Wolfe Research's Auto & Auto Retail Analyst, Chris Bottiglieri, hosted a webcast to discuss latest thoughts on Carvana, KAR, IAA, and AAP.
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This AM (08/13/19) IAA reported Q2 with Rev beating Cons but EBITDA missing. However, these results were already known via discontinued ops disclosure in KAR’s 10-Q. The acceleration in volume and clarity around purchase accounting impacting COGS settled shares, which were +5%.
Does Tenneco have strategic options?
The Auto Industry Outlook has deteriorated since Tenneco’s current strategy was unveiled in the Spring of 2018. And while it may be difficult for the Company to change direction, we believe that this needs to be considered. The current plan does not look like it will work. But we believe that TEN may have options that the Street is not actively contemplating.
Why are OEM’s adding EV’s into the lowest-priced vehicle segments?
FCA’s $788mln investment for a Fiat 500 EV production line is another data point that highlights the economic challenges of Europe CO2 regulations. But more fundamentally, why do OEMs think consumers are going to pay a €10k-€12k premium for car types that typically cost €20k or less?
Tire update… Natural Rubber continues to decline; And Q2 replacement demand was decent (despite a pullback in June)
Overall, industry trends suggest CTB is increasingly well positioned.