|Bid||67.52 x 0|
|Ask||67.54 x 0|
|Day's range||66.79 - 67.64|
|52-week range||58.04 - 79.38|
|Beta (3Y monthly)||0.85|
|PE ratio (TTM)||9.22|
|Earnings date||6 Nov 2019|
|Forward dividend & yield||3.50 (5.25%)|
|1y target est||93.69|
(Bloomberg) -- Germany’s car industry built its world-class reputation on sedans like the Audi A4, the BMW 5-Series and the Volkswagen Passat, reliable models that look good in the family driveway or company lot. But a shift in consumer taste to more hulking vehicles is coming at the worst possible time.Demand for sport utility vehicles that initially took hold in America has spread across the globe, dramatically changing the product mix of carmakers along with their production footprint. Higher sales of the lucrative vehicles, while good for German manufacturers overall, threatens to hurt the workforce in factories at home that are heavily geared toward traditional sedans and hatchbacks.At BMW AG, sales of SUVs made mostly in the U.S. account for 44% of all global deliveries, up from 24% a decade ago -- with a corresponding drop for models like the bread-and-butter 5-Series made at the Dingolfing plant near Munich. The trend is similar at Audi, which churns out SUVs mainly in Mexico, Hungary and Slovakia, and Mercedes, whose workers in Tuscaloosa, Alabama, can’t make the massive GLE fast enough to satisfy demand.Recession, Trade WarsGermany’s automotive industry, the largest employer with about 830,000 workers, is already straining under the biggest production drop in nearly a decade. That has helped push Europe’s largest economy closer to recession. The decline, led by trade tensions and a slowing global economy, comes at a delicate time for an industry already facing a future when fewer hands will be needed to assemble battery-powered vehicles.A car’s combustion engine alone counts more than 1,000 parts, compared with just a couple of dozen components in an electric motor that doesn’t require an exhaust, transmission or fuel tank. The repercussions from the simpler setup cascade through the making of an electric car, with fewer people involved in development, testing, parts purchasing and service.“The SUV trend will certainly have implications for production structures,” said Rolf Janssen, a partner at Roland Berger consultancy. “For workers, this adds additional pressure to the overall transformation trend.”Like the pick-up truck, a model that’s popular in the U.S. but largely absent from European roads, SUVs were a fringe phenomenon on the continent two decades ago. Instead, motorists aspired to own an Audi A3 or the Mercedes C-Class, while their larger luxury siblings chauffeured around captains of industry and politicians.Mercedes set up shop in Alabama in 1995, making SUVs near consumers in a key market, while BMW’s sprawling Spartanburg plant in South Carolina, its biggest globally, churns out X3 through X7 models. VW manufactures its T-Roc crossover, credited with lifting results in its most recent quarter, in Portugal, while the Audi Q7 and Q8 takes form in Slovakia and the Q3 in Hungary.Forecaster LMC Automotive expects domestic German car production to sag to a 10-year low this year, with the export market in particular facing trouble. Justin Cox, director for global production at LMC, singled out Audi’s Neckarsulm plant in Baden-Wuerttemberg, the Passat factory in Emden in northern Germany and VW’s massive Wolfsburg site as vulnerable.“The sedan localization issue isn’t helping Germany,” Cox said.Factory OutputFactory staff are starting to push back. In June, Neckarsulm worker representatives estimated the site’s utilization rate at a woeful 60%, despite model revamps for A6, A7 and A8 sedans. The factory, which employs almost 17,000, is missing out on the SUV sales boom and lacks firm commitments to assemble upcoming electric models, the powerful works council said, vowing to not budge on concessions as Audi seeks talks to cut costs.Since 2009, sales of A6 sedans and hatchbacks have sagged to make up 12% of the total, down from 20%, while the A4 made at the Ingolstadt headquarters has declined to 18% from 31%.“We urgently need plan to improve capacity utilization now and a medium-term solution for the future,” Neckarsulm labor head Juergen Mews said in a statement.Audi said its German sites remained the backbone of its global production network. In Ingolstadt, which already makes the Q2 compact SUV alongside sedans, the brand is in the midst of construction work to make the plant more flexible, a spokeswoman said. Talks with the labor council on future allocation plans are ongoing, she said.Volkswagen’s factory in Emden has likewise faced problems as SUVs like the T-Roc cannibalize the trusty but staid Passat. Falling demand for the former drawing card has forced VW to put some 10,000 staff at Emden on reduced working hours and cut temporary employees.The world’s biggest carmaker is shifting the Passat to Czech Republic and will retool Emden to make only electric vehicles by 2023 -- a move VW has said will require still fewer workers.Plant RebalancingEven VW’s headquarters plant in Wolfsburg, the world’s largest single car-manufacturing complex, faces risky times. The ubiquitous Golf, the car that brought VW back from the brink in the 1970s and set the tone for compact city hoppers, has struggled to maintain its allure amid mushrooming offerings of popular compact crossovers.As an offset, the 20,000-worker plant also makes the popular Tiguan SUV, and should get a boost from Golf production being moved from Puebla in Mexico, Cox said. SUVs make up 42% of production at Wolfsburg with the Tiguan and Seat Tarraco, and VW plans to build compact electric SUVs in Germany, a spokeswoman said. SUV sales should account for half of VW brand deliveries by 2025 and the group will step up bundling similar products across its 12 automotive brands to boost efficencies, according to the company.BMW has also sought to balance its SUV footprint, adding the X1 entry-size model to its Regensburg site in Bavaria. BMW said its global production network was able to react to changes in demand and customer behavior, while utilization at its eight German plants was “good.”German SUVsMercedes began German production of the GLA compact crossover at Rastatt in 2013 and Sindelfingen last year, in addition to the mid-size GLC SUV in Bremen. But its lucrative GLE and GLS vehicles are still made in Tuscaloosa, and the top-priced G-Wagon is largely hand-built in Austria at contract manufacturer Magna International Inc. Mercedes upgraded its facilities early to quickly react to changes in demand, a spokeswoman said, as demand for Mercedes SUV models has increased every year since 2009.Switching production to new models is difficult, expensive and time-consuming. Roland Berger estimates that it can take as long as a year to retool a plant to start making SUVs alongside sedans -- provided the legwork to accommodate the bigger and heavier vehicles has already been done.BMW’s Dingolfing factory, its biggest in Europe, last year made 330,000 sedans, from the entry-level 3-Series all the way up to the top-range 8-Series coupe. The facility’s hopes now lie partly on the iNext crossover, a technology flagship in the mold of the i3 electric car and the i8 sports car, which use a carbon fiber chassis, that will go on production in 2021.“Some of the juggernaut or brownfield plants with deeply ingrained structures will face a tougher task,” said Roland Berger’s Janssen.To contact the reporter on this story: Elisabeth Behrmann in Munich at email@example.comTo contact the editors responsible for this story: Anthony Palazzo at firstname.lastname@example.org, Benedikt KammelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Siblings Susanne Klatten and Stefan Quandt own almost half of Bayerische Motoren Werke AG.The billionaires are descendants of Guenther Quandt, who built a German industrial empire by, among other things, supplying weapons to the Nazis during World War II. In the years since, the family has established stakes in both Daimler-Benz AG and BMW.Today, Klatten is Germany’s second-richest person, worth $18.6 billion, with interests in chemicals and carbon production, according to the Bloomberg Billionaires Index. Quandt, who owns part of a logistics company and a homeopathic medicine company, has a net worth of $15.5 billion. Both are members of BMW’s supervisory board, making them the richest related pair deriving wealth from the automotive industry. All told, the 25 richest families in the world now control almost $1.4 trillion in wealth, up 24% from last year. Our list of the 20 wealthiest people who have made fortunes in the automotive sector includes some household names: Tesla’s Elon Musk is worth $23.1 billion; Larry Ellison, with $58.5 billion in total wealth, owns a stake in Tesla that’s worth more than $730 million.Others are less prominent but no less successful: Pallonji Mistry, chairman of Shapoorji Pallonji Group, owns much of Tata Sons and is worth $20.3 billion; Li Shu Fu, the chairman of Volvo and Geely, is worth $10.6 billion.The Method The methodology behind wealth analysis can be challenging. In fortunes backed by decades of accumulated assets and dividends, the true extent of an individual’s or family’s holdings is often obscured. Most in this tax bracket are not thrilled to have their names, assets, shares, and interests published by a global news organization. Automotive wealth also tends to be a family affair. While individual members of these dynasties may not make the list, a clan’s overall wealth may be vast. (See: the Ford, Porsche, and Pieech families.) So we followed the same criteria applied to Bloomberg’s Billionaire Index. In order to keep it (relatively) simple, we have omitted those whose wealth comes from oil. Take the House of Saud, for instance. The family is worth an estimated $100 billion, a figure based on the cumulative payouts the country’s royals have received over the past five decades from the executive office of the king. That number doesn’t even include the planned initial public offering of its crown jewel, oil giant Saudi Aramco. It will be offered with an anticipated valuation of $2 trillion.Maybe we’ll come up with a special list for members of the House of Saud. In the meantime, here are the year’s richest people in cars.* *Stake value and percent of net worth figures are as of July 19, 2019. Total wealth figures are as of Oct. 9, 2019. 1. Bill Gates Company: AutoNation Inc.Stake Value: $914,554,258Percent of Total Net Worth: .9%Total Wealth: $105 billionLocation: Fort Lauderdale, Fla.Segment: Car dealersGates may not be the first person you would expect to see on a list of automotive wealth, but his share of car dealer AutoNation contributes to his overall fortune, most of which comes from Microsoft Corp. and Cascade Investment (which controls stakes in dozens of publicly traded companies, including Canadian National Railway, Deere, and Ecolab). 2. Larry Ellison Company: Tesla Inc.Stake Value: $730,773,000 to $1 billionPercent of Total Net Worth: 1.3%Total Wealth: $58.5 billionLocation: Palo Alto, Calif.Segment: Passenger vehiclesAlthough he is the company’s second-largest shareholder, Ellison’s recently announced stake in Tesla is not the primary source of his wealth. He is the founder and main shareholder of the database company Oracle. The 75-year-old also owns the Indian Wells tennis event and real estate, including the island of Lanai, Hawaii. 3. Elon Musk Company: Tesla Inc.Stake Value: $8,307,076,693Percent of Total Net Worth: 36.9%Total Wealth: $22.9 billionLocation: Palo Alto, Calif.Segment: Passenger vehiclesLikely the most famous person invested in the segment—certainly the most colorful—the South African divides his time between Tesla, the maker of luxury electric vehicles, and SpaceX, a rocket manufacturer. Musk has always been a polarizing figure, garnering acclaim for his visionary leadership and criticism for failing to meet deadlines and engaging in public disputes. 4. Pallonji MistryCompany: Tata Motors Ltd.Stake Value: $302,722,710Percent of Total Net Worth: 1.5%Total Wealth: $19.7 billionLocation: MumbaiSegment: Passenger vehiclesMistry, 90, and his family are shareholders in Tata Sons, the holding company behind more than 100 affiliates with $100 billion in annual revenue, according to the Bloomberg Billionaires Index. The group employs 700,000 people in more than 100 countries. 5. Susanne Klatten Company: BMW AG Stake Value: $8,763,327,399Percent of Total Net Worth: 47.8%Total Wealth: $18 billionLocation: MunichSegment: Passenger vehiclesKlatten, 57, is the second-richest person in Germany. She inherited her wealth from her father, German industrialist Herbert Quandt, who turned BMW from a struggling carmaker into one of the world’s largest manufacturers of luxury vehicles. Klatten recently said that dealing with the responsibility of inherited wealth is a misunderstood burden. “Many believe that we are permanently sitting around on a yacht in the Mediterranean,” she said. “The role as a guardian of wealth also has personal sides that aren’t so nice.” 6. Stefan Quandt Company: BMW AGStake Value: $10,817,887,438Percent of Total Net Worth: 72.2%Total Wealth: $14.8 billionLocation: MunichSegment: Passenger vehiclesQuandt, 53, holds substantial stakes outside the family business, including homeopathic medicine company Biologische Heilmittel Heel; credit-card maker Entrust Datacard; and logistics company Logwin. His wealth derives from family matriarch Johanna Quandt, who died in 2015. 7. Li Shu Fu Company No. 1: Geely Automobile Holdings Ltd.Stake Value: $38,988,918Percent of Total Net Worth: .4%Location: Hangzhou, ChinaSegment: Passenger VehiclesCompany No. 2: Zhejiang Geely Holding GroupStake Value: $10,520,321,446Percent of Total Net Worth: 99.9%Total Wealth: $10.6 billionLocation: Hangzhou, ChinaSegment: Auto manufacturingLi, 56, is the founder of Zhejiang Geely Holding Group, a maker of cars and related components, though he started his career manufacturing refrigerators. Geely’s $1.5 billion purchase of Volvo in 2010 was the largest ever overseas acquisition by a Chinese automaker. 8. Georg Schaeffler Company No. 1: Continental AGStake Value: $9,494,765,020Percent of Total Net Worth: 110.4%*Location: Hanover, GermanySegment: Auto partsCompany No. 2: Schaeffler AGStake Value: $3,116,322,400Percent of Total Net Worth: 36.2%Total Wealth: $7.99 billionLocation: Herzogenaurach, GermanySegment: Auto partsShaeffler, 54, is chairman and majority owner of Schaeffler AG, which makes ball bearings and other automotive supplies. He owns 80% of the company, while his mother, Maria-Elisabeth Schaeffler-Thumann, owns the rest, according to company filings. The two collectively hold 46% of auto supplier Continental as well, according to the company’s website as of June 2019.*Due to debt. 9. Blair Parry-Okeden Company: Cox AutomotiveStake Value: $1,738,541,209Percent of Total Net Worth: 21.6%Total Wealth: $7.84 billionLocation: AtlantaSegment: Automotive services Parry-Okeden, 69, is the granddaughter of James Cox, who founded Cox Enterprises in 1898. She owns almost 25% of the company, a $21 billion conglomerate that encompasses Kelley Blue Book and other automotive brands. She resides in Australia. 10. James Kennedy Company: Cox AutomotiveStake Value: $1,738,541,209Percent of Total Net Worth: 21.6%Total Wealth: $7.84 billionLocation: AtlantaSegment: Automotive servicesAn avid cyclist and hunter, Kennedy, 68, is the chairman of Cox Enterprises. 11. James Pattison Company: James Pattison GroupStake Value: $48,327,817Percent of Total Net Worth: .8%Total Wealth: $6.35 billionLocation: VancouverSegment: Car dealersPattison’s company is the largest car dealer in western Canada. It also publishes the Guinness World Records standings. He began his automotive career while still in college, fixing and selling used cars to fellow students before dropping out to manage a General Motors dealership. Today, Pattison, 90, and his wife, Mary, live in Vancouver. 12. Ernie Garcia Company No. 1: Carvana Co.Stake Value: $4,060,262,827Percent of Total Net Worth: 67.4%Location: Tempe, Ariz.Segment: Used car dealersCompany No. 2: DriveTimeStake Value: $1,005,999,251Percent of Total Net Worth: 16.7%Total Wealth: $4.93 billionLocation: Tempe, Ariz.Segment: Used car dealers and financingGarcia, 62, is the largest shareholder of Carvana, but his son, Ernie III, runs the business. The elder Garcia started developing DriveTime in the 1990s, when he bought rental-car company Ugly Duckling out of bankruptcy. He then merged it with a financing company to make it a vehicle for selling used cars to subprime borrowers. In 1990, Garcia was convicted of fraud for playing a small role in the Charles Keating savings-and-loan scandal. 13. Hiroshi MikitaniCompany: Trust Co Ltd.Stake Value: $234,488Percent of Total Net Worth: NegligibleTotal Wealth: $5.87 billionLocation: Nagoya, JapanSegment: Automotive retailMikitani, 54, amassed the bulk of his wealth after he founded Rakuten, Japan’s largest cybermall, which boasts more than 1.2 billion users worldwide. He qualifies for this list by virtue of his share of Trust Co Ltd., an exporter of used vehicles. Mikitani is a music lover and chairman of the Tokyo Philharmonic Orchestra. 14. Margaretta Taylor Company: Cox AutomotiveStake Value: $1,150,111,876Percent of Total Net Worth: 21.6%Total Wealth: $5.18 billionLocation: AtlantaSegment: Automotive services Taylor, 77, is the granddaughter of James Cox and the cousin of James Kennedy, who runs Cox Enterprises. She owns roughly 16% of the family business, which owns Kelley Blue Book and Autotrader.com, among other brands. 15. James Cox Chambers Company: Cox AutomotiveStake Value: $1,150,111,876Percent of Total Net Worth: 21.6%Total Wealth: $5.18 billionLocation: AtlantaSegment: Automotive servicesChambers, 62, is the cousin of James Kennedy, who runs Cox Enterprises. He owns 16% of the company. He’s also an organic farmer in Columbia County, N.Y.16. Katharine Rayner Company: Cox AutomotiveStake Value: $1,150,111,876Percent of Total Net Worth: 21.6%Total Wealth: $5.18 billionLocation: AtlantaSegment: Automotive servicesRayner, 74, is the granddaughter of company founder James Cox. She has largely stayed out of the public eye. 17. Quek Leng Chan Company No. 1: Hong Leong Asia Ltd.Stake Value: $5,103,369Percent of Total Net Worth: .1%Location: Kuala LumpurSegment: Auto partsCompany No. 2: Hong Leong Industries Bhd.Stake Value: $291,110,648Percent of Total Net Worth: 5.5%Total Wealth: $5.27 billionLocation: Kuala LumpurSegment: Motorbikes and partsQuek, 76, has interests in almost a dozen public companies, including property manager Guoco Group, insurer Hong Leong Financial, and manufacturer Hong Leong Industries. He’s a cigar aficionado. 18. Rahul Bajaj Company No. 1: Bajaj Finance Ltd.Stake Value: $586,320,006Percent of Total Net Worth: 12.4%Location: Pune, IndiaSegment: Auto financingCompany No. 2: Bajaj Auto Ltd.Stake Value: $1,208,532,867Percent of Total Net Worth: 25.5%Total Wealth: $5.2 billionLocation: Pune, IndiaSegment: Motorbikes and partsBajaj, 81, is the chairman of the world’s largest maker of three-wheeled motorcycles. He attended Harvard Business School and also owns stakes in an investment company and an insurance firm. His grandfather, Jamnalal Bajaj, an Indian independence fighter and Mahatma Gandhi confidant, founded the group in 1926. 19. Chung Mong-Koo Company No. 1: Hyundai Motor Co.Stake Value: $1,269,429,178Percent of Total Net Worth: 27.9%Location: SeoulSegment: Passenger vehiclesCompany No. 2: Hyundai Mobis Co.Stake Value: $1,408,455,597Percent of Total Net Worth: 30.9%Total Wealth: $4.5 billionLocation: SeoulSegment: Automotive technologyChung, 81, is the chairman of Hyundai Motor Group. He was convicted in 2007 of embezzling $110.5 million from Hyundai, Kia, and other affiliates and using the funds as a political slush fund. He was pardoned in 2008 by then-South Korean President Lee Myung Bak. 20. Wang Chuan-Fu Company: BYD Co.Stake Value: $3,522,094,647Percent of Total Net Worth: 82.4%Location: Shenzhen, ChinaSegment: Passenger vehiclesCompany: BYD Co Ltd.Stake Value: $4,993,622Percent of Total Net Worth: .1%Total Wealth: $4.11 billionLocation: Shenzhen, ChinaSegment: Passenger vehiclesWang, 53, is the founder and largest shareholder of BYD. The company makes cars, buses, and other goods, including cell phone batteries.To contact the author of this story: Hannah Elliott in New York at email@example.comTo contact the editor responsible for this story: Joshua Petri at firstname.lastname@example.org, David RovellaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- As others automakers plan battery-powered SUVs and trucks, Toyota Motor Corp.’s vision for the future of driving remains a hydrogen-sipping sedan.The Japanese behemoth will begin sales late next year of the second-generation Mirai, its fuel cell-powered four-door, and ramp up annual production by 10-fold from the current model. Toyota’s bet that it can position a hydrogen sedan for more of a mass market flies in the face of rivals wagering on putting batteries into the bigger-bodied vehicles consumers are buying.Toyota has been slower than peers to embrace EVs, citing uncertain demand in key markets including the U.S. and technical hurdles that limit battery range and recharging times. While the company has pledged to offer an electrified version of every model in the next five years, and 10 fully electric vehicles by early the next decade, it’s also going to keep coaxing consumers to give hydrogen a try.“Toyota won’t be putting all our eggs in one technology basket,” Doug Murtha, Toyota’s U.S. group vice president for corporate strategy and planning, said at a briefing in Greensboro, North Carolina.Toyota’s near-term electrification goals in the U.S. center on its gas-electric hybrid powertrains. It currently sells six hybrid vehicles and said Thursday it will add a plug-in hybrid version of its RAV4 crossover next year.The company plans to increase sales of hybrid cars and SUVs in the U.S. to 25% of deliveries by 2025, up from about 9% today.Slow DevelopmentToyota began developing hydrogen-powered cars more than 20 years ago, but progress has been slow due to high material costs and steep hurdles to setting up refueling infrastructure. Recent technological advances halved the cost of fuel cell stacks that mix hydrogen and oxygen to produce electricity, allowing the carmaker to boost global output from 3,000 a year in 2018 to 30,000 next year and 200,000 by 2025, Taiyo Kawai, general manager of the company’s hydrogen efforts, told reporters during a briefing in London.Rival automakers such as General Motors Co. in the U.S. and BMW AG in Europe have invested in fuel cell technology but are prioritizing EVs in their current and future zero-emission products. In the U.S., only Toyota, Honda Motor Co. and Hyundai Motor Co. sell fuel cell-powered passenger cars -- and only at a handful of dealers due to the scarcity of hydrogen stations.Fuel cell vehicles offer several advantages over battery-powered cars, including quicker refueling times and longer driving ranges. But they remain a novelty, accounting for less than 0.1% of the nearly 100 million vehicles produced each year, according to research by the National Academy of Sciences.“Unfortunately, despite years of education efforts, hydrogen cars are still a mystery to most people,” said Jackie Birdsall, a senior engineer at Toyota’s R&D center in Gardena, California. “The good news is that fuel cell technology is gaining momentum around the world,” she said.‘Such a Hassle’Improvements have been made to shrink the size of hydrogen fuel tanks and reduce the amount of costly platinum needed for fuel cell stacks. But there’s still more to do, including replacing platinum with cheaper synthetic materials, said Shawn Litster, a mechanical engineering professor at Carnegie Mellon University.Toyota, which loses money on the current Mirai, hasn’t said when it plans to break even with a future version. The company showed a near production-ready model to reporters this week in Greensboro, but wouldn’t say when the car will make its official public debut.The first Mirai -- which means “future” in Japanese -- debuted in late 2014, but availability in the U.S. has been limited to California and Hawaii. California has spent about $100 million over the past several years to build out a network of hydrogen stations. The state currently lists just 38 retail locations that are operational; another 22 are in various stages of development.The first-generation car’s oddball looks, $58,500 sticker price and cramped interior made it a hard sell for dealers. Most U.S. drivers lease the Mirai, and experiences with the futuristic vehicle have been mixed.Lawrence Kopp, a 42-year-old San Diego area resident, traded his Mirai in for a gasoline-powered Ford SUV in August after two years of headaches. Too few hydrogen pumps and a lack of cabin space wasn’t a good fit for a father with young children. “It was such a hassle I was ready to go back to a gas vehicle,” the corporate real estate executive said.Going GlobalThe new version of the Mirai is sleeker and more coupe-like, with a lower, longer and wider stance. It has room inside for five passengers, one more than the current model, and sports racier 20-inch wheels.Toyota says the Mirai will make a 30% leap from the existing model’s 312-mile range. Pricing won’t be announced until later, but it will be sold as a premium vehicle under the Toyota brand. Sales may be expanded to some states in the Northeast and Northwest, pending their buildup of hydrogen station networks.Toyota’s U.S. executives said that while they may prefer to have an SUV to sell, the company has stuck with a sedan body style to compete with premium models where passenger cars are still popular. In addition to Japan, Europe and the U.S., the Mirai will be sold in China, Australia and parts of the Middle East.“If I were king, we might have gone for something larger,” Murphy said. “But this needed to be a vehicle for global markets, not just us here.\--With assistance from Siddharth Philip.To contact the reporter on this story: Chester Dawson in Southfield at email@example.comTo contact the editor responsible for this story: Craig Trudell at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
European shares ended a tumultuous week on a high note on Friday as data showing modest U.S. jobs growth lifted sentiment slightly, pushing a pan-region index to its best day in more than three weeks. A raft of weak economic data from the United States and Europe, and threats of a transatlantic trade war between the European Union and the U.S, had knocked European shares this week, shaving nearly 3% off the pan-European STOXX 600 index in its worst week in two months.
Every investor in Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW) should be aware of the most powerful...
Tesla Inc's electric Model 3 remained Norway's top-selling car in the third quarter, although its sales declined from earlier in the year, registration data showed on Tuesday. Tesla sold 3,300 Model 3s in Norway in July-September, beating Volkswagen's Golf by some 900 cars.
Tesla Inc's electric Model 3 remained Norway's top-selling vehicle in the third quarter even as sales of the car declined from earlier in the year, registration data showed on Tuesday. Tesla sold 3,300 Model 3s in Norway in the July-September period, beating Volkswagen's Golf by some 900 cars, but was down from sales of 6,123 in the first quarter and 4,438 in the second, according to the Norwegian Road Federation.
(Bloomberg Opinion) -- In the darkest days of the 2009 recession, Germany’s industrial output was collapsing at an annual rate of more than 20%. An unfathomable implosion but one that thankfully ended almost as quickly as it started.Some 10 years on, a crisis is brewing once again in the country’s industrial heartlands. The pain could prove more enduring this time.So far the problems aren’t nearly as acute as in 2009; industrial production fell by a comparatively modest 4.2% in July. The worry, though, is that demand is being sapped by a mix of both cyclical and longer-lasting structural factors such as the demise of diesel and the shift to electrical vehicles. Trump’s trade wars and Brexit aren’t helping. Germany’s industrial sector contributes more than one-fifth of GDP and is usually a huge asset. Right now this export engine is pulling the economy down. Signs of distress are everywhere. German manufacturing activity is at a decade low, according to IHS Markit’s purchasing manager’s index. The Ifo Institute estimates that more than 5% of manufacturing companies have cut working hours and about 12% expect to do so during the next three months. German machinery orders declined 9% in the first six months of the year, according to the VDMA association, which represents the country’s engineers. In chemicals and pharmaceuticals, domestic production fell 6.5% in the first half of the year, while domestic car output has fallen 12% this year. Auto exports have dropped 14%. ThyssenKrupp AG, a former industrial jewel that makes everything from steel to submarines to car parts, is in crisis. It’s burning cash, weighed down by debt and has parted company with two chief executives in the space of 14 months. The chemicals giant BASF is cutting 6,000 jobs and has warned on profits.Meanwhile, the German carmakers BMW AG and Daimler AG have issued profit warnings as tighter emission rules oblige them to keep spending heavily. Their suppliers are the ones really hurting though. At least three — Eisenmann, Weber Automotive and a subsidiary of Avir Guss — have filed for insolvency in recent weeks and investors are betting the pain will spread more widely.The list of manufacturing heartache goes on. Debt-laden wiring and cable company Leoni AG is among the Germany’s most shorted stocks. The shares have lost two-thirds of their value over the past year and this is hardly unique.The company that best illustrates this slow-burn crisis is Continental AG. Last week the tire and car parts titan announced a massive restructuring, which it said would affect 20,000 jobs over the next decade, or some 8% of the workforce. Explaining its decision, the manufacturer warned of an “emerging crisis in the automotive industry.” Demand is weak and technological requirements are shifting fast. In future it will need more software engineers but fewer people building components for gasoline and diesel engines.Conti’s great rival Robert Bosch GMBH has a big diesel technology business and is preparing for upheaval too. Its chief executive officer Volkmar Denner told Sueddeutsche Zeitung last month that he expects autos production to stagnate. “That’s different from the past when it almost always went up. The tailwind is gone,” he said.With luck these grim warnings will compel the government to reconsider its demand-sapping commitment to a balanced budget. Last week the head of the BDI industry lobby group urged Berlin to consider additional borrowing to fund public investment — a once unthinkable heresy but one that’s common sense when even 30-year German debt yields nothing.However, unlike in 2009 when a domestic car scrappage scheme boosted demand, Germany can’t easily buy itself out of trouble this time. Tens of thousands of well-paid industrial jobs face obsolescence because of the demise of the combustion engine. Electric vehicle drivetrains have far fewer parts and the process is less labor intensive.Germany’s economic power was built on the back of its excellent gasoline and diesel cars. Their inevitable demise puts the country’s position as the “engine of Europe” under threat.To contact the author of this story: Chris Bryant at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Automakers that are under U.S. antitrust scrutiny over an emissions agreement reached with California regulators are set to meet next week with the Justice Department, according to a person familiar with the matter.Ford Motor Co., Honda Motor Co., BMW AG and Volkswagen AG agreed in July to voluntarily meet emissions targets offered by California regulators, defying a Trump administration proposal to freeze national standards at 2020 levels. Both would be less stringent than requirements put in place during the Obama administration.The Justice Department’s antitrust division raised concerns in August that the automakers’ agreement may be in violation of antitrust laws and invited them to meet with the department to discuss the issue.Representatives for Ford, Honda, BMW and VW declined to comment. The Wall Street Journal reported the planned meeting earlier on Friday.The government’s inquiry into the agreement has come under fire from Democratic lawmakers who say it’s politically motivated.During a hearing with a senior Justice Department official earlier this month, Democratic Senator Amy Klobuchar of Minnesota said the probe “appears to have less to do with protecting competition than with intimidating parties that don’t fall into line with the Trump administration’s plan to relax emissions standards.”To contact the reporter on this story: David McLaughlin in Washington at email@example.comTo contact the editors responsible for this story: Sara Forden at firstname.lastname@example.org, Craig TrudellFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Britain’s biggest carmaker, Jaguar Land Rover, will halt production at its British factories for a week in November, its boss said on Thursday, joining BMW and Toyota in plans to help mitigate any immediate disruption from a no-deal Brexit. The industry, Britain's biggest exporter of goods, has been vocal about its concerns that a disorderly departure from the European Union could disrupt the flow of components and vehicles, ruining production processes and damaging the viability of factories. Prime Minister Boris Johnson has vowed to take Britain out of the EU, with or without an exit deal, on Oct. 31.
(Bloomberg) -- Bayerische Motoren Werke AG and life insurer Just Group Plc are among six borrowers selling pound bonds on Wednesday, as issuers rush to lock in financing before potential market upheavals around the looming Brexit deadline.The deluge will push sterling sales for the month above 16 billion pounds ($19.9 billion), including a gilt deal, according to data compiled by Bloomberg. That’s the highest monthly tally since January, when a then-March Brexit date turbocharged the usual start-of-the-year rush.Issuers may be stepping up sales now because upcoming earnings blackout and the countdown to the Oct. 31 Brexit date are likely to hinder sales next month. U.K. Prime Minister Boris Johnson has pledged to take the country out of the European Union on schedule -- with or without a deal -- even after suffering an unprecedented legal defeat in the Supreme Court.“Companies are very keen to get issuance out of the way before U.K. uncertainty becomes even more fraught,” said Gordon Shannon, a portfolio manager at TwentyFour Asset Management, which oversees 15.3 billion pounds.BMW is selling a benchmark-sized five-year note, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. The luxury-car maker, which regularly issues pound bonds, has three notes totaling about 700 million pounds maturing by year-end, Bloomberg data show.U.K. BorrowersJust Group is marketing 125 million pounds of subordinated Tier 2 notes at a yield of 8.125% to 8.25%. That would be the biggest yield of any pound debt sale this year, Bloomberg data show. Another U.K. borrower WM Morrison Supermarkets Plc sold notes on Tuesday, following deals by issuers including ITV Plc and Barclays Plc last week.Still, Metro Bank Plc scrapped a pound sale of senior non-preferred bonds on Monday after the promise of record coupons failed to win over investors. The troubled lender opted against the sale due to “current market conditions,” according to an emailed statement.Overseas borrowers have also flocked to the pound market, as U.K. investors seek to put money to work with issuers less exposed to Brexit risks. French lenders Banque Federative du Credit Mutuel SA and Credit Agricole SA were both in the market on Wednesday, along with Kreditanstalt fuer Wiederaufbau. The German state-owned bank, better known as KfW, is marketing a 250 million-pound tap of a 1.375% 2024 note. It has a 4.8 billion-pound note due in December.“For European issuers in particular it has become cheaper to issue in sterling than euros,” said Luke Hickmore, an investment director at Aberdeen Standard Investments. “And, with the books for recent sterling issues having been so big, I can see why they have printed.”To contact the reporters on this story: Hannah Benjamin in London at email@example.com;Lyubov Pronina in Brussels at firstname.lastname@example.orgTo contact the editors responsible for this story: Vivianne Rodrigues at email@example.com, Neil DenslowFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- If there was an award for a “corporate executive with absolute worst sense of timing” my nominee would be Volkswagen AG’s chief executive Herbert Diess.The German carmaker poached Diess from BMW AG to take over as head of its struggling mass market VW brand in December 2014 after he was disappointed to have been passed over for the top job at BMW. The initial plan was that Diess would start work at VW’s Wolfsburg headquarters on Oct. 1 2015. However, Diess and BMW agreed he could shorten his gardening leave and take up his new job on July 1 instead.Boy was that a mistake on his part. In Sept. 2015, barely two months after Diess landed, VW admitted rigging some 11 million vehicles worldwide to cheat diesel emissions tests — an admission that would lead to 30 billion euros ($33 billion) of penalties, provisions and recall costs.On Tuesday German prosecutors charged Diess, who has since become CEO of the entire VW group, with stock market manipulation. They allege he was told about the cheating shortly before the end of July, some four weeks after he started work, but that he didn’t immediately inform the market as he’s obliged to do.Martin Winterkorn, who stepped down as VW boss when the cheating was revealed, and Hans Dieter Poetsch, VW’s then finance director who is now the company’s chairman, have been charged with the same offense. VW’s position all along has been that it didn’t recognize how financially serious its problems would prove to be with U.S. regulators (who got the ball rolling on uncovering and investigating the scandal). It reiterated on Tuesday that it thinks the latest allegations are groundless. Lawyers for the three men said similar.If the case goes to trial, which wouldn’t be until next year at the earliest, things could get awkward for VW. The news is particularly unhelpful for Diess, who has spearheaded the car giant’s effort to leave behind the diesel scandal and embrace electric vehicles. Diess has bet the farm on his electric strategy and VW needs him to finish the job.The charges are a reminder too that VW was perhaps a little cavalier in confirming Poetsch’s elevation to the chairmanship even though he had the market manipulation allegation hanging over him. In view of his role in overseeing VW’s recovery from the scandal, a VW shareholder once branded Poetsch the “personfication of a conflict of interest.” He certainly wasn’t the fresh start VW probably needed.Given the abject panic that any inkling of a U.S. criminal or regulatory investigation typically sparks in corporate boardrooms, it seems bizarre that VW executives failed to recognize the severity of the trouble the company was in back in 2015 and didn’t communicate promptly to investors.Anyone who bought VW stock in the months prior to September 2015 can feel aggrieved that they weren’t in possession of the same information that executives had. More than 30 billion euros of market value went up in smoke when U.S. regulators went public with their accusations about VW’s use of “defeat devices,” which hid diesel emission levels during tests, though it’s since recovered much of that ground. A finding against the executives would provide fodder to investors pursuing civil claims for compensation. The stocks’s 2.5% drop on Tuesday suggests today’s crop of VW investors are worried, but not excessively.In hindsight, Diess would have been better off staying in his garden in Bavaria a little longer. Rarely can such eagerness to show up to work have turned out so badly. To contact the author of this story: Chris Bryant at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
SEOUL/NEW YORK, Sept 23 (Reuters) - Hyundai Motor Group will invest $1.6 billion in a joint venture to develop self-driving vehicle technologies with Aptiv, the biggest overseas investment by the South Korean carmaker to catch up to rivals in the autonomous car market. Global carmakers and their suppliers are forging alliances to develop autonomous car technologies partly due to the need to share the huge financial and technical burdens.
A month before Britain is due to quit the European Union, the bloc's car-makers have joined forces to warn of billions of euros in losses in the event of a no-deal Brexit with production stoppages costing 50,000 pounds a minute in Britain alone. Britain is scheduled to quit the EU on October 31 but businesses have grown increasingly concerned at Prime Minister Boris Johnson's apparent lack of progress towards a new withdrawal deal to replace the proposals of his predecessor Theresa May, which the British parliament rejected three times. In a statement, groups including the European Automobile Manufacturers' Association, the European Association of Automotive Suppliers and 17 national groups warned of the impact of "no-deal" on an industry which employs 13.8 million people in the European Union including Britain, or 6.1% of the workforce.
Morgan Stanley analyst Adam Jonas came out with a note claiming Tesla could more than triple its model lineup over the next 5 years. Now, what Jonas isn’t saying is that Tesla will have 9 models compared to the 3 it has out right.
(Bloomberg Opinion) -- America’s automakers hit rock bottom with the public when their executives went to Washington in 2008 to beg for a bailout — in corporate jets.Now it’s the German car industry’s turn to suffer an image crisis and, as with General Motors Co. and Chrysler a decade ago, it couldn’t be happening at a less auspicious moment. Amid trade wars and plunging China sales, the number of cars rolling off Germany’s production lines has dropped by 12% this year and exports by 14%. European auto sales fell 3% in the first eight months of 2019.(1) With demand expected to remain weak for a couple of years, the German parts supplier Continental AG isn’t ruling out cuts to working hours and jobs.It’s a bad time to be having a public relations crisis too, but that is what’s happening in the country that invented the internal combustion engine. This month’s Frankfurt Motor Show was meant to give Germany’s mighty auto industry a platform to show off its expensive plans to build more electric vehicles.Instead, many international carmakers chose to stay away (some to save money) and Karl-Thomas Neumann, the ex-boss of Opel/Vauxhall, declared the event a “huge fail.” Compounding the misery, Daimler AG’s Mercedes, BMW AG and Volkswagen AG were upstaged by climate protesters who accused them of not doing enough to end their addiction to diesel and gasoline engines.Things had already got off to an ugly start. On the eve of the show four pedestrians were struck and killed by a sport utility vehicle in Berlin, prompting a fierce debate about the “social utility” of these gas-guzzling, tank-like cars. Featuring a picture of a Porsche SUV on its cover this week, Der Spiegel magazine declared a “new object of hate.” I’ve written before about the industry’s dependence on very profitable SUVs and the risk of a backlash.Meanwhile, the organization that one might usually expect to defend the German car giants — the VDA lobby group — was preoccupied with the abrupt resignation of its president, Bernhard Mattes. This fueled speculation that the industry was unhappy about its loss of political influence and increasing stigmatization.The German car industry provides more than 800,000 jobs in the country and it accounts for a big chunk of its manufacturing production and exports. Past governments fought hard to protect their industry crown jewel from troublesome regulations. That’s no longer always the case.First, the Volkswagen diesel emissions scandal made it unwise for politicians to go easy on companies that put profits above public health. And second, Germans have become alarmed by climate change and the industry’s role in that. The average emissions of new vehicles sold(3) climbed for the second year in a row last year, in part because of SUV sales. That’s one reason why Germany is set to miss its 2020 carbon pollution reduction targets. Passenger cars account for about 11% of its greenhouse gas emissions.(2)Stringent European Union emission targets, and massive fines for non-compliance, have been put in place already. A German federal government led by the Greens (not unimaginable given the party’s poll surge) would be tougher still. After the deadly accident in Berlin, there were calls to ban SUVs from cities.The average age of a new car buyer in Germany has climbed to 53, suggesting that the industry may be looking at a difficult future. Yet claims that Germans have fallen out of love with the automobile feel overblown. They still bought about 3.4 million new vehicles last year, pretty decent by historic standards. About 95% of them had a combustion engine. More than one-quarter were SUVs. Nor does the government have any desire to kill its golden goose. Earlier this year officials rejected attempts by campaigners to mandate a speed limit on the autobahn.With this contradiction between the public’s anxiety about climate change and its fondness for big vehicles, it’s not surprising that the government and carmakers are struggling to keep everyone happy. Riding a bike and car-sharing have become a genuine alternative in cities such as Berlin. But for those who still feel they need a car, electric vehicles tend to be more expensive and their driving range can be limited (for now, at least). The climate package the German government is due to announce on Friday will doubtless try to address this by including more incentives for electric vehicles and infrastructure.As the industry wrestles with such epochal challenges, it helps that Germany’s automakers have all recently appointed new bosses. They’re far from united, however, on how aggressively to abandon the combustion engine. Volkswagen is going “all-in” on battery cars (it’s targeting 40% of electric sales by 2030), while BMW is more cautious. The latter thinks hydrogen fuel-cells might have a future, though VW isn’t a fan.Yet even VW plans to use the profit from selling large SUVs such as its three-row “Atlas” to fund investments in green alternatives.At last week’s show in Frankfurt, electric vehicles like the Porsche Taycan and Volkswagen ID3 sat alongside gas-guzzling monsters like the BMW X6 and Mercedes AMG GLE Coupe. With the climate crisis intensifying, the industry’s split personality is getting more incongruous and indefensible by the day.(1) It's not all bad - the German market has actually expanded slightly so far this year.(2) In terms of grams of CO2 per km(3) See hereTo contact the senior editor responsible for Bloomberg Opinion’s editorials: David Shipley at firstname.lastname@example.org, .Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- President Donald Trump said he will revoke California’s authority to regulate greenhouse gas emissions from autos, his latest clash with the state that threatens to plunge the auto industry into protracted legal uncertainty.“This is the fight of a lifetime for us. We have to win this and I believe we will,” California Air Resources Board Chairman Mary Nichols said during a defiant press conference after Trump’s announcement Wednesday.Trump’s decision, announced on Twitter, adds to his long-running disputes with liberal California. As he began a two-day fundraising trip in the state Tuesday, Trump derided its homeless crisis while calling out the “tremendous taxes” its property owners pay. That comes on top of his criticism of the state’s management of immigration, forest fires and water policy.California, a heavily Democratic state that’s home to one in eight Americans, has filed more than 50 lawsuits and other protests over the president’s actions.Taking away California’s clean-car authority upends fuel-economy rules negotiated with the auto industry by President Barack Obama. Trump said his administration’s replacement efficiency standards, which are being finalized by federal agencies for cars built after 2020, will lead to greater vehicle production by reducing the cost of new vehicles.“Many more cars will be produced under the new and uniform standard, meaning significantly more JOBS, JOBS, JOBS! Automakers should seize this opportunity because without this alternative to California, you will be out of business,” Trump said in a tweet.Legal experts said the Trump administration may have a tough time defending a suit. A waiver has never been revoked in the 50-year-history of the Clean Air Act, said Julia Stein, a University of California at Los Angeles environmental law expert.“Ironically, even though the administration insists that it will be creating ‘one national standard’ by revoking California’s waiver, it will actually be doing the opposite,” Stein wrote in a blog post Thursday.California officials including Governor Gavin Newsom and Attorney General Xavier Becerra said in a press conference that the state has received roughly 100 waivers to combat air pollution and they would defend the one underpinning its vehicle rules.“This is such a pivotal moment in the history of climate change,” Newsom said, citing statistics on the role of transportation in greenhouse gas emissions. “This is our legacy moment.”With some 35 million vehicles in the state, and the transportation sector’s role as the top contributor of greenhouse gas emissions, Becerra said California’s ability to combat vehicle greenhouse gas emissions is critical to the state’s clean-air goals.“Our message to those who claim to support states rights: don’t trample on ours,” Becerra said. “Doing so would be an attempt to undo the progress we’ve made over the past decades.”Under Trump’s plan, the Environmental Protection Agency will revoke the so-called waiver underpinning the state’s ability to set tailpipe greenhouse-gas emissions standards that are more stringent, as well as the state’s electric vehicle sales mandate. The Transportation Department meanwhile will assert that the California rules are preempted by federal fuel-economy standards administered by the National Highway Traffic Safety Administration.EPA Administrator Andrew Wheeler and Transportation Secretary Elaine Chao have a “major policy announcement” planned at the EPA’s headquarters Thursday morning, the agency said in a statement following Trump’s tweet.Why Trump Attacks California’s Anti-Pollution Powers: QuickTakeDave Schwietert, interim president of the Alliance of Automobile Manufacturers, said the group will review the action and the still-pending federal emissions and fuel-economy standards for 2021 to 2026 to evaluate how they effect its member companies, employees and consumers.Predictable emissions and fuel economy standards are vital for automakers because as they plan production and model offerings several years in the future.“Automakers support year-over-year increases in fuel economy standards that align with marketplace realities, and we support one national program as the best path to preserve good auto jobs, keep new vehicles affordable for more Americans and avoid a marketplace with different standards,” Schwietert said in a statement.The move will shatter a nearly decade-long regulatory arrangement between NHTSA, EPA and the California Air Resources Board that has allowed automakers to satisfy fuel economy and efficiency standards administered by each agency with a single fleet of vehicles that can be sold nationwide.“Our viewpoint is that we want one national fleet” standard for fuel economy and emissions, said Art St. Cyr, vice president of auto operations at American Honda Morot Co. “We don’t want to have a split fleet.”Trump’s move “is bad for California and it’s bad for the country,” said California Democratic Senator Dianne Feinstein. “Revoking California’s authority will lead not only to more pollution, it will cost consumers billions of dollars a year in increased fuel consumption.”California’s Weak Case in Emissions War With Trump: Noah FeldmanThe Trump administration in August 2018 proposed stripping California’s authority as part of its broader plan to slash federal emissions and fuel-economy requirements enacted by the Obama administration.The plan initially recommended capping requirements after 2020 at a 37 mile-per-gallon fleet average, instead of rising each year to roughly 50 mpg. U.S. officials have since signaled that the final rule may require small annual improvements, but at levels far less than required under the current standards. Separating the attack on California’s authority allows that piece of the rule to proceed while federal agencies continue to finalize the new replacement requirements.CARB announced in July an accord with the Ford Motor Co., Honda Motor Co., BMW AG and Volkswagen AG on compromise tailpipe greenhouse gas emissions regulations, drawing Trump’s ire.The carmakers agreed with the state’s clean-air regulator to boost the fuel efficiency of autos sold in the U.S through 2026.Earlier this month, Trump’s Justice Department opened an antitrust probe into the deal.Free-market groups that have been pushing the administration to roll back the standard cheered the move while environmentalists decried it.“Withdrawing the California waiver is great news for car buyers and drivers. The rapid increase in new car prices should slow down, which means more people will be able to afford to buy a new car,” said Myron Ebell, a director at the Competitive Enterprise Institute, who is one of the main proponents of revoking California’s waiver. “The decision also restores our federalist system. With the waiver, California was for practical purposes put in charge of deciding what kinds of cars people across the nation can buy.”Paul Cort, an attorney for the environmental group Earthjustice, said “It’s bad enough the administration won’t take any meaningful action to clean our air or fight the warming climate that threatens us all; now they want to prevent California and other states from filling that gap.”\--With assistance from Keith Naughton and Andrew Harris.To contact the reporters on this story: Ryan Beene in Washington at email@example.com;Ari Natter in Washington at firstname.lastname@example.org;Jennifer A. Dlouhy in Washington at email@example.comTo contact the editors responsible for this story: Jon Morgan at firstname.lastname@example.org, Elizabeth WassermanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- The Trump administration is gearing up for its next big legal fight, taking on California’s long-established authority to set vehicle emission standards for new cars. Because the state is so large, this effectively creates national miles-per-gallon targets for any manufacturer selling vehicles in the U.S. Trump would like to take this power away from California and set lower national MPG standards.The question is, can he do it? Or is this just another example of presidential overreach in an administration that specializes in going too far?The answer turns out to be more complicated than you might think. California’s practices do have a strong basis in a federal law created to let the state fight smog. Yet California may have gone beyond this original mandate and become a regulator acting on par with the federal government — a strange deviation from the norms of U.S. federalism. The issue may eventually make its way to the Supreme Court, and with its current conservative majority, the court could very well decide in favor of Trump.The origin of California’s unusual powers goes back to the Clean Air Act of 1963. The law gives the Environmental Protection Agency authority to set emission standards, and bars states and local governments from setting standards of their own. But Section 209 allows California to apply for a waiver from that ban to allow it to set its own emission standards. The EPA is required to grant California’s waiver unless it finds that California doesn’t need the standards “to meet compelling and extraordinary conditions” or that California was “arbitrary and capricious in its finding that its standards are, in the aggregate, at least as protective of public health and welfare as applicable federal standards.”The reason California got this special treatment back in 1963 was that Congress recognized that the terrible smog in Southern California was largely a product of vehicle emissions. The idea was that California could clean up its air by requiring things like catalytic converters and “check engine” systems to limit tailpipe emissions.It worked, more or less, and California’s skies got somewhat cleaner. And because California was and remains such a huge auto market, manufacturers came to treat the California standards as their de facto requirements for the whole country.The Trump administration is targeting California’s power because of a fight over a proposed EPA rule that reduces 2026 mileage targets of 51 MPG established under the Obama administration. After the Trump administration proposed lowering the standard to 37 MPG, California signed a separate deal with Ford, Honda, Volkswagen, and BMW in which the automakers said they would aim to meet the original target.As far as California is concerned, it’s still simply limiting carbon dioxide emissions and attempting to fight smog … but it’s doing so by setting mileage standards. The Trump administration is poised to argue that California has used its waiver to get into the business of regulating carmakers generally — not just to keep the skies clear over California. Effectively, the Trump demonstration says, California is competing with the EPA as a policymaker setting national standards.If you care about climate change, you might think that’s perfectly fine, especially because California can only set standards that are tougher than the federal government’s, not weaker.But from the standpoint of government design, it’s pretty strange that one state can thwart the will of the executive branch. The governor of California represents Californians; the U.S. president represents the entire country. Even if you don’t like Trump’s policies, you should be willing to admit that he’s the elected president.The technical name for a situation where one state has special powers is “asymmetrical federalism.” The Clean Air Act waiver is one of those highly unusual cases where the U.S. Congress has given asymmetrical powers to one state. Lots of other states have pledged to follow California’s standards; but they don’t have the same legal authority to set standards of their own.When conservative courts come to consider whether California’s mileage standards go too far, expect them to analyze the issue against the backdrop of federalism. Sure, conservatives like states’ rights. But they may not like the idea that one state out of all the others has the capacity to compete with the federal government to make policy. And frankly, if it were not for the environmental twist, many liberal judges would also be skeptical of a state pushing the boundaries of its unique powers.The legal fight is just getting started, and it will take years to wend its way through the courts. If Donald Trump isn’t re-elected, the whole issue will probably go away. If he is, however, we are very likely to see a lengthy fight over federalism, the environment, and just how unique California really is.To contact the author of this story: Noah Feldman at email@example.comTo contact the editor responsible for this story: Sarah Green Carmichael at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Noah Feldman is a Bloomberg Opinion columnist. He is a professor of law at Harvard University and was a clerk to U.S. Supreme Court Justice David Souter. His books include “The Three Lives of James Madison: Genius, Partisan, President.” For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- European car sales fell sharply in August, deepening the woes of an industry battling sluggish demand in key markets and the challenge of rolling out electric vehicles.Registrations dropped 8.4%, the steepest monthly decline this year, according to the European Automobile Manufacturers Association. The fall was partly due to exceptionally high growth a year earlier as manufacturers rushed out models ahead of tough new emissions-testing rules. Volkswagen AG shares lost 0.4% in early trading in Frankfurt and BMW AG was 0.3% lower.In addition to the risk of a recession in Germany, carmakers are also facing a slowdown in the Chinese car market. European sales over the year to date are down 3.2% and the continent’s five biggest markets all contracted in August, with Spain and France posting the biggest slowdowns. The drop last month brought registrations down to 1.04 million units.Nissan Motor Co. and Fiat Chrysler Automobiles NV saw the biggest slowdown in August sales at 47.5% and 26.5% respectively.The industry’s predicament took center stage at the Frankfurt auto show, where thousands of protesters demanded political and industry action to combat climate change. The head of Germany’s auto lobby group also unexpectedly announced his resignation last week.Carmakers at the show displayed their new electric models, which will become crucial in coming months as the companies race to meet new European carbon-dioxide emissions rules. Carlos Tavares, head of the ACEA and chief executive officer of Groupe PSA, last week called for more charging infrastructure to encourage consumers to buy the vehicles.After the August 2018 boost, auto sales dropped dramatically overall and have failed to pick up since, with the association forecasting a 1% drop for the year.While the ongoing issues in the car industry are hitting Germany in particular, there are signs of weakness in manufacturing across Europe. Euro-area economic growth is forecast to slow to 1.1% this year from 1.9% in 2018, which would be its worst performance in six years.The weakness in industry hasn’t had a dramatic impact on the labor market so far. If that changes, and unemployment starts to rise, that would mark a step up in the seriousness of the slowdown. It would also further hurt car sales as consumers rein in big-ticket purchases.Europe’s July sales increase, one of only two monthly gains in 12 months, was almost entirely down to Central European countries, the association said. Only Germany showed positive growth that month among Western European countries.(Adds shares in second paragraph.)\--With assistance from Fergal O'Brien.To contact the reporter on this story: Oliver Sachgau in Munich at email@example.comTo contact the editors responsible for this story: Tara Patel at firstname.lastname@example.org, John BowkerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Bayerische Motoren...