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We wanted to flag a few highlights in today's (07/15/19) Wolfe Research Auto Daily....
Thoughts on the Ford/VW partnership in AV and EV
This mitigates development cost for Ford (Argo will likely be de-consolidated). And it may signal a strategic shift.
Ford/VW Partnership has implications for Uber and Lyft
Initial deployments of AMOD are fairly near-term (12-24 months). This realization has forced a decision point for many automakers. Also worth noting… since AMOD doesn’t promise much value for the vehicle assembler (fairly low volume, low brand value of the car itself), they need to either own the network or own the self-driving hardware / software themselves to derive value.
Another Daimler profit warning…. but this one is different
Daimler issued another profit warning this week, citing worse market growth and slower new product launches. Veoneer, Magna, Lear, and Delphi could have some exposure.
We wanted to flag a few highlights in today's (07/09/19) Wolfe Research Auto Daily....
Reuters battery article highlights disconnect between CO2 commentary and reality
VW Purchasing Chief clarifies that co-investing will be required to secure battery supply. And another data point that makes 7%-8% EV adoption targets for 2020 / 2021 seem almost impossible.
Geely guidance cut highlights concerns about China
Geely cut 2019 delivery guidance by 10% and issued a profit warning, underscoring concerns about the China market.
Manheim Q2 Call: Used Pricing Remains Strong in June, and Used Retail Sales Outlook More Positive than Expected
Generally strong used pricing, modest retail used vehicle sales growth in 2019 and 2020, and plateauing off-lease were our key takes from Manheim’s quarterly call.
We wanted to flag a few highlights in today's (07/03/19) Wolfe Research Auto Daily....
U.S. Sales annualized at 17.3 MM for June, a bit better than our 17.0 MM estimate.
June LV SAAR came in above our (and JD Power) estimates, with annualized large truck sales and share tracking well above YTD averages. See our takeaways within.
Tesla reported blow-out Q2 deliveries of 95,200
We believe that US Model 3 deliveries more than doubled, making Q1 look like an aberration and putting 7k per week volume back in play. Model S and Model X also better-than-expectations but likely due to discounting. Demand looks to be on solid footing but major upside still requires a return to the 2nd Half of 2018 margin profile, something we don’t see as likely in the near-term.
Does very soft June production in Germany suggest downside to 2Q IHS production expectations?
Very soft German auto production in June could point to potential downside versus the (already weak) IHS 2Q19 Europe production forecast of -6.9%
Another very weak month for NA Truck Orders points to a sharp reduction in 2H19 & 2020 builds
The latest data on NA Class 8 Truck orders remains weak (Class 8 down 70% y/y in June; Class 5-7 down 30%), further pointing to a sharp production decline in 2020. We assess implications for our Suppliers.
We wanted to flag a few highlights in today's (07/01/19) Wolfe Research Auto Daily....
2Q Supplier Preview
Expectations for light vehicle production, both for Q2 and the full year, have deteriorated further over the past few weeks. We expect most suppliers (ALV, DLPH, LEA, MGA, TEN, AXL) to all come in below consensus for Q2.
Gas Pressure: Why a soft Q2 for U.S. Suppliers looks like a prelude to something worse.
In a report published today we discuss why we’re becoming more cautious about the outlook for 2020, and lowering estimates.
China: We are seeing signs of stress amongst local OEMs and Suppliers in China, with potentially adverse near- to intermediate-term implications.
Europe: Even more concerning for U.S. Suppliers, CO2 regulations in Europe will likely have negative implications for customer margins, pricing and terms, and ultimately demand. In today’s report we summarize high level views on European CO2 Regs that we’ve gathered from OEMs, Suppliers, and Consulting Firms. Our conclusion: Even without an economic downturn, the implications for suppliers are likely larger than expected.
Expectations for light vehicle production, both for Q2 and the full year, have deteriorated over the course of Q2. As of mid-April, IHS was projecting a Q2 global production decline of 3.4%... Now it’s -6.1%. And based on anecdotes we’ve gathered from suppliers we believe that the actual result might even be lower (production schedules in NA and China have ratcheted lower over the past 3-4 weeks). We expect ALV, DLPH, AXL, LEA, MGA, and TEN to all come in below consensus for Q2. And we believe that all of these, plus VC and VNE, face risks for 2H.
Ford be up in Europe, just working on its fitness
Ford issued a release summarizing high level details of a European restructuring that will result in a 20% headcount reduction and decline in production sites. Ford had previously announced many of these actions, so the release was not surprising but it illustrates the magnitude of the changes Ford is pursuing in this region and we believe these actions should result in over $2bn savings.
NIO announces recall to fix an issue that caused 2 battery fires
NIO announced that it is recalling 4,800 vehicles to replace the battery. While the financial cost is manageable and the issue was a suppliers’ fault, the damage to the brand is much more concerning.
2018 EEA data shows a long road ahead
The EEA released provisional European emissions data for 2018, with the average emissions per vehicle increasing for the second consecutive year to 120.4 g CO2/km (vs. 118.5 last year) … well above the limits we will see starting in 2020.
CVNA priced its 2nd ABS deal, 2019-2, which closes 6/27. With the benefit of the pre-sale reports and pricing, we estimate that Financing profit per unit will be $823/Unit in Q2, which is 31% sequentially higher than Q1 and 17% higher than we had been anticipating. Keep in mind, unlike other captive finance companies, CVNA sells the residual and recognizes all the profit up-front, which means that it benefits immediately when rates drop.
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