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Renault talks on FCA deal continue; VW to cut 4,000 jobs in digitalization push


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Essential IR Insights Newsletter - Summer July-August 2023

Renault talks on FCA deal continue; VW to cut 4,000 jobs in digitalization push


* Renault SA said its board will meet again June 5 to continue to discuss Fiat Chrysler Automobiles NV's merger proposal. It has been reported that Fiat Chrysler could improve merger terms to win the support of the French government, which reportedly asked for a "significant" board presence and the right to veto future CEO appointments.

* Volkswagen AG will invest up to €4 billion in its digitalization drive through 2023, a move that will see 4,000 jobs cut as a result. The German carmaker said about 2,000 jobs will be created in its digital department and that non-production jobs in Volkswagen AG Passenger Cars, Volkswagen Group Components and Volkswagen Sachsen GmbH will be affected by the cuts. In the same release, VW said it will invest €60 million more in training and plans to achieve an operating return on sales of 6% by 2022, three years earlier than its original target.


* Renault said an audit into RNBV, a subsidiary it jointly owns with Nissan Motor Co. Ltd., found that ousted Chairman Carlos Ghosn spent about €11 million of RNBV funds on questionable air travel, gifts and other expenses. Renault said it will reach out to Nissan and determine legal actions and corrective measures to be implemented by 2019-end.

* Volkswagen AG is likely to start the sale process for its transmission unit Renk AG in the autumn and has identified a number of private equity firms as possible buyers, Reuters reported, citing people familiar with the matter. The move is reportedly part of the German carmaker's efforts to streamline its business to free up funds for investment in electric vehicles.


* Bayerische Motoren Werke AG and Tata Motors Ltd.'s Jaguar Land Rover Automotive PLC will team up to build drive units for both companies' electric vehicles. The carmakers will build BMW's Gen 5 power units, which houses a propulsion system, electric motor, transmission and power electronics in one casing. A group of BMW and JLR staff will develop the units in Munich, though production will take place in the carmakers' respective plants to allow for brand-specific details.

* Tesla Inc. CEO Elon Musk said it will roll out Supercharger stations and service centers in Kazakhstan by 2019-end.

* China's NIO Inc. sold 1,089 of its ES8 all-electric SUVs in May, Gasgoo reported, citing filings to the Securities and Exchange Commission.


* China's market regulator fined Ford Motor Co.'s Chinese joint venture 162.8 million yuan for monopolistic behavior, Reuters reported. Ford's 50/50 JV with Chongqing Changan Automobile Co. Ltd. reportedly set minimum resale prices for its vehicles.

* The Office of the U.S. Trade Representative denied General Motors Co.'s request for an exemption to a 25% U.S. tariff on its Chinese-built Buick Envision SUV as the vehicle is "strategically important or related to 'Made in China 2025' or other Chinese industrial programs," Reuters reported. The Detroit-based carmaker acknowledged the denial but has not raised the SUV's price, which starts at about $35,000, to account for the tariff that it has been paying since July, Reuters reported.

* Toyota Motor Corp. warned its U.S. dealers that supplier costs could increase by $1 billion if the Trump administration proceeds with its planned tariffs on Mexican imports, Reuters reported, citing a memo to dealers.

* France's financial prosecutor is investigating former Justice Minister Rachida Dati over consulting fees she was paid by the Renault-Nissan alliance, Reuters reported. A Renault shareholder told authorities that Dati, Ghosn and security consultant Alain Bauer, who is also being probed, had misused company funds. Dati and Bauer's lawyer, Olivier Pardo, said their contracts and agreements with the carmakers were "totally compliant with the rules."

* South Korea's finance ministry will extend a 30% cut in consumption tax on passenger vehicles by a further six months to help boost demand in the auto industry, Reuters reported. The tax cut, which was introduced in July 2018 and has already been extended once, could help buyers save about 100 billion won through the period, the report said.


* Compagnie Générale des Établissements Michelin and General Motors began testing an airless tire called Uptis on the carmaker's Chevrolet Bolt electric vehicles. Uptis' design will eliminate blowouts and flat tires, the tire-maker said.

* Automotive parts producer Aptiv PLC said it would cost the company $17 million per month if U.S. President Donald Trump imposes a 5% tariff on Mexican imports. Aptiv's Mexican imports are valued a little over $3 billion a year, according to company executives.


* New car registrations in the U.K. fell 4.6% year over year in May to 183,724 vehicles, according to the Society of Motor Manufacturers and Traders. Ford Motor Co. took the largest share at 10.83% with 19,892 cars sold, followed by Volkswagen, which held an 8.57% share at 15,737 vehicles sold, then Daimler's Mercedes-Benz brand at 14,431 autos sold, representing a 7.85% market share. Registration of diesel vehicles fell 18.3%, the 26th consecutive month of declines. Electric-vehicle registrations increased 11.6% year over year to 12,137. Battery-electric vehicles sales increased 81.1% to 1,990 autos sold.

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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 increased 0.50% to 26,895.44, while the Nikkei 225 gained 1.80% to 20,776.10.

In Europe, around midday, the FTSE 100 went up 0.59% to 7,256.51, and the Euronext 100 climbed 0.77% to 1,037.96.

On the macro front

The U.S. ADP employment report, the U.S. services purchasing managers' index, the U.S. Institute for Supply Management non-manufacturing index, the U.S. Energy Information Administration petroleum status report and the U.S. Beige Book 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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