Automotive future: mixed feelings
It’s the time of the year. Car manufacturers come with their financial results. And we see more negative than positive signs — a quick round-up of the news that gives us very mixed feelings about the near future in the automotive business.
Yesterday, there was some bad news from Nissan. Shortly we will know what happens next and if CEO Saikawa will survive the turmoil, probably not. We’ll come back on it later.
For the first time in 10 years, the German premium manufacturer, Daimler, has announced a loss of 1,6 billion euros in Q2. The operational loss is due to the 4,2 billion one-off debts that the company booked in. They are also due to provisions for the jurisdictional fall-out of dieselgate and unforeseen recalls.
The management, now headed by the new CEO Ola Källenius, expects sales to revive in the second half of this year, due to the bunch of new models coming on the market now. Nevertheless, profits and profit margins are suffering.
To counter this, efficiency has to increase, says Källenius. More details about cost-cutting and augmenting efficiency will come after the summer, he promised.
Ford deceived shareholders on Wednesday, announcing a steep profit drop for Q2 this year (148 million dollars instead of 1,06 billion last year). The major restructuration the company announced, with 12.000 jobs at stake in Europe, will cost the company an estimated 11 billion dollars.
Fortunately, things are going slightly better in Europe and China. On the old continent, there has been a small profit (53 million dollars for Q2). In China, losses have been reduced, during Q2 only 155 million was lost.
Also, Ford has launched a series of new models that should improve the figures in the second half of the year, finally aiming at an operational profit of 7,5 billion dollars for 2019, slightly up compared to the past year.
For a manufacturer it’s tricky to be dependable on one or two continents in the world, at the moment it’s beneficial for PSA. The group is going very strong in Europe, thereby hiding that North and South America are not so good, and China is a real disaster.
Although the total turnover has regressed a bit (0,7% to 38,34 billion euros), the French manufacturer has the best operational margin in history. With 8,7% it’s seriously approaching those of the premium manufacturers.
CEO Tavares is giving the economies of scale and the well-progressing integration of Opel into the group as the main reasons for the success. In China, the CEO is cutting vigorously in costs, and he’s thinking about reducing capacity over there.
With the sanctions against Iran, PSA has lost a small half-million of annual sales, but in the end, the manufacturer will have to grow on other continents to be safe for the future. That’s why Citroën is launched in India, and Opel is returning to Russia.
PSA has one major trump in its sleeve: the end of June it was sitting on a financial war treasure of 7,9 billion euros. Five years ago, it was almost bankrupt. With the consolidation movement in the years to come, PSA can play a significant role.
Volkswagen Group published its half-year results yesterday. The group sold fewer cars than in the same period the year before (5,4 million instead of 5,5 million), but market share increased in a declining world market.
The operating profit improved by 10,3% to 9 billion euros. The brands that did well were Volkswagen, Skoda, and Seat, which boosted their sales revenue (respectively by 3,4, 10,8, and 8,3%). Audi’s sales revenue declined by 7,7%.
The luxury brands Bentley and Porsche did better, Bentley earning money again (57 million euros instead of losing 80) and Porsche also increased its operating profit with 2,5% to 2,1 billion euros. From that, you have to deduct special items of 0,5 billion euros, still as consequences of Dieselgate.
It’s not only the larger manufacturers that have to be careful. The specialized luxury sports car manufacturer, Aston Martin, has also issued a profit warning, receding from a predicted 13 to a mere 8%.
Production will only be 6.200 to 6.500 vehicles compared to the 7.300 predicted. Sales fell back 22% in Europe and 28% in Africa and the Middle East. The reaction of the shareholders was instantaneous: the Aston Martin share regressed by 26%. Since the POI in October last year, share value has diminished with 60%.
One could think that the leader in electric mobility would be in better shape. But in Q2, Tesla has registered a loss again (408 million dollars). The Palo Alto-based manufacturer made and sold more cars than ever before (95.000 from April till June), but restructuring costs (117 million) and other one-off costs influenced the final result.
At the end of the year, the Californian company wants to produce 10.000 cars a week, but therefore the new factory in China (near Shanghai) has to get started on time. The European giga-factory for Europe has to be accelerated. Its cost is estimated at 2 billion dollars, and the final location for it will be chosen very soon.
Tesla also sold more home batteries and industrial batteries than before, but the sales of its solar roofs have decreased again. According to the company, they’re working hard to repair this.