By Jeff Sanford
Toronto, Ontario — November 5, 2015 — Herewith, a collection of interesting news bits related to the collision repair sector from the week that was:
– Get ready for a whole batch of new cars to repair. Times are good in the Canadian auto industry. The sector reports that new car sales surged to a new record for the month of October. DesRosiers Automotive Consultants reports Canadians bought 163,053 light vehicles in October. This is a 5.1 percent increase over the previous all-time high for the month set in 2014. Luxury nameplates did exceptionally well. Sales at Land Rover were up 71.9 percent, Porsche sales rose 45.4 percent and Lexus sales were up 29.4 percent. Nissan also did well, up 24.4 percent. Infiniti sales were up 22.8 percent. Honda sales grew 14.7 percent. Volvo sales rose 12.3 percent, and Subaru sales increased 11.7 percent. Even embattled German manufacturer Volkswagen managed to post a gain, with a 8.3 percent advance in sales. General Motors came in at a 5.8 percent increase. Fiat Chrysler was up 0.4 percent and Ford Canada 0.2 percent. Toyota Canada sales were up 4.2 percent and Hyundai sales rose 4.4 percent.
But then the news on business is good throughout the auto sector these days. Investors sent the stock of US aftermarket parts provider Auto Parts Network up almost 21 percent this week. The company posted net sales for the latest quarter, reversing previous losses. “Our third quarter was highlighted by the continued strength in our private label business, which realized double-digit, year-over-year growth for the seventh consecutive quarter,” said Chief Executive Shane Evangelist in a statement.
– Overseas, the Hungarian car market seems to be doing particularly well. In that country new car registrations rose 34 percent over the same period last year. The auto industry now accounts for 24 percent of that country’s GPD. This is a huge share of the economy.
– Back home in Canada, AutoCanada has been assigned an average recommendation of “Buy” from the six ratings firms covering the stock. Three analysts rate it a hold, three a buy. The average twelve-month price target is C$37.40. This is an optimistic outlook considering the stock is currently trading at about C$31.
– The only auto company not doing well? If former GM chief Bob Lutz is right, it’s Tesla. The company recently saw Consumer Reports magazine lower the rating on the company’s latest vehicle from “recommended” to“worse than expected” as a result of glitches in the car and build-quality issues. Tesla’s disappointing ability to cope with complaints from consumers was also cited as a reason for the downgrade. Tesla had previously garnered overwhelmingly positive reviews from Consumer Reports. Former GM exec Lutz suggested the company is actually in trouble, telling Fortune magazine that, “Tesla’s showing all the signs of a company in trouble: bleeding cash, securitized assets, and mounting inventory. It’s the trifecta of doom for any automaker, and anyone paying attention probably saw this coming a mile away. Like most big puzzles, the company’s woes don’t have just one source.” Global investment bank, Barclays, recently downgraded Tesla from a “neutral” rating to a “sell” rating.
– The steel-versus-aluminum debate goes on. Sean Stack, CEO of US aluminum sheet producer and recycler Aleris International, said Tuesday it is still “too early” to expect additional steel-to-aluminum announcements from other major automakers such as Toyota and General Motors. So far only Ford has increased the usage of aluminum sheet in its vehicles. On the other hand a report this week suggests think shifts in the Asian car industry will lift aluminum demand as a result of its burgeoning middle-class and rapid urbanization in that region. Henning Flaig, an executive with Hydro Aluminum Asia, was quoted as saying, “Asia is far behind because, in kilogram terms, the penetration of aluminium in Asian-produced cars is roughly half that in European cars.”
-As global car makers continue to deal with the fallout from the VW emissions scandal, French auto-industry weekly Auto Plus reported last week that the major auto brands are underestimating the real-world fuel consumption of their vehicles by almost forty percent. This is not good news for an industry still suffering the effects of the VW emissions scandal. The magazine tested fuel consumption on more than 1000 models and found that on average fuel consumption was an astounding 37.2 percent higher than what is reported by carmakers. The gap between reported fuel consumption numbers and real-world numbers has been growing for years. But to find the gap has grown to almost 40 percent is remarkable. In the wake of the report the European Manufacturers’ Association (ACEA) reiterated a commitment to new real-world emissions tests, but warned the it could be “difficult for manufacturers to meet” real-world standards and that a recognition of real-world emissions could see diesels being “phased out earlier than expected.”
– VW continues to suffer bad news. Shares in the company were down 10 percent last week when major bond-rating firm Moody’s downgraded the car maker’s credit rating as a result of an after-hours statement on Tuesday issued by VW warning that the car-maker had found “irregularites” with the amount of CO2 emmitted by 800,000 of its vehicles.
The worry is that the company’s “entire range of vehicles may have been cheating to hit pollution control targets.” The most recent VW announcement finds that “CO2 levels and thus the fuel consumption figures for some models were set too low during the CO2 certification process.”
– It seems to happen every couple of months. A vehicle drives into a collision repair facility. The latest one is in Snohomish Country, Washington. This one’s a bit different than most, though, in that was actually a hit and run. The facility is B&H Body Repair, and co-owner Mike Benjamin has been quoted in the Snohomish Country Tribune as saying “They left some of their car parts here, which is a bad thing to do at a body shop, because we can identify those parts. They’re black, and they belong to a Subaru Forester.”
