Toyota, Honda, Hyundai, Kia Rebound Sharply From Pandemic Low

First Up 05/04/21

Toyota, Honda, Hyundai, Kia Rebound Sharply From Pandemic Low

Toyota Motor Corp., American Honda, Hyundai, Subaru, Kia, and Mazda, behind light trucks and robust retail demand, posted sharply higher U.S. light-vehicle sales last month compared with April 2020, when the market bottomed out early in the pandemic, with showrooms and factory floors mostly shuttered. And, reports Automotive News, in the latest sign the market is running hot, while mostly avoiding the impact of falling inventories from tight chip supplies, Toyota said the preliminary seasonally adjusted, annualized rate of sales in April was 17.8 million, in the middle of forecasts. April volume jumped 183 percent to 239,311 at Toyota Motor, with the Toyota brand up 183 percent to 212,283 and Lexus advancing 177 percent to 27,028 – April records for all three. April deliveries rebounded 171 percent at American Honda, the company said Monday, with volume jumping 165 percent at Honda and 226 percent at Acura. Read more here (Source: Automotive News). 

Rental Companies Buy Up Used Cars as Chip Crisis Gets Worse

The semiconductor shortage has slashed vehicle production so much that rental-car companies can’t get the new cars they need, so they have resorted to buying used vehicles at auction, reports Bloomberg. This is uncharted territory for the likes of Hertz Global Holdings Inc. and Enterprise Holdings Inc., which have made their profits by purchasing new vehicles cheaply in bulk, renting them out for as much as a year and selling them at auction. In the past, they have bought some used cars to shore up an occasional unforeseen burst in demand, but rarely for the mainstays of their fleets. The demand is sending used-car costs soaring. Despite the acquisition expenses, the car crunch is a boon for rental companies, which stand to benefit from improved profitability as they rent out every car they own at much higher rates than they could charge before the Covid pandemic. Read more here (Source: Bloomberg). 

Pandemic Performance Fuels Investor Interest in Dealerships

Erin Kerrigan, Managing Director of Kerrigan Advisors, the leading sell-side advisor to auto dealers in the U.S. joins BeltwayTalk to discuss the disruption year of 2020, its impact on the dealership buy-sell market, and the “once in a lifetime” valuations she sees for dealers today. Armed with her latest Blue Sky Report, Erin offers valuable insight for dealers wanting to learn more about acquisition trends and how their business is valued today. Listen and subscribe to future Beltway Talk podcasts here. 

Automakers Retreat From 50 Years of 'Just in Time' Manufacturing

The hyperefficient auto supply chain symbolized by the words “just in time” is undergoing its biggest transformation in more than half a century, accelerated by the troubles car makers have suffered during the pandemic, reports The Wall Street Journal. After sudden swings in demand, freak weather and a series of accidents, they are reassessing their basic assumption that they could always get the parts they needed when they needed them. “The just-in-time model is designed for supply-chain efficiencies and economies of scale,” said Ashwani Gupta, Nissan Motor Co.’s chief operating officer. “The repercussions of an unprecedented crisis like Covid highlight the fragility of our supply-chain model.” With vaccinations beginning to beat back Covid-19, customers bought around 200,000 F-150s in the first quarter of this year, its best retail start in 13 years. Yet now supply is short. Truck factories were shut down or had limited production for all of April and the slowdown will likely continue through at least mid-May. The hit to pretax profit is as much as $2.5 billion. Read more here (Source: The Wall Street Journal). 

How Small and Scrappy Mazda Competes with Big Automakers

Mazda is a small independent manufacturer that sells a fraction of the cars churned out by the world’s largest automakers. And being a small automaker in 2021 is not easy. But, reports CNBC, the company has managed to carve out a reputation for building cars that are fun to drive and offer good value for the money, according to industry experts. It’s MX-5 Miata roadster has attained a kind of iconic status, and it’s one of the best-selling two-seat roadsters of all time. Mazda has also made other cars beloved by enthusiasts, such as the RX-7. Mazda has also been something of an innovator in engines. For 50 years, it stocked its vehicles with rotary engines — a highly unusual engine design. In recent years, it has made strides toward improving the efficiency of gasoline engines with its Skyactiv technology. Read more here (Source: CNBC). 

Ford, BMW Lead $130M Investing Round in Solid-State Battery Startup

Ford Motor Co and BMW AG are leading a $130 million funding round in a solid-state battery startup, Solid Power, as carmakers push to lower the cost of electric vehicles by investing in the development of affordable but powerful rechargeable batteries, the companies said on Monday. According to Reuters, the Series B investment round, which includes venture capital firm Volta Energy Technologies, allows Solid Power to expand in-house manufacturing capabilities and positions the battery maker to eventually supply future EVs, possibly by the end of the decade according to BMW battery cell technology chief Peter Lamp. Solid Power declined to say at what level the funding round values the company. "The partnerships and the capital that comes along with it are really going to put us on a good footing to execute on our road map, which simply speaking is qualifying this technology for vehicle use and getting them into vehicles in the not-too-distant future," Solid Power Chief Executive and co-founder Doug Campbell said in an interview. Read more here (Source: Reuters).  

Dealers Receive Over $50 Million for Participation Programs for 2020

CNA National returned a record amount to automobile dealers across the U.S. through its various participation programs for 2020—more than $50 million, bringing its inception-to-date total to $610 million. “As the F&I segment becomes increasingly competitive, we continue to bring greater value to dealers through personalized attention and dedication to helping them thrive as our industry evolves,” said Joe Becker, CNAN president and CEO. “The investment returns from our participation programs last year are evidence of this commitment. Given our in-house expertise and deep line-up of external resources, dealers can be confident of our ability to consistently help them generate more income.” CNA National works closely with dealers to understand their needs and guide them to the best plan for their business and individual financial goals. The company has earned multiple accolades as “Best Reinsurance Provider” in the Dealers’ Choice Awards, including first-place honors in 2011, 2012, 2013, 2017 and 2020. To learn how CNA National can help you maximize your income potential and long-term success, call (800) 345-0191 x450.

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