Toyota, Honda Extend China Shutdowns as Virus Gathers Pace

First Up 02/07/20

Honda Quarterly Profit Declines 2% on Falling Sales, R&D Costs

Honda Motor Co. reported a 2.1 percent decline in operating profit in the latest quarter as falling sales, higher r&d outlays and swinging foreign exchange rates hit earnings. Automotive News reports that operating profit slipped to 166.6 billion yen ($1.53 billion) in fiscal third quarter ended Dec. 31, Honda said Friday in its earnings report. Net income fell 31 percent to 116.4 billion yen ($1.07 billion) in the three-month period, partly because the company was hit by higher income tax expenses in the U.S. Revenue decreased 5.7 percent to 3.75 trillion yen ($34.4 billion), as worldwide sales retreated 11.4 percent to 1.25 million vehicles in the October-December quarter. Despite the downturn in operating profit, Honda raised its full fiscal year profit outlook, citing a return to more favorable foreign exchange rates and better-than-expected sales in Japan. But the company still expects global sales to decline 6.4 percent this fiscal year. Read more here. 

Toyota, Honda Extend China Shutdowns as Virus Gathers Pace 

Toyota Motor Corp. and Honda Motor Co. were among carmakers extending shutdowns at their China plants as the country steps up measures to fight the deadly coronavirus, reports Bloomberg. Toyota, which initially halted its Chinese plants until Feb. 9, said it now plans to resume production as soon as Feb. 17. Honda said it will reopen its factory on Feb. 14 with an eye toward restarting output during the week of Feb. 17. The shutdowns compound the headwinds for automakers in the world’s largest car market, which was already headed for an unprecedented third straight annual decline before the virus started spreading. China’s auto market may shrink 10% or more this year if the outbreak persists through the third quarter, researcher LMC Automotive said. Analysts and investors are working to assess the financial toll of the virus, which has infected more than 31,000 and killed hundreds. Read more here. 

How Audi Went From Pariah to BMW and Mercedes Rival 

From the 1980s to the late 2010s, Audi went from being an also-ran among German luxury car brands to a serious rival to BMW and Mercedes-Benz. CNBC reports that now it is recovering from a few recent stumbles and is trying to transform itself for a new era of electrification. The German luxury carmaker last year began delivering is e-tron fully electric SUV, the first of several battery-powered vehicles the brand is planning to release over the next several months. Audi’s transformation into a brand heavy on electric vehicles is part of its parent Volkswagen’s broader commitment to electrification in the wake of a diesel test cheating scandal that rocked VW to its core. It is also part of a product overhaul the brand has been promising since top brass acknowledged a brief slump in sales. After years of global growth, Audi’s sales fell 3.5% in 2018. In November 2018, the brand’s U.S. sales also broke a more than 100-month streak of year-over-year monthly growth hat had lasted since November 2009. Read more here. 

Fiat Chrysler's Profit Rises as North American Business Booms

Fiat Chrysler Automobiles earned bragging rights among Detroit auto makers as its North American profit margin outpaced that of its rivals for the fourth quarter and all of 2019, reports The Wall Street Journal. The company’s booming North American business offset weakness in other markets to boost Fiat Chrysler’s fourth-quarter earnings at a time when the industry faces a tough year for new-vehicle sales. The Italian-American automaker has consistently booked brisk sales of high-margin Ram trucks and Jeep sport-utility vehicles in North America, making that segment its cash cow ever since Fiat took over bankrupt Chrysler. That multistep takeover concluded in 2014, and now Fiat Chrysler is in the process of merging with Peugeot maker PSA Group with the deal slated to wind up by early 2021. Fiat Chrysler’s North American operating profit margin, a closely watched metric, was 10% in the fourth quarter, off slightly from the third quarter but a big improvement from the first half of the year. The late Sergio Marchionne, who as chief executive engineered Fiat’s takeover of Chrysler, had set 10% as his ongoing target for North America. Read more here. 

Volkswagen Updates Atlas SUV a Year Ahead of Usual 

Volkswagen shortened its traditional product cycle to refresh the midsized sport-utility vehicle instrumental in sparking the VW’s sales revival in the United States, reports The Detroit Bureau. The 2021 Volkswagen Atlas, which is due in showrooms this spring, will have a completely new front and rear as well as updates to the interior and additional powertrain options, including all-wheel drive. The refreshed Atlas arrives three years after it first went on sale in the U.S. and is the first fruit of the strategy of introducing a facelift after three years, compared to the previous four-year interval traditionally used by Volkswagen. The changes to the 2021 Atlas include new bumpers, grille and new head and taillights. In addition, the 2021 Atlas is nearly three inches longer than the original version and 5.7 inches longer than the two-row Atlas Cross Sport, which is also scheduled to reach dealers next spring. Read more here. 

Beltway Talk Podcast: January Auto Sales Review with Cox's Charlie Chesbrough

Cox Automotive’s Charlie Chesbrough joins AIADA’s Beltway Talk podcast for his monthly round up of auto industry sales figures. In this episode, find out why more and more manufacturers are moving to a quarterly reporting pattern, why Toyota should be feeling good, and more. Click here to listen and subscribe. 

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