Luxury Market Changes

Luxury Market Changes

Automotive Weekly

Luxury Market Changes


Goldman Sachs Group Inc. is buying General Motors' credit card business for about $2.5 billion, the Wall Street Journal reported Thursday, citing people familiar with the matter. The Wall Street bank won the bidding for the deal over Barclays, according to the Journal.

GM's credit card issuer Capital One Financial Corp. and Goldman have agreed upon the purchase price and expect to finalize the deal in the coming weeks, the report said.

The acquisition will enhance Goldman's focus on its consumer banking business, which it is expanding to even out volatile results from segments such as trading and investment banking.

Goldman currently has a much smaller presence in consumer banking, unlike larger peers JPMorgan Chase & Co. and Citigroup Inc., and it is an area CEO David Solomon has been aggressively looking to strengthen. It is the bank's second major credit card partnership, following the launch of a card with Apple Inc. last year. The purchase would also come at a time when U.S. households are cutting back on debt in response to the COVID-19 pandemic.

Goldman Sachs and Barclays declined to comment, while GM did not immediately respond to a request for comment.

Source: Reuters


Volkswagen is drawing up plans to carve out Lamborghini and has sounded out bankers and potential investors about listing the Italian sports car maker on the stock market, two sources familiar with the matter told Reuters. They said the German carmaker is looking to make Lamborghini a more independent unit within its stable of car brands and is discussing long-term supply deals, both steps which would make it easier to carry out an initial public offering (IPO).

“This is a first step which gives VW the option to list the unit further down the line,” one of the sources familiar with the discussions about the future of Lamborghini told Reuters. The source said there was no formal decision to divest Lamborghini and the timetable of any deal remained unclear.

A second source familiar with the talks about Lamborghini, which is currently part of Audi, said Volkswagen would retain a controlling stake in the supercar brand if it were to list.

Volkswagen declined to comment. Volkswagen’s management and supervisory board will host a five-year planning round in mid-November and preparations to carve out Lamborghini could help executives make a decision on a sale or partial listing at short notice.

A third source familiar with the discussions said the future of all three brands was discussed at a supervisory board meeting last Friday, including how to electrify the Lamborghini and Bugatti brands through partnerships and investors. Lamborghini’s Chief Executive Stefano Domenicali announced this week his departure from the sports car maker to take on a new job as president of Formula One.

‘Important Steps’

Volkswagen Group’s Chief Executive Herbert Diess said on Wednesday the carmaker would announce “important steps” about the company’s future before the end of the year. A global clampdown on vehicles powered by combustion engines to curb carbon emissions has forced carmakers to accelerate the development of low-emission technology for their mainstream models. California, for example, which accounts for 11% of U.S. car sales, plans to ban the sale of new gasoline-powered passenger cars and trucks from 2035, the State’s Governor Gavin Newsom said last week.

Volkswagen managers, however, are struggling to find the resources needed to electrify low-volume sports car models such as Lamborghini and Bugatti, which sold 4,554 and 82 cars respectively last year. By reviewing VW’s portfolio, Diess is slowly unwinding an empire built by his mentor, Ferdinand Piech, Volkswagen’s former chairman and chief executive who died in 2019. Piech, who hired Diess in 2015, turned Volkswagen around by betting on modular construction techniques which allowed Audi, Seat, Skoda, VW and to use common parts for up to 65% of their construction. Diess is taking a similar approach with electrification to boost economies of scale, developing a modular electric vehicle platform known as MEB, which will fit its mainstream compact and medium-sized vehicles - but not supercars. Piech bought the Bugatti, Bentley, and Lamborghini brands as part of an aggressive expansion push in 1998 which eventually turned Volkswagen into the biggest car company in the world by sales ahead of Toyota 7203.T.

Diess told Reuters last month he had abandoned VW’s decades-old obsession with empire building and no-expense-spared engineering to free up resources for the development and mass production of electric cars. “The product experience needs to be right. But you need to keep an eye on cost. You cannot run the business by focusing only on product,” Diess said.

Source: Reuters


But Don't Expect a Return to Sedans

Harkening back to the era of Henry Ford, Ford Motor Co. plans to make more affordably priced vehicles for the great multitude, a market it largely exited when it made the decision to eliminate sedans in North America. The move was made official Thursday when Jim Farley stepped up as new president and CEO of the Blue Oval and unveiled his plan to speed up profitable growth of the business.

Source: The Detroit News


While a narrow interpretation [of Massachusetts Question 1] might consider repair and maintenance to only relate to physical components, a more realistic perspective also considers the maintenance and repair and updating of vehicle software. Therefore, one has to ask - should anyone beyond the vehicle manufacturer be responsible for the maintenance or repair of a vehicle’s software? Should consumers be free to authorize an independent repair facility to augment, update or otherwise change a vehicle’s software without safety and cybersecurity oversight embodied in manufacturer processes? If so, where do the bounds of liability to the original equipment manufacturer or independent repair shop fall? Given that new cars actually contain dozens of connected computers that need to seamlessly interact to meet safety and environmental standards - there is no easy answer. 

Source: Forbes


General Motors is considering revisions to its deal with embattled Nikola Corp., according to people familiar with the discussions, and may seek a higher stake in the startup now that its valuation has fallen after allegations of deception. GM tentatively agreed to take an 11 percent stake  Nikola as part of a cash-free deal made public last month. The Detroit automaker would supply hydrogen fuel-cell technology to its junior partner and manufacture a new battery-powered pickup for it called the Badger. Talks to finalize the agreement are ongoing ahead of a Dec. 3 deadline.

Since the deal was announced on Sept. 8, Nikola stock has fallen by more than half and GM has sought better terms before closing, said the people, who asked not to be identified because the discussions are private. GM could push to raise its equity in Nikola beyond the planned 11 percent or seek warrants that would guarantee or even increase that level of ownership if the company raises more money.

GM’s due diligence on the startup has been questioned after a short-seller accused Nikola of overstating its capabilities and know-how. The allegations -- and federal regulatory probes into those claims -- sent the Phoenix-based company’s stock price into a downward spiral. Nikola has denied the allegations against it and Trevor Milton, the company’s founder and former chairman.

Source: Bloomberg


So far, electric vehicles have been little more than a highly subsidized niche market in the U.S. That's not much of a track record for automakers as they lay out their investment plans for future EVs. A sustainable industry — as well as a sustainable planet — requires a top-to-bottom rethink of the way vehicles are produced, marketed, sold, powered and recycled. Just as it has done with battery costs to date, the industry needs to continue to relentlessly drive down costs and improve performance. That has always been the key to increasing customer satisfaction — while making money.

Source: Automotive News


Full-size pickups are built for hauling capability, and these particular vehicles certainly are carrying wholesale prices higher. Referenced by KAR Global chief economist Tom Kontos, as well, Black Book senior vice president data science Alex Yurchenko described what full-size pickups did to wholesale prices as Black Book shared its Used Vehicle Retention Index for September. According to the newest reading released on Monday, the index rose 1.8 percentage points from August to September to land at 130.8. The Black Book Used Vehicle Retention Index is calculated using Black Book’s published wholesale average value on 2- to 6-year-old used vehicles, as a percent of original typically equipped MSRP. It is weighted based on registration volume and adjusted for seasonality, vehicle age, mileage, and condition.

Source: Auto Remarketing


Toyota Motor Corp. said Monday it would develop a heavy-duty, fuel-cell electric truck with its subsidiary, Hino Motor Co., for the North American market. The move expands upon Toyota's existing effort to develop a 25-ton, Class 8 fuel-cell electric truck for the Japanese market, announced earlier this year.

The first demonstration truck is expected to be ready in the first half of 2021, Toyota said.“Toyota’s twenty-plus years of fuel cell technology combined with Hino’s heavy-duty truck experience will create an innovative and capable product," said Tak Yokoo, senior executive engineer, Toyota Research and Development, in a statement.

Source: Reuters


Toyota Motor Corp.’s Lexus brand outsold luxury rivals Mercedes and BMW in the latest quarter as inventory shortages triggered by the pandemic hampered the German brands. Lexus, which hasn’t won the annual U.S. luxury sales race in a decade, grew 2% on the year to 75,285 vehicles in the third quarter. Deliveries at Daimler AG’s premium line declined 9.4% to 69,631 units, and BMW AG suffered a 16% decline to 69,570. Mercedes is still leading the other two carmakers year-to-date by a wide margin.

Source: Bloomberg


BMW AG is on track to meet its full-year targets after a recovery in auto sales led by China helped the manufacturer weather the coronavirus pandemic. The German carmaker will meet both its full-year forecasts and the European Union-mandated CO2 targets this year, Chief Financial Officer Nicolas Peter said Thursday. He cited a boon from China, where car sales rose by a fifth in September from a year ago. Source: Bloomberg


Prime Minister Justin Trudeau and Ontario Premier Doug Ford are rolling out half a billion dollars as part of a nearly $2-billion plan to overhaul Ford’s Oakville assembly plant to manufacture electric vehicles and batteries.

The federal and provincial governments are each chipping in $295 million to mass produce electric vehicles — and the batteries that power them — at the manufacturing plant.

It is part of a three-year agreement worth nearly $2 billion that was announced last month between the automaker and Unifor, the union that represents autoworkers in Canada.

“This shows how much we can do when we work together,” said Trudeau at a joint press conference with Ford, provincial and federal legislators, and Jerry Dias, the head of Unifor

Ford said his government is “all in” on supporting the industry despite having faced criticism in the past for cancelling a planned rebate to encourage people to buy electric vehicles.

“We’re blazing a new trail with this announcement,” said Ford. “Rather than bickering and arguing with each other, when we’re all pulling in the same direction, this is the result we get.”

Source: The Canadian Press

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