底特律之旅：與Mary Barra等人的會(huì)談

1、Detroit Trip TakeawaysOur Meetings with Mary Barra, Joe Hinrichs, Jim Farley & Roger Penske GM, F, AXL, DAN, THRM, LEA, MGA, MTOR, PAG & IHSWe recently met with the managements of General Motors (including CEO Mary Barra and CFO Dhivya Suryadevara) and Ford (including President of Automotive Joe Hin

2、richs and President of New Business, Technology and Strategy Jim Farley), along with suppliers American Axle, Dana, Gentherm, Lear, Magna International, and Meritor, franchise dealer Penske Automotive (including CEO Roger Penske), and industry consultant IHS Automotive, as part of our annual trip to

3、 visit automotive managements in Detroit, Michigan. Immediately below, we briefly summarize what we see as the most important takeaways from each of our meetings. Please refer to the pages that follow, however, for a much more in-depth exploration of these and many other takeaways.General Motors (GM

4、, OW) We met with President & Chief Executive Officer Mary Barra, Executive Vice President & Chief Financial Officer Dhivya Suryadevara, Vice President & Treasurer Rocky Gupta, Director of Investor Relations Michael Heifler, and Senior Manager of Investor Relations Diane Farrow. Key takeaways from o

5、ur meeting include: (1) GM management provided a retrospective on its recent costly labor stoppage and new four year contract the strike was disappointing but the company was able to preserve its operational flexibility and achieve other goals while expecting to offset wage increases with productivi

6、ty improvements and is searching for additional savings to offset the impact of one less plant closure; (2) We engaged GMs CEO & CFO in a discussion of puts and takes to 2020 earnings the macro environment is uncertain-to-softer, although company-specific tailwinds appear to outweigh company-specifi

7、c headwinds and in our view are likely sufficient to overpower base case scenario industry headwinds to drive material earnings growth; (3) GM is optimistic about long-term market growth in China and feels good about its relative position (including the strength of its brands and partnerships) and i

8、s looking forward to the near-term benefit of new product launches, but expects macro volatility to continue into 2020 and for industry- wide profitability to be pressured by New Energy Vehicle (NEV) regulations;(4) Update on GM International ex-China Korea profitability improvement is tracking acco

9、rding to plan; South America is in a good position from a structural standpoint and the cycle might continue to normalize higher, but currency is a clear headwind; (5) GM has a strong and profitable overall portfolio of Crossover Utility Vehicles in North America, although acknowledged increasing co

10、mpetition and pricing pressure in the market for smaller crossovers; (6) Could a battery electric revival of the Hummer brand be in the works? GM management declined to comment on market speculation, but noted its belief a material increase in residual values for older model Hummers suggests strong

11、consumer enthusiasm (a similar phenomenon at Ford may have preceded that management teams decision to reintroduce the Bronco); (7) Cruise Operations Update GM is confident it has a path to removing the driver from the equation (even if timing is delayed a little bit); and (8) GM is likewise confiden

12、t in the valuation of Cruise, given multiple investors (a technology company, an automaker, and an institutional investor) have triangulated upon this value using a wide variety of approaches and valuation methodologies.North America Equity Research09 December 2019Autos & Auto Parts Ryan Brinkman AC

13、 (1-212) 622-6581 HYPERLINK mailto:ryan.j.brinkman ryan.j.brinkmanBloomberg JPMA BRINKMAN J.P. Morgan Securities LLCRajat Gupta AC(1-212) 622-6382 HYPERLINK mailto:rajat.gupta rajat.guptaBloomberg JPMA GUPTAR J.P. Morgan Securities LLCManasvi Garg(91-22) 6157 5078 HYPERLINK mailto:manasvi.garg manas

14、vi.gargJ.P. Morgan India Private LimitedSee page 36 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conf

15、lict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. HYPERLINK / Ford (F, NR) We met with President of Automotive Joe Hinrichs, President of New Businesses, Technology and Strategy Jim Fa

16、rley, Vice President of Enterprise Product Line Management Jim Baumbick, and Executive Director of Investor Relations Lynn Tyson. Key takeaways from our meetings include: (1) Management believes investors should think of the companys difficulties launching the new Ford Explorer this year as an anoma

17、ly, and that the firm is well positioned to execute smoothly on upcoming launches including the Super Duty and Escape / Corsair this year and the F-150 and Mustang Mach-E next year; (2) Fords European “Reset & Redesign” is proceeding according to plan, with strong progress being made toward addressi

18、ng historical structural problems, although the European business remains challenging overall and investors should be reasonable about the pace at which Ford is likely to show dramatic progress in financial results;(3) While European emissions regulations are set to grow significantly more stringent

19、 in coming years, Ford is confident in its ability to comply with the new regulations in 2020 and has a good plan in place for 2021 also, predicated upon the electrification of its portfolio in the region; (4) Ford continues to struggle in China relative to sales and market share, with the Ford bran

20、d having lost considerable momentum in the market (the story for Lincoln is brighter) with that said, there has nevertheless been progress in reducing losses and improving its sales, marketing, and distribution strategy and reducing dealer inventories, laying the groundwork for recovery; (5) Ford is

21、 making solid progress on addressing structural cost in South America, although improvement in Brazil is being offset by deterioration in Argentina (due to both a softer industry and a weaker exchange rate); (6) Higher warranty expense will weigh on earnings near-term (as outlined in recently lowere

22、d guidance at the time of 3Q earnings) but the issue giving rise to the elevated costs has since been resolved, implying expense should normalize lower over time; (7) Ford is satisfied with its new four year contract with the United Auto Workers while wages were patterned after union target GMs infl

23、ationary contract, there are other aspects of the agreement which are favorable to Ford on a relative basis; (8) Fords partnerships with other OEMs including Volkswagen, Mahindra, and Rivian are extremely important to its strategy going forward, as they help Ford press existing strengths in commerci

24、al vehicles, share autonomous and electrification investment costs, and better solve structural issues in emerging markets; (9) Fords autonomous mobility strategy seems very focused on commercial vehicles relative to competitors, with Ford decidedly less interested in competing to be first in the ro

25、bo-taxi market (including because of what was characterized as “the realities of the technology” and “the realities of LiDAR”, citing speed and weather limitations), potentially leaving this space to other partners of Argo AI; (10) The cost side of the electrification equation is going a bit better

26、than Ford thought, and the firm is focused on maximizing the revenue side by focusing on “Performance” (i.e., Mustang Mach-E) and “Work” (i.e., Transit PHEV, electric F-150, & Rivian) where customers are more willing to pay for the technology; and (11) Fords Enterprise Line Product Management team h

27、elps the company determine which products, geographies, and businesses are most deserving of the organizations time, focus, energy, and shareholder capital the team has already pulled resources from certain parts of the business (such as passenger sedans in North America) to reinvest in higher retur

28、ning areas and there are a number of potential additional moves currently in the works. Ford has put a “shot clock” on multiple businesses requiring improvement some of which are already well in the advanced stage and it will not hesitate to make difficult decisions that are in the best interest of

29、the business.American Axle (AXL, OW) We visited with American Axle management at their headquarters in Detroit, Michigan, including with Vice President & Chief Financial Officer Christopher May, Director of Investor Relations Jason Parsons, and Manager of Investor Relations Sarah Barry. Key takeaway

30、s from our meeting include: (1) 2020 cash flow should benefit from multiple drivers, including a material step-down in capital expenditures, non-repeat of business unit consolidation cash restructuring costs, a step-down in Metaldyne-related cash restructuring costs, and a full years benefit of the

31、cost savings that gave rise to 2019 cash restructuring costs; (2) The revenue impact to American Axle of the GM-UAW strike in 3Q & 4Q is running in line with earlier expectation, as production has re-ramped as expected but GM likely remains limited in ability to recoup lost production near-term, giv

32、en a heavy holiday schedule and as GMs assembly plants producing its most in-demand models are already running at or near full capacity; (3) Our visit included a tour of American Axles product development center, showcasing varied products and technologies to facilitate electric drive, which has the

33、 potential to be a large tailwind, given the firms content per electrified vehicle can run from $500 to $2,500; (4) American Axle is stepping up its spending on electrification research & development efforts, and is in some cases able to share these costs with OEMs.Dana (DAN, OW) We hosted Dana mana

34、gement for a group dinner in Birmingham, Michigan, including Executive Vice President & Chief Financial Officer Jonathan Collins, Senior Vice President & Treasurer Timothy Kraus, and Vice President of Investor Relations Craig Barber. Key takeaways from our meeting include: (1) Management sees potent

35、ial upside to 2020 backlog, driven by the success of 2019 customer launches on which it has substantial content (including the Jeep Gladiator and Ford Ranger), potentially stronger volume of 2020 launch models, and new wins at Oerlikon and Nordresa; (2) Off-highway markets are likely to remain chall

36、enging in 2020, being negatively impacted by trade conflicts affecting demand in the agriculture sector and the slowdown in industrial production globally (also partly related to trade conflicts), with some potential for improvement in 2H20; (3) Dana stands to generate substantially more revenue per

37、 vehicle for electrified programs across off-highway, commercial on-highway, and light vehicle end-markets, with demand driven to varying degrees by economics and regulation; (4) Danas aftermarket business (12% of revenue) is attractive, given its much more stable end-market and ability to provide i

38、nsight into future trends in the OE business; (5) Dana management has positioned the firm to minimize decremental margins amidst cyclical downturns in end-markets, including via being less vertically integrated than major peers and employing a relatively high degree of temporary workers;(6) Manageme

39、nt expects a substantial improvement in cash flow in 2020, driven by multiple factors including higher EBITDA owing in part to highly visible synergy savings, materially lower capital expenditures, and lower one-time costs; (7) Relative to portfolio options, Dana sees strong benefits from continuing

40、 to provide driveline solutions across light vehicle, commercial on- highway, and off-highway end-markets; Power Technologies has the softest strategic coherence of any of the segments across the business and may not be core, although now also seems not an attractive time to sell, given sentiment as

41、 relates to China and the industry in general, etc.; (8) Dana management shared that it is likely to be quite conservative relative to financial leverage and desires to push toward investment grade metrics over time, including as a result of its push into electrification (we took these comments as d

42、ownplaying the potential for material share repurchases over the next two years).Gentherm (THRM, N) We visited with Gentherm management at their headquarters in Northville, Michigan, including with President & Chief Executive Officer Phil Eyler, Executive Vice President & Chief Financial Officer Mat

43、teo Anversa, and Senior Vice President of Investor Relations and Financial Planning Yijing Brentano. Key takeaways from our meeting include:(1) We participated in the first in-vehicle demonstration for investors of Gentherms next generation ClimateSense solution and walked away highly impressed, est

44、imating adoption could be driven by consumer pull due to increased creature comfort, as opposed to merely being regulation-driven; (2) Battery Thermal Management is a key growth opportunity longer-term including in the new growth area of cell connecting; and (3) Gentherm sees a long runway for penet

45、ration of Climate Control Seat technologies, including because of consumer pull for creature comfort products and because of regulation.Lear (LEA, N) We visited with Lear management at their Global Product and Technology Center in Southfield, Michigan, including with product and technology experts f

46、rom both Lears Seating and E-Systems segments, and with Director of Investor Relations David Lim and Manager of Investor Relations Melissa Skauradchun. Key takeaways from our meeting include: (1) Lear showcased several seating products relevant to the autonomous mobility market, including one of the

47、ir latest ideas which is a set of seats that are easily reconfigurable with regard to their orientation in the car and yet still offer electric power (while also emphasizing durability and cleanliness attributes expected to appeal to future fleet operators). Management is in discussions with multipl

48、e customers, including non-traditional automakers, and has already secured one contract; (2) Within E-Systems, Lear showcased their ability to integrate multiple modules that serve different functions, with ability to reprogram and reconfigure, allowing for scalability. Lear believes they have the a

49、bility to provide offerings and capabilities similar to those that Aptiv has showcased with their Smart Vehicle Architecture; (3) Lear also showcased its Lears wireless charging system that enables a vehicle to be automatically charged simply by parking the vehicle atop a charging pad integrated int

50、o the ground (for example, into the floor of a garage), eliminating the need for the handling of physical plugs, aimed at reducing barriers to EV adoption. The contactless system allows for greater than 90% charging efficiency.Magna International (MGA, OW) We recently visited with Magna management,

51、touring their Troy, Michigan Innovation Room facility, including with Chief Technology Officer and President of Power & Vision Swamy Kotagiri, Chief Marketing Officer and President of Magna Asia Jim Tobin, Vice President of Investor Relations (Magna Services of America) Eric Goldstein, and Manager o

52、f Investor Relations Jim Floros. Key takeaways from our meeting include: (1) Management provided a recap of the causes of the softer performance this year of the firms Getrag operations in China, citing (in addition the substantially lower volume plaguing all suppliers) headwinds related to a faster

53、 than expected transition away from manual transmissions, domestic automaker insourcing, and the transition to China 6 emissions; (2) On the positive side, Getrag has scored a big win with BMW, including because of Magnas strong capabilities in the area of vehicle electrification; (3) Management pro

54、vided an update on its Complete Vehicle Assembly business in China in light of the difficulties of some more recent upstart domestic OEMs, commenting that at least 50% of the capacity is expected to be supported by its venture with BAIC, minimizing the risk of needing to look to start-ups; (4)Magna

55、showcased its breadth of its Advanced Driver Assist Systems (ADAS) capabilities during our product technology tour, with our takeaway being that the relative completeness of Magnas offerings is likely underappreciated by investors; and (5) Relative to the electro-chromatic auto-dimming mirror market

56、 (currently dominated by Gentex, but in which Magna is also a player), Magna noted it has been winning business and has Full Display Mirror capabilities.Meritor (MTOR, N) We visited with Meritor management at their headquarters in Troy, Michigan, including with Senior Vice President & Chief Financia

57、l Officer Carl Anderson and Director of Investor Relations Todd Chirillo. Key takeaways from our meeting include: (1) Management is confident of its relative position in the budding market for on-highway e-Axles, including because of recent wins in France (Alstom Aptis) and Brazil (VW-MAN); (2) Elec

58、trification dilutive to margin near-term but accretive medium-term; investments can be flexed down if necessary in a down-cycle; (3) Meritor remains confident in executing on the targeted $15 mn in AxleTech synergies, which will be important for delivering upon the firms M22 target of 12.5% EBITDA m

59、argin.; (4) Meritor has not seen pushback from commercial vehicle OEMs relative to the improvement in its own margin (as suppliers sometimes do in the light vehicle space); (5) Meritor maintains a flexible cost structure, including via the use of temporary workers, which will help to limit decrement

60、als associated with industry down-cycles even if North America Class 8 volumes were to cycle down to 215K and Europe to 400K, Meritor still anticipates delivering 10.5% margin and $125 mn FCF; (6) Meritor prefers the India market to China at present it continues to evaluate ways to enter the China m