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Nissan Settles Corporate Governance Spat With Renault

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Automakers Willing to Compromise to Use the Benefits of Teamwork

The carmakers take the first step towards repairing their fragile relationship.  A fortified corporate governance of the relationship between Nissan Motor Company (OTC: NSANY) and Renault (OTC:RNLSY) is vital for the health of this association and for any possibility to revisit the talks with Fiat Chrysler Automobiles (NYSE: FCAU) that collapsed two weeks ago due to the pressures from Nissan and the French government.

The two companies are clearly trying to navigate around their sensitive areas and reinforce their alliance after it was severely damaged. The first blow was Mr Ghosn’s financial misconduct and subsequent arrest last November. Nissan has worked for months on strengthening its corporate governance structure following this scandalous executive behavior that Ghosn is not willing to take any responsibility for, denying all accusations. Nissan plans to establish three statutory board committees to enhance oversight on audit, executive remuneration and nomination.

On Wednesday, it was reported that Nissan Motor Co. has decided to accept Renault SA’s request for more representation on the Japanese carmaker’s new board. Renault is Nissan’s largest shareholder, owning 43 percent of the company.

Nissan initially proposed giving a seat only to Renault Chairman Jean-Dominique Senard, who has been on Nissan’s board since April, because the company wanted the majority of the committees to be comprised of outside directors .According to Japan Times, Renault  threatened to abstain from voting on the proposal unless it was given more representation. Nissan offered the new proposal to Renault for CEO Thierry Bollore to also be nominated as a new director, subject to approval at the shareholders meeting and the two partners reached an agreement. So, Nissan will give Renault Chairman Jean-Dominique Senard and CEO Thierry Bollore seats on committees as part of the company’s measures to bolster the quality of the company’s governance.

Despite these efforts, imbalance of power remains an issue as Nissan is holding only a 15% of non-voting stake in Renault. The relationship between Renault and its Japanese partner is surely not as constructive as either of the side wish it to be.

If Renault’s talks with Fiat aimed at creating the world’s third automaker are to be revisited, this needs to be done quickly before more major changes occur in the industry that is transforming in quite a dramatical manner.  The Japanese automaker’s clear advantage is in its technology. This aspect includes vehicles that meet China’s tougher emissions regulations. This is why both Renault and FCA need Nissan to help them meet increasingly tough fuel standards regarding emissions and electric vehicle (EV) quotas  and not only in China, but all around the world. But Nissan needs Renault too do deal with its struggling performance after hitting rock bottom last year. Fiat is also trying to settle UAW training center criminal case by negotiating with feds. On the upside, Fiat Chrysler Automobiles N.V. announced the association with the self-driving technology company, Aurora Innovation, to develop and deploy autonomous vehicle platforms, according to Bloomberg. Further, Fiat signed to supply Waymo, the self-driving unit of Alphabet Inc, with more than 62,000 Chrysler Pacifica plug-in hybrid minivans to create autonomous vehicles.

No wonder that Wall Street expects many automakers to merge as they need to be ready to face more than costly changes brought on by the new era of fully automated and electric vehicles that is upon us.

Ford Motor Company (NYSE:F) announced that it would close its troubled engine plant in Bridgend, South Wales due to cost disadvantages, changing demand pattern of consumers and absence of additional engine models. This is a big blow to the UK car market and economy due to the potential end result of 1,700 lost jobs. Recently, Britain’s car sector overall witnessed a severe slump in sales, output and investment. So, we will see how successful will Ford’s turnaround plan for Europe turn out to be as external pressures are not easing in magnitude.

The Japanese ‘stable’ giant Toyota Motor Corporation (NYSE:TM) is even open to partnerships to decrease the amount of capital expenditure needed to develop these new technologies. With the help of Subaru Corp, Toyota intends to develop a battery-electric SUV on a joint platform, according to Reuters. The underlying idea is to share huge costs involved in the production of low-emission vehicles. Although Toyota has led the way of hybrid technologies, it needs help to bridge the gap and conquer the technology of fully-electric vehicles. And Toyota is aware of this and is already acting on it big time.

Reuters reported that General Motors (NYSE:GM) intends to invest around $150 million at its Flint Assembly in Michigan, the plant where its iconic vehicles came from. But it is also where its full-size pickup trucks are produced and this line is to be further enhanced. It seems that robust demand for large vehicles is likely to drive the industry players’ top line, compensating for the loss caused by the drop in sales of traditional cars. With the rising demand for pickup trucks, automakers are widening their product line and flooding the market with enhanced and spacious vehicles. So the directions in which efforts are focused at seem to be: electric and automated vehicles, but also pickup trucks and SUVs.

But let’s also not forget about the factor of cultural fit which can be detrimental in these joint ventures or any kinds of associations. Although cutting its stake or exiting Nissan is not on Renault’s list as Bollore stated on Wednesday, its stake of 11 billion euros could be a handy investment into an electric future. And who knows what the future holds Theoretically, FCA and Renault are a better fit than Renault and Nissan which have a 20 year long relationship, but we all know by now that this is not the way business (or life in general) works. And this rule makes plenty of room for many more surprises along the way. What remains certain is that merging and consolidating seems to be the only way for auto making companies to survive and potentially thrive in the new chapter of electrification and automation.

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Earnings

Toyota’s News: Redesigned Corolla, New Investments and Partnerships

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Toyota Stock Market News

Toyota Motor Corporation (NYSE: TM) is managing something other automakers only dream of. The company is honouring its values while achieving sustainable growth for over a decade. The dependable Japanese giant continues to deliver on its promises as it prepares for an electric future.

A new sturdy yet sporty Corolla

On September 17th, the company announced a completely redesigned Corolla that now goes beyond just being a practical buying decision. The newly evolved Corolla has a sporty design, offering pleasurable driving and advanced safety equipment. Being built on Toyota New Global Architecture (TNGA), Corolla is ready to evolve to meet customers’ needs, according to Yasushi Ueda, chief engineer in charge of development.

Since its debut in 1966, this car is nothing less than adored by consumers all over the world and now, it will have its first hybrid version available to U.S. customers.

Hybrid strategy is actually paying off

Just like Honda Motor Co. (NYSE:HMC) with its 2020 CR-V Hybrid, Toyota is using its hybrid technology to position itself for future growth and transition to an all-electric future, despite the fact these energy saving vehicles do not qualify for government subsidies. But, this strategy is paying off as hybrid demand skyrocketed and the company proudly revealed in February that Lexus reached its 10 millionth vehicle sales milestone since its launch, with its 2018 sales performance achieving several ‘best-ever records’. And it is thanks to these figures that the Chinese government is also starting to see the potential of such vehicles so things can only get even better for Toyota. As the saying goes, persistence is the key to success and these two companies have been quite brave in sticking to HEVs.

New Investment – $391 Million Goes to Texas’ San Antonio Plant

This will be Toyota’s first expansion in nine years at the plant that produces its Tundra and Tacoma pickup trucks. It is the part of the company’s strategy to invest $13 billion in its U.S. operations over the period of five years, ending in 2021.

Future Investment – $243.29 million to Produce New Vehicle in Sao Paulo

Toyota is also about to get an even stronger presence in Brazil as it will hire 300 new employees at the Sorocaba Plant to start the production of a new vehicle.

Partnership

And let’s not forget the ground-breaking partnership of Japan’s leading automakers that was revealed in August as Toyota and Suzuki Motor Co. (OTC: SZKMF) announced they will collaborate on developing autonomous car technology. This deal is cementing the bond that the two automakers kicked-off in 2016. They might seem like an odd couple as Suzuki is a everything but a big player, yet its strong presence in India is only one of the things that will greatly benefit Toyota. Although Suzuki admitted defeat on the world’s biggest playgrounds, China and the U.S., it cracked the code for emerging markets. And this is exactly where future global sales growth is expected to come from.

Inventing a car that will run forever?

According to Bloomberg, Toyota aims to go far further than electric by teaming up with Sharp Corporation (OTC:SHCAY) and Japanese governmental organization NEDO that encourages the development of innovative technologies. Considering that Toyota is a company that has even used the economic crisis and recession to only come out stronger, it’s not unlikely that it is set to out do the impossible by mixing the most efficient batteries with solar panels. The company’s strong financial performance and track record show that if anyone can do it, it’s Toyota Motor Co.

 

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Nike Exceeds Wall Street Expectations With Q1 Earnings for FY2020

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Direct-to-consumer sales and digital momentum strategies did the trick for Nike

When Nike (NYSE:NKE) released its better-than-expected first quarter of the fiscal 2020 results late Tuesday. Naturally shares jumped more than 5% to reach $91.80. The reported revenue increased 7.2% year comparing to last year, achieving $10.7 billion, greater than the expected $10.44 billion. Net income soared more than 28%, making adjusted earnings per share $0.86, also smashing expectations of $0.70 per share.

Nike managed to achieve a turnaround

The biggest contributor to total sales was Nike’s North American segment that increased 4% comparing to last year. But China sales also continue to grow and by double digit percentages: 22% to be exact, topping $1.68 billion. Overall, these are fantastic news for investors. Especially since the company’s rare earnings miss for the final quarter of the previous fiscal year. The company attributed this to increased marketing costs and a higher tax rate. But highly anticipated new product launches and solid results for continuing lines, along with efforts to draw new customers to the Nike SNKRS app, did their magic.

Digital momentum is key

Digital movement is transforming and amplifying everything Nike does and in Q1, Nike Digital grew 42% on a currency neutral basis. This growth is driven by enhanced digital services and the international expansion of its app ecosystem. Moreover, The Nike app and SNKRS app are now both live in over 20 countries, with more expansion coming throughout the year.

There are literally no weak spots for investors

Arguably, there are no weak spots for prudent investors to dig in as far as this quarter’s report is concerned. The company is literally firing on all cylinders. The company’s management attributes these results to “the depth and balance of the company’s complete offense, building on the strengths of its foundational business drivers and capitalizing on the untapped dimensions of its portfolio”. Management has also dismissed any concerns that US-China trade conflicts could harm its operations, disclosing no impact has been seen up to date.

Nike showed it can even handle the increased tariffs

Earlier this year Nike joined over 200 other footwear companies urging President Trump not to increase tariffs on footwear imported from China, calling the move “catastrophic for our consumers, our companies, and the American economy as a whole.” But while those tariffs are certainly catastrophic for small players, Nike seems more than capable of mitigating the consequences of this added expense.

Poor macroeconomic conditions are only masking Nike’s true power

The company made it clear that its figures would have been even stronger had it not been for macroeconomic challenges which are manifesting through tariffs and foreign-exchange rates. They implied that the weakening economic climate is essentially masking Nike’s true strength. And in addition to children, women are also a big opportunity for the company that Nike will continue exploiting. This is why Nike expects better-than-planned growth in its higher-margin NIKE Direct channels and international segments and consequently, its full-year gross margin. One thing is for sure: Nike has turned itself into so much more than a ‘sneaker-company’.

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Apple Will Be Making Its MacBook Pros in the US

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With a newly granted “federal product exclusion,” enabling it to import some Mac Pro parts without paying tariffs, Apple (NASDAQ: AAPL) will be able to save enough money to make US assembly worthwhile. The company announced on Monday that it will manufacture the new version of its Mac Pro desktop computer in Austin, Texas. It’s also a big political win for Apple, since President Trump has for years called on the company to make more products in the US. Tim Cook clearly made a compelling case during his meetings with President Trump. Apple described the decision to keep Mac Pro production in Austin as part of its “commitment to US economic growth.”

Macroeconomic climate is not favourable

The September figures around the world are simply awful. The uncertainty brought on by intensifying trade wars, the outlook for the car industry and Brexit are paralyzing investors, with September seeing some of the worst performance since the financial crisis in 2009, leading many to worry about whether yet another crisis is upon us. On a brighter note, Apple’s stock went up 0.2% after Bloomberg reported that ten of its 15 requests for an exemption from tariffs on imports from China had been approved.

New investments

Apple previously disclosed plans to spend $350 billion in the U.S. by 2023, a figure that includes new and existing investments. Its Apple TV+ is set to launch on November 1, with stars like Oprah Winfrey bringing her famed book club streaming show to the company’s subscription service. Among documentaries that will be released, there will even be a multi-series about mental health, featuring no other than Prince Harry himself. Apple’s subscription service will cost only $4.99 a month and will be available in 100 countries and regions at launch. Also, customers who buy a new Apple device will also get a free year of Apple TV+.

Competitors

Netflix (NASDAQ: NFLX) is still the leader when it comes to U.S. streaming, along with Amazon Prime (NASDAQ:AMZN), AT&T’s HBO (NYSE: T) and upcoming Disney+ (NYSE:DIS), it is certain that competition will be intense. Netflix’s stock has been dropping since July, which was the first time the number of subscribers fell. Moreover, Netflix’s stock price has now officially wiped out any gains it’s made over the year so far and both Disney and Apple have a shot at beating Netflix at its own game.

Apple is still facing impending import duties and innovation difficulties

Let’s not forget that the company still faces import duties scheduled for Dec. 15 that could affect nearly all of its major products including iPhones, iPads, MacBooks and Apple Watches. And more importantly, it is thought by many as facing an innovation problem so it heavily relies on customer loyalty that will continue driving its sales. We’ll just have to wait for November 1st launch of Apple TV+ to see the impact of Apple’s new streaming subscription service.

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