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Earnings/Financial

Nurburgring Race Track to File for Bankruptcy

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Nurburgring Race track

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The German state of Rhineland-Palatinate has reported that the Nurburgring race track will file for bankruptcy, a development I bet no one in North America saw coming. How could a race track as renowned as the Nurburgring go bankrupt?

The race track is like any other business in Germany — it has to make a profit to stay operational. Apparently, it fell into financial trouble due to a dispute with the track’s operator over leasing fees. Rhineland-Palatinate, which has a 90 percent ownership, did try to restructure the company with the help of a bridge financing package but failed because the European Commission apparently took too long to approve a rescue package.

The Nurburgring has become an icon in the enthusiast world, so we wouldn’t want to see it go.

Reference: Automotive News

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Earnings/Financial

GM Posts Record $9.7 Billion Profit in 2015

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General Motors CEO Mary Barra

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Once struggling General Motors has posted a record profit of $9.7 billion in 2015.

That figure is significantly higher than the 2.8 billion income the automaker earned in2014, even though both years included financial setbacks associated with the ignition-switch defect. GM CEO Mary Barra stated:

“It was a strong year on many fronts, capped with record sales and earnings, and a substantial return of capital to our shareholders.”

The company achieved a full-year EBIT-adjusted profit of $11 billion and a margin of 10.3 percent in North America — a record on both counts — but lost money in Europe, although not as much as in 2014. The Chinese market continues to be a boon, bringing in a total of $2.1 billion in equity income.

The company plans to pay its eligible North America unionized hourly employees up to $11,000 in accordance to the profit-sharing agreement established during the 2008-2009 industry crisis. Barra added:

“We believe the opportunities this will create in connectivity, autonomous, car-sharing and electrification will set the stage for driving value for our owners for years to come.”

Interestingly, GM’s cash flow and liquidity dropped. Q4 2015 cash flow was $2.2 billion compared to $3.8 billion in Q4 2014, while total automotive liquidity in 2015 was $20.3 billion compared to $25.2 billion prior.

Regardless, there is no doubt that GM is healthier than it has ever been in decades. With the new Chevrolet Volt and $30,000 Bolt EV now on the market, it will be interesting to see how much better it performs in the coming years.

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Chrysler

Fiat Chrysler Automobiles Spins Off Ferrari into Own Corporation

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Red Ferrari LaFerrari rear end

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Fiat Chrysler Automobiles (FCA) has announced plans to spin off its Ferrari division into a separate corporation in an effort to raise more money. The announcement follows shortly after long-time Ferrari chairman Luca di Montezemolo resigned from his post following an apparent dispute with FCA CEO Sergio Marchionne over the long-term plans for the Italian luxury marque.

The move is being described as an investment strategy and calls for 10 percent of Ferrari’s shares to be sold off, with the remaining 90 percent being split among existing FCA shareholders. The shares will be listed on US exchanges and possibly in Europe.

MUST READ: Ferrari Chairman Quits After a Dispute with Marchionne

“As we move forward to secure the 2014-2018 Business Plan and work toward maximizing the value of our businesses to our shareholders, it is proper that we pursue separate paths for FCA and Ferrari,” FCA CEO Sergio Marchionne stated in a press release.

The money obtained from the shares will go into FCA’s ambitious $61 billion growth plan, which calls for the introduction of a slew of products spanning the lineups of Ferrari, Maserati, Chrysler, Dodge, Jeep and Ram.

FCA chairman John Elkann is adamant that “the separation of Ferrari will preserve the cherished Italian heritage and unique position of the Ferrari business and allow FCA shareholders to continue to benefit from the substantial value inherent in this business.”

Ferrari’s spin-off from FCA will be completed in 2015. Do you think it is a smart move?

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Earnings/Financial

Tiny Porsche Made More Money in 2013 than Most Automakers

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Porsche 911 Targa

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While most automakers are still reeling from the effects of the global financial and Euro crises, Porsche continues to do business as if nothing happened. The tiny German had a banner year in 2013, raking in record deliveries, revenues and profits.

Porsche delivered 162,145 vehicles worldwide during fiscal year 2013, representing a 15 percent improvement over 2012’s results and the best sales performance in the company’s long history. Thanks to those deliveries, revenue increased 3 percent to 14.3 billion euros ($19.9 billion), while profits jumped 6 percent to 2.58 billion euro ($3.59 billion).

Related story: New Porsche Macan Compact SUV, Pictures and Details

Despite being a low volume automaker, the German company made more money in 2013 than almost all automakers with sales of over 1 million units. It made more than Chrysler, loss-making Fiat and PSA, Renault, and almost as much as the world’s second largest carmaker, General Motors.

In fact, Porsche enjoyed an operating margin of 18 percent during 2013, which means it made on average about $23,200 on every car sold. This explains why it made so much money with so few sales, while the aforementioned large automakers — with their much, much lower margins — made so little on their large volumes.

Company CEO Matthias Müller predicts another record year for 2014, stating in a press release “This positive trend will intensify in the course of 2014 and the market launch of the Macan in April will further increase the company’s sales.”

To fuel that strong growth, Porsche now employs 19,456 workers globally, its highest level ever.

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