson broke his long-running bad luck this weekend at Dover International Speedway, winning his first race in two years to lock up his spot in the Round of 8. Winning by a convincing 1.578 seconds over Martin Truex Jr. in second and Alex Bowman in third, Larson pulled ahead of Denny Hamlin for the win late despite Hamlin leading a race-high 218 laps.

“After the first stage, I kind of changed my driving style up and I felt like I made the car better at the same time, and it really benefited our long runs,” said Larson, who led 154 laps en route to his sixth career win and first playoff victory. “That’s as good as I’ve ever been around cutting the bottom here. Just a great combination here. Good to be fast in practice and then be good again in the race and get the win.”

The next race in this year’s Monster Energy Cup Series in the 1000Bulbs.com 500 at Talladega Superspeedway on October 13, 2019.

Xfinity Series

It was an historic weekend for Cole Custer at the Monster Mile this weekend. Not only did he finish first ahead of Justin Allgaier and Austin Cindric but he also became the fifth Xfinity series driver to win his 100th career start, all while Dover celebrated its 50th anniversary.

Custer took advantage of a late restart with only seven laps to go to pull ahead of his competition and win the Use Your Melon Drive Sober 200. “I’ve wanted to win here so bad for so long,” said Custer of his first Dover victory. “I’ve been close a number of times but just to win the gold Monster (trophy) is unbelievable.”

Next up for XFinity playoff series drivers is the Kansas Lottery 300 at Kansas Speedway on October 19.