Latest / Bloomberg Intelligence / Alan Baum Forecasts 2016 Auto Sales: Flat to Last Year (Audio)

Transcript

Alan Baum Forecasts 2016 Auto Sales: Flat to Last Year (Audio) · Bloomberg Intelligence

• 0:03
  Speaker 1: Global business news twenty four hours a day at Bloomberg
• 0:06
  Speaker 1: dot com, the Radio plus mobile last and on your radio.
• 0:09
  Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.
• 0:13
  Speaker 1: I'm Katherine Cowdery Bloomberg. Taking Stock is brought to you
• 0:16
  Speaker 1: by national realty providers of one satisfaction guaranteed New York
• 0:21
  Speaker 1: City realty investments. See them at m r i A
• 0:24
  Speaker 1: dot net. We check the markets every fifteen minutes throughout
• 0:27
  Speaker 1: the trading day. Now, let's go over to the First
• 0:29
  Speaker 1: Word Breaking news desk for today's afternoon call with Bill Maloney. Bill,
• 0:33
  Speaker 1: Good afternoon, Katherine. Modest gains for US stocks today, with
• 0:37
  Speaker 1: the Dow currently higher by thirty five points, sp S
• 0:40
  Speaker 1: gain five and AzaC rises twenty three. Over in Europe,
• 0:43
  Speaker 1: Spain rose one point three percent, the UK climbed one
• 0:46
  Speaker 1: point one percent back in the U s mall cap
• 0:49
  Speaker 1: six hundred is little changed, and the US tenure yield
• 0:52
  Speaker 1: at one point for four six out of tennis to
• 0:55
  Speaker 1: be sectors are highered by gains in consumer discretionary, telecom
• 0:58
  Speaker 1: and healthcare. Financial's, consumer staples and utilities led to the
• 1:03
  Speaker 1: down side down. Transports rise seventy three Nazarbotech's outperform climbing
• 1:08
  Speaker 1: fifty and the DAT and the vix is down by
• 1:10
  Speaker 1: five point eight percent. Down leaders included Home Depot, Fiser,
• 1:14
  Speaker 1: and Caterpillar, while JP Morgan and DuPont led to the
• 1:17
  Speaker 1: downside until news Edita is said to plan assets sales
• 1:21
  Speaker 1: to address anti trust concerned over its deal with Humana.
• 1:25
  Speaker 1: Micrimes dropped ten percent after its earnings, where Holly Davidson
• 1:28
  Speaker 1: served as much as seventeen percent. That's the most since
• 1:32
  Speaker 1: two thousand nine. Live from the first breaking news a
• 1:34
  Speaker 1: scone Bill Maloney, Katherine, thank you, Bill and to hear
• 1:37
  Speaker 1: live breaking news over your Bloomberg type s q U
• 1:39
  Speaker 1: a K on your terminal. West Texas Intermediate crude oil
• 1:43
  Speaker 1: is up eighty four cents of barrel one and three
• 1:45
  Speaker 1: quarters percent at seventeens. About gold up twenty three dollars
• 1:48
  Speaker 1: announced at thirteen sixty ten year treasury up seven thirty
• 1:52
  Speaker 1: seconds with the yield of one point four four percent.
• 1:54
  Speaker 1: And in a breaking story, a group of as money
• 1:57
  Speaker 1: is nine gunmen that have attacked a restaurant popular with
• 1:59
  Speaker 1: four warners in a diplomatic zone of the Bangladeshi capital
• 2:03
  Speaker 1: on Friday, night. Now authorities say they have taken hostages
• 2:06
  Speaker 1: and they've exchanged gunfire with security forces. Some foreigners are
• 2:10
  Speaker 1: believed to be the hostages. We'll have more details as
• 2:13
  Speaker 1: they become available. And that's a Bloomberg Business flash. This
• 2:19
  Speaker 1: is taking Stock with Kathleen Hayes and Prim Fox on
• 2:22
  Speaker 1: Bloomberg Radio. A mixed bag for US auto sales last
• 2:27
  Speaker 1: month raises the question more than ever after a very
• 2:31
  Speaker 1: hot year last year, have sales peaked in the United States.
• 2:35
  Speaker 1: General Motors, Toyota, Chrysler, Honda, all saying Friday that their
• 2:40
  Speaker 1: sales in June trailed analyst estimates, although Nissan and Ford
• 2:44
  Speaker 1: Motor beat projections. In fact, Nissan saw their sales pop
• 2:49
  Speaker 1: some thirteen percent to a June record. He's about to
• 2:53
  Speaker 1: tell us where the auto industry is, where it's heading next,
• 2:56
  Speaker 1: about a big drop in b W sales and some
• 3:00
  Speaker 1: is from Tesla that has people wondering about the future
• 3:03
  Speaker 1: of self driven cars. Alan Baum, principle at Baum and Associates.
• 3:07
  Speaker 1: He's joining us from the heart of the auto industry
• 3:11
  Speaker 1: in West Bloomfield, Michigan. Alan, good afternoon, and good afternoon
• 3:15
  Speaker 1: to you. So what do you know what can you
• 3:18
  Speaker 1: say from this report about the strength of demand for
• 3:21
  Speaker 1: US cars and trucks, Well, it is, uh, it's it's good,
• 3:25
  Speaker 1: it's not great. UH. The thing to be a little
• 3:28
  Speaker 1: concerned about. You know, we're still two percent ahead of
• 3:31
  Speaker 1: last year year to date. But what kind of flies
• 3:34
  Speaker 1: under the radar is that last fall we had annual
• 3:39
  Speaker 1: sales rates um in in uh as say, in the
• 3:42
  Speaker 1: fall at eighteen million rate uh in UH in those months,
• 3:47
  Speaker 1: and obviously that's gonna be a hard nut to crack
• 3:50
  Speaker 1: this year. So the fact that we're ahead a little
• 3:53
  Speaker 1: bit so far this year does not to me suggest
• 3:56
  Speaker 1: that that's going to continue. I think we're gonna be
• 3:59
  Speaker 1: by the end of the year. We're just gonna be
• 4:01
  Speaker 1: flat with last year. Now that's not horrible. That's seventeen
• 4:05
  Speaker 1: and a half billion units, and I think we'll go
• 4:07
  Speaker 1: down from there again, not horribly U. But what we're
• 4:11
  Speaker 1: seeing is one of the things I was looking for
• 4:14
  Speaker 1: today was the pickup story. UM. As you they remember,
• 4:20
  Speaker 1: Jim has been on the wolf pack a little bit
• 4:22
  Speaker 1: with respect to the strength of their pickup versus Ford UH.
• 4:27
  Speaker 1: And they actually came out on the short end of
• 4:28
  Speaker 1: it this month. UM. And they were down, Ford was
• 4:32
  Speaker 1: up uh and so was the ram UH brand. Now
• 4:36
  Speaker 1: what I don't know, and we'll see you the next
• 4:38
  Speaker 1: few days, is how incentives flew out there? What was
• 4:42
  Speaker 1: the uh the approach that that the automakers took. But
• 4:47
  Speaker 1: clearly GM is trying to dent UH that was in
• 4:51
  Speaker 1: fact their their strategy. And though that uh Ford in
• 4:54
  Speaker 1: n f C A at least in June, it didn't work.
• 4:58
  Speaker 1: Um So you know that matters a because of course
• 5:00
  Speaker 1: with the huge profitability exactly so in terms of the
• 5:04
  Speaker 1: Big three, what how does their profitability look to you
• 5:07
  Speaker 1: this year? Good for investors or maybe not so hot? No,
• 5:10
  Speaker 1: I think they're doing quite well. Like you know, when
• 5:13
  Speaker 1: I talk about incentives, we haven't had very uh. GM
• 5:19
  Speaker 1: has been restrained in their incentives. They're reducing their their
• 5:24
  Speaker 1: fleet sales. UH So from the profitability standpoint, they're good.
• 5:29
  Speaker 1: But so is Florid because Florida has a full year
• 5:32
  Speaker 1: of availability of the F series and this fall they'll
• 5:35
  Speaker 1: have the new Super Duty, which will increase transaction prices
• 5:39
  Speaker 1: yet again for a very popular model. Um GM has
• 5:42
  Speaker 1: also continued to do well with the large utilities, which
• 5:46
  Speaker 1: of course are incredibly profitable now on the car side,
• 5:49
  Speaker 1: the only glimmer of hope really from GM is the
• 5:54
  Speaker 1: new Malibu, which is a great car and it's selling well. Uh.
• 5:58
  Speaker 1: The Cruise, on the other hand, it is not and
• 6:00
  Speaker 1: it is a it's a new car as well and
• 6:03
  Speaker 1: not doing so well. Okay, Alan, two more questions. I
• 6:06
  Speaker 1: want to get in before we have to say goodbye.
• 6:08
  Speaker 1: VW sales down twenty two per cent? Is their eighth
• 6:12
  Speaker 1: straight drop? Can they turn this around? They can turn
• 6:16
  Speaker 1: it around, but not soon. And you know the problem is,
• 6:19
  Speaker 1: even with the announcement of the settlement, it says nothing
• 6:23
  Speaker 1: about getting their existing diesel new cards back on the market.
• 6:28
  Speaker 1: So that's going to continue and uh. And the result
• 6:31
  Speaker 1: is there incentives they're huge, just to get people in
• 6:34
  Speaker 1: their show rooms. US regulators are investigating a fatal accident
• 6:37
  Speaker 1: involving a Tesla motor sedan that was driving on autopilot
• 6:40
  Speaker 1: of forty year old man killed in Ohio. The Tesla
• 6:43
  Speaker 1: didn't read the side of a big truck. What does
• 6:45
  Speaker 1: this mean for the future of auto drive self driven cars?
• 6:48
  Speaker 1: Seems to me it's only one, but you know it
• 6:50
  Speaker 1: was my husband or brother. I might think twice. And
• 6:54
  Speaker 1: if it's test foot It gets a lot of attention
• 6:56
  Speaker 1: because of course everything Tesla does gets a lot of attention.
• 6:59
  Speaker 1: That's said, uh, this is an unusual situation. They have
• 7:03
  Speaker 1: said that they are putting out data software uh, in
• 7:07
  Speaker 1: the in the self driving realm, which of course is
• 7:11
  Speaker 1: an unusual thing in cars. It's not an unusual thing
• 7:15
  Speaker 1: on your on your iPhone or on your keyboard. So
• 7:19
  Speaker 1: this is They'll get through this. Um, There'll be some
• 7:23
  Speaker 1: issues that have to be addressed. Well, Alan Baum, we
• 7:25
  Speaker 1: know you'll come back and discuss those issues with us.
• 7:28
  Speaker 1: It's a fascinating story, such an important trend in the
• 7:30
  Speaker 1: auto industry. Our sympathy to the family of the man
• 7:32
  Speaker 1: who was killed in Ohio. It was Alan Boum, principal
• 7:35
  Speaker 1: at Baum and Associates. I'm Kathleen Hayes. This is taking
• 7:39
  Speaker 1: Stock and this is Bloomberg. What's next for the stock
• 7:48
  Speaker 1: market following the Brexit? What are central banks going to
• 7:51
  Speaker 1: do to keep the global economy on track? And what
• 7:53
  Speaker 1: does it mean for your portfoliobo ob coming up. This
• 7:57
  Speaker 1: is Bloomberg.