Carlos Ghosn wants a documentary, Volvo might go public, and the coronavirus is having a big impact on the auto industry. All this and more in The Morning Shift for Monday, February 10, 2020.
Viruses aren’t the only reason automakers are cutting back or halting production. Over in Europe, Daimler is doubling down on cost-cutting measures by axing up to 15,000 jobs, Automotive News reports. From the article:
The maker of Mercedes-Benz cars had said in November that it would cut at least 10,000 jobs and reduce staff costs by around 1.4 billion euros ($1.5 billion) by the end of 2022, a number Handelsblatt said would be significantly exceeded.
Daimler plans to announce the expanded savings at its annual news conference on Tuesday, the paper said, adding that CEO Ola Kallenius would also reduce investments in money-losing projects that are not part of the core business.
This comes alongside a trimming of Mercedes’s product lineup, with the future of many different classes remaining uncertain or, in the case of the X-Class, definitely doomed.
Carlos Ghosn has been ready to hit the big screen for about a month now and things are developing. The former chairman of the Renault-Nissan-Mitsubishi alliance has a story to tell, and Bloomberg is reporting that he’s already well on his way to making big waves in the documentary community. From the article:
Ghosn is working with Michael Ovitz, the founder of Creative Artists Agency and former president of Walt Disney Co., to explore film and TV projects. A spokeswoman for Ghosn said Ovitz would assist with projects and evaluating proposals he has received, cautioning that any discussions are still preliminary.
Ovitz is something of a superagent, the kind of guy whose agency only represents big-name clients like Steven Spielberg, Tom Cruise, Barbra Streisand, and Madonna. Now, we can add Ghosn’s name to that list.
A big documentary deal would probably be the best thing to happen to Ghosn right now, who has bled millions as a result of his recent fugitive escapades. There’s nothing to line your wallet like Hollywood when you have a story people are dying to hear.
There isn’t an official deal yet, but Bloomberg muses that the Ghosn saga would make a great mini-series on Netflix or Amazon, and I’d have to agree.
But that’s not the only Ghosn news this morning. Ghosn launched a lawsuit against car makers in the Netherlands in July of 2019, arguing that he was “unfairly dismissed” from his position. Now, his lawyers are arguing for the public release of documents. From Reuters:
Ghosn’s lawyers claim he was unfairly dismissed as chairman of Nissan-Mitsubishi BV, a Dutch-registered entity, because the details of the allegations were not shared with him.
Ghosn is seeking access to documents relating to internal Nissan and Mitsubishi investigations, which the carmakers used to substantiate his dismissal on allegations of financial misconduct.
His defense team has argued the documents will show the companies were aware of Ghosn’s activities.
Whew. It’s a big day to be Ghosn.
Geely might not have managed to nab Aston Martin, but it could be combining with Volvo Cars sometime in the near future, Bloomberg reports. A unified company, Geely founder and Volvo chairman Li Shufu argues, would help raise a combined profile and enable both Volvo and Geely to compete in a market that’s been rapidly consolidating over the past few years.
From the article:
Volvo, wholly owned by Li’s Geely Group, will study the proposal to merge with publicly traded Geely Automobile Holdings Ltd., according to a statement Monday. The enlarged company would be listed in Stockholm as well as Hong Kong, where Geely Automobile trades now.
A transaction would unify the bulk of billionaire Li’s growing stable of automotive brands. He bought Volvo Cars in 2010, and the company has since doubled sales while growing rapidly in China. Li, who is also Daimler AG’s largest shareholder, has championed consolidation as a way for automakers to pool resources for initiatives like electrification and automated driving.
Potentially, the new company could be valued at around $30 billion or more. Geely Automotive commands a current market value of about $16 billion in Hong Kong, while Volvo targeted a range of $16 billion to $32 billion before it dropped its IPO plans in 2018, people familiar with the matter said at the time. Investors were only willing to pay between $12 billion and $18 billion, those people said.
Volvo has had ties to Geely in the past. Geely took over Volvo Cars in the wake of the financial crisis in order to get the brand back on its feet. And last year, Geely and Volvo announced a partnership to develop a traditional combustion engine. An actual consolidation would be a logical next step, serving as a way to keep both brands more competitive.
While the rumor of the consolidation is still just that—a rumor—it’s very likely that we’ll see the Geely-Volvo engine project operational by the end of 2020.
While it can occasionally be a good thing when the top brass take off, it doesn’t look like it’s going to be particularly promising for the Ford Motor Company, Bloomberg reports. Jim Hinrichs has been the automotive president at Ford for nearly two decades, but as we noted last week, he’s stepping back from his role on March 1. And here’s what’s going on in the aftermath:
With Hinrichs out of the picture, Ford is elevating Jim Farley, the company’s only other president, to become the first chief operating officer since the automaker planned for Mulally’s succession seven years ago. The announcement that the board will revive the role of COO came days after Hackett reported dismal earnings results, dogged by the disastrous rollout of the redesigned Explorer SUV, and forecast more disappointing numbers for the upcoming year.
“This signals to everyone that Farley is Hackett’s successor, unless they plan to go outside the company,” said David Whiston, an analyst with Morningstar in Chicago. “Perhaps it could be nine months from now, or it could be 18 months from now, but they will make an announcement that Hackett is retiring and Farley takes over as CEO.”
The big thing is, no one was expecting Hinrichs to retire—especially considering the fact that Hinrichs was just promoted a few months ago.
But... can you blame him? Things at Ford have been a hot mess lately, with lost profits, recalls, and botched car launches. It would be like being placed in charge of a toddler right before they start throwing a fit. It reflects poorly on you, and it also sucks a big one.
This could be the chance Ford needs to dramatically revamp its public persona and financial earnings—that is, if they play their cars right.
As the coronavirus continues spiking fear into the hearts of just about everyone who reads about it, industries in China and Japan are suffering. It is, after all, hard to go about your business as usual when things are definitely not... the usual. Here’s a little bit about why China is going to see a hard economic hit from Reuters:
Authorities have cordoned off cities, suspended transport links and shuttered facilities where crowds gather, hammering economic growth which one senior economist said may slow to 5% or less in the first quarter.
Obviously, that’s not a great thing for industries that depend on people to be out and about. And a lot of those suffering industries involve the transportation sector. From the article:
More than 300 Chinese firms including Meituan Dianping (3690.HK), China’s largest food delivery company, and smartphone maker Xiaomi Corp (1810.HK) are seeking bank loans totaling at least 57.4 billion yuan ($8.2 billion) to soften the impact of the coronavirus, two banking sources said.
The firms, including China’s dominant ride hailing service provider, Didi Chuxing Technology Co, Megvii Technology Inc and Qihoo 360 Technology Co, were either involved in the control of the epidemic or had been hardest hit, the sources told Reuters on Monday.
Meituan Dianping is seeking 4 billion yuan ($572.99 million), partly to help finance free food and delivery to medical staff in Wuhan, the epicenter of the outbreak in central Hubei province.
China isn’t the only country afflicted, though. In Japan, Nissan is planning to halt production, Financial Times reports. This comes as a result of shortages in the parts you actually need to put a car together. Links in the global supply chain have suffered. Here’s more:
It will be the first time for car production in Japan to be halted due to the widening epidemic, which has killed more than 900 people in China.
Nissan’s move came after Hyundai last week said it would shut all its car factories in South Korea after running out of components from China. Fiat Chrysler has also warned that one of its European plants could be forced to halt production in a matter of weeks for similar reasons.
Basically, the usual supply of parts isn’t making its way out of China, meaning that other countries just can’t go about business as usual.
By the mid-1960s, U.S. automakers were still largely unregulated. Nader’s book, which was published in November 1965, accused car companies of designing vehicles with an emphasis on style and power at the expense of consumer safety. One chapter of “Unsafe at Any Speed” focused on handling problems with the Chevrolet Corvair, a car produced by auto giant General Motors (GM). Shortly after Nader’s congressional testimony, the news media reported that Nader had been followed by detectives. It was later determined that starting in early February 1966, GM sent investigators to spy on Nader and look into his personal life in an effort to discredit him. Nader sued GM for harassment and invasion of privacy and won a settlement. The publicity surrounding GM’s actions helped make “Unsafe at Any Speed” a best-seller and turn Ralph Nader a household name.
We’ve had some pretty decent films come out recently about the auto industry, but there’s a vast world of untapped potential out there that filmmakers could draw from. I can’t recall anything quite as big as the Ghosn scandal off the top of my head, but I know some of you folks out there have a broader depth of historical knowledge than I do. What do we want to see next?