The auto stocks gained on Monday trading in Europe after the confirmation of the Italian-French car manufacturing merger proposal. Fiat Chrysler (FCA) and Renault (RNO) said that they are planning a 35 billion euros merger, which would make the new company the world’s third largest auto manufacturer. The planning of the merger was published on Saturday evening.
Fiat´s stock price jumped by 7,98 % to 12,37 euros and Renault´s 12,09 % to 56,03 euros. The Stoxx Europe 600 Automobiles & Parts index ended up 1,43 % to 473 points.
The idea of the auto merger is to get synergies, estimated of 5 billion euros, in the R&D related to electric cars and lower emissions, and in the purhasing power. The new company, owned by 50-50 % by a Dutch holding company, would have production of 8,7 million cars annually. Brands like Jeep, Maserati and Alfa Romeo would be part of the merger.
The Japan alliance partner Nissan Motor & Mitsubishi might join the new group later on. In order to proceed the Italian and French Governments will comment the merger in details during the next week.
Otherwise the German DAX-index gained 0,5 % to 12071 points and the French CAC 40 0,37 % to 5336 points. The shares of Volkswagen, the world´s largest car manufacturer, (VOW) ended up 0,55 % to 145,25 euros in Frankfurt.
In London the trading was closed due to the Spring Bank Holiday.
In the US, the stocks markets were closed while having Memorial Day holiday.
The big question in the financial markets will be the market reactions on Monday. What have we heard so far? The first thing is that trade wars are real at the moment and the markets are waiting for more information from the meeting in Helsinki on Monday. Will the US president Donald Trump or Russian president Vladimir Putin say something regarding the trade wars, economics or sanctions? Last week the markets closed mixed globally.
The trade wars are affecting primarily auto, steel and aluminum industries globally. So far the auto industries have developed very differently. For example the Swedish car manufacturer´s Volvo stock price (VOLVB) has increased by nearly 2 % annually, but for example the luxury car manufactuer Ferrari (Ferrari) by over 50 % in New York, On the other hand Tesla´s (TSLA) stock price has declined by over 2,5 % and the German company Daimler´s (DAI) by over 6 % and Volkswagen´s (VOW) with 0,5 % during the same period.
The autoindustry is important to the EU, while the German auto production is about 20 % of the global passanger car production. The turnover is about 404 billion euros according to the German Trade & Invest. And the industry sector is having otherwise very good future outlook with energy efficient cars, growth estimates are nearly 30 procent annually by 2020.
In the US, the autoindustry has seen signs of declining sales during the summer time – General Motors and Ford have been reporting. The city of Detroit is facing lay offs.
Last year totally 17 million passanger cars were built in the EU and EU was the second largest producer of passanger cars. The US production declined by 11,5 percent and the production totalled 8 million cars. China maintained its leading position among global passanger car producers – totally 29 percent of all cars were produced in China according to ACEA.
So, one can understand that Tesla decided to build a new car plant in China. The company announced last week that they will open a plant in Shanghai delivering 500 000 vehicles a year. The project time for the plant is about five years, but the size of the investment was not published.
The autoindustry is having big changes and for example the OEM production is also one part of it. So far, the EU has been the place for premium cars, but for how long? Also the UK Brexit-talks will have their own impact on the autoindustry development,
Sometimes you get really impressed with the speed by the small-size cars. Like the new Golf GTE hybrid. By the look you could never quess that the car is having combined 150 kW, which allows you to speed from 1 to 100 km/h in 7,6 seconds. Amazing combination of electric and gasoline engines.
The combination works very well also for short distance travelling with 50 kilometers range of electric power. According to the company information the combined CO2 emissions are 36-40 g/km. The energy from using brakes is also storaged and reused during the drive.
This plug-in-hybrid is having 5 seats and guite large luckage space. The fuel tank capacity is 50 liters. In the infosystem you can easily connect with your mobile phone via Car-Net App and it includes for example an European wide map service, navigation and it allows you to use your own applications as well.
It is also good to check what is the quarantee of the batteries in your car. Volkswagen is saying that it gives 8 years quarantee for the batteries or 160 000 km.
Golf GTE is really a Volkswagen (VOW), enabling safety and quality in a package, which includes technology into details.
Nokia (NOKIA), today published its third quarter interim report. According to the press release, the company says the merge with the French Alcatel-Lucent is now closer and they have received all the regulatory approvals to proceed with the public exchange offer. It is estimated to happen during the first quarter next year.
Nokia reported a turnover with 3036 million euros in July-September, declining 2 percent from the year earlier and increasing from the previous quarter. The operating profit was 475 million euros, up 4 percent from year earlier , but down 4 percent from the previous quarter. Earnings per share was 0,05 euros compared to 0,57 euros.
– I continue to believe that the acquisition of Alcatel-Lucent provides a very strong long-term value creation opportunity, the CEO Rajeev Suri said in the release.
The company also said it will raise the near term outlook. – The performance at Nokia Networks was the highlight of the quarter, and allowed us to raise our full-year outlook for that business, Suri said.
Nokia sold its HERE maps and location unit to German automakers Audi, BMW and Daimler in August 2015. According to Volkswagen (VOW:Xetra) press release yesterday, the company is expecting to close the deal during the next six months after the regulatory approvals. Audi´s share of the purchase price will be around 0,85 billion euros, according the release.
According to Nokia release today, HERE net sales amounted to 283 million euros in the third quarter 2015, compared to 236 million euros a year earlier. The operating profit was 20 million euros in the third quarter 2015, compared to an operating loss of 1 215 million euros in the third quarter 2014. On a non-IFRS basis and excluding the positive impact of stopping amortization and depreciation, HERE operating margin in the first nine months of 2015 was 10.1%, compared to 1.6% in the first nine months of 2014.
Nokia published also 7 billion euros program to optimize capital structure ahead of planned public exchange offer for Alcatel-Lucent securities. It also said that the 900 million euros synergies from the Alcatel-Lucent merge would be achieved in 2018, not in 2019 as earlier planned.