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| A rising tide, an uneven lift |
COVID-19 is having an uneven impact on the automotive universe.
U.S. auto sales for a number of automakers — including Ford, GM and Toyota — actually rose last month. Those September advances limited the quarterly decline to about 10 percent — welcome relief after a 33 percent second-quarter drop.
On the retail front, some of the public dealerships are pointing to strong third-quarter earnings. As we note in Monday’s issue, one of them, Lithia Motors, is feeling bullish enough to embark on an ambitious, multi-year acquisition spree.
But the parts-supply sector is hurting. The warnings came back in spring, during two months of auto factory shutdowns. The fear was that after being starved for revenue, suppliers would struggle to gear up once the assembly lines started rolling again.
Those struggles are now playing out in a variety of ways. Debt loads are high. Cash is tight. Borrowing is a challenge. Unprofitable units are being sold. And bankruptcies are beginning to creep back onto the scene.
A late-September casualty: turbocharger-maker Garrett Motion Inc. And as the analysts we quote in a Page 1 story Monday note, many more are likely.
“Dealers are selling vehicles again, but suppliers are absolutely not out of the woods yet,” said Laurie Harbour, a consultant and small-supplier expert. “They’re facing a severe labor shortage as workers are afraid to go back to work.”
Dealers are indeed selling vehicles again. And it’s not just new ones.
We kick off a special section on used cars with this nugget: Through July of this year, the average new-car dealer sold more used vehicles than new. That’s rare.
Of course, strong demand means tight supplies, which have forced dealers to get creative in the hunt for new inventories. The section explores that development, as well as 2020’s “wild ride” for wholesale values.
A wild ride. That’s an apt description for this year. As Ford’s sales chief Mark LaNeve says in another Page 1 story: The third-quarter performance “makes us cautiously optimistic for Q4, but there’s still a lot of uncertainty and a lot of Americans are still suffering.”
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“There were two types of Ghosn’s remuneration: one that was already confirmed and paid, and the other that had yet to be paid. We explored ways as to how to pay this unpaid amount to Mr. Ghosn without disclosing it.” |
– TOSHIAKI OHNUMA, HEAD OF NISSAN’S SECRETARIAT OFFICE UNDER CARLOS GHOSN, TESTIFYING IN THE TRIAL OF FORMER NISSAN EXECUTIVE GREG KELLY |
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From “Key Nissan witness in Kelly trial admits trying to conceal Ghosn compensation” |
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Coming Monday in Automotive News:
Finding new ponds to fish in: With fewer trade-ins and used vehicles available in general, dealers have had to move beyond their own customers and auctions to find ways to fill their used-car lots. Shopping on Facebook and Craigslist? Check. Checking with employees to find out whether family and friends are willing to sell? Check. Automotive News looks at the approaches adopted by dealers looking for inventory to sell in a hot market.
Will Toyota produce a supercar? Two years after introducing a Le Mans-inspired hypercar concept, Toyota’s Gazoo Racing high-performance division has breathed fresh life into the idea with a running prototype. Is the prototype evidence that Toyota intends to make a production version of the sleek GR Super Sport Concept that it showed at the Tokyo Auto Salon in January 2018? Automotive News takes a look at how that vision may be unfolding.
Weekend news:
Honda confirms 17th U.S. death in Takata airbag rupture: The defect, which can lead to airbag inflators rupturing and sending metal fragments flying, prompted the largest automotive recall in U.S. history and is tied to 15 U.S. deaths in Honda vehicles and two in Ford since 2009.
Polestar 2 electric sedans recalled to fix software glitch: The Sweden-based automaker started producing the Tesla Model 3 rival this year and sells them in China, Europe and the U.S.
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All in the family: The 11-member executive board of Stellantis, the company that will come from the merger of PSA Group and Fiat Chrysler Automobiles, will be headed by family members controlling both companies. John Elkann, current FCA chairman, will be board chairman; Robert Peugeot, PSA advisory board member and head of the Peugeot family companies, will be vice chairman; and Andrea Agnelli, John’s cousin, will be the second board member representing FCA. The Agnelli-Elkann family controls FCA. PSA CEO Carlos Tavares will hold the same title with Stellantis and will also be on the board. Conspicuously missing is FCA CEO Mike Manley. Stay tuned for his role.
15 for 15: More than three years after it began, the federal probe that has exposed fraud in the UAW caught another big fish. This time it was Dennis Williams, UAW president from 2014 to 2018, who pleaded guilty to embezzling money from the members he once led. His admission came almost four months after his successor, Gary Jones, pleaded guilty to similar charges. For those keeping count, that’s 15 indictments and 15 convictions for federal prosecutors.
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A selection from Shift and Daily Drive:
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Oct. 10, 1901: A young Henry Ford wins a cut-glass punch bowl after besting heavy favorite Alexander Winton, founder of Winton Motor Carriage Co., in a 10-lap race at the Detroit Driving Club in Grosse Pointe, Mich. The race was the Big Bang that began Ford Motor Co. And the punch bowl? It’s been missing since 1951. There’s a reward for its return.