Dealerships got a whole lot of money from the federal government, Daimler will cut even more costs, and Audi thinks it sees opportunity. All that and more in The Morning Shift for July 8, 2020.
1st Gear: Most American Dealers Got Government Help
More than three-quarters of them did, according to Automotive News, up to $10.3 billion in loans.
From Automotive News:
According to data released this week by the Small Business Administration, 12,693 new-car dealerships collectively received between $6.97 billion and $10.36 billion in PPP loans. That figure represents about 76 percent of the 16,682 dealerships in the U.S., according to NADA’s year-end 2019 count. In addition, 1,988 used-car dealerships received between $625 million and $1.53 billion in PPP loans.
Exact loan amounts weren’t available because the SBA provided ranges for the forgivable loans that were more than $150,000 rather than specific figures. The ranges reported were:
- $150,000-$350,000
- $350,000-$1 million
- $1 million-$2 million
- $2 million-$5 million
- $5 million-$10 million
Loans between $150,000 and $10 million accounted for almost 75 percent of the loans granted under the program, the SBA said.
About four dozen dealers got loans in that $5 million to $10 million range, while a little over half were in the $350,000 to $1 million range.
2nd Gear: Daimler Bad
Daimler is suffering like every automaker amid the coronavirus pandemic, but today its chief executive said that it would have to implement even more cost cuts ahead of an expected second-quarter loss.
From Reuters:
Daimler said sales of its Mercedes-Benz brand dropped almost 19% to about 870,000 cars in the first half, although the brand achieved its best second quarter sales so far in China.
Despite the rebound in China, the business losses racked up in recent months would not be recovered by the end of the year, demanding more cost cuts, CEO Ola Kaellenius told shareholders.
“Our previous efficiency goals covered the upcoming transformation, but not a global recession. That’s why we are further sharpening our course,” Kaellenius said, adding that the company was in talks with labour representatives about savings.
Daimler, which reports second-quarter results on July 23, said it expected a significant decline in sales for the period, a negative adjusted group operating profit and negative free cash flow in the industrial business.
“Our previous efficiency goals covered the upcoming transformation, but not a global recession” is one of the bleaker quotes I’ve read amid all of this.
3rd Gear: Audi Thinks The Pandemic Is An Opportunity
This is boilerplate stuff, really, from a company CEO, but Audi’s newish CEO Markus Duesmann said this week that, in fact, the pandemic could be good for Audi all told.
From Bloomberg:
Duesmann intends to review Audi’s product lineup and speed up vehicle development at Volkswagen AG’s premium-car division, he said during a webcast for the unveiling of the electric Q4 Sportback E-Tron concept vehicle.
“We take the crisis as opportunity and even invitation to try new things,” Duesmann said, in his first public comments as CEO since taking over in April. “We have to do a big job, but we will get it done.”
The former BMW AG executive was hired to revive profits at Audi after years of upheaval in the wake of the diesel-emissions crisis that erupted in 2015. Audi’s earnings are vital for Volkswagen to finance the industry’s largest push into electric vehicles, with the Covid-19 pandemic only increasing the pressure to become more flexible to protect liquidity.
Audi is playing catch up along with pretty much every other carmaker in terms of competing with Tesla.
The Q4 Sportback E-Tron is slated to expand Audi’s electric-car offerings next year, flanking the E-Tron SUV introduced in 2018 as well as the E-Tron GT sportscar that will be based on technology from Porsche.
One of Duesmann’s key moves since taking over at Audi was to set up an engineering task force dubbed Artemis to develop a new electric car by 2024. The brand’s previous efforts to challenge Tesla struggled to gain traction.
As Bloomberg notes, Audi was well-positioned to take on Tesla with an early rival to the Model X, but that car, the Audi E-Tron, has had a hard time making a splash. How future Audi EVs will be different is yet to be seen.
4th Gear: Speaking Of Volkswagen Group Marques
SEAT says it will spend billions over the next five years with an eye toward making electric vehicles in Barcelona by 2025. We don’t get SEATs here, of course, which means we are missing out on the delightful Mii.
From Reuters:
BARCELONA (Reuters) – Volkswagen’s (VOWG_p.DE) Spanish brand SEAT said on Wednesday it plans 5 billion euros in investments in 2020-2025, mainly in new R&D, equipment and electric cars, after investing 3.3 billion in 2016-2020.
Please mail me a Mii when you get around to it.
5th Gear: Volvo Puts Millions Into … Blockchain?
There was a time a while ago when I made earnest, persistent efforts to understand what blockchain is. After reading many thousands of words, I regret to report I failed, resigned to the fact that some parts of this life will forever be unknowable. That’s no matter, though, because blockchain is still a real thing.
Volvo, for example, said Wednesday it was investing millions in one blockchain company in an effort to better source materials for electric batteries.
From the Financial Times:
The company will invest high single-digit millions into Circulor as it plans to expand the materials it tracks in an effort to eliminate unethical sourcing from its products.
Despite relying on a vast network of companies around the world, carmakers often have limited visibility of the businesses operating below tier 1 suppliers that work directly with them.
[…]
Volvo has been using blockchain, where its components are monitored and accounted for, to track cobalt used in batteries for electric vehicles.
The company wants to expand its use of blockchain to monitor other materials, such as mica, a mineral used in electric battery packs.
It also allows the company to widen its view of individual businesses further down its supply chain, as it tries to reduce CO2 emissions through its network.
“The traceability of materials has been very important for us,” said Martina Buchhauser, Volvo’s chief procurement officer, ahead of announcing the deal at the Financial Times’s Future of the Car virtual summit on Wednesday.
The effort, like with most things Volvo does, seems very well-intentioned.
Reverse: Trade
Neutral: How Are You?
I’ve put The Irishman on repeat in recent weeks. Also sometimes, I get into the Fit at night when the BQE is empty and floor it on the onramp, and for a minute things are fine.
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