Toronto, Ontario, May 7, 2018– In this week’s Tuesday Ticker: the loonie’s dip in value and its impact on the aftermarket, China’s auto sector strategy U-turn and much, much more!
Loonie Loss Lessons
This week, the release of surprisingly good employment numbers sent the Canadian dollar into freefall. Trading at just 74 cents U.S., the loonie’s losses could have a major impact on Canada’s auto aftermarket–not all of it bad. While dealerships are likely to see less interest from buyers because of rising prices, repairers may stand to benefit. Despite any rise in parts costs, the number of repairs required by Canadian drivers is unlikely to fall.
Franchise operators with operations on both sides of the border may also stand to benefit. With most of its businesses located in the United States, the Boyd Group’s value is likely to increase as a result of the dollar’s dip.
For companies considering expansion, however, a soft dollar may drive interest in investing in north-of-the-border businesses. For cross-border companies like Driven Brands, which has been buying-up American auto lubricant outlets, the opportunity to buy up similar Canadian franchises at a discount may be tempting.
Bad News for BASF
BASF CEO Martin Brudermueller announced the car refinishing giant was likely to see annual growth of close to one percent, despite earlier predictions suggested the company could see as much as 10 percent growth. The announcement, which comes during Brudermueller’s first year as CEO, does not seem to have had spooked investors. In the past twelve months, the company’s stock value has risen by twenty percent, far more quickly than its bottom-line profitability. Despite the announcement, shares rose, though only slightly. While there can be some lag between corporate announcements and stock adjustments, it appears likely that investors believe the stock was underpriced last year, rather than overpriced today.
Eastern Promises
The Chinese Minister for Industry has announced the communist country will reduce its controls on the auto sector. The moves appear to be an attempt at conciliation with the Trump Administration, which has used Chinese meddling in the auto sector to justify a number of economic sanctions against China. The Minister, Miao Wei, delivered his remarks at the China Development Forum, where a number of other new policies were outlined. Many of these policies involved investments in the tech sector, and are likely to ruffle feathers with the U.S. President. While the concessions on auto market intervention were a major aspect of Trump’s criticisms of Chinese trade practices, the President has also highlighted the country’s refusal to respect American and international intellectual property laws.
Autonomous Advertising
While Tesla may trust its driver’s lives to a decision-making algorithm, it does not trust its marketing to them, a report has found. Issued by the U.S.-based firm Brand Total, the report analyzed all paid and organic social campaigns from major automotive brands, including Toyota, BMW, Ford, Audi, Honda, Nissan, Infiniti, Tesla, Lexus, Cadillac and Porsche in the U.S. over the course 30 days. Unlike any of the other profiled brands, Tesla invested no money in social media advertisements. Unlike traditional advertisements, social media companies use self-learning algorithms to predict which viewers are most susceptible to a particular advert.
