US market proves a headache for global carmakers
Adds Honda comments in paragraphs 8-10
Stellantis, Nissan profits hit by problems in U.S. market
Shares hit by poor results
Ford's EV business weights on earnings
Stellantis ready to axe unprofitable brands
By Nick Carey and Nora Eckert
LONDON/DETROIT, July 25 (Reuters) -Problems in the highly competitive U.S. car market including weak prices, high inventories and difficult logistics dented profits and hit shares of automakers including Ford Motor F.N, Stellantis STLAM.MI and Nissan 7201.T on Thursday, as they scramble to find a fix.
Global automakers are facing a weakening outlook for sales across major markets such as the U.S., while also juggling an expensive transition to electric vehicles and growing competition from cheaper Chinese rivals.
U.S. automaker Ford plunged 16% after its second-quarter profit missed analyst expectations, weighed down by high warranty costs and a cash-burning electric vehicle business.
Shares in Milan-listed Stellantis lost nearly 9% after earlier hitting their lowest in almost a year. Nissan dropped 7%, sending the stock of its French alliance partner Renault RENA.PA down as well despite posting a first-half profit that beat estimates.
Automakers were dragged down by excess inventory in the United States, in part due to a June software outage that slowed or halted some dealerships' operations. New-vehicle supply at the start of July was more than double the year-ago period, according to Cox Automotive.
Cox analysts expect inventories to normalize in a couple of months as the effects of the CDK software outage wane. Still, investors are wary of higher inventories as motor vehicle output has been strong in the United States.
"Most investors have cited concerns on pricing risk emerging, especially amid rising inventory," Barclays analyst Dan Levy wrote in a note this week. U.S. federal data shows average spending per vehicle has ebbed of late.
Honda 7267.T U.S. sales chief Lance Woelfer said inventories haven't been an issue for the Japanese automaker in the United States, but it affects everyone when any automakers struggle as that can then affect pricing.
"It creates a market dynamic you need to be aware of and adjust to," he said.
Woelfer said this year has been about balancing inventories and demand. Honda's U.S. sales are expected to rise 10% this year.
Nissan was hit hard by higher inventories, as its fiscal first-quarter profits were virtually wiped out and it slashed its annual outlook due to deep discounting in the U.S. market to get cars off lots.
CEO Makoto Uchida said it was a "tough one" to optimise inventory buildup in the United States and it would focus on better cars it can charge more for.
Ford has been beset by structural inefficiencies and by its electric vehicle business as it struggles to gain traction in that market. The company's EV and software unit posted a $1.1 billion operating loss for the quarter and expects that business to lose up to $5.5 billion for the year before taxes.
WEAKENING OUTLOOK FOR SALES
World No. 4 automaker Stellantis said it was taking steps to fix weak margins and high inventory in the U.S. after delivering worse than expected first-half results. CEO Carlos Tavares said he will not hesitate to axe underperforming brands in its sprawling portfolio.
"If they don't make money, we'll shut them down," he said.
He has maintained since Stellantis was created in 2021 from the merger of Italian-American automaker Fiat Chrysler and France's PSA that all of its 14 brands including Maserati, Fiat, Peugeot and Jeep have a future.
Stellantis' profit margins have been higher than its peers in recent years, but in a note Bernstein analysts said its margins were now not far above those of General Motors GM.N, which posted solid results earlier this week and raised its annual profit forecast.
"This raises questions over Stellantis' cost efficiency reputation," they wrote. Its shares have fallen more than 20% this year, worst among the major European carmakers.
The world's number 3 automaker by sales, Hyundai 005380.KS, posted strong second-quarter results, lifted by U.S. sales of premium SUV models and hybrid vehicles, which helped it offset prolonged weakness in South Korea.
Like Stellantis, Nissan plans to bolster sales from new and refreshed models in the second half, including the Armada and Murano SUVs.
"It's totally unclear what vehicles that Nissan is selling in the United States are popular," said Seiji Sugiura, an analyst at Tokai Tokyo Intelligence Laboratory.
"As the competitiveness of the models in their lineup is falling, they have no other choice but to make new vehicles, sell those and hope that they will be popular."
GRAPHIC-Types of vehicles sold in Q2 https://reut.rs/3RRWkRJ
GRAPHIC-Chinese car exports soared by more than 50% in 2023 https://reut.rs/3KtEKzk
GRAPHIC-U.S. auto sales interactive https://reut.rs/343ZbwX
Reporting by Nick Carey, Nora Eckert and Ben Klayman in Detroit; Additional reporting by Daniel Leussink in Tokyo, Giulio Piovaccari in Milan and Gilles Guillaume in Paris; Editing by Josephine Mason, Elaine Hardcastle and Nick Zieminski
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.