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Rising aluminum costs cut into Ford's profit

When Ford reports fourth-quarter results on Wednesday afternoon, it is expected to fret that rising metals costs have cut into profits, even as rivals say they have the problem under control. Aluminum prices have risen 20 percent in the last year and nearly 11 percent since Dec. 11. Steel prices have risen just over 9 percent in the last year. Ford uses more aluminum in its vehicles than its rivals. Aluminum is lighter but far more expensive than steel, closing at $2,229 per tonne on Tuesday. U.S. steel futures closed at $677 per ton (0.91 metric tonnes). Republican U.S. President Donald Trump's administration is weighing whether to impose tariffs on imported steel and aluminum, which could push prices even higher. Ford gave a disappointing earnings estimate for 2017 and 2018 last week, saying the higher costs for steel, aluminum and other metals, as well as currency volatility, could cost the company $1.6 billion in 2018. Ford shares took a dive after the announcement. Ford Chief Financial Officer Bob Shanks told analysts at a conference in Detroit last week that while the company benefited from low commodity prices in 2016, rising steel prices were now the main cause of higher costs, followed by aluminum. Shanks said the automaker at times relies on foreign currencies as a "natural hedge" for some commodities but those are now going in the opposite direction, so they are not working. A Ford spokesman added that the automaker also uses a mix of contracts, hedges and indexed buying. Industry analysts point to the spike in aluminum versus steel prices as a plausible reason for Ford's problems, especially since it uses far more of the expensive metal than other major automakers. "When you look at Ford in the context of the other automakers, aluminum drives a lot of their volume and I think that is the cause" of their rising costs, said Jeff Schuster, senior vice president of forecasting at auto consultancy LMC Automotive. Other major automakers say rising commodity costs are not much of a problem. At last week's Detroit auto show, Fiat Chrysler Automobiles NV's Chief Executive Officer Sergio Marchionne reiterated its earnings guidance for 2018 and held forth on a number of topics, but did not mention metals prices. General Motors Co gave a well-received profit outlook last week and did not mention the subject. "We view changes in raw material costs as something that is manageable," a GM spokesman said in an email.

Average new-vehicle transaction price hits a whopping new peak in December

Elevated prices for products and higher borrowing rates led to record high transaction prices for new vehicles in December, with the average cost in the U.S. rising to a record $49,507, according to data from Kelley Blue Book released today. The report notes that ATPs — average transaction prices — have climbed above suggested retail prices — MSRPs — for more than a year. Sales volumes were up in December on a year-over-year basis by more than 5%, a situation Kelley attributed to improved supply. Overall sales for 2022, however, were off 8% year over year. “The transaction data from December clearly indicates overall prices showed no signs of coming down as we headed into year-end,” said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive. “Luxury prices fell slightly in December, but non-luxury transaction prices were up. Truck sales were particularly strong last month, and with many trucks selling for more than $60,000, a new record was all but inevitable.” Industry analysts claim the most obvious headwinds in the new car market are generated by higher interest rates, forced by the Federal Reserve's rate hikes intended to tame inflation, and by generally limited inventory. A recent report from J.D. Power showed that the average monthly payment for a new vehicle loan in December was $718, up $47 from a year ago. But 16% of consumers in December took out loans with monthly payments of over $1,000. Consumers think vehicles, and electric vehicles especially, are way too expensive. Fortunately, manufacturersÂ’ incentives, all but extinct in the past two years, are returning, especially in the electric-vehicle and luxury market, the Kelley data suggest. Plus, "With the new tax credits on the way, electric vehicle ATPs will drop lower for qualifying vehicles,” Rydzewski said. Non-luxury brands, such as Honda and Kia, showed particularly strong performance in December, with the average price paid at $45,578 — a record high and an increase of $994 month over month. Meanwhile, the average luxury buyer paid $66,660 for a new vehicle last month. Mercedes-Benz and Land Rover showed the most price strength in the luxury market, transacting between 2.6% to 6.5% over sticker price. But luxury brands Audi, BMW, Infiniti, Lexus, Lincoln, and Volvo showed the least price strength with some discounting in effect, selling 1% or more below MSRP in December, according to the survey.

Kahn and Evanta team up for hot-rod Defender, custom Barchetta

If you're familiar with the work of Afzal Kahn, it's probably for his tuned Range Rovers. And if you live in London, you may have seen his Bugatti Veyron with the F1 license plate. But the British tuner and self-styled "automotive fashion designer" is now embarking on a far more ambitious project. Kahn is teaming up with Ant Anstead of Evanta fame – responsible for rebodying Aston Martin DB7s to look like DB4 GTs and that full-scale DBR1/2 model kit – on a new outfit called Ant-Kahn. Far more than a tuning endeavor, Ant-Kahm is setting about creating truly unique (and uniquely British) automobiles. Their first project is called the Flying Huntsman, a long-nose Land Rover Defender that we imagine will emerge as something like a British take on the 1998 Jeepster concept crossed with something Icon might concoct. It'll pack a 6.2-liter GM LS3 V8 producing 550 horsepower, mated to a push-button six-speed automatic transmission, mounted close to the bulkhead with over 15 inches of extra bodywork and set to be unveiled within the coming months. Their second collaboration is set to yield the Evanta Barchetta previewed by rendering above. "Inspired by the design language of 1950s motorsport," the Barchetta pays homage to classic British and Italian roadsters. It's being built around a tubular frame with handcrafted composite Kevlar bodywork and powered by that same LS3 tuned to 450 hp but in a much lighter form than the Flying Hunstman. Only 20 examples will be made after its debut at the Goodwood Revival come September. An Aston Martin project codenamed WB12 is also in the works, painting a picture of an ambitious startup backed by two experienced operators whose projects we're looking forward to seeing come to fruition. Ant-Kahn – The birth of a groundbreaking collaboration between two leading figures in the UK automotive industry. Ant-Kahn is a collaborative partnership between Afzal Kahn - innovative automotive fashion designer and founder of the Kahn group of companies, and Ant Anstead, founder of expert vehicle manufacturer Evanta, and star of Channel 4's "For The Love of Cars". Working together under the Ant-Kahn banner, they will lead a resurgence in British specialist vehicle manufacture, with a number of projects already underway. Their focus is on luxury and quality, using modern prototyping and manufacturing technology, while maintaining the attention to details associated with traditional coach building.