Mexico Appears to Delay Industry Restart to June 1 Amid Confusion
Mexico on Thursday pushed back by two weeks the reopening of automotive plants and the mining sector after the coronavirus lockdown, creating confusion among companies about how soon they can reconnect supply chains tied to U.S. manufacturing, reports Reuters. The government on Wednesday had indicated the auto sector would resume operations on Monday and published advice to that effect in its official gazette. It later withdrew the page from the gazette and on Thursday published fresh instructions in the gazette indicating the industry would not reopen until June 1. “This would be a real crisis for suppliers,” said Ann Wilson, senior vice president of government affairs at the Motor & Equipment Manufacturers Association, a major U.S. auto parts industry group, referring to the possibility of not being allowed to resume production next week in Mexico. Despite the intensifying challenge posed by the pandemic in Mexico, the United States and auto companies have been pressing its government to reopen factories quickly because automakers will struggle to operate without parts from south of the border. Read more here.
U.S. New Car Sales Continue Rebounding – But the Industry Isn't Out of the Woods
Two months after much of the United States began entering lockdown there are clear signs of recovery by the U.S. auto industry – though the American market still could end 2020 down nearly 25% from last year’s levels, reports The Detroit Bureau. Automakers hoping for a rebound have been flooding the market with hefty incentives, such as 84-month, no-interest loans. But the risk is that these profit-eating givebacks could become “the new normal,” warned a senior analyst with J.D. Power. After hitting bottom at the end of March, the new car market has now posted five weeks in a row of improving sales, said Power analyst Tyson Jominy, in the latest in a series of weekly briefings on the impact of the coronavirus pandemic. For the week ending May 10, sales were off 26%, said Jominy. By comparison, the market was off by nearly half for the full month of April. Read more here.
VW, Ford Forge Ahead with Technology Sharing to Save Costs
Volkswagen Group and Ford Motor Co. are pushing ahead with plans to team up on electric and self-driving vehicles even as the coronavirus derails other projects. According to Automotive News, the deal is expected to close by the end of next month, with both sides recognizing a need to share the large investments needed to develop battery-powered and autonomous cars, said the people, who asked not to be identified as the negotiations are private. The talks with Ford are progressing well, a VW spokesman said by phone, without giving further details. Alan Hall, a representative of Ford's autonomous-car partner Argo AI LLC, said the plan is on track to close in the second quarter. Ford said separately it expects the same. With the global pandemic bringing the automotive industry to its knees, both companies are keener than ever to move beyond an initial agreement to join forces on light commercial vehicles and midsize pickups. Read more here.
Nissan's Struggling American Operation Loses Locally Based Chief
Nissan Motor Co. is tapping a senior executive based in Japan to help revitalize its ailing business in North America as part of a broader reshuffling of its regional headquarters staff, reports The Detroit News. The Japanese automaker said Thursday that Christian Vandenhende, Nissan’s vice-chief performance officer and chief quality officer, will add North American operations to his portfolio starting June 15. The Yokohama-based executive will start working in the region for two weeks a month, the company said in a statement. The move coincides with the resignation of Jose Luis Valls, who will leave the company after having served for a little more than a year as the top executive in North America from Nissan’s regional headquarters in Nashville, Tennessee. Valls is stepping down as chairman and president next month for family and personal reasons, the company said. The changes come as the carmaker mulls a widespread restructuring of its business globally and as sales in the U.S. remain mired in a slump that pre-dates the coronavirus, which has exacerbated its woes. Read more here.
Ford Tries to Soothe Weary Shareholders
Ford Motor Co. executives tried to reassure investors Thursday the auto maker was on track with a plan to lift its beaten-down stock price, as a halting restructuring effort that began nearly two years ago has been complicated by the Covid-19 pandemic. The Wall Street Journal reports that executives told investors during a webcast of its annual meeting that 2019’s results fell short of goals, in part because of unexpectedly high warranty costs and a troubled rollout of a redesigned Explorer sport-utility vehicle. They said the company is belt-tightening while preserving capital for key programs, including a revamped F-150 pickup truck and several new electric models in the works. “We feel very good about our plan,” said Ford Executive Chairman Bill Ford Jr. “Look, management’s compensation is heavily tied to our stock, so it’s in everyone’s interest to get our stock price back up.” Read more here.
Kerrigan Advisors Offers Restructuring Services to Dealers
Kerrigan Advisors has added confidential financial restructuring and turnaround services for auto dealers to its consulting practice. As a leading thought partner and sell-side advisor to auto dealers, Kerrigan Advisors supports clients with their major strategic decisions through the full ownership lifecycle of auto retail, from growth through exit. Leveraging its team’s vast experience advising dealers through the Great Recession, the firm’s consulting practice is well-positioned to assist dealers with the restructuring process, including negotiations with lenders, creditors and vendors, as well as operational performance to achieve required efficiencies for increased profitability. Learn more about Kerrigan Advisors’ Restructuring Services here.
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