Yahoo Autos Stellantis Had a Record Year in 2022
Stellantis shattered expectations, Carvana has a glimmer of hope again, and Tesla’s decision to focus battery production in the United States is one of many that’s making Europe very nervous. All that and more in The Morning Shift for Wednesday, February 23, 2023.
1st Gear: Stellantis Made So Much Money
Ancient muscle cars, ancient SUVs and ancient Italian unreliability: These are the criticisms typically levied at Stellantis, the third-largest automaker globally that, at least here in the States, is often counted out as the underdog behind its domestic rivals.
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Maybe it shouldn’t be. Whatever it’s doing is working, as Stellantis announced stellar results to cap 2022. The company raked in $18 billion in net profit last year — good for a record 26-percent increase — enabling it to issue a $1.6 billion share buyback as well as up to about $15,000 to every United Auto Workers-represented employee in the U.S. From Automotive News:
The automaker, which doesn’t disclose quarterly results under French financial reporting rules, on Wednesday said net profits for the year surged 26 percent to 16.8 billion euros ($17.9 billion) while global revenue rose 18 percent to 179.6 billion euros ($190.9 billion).
North American results paced the company’s 2022 gains. Stellantis said North American adjusted operating income rose 23 percent to 13.9 billion euros ($14.8 billion). Revenues surged 23 percent to 85.5 billion euros ($90.9 billion). Deliveries rose 2 percent to 1.86 million vehicles.
In the U.S., Stellantis will distribute $14,760 each to eligible UAW-represented workers as part of a profit-sharing plan. About 40,500 workers are eligible for the bonus. The payout is up slightly from 2021, when workers received $14,670 each.
General Motors’ unionized workers will receive a profit-sharing bonus of up to $12,750 based on the company’s North American performance last year, while UAW members at Ford Motor Co. are getting an average of $9,176.
For reference. GM’s net profit on last year was $9.9 billion, while Ford lost $2 billion. All of the regions in which Stellantis plays grew last year, even though shipments lagged in the latter half of 2022 due to supply-chain constraints. Nevertheless, this strong performance has encouraged the company to be bullish entering 2023, where it predicts a “double digit adjusted operating income margin and positive industrial free cash flow,” according to the Detroit Free Press. Much like every sports team ever, you have to think Stellantis likes being the underdog.
2nd Gear: ‘Squishy’ Days Ahead for Carvana
Look — I’m not an economist, so I don’t know what that means. Generally speaking though, squish is not a desirable quality in just about any context, and it isn’t in terms of Carvana’s finances, either. The good news is that the company’s stock price has trended upward over the past two months, leading some to believe it might just be able to stave off bankruptcy. The bad news is that we’re still talking about Carvana, and old fears die hard. From Automotive News:
The online used-vehicle retailer, which is scheduled to release fourth-quarter and full-year 2022 earnings Thursday, saw its stock share price double from $5 in mid-January to $10 by month’s end. That upward movement has been driven in part by investors who believe recent upticks in used-vehicle prices and demand may bode well for the company in the first quarter, according to analysts.
Wells Fargo equity analyst Zachary Fadem wrote in a Friday note to investors that while Carvana’s improved share price performance “suggests investors are moving past the most draconian bear case” of bankruptcy, 2023 “still looks squishy” for the retailer. The firm on Friday raised its price target for Carvana from $5 to $10.
Fadem wrote that Carvana’s fourth-quarter vehicle sales are likely to fall short of Wall Street expectations. Concerns about Carvana’s liquidity and how much gross profit it brings in per vehicle sold are likely to linger, he added.
In a research note Thursday, Piper Sandler analyst Alexander Potter wrote that slashed estimates are forcing the firm’s price target for Carvana to $21 — down from $45 — but the firm does not think Carvana will go bankrupt.
Over the past couple of years, Carvana has demonstrated an uncanny knack for hanging on just when you think that last finger is about to slip off the ledge. Who knows what’ll happen next, but one thing’s for sure — it’s going to be squishy.
3rd Gear: Everyone Follows Toyota
When Toyota raises its base salary in Japan, every other Japanese company takes note. The automaker just agreed to a demand from its union to increase pay by the largest amount in two decades, per Reuters:
The automaker’s incoming president Koji Sato said the decision to accept the union’s demands in full at the first round of talks was meant not just for Toyota but “also for the industry as a whole, and in the hope that it will lead to frank discussions between labour and management at each company.”
Within hours of Toyota’s announcement, rival Honda Motor Co Ltd said it had agreed to union demands for a 5% pay increase. The average monthly base salary rise of 12,500 yen ($92.70) at Honda is the biggest jump since at least 1990.
Toyota and the union federation representing 357,000 Toyota group workers said the base pay rise was the biggest in two decades, though they both declined to provide the percentage increase.
With inflation running at around 4% - the highest level in 40 years following decades of deflation - Japan is under more pressure than ever before to raise wages to revive consumption.
Toyota’s union requested monthly base salary raises ranging from 3,570 yen ($26.53) to 9,370 yen ($69.63) based on position, according to Nippon.com. The automaker has accepted the union’s proposal for three years in a row now. Unfortunately, the rather dire state of the Japanese economy means that the only companies that will likely raise pay are firms of Toyota and Honda’s scale — and you really can’t get any bigger than Toyota.
4th Gear: Europe Knows Tesla Knows Where it’s Building Batteries
A little bit in Germany, but mostly in the U.S. From Reuters:
