Commentary

Tesla, Nissan, Ford, Daimler Tell Us How They're Doing

The automobile industry may be in the midst of a revolution due to the four disruptive trends identified by McKinsey -- diverse mobility, autonomous driving, electrification and connectivity -- but its players still still need to justify what and how they’re doing on a quarterly basis. Yesterday and today, four of them did.

After gaining in recent weeks following reports that it had delivered a record-setting 95,200 vehicles in the three months that ended June 30, Palo Alto, California-based Tesla’s shares fell 10% in extended trading after posting a larger-than-expected loss yesterday, CNBC’s Lora Kolodny and Christine Wang report. But it “reaffirmed full-year delivery guidance, saying it still expects to sell 360,000 to 400,000 vehicles this year, mostly Model 3s.”

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“The company blamed a decline in the average sales price of its vehicles during the second quarter on the rollout of its Model 3 Standard Range Plus, and sales of inventory Model S and Model X vehicles that lacked an upgraded powertrain, which gives the cars the ability to drive further on a single charge,” Kolodny and Wang add.

“The challenge for Tesla has been balancing a desire for sales growth with the realities of the auto industry, which can demand billions in cash to operate factories and fund new products. Tesla is racing to build a factory in China, and it plans to start production of a new compact SUV next year, called the Model Y. The company on Wednesday said work is on track for both projects,” Tim Higgins writes for The Wall Street Journal.

Back in Detroit, Ford’s second-quarter profits slid 86% due to its ongoing global restructuring, and its “income will likely continue to take hits through the remainder of 2019, officials said Wednesday, as the automaker moves to cut costs and reform unprofitable pieces of its global business,” Ian Thibodeau writes  for The Detroit News.

“North American consumers' voracious appetite for F-Series trucks and SUVs continues to power earnings at Ford,” Eric D. Lawrence points out for the Detroit Free Press. “Robust sales of larger vehicles have been a mainstay for the Dearborn automaker's bottom line and that story showed little sign of change in the second quarter of 2019, especially as the automaker prepares to launch a raft of new models focused in that arena in coming quarters.”

Mainstay Capital Management CEO David Kudla last week said Ford is  “firing on all cylinders,” signing out its restructuring efforts and partnership with Volkswagen, Lawrence adds.

Meanwhile, “luxury carmaker Daimler said it would intensify cost cuts after legal risks for diesel-related issues and the cost of replacing Takata airbags triggered a 1.56 billion euros ($1.74 billion) loss before interest and taxes in the second quarter, Reuter’s Edward Taylor reports

But broader issues are also taking a toll on its bottom line. 

“Like other leading German auto makers, Daimler is caught between a slowdown in sales and an increase in investment to develop electric and self-driving cars. A tailspin in the luxury segment after years of robust growth has hit its Mercedes brand, while rivals BMW and Audi, a unit of Volkswagen AG, have hit rough patches and recently switched out their top management,” William Boston points out for The Wall Street Journal.

Finally, Tokyo-based Nissan this morning said it is "slashing 12,500 jobs or about 9% of its global workforce to cut costs and achieve a turnaround amid tumbling profits,” the AP’s Yuri Kageyama reports in USA Today.

“Nissan, like other global carmakers, faces severe challenges. A sluggish global economy has hurt sales, and the U.S.-China trade war remains a big risk for manufacturers. New emission standards, driven in part by the climate crisis, have also disrupted the industry,” Jill Disis and Sherisse Pham write for&a mp;a mp;n bsp;CNN Business.

“But Nissan has also been grappling with problems of its own. It has been losing market share in the United States and Europe. In the first quarter, for example, the company sold 351,000 units in the United States, giving it 7.9% of the market. It had 8.1% a year earlier,” they add.

“The Japanese automaker is struggling to fix its brand image and get growth going again following the arrest of former chairman Carlos Ghosn. Ghosn says he is innocent. He is awaiting trial in Japan on various financial misconduct allegations,” the AP’s Kageyama reminds us.

Ghosn, who claims  he is a victim of backstabbing plot by “a few executives,” last week filed  a suit in the Netherlands seeking $16.8 million in damages from Nissan and Mitsubishi.

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