Who gives a dime? The impact of Electric Vehicles on Jobs in Auto makers and retailers

As politicians and activists, auto-makers and early-adopters, embrace electric vehicles as the key transport development of the early 21st century, few are concerned about the impact on jobs. Automotive is one of the world’s largest industries with 8MN-10MN employed directly and another 20MN-25MN in support roles. The outlook for these stable, high quality jobs is at best uncertain. Up to 1MN jobs may be lost in manufacturing and another 13MN in support jobs. Does anyone give a dime?!

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Thinking the Unthinkable: Net Zero Emissions

Welcome the attention given to global warming or not, it ranks high on the world’s political agenda. But, political aspirations and policies are all predicated on the assumption that electric vehicles can be produced and deployed fast enough and in sufficient numbers to make a difference to global emissions. For the more radical activist’s timetable of ‘net zero’ emissions by 2025, aspirations are likely to be dashed. However, the direction of travel is clear and will have significant consequences for the automotive industry, its supply chain and consumers. This post considers dealer profitability.

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Brexit: the impact on car retailers

Whatever your political preferences there is no escape from the impacts of ‘Brexit’ if you’re in motor retail. Retailers and repairers are the final link in global supply chains that are all likely to see disruption. These two blog posts highlights the likely effects on motor retailers and authorized repairers of three possible Brexit negotiation outcomes over two time horizons: immediate and medium and long term effects. This first post focuses on the immediate effects.

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Seven Global Car Maker’s KPI’s Part 4: Liquidity and Debt

click on an image or table to enlarge.   Financial management in a global carmaker is more complex than most. Carmakers commonly manage both global industrial businesses and global finance companies at the same time. They make vehicles and most finance vehicle purchase and leasing as well. As a result, managing large flows of cash and debt, and the risks associated with them, is their daily activity. How do we know if they are sound? The financial resilience of a business stems from a combination of the risks linked to three core financial concepts – liquidity, solvency and debt. Liquidity and solvency are often coupled but mean two different things. Liquidity is a firm’s ability to pay its debt obligations when they fall due. Debt obligations can be in any amount, but the key factors in liquidity remain the same: cash and timing. Solvency is a broader concept that measures if the value of the firm’s assets is equal to or greater than its liabilities. It makes two balance sheet measurements: One, are total assets greater than total liabilities? Two, are current assets greater than current liabilities? Debt, for businesses, takes many forms, from ‘plain vanilla’ term loans and mortgages through to bonds and complex structured financial instruments, but they too have common features: a repayment schedule; a cost; a consequence and a risk. To start with analysts assess these core financial concepts using ratios. Two common ones are Current Ratio and Financial Leverage. If either of these gives unusual results, they lead to more ratios used to uncover further facts. So, how well did our 7 car makers do against these two ratios? Current Ratio (Current Assets/Current Liabilities): In 2016 BMW’s Current Ratio returned to its long term average for the last decade of 0.98:1. It rose in 2009, when […]

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Seven Global Car Makers KPI’s Part 3: Profitability

Global carmakers have never had it so good and so bad at the same time. Being positive, the global car market is growing and they have never had more potential for profitable business. Being negative they have to keep their investors onside while spending significant sums on untested technology and new product concepts. The key issue is cash flow and the driver of cash flow is profits. This post – the third in the series – looks at where 7 global carmakers generate their profits today and the potential they have for generating profits in the future.

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Seven Global Car Maker’s KPI’s Part 2: Sales Revenue

Every successful business likes to trumpet its sales revenue. None more so than car manufacturers. But, while year on year sales growth gives CEO’s a warm glow, experienced professionals know that revenue alone tells an investor or stakeholder very little. This post explains what you need to know to interpret the headline sales revenue figures using the published results of seven global car makers as examples. It illustrates what else you need to consider to decide if a car maker is really doing well or merely appearing to do so. It’s part of a series of posts assessing the KPI’s of these businesses – Daimler, BMW, VW, Toyota, FIAT-Chrysler Auto, Ford and GM – for the turbulent 10 years from 2007 to 2017.

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Seven global car maker’s KPI’s Part 1: Unit Sales

  Few items of business news grab the headlines more than sales volumes and, whether you’re a consumer or an industry insider, that is never more true than when car sales results for a market or a car manufacturer are published. It’s not just the numbers themselves. Car sales volumes are used as key idicators of global and regional economic development, consumer confidence, consumer preferences and urbanization, to mention just a few. Two factors help to put global car sales figures need to be placed in context. First, the global car market is highly dynamic and is expected to reach 100 MN units by 2022. In that forecast the market in China doubles from it’s current size – from 28MN to 55MN units – and the US grows to around 22MN units. More surprising is that India moves into the #4 slot with sales of around 5MN just behind Japan. Second, the proliferation of modular platforms across manufacturers will reduce production costs and lead to significant model development. Carmakers are likely to produce a growing range of models in shorter production runs. Using the same platform should help them make more profits. But, this may not lead to a bonanza for shareholders. Most of the profits could be eaten up in the extra costs of developing new technology and rising raw material prices. As for dealers, if they’re to keep a role in the distribution chain at all, they will need to become savvy at reaching and trading with a wider range of segments. That will cost them more money too.

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How sound is your franchise? Seven global carmakers compared.

Car makers are skilled at assessing the financial and operational strengths of existing or would-be dealers and, for forty years, dealers have been rating franchises in terms of how profitable they are to invest in and constructive to work with. But, so far, dealers have not assessed car makers on their financial and business viability. However, in a time of unprecedented change and potential disruption to car-makers and the retail dealer model, perhaps its time for a change. This series of posts complete a financial KPI and business analysis of seven global car makers from the viewpoint of a dealer or other potential stakeholder: Daimler, BMW, Ford, General Motors (GM), FIAT-Chrysler Auto (FCA), Volkswagen Group (VW) and Toyota. This first post gives an overall ranking of each car maker based on the data. The subsequent posts look more closely at specific issues such as unit sales volume, sales revenue, profitability, liquidity and debt and operating efficiency.

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Pyramids, Voting Shares and Cross Holdings: Staying in Control in a family-owned dealership.

‘Born with a silver spoon’. That’s often how it looks to outsiders when a family-owned dealership passes successfully from one generation to the next. In truth, it’s usually taken a lot of hard work and hard bargaining for all concerned. In UK motor retailing, the dominant and most successful business model is the family owned dealership or dealer group. But, as a rule of thumb, only one in three family firms successfully make it to the second generation. Plus,of the one that succeeds, most grow very slowly. One reason is that many do not know how to attract new investment without losing control.  How do successful family firms structure themselves to overcome this challenge?

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Steering an independent motor group: Part 2. From Regional to National

Successful independent or family based motor groups pass through three stages: Formation of a stable business; alignment with a manufacturer to achieve control of a region; and either dominance of the region or adding a new one
But a few manage to get beyond this stage, heading towards the national market.
To achieve success they need a clear strategy and vision, relationships with a broad range of partners and a management infrastructure.
But above all, they need a restless and relentless senior management to drive the process through
This post looks at three companies doing it: Stoneacre, Johnson Cars and Toomeys

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