Newsflash: Stroll vergroot greep op Aston Martin


+++ The investment fund headed by billionaire Lawrence Stroll has reworked its planned investment in ASTON MARTIN , taking a bigger slice of the company as a result. While other car firms also suffered, the British company’s share price has been especially badly hit by market uncertainty sparked by the coronavirus pandemic. At one point earlier this week shares were listed at under £2 each. In January, Stroll’s investment fund had agreed to take a 16.7 % stake in Aston Martin for £182 million at a price of £4 per share. The deal also included a £318 million cash infusion through a new rights issue for a total of £500 million. Given Aston’s dramatically reduced share price, Stroll and his fellow investors have radically reworked the agreement. The revised deal will be worth a total capital raise of £536 million, with Stroll’s investment fund, named Yew Tree, taking a larger 25 % stake in the company at a value of £2.25 per share. Yew Tree will also provide £75.5 million in “short-term working capital support” to ensure Aston has the liquidity it needs to meet the revised investment timetable. That is an increase in £20 million from original plans. The annual general meeting scheduled for 16 March has been postponed, with voting to approve the new deal to be conducted by proxy. Stroll said: “There has been a significant change in the global market environment in which Aston Martin operates. What has not changed is our commitment to provide the Company with the necessary funding it needs to manage through this period, to reset the business and to deliver on its long-term potential. “Following recent moves in the share price and discussions with the Board, I and my consortium of investors, have agreed that we will now acquire 25 % of the company and take up our rights in full in return for a long-term capital Investment of £262 million. In addition, we have agreed to advance a further £20 million in short term funding to support the company, bringing this total amount to £75.5 million. Whilst the immediate outlook looks increasingly challenging, I remain fully committed to the future of Aston Martin and look forward to implementing our plans once the fundraising is complete”. While announcing the deal, Aston Martin said that it is proactively managing its supply chain and business during the spread of the Covid-19 virus. It says it has put public health measures in place to protect its staff. The firm also said that despite some parts supply disruption from China “there has been no impact on production to date”, with supply secured “until at least early April”. Aston Martin did note that Covid-19 has impacted customer demand in China and Asia, adding it “has the potential to do the same in other markets”. CEO Andy Palmer said: “We are actively managing the potential impacts of Covid-19 on a daily basis, most particularly in our tier 2 supply chain, with no disruption to production to date and are mindful of the ongoing uncertainties and risks to the business. The first 2 months of the year were planned to be our smallest in wholesale unit terms as we start to rebalance supply and demand; a key component of our plan to turn around performance and restore our price positioning. Trading has generally been in line with these conservative expectations, with retail performance slightly better than planned”. +++

+++ CHINA ’s auto sales plunged 81.7 % in February from a year ago after much of the economy was shut down to fight a virus outbreak, an industry group, adding to problems for automakers already struggling with shrinking demand. Sales of SUVs, sedans and minivans fell to 224.000, according to the China Association of Automobile Manufacturers. Total vehicle sales, including trucks and buses, fell 79.1 % to 310.000. Auto dealerships, cinemas and other consumer businesses were ordered to stay closed after the Lunar New Year holiday to help contain the virus that emerged in central China in December. Sales “fell sharply due to the severe impact of the new coronavirus epidemic”, a statement said. The government is easing controls in many areas to revive economic activity. Auto factories are reopening, but tens of millions of city dwellers still are under travel and other curbs that weigh on consumer spending. Sales in the first 2 months of 2020 were down 43.6 % from a year earlier at 1.8 million units. Total vehicle sales were off 42 % at 2.2 million. Demand already was weak due to consumer jitters about a tariff war with Washington, slower economic growth and possible job losses. Sales fell 9.6 % last year, their second straight annual decline. The downturn is a blow to global automakers looking to China to drive revenue growth amid weak demand in the United States and Europe. Forecasters say it will be weeks, maybe months before the industry returns to normal production levels. Automakers say the pace depends on how fast suppliers can resume delivering components. Reviving the industry “could take longer than previously expected due to labor and materials supply shortages”, said Fitch Solutions in a report this week. Both foreign and Chinese brands also are investing billions of dollars to develop electric vehicles under pressure to meet government sales targets. Sales of electric and gasoline-electric hybrid SUVs and sedans fell 75.2 % in February from a year ago to 12.908 vehicles. Sales for the first 2 months were down 59.5 % at 59.705. China is the biggest market for electric cars, accounting for about half of global sales last year. Demand sank in mid-2019 when Beijing ended multibillion-dollar subsidies to producers and buyers and shifted the burden to the industry by requiring automakers to make a portion of their sales electric. The extended closure of factories also is hurting the industry by disrupting the global flow of components. China’s accounts for about 8 % of global exports of auto parts, according to UBS. Producers abroad that need Chinese components “will see little relief as the industry recovers”, said Fitch. The economic impact of the most sweeping anti-disease measures ever imposed is expected to be so big that private sector forecasters have cut their growth outlooks for this year. February sales usually get a boost as shops reopen after the Lunar New Year holiday, which fell this year in January. Forecasters expect automakers to make up a big share of their losses this year once consumers start making delayed purchases. +++

+++ The Volkswagen Group has stopped development on new cars powered by compressed natural gas. CEO Herbert Diess recently told top executives the powertrain would be phased out so the automaker had more to spend on its electrification shift. He added that CNG development costs “are higher than potential revenues”. VW has committed to spending almost $50 billion on electric vehicles, more than any other automaker. The result of that investment will be at least 70 electric cars. The phase out will not affect current production of Volkswagen Groups CNG cars. VW’s head of light commercial vehicles head, Thomas Sedran, said the recently unveiled fifth generation Caddy will be available with a CNG powertrain. Volkswagen Group Spanish subsidiary Seat has unveiled a CNG version of the recently new Leon. At the 2018 Geneva auto show, Czech subsidiary Skoda presented the Vision X crossover concept that featured a gasoline-CNG engine supported by an electric motor powered by a 48 volt battery. News of the potential end of CNG cars at VW Group comes just 2 years after former Seat CEO Luca de Meo said “CNG has great business potential for the automotive industry”. De Meo, who takes over as Renault CEO later this year, was VW Group’s de facto CNG chief because his brand was assigned responsibility for developing CNG technology. A Seat source told that CNG has always been viewed as a transition technology. The powertrain is only popular in Italy, which accounted for 38.615 out of 68.581 registrations in Europe last year, according to industry association ACEA. With 19 CNG models in its range, Volkswagen Group has Europe’s largest portfolio. In Italy, VW Group models held 9 spots on the top 10 sellers’ list last year. The Golf was No. 1 followed by the CNG versions of the Up and Fiat Panda. The CNG and liquefied petroleum gas (LPG) markets have historically been the main alternatives to gasoline and diesel models in Europe. Neither alternative fuel has ever caught on Europewide. The LPG market is bigger than the CNG sector. LPG sales rose 11 percent to 180.229 last year. Italy also leads the LPG market. The country’s registrations were up 8.7 percent to 135.484 last year. Second-place Spain had just 19.715. The main players in the LPG market are Fiat Chrysler Automobiles and Renault. Last year the Duster from Renault budget brand Dacia was Italy’s top-selling LPG model followed by the Panda and Lancia Ypsilon. While the Volkswagen Group is moving away from the CNG niche, Renault earlier this month announced it would offer the Clio and Captur small cars with its dual-fuel powertrain combining LPG and gasoline. +++

+++ DODGE could be looking to sting the car market like a hornet with the new trademark filing that might suggest a new product of some sort. Filed with the United States Patent and Trademark Office at the beginning of the month, the ‘Hornet’ and ‘Dodge Hornet’ are said to be in the process of being secured in Canada and Mexico as well. So, the big question is, what could a Hornet or a Dodge Hornet be? The brand’s lineup is outdated and only includes the Challenger, Charger, Durango, Journey and Grand Caravan, with the latter to be pulled out soon, and the second-to-last believed to follow it. As such, Dodge will be left with only the 9-year old Durango to cater to the needs of high-riding vehicle buyers, so they might be planning a compact crossover. Of course, there’s no indication pointing in any direction at the time of writing, but we could also assume that with the FCA-PSA merger, some Euro companies might be heading to North America and they could be rebadged as Dodges. It would make sense for the North American automaker to secure a moniker that’s already familiar to potential customers. The AMC (American Motors Corporation) Hornet was made between 1969 and 1977, and was a compact car offered in 2-, 3-, 4- and 5-door body styles, with front-engine and rear-wheel drive. Last time the Hornet nameplate was used on a vehicle was in 2006, when they presented the subcompact concept, which was supposed to preview a model for the European market, but its fate was sealed by the 2009 financial crisis. Now, with the demand for crossovers and SUVs skyrocketing, it would make sense for FCA to plan more. We will just have to wait and see if they approve it for production and if it will indeed be another high-rider. +++


+++ Ford has effectively tapped Chief Operating Officer Jim FARLEY as its next chief executive. According to a filing with the Securities and Exchange Commission, Ford has agreed to award Farley a stock grant worth $2.5 million should someone else eventually succeed 64-year-old CEO Jim Hackett. If Farley is offered the position of president and CEO and declines, he would not receive the stock grant, the filing said. Farley (57) assumed the COO post on March 1, a job widely viewed as a stepping stone to the top role. But the filing is the first time Ford has tied financial incentives to Farley and CEO succession. Ford has revived the COO post as part of a sweeping turnaround and effort to boost operating profits. The automaker’s board of directors made the unusual move “to offer a long-term incentive for a highly accomplished, highly regarded executive who’s playing a major role in transforming Ford”, a company spokesman said. Ford previously disclosed with the SEC that Farley’s total compensation as COO will rise to $8.29 million, up nearly $2 million from his compensation as president of new business, technology and strategy at the automaker. The compensation payouts reflect base salary, stock grants and yearly bonus targets. Farley’s base salary rises to $1.4 million from $1.1 million. His annual bonus target rises to $1.89 million from $1.375 million and his annual stock grant rises to $5 million from $3.82 million. Farley earned $5.86 million in 2018, according to Ford’s most recent proxy filing. Hackett became CEO in May 2017. He previously was on Ford’s board of directors. Farley joined Ford in 2007 and initially held a number of marketing and senior executive positions. +++


+++ FORD was going to unveil the all-new Bronco on March 17th, but the event has now been postponed due to the coronavirus pandemic. Ford’s chief communications officer Mark Truby said: “While we looked forward to hosting you for our Bronco Brand Immersion and all-new Bronco embargoed technical briefing next week, the safety of our employees, partners and media friends remains paramount. With that in mind, we’ve made the decision to cancel our event due to the ongoing coronavirus concerns”. He went on to say Ford apologies for the inconvenience and to “stay tuned for updates regarding the return of Bronco”. The cancelling shouldn’t come as much of a surprise as General Motors recently suspended press drives and the New York Auto Show was pushed back until August. Nearly 55 years after the debut of the original Bronco, and 24 years after the demise of the last one, Ford is dusting off one of its treasured nameplates this spring in hopes of reviving a decades-old rivalry with Fiat Chrysler Automobile’s popular Jeep brand. Leading the charge is a trim new Bronco SUV, based on the Ranger pickup. Ford insiders have hinted there are more Bronco models to follow, including a smaller Bronco Sport later this year, with rumors of a Bronco pickup and a high-performance Bronco Raptor said to be under consideration. Since announcing the return of the Bronco 3 years ago, Ford executives have made it clear the latest edition is targeted at the long-lived Jeep Wrangler. The rivalry dates back to mid-1965, when the original Bronco was launched as a compact 2-door SUV, aimed squarely at the Jeep CJ, the predecessor of the Wrangler. But Ford does not intend to stop there. It sees the potential to build a franchise around the Bronco name, a feat accomplished by Jeep over a period of 8 decades, though under at least 6 owners. Beau Boeckmann, president of Galpin Ford in the Los Angeles area and one of the largest U.S. Ford dealers, said the return of the Bronco is the most exciting vehicle launch he has seen from Ford in a long time. “I’ve had more people ask about this car than anything else we’ve launched”, he said. “I don’t see why Bronco’s potential wouldn’t be the same as Jeep’s”. The Jeep family now includes 6 nameplates in North America, from the tiny Renegade to the new Gladiator pickup, with several additional models sold overseas and more coming. The Jeep brand generates a huge share of Fiat Chrysler’s profit, analysts say. So much so that Morgan Stanley analyst Adam Jonas 3 years ago estimated the Jeep brand alone was worth 120 % of the parent company’s market value; more than $20 billion at the time. Last year, Fiat Chrysler sold 1.5 million Jeeps globally, down from 1.6 million in 2018. That seems like a distant target for the resurrected Bronco, for which Ford has relatively modest aspirations: About 125.000 sales in its first year, suppliers say. Sales of the earlier Bronco peaked in 1979 at around 100.000. Ford hinted at the general shape and size of the new Bronco last fall when it revealed a racing version called Bronco R. The new model goes into production this spring at Ford’s Michigan plant. The 2021 Bronco Sport, which shares underpinnings with the Kuga, is slated for production this fall at Ford’s Hermosillo plant in Mexico. +++

+++ Volkswagen’s massive electric car offensive aims to OUTSELL Tesla and there are ways in which VW intends to do this. There’s no denying the fact that VW has its sights set on an electric-car future. To date, no other automaker has shown such a high level of commitment to even outside of Tesla, yet Volkswagen still doesn’t have a dedicated electric car available to buy today, so looking into the future and predicting sales are rather near impossible. However, VW has announced that it intends to sell 28 million all-electric cars by 2028 and that’s a very ambitious figure. I don’t doubt that VW could sell that many EVs (in fact, I hope it does and even sells more), but there’s just no track record of VW selling EVs in massive volumes to go by, so we really must wait to see what the future brings. Volkswagen does intend to compete with Tesla in several segments. The upcoming ID.3 will basically be head-on competition for the Tesla Model 3. The next model, called the ID.4, will go up against the Tesla Model Y. Although Tesla reigns as king of the EV market thanks to its Model 3, Volkswagen has a plan in place to outsell them in the next few years. The automaker has set its sights on becoming a major name in the EV game, investing $37 billion in its electric car program. Between its production plans, new lineup of plug-in vehicles, and $2 billion marketing plan for emissions-free cars, this car giant could easily be on its way to outselling Elon Musk. +++

+++ Several RENAULT – Nissan plants in Spain halted production temporarily or were planning stoppages next week due to a lack of parts amid the coronavirus epidemic, company officials said. Nissan’s 2 Barcelona plants stopped as a wheels supplier was affected by a lockdown in the town of Odena nearby because of a coronavirus outbreak. Renault’s plants, in Valladolid and in Palencia, will cease production for 2 days due to a lack of components. “Yesterday we had no problems and now we have to stop for 2 days in Palencia and Valladolid”, a spokesman said, explaining that the supply chain had suffered setbacks in Catalonia. There are about 6,000 workers at the 2 plants. Around 3.000 people work at Nissan’s Barcelona plants, which produce electric vans and pick-up models. +++

+++ TESLA has a 10-year start on rivals when it comes to building electric cars and software, Thomas Ulbrich, the Volkswagen brand’s board member for electromobility said. “Tesla is an impressive manufacturer. It is a motivator for us. Tesla has 10 years more experience. But we are very quick in catching up”. Volkswagen’s expansion in electric cars will open up new business opportunities in storing and managing energy, encroaching on business currently dominated by utilities and energy firms, chief strategist Michael Jost said. Electric car batteries could be used to stabilize the energy grid by charging the battery in times of excess supply and selling electricity back to the grid at times when supplies of electricity from wind and solar power are low, Jost said. “By 2025 we will have 350 gigawatt hours worth of energy storage at our disposal through our electric car fleet. Between 2025 and 2030 this will grow to 1 terawatt hours worth of storage. That’s more energy than is currently generated by all the hydroelectric power stations in the world. We can guarantee that energy will be used and stored and this will be a new area of business”. The German carmaker is not alone in looking into this field. German utility E.ON has been working with Nissan to develop so-called vehicle-to-grid (V2G) services. Volkswagen is launching the ID.3 electric car this year. A basic version will cost less than €24,000 in Germany, once green car tax breaks and incentives are deducted, putting electric cars on par with combustion engined variants. +++

+++ The VOLKSWAGEN Group does not expect supply bottlenecks from China to disrupt the its global production network, a senior China manager at the automaker told. “We currently expect there to be no disruptions at other sites”, the manager, who declined to be identified, said. Measures designed to contain the spread of the coronavirus had disrupted normal life, making it impossible to forecast whether economic activity in the world’s largest car market will return to levels prior to the outbreak, the manager said. Car demand in the Chinese market was down 80 % in February and will likely be between 40 % and 50 % below year-earlier levels in March, the manager said. “If restrictions continue to be eased, then we are cautiously optimistic that we could return to the year-earlier level of demand by June or July”. The desire to avoid densely populated areas and public transport has motivated some potential buyers to inquire about buying a car, which could lead to sales rebounding quickly. “In the crisis the Germans want to buy toilet paper and the Chinese want to buy a car”, the manager said. However, the level of domestic demand can only recover if business sentiment remains positive, he said. Demand in China is dependent on the economic health of some of its largest export markets, like the United States, which is also being hit by the coronavirus, the manager said. “I cannot say whether it will be a boom in the second half of the year or if we return to normal, an outlook for the rest of the year is not possible”, he said. Volkswagen will deploy a new operating system this year, which the carmaker hopes will help prevent any and all car accidents within the next 30 years. Next-generation models will feature software, sensors as well as processors that should enable these cars to anticipate and avoid accidents, while also being able to learn new reflexes. “We want to have no more accidents by 2050”, said Volkswagen strategy chief, Michael Jost. “This new operating system, which is being launched along with the ID.3 electric vehicle, will be continually updated as software algorithms improve. How quickly can data and algorithms improve? Our customers should benefit from deep learning every week and every day. We are moving from being a device company to being a software company”. Yet, VW is reportedly having major issues with the ID.3, specifically its software, with some media outlets saying that severe glitches could force the automaker to abandon the EV’s planned sales launch for this summer. “We are not yet at 100 %”, said Thomas Ulbrich, a board member responsible for electromobility. “It is normal that there are still technical tasks to be done shortly before market launch”. Of course, there’s a pretty big difference between not being at 100 % regarding the ID.3’s software and test drivers reporting some 300 errors per day. We’ll have to wait and see if the ID.3 will be good to go by the summer, because if not, the brand’s plans to build 1.5 million electric cars by 2025 might be impacted. Volkswagen has announced many employees will receive €4,950 bonuses for their work in 2019. While the German car manufacturer hasn’t revealed just how many of its employees will receive the bonus, it says it will be limited to those covered by collective bargaining agreements. Last year, VW provided roughly 100,000 employees on collective wage deals with a bonus of €4,750 each. “The employees of Volkswagen again demonstrated a strong team performance in 2019”, chief executive Herbert Diess said. “They have made a key contribution to the business success of Volkswagen. With the bonus under the collective bargaining agreement, we wish to thank them for their commitment and to allow each individual employee to participate in the success of the company”. “2019 was another tough year for our colleagues”, added chairman of the General Works Council, Bernd Osterloh. “But once again, they got down to work to bring Volkswagen forward again. It is therefore only fair that the employees should now have their share in the company’s success. They have earned it”. This year is shaping up to be an important one for Volkswagen in the continued electrification of its range. Earlier this month, it was confirmed that the ID.4 will be launched in Europe later this year and be sold and produced in Europe, China, and North America. +++

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