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GM ups 2019 outlook; China car sales fall for 1st time in 2 decades

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GM ups 2019 outlook; China car sales fall for 1st time in 2 decades

TOP NEWS

* General Motors Co. raised its adjusted diluted EPS and free cash flow outlook for fiscal 2019. The automaker expects adjusted diluted EPS to come in at $6.50 to $7 for the year ending Dec. 31, 2019, versus its previous guidance of $5.80 to $6.20. It also forecasts adjusted automotive free cash flow of $4.5 billion to $6 billion for the year. GM president Mark Reuss told investors on a call that GM aims to become the first maker of "profitable, highly desirable" electric vehicles. The new president said the Cadillac brand will become GM's lead electric-vehicle brand. The carmaker also announced it would seek a $3 billion revolving credit facility to "fund immediate transformation costs and provide additional financial flexibility."

* China car sales fell 2.8% year over year in 2018, marking the first yearly contraction in over two decades, Reuters reported, citing figures released by China's Association of Automobile Manufacturers, or CAAM. A total of 28.1 million cars were sold in 2018. CAAM attributed the drop to a phase-out of tax subsidies on small cars and the ongoing trade war with the U.S. Sales in 2019 are expected to be flat as the Chinese car market "still faces relatively large pressures in the short-term," said Shi Jianhua, a senior CAAM official. Ford Motor Co. was the biggest loser in China as annual sales dropped 37% year over year, while Geely Automobile Holdings Ltd. increased sales by 20% in 2018, compared with growth of 63% in 2017, the news agency reported. Sales of new energy vehicles rose 61.7%.

CARMAKERS

* Jose Munoz, Nissan Motor Co. Ltd.'s chief performance officer and head of its China business, resigned following a leave of absence earlier in January, Reuters reported. Munoz, regarded as a close aide of former Nissan chairman Carlos Ghosn, announced his resignation in a LinkedIn post. Meanwhile, the company is expanding its internal probe into operations in the U.S., India and Latin America, particularly looking into decisions taken by Munoz when he led Nissan's North America operations from 2014 to 2018, Reuters reported, citing three people with knowledge of the investigation. Arun Bajaj, Nissan's senior vice president for human resources, has also been put on leave "to assist the company by concentrating on special tasks arising from recent events." Further, Nissan is probing Ghosn's role in picking Hover Automotive India Pvt. Ltd. as Nissan's India marketing partner and is conducting audits of some of its distributors in the Middle East, including Saudi Arabia's Al-Dahana, Nissan's partner in a 50:50 joint venture, Nissan Gulf.

* Former Nissan Motor Co. Ltd. chairman Carlos Ghosn received €7 million from a Dutch joint venture between Nissan and Alliance partner Mitsubishi Motors Corp. after being hired as an employee of the entity, called Nissan Mitsubishi BV, in February 2018 without the knowledge of other directors, Reuters reported, citing the French financial daily Les Echos. A Nissan spokesman did not immediately respond to Reuters' request for comment. Separately, Ghosn's wife, Carole Ghosn, wrote to the Japan director for Human Rights Watch about reforming the country's "draconian system of pretrial detention," which has let prosecutors keep Ghosn in detention since Nov. 19, 2018, Automotive News reported.

* Peugeot SA-owned Opel's board appointed Ralph Wangemann as the new managing director personnel and labour director, in charge of human resources for the Opel and Vauxhall brands. Wangemann succeeds Anke Felder, who left the company, Opel said.

* Great Wall Motor Co. Ltd.'s SUV brand Haval forecasts annualized sales of 2 million units globally over the next five years on the back of 20 new model launches by 2023, with over 60% being new energy vehicles, as part of its "Haval 5-2-1" strategy, Gasgoo reported, citing Wei Jianjun, chairman of Great Wall Motor. Haval, which intends to invest 30 billion yuan in research and development over the next five years, reportedly plans to have deliveries outside China make up over 20% of its total sales from 2019.

ELECTRIC AND AUTONOMOUS VEHICLES

* Geely Automobile Holdings Ltd. unveiled an all-electric sedan that will lead the Chinese carmaker's overseas markets strategy. The new model is set to be unveiled in early 2019.

POLICY, REGULATIONS AND SAFETY

* Volkswagen AG may be ordered by Germany's Federal Motor Transport Authority to recall more of its vehicles over the "dieselgate" scandal, Reuters reported, citing Bild am Sonntag. The agency, also known as Kraftfahrt-Bundesamt, or KBA, launched a probe into whether the automaker's software updates for vehicles with a 1.2-liter engine enabled them to cheat emissions tests, sources reportedly told the German newspaper. A Volkswagen spokesperson told the news agency that the company is now analyzing irregularities discovered on cars fitted with EA189 1.2-liter engines. The spokesman also reportedly said VW has informed authorities of its findings and they are in continuous discussions.

AUTO PARTS AND EQUIPMENT

* Continental Aktiengesellschaft reported preliminary adjusted earnings of about €4.1 billion for the full year 2018, down from the €4.79 billion it posted in 2017 but slightly ahead of the €4.04 billion consensus mean of analyst estimates according to S&P Global Market Intelligence. Turnover for the 12 months to Dec. 31, 2018, came in at €44.4 billion, compared to €44.01 billion in 2017. Continental's fourth-quarter sales of about €11.25 billion beat the Street estimate of €11.12 billion on higher demand for winter tires and positive market development in its non-automotive industrial business. The company expects consolidated sales for 2019 to be about €45 billion to €47 billion amid "declining automotive markets" and "profound changes" in the sector. Continental confirmed that it had completed the legal separation of its Powertrain unit ahead of a possible IPO "by the middle of the year."

* Automotive technology company ClearMotion Inc., which provides a ride system that can reduce vehicle movement across uneven road surfaces, raised $115 million in a series D financing round led by Franklin Templeton Investments. Other investors included NewView Capital Management LLC, Eileses Capital LLC, Microsoft Corp., Bridgestone Corp., Qualcomm Inc., World Innovation Lab and AARP and clients advised by JP Morgan Asset Management.

AUTOMOTIVE RETAIL

* Volkswagen AG's premium car unit Audi AG sold 154,550 vehicles in December 2018, a 14.3% year-over-year decline, and 1,812,500 automobiles in 2018, down 3.5% from 2017. CEO Bram Schot attributed the sales decrease to an "extremely challenging" 2018 and to the introduction of the EU's Worldwide Harmonized Light Vehicle Test Procedure emissions norms, which affected auto sales across Europe. Schot added that the company is preparing for "new challenges ahead" this year.

* Autonomous driving startup AutoX Technologies Inc. is in discussions with investors to raise as much as $100 million to fund its research and development, the South China Morning Post reported. AutoX piloted a grocery delivery service in San Jose, Calif., using autonomous vehicles in August 2018. Current investors include chip manufacturer Mediatek and SAIC Capital, the investment arm of Chinese car manufacturer SAIC Motor Corp. Ltd., the newspaper reported.

* GrabTaxi Holdings Pte Ltd. filed an appeal at Vietnam's Ho Chi Minh City People's Court to reverse a December 2018 ruling that requires the ride-hailing service provider to pay 4.8 billion dong to local taxi operator Vietnam Sun Corp., Reuters reported, citing an emailed statement from GrabTaxi. Vietnam Sun, better known as VinaSun, reportedly accused Grab of unfair business practices that resulted in lost revenue, but Grab contended that "VinaSun could not prove its actual damages and/or the causal link between any of Grab's alleged violations and VinaSun's alleged damages." VinaSun did not immediately respond to Reuters' request for comment.

The day ahead

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

In Asia, the Hang Seng was down 1.38% to 26,298.33.

In Europe as of midday, the FTSE 100 slid 0.98% to 6,850.48, and the Euronext 100 declined 0.96% to 926.19.

On the macro front

There are no notable economic reports 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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