+++ ASTON MARTIN is interviewing candidates to become its 4th chief executive in as many years, as the struggling carmaker prepares to replace 77-year-old Amedeo Felisa. Executive chairman Lawrence Stroll has contacted current and former heads of other luxury auto manufacturers to gauge interest in the role, according to people familiar with the matter, who asked not to be identified because the conversations were private. An Aston Martin spokesperson declined to comment. The company’s shares dropped as much as 4%. The stock has slumped 54% since the end of July. Stroll, 64, tapped Felisa to be CEO in May 2022, replacing former Mercedes-AMG boss Tobias Moers, who spent less than 2 years in the job. His predecessor, Andy Palmer, left months after Stroll rescued Aston Martin in early 2020. Aston Martin’s search is no surprise given that Felisa (who initially retired from Ferrari in 2016) was always a temporary solution. The carmaker synonymous with James Bond has repeatedly needed to raise more capital since Stroll took over as the largest shareholder 4 years ago. Saudi Arabia’s Public Investment Fund, China’s Zhejiang Geely Holding Group and EV maker Lucid Group have taken stakes in the British company since mid-2022. Aston Martin warned in November that it expected to ship fewer vehicles than previously forecast for the full year, after supply-chain issues hampered the rollout of its new DB12. Felisa was on Aston Martin’s board when Stroll needed a chief executive to replace Moers, who left in the midst of the company’s troubles launching the $3 million Valkyrie supercar. Felisa spent 26 years at Ferrari and was CEO in his last 8 years with the company, ending in 2016. While Stroll has steadied Aston Martin to a degree, the Canadian billionaire acknowledged last year that he didn’t know what he was getting into when he threw the company a lifeline around the start of the global pandemic. He’s set targets for the manufacturer to generate $3.3 billion of revenue and $1 billion in adjusted earnings by 2028, both well short of what Ferrari brings in annually. Aston Martin’s next CEO faces the challenge of executing the transition to electric vehicles while launching 2 new front-engine sports cars, a new Valhalla and a revamped DBX. The carmaker forged ties with Lucid last year to source components from the EV maker in exchange for shares and cash. Stroll capitalized on growing investor interest in Formula One racing late last year by selling a minority stake in Aston Martin’s team (which is separate from the listed car company) to U.S. private equity firm Arctos Partners at a valuation of about $1.25 billion. +++
+++ FORD , buffeted by electric vehicle losses and rising labor costs, posted 4th quarter results that soundly beat expectations and forecast higher profits in 2024. The automaker posted adjusted earnings per share of 29 cents, more than double the 13 cents analysts expected on average. 4th quarter revenue of $46 billion surpassed the $40.3 billion analysts expected. For the current year, Ford forecast earnings of $10 billion to $12 billion before interest and taxes, compared with $10.4 billion on that basis in 2023. That result was on the high end of the $10 billion to $10.5 billion the company predicted in November, when it lowered guidance following a six-week strike the by the United Auto Workers union. As electric vehicle sales slow, Ford chief executive officer Jim Farley is attempting to thread the needle between scaling back the company’s EV spending by $12 billion while dialing up output of traditional internal combustion engine models, which generate profits needed to fund future growth. The automaker just halved production of electric F-150 Lightning pickups, while boosting output of its highly profitable Bronco and Ranger. “They have a very strong combustion engine business they can fall back on to help subsidize the transition to EVs and also make money now”, David Whiston, an analyst, said in an interview before Ford posted results. “They absolutely should be trying to crank out a ton of Broncos right now”. The automaker lost $4.7 billion on electric vehicles last year before interest and taxes, more than the $4.5 billion EV deficit Farley predicted in July. That translates to a loss of roughly $38.000 on each battery powered model Ford sold last year, according to an analyst, who noted those losses are “unsustainable”. In the 4th quarter, Ford’s EV unit, known as Model e, posted a loss of $1.57 billion, which was greater than the $1.34 billion loss analysts expected. “The Model e unit may improve its loss per vehicle by more than $10,000 in 2024”, the analyst wrote in a February 1 note. “Yet at an estimated $28.000 loss per unit, the segment will slice more than $4 billion off Ford’s profitability in addition to capital investments”. The Dearborn, Michigan-based automaker also faces higher labor costs than its crosstown rival General Motors, which wowed Wall Street last week with a 2024 forecast of $12 billion to $14 billion in earnings before interest and taxes. GM has said the contract it struck with the UAW will add about $575 in costs per car, while Ford predicts an increase of up to $900 per vehicle due to the record deal that increases workers’ wages by 33% over 4,5 years. “GM is better set up to absorb those labor costs because they already had a healthier cost base in North America”, the analyst said. “And Ford has more UAW employees in the United States than GM”. In its traditional internal combustion engine business, known as Ford Blue, the company earned $813 million before interest and taxes in the fourth quarter, less than the $866.5 million analysts expected. Ford’s US sales rose less than 1% in the 4th quarter as the UAW strike cost it production of high profit models such as the F-Series Super Duty pickup truck and the Explorer. In its commercial business, known as Ford Pro, the automaker earned $1.81 billion before interest and taxes, more than the $1.43 Billion analysts expected. Predictions are Ford Pro will see margins expand this year while its Ford Blue unit will experience margin pressure as pricing drops because dealers have replenished their lots with inventory after pandemic-related shortages. “Ford profit is on a tightrope as the transition to electric vehicles takes longer than expected, requiring right-sizing to cut EV losses while managing increased pricing competition for Ford Blue”, the analyst wrote in a note. “My scenario sees US electric-vehicle sales climbing 9% this year after growing at a compounded annual rate of 65% over the past 3 years”. +++
+++ Infotainment technologies involving connectivity (from systems like Apple CarPlay and Android Auto) are among the most problematic issues for drivers, according to a new J.D. Power Vehicle Dependability Survey. The study ranks LEXUS in the premium brand category as highest overall in vehicle dependability for a second consecutive year. Porsche and BMW come in second and third respectively. Overall, the report is based on responses from 30.595 owners of 2021 model-year vehicles who were questioned after 3 years of ownership. The results suggest “a decline in long-term vehicle dependability, with increased levels of problems reported for nearly two-thirds of brands” included in the study. Electric vehicles are not immune from dependability problems, Power says. Full EVs are the most troublesome, followed by plug-in hybrids; Hybrids and ICE vehicles do better. At 3 years of ownership, tires are a sore spot for battery-powered electric owners, with 39 percent saying that they replaced tires in the past 12 months; 19 percentage points higher than owners of gas-powered vehicles. Returning to brand rankings, Toyota ranks highest in the mass market segment, with Buick second, while Chevrolet and Mini are tied for third. The top-3 brands showing the greatest improvement in the number of problems are Porsche, Mercedes-Benz and Toyota. The Toyota Group as a parent manufacturer received the most model-level awards, with 9 cars. Among them are the Lexus ES, Lexus IS, Lexus NX, Lexus RX, Toyota Camry and Toyota Corolla. General Motors received 4 segment awards. BMW receives two segment awards for the X1 and X6. Brands that slot in at the bottom of the survey include Volkswagen, Land Rover, Audi and Chrysler. “Historically, VDS model results mirror the results of the respective model year in the J.D. Power Initial Quality Study, so a deterioration of vehicle dependability is unusual”, said Frank Hanley, senior director of auto benchmarking at J.D. Power. “This can likely be attributed to the tumultuous time during which these vehicles were built, and owners are keeping their vehicles for much longer. In fact, the average age of vehicles on American roads today is approximately 12 years, which underscores the importance of building a vehicle designed to stand the test of time”. The dependability study, now in its 35th year, covers 184 specific problem areas across nine major vehicle categories: climate; driving assistance; driving experience; exterior; features/controls/displays; infotainment; interior; powertrain; and seats. A caveat to keep in mind: Power’s methodology does not weight the severity of the problems, so it does not distinguish between a fussy infotainment system and a blown engine or transmission. And as noted at top, infotainment issues make up the majority of the problems. +++
+++ MAZDA announced its financial and sales results for the first three quarters of the fiscal year, today, reporting global sales of 930.000 vehicles for the period 1st of April to 31st of December 2023, up 17% year-on-year. Sales in Europe in the first 3 quarters of the year were up 24% year on year to 135.000 vehicles, driven by sales of the CX-60 and CX-5. Germany and the United Kingdom, Mazda’s biggest markets in the region, contributed with 34.000 and 22.000 units, respectively. Mazda’s sales volume in North America was up 32%, to 380.000 units. In Mazda’s home market of Japan, sales were 121.000 units in the first 3 quarters of the fiscal year, a 12% year-on-year increase. China, Mazda’s biggest market in Asia, registered sales of 73.000 units, up 1%. For the 9-month period, Mazda reported record profits at all levels: net sales were €23 billion, up 32% from the prior year, and operating profit was €1.3 billion, up 83%. Net income was up 60% to €1.067 billion. Carefully reviewing the various risks and opportunities, including the recent earthquake in the Noto Peninsula in Japan, Mazda’s full year forecast remains unchanged: including global sales of 1.286.000 units for the full fiscal year, net sales of €31.8 billion, a record operating income of €1.7 billion and a net income of €1.1 billion for the fiscal year ending in March 2024. In the third quarter of the fiscal year, Mazda re-established the RE Development Group to accelerate research and development of rotary engines to be used as generators in electrified models. The RE Development Group will conduct research and development in areas such as regulatory compliance in major markets as well as the application of carbon-neutral fuels. +++
+++ NISSAN ’s profit sank in October-December to about half of what it earned the year before, the automaker said Thursday, though it stuck to its earlier earnings forecasts. Nissan, based in the port city of Yokohama, reported its profit was 29 billion yen ($195 million) in the last quarter, down from 50.6 billion yen a year earlier. Quarterly sales jumped nearly 10% to 3.1 trillion yen ($21 billion) for the maker of the Leaf electric car, Infiniti luxury models and Z sportscars. Market conditions were especially difficult in China, Stephen Ma, Nissan’s chief financial officer, told reporters. The Chinese auto market remains intensely competitive amid a price war between manufacturers, dominated by locals like BYD, with its strong EV offerings. Nissan’s vehicle sales in China plunged 35% in April-December from the previous year. Nissan sales rose about 30% in the U.S. from a year earlier, helping to offset the China woes. For the first 9 months of the fiscal year that ends in March, Nissan’s global sales rose 22% to 9.17 trillion yen ($61.7 billion). Nissan kept unchanged its annual projection for a 390 billion yen ($2.6 billion) profit on 13 trillion yen ($87 billion) in sales. Nissan expects to sell 3.55 million vehicles globally for the year through March, down from an earlier projection of 3.7 million vehicles. That’s still better than the 3.3 million vehicles Nissan sold the year before. By region, Nissan expects vehicle sales to grow in the U.S., Japan and Europe, but not in China. +++
+++ I spent a little time at the Chicago Auto Show speaking with Trisha Jung, Nissan’s senior director for EV Strategy and Transformation. Naturally, the conversation was focused on EVs and Nissan’s plans for the future. And in a roundabout way, I think I know when the next-generation NISSAN LEAF will be arriving: model year 2026. You see, the standard line from many automaker representatives when it comes to certain things is, “We’re not going to comment on future product”. But Jung was able to confirm that the Leaf as we know it today will continue on for the 2025 model year. Nissan has also previously said that the Leaf will stick around and so it will get another generation. The company’s European branch also went so far as to point out that three future EV models, the Qashqai, Juke and Leaf, will get design inspiration from 3 of Nissan’s recent concept cars: the Hyper Urban, Hyper Punk and Chill-Out. Again, Nissan didn’t specifically call out which vehicles corresponded with each other, but based on past models and the styling of the concepts, it’s pretty easy to figure out that the Chill Out would be the basis for the Leaf. Even when the Chill-Out was revealed, it seemed liable for production. Nissan noted that it was based on the platform that underpins the Ariya. It also shares some clear design DNA with the SUV, and its crossover-y shape is a good fit for the market. And to sum up, expect the next-generation Leaf to be revealed in about a year or two as a 2026 model. And if it’s based on the Ariya platform, it could be offered with dual motors and all-wheel drive, and could very likely have NACS charging, since Nissan is incorporating the plug standard starting next year. We’ll be curious to see if production continues in Tennessee, like the current Leaf. It would seem like the smart move, since that would help maintain tax credit eligibility. +++
+++ It’s usually stricter emissions regulations that force automakers to discontinue their fun cars in Europe. However, the TOYOTA GR 86 and Subaru BRZ will be discontinued due to upcoming safety legislation. It’s called the General Safety Regulations 2 (GSR2) and is sadly going to put the final nail in the Toyobaru’s coffin this year. Both automakers have confirmed the rear-wheel-drive coupes are not going to be available on the Old Continent for much longer. Patrick Scheelen, senior manager Lexus and Toyota Gazoo Racing Communications, told me the original plan to sell the GR 86 for only 2 years in Europe remains in place. He went on to mention the company has no intention of modifying the affordable sports car to meet the requirements of GSR2. Jürgen Ehlenberger, Subaru Head of Marketing Services and Corporate Communications declared: “After 2024, there will be no more BRZ in Europe. The sale of stock vehicles will take place in 2024”. The writing had been on the wall since December 2021 when Toyota announced the second-generation GR 86 would be offered in Europe for just 2 years. To make the car comply with the new safety legislation, it would have to be “completely re-engineered”. That’s just not feasible from a business point of view since the GR 86 is a niche product in Europe and just about anywhere else. The fact Toyota teamed up with Subaru to spread costs speaks volumes of how difficult it is to build a viable business case for a sports car. The same goes for the Supra, which is essentially a BMW Z4. Assuming Toyota would do the work and spend the money to make the GR 86 up to snuff, it wouldn’t be the same car, or so we’re told. Modifying the sports coupe “would detrimentally affect the dynamic character of the car” and “it simply wouldn’t be the driver’s car everybody knows and loves”. That’s according to an article written by Joe Clifford for the official Toyota UK Magazine. The GSR2 standard will prevent Toyota and Subaru not just from taking new customer orders for the GR86 and BRZ but the automakers won’t be allowed to sell any available stock. It means the window of opportunity is closing since the companies will be increasingly reluctant to keep cars in their inventory. It’s going to be a sad day when the Toyobaru bows out in Europe, but we do have some good news. Enthusiasts will still be able to buy the MX-5 after 2024. A spokesperson for Mazda has told us the beloved roadster is sticking around, despite being an older car. As a reminder, the ND generation was unveiled in September 2014 with a fabric roof before the hardtop RF premiered in March 2016. Since then, the tiny convertible sports car has received two notable updates, the ND2 in 2018 and the ND3 in 2023. MX-5 Program Manager Shigeki Saito is promising “very cool” special editions are coming. The GSR2 implementation is going to impact the availability of another fun car in Europe. In an interview last year, Alpine’s vice president of engineering Robert Bonetto said the car is not compliant with the new active safety homologation standards. Consequently, the Renault-owned brand says “options for European sales will be limited”. Echoing the statement made by Toyota, Alpine argues it would be cost prohibitive to modify the A110, adding that costs would not be amortized by the end of the car’s production run in 2026. Seeing the glass half full, the Alpine A110 is not going away completely in Europe. There is a special 2-year exemption from the rules that allows the company to sell a maximum of 1.500 units annually. Another notable death in Europe this year, albeit not of a sports car, is the first-generation Porsche Macan. The gasoline-fueled crossover is bidding adieu since it doesn’t meet an upcoming GSR2-related cybersecurity law, which is also coming into effect in July. A couple of weeks ago, Ben Weinberger, sSpokesperson for Macan and Cayenne, declared in an e-mail: “In the European Union and some states that apply EU legislation, the combustion-powered Macan will not be available indefinitely. The main reason for this is the General Safety Regulation of the European Union (including cybersecurity), to which the platform will not be converted. Any models that do not meet these requirements will no longer be eligible for new registration in the EU after the beginning of July 2024″. This applies not only to the Macan with an internal combustion engine, but to all models from all manufacturers, and this regardless of whether it is an e-vehicle or one with an internal combustion engine. As a result, sale of the Macan with an internal combustion engine is expected to be discontinued in the EU during the spring, thereby ensuring that the vehicles can be delivered to customers and registered by the deadline. In regions where the relevant EU legislation is not applied, the Macan with an internal combustion engine can remain available for longer”. The first phase came into effect on July 6, 2022, when the EU stopped providing type approvals for cars that didn’t meet the standard. The rules will extend to all new vehicles from July 2024, so the clock is ticking. According to vehicle engineering, test and development consultancy company Horiba Mira, GSR2 represents a “massive list of 100 or so regulations, depending on vehicle category. Some are amendments, but we’ve identified about 20 to 25 items that are new”. One of the items that will become mandatory from July 2024 is going to be the Event Data Recorder, colloquially known as a black box. It’ll record five seconds before the crash and 0.3 seconds after the impact, while analyzing the car’s speed, braking, position, and how the safety systems work, including the emergency call function. The latter is known as eCall and has been mandatory in the EU since April 2018. The European Commission’s factsheet details the new safety measures, varying from lane keeping assistance and tire pressure monitoring system to an emergency stop signal and attention warning in case of driver drowsiness. Additional measures will be implemented until July 2029, such as improved safety glass, advanced driver distraction warning, longer-lasting tires, and “improved direct vision to better see cyclists and pedestrians”. We can safely assume that cars will become even more expensive in Europe. The addition of new hardware and software to comply with regulations will undoubtedly result in higher costs for the automaker, which will then be passed on to consumers. We believe smaller vehicles are particularly at risk, as the integration of extensive safety technology might render them too expensive. +++
