AD #1485 – Honda Execs. Not Fit for Pay, Q3 Results, Ford Adds Automated Technology
October 23rd, 2014 at 11:55am
Runtime: 6:37
- Honda Cuts Executive Pay Over Recalls
- Scion Teases iM Concept
- Spain Sales Soar
- GM’s 3rd Quarter Looks Decent
- Daimler Posts Spectacular Numbers
- Strikes Hurt Hyundai’s Bottom Line
- Ford Adds Automated Technology
- Terra’s New Electric Scooters
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Despite its recall fiasco GM posts decent earnings, Honda cuts executive pay over recalls, and Ford is democratizing safety technology. All that and more in today’s Autoline Daily.
HONDA CUTS EXECUTIVE PAY
Welcome to Autoline Daily for Thursday, October 23rd. Here’s something you rarely see in the corporate world, executives being held accountable for poor results. Honda announced that its President and CEO, Takanobu Ito, and twelve other execs are being hit with a pay cut because the Fit Hybrid was recalled five times this year. Over the next three months Ito will take a 20% pay cut while the others are getting 10% of their salary docked. Now there’s the way to show the world you’re serious about preventing recalls.
SCION TEASES iM CONCEPT
The LA Auto Show is less than a month away, so that means automakers are starting to tease what they will reveal at the show. Scion released these images of a concept car called the iM. Not surprisingly the company didn’t share any details about the car but as you can tell from these front end shots it’ll be what they call sporty.
SPAIN SALES SOAR
Spain has been hit hard by the recession in Europe but maybe this is a sign things are finally starting to turn around. Wards reports that sales last month shot up 25% compared, hitting 66,000 units. Volkswagen is the number one brand in the country this year, capturing 18% of the market. Through the first nine months of the year car sales in Spain are up nearly 20%. And that is a really good sign.
GM’S 3RD QUARTER LOOKS DECENT
General Motors posted its third quarter earnings and despite all those recall problems, the numbers look kind of decent. GM sold 2.4 million vehicles worldwide, up two and a half percent. But it’s revenue barely budged, up only 0.7%, suggesting the company did a lot of discounting to boost its sales. It’s operating profit was exactly the same as a year ago, $2.2 billion. But it doubled its net profit to $1.4 billion. GM broke even in South America, a region that’s giving everyone headaches, but lost another $400 million in Europe.
| Sales | 2.4 M | +2.5% |
|---|---|---|
| Revenue | $39.3 B | +0.7% |
| Operating Profit | $2.2 B | —- |
| Net Profit | $1.4 B | +100% |
Don’t go away. Coming up next: Daimler made a lot of money in the last three months, Hyundai did not. Ford is democratizing safety technology and we take a look at a cool electric scooter.
DAIMLER POSTS SPECTACULAR NUMBERS
We just showed you how GM posted pretty good number, but nothing like Daimler. The parent company of Mercedes-Benz, posted spectacular numbers. Sales grew 7% to 637,000 cars, trucks and busses. Revenue climbed 10% to nearly $42 billion. Its operating profit or earnings before income taxes, shot up 67% to almost $4.7 billion, and the bottom line jumped 49% to $3.5 billion. So even I said though the GM numbers look decent, Daimler’s numbers show how far GM has to go. Even though GM sold 1.7 million more vehicles than Daimler, the German company made $2 billion more in profits.
| Sales | 637,000 | +7% |
|---|---|---|
| Revenue | $41.9 B | +10% |
| Operating Profit | $4.69 B | +67% |
| Net Profit | $3.5 B | +49% |
STRIKES HURT HYUNDAI’S BOTTOM LINE
Meanwhile, in Korea, Hyundai completed a difficult quarter. Sales came in at 1.1 million vehicles worldwide, and revenue increased by 2.2%. However, the company’s operating profit dropped by 18% and its net profit plummeted 28%. As we’ve been reporting all year, strikes in Korea really hurt the bottom line.
| Sales | 1.1 M | —- |
|---|---|---|
| Revenue | $20 B | +2.2% |
| Operating Profit | $1.5 B | -18% |
| Net Profit | $1.5 B | -28% |
FORD ADDS AUTOMATED TECHNOLOGY
Toyota recently announced that it will be adding the Pre Collision System with full braking from Lexus across its entire lineup and now Ford just announced that it will have a very similar system. The system uses a camera and radar to warn the driver if the car will hit a pedestrian, and if the driver does not act, it will apply the brakes automatically. The technology will first be available in Europe on the 2015 Mondeo, but will spread to other Ford and Lincoln products around the world. We’re willing to bet that the Lincoln MKZ could be the first vehicle in the U.S. to offer the system, since it shares the same platform as the Mondeo. So does the Fusion, but wouldn’t it make more sense to give it to Lincoln first?
NEW ELECTRIC SCOOTERS
Terra Motors is a Japanese manufacturer of 2 and 3-wheel electric scooters, which is perhaps the best application for a electric powertrain. And its showing off 2 new models. The first is called the A400i and has a range of 60km or 37 miles. It will first be offered in Italy. The other model is called BIZMO II, a commercial bike which has a range of 150km or about 93 miles and can carry a load of up 65 pounds, not including the driver. Electric scooters are very practical, since you can usually remove the battery and take it into your apartment. In China, electric scooters have taken over the market and we expect to see this happen all over the world.
Don’t forget to join us for Autoline After Hours tonight. Our special guest is Dave Pericak, the chief engineer on the all-new Ford Mustang. If you’ve got questions you’re dying to ask Dave, shoot an email to [email protected]. We’ll get going live at 6 pm eastern time tonight and give you a front row seat for some of the best insider discussions in the industry.
But that wraps up today’s show, thanks for watching.
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Comments (29)
October 23rd, 2014 at 12:29 pm
Bravo to Honda!
October 23rd, 2014 at 12:38 pm
Yes, bravo to Honda! These high paid execs need to be held accountable – just like Lee Iacocca help himself accountable back during the dark days at Chrysler in the 1970′s and 80′s. If I remember correctly, wasn’t he only paid a dollar a year or some ridiculously low amount such as that? Execs like that are putting their reputation ahead of their wallet, and in the process gain tons of respect.
October 23rd, 2014 at 12:39 pm
Help = Held
October 23rd, 2014 at 12:41 pm
If Toyota and GM did the same as Honda, the top execs would make less than the assembly line workers!
October 23rd, 2014 at 12:45 pm
I have observed a lot more Mercs being sold around these parts, I guess the infatuation with BMW is slowly dying, I rode a new C class the other day and it was fantastic!
October 23rd, 2014 at 12:56 pm
The new C-Class is nice, but it’s grown almost to E-Class proportions, in both size and price. And of course, we Americans can’t buy the wagon.
October 23rd, 2014 at 1:11 pm
Now if we can force our elected officials to ‘man up’ and make them take a pay cut….
October 23rd, 2014 at 1:34 pm
Kit, they had to cause the CLA was the same as the old C class.
October 23rd, 2014 at 1:54 pm
GM may have discounted their vehicle to raise sales faster than revenue, but other dynamics can explain it… their mix of sales could have shifted to lower priced vehicles.
October 23rd, 2014 at 2:06 pm
And if GM’s vehicles (are good enough) to sway new owners or returning buyers, then these conquest sales (if some of them are actually conquest) could lead to future profits if they sway loyalty back to the (GM) fold.
October 23rd, 2014 at 2:19 pm
8, Yep, based on sales, they have done a good job of convincing people that the CLA is “the new C-class,” even though the outgoing C, and the one before that, are much better cars than the CLA.
October 23rd, 2014 at 2:23 pm
Weren’t we reading elsewhere how the wannabee CLA was going to hurt Merc’s brand equity?
Not So Much
October 23rd, 2014 at 2:25 pm
John, A possible story line for you. A Detroit Tier One contacted me yesterday: “We noticed you applied to go to work here five years ago. Are you still interested? Detroit lost a lot of people in the 2008-9 timeframe. Many had to move and take huge losses on their housing. Now Detroit is busy again and really struggling to attract talent back to Southeast Michigan. The fact that incentives “to stay” like pensions and longevity went away also means the jobs are not as attractive as they once were. Even “full hire” jobs smell like “contract positions” without the higher pay that comes with “temporary” or “contract” work
October 23rd, 2014 at 2:29 pm
#12
“Nobody ever went broke underestimating the taste of the American public.”
H. L. Mencken
October 23rd, 2014 at 3:16 pm
@13. I think we’re going to see automakers and suppliers starting to offer better pay. Everyone wants to hold the line on costs, but if you can’t develop new products it doesn’t matter how good of a job you’re doing holding the line on expenses.
October 23rd, 2014 at 4:32 pm
The story from friends is that some of the Tier ones are “almost depressed” on how hard it is to get people. “Where did they go?” They went to Wisconsin, Texas and other places to get a job with benefits and stability.
Now they are digging through 5 year old applications and recruiting heavily from other Midwest states. They are having trouble getting people to give Southeast Michigan another try.
Part of this may be an unfortunate legacy from Mr. Mullaley. In aerospace they bring in Engineers when they need them, and then let them go when they don’t. My understanding is that this has led to most Engineers in and around Seattle renting housing instead of buying. The employment risk is too great to get stuck with expensive housing in a recession.
October 23rd, 2014 at 4:38 pm
The SE Michigan Employment problem may be something of a legacy from Mr. Mullaley. In Aerospace, they hire, then fire, based on their talent needs. For this reason, a lot more people rent their homes in Seattle. The risk is too great that there might be another massive layoff. I think the headhunters are digging through 5 year old resumes and heavily recruiting in nearby states in an effort to replenish the Engineering Pool for SE Michigan. Baby boomer retirements sure are also a problem. A lot of the tech specialists and deep knowledge folks are retiring and there has been no plan in place to train new folks up to that knowledge level. Software modeling is not such a great replacement for genuine knowledge and experience.
October 23rd, 2014 at 5:31 pm
When I started working for GM in 1977, the auto industry had competitive pay, and better benefits than most industries for technical people. Also, job security was generally good, at least with GM and Ford. We had engineers leave for better pay, mostly to big semiconductor houses like Intel, TI, etc. but in the 80′s, the job security wasn’t necessarily too good, as companies acquired, and lost contracts with semiconductor users.
Now, both pay and job security for engineers would be better at places other than car companies.
October 23rd, 2014 at 5:36 pm
17, At one time, Boeing was like the auto industry for engineers, and had the nickname “Lazy B” because if you showed up and did a reasonably good job, your employment was secure. Yes, that has changed, as with the car biz.
October 23rd, 2014 at 5:53 pm
When I want to listen to music it is a personal choice. I decide the type and volome of music I will play. The same is true for a program I choose to watch-I pick the program.
You at Autoline are still incorporating background music to good automotive investigative- documentary type program. Why? it is not necessary! 60 minutes doesn’t do it.
Autoline Daily is something I look forward to every week day. Please drop the unnecessary unpleasant music or “I may drop”.
October 23rd, 2014 at 7:10 pm
For anyone who was watching AfterHours, did you hear that caller asking the Mustang boss about talk that there was going to be a big engine V8 with a flat crank? Flat crank? You mean the kind that spins up real quick? Like for racing purposes? Like in IMSA?
No comment about future plans, of course
October 23rd, 2014 at 7:31 pm
Flat crank V-8′s rev quickly, because they have low “flywheel” effect, but they vibrate like an inline 4 without balance shafts.
October 23rd, 2014 at 7:40 pm
Are you saying Ferrari’s vibrate, Kit? ’cause that’s what I’m hearing.
October 23rd, 2014 at 7:56 pm
Yeah, the V8 ones probably vibrate, at least for their engine size and cylinder count, unless I’ve been missinformed over the years.
October 23rd, 2014 at 10:27 pm
Mustang enthusiast here. Rumor mill on dry sump & flat crank for over a year now. Take a listen to YouTube videos of the new mustangs testing at the N. ring.
October 24th, 2014 at 2:01 am
The jury is still sequestered on whether or not the CLA will hurt Mercedes brand image, these things take years, not months.
GM’s financials have nothing to do with discounts, or sales mix…it’s the cost of recalling nearly everything they have built for the past decade.
October 24th, 2014 at 5:42 am
25 Well, it’s been a year that CLA has been out, and now GLA is on the market. At least the jury has rendered a verdict on the fragility of the Merc brand.
October 24th, 2014 at 9:36 am
Germans don’t take to the CLA like Americans. It isn’t in the top 20 car models in sales, but the C-class is #8. The Audi A3 is the top selling model from a “premium” nameplate, at #3.
October 26th, 2014 at 5:39 pm
I like the Honda announcement. If only those executives had offered pay cuts to the company voluntarily, that would have been a great story.