Retailers Hopeful After Q2 Rebound
Automotive News reports that pent-up demand, expense cuts and Paycheck Protection Program money, plus automaker support and temporary relief from lenders and vendors, helped many dealers turn a profit in the second quarter — some even boasting earnings records. It is a far cry from the financial bloodbath many feared in late March as the coronavirus pandemic stifled consumer demand and led to government stay-at-home orders and closed showrooms. Sonic Automotive Inc. CEO David Smith in April predicted the second quarter would be the worst in the dealership group's history. Instead, the sixth-largest U.S. new-vehicle retailer saw sequentially stronger results over the three months. Higher new-vehicle margins aided by inventory shortages, increased used-vehicle sales and strong finance and insurance performance, along with big cost cuts, helped Sonic post higher net income than a year ago. All six public dealership groups ended up profitable for the quarter, with Lithia Motors Inc. and AutoNation Inc. both posting adjusted earnings records. Read more here.
Toyota Surprises Analysts, Turns Small Q1 Profit
Toyota Motor Corp. surprised analysts by turning a small profit for the quarter, albeit the company’s smallest profit in nearly a decade, overcoming poor sales globally due to the impact of the coronavirus pandemic. The Detroit Bureau reports that the company reported an operating profit of 13.9 billion yen, or $131.73 million, for the most recent quarter — a drop of 98 percent. However, that exceeded analysts’ estimate for a loss of 179 billion yen, or $1.69 billion. The result gives credence to the company’s earlier assertion that it would be profitable in fiscal year 2021 despite the current economic conditions. Thus far, Toyota has fared better than many of its rivals during the pandemic. Home market competitors Nissan and Honda reported Q1 losses. Most of its global adversaries are expecting to post full-year losses. Despite the tough sales environment, the company expects sales to drop just 13% for the year. Toyota reiterated its annual operating profit forecast of 500 billion yen, its weakest in nine years, based on its current sales recovery pace. Read more here.
Mazda, Hyundai Small Gains Are Big Deal as Industry Struggles
It's rare that a 0.6 percent sales gain can feel like a watershed moment, but Hyundai is celebrating its return to positive numbers in July as a launch pad into a hopefully brighter second half, reports Automotive News. And for Mazda, that launch has already happened. July's 3.4 percent increase came on top of an 11 percent rise in June, which put the automaker back in the black after an otherwise crushing second quarter. The two brands are rare bright spots in a U.S. retail market dragged down by deserted showrooms and plunging sales. Both Mazda and Hyundai crashed into the red in March along with the rest of the industry. But since then, they have been two of the industry's better performers. Hyundai was down 18 percent in the January-June period, and Mazda fell 7 percent compared with the first half of 2019. The light-vehicle industry as a whole was off 23 percent in the first half of this year. Most automakers did not report U.S. sales numbers in July and won't do so until the end of the third quarter. Read more here.
Chinese Tesla Rival Xpeng Motors Files for New York IPO
Chinese electric car start-up Xpeng Motors has filed for an initial public offering on the New York Stock Exchange, according to an official filing, reports CNBC. While the company did not disclose how many Class A ordinary shares it would sell, Xpeng Motors said it would sell 429,846,136 class B ordinary shares, according to the Securities and Exchange Commission (SEC) filing published Friday. It also said it plans to raise a placeholder amount of $100 million, a figure that will likely change. The filing comes after CNBC reported that it raised a further $400 million from Alibaba, one of its biggest shareholders, the Qatar Investment Authority (QIA) and Abu Dhabi sovereign wealth fund Mubadala. QIA and Mubadala both invested $100 million each as part of that round. The IPO will give Xpeng another injection of cash as it faces tough competition in China from a number of players including Li Auto, which recently listed in the U.S., WM Motor and Nio. But the company also competes with Tesla, which has looked to boost its presence in China with a Shanghai factory. Read more here.
Peugeot Looking to Make U.S. Return in 2023
Groupe PSA is still planning to bring the Peugeot to brand back to North America by 2023, PSA North America CEO Larry Dominique said during a keynote address to the Center for Automotive Research’s annual Management Briefing Seminars. According to The Detroit Bureau, Dominique said during his virtual address that PSA North America is still wrestling with the shape of its retail network for the Peugeot brand, which last sold vehicles in the U.S. in 1991. The challenge has been exacerbated by the COVID-19 pandemic, which has put pressure on traditional network, Dominique noted. PSA will use franchise dealers, but it also expects to lean heavily on online retailing, he said. The fact is customer satisfaction with the traditional automotive retailing, when measured against other businesses, isn’t stellar. However, a whole range of surveys show that buyers have taken to purchasing a new vehicle on the internet, Dominique noted. Read more here.
This Week: Join Webinars Featuring an Economic Update & How to Handle COVID-19 at Your Dealership
Don’t miss out on AIADA’s back-to-back AutoTalk webinars this week. Together, they’ll help you understand where our industry stands, and what you can do to handle COVID-19 at your own dealership.
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Tuesday, August 11: An Update on COVID-19’s Impact on U.S. Auto Sales
Join Cox Automotive Senior Economist Charlie Chesbrough for a review of our industry’s most recent economic data. -
Thursday, August 13: What If My Employee Tests Positive for COVID-19?
Learn critical steps you can take to protect your employees, steps to take if an employee contracts COVID-19, and how to return employees to work after they recover.
Register for both sessions by clicking here.
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GM Reveals All-Electric Lyriq SUV Critical to Cadillac's Future [Detroit Free Press]
How the Jeep Wrangler, Ford Bronco, and Land Rover Defender Stack Up [Bloomberg]
Stray Dog Keeps Visiting a Hyundai Dealership, They Gave Him a Job and His Own Badge [BoredPanda]
