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Nordstrom Family To Take Chain Private, Retail Outlook for 2025 · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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  Speaker 3: Nordstmb Family, they're going to acquire all the outstanding common
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  Speaker 3: stock not already owned by them. And here with more
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  Speaker 3: is Bloomberg's Emily Cone. Emily, thank you so much for
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  Speaker 3: joining us here in studio. Nordstrom. Why are they going private?
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  Speaker 4: So we have Nordstrom here, a retail giant that's really
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  Speaker 4: been struggling. It's been struggling to compete with fast fashion,
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  Speaker 4: it's been struggling to compete with discount chains like TJ Max.
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  Speaker 4: So we have the company saying that they think they
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  Speaker 4: can do a better job navigating this tough retail landscape,
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  Speaker 4: taking the company private without the scrutiny from Wall Street
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  Speaker 4: so they can really focus on their operations.
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  Speaker 5: What does that look like, Emini? Does that mean cost cots?
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  Speaker 5: Does that mean job cots? Does that mean a tough
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  Speaker 5: a payod to come. I feel pot of Nordstrum.
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  Speaker 1: I think that's still to come.
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  Speaker 4: I think we don't know, but I think probably all
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  Speaker 4: those things around the table this company has. You know,
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  Speaker 4: it was once worth fifteen billion dollars I believe in
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  Speaker 4: twenty nineteen. Now it's going for six point two five billion.
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  Speaker 4: The stock price has plunged forty percent in the last
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  Speaker 4: five years, so there's a lot that needs to change.
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  Speaker 3: Emily, there's a lot of Nordstroms in this management team,
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  Speaker 3: in this ownership. How does the street view this family
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  Speaker 3: ownership in terms of being managers?
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  Speaker 6: That's a good question. I think there's a lot there,
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  Speaker 6: you know.
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  Speaker 1: I think the.
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  Speaker 4: Company has invested a lot in its rack business, that's
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  Speaker 4: the discount chain that's competing with TJ Max. I think
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  Speaker 4: they've seen a lot of growth from Max in recent years.
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  Speaker 4: I think you might be seeing more investment in that.
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  Speaker 4: That's definitely been better than expected part of the business.
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  Speaker 4: That's the part that competes with the TJ Max and
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  Speaker 4: you get stuff that is very discounted, and that's sort
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  Speaker 4: of like what consumers these days are looking for when
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  Speaker 4: they're shopping.
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  Speaker 6: They sure are.
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  Speaker 5: Let's just talk a little bit about a Mexican involvement,
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  Speaker 5: because fifty point one percent is going to be held
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  Speaker 5: by the nord Strom family, but then a Mexican department
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  Speaker 5: store owner is coming in and taking up the rest.
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  Speaker 6: Is that about agility?
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  Speaker 5: Is that about finding strategic investors here who know how
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  Speaker 5: to operate?
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  Speaker 1: Yeah?
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  Speaker 4: I mean I think it's also about the cash. And
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  Speaker 4: this is a big department searchain in Mexico and they're
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  Speaker 4: they're helping finance the deal.
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  Speaker 5: Okay, money on the table always helps us a little
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  Speaker 5: bit of operational flexibility.
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  Speaker 6: I'm sure great to have time with you. Thank you
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  Speaker 6: so much, Emi Cone.
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  Speaker 5: All over this story, big six point twenty five billion
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  Speaker 5: dollar deal for Nordstrom.
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  Speaker 6: Let's just brunen this out, Paul. Let's talk about.
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  Speaker 5: The retail industry going into twenty twenty five when we
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  Speaker 5: get those pretty ugly consumer numbers in terms of confidence
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  Speaker 5: today and what please to welcome Jennifer Bartasha.
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  Speaker 6: She can do that with us.
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  Speaker 5: Of course, she is of BlueBag Intelligence, and Jenniva push
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  Speaker 5: us forward as to what we're looking like from we've
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  Speaker 5: got a Nordstrom signaling that they want to go private,
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  Speaker 5: they need to rework and re energize their business. How
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  Speaker 5: is the rest of the High Streets set up for
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  Speaker 5: twenty twenty five.
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  Speaker 7: Good morning. So one of the things that we're looking
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  Speaker 7: at is really the consumer is doing well, but it's
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  Speaker 7: about where is their focus, And the focus is on value.
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  Speaker 7: And so what we're seeing is across the entire industry
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  Speaker 7: a lot of retailers trying to re orient them their
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  Speaker 7: operations in a way that presents a value. However that
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  Speaker 7: might mean to their core consumer. So for nord Stream,
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  Speaker 7: you may see that pivoting in terms of the way
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  Speaker 7: they do their assortment. But for retailers like Walmart and Target,
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  Speaker 7: it's about price and it's about selection.
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  Speaker 3: And there's a great story on that general in the
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  Speaker 3: Bloomberg terminal today, Leslie Patten and Jay Won Kang have
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  Speaker 3: this story. The headline's just a great headland Kirkland for
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  Speaker 3: Christmas shoppers ditch logos for store brands. That kind of
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  Speaker 3: goes to your value argument. How do you see that
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  Speaker 3: with the stores you cover?
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  Speaker 7: Yeah, value is, as I said, it's utmost importance. But
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  Speaker 7: private Label had a great year in twenty twenty four,
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  Speaker 7: and we actually see that momentum just continuing in twenty
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  Speaker 7: twenty five. So Kirkland is Costco's own brand. It is
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  Speaker 7: over thirty percent, almost thirty five percent of their sales,
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  Speaker 7: and it is just a trusted brand to the point
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  Speaker 7: where consumers no longer think of it as a private
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  Speaker 7: label alternative to national brands.
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  Speaker 1: They just see it as a brand in and of itself.
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  Speaker 7: Walmart, Target, Kroger, Albertson's, these companies have all invested in
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  Speaker 7: private label in the last year couple like the last
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  Speaker 7: several years, and it's really starting to pay dividends because
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  Speaker 7: it's value, it's novelty, and it's something consumers are really
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  Speaker 7: resonating with.
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  Speaker 5: To get that data to understand that it's resonating with
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  Speaker 5: a consumer, they're having to be leaning into all the
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  Speaker 5: data points, largely through digital investment.
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  Speaker 6: I'm sure, and through artificial intelligence.
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  Speaker 5: How is that something that they're not just plowing money
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  Speaker 5: in by getting the rewards back.
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  Speaker 7: Yeah, the rise of retail media is really the answer
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  Speaker 7: to that question. And when we look at the industry,
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  Speaker 7: actually last year we made a prediction that retail media
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  Speaker 7: would be up by over twenty percent the revenue associated
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  Speaker 7: with it for twenty twenty four, and it looks like
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  Speaker 7: we're going to exceed that and it's on pace to
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  Speaker 7: continue that kind of momentum into twenty twenty five. So
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  Speaker 7: retail media is really advertising, and it's the selling of
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  Speaker 7: ad space, it's the selling of search results, and it's
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  Speaker 7: the digital products such as you see online as well
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  Speaker 7: as digital screens that you see in stores. And so
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  Speaker 7: retailers have really been unlocking the value of that and
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  Speaker 7: are finding that it's a way to bring a high margin,
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  Speaker 7: very low overhead business into their mainstream core.
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  Speaker 3: You know, Jen, that's a business for better or worse,
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  Speaker 3: I have experienced with back in my banking days. We
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  Speaker 3: tried to finance a bunch of those companies because we
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  Speaker 3: felt like, you know, just like you said, they're captured customers,
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  Speaker 3: they're at the point of buying. What a great time
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  Speaker 3: for video to be introduced there in terms of advertising.
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  Speaker 3: What does it mean for the big retailers? What are
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  Speaker 3: the economics to the big retailers for this media?
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  Speaker 7: So this media carries a margin of eighty percent, and
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  Speaker 7: when you think about when you think about retail staples,
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  Speaker 7: you're talking about operating margins in the three to five
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  Speaker 7: percent range, right, You're talking about gross margins in the
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  Speaker 7: high teens, low twenties. So the ability to have a
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  Speaker 7: revenue stream with such a high margin is very appealing
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  Speaker 7: to these companies.
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  Speaker 1: And they have the data.
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  Speaker 7: They have all this first party data that they can monetize,
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  Speaker 7: and so it really is a very effective partnering. And
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  Speaker 7: one of the interesting things that we're finding is that
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  Speaker 7: there's always been historically investment from say, packaged food companies
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  Speaker 7: into retailers for placement on shelves and things like that,
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  Speaker 7: but we're finding that retail media is actually incremental spend.
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  Speaker 7: So that's actually an even bigger tailwind for these retailers
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  Speaker 7: as they get deeper into this new revenue stream.
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  Speaker 5: In many ways, everyone takes a leaf out of Amazon's book.
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  Speaker 5: In the end, I'm interested in Jane a little bit
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  Speaker 5: more about the pure data side of it and the
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  Speaker 5: forecasting side of it. We go to you to help
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  Speaker 5: us forecast what the retail looks like. How are the
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  Speaker 5: companies themsells forecasting in twenty twenty five.
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  Speaker 7: Well, it's been interesting because what we've really seen were
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  Speaker 7: in twenty twenty three and twenty twenty four we saw
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  Speaker 7: some initial pilot cases of the use of AI, for example,
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  Speaker 7: to help with demand forecasting, and we're seeing that those
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  Speaker 7: pilot programs have been successful and are being more widely
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  Speaker 7: rolled out across organizations at places like Kroger and Walmart
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  Speaker 7: and Target. And you know what that really means is
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  Speaker 7: that they're getting more efficient and smarter about understanding when
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  Speaker 7: they need product and where they need product. That then
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  Speaker 7: goes all the way back up to supply chain and
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  Speaker 7: makes them more efficient as an organization. And so, you know,
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  Speaker 7: that kind of cost cutting initiative is good from a
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  Speaker 7: operational perspective, but it's also good for customers because that
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  Speaker 7: means that what they want will be in the stores
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  Speaker 7: or online available at the time they want it.
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  Speaker 3: And Jen, what I learned from you a while backward
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  Speaker 3: shocked me. It still shocks me. Who's the number one
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  Speaker 3: supermarket in the United States.
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  Speaker 7: That would be Walmart. Over fifty percent of Walmart's sales
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  Speaker 7: come from groceries and they hold a little over thirty
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  Speaker 7: percent of total market share in the United States, which
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  Speaker 7: is pretty significant.
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  Speaker 3: And yet the regulators won't let Albertson's and Kroger get together.
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  Speaker 7: You know, it's the end of a two year saga.
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  Speaker 7: You know, when we first heard the announcement of that merger,
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  Speaker 7: we thought it was actually good for both organizations, but
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  Speaker 7: in this instance, the FTC prevailed, the merger is now dead,
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  Speaker 7: and Kroger and Albertson we'll just have to continue on
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  Speaker 7: their own individual strategies and we'll see how that unfalls.
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  Speaker 6: Jennifer about hash. Just great to check in with you all.
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  Speaker 5: An important look ahead to twenty twenty five retail and
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  Speaker 5: a bit of a look behind us at that M
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  Speaker 5: and a deal that went very sour.
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  Speaker 6: Thank you so much for Blue Big Intelligence.
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  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 5: Juna Coronado's with us macro policy perspectives. President and of
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  Speaker 5: course you're the founder. To you once upon a time,
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  Speaker 5: we're a key researcher over at the FED, so point
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  Speaker 5: us into twenty twenty five and the charity we need
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  Speaker 5: because Friday a bit of a relief in terms of
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  Speaker 5: the inflationary signals that we got, but certainly we'd all
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  Speaker 5: been rocked by what the FED had been telling us.
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  Speaker 6: Earlier.
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  Speaker 8: Yeah, that's right, they're messaging that we got at the
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  Speaker 8: December meeting was a lot sterner than expected, with only
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  Speaker 8: two cuts and just a general tone of concern about inflation.
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  Speaker 8: And I think, you know, when we look at the
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  Speaker 8: data that's come in, it's fair for President Daily to
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  Speaker 8: say that, you know, it's the data have been disappointing
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  Speaker 8: on the inflation front. But this wouldn't have really happened
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  Speaker 8: if it weren't for the risks to inflation in the outlook.
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  Speaker 8: And they can't really pinpoint them or put too fine
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  Speaker 8: a point on what's likely to happen, but every major
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  Speaker 8: policy prong of the incoming Trump administration could potentially be inflationary.
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  Speaker 8: So you can see they released their assessment of risks
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  Speaker 8: to inflation and unemployment, and the change in upside risks
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  Speaker 8: to inflation really moved at the December meeting. So we
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  Speaker 8: don't know the specifics on policy. Yes, we have to
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  Speaker 8: wait and see what materializes and how that feeds into
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  Speaker 8: the data.
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  Speaker 6: But there's a direction of travel.
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  Speaker 8: Here that's of concern to the FMC. Broadly speaking, this
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  Speaker 8: was a big move across a lot of participants, and
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  Speaker 8: so you know they want us to be on watch
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  Speaker 8: for that.
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  Speaker 5: Have you been running the numbers and with the best case,
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  Speaker 5: worst case scenario. Yes, we don't know the direction exactly
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  Speaker 5: of where policy will go. But we've been on this
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  Speaker 5: rodeo before, and there's been tough talk about taris in
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  Speaker 5: the past.
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  Speaker 8: Yes, and we got tariffs in the past, and we
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  Speaker 8: did see them flow through into goods prices. The difference
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  Speaker 8: was that we were in an environment in the Trump
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  Speaker 8: the first Trump administration, where inflation was running low and
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  Speaker 8: in fact below the Fed's target, so they could be
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  Speaker 8: very sanguine and patient and sort of accommodate the increase
• 11:40
  Speaker 8: in goods prices that came with the trade war. This
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  Speaker 8: time around, we're in a different environment. They've just re
• 11:46
  Speaker 8: established credibility, They've just brought inflation back down, not even
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  Speaker 8: to their target yet, and so you know the threat
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  Speaker 8: of a round of tariffs and an impulse into goods
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  Speaker 8: prices is more meaningful now. The thing that they're going
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  Speaker 8: to have to grapple with and we saw that also
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  Speaker 8: in last trade war is trade wars also destroyed demand.
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  Speaker 8: That spike and prices isn't good for consumer purchasing power,
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  Speaker 8: and it's unlikely to be accommodated like it was during
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  Speaker 8: the pandemic, with a lot of fiscal support to households
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  Speaker 8: directly to households, which helped the economy weather the inflationary
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  Speaker 8: shock during the pandemic and sort of stay on track.
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  Speaker 8: In the first Strump administration, we actually saw the trade
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  Speaker 8: war damp in economic activity, put the global manufacturing sector
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  Speaker 8: into a recession, and the FED actually ended up cutting
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  Speaker 8: rates in twenty nineteen to take out some insurance against
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  Speaker 8: that manufacturing recession broadening into the service sector. So, you know,
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  Speaker 8: very different circumstances. This could weaken the economy, it could
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  Speaker 8: cause inflation, It could do both, and then the Fed's
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  Speaker 8: mandates go in different directions and they have to make
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  Speaker 8: a judgment.
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  Speaker 3: So, you know, tariffs are clearly an issue. What I've
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  Speaker 3: heard from a lot of folks is restrictive immigration policies,
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  Speaker 3: perhaps forced deportations that impact on the labor market that
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  Speaker 3: might even be even more inflationary going forward.
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  Speaker 1: How do you view that risk?
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  Speaker 8: Yeah, no, absolutely, and I think that is definitely something
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  Speaker 8: we are likely to see. That is one of the
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  Speaker 8: main promises of the campaign, and we can already see
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  Speaker 8: the appointees and the plans being put in place to
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  Speaker 8: implement this policy. And let's not forget that immigration, that
• 13:38
  Speaker 8: plentiful flow of immigration. While it became a political hot
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  Speaker 8: potato during the election, it's unambiguously positive from a macroeconomic standpoint.
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  Speaker 8: We had abundant labor supply. It helped growth, it helped demand.
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  Speaker 8: So immigration is good for the economy. And to even
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  Speaker 8: just turn off this bigot, let alone turn around and
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  Speaker 8: you know, cast a shadow over the labor market and
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  Speaker 8: deport some workers, it's going to change the macro environment.
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  Speaker 8: And yes, in areas where the most targeted population, the
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  Speaker 8: undocumented workers are employed, food services, construction. I have conversations
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  Speaker 8: with people here in Texas, people in the real estate
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  Speaker 8: industry that are pretty worried about the availability of workers
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  Speaker 8: as as early as next year, as early as the
• 14:33
  Speaker 8: spring building season. So this could be very material. It
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  Speaker 8: could bring higher prices. It could also just slow down
• 14:41
  Speaker 8: building activity because you just don't have the people that
• 14:43
  Speaker 8: you need. Similarly, for food, availability of certain crops and
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  Speaker 8: the prices of those would likely spike. So leisure and
• 14:52
  Speaker 8: hospitality another industry that relies heavily on an immigrant workforce.
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  Speaker 8: So yeah, we could see that ripple across numerous sectors
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  Speaker 8: in the economy, and it could be you know, by
• 15:04
  Speaker 8: mid year we're seeing some material constraints and some price
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  Speaker 8: increases on the back of that, you.
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  Speaker 3: Know, and Julie, it kind of goes to that consumer
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  Speaker 3: confidence number we got today came in, you know, weaker
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  Speaker 3: than expected, and the expectations looking forward were weaker than expected.
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  Speaker 3: That actually surprised me because I've been talking to a
• 15:21
  Speaker 3: lot of our guests since the election about a palpable
• 15:25
  Speaker 3: sense of optimism in this country since the election, particularly
• 15:29
  Speaker 3: as it relates to economic outlook, reduced taxes and so
• 15:33
  Speaker 3: on and so forth. How do you think about the
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  Speaker 3: consumer consumer confidence?
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  Speaker 8: That data surprised you today, So I was just digging
• 15:40
  Speaker 8: through those details, And of course the optimism depends on
• 15:44
  Speaker 8: who you ask. So you're probably talking to a lot
• 15:46
  Speaker 8: of market participants who have experienced the rally and are
• 15:51
  Speaker 8: looking forward to maybe reduced regulation in the finance industry,
• 15:57
  Speaker 8: maybe some corporate tax cuts. But when you look at consumers, well,
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  Speaker 8: there's a lot of uncertainty as to how this mix
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  Speaker 8: of tariffs and immigration and is going to affect more
• 16:07
  Speaker 8: the average consumer. And when I looked at actually what
• 16:11
  Speaker 8: was interesting you could see a little bit of a
• 16:13
  Speaker 8: political footprint here when you look at it by region.
• 16:17
  Speaker 8: The Conference Board doesn't have the breakdown by political party
• 16:20
  Speaker 8: like the Michigan Sentiment Measure does, but you can clearly
• 16:24
  Speaker 8: see sort of the South confidence going up, in the
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  Speaker 8: West and the Northeast the confidence going down. So, you know,
• 16:33
  Speaker 8: we are a fifty to fifty country. We always have been.
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  Speaker 8: Some people are feeling better, some people are feeling a
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  Speaker 8: lot worse, and it really depends on who you ask.
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  Speaker 5: What about stockholders, because boy, twenty twenty four should have
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  Speaker 5: been the year that made everyone feel pretty good. It's
• 16:47
  Speaker 5: if you've been long AI, if you've been long S
• 16:49
  Speaker 5: and p as that big of benchmarks and then it
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  Speaker 5: just tails off in the last couple of weeks. So
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  Speaker 5: how does sentiment around being an asset holder right now feel?
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  Speaker 1: Yeah?
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  Speaker 8: Yeah, well, that's what was interesting about the numbers, right
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  Speaker 8: It was the expectations component, not the present situation. We
• 17:05
  Speaker 8: have been on quite a tear in the stock market,
• 17:08
  Speaker 8: and of course you all know that it's been very,
• 17:11
  Speaker 8: very concentrated in a handful of names that are related
• 17:14
  Speaker 8: to the AI. You know, sort of euphoria.
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  Speaker 6: But you know now we're.
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  Speaker 8: Moving into the expectations meets reality phase of change in administration.
• 17:26
  Speaker 8: So by the end of January, we're going to know
• 17:29
  Speaker 8: a lot more about this mix of policies. And yeah,
• 17:32
  Speaker 8: some are growth positive and some are growth negative, and
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  Speaker 8: so different industries are going to experience that differently. The
• 17:40
  Speaker 8: tax cuts, I think one of the things that we
• 17:42
  Speaker 8: just saw with the budget dog fight is that it's
• 17:48
  Speaker 8: a lot easier to talk about tax cuts on the
• 17:51
  Speaker 8: campaign trail than implement them in a very closely divided Congress,
• 17:56
  Speaker 8: and even within the Republican Party, while they hold majorities
• 17:59
  Speaker 8: in both houses. Uh, there's a lot of different views
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  Speaker 8: on the right the correct direction of fiscal policy. So
• 18:07
  Speaker 8: I we sort of imagine it's going to take most
• 18:10
  Speaker 8: of the year to legislate anything meaningful on the fiscal front.
• 18:14
  Speaker 8: They want to push forward a border a package early.
• 18:18
  Speaker 8: We'll see how that plays out.
• 18:19
  Speaker 1: I'm sure.
• 18:20
  Speaker 8: I assume they're going to be able to get a
• 18:22
  Speaker 8: lot done. But remember, like again, very different from last
• 18:26
  Speaker 8: time budget wise, the US fiscal position is a lot
• 18:30
  Speaker 8: worse than last time, and so that room for maneuvering
• 18:35
  Speaker 8: is a little tighter, and their ability to enact something
• 18:38
  Speaker 8: that's really going to change. The backdrop is more limited.
• 18:42
  Speaker 3: Enjoy about a minute left. How do you put in
• 18:44
  Speaker 3: Elon Musk into your calculus here?
• 18:47
  Speaker 8: Elon Musk is going to be a noise generator at
• 18:50
  Speaker 8: a minimum, and certainly will be as we saw with
• 18:53
  Speaker 8: his budget fight, fighting for things that are good for
• 18:55
  Speaker 8: his companies. But I think what we also saw in
• 18:59
  Speaker 8: the last last week is that he's not going to
• 19:02
  Speaker 8: just get his way. He's going to talk a lot.
• 19:05
  Speaker 8: Do I think he's actually going to be successful eliminating
• 19:07
  Speaker 8: the VA health care system? No?
• 19:10
  Speaker 1: I do not.
• 19:12
  Speaker 8: So you know he's going to run into constraints. He's
• 19:16
  Speaker 8: not an elected official. He actually doesn't have any sort
• 19:19
  Speaker 8: of direct lever that he can pull. And these elected
• 19:23
  Speaker 8: officials have a lot of views about the programs that
• 19:25
  Speaker 8: they want to protect and their constituents that they want
• 19:30
  Speaker 8: to serve. So I think it's going to be messy
• 19:33
  Speaker 8: and loud and harder to extract the signal from the noise.
• 19:40
  Speaker 5: Currently, his eyes are on the FED, absurdly overstaffed.
• 19:44
  Speaker 6: Certainly overstate.
• 19:45
  Speaker 8: How I looked at this number the Federal Reserve entire
• 19:51
  Speaker 8: system employees point one two percent of the zero point
• 19:57
  Speaker 8: one two percent of the workforce.
• 20:01
  Speaker 1: That's tiny.
• 20:02
  Speaker 6: What do we get for that?
• 20:03
  Speaker 8: We get over so the banking system, monetary policy, we need.
• 20:09
  Speaker 6: To leave it there. Okay, people weigh in good context.
• 20:12
  Speaker 6: It's everything here. That's Julia Cornardo. This is a Bloomberg.
• 20:18
  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 20:22
  Speaker 2: weekdays at ten am Eastern on Apple Card playing Android
• 20:25
  Speaker 2: Otto with the Bloomberg Business App. Listen on demand wherever
• 20:28
  Speaker 2: you get your podcasts, or watch us live on YouTube.
• 20:33
  Speaker 6: Let's turn our attention though to Auto's now.
• 20:36
  Speaker 5: Because there is a big deal now being confirmed.
• 20:39
  Speaker 6: Over in Japan, Paul, and it's.
• 20:40
  Speaker 5: Not coming till twenty twenty six, but it's going to
• 20:42
  Speaker 5: take a long hard time. There's also a lot to
• 20:44
  Speaker 5: talk about in Europe as well. We do it all
• 20:46
  Speaker 5: with Craig Triddell, who's sat here in.
• 20:47
  Speaker 6: London at the moment. And Craig just take us over
• 20:50
  Speaker 6: to Nissan and Honda. A deal done.
• 20:53
  Speaker 9: Yeah, this is going to play out over quite a while.
• 20:57
  Speaker 9: As you alluded to, I think, you know, real questions
• 21:00
  Speaker 9: about you know, just how happy shareholders across the various
• 21:04
  Speaker 9: companies involved are going to be with this. You know,
• 21:08
  Speaker 9: to put it plainly, I mean, this is really Honda
• 21:10
  Speaker 9: coming to Nissan's rescue, and that that is sort of
• 21:14
  Speaker 9: you know, the writing is on the wall there. In
• 21:16
  Speaker 9: terms of looking at the terms that these companies talked
• 21:18
  Speaker 9: about in Tokyo Monday, Honda will you know, take the
• 21:23
  Speaker 9: lead and forming this holding company that Nissan will be
• 21:27
  Speaker 9: a part of. Maybe Mitsubishi Motors will join. And the
• 21:31
  Speaker 9: big question is, you know, where does Renault stand in
• 21:33
  Speaker 9: all this as as Nissan's biggest shareholder, will they be
• 21:37
  Speaker 9: content to move forward with this style of deal?
• 21:41
  Speaker 3: So, Craig, how are the how's Honda and Nissan? How
• 21:44
  Speaker 3: are they positioning this new co? Is this going to
• 21:46
  Speaker 3: be competitive with the Fords, the Gms, the vulksh legends
• 21:51
  Speaker 3: of the world. Where does it want to be?
• 21:54
  Speaker 9: I mean in terms of scale, it will be, you know,
• 21:57
  Speaker 9: one of the bigger carmakers in the world. I think,
• 22:00
  Speaker 9: you know, if we just look at you know, annual sales,
• 22:04
  Speaker 9: I mean maybe somewhere in the third or fourth largest.
• 22:07
  Speaker 9: But in terms of you know where it's it's you know,
• 22:10
  Speaker 9: directionally heading. You know, Nissan in particular is shrinking in
• 22:15
  Speaker 9: dramatic fashion. Mitsubishi Motors is far and away the smallest
• 22:18
  Speaker 9: of the three, and there's real concerns about the state
• 22:22
  Speaker 9: of Nissan, and you know, just to what extent Honda
• 22:25
  Speaker 9: would want to sort of, you know, hitch its wagon
• 22:27
  Speaker 9: to Nissan, given the track record that it's had. You know, really,
• 22:31
  Speaker 9: since we're talking about you know, Carlos Gon leaving the
• 22:35
  Speaker 9: picture in twenty eighteen, we've really seen just a steady
• 22:38
  Speaker 9: deterioration in the state of that company. And you know,
• 22:41
  Speaker 9: the product portfolio is not in good shape.
• 22:45
  Speaker 1: There's not a whole lot of reason for optimism.
• 22:47
  Speaker 9: And so this is you know, potentially a distraction within
• 22:52
  Speaker 9: an industry that is just you know, extremely extremely competitive
• 22:55
  Speaker 9: and getting more so with the rise of Chinese companies
• 22:58
  Speaker 9: like BYD.
• 23:00
  Speaker 5: And look, since twenty eighteen, there has been significant disruption
• 23:03
  Speaker 5: around the world for autos, the rise of evs, the
• 23:05
  Speaker 5: rise of Tesla in the United States, the right of
• 23:08
  Speaker 5: them coming into China and taking Tesla's lunch there. And
• 23:11
  Speaker 5: then you think of Europe and you think of Germany,
• 23:13
  Speaker 5: that had been you know, the beauty spot for all
• 23:16
  Speaker 5: things autos. VW clearly showing that this time is still hurting.
• 23:22
  Speaker 9: Yeah, and we saw that toward the end of last week,
• 23:25
  Speaker 9: where for months now management has been pushing for restructuring
• 23:28
  Speaker 9: of the VW brand, which you know has long clearly
• 23:32
  Speaker 9: been an issue for the company.
• 23:34
  Speaker 1: It's just not been competitive.
• 23:37
  Speaker 9: It has you know, long had really really sort of
• 23:40
  Speaker 9: thin thin profit margins. Management wanted to knit that in
• 23:44
  Speaker 9: the butt and really, you know, do something that is
• 23:47
  Speaker 9: long overdue. They were not able to do that. They
• 23:50
  Speaker 9: wanted to close as many as three plants. All the
• 23:53
  Speaker 9: factories in Germany for VW will remain open, but there's
• 23:58
  Speaker 9: there's you know, yes, there's going to be some capacity reductions,
• 24:02
  Speaker 9: but I think we've seen the shares react in a
• 24:04
  Speaker 9: way that's you know, sort of suggests a bit of
• 24:07
  Speaker 9: a letdown in terms of what management was pushing for
• 24:10
  Speaker 9: versus what they were actually able to extract from labor,
• 24:13
  Speaker 9: which you know, as we know, they are structurally in
• 24:17
  Speaker 9: an extremely strong negotiating position in Germany.
• 24:20
  Speaker 3: Craig, as we step back from twenty twenty four to
• 24:22
  Speaker 3: think about twenty twenty five, what's the feeling within the
• 24:26
  Speaker 3: global auto industry about how this evolution to electric vehicles
• 24:31
  Speaker 3: is going to take place? Because I would argue that
• 24:32
  Speaker 3: twenty twenty four wasn't necessarily a great year. It felt
• 24:35
  Speaker 3: like momentum in certain parts of the world, particularly here
• 24:38
  Speaker 3: in the US, might have slipped a little bit. What's
• 24:41
  Speaker 3: the feeling within the global industry about this transition to EBS.
• 24:46
  Speaker 1: I think that's a really important point.
• 24:47
  Speaker 9: That's sort of, you know, part of the broader landscape
• 24:50
  Speaker 9: here right where it is both the case that the
• 24:53
  Speaker 9: industry needs to move in this direction, regulators are really
• 24:56
  Speaker 9: you know, continuing to put the pressure on these companies
• 25:00
  Speaker 9: to make that switch, and yet we have a situation
• 25:02
  Speaker 9: where the consumer I think really kind of was reluctant.
• 25:06
  Speaker 9: In twenty twenty four, to your point, we saw a
• 25:08
  Speaker 9: real slowdown and momentum for electric vehicles, some real questions
• 25:12
  Speaker 9: about you know, just how you know, keen car buyers
• 25:17
  Speaker 9: are to go fully electric. In the US market, hybrids
• 25:20
  Speaker 9: have have had a banner year, and I do think
• 25:24
  Speaker 9: that that's part of what's coming into play here for
• 25:26
  Speaker 9: Nissan is this is a company that you know, years ago,
• 25:30
  Speaker 9: you know, was actually in a pretty competitive position. It
• 25:34
  Speaker 9: was out there out front with the Leaf. However, that
• 25:36
  Speaker 9: car really sort of flopped, and you know, the company
• 25:39
  Speaker 9: has has not really reinforced that bet with you know,
• 25:43
  Speaker 9: competitive evs and so, you know, I think we're seeing
• 25:47
  Speaker 9: drastic measures to try and deal with this really uncertain
• 25:51
  Speaker 9: environment and future for this industry.
• 25:55
  Speaker 5: But Craig, briefly, government's taking drastic measures as well. Just
• 25:58
  Speaker 5: think of the numbers Chinese imports into Europe absolutely curtailed
• 26:04
  Speaker 5: at the back of these thirty five percent taris by
• 26:06
  Speaker 5: the EU.
• 26:08
  Speaker 1: Yeah, that's absolutely right.
• 26:09
  Speaker 9: I think, you know, government is likely behind this Honda
• 26:13
  Speaker 9: Nissan combination. We may see in Europe some softening of targets.
• 26:19
  Speaker 9: We may see that in the UK as well, in
• 26:21
  Speaker 9: terms of CO two emissions reductions and ev you know mandates.
• 26:26
  Speaker 9: So it's it's definitely I think we're in for a
• 26:30
  Speaker 9: turbulent twenty twenty five.
• 26:32
  Speaker 1: Hi, Craig Judell, Thank you so much. We appreciate that.
• 26:34
  Speaker 3: Craig Judelle covers all the autos for Bloomberg News based
• 26:38
  Speaker 3: over there in London.
• 26:40
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