Day: July 22, 2024

General Motors and Ford may post lower profit when they report quarterly results this week, as the industry’s high-stakes bet on EVs fails to pay off, while a cyberattack on a crucial computer network used by dealerships disrupted sales.

GM is expected to report a 7.7% drop in second-quarter net income, while Ford is expected to post a 10% drop in profit, according to data from LSEG. GM is scheduled to report its results on Tuesday and Ford the following day.

The cyberattack-induced outage at CDK forced the retail technology provider to shut down a key software system used at more than 15,000 U.S. car dealerships in June, a major sales month in the industry.

Dealers are estimated to collectively lose about $1 billion because of the outage, according to consultancy firm Anderson Economic Group.

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A slowdown in growth of EV sales is also making it harder for automakers such as GM and Ford to boost volumes to levels where they can drive down costs and hit profitability sooner.

“It can’t be expected that established vehicle manufacturers, who need to make similar investments that a start-up would in vehicle design and manufacturing facilities, could turn a profit immediately,” said Sam Fiorani, vice president at research firm AutoForecast Solutions.

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Legacy American carmakers are also seeing their EV ambitions being throttled by cutthroat competition from Chinese EV makers and Tesla, which have triggered a price war globally.

GM last week declined to reiterate its previously announced forecast that it would have one million units of EV production capacity in North America by the end of 2025.

Ford had also outlined plans to use a Canadian plant it had earmarked for a future electric vehicle to instead build larger, gasoline-powered versions of its flagship F-Series pickup truck.

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Ford previously said it would delay the launch of its new three-row EVs that would be built at its assembly complex in Oakville, Ontario to 2027 from 2025. Both Detroit automakers also reported slower sales growth for the quarter earlier this month.

Evercore ISI analysts said they remain positive on GM, particularly over Ford, and expect the Detroit automaker to guide towards the upper end of their prior full-year forecast.

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Investors will look for more details on EV plans as both automakers have cited consumer demand as a cause for pushing out forecasts for those vehicles, as well as comments on the impact of outage at CDK.

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Former New York City Mayor Michael Bloomberg, whose net worth is over $104 billion per Forbes, is urging Democrats to take their time in selecting a new presidential nominee in the wake of President Biden’s decision to drop out of the 2024 election.

Bloomberg, a businessman and former Republican who entered the 2020 Democratic presidential primary, released a statement Monday telling Democratic Party leaders there’s still enough time for them to take stock of the views of voters around the country about the best candidate to lead the party after Biden’s withdrawal.

“Democrats now have a chance for a fresh new start, and while some elected leaders and party officials make their endorsements, there are still more than four weeks before the party’s more than 4,000 delegates convene in Chicago,” Bloomberg said.

“That is more than enough time for the party to take the pulse of voters, especially in battleground states, to determine who is best positioned to win in November and lead the country over the next four years,” he added. “We don’t need a resolution right away, but we do need to get it right. The decision is too important to rush, because the election is too important to lose.”

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Bloomberg’s call for Democrats to take the time to evaluate other potential candidates to replace Biden at the top of the party’s presidential ticket comes as a growing number of leading Democratic politicians — including President Biden — have endorsed Vice President Harris as the party’s nominee.

Biden released a statement endorsing Harris immediately after announcing he would withdraw from the race. 

Following that announcement, a number of Democratic leaders who may have been potential alternatives to Harris moved to endorse her, including Pennsylvania Gov. Josh Shapiro, Maryland Gov. Wes Moore, California Gov. Gavin Newsom and Michigan Gov. Gretchen Whitmer, among others.

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No new contenders have stepped forward to challenge Harris for the Democratic nomination in the wake of Sunday’s news.

Sen. Joe Manchin, I-W.V., told Fox News’ Bret Baier on Sunday that he was considering re-registering as a Democrat after leaving the party in May so that he could challenge Harris. However, Manchin opted against it and told CBS on Monday that he won’t be a candidate for president while calling for a competitive nomination process.

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Bloomberg’s call for Democrats to hold off on picking a candidate until voters can weigh potential options also featured a tribute to outgoing President Biden’s “lifetime of honorable public service” which he said “deserves the respect of all Ameicans, no matter their party.”

“Stepping aside from this campaign is an act of selflessness that only a great patriot would do. No matter what happens in November, history will record that he put the country’s interests ahead of his own to defeat a candidate who has always put his own interests ahead of the country’s, as the aftermath of the 2020 election proved in such a disgraceful and dangerous fashion,” Bloomberg added.

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