Can Jim Cramer solve Tesla dilema; CramerTeslaAutos “a 0% margin dealer”

100780462-CRAMER-IN-TSLA.600x400The media narrative is predictable.  Elon Musk, the transformative latest incarnation of Thomas Edison, locking horns with the entrenched old economy model of the NJ Auto Dealers.  Musk is cool, he has a cool car, he’s a visionary.  NJ and other states surely must yield.  Right?  While I may agree with the Tesla model of new direct sales — I don’t see Tesla volume and positioning an existential threat to any dealer from AutoNation to the local mom-and-pop single point dealer.   I don’t agree with this in your face reply to the NJ dealer and politicians.  It may gin up support from those who already support Tesla, but it’s not going to work in the long run.  What if Musk turns to Jim Cramer and his hedge fund buddies for solution?

Auto dealers, while, not the most popular businessmen in perennial “trust surveys” hold significant clout in their local and state economies and political circles.  Dealer are the biggest donors in the sector, and they donate mostly on local issues.  Remember during the GM and Chrysler bailout we were reminded by the Car Tsar how the dealer networks were key employers of the million or so jobs at risk.

In addition to the “million” or so folks whose jobs are “at risk” there are the 99% of car buyers who view Tesla as an elitist brand.  Cool, but elitist.  Jim Cramer comes across as an any man, but at $100K a pop, Tesla is a rich man’s toy.  And I don’t need to remind anyone that while green is good, class warfare has been fomented to froth over the past few years.  How bad does a marginally employed tradesman feel for the hedge fund manager who can’t buy a six figure sports car?  Not!

Just a thought.  What if all these doctors, lawyers, marketing execs (one of my friends) set Back Cameraup a dealer group that sells Tesla at 0% for the company.  The meeting-of-minds with these financial titans should be able to configure a pass-through dealer model that can be funded through Tesla equity and or new Tesla product ownership derivatives.  Jim Cramer has been a major cheerleader for the group.  He can be the front.

OK, so slightly more seriously.  I am confident Tesla is working on creative relationships to transform the dealer experience at the same time as transforming the auto experience.  For those that detect a touch of sarcasm, I’m serious.  The last reform of the dealer structure was 20 years ago when Wayne Huizenga opened his first CarMax.

A hedge fund run dealer group is just one throught.  Apple?  Google?  Or maybe a viable future for JC Penny or Radio Shack. OK, sarcasm noted.

It’s Tesla, I’m just trying to think out of the box. 

Wall Street Tesla@elonmusk @jimcramer @madmoney

 

GM names Barra CEO; “bold and timid,” good luck

Luxury race to where

When I heard that the GM board had picked Mary Barra this morning, my gut reaction was different than most. It didn’t even dawn on my that they had picked a woman.  I thought about how they went with a 30+ year GM veteran.  So we have the first female head of a car company, great, now what?

gmAll morning we’ve heard the accolades and hopes.  Now that she has the reigns and the company is no longer constrained by government holdings, she has to prove herself the reformer she and her advocates say she is.  GM has a long way to go in throwing off the mantle of “government motors.”  To many insiders the moniker was as much an indictment on the bureaucracy and inefficiency of GM than the government shareholders we all knew were a losing investment.  

I liked GM’s move to ditch Chevy and focus on Opel in Europe last week.  Other moves including the relocation of International Operations out China seem more shuffling.

And don’t get me wrong, I have no issue with her being chosen over Mark Reuss, Steve Girsky or Dan Amman.  She has a strong engineering background has been through the ranks like any other vet and there’s no doubt she knows GM and the business.

The top centenders: Girsky, Amman, Barra, Reuss

The top contenders: Girsky, Amman, Barra, Reuss

Bottom line is that GM still faces some tough questions.

  • More and more competition from the same old foes like Ford and Toyota. But now they’re getting hit on the flanks from new US assaults from the likes of VW/Audi and Hyundai/Kia.
  • They still are too bureaucratic.  I love the story of her tossing the dress code, but what about streamlining sales/production and planning?  Have they overcome the real challenges bluntly laid out by industry maven Jerry Flint in 2000?  I hear conflicting reports from GM insiders and refugees.The bailout gave GM a new lease on life, I am cautious in the assumption that it gave them new DNA.
  • Finally, the real test for the industry and GM comes in the next 12-24 months as the US industry ends its run of double digit annual growth.  Crossing our fingers and hoping Europe turns is not a strategy.  It’s going to be the ultimate test of production and sales coordination.  We’ve seen huge strides in pricing power in 2013 at GM and  with most virtuous players.

But, I’m keeping an eye on building inventories, decreasing resale values and relatively low discounts;  If nothing else, she has a great environment to show her stuff.

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Peugeot breaks tradition with Tavares

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Philippe Varin swept into PSA in 2009 to prepare to prepare the French OEM for the current European economic malaise, and now his tenure is up.  In a move that is surely printing as much ink in the gossip pages in Paris as the economic journals, PSA has signed former Renault COO Carlos Tavares to take over.  This is just not done in Paris where niceties may be superficial, but are strong.  Well it’s been done now.  It may not be GM or Ford as Tavares had suggested in an August Automotive News interview, but leading a revival of near dead PSA presents a tantalizing and potentially highly rewarding challenge to the international auto veteran.

While Tavares may lack some of the product flair of his Nissan predecessor Patrickimages (2) Pelata, he corralled a Nissan organization that was lacking any top-level direction below CEO Carlos Ghosn.  At Nissan, he cemented the importance of U.S, product and sales discipline, and balanced Ghosn’s quest for market share Continue reading

Breaking News: Japanese car brands are alive and well in the U.S.

Newly assembled 2013 Ford Escapes sit on plant lots ready to be shipped out to dealers at the newly transformed Louisville Assembly Plant in LouisvilleSo Japanese brands are back in the U.S. auto market. I wasn’t aware they ever left.

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Japanese brands gained during crisis, but overall have been stable.

Sure, the past two years have given us production upsets from a tsunami, the Tsunami and a hyper strengthening of the yen all while the US auto market has bounced back from historic lows during the financial crisis. Japanese brand market share peaked in 2 Continue reading

Daimler Tesla – dating again?

c0ourtesy car & driver

courtesy car & driver

The on again, off again love affair between Daimler and Tesla seems to warming up again and Elon Musk and Tesla fans couldn’t ask for better timing.   At a press briefing in NY this week, Daimler CFO Bodo Uebber, confirmed he has urged his team to “learn more from Telsa

Early on, Daimler took a 10% equity stake in Tesla (since sold down to 4.3%), providing smart_evthe company not only with much-needed capital but two more important assets; legitimacy and orders for the SmartForTwo and B-Class.  Along with Toyota, Daimler hedged it’s entry into the electric market via Telsa with a smaller order for 2400 Rav4 E.

It strikes me as interesting that this comment comes on the heels of an announcement from Thomas Weber, Daimler’s Head of R&D that the company would deepen its relationship with Continue reading

News from CARB: Tougher ZEV credits? Risk for TSLA?

cardNews today from California and the CARB (California Air Resources Board) cabal on zero emission credits and efforts to spur more zero emission vehicle (ZEV) sales.

1) Expect to hear a lot of traders screaming this is the end of Telsa ride as ZEV credits may be cut from 7 to 4.  This would cut TSLA profit from selling these credits.  This argument hasn’t been realized for the past six months that I’ve heard it.  We might see some dip as people shy away, but the true TSLA believers are banking on GEN3 not ZEV credit profits.

2) If the states really step up efforts to make it hard to just pay the penalty, we will see more ZEV plug-in hybrid (PHEV) and battery electric vehicles (BEV) in production.  Players like BMW with the new i3 and others like Ford and Toyota will increase production squeezing GM and Nissan who have been Continue reading

PSA, an existential outlook. UG or not UG

psa

Will PSA be here as a company in 5 years.  Sure it will, as a brand, company and equity.  But in what way shape or form seems to shift each day.  Six months ago the market was pretty hedged on that question, a couple of weeks ago they seemed to have a plan.  After Philippe Varin’s comments this week on “alliances” fear is creeping back.  So, is there an existential threat to PSA at least as an invest-able vehicle?

Worries over the partnership with GM dying out are overblown.  The real cost savings PSA-RADD2012-EN_01_img_58have always been closer to 2017-2018.  At the same time, Opel and PSA do have a number of areas where they can cooperate. Mr. Varin made it clear that while the B platform is “under review” the B- and C-MPV projects are Continue reading