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Ford's 2018 preliminary EPS misses estimates; Renault may replace Ghosn soon

TOP NEWS

* Ford Motor Co. reported preliminary full year 2018 results that saw its adjusted EPS fall 27% to $1.30, down from $1.78 in 2017, and miss an analysts consensus estimate of $1.32 compiled by S&P Global Market Intelligence. The company said it sees potential for a stronger result in 2019 as the U.S. automaker embarks on a transformation plan. Ford aims to shake-up its global vehicle portfolio and by 2021 refresh 75% of its lineup in North America and introduce more than 30 Ford and Lincoln models in China, including 10 this year. The restructuring is part of Ford's plans to cut operational costs to raise capital for its move to high-growth and high-margin product segments and smart vehicles and services.

* Renault SA is expected to replace its incarcerated chairman and CEO, Carlos Ghosn, in a Jan. 20 meeting, which was called by the company's largest shareholder, the French government, according to various media reports. Renault COO Thierry Bollore, who is temporarily leading the automaker, could be named CEO, with Toyota Motor Corp. Executive Vice President Didier Leroy also in contention, while Michelin CEO Jean-Dominique Senard may be appointed chairman. Separately, Alliance partner Nissan Motor Co. Ltd. is mulling a civil suit against Ghosn seeking damages due to his alleged misuse of company funds, a person with knowledge of the issue told Reuters.

CARMAKERS

* Volkswagen AG and Ford confirmed reports that they will form an alliance to develop commercial vans and medium-sized pickups for global markets, beginning as early as 2022. They announced that the alliance, which does not entail cross-ownership between the two companies, will be led by a joint committee overseen by both Volkswagen CEO Herbert Diess and Ford CEO Jim Hackett. More details will be announced in the coming weeks on how the alliance will impact specific regions, Hackett said. They also signed another MOU to investigate further collaborations on autonomous vehicles, mobility services and electric cars.

* Fiat Chrysler Automobiles NV CEO Mike Manley is open to partnering with other automakers for producing a new midsize pickup truck, targeted toward Latin America and other markets outside of the U.S., to better compete against models like Ford Motor Co.'s Thailand-built Ranger truck, Reuters reported, quoting Manley in an interview at the Detroit auto show. A metric ton pickup is a "gaping hole" in Fiat Chrysler's portfolio, Manley reportedly said. The carmaker drew up plans in 2018 to launch such a pickup by 2022, the news agency reported.

* The head of Aston Martin Lagonda Global Holdings PLC said the luxury car industry could see brands exiting the premium segment in 10 years. While the auto industry as a whole transforms in a "tech revolution" that includes autonomous vehicles, luxury brands are working with a "broken business model," Aston Martin President and CEO Andy Palmer said during the Automotive News World Congress in Detroit. Palmer said automakers are spending billions of dollars to produce luxury brand vehicles but then sell the cars at discounted prices.

ELECTRIC AND AUTONOMOUS VEHICLES

* Magna International Inc. CEO Don Walker said the automotive industry needs to be more "efficient" in deploying capital toward electric vehicles and self-driving cars because this is a "very expensive endeavor" where "payback will not come quickly," Reuters reported, quoting Walker at the Automotive News World Congress in Detroit. Walker reportedly added that the "end consumer basically wants cheap transportation" as he called for more cooperation among players. The Canadian auto-parts maker estimates all-electric vehicles to comprise a mere 4% to 6% of market share by 2025, while fully autonomous vehicles without steering wheels or pedals are expected to occupy just 7% of market share in 2030.

* Magna and Chinese automaker BAIC Motor Corp. Ltd.'s EV unit, Beijing Electric Vehicle Co. Ltd., opened a new engineering center to develop smart electric vehicle architecture for the domestic market, Gasgoo reported. The two companies also announced the groundbreaking of a 12,000-square-meter new energy vehicle test center, scheduled to open by September, as part of their June 2018 joint venture.

* China Evergrande Group's Evergrande Health Industry Group Ltd. subsidiary purchased a 51% stake in global electric vehicle company National Electric Vehicle Sweden AB for total consideration of US$930.0 million. Evergrande will pay NEVS an additional $153 million in the form of a shareholder loan. The purchase follows Evergrande settling its dispute Jan. 2 with electric car startup Faraday & Future Inc. after it agreed to restructure its pledged US$2 billion investment in the Los Angeles-based company.

* Ford Motor teamed up with tech giant IBM, electric vehicle battery maker LG Chem, Huayou Cobalt and RCS Global to use blockchain technology to trace and validate ethically sourced minerals, especially those used in consumer products. The companies are piloting a project to trace cobalt, used in lithium-ion batteries, from a Huayou mine in the Democratic Republic of the Congo, through LG Chem's battery plant in South Korea and finally into a Ford plant in the U.S. The pilot is expected to be completed mid-year 2019.

POLICY, REGULATIONS AND SAFETY

* The automotive industry reiterated its warning against a no-deal Brexit after U.K. lawmakers rejected Prime Minister Theresa May's proposed deal 432-202. The Society of Motor Manufacturers and Traders warned that leaving the EU, the U.K.'s biggest trading partner, without a deal puts the country's auto sector and associated jobs at "immediate risk," while German auto industry association VDA said the consequences of a no-deal Brexit would be "fatal."

* Kia Motors Corp. issued a recall of tens of thousands of cars and SUVs in the U.S. as some dealers might not have installed the vehicles' high-pressure fuel pumps properly during a previous engine replacement recall, alleged to be related to over 220 instances of noncollision fires, ABC Action News reported. The Hyundai Motor Co. affiliate reportedly said the latest recall would involve over 50,000 Optima models, over 17,000 Sorento models and about 1,000 Sportage models. A company spokesman told ABC Action News that the recall is not yet approved by the National Highway Traffic Safety Administration due to the U.S. government shutdown.

AUTO PARTS AND EQUIPMENT

* Goodyear Tire & Rubber Co. stock slid 13.04% to $19 after the U.S. tire-maker said it expects full-year 2018 segment operating income to be slightly below a previous guidance of about $1.3 billion, hurt by continued slowdowns in China and India and escalating raw material costs. These macro headwinds will continue in 2019, the company predicted, as its preliminary fourth-quarter volume decreased 3% year over year versus a prior forecast of almost-flat volume growth.

AUTOMOTIVE RETAIL

* European Union's passenger car registrations fell for the fourth straight month to 998,503 vehicles in December 2018, down 8.4% year over year, hurt by the September 2018 introduction of the Worldwide Harmonized Light Vehicles Test Procedure emissions norms, according to a monthly report. For the year, registrations are up marginally 0.1% year over year, a fifth consecutive annual gain, led by higher demand in Central Europe, the European auto industry body ACEA said.

* Alliance Ventures, the venture capital arm of the Renault-Nissan-Mitsubishi Alliance, invested an undisclosed sum into Silicon Valley startup Tekion, which offers digital, cloud-based dealership software systems that uses machine learning and artificial intelligence capabilities.

TRUCKS AND MOTORCYCLES

* Swedish truck-maker AB Volvo's venture capital arm invested an undisclosed amount in Momentum Dynamics Corp., which provides high-power inductive charging technology for the automotive and transportation markets. The transaction is not expected to have a significant impact on Volvo Group's earnings or financial position.

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The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, the Hang Seng is up 0.27% to 26,902.10, while the Nikkei 225 decreased 0.55% to 20,442.75.

In Europe, around midday, the FTSE 100 decreased 0.51% to 6,859.68, and the Euronext 100 was up 0.03% to 934.88.

On the macro front

The MBA Mortgage applications report, the Housing market index report, the EIA petroleum status report and the Beige book report are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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