The Big Automaker Coronavirus Losses Are Here

Illustration for article titled The Big Automaker Coronavirus Losses Are Here
Photo: Getty Images (Getty Images)
The Morning ShiftAll your daily car news in one convenient place. Isn't your time more important?

Volkswagen posted a big loss, as did Renault. Also someone has a dumb idea about GM’s name. That and more in The Morning Shift for July 30, 2020.

Advertisement

1st Gear: The Volkswagen Group Posts A $2.8 Billion Loss For The Second Quarter

That is bad but VW also said it saw some hopeful signs for the second half of 2020. VW is also in the midst of rolling out its most important new car in decades, while some of its other brands did sort of fine under the circumstances. Per Bloomberg, the company also said that it expected 2020 to be profitable as a whole.

The Porsche brand proved relatively resilient in the first half, recording an operating profit thanks to deliveries that declined just 15 percent.

Audi swung to an operating loss after sales plummeted. The premium-car division embarked on a deep restructuring last year to revive squeezed margins at what used to be the group’s biggest profit contributor. New chief Markus Duesmann this month pledged to seize the virus-related slump to make the carmaker more nimble.

While Volkswagen aims to more than double its market capitalization to 200 billion euros ($235 billion), it’s currently worth less than 70 billion euros after its shares fell by about a quarter since the beginning of the year.

The company is determined to lift its value by reducing complexity and consistently meeting financial targets, Witter told reporters during a call.

Advertisement

As a reminder, the Volkswagen Group includes Audi, Bentley, Bugatti, Porsche, Ducati, SEAT, Skoda, and also Volkswagen itself.

2nd Gear: Renault Also Reports A Massive Loss

That would be $8.6 billion gone in the first half, according to Bloomberg. That is in large part due to Nissan absolutely tanking for a while now but especially so so far this year, as Renault owns 43 percent of Nissan. And the pandemic, of course.

“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.

The loss is a record for Renault, but since France itself is a shareholder I doubt Renault is going anywhere anytime soon.

3rd Gear: Sales Still Down In Japan

They were down 21 percent in June, according to Reuters, compared to June of last year.

The country’s seven major automakers, including Toyota Motor Corp (7203.T) and Nissan Motor Co Ltd (7201.T), sold a combined 1.88 million vehicles last month, down from 2.39 million units a year earlier, according to Reuters calculations based on sales data released by the companies.

The decline in monthly sales has slowed ever since a 50% drop posted in April, and compared with a 38% fall in May.

Global production at these automakers last month fell 26.1% to 1.65 million units on-year, while there was a 62% slump reported in May.

Advertisement

Japan has been smarter about the pandemic than the US, which is a low bar, but the fact that car sales are still down shows that even in the best of scenarios the economic recovery will be long and slow.

4th Gear: Panasonic Says Its Batteries Will Be Better

Panasonic supplies Tesla, which is in competition with every other automaker for the future of the business. Panasonic exclusively told Reuters that the energy density of its batteries will soon be 20 percent better, in addition to making a cobalt-free battery, all in five years’ time or sooner.

This is the first time Panasonic, a leading cell provider for the world’s top electric vehicle (EV) maker Tesla, has outlined these targets, putting down a marker in a highly competitive sector to stay ahead of the game.

Panasonic introduced the “2170” lithium-ion cells, with the nickel-cobalt-aluminium (NCA) cathode chemistry, for Tesla’s Model 3 in 2017. Researchers say it already has the highest energy density at above 700 watt-hour per litre.

With an even higher density, these cells could help increase how much an EV can run on a single charge, while also paving the way for smaller batteries and roomier car interiors.

Advertisement

This is the kind of incremental edge that could help Tesla remain at the top of the pack of the EV game, but there are also extremely heavy hitters in the EV space, like VW and GM. And I don’t at all mean that snidely! These are multinational corporations throwing billions of dollars around, this will be fun to watch.

5th Gear: Should GM Be Called Ultium?

Bloomberg identifies this analyst as “Adam Jones” but I’m pretty sure it is actually Adam Jonas. In any case, this suggestion is one of the dumber things I’ve encountered in at least a few weeks.

Morgan Stanley analyst Adam Jones posed that challenge to Mary Barra, GM’s chief executive officer, on a conference call Wednesday after the automaker reported better-than-expected second quarter earnings. His suggestion for a new moniker: Ultium, the brand name of GM’s electric-car batteries.

“The General Motors brand has done its job, but I’m wondering if it might be out of touch with some of the really interesting directions you’re taking the business,” he said. “Why not call the company Ultium, the entire company?”

[...]

GM’s CEO replied diplomatically on the call, not ruling out a rebranding at some point but saying the automaker is focused on delivering on its EV strategy. Barra has said converting the massive number of cars on America’s roads to battery power from gasoline engines will take decades.

Advertisement

I didn’t even know that I had takes within me about GM’s name, but I guess I do, in that you could argue that General Motors is the best name going among automakers. It tells you what the company is all about right off the bat, all company names should be as simple and straightforward.

Reverse: USS Indianapolis

The USS Indianapolis was also, of course, the subject of one of the best monologues in movie history.

Advertisement

Neutral: How Are You?

I got into a moped crash on Sunday and my phone got busted in the process; the alternator on my Fit also died earlier that day, real banner day for me all told. That said! The alternator is now fixed, I have an old iPhone up and running, I can again move my limbs without crippling pain. You hurt yourself to remind yourself you’re still alive, or something.

News Editor at Jalopnik. 2008 Honda Fit Sport.

Share This Story

Get our newsletter

DISCUSSION

room666
Don't know what I got

OK, me first. Do not take Ultium if you are allergic to Ultium. If you have had problems tolerating  Stellantis, consult your health care professional prior to beginning Ultium.