Daimler had a big second-quarter, Lyft has resumed ride sharing, and Audi. That and more in The Morning Shift for July 15, 2021.
The pandemic has been a curveball for automakers, like it has been for everyone, though another curveball they didn’t see coming was the global chip shortage. If you thought that would hurt profitability, well, it hasn’t. Daimler is the latest example, per Bloomberg:
Preliminary earnings before interest and taxes surged to 5.19 billion euros ($6.1 billion) in the second quarter, the Mercedes-Benz maker said late Wednesday, beating a company-compiled consensus of 4.11 billion euros. Profit margin at the cars and vans division reached double digits for a third straight quarter.
Daimler joins Volkswagen AG and Jeep maker Stellantis NV in reporting that it’s coping well with the scarcity of chips that has constrained car production since late last year. Facing limitations on just how many assembly lines they can keep running, automakers are prioritizing output of their biggest money makers and abstaining from discounts customers are accustomed to even from luxury brands.
“Daimler’s shift to higher-margin vehicles in light of the semiconductor shortage issue likely helped propel margins above normal levels,” Tom Narayan, an analyst at RBC Capital Markets with the equivalent of a buy rating, said in a note. He expects Mercedes rival BMW AG “could similarly pre-announce to the upside.”
Daimler forecast in April that its main Mercedes-Benz unit will be more profitable than it’s been in years, thanks to resurgent demand for cars and trucks in the midst of the global pandemic. It raised its projection for annual return on sales for its cars and vans division to 10% to 12%, up from 8% to 10%.
I remain somewhat worried that automakers have finally realized that they don’t need to sell $20,000 cars anymore because obviously all the real money is in the $40,000 and $50,000 ones, but then I think there probably has to also be a course correction at some point. Anyway, as long as the Mitsubishi Mirage is here, I’m good.
Shared Lyft rides are coming back in some cities, though with limitations. From Reuters:
Lyft said shared rides, which allow multiple passengers to split a car traveling in the same direction, would become available in Chicago, Philadelphia and Denver as of Monday. The company, which prior to the pandemic operated shared rides in 18 markets, said it plans to return the option to all those cities in the next few months.
Lyft said its mask mandate for drivers and riders remained in effect and that drivers could opt out of offering shared rides. Shared rides would also be limited to two passengers, with the middle and front seats remaining empty.
“As the country reopens, we want our most affordable ride option to be available to our riders,” Lyft President John Zimmer said in a statement.
I don’t know about you but I think I would be fine sharing a cab with a stranger, as it doesn’t seem all that much different from sharing the cab with the driver, also a stranger. That said, it’s still going to take some time to feel comfortable with the old ways.
This time it is at Jefferson North Assembly in Detroit, where they make the Jeep Grand Cherokee and Dodge Durango. That’s right, the chip shortage has come for the Dodge Durango.
From Automotive News:
Layoffs are scheduled from July 11 to Aug. 1. A shutdown was previously scheduled from Aug. 2 to 6, something Stellantis said is necessary to perform maintenance and begin work for future models. Production is set to resume Aug. 9.
The new downtime is a continued result of the global semiconductor chip shortage, according to a statement from Stellantis spokeswoman Jodi Tinson.
Meanwhile, supply chain issues continue to impact manufacturing at other plants. Belvidere Assembly Plant in Illinois, Toluca Assembly Plant in Mexico and Windsor Assembly Plant in Ontario are set to be down through the end of the month.
But not for what that phrase usually suggests; this is rehab for covid. It seems extremely precautionary.
From Automotive News:
[CEO Markus Duesmann] had fallen ill with COVID-19 in April, Automotive News’ sister publication Automobilwoche reported. He then spent two weeks in quarantine at home, Audi sources told Automobilwoche.
Overall, the disease had taken a mild course in him, and Duesmann continued to work from home by telephone and video call, Automobilwoche said. After the end of the quarantine, he resumed work on site.
In a message to his employees this week, Duesmann wrote that based on his experience he felt anyone could catch the disease “despite caution and many safety precautions.”
For this reason, he said, he had now decided to take part in a rehabilitation program for two to three weeks, just to be on the safe side, so that he could then come back to work and “go full throttle again.”
This time it involves the self-driving startup Aurora, which Bloomberg reports is about to merge with a SPAC and go public.
Driverless technology startup Aurora Innovation Inc. has agreed to go public via a merger with Reinvent Technology Partners Y, a blank-check firm led by executives including LinkedIn co-founder Reid Hoffman and Zynga Inc. founder Mark Pincus, people with knowledge of the matter said.
The transaction’s valuation couldn’t immediately be learned. TechCrunch in early June reported that Aurora and the Reinvent SPAC were in talks for a deal close to $12 billion. An agreement is set to be announced as soon as Thursday, the people with knowledge of the matter said.
Representatives for Aurora and Reinvent declined to comment.
I continue to think that if you gotta go public via SPAC and not a traditional initial public offering, you don’t have the goods.
Modern Ford is the corniest of the automakers, my evidence is the following tweet:
The Fit has been taking a hair longer to start recently, which probably has nothing to do with the spark plugs since it runs fine. Probably a tune-up is in order since it is 13 years old and I’m almost at 80,000 miles. The air-conditioning compressor, alternator, driveshafts, airbags, front suspension, and front body have all been replaced over the years, along with the usual stuff like brake pads and rotors, oil and oil filters, various lights, air filters, transmission fluid, and battery. The Fit is firmly in Old Familiar Friend territory and I would be somewhat upset if I got rear-ended, despite the fact that every few weeks I consider selling it for some old German roadster.