Renault swung to a record first-half loss as the French automaker grappled with a sharp market downturn and increasingly dismal results from alliance partner Nissan.
The 7.29 billion euro ($8.6 billion) net loss underlines the challenges facing the automaker, which is slashing costs and trying to repair relations with its Japanese alliance partner. It refrained from giving any financial guidance for the year except to say it’s on track on cost savings. “Although the situation is unprecedented, it is not final,” new CEO Luca de Meo, who took over this month, said in a statement Thursday. “I have every confidence in the group’s ability to recover.”
Renault’s vehicle sales plunged by more than a third during the period, when showrooms and factories were shut for weeks due to the coronavirus pandemic. Adding to its pain are mounting losses at Nissan, the company in which it owns a 43 percent stake. The Japanese automaker has decided to forgo paying a dividend, denying Renault a payout it has long relied on to bolster its earnings. Nissan’s performance reduced Renault’s net income by a total of 4.8 billion euros ($5.6 billion) in the first and second quarters.
Renault in May unveiled a plan to eliminate about 14,600 jobs worldwide and lower production capacity by almost a fifth in a bid to cut costs by more than 2 billion euros ($2.4 billion), of which 600 million euros is forecast for this year. De Meo will oversee politically tricky job cuts in France and a strategy to recalibrate the company’s brands and model lineup.
The company reported a group operating loss of 2 billion euros ($2.4 billion) in the first half, compared with income of 1.52 billion euros a year earlier and said the automotive cash burn was 6.4 billion euros ($7.5 billion). Renault turned to its most powerful shareholder, the French state, for help during the health crisis, accepting a government-backed credit facility of 5 billion euros ($5.9 billion). At the end of June, the automaker said it held 16.8 billion euros ($19.7 billion) of liquidity, compared with 10.3 billion euros on March 30.
This week, the company poached top designers away from PSA Group and Volkswagen Group subsidiary Seat, and Renault Deputy CEO Clotilde Delbos has cited a successful revamp at the maker of Peugeot and Citroen cars as a reason to focus on profitability rather than volume. PSA won investor praise for sticking to its financial outlook and reporting a first-half profit on July 28.
Renault and Nissan are regrouping from a two-decade era of aggressive expansion under the alliance’s former leader, Carlos Ghosn. His 2018 arrest in Japan added strain to the companies’ already tenuous relationship and triggered a period of management upheaval.
Ford Motor Co. posted a $1.9 billion operating loss in the second quarter, the latest global auto maker to report steep losses from factory closures as the pandemic’s financial fallout on the car business comes into focus. Still, global auto makers this week said they expect profits to return in coming months—barring further factory disruptions related to Covid-19—as the restart of production has mostly gone smoothly and buyer demand has been stronger than analysts expected when the crisis hit. Ford’s -2.60% second-quarter result was far better than the $5 billion operating loss the company signaled in April, when its U.S. factories were idled amid Covid-19 lockdowns.
Source: The Wall Street Journal
Italian American automaker Fiat Chrysler posted a smaller-than-expected operating loss in the second quarter, as it managed to contain negative effects of the COVID-19 pandemic. Fiat Chrysler (FCA) said its loss was $1.24 billion, adjusted earnings before interest and tax (EBIT) were negative for 928 million euros ($1.10 billion) in the April-June period, versus forecast for a 1.87 billion euro loss in an analyst poll compiled by Reuters. Chief Executive Mike Manley said the group’s plants were up and running and car dealers were selling in showrooms and online.
After years of being part of a future that never quite arrived, the coronavirus pandemic has put U.S. online car sellers on the map. Now comes a race to spend vast sums on digital commerce platforms specifically designed to handle auto sales. Without deep pockets, many startups and others trying to join the online game will likely be left in the dust. Online sales still only account for around 1% of the roughly $840 billion Americans spend annually on around 40 million used cars. But after numerous U.S. states went into COVID-19 lockdowns in March, the advantage of socially-distant online sales has come squarely into focus.
Lordstown Motors has agreed to go public through a merger with blank-check company DiamondPeak Holdings in a deal that gives the electric pickup start-up a pro forma equity value of $1.6 billion, the companies said on Monday. The combined company will be called Lordstown Motors Corp following the closure of the deal in the fourth quarter and will trade on the Nasdaq under the ticker symbol RIDE, the companies said. "Lordstown ... has a transformational product and business plan in what are two of the most valuable areas of focus and tremendous opportunity in the auto sector -- electric vehicles and light-duty trucks," DiamondPeak CEO David Hamamoto said on a conference call. "Lordstown has attracted a clear lane of customers in the commercial fleet segment of the market."
A blank-check company is a shell company that raises money through an initial public offering to buy an operating entity, typically within two years. Several EV developers such as Nikola Corp. and Fisker have either gone public or are planning to list their shares through mergers with blank-check companies this year.
Lordstown has been working on a new full-size electric pickup truck called Endurance and last year hired Rich Schmidt, a former director of manufacturing at Tesla Inc., as chief production officer. The company said the truck is aimed at the U.S. commercial fleet market, with initial production expected in the second half of 2021.
Lordstown expects to receive about $675 million of gross proceeds from the deal and will use the funds for the production of the new truck, which has secured $1.4 billion worth of pre-orders, the company said. “That should get us all the way to the finish line,” Lordstown Motors founder and CEO Steve Burns said in a phone interview with Bloomberg. “It will get us into production and also help bring new models quicker than we could have.”
The transaction includes an investment of $75 million from GM. GM’s stake will be significant but less than 10 percent, Burns said. DiamondPeak is controlled by Hamamoto, a former executive at Northstar Realty, and Mark A. Walsh, a former real estate banker at Lehman Brothers and now a partner at investment fund Silverpeak. Shares of DiamondPeak rose as much as 17 percent to $11.95 as of 9:32 a.m. in New York. Workhorse Group Inc., which owns a small stake in Lordstown Motors, rose as much as 5.7 percent, and Nikola shares were up as much as 6.3 percent.
Lordstown Motors purchased the Lordstown, Ohio, factory after General Motors decided to close the plant, which was founded in 1966. Its closure was a liability for U.S. President Donald Trump, who a year earlier went so far as to discourage rally-goers from selling their homes because of all the jobs he would bring back to the area.
Burns said he has been staffing the plant with contractors while getting ready to start production but won’t begin replacing them with full-time workers. He said he will need 600 production employees and as many as 400 engineers to get the old Lordstown plant running. When GM made the Chevrolet Cruze compact in the plant, it employed about 3,000 workers on several shifts. It gradually downsized output as demand for small cars declined and closed the plant in 2019.
Burns' plan is to build 20,000 truck in the first full year of production. The company has a letter of intent from potential customers for 27,000 vehicles, he said.
The transaction also includes funding from Fidelity Management & Research Co., Wellington Management Co., Federated Hermes Kaufmann Small Cap Fund, and funds and accounts managed by BlackRock Inc., among others. Goldman Sachs served as the exclusive finance adviser to DiamondPeak, with Deutsche Bank serving as an additional capital markets adviser.
Source: Car and Driver, Bloomberg, Reuters
General Motors Co. has asked a federal judge to reconsider the tossing of a lawsuit it filed last fall against Fiat Chrysler Automobiles, in GM’s latest attempt at reviving an unusual legal battle between the two Detroit rivals. In a motion filed Monday in Detroit, GM said it had uncovered new evidence to further support its earlier claims that Fiat Chrysler was trying to weaken its larger competitor by bribing top officials with the United Auto Workers union.
Japan’s Honda Motor Co on Wednesday forecast a 68% decrease in annual operating profit to a 10-year low with global demand for cars expected to slide because of the coronavirus pandemic. The country’s No. 3 automaker expects profit to sink to 200 billion yen ($1.89 billion) in the year to end-March 2021, its weakest since the 2010/11 year and undershooting analyst estimates. Honda is bracing for a 6% decrease in annual vehicle sales after a 40% plunge in the June quarter, which resulted in a 113.7 billion yen operating loss.
BMW AG’s loss-making automotive division dragged the company into the red for the first time in more than a decade, rounding out a dismal quarter for European carmakers hit by the coronavirus pandemic. The German manufacturer lost 666 million euros ($787 million) before interest and taxes between April and June, its first quarterly deficit since the financial crisis in 2009. BMW’s auto business, which recorded a bigger-than-expected Ebit loss, was mainly to blame after deliveries tanked due to pandemic-related shutdowns of dealerships and factories, the company said Wednesday in a statement.
Fiat Chrysler Automobiles is preparing for a possible recall related to an issue affecting upward of one million vehicles, likely including Jeep SUV models, equipped with its 2.4-liter Tigershark engine. The expected recall is related to emissions testing conducted on the gasoline engine and, according to the company, is not connected to claims summed up in various lawsuits that the engines burn excessive amounts of oil, which could cause stalling.
Source: Detroit Free Press
Toyota Motor Corp. sees sales rebounding from the coronavirus pandemic faster than it initially expected, leading the company to bolster its sales projections and forecast a nearly $7 billion profit for the full year. The company said Thursday that it sold around 200,000 more vehicles than anticipated in the April-to-June quarter. It now expects to sell 7.2 million vehicles in the financial year ending in March, up from a May forecast of seven million but still well below the previous financial year’s total of nearly nine million. Those figures mostly don’t include vehicles sold through Toyota’s joint ventures in China.
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