By Jeff Sanford
Toronto, Ontario — December 30, 2015 — We usually run these on Fridays, but there’s no reason you should miss your weekly dose of fun and weird stories just because of the holidays. We’ve got the usual mix of noteworthy, unusual and downright bizarre stories from the automotive world.
– General Motors is expected to announce it will introduce Apple vehicle software, CarPlay, on its entire fleet in 2016. This will allow drivers to plug their iPhone into the car’s USB port and have Apple icons come up on the cars dashboard.
– The technology media in the US is reporting that Ford and Google will announce the development of a self-driving car initiative at the Consumer Electronics Show (CES) in Las Vegas early next month. CES is typically reserved for consumer items, but car-based products are making more appearances at the show (see Magna to display connected car, driver safety systems at CES 2016 for more on this trend). Are vehicles becoming simply another consumer item, akin to a washer or dryer, rather than a major, life-defining purchase? Or is it simply that automotive and consumer electronics are becoming more entwined than ever before? In any case, we suspect we’ll see more and more car companies heading to CES in the future, and more electronics and computer companies getting involved in automotive.
– Could insurance companies of the future be sending a drone to log insurance claims? Don’t rule the possibility out. Allstate is testing just such a service in Iowa. The company is sending drones out to document claims. The service seems to make sense for property damage claims. But who says the service wouldn’t work for autos as well?
– Will cars ever be made “unhackable?” This is one of the big questions facing the emerging connected car industry according to a media report. Some of the other questions flowing from the now-occurring merger of digital tech and autos: Will the majority of new and used cars be brought online in the future? Some industry experts think the 2017 Cadillac CTS going to be the first car to “talk” to others on the road.
– Online used car sales startup Vroom has raised $95 million in equity. The company is using some of those funds to acquire Texas Auto Direct, a competitor known for developing software that significantly reduces the time it takes to process and recondition used vehicles. Vroom is building a business that fixes up used cars for sale over the Internet. The company typically invests about $1,000 in each used car. The goal is to ship cars to customers throughout the US within 48 hours of purchase. Vroom provides a seven-day money back guarantee, a no-questions-asked return policy, and a 90-day bumper-to-bumper warranty. The company is about to open a new 500,000 sq. ft. facility in Indianapolis in early 2016.
– It’s going to be close. Depending on how December sales work out, this year could set a record for annual vehicle sales. Whether or not the record is broken, it seems there are lots of new cars out there to fix.
– BMW is expected to begin introducing its new “airtouch” technology at car shows this year. By utilizing sensors and interior cameras drivers will be able to make hand motions in the air to change settings on the control panel … without touching any buttons. The technology is only a demonstration, but a new era has arrived—no more fingerprints on the dash.
– Who in their right mind leaves a crashed Lamorghini on the side of the road? We’re not sure, but Toronto police say they were picked up by a BMW. The Lamborghini was involved in a two-car collision on the Gardiner Expressway in Toronto on Monday. The police are currently seeking the driver, who reportedly fled the scene in the aforementioned BMW.
– Persistently low oil prices aren’t going to be around forever. While few expect prices at the pump to skyrocket anytime soon, it’s generally expected that oil will at least modestly increase in value in the upcoming calendar year. Although the Chinese economy has slowed, new demand for gasoline from China continues to expand. Production of American shale oil is expected to begin to drop this year as expensive shale drilling companies go broke as a result of low prices. As they say in the industry, the best cure for low oil prices are low oil prices. Balancing out the bullish case for prices is the prospect that more Iranian oil will come online once American sanctions come off in the wake of the nuclear deal with Tehran. Iraqi oil production also continues to expand. How these factors settle out is anyone’s guess. American investment banks seem to be suggesting a $40 price of a barrel of crude in the year to come. Saudi Arabia recently suggested that as American shale production declines prices could spike to over $200 a barrel in the next couple of years. As usual: No one knows for sure what’s going to happen to the price of oil. But the story is going to be an interesting one to follow as the American shale boom peaks.
– Could the recently announced mega-merger between Dow Chemical and DuPont have effects on the collision repair industry? Dow and DuPont, of course, manufacture a vast array of plastics, polymers and chemicals used in all kinds of products, from paint to parts. What it means now that these mighty players have hitched up is another interesting question. Some analysts suggest the effects will be felt “throughout the automotive supply chain.” Media reports suggest the effects of the merger could “ripple…into the second and third tiers of the supply chain,” which often use materials from both companies in parts and components. That said, DuPont’s auto business is not as big as it was even a few years ago. The company sold its paint business in 2013 to the Carlyle Group for $4.9 billion (creating Axalta Coating Systems). But as auto companies replace heavier materials with advanced plastics and composite fibre materials, the products of the new company could be expected to be in ever-greater demand. The resulting company will be worth an astounding $130 billion.
– Tesla may be making a mark in North America, but it seems China is the real leader in the adoption of electric cars. China has been the world’s largest car market since 2009. Now it is emerging as the top country for plug-in cars. The country has been enveloped in choking smog this year. As a result the government is rapidly building out the country’s electric-vehicle market. In the first ten months of this year Chinese consumers purchased more than 114,00 fully electric cars. This is compared to the roughly 100,000 vehicles Tesla has sold in its 12-year existence. It is said that aspiring new-car owners in China (and there are hundreds of millions of them) have been “flooding” local dealerships in search of modestly priced, domestically made electric vehicles.
– RBC Capital began coverage on shares of Boyd Group Income Fund in a recent research report. The brokerage set a “sector perform” rating on the stock. A number of other analysts have also issued reports on the stock. Laurentian Bank lifted their target on shares of Boyd Group Income Fund from C$70.00 to C$80.00 this past November. Shares currently trade in the mid-$60 range.
– Volvo has announced that its “Drive Me” pilot program planned for 2017 will see “Level 4” automated vehicle technology tested along 50 miles of limited-access highway roads in Gothenburg, Sweden. Along that stretch testers do not have to be in control of their vehicles. Those taking part in the test will “read, eat, make phone calls, or even nap.” If there are any problems or accidents Volvo has announced it will take full responsibility. The age of self-driving cars is arriving rapidly.
– Mysteries of the universe: How do you not notice a traffic light and pole your vehicle has hit and been dragging for a kilometre? According to the Manitoba RCMP detachment, a drunk driver smacked into the pole and drove a full kilometer before finally stopping. It’s also worth noting that the van eventually stopped because of a blown transmission, rather than the driver finally wising up.
– LKQ has made a major move in Europe. The company recently announced it has signed a definitive agreement to acquire Rhiag-Inter Auto Parts, which is a “do-it-for-me” aftermarket parts distributor in Europe (primarily Italy and Eastern Europe). According to a recent brokerage report, the acquisition “expands the company’s presence in the large and fragmented European market and gives the company a platform to accelerate growth via market share gains and new product introductions (e.g., collision and remanufactured parts, paint).” Rhiag is said to have a slightly lower margin profile than LKQ, but it should “generate nice cost synergies and accretion potential … While LKQ is paying slightly more than it has for some previous acquisitions, we believe it is justified given the strategic fit and better growth and margin profile.” The transaction is expected to close by the second quarter of 2016 and will be financed with cash and debt.” LKQ stock reacted positively, rising about 5 percent on the news. The acquisition provides “a needed earnings boost given continued headwinds from scrap steel prices and represents another step in LKQ’s European expansion efforts,” according to the report.” Rhiag is a DIFM aftermarket mechanical parts distributor in Italy, Switzerland, and Eastern Europe, operating through 247 distribution centers and 10 warehouses. The company has the largest market share in Italy (about 15 percent), Czech Republic (37 percent), and Slovakia (24 percent).
