As Steve Rattner described in his book “Overhaul,” the Presidential Auto Task Force very nearly decided not to rescue Chrysler, with the decision coming down to a single vote. Now, it seems, that with Chrysler blaming the “shyster” interest rates on its government loans for its lack of profitability, Chrysler’s viability now depends on rounding up a “lender of second to last resort.” And, according to the latest reports, that rescue-of-a-rescue effort is still very much hanging in the balance as well. If CEO Sergio Marchionne thought the government’s loan terms were “shyster”-ish, he was clearly in need of some context from Wall Street… and he doesn’t seem to be liking it. Read More >
There’s an old saying that goes something like: “money talks and bullshit walks.” We don’t necessarily subscribe to it completely here at TTAC, where words pay the bills, but you have to admit that no amount of talk could make the same impact as news that GM’s CEO Dan Akerson has dropped nearly $1m of his own money on GM’s underperforming stock. I bring this up because, for the first time ever, you can now buy CARZ, which in addition to being an awful Sir Mix-A-Lot song is the first-ever auto industry index fund. Specifically:
CARZ is designed to track a basket of reputable car makers in the United States and rest of the globe. The fund’s 30 holdings present as a who’s who of the car industry, with Daimler, Ford, General Motors, Honda and Toyota comprising the top five positions. Together, these and the rest of CARZ’s top 10 holdings represent close to 60% of its assets
But, while it’s one thing for a CEO to bet on his own company (or anyone to bet on any company they believe in), investing in the industry at large is a very different gamble. Which raises an interesting question: having destroyed billions of dollars of value in recent decades, and proved itself to be vulnerable to all kinds of unpredictable events in the shorter term (think: recalls, credit crunches and and tsunamis), is the auto industry as a whole really worth gambling on? I’m not sure I’m entirely convinced…
Jefferies is one of those starchy global investment banks and institutional securities firms where a two tone collared shirt is their idea of casual Friday. It is also a place where highly paid financial analysts outsnark the most ruthless TTAC writer, Yesterday, Jefferies sent its “Jefferies institutional clients that include investment managers, insurance companies, hedge funds and pension funds worldwide” a research note that my pal who owns a hedge fund volunteered to share with TTAC readers, as long as we guarantee full anonymity. No problem.
The note is titled “Is GM Turning into a Busted Thesis?” and deals – you guessed it – with the GM stock. H. Peter Nesvold, CFA, and Thomas Fogarty, CFA, both equity analysts at Jefferies, are underwhelmed by the GM share. Read More >
When I arrived at Toyota’s downtown Tokyo basement conference room, I bumped into Toyota spokesman Paul Nolasco, who was in the grips of stage fright. Annual results conferences with the world watching can do that to a spokesman. Trying to cheer Paul up in my charming way, I said: “Come on Paul. This one will be great. It’s the next ones that will be rotten as hell.” Paul gave me a pained look.
When I left an hour and a half later, I had changed my mind. Toyota will survive this crisis just like it survived the previous two: Stronger. Not unscathed, but not as badly affected as some officially fear and silently hope. What may not survive are Japanese jobs. Read More >
Some taxpayer-funded turnarounds just have a little more turnaround than others, according to the GAO’s recent report on the auto bailout [PDF here], which tracks the progress of the Detroit patients and considers their futures. Sure, GM received quite a bit more government money than Chrysler, but the improvements in GM’s financial performance compared to Chrysler’s are clear. But the GAO still has a number of concerns about the “more than $34 billion” of taxpayer value that’s still floating around, unrecouped, in the rescued automakers. Feel free to peruse the GAO’s full 59-page report, or you can hit the jump for the highlights.
In a packed conference room in downtown Tokyo, Toyota CEO Akio Toyoda announced this afternoon that Toyota finished the fiscal year to March 31, 2011 with a group net profit of 408.1 billion yen ($5 billion), up 95 percent on the year. This despite an ever increasing yen that is driving the company – and a lot of the Japanese industry – “to the limit” as CFO Satoshi Ozawa (above) warned. Sitting next to Toyoda, Ozawa said that he might have to recommend to his CEO to move production elsewhere unless a level playing field is created.
Ozawa put the impact of the March 11 earthquake and tsunami at 110 billion yen ($1.36 billion). However, the fiscal year had ended two weeks after the catastrophe. Financially, the worst is yet to come. Toyota appears to be in excellent financial and operational shape to weather a few quarters until production is back on line – which will happen earlier than expected.
More as I have worked through my notes. There will be some interesting morsels.
‘Tis the season when Japanese companies publish annual results. They all work on a fiscal year that runs from April 1 through March 31. Then, they need a good month to count the beans, to be ready in mid May. Suzuki was first to announce, and the announcement was good: Read More >
Australian investors in the photo enforcement firm Redflex Traffic Systems voted down a buyout offer from toll road giant Macquarie Bank and the asset management firm Carlyle Group at a general meeting in Melbourne today. The recently sweetened deal would have paid A$2.75 per share, or $305 million total, to take over the speed camera and red light camera business.
“Your directors unanimously recommend that shareholders vote in favor of the improved scheme proposal, in the absence of a superior proposal,” Redflex Chairman Max Findlay told assembled shareholders. “I can confirm that no superior proposal has been received.”
GM solidly trounced analysts’ expectations and delivered $3.2 billion if Q1 2011 net income. The consensus of a Bloomberg panel was $1.74 billion. Compared with the first quarter of 2010, revenue increased $4.7 billion to $36.2 billion, says GM press release. GM’s first-quarter profit more than tripled to its highest in at least 21 years. Read More >
Didn’t they say that you have to be a monster car company with at least 5 million units, just to survive? BMW did not get the memo. Aiming for sales of just 1.5 million units this year, BMW delivered a first quarter 2011 net profit before tax of €1.812 billion ($2.691 billion), surprising analysts that had expected something in the neighborhood of $2 billion. Read More >
How many Civics could a Honda make, if a Honda could make Civics? Here’s a hint: “half as many” would be too optimistic a guess. Honda has warned its dealers to expect “severe shortages” in supply of the new 2012 model, and virtually every other Honda model will have the same availability issues until later this year. Toyota’s in the same boat.
What does this mean for TTACers who want to buy a Japanese-brand car?
Saab’s got a new short-term lease on life, as Automotive News Europe [sub] reports that the Swedish brand has secured a €30m, six-month convertible loan from Gemini Investment Fund. Saab is also requesting a €29.1 drawdown of its EIB loan, and when that is approved next week, Saab will reach the €59.1m in liquidity it needs to restart production. According to another piece by Automotive News [sub], Saab is still in talks with the Chinese automakers Great Wall Motor Co., China Youngman Automobile Group Co. and Jiangsu Yueda Group Co. in hopes of securing an additional investment in the struggling Swedish automaker, as well as a joint venture for Chinese production of the next-generation 9-3, and a possible Chinese market distribution deal.
Meanwhile, Saabsunited reports that several companies have been told to stop development on that next-gen 9-3 while the company gets back on its feet, meaning it could be delayed into the 2013 timeframe. And while Saab sacrifices long-term development for short-term survival, the recent production shutdown is taking its toll: Swedish sales of the 9-3 are up, but the new 9-5 is falling off (128 sold last month) as stocks dry up. The drama continues…
Chrysler’s Q1 conference call is just beginning, and though you can’t listen in unless you’re registered media, you can download the slide set here [PDF] and the press release here. Besides, I’ll be updating this post with the latest as it happens, so why bother? Marchionne is just noting that Chrysler’s $116m Q1 profit is the first since 2009, although he seems more excited about “modified operating profit” of $477m, and free cash flow of other $2.526b.
Volkswagen was all grins when litigating hedgies lost the first round in court in the U.S. (it’s on appeal) and when the public prosecutor in Stuttgart dropped some of the investigation into former Porsche CEO Wendelin Wiedeking and former CFO Holger Härter (only to add new angles.) Until the matters are cleared, Volkswagen and Porsche officially are not married, unofficially, they share all available beds.
Now, a new lawsuit causes frozen faces and acid reflux at the very top of Volkswagen: German investment funds intend to involve prominent supervisory board members of Volkswagen AG in a billion dollar court case. Read More >
Recent Comments