AutoNation Posts Q4 Gains in Most Segments, Except New Vehicles

First Up 02/11/20

AutoNation Posts Q4 Gains in Most Segments, Except New Vehicles 

Auto-retail giant AutoNation Inc. set an all-time record for same-store finance and insurance gross profit per vehicle, while it posted gross profit jumps in all business sectors despite a pull-back in new-vehicle sales. That all helped AutoNation's fourth-quarter net income soar, reports Automotive News. Revenue for the nation's largest new-vehicle retailer grew 2.5 percent to $5.55 billion. AutoNation said Tuesday that net income from continuing operations jumped 70 percent to $158 million. CEO Cheryl Miller told Automotive News that AutoNation benefited from strength across all of its business areas and from the buying public during the quarter. "You had low unemployment. You had three Federal Reserve cuts last year. And it really supported demand," Miller said. "In addition to that we executed well." The quarter included $20 million in gains from the sale of two dealerships and properties and a $19 million non-cash gain in its Vroom investment following a recent valuation of the online used-vehicle retailer. In fall 2018, AutoNation invested $50 million into Vroom for a roughly 7 percent stake in the company. Read more here. 

Automakers Resume or Prepare to Restart Car Production in China Amid Coronavirus Outbreak 

Several automakers on Monday reopened or are preparing to restart factories in China after an extended holiday shutdown due to the coronavirus, which is now responsible for more than 900 deaths in the country. According to CNBC, Ford Motor resumed vehicle production at its plants in Chongqing and Hangzhou, according to Anderson Chan, a company spokesman. It’s unclear when the facilities will fully reopen to their capacity before the shutdown, which started late last month. The Dearborn, Michigan-based automaker operates six assembly plants in the country. Tesla, according to Reuters and local media reports, on Monday reopened its Shanghai gigafactory. Tesla on Jan. 30 said it expected a one to one-and-a-half-week delay in the ramp of its Model 3 sedan as a result of the epidemic. Spokespeople for Tesla did not immediately respond to a request for comment. Read more here. 

Volvo Cars and Owner Geely Consider Merger Deal 

Swedish automaker Volvo Cars and its owner Chinese automaker Geely Holding said Monday they are considering combining their businesses to create a company that “would accelerate financial and technological synergies between the two companies.” The Detroit News reports that a combined company would preserve the distinct identity of each of the brands Volvo, Geely, Lynk & Co and Polestar, Volvo’s electric brand. The proposal comes at a time when carmakers face huge investments to develop electric cars to meet tougher CO2 emissions limits, particularly in China and Europe, as well as technological innovation like driverless vehicles.  In a joint statement, the two companies said that a combined group “would have the scale, knowledge, and resources to be a leader in the ongoing transformation of the automotive industry.” Read more here.

Toyota Motor Credit Sells Year's First U.S. Company Green Bond 

Toyota Motor Corp. borrowed $2.5 billion through its finance company to help support the sale of clean cars, marking the first U.S. corporate green bond deal this year, reports Bloomberg. Toyota Motor Credit Corp. sold the debt in three parts, according to a person with knowledge of the matter. Only the 10-year security will be green, and it will yield 65 basis points above Treasuries, after initially discussing in the high 70s-basis point range. Toyota capped the green portion of the deal at $750 million, the person said. The proceeds of the other securities, a floating rate note due 2021 and five-year fixed rate bond, will be used for general corporate purposes. Toyota has outlined a green bond program that will help finance new loans and lease contracts for eligible Toyota and Lexus vehicles, such as gasoline-electric hybrids like the Prius. Monday’s issuance adds to the $5.3 billion of green bonds that Toyota Motor Credit had issued through the end of 2019. Read more here.

Daimler Profits Slump as Auto Industry Comes Under Pressure 

Daimler AG, maker of Mercedes-Benz cars, saw profit slump in 2019 and turned in a loss for the fourth quarter, underlining the pressures on the auto industry from economic headwinds and the need to invest in electric cars to meet tougher European Union limits on greenhouse gases. According to ABC News, the company also saw deductions to earnings from regulatory troubles regarding the emissions of its diesel cars. Net profit for the full year fell to 2.71 billion euros ($2.94 billion) from 7.58 billion euros. In the fourth quarter of the year the Stuttgart-based company lost 11 million euros, compared with a profit of 1.64 billion euros in the year-earlier quarter. CEO Ola Kallenius said “we cannot be satisfied” with the results but added that the company was on track to cut costs and improve its earnings performance. Read more here.

Webinar TODAY: Tax Reform Reversal or Status Quo? 

Join AutoTalk for an early February program TODAY, Tuesday, February 11th at 2:00 p.m. ET and listen in as experts from Moss Adams help you navigate planning for the uncertainty and how to maximize today's tax environment.

They will also discuss:

  • Areas That Are Highly Susceptible To Reversal In A New Administration 

  • How Can I Hedge Against Future Changes? 

  • What Steps Can I Take Now To Ensure I Am Maximizing The Current Tax Environment?

To register, click here.

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