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Ford CEO Has Harsh Words for Employees After 'Mediocre' 2018

Alanis King Jan 25, 2019. 23 comments
The Morning ShiftAll your daily car news in one convenient place. Isn't your time more important?   

Ford’s CEO isn’t mincing words when he wants to turn things around, Cadillac wants to do the same, and Nissan CEO’s said he plans to step down too. All of this and more in The Morning Shift for Friday, Jan. 25, 2019.

1st Gear: No More Mr. Nice Guy

Ford CEO Jim Hackett is about done with all of this losing-money stuff and said so in an email he sent to employees, as seen and reported on by Reuters. Hackett said in the email that 2018, a year in which Ford got hammered money-wise, was “mediocre by any standard,” and that it was time to improve things.

Improvement is probably the best route, since investors aren’t happy with Ford and it’s hard to tell what the company actually wants to become at this point, given its dramatic moves to eliminate small cars in North America and “shift toward mobility ” and “data .”

Ford did just announce an alliance on trucks and vans with Volkswagen, though, which should help save a little bit of money. Here’s Hackett’s admittedly vague idea on making more, as sent in the reported email, via Reuters:

Ford announced its fourth-quarter results on Wednesday, reporting a 2018 operating profit of $7 billion with a profit margin of 4.4 percent, down from 6.1 percent in 2017. Ford said last week that its target for operating margin was more than 8 percent.

“2018 was mediocre by any standard,” Hackett said in the email. “Yes, we made $7 billion last year. But think of it this way: this represents a 4.4 percent operating margin, about half what we believe is an appropriate margin. So we are aiming for much closer to $14 billion.”

Hackett did not give a timetable for hitting the $14 billion target. A Ford spokesman said Hackett was simply doing the math to show employees how the margin target translated to overall profit.

Ford didn’t give Wall Street a specific forecast for the year, Reuters reports, and instead said it has “potential to improve earnings and revenue.” But Hackett, who’s been Ford CEO for nearly two years now , got a little more specific about last year, quoted by Reuters as saying that it’s time to “bury the year (2018) in a deep grave, grieve over what might have been and become super focused on meeting, and, in fact, exceeding this year’s plan.”

Oh. Alrighty then. Sounds good.

2nd Gear: Nissan’s CEO Plans to Step Down

After leading the charge against former Nissan-Renault boss Carlos Ghosn—who’s been jailed since November for alleged financial misconduct—Automotive News reports that Nissan CEO Hiroto Saikawa said he plans to step down as Nissan CEO. Ghosn resigned from Renault, from jail , on Wednesday night .

While it’s odd that these two bits of news are coming so close to one another, it makes sense. Renault and Nissan have an alliance to try to keep up, and their relationship hasn’t exactly been great since Nissan’s CEO sent the forces after Renault’s CEO.

Aside from all of the reports about how much animosity there was between the two CEOs and companies, the rockiness of the relationship was just as obvious even from an organizational standpoint, as Nissan kicked Ghosn out quickly and Renault kept him on as CEO for months after the arrest.

It only makes sense in terms of saving the relationship, really, to throw the two at the top out and try to start over. Nobody’s forgetting what happened anytime soon, so the companies might as well appoint people other than the ones who were out to get each other as their new heads to try to salvage things.

Thus, Automotive News reports that Saikawa wants to “pass the baton” after doing what he deemed most important: “reforming the poor governance he says weakened the Japanese automaker,” Automotive News wrote. From the story:

Renault’s decision to abandon its leader, and the prospect that Saikawa could soon hand over the reins, may help remove some of the mistrust that has built up on both sides of the alliance. Before his arrest, Ghosn’s chairmanship at the companies kept a lid on tension and prevented clashes from bursting into view. Now it will be up to an outgoing Saikawa and Jean-Dominique Senard, the 65-year-old Michelin CEO named by Renault on Thursday to take over as chairman and manage the French automaker’s relationship with Nissan and with the alliance. [...]

Senard is backed by France, Renault’s most powerful shareholder. His appointment could mean he will be more open to politicians’ input than Ghosn, who sometimes clashed with the government. The new Renault chairman will join Nissan’s board and is tasked with proposing any changes to the structure of the alliance.

So, if everything goes according to the plan, there will be a relatively blank slate at the top of Renault and Nissan as they try to come back from all of this. Maybe it’ll help.

3rd Gear: Cadillac Wants to Make 2019 Its Year

Cadillac is in a rough spot . Its lineup has long been dominated by sedans, which aren’t doing well, and it’s behind on the crossover and SUV wave . Executives at General Motors can’t even seem to agree on the brand or its choices right now.

But never fear, another executive is here to tell us that things will be fine and look promising for the future. Cadillac’s chief marketing officer, Deborah Wahl, spoke to a group Thursday and said an “unprecedented product assault” should help the brand end its three-year sales slump in the United States, according to Automotive News.

In 2019, Wahl said, “the year of the Cadillac SUV family,” the company wants double-digit global growth. Global growth isn’t the pressing problem, though, since Automotive News reports that Cadillac set a global sales record last year thanks to China.

And while 2019 may be about SUVs, Wahl said Cadillac isn’t giving up on sedans—even if we’ve all gotten some mixed messages on the CT6, which launched in 2015 , was supposed to die in the U.S. in June, and is now likely going to live on .

From the story:

Despite plans to close the Detroit-Hamtramck assembly plant that produces the CT6 sedan, Cadillac executives have said they’re evaluating options to keep the vehicle in the lineup. Wahl said they plan to sell it at least for the rest of 2019 and into 2020.

“The news of its demise has been greatly exaggerated,” Wahl said. “This vehicle has so much to offer.”

That includes a new Blackwing engine, a 550-hp V-8 in the CT6-V, which is scheduled to arrive in mid-2019 starting at $89,785, including shipping.

“This, I believe, is how new legends are made and how mystique is reclaimed and burnished,” she said.

Basically, everything is fine at Cadillac. The brand is going to lead GM’s move toward electric vehicles , didn’t you hear? Everything is great. Things are going well. Seriously, life is wonderful at Cadillac. Why do you keep asking? Why don’t you sound convinced?

Can we change the subject now?

4th Gear: Ford Could Lose $1 Billion

Back to Ford real fast, and Brexit.

The United Kingdom leaves the European Union in about two months, and the fear is that the country could end up leaving without agreements set up to govern the entities’ relationship in the future. That would mean a no-deal Brexit, and it would not be great for automakers like Ford.

Reuters reports that internal calculations are that a no-deal Brexit could cost Ford between $500 million to $1 billion, depending on different factors. Some of the potential impacts of a no-deal exit include higher tariffs, issues with supply chains and threats to jobs, and those are things threatening other automakers and manufacturers , too.

Here’s the deal, or the lack of one, via Reuters:

Britain is due to leave the European Union in 64 days, and with Prime Minister Theresa May failing to win support for her negotiated deal, companies are increasingly worried about the possibility of a chaotic Brexit.

Ford Chief Financial Officer Bob Shanks on Wednesday declined to say what the financial impact of a no-deal exit could be, but said Ford was already planning for it.

“We clearly have already started to work on the eventuality of there being a hard Brexit,” he told reporters at the No. 2 U.S. automaker’s headquarters outside Detroit. “We’re certainly hoping that does not happen, but we can’t wait.”

“We’re actually incurring costs, doing things now to prepare for that, so there will be an impact. It’s a material impact,” he added.

Ford is the top-selling car brand in Britain, according to Reuters, and employs about 13,000 people there. But Shanks said a no-deal Brexit, if it happened, would be “catastrophic.”

5th Gear: Hyundai’s Sales in China Are Hurting

Ford and Cadillac aren’t the only automakers with some work to do. Hyundai posted its first quarterly net loss since the company changed its accounting methods in 2011, with struggling sales in China putting a dent in the numbers.

The Nikkei Asian Review reports that Hyundai posted a net loss of nearly $115 million for the fourth quarter that ended last month, due in part to falling sales in China. Car sales in China surprisingly slowed this year , and they certainly slowed for Hyundai.

Here’s a more detailed picture of how things are going for Hyundai in China, from the Nikkei Asian Review:

Hyundai, which together with affiliate Kia Motors used to be the third-biggest automaker in China, is now saddled with overcapacity, with its 2018 China sales falling short of target and reaching only half of its total production capacity.

China, the world’s biggest auto market, contracted for the first time in more than two decades last year, hit by the Sino-U.S. trade war and the phasing out of purchase tax cuts on smaller cars.

Hyundai sold 790,000 vehicles in China last year - lower than its target of 900,000 and almost flat from its six-year-low of 785,000 in 2017 when Seoul’s diplomatic row with Beijing hurt consumer sentiment about Korean products. Hyundai’s total capacity is 1.65 million vehicles in China.

In addition to the sales slump, Hyundai and Kia both have some potentially defective, potentially dangerous engines to look at.

Reverse: Former Fiat Head Giovanni Agnelli Dies

Giovanni Agnelli, whose grandfather founded Fiat, died on Jan. 25, 2003 at age 81, according to History. Agnelli, who took over as head of Fiat in 1966, was the one who expanded the company internationally.

Neutral: Can Crossovers Redeem Cadillac?

Sure, crossovers are popular. But are they popular enough?

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