1, GM withdraws 2020 financial performance target? Doubles Cash with $16 Billion Line of Credit
General Motors said Tuesday it is withdrawing its previously issued 2020 financial performance target and doubling its cash reserves by borrowing $16 billion from its existing line of credit to cope with the onslaught of a new coronavirus outbreak, Bloomberg reported.
The move will improve GM's cash position and maintain financial flexibility in an uncertain global market. GM had originally expected to end March with cash reserves of about $16 billion. So with the $16 billion line of credit activated, GM will have about $32 billion in cash to deal with risk.
GM Chief Executive Officer Mary? Mary?Barra said in a statement, "We are taking aggressive austerity measures to preserve cash and take the necessary steps in an ever-changing and uncertain environment to ensure sufficient liquidity to ensure the continued viability of our business and protect our customers and stakeholders."
"Over the past several years, we have made the necessary strategic decisions and structural adjustments that have transformed our company and strengthened our business, enabling us to better respond to the economic downturn."
GM's shares have fallen by nearly half in the past month, but were up more than 5 percent in premarket trading Tuesday. The stock had lost a cumulative 52 percent this year through Monday's close.
GM's statement did not mention any plans to change the company's dividend payment. GM paid its first-quarter dividend of $0.38 per share on March 20, said Juli?Huston-Rough, a spokeswoman for the company.
She said, "We are about a month away from declaring our usual second-quarter dividend. We will assess the evolution of the macro environment before making our next decision."
Ford also announced last week that it was taking a number of initiatives to further ensure the company's cash flow stability in response to the impact of plant closures and slumping sales caused by the new coronavirus outbreak.
Ford decided to suspend its dividend, withdraw previously announced targets for the company's 2020 financial performance, and activate two unused lines of credit, including $13.4 billion under the Ford Motor Company line of credit and $2 billion under the Ford Motor Credit Company line of credit. These new cash additions will be used primarily to offset the temporary working capital impact of production shutdowns due to the new coronavirus outbreak and to maintain Ford's financial flexibility.
GM has consistently outperformed Ford, and the continued dividend payment to shareholders suggests the automaker is more confident in its ability to retain cash during plant shutdowns.
RBC?Capital?Markets analyst Joe?Spak estimated in a report to clients that GM's $32 billion in cash holdings would be enough to sustain a shutdown for up to 21 weeks.
And Ford had $22 billion in cash and $35 billion in liquidity on its books as of the end of last year. Enabling the line of credit in this way would leave Ford with more than $37 billion in cash, nearly the same as the company's revenue reported in the fourth quarter of last year.
Ford said Tuesday that it does not intend to resume production at its U.S., Canadian and Mexican manufacturing plants on March 30 as originally planned, and is reevaluating the timing of the resumption.
A GM spokesman said the company is also reconsidering plans to resume production at its plants, though no final decision has been made.
Not only does GM pay $560 million in quarterly dividends to shareholders, but its financial arm, GM?Financial, plans to pay GM $400 million in the second half of this year.
Bloomberg Information credit research analyst Joel? Levington said, "By maintaining both dividend payments, it shows that the world is not ending."
In February this year, in its 2019 earnings report, GM had projected that adjusted EPS in 2020 would be roughly the same as in 2019, with an estimate of $5.75?-?6.25 a share, compared with analysts' average estimate of $6.24.
Morningstar?Inc. analyst David?Whiston said that while GM's dividend is unchanged at the moment, the company may make a change when it declares its second-quarter dividend on April 27th.
Whiston believes GM will try to pay a dividend, but then may have to suspend it.
For 2019, GM's full-year net income was $137.2 billion, down 6.7 percent compared with the same period a year ago; net income was $6.7 billion, down 17.4 percent from a year ago; adjusted EBITDA was $8.4 billion, down 28.8 percent from a year ago; and the adjusted EBITDA margin of 6.1 percent was 1.9 percentage points lower than the same period a year ago.
The strike affected GM's adjusted free cash flow, which fell by $5.4 billion to $1.1 billion in 2019.
GM previously expected 2020 earnings to be flat with 2019 as unfriendly market conditions in the U.S. and China offset gains from new trucks and large SUVs, while the auto business will generate $6 billion to $7.5 billion in 2020. (Source: Sina Motors)
2, Volkswagen plans to shorten working hours of 80,000 German employees
(Image source: Volkswagen's official website)
Gaixin Automotive reported that Volkswagen Group plans to shorten the working hours of about 80,000 German employees, after the company shut down its factories in Europe due to the new Coronavirus outbreak, according to foreign media.
Germany's short-term work law states that the state will pay workers a portion of their reduced wages. A VW spokesman said the company would work shorter hours at its plants in the states of Lower Saxony, Hesse and Saxony, a program that will run until April 3rd. VW Group's Audi and Porsche brands, as well as its truck division MAN, have also adopted short hours as a way to save money.
Volkswagen board member Bernd Althusmann said in a speech in Hanover, Germany, on March 24 that disruptions to companies of all sizes are "far greater" than they were during the financial crisis of 2008-2009, according to the minister of economy for the state of Lower Saxony. Althusmann is the economy minister for the state of Lower Saxony, which is also home to VW's global headquarters.
VW will also provide additional liquidity support to its dealer network in Germany. The company said it will support dealers through delayed repayments, increased credit lines and more favorable payment rates.
Besides Europe, VW's plants in Russia and South America have also suspended operations. Meanwhile, in China, its biggest market in the world, VW's factories have begun to resume work one by one. (Source: Gaijin Auto? Nebula)
3, Nissan: all new cars sold in Japan in the future will have an electric version
(Image source: Nissan's official website)
Gaijin Automotive, according to foreign media reports, in the field of electric vehicles, Nissan can be regarded as a forerunner. However, sales of the company's electric model LEAF have been flat in the United States, despite the fact that it's everywhere on the streets. In the Japanese market, though, things are different.
The Nihon Keizai Shimbun notes that the LEAF and Nissan hybrid models accounted for 25 percent of its total sales in fiscal 2018, and the company plans to expand that to 50 percent by 2022. Now Nissan has announced that the company will soon offer all-electric versions of all new and revised models in the Japanese market. Nissan hopes more electric cars will help reduce battery costs.
The company plans to launch an electric SUV later in 2020 and an electric version of the Dayz minivan in 2021. The company also plans to introduce several new hybrid models for the Japanese market. In addition, Nissan will launch hybrid versions of the Kicks?SUV and Note subcompact in the Japanese market this summer. The Nissan X-Trail (Kicks in China) SUV will also include a hybrid version when it gets a facelift next year. Nissan's hybrid vehicles will use the company's proprietary e-Power system.
Besides the Japanese market, the company has a long-term plan: more electrified models in Europe and China. Nissan aims to increase the share of sales of electrified vehicles to 50 percent and 30 percent, respectively, in those two markets by fiscal 2022.
Nissan's move reflects a new trend across the auto industry to accelerate electrification. Volkswagen plans to make all of its models electrified, while Toyota seeks to equip all its models with hybrid, plug-in hybrid and all-electric versions by 2025 and sell them in global markets. (Source: Gaijin Motors? Nebula)
4, Ford joins hands with GE, 3M to produce respirators and protective masks
(Image source: Ford official website)
Gaijin Automotive reported in foreign media that Ford plans to collaborate with manufacturing firms 3M and GE Healthcare to **** together to produce respirators, protective masks and masks, thus providing assistance to healthcare workers, with the current neo-coronavirus outbreak putting enormous pressure on the supply of medical equipment.
Ford executives said on March 24 that the company plans to use its manufacturing facilities as early as this week to provide medical equipment to doctors, nurses and first responders. Ford's internal code name for the program is Project Apollo.
Ford Chairman Bill Ford announced the company's plans on a television program, saying, "During World War II, we were the Arsenal of Democracy. We also used to make iron lungs for polio victims. Whenever we are called upon, we will be there."
Ford will work with 3M to produce breathing masks that clean the air in two ways. First, Ford will help 3M increase production of its existing products, while Ford will also design its own breathing masks, which will use fans from F-150 pickups, hood material from the assembly plant's paint shop, 3D-printed parts, and portable tool battery packs that will allow the breathing masks to run for up to eight hours.
Ford will produce the respirator masks at its Advanced Manufacturing Center near Detroit, Michigan. Ford said it has upfront plans to produce up to 1,000 respiratory masks a month and to help 3M boost its production 10-fold. Ford executives said in a conference call that production would begin days or weeks later.
In addition, Ford plans to produce 100,000 protective masks a week at the plant of its Michigan subsidiary Troy?Design?andManufacturing. Ford expects the company to produce 75,000 protective masks this week.
Ford will also work with GE Healthcare to help GE boost production of its simplified respirator. Ford said they could make the respirators at Ford's manufacturing sites in addition to GE's own plants. Ford CEO Jim Hackett said the company is aiming to produce "hundreds of thousands" of ventilators and will boost capacity between now and June.
Ford said in a statement, "This is a critical time for America and the world. Now is the time to act and **** together. By working together across multiple industries, we can bring help to those in need and those on the front lines. Ford feels a deep responsibility to step up and contribute in times of need, just as our company has done throughout our 117-year history." ? (Source: Gaylord Motors? Nebula)
5, European parts supply chain disruption? Volkswagen will stop production in Russia
(Photo source: Volkswagen official website)
Gaijin Automotive According to foreign media reports, on March 24 Volkswagen Group's Russian branch said that due to the outbreak of the new Coronavirus outbreak in Europe, which led to a shortage of supply of parts and components from Europe, the Volkswagen Group will suspend the production of cars in Russia work.
The company revealed that its car manufacturing plant in Russia's Kaluga region, as well as the assembly line of its Russian OEM GAZGroup in Nizhny Novgorod, will stop production between March 30 and April 10th. Russian Federation law requires the company to continue paying its employees during the shutdown.
Volkswagen produces the Touareg SUV, a three-box version of the Polo minivan, and the Skoda Xerox model at the Kaluga Oblast plant. It also produces gasoline engines with a 1.6-liter displacement as well as SKD versions of the Audi Q8 and Q7.The Nizhny Novgorod plant builds the Skoda Mingrui, Kodiak and Kolok models.
Last week VW announced that production at the company's plants in Europe would be temporarily shut down, this time for two weeks, in light of the new coronavirus that has infected more than 330,000 people worldwide.
At the moment, automakers around the world have been announcing production stoppages to protect their employees and to deal with declining demand due to the outbreak. Despite the impending shutdown, Volkswagen Group Russia said they are now able to "provide a stable supply of cars and parts to dealers and customers. Volkswagen Group Russia has more than 60 suppliers in the region and has localized more than 5,000 components. (Source: Gaijin Automotive? Nebula)
6, Aston Martin's UK plant will suspend production
(Image source: Aston Martin's official website)
Gaixian Automotive, according to a foreign media report, Aston Martin announced that the company will suspend the production work of its UK vehicle manufacturing plant from March 25th to April 20th as a response to the outbreak of the new coronavirus epidemic.
The luxury automaker has two plants in the U.K., one in Gaydon, central England, to produce its sports car offerings, and a new plant in St. Anselm, South Wales, to build the company's latest DBX?SUV. Aston Martin says that bookings for the DBX have been steadily increasing, and deliveries of the model are still expected to begin in the summer of 2020, if the plant can resume production in time.
Aston Martin said in a press release that it currently plans to suspend the plant until Monday, April 20, but that it will continue to assess the outbreak and will "seek to resume operations as soon as reasonably possible." The company also said the outbreak has added new risks to its 2020 financial results, with only two-thirds of the company's worldwide dealer network currently in operation.
Last year's sales of Aston Martin's sports cars were not as good as hoped, and additional cost overruns have further compounded the company's woes. In January, the company had to receive a short-term cash injection by accepting a bailout investment led by billionaire investor Lawrence?Strol.
Before Aston Martin, a number of carmakers, including Bentley, Vauxhall, Mini, Rolls-Royce, Nissan, Jaguar Land Rover, Toyota and Honda, announced a UK-wide shutdown. In addition, Ford will also stop engine production work at its plant in Dagenham, near London, as well as at its plant in Bridgend, Wales. (Source: Gaijin Automotive? Nebula)
7, Hyundai adds new safety executives to Washington office? Kia's U.S. plant will shut down production again
(Image source: Hyundai's official website)
Gaijin Automotive announced that it is expanding its Washington, D.C.-based safety office and appointing industry veteran Steve?Gehring as its executive director of North American safety regulation and policy, according to a foreign media report.
Hyundai said in a press release that Gehring will be responsible for overseeing the company's vehicle safety strategy in the U.S., Canada and Mexico, and will work with the National Highway Traffic Safety Administration (NHTSA), the U.S. Department of Transportation and other safety policy organizations and stakeholders. The appointment will be effective Monday, March 30, and Gehring will report to Brian?Latouf, chief safety officer of Hyundai Motor North America.
Latouf said in a press release, "Both regulation and safety are complex issues, and we are fortunate to welcome Steve to our team, where he will provide us with guidance and expertise in these areas. Ensuring the safety of our customers is at the forefront of what we do, and with 30 years of experience in vehicle policy and regulation, we are confident that Hyundai will remain a leader in transportation safety."
Prior to joining Hyundai, Gehring worked for the Association?of?Global?Automakers and the Alliance for?Automotive?Innovation, where he was responsible for safety and self-driving vehicle policy and regulatory He has worked on safety and self-driving car policy and regulation. Earlier, he served as GM's director of safety public ***** policy for the Washington, D.C., region.
Hyundai subsidiary Kia Motors announced that its U.S. plants will shut down again starting next week due to the spread of the outbreak. Kia had shut down its plant in Georgia for two days last week due to supply chain problems, then resumed operations on Monday, March 23rd.
Kia said in a press release that its plant in West Point, which is responsible for the Optima, Sorento and Telluride models, will close on March 30 and is expected to restart production on April 13, the company said. The shutdown includes a previously planned plant closure from April 6 to 10 due to the replacement of new model equipment, the company said. During the plant shutdown, the company said it will clean and sanitize the plant's workstations. (Source: Gaijin Automotive? Nebula)
8, Guangzhou Automobile Group to provide entrusted loans of 500 million yuan to Guangzhou Automobile Fike by share ratio
A few days ago, Sina Automobile was officially informed by Guangzhou Automobile Group Company Limited (hereinafter referred to as Guangzhou Automobile Group), Guangzhou Automobile Group's fifth board of directors of the ?40th meeting of the Board of Directors to consider and pass the "on the entrusted loans of Guangzhou Automobile Fike, agreed to provide entrusted loans to Guangzhou Automobile Group Company Limited (hereinafter referred to as the Guangzhou Automobile Group) through the subsidiary Guangzhou Automobile Group Finance Co., Ltd. to provide entrusted loans of 500 million yuan (1 billion yuan for both shareholders ****) to the joint venture company Guangzhou Automobile Fike Automobile Company Limited (hereinafter referred to as GAC Fike) in proportion to its shareholding, for a period of one year, with the interest rate of one-year ?LPR? rate announced by the People's Bank of China on the date of lending.
It is understood that the 500 million yuan loan will be used to supplement the daily production and operation of GAC Fike cash flow. Data show that Guangzhou Automobile Fike after experiencing high growth in 2016 and 2017, sales have declined sharply since the beginning of 2018, and the sales of Guangzhou Automobile Fike in 2019 were only one-third of the sales in 2017 when it was at a high level of sales, and entering 2020, Guangzhou Automobile Fike still has not come out of the predicament, and the sales decline in the first February has been as high as 83.05%. (Source: Sina Auto)
9, FCA plant two new crown pneumonia diagnosed patients died in the first case of U.S. auto plants
According to the U.S. automotive news network reported, the United Auto Workers (UAW), a spokesman for the U.S. automobile workers (UAW) said on Tuesday, two Fiat Chrysler auto plant workers after being diagnosed with the new crown pneumonia has died. They are the first known U.S. auto plant workers to die after the diagnosis.
Rory?Gamble? president of the United Auto Workers, said in a letter to members Tuesday that one of the workers worked at the Ram pickup plant in Sterling?Heights, Michigan, and the other at the Kokomo plant in Indiana.
Fiat TT Chrysler previously confirmed it had confirmed workers at the Sterling Heights and Kokomo plants. It is unclear when the two workers died.
"This is a terrible tragedy for our entire United Auto Workers," Gamble wrote. "Many of our friends and family members are scared and facing tremendous difficulties and challenges at this unprecedented time. The National Auto Workers Federation is doing everything in its power to keep everyone safe and to stop the spread of this terrible epidemic in the best way possible."
Fiat Chrysler declined to comment, saying it did so "out of respect for the privacy of these families and those affected by this situation."
Gamble also wrote that "FCA has told us that they intend to comply with Michigan Gov. Gretchen Whitmer's order and do not intend to reopen the plant on March 30."
Last week, Fiat Chrysler, Ford, and GM had already closed in the U.S., Canada, and Mexico from March 18 until March 30th.
Shortly before that, FCA had briefly shut down the Sterling Heights plant after it was discovered that a worker at the plant had contracted the virus, which was diagnosed March 12 in a worker at the Kokomo plant.
Fiat Chrysler did not immediately comment on the extended plant shutdown, but said it had not yet made a decision on whether it would need to extend the shutdown beyond the end of March.
Meanwhile, Ford Motor said Tuesday that its North American manufacturing plants will remain closed beyond March 30 as the new coronavirus outbreak continues to spread.
Gamble said the United Auto Workers asked GM to "put the safety of our members first by following the advice of government and health officials to keep workers at home."
Ford did not provide a timetable for the plant's reopening, but said it would make weekly assessments.
Several U.S. states have issued "stay at home" orders because of the rapid spread of the new coronavirus outbreak. In Michigan, the order will be extended through April 13th. It is based on federal guidelines that exempt key manufacturing sectors in the transportation industry, but do not specifically mention auto manufacturing. (Source: Sina Motors)
10, U.S. auto industry seeks federal government to provide loan guarantees, tax deferral and a series of other bailout programs
According to foreign media reports, the U.S. auto industry is seeking guidance and relief from the federal government as auto assembly plants, suppliers and dealers across the country are shut down due to the new coronavirus outbreak, but the U.S. government's proposed bailout program details of which are still up in the air.
The U.S. Senate debated an emergency stimulus package approaching $2 trillion on Tuesday local time in response to the economic impact of the growing new coronavirus outbreak, but it has yet to pass Congress.
While Washington is discussing proposals to set aside bailout money for certain industries, including airlines, automakers have not yet asked to receive it directly. Instead, they are hoping to get funding relief from Congress in the form of loan guarantees, tax breaks for paid employee leave and deferred corporate taxes.
The automakers also asked for clarification on whether dealerships would still be a "necessary" base of operations in the event that states declare emergency closures.
U.S. Rep. Debbie Dingell (D-Mich.) said the automakers are wary of direct government financial assistance a decade after the U.S. federal government was forced to bail out GM, and Chrysler.
GM and Chrysler received federal bailouts of $51 billion and $12.5 billion, respectively, 10 years ago, but Ford has not accepted federal money.
"They don't want to be seen as begging for a handout, they just need to have liquidity like all businesses that want to take care of their workers." Dingle said.
In addition, the auto industry has asked for a delay in the June 1 accession to a replacement agreement for the North American Free Trade Agreement. Dealers, for their part, are asking the White House to treat them as essential services and to exempt them from emergency closures at the state level.
This series of closure order actions by the U.S. government comes at a time when the outlook for the auto industry is bleak as Michigan and a number of other states have issued temporary shelter orders.
J.D. Power predicted that sales in March could fall 41 percent from last year, almost all of which is attributable to the outbreak of a new coronavirus.
ALG, a subsidiary of TrueCar, an automotive research and sales platform,?predicts a worst-case scenario in which the government requires factories to shut down for the entire summer so that U.S. full-year auto sales will be down 5.7 million units from the previously expected 16.9 million. And even if most factories return to work by May 1, sales would fall by 1.6 million units this year.
Automotive plants across North America have closed in the past few days. While some of those plants were scheduled to return to work at the end of this month, Michigan Gov. Gretchen?Whitmer's emergency order lasted until April 13th. Ford said Tuesday it would extend the closure of its North American plants indefinitely.
Kristin Dziczek, vice president of the Center for Automotive Research, said the new problem facing the U.S. auto industry will be disruptions to sources of supply and a greater evolution of the industry from a "crisis of supply to a crisis of demand," with potentially wide-ranging economic consequences.
Figures from the Center for Automotive Research (CAR) in Ann Arbor, Michigan, show that for every seven days that consumers don't buy a new car, the U.S. economy loses about 94,400 jobs and $7.3 billion in overall revenue, while government tax revenues are reduced by about $2 billion.
But the epidemic crisis could have a devastating impact on the auto industry, but it's still unlikely to be as severe as the 2008-09 financial crisis, which forced General Motors and Chrysler into bankruptcy protection.
Kristin?Dziczek, vice president for industry, labor and the economy at the CAR Research Center, said, "If the car companies had survived the 2008-?2009 financial crisis, they would have been on a better footing and would have made different decisions over the next decade, which would have allowed them to be better able to deal with the the storm."
In response to the shock of plant closures and slumping sales caused by the new coronavirus outbreak, major automakers are also taking a number of initiatives to further ensure that their companies' cash flows are stabilized.
Ford decided to suspend its dividend and activate two unused $15.4 billion lines of credit. And GM borrowed $16 billion from its existing line of credit to double its cash reserves to deal with the impact of the new coronavirus outbreak. (Source: Sina Motors)
11, Porsche Offers Bailout Program to 192 U.S. Dealers to Cope with Epidemic Shock
Porsche will offer a bailout program to its 192 U.S. dealerships to cope with the slowdown in the auto industry due to the impact of the new coronavirus epidemic pandemic, according to a report by AutoNews.com.
Porsche is guaranteeing bonus payouts to dealers, easing performance bonus targets, and expanding the size of the funds offered. This is similar to dealer-focused help programs developed by BMW, Mercedes-Benz, Nissan and other automakers.
For the first half of this year, Porsche dealers can earn marketing and customer satisfaction bonuses even if they don't meet certain targets. Meanwhile, in an effort to boost retailers' profits, Porsche's planning assistance package will cover a "significant portion" of the cost of car inventory for 60 days.
Porsche dealers will receive an unspecified fixed amount to cover the cost of delivering new cars to their homes by April 30th. The number of cars delivered to homes is expected to increase as customers stay home to avoid contracting the coronavirus.
Dealers can also return unleased cars instead of keeping them in the certified pre-owned program. Some mandatory work standard requirements, such as warranty work, have also been eliminated.
Additionally, Porsche Financial Services (?PFS) will provide assistance to retail-ready customers. The company will extend leases that were set to expire on April 30 by up to six months, four months longer than the typical extension. It will also consider offering lease payment delays of 30 to 60 days. (Source: Sina Motors)
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