|Bid||11.75 x 0|
|Ask||11.91 x 0|
|Day's Range||11.63 - 11.98|
|52 Week Range||10.93 - 15.31|
|Beta (3Y Monthly)||1.05|
|PE Ratio (TTM)||2.62|
|Forward Dividend & Yield||0.65 (5.75%)|
|1y Target Est||N/A|
(Bloomberg Opinion) -- During the past 12 months Renault SA has looked more like a soap opera than a carmaker. The French company served up an ill-tempered denouement on Friday when it sacked Chief Executive Officer Thierry Bollore, who said he was the victim of a “coup.”Bollore only took the job in January after his predecessor Carlos Ghosn was arrested for alleged impropriety around his pay and resigned. Since then, Renault’s alliance with Japan’s Nissan Motor Co. has been in turmoil and the French company’s cash flow and share price have skidded.Renault compounded the dramatics earlier this by trying to merge with Fiat Chrysler Automobiles NV, only for the French state to torpedo the union.These events have created a profound sense of drift at the manufacturer, for which Bollore and his chairman Jean-Dominique Senard are probably equally to blame. It’s Bollore who’s been given the shove, though, and Renault now has (yet another) opportunity to start afresh. Clotilde Delbos, the finance director, has been appointed interim CEO while the company looks for a permanent replacement.The first priority must be to tone down the histrionics. As at Nissan, which appointed a new CEO this week, Renault needs to focus on operational matters, not creating newspaper headlines. Boardroom bust-ups are never helpful but this one is especially ill-timed. Car markets are weakening and anti-pollution regulations and the shift to electric vehicles require heavy spending.Unfortunately Renault isn’t starting out from a position of strength. It is reasonably well positioned in electric vehicles (with the Zoe) and in emerging markets such as Brazil and Russia. Its low-cost Dacia business performs well. However, Renault can no longer rely on chunky profit contributions and dividends from Nissan because its Japanese partner is also battling slumping sales. Renault’s balance sheet isn’t the strongest: the group had just 1.5 billion euros ($1.65 billion) of industrial net cash at the end of June And its core automotive business eked out a meager 4 percent operating return on sales in the first six months of the year. Its local rival Peugeot SA achieved twice that. Overall, net income will probably fall by about one-quarter this year. Looking ahead, Renault targets 70 billion euros in yearly revenue by 2022, about one-fifth higher than last year. Yet with car demand plateauing it’s unlikely to get anywhere near that. Sales will rise only slightly to about 59 billion euros in 2021, according to analysts polled by Bloomberg.Fresh leadership at Renault and Nissan might at least help the two partners work more harmoniously. Then perhaps Senard and Fiat’s scion John Elkann can start talking again about a merger (Nissan wasn’t happy about the lack of consultation on the idea). But in view of the bad blood and false starts of the past 12 months, neither seems likely in the short term. Renault doesn’t need another distraction.The company’s shares jumped 4 percent on Friday but Renault shareholders remain pretty downbeat. Subtract the value of Renault’s 43% stake in Nissan, its stake in Germany’s Daimler AG and its net cash, and you’ll see they ascribe only about 2.5 billion euros of value to the core business.Bollore claims he’s been treated shabbily, but his successor inherits a lousy valuation, a trunk full of strategic problems and a chairman and French state stakeholder second-guessing their every move. His departure feels like an act of mercy.To contact the author of this story: Chris Bryant at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first […]
General Motors (NYSE:GM) stock opened for trade Oct. 10 at $34.45 -- just 75 cents above its 2019 low of $33.70 per share. Since the United Automobile Workers strike began Sept. 15, shares are down almost 11%. Half that loss came after Oct. 1, when the company began laying off workers at its Mexican factories over a shortage of parts. More were laid off Oct. 9.Source: Joseph Sohm / Shutterstock.com After talks to end the walkout turned negative, the strike transformed from a hiccup into an existential threat. This threat poses risks both to GM and the United Auto Workers union. The UAW has yet to organize the nation's foreign-owned plants -- even Volkswagen (OTCMKTS:VLKAY), where workers have voted twice on the matter in five years.The question for investors is whether to grab GM and the strike discount or stand off the sidelines.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Why Buy GM?GM has been dirt cheap ever since it began trading again in 2010. It opened that November at $35 per share.GM, Ford Motor (NYSE:F) and Fiat Chrysler (NYSE:FCAU) have been so cheap so long you can't call them undervalued. This is their value. GM currently sells at a trailing price-to-earnings ratio of 5.5. Its 38 cent per share dividend represents a yield of 4.5%. The other two U.S. automakers sport even higher yields. It's clear that investors don't believe in the car business. * 10 Super Boring Stocks to Buy With Super Safe Returns Or, they just don't believe in today's car business. Tesla (NASDAQ:TSLA), which offers no dividend, is worth $43.7 billion. That's just $6 billion less than GM stock.What investors know is that electric cars and autonomous vehicles are the future. What investors know is that Detroit's lineup of SUVs and pick-up trucks has a limited shelf life. U.S. auto sales peaked in 2015 at an annual rate of 18.2 million. The most recent report, for September, shows sales almost 500,000 below that figure. Detroit vs. Silicon ValleyFor the last several years Detroit has been in a tug of war with Silicon Valley over which side will direct the autonomous revolution. GM has joined the Autonomous Vehicle Computing Consortium, hoping to set standards for self-driving cars. It has its own self-driving unit, Cruise, and is working with other car companies.Meanwhile, Alphabet's (NASDAQ:GOOG, NASDAQ:GOOGL) Waymo unit is telling its Phoenix ride-hailing customers to soon expect Waymo cars without drivers. It is putting a fleet of self-driving cars into Los Angeles to gather real-time location data.Morgan Stanley recently cut Waymo's valuation 40%, to $105 billion. That's still more than twice GM's valuation. Cars Aren't Going to Be CarsGas-powered cars are complicated. They have engines and transmissions with many parts that can break. Electric vehicles have always been simpler, more reliable and less expensive to operate. This has been true since the 1890s. Gas-powered cars came to dominate the market because gasoline's supply infrastructure made the fuel cheap while electricity was still just barely keeping the lights on.Now that the electrical system is mature and seeking new markets as efficiency presses down on demand, the equation is shifting. GM knows it. Tesla has taken a big bite of the luxury market. Standards like Volkswagen's MEB, already being accepted by Ford, promise to make electrics cheaper as well. The Bottom Line on GM StockRegardless of the merits of this strike, GM and its union are fighting over scraps.Electric vehicles are the future. Self-driving cars are the future. The industry's entire business model is going to change utterly over the next decade. That's why GM, and the other U.S. automakers, are so cheap.This isn't just an existential crisis. This is the future telling the past what time it is. Both sides are going to lose here. Don't join them with your money.Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Super Boring Stocks to Buy With Super Safe Returns * 10 Winning Stocks to Buy and Stick With for the Long Haul * Don't Give Up on These 4 Cannabis Stocks The post Donat Buy General Motors Stock -- Even on UAW Strike Discount appeared first on InvestorPlace.
Eight automakers and their industry organizations are calling on already strained N.C. regulators to “act with a sense of urgency” to approve the $76 million electric-vehicle charging pilot programs that Duke Energy Corp. proposed in March.
(Bloomberg Opinion) -- In 2014, when Brussels regulators began to probe Apple Inc.’s low-tax arrangements in Ireland, an unlikely figure rushed to Dublin’s defense. U2’s lead singer Bono, no stranger to attractive offshore jurisdictions, pleaded that Ireland’s multinational-friendly model had brought the only prosperity the nation had ever known. “We are a tiny little country,” he told The Observer newspaper. “We don’t have scale… We don’t have natural resources.” The future happiness of the Irish depended on keeping companies like Apple in clover.The Bono defense is a frequent national battle cry in Ireland, deployed to drown out awkward questions about the tax arrangements of Big Tech. It’s not convincing. When the EU ruled in 2016 that, yes, Apple’s tax treatment was illegal state aid and, yes, Ireland did have to collect up to 13 billion euros ($14 billion) in back taxes, the Irish leader Enda Kenny rejected the decision. He accused Brussels of overreach and vowed to fight alongside Apple to defend his people’s economic prosperity.Now Dublin’s appeal against the ruling is working its way through the courts, it’s a reminder of how bad the country’s argument looks. Ireland is spending millions of euros of public money on an appeal to prevent billions of euros from flowing into state coffers, which to Apple would be the equivalent of three months’ profit. Dublin says it just wants to clear its name. But really it’s going in to bat for a practice that netted Apple’s Irish unit a 2014 tax rate of 0.005%. While the loophole that allowed this was closed, thanks to international pressure, others have taken its place.Is this really in the national interest? The imprint of tech multinationals on the Irish economy is certainly hard to miss: All those shiny headquarters in Dublin’s “Silicon Docks” are evidence of investment and jobs. The Irish economy grew 8.2% last year, and the unemployment rate is below 5%.But the prosperity of this low-tax, high-trade economy can also sometimes look a little over-dependent on capricious global corporations. Apple’s restructuring of its Irish tax affairs in 2015, which largely involved moving ownership of intellectual property into the country, boosted Ireland’s GDP by a preposterous 26%. Gross national income (the total money actually earned by Ireland’s people and businesses) is barely 80% of GDP. The economist Paul Krugman calls it “leprechaun economics.”Moreover, the money rushing into Ireland is sucked away from elsewhere. An estimated $117 billion in corporate profits was shifted to the country in one year from higher-tax jurisdictions, according to the Missing Profits research group. Some of these countries are Ireland’s European Union partners, the very same ones that Dublin wants to defend its interests during Brexit. At last year’s Davos summit, the Irish finance minister Paschal Donohoe was berated personally by the economist Joseph Stiglitz for “stealing” from the rest of the EU.Ireland is right about one thing: It can’t unilaterally become the world’s upright collector of taxes. There needs to be international cooperation to fight corporate wheezes. A change in Irish policy would simply encourage companies to send their money to another tax haven. Other EU members, Luxembourg and the Netherlands, have appealed similar Brussels tax rulings against Starbucks Corp. and Fiat Chrysler Automobiles NV.But Dublin doesn’t look too keen on multilateral solutions either. It opposed EU plans for a tax on digital services, opposed EU plans for a common tax code for multinationals and delayed fully closing some aggressive loopholes even as it signed up to new OECD tax reforms. That “wasn’t smart,” the OECD’s tax policy chief Pascal Saint-Amans said in July, describing Ireland’s response to the global crackdown as: “No, no, no.”Plenty of Irish people have spoken out against the Apple appeal, from Green Party politicians to academics. They should be heard. If the global tide is indeed turning against aggressive tax schemes, it makes sense to prepare the way for a different type of economic policy. Bono’s an ageing rock star; he’s out of tune with the times.To contact the author of this story: Lionel Laurent at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- The milkman went missing thanks to the rise of refrigerators. Switchboard operators were done in by the dawn of direct dialing. And in the car industry, auto workers are deathly afraid the engine assembler will give way to battery builders.Dread over the prospect that plug-in cars -- which have fewer parts and require less labor to build -- will doom auto jobs helped spark the first United Auto Workers strike against General Motors Co. in over a decade. Ford Motor Co. and Fiat Chrysler Automobiles NV, which are rolling their own battery-powered models to market in the coming years, could face a similar fate if they’re unable to quell the UAW’s concerns that widespread adoption of EVs endangers the employment of 35,000 union members.“There’s a potential for our jobs to be gone -- they don’t need us anymore,” said Tim Walbolt, president of the UAW local representing workers at a Fiat Chrysler transmission components plant near Toledo, Ohio. “It scares us.”For all the buzz generated by Tesla Inc., the EV era is still in its infancy, with zero-emission autos having reached just 2% of global production. GM has extended the UAW an offer to get in on the ground floor, pitching a new battery plant staffed by dues-paying union members in an Ohio town jarred by job loss. But the overture came with a catch: GM wants to pay the workers less, and the facility is unlikely to need as many staff as an engine or transmission factory would.A recent study of electric-vehicle production in Europe by consultant AlixPartners found that it took 40% fewer hours to assemble an electric motor and battery than a traditional internal-combustion engine and transmission.“It’s a bad news story from a labor perspective,” said Mark Wakefield, the head of AlixPartners’s automotive practice. “You would just fundamentally need less people.”Perversely, GM also arguably has uncertainty on its side at the bargaining table. It’s going to want concessions to cushion itself against the risk that consumer adoption of electric autos remains slow. The carmaker isn’t fully utilizing the factory that builds the Chevrolet Bolt EV north of Detroit, and tepid demand for the plug-in hybrid Chevy Volt put the future of the factory that assembles it in nearby Hamtramck in doubt.Collision CourseThe collision with carmakers over electrification is one the UAW saw coming.“Electric, to me, is where the real risk is to our membership,” Jennifer Kelly, the union’s research director, said during a collective-bargaining conference in Detroit earlier this year.It’s almost certain to carry over from the UAW’s talks with GM to negotiations with Detroit’s other automakers. Ford has estimated electric cars will require 30% fewer hours of labor per vehicle and 50% less factory floor space.“Rationalization of the powertrain portfolio is certainly a huge opportunity for all of us as we start this transition,” Joe Hinrichs, Ford’s automotive president, told investors on an earnings call in April.Even Fiat Chrysler, a laggard with regard to electrification, has stoked fear at union halls linked to internal-combustion components plants, where rumors are flying that the company plans to outsource work to lower-paying suppliers.“We cannot help but feel like the left behind stepchildren of the UAW,” Mike Booth, the president of the union’s local in Marysville, Michigan, wrote in a letter to the labor group’s Chrysler council last month. He and other UAW leaders fear that German mega-supplier ZF Friedrichshafen AG, which took over operation of a Chrysler axle plant in 2008, will take work away from the automaker’s machining facility near Toledo and a transmission and castings complex in Kokomo, Indiana.A Fiat Chrysler spokeswoman categorically denied that another company is seeking to take work from the Toledo or Kokomo operations and called them critical to the automaker’s business. ZF will continue to work with the UAW in Marysville, and an arrangement in which Fiat Chrysler licenses technology from the supplier in Kokomo may be creating some confusion, a spokesman said. He declined to comment on Toledo.‘Shrinking Bubble’In August, GM shut down a transmission plant outside Detroit, affecting more than 260 workers as part of a larger restructuring. That may foreshadow other closures as EV production ramps up. The supply chain is where the job risk is greatest, especially for workers employed making engines, transmissions and sub-components that aren’t needed in EVs.Consultant IHS Markit predicts the introduction of new gas-powered engine families will drop to zero in 2022, from nearly 70 in 2011, as automakers shift spending to electric propulsion. The market for a whole range of parts used in internal combustion vehicles -- such as axles, mufflers, fuel tanks and transmissions -- will shrink in a range from 6% to 20% by 2025, according to a study by Deloitte Consulting.“The value chain is shifting and companies and their unions are going to have to figure out how to change themselves or risk becoming part of a shrinking bubble,” said Neal Ganguli, head of the auto supply base group at Deloitte’s U.S. automotive practice.That’s a problem because engines and transmissions currently account for just under half of automaker manufacturing capacity, Credit Suisse auto analyst Dan Levy estimated in a Sept. 23 note to investors. As a result, automakers may face labor, social and political challenges as they transition to EVs, he wrote.‘Rough Time’GM’s EV factory in Lake Orion, Michigan, offers a window into what the UAW is worried about.While the plant is unionized, the automaker staffs it in part with lower-wage employees under a special contract. What’s more, 64% of the fully electric Bolt model’s content is made in Korea, including the battery.One of the biggest suppliers is Seoul-based LG Chem Ltd., which makes cells in South Korea and assembles packs for GM and Fiat Chrysler at a non-union plant in western Michigan with a starting wage for technicians of $16 an hour.That’s close to what Ford pays its entry-level temporary workers, but far below the $28 to $30 an hour for legacy UAW employees. Temp workers at Ford’s engine and transmission plants also can move up into legacy wage brackets, which isn’t the case at LG’s facility.“The move to electric could weaken the union further,” Joshua Murray, a labor expert and assistant professor of sociology at Vanderbilt University. “Certainly, the UAW is going to have to try to organize the battery plants, but I think they’ll have a rough time.”Imported BatteriesNo major automaker entirely outsources engines, in no small part thanks to displacement and horsepower being the source of marketing buzz and bragging rights for decades. EVs are a different story -- even Tesla relies heavily on Japan’s Panasonic Corp. in the making of its battery packs.Batteries -- the single most expensive part of an electric vehicle -- are almost exclusively manufactured overseas and mostly by companies relatively new to the automotive powertrain, such as China’s Contemporary Amperex Technology Co. Ltd. and South Korea’s SK Innovation Co.SK Innovation broke ground earlier this year on a new battery factory outside of Atlanta, which will employ some 2,000 non-union workers. And CEO Jun Kim thinks carmakers will have a tough time replicating what his company does.“There is a difference between the DNA of automakers and battery makers such as us,” Kim said in a March interview. “There are only a handful of battery suppliers that are capable of delivering high-quality products while guaranteeing cost competitiveness.”\--With assistance from David Welch.To contact the reporters on this story: Chester Dawson in Southfield at email@example.com;Keith Naughton in Southfield, Michigan at firstname.lastname@example.org;Gabrielle Coppola in New York at email@example.comTo contact the editor responsible for this story: Craig Trudell at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Starbucks Corp. won a court fight and a Fiat Chrysler Automobiles NV unit lost one over European Union tax orders in decisions that left lawyers puzzling over the impact on Apple Inc.’s chances of toppling a record 13 billion-euro ($14.3 billion) bill.Even though the amounts at stake in Tuesday’s rulings -- about 30 million euros each for Starbucks and Fiat -- aren’t huge, lawyers are now poring over the judgments ahead of multiple appeals as companies, including the iPhone maker, counter EU Competition Commissioner Margrethe Vestager’s five-year crackdown on allegedly unfair tax deals.While Vestager generally came out of the latest rulings on top, “what this bodes for the eventual decision in the Apple case is still not clear,” said Howard Liebman, a tax partner at Jones Day, a Brussels law firm. He isn’t involved in the disputes. “There will be no ‘cookie cutter’ decisions relying on broad or sweeping generalizations about paying one’s ‘fair share’ of tax,” he said.The EU General Court in Luxembourg said Tuesday that the EU failed to show that coffee giant Starbucks obtained an unfair tax deal by the Netherlands. The judges threw out a similar challenge by Fiat over its fiscal arrangements in Luxembourg.“The principles laid down in these judgments provide some ammunition for both the taxpayers and the commission in the ongoing investigations,” said Natura Gracia, a lawyer with Linklaters in London.Tax AgreementsChallenges have been piling up at the EU courts since state-aid investigators started work in 2013 to unearth what they deemed to be the most problematic examples of otherwise legal individual tax agreements, known as tax rulings, doled out to companies by member countries.Luxembourg’s finance ministry said it would “analyze the judgment” and pointed out that the government “in the past few years has done numerous reforms to find against fiscal fraud and tax evasion.”The Dutch finance ministry is “glad there is clarity” following the court ruling, deputy finance minister Menno Snel said in an emailed statement. The judgment “means that the tax authorities have not treated Starbucks better or differently than other companies,” he said.Fiat said in an emailed statement that while it’s disappointed with the ruling and considering its next steps, the decision isn’t material to the group.No ‘Special’ TreatmentStarbucks said in a statement that it pays its taxes wherever they are due and that the ruling in its challenge “makes clear” that it “did not receive any special tax treatment from the Netherlands.”The decisions, which can be appealed to the EU Court of Justice, “give important guidance” to the commission on how to apply EU state aid rules in tax cases, and the regulator will study them before deciding on the next steps, according to a statement by Vestager.She said they “confirmed the commission’s approach to assess whether a measure is selective and if transactions between group companies give rise to an advantage under EU state-aid rules based on the so-called ‘arm’s length principle’.”Vestager, who’s set to take on another five-year stint as competition commissioner, said she’ll continue to look at “aggressive tax planning measures under EU state aid.” Ultimately, the goal is that all companies “pay their fair share of tax,” she said.In the Apple case, the EU said Ireland illegally reduced the company’s tax bill, a finding Apple and Irish officials don’t accept.Apple declined to comment Tuesday beyond pointing to its remarks in a hearing in its own appeal at the same court last week. It told judges it’s “now paying around 20 billion euros in tax in the U.S. on the very same profits that the Commission says should also have been taxed in Ireland.”The guidance from judges on the European Commission’s use of state aid law could also have an impact on Vestager’s tax probes, now centering on fiscal deals done by Alphabet Inc. and Ikea.Starbucks and Fiat were targeted on the same day in 2015 by a similar EU order to pay back 30 million euros each over their tax arrangements in the Netherlands and Luxembourg respectively.The EU said at the time the companies did this by setting prices for products and services sold between units -- called transfer prices -- that didn’t reflect market conditions.“These two judgments prove that the court will look at the precise facts of each state aids case brought before it and judge each on their individual merits,” Liebman said in an email.Finding itself at the receiving end of most of the EU’s decisions since then, Luxembourg was ordered to recoup 250 million euros from Amazon.com Inc. in 2017 and 120 million euros in back taxes from energy utility Engie SA, France’s former natural-gas monopoly, previously known as GDF Suez, last year.The cases are: T-636/16 - Starbucks and Starbucks Manufacturing Emea v. Commission, T-755/15 - Luxembourg v. Commission, T-759/15 - Fiat Chrysler Finance Europe v. Commission, T-760/15 - Netherlands v. Commission.\--With assistance from Ruben Munsterman and Tommaso Ebhardt.To contact the reporter on this story: Stephanie Bodoni in Luxembourg at email@example.comTo contact the editors responsible for this story: Anthony Aarons at firstname.lastname@example.org, Peter Chapman, Paul SillitoeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- The Luxembourg court decisions today on Starbucks Corp.’s antitrust tax case – which was a loss for the European Union -- and Fiat Chrysler Automobiles NV’s – which was a win – offer important clues to how a much bigger tax showdown between Brussels and Apple Inc. might play out. While there’s something for critics and defenders of the EU in Tuesday’s 50-50 split ruling, on closer inspection Apple probably has less to cheer about.The EU’s top antitrust official Margrethe Vestager has snared some big corporate fish in recent years, slapping record fines on the likes of Google Inc. in the name of fair competition. But the real litmus test for some of her department’s most controversial rulings is Apple’s appeal of the EU’s decision in 2016 to impose a 13 billion euros ($14.3 billion) bill over its aggressively efficient Irish tax structure.The Starbucks and Fiat cases were always going to matter more symbolically than financially, given the sums at stake were about 30 million euros apiece. As with Apple, Brussels accused Starbucks and Fiat of sweetheart tax arrangements that gave them an unfair advantage, and ordered repayment to their respective tax authorities in Netherlands and Luxembourg.While it may seem like a 50-50 win-loss ratio is neutral for Apple, maybe even a coin toss, in fact there’s a fair amount of commonality across both rulings that bodes well for Vestager’s approach. Before even getting to the details of the tax arrangements themselves, the court statements slap down accusations by both the Starbucks and Fiat appeals that the Commission has strayed beyond its antitrust mandate and into fiscal territory belonging to member states. The rulings say that the Commission is entitled to dig into whether “arm’s-length” transactions between group companies are conducted on fair terms. That will make Vestager’s critics think twice before accusing the EU of tax harmonization by stealth.Where the rulings differ is in analyzing the strength of the Commission’s case against the tax arrangements themselves. In the case of Fiat, the court was satisfied with the EU’s evidence that Luxembourg’s authorities had endorsed an arrangement that reduced the carmaker’s tax liability, and that this was a selective advantage. But on Starbucks, the court found Brussels hadn’t sufficiently demonstrated evidence of special treatment. For Bloomberg Intelligence antitrust analyst Aitor Ortiz, it’s a message that in this case the EU’s evidence didn’t quite go far enough. The EU failed to prove selective treatment and advantage, even after showing that the Dutch authorities used methodology that had overlooked how Starbucks inflated prices for intra-group transactions on things like coffee beans or intellectual property to game the tax system. It’s hardly a decisive failure for Vestager. She might even feel encouraged to go further rather than stop pursuing cases.None of this means that predicting the outcome of Apple’s tax appeal is any easier. The rulings show that the fine details of the tax arrangements in question and the EU’s ability to demonstrate an unfair advantage can make or break a case. But what matters is that the court backed the right of Brussels to apply antitrust tools to tackle multinational tax-dodging. It said the Commission was within its rights to examine whether “arm’s-length” intra-company deals are fairly-valued. All this means there will likely be fewer accusations of overreach aimed at Brussels. Even if Apple wins its appeal, there’ll be every reason for Vestager to keep up the fight, and fewer ways for tax havens like Ireland and the Netherlands to keep the EU at bay.To contact the author of this story: Lionel Laurent at email@example.comTo contact the editor responsible for this story: Stephanie Baker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Apple Inc. may only need to wait until Tuesday to get early clues about its chances of success in the biggest tax case in recent history.The iPhone maker has been arguing its case at the European Union’s General Court to topple a record 13 billion-euro ($14.3 billion) EU tax order. This week the same panel of judges will deliver a ruling on two smaller but related challenges by Starbucks Corp. and a Fiat Chrysler Automobiles NV unit.They’re the first in a series of cases to come to a decision as companies rail against EU Competition chief Margrethe Vestager’s five-year crackdown on allegedly unfair tax deals.While the facts of the various appeals differ, Tuesday’s decisions “should have a far-reaching impact, both on the other pending cases and going forward,” said Howard Liebman, a tax partner at law firm Jones Day in Brussels, who isn’t involved in the disputes.The judges’ stance will “presumably establish some precedent as to how far the court is willing to allow the commission to extend its approach of judging tax regimes -– and individual tax rulings –- in the context of a state-aids analysis,” he said.Vestager’s ProbesAppeals have been piling up at the EU courts since state-aid investigators started work in 2013 to unearth what they deem to be the most problematic examples of otherwise legal individual tax agreements doled out to companies by countries. The judges’ verdicts could empower or halt Vestager’s probes, which are now centering on fiscal deals done by Amazon.com Inc. and Alphabet Inc.Starbucks and Fiat were targeted on the same day in 2015 by a similar EU order to pay back about 30 million euros each over their tax arrangements in the Netherlands and Luxembourg respectively.The commission accused Luxembourg and the Netherlands of granting so-called tax rulings to the companies that backed “artificial and complex methods” to calculate their taxable profits that didn’t reflect “economic reality.”The EU said at the time the companies did this by setting prices for products and services sold between units -- called transfer prices -- that didn’t reflect market conditions.“As a result, most of the profits of Starbucks’ coffee roasting company are shifted abroad, where they are also not taxed, and Fiat’s financing company only paid taxes on underestimated profits,” said in a 2015 statement.Back TaxesLuxembourg has since also been ordered to recoup 250 million euros from Amazon.com and 120 million euros in back taxes from energy utility Engie SA, France’s former natural-gas monopoly, previously known as GDF Suez.In the Apple case, the EU said Ireland illegally slashed the iPhone maker’s tax bill between 2003-2014, a finding the company and Irish officials don’t accept.The EU alleged that “Apple paid essentially no tax on earnings in Europe” and “sought headlines by quoting tiny numbers, but this public campaign ignores the taxes Apple pays all across the world,” Apple attorney Daniel Beard said at last week’s hearing.The Dutch finance ministry said it had nothing to add to previous statements criticizing the EU’s approach. Fiat Chrysler, Starbucks, Apple and the commission declined to comment, as did the Luxembourg and Irish finance ministries. EU nations ordered to claw back the allegedly illegal tax aid have accused the commission of overreaching itself by using state aid law to attack individual fiscal arrangements that dated back many years. A key question for the commission in the cases is whether its argument that these tax rulings were selective and unfair stands up in court.“The commission did not identify a single instance where a taxpayer was treated less favorably than Apple,” Paul Gallagher, a lawyer for Ireland, told the judges in the court hearings last week.Luxembourg, which has so far faced the brunt of the EU’s decisions, has attacked the “arbitrary nature” of the commission’s approach which creates “complete legal uncertainty,” their lawyer Denis Waelbroeck said in a court hearing about Fiat’s case last year. Ireland and Luxembourg have supported each other in their respective appeals.The nation was among the first EU countries to be singled out in 2014 over its tax practices, when a group of investigative reporters published thousands of pages from secret arrangements between the tiny nation and companies including Walt Disney Co., Microsoft Corp.’s Skype and PepsiCo Inc. The so-called LuxLeaks publications have been used by EU regulators in their deliberations and EU officials further expanded their probes by seeking new information to find more “outliers” among these tax deals.Still, in a first in the EU’s continued crackdown on “outliers” among these otherwise legal tax rulings, the commission last year closed its probe into the fiscal deal between McDonald’s Corp. and Luxembourg, finding there was no violation of state aid laws.The cases are T-636/16 - Starbucks and Starbucks Manufacturing Emea v. Commission, T-755/15 - Luxembourg v. Commission, T-759/15 - Fiat Chrysler Finance Europe v. Commission, T-760/15 - Netherlands v. Commission,(Updates with more on Luxleaks revelations and McDonald’s probe in last two paragraphs.)\--With assistance from Peter Flanagan, Daniele Lepido and Ruben Munsterman.To contact the reporter on this story: Stephanie Bodoni in Luxembourg at email@example.comTo contact the editor responsible for this story: Anthony Aarons at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Apple Inc. and Ireland’s court room clash with the European Commission finally lived up to its billing as the world’s biggest tax case.A two-day hearing into their appeal of the EU’s record 13 billion-euro ($14.4 billion) tax bill heated up on Wednesday as Apple rebutted claims that Irish units at the center of its fight are just “phantoms” and Ireland hit back at regulators for saying the country would willingly forgo one-fifth of its corporate tax takings.Ireland is the victim of "wholly unjustified criticism of its tax system and its approach" from the EU in "the biggest state aid case ever," said Paul Gallagher, the government’s lawyer, in closing arguments of an EU General Court hearing in Luxembourg.EU officials "have not produced to this court a single example of Apple being preferred to anyone else" and Irish tax law didn’t require Apple to pay any more.Apple and Ireland are battling the European Commission’s 2016 order that ruled illegal a tax deal that saw the company channel sales through two Irish units. The iPhone maker is the biggest target of EU Competition Commissioner Margrethe Vestager’s crusade against corporate tax deals that allow big firms to reduce their fiscal burden.Irish BranchesThe five-judge panel homed in on the exact functioning of the Irish branches that allowed Apple revenues to be covered by a national tax deal labeled as illegal by regulators.The EU asserts the units received selective tax treatment that allowed Apple to allocate all sales profits to two companies that “existed only on paper.” Apple attempted to show that each business wasn’t a ghost while saying strategic decisions over products and sales were made elsewhere and profits should also be taxed elsewhere.“This wasn’t some kind of shell company, this was a company doing things in the U.S.,” Apple’s lawyer Daniel Beard responded, citing one of the firms. He said that no critical decisions on intellectual property were made in Ireland.Marc van der Woude, a Dutch judge and the court’s vice-president, had quizzed the EU’s lawyer late Tuesday on what evidence the European Commission had to show whether the Apple units determined strategy or drew up business plans.The business "looks like a phantom company,” he said at one point. Other judges dug into details of how the branches were run and how the Irish government determined that the revenue should be taxed there.The EU’s lawyer Richard Lyal sought to dismiss Apple’s arguments that the revenue at stake should have been taxed in the U.S. where its products are developed."Apple should not now pretend" that its Irish units "make all that money but that only a tiny proportion of it should be attributed to Ireland," he told the court. "All arguments as to tax being paid in the U.S. are completely irrelevant."Amazon, AlphabetA court ruling, likely to take months, could empower or halt Vestager’s tax probes into complicated corporate structures used by many American technology firms. The EU has also scrutinized fiscal deals done by Amazon.com Inc. and Alphabet Inc. and may draft new rules to net digital companies’ revenue.The first hints of how the Apple case may turn out will come from a pair of rulings scheduled for Sept. 24.The General Court will rule on whether the EU was right to demand unpaid taxes from Starbucks Corp. and a Fiat Chrysler Automobiles NV unit. Those judgments could set an important precedent on how far the EU can question tax decisions national governments make on how companies should be treated.To contact the reporters on this story: Aoife White in Luxembourg at email@example.com;Stephanie Bodoni in Luxembourg at firstname.lastname@example.orgTo contact the editors responsible for this story: Anthony Aarons at email@example.com, Peter Chapman, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- European car sales fell sharply in August, deepening the woes of an industry battling sluggish demand in key markets and the challenge of rolling out electric vehicles.Registrations dropped 8.4%, the steepest monthly decline this year, according to the European Automobile Manufacturers Association. The fall was partly due to exceptionally high growth a year earlier as manufacturers rushed out models ahead of tough new emissions-testing rules. Volkswagen AG shares lost 0.4% in early trading in Frankfurt and BMW AG was 0.3% lower.In addition to the risk of a recession in Germany, carmakers are also facing a slowdown in the Chinese car market. European sales over the year to date are down 3.2% and the continent’s five biggest markets all contracted in August, with Spain and France posting the biggest slowdowns. The drop last month brought registrations down to 1.04 million units.Nissan Motor Co. and Fiat Chrysler Automobiles NV saw the biggest slowdown in August sales at 47.5% and 26.5% respectively.The industry’s predicament took center stage at the Frankfurt auto show, where thousands of protesters demanded political and industry action to combat climate change. The head of Germany’s auto lobby group also unexpectedly announced his resignation last week.Carmakers at the show displayed their new electric models, which will become crucial in coming months as the companies race to meet new European carbon-dioxide emissions rules. Carlos Tavares, head of the ACEA and chief executive officer of Groupe PSA, last week called for more charging infrastructure to encourage consumers to buy the vehicles.After the August 2018 boost, auto sales dropped dramatically overall and have failed to pick up since, with the association forecasting a 1% drop for the year.While the ongoing issues in the car industry are hitting Germany in particular, there are signs of weakness in manufacturing across Europe. Euro-area economic growth is forecast to slow to 1.1% this year from 1.9% in 2018, which would be its worst performance in six years.The weakness in industry hasn’t had a dramatic impact on the labor market so far. If that changes, and unemployment starts to rise, that would mark a step up in the seriousness of the slowdown. It would also further hurt car sales as consumers rein in big-ticket purchases.Europe’s July sales increase, one of only two monthly gains in 12 months, was almost entirely down to Central European countries, the association said. Only Germany showed positive growth that month among Western European countries.(Adds shares in second paragraph.)\--With assistance from Fergal O'Brien.To contact the reporter on this story: Oliver Sachgau in Munich at firstname.lastname@example.orgTo contact the editors responsible for this story: Tara Patel at email@example.com, John BowkerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
GM strike 2019 news is spreading following a walk out of 50,000 United Auto Workers (UAW) members on Sunday night.Source: Katherine Welles / Shutterstock.com The strike against General Motors (NYSE:GM) comes as it negotiates with workers that are part of the UAW union. These members are negotiating for higher pay, better benefits and more job security.The GM strike 2019 is the result of the two groups not being able to come to terms on a deal. GM says that it is offering higher pay and better profit sharing. However, it appears that the UAW wasn't happy with the offer.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe GM strike 2019 is the largest that has happened since 2007 when UAW members spoke out against pay and benefits then too. GM and UAW are meeting again today, but it's unknown if they will reach an agreement this time around, reports CNNBusiness."The fight more is for the future. The middle class has been eroding. We've been losing, losing. We've been making concessions for the past three contracts…" Celso Duque, a GM employee, told Fox Business. "The main issue isn't that they're building in Mexico. The issue is that they're building in Mexico and then shipping the cars up here to sell." * 7 Tech Stocks You Should Avoid Now It's worth noting that the GM strike 2019 is important for more than just GM. UAW members also work at Ford (NYSE:F) and Fiat Chrysler (NYSE:FCAU). Whatever happens here could affect negotiations with those two companies further down the line.GM stock was down 4% as of noon Monday. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now As of this writing, William White did not hold a position in any of the aforementioned securities.The post GM Strike 2019: 50,000 Auto Workers Walk Out appeared first on InvestorPlace.
Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...
News last week that the United States and China would resume negotiations next month sent stocks sharply higher. Astute investors may grow tired from watching markets go up or down on hope alone. Even without any solid trade terms, anticipation of a resolution is powerful enough to move stocks. The automotive sector is a beneficiary of the two countries backing down from tariffs. Currently, China is imposing tariffs on the U.S. with Ford (NYSE:F) most likely to feel the impact.Yet the trade war is not the only reason for investors to buy automotive stocks. Valuations are compelling and some of these companies reward investors with rich dividends.There are seven automotive stocks that investors should buy.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Automotive Stocks to Buy: Ford (F)Source: FotograFFF / Shutterstock.com Since peaking at $10.50 in July, Ford stock fell steadily and recently found a bottom at around $8.75. The company reported a weak quarter but the stock's drop increased its dividend yield to 6.3%. Ford is not without issues. It is recalling 482,520 vehicles in the U.S. because the mechanism that controls how seat backs recline may have been improperly assembled. This news is not a setback: The company is acknowledging a problem and fixing it.In July, the decline in automotive sales in China fell by just 4.3%. But with Ford still losing money in the region, the slowing decline is welcome news. In Q2, Ford said that it saw signs of stability in its business in China. Overall earnings before interest and taxes increased by 19%, supported by a broad-based improvement in market factors led by China, North America and Europe. In China, consolidated revenue grew 48% year-over-year driven by higher volumes of Ford's Lincoln model. Additional initiatives that enhanced capabilities and stronger ties with joint venture partners will lead to stronger performance in the region. * 10 Stocks to Sell in Market-Cursed September Ford stock is worth over $11 if, using a five-year revenue exit model, investors assume revenue growing 1%-3% annually. Similarly, analysts have an average price target of $11.36. This target is achievable if Ford's revenue rebounds in the quarters ahead. General Motors (GM)Source: Linda Parton / Shutterstock.com General Motors (NYSE:GM) shares may have bottomed recently below $36, as it trades currently in the $39 range. Investors flocked to the stock when trade tensions eased. The company reported Q2 results Aug. 1 and included a reaffirmed full-year earnings per share guidance of $6.50-$7.00 for the year. In the period, North American year-over-year results improved, led by growing truck sales. Average transaction prices and crossover delivers rose. Later this quarter, the start of the deliveries of the Silverado with an optional all-new Duramax turbo-diesel engine opens a new chapter in good fuel economy. And the unveiling of the 2020 Corvette Stingray to an audience of 300,000 should excite sports car enthusiasts.GM's Cadillac is in high demand, too. It sold more than 111,000 vehicles globally in the last quarter. It launched a new XT6 seven-passenger model in China and the U.S., giving it an edge over its competition in the high-growth, luxury SUV segment.To align its workforce to demand, GM has jobs for every employee affected by the restructuring. So far, around 1,700 of the 2,800 employees accepted a transfer to plants that support the company's growth segments. So, as the economic slowdown in China gets resolved, GM is in a good position to capture more market share while operating more profitably.GM shares trade at fair value but the stock has a dividend yielding 3.9%. Honda (HMC)Source: Jonathan Weiss / Shutterstock.com Honda (NYSE:HMC) shares bottomed at $23 in August and traded recently at $24.85. Valuations for HMC are even more compelling than for either F or GM stock. HMC stock has a dividend yielding 3.3% and a price-to-earnings ratio of 8.9. Last month, sales were at levels not seen in the company's history. It also set multiple all-time monthly records. Truck sales and passenger car sales lifted total sales to 173,993, up 17.6% year-over-year. All segments performed well, including the CR-V, Passport, Accord and Civic. Even sales of the tiny-but-gas-efficient Fit grew 58% year-over-year.In the first quarter, Honda reported a 0.7% drop year-over-year in revenue. Profits fell due to higher selling, general and administrative costs. Despite the weak quarter, higher research and development spending along with renewed demand should drive sales higher in the quarters ahead. On the balance sheet, higher operating margins from the motorcycle, financial services and automobile business should ensure that Honda meets full-year guidance. * 7 Safe Dividend Stocks for Investors to Buy Right Now Honda shares have a modest upside but also pays a 3.3% dividend yield that will keep investors happy. Cost reductions and favorable raw material pricing will also help the company meet its full-year 2020 targets. Fiat Chrysler (FCAU)Source: bondvit / Shutterstock.com Fiat Chrysler (NYSE:FCAU) shares may not have the same quality levels as a Ford or Honda, but investors are happy with the company's prospects. The stock bottomed close to $12, trading recently just below $14. With a trailing P/E of 6, this stock is among the cheapest. If investors decide the stock is worth a valuation closer to its peers, then the stock might even get to the Wall Street average price target of $19.73.FCAU stock is still enjoying a rally fueled by speculation the company is holding talks with Renault to merge. On paper, merging the two firms makes sense because a bigger company could compete more effectively. It could share costs and technology with Renault. Electric vehicle and autonomous vehicle development between the two firms would prevent the two from falling behind. Fundamentally, neither firm should be kept independent in the name of being a national asset. Both auto firms need a bigger resource pool to compete as global players. A merger should result in a better return on capital.On the charts, FCAU stock is at the cusp of breaking out of a year-long downtrend. A definitive merger would send the stock back to yearly highs. Toyota (TM)Source: josefkubes / Shutterstock.com Close to a 52-week high, Toyota (NYSE:TM) is not an ideal deep-value play. But at a trailing P/E of 8 and with a dividend yielding 3.3%, TM stock may still reward patient investors. In August, the company reported strong 12.3% growth on a volume basis, posting sales of 218,403 units. This is the best-ever August. Hybrid sales increased 68.3% in the Toyota division and 44.2% for the Lexus division, suggesting that investors benefit from the company's diversification from gas-powered vehicles.As the popularity of cars falls, Toyota is bucking the trend by reporting a 15.2% increase in Corolla sales. Highlander sales rose 21.7% while RAV4 sales were up 17.2%.Just as Ford paired with Volkswagen in a joint venture and Fiat may merge with Renault, Toyota and Suzuki invested in each other. Toyota is buying a 5% stake in Suzuki while Suzuki will buy $453 million of TM stock. The companies will share costs related to the development of new technologies, and primarily, self-driving cars. * The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off In its first-quarter earnings call, Toyota said it will address staff redundancies in the U.S. It will also reduce redundancy in accounting. To increase profit margin above the 8% level by the fiscal year 2021, it will increase the SUV/truck ratio. So long as customers demand such vehicle types, Toyota will adjust its product mix to meet their needs. Navistar (NAV)Source: Casimiro PT / Shutterstock.com Navistar (NYSE:NAV) is not technically a car company. As a truck supplier, its strong Q3 report and analyst price target that is 22% above the recent $25.35 closing price are two reasons to consider this stock.Navistar reported revenue growing 17% year-over-year, led by a 25% increase in truck revenue. Adjusted earnings before interest, taxes, debt and amortization rose 22% to $266 million. The adjusted EBITDA margin rose 8.7%, up from 8.4% last year. The company provided volume guidance for 2019 and 2020. While Class 6/7 and Class 8 units are both up in 2019, it will drop in 2020. Still, the company reaffirmed revenue of $11.3 billion -$11.8 billion.Importantly, Navistar's days sales inventory on-hand is on the decline. The normal range, established since 2014, is 80 days - 120 days. In July, it was at 85 days. The balance sheet remains strong, with manufacturing cash balance at $1.12 billion. It faces no debt maturities until the year 2025 when $1.6 billion is due.NAV stock does not offer a dividend but Wall Street forecasts upside through the three recent "hold" ratings and one "buy" posted by analysts. Similarly, investors may input assumptions in a five-year discounted cash flow growth exit model to arrive at a higher fair value target. Ferrari (RACE)Source: Kharchenko Olena / Shutterstock.com With a market capitalization of $37 billion, Ferrari (NYSE:RACE) is similarly sized to Ford but almost half the size of GM. Although the stock does not pay a dividend,it is growing at a healthy pace.In the second quarter, Ferrari reported total shipments growing 8.4% year-over-year to 2,671 units. Revenue rose 6.8%, adjusted EBITDA was up 8.7% to $346 million and the EBITDA margin was 32%. The company benefited from an increase in V8 models shipped, offset by a drop in V12 models falling by a few units. Geographically, sales to China rose due to a decision to speed up client deliveries ahead of new emission regulations.Ferrari confirmed its guidance will approach the high end of the range on all metrics. Volume increase for the 488 Pista and 488 Pista Spider, Portofino and the 812 Superfast is driving demand for cars and spare parts. Higher sponsorship levels from Formula 1 racing activities is likely contributing favorably to the full-year results.Ferrari does not need a dividend to increase shareholder value. It has a $1.65 billion multi-year share buyback program and will buy back $220.1 million in the second half of 2019. In the first half of the year, it bought back $165.5 million worth of shares.RACE stock is the most expensive of the stocks discussed, with a P/E of 34 times. But it earned that valuation. Its clientele is buying more units, driving revenue higher.As of this writing, Chris Lau held shares of F. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post 7 Automotive Stocks to Buy Now appeared first on InvestorPlace.
(Bloomberg Opinion) -- The resignation of Hiroto Saikawa, chief executive of Nissan Motor Co. gives the embattled Japanese carmaker a much needed opportunity to clean decks and move on.Ever since the shock arrest of the company’s chairman Carlos Ghosn almost a year ago, the Japanese auto giant has been in permanent crisis mode and ties with its French alliance partner Renault SA have frayed. To steer it through that period Nissan needed a leader with deft political skills who embodied a clean break with the Ghosn era. Saikawa – a Ghosn appointee – wasn’t it.The report that Nissan published concurrently on Monday, detailing allegations of financial misconduct by Ghosn, makes for grim reading (Ghosn denies wrongdoing). Yet Saikawa could never distance himself fully from an era during which Nissan paid lip service to principles of good corporate governance.Revelations that Saikawa too was overpaid improperly were an unacceptable reminder of the allegations that led to Ghosn’s downfall, even if the amounts were smaller and Saikawa says he was unaware of the payments. He isn’t accused of misconduct.That the Nissan CEO seemed to revel in Ghosn’s ousting – so much so that it sparked claims of a palace coup – made it much harder to restore a basis of trust with Renault. In fairness, Renault didn’t help by pushing subsequently for a full-blown merger with Nissan that was unwanted by the Japanese, and then secretly discussed a tie-up with Italy’s Fiat Chrysler Automobiles NV.Meanwhile, Nissan’s recent financial performance under Saikawa has been nothing short of disastrous. Profit is in free fall, the company has lost ground in the vital U.S. market and it has been forced to slash production and jobs.His departure will spark hopes that Nissan can finally mend ties with Renault and do something about the destruction of shareholder value at both companies in recent months. In time perhaps the French side will be able to revive merger talks with Fiat; that deal has strategic and financial merit even if it remains dicey politically. Renault agreeing to cut its 43% Nissan stake might be a good place to start. Nissan holds only 15% of Renault, an imbalance that has fueled the tensions between them. First things first, though. Saikawa’s successor, whose identity Renault will have a say in, must put Nissan’s own house in order. That’s a sentiment Renault chairman Jean-Dominique Senard appears to share.At a time of unprecedented upheaval in the car industry, Nissan can’t afford to be distracted by in-house politics. If change at the top lets executives focus on the business of making and selling cars, so much the better.To contact the author of this story: Chris Bryant at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.