Nissan is (still) in a world of hurt, McLaren is (still) as well, ditto for Nio. Everything’s fine, why do you ask. All that and more in The Morning Shift for May 28, 2020.
The company reported a $6.5 billion loss for its fiscal year ending in March, according to The Wall Street Journal. The company is in the midst of undoing pretty much everything former chairman Carlos Ghosn spearheaded, which means no more going big on volume and more of “how about we just make the right amount of good cars people actually want to buy.” The WSJ explains:
Nissan Chief Executive Makoto Uchida said the company had gone astray by seeking “excessive sales expansion.” He said its new strategy is “maintaining financial discipline and focusing on net revenue per unit to achieve profitability.”
The company said it would reduce annual production capacity by 20% to about 5.4 million units a year and close a factory in Barcelona, Spain, eliminating 3,000 jobs. It said it would aim for cost savings of ¥300 billion a year, confirming an earlier Wall Street Journal report.
The auto maker said it had ample cash on hand to weather a difficult business environment. It said it raised ¥712.6 billion in April and May to respond to the coronavirus pandemic and had unused credit lines totaling about ¥1.3 trillion.
Under the plan, called Nissan Next, Japan’s No. 2 automaker wants to cut 300 billion yen ($2.78 billion) in fixed costs and reduce global production capacity from 7.2 million to 5.4 million vehicles. Nissan will close plants in Indonesia and Spain, and a line making vans at its Canton, Miss., plant.
The reconfiguration will boost factory utilization to 80 percent, from around 70 percent today.
As part of the downsizing, Nissan will also trim the number of nameplates 20 percent to shrink the global lineup to under 55 models from 69. It will focus on a smaller number of more profitable core models and roll them out more quickly to bring the average portfolio age below 4 years.
The company plans to achieve the bulk of the targets in the fiscal year ending March 31, 2024. It said the measures should deliver a 9.1 percent global sales increase to 5.38 million vehicles by then.
The company said this week it would lay off 1,200 workers and today, like Nissan, it reported a big loss.
Formula One team owners McLaren saw group revenues reverse from 284 million pounds ($348.13 million) to 109 million in the first quarter of 2020 due to the COVID-19 pandemic, results on Thursday showed.
The sportscar maker also reported a plunge in car sales to 307 units over the three months, compared to 953 in the same period last year, with dealerships closed and factory production halted.
It said second quarter figures were expected to be in line with Q1 but saw a stronger performance in the second half and also detected the first signs of recovery during May, particularly from China due to relaxed restrictions.
Judging by how many boutique automakers come and go, it’s extremely difficult to make money building and selling supercars, even in the best of times. But McLaren should be able to weather this, if economies remain on track to reopen, and the Formula One season goes ahead in July.
The Woking-based company said McLaren Group was “looking at a number of potential financing alternatives, secured and unsecured, of up to 275 million pounds equivalent to strengthen its liquidity position.”
That’s despite, like Nissan and McLaren, coronavirus-related losses. The car company aspires to be Tesla, and has actually been one of the few startups to graduate to making and selling electric cars. You do see them on the road in China, but looking at the company from America where we’ve had press launches and demos but no sales, Nio has kind of been neither here nor there for awhile now. What’s worse is that car sales in China have been slowing even before the pandemic.
But it has managed to hang around, and despite reporting a steep revenue hit on Thursday, said that it expected to boost deliveries in the second quarter.
Nio delivered 3,838 vehicles in the first quarter ended March 31, down from 3,989 vehicles. Sales from vehicles fell 18.2% to 1.26 billion yuan, the company said.
However, the company, which is seen as a rival to Tesla Inc, added that growth in orders since late April has rebounded to pre-COVID levels.
Nio said it expects to deliver 9,500 to 10,000 vehicles in the second quarter.
The Federal Trade Commission accused the dealer of targeting minorities for various scammy markups in what sounds like a scene from Fargo, except with discrimination added in for the hell of it.
From Automotive News:
The FTC, in a complaint filed in U.S. District Court in New York on May 21, accused Bronx Honda and its general manager, Carlo Fittanto, of deceptive advertising, inflating vehicle prices with fraudulent expenses, charging above the minimum $75 state limit for documentation fees, and double-charging consumers taxes on vehicle purchases. With these and other practices, the FTC alleged the defendants violated the FTC Act, the Truth in Lending Act and the Equal Credit Opportunity Act, the agency said in a statement Wednesday.
Despite the fact that American Honda prohibits dealerships from charging a separate fee for the seven-year, 100,000-mile warranty included with CPO vehicles, Bronx Honda charged customers “certification fees” of up to $1,995 for the coverage. Additionally, the FTC accused Bronx Honda of passing on to CPO customers the certification expenses, such as reconditioning fees, of about $3,000. Bronx Honda also charged customers as much as $695 in document fees when selling vehicles, the complaint said.
Among thousands of consumers who received indirect financing contracts through Bronx Honda, the dealership charged the average African-American borrower approximately 19 basis percentage points, or $163, more in interest, and the average Hispanic borrower approximately 24 basis percentage points, or $211, more than white counterparts, the FTC alleges.
“The defendants told employees that these groups should be targeted due to their limited education, and not to attempt the same practices with non-Hispanic white consumers,” the FTC said in the statement.
The $1.5 million will go to consumers, according to the FTC.
In addition to the $1.5 million payment that will be used to provide redress to consumers, the settlements also prohibit Bronx Honda and Fittanto from misrepresenting the cost or terms to buy, lease, or finance a car, or whether a fee or charge is optional. They will also be required to establish a fair lending program that will, among other components, cap the amount of additional interest markup they can charge consumers.
That would be at its Chicago stamping plant, which the Detroit Free Press said Wednesday was temporarily shut down for cleaning after a worker fell ill with the virus. The shutdown is its fourth since manufacturing restarted.
From the Freep:
“We temporarily paused production on one line at Chicago Stamping Plant to complete enhanced cleaning and deployed employees to another part of the plant to work. Production on the affected line resumes later today. We are notifying people known to have been in close contact with the infected individual and asking them to self-quarantine for 14 days,” Kelli Felker, Ford global manufacturing and labor communications manager, said in a statement.
“The safety of our workforce is our top priority. Working closely with the UAW and external experts in infectious disease and epidemiology, we have developed safety standards to protect our workforce,” she said. “In this instance, our protocol calls for us to do enhanced cleaning and disinfect the employees’ work area, equipment, team area and the path that the employee took while at the plant today.”
Unscheduled plant shutdowns, or disruptions of any kind, can be a financial burden. Ford declined to comment on cost on Wednesday.
Ford has had a choppier restart than others, though you have to think after a while this will just become the new normal. Start, stop, restart, repeat.
It dawned on me yesterday that my next car will be some kind of roadster situation, but NOT a Miata. Nothing against Miatas, I’ve just been looking at a lot of German cars lately for some reason, specifically the SL, more specifically the R129 SL. But I’m sure this is a terrible idea for reasons I will soon learn.