Rss Feed
Tweeter button
Facebook button

How one automotive retailer is thriving amid a wary auto industry


Cars 3 Pixar finalPixar

The market’s fears regarding peak auto sales, a growing concern
about a possible automotive subprime loan bubble, and declining used-car prices have gripped
investors and slashed value from just about every automotive
stock throughout 2017.

It’s been less than ideal, to put it nicely, but despite these
concerns, CarMax managed to top analysts’ estimates on both
the top and bottom lines during the first fiscal quarter of 2018
— here are the highlights from Wednesday’s report.

By the numbers

Starting from CarMax’s top line, net sales and operating revenue
increased 10.1% to $4.54 billion, which was ahead of consensus
estimates calling for $4.45 billion, per Thomson Reuters. The
increase was driven organically as well as by new store openings;
used unit sales in comparable stores increased a healthy 8.2%,
while total used unit sales rose 14.1%.

On the bottom line, net earnings jumped a strong 20.7% to $211.7
million, which pushed its net earnings per diluted share 25.6%
higher to $1.13. That easily topped analysts’ estimates calling
for $0.98 earnings per share and helped drive CarMax shares up
more than 3% after the markets digested the news.

Bright spot

One major concern facing CarMax, as well as other automotive
companies, has been the decline of used-car prices. That will
pressure financing divisions of major automakers, and it also
affects CarMax’s top and bottom lines. That’s why this quarter is
such a relief to many investors, because CarMax was able to
offset those mounting pressures and push gross profit per unit
higher.


carmax quarterly filings
DATA
SOURCE: CARMAX QUARTERLY FILINGS. CHART BY DANIEL
MILLER


A couple of other important takeaways for investors involve the
company’s SGA expenses and CarMax Auto Finance (CAF).
Investors can expect the company’s SGA expenses to rise –
that’s simply a fact of life for young and growing businesses.
However, management has thus far done a pretty good job of
offsetting the rising expenses.

Compared to the first quarter of fiscal 2017, its SGA
expenses increased 6.1%, but that’s far below the 11% increase of
its store count over the same time frame (18 stores). For
investors, SGA is certainly a figure to keep an eye on
quarter to quarter, because it cost the company $2,066 per used
unit, and controlling that expense directly helps improve margins
and the bottom line.

CAF also posted a solid quarter, as it increased its income by
8.5% to $109.4 million, with average managed receivables growing
11.1% to $10.83 billion. As the market becomes more competitive
and prices potentially decline further, CAF represents an
opportunity for CarMax to grow its top and bottom lines simply by
increasing the number of customers financed, or improving the mix
of type of loans in favor of a better interest spread — if the
potential reward is worth the risk.

The road ahead

Going forward, the company will be focused on three things:
opening stores, improving its mobile presence, and improving
margins. During the first quarter, CarMax opened three stores,
and the plan is to open another 16 stores through the end of next
May.

In terms of its mobile presence, CarMax has decades of valuable
vehicle selling data that helps it turn over inventory better
than the competition — if it can find a way to utilize this data
better with its online presence, it could help improve conversion
rates on sales — and thus its top and bottom lines.

If management continues to control SGA during its store
expansion, this quarter proves that the company can succeed even
amid a peaking automotive industry, and that’s welcome news for
many investors. 

 

Article source: http://www.businessinsider.com/carmax-auto-industry-concerns-2017-6

Takata Bankruptcy Poses a Risk to Auto Industry’s Biggest Recall …

The expected bankruptcy of troubled air-bag maker Takata Corp. isn’t just a crisis for its employees and suppliers. It also throws a wild card into one of the biggest and most complicated recalls in automotive history.

The Japan-based auto supplier has pledged to recall and replace tens of millions of defective air-bag inflators used by 19 car and truck makers around the world, from Tesla Inc. to Toyota Motor Corp. Takata is expected to file on Monday for bankruptcy protection and announce a takeover offer from Key Safety Systems Inc. for about 180 billion yen ($1.62 billion), according to people familiar with the matter, who asked not to be identified because the information is private.

A filing to restructure doesn’t relieve a manufacturer of recall responsibilities. However, should its financial assets be exhausted before all the work is done, carmakers may have to cover the difference.

U.S. bankruptcy laws permit a would-be buyer to acquire Takata’s desirable assets, but not necessarily assume unwanted liabilities — including recall obligations, according to Robert Rasmussen, a University of Southern California law professor specializing in corporate reorganizations.

Funds raised by an asset sale would go toward funding Takata’s production of replacement parts, Rasmussen said. U.S. law treats a manufacturer’s recall obligations in bankruptcy as a claim of the U.S. government and they receive priority “to ensure that consumers are adequately protected from any safety defect” in a manufacturer’s products, according to statute.

“The big risk,” Rasmussen said, “is how much are the assets worth versus what’s the cost to do the replacements.”

Read more: Takata Plunges 55% as Investors Anticipate Bankruptcy Filing

Scott Upham, president of Valient Market Research, estimates that automakers and suppliers globally face $5 billion in future costs tied to the recalls, about $2 billion of which can be tied to Takata. He estimates a Takata asset sale will generate about $1.5 billion to $2 billion.

“There’s not enough money,” Upham said. Automakers may have to cover any shortfall, he said.

The car companies have already shifted business away from Takata and toward rivals for about 70 percent of the parts to repair the millions of vehicles recalled for the company’s defective airbag inflators, which can explode with too much force and spray drivers and passengers with metal and plastic shards. That should assure enough new inflators for the estimated 100 million defective ones forecast to be replaced worldwide.

Only 38 percent of the 43 million air bag inflators under recall in the U.S. had been repaired as of May 26, according to data on the U.S. Department of Transportation’s National Highway Traffic Safety Administration website. In Japan, 73 percent of the close to 19 million air bags under recall have been repaired, a spokesman at the country’s transport ministry said this month.

Prior story: Takata Rises as Carmakers to Pay $553 Million Over Recall Losses

At least 17 deaths have been linked to the devices worldwide. Mounting liabilities associated with the faulty airbags have forced Takata to seek a buyer that would see it through a costly restructuring process. A Takata steering committee has recommended Key Safety Systems — the U.S. air-bag maker owned by China’s Ningbo Joyson Electronic Corp. — as the preferred bidder, and bankruptcy filings would bring the Japanese company a step closer to a sale.

The challenges for the acquirer are manifold. Takata posted its third-straight annual loss even without including the full costs of repairing millions of air bags, which automakers are now paying for. It faces a talent exodus and auto industry distrust. Takata didn’t respond to an emailed request for comment on its expected bankruptcy filing, while Key Safety Systems declined to comment on its bid for the company.

“It would be hard for Key Safety Systems to put in huge amounts of money if there’s no guarantee against unexpected liabilities, after any deal,” said Mitsuhiro Harada, a researcher at Tokyo Shoko Research. “Takata is making money in non-airbag operations, so if they can drastically cut recall-related debt through bankruptcy, they can surely revive soon.”

Read more: Takata to Pay $1 Billion, Plead Guilty in U.S. Air Bag Probe

Automakers have avoided supply disruptions by sourcing replacement parts from Takata competitors Autoliv Inc., ZF-TRW and Daicel Corp. Autoliv, for example, has already provided 15 million replacement inflators and has orders for another 15 million into 2019, company spokesman Thomas Jonsson said.

“We are working with suppliers to ensure a steady supply of replacement inflators for our customers,” said Kelly Stefanich, a Toyota spokeswoman in Princeton, Indiana. “We don’t anticipate any supply disruptions at this time.” Honda Chief Executive Officer Takahiro Hachigo said at a June 16 media briefing that the automaker hasn’t heard any specifics about the Takata bankruptcy plan.

The Japanese government has said it’s focused on completing the recall process and ensuring there’s no disruption of the supply chain.

In the U.S., NHTSA has been coordinating the pace of recalls and the flow of parts under a legally-binding 2015 agreement with Takata and 19 companies. That pact, NHTSA said, “is designed to deal with future contingencies, including the possibility of additional recalls, new information about the cause of the ruptures, or interruptions in the supply of replacement inflators.”

“The automakers, the government, Key Safety Systems and Takata will come to an agreement to keep supplies flowing,” Upham said. “The No. 1 priority is the safety of the driving public, and I think everybody realizes that.”

Why It Seems Like Open Season on Car Companies: QuickTake QA

Honda first started recalling Accord and Civic models in 2008 due to the flaw that may end up being Takata’s undoing. The supplier’s inflators use ammonium nitrate propellant that can be rendered unstable after long-term exposure to heat and humidity. That same year, Takata began adding a drying agent to its propellant formula in an attempt to fix the problem. It has until the end of 2019 to prove to U.S. regulators that those air bags are safe.

Honda now uses no Takata-sourced inflators for recall repairs in the U.S., and none of the company’s new vehicles in mass production worldwide use Takata inflators with ammonium nitrate propellant, said Chris Martin, a Honda spokesman in the U.S..

Opting for bankruptcy protection in Japan and the U.S., as opposed to a court-led restructuring, should ensure there’s “minimum negative impact to the airbag supply chain for automakers,” said Takeshi Miyao, an analyst at Tokyo-based market researcher Carnorama. He predicts the procedure would take two months in a best-case scenario, but would more likely need half a year.

    Article source: https://www.bloomberg.com/news/articles/2017-06-25/takata-bankruptcy-poses-a-risk-to-auto-industry-s-biggest-recall

How AI will play a major role in the auto industry

Artificial intelligence (AI) systems, blending data and advanced algorithms to mimic the cognitive functions of the human mind, have begun to simplify and enhance even the simplest aspects of our everyday experiences — and the automotive industry is no exception. A Tractica market intelligence study forecasts that the demand for automotive AI hardware, software, and services will explode from $404 million in 2016 to $14 billion by 2025.

The cars of the (near) future

Semi-autonomous and fully autonomous vehicles must heavily rely on AI systems to guide the dependability of their fail-safe navigation and earn the trust of drivers and passengers. Accordingly, we’re seeing significant AI-related investment for self-driving cars from across the design space, with players including Tesla, Google, and Mercedes-Benz. In February 2017, Ford invested $1 billion —  Detroit’s biggest investment yet — in the self-driving car startup Argo AI, which was founded by a partnership between two top engineers from Google and Uber.

Tesla founder Elon Musk speculates that AI will surpass solely human-based efforts by the year 2030. In a Twitter response to a research paper that hypothesizes the human race will be overtaken by AI-equipped robots by 2060, Musk mused, “Probably closer to 2030 to 2040 in my opinion.” People frequently cite but critically underestimate the speed at which machine learning is helping data sets refine accuracy and displace user-based error to deliver clean and distraction-free processes safely. The speed at which these efficiencies are turning into improvements in our everyday lives is not something we’re having to wait long to experience at all — it’s happening faster than many continue to project.

The technology structure supporting AI development is finally realizing its potential after decades of computer intelligence development. For the first time, we’re approaching the creation of artificial “general” intelligence that allows machines to successfully perform intellectual-level tasks that could previously only be executed by humans. Thanks in large part to modern algorithms implementing multi-layered intelligence, the technology can take action on complex decisions based on advanced-level strategic and tactical considerations.

Market smarter with AI

While self-driving cars and complex decision-making are the prime use cases for modern AI, the auto industry continues to search for new ways to engage customers through existing and new channels. AI provides a completely new set of tools to better understand customer behavior and deliver an optimally personalized auto purchase and finance experience.

With advanced analytics, companies can better understand data, discovering insights and generating reliably predictive models for their customers. The value of machine learning is rooted in its ability to create accurate models that can guide future actions and rapidly identify patterns at a scale that was not achievable before. Machine learning methods are particularly applicable when it comes to powering new insights within the auto industry because the data sets are large, diverse, and change quickly. Applying machine learning to auto industry data is a game-changer, showing us iterative new connections that were previously unknown and unknowable.

Disrupting the car buying experience

For consumers, any new car purchase can be an emotional experience. However, most people still need to operate within their fixed monthly budget. According to Experian Automotive, more than 80 percent of new vehicles sold across the country are either loaned or leased. Of these transacting customers, more than 70 percent found it challenging to gather financing information before visiting a dealership, short-stopping their early purchase-driven research and forcing them to change research modes from online to in-person. Moreover, online calculators available today that offer monthly installment estimates aren’t tailored to customers, wuth their own highly unique credit histories, which leaves prospective buyers less than confident in their next steps.

The current process for vehicle financing poses challenges for dealers and financial institutions alike. Many customers who walk into dealerships remain unaware of which vehicle they can truly afford; therefore, dealers end up explaining and calculating the best possible deals for multiple car models prior to a customer deciding on a single vehicle, a process that can unfold over half a workday or more. Car buyers often choose a lender based on dealer recommendations, which eliminates contact between other lenders and the prospective buyers to whom they may be able to offer a better match.

Unifying an outstanding car buying experience with a transparent, customer-friendly financing process is essential to powering the next chapter of future-thinking auto purchases. Given the vast selection of cars and finance providers available, machine learning has the potential to help car buyers quickly find the vehicles and financing options that are right for them, vastly simplifying their customer journey.

I’m passionate about the transformation that AI is bringing to the auto industry — in self-driving cars, but also in terms of fundamentally changing three major blocks of the supply chain: the way people shop, the way that dealerships sell, and the way that lenders finance auto purchases. AI has the potential to change all aspects of the auto industry — starting with more intelligent cars and ultimately creating a shorter and frictionless transition from shopping to driving.

Martin Prescher is the Chief Technology Officer at AutoGravity, where he leads a team of engineers and data scientists to develop secure and convenient car financing.

Article source: https://venturebeat.com/2017/06/24/how-ai-will-play-a-major-role-in-the-auto-industry/

CarMax Provides Hope Amid Auto Industry Concerns

The market’s fears regarding peak auto sales, a growing concern about a possible automotive subprime loan bubble, and declining used-car prices have gripped investors and slashed value from just about every automotive stock throughout 2017. It’s been less than ideal, to put it nicely, but despite these concerns, CarMax (NYSE:KMX) managed to top analysts’ estimates on both the top and bottom lines during the first fiscal quarter of 2018 — here are the highlights from Wednesday’s report.

By the numbers

Starting from CarMax’s top line, net sales and operating revenue increased 10.1% to $4.54 billion, which was ahead of consensus estimates calling for $4.45 billion, per Thomson Reuters. The increase was driven organically as well as by new store openings; used unit sales in comparable stores increased a healthy 8.2%, while total used unit sales rose 14.1%.

On the bottom line, net earnings jumped a strong 20.7% to $211.7 million, which pushed its net earnings per diluted share 25.6% higher to $1.13. That easily topped analysts’ estimates calling for $0.98 earnings per share and helped drive CarMax shares up more than 3% after the markets digested the news.

Image source: Getty Images.

Bright spot

One major concern facing CarMax, as well as other automotive companies, has been the decline of used-car prices. That will pressure financing divisions of major automakers, and it also affects CarMax’s top and bottom lines. That’s why this quarter is such a relief to many investors, because CarMax was able to offset those mounting pressures and push gross profit per unit higher.

Data source: CarMax quarterly filings. Chart by author.

A couple of other important takeaways for investors involve the company’s SGA expenses and CarMax Auto Finance (CAF). Investors can expect the company’s SGA expenses to rise — that’s simply a fact of life for young and growing businesses. However, management has thus far done a pretty good job of offsetting the rising expenses. Compared to the first quarter of fiscal 2017, its SGA expenses increased 6.1%, but that’s far below the 11% increase of its store count over the same time frame (18 stores). For investors, SGA is certainly a figure to keep an eye on quarter to quarter, because it cost the company $2,066 per used unit, and controlling that expense directly helps improve margins and the bottom line.

CAF also posted a solid quarter, as it increased its income by 8.5% to $109.4 million, with average managed receivables growing 11.1% to $10.83 billion. As the market becomes more competitive and prices potentially decline further, CAF represents an opportunity for CarMax to grow its top and bottom lines simply by increasing the number of customers financed, or improving the mix of type of loans in favor of a better interest spread — if the potential reward is worth the risk.

The road ahead

Going forward, the company will be focused on three things: opening stores, improving its mobile presence, and improving margins. During the first quarter, CarMax opened three stores, and the plan is to open another 16 stores through the end of next May. In terms of its mobile presence, CarMax has decades of valuable vehicle selling data that helps it turn over inventory better than the competition — if it can find a way to utilize this data better with its online presence, it could help improve conversion rates on sales — and thus its top and bottom lines. If management continues to control SGA during its store expansion, this quarter proves that the company can succeed even amid a peaking automotive industry, and that’s welcome news for many investors.

Article source: https://www.fool.com/investing/2017/06/22/carmax-provides-hope-amid-auto-industry-concerns.aspx

Autocar and Ford celebrate women in the automotive industry

Each year, Autocar recognises 100 rising stars from within the automotive industry; earlier this month, 13 female employees from Ford – all of whom graced the top 100 – were celebrated at the Autocar Great British Women in the Car Industry event. The event aims to encourage more women to become part of the automotive industry, and this year included a networking lunch for last year’s female Ford winners to share experiences and insights with 2017’s winners.

The Manufacturing category was won by Ford’s own Diesel Manufacturing Strategy Manager, Leah Bruce. There was also strong representation of female Ford employees in the Marketing and Product Development categories.

Ford of Britain Chairman and Managing Director said: “I’m delighted to see so many of our female employees being recognised at this special event. Women are underrepresented in the automotive sector and it’s fantastic that events like this highlight the successful women in our industry, and raise awareness of the rewarding career opportunities that exist.”

Autocar’s Editorial Director, Jim Holder, said of Bruce’s win: “Leah’s job puts her at the epicentre of one of the toughest debates in the industry at present, making her the ideal standard bearer for showcasing just how far a career in automotive manufacturing can take you. She has reached this incredible role through a career in which it is clear she has consistently shone individually, both in the UK and abroad, and by showing a dedication to highlighting the opportunities on offer in the industry through her work promoting STEM subjects.”

Ford recognises the challenges of attracting young people, especially girls, to consider a future career in the automotive industry and runs a wide range of activities and initiatives to address: Here is a list of Ford’s initiatives that aim to involve more women and young people in the industry:

FoB Women in IT – IT Girls Day

Women in IT (WIT) host  a fun, exciting and educational event at the Dunton Technical Centre for 60 female students, from five local schools, aged 13-16. The purpose of the event is to actively engage with the local school communities to attract more girls into STEM related careers such as IT and, specifically, at Ford. Activities include a ‘hands-on’ coding session and an insight into the role IT plays in future smart mobility opportunities.

International Women in Engineering Day

Ford’s Dunton Technical Centre opens its door to welcome 80 Year nine students from local schools. Pupils spend the day taking part in engineering activities, such as an egg crash challenge, and tours of the engineering facilities, with the aim to promote interest in pursuing STEM subjects. 

Greenpower Trust (Formula Goblins, Formula 24)

Ford Engineers support local schools and the Dunton Technical Centre hosts the regional finals of the Greenpower Trust competition round including both Formula Goblin (between nine and 11 years old) and Formula 24 teams (between 11 and 16)

Formula Student UK

Ford sponsors three ‘Formula Student’ teams. Formula Student is the the world’s largest student motorsport event, seeing over 3,000 students in 135 teams from 28 different countries compete at Silverstone racing track in Northamptonshire. Its aim is to help develop the UK’s next generation of engineers, scientists and innovators.

STEM Prize

Recognising that women are traditionally under-represented in STEM studies and the related professions, The Ford PWN (Professional Women’s Network) awards an annual prize to recognise the achievements of women in STEM. The prize is awarded to a female student undertaking a STEM degree who can demonstrate that they are helping to inspire the next generation of scientists, engineers and technologists.

Ford Blue Oval Scholarships

Launched in 2011, to celebrate 100 years of Ford in Britain, the Ford Blue Oval Scholarship Programme is established to support the UK’s next generation student engineers, scientists and innovators. 

Ford provides sponsorship for undergraduates on a selection of engineering, science, manufacturing and technology courses at leading UK universities. These universities are: Bath, Bradford, Brunel, Cardiff, East Anglia, Imperial College London, Loughborough, Nottingham, Southampton, Strathclyde, Surrey and Warwick.

First Lego League event

FIRST LEGO League is a global science and technology challenge for teams of students, to encourage an interest in real world issues and develop key skills that are crucial for their future careers. The students work together to explore a given topic and to design, build and program an autonomous LEGO robot to solve a series of tasks. FLL is for young people aged between nine and 16, working in teams of up to 10 students with a supporting adult coach.

Article source: http://www.manufacturingglobal.com/people-and-skills/autocar-and-ford-celebrate-women-automotive-industry

Automotive industry enjoys record £77.5bn year – ChoiceQuote

Britain’s automotive industry has enjoyed a record year after securing a turnover of £77.5 billion last year, according to the latest figures.

Published by SMMT on behalf of the Society of Motor Manufacturers and Traders, the 2017 UK Automotive Sustainability Report showed that the manufacturing industry has enjoyed a seventh consecutive year of growth, while productivity, production output and vehicle sales also increased significantly.

Car dealers are used to experiencing fluctuations in the market, but this consistent increase in growth could allow many to invest in the growth of their own businesses. However, when investing in such an historically volatile sector it’s important to ensure motor trade insurance and other financial policies are kept up to date to reduce negative impacts should the market fall.

Thankfully, the figures suggest this is unlikely in the near future, with UK car and commercial vehicle production and new vehicle registration volumes increasing to record levels last year, up by 8.6 per cent and 0.2 per cent respectively.

This industry growth has also had an impact on the success of the sector’s workers, with employment remaining steady at 169,000 jobs and productivity reaching a record high of 11.8 vehicles produced for each industry employee.

This success is having a positive effect on the economy, too, with data showing that the average worker within the vehicle manufacturing sector alone is generating more than £130,000 for the country’s economy each year, an increase of 9.8 per cent on the previous year.

Commenting on the results, SMMT chief executive Mike Hawes said: “Today’s results demonstrate how UK Automotive is delivering growth across the UK, boosting productivity and improving environmental performance. This has been driven by massive investment in new models, plants, innovation and one of the world’s most skilled workforces.”

However, he suggested that more should be done to continue this success across the industry. Mr Hawes added: “However, for UK auto manufacturing to continue to thrive, we need clarity on the future, post-Brexit, to encourage ongoing investment and growth.”

Article source: https://www.choicequote.co.uk/news/motortrade/automotive-industry-enjoys-record-775bn-year-214876

Car makers cry out for interim Brexit deal to stop industry falling off a cliff

JLR has invested £12bn in facilities and RD over the past five years and a few days ago said it planned to recruit a further 5,000 engineering and technical staff in the UK, boosting its domestic workforce by 15pc, but there are concerns that such willingness to back Britain as a place to build cars could be hit by the failure to secure a good deal as the country leaves the EU.

Customs union

Ian Howells, senior vice-president of Honda, warned of the impact leaving the customs union would have on the company’s Swindon plant, which relies on a steady flow of parts to production lines to operate its ‘just in time’ manufacturing.

“We have deliveries of 2m components every day, arriving on 350 lorries,” he said. “We have just one hour of supply of parts at the side of the line, and half a day in local warehouses.

“From that description of the flow of goods you can see how new customs rules would harm our ability to produce cars.”

Article source: http://www.telegraph.co.uk/business/2017/06/20/car-makers-cry-interim-brexit-deal-stop-industry-falling-cliff/

Automotive industry embraces DAB+ radio | Southgate Amateur …

Over 4.6 million new cars with DAB sold in 2016, across eight key European markets and Australia

At the 2017 WorldDAB Automotive event in Munich, speakers from automotive manufacturers, regulators and the broadcast industry gathered to discuss the growing adoption of DAB radio in the car.

The event also saw the announcement of results from research WorldDAB and its members have undertaken into the digital radio user experience in cars, a first of its kind study.

The adoption of DAB radio in cars :

In 2016, 4.6 million new cars were sold with DAB across Germany, France, the UK, Italy, the Netherlands, Norway, Switzerland Denmark and Australia – up nearly 40% on 2015.

In Norway 98% of new cars are fitted with DAB as standard, with the UK at 87% and Switzerland at 66% all three markets are leading the push for drivers to go digital. In the second wave of European markets, Denmark, France, Germany, Italy and the Netherlands, DAB is fitted as standard in a growing number of vehicles.

“Drivers should be able to listen to their favourite stations on the move and across borders. Our members represent over 300 stations that reach more than 130 million people each day and it’s clear that DAB digital radio is the core future platform for radio. Our members and the automotive industry continue to work together on delivering the best possible experience to drivers across Europe. As DAB becomes the natural choice for consumers we want Europe to embrace it and manufacturers to offer DAB alongside FM in sets and vehicles, just as they did for AM and FM, and at a price which is attractive to the consumer.”

German highlights:

The event saw a particular focus on developments in Germany. Population coverage has now hit 96% and in February 2017, Dorothee Bär, Parliamentary State Secretary to the Federal Minister for Transport and Digital Infrastructure, published the Digital Radio Action Plan.

More here:
https://www.worlddab.org/system/news/documents/000/007/886/
original/Auto17_PR_FINAL.pdf?1498028885

• Our thanks to Mike Terry for spotting this item

Article source: http://www.southgatearc.org/news/2017/june/automotive-industry-embraces-dab-radio.htm

Hard Brexit to cost German car industry jobs: study

German and European carmakers could see their revenues decline by as much as 20 percent in the event of the UK leaving the EU’s single market and customs union entirely, concluded a new study released Thursday by the consulting firm Deloitte.   

The UK is an extremely important market for German automakers. About a fifth of Germany’s automotive exports are shipped to Great Britain. In 2016, around 950,000 newly registered vehicles in the UK were made in Germany. 

It is estimated that as many as 60,000 automotive jobs in Germany are dependent on exports to the UK. Deloitte’s researchers projected that about 18,000 of them would be threatened by a hard Brexit.

A weakened British pound, they said, would increase the price of German-made cars while decreasing the purchasing power of the British buyer, leading to a drop in demand. Customs duties would raise the car price even higher, with the study estimating that vehicles made in Germany could cost as much as 21 percent more than they do now in the UK.

Big losses

The report noted that car manufacturers based in continental Europe would be the biggest losers from such a scenario.

It said that although firms based in the UK and those from other non-EU countries would be able to gain some market share in the short term, they would not be able to benefit from the situation in the long run. That’s because their production costs would increase as they rely on suppliers based in the EU, whose parts would become pricier, the authors argued.

Formal talks about the British departure from the European Union began this week, with the UK’s Brexit Minister David Davis stressing that Britain would have to quit the bloc’s common market and customs union to ensure the return of full sovereignty.

Read: German firms warn Brexit will ‘seriously damage’ UK business

The clock is ticking for Britain’s exit from the bloc as Article 50 sets out a strict two year timetable. That means a deal will have to be agreed by March 2019, failing which Britain would fall back on World Trade Organization rules, which could result in higher export tariffs and other barriers.

Britain’s Society of Motor Manufacturers and Traders, an automotive industry body, this week urged the government to agree on an interim Brexit trade deal, calling for Britain to keep membership of the European single market and customs union until a final Brexit deal has been signed.

sri/bea (dpa, AFP) 

 

Article source: http://www.dw.com/en/hard-brexit-to-cost-german-car-industry-jobs-study/a-39362028

Carr: ‘Australia has capacity to rebuild automotive industry’

Senator Kim Carr (picture by David Howe)

Senator Kim Carr (picture by David Howe)

Shadow industry minister Kim Carr insists Australia can revive its automotive industry – but warns it will look very different.

A special guest at the Manufacturing Matters conference held at Parliament House in Canberra on Wednesday, the senator took several questions from an audience made up of industry leaders and thinkers.

One member of the audience described the decisions that led Australia’s automotive sector to the brink of closure as the worst in the country’s history.

However, while the doors are set to close at Toyota later this year, Carr believes there is still scope to rebuild the sector.

“I agree with most of what [the gentleman] said except that he says this is the end of the automotive industry in Australia,” Carr told the conference.

“We still have many top tier suppliers and, whatever happens, there will be thousands of companies who will continue to employ workers [in the automotive sector].

“What we won’t be doing is making fully-produced vehicles, but we do have a significant number of manufacturers [making] a major contribution to the supply chain.”

 Carr, who gave a speech about the future of manufacturing in Australia, also reflected in the car industry in the UK, which saw major foreign automakers – notably from Japan – establish factories in the country during the 1980s.

“After the Margaret Thatcher era, it took a long time for the country to understand what they had lost [in the automotive industry],” Carr said.

“If you look at the country now, across the political system the automotive sector is critical to the UK’s manufacturing capability.

 “They have rebuilt a manufacturing industry and is now one of the largest automotive exporters in Europe.

 “It proves there is the capacity to rebuild and we would have to think hard about the different ways we could do it [in Australia]. I am up for that.” 

Article source: http://www.manmonthly.com.au/news/carr-australia-capacity-rebuild-automotive-industry/