a post for analyses...
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Auto sales: GM, Toyota up; Ford, FCA drop
The Detroit News - Nora Naughton - Feb. 1, 2018 | Updated
General Motors Co. was the only Detroit automaker to report a sales increase in the first month of 2018, up 1.3 percent.
Ford Motor Co. reported a 6.6 percent decrease and Fiat Chrysler Automobiles NV was down 13 percent.
GM’s Buick and Chevrolet brands were the only two to post increases, up 4 percent and 5 percent respectively. Several Chevrolet nameplates posted best-ever January sales, including the Equinox, Traverse and Trax.
The Chevrolet Bolt EV also posted a gain of 1.3 percent in January.
“All of our brands are building momentum in the industry’s hottest and most profitable segments,” Kurt McNeil, GM’s U.S. vice president of sales operations, said in a statement. “Chevrolet led the growth of the small crossover segment with the Trax as well as the mid-pickup segment with the Colorado. Now, we have the all-new Equinox and Traverse delivering higher sales, share and transaction prices.”
The Blue Oval’s biggest vehicles posted some of the strongest sales in over a decade.
The company moved 161,143 vehicles in the first month of the year. Car sales at that time were down 23.3 percent compared to Jan. 2017.
Ford said the F-Series had its best January since 2004 last month. The new Lincoln Navigator also had its strongest sales in a decade, riding the redesign that launched in 2017.
Ford saw average transaction pricing jump $2,000 – with incentive spending down $200 – compared to the same month a year ago. Mark LaNeve, Ford vice president of U.S. marketing, sales and service, attributed that to a strong economy.
Not only are people buying more trucks and SUVs, but consumers are opting for higher, more expensive trim levels.
“U.S. economic factors are very healthy and we’re seeing the effect in the auto industry,” LaNeve said in a statement. “Our all-new Expedition and Navigator are off to a hot start across the country; Platinum Expedition and high series Reserve and Black Label versions of Navigator are in high demand.”
Ford Focus sales fell 31 percent compared to the same month a year ago, while Fusion sales dove 33 percent. The company sold 500 EcoSport compact SUVs last month, which was the first month they were available in the U.S.
Sales for all Ford SUVs were down 5.9 percent overall. Truck sales grew 2.2 percent. Ford also saw a 12 percent drop in fleet sales in January.
FCA’s Jeep brand continues to be the bright spot for the Italian-American automaker, the only brand to post a gain in January, up 2 percent on a good month for the Cherokee, Wrangler and Compass.
The Dodge brand fell 31 percent in January while Ram fell 16 percent.
Meanwhile, Toyota North America reported a 16.8 percent increase in January sales compared to the same month a year ago.
The company had its “best-ever” January sales for light trucks, and saw Camry sedan sales climb 21.3 percent as U.S. consumers turn away from almost every other car on the market in favor of a bigger vehicle.
Toyota sold 26,655 RAV4 SUVs last month, a 20.3 percent increase. The company saw sales of the Tacoma and Tundra pickups grow 33.6 percent and 15.3 percent, respectively.
“We are off to a great start with strong customer demand for light trucks, including RAV4, Highlander and 4Runner, setting best-ever records for January,” said Jack Hollis, group vice president and general manager, Toyota division, in a statement. “We’re encouraged by the strength of the market and the momentum we have with a full calendar year of the all-new Camry, followed by the launch of the all-new Avalon in the spring.”
Analysts are expecting the industry overall to report a slight decrease in sales last month, with Edmunds forecasting a 1.4 percent decrease from January 2017. Some of this decrease is driven by severe winter weather around the country, like the bomb cyclone snowstorm that dumped on the East Coast at the beginning of January.
Automakers are also expected to pull back on incentives that drove buyers to showrooms during the holiday season.
“In January, automakers are expected to pull the reins in on the more generous incentive programs that we saw at the end of 2017,” Jessica Caldwell, an automotive analyst for Edmunds, said in a statement. “However, it’s typical to see a slowdown at dealerships in January following the high-selling holiday months. This isn’t necessarily a solid indicator of the direction that the year is headed in terms of overall sales.”
Average transaction prices were on the rise in January, according to Kelley Blue Book, which reported the average price of a light vehicle in the U.S. last month was $36,270, a 4 percent increase over the same period last year. The bump in average transaction prices is driven by the consumer shift away from cars to more expensive trucks and SUVs. Even the price of mid-size cars rose in January, though, up 3 percent on gains for the Toyota Camry and Honda Accord, according to Kelley Blue Book’s report.
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Investors can’t get enough Tesla bonds
The Detroit News - Claire Boston, Bloomberg - Jan. 31, 2018
Days after Elon Musk put 20,000 flamethrowers on sale to help pay for his proposed transportation tunnels, investors are clamoring to get their hands on a more conventional source of funds for Musk’s Tesla Inc.
They’ve put in orders for as much as 14 times what the electric-car maker intends to sell on some slices of an asset-backed security, according to people familiar with the matter.
Tesla has been marketing $546 million of bonds backed by leases of its Model X and Model S vehicles. It’s the company’s inaugural auto ABS deal after charming buyers in the equity, convertible bond and junk-debt markets. Tesla dangled juicy yields — as high as 2.9 percent over benchmarks on lower-rated portions of the debt — to lure investors. But the fact that it’s a well-known innovator with a charismatic chief and a hotly anticipated product didn’t hurt.
“It’s got the Elon Musk magic to it,” said John Kerschner, head of securitized products at Janus Henderson Investors, which manages $360.5 billion. “It just makes for an easier sale.”
Tesla didn’t immediately respond to requests for comment.
A successful deal bodes well for Tesla’s future fundraising efforts, a perpetual concern for the company as it ramps up production for its Model 3 mass-market car. The company could burn through $4.2 billion this year, according to Barclays Plc analyst Brian Johnson. The automaker plans to become a regular issuer of auto ABS, according to people familiar with the matter.
Demand for debt backed by consumer payments such as auto leases has been booming, sending risk premiums on auto ABS deals to some of the lowest levels since 2007, according to Bloomberg Barclays index data.
With Tesla, investors had to weigh uncertainties about the resale value of electric cars — a relatively sparse data point — against the fact that lessees on average had high credit scores and the bonds mature in less than three years.
“It’s definitely a split market,” said Jennifer Thomas, an analyst who studies mortgages and structured bonds at Loomis Sayles & Co., which manages $268 billion. “We preferred to play it cautious.” She called investor demand for the deal “extreme.”
Musk is marketing $500 flamethrowers through his Boring Co. as a way to raise money for two tunnel projects, one in Southern California and the other connecting New York and Washington.
Tesla’s previous forays into the debt markets have been mixed. Investors greeted its August junk-bond sale with euphoria, allowing the Palo Alto, California-based carmaker to upsize the deal. But the notes plunged below their selling price almost immediately after the deal closed on concerns about Tesla’s cash flow. They haven’t recovered. A slate of convertible notes, however, trade well above par, and the company has become the most frequent issuer in the market for bonds backed by solar contracts.
Though investors were ravenous for the deal, Kerschner said it was unlikely that many potential buyers were Musk superfans dabbling in the ABS market. But investors who might typically look at investment-grade and high-yield debt have increasingly fallen in love with the structured-credit market as yields shrink across fixed income...