While we took a look at Mitsubishi and Infiniti this week, next week’s big news will be the Nissan Motor restructure
COVID-19 or not, our analysis never stops. Leading the pack this week was a look at Mitsubishi, ahead of a critical restructuring announcement from major shareholder Nissan Motor next week. Four years ago this month Nissan Motor told us that it had become the largest shareholder in Mitsubishi Motors. Time enough to have integrated platforms, powertrains, plants and consolidated or where relevant, expanded the global model range? For many and varied reasons, a fresh plan is being drawn up with much of that in mind plus other restructuring. Some of the action points could be drastic. The details remain secret but with Nissan set to lay out its own path back to profitability on 28 May, we should learn the specifics relatively soon. There were some hints earlier on 19 May as the firm’s CFO announced FY19-20 numbers (they managed a full year operating profit).
Also braced for Nissan Motor cuts – the troubled Infiniti division. Nissan’s luxury brand will soon have a new boss. Much work awaits Peyman Kargar. The list of tricky tasks for the incoming SV-P & chairman includes what to do about collapsed sales in North America, an only tiny presence in China, plus decisions relating to the future of Infiniti’s cars. And if there is money to be made out of EVs, how will he make that happen?
In the midst of all the recent virus chaos, the pending merge of FCA and PSA may have been overlooked. In a call this week with investors and analysts Exor NV – FCA’s largest investor – has confirmed the timing for the proposed FCA-PSA merger for completion by early 2021 as initially announced. FCA and Exor chairman John Elkann said the terms of the merger agreement were unchanged and that the rationale for the merger was ‘stronger than ever’ now that the COVID-19 pandemic adds to the list of challenges facing the automotive industry. He also said that preparatory work for the merger was on schedule. An EUR5.5bn special dividend for FCA shareholders as part of the merger has attracted some criticism in Italy because the company has also asked for an Italian government guarantee to a planned EUR6.3bn loan. The planned merger will create the third largest global car company by revenues and fourth largest by volume. The new company will be led by current PSA chief Carlos Tavares and a big part of the rationale behind the move is to have the greater scale and resources to be at the forefront of the long-run CASE megatrends that are impacting mobility and the transport industry.
Brexit is another ongoing event that has perhaps been overlooked. But work has been going on. The UK government is preparing a new set of import tariffs which would include a 10% tariff applying to all imported new cars when the UK’s Brexit transition period ends at the end of this year. The new provisional measures assume there is no new trade deal with the EU and would therefore mean tariffs applying to some goods imported from the EU, including food and new cars. The new UK tariffs will replace the EU’s Common External Tariff (CET) on 1 January 2021 at the end of the current ‘transition period’. However, tariffs would be removed from a range of other products imported from around the world. The UK’s Department for International Trade (DIT) said leaving the EU would allow the UK to have a bespoke system that would be simpler and cheaper while providing support for key sectors of the economy. In a sign that there will be no extension to the transition period designed to smooth the UK’s exit from the EU, the UK government said the new global tariff would be introduced on 1 January, 2021.
COVID-19 related restarts continue, in fits and starts. On Monday the president of General Motors’ Mexican unit was reported to have advised suppliers to prepare to resume operations after the Mexican government said the automotive industry could exit the coronavirus lockdown before 1 June with adequate safety measures. “We are now beginning a new phase given the Mexican government’s official announcement earlier this week to consider the transportation manufacturing industry as essential for the country’s economy,” Francisco Garza, president of General Motors de Mexico, wrote in an email to suppliers dated last Friday that was viewed by the Reuters news agency. Noting the Mexican government was due to publish final safety rules on Monday, 18 May, Garza added: “Once those final guidelines are known, we will be in a position to move swiftly to comply.” GM was tentatively planning to restart operations at its vehicle assembly plant in Silao on Wednesday, according to a message to workers seen by Reuters on Sunday. And it happened: General Motors on Thursday said it was gradually restarting the transmission and engine lines at its Mexican facilities in Silao and Ramos Arizpe, while supplier Lear also geared up for production. GM Mexico told Reuters assembly plants at Ramos Arizpe in the northern state of Coahuila, and Silao in the central state of Guanajuato, could restart operations on Friday (22 May) depending on suppliers, and that it was assessing when to reopen plants in the central state of San Luis Potosi, and in Toluca, near Mexico City.
General Motors’ CEO has said layoffs announced at the company’s self-driving Cruise unit were “prudent” but insisted she saw a “huge opportunity” for its vehicles to move both people and packages. “We see a huge opportunity to move people and that same vehicle is very applicable to package delivery,” Mary Barra said at a Bank of America investor conference, according to Reuters. “We’ll continue to aggressively work on both.” According to an internal email partially read to Reuters on Thursday, about 8% of Cruise staff would be cut, which amounts to more than 140 people. The coronavirus pandemic had caused funding to dry up in the autonomous driving industry, Reuters noted. Speaking to Bank of America, Barra repeated previous statements that GM remained “unwavering in our commitment to Cruise”.
Fits and starts restarts: Ford shut down its Dearborn Truck Plant on Wednesday afternoon after learning a worker tested positive for coronavirus and released its early shift about 1:30 pm. “They sent everybody home,” a UAW worker told the Detroit Free Press. “We probably got 800 people there. After lunch, everybody got sent home. They had people start cleaning.” The paper said this was is the second plant shutdown in two days at Ford because of UAW employees testing positive for the coronavirus, the first being Chicago Assembly on Tuesday. Chicago Assembly was stopped again on Wednesday morning after supplier Lear shut a plant supplying seats, a separate media report said. We learned later the Lear closure was due to a positive virus test in the plant.
Have a good weekend.
Graeme Roberts, Deputy Editor, just-auto.com