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  • Mercedes-Benz workers in Alabama vote against UAW union membership

    Mercedes-Benz workers in Alabama vote against UAW union membership

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    United Auto Workers (UAW) members and supporters on a picket line outside the ZF Chassis Systems plant in Tuscaloosa, Alabama, US, on Wednesday, Sept. 20, 2023.

    Andi Rice | Bloomberg | Getty Images

    Mercedes-Benz workers in Alabama have voted against union representation by the United Auto Workers, the National Labor Relations Board said Friday.

    The results are a blow to the UAW’s organizing efforts a month after the Detroit union won an organizing drive of roughly 4,330 Volkswagen plant workers in Tennessee. Voting started Monday and ended Friday.

    Union organizing failed with 56% of the vote, or 2,642 workers, casting ballots against the UAW, according to the NLRB, which oversaw the election. More than 90% of the 5,075 eligible Mercedes-Benz workers voted in the election, according to the results.

    The NLRB said 51 ballots were challenged and not counted, but they aren’t determinative to the outcome of the election. There were five void ballots. 

    The union and company have five business days to file objections to the election, including any alleged interference, according to the NLRB. If no objections are filed, the election result will be certified, and the union will have to wait one year to file for a union election for a similar bargaining unit.

    Mercedes-Benz in a statement said company officials “look forward to continuing to work directly with our Team Members to ensure [Mercedes-Benz US International] is not only their employer of choice, but a place they would recommend to friends and family.”

    United Auto Workers President Shawn Fain (right) and UAW Secretary-Treasurer Margaret Mock (left) lead a march outside Stellantis’ Ram 1500 plant in Sterling Heights, Michigan after the union called a strike at the plant on Oct. 23, 2023.

    Michael Wayland / CNBC

    The loss is expected to hurt the UAW in an unprecedented organizing drive launched late last year of 13 non-union automakers in the U.S. after securing record contracts with Detroit automakers Ford Motor, General Motors and Stellantis. Those agreements included significant wage increase, reinstatement of cost-of-living adjustments and other benefits.

    UAW President Shawn Fain said while the Mercedes-Benz vote was obviously not the result the union wanted, it was a valiant effort, adding the vote “isn’t a failure” but a “bump in the road.”

    “While this loss stings, I’ll tell you this, we’re going to keep our heads up, keep our heads up high. These workers have nothing to do but be proud in the effort they put forth and what they’ve done,” he said Friday during a media conference. “We fought the good fight and we’re going to continue on, continue forward. Ultimately, these workers here are going to win.”

    The Mercedes-Benz vote was expected to be more challenging for the union than the Volkswagen plant in Tennessee, where the union had already established a presence after two failed organizing drives in the past decade and where it faced less opposition from the automaker.

    Stephen Silvia, author of “The UAW’s Southern Gamble: Organizing Workers at Foreign-Owned Vehicle Plants,” noted Mercedes-Benz replaced the plant’s leader weeks ahead of the election. He said companies routinely do this, promising workers changes at their facilities in an effort to stave of organizing.

    “Companies do anti-union campaigns because they can be effective, and I think this one was effective,” said Silvia, a professor at American University in Washington, D.C. “A common piece of an anti-union campaign is firing the plant manager … That seems to have persuaded enough of the workers to vote against the union.”

    Alabama Gov. Kay Ivey, who was one of six Republican governors to condemn the union’s organizing drive, hailed the outcome of the vote.

    “The workers in Vance have spoken, and they have spoken clearly! Alabama is not Michigan, and we are not the Sweet Home to the UAW. We urge the UAW to respect the results of this secret ballot election,” she said.

    Workers at Mercedes-Benz’s Tuscaloosa plant, located about 60 miles southwest of Birmingham, have produced more than 4 million vehicles since the plant opened in 1997, including 295,000 vehicles in 2023, according to the plant’s website.

    The Alabama plant currently produces vehicles such as the gas-powered GLE and GLS Maybach SUVs as well as the all-electric EQS and EQE SUVs.

    The NLRB last week said it continues to process and investigate open unfair labor practice charges filed by the UAW against automakers, including six unfair labor practice charges against Mercedes-Benz since March.

    Fain said Friday the union would continue to move forward with those charges. He declined to say whether the union plans to challenge the election results, saying he’d “leave that” to the union’s legal team.

    The charges allege that Mercedes-Benz has “disciplined employees for discussing unionization at work, prohibited distribution of union materials and paraphernalia, surveilled employees, discharged union supporters, forced employees to attend captive audience meetings, and made statements suggesting that union activity is futile,” the NLRB said.

    The union has filed other charges against automakers Honda, Hyundai, Lucid, Rivian, Tesla and Toyota, according to the NLRB.

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  • Why automakers are turning to hybrids in the middle of the industry's EV transition

    Why automakers are turning to hybrids in the middle of the industry's EV transition

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    2023 Prius Prime on display, April 6, 2023.

    Scott Mlyn | CNBC

    DETROIT — As sales of all-electric vehicles grow more slowly than expected, major automakers are increasingly meeting their customers in the middle.

    More and more companies are reconsidering the viability of hybrid cars and trucks to appease consumer demand and avoid costly penalties related to federal fuel economy and emissions standards.

    The shifting strategies run counterintuitively to industrywide EV messaging of recent years. Many auto companies have begun to invest billions of dollars in all-electric vehicles, and the Biden administration has made a push to get more EVs on U.S. roadways as quickly as possible.

    But hybrid vehicles — those with traditional internal combustion engines combined with EV battery technologies — could help the automotive industry lower fuel consumption and emissions in the short-term, while easing consumers into vehicle electrification.

    Sales of traditional hybrid electric vehicles, or HEVs, such as the Toyota Prius, are outpacing those of all-electric vehicles in 2023, according to Edmunds. HEVs accounted for 8.3% of U.S. car sales, about 1.2 million vehicles sold, through November of this year. That share is up 2.8 percentage points compared with total sales last year.

    EVs made up 6.9% of sales heading into December, or roughly 976,560 units, up 1.7 percentage points compared with total sales last year. Sales of plug-in hybrid electric vehicles, or PHEVs, accounted for only 1% of U.S. sales through November.

    “There’s been so much talk over the past few years about the move toward electrification and sort of forgoing hybrids, but … hybrids are not dead,” said Jessica Caldwell, Edmunds executive director of insights. “There’s a lot of consumers out there that are interested in electrification, maybe not ready to go fully electric.”

    Hybrids can also cost less and relieve many concerns typically associated with EVs such as range anxiety and lack of charging infrastructure. The average hybrid this year cost $42,381, according to Edmunds. That’s below the roughly $59,400 average for an EV; $60,700 for a PHEV; and $44,800 for a traditional vehicle.

    Morgan Stanley earlier this month said Toyota Motor, Honda Motor and Hyundai Motor, including Kia, account for 9 out of 10 hybrid sales in the U.S. Representatives for those automakers said they are actively attempting to increase production and sales of hybrid vehicles in the U.S.

    “While the transition to full battery electric transportation will take time, hybrids and plug-in hybrids will play an equally important role in Kia America’s near and mid-term goals,” Eric Watson, vice president of Kia America sales, said in a statement to CNBC.

    And other companies, such as the Detroit automakers, are following suit.

    Detroit Three automakers

    The Detroit automakers have varying strategies for hybrid vehicles.

    Ford Motor offers PHEVs but is leaning into HEVs, announcing plans in September to double sales of the V-6 hybrid model during the 2024 model year to roughly 20% in the U.S. It’s part of Ford CEO Jim Farley’s plans to quadruple the company’s production of gas-electric hybrids.

    Ford’s hybrid sales through November of this year are up 23% over the same period in 2022 to more than 121,000 units, or 6.8% of its total sales through that point. In comparison, Ford’s EV sales are up 16.2% to roughly 62,500 units, accounting for 3.5% of its total sales.

    Battery breakdown

    Both hybrids and plug-in hybrids have a traditional engine combined with EV technologies. A traditional hybrid such as the Toyota Prius has electrified parts, including a small battery, to provide better fuel economy to assist the engine. PHEVs typically have a larger battery to provide for all-electric driving for a certain number of miles until an engine is needed to power the vehicle or electric motors.

    Chrysler parent Stellantis, for its part, is leaning on PHEVs for its electrification strategy, before introducing a host of EVs starting next year. The company is the top seller of plug-in hybrid electric vehicles in the U.S., and the vehicles accounted for about 10% of the company’s third-quarter sales, led by Jeep Wrangler and Grand Cherokee SUVs.

    But General Motors isn’t ready just yet to alter its EV plans, which include a goal to exclusively offer all-electric vehicles by 2035.

    GM led the way for plug-in electric vehicles with the Chevrolet Volt during the 2010s. The company discontinued the vehicle in early 2019, citing demand and cost concerns.

    Since then, the automaker has not offered another hybrid vehicle in the U.S. other than the recently launched Chevrolet Corvette E-Ray, a hybrid version of the famed sports car. GM does offer hybrids, including PHEVs, in China.

    2024 Chevrolet Corvette E-Ray hybrid sports car

    GM

    “We still have a plan in place that allows us to be all light-duty vehicles EV by 2035,” GM CEO Mary Barra said Monday during an Automotive Press Association meeting in Detroit. “We’ll adjust based on where the customer is and where demand is. It’s not going to be ‘if we build it they will come.’ We’re going to be led by the customer.”

    Her comments come after GM President Mark Reuss told CNBC in August that he was “flexible” regarding hybrids as a way of meeting federal regulations.

    “If it means we have to do that by law, then we have to do that by law,” he said. “If there’s regulations that get dealt on us, then we’re going to look at everything in our toolbox to meet them.”

    Federal regulations

    Major auto companies, including the Detroit automakers, were counting on EVs to assist in offsetting the emissions and low fuel economies of larger SUVs and trucks that can cost them hundreds of millions of dollars in fines by the federal government.

    GM and Stellantis were forced to pay a combined $363.8 million in penalties for failing to meet federal fuel-economy standards for cars and trucks they produced in previous years, according to information published by the National Highway Traffic Safety Administration in June.

    Such fines would significantly increase under current proposals by the Biden administration to improve fuel efficiency of vehicles and move toward EVs, according to automaker lobbying groups.

    The American Automotive Policy Council, a group representing the Detroit Three, earlier this year said the automakers would face more than $14 billion in noncompliance penalties between 2027 and 2032 barring significant changes to their fleets’ overall fuel efficiency. U.S. automakers have separately warned the fines would cost $6.5 billion for GM, $3 billion at Stellantis and $1 billion at Ford, according to Reuters.

    NHTSA in July proposed boosting fuel efficiency requirements by 2% per year for passenger cars and 4% per year for pickup trucks and SUVs from 2027 through 2032, resulting in a fleetwide average fuel efficiency of 58 mpg.

    With EVs playing a lesser role than anticipated to boost those fleetwide averages, hybrids could save automakers millions.

    “Even without electric vehicles, there’s an expectation that electrification of an internal combustion engine is going to be necessary to meet regulations anyway,” said Stephanie Brinley, principal automotive analyst at S&P Global Mobility.

    Industry leader

    The resurgence of hybrids is especially important for Toyota. The world’s largest automaker is considered the pioneer of traditional hybrids, with the Prius.

    The company ironically became a target of environmental groups last year for its strategy to move forward with a mix of hybrids, PHEVs and EVs, which critics viewed as a lack of commitment to an all-electric future.

    Toyota’s argument at the time, and still, is that it’s meeting consumer needs and planning for a more gradual global adoption that will naturally include some markets shifting to EVs sooner than others.

    The company further says it takes into account the entire environmental impact of producing EVs compared with hybrid electrified vehicles, arguing it can produce eight 40-mile plug-in hybrids for every one 320-mile battery electric vehicle and save up to eight times the carbon emitted into the atmosphere.

    “People are finally seeing reality,” Toyota Chairman and former CEO Akio Toyoda, who has been heavily criticized for the slower approach on EVs, said in October regarding EVs, according to The Wall Street Journal.

    Toyota CEO Akio Toyoda speaks during a small media roundtable on Sept. 29, 2022 in Las Vegas.

    Toyota

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  • Easily stolen Hyundais and Kias should be recalled, more than a dozen attorneys general say | CNN Business

    Easily stolen Hyundais and Kias should be recalled, more than a dozen attorneys general say | CNN Business

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    CNN
     — 

    A coalition of attorneys general for 17 states and the District of Columbia on Thursday called for a federal recall of Hyundai and Kia vehicles that they say are unsafe and too easy to steal.

    The attorneys general called for the recall “following the companies’ continued failure to take adequate steps to address the alarming rate of theft of their vehicles,” a release from California Attorney General Rob Bonta, who is leading the coalition, said.

    In a letter to the National Highway Traffic Safety Administration, the coalition requested a recall of “unsafe” Hyundai and Kia vehicles manufactured between 2011 and 2022 “whose easily bypassed ignition switches and lack of engine immobilizers make them particularly vulnerable to theft.”

    The vehicles in question, 2015-2019 Hyundai and Kia models, such as the Hyundai Santa Fe and Tucson and the Kia Forte and Sportage, when equipped with turn-key ignitions — as opposed to cars that only require a button to be pushed to start — are roughly twice as likely to be stolen as other vehicles of a similar age. Many of these vehicles lack some of the basic auto theft prevention technology included in most other vehicles, even in those years, according to the Highway Loss Data Institute, an industry group that tracks insurance statistics.

    These models became the subject of a viral social media trend in which thieves filmed themselves and others stealing Hyundai and Kia vehicles and taking them for a drive. In some parts of the country, the problem became so bad that some insurance companies refused to write new policies on these Hyundai and Kia models in places where the thefts had become extremely common.

    The models in question don’t have electronic immobilizers, which rely on a computer chip in the car and another in the key that communicate to confirm that the key belongs with that vehicle. Without the right key, an immobilizer should do just that — stop the car from moving.

    “Hyundai and Kia announced that they will initiate voluntary service campaigns to offer software updates for certain vehicles with this starting-system vulnerability. Unfortunately, however, this is an insufficient response to the problem and does not adequately remedy the safety concerns facing vehicle owners and the public,” the letter to the NHSTA said.

    Hyundai and Kia did not immediately respond to CNN’s request comment.

    The two South Korean automakers have created a software patch to fix the problem, the automakers have said. Hyundai and Kia operate as separate companies in the United States, but Hyundai Motor Group owns a large stake in Kia, and various Hyundai and Kia models share much of their engineering.

    The patch will be installed free of charge on models that need it, with software that requires an actual key in the ignition to turn the vehicle on. The software will also block the car from being started after the doors have been locked using the key fob remote control. The vehicle will need to be unlocked before it can be started.

    The software also extends the length of the alarm sound from 30 seconds to a full minute. Hyundai dealers will also affix window stickers stating that the vehicle has anti-theft software installed.

    “The bottom line is, Kia’s and Hyundai’s failure to install standard safety features on many of their vehicles have put vehicle owners and the public at risk,” Attorney General Bonta said. “We now ask the federal government to require these companies to correct their mistake through a nationwide recall and help us in our continued efforts to protect the public from these unsafe vehicles.”

    Recalls are ordered by NHTSA or, much more commonly, undertaken by automakers to correct safety-related defects. The attorneys general’s letter asserts that the ease of theft of these Hyundai and Kia vehicles constitutes a safety hazard and the vehicles fail to meet federal standards for theft prevention.

    “Moreover, thieves have driven these vehicles recklessly, speeding and performing wild stunts and causing numerous crashes, at least eight deaths, and significant injuries,” the letter said.

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  • Some auto insurers are refusing to cover certain Hyundai and Kia models | CNN Business

    Some auto insurers are refusing to cover certain Hyundai and Kia models | CNN Business

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    CNN
     — 

    Progressive and State Farm, two of America’s largest auto insurers, are refusing to write policies in certain cities for some older Hyundai and Kia models that have been deemed too easy to steal, according to the companies.

    Several reports say the companies have stopped offering insurance on these vehicles in cities that include Denver, Colorado and St. Louis, Missouri. The insurance companies did not tell CNN which cities or states were involved.

    The Highway Loss Data Institute released insurance claims data last September that confirmed what various social media accounts had been saying: Some 2015 through 2019 Hyundai and Kia models are roughly twice as likely to be stolen as other vehicles of similar age, because many of them lack some of the basic auto theft prevention technology included in most other vehicles in those years, according to the HLDI.

    Specifically, these SUVs and cars don’t have electronic immobilizers, which rely on a computer chip in the car and another in the key that communicate to confirm that the key really belongs to that vehicle. Without the right key, an immobilizer should do just that – stop the car from moving.

    Immobilizers were standard equipment on 96% of vehicles sold for the 2015-2019 model years, according the HLDI, but only 26% of Hyundais and Kias had them at that time. Vehicles that have push-button start systems, rather than relying on metal keys that must be inserted and turned, have immobilizers, but not all models with turn-key ignitions do.

    Stealing these vehicles became a social media trend in 2021, according to HLDI, as car thieves began posting videos of their thefts and joyrides and even videos explaining how to steal the cars. In Wisconsin, where the crimes first became prevalent, theft claims of Hyundais and Kias spiked to more than 30 times 2019 levels in dollar terms.

    “State Farm has temporarily stopped writing new business in some states for certain model years and trim levels of Hyundai and Kia vehicles because theft losses for these vehicles have increased dramatically,” the insurer said in a statement provided to CNN. “This is a serious problem impacting our customers and the entire auto insurance industry.”

    Progressive is also cutting back on insuring these cars in some markets, spokesman Jeff Sibel said in an emailed statement.

    “During the past year we’ve seen theft rates for certain Hyundai and Kia vehicles more than triple and in some markets these vehicles are almost 20 times more likely to be stolen than other vehicles,” he wrote. “Given that we price our policies based on the level of risk they represent, this explosive increase in thefts in many cases makes these vehicles extremely challenging for us to insure. In response, in some geographic areas we have increased our rates and limited our sale of new insurance policies on some of these models.”

    Progressive continues to insure those who already have policies with the company, he said. Progressive is also providing them with advice on how to protect their vehicles from theft.

    Michael Barry, a spokesman for the Insurance Information Institute, said it was very unusual for auto insurers to simply stop writing new policies on a given make or model of vehicle.

    “They generally want to expand their market share depending on where they’re doing business,” he said.

    Hyundai and Kia operate as separate companies in the United States, but Hyundai Motor Group owns a large stake in Kia and various Hyundai and Kia models share much of their engineering.

    Engine immobilizers are now standard on all Kia and Hyundai vehicles, the companies said in separate statements. Both automakers also said they are developing security software for vehicles that were not originally equipped with an immobilizer. Kia said it has begun notifying owners of the availability of this software, which will be provided at no charge. Hyundai said its free software free update will be available next month.

    Hyundai also said it is providing free steering wheel locks to some police departments around the country to give local residents who have Hyundai models that could be easily stolen. Hyundai dealers are also selling and installing security kits for the vehicles, the company said.

    Correction: A previous version of this story misstated the cost of Hyundai security kits.

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  • Korean auto giant Hyundai investigating child labor in its U.S. supply chain | CNN Business

    Korean auto giant Hyundai investigating child labor in its U.S. supply chain | CNN Business

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    CNN Business
     — 

    Hyundai Motor Co, Korea’s top automaker, is investigating child labor violations in its U.S. supply chain and plans to “sever ties” with Hyundai suppliers in Alabama found to have relied on underage workers, the company’s global chief operating officer Jose Munoz told Reuters on Wednesday.

    A Reuters investigative report in July documented children, including a 12-year-old, working at a Hyundai-controlled metal stamping plant in rural Luverne, Alabama, called SMART Alabama, LLC.

    Following the Reuters report, Alabama’s state Department of Labor, in coordination with federal agencies, began investigating SMART Alabama. Authorities subsequently launched a child labor probe at another of Hyundai’s regional supplier plants, Korean-operated SL Alabama, finding children as young as age 13.

    In an interview before a Reuters event in Detroit on Wednesday, Munoz said Hyundai intends to “sever relations” with the two Alabama supplier plants under scrutiny for deploying underage labor “as soon as possible.”

    In addition, Munoz told Reuters he had ordered a broader investigation into Hyundai’s entire network of U.S. auto parts suppliers for potential labor law violations and “to ensure compliance.”

    Munoz’s comments represent the Korean automotive giant’s most substantive public acknowledgment to date that child labor violations may have occurred in its U.S. supply chain, a network of dozens of mostly Korean-owned auto-parts plants that supply Hyundai’s massive vehicle assembly plant in Montgomery, Alabama.

    Hyundai’s $1.8 billion flagship U.S. assembly plant in Montgomery produced nearly half of the 738,000 vehicles the automaker sold in the United States last year, according to company figures.

    The executive also pledged that Hyundai would push to stop relying on third party labor suppliers at its southern U.S. operations.

    As Reuters reported, migrant children from Guatemala found working at SMART Alabama, LLC and SL Alabama had been hired by recruiting or staffing firms in the region. In a statement to Reuters this week, Hyundai said it had already stopped relying on at least one labor recruiting firm that had been hiring for SMART.

    Munoz told Reuters: “Hyundai is pushing to stop using third party labor suppliers, and oversee hiring directly.”

    Munoz did not offer further detail into how long Hyundai’s probe of its U.S. supply chain would take, when Hyundai or any partner plants could end their dependence on third party staffing firms for labor, or when Hyundai could end commercial relationships with two existing Alabama suppliers investigated for child labor violations by U.S. authorities.

    In a statement on Wednesday, SL Alabama said it had taken “aggressive steps to remedy the situation” as soon it learned a subcontractor had provided underage workers. It terminated its relationship with the staffing firm, took more direct control of the hiring process and hired a law firm to conduct an audit of its employment practices, it said.

    SMART Alabama did not immediately respond to a request for comment.

    Munoz’s comments come on the same day that an investor group working with union pension funds sent a letter to Hyundai, pushing it to respond to reports of child labor at U.S. parts suppliers, and warning of potential reputational damage to the Korean automaker.

    The letter said that the use of child labor violated international standards Hyundai committed to in its Human Rights Charter and its own code of conduct for suppliers.

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