Author: Staff Writter

Ford Motor extended the temporary suspension of vehicle and engine production at most of its European factories to May 4.
“Ford’s production restart plans depend heavily on the pandemic situation in the weeks ahead, national restrictions in operation at the time, supplier constraints and the ability of our dealer network to operate,” the company said in a statement on Friday.
Ford paused production at its plants in Europe last month, including sites in Cologne and Saarlouis in Germany, the Craiova facility in Romania and Valencia in Spain, along with engine plants in the UK.

Editor’s note: An earlier version of this story understated the pay cut for executive vice presidents.
AutoNation Inc. is laying off 7,000 workers, slashing executive pay and postponing capital spending after vehicle sales fell by half in late March because of the coronavirus pandemic. 
“Markets from which we derive approximately 95 percent of our total revenue are currently under extensive ‘shelter in place’ or ‘stay at home’ orders from federal, state, and local governments, which significantly restrict our business operations, in particular our sales activities,” the largest U.S. dealership group said in a regulatory filing. 
In addition to putting the 7,000 workers on unpaid leave, the retailer has:
Postponed more than $50 million of capital expenditures through the second quarter.
Implemented a temporary 50 percent salary cut for Executive Chairman Mike Jackson and CEO Cheryl Miller. Executive vice presidents will get a 35 percent reduction and senior vice presidents 30 percent. Remaining corporate and regional staff will take a 20 percent hit. Board members waived their retainer fees.  
Reduced second-quarter advertising expenses by about 50 percent. 
Significantly trimmed discretionary spending.
Frozen new hiring. 
AutoNation said sales of new and used vehicles dropped by about 50 percent from year-earlier levels during the last two weeks of March.
“Our parts and service business is currently operating below full capacity, despite auto retailers having been deemed essential services in most of the markets in which we operate,” the filing said. 
AutoNation said it has a $1.8 billion revolving credit line. As of March 31, it had borrowings of about $790 million and about $1.1 billion in available cash and credit lines. 

AutoNation Inc. said on Friday its new- and used-vehicle unit sales fell about 50 percent year-over-year during the last two weeks of March due to the coronavirus pandemic.
The largest U.S. auto dealership chain has placed about 7,000 employees on unpaid leave, implemented temporary pay cuts for associates and frozen new hiring, the company said in a regulatory filing. 

If the merger between PSA Group and Fiat Chrysler Automobiles to create the world’s fourth-largest automaker had a certain logic when it was announced last Oct. 31, the case for a tie-up is even stronger now, with the auto industry on the verge of recession from the coronavirus pandemic.
The idea is that increased economies of scale would reduce unit costs and better amortize huge investments in future technologies, ensuring profits for the merged entity in years to come. Now, such synergies are becoming a basic tool to survive a shock that many experts say will be deeper, if not longer, than the 2008-09 financial crisis.
One positive effect of the coronavirus crisis, if there is one, is that some future FCA products are being put on hold or delayed. This will not only preserve cash in the short term, but also offer the possibility after the merger of more quickly aligning two product cycles that were locked into a set cadence. The virus is zeroing the clock the same way for any automaker.
So the deal still makes good sense.
But this is the wrong time to revise the financial terms of the merger, which call for a special dividend of 5.5 billion euros ($5.9 billion) to FCA shareholders, the divestment of PSA’s controlling stake in supplier Faurecia, and 1.1 billion-euro dividends for shareholders in the 2019 fiscal year.
With stock markets on a roller coaster and car sales in free fall over the world, any forward-looking statement could become obsolete in just few weeks. Each company has lost half of its market capitalization since the merger was announced. If Europe regains traction before the U.S. does, PSA could benefit. If the opposite happens, FCA could be stronger.  

Yet there is no urgency for such a discussion. The terms of the memorandum of understanding announced in December call for the deal to close by June 30, 2021, extendable to Sept. 30, 2021. At the time PSA and FCA said they expected that would take place in 12 to 15 months, so between December 2020 and spring 2021.
That breathing room will be helpful, as the two companies will need to make some tough financial decisions in coming weeks. The first is whether to freeze or cancel the 1.1 billion-euro dividend. Cash is king in a crisis, and at least freezing these payouts could be a wise move.
FCA was among the first major automakers to cut the salaries of its top executives, and its board members won’t get any compensation for their duties for the remainder of the year, a strong message needed when white- and blue-collar workers are facing reduced salaries because of plant shutdowns and shortened office hours.
Daimler has also cut executive compensation, and other European companies are likely to follow FCA’s example.
At PSA and FCA headquarters – as well as at their executives’ home offices – perhaps the only certainty right now is the need to reassess their individual businesses to weather this totally unexpected perfect storm.

MILAN — Fiat aims to restart operations at three Italian sites as soon as the government lifts coronavirus restrictions on manufacturing, a union representative said.
Unions will monitor health precautions, said Gianluca Ficco, a representative of the UILM metal workers’ union.
Despite Italy’s lowest death toll from coronavirus in six days on Wednesday, Prime Minister Giuseppe Conte said a national lockdown in place since March 9, and due to expire on Friday, would be extended until at least April 13. The lockdown measures include a freeze on all non-essential economic activity, including car production.
Ficco said unions had started talks with the automaker to make sure all health and security requirements were met in factories, with a view to resuming operations after the lockdown.
“At the moment the date we are looking at is April 14,” he said.
The sites are the Melfi operation in southern Italy that produces Jeep’s Compass and new hybrid models; the Atessa plant making light commercial vehicles in central Italy; and the Mirafiori plant in Turin that includes preparatory operations for the new electric 500, Ficco said.
An Fiat spokesman confirmed on Thursday that, if the government allowed production to restart after April 13, those three operations would be the group’s priority.
Last week, before the national lockdown was extended, the automaker had told unions it would have been ready to resume the same three operations on April 6 if the government had given its go-ahead.

BEIJING — Organizers of the Beijing auto show, which was scheduled to be held in late April, said the event would be held between Sept. 26 and Oct. 5 due to the coronavirus pandemic.
Several other auto shows globally have been canceled or postponed due to the outbreak, including those in Detroit, Geneva, New York and Sao Paulo. The Beijing show was to be held April 21-30. Organizers had said in February that it would be postponed but no new date was given.
In light of the “serious challenges” from the coronavirus outbreak the show is being postponed “to effectively protect the health and safety of exhibitors and spectators,” organizers said in a statement Friday.
The epicenter of the coronavirus outbreak was in Hubei province, China, where the city of Wuhan is home to many automotive factories. Plants there were closed for around two months starting in January after the area was placed on a near-total lockdown. The Chinese auto market is stirring to life again, but fears of a second wave of coronavirus continue as areas are reopened to commerce and movement.
Since it started in 1990, the Beijing show has become one of the world’s largest automotive trade fairs. It’s a key launching pad for new product for the world’s biggest auto market. The Beijing show is held every two years and alternates with a similar event in Shanghai.
At the 2018 show, companies including VW, Audi, BMW, Ford and Mercedes-Benz held key product launches.

General Motors on Thursday rolled out a series of safety measures for workers in Indiana who will make ventilators, outlining what could be a blueprint for opening U.S. auto plants in the coming weeks.
More than 1,000 GM workers will make the ventilators at GM’s Kokomo, Ind., plant. The automaker aims to begin mass production by mid-April and to make 10,000 ventilators a month by summer.
The measures include checking workers’ temperature as they arrive for work, and each work station will be placed at least 6 feet apart, GM said.
There will be a 30-minute interval between shifts so workers can clean work stations when they arrive and before they leave. Cleaning crews will sanitize common areas and “touch areas” such as door handles, at least three times per shift.
A spokeswoman for GM said the measures may form a blueprint for safety protocols at the rest of GM’s plants once the automaker decides to restart production when the pandemic crisis recedes.
Other big automakers and large U.S. employers in other industries, such as Amazon.com Inc., are laying the groundwork to bring employees back to workplaces using screening and social distancing to address COVID-19 safety concerns.
Earlier this week, Ford Motor Co. said it will produce 50,000 ventilators over the next 100 days at a plant in Michigan in cooperation with General Electric’s healthcare unit. It said it can then build 30,000 per month as needed to treat patients afflicted with the coronavirus.
Ford plans to deploy “a whole host of techs to keep workers safe,” developed in cooperation with the UAW, Ford manufacturing executive Adrian Price said in a call earlier this week.
Ford will organize production lines so workers are a safe distance apart and use technology to check their health, Price said. “We have been planning the reopening of our facilities with this same approach.”
GM has been working with ventilator firm Ventec Life Systems, numerous auto suppliers and other ventilator firms as officials warn the United States may need tens of thousands of additional ventilators to treat seriously ill patients.

Tesla Inc.’s first-quarter deliveries fell less than expected from record levels reached late last year.
Tesla handed over 88,400 vehicles worldwide in the first quarter, a record for the period, but down 21 percent from the last three months of 2019. But the total beat analysts’ average estimate for about 78,100.
In the first quarter of 2019, Telsa racked up sales of 63,000 worldwide when Model 3 deliveries were ramping up overseas.
“I’m shocked they did so well,” said Gene Munster, managing partner of venture capital firm Loup Ventures. “I don’t know how they did it. They had every excuse in the world to put out a bad number.”
Sequential slowdown
Tesla tried to salvage as much business as possible last month by introducing “touchless” deliveries at a time when authorities around the globe are urging would-be car buyers to shelter in place.
While Tesla managed to deliver more vehicles than the year-ago quarter, the improvement was small considering the company added a new product — the Model Y — and opened an assembly plant in China.
Tesla didn’t give an update on whether it still expects to deliver at least 500,000 vehicles this year. The carmaker’s stock rose 12 percent as of 4:40 p.m. ET in after hours trading Thursday in New York.
Analysts anticipate Tesla will sustain a significant blow along with other automakers from the spread of the viral illness known as COVID-19.
With a global recession increasingly likely, consumers are expected to be less interested in making big-ticket purchases like new vehicles even once they’re able to leave their homes.
Model Y
The vehicles delivered in the quarter include the first Model Y crossovers that started reaching customers in mid March.
Tesla said production and deliveries of the Model Y was significantly ahead of schedule
Musk has predicted it will be a big seller, potentially eclipsing the combined volume of all other vehicles in Tesla’s lineup: the Model 3, S and X.
Tesla didn’t say how many vehicles it built during the quarter at its plant near Shanghai, which started production late last year. While the company suspended output when measures to contain the coronavirus forced plant closures across China, government authorities bent over backward to help the company reopen quickly.
“The production number was very good, especially with what was going on in China,” Ben Kallo, an analyst at Robert W. Baird, said of the 102,672 vehicles Tesla built in the quarter. He isn’t bothered by the company neglecting to update its 2020 forecast. “It shows they don’t have visibility in this environment. Saying nothing is better than saying something at this point.”
‘Small victory’
Tesla’s only U.S. assembly plant, in Fremont, Calif., stopped production on March 23 after days of back-and-forth with city and county officials. San Francisco Bay area health authorities have since extended “stay-at-home” orders to at least May 3.
Tesla delivered over 14,000 fewer cars than it produced in the quarter, meaning the automaker built inventory.
Musk warned back in July — long before the coronavirus outbreak — that the first quarter of this year would be “tough.” Tesla’s vehicles are no longer eligible for federal tax credits in the U.S., and buyers also are getting less-generous support from the Netherlands, a market that contributed to record fourth-quarter deliveries.
“I view it as a small victory during a dark time,” said Dan Ives, a Wedbush Securities analyst who rates Tesla a hold. “The devil is in the details and the big question is around 2Q cash burn given this unprecedented, treacherous environment.”

General Motors will help develop two new electric vehicles for Honda that will be powered by GM’s upcoming Ultium batteries, the automakers said Thursday.
Honda will design the interior and exterior of the vehicles. They will ride on GM’s global EV platform, which “will be engineered to support Honda’s driving character,” the companies said in a joint statement.
GM will build the EVs at its North American plants and sales are expected to begin in the 2024 model year in Honda’s U.S. and Canadian markets.
The vehicles will offer GM’s hands-free advanced driver-assist technology. The technology mirrors GM’s SuperCruise system but will have Honda-specific branding, a spokeswoman said.
“This collaboration will put together the strength of both companies, while combined scale and manufacturing efficiencies will ultimately provide greater value to customers,” Rick Schostek, executive vice president of American Honda, said in the statement. “This expanded partnership will unlock economies of scale to accelerate our electrification roadmap and advance our industry-leading efforts to reduce greenhouse gas emissions.”
GM and Honda’s electrification partnership goes back to 2013 when the automakers jointly developed hydrogen fuel-cell technology. The companies also worked together on the Cruise Origin, a self-driving, shared electric van unveiled in January. Honda invested $2.75 billion into GM’s Cruise subsidiary last year and became involved in GM’s battery module development efforts starting in 2018.
The companies continue to evaluate the possibility of extending the partnership further, Schostek said.
As part of the agreement, Honda will incorporate GM’s OnStar safety and security services into the vehicles, integrating them with HondaLink.
The agreement “further validates the technical advancements and capabilities of our Ultium batteries and our all-new EV platform,” Doug Parks, GM executive vice president of global product development, said in the statement. “It is another step on our journey to an all-electric future and delivering a profitable EV business through increased scale and capacity utilization. We have a terrific history of working closely with Honda, and this new collaboration builds on our relationship and like-minded objectives.”
Honda has long resisted jumping on the EV bandwagon, insisting that hybrids are more appropriate for the North American market. At the same time, the company has stressed its partnerships with GM on hydrogen fuel-cell development and autonomous driving.
Honda debuted its Honda e small EV in Europe in January but said there were no plans for the city car with limited EV range to come to the U.S. Honda also recently discontinued its Clarity EV in the U.S. The Clarity had only 89 miles of range and was considered a “compliance car” to meet zero-emissions vehicle regulations in California and other states.
GM, meanwhile, has pledged $20 billion toward electric and autonomous vehicle programs through 2025. It plans to build 20 EVs globally by 2023 and is converting its Detroit-Hamtramck Assembly plant into an EV manufacturing hub with a $3 billion investment.
GM’s proprietary Ultium battery, which it will manufacture through a $2.3 billion joint venture with LG Chem in Ohio, will allow for a range of up to 400 miles on a full charge — about 50 percent more than the 259-mile range for the 2020 Chevrolet Bolt.
The batteries have large-format, stackable pouch-style cells for more flexibility and optimal battery energy storage. They are made of a traditional nickel-cobalt-manganese combination, but GM also added aluminum to reduce the amount of costly cobalt by 70 percent. GM last month said the Ultium technology would allow its battery costs to drop below $100 per kilowatt-hour, the threshold widely seen as making EVs competitive with internal-combustion vehicles. The company projects its EV sales in North America and China combined will reach 1 million a year by the middle of the decade.
Laurence Iliff contributed to this report.

Leasing rates are falling across the industry during the unfolding coronavirus crisis as automakers have ramped up new incentive programs aimed at getting customers to purchase vehicles.
Competition for returning lease customers “will be fierce,” said Patrick Roosenberg, director of auto finance at J.D. Power. About 1.8 million consumers have been scheduled to return their leased vehicles between March and July, according to the J.D. Power 2020 U.S. End of Lease Satisfaction Study.
“Aggressive retail programs, some of which have already launched with 0 percent financing and deferred payments up to 120 days on extended term loans, will create more obstacles for lease retention,” Roosenberg said in a statement.
Leases accounted for 31 percent of new vehicles retailed in 2019, according to the study. That compares with 20 percent of buyers opting for leases during the week ended March 29, J.D. Power reported Wednesday. In addition to the new incentives to purchase, the change was attributed to a combination of lessees postponing purchases and to sales declines in high-lease markets and for luxury brands.
The drop in leasing rates is significant but likely will be temporary, according to Roosenberg.
“What the lenders are trying to do is present a lot of options to their customers in a difficult time,” Roosenberg told Automotive News. “You will see some conversion to retail, but lease customers tend to go back to leasing.”