The Morning ShiftAll your daily car news in one convenient place. Isn’t your time more important?
Mazda isn’t great, Henry Ford III is rising, and the cops visited Tesla’s Fremont factory. All that and more in The Morning Shift for May 14, 2020.
1st Gear: Mazda Is In The Thick Of It
We got a preview a couple days ago of how bad it might be for Mazda, and today we got the actual numbers: Operating profits for the first three months of 2020 fell 55 percent compared to the same period a year ago, which translated into a net loss of $188 million. Sales were down 20 percent worldwide. Like almost every other automaker, Mazda declined to predict its future results, because like everyone else it has no idea what will happen next.
From Automotive News:
“Operations at our dealerships are starting again, and we feel sales are on a recovery trend in the U.S.,” Senior Managing Executive Officer Akira Koga said while announcing the results. “But given a possible second wave of infection, there is uncertainty in other countries. So, at the moment, we can’t say when sales demand will recover globally or on a country basis.”
The pandemic slowdown chopped about 10 billion yen ($92.8 million) off Mazda’s quarterly operating profit and suppressed sales volume to the tune of 90,000 vehicles worldwide.
Widespread U.S. lockdowns also torpedoed robust sales momentum for Mazda. The brand’s U.S. sales were up 19 percent through February on growing demand for its crossovers. But Mazda chalked a 4.5 percent decline in the quarter, in an overall market down 13 percent.
Also like more than a few automakers, Mazda has a glut of new cars sitting at dealerships that it needs to sell before ramping up production back to what it was before the pandemic. But Mazda says it won’t get desperate. We’ll see!
Said Koga: “We will prioritize selling cars from the piled-up inventory and try to regain cash without getting caught up in incentive competition in the market.”
2nd Gear: Meet Henry Ford III
The 39-year-old is being groomed to get some control of the company is great-great grandfather founded, along with a cousin, Alexandra Ford English, who was recently installed on the board of Rivian, which Ford has invested in. Bloomberg profiled them today.
Henry Ford III and Ford English are likely years away, if ever, from assuming the uppermost leadership roles. Jim Farley, promoted March 1 to chief operating officer, is the clear heir apparent to current CEO Jim Hackett. But each is now moving through a variety of jobs at the company. Henry, known as “Sonny” among friends and family, was director of corporate strategy before taking the investor relations job. He is the son of Edsel Ford II, a board member and now a company consultant.
Ford English, the daughter of Bill Ford, assumed a corporate strategy position similar to the one previously held by her cousin, while also being named to the board of Rivian Automotive, the electric-truck maker in which Ford has taken a significant ownership stake.
Each declined an interview request through a Ford spokeswoman.
Their seasoning is similar to what their fathers received while rising in the ranks in the 1980s and ’90s. Bill and Edsel Ford landed on the company’s board of directors in 1988 while still in their 30s and agitated successfully for more prominent roles as directors. Edsel eventually rose to president of Ford’s highly profitable credit unit before retiring in 1998, and Bill became company chairman in January 1999 and served as CEO from 2001 to 2006.
Ford sounds about as uncool as you would expect for someone born into wealth.
Unlike some children of famous people, he has no qualms about using his name in business, recalled Los Angeles Ford dealer Beau Boeckmann. Ford III worked at his store selling cars during the summer of 2009 while getting an MBA from the Massachusetts Institute of Technology.
“When he walked through the door, he said I want to be called Henry Ford and have it on my nametag,” Boeckmann said. “Customers would say, ‘Wait a minute, your name’s Henry Ford, are you any relation?’ And he’d laugh and say, ‘Yeah, I’m Henry Ford III.’”
His cousin, meanwhile, seems a bit more grounded.
Her first job at Ford, in 2017 at the age of 29, was in a department helping to find new mobility solutions for crowded cities, and then she moved on to Ford’s self-driving vehicle unit.
“I was originally hesitant to join Ford because I don’t have a technical background and it’s a company built upon engineering,” Ford English said in a 2018 company-sponsored video.
3rd Gear: The Police And Tesla
Tesla has been battling it out with Alameda County health officials over the reopening of its plant in Fremont, California. Which has all been an absurd sideshow, now involving the cops.
From Bloomberg:
A lieutenant with the Fremont, Calif., police department went to the factory late in the afternoon to view employee screening and physical distancing measures, as well as to confirm universal use of face coverings. Findings from the visit — which Tesla was notified of in advance — will be presented to the public health officer for Alameda County, which will determine compliance, according to a police spokeswoman.
The police visit followed a confusing series of events that has typified the U.S. debate over how soon to reopen the economy. Alameda County issued a statement late Tuesday saying it had agreed to let Tesla augment “minimum basic operations” at the factory more than a full day after Musk said the company was restarting production and was doing so against county rules.
President Donald Trump and Treasury Secretary Steve Mnuchin voiced support for the carmaker.
The county said Wednesday that Tesla representatives confirmed the company was not fully operating.
You know you’re on the right side of things when Trump and Mnuchin come to your defense.
4th Gear: Fiat Chrysler And Peugeot Nix Their Dividends
The two companies are in the midst of a merger, and the axing of the dividends is both planned and completely unsurprising given the pandemic. It isn’t expected to affect things much.
From Reuters:
A 1.1 billion euro ($1.19 billion) ordinary dividend for both FCA and PSA was announced in December as part of the binding tie-up agreement between the two automakers.
A source close to PSA said that the withdrawal of both ordinary dividends was a safety measure to protect cash reserves as much as possible and did not change the terms of the deal as both companies agreed to the same.
[…]
FCA and PSA said on Wednesday that preparations for their planned 50-50 merger were “advancing well”, including with respect to antitrust and other regulatory filings.
5th Gear: BMW Has Chosen A Different Path
BMW will be giving its dividend, despite getting subsidies from the German government and despite the possibility of having zero profits in 2020. No one really seems to know why and people are mad!
From the Financial Times:
BMW will face the ire of activists on Thursday as it pushes through with plans to pay more than €1.6bn in dividends despite requesting subsidies from the German government and relying on state-sponsored furlough schemes.
[…]
BMW, which warned last week that its automotive business could make zero profit in 2020, had roughly 30,000 employees on the government scheme as of April and is the first of the main carmakers to hold its annual meeting since the pandemic.
The Association of Ethical Shareholders, which has filed a motion calling for BMW’s dividend to be scrapped, said it would “be negligent to distribute profits in view of the enormous drop in sales and the looming deep recession”.
Jens Hilgenberg, a board member at the organisation, accused the car companies of “privatising profits and socialising risks”, while calling on BMW’s main stakeholders, the billionaire Quandt and Klatten families, to “take a stand”.
BMW says the dividends are for past results, not its current standing. And I truly, sincerely applaud the FT for including this quote, which invites you to feel bad for, of all people, the shareholders
Jürgen Pieper, a veteran auto analyst at Metzler, also came to BMW’s defence, arguing that shareholders “have already paid a high price for their risk”.
Reverse: Skylab
Neutral: How Are You?
Dancing alone late at night is my salve.
