Toyota and Wall Street steer GM in a bad direction 19 Mar 2014 The Japanese carmaker is paying $1.2 bln to resolve safety concerns from U.S. authorities just as its Detroit rival starts to grapple with its own. GM’s fiasco lasted longer and involves more deaths. The fine inflation in bank settlements doesn’t bode well.
Hertz needs a better way to spin its spinoff 18 Mar 2014 The rental car group is caving to years of pressure to carve out its hacksaw and backhoe hire unit. Not only does it make strategic sense, but peer multiples suggest it could boost the company’s value by 25 pct. Investors’ muted reaction shows Hertz has more work to do.
Volkswagen has no reason to improve Scania bid 18 Mar 2014 Minority owners of the Swedish truckmaker want more than the 53 pct premium offered by Volkswagen. They’re right to try, but limited medium-term synergies don’t justify topping up a generous bid. Sadly the German carmaker can still fall hostage to its executives’ oversized egos.
GM recall woes go way beyond financial penalties 14 Mar 2014 The automaker may face hefty fines for faulty ignitions, though bankruptcy shielded it from some lawsuits. The bigger issue is why a problem that would have cost peanuts to fix festered for 13 years. CEO Mary Barra will have a tough time proving GM’s culture has since changed.
VW faces multiple management crash tests 13 Mar 2014 The German carmaker may have become the world’s No. 2, but parts of the empire are looking shaky. The fleet at profit engine Audi is ageing and VW is struggling in America. Most worrying, the management structure looks more suited to a smaller and simpler enterprise.
Lehman scourge may finally root out old GM 10 Mar 2014 Mary Barra, the automaker’s CEO, has brought in lawyer Anton Valukas to investigate how faulty ignitions became a 10-year saga behind 13 deaths. Valukas unpicked Lehman’s failure and didn’t mince his words. A similar approach at GM could bring the revamp that bankruptcy didn’t.
Elon Musk’s Gigafactory puts utilities on notice 6 Mar 2014 The Tesla CEO reckons he can kick off a virtuous circle by doubling world lithium-ion battery production. Musk expects that to slash costs by more than 30 pct and add a turbo boost to Tesla’s sales. It may also leave electric pylons looking as outdated as telephone poles.
Tesla customizes hot new convertible for hedgies 27 Feb 2014 A $1.6 bln bond that becomes equity is a cheap way for Elon Musk’s electric carmaker to raise cash for its new Gigafactory. Hedge funds love such securities, which provide unique trading opportunities on volatile stocks. And lately they’ve been almost as hard to buy as a Tesla.
VW’s $9 bln Scania bid puts own investors second 24 Feb 2014 The German automotive group is offering a 53 pct premium to the Swedish truck maker’s minority owners. Cost savings cover the gap on paper but will take up to 15 years to materialise. And VW investors must stump up $2.7 bln while seeing little short-term benefit.
Tesla delivers enough to keep faithful charged up 20 Feb 2014 Elon Musk’s electric carmaker unveiled improving margins, decent sales targets for this year and the prospect of cutting the cost of producing the batteries for its vehicles. That sent the stock to new highs, but at $27 bln Tesla’s valuation is rooted in hope, not reality.
Santander gains cheap foothold in France 19 Feb 2014 The Spanish bank is in talks to finance Peugeot’s future sales in 11 European countries as the French state leaves the carmaker’s finance arm. Santander gets access to millions of captive clients and some legacy loans at a discount. Peugeot will benefit from cheaper funding.
Pimped-up Peugeot ready to steer away from crisis 19 Feb 2014 The French carmaker’s 3 bln euro capital hike is the missing link in its turnaround. Peugeot has tackled overcapacity and costs, invested in new cars, and found a capable new CEO. It is set to go global. But it will be encumbered by its new, complex shareholder structure.
China potential sparks electric car investment 18 Feb 2014 The People’s Republic is already the biggest car market. Now the likes of Tesla and parts maker Wanxiang are betting on a boom in electric vehicles. Though infrastructure lags behind the West, a dense urban population and strong central planning could give the market a jolt.
VW’s U.S. union critics are damaging own interests 13 Feb 2014 Tennessee Republicans like Senator Bob Corker are warning of pain if the automaker’s workers there vote to join the UAW. The anti-union gripes reflect old ideology, not the new reality. VW isn’t bothered by unions and has $7 bln to invest elsewhere if lawmakers make it unwelcome.
Rolls-Royce shock heaps pressure on management 13 Feb 2014 Shares in the world’s second-largest engine maker slid 12 pct on a warning of flat revenue and profit. Falling defence budgets are no surprise, so it’s unsettling that Rolls couldn’t have guided the market down gradually. Management must now over-deliver on cost-cutting pledges.
Australia’s auto demise foreshadows demand slump 12 Feb 2014 Toyota has joined Ford and GM in closing its plant in the country. That’s a delayed reaction to the decade-long loss of manufacturing competitiveness. But the big risk to the economy is not Australians making fewer things. It’s that they will be buying less than before.
Conti takes smart road west in $2 bln Veyance deal 11 Feb 2014 The German automotive group is buying the U.S. rubber and plastics firm from private-equity owner Carlyle. Investors may be disappointed Conti is doing M&A rather than returning cash. But the price looks undemanding and there’s strategic logic in diversifying away from Europe.
General Motors, analysts both have egg on faces 6 Feb 2014 The automaker missed Q4 estimates by a mile. Some overseas markets are a concern, but most of the shortfall stems from restructuring charges, not a slump in business. These ought to have been known in advance. Either GM’s failing to communicate or analysts aren’t listening.
Revving-up Daimler still not running at full speed 6 Feb 2014 Shiny new models helped the carmaker show record sales and profit in 2013. But Daimler still faces big challenges. While margins are increasing, they’re still below rivals’, and headaches in China are only abating slowly. The shares are already counting on much more good news.
Chinese M&A rings in new year with Auld Lang Syne 31 Jan 2014 The $2.5 bln sale of Cooper Tire was undermined by its joint-venture partner in Rongsheng. The two sides have now agreed a deal that helps them part ways. Given what transpired, other foreigners may also fancy singing “should old acquaintance be forgot” in the Year of the Horse.