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Aim to bring auto industry bodies together to unitedly pursue long-standing issues: FADA

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New Delhi: Automobile dealers body FADA aims to bring major auto industry bodies together to effectively engage with government regarding various issues plaguing the sector, a top official said. Vinkesh Gulati, in an interview with after taking over as new President of the Federation of Automobile Dealers Associations (FADA), said the move is important to get much needed attention from the government regarding various policy matters and long-standing demands.

Elaborating on tasks at hand, he said FADA would also work for making auto retail business viable again by taking steps to enhance profitability of the dealer community which has been hit hard by a prolonged slowdown.

The industry body, which represents around 15,000 auto dealers across the country, aims to push for increasing dealer margins and collaborate with other retail organisations across verticals to work out a law that protects retailers and dealers.

“We are of the view that auto industry should have a common stand. Practically as of today our voice is not being heard. For the past two-three years, SIAM, ACMA (Automotive Component Manufacturers Association), FADA have been independently trying to go to government for benefits for auto industry. But nothing has happened,” Gulati said.

“So we are trying that FADA should take the lead and make all these 5-6 auto organisations come together so that when we go to the government we are actually heard,” he added.

As of today, the government doesn’t listen to the industry even when the auto industry accounts for over 50 per cent of the manufacturing GDP in the country. Even with such huge impact, there is still no value attached to the industry, he said.

Pointing out issues with the Society of Indian Automobile Manufacturers (SIAM), he said there are only 10-15 members who are active among 60 odd manufacturers in the auto industry body.

“So there are no electric vehicles makers nor there are any premium car makers as members. We are not trying to make it look small, but we are making sure that all should come on one platform and our voice should be heard and if that happens, future can be better for the industry,” Gulati said.

The government is aware that auto bodies do not work together and therefore, FADA is trying that whatever communication goes to the government, it is through a common platform, he noted.

Commenting on other priorities, Gulati said the dealers’ body expects to be included under MSME fold once again so that the members can get central and state government benefits.

“We will also be working with SIAM and its members to increase dealer margin on vehicle sales. The margins being offered currently in India are among the lowest in the world,” he added.

Besides, FADA would like to collaborate with other retail organisations in the country to push for a franchise law which would help in protecting the community when faced with issues like company exiting the business or terminating retailer/dealer agreements, Gulati said.

“This would be beneficial for all including FMCG retailers…such kind of law is prevalent in all the major developed countries,” he added.

Franchise laws actually level the playing field between large automakers and small local dealers, Gulati said.

There is disparity in size and power between individual dealers and manufacturers, franchise law will help to bring level playing field between them, he added.

Currently, any agreement between a retailer and a manufacturer is skewed towards the latter, Gulati noted.

“So if something happens, he cannot go to court and take action. So this (law) is not something which will be over in six months or one year, so will try to speak to other organisations like CII, FICCI and through them try to push for this law,” Gulati said.

When asked about FADA’s view on auto industry’s demand for a cut in GST rate, he said entry level cars and bikes should not be considered luxury items and should have a lower tax.

“Three-wheeler provides employment for a family and it also comes under the 28 per cent GST slab. It is not a luxury product,” he noted.

FADA also plans to come out with a two-wheeler vertical which will specifically cater to the segment, Gulati said.

State directors would be appointed for the vertical followed by a national director as well, he added.

Gulati and his team have been elected for a two-year term.

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Tesla (TSLA) earnings Q3 2020

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Tesla CEO Elon Musk attends the Tesla Shanghai Gigafactory groundbreaking ceremony in Shanghai, China, January 7, 2019.

Aly Song | Reuters

Elon Musk’s electric car and renewable energy company, Tesla, reports third-quarter results after the bell on Wednesday.

Here’s what Wall Street analysts are expecting, per an average of analyst estimates compiled by Refinitiv:

  • Earnings per share (adjusted): 57 cents
  • Revenue: $8.36 billion

The company already reported that it delivered 139,300 vehicles during the quarter, a new record for Tesla.

At Tesla’s 2020 annual shareholder meeting and battery day presentation in September, CEO and co-founder Elon Musk said that vehicle deliveries in 2020 would be up 30% to 40% from last year, implying a range from 477,750 to 514,500 deliveries total. (Earlier, the company said it would comfortably exceed deliveries of 500,000 this year, but it reined in expectations slightly as the Covid-19 pandemic began to impact Tesla operations and auto sales.)

Tesla completed a five-for-one stock split during the quarter. When a company splits its stock, its total value doesn’t change, but it helps get smaller investors to buy shares.

Ahead of the earnings call on Wednesday, institutional and retail investors submitted questions to a site called Say.com that Tesla uses to pick questions for executives to answer during the Q&A portion of its calls.

Among other things, institutional investors sought information about just how much Tesla plans to spend on new factories over the next decade. They were also curious about Tesla’s pricing and margin targets, after the company recently cut prices on its vehicles including in the U.S. and China. Tesla is currently building new factories in Austin, Texas, and Brandenburg, Germany (outside of Berlin).

In September, Musk and Senior Vice President of Energy Engineering, Drew Baglino also unveiled a new battery cell that the company designed itself, and plans to produce on their own, starting on pilot lines in Fremont, California, then at their other factories.

Institutional and retail investors also wanted to know when Tesla will roll out vehicles, and energy storage products, that include the new battery cells. They also had questions about when Tesla’s vehicles will be capable of functioning as driverless robotaxis, and when Tesla will offer its own ride-hailing service.

Today, Tesla offers its customers what it markets as a Full Self-Driving or “FSD” option, which it sells for $8,000. The FSD package is Tesla’s most advanced driver assistance system, but it is not a fully autonomous one. Tesla recognizes a portion of revenue from FSD sales with each new feature update that moves it closer to what the company defines as driverless capability.

Musk has previously said a Tesla vehicle with FSD should be able to drive itself coast to coast, or from a Tesla facility to a customer’s home, in lieu of a traditional delivery arrangement. It’s been about four years since the CEO promised a driverless vehicle was on the way.

During the third quarter, however, he said that Tesla was rewriting its semi-autonomous system:

In October, he promised a beta software update for select drivers who purchased the company’s Full Self-Driving option. Tuesday after markets closed, Musk wrote the rollout would begin slowly rolling out overnight.

Retail investors, many of whom are enthusiastic Tesla owners themselves, want executives to say whether Tesla will let customers transfer their FSD software to their next vehicle, with or without a transfer fee, much the way that gaming or mobile companies let customers transfer games and apps when they upgrade to newer hardware.

This is breaking news. Please check back for updates.


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Skoda: Backed by new SUVs and sedans, Skoda Auto Volkswagen India eyes trebling output in 2 years

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Mumbai: Skoda Auto Volkswagen India Pvt Ltd is planning to treble output to 200,000 units in the next two years, on the back of new product launches, with the carmaker utilising the Covid-19 pandemic-induced lockdown to revamp its factory under its India 2.0 project.

The Indian arm of Volkswagen Group – the world’s largest carmaker — is also open to partnerships in the country and will continue to talk to interested parties in future, its India chief told ET, a move that will help build scale and reduce break-even points.

The carmaker is bullish on the future of the Indian market, including its exports potential, and will roll out sedans and sport utility vehicles between 2021 and 2022, said Gurpratap Boparai, managing director of Skoda Auto Volkswagen India.

Boparai said the company expects to operate the plant at 100% capacity within two years and the group garnering 3% share of the Indian market.

“We will be in the phase of ramping up production from next year. One by one, new models will be launched every six months till 2022 under the India 2.0 plan. The next year will be definitely better than this year, but we will really see our full volumes in 2022. That’s when we expect our group market share to be around 3%,” he added.

With capacity likely to be fully utilised next year, Skoda VW will explore its next phase of expansion in the country, Boparai said, but when and how soon will depend on market recovery.

“If we do a partnership, we would clearly be expanding capacity and then that capacity can be shared. There is nothing concrete at the moment (on partnership). We continue to engage with all players that have similar strategies,” he added.

The company has reportedly been in talks with MG Motor India for a contract manufacturing tie-up.

Boparai, however, declined to comment on potential partners it is in discussions with.

For years, 60-70% of Skoda VW’s total production was reserved for exports, but Boparai said that is set to reverse from 2021.

“We are very bullish about recovery in the Indian market, so we will continue to produce as much as the Indian market absorbs and then whatever is required to completely utilise our production capacity that we will export. The recovery in the exports market is rather slow, as against a V-shaped recovery we have seen here,” he said.

VW Group has so far exported half a million cars from India, the company said on Tuesday.

While the domestic market will take precedence over exports, the group is likely to start exporting Skoda-badged vehicles starting next year, expanding its global footprint for India-made cars to over 100 markets.

Backing the government’s Make in India push, Boparai said the country can gain a competitive edge on bigger car exports too by removing the sub-4 metre definition.

India is one of the most cost-efficient production bases for automobile companies, but the tax structure prefers cars less than 4 metres in length and that is taking away its competitive edge, Boparai said.

“The global market of sub-4-metre cars is roughly 7% of the pie. And that is obviously not too big,” he said.

“We understand that it will take time to transition to any new taxation regime, but there has to be some roadmap on when the cess on the two categories of cars will come down to the same number. That would really open up our industry to the segments where there is far more export potential globally,” Boparai said.


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AutoNation CEO Mike Jackson on earnings and Covid boosting car sales

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AutoNation CEO Mike Jackson told CNBC the coronavirus pandemic has significantly shifted American attitudes toward personal vehicles, leading to the company’s blowout earnings report Wednesday.

“Coming out of the lockdowns, they said, ‘So much for sharing everything. I’d really like to have my own space that I define,'” Jackson said on “Squawk Box.”

The country’s largest auto dealership chain posted third-quarter revenues of $5.4 billion, eclipsing Wall Street forecasts of $5.19 billion. The company’s adjusted earnings per-share of $2.38 was an all-time record and topped expectations of $1.65.

“It’s our absolute best quarter ever,” Jackson said. “The demand for individual mobility has gone through the roof, and I think this pandemic/shelter in place has shifted the American psyche in a long-term way, and it’s hard to predict past five years, but for the next three to five years, there’s been a shift in demand,” he added.

Shares of AutoNation jumped nearly 8% in premarket trading. The stock was up nearly 30% year to date, as of Tuesday’s close. CNBC’s Jim Cramer said he’s not surprised by the strength in AutoNation stock Wednesday because during the pandemic, people have decided they want their own vehicles rather than carpooling or taking mass transit.

Surging auto demand is present across all price points and for both new and used vehicles, said Jackson, who also chairs AutoNation’s board. He added that the interest in buying cars has been buoyed by “incredibly low” interest rates, which makes financing the purchases more attractive.

Auto sales plummeted earlier this year as the coronavirus swept the U.S., with showrooms shutting down and consumers subject to stay-at-home orders. Inventories also have taken a hit as manufacturers shuttered plants.

While the sales figures have rebounded faster than expectations, Jackson said that AutoNation continues to face challenges on the supply side as production ramps back up.

“We made absolutely no progress in the third quarter. Our inventories are actually lower at the end of the third quarter than they were at the second quarter when it comes to new vehicles,” he said. “Industry inventories are still 25% to 30% below where they should be, if not even more, so it was challenging to adjust pricing to reflect the shortages.”

It showed up in AutoNation’s earnings. The company’s gross profits per new vehicle sold were higher by 56% at comparable stores compared to the same period last year. For used autos, that metric was up 43%.

Jackson said he believes inventories will “gradually improve” into next year, but added that the company will closely watch how that impacts its earnings.

“It’s always, as a retailer, a balance between pricing and volume, and we’re managing that well,” he said. “As the factories can do a bit better, we’ll adjust to that. But net net, we’ll either sell more volume and adjust pricing or the availability is not there and we’ll get it on the pricing side.”


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