Welcome to the Daily 5 report for Friday, Feb. 21.
When it comes to automakers' decisions to delay new-vehicle launches, you could have an endless nobody-is-wrong debate among industry experts about who gets disrupted the most. Engineers? Designers? Dealers? Suppliers?
This story today from Crain's Detroit Business reporter Kurt Nagl makes a good case for suppliers.
As Nagl reports, automakers faced with numerous reasons to be uncertain about future products are hitting the brakes on bread-and-butter products. This includes the 15th-generation gasoline/hybrid Ford F-150, which is being pushed back by at least a year. And it isn't just Ford Motor Co. General Motors is also pushing back big redesigns of key vehicles, on the EV and internal combustion side.
For those of us who are paid to analyze suppliers' quarterly earnings reports, you can see the inherent existential risks for suppliers when their top customers push back these kinds of key programs.
Then look downstream to a supplier such as Dana Inc., which has been making Ford's drivetrain products for more than a century. The Ohio supplier's net loss nearly doubled to $80 million in the fourth quarter despite a small bump in revenue. Many suppliers tell investors in their earnings reports about their current business backlogs — and these disclosures can drive share prices up or down. The all-too-important "analyst expectations" are driven in part by this.
So when product launch revenues get delayed, suppliers and their shareholders — and employees — pay the price. If the supplier is already losing money, do the math.
Along those same lines, suppliers to Stellantis in Brampton, Ontario, are going to feel pain after the automaker on Thursday announced it is temporarily halting all activity at the plant, effective immediately, as it evaluates its strategy for the next-generation Jeep Compass that is slated to be produced there, as Vince Bond Jr. reported in this story.
The automaker didn't specify how long activity would be paused, and a spokesperson couldn't confirm whether this move will lead to temporary layoffs. The company plans to decide what's next for the Compass in March, a source familiar with the situation told Automotive News.
In other news today, the timing of this new Tesla recall raises some eyebrows. As we reported Thursday, President Donald Trump's nominee to lead NHTSA has a history of standing up to Tesla, raising questions about how he'll deal with the White House's close relationship with Tesla CEO Elon Musk, the leader of Trump's cost-cutting Department of Government Efficiency, or DOGE. Jonathan Morrison, nominated Feb. 11 to be NHTSA administrator, previously worked at Apple and as chief counsel at NHTSA during the first Trump administration.
Meanwhile, from the retail world we have this update on the outlook for used-car giant Carvana Inc., which generated a 50 percent gain in vehicle sales during the recent fourth quarter. As C.J. Moore reports, Carvana plans to operate the business in 2025 as if it's any other year amid uncertainty around Trump's plans to impose tariffs, CEO Ernie Garcia told analysts and investors this week.
"We certainly don't know what's going to happen with tariffs and wouldn't want to take a strong stand there," Garcia said. "I think the smartest thing to do is probably wait and let's see."
That's it for today. Have a great weekend!
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— Philip Nussel, online editor
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