AD #1605 – VW Battle Far From Over, Acura’s New Casting Process, Q1 Not Good to GM
April 23rd, 2015 at 11:51am
Runtime: 6:51
- VW Executive Battle Far From Over
- Renault Maps Out China Plan
- GM Back to #3
- Acura’s New Casting Process
- Q1 Not So Good for GM
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On today’s show… we’ve got brand new details about the Acura NSX, the battle between VW’s Ferdinand Piech and Martin Winterkorn is far from over and GM’s quarterly earnings do not look very good. All that and more coming right up on Autoline Daily.
This is Autoline Daily for April 23rd, 2015.
VW EXEC. BATTLE FAR FROM OVER
Last week, Volkswagen’s board of supervisors threw its support behind CEO Martin Winterkorn when company chairman Ferdinand Piech said he had lost confidence in Winterkorn. Last Friday we said this fight was far from over and we were right. Now reports in the German media say that Piech is on the warpath and wants Winterkorn removed at the annual shareholder’s meeting on May 5. Those reports say that either Matthias Mueller, the CEO of Porsche or Winfried Vahland, the head of Skoda are probably Piech’s choice to be the next CEO of Volkswagen. Here’s my Autoline Insight. This is going to turn into a back alley knife fight, pitting members of the Piech and Porsche families against each other. Pity the poor Volkswagen executives who are going to have to choose sides at some point soon, which will make or break their careers. I can only imagine that this fight is paralyzing the corporate staff and the sooner this is resolved–no matter which way it goes–the better for Volkswagen.
RENAULT’S CHINA PLAN
Renault was late to the party in China but thanks to its partner Nissan is has a playbook to follow on how to ramp up its operations there. The company is building a new plant which will start production by the end of the year. Carlos Ghosn, the CEO of Renault-Nissan, says China will become the main growth market for Renault from here on out. He says Renault will be successful because Nissan has been in China for 12 years and Renault is simply going to borrow its strategy for the Chinese market.
And we’ll be back with more news right after this short break.
GM BACK TO #3
Last week we told you that GM slipped to number 4 in global sales during the first two months of the year. But the company was able to bounce back in March. It sold 2.4 million vehicles in the first quarter which puts it back in third place behind Toyota and Volkswagen. Toyota remains the top automaker with 2.5 million in sales and VW is right behind at 2.49 million.
ACURA’S NEW CASTING PROCESS
When Acura set out to make the new NSX, it wanted to keep the spirit of the original car, but create something new and exciting. A hybrid powertrain consisting of 3 electric motors and a twin-turbo V6 is an obvious difference, but there’s major changes under the skin as well. While the previous generation was all-aluminum, the new NSX is Acura’s first use of a multi-material frame design. Most of the structure is made from aluminum extrusions and ultra-high strength steel, but it’s also uses the world’s first application of a process called ablation casting. Ablation casting is a sand casting, but the binding substance used to hold the sand cast together is water soluble. So, once the aluminum is poured into the cast it immediately runs through a water shower that washes the binder away and rapidly cools the part. This process makes the cast very rigid, while also giving it the ductility and energy absorption characteristics of an extruded part, which means they can be used in crush zones at major suspension and transaxle mounting points. Another benefit of putting crush zones into the ablation castings is that designers were able to shorten the overhangs at the front and rear of the car. And if it does get into an accident these castings can be removed and replaced as a whole unit, making repair easier and faster. While the NSX is the first to use this technology, you can bet ablation castings will find their way onto other Honda vehicles.
Coming up next, we take a look at GM’s first quarter financial earnings and they don’t look very good.
Q1 NOT SO GOOD FOR GM
General Motors announced its first quarter earnings this morning, and while the company posted some noticeable improvements in some areas, these numbers are not very good. GM sold just over 2.4 million vehicles worldwide in the last three months, but that was down compared to last year. It brought in $35.7 billion in cash, but that was down even more. It posed a 2,400% improvement in earnings before income taxes, and a 343% improvement in net profit, but that’s only because a year ago it was heavily impacted by recall costs. Those costs have not gone away but are nowhere near where they were a year ago. GM’s cash and securities dropped by $4 billion due to costs. It finished the quarter with $24 billion, which is a lot of money, but we’re seeing an erosion of the fortress-like balance sheet management set out to build.
Before we go, don’t forget to join us for Autoline After Hours later today. Our guest is Sandy Munro, whose recent tear down and cost analysis of the BMW i3, prompted BMW to worry that someone had leaked him internal information. Tune in to learn some of the secrets that Sandy and his team discovered as they chiseled the car apart.
But that wraps up today’s, report, please join us again tomorrow.
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Comments (24)
April 23rd, 2015 at 12:03 pm
Isn’t it way past time for Piech to be out of there? He’s 78 years old.
April 23rd, 2015 at 12:08 pm
Something tells me Johan deNysschen is making popcorn for this fight at VW. How can he lose?
April 23rd, 2015 at 12:17 pm
Henry Ford was rather problematic during the final days of his being at the helm of FMC, too.
Time for Piech to go.
April 23rd, 2015 at 12:18 pm
Instead of VW’s execs having a pissing contest over what amounts to a personality clash,they should focus their energy in improving their sales in the NA market.
April 23rd, 2015 at 12:19 pm
Lunchline HtG
Here’s a link to an ARM Holdings* press release about the rise of computing power in cars. ARM foresees that,…”Advanced Driver Assistance Systems (ADAS) equipped vehicles will require at least 100x more compute performance by 2024 compared to 2016 models, with functional safety an industry priority.”
ARM has a unique position in the computer industry, since it supplies IP and to so many of the firms that make chips, and must understand and plan for their needs a decade into the future. My reading of the press release is that just like in the mobile space, ARM’s value proposition is that its designs allow firms to concentrate on differentiating their products and get to market faster. Same for the auto space.
http://www.arm.com/about/newsroom/arm-expects-vehicle-compute-performance-to-increase-100x-in-next-decade.php?utm_content=sf37767037&utm_medium=spredfast&utm_source=twitter&utm_campaign=ARM+Social+Media&sf37767037=1
*I own yada yada shares of ARM, I do disclose.
April 23rd, 2015 at 12:23 pm
I have this theory that you can tell a lot about today’s new models by looking at older products from the same manufacturer. I looked a 10 year old VW Passat wagon in Florida last week. This one would have needed a complete paint job and the replacement of a bunch of little, broken interior parts to be salable. For a car with less than a 100K miles on it, this one was way too close to junkyard ready.
April 23rd, 2015 at 12:39 pm
In Florida, and other places where it is often hot and sunny, the condition of paint, interior, and headlight lenses of a 10-15 year old car can vary from perfect to horrible, depending on whether the car is always outside, or usually garaged.
If that Passat had an extraordinary number of broken interior parts, yeah, that indicates something.
April 23rd, 2015 at 2:08 pm
“but we’re seeing an erosion of the fortress-like balance sheet management set out to build”: no, management has not set out to build that balance sheet. The government has done that by bailing them out of their self-inflicted bankruptcy, the executives were mere by-standing beneficiaries.
And GM and Autoline TV continue to think that GM is formidable, being the number 3 or 4 automaker based on the number of vehicles they produce. They are actually probably number 8 or worse if you would look at GM as a business instead of a set of plants: measuring revenues, profits, or market capitalization instead of production figures. Businesses produce money and are judged based on how much they manage to generate based on an intelligent mix of good products, financing, after market sales, etc.
Look at other sectors: is GE judged based on how many jet engines they produce? Is Procter & Gamble judged based on how many tons of detergent they produce? Is Apple judged based on how many computers they produce?
I don’t think so.
April 23rd, 2015 at 2:24 pm
I don’t think that you can apply identical metrics to disparate industries. “When all you have is a hammer, everything starts looking like a nail.”
It seems to me that John did discuss profit and loss figures, not simply production. Oh, he did mention ranking based on vehicle sales, but he also discussed the rest.
Somehow I suspect that you’d agree that “Government Motors” should’ve been allowed to fail and been dismembered in an orgy of capitalist “creative destruction”.
I don’t, because GM isn’t just a bunch of incompetent executives and production facilities. It is also thousands of real people who were not responsible for what happened at GM.
April 23rd, 2015 at 2:28 pm
Isn’t GE judged mainly on being good at tax evasion, and actually making almost nothing EXCEPT jet engines, now that they have sold their appliance division to Electrolux?
April 23rd, 2015 at 2:30 pm
9 Exactly. Well said.
April 23rd, 2015 at 3:30 pm
@10: You should know for yourself, of course, but if I were you I would not accuse a company like GE of tax evasion. Unless you can prove that in a lawsuit, just in case GE would consider you worthy of a lawsuit for a false accusation and damage to their reputation.
April 23rd, 2015 at 3:41 pm
12 I’m not worried about being sued by GE. I did exaggerate their not making anything except jet engines, though. They are big in medical equipment, and certain industrial and power plant equipment. Their “bringing good things to life,” at least with consumer products, is long gone.
April 23rd, 2015 at 4:18 pm
Call it tax evasion or legal tax evasion,but it no secret GE and Apple manage/hide their profits overseas for the very purpose of avoiding taxes. Business has no moral or ethical values….just the bottom line!
April 23rd, 2015 at 4:34 pm
I heard somewhere today that Piech is denying efforts to remove Winterkorn. How can he be believed when holding a knife for a good back stabbing?
April 23rd, 2015 at 4:51 pm
13,14: Tax evasion is a crime. Accusing somebody or a company of a crime should be done with proper evidence at hand IMHO.
It seems like what you are referring to is tax avoidance. The businesses I know avoid paying unnecessary taxes, so do all individuals I know.
I do not know you, and you may be different. You may calculate how much you owe the IRS and add a scoop or two. I and everybody I know calculate what is owed and pay exactly that. Not more, not less.
April 23rd, 2015 at 5:24 pm
16 Yes, unethical tax avoidance might be a better term for what GE, Apple and other companies are doing in hiding their profits off-shore. Yes, the tax “system” is certainly flawed.
April 23rd, 2015 at 5:56 pm
Kit, you summed it up pretty well. Many corporations are flooded with profits, yet still are given numerous tax breaks and gov’t money towards various adventures,… unlike individuals. Maybe WvA would thus, then, agree these incentives are not needed he believes it is O.K. for these businesses to use unintended loop-holes to avoid what is just and fair.
April 23rd, 2015 at 6:24 pm
I had to reread the transcript to make sure I didn’t hear John wrong . So after Losing $4 Billion GM still has $24 Billion. Uh okay can someone explain again why they needed the bailout? Seems like they got to keep their money and spent the taxpayers instead.
April 23rd, 2015 at 6:50 pm
With the 3 trillion or so, and counting, spent on the Iraq invasion, I’m not too worried about what the GM and Chrysler bailouts might, or might not have cost.
April 23rd, 2015 at 8:05 pm
I think I’m done explaining. In another landscape where I play, it astonishes me when argument fails to persuade even elites if their careers and identities are challenged. They just can’t.
So it goes
April 24th, 2015 at 2:20 am
…so how ling ’til GM files for bankruptcy again…?
April 24th, 2015 at 9:01 am
If you haven’t seen the latest AAH (with Sandy Monroe); I give it two thumbs up………….Outstanding this week. If you lean towards the engineering side of the business this is a not to be missed show.
April 24th, 2015 at 3:50 pm
Perhaps the character of the base VW Golf sums up the entire situation at VW. 5 spd gearbox, 15″ wheels with no options. Compare to previous “Rabbit” offerings. Boring – trying to push customers into upscale models. We drivers simply want a good chassis, great gear box and engine – skip the glitz. I notice the whole line is pushing the luxury stuff. They lost me. Maybe Piech still digs simple sports cars, you think? Isn’t that what VW is supposed to be all about?