Honda's annual profits, Nissan's new plan, hybrid production picks up at Ford

Hey everyone. In case you missed it, I joined Brian Sullivan on CNBC’s Last Call yesterday to talk about why used EV sales are surging and whether or not it’ll last. Check out what I had to say on the segment here.

Now let’s get into today’s daily round up.

—CDG

1. Honda’s annual profits rise on strong sales, weak yen

Driving the news: Honda's profits rose 70% for the fiscal year ending in March, reaching 1.1 trillion yen ($7 billion). The boost came from strong U.S. sales and a weaker yen that lifted overseas earnings. Global vehicle sales rose to over 2.8 million, up from 2.3 million a year earlier.

Key takeaways:

• Despite this growth, Honda expects profits to decline nearly 10% to 1 trillion yen ($6.4 billion). Honda attributes part of the decline to rising research and development costs, which will hit nearly 1.2 trillion yen ($7.7 billion). Last year, these costs were 964 billion yen.
  

• Honda announced a 300 billion yen stock buyback or 3.7% of its shares. It marks Honda's largest-ever payout to investors.
  

• The U.S. dollar trades at about 155 yen, up from 130 yen a year ago. Japanese automakers like Honda are using the weaker yen to increase their earnings from foreign markets.

Why it matters: Japanese automakers have long excelled with gas-powered vehicles and hybrids. But, they have lagged behind competitors like China's BYD and Tesla in the U.S. in adopting electric vehicles. Honda aims to sell 1 million hybrids this fiscal year and produce 2 million by 2030 to fund the shift toward full electrification.

What’s next: Honda is gearing up to invest $15 billion CAD ($11 billion) in its Canadian electric vehicle supply chain to boost efficiency in EV production.

2. Nissan has a new plan for dealers to move aging inventory

At a glance: Nissan is aiming to boost sales across the country by allowing dealers to advertise almost its entire line under invoice. Meaning, dealers can sell vehicles for less than what they paid to the manufacturer to buy them. 

• Recent data show that cars, on average, sit on Nissan dealer lots for 98 days before they are sold, well above the 72-day industry average. 

• To remedy this oversupply, dealers can market 2024 model-year cars at 10% below invoice, according to a memo obtained by Automotive News. The Nissan Armada, in particular, can be advertised at 15% under invoice. 

The reasons for this change are twofold: Nissan dealers need to clear out aging inventory and the Japanese automaker also needs to make way for incoming 2025 models like the Nissan Kicks. 

• For car buyers, now is a good time to grab a deal on a new Nissan, but dealers are not as happy. Some believe that Nissan should instead implement corporate incentives so dealers don’t have to potentially sell cars at a loss.

Other dealers see an upside to the new marketing rules. 

• This major metropolitan retailer paid about $80,000 in floorplan interest on more than 200 vehicles last month.

Why it matters: Dealerships aren’t required to sell their cars for under invoice. Nissan is simply giving dealers the leeway to advertise the steep discounts. 

This practice, however, can be controversial. These discounts can be great traffic drivers, but once car buyers visit a dealership, salespeople have the option to upsell them to higher trim levels and add features and upgrades. All of these things drive prices back up and could sow distrust with customers. Yet, dealers have limited options as consistently selling cars at a loss is financially unsustainable.

3. Ford eyes hybrid growth while tackling EV headwinds

Top line: At Ford's annual virtual shareholder meeting this week, CEO Jim Farley discussed the company’s “bumpy” road to one day becoming a profitable EV business. He also explained why the company is leaning into hybrids. 

Key numbers:

• Model e Division: Lost $1.32 billion in the first quarter of 2024, or $132,000 for each of the 10,000 vehicles it sold. This division is expected to lose up to $5.5 billion this year.
  

• Hybrid Sales: Jumped 47% in the first four months of 2024, with the Maverick and F-150 hybrids reporting strong numbers. Now, 20% to 25% of new F-150 pickups built are hybrids, a sharp increase from 10% last year.
  

• Ford Pro: Made $18 billion in revenue in Q1 with adjusted earnings of $3.01 billion, up 120% from this time last year, helping to offset the high costs of developing EVs.

Why it matters: Ford delayed about $12 billion in EV investments after overestimating consumer demand, postponing the production of several new models. 

• Farley acknowledged that EV affordability is a crucial factor at play in preventing wider adoption. He suggested that future solid-state battery technology could help mitigate production costs.
  

• To bridge the gap to electric vehicles, Farley plans to offer hybrid options across Ford's North American lineup by the end of the decade.

Looking ahead: Ford anticipates reaching $12 billion in earnings before interest and taxes in 2024, on strong hybrid sales, a profitable gas-powered business, and a growing Ford Pro division.

• BP’s EV charging arm is eager to snap up Tesla supercharging sites across the U.S.

• Fisker’s Austrian unit announced it has voluntarily filed for bankruptcy protection.

• China's car exports surged to a record high in April.

• NHTSA probes 200,000 Ford Super Duty trucks for risk of fire.

• With a new $50 million investment, Atlanta-based EV charging company EnviroSpark wants to hire the Tesla Supercharger team.

We’ve got tons of great jobs hitting the CDG Job Board right now. Here are some standouts for anyone looking for their next move.

• Sales more your game? S&P Global is looking for a Sales Executive-retail.

• Feel at home in the dealership? Tom Whiteside Chrysler Dodge Jeep Ram, near Columbus, OH, is hiring an FCA Technician.

• SaaS company BizzyCar has put the call out for account executives in Los Angeles and Orlando (remote).

Looking to hire? Add your roles today—it’s 100% free.

Thanks for reading everyone. Have a great weekend.

— CDG