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Tough decisions ahead for embattled automakers


Tracking Credit Risk of a Major U.S. Retailer


M&A rebound sparks optimism for near-term deal activity


What's on the Horizon for the Cruise Hotel Resorts Sector


Message in a (Word)Cloud

Tough decisions ahead for embattled automakers

The good and great of the automotive world gathered last week at the annual Detroit auto show. As our dispatches below convey, the mood was about as bleak as the Michigan weather.

From the shifts toward battery-powered vehicles, shared mobility services and autonomous driving, to the macro pressures from tariff disputes, falling subsidies and Brexit, the list of challenges facing car manufacturers is as unenviable as it is lengthy. This was in the week too that Ford Motor Co. missed its earnings expectations and revealed further details of a companywide restructuring, and Tesla Inc. said it would cut 7% of its workforce.

All automotive companies are reassessing the way they operate. The tie-up between Ford and Volkswagen AG announced Jan. 15 is indicative of the industrywide drive to share costs. Bayerische Motoren Werke AG is in the process of raising its holding in its Chinese joint venture, suggesting that it will increase its focus on the world's largest car market. General Motors Co. has announced its own massive restructuring in anticipation of harder times to come.

In many ways, these efforts recall the actions taken by Fiat Chrysler Automobiles NV and its late CEO Sergio Marchionne over the past decade. Marchionne was credited with reviving the Chrysler brand and successfully uniting two companies with very different cultures. It often required heavy cost-cutting, major changes to its model lineup and other tough, unpopular decisions, but the results are undeniable — over the past three years FCA's stock has significantly outperformed all other major car manufacturers, and in 2018 it posted its highest annual U.S. retail sales in 17 years.

The pain may be acute in the short term, but carmakers can look to Marchionne for reassurance that hard decisions taken now can reap rewards in the future.

Chart of the week: How companies are responding to tariffs

SNL Image


Auto industry faces rising costs and tariff uncertainty in 2019

Tariffs between the U.S. and China, along with U.S. metals tariffs, are projected to increase costs for both automakers and consumers, which could negatively impact companies' sales.

Ford to allocate 90% of capital toward SUVs, trucks as part of restructuring

The automaker is restructuring its lineup specific to different regions as it moves to cash in on the industry's fast-growing SUV segment as part of a major "transformation plan" globally to boost profitability.

Brexit vote raises uncertainty for Ford

James Farley, the automaker's president of global markets, said at an industry event in Detroit that a hard Brexit could lead to more severe cuts across the company's European operations.

Aston Martin CEO: Autonomous future could impact luxury auto brands

The president and CEO of Aston Martin said the changing auto industry is turning cars into commodities, which could hurt luxury brands.

GM preparing for potential downturn with restructuring, CEO says

Mary Barra said at an automotive industry event in Detroit that the company's decision to close plants in the U.S. and Canada addressed the cyclical nature of its business.

US tariff exemption denials rise; Fiat and Ford count the cost of tariffs

The U.S. is denying an increasing number of petitions from companies wanting to be exempt from tariffs on Chinese exports, and Fiat Chrysler and Ford have flagged the costs and uncertainties that the tariffs can entail.


Retailers turn to new checkout tech in the age of Amazon Go

Shopping carts with scanners and shelves with sensors are on display at the National Retail Federation's 2019 Big Show.

China tariff uncertainty limiting investment, expansion for American companies

The trade war is forcing companies to raise prices, accept lower margins and switch sourcing to new countries.

January retail market: 6 companies go bankrupt; strong holiday sales expected

Consumers had more money to spend at retailers during the end of the year because of job and wage growth, in addition to tax cuts that left them with more of their paychecks, economists said.

Chinese economy, wealth disparity in US could impact 2019 retail performance

A slowing Chinese economy and shrinking middle class in the U.S. are among the challenges retailers are likely to face in 2019, economists speaking at the National Retail Federation's 2019 Big Show in New York said.

Alibaba Group president downplays significance of China slowdown

Michael Evans emphasized the longer-term prospects of the market for retailers and Alibaba's youthful consumer base while speaking at a retail conference in New York.

Lowe's CEO sees room for growth in $900B home improvement market

But the retailer has to tackle operational problems before growing its market share, Marvin Ellison said at an industry conference Jan. 14.

Food, Beverage & Tobacco

Grocery wholesale prices spike in December '18, likely to hit supermarket profit

The difference between the prices consumers pay and the cost grocers pay to stock their shelves has reached its widest point in over a year.

Alibaba exec: e-commerce giant plans Hema supermarket expansion within China

Xulin Guo, chief of staff to Hema's CEO, said the company has no plans to export its high-tech supermarket chain to international markets.

Monster Beverage to debut new drinks in US, internationally in 2019

The energy drink-maker is trying to get consumers to drink its products more often on more occasions, executives said Jan. 17.

Zurich's $100M cyber claim battle could trigger policy overhaul

Cyber underwriters may need to be clearer about how they intend to use war exclusions if Zurich successfully avoids a claim from U.S. food giant Mondelez for the NotPetya malware attack.

Consumer Edge is a weekly collection of critical developments across the automotive; retail; and food, beverage, and tobacco industries that draws on exclusive analysis and value-added content from the Consumer News team at S&P Global Market Intelligence.