GM And Mercedes Beat Estimates, Hyundai Not So Much
This is The Morning Shift, our one-stop daily roundup of all the auto news that's actually important — all in one place every weekday morning. Or, you could spend all day waiting for other sites to parse it out to you one story at a time. Isn't your time more important?
1st Gear: BOOM, GM
GM's third quarter earnings of $.97 a share beat the estimate of $.95 a share, up 98% from a year ago (although a year ago there were a bunch of special items to drag that price down. Here's Melissa Burden on why the market was more pessimistic:
Some analysts in recent days had revised down third-quarter estimates with sales slowdowns in Russia and South America. The automaker had $331 million in special charges in the third quarter, including $132 million in charges related to flood damage at the GM Tech Center in Warren. Another $194 million in special items were related to a write down of assets in Russia. It also had about $300 million in restructuring charges in the quarter, $200 million of which was in Europe.
Still, revenue was up and a lot of that came in the form of truck and SUV sales in the U.S. which is $$$$$$$$.
2nd Gear: BOOM, Mercedes
Mercedes saw an operating profit rise of 21% over the third quarter last year to $3.53 billion, thanks in part to selling a crap ton of S-Classes.
While things aren't perfect in Stuttgart, it's a nice turnaround from where they were. Per Bloomberg:
"They're not raising exuberant expectations, truck orders are down and they signaled that they won't pay a special dividend" even as cash on hand jumped, said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler on the phone. "That damps any euphoria. But the general picture is good, with strong S-Class deliveries and high truck sales in North America."
Now all they need to do is figure out how to put their stellar 2.0 turbo fourbanger into the back of a Smart.
3rd Gear: BUST, Hyundai
Hyundai saw a 29% drop in third quarter profits, missing their estimates. There's a lot to blame here, including a weaker won, a bunch of strikes, and mediocre returns in the United States.
Oh, and they agreed to spend $10 billion buying land for a new HQ to be paid out in three installments from their cash fund.
So you'd think that e'rbody be bailing out of Hyundai, but actually the stock price rose more than it has in two years. Buh?
South Korea's largest automaker is considering shareholder payouts in addition to annual dividends starting in 2015, Chief Financial Officer Lee Won Hee said in a conference call after Hyundai released third-quarter earnings. The move helped ease concerns that the 10.6 trillion won ($10 billion) cash property purchase by Hyundai and two affiliates would limit the prospects of increased dividends.
Hyundai managed to piss off their investors and their employees with the move. Now they've just got to contend with their employees.
4th Gear: Some History On The Tesla Dealer Issue
We've got some smart guidance this morning on Tesla's dealership conundrum, but I thought I'd add to it this piece from the Freep provides some nice history:
Most states passed a form of these laws in the years before and after World War II when most dealerships were owned by small local businessmen and General Motors, Ford and Chrysler dominated the market.
The manufacturers could deny vehicles to dealers or force them to buy more models than they could realistically sell, thus shifting inventory costs from their own accounting books to dealers. The Big 3 could terminate franchises without cause.
"Dealers were worried about a variety of different kinds of exploitation, including that manufacturers would open up their own retail outlets and undercut the dealers on price after the dealers had made big investments to promote the manufacturers' brands," said Daniel Crane, a University of Michigan law professor.
Bill was backed by the state's auto dealers
So dealers began to fight back. Gradually they passed various laws to protect them against such abuses. In 1956, Congress passed and President Dwight Eisenhower signed the Automobile Dealers' Day in Court Act, which empowered dealers to sue an automaker who they alleged had violated terms of a franchise agreement.
These aren't bad laws, or at least they weren't, but they're inconsistent with the world we want.
5th Gear: Here Comes The Sheriff
After massive recalls and questions over how Takata informed companies and customers about their safety, it's clear that it was only a matter of days before they'd draw the attention of federal prosecutors and, according to the WSJ that's happening.
The probe is at a preliminary stage, one of the people said, and U.S. officials are working carefully to avoid slowing down recalls. The investigation could end with no charges being filed, the people said.
The investigation, which is being conducted by prosecutors in the Manhattan U.S. attorney's office, is examining whether Takata made misleading statements about the safety of its air bags to U.S. regulators, the people familiar with the matter said.
Buckle up, Takata, you're about to crash. Oh, and maybe disable your airbags first.
Reverse: Cars Shouldn't Be Made Into Bombs
On this day, a suicide bomber drives a truck filled with 2,000 pounds of explosives into a U.S. Marine Corps barracks at the Beirut International Airport. The explosion killed 220 Marines, 18 sailors and three soldiers. A few minutes after that bomb went off, a second bomber drove into the basement of the nearby French paratroopers' barracks, killing 58 more people. Four months after the bombing, American forces left Lebanon without retaliating.
[HISTORY]
Neutral: What About Ford?
We'll find out about Ford soon enough, what do you expect? Boom, bust, meh?
Photo Credit: AP Images