With the Society of Motor Manufacturers revising its UK new car registrations forecast for 2012 upward to two million units and the Finance & Leasing Association posting a new record for dealer penetration, Richard Brown surveys the third-quarter results and fourth-quarter plans for some of the globe’s biggest manufacturer finance operations.
The Society of Motor Manufacturers and Traders (SMMT) has revised its projection of total UK new car sales for 2012 to over two million vehicles, following another month of growth for registration figures.
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A total of 151,252 new cars were registered in October, a rise of 12.09% year-on-year, with 1,771,861 registrations year-to-date, up by 4.97% or 83,823 units.
Private sales of new cars were up 23.89% for October to 68,191 units, and up 12.38% year-to-date to 813,139 units. Market share of private sales was 45.08% for the month, up from 40.8% in October 2011, and 45.89% for the year-to-date, up from 42.9% this time last year.
Every month so far this year except February, typically the quietest of the year, has recorded year-on-year growth, including both plate-change months.
Registration forecast totals for 2012 have been revised upward by the SMMT twice already this year – from a total of 1.92m to 1.95m following figures for April new registrations, and up again to 1.97m units in August.
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By GlobalDataStudies published in October by White Clarke Group and Professor Peter Cooke, however, have kept to the more conservative estimate of 1.94m units, while extrapolations by Motor Finance, have put the final figure at 1,997,844 units.
Car brands with October sales in four figures all enjoyed a year-on-year bump except Renault, going through a pre-emptive retail downsizing which saw October new registrations nearly halved to 3,271, and Honda, which was down by almost a third to 3,352 sales.
koda gained 61.65% in October new registrations, selling 4,759 units, increasing monthly market share to 3.15% from 2.18% in 2011, and pushing year-to-date UK brand sales past its full-year 2011 total. The brand also launched an aggressive finance campaign at the end of September offering PCP, 0% HP and no-VAT deals.
Of those brands to make headline finance offers ahead of the fourth quarter, Citroën, which launched a new 0% deal, saw the biggest bump in new sales in October – up 26.51% to 5,888 units.
Since then, Hyundai, which saw new sales jump 40.68% in October to 6,861 units, has launched a 36-month PCP offer (5.9% representative APR) on the Santa Fe, operated by its joint-venture with Santander Consumer Finance. Ssangyong, which gained 71.79% to record 67 new sales for the month, has begun a five-year 0% finance deal through GMAC on the Korando and Rodius models.
Suzuki, which has extended no-VAT and PCP deals, saw a gain of 18.83% to 934 units in October new sales.
Two of the biggest-selling marques in the UK, Ford and Volkswagen, each announced PCP deals around the end of the third quarter. The American giant, offering 4.9% representative APR on selected models, recorded a 12.25% rise in new registrations. Its German competitor sold 20,740 new units in October offering 7.9% representative APR on a range of vehicles, growing sales by 11.35% with 13,480 registrations.
Meanwhile, Kia grew October sales by 13.23% to 4,837 units and year-to-date sales by 21.49% to 57,736 units, thus exceeding its previous best-ever full-year new registrations total.
BMW FS profit up Q3, down year-to-date
BMW Financial Services (BMW FS) "performed well" during the third-quarter with revenues up 14.97% year-on-year to 4.92bn (£3.94bn), according to a report from BMW Group. Profit before tax was also up 20.06% to 425m compared with the same period last year which was itself noted for "rapid growth".
Year-to-date revenues were also up, growing 15.4% to 14.58bn, although profit before tax dropped 15.5% year-on-year to 1.29bn over the period. As of 30 September, BMW FS was managing 3,745,760 contracts, a rise of 5.4% year-on-year and 1.4% up on the previous quarter. From January to September, 979,322 new financing and lease contracts were signed; a gain of 10.9%.
BMW FS has seen constant growth throughout the year but not without hiccoughs. Second-quarter revenue and contract volume were both up year-on-year but profits slid, and despite 1.17% year-on-year growth in the first quarter, BMW FS profit dropped as a proportion of the BMW Group total from 25% to 21%.
BMW FS third-quarter profit before tax as a proportion of the Group’s total of 1.99bn, was 21.39%; across the first nine months of the year it accounted for 21.35% of the 6.04bn recorded by the Group.
Third-quarter revenues for the automotive segment were up 12.01% year-on-year to 17.19bn. Profit before tax, however, fell by 2.41%to 1.7bn. Over the first nine months, revenues rose by 9.31% to 50.71bn while profit before tax sank 6.61% to 5.27bn.
Worldwide BMW brand sales were up 9.28% to 362,898 units in quarter three and up 8.61% for the January-September period to 1,109,962 units, "a new high" according to the Group report.
Third-quarter Mini brand sales were up 7.6% to 71,339 units, with January-September sales up 7.2% to 223,214 units. Global Rolls-Royce sales were down 14.49% to 726 registrations for quarter three and down 4.71% to 2,326 registrations across the first nine months.
Fiat’s four-year plan
Fiat Group has posted a trading profit of 951m at the end of third quarter of 2012, down from the 1bn reported at the end of Q2, with $381m (£236.9m) coming from the net income reported by the Chrysler brand, up 80% year-on-year.
Trading profit for Fiat Group in Q3 was up 11.75% on Q3 2011, despite the Europe, Middle East and Africa region recording a trading loss of 238m. Group revenues stood at 20.4bn at the end of Q3, up 16% year-on-year but down 5.12% on Q2, with net profit at 286m, down from 358m at the half-way point of 2012.
With net industrial debt at 6.7bn and liquidity reduced to 20bn, all figures were reported as "in-line with reconfirmed full-year earnings guidance", according to a company statement.
Chrysler, reporting separately from Detroit, posted revenue for the quarter at $15.5bn, up 18% year-on-year.
Sergio Marchionne, chief executive of Chrysler and parent Fiat, said the Chrysler brand had "changed the conversation" and was working "feverishly" since bankruptcy and government bailout in 2009.
"Market conditions in Europe" were also cited by the Fiat Group statement as contributing to the company’s industrial debt (excluding Chrysler) which increased by 24.07% from Q2, although the Group expects this to reduce to 6.5bn by the end of the year.
Total available liquidity for the group was down by 11.89% quarter-on-quarter at 20bn, including 3bn in undrawn credit lines and the effect of operations’ cash absorption and gross debt reduction of 1.7bn.
Marchionne also confirmed Chrysler’s end-of-year target of $1.5bn in net income, with the company holding $11.9bn in cash at the end of Q3, up 25.26% on the end of Q3 2011. Net industrial debt was $693m, down from $2.86bn a year ago.
The expected Group revenues for the end of 2012 now stands at 83bn, revised up from the estimation at the end of H1 of 77bn.
Trading profit and net profit were both estimated to be ‘in excess’ of 3.8bn and 1.2bn respectively, the same figures as at the end of June when the company forecast a maximum expectation of 4.5bn trading profit and 1.5bn net profit.
The revised industrial debt estimation of 6.5bn by the end of the year is, however, still in excess of the figure anticipated in the H1 report of between 5.5 and 6bn.
Ford Credit down 36%, brand’s aggressive response
Ford Credit has been acclaimed as "a strategic asset" by the Q3 statement from the Ford Motor Company despite recording a lower global pre-tax profit of $388m (£241m) in Q3, a drop of 35.87% year-on-year.
Pre-tax profit for the finance arm of the Ford Motor Company for the first nine months of 2012 worldwide was $1.29bn, a drop of 32.67% year-on-year. As such, Ford Credit is expected to record $310m of profit in the final quarter of 2012.
The downturn for Ford Credit, which recently appointed Briton Bernard Silverstone as global chairman and chief executive, and David Andrews as managing director of the company’s UK operation, was "in line with expectations".
The reduced profit, continued the statement, was "explained by fewer lease terminations, which resulted in fewer vehicles sold at a gain."
End-of-year predictions by Ford put Ford Credit pre-tax profit at $1.6bn and total "distributions" to Ford Motor Company at $600m, with managed receivables at the close of the year to be between $85bn and $90bn.
Ford itself recorded $2.16bn profit in Q3, $1.57bn after tax and up 11.27% year-on-year. The company has now posted pre-tax profit for 13 quarters on the bounce. Profit for the first nine months of the year, however, was $6.29bn, $4.36bn post-tax, down 17.94% year-on-year.
Industry sales across the 19 European markets in which Ford Europe operates were down by a fifth over the past five years with "only modest improvement expected by mid-decade", according to the statement. Ford Europe now expects a pre-tax loss in excess of $1.5bn by the end of the year. Ford said it would respond with the launch of 15 new vehicles in the next five years under "an aggressive new product roll-out".
GM Financial up, brand vows recovery
GM Financial finished the third quarter $200m in the black and "slightly" up on last year, according to parent GM.
Other Q3 GM results included revenue of $37.6bn, up 2.5% year-on-year; net income of $1.5bn, down 11.8%; and earnings before tax of $2.3bn, up 4.6%.
Automotive net cash flow stood at $3.1bn, up 72.2% year-on-year; automotive free cash flow at $1.2bn, a four-fold increase on the year before; with total automotive liquidity of $37.5bn and automotive cash and marketable securities of $31.6bn.
In a statement, GM said the final, worldwide result for 2012 will be "slightly better" than at the end of 2011. However, senior vice-president and chief financial officer Dan Amman warned "we still have a lot of work to do, especially in Europe," where GM has just announced plans to have GM Europe (GME) balance its books by the middle of this decade with a range of new products and cost cuts.
Steve Girsky, acting president of GME, said such plans would require higher revenue from existing and new vehicles plus the reduction of the company’s break-even level "from where it is today". By current company estimate, GME will end 2012 between $1.5bn and $1.8bn in the red before tax.
Cost savings so far include reducing vehicle inventory by 100,000 units since February, with a further 20,000 units gone by the year’s end; cutting 2,300 jobs, with 300 more to go; plus the reducing of fixed costs by $300m this year, reduced by a further $500m from 2013 to 2015.
The plans also include the introduction of 23 models and 13 engines, led by the Mokka small SUV, Adam supermini and the mid-size Opel Cascada convertible.
Jaguar Land Rover profit doubles
Second-quarter profit for the fiscal year 2012/13 at Jaguar Land Rover (JLR) has doubled year-on-year on the back of a 29% rise in global sales.
Profit before tax, July to September 2012, was £431m, compared to £216m for the same period last year. Revenues were up 11.66%, or £373m, to £3.2bn.
JLR profit before tax for the previous financial year was confirmed as £1.5bn, with revenues of £13.5bn.
Despite the "challenging economic backdrop", Ralf Speth, chief executive at JLR said the company will invest "in the region of £2bn across the financial year" on products, plants and other drivers of growth.
The two brands shifted 84,749 vehicles globally during the period, of which 16,804 were sold in the UK, a gain of 27.56% year-on-year, with Jaguar sales for the period down 9.37% and Land Rover sales up 46.4%.
Quarter of Toyota profit from finance
Toyota is once more the biggest-selling brand in the world, according to six-month company results, with the financial services operation of the Japanese carmaker contributing a quarter of operating profit, despite generating only 5% of revenue.
Global financial services operating income for the first half of the financial year, April-September, stood at ¥147.8bn (£1.16bn), down 9.49% on the same period for 2011/12. Toyota attributed the loss to "reduced reversal of provisions" in its half-year report.
Including gains from interest rate swaps, however, operating income was ¥174.5bn, a year-on-year rise of 1.99%.
Operating income for July-September was ¥77.7bn, or ¥87.7bn when including gains from interest rate swaps – a year-on-year rise of over 11% in both cases, for which the company cited an increased lending balance.
The results mark a recovery for Toyota’s finance operations from the lull of four years ago – the three-month period to 30 June 2008 reported a drop in pre-special item operating income of 51%, quarter-on-quarter, following credit losses, especially in the US, residual value losses, bad debt and declining used car prices.
By February the next year, Toyota’s finance arm was forced to ask for a loan of ¥200bn backed by the Japanese government as the manufacturer prepared to announce its first annual loss since 1950.
Since then, the production, marketing and financing of specialist vehicle segments such as hybrids and pick-up trucks has seen Toyota reclaim sales around the world, with the Prius and Auris regularly recorded among the world’s best-selling models and the Hilux dominating small truck sales in Australia and the US.
Toyota has revised its net profit forecast for the 2012/13 financial year to ¥780bn, up 2.6% from its previous estimate, with operating profit of ¥1.05trn, up 5%.
Globally, the brand sold 7.4 million vehicles in the first nine months of 2012, returning it to the world’s biggest-selling brand ahead of GM and Volkswagen, with financial-year second-quarter net profit more than trebled to ¥257.9bn following resurgent sales in North America and Southeast Asia. These results come despite the brand and its two Chinese joint ventures experiencing a sink in registrations in China – the biggest car market in the world, where Toyota typically records 12% of global sales – on the back of anti-Japanese sentiment.
richard.brown@timetric.com
