Nissan remains in the shitter, the used car market is strong because new cars are too expensive, and Hyundai has partnered with an electric vehicle startup. All that and more in The Morning Shift for Wednesday, February 12, 2020.
Remember Nissan? It’s a manufacturing company that makes cars, trucks, and SUVs, even selling them here in America. It has done so profitably for over a decade, but Reuters says that gravy train is just about over. The company will release its earnings report tomorrow, and sources Reuters spoke to say Nissan might show its first quarterly loss since 2009:
The company is likely to report operating profit of 48.6 billion yen ($442.5 million) for the quarter ending in December, less than half the 103 billion yen profit a year ago, according to SmartEstimate’s survey of three analysts, who revised their forecasts in January.
However, those forecasts were issued before the release of the December vehicle sales figures on Jan. 30, which show third-quarter sales dropped by 11% from the year earlier period, according to Reuters calculations. That is the biggest quarterly slump of its current sales downturn that began two years ago.
That sales decline led one auto equities analyst based in Japan to scrap his forecast and also warn that Nissan could post a loss.
“It will be a question of whether there will be a profit or a loss. For the quarter, a loss is a possibility,” he said, declining to be named as his forecast had not been updated to reflect his latest view.
Nissan mostly deserves this, not having done anything relatively interesting in a decade, probably since the Nissan Cube or Leaf. This is also a good reminder about how precarious automaking is, how slim the margins can be. But wait!
Nissan’s former chairman Carlos Ghosn is Lebanon these days, after his daring escape from Japan, but his former employer is still a little sore about how everything went down. The lawsuit was filed in Japan, where Nissan is seeking $90 million, a number which Nissan says is how much Ghosn took from the company through misconduct or fraud.
Details are a little sparse but here’s a bit more from The New York Times:
Nissan said that it expected that amount to increase as it seeks to recover the fines paid to the Japanese Financial Services Agency and other penalties linked to Mr. Ghosn’s alleged misconduct.
Mr. Ghosn has denied any wrongdoing. In an emailed statement, a spokesman said, “Nissan’s maneuvers continue,” noting that the lawsuit was made public one day before the automaker was scheduled to release its earnings report.
“Mr. Ghosn’s lawyers will react on the merits of the case once the content of the claim has been brought to their attention,” the statement read.
Good luck ever seeing a penny of that $90 million, Nissan.
That’s because new cars these days are pretty expensive, as manufacturers double down on pricey trucks and SUVs. The market for new cars is even expected to contract in 2020, probably to below 17 million in the U.S., for the first time since 2013.
AutoNation, the country’s biggest car dealer, is loving it.
The biggest auto dealer in the U.S reported record fourth quarter and 2019 earnings, thanks in part to used-car profit that jumped 21% in the last three months of the year on a same-store basis.
Automakers had another year of more than 17 million new-vehicle sales in 2019, though they propped up deliveries by spending on incentives and relying on rental-car companies. Consumers are likely to buy fewer new cars and trucks in 2020, but the used market will keep total volume for dealers roughly flat, said Cheryl Miller, AutoNation’s chief executive officer.
I would say this might be a wake-up call for automakers, but I’m not that self-delusional, since volume doesn’t matter to them so much as profit, and they all will make a ton of profit off of SUVs and trucks as long as people keep buying them.
For consumers, well, it’s always been smarter to buy used rather than new. It’s good to see more people accepting that.
You remember Canoo right? Sure you do. Canoo is the one that—mostly attractively—put a box on a skateboard. It’s only a little more than two years old after it was founded by some ex-Faraday Future folks, but Hyundai has decided that it has seen enough.
Hyundai said yesterday it would partner with the California startup to build EVs, though exact terms, like how much money Hyundai might be pumping into the company, were not disclosed.
Here’s a bit more from The Verge:
Canoo and Hyundai Motor Group, Hyundai and Kia’s parent company, will develop a new electric vehicle platform that’s based on the one that powers Canoo’s own vehicle, which was unveiled last year. This EV platform will power small, “cost-competitive” electric vehicles, as well as “purpose built vehicles,” which would more closely resemble shuttles or even autonomous people-movers.
This is good news for Canoo, and gives them some credibility, though now all that’s left to do for them is the hard part, which is to successfully make, market, and mass-produce a car. I hereby upgrade my Hyperloop rating for Canoo to a single Hyperloop, out of five.
A hearing! Big news, I know. Autonomous vehicles are currently under-regulated at the federal level in terms of safety, in that there just isn’t much of a framework or many guidelines for companies working on autonomous tech. That could change with new legislation but given the current political climate I wouldn’t bet on it.
Anyway, legislators and interest groups met Tuesday in the House of Representatives to have a chat.
Automotive News monitored things:
Jeffrey Tumlin, director of transportation for San Francisco’s Municipal Transportation Agency, also called on Congress to require companies to include event data recorders in AVs to preserve information from sensors, and that every safety incident involving a self-driving vehicle be documented in a national public database.
Others, including Mark Riccobono of the National Federation of the Blind, spoke to the positive impact AVs could have for those with disabilities and limited mobility and urged committee members to avoid discriminatory legislation.
“In other words, eyesight must not be a requirement for a license to operate an autonomous vehicle,” Riccobono said in his written testimony.
What everyone seems to agree on is that Congress must do something, since the uncertainty is likely to delay autonomous development.
Rep. Jan Schakowsky, D-Ill., added that Congress “must be very thorough and move with an abundance of caution” in passing AV legislation.
The job before the subcommittee now is to work on legislation that will reduce fatalities and injuries from accidents and collisions, pointing to short-term safety goals that will create a path to fully automated driving, she said.
Committee members, including Rep. Debbie Dingell, D-Mich., said they are working on bipartisan legislation.
“We must, in 2020, get this over the line,” she said.
Still with us? Pulled out of the United States just to focus on other markets? Or totally donezo?