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    China’s plan to boost consumption by encouraging trade-ins has yet to show results

    China’s plan to boost consumption by encouraging trade-ins has yet to show significant results since it was announced in late July, businesses said.
    “We are not aware of companies that have seen this translate, since the promulgation of the measures, into concrete incentives on the ground in China,” Jens Eskelund, president of the EU Chamber of Commerce in China, told reporters earlier this week.
    Several major cities and provinces have only in the last few weeks announced details on how the trade-in program would work for residents.

    A banner plays up China’s trade-in policy at a home goods expo in Qingdao, Shandong province, China, on June 1, 2024.
    Nurphoto | Nurphoto | Getty Images

    BEIJING — China’s plan to boost consumption by encouraging trade-ins has yet to show significant results, several businesses told CNBC.
    China in July announced allocation of 300 billion yuan ($41.5 billion) in ultra-long special government bonds to expand its existing trade-in and equipment upgrade policy, in its bid to boost consumption.

    Half that amount is aimed at subsidizing trade-ins of cars, home appliances and other bigger-ticket consumer goods, while the rest is for supporting upgrades of large equipment such as elevators. Local governments can use the ultra-long government bonds to subsidize certain purchases by consumers and businesses.
    While the targeted move to boost consumption surprised analysts, the measures still require China’s cautious consumer to spend some money up front and have a used product to trade in.
    “We are not aware of companies that have seen this translate, since the promulgation of the measures, into concrete incentives on the ground in China,” Jens Eskelund, president of the EU Chamber of Commerce in China, told reporters earlier this week.
    “Our encouragement would be that now we focus on execution [for] visible, measurable results,” he said.

    The chamber’s analysis found that the central government policy’s total budgeted amount is about 210 yuan ($29.50) per capita. Given that “only a portion of [it] will reach household consumers, it is unlikely that this scheme alone will significantly increase domestic consumption,” organization said in a report published Wednesday.

    Analysts are not overly optimistic about the extent to which the trade-in program could support retail sales.
    UBS Investment Bank Chief China Economist Tao Wang said in July that the new trade-in program could support the equivalent of about 0.3% of retail sales in 2023.
    China’s retail sales for August are due Saturday morning. Retail sales in June rose by 2%, the slowest since the Covid-19 pandemic, while July sales growth saw a modest improvement at 2.7%.
    New energy vehicle sales, however, surged by nearly 37% in July despite a drop in overall passenger car sales, according to industry data.
    The trade-in policy more than doubled existing subsidies for new energy and traditional fuel-powered vehicle purchases to 20,000 yuan and 15,000 yuan per car, respectively.

    Waiting for elevator modernization

    In March and April, China had already started to roll out policy broadly supporting equipment upgrades and consumer product trade-ins. Around the measures announced in late July, officials noted 800,000 elevators in China had been used for more than 15 years, and 170,000 of those had been in service for more than 20 years.
    Two major foreign elevator companies told CNBC in August they had yet to see specific new orders under the new program for equipment upgrades.
    “We are still at the very early stage on this whole program right now,” said Sally Loh, president of China operations for U.S. elevator company Otis. Businesses know about the overall monetary amount, she said, but “as to how much is being allocated to elevators, this hasn’t really been clarified.”
    “We do see that definitely there is a lot of interest by the local government to make sure this kind of funding from the central government is being effectively deployed to the residential buildings that most need this replacement,” she said, noting the announced funding “really helps to resolve some of the financing issues that we saw were a big concern for our customers.”
    Otis’ new equipment sales fell by double digits in China during the second quarter, according to an earnings release. It did not break out revenue by region.
    Finnish elevator Kone said its Greater China revenue fell by more than 15% in the first six months of 2024 year on year to 1.28 billion euros ($1.41 billion), dragged down by the property slump. That was still more than 20% of Kone’s total revenue in the first half.
    “Definitely we’re excited about the opportunity. We’ve been excited about it for a long time,” said Ilkka Hara, CFO of Kone. “This is more of a catalyst that will enable many to make the choice.”
    “I definitely see opportunity in the future,” he said. “How quickly it materializes, that’s hard to say.”
    Hara pointed out that new elevators can save more energy versus older models, and said Kone plans to grow its elevator service business in addition to unit sales.

    Secondhand market outlook

    Central government policies can take time to get implemented locally. Several major cities and provinces have only in the last few weeks announced details on how the trade-in program would work for residents.
    For ATRenew, which operates stores for processing secondhand goods, the ultra-long government bonds program to support trade-ins does not have a short-term impact, said Rex Chen, the company’s CFO.
    But he told CNBC the policy supports the longer-term development of the secondhand goods market, and he hopes there will be more government support for building trade-in kiosks in neighborhood communities.
    ATRenew focuses on pricing and resale of selected secondhand products — the company claims it became Apple’s global trade-in partner last year.
    In specific categories and regions — such as mobile phones and laptops in parts of Guangdong province — trade-in volume did rise this summer, Chen said.
    Trade-in orders coming from e-commerce platform JD.com have risen by more than 50% year on year since the new policy was released, according to ATRenew, which did not specify the time frame.
    — CNBC’s Sonia Heng contributed to this report. More

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    Stocks making the biggest moves after hours: Adobe, RH, Oracle and more

    Horacio Villalobos | Corbis News | Getty Images

    Check out the companies making headlines in extended trading:
    Adobe — Shares plunged more than 10% after the software company issued soft guidance. Adobe issued a fiscal fourth-quarter revenue forecast in a range between $5.50 billion and $5.55 billion. Analysts polled by LSEG had estimated $5.61 billion in revenue. Guidance for adjusted earnings per share came in at $4.63 to $4.68 per share, while analysts had expected $4.67 in earnings per share. Meanwhile, third-quarter adjusted earnings and revenue beat estimates. 

    Oracle — The cloud software company advanced nearly 6% after raising its revenue guidance. The company announced during its analyst day on Thursday that it estimates 2026 revenue of at least $66 billion, higher than prior guidance for $65 billion and analysts’ forecast for $64.8 billion, per FactSet. 
    Neurocrine Biosciences — The neuroscience-focused biopharma company lost more than 2%. Neurocrine Biosciences reported that its investigational drug luvadaxistat, a schizophrenia treatment, failed to reach primary endpoints in a phase two study. 
    RH — The home furnishings company surged nearly 19% after posting a top- and bottom-line beat for the fiscal second quarter. RH reported adjusted earnings of $1.69 per share on $830 million in revenue. Analysts surveyed by LSEG had called for $1.56 in earnings per share and revenue of $825 million. 
    Aptiv PLC — Shares of the auto parts company added 1.7%. A filing with the U.S. Securities and Exchange Commission showed CEO Kevin Clark purchased nearly 30,000 shares earlier this week. 
    — CNBC’s Nick Wells contributed reporting. More

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    Three key questions that will shape whether Coach and Michael Kors owners will merge

    Coach’s owner Tapestry and Michael Kors’ owner Capri are in the courtroom this week for a federal antitrust challenge.
    The companies are trying to combine into a single company, after announcing the $8.5 million acquisition last year.
    The FTC sued to block the deal in April, saying it will lead to higher prices for consumers.

    Pedestrians walk past a Coach store and a Michael Kors store.
    Scott Olson | Getty Images

    Just a few miles from the birthplace of Coach in New York City, a federal judge will soon decide whether its owner Tapestry can become a bag behemoth — in a decision that will weigh big questions about how much consumers are paying for goods and the choices they have when they shop.
    Investors, lawyers and reporters have flocked this week to a courtroom in Manhattan for an antitrust trial over a Federal Trade Commission lawsuit that seeks to stop the merger of Tapestry and Capri. The deal, if approved, would put six fashion brands under a single company: Tapestry’s Coach, Kate Spade and Stuart Weitzman with Capri’s Versace, Jimmy Choo and Michael Kors. 

    Tapestry and Capri announced the $8.5 billion deal more than a year ago, but the FTC sued to block it in April. It argued the combined companies would take away competition and leave consumers with fewer affordable handbag options and employees with worse pay and benefits.
    Attorneys for the FTC have argued this week that the merger would harm consumers by putting Coach and Michael Kors — two brands it described as having similar prices and often competing head-to-head — under the same company. Both brands sell directly to customers on their websites and in stores, but also are carried by stores that cater to Americans across incomes including department stores Macy’s and Dillard’s, off-price retailers like T.J. Maxx and outlet stores.
    Tapestry and Capri, on the other hand, have argued the deal will allow them to keep up in a trend-driven industry where newer brands and changing consumer tastes are a competitive threat. At the time when the companies announced the deal, Tapestry’s CEO Joanne Crevoiserat told CNBC that it’ll allow Tapestry to reach more customers across age groups and incomes across the global, especially in the luxury and higher-end markets.
    The outcome of the antitrust case could shape the outlook for the industry that makes the bags, eyeglasses and apparel that many Americans carry and wear across the country. It comes as Americans increasingly balk at high prices after years of high inflation — and the Biden administration takes aim at mergers in the grocery, technology and apparel spaces.

    More CNBC retail news

    Investors are watching the trial closely for how it could affect shares of Tapestry and Capri. Shares of Tapestry are up more than 13% this year. On the other hand, Capri’s stock has tumbled about 21% this year.

    Here are key questions that have defined the first three days of the trial, including highlights from some of the testimony:

    How fierce is competition in the handbag industry?

    In a fast-moving world where a new product can become the “it” bag from a TikTok video or celebrity sighting, Tapestry and Capri have argued that competition is fierce — even for the biggest handbag players.
    With the transaction, Tapestry and Capri’s executives have argued the brand could better compete with the wide variety of other retailers and brands that consumers choose from, ranging from fast-fashion brands like Zara and H&M to European luxury names like Burberry and LVMH’s Louis Vuitton.
    One of the major debates in court has surrounded who are Coach and Michael Kors’ true competitors. Are they each other’s main rivals, or do they compete with a vast mix of brands that steal away sales? The FTC has defined the relevant market for two brands as “accessible luxury,” a term that Tapestry has used with its investors and board of directors to describe how it offers higher-end fashion looks at a better value.
    Yet attorneys for Tapestry and Capri have pushed back, saying that the field of rivals is growing to include more price points.
    Crevoiserat said she’s seen that dynamic close to home. Lululemon, known for its popular leggings and other athletic apparel, is the maker of belt bags, a hands-free, fanny pack-like bag that can be wrapped around the waist or slung across the body. The bags have been a hit, especially with younger shoppers.
    “What really pains me about that is my daughter has one,” she said. “They’re a meaningful brand.”
    In her testimony, Crevoiserat said the competition isn’t just with other handbag or fashion brands. She said the company is fighting to woo consumers who have many ways that they could spend their dollars.
    “They could go anywhere,” she said. “They could buy a pair of yoga pants or go out to dinner. It’s discretionary.”
    During the trial, attorneys have showed off industry data from market research companies and internal documents, such as consumer surveys and research on the competition. The research has related to not only Tapestry and Capri, but also other fashion brands including Chanel and Rebecca Minkoff.
    Attorneys for Tapestry and Capri have argued that competition has intensified, as consumers have new ways to shop and their style preferences change. On the other hand, attorneys for the FTC have said the combined companies would corner the “accessible luxury” market.
    Some executives from other brands have also testified on the state of play in the industry. Suwon Yang, Chanel’s head of merchandising for accessories and leather goods, took the stand on Wednesday. She said customers buy from many brands, but Chanel in its own research focuses on how it stacks up against European luxury lines like Saint Laurent and Hermes. She said in her experience, Coach, Kate Spade and Michael Kors have never come up in customer surveys or company conversations about the competition.
    She also described the rigor of the craftsmanship behind Chanel’s bags, which she said sets the brand apart and leads to its price points of about $5,000 to $11,000 or even higher. Handbags are made in Italy and France, and for artisans, it takes a decade to make the company’s highest level of handbag.

    Would the deal hurt consumers?

    The FTC argues the deal would bring more sticker shock for American consumers already facing higher prices on many items.
    On Wednesday, economist Loren Smith, one of the FTC’s key witnesses, took the stand and contended that the merger would turn the combined companies into a handbag giant that would raise prices for shoppers and have little reason to invest in sharper styles or better materials. Smith is a Washington, D.C.-based consultant and former staff economist for the FTC.
    He laid out financial models and methodology he used to define the market for Tapestry and Capri, and particularly Coach and Michael Kors, saying they primarily compete with other “accessible luxury” players even if its consumers shop with other cheaper and pricier brands. He zeroed in on the handbag market in the U.S., and included common styles like cross-body bags and totes in the calculations.
    Ultimately, he said he found the merger raises “significant competitive concerns” and his simulation indicated that it would lead to an average price increase of 15% to 17% for the combined company’s goods and a decrease in the quality of products.
    If the two companies became one, he said the combined company would have about 58% market share in the handbag market in the U.S. He said Tapestry could get away with raising prices on Michael Kors handbags since it could recapture lost sales by attracting enough of those same shoppers to Coach and Kate Spade bags.
    And he said it wouldn’t need to worry as much, even if Michael Kors’ brand continued to be challenged.
    “Once they come together, if Michael Kors continues to decline, some of that decline is going to benefit the Coach brand,” he said.
    Plus, he said, the handbag industry has margins of 60% to 80%, a high number that makes the risk of diverting customers to another of their brands or losing customers to other brands less significant.
    He estimated annual consumer harm would add up to $365 million per year from a combination of price increases and merchandise that wouldn’t be as well made.
    Attorneys for Tapestry and Capri pushed back on how he defined the competition, questioned his calculations and said he did not account for shoppers’ newer habits, such as the ability to buy a Louis Vuitton or Prada bag at a lower price because of the rise of secondhand marketplaces.
    They also argued Smith is out of touch on the handbag market. The attorney for Tapestry and Capri noted that he’s only bought one handbag before, and his wife instructed him what to buy.

    Why did Tapestry want to buy Capri?

    When Tapestry CEO Joanne Crevoiserat took the stand on Tuesday, she said her goal for the merger is straightforward: Putting more handbags in the hands of more customers.
    Attorneys for the fashion brands rolled carts of dozens of handbags from the two companies and from competitors into the courtroom on Monday, the day the trial began. Since then, a mix of executives and industry players have taken the stand, including Capri CEO John Idol and Coach CEO Todd Kahn.
    In her testimony on Tuesday, Crevoiserat held up a few of the handbags in the room. She spoke about their contrasts and how the bags illustrate the range of brands that Tapestry owns. She said Tapestry benefits from having a portfolio of distinct brands to cater to customers who shop for a variety of occasions and have different senses of style.
    She showed off Coach’s Rogue, a maple colored leather tote bag that a customer might use to carry what she needs to the office. Then, she held up another bag, a more playful looking smaller green and white Kate Spade bag that’s made of woven fabric and has been featured in Netflix’s “Emily in Paris.”
    Capri has its own distinctive brands too, she said.
    Internal documents also flashed on the courtroom screen, showing some emails and slide decks from a more than year long process that Tapestry pursued as it looked for an acquisition target and deliberated whether to buy a still emerging brand or a more established player like Capri. The names of other acquisition targets were redacted, but the code name for Capri was “Comet.”
    Crevoiserat said Tuesday that if the deal closes, Tapestry would want to grow all of its brands — especially those of Capri, which has had weaker sales in recent quarters.
    “I believe we can inject more relevancy, more vibrancy into the Capri brands,” she said.
    Instead of operating as a top-down company, Tapestry is a house of brands, Crevoiserat said. She added Coach, Kate Spade and Stuart Weitzman each have independent teams that select merchandise, set pricing and shape marketing.
    As the FTC raises questions about whether the deal will raise prices, she said Tapestry as a whole offers cost-savings benefits that come from having more scale, such as manufacturing and transporting products at a lower price.
    She said that way of operating wouldn’t change. She added the high price tag to acquire Capri only makes sense if Tapestry gives the brand both financial support and creative freedom.
    “The deal simply wouldn’t pencil if all brands couldn’t grow,” she said.
    The antitrust trial continues on Thursday and is expected to run through early next week. Attorneys for the FTC have hinted that other key witnesses are poised to testify, including more executives from Tapestry and Capri and the namesake of one of the top brands in the merger, American fashion designer Michael Kors. More

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    Flights are getting more expensive again as airlines scale back their growth plans

    Airlines are raising their unit revenue forecasts for the third quarter.
    Flights are getting more expensive again, according to the latest inflation report.
    Carriers have been moderating capacity growth after a glut of flights pushed down fares.

    Delta Airlines planes are seen parked at Seattle-Tacoma International Airport on June 19, 2024 in Seattle, Washington. 
    Kent Nishimura | Getty Images

    Airlines are reporting better unit revenues for the tail end of summer, a sign customers will continue to have to shell out more to fly in the coming months.
    Alaska Airlines on Thursday raised its third-quarter profit forecast to a range of $2.15 to $2.25 per share from a previous outlook of no more than $1.60 per share. It also said it expects unit revenue to rise by as much as 2% after previously estimating flat to “positive” unit revenue growth over last year.

    Delta Air Lines said domestic and trans-Atlantic unit revenue would be up in September from last year, though it said the CrowdStrike outage in July will mean unit sales will rise no more than 1% compared with a previous forecast of as much as 4% higher for the quarter. Delta has said it expected a $500 million hit from the outage and its aftermath, when it canceled some 7,000 flights.
    Alaska said it had a tail wind from the outage, which affected Delta customers more than those on other airlines.
    “While capacity remains in line with prior expectations, revenue has performed better than anticipated driven by additional revenue in July related to CrowdStrike disruptions across the industry and stronger performance in August and September,” Alaska said in a securities filing.
    Delta’s president, Glen Hauenstein, told a Morgan Stanley conference on Thursday that Delta isn’t seeing a lingering impact on bookings from the outage.

    Read more CNBC airline news

    Airlines had been wrestling with record numbers of travelers but lower fares and weaker-than-expected pricing power. That appears to be changing.

    Wednesday’s U.S. inflation report showed an airfare price index rose 3.9% in August after five consecutive months of declines.
    Frontier Airlines said Wednesday that it might break even this quarter, on an adjusted basis, after a previous forecast of margins ranging from -3% to -6%, after it moderated capacity. Last week, JetBlue Airways raised its unit revenue growth forecast for the current quarter because of higher demand and a benefit from the “re-accommodation of customers affected by other airlines’ cancellations due to technology outages in July.”
    Airlines from full-service carriers like Delta and United to budget airlines like Frontier and Spirit have been chasing higher-spending travelers with perks like more space on board.
    “We are constantly thinking about what we can do to continue to increase that competitive gap with premium products, from improving the food we serve on our planes to improving our loyalty program, to improving our Wi-Fi product, to improving particularly our Polaris product on international first class,” United’s CFO Mike Leskinen said at the Morgan Stanley conference on Thursday.
    U.S. airlines have also slowed if not halted hiring altogether this year as aircraft arrive late from Boeing and Airbus, and demand moderates after a massive hiring spree.

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    American Airlines flight attendants ratify new contract with immediate raises topping 20%

    American Airlines flight attendants on Thursday voted on a new five-year labor deal, giving cabin crews more than 20% immediate raises.
    The approval ends one of the industry’s most contentious labor negotiations.
    Airline and other workers have pressed companies for higher pay and better benefits.

    Julie Hedrick, president of the Association of Professional Flight Attendants, right, announces a strike authorization outside Dallas-Fort Worth International Airport near Dallas on Aug. 30, 2023.
    Shelby Tauber | Bloomberg | Getty Images

    American Airlines flight attendants approved a five-year labor deal, ending one of the industry’s most contentious contract negotiations and giving cabin crews raises of up to 20.5% at the start of October.
    Eighty-seven percent of the American Airlines flight attendants who voted approved the contract, the union said Thursday, shortly after polls closed.

    “This contract marks a significant milestone for our Flight Attendants, providing immediate wage increases of up to 20.5%, along with significant retroactive pay to address time spent negotiating,” said Julie Hedrick, president of the Association of Professional Flight Attendants, which represents the carrier’s roughly 28,000 cabin crew members.
    Flight attendants are the biggest unionized work group at the Fort Worth-based airline.
    The contract deal is a relief for American Airlines’ leaders, which had faced a strike threat from flight attendants if the two sides could not get to a deal. Transportation Secretary Pete Buttigieg and Labor Secretary Julie Su had attended negotiations in June, overseen by the National Mediation Board. More than 160 lawmakers have also pushed the NMB to get to deals across the airline industry.

    Read more CNBC airline news

    “Reaching an agreement for our flight attendants has been a top priority, and today, we celebrate achieving this important milestone,” American Airlines CEO Robert Isom said in a statement.
    Flight attendants, similar to other airline workers, have pushed for higher pay and other work-rule improvements after the Covid-19 pandemic derailed negotiations and the cost of living has skyrocketed in recent years.

    United Airlines and its flight attendants’ union are still negotiating for a new contract, while Alaska Airlines cabin crew members recently rejected a tentative labor deal.
    Other industries have also won higher pay in new contracts, some of them after strikes, such as in the auto industry and in Hollywood.
    Some 33,000 Boeing workers are voting on Thursday on a new contract with 25% raises, which some workers have said they will reject. Boeing faces a potential strike if the deal is rejected.

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    Here’s the deflation breakdown for August 2024 — in one chart

    Deflation, contrary to inflation, is when prices fall for certain goods and services.
    Deflation tends not to occur across the overall U.S. economy outside of recessions.
    However, consumer prices have fallen in some categories, such as cars, household furniture and appliances, airfare, and certain groceries since August 2023, according to the consumer price index.

    D3sign | Moment | Getty Images

    Inflation cooled in August and fell to its lowest level since February 2021, which was around the time the consumer price index began to climb during the pandemic era.
    This broad trend in the U.S. economy — a declining but still-positive rate of inflation — is known as “disinflation.” It means that, in aggregate, the average prices of goods and services are rising, just more slowly.

    However, there are also pockets of “deflation.” Their inflation rate is negative, meaning prices are falling.

    Deflation has largely been happening for physical goods such as cars and household appliances, though it has also appeared in categories such as gasoline and various groceries over the past year, according to the consumer price index.
    That said, consumers shouldn’t expect — or root for — a broad and sustained fall in prices across the U.S. economy. That generally doesn’t happen unless there’s a recession, economists said.

    ‘A huge shift in demand’

    Prices for “core” goods — commodities excluding those related to food and energy — have deflated by about 2% since August 2023, on average, according to CPI data.
    They fell 0.2% during the month, from July to August 2024.

    The dynamic of falling goods prices has largely been due to a “normalization” of supply-and-demand trends that were thrown out of whack during the pandemic, said Stephen Brown, deputy chief North America economist at Capital Economics.
    Demand for physical goods soared in the early days of the Covid-19 pandemic as consumers were confined to their homes and couldn’t spend on things such as concerts, travel or dining out. Households also had more discretionary income due to the pullback on spending coupled with federal aid.
    More from Personal Finance:Social Security cost-of-living increase could be lowest since 2021Why it’s not always ‘a sexy thing’ to be a millionaireThe ‘vibecession’ is ending
    “We saw a huge shift in demand, in terms of the type of things people were spending on, where you weren’t going out as much,” said Sarah House, senior economist at Wells Fargo Economics.
    The pandemic also snarled global supply chains, meaning goods weren’t hitting the shelves as quickly as consumers wanted them.
    Such supply-and-demand dynamics drove up prices.
    However, those economic contortions have largely eased and prices have deflated as a result, economists said.

    Where prices have deflated

    For example, prices have declined by about 5% for furniture and bedding and 3% for appliances since August 2023, according to CPI data.
    They’ve also fallen for tools, hardware and outdoor equipment, which are down 3%, toys, down 3%, and apparel, such as men’s suits and outerwear, down 10%, women’s outerwear, down 9%, and footwear, down 1%.
    Prices for new and used vehicles have fallen by 1% and 10%, respectively, since August 2023. Car and truck rental prices have deflated about 8%.

    Car prices were among the first to surge when the economy reopened broadly early in 2021, amid a shortage of semiconductor chips essential for manufacturing.
    Recent declines in car prices are largely due to “the inventory picture being more improved in the overall vehicle space,” House said. Higher financing costs have also reduced consumer demand, economists said.
    Outside of supply-demand dynamics, the U.S. dollar’s strength relative to other global currencies has also helped rein in prices for goods, economists said. This makes it less expensive for U.S. companies to import items from overseas, since the dollar can buy more.

    Long-term forces such as globalization have also helped, by increasing imports of more lower-priced goods from China, economists said.
    Airline fares have declined about 1% over the past year, according to CPI data.
    The drop is partly attributable to a decline in jet fuel prices, Capital Economics’ Brown said.
    Average aviation jet fuel prices are down about 21% from last year, according to the International Air Transport Association.
    Grocery prices have fallen for items such as apples, potatoes, ham, coffee, rice, seafood and bananas, according to CPI data. Each grocery item has its own supply-and-demand dynamics that can influence pricing, economists said.

    Other categories’ deflationary dynamics may be happening only on paper.
    For example, in the CPI data, the Bureau of Labor Statistics controls for quality improvements over time. Electronics such as televisions, cellphones and computers continually get better, meaning consumers generally get more for the same amount of money.
    That shows up as a price decline in the CPI data. More

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    UAW, U.S. dealers increase criticism of Stellantis CEO over cuts, sales declines

    Stellantis’ U.S. dealer network has joined the United Auto Workers union in criticizing CEO Carlos Tavares for recent sales declines, factory production cuts and other decisions.
    The head of Stellantis’ U.S. dealer council condemned Tavares for prioritizing the company’s profits at the cost of sales, market share and the reputations of its American brands.
    The UAW is holding a rally Thursday afternoon near Stellantis’ Warren Truck Plant in suburban Detroit to “condemn the gross mismanagement” at the company.

    Carlos Tavares, CEO of Stellantis, poses during a presentation at the New York International Auto Show in Manhattan, New York, on April 5, 2023.
    David Dee Delgado | Reuters

    DETROIT – Stellantis’ U.S. dealer network has joined the United Auto Workers union in criticizing CEO Carlos Tavares for the company’s recent sales declines, factory production cuts and other decisions they deem detrimental to the automaker’s business.
    In an open letter to Tavares this week, the head of Stellantis’ U.S. dealer council, Kevin Farrish, condemned the chief executive for prioritizing the company’s profits at the cost of sales, market share and the reputations of its Chrysler, Dodge, Jeep and Ram brands. The council represents the company’s 2,600 U.S. dealers.

    “The market share of your brands has been slashed nearly in half, Stellantis stock price is tumbling, plants are closing, layoffs are rampant, and key executives fleeing the company. Investor lawsuits, supplier lawsuits, strikes–the fallout is mounting. Your own distribution network, your dealer body, has been left in an anemic and diminished state,” Farrish wrote in the Tuesday letter, which Bloomberg first reported Wednesday night.
    Farrish, a dealer in Virginia, said the dealer council has raised concerns about the company’s operations for two years, and accused Tavares of “reckless short-term decision making” that boosted profits and padded his compensation but have led to the “rapid degradation” of its brands, he wrote.

    Stock chart icon

    Stocks of Stellantis, GM and Ford

    Stellantis, in a statement Wednesday night, said it takes “absolute exception to the letter,” citing a 21% increase in August sales over July and an “action plan developed with the dealer body.”
    “At Stellantis, we don’t believe that public personal attacks, such as the one in the open letter from the NDC president against our CEO, are the most effective way to solve problems,” the company said. “We have started a path that will prove successful. We will continue to work with our dealers to avoid any public disputes that will delay our ability to deliver results.”
    Stellantis reported a record profit in 2023, but so far this year, the automaker reported a first-half net profit of 5.6 billion euros ($6.07 billion), down 48% from the same period of 2023.

    Shares of Stellantis are off roughly 36% this year to around $15. The stock hit a new 52-week low Thursday of $14.76 per share.
    Tavares has been on a profit-driven, cost-cutting mission since the company was formed through a merger between Fiat Chrysler and France’s PSA Groupe in January 2021. It’s part of his “Dare Forward 2030” plan to increase profits and double revenue to 300 billion euros ($325 billion) by 2030.
    The cost-saving measures have included reshaping the company’s supply chain and operations as well as headcount reductions and cutting vehicle production at plants.

    United Auto Workers (UAW) President Shawn Fain speaks to the attendees during a campaign rally for U.S. Vice President and Democratic Presidential candidate Kamala Harris and her running mate Tim Walz in Romulus, Michigan, U.S., August 7, 2024. 
    Rebecca Cook | Reuters

    Several Stellantis executives described the earlier cuts to CNBC as difficult but effective. Others, who spoke on the condition of anonymity due to potential repercussions, said they were grueling to the point of excessiveness.
    UAW President Shawn Fain also has publicly criticized Tavares, including in a speech last month at the Democratic National Convention. He has accused Tavares of price gouging consumers and failing to uphold parts of the union’s labor contract with the automaker.
    The UAW, which represents roughly 38,000 Stellantis employees, is holding a rally Thursday afternoon at a union hall near Stellantis’ Warren Truck Assembly Plant in suburban Detroit to “condemn the gross mismanagement” at the company, according to an email.
    U.S. sales for Stellantis, formerly Fiat Chrysler, have declined every year since a recent peak of 2.2 million in 2018. The company sold more than 1.5 million vehicles last year, a roughly 1% decline from 2022, when it reported a significant drop of 13% compared with the previous year.
    Stellantis’ performance compares to the overall U.S. new light-duty vehicle sales market, which increased 13% last year, according to federal data. More

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    Airbus Ventures launches $155 million fund focused on deep tech, including space

    Airbus Ventures, one of the most prolific investors in space startups, has raised a $155 million fund.
    “This fund is designed to unlock new possibilities, and space is one of them,” Thomas d’Halluin, managing partner of Airbus Ventures, told CNBC.
    Airbus Ventures currently has $465 million under management, with Fund-Y marking its fourth fund to date. 

    Thomas d’Halluin, managing partner of Airbus Ventures, at Hangar One of NASA Ames Research Center’s Moffett Field in California.
    Airbus Ventures

    Airbus Ventures, one of the most prolific investors in space startups, has raised a $155 million fund that it plans to deploy across the burgeoning space sector, as well as the broader “deep tech” ecosystem.
    “This fund is designed to unlock new possibilities, and space is one of them,” Thomas d’Halluin, managing partner of Airbus Ventures, told CNBC.

    The move comes as investment in the space industry, especially from venture capital, has been rebounding after two lean years.
    Airbus Ventures’ new “Fund-Y” is targeting long-term opportunities in early-stage deep tech startups, which d’Halluin defines as “going back to the laws of physics and not being afraid of what’s difficult.” Historically, deep tech is a classification for companies working on technologies that face steep scientific or engineering obstacles.

    Read more CNBC space news

    Founded in 2016, Airbus Ventures takes a different tack from traditional corporate venture capital arms. The firm maintains a gap from its eponymous corporation, the European aerospace company, and more than half of Fund-Y comes from outside capital such as institutional investors, private equity and family offices. 
    Airbus Ventures currently has $465 million under management, with Fund-Y marking its fourth fund to date. 
    About a third of Airbus Ventures’ capital deployed so far has been in the space sector, the firm said, backing 14 pure-play companies in the sector, with notable investments including propulsion startup Impulse, lunar cargo company ispace and tracking service LeoLabs.

    “This is about patience. Often, and too often, people want immediate reward. Space is not a place of immediate reward,” d’Halluin said.

    The booster of SpaceX’s Falcon 9 rocket lands on the company’s barge after launching the Spaceflight SSO-A mission.

    He emphasized the importance of funding founders with the “extremely rare” trait of great execution, highlighting Airbus Ventures’ backing of Impulse. The startup was founded by Tom Mueller, best known for developing SpaceX’s family of rocket engines.
    “Impulse was successful on its first mission because of the 17 years of experience of Tom at SpaceX,” d’Halluin said.
    “That element of human capital we see often neglected in deep tech diligence — this notion of who’s capturing the execution and the knowledge and the skill set in a particular company — is what we’re pointing towards,” he added.
    While Airbus Ventures has traditionally deployed the majority of its funds in the U.S., d’Halluin said it intends for Fund-Y to be global. In particular, he sees “very strong momentum” for space startups in Europe and Japan.

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