Italy Close to Approving $7.1B Fiat Chrysler Loan, Report Says
Italy is close to approving a 6.3 billion-euro ($7.1 billion) credit facility for Fiat Chrysler Automobiles, setting the stage for Europe's biggest government-backed financing to an automaker since the start of the coronavirus pandemic, according to people familiar with the matter. Automotive News reports that the guarantee still needs a signoff from Finance Minister Roberto Gualtieri after accounting offices at his ministry approved the terms, the people said. It will then need to be green-lighted by Italy's state auditor. The financing will be used exclusively for the automaker's Italian activities, FCA has said. The company will use the funds for workers' salaries, to pay suppliers, and for planned investments at domestic facilities. Italy's automotive supply chain includes 200,000 small and medium-sized companies and the domestic industry generates more than 100 billion euros in annual revenue. Read more here.
European Carmakers' Latest Pandemic Problem: Glut of Unsold Vehicles
The Wall Street Journal reports that after reopening factories and sorting out supply chains, Europe’s carmakers are facing a new problem related to the coronavirus pandemic: a glut of unsold cars. New-car sales in the European Union, in its affiliate free-trade association partners and in the U.K. fell 57% in May from a year earlier to 623,812 vehicles, according to data published Wednesday by the European Automobile Manufacturers’ Association. Each of the 27 EU member states reported double-digit-percentage declines in new-car sales, and the U.K. was down 89% from a year earlier. The data marked a small improvement following steeper drops in March and April, but new-car sales across the region remain far below last year’s. Production is still well below precrisis levels, but with such comatose demand even this reduced output is creating a surplus of new cars, producing a bottleneck that is slowing down the industry’s recovery and threatening jobs and profits. Read more here.
Sonic Updates Q2 Outlook Amid Improving Used-Vehicle Sales
Used-vehicle sales for Sonic Automotive Inc. so far in June have been higher than a year ago for the retailer's franchised and EchoPark locations. According to Automotive News, the rise in used-vehicle sales is part of a steady increase in overall operations since the onset of the coronavirus pandemic in March, the nation's sixth-largest new-vehicle retailer said Tuesday in providing an updated outlook for the second quarter and the rest of the year. It follows a May update that included better-than-expected sales. Used-vehicle sales volumes were up 7 percent on an annual basis at Sonic's franchised stores on a same-store basis month-to-date in June, compared with an 8 percent decline in May and a 32 percent drop in April. The company expects franchised used-vehicle sales volume to be in line with its original forecast in July, and to be slightly above that forecast for August through December. Read more here.
Nikola Founder: We're Going After Top-Selling Ford F-150 with Our $60K Electric Badger Pickup
CNBC reports that Nikola Corp.’s stock has gotten a lot of attention, and its founder boasts that its Badger pickup will rival Ford’s F-150, the best-selling truck in the U.S., even though you can’t drive one of the electric truck maker’s vehicles off the dealer’s lot yet. Nikola went public through a reverse merger on June 4, and its stock has been a roller coaster ride since. It closed June 4 around $34 per share and then soared to nearly $94 each on June 9. It was trading around $64 per share during Tuesday’s session, down more than 6%. Nikola, which makes battery-electric and hydrogen-electric trucks, will begin taking reservations for the Badger on June 29, founder and executive chairman and founder Trevor Milton said. Reservations will range from $250 to $5,000, and the vehicle will cost about $60,000 to $90,000, Milton said. He acknowledged it will be more expensive than Tesla’s Cybertruck, which Tesla’s website says starts at $39,900. Read more here.
GM Aiming to Be Back to Full Production by Month's End
It has been a “tragic year,’ between the coronavirus pandemic, the collapse of the U.S. economy, and the “brutal” murders of black Americans at the hands of police, said General Motors CEO Mary Barra. The Detroit Bureau reports that during an online meeting with members of the Detroit Automotive Press Association, Barra addressed a variety of challenges facing GM and the U.S. “We’re at a critical point for our company, the industry and for our country and frankly for our globe. I think 2020 will go down in history as a tragic year because of the human and economy devastation of the global COVID-19 pandemic,” Barra said during the webinar, adding her concerns about racial injustice brought to the fore by the murder of George Floyd in Minneapolis last month. In terms of manufacturing, GM finally has its North American operations back in gear and has so far been able to manage using aggressive containment methods to prevent the spread of COVID-19, the disease caused by the coronavirus, within those plants. “We feel, with a few exceptions, we will be running the plants at the rate before COVID by the end of the month,” Barra said. Read more here.
Kerrigan Advisors Releases Latest Blue Sky Report®
The auto retail buy/sell market declined 9% in the first quarter of 2020, as reported in the recently released First Quarter 2020 Blue Sky Report® by Kerrigan Advisors. Though transactions were postponed, renegotiated and even terminated as a result of COVID-19, the reports indicates that the resilience of the dealership business model, strong buyer demand and today’s low cost of capital will sustain blue sky values for the forseeable future. With auto sales due for an uptick, Kerrigan Advisors anticipates a buy/sell market rebound in the second half of 2020. The Blue Sky Report® is the leading industry publication analyzing the auto retail buy/sell market and includes current blue sky multiples and trends impacting dealership valuations. Read a preview of The Blue Sky Report® here.
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