Bloomberg May 22, 2019
Some highlights from the article:
As global auto sales slow after a decade of growth, carmakers are girding for a deeper downturn by slashing payrolls. From China to the U.K., Germany, Canada and the U.S., companies have announced at least 38,000 job cuts in the past six months. It may be just the beginning: Daimler AG’s departing CEO, Dieter Zetsche, on Wednesday warned sweeping cost reductions are ahead to prepare for unprecedented industry upheaval.
The industry is right now staring down the barrel of what we think is going to be a significant downturn,” Bank of America Merrill Lynch analyst John Murphy said at a four in Detroit on Tuesday, adding that the pace of decline in China “is a real surprise.”
What carmakers are doing:
* cutting shifts
* closing factories globally
* trying to find money to pivot to electric and self-driving vehicles
* laying people off; for example, Ford announce a 10% reduction (7k) in salaried workers recently
* higher tariffs are hurting, a trade group representing 12 of the largest foreign and domestic automakers warned it puts 700k American jobs at risk
Announced Job Reductions:
* Ford 7,000
* Nissan 4,500
* Honda 3,500
* Daimler 10,000
* Tesla n/a
* Fiat 1,500
* Ford another 5,000 in Germany
* Ford’s China JV n/a
* Audi n/a
* Tesla 3,000 (last January)
* Jaguar 4,500
* Nissan 700 (US)
* GM 14,000 (plus several factory closings)
Global light vehicle sales fell 0.5% in 2018 to 94.8 million, the first drop since 2009; Morgan Stanley projects another 0.3% drop this year, but as sales figures come in it’s worse than that so far.
Auto affiliated lenders have been handing out subprime auto loans, defaults are 7% and rising.
You look at market segments, while overall sales are down EV sales are exploding. Global EV sales were 224k through March compared to 141k in 2018 for the first quarter. Tesla is leading the growth. EV sales in the US were basically flat the first 3 months, but M3s are pouring into Europe and China now. Musk’s email last week says Tesla has chance to deliver more cars in Q2 2019 than in Q4 2018, Tesla’s best quarter ever.
Facts. The FUD says Tesla is on the verge of bankwuptcy. Other auto stocks are down just a little. Tesla is building factories while Ford et al are closing theirs. Tesla’s layoffs pale compared to the others. Tesla still employs 45,000 people where the layoffs have been 38k.
Yet it’s Tesla’s stock that is absolutely being hammered by the shorts while Ford/GM stocks are down only a little.
What’s wrong with the short's picture in light of all this?