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Auto & Transport Roundup: Market Talk

19 May 2018 8:20 am

The latest Market Talks covering the Auto and Transport sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

1623 GMT - Ford's Global Markets Chief Jim Farley says the US auto maker plans to replace the small car and sedan models it is killing off with a new style of vehicle that is more in line with buyers' tastes these days, according to a research note by Morgan Stanley analyst Adam Jonas. Meeting with analysts recently, Farley described this new vehicle style as a "tweener," falling between a passenger car and crossover in height, size and silhouette, Jonas wrote. He likened the style to the taller-riding wagons produced by Subaru. Farley also said Ford will have a full lineup of off-roading SUVs to compete with Jeep and Land Rover, Jonas added. Ford, like other auto makers, is retrenching from the passenger car market as more buyers shift to roomier SUVs and trucks amid low gasoline prices. (christina.rogers@wsj.com; @cvrogers)

1615 GMT - A booming US shale industry has led to an explosion in exports of everything from crude oil to gasoline to liquefied natural gas. But it's also exposing infrastructure and transportation inadequacies, and RBN Energy says the Panama Canal may become another choke point. A newly-widened canal began operations almost two years ago, and while it's been a savior and a "game-changer," RBN says "even the expanded canal isn't big enough for the Very Large Crude Carriers favored for Gulf Coast-to-Asia crude shipments, or for fully laden Suezmax-class vessels." The expansion has undoubtedly boosted US energy exports, but "there already are indications that the canal's capacity may not be sufficient to meet future LNG needs." (dan.molinski@wsj.com)

1546 GMT - Tesla Inc., which has seen significant turnover among its team trying to make cars more automated, has lost the manager responsible for overseeing the entire software stack of Autopilot. Sameer Qureshi left Tesla to begin at Lyft Inc. to be director of product for the ride-hailing services autonomous car effort, according to a change Friday on his LinkedIn bio. Lyft confirmed he began this week while Tesla didn't respond for a request for comment. Lyft is trying to build out a driverless car team as it races to catch up to Waymo, General Motors and Uber who all aim to put robot taxis on the road. At Tesla, Mr. Qureshi was senior manager of autopilot programs. The head of Autopilot recent left for Intel Corp. (tim.higgins@wsj.com)

1437 GMT - Altice's improvement in net subscriber gains during 1Q in France looks encouraging, but comes at the expense of lower revenues, Credit Suisse says. The Swiss bank says that subscriber growth was driven by deep discounting, which hit the company's average revenue per user. Credit Suisse says that the market's positive reaction to the results of Altice's peer SFR--which were driven by net subscriber gains--could support the operator's marketing strategy for a bit longer. However, the bank points out that such promotional intensity could prove unsustainable in the long term, partly due to the weakness of Altice's international business. Shares trade 2.9% lower at EUR8.58. (marc.navarro@dowjones.com)

1352 GMT - Gerry Laderman spent the best part of a year as United's acting CFO after John Rainey departed for PayPal. Andrew Levy's move puts the Continental veteran back in the seat, but at an awkward time, in the early innings of United's growth-based effort to boost earnings. Investors know United's playbook, but many remain unconvinced about the domestic expansion, so would an outsider -- another outsider -- brought in as CFO help bolster confidence in the strategy? Shares trade slightly lower on a flat day for sector stocks as oil ticks down slightly. (doug.cameron@wsj.com; @dougcameron)

1031 GMT - Any losses incurred by Stagecoach Group PLC after the U.K. government's decision to re-nationalize the operation of the country's East Coast main line rail route are likely to be manageable, says Moody's. Joint private operators Stagecoach and Virgin will hand back control of the route from June 24 after failing to meet profit targets. "The U.K. Department for Transport's decision to re-nationalize East Coast is credit neutral for joint-operator Stagecoach (Baa2 stable) as related cash losses will be manageable and have minimal impact on the companies' key debt coverage metrics," says Andrew Blease, a Moody's Associate Managing Director. Stagecoach shares fall 1.3%. (philip.waller@wsj.com)

1017 GMT - Tire makers' margins could expand in the near term as input costs turn into a tailwind, UBS says. In the bank's view, the industry's capital expenditure has peaked, which in the midterm could lead to improved cash conversion. Pirelli offers strong earnings growth and Continental is least exposed to budget competitors, while French peer Michelin is in the best position to benefit from the growing high-value tire segment, UBS says. (Max.Bernhard@dowjones.com; @mxbernhard)

0918 GMT - Willie Walsh, chief executive of British Airways parent International Consolidated Airlines Group SA, expresses confidence Washington and London will ink an open skies deal to keep flight going even once Britain exits the EU. The U.S. has put forward a model agreement on which to base the accord. Mr. Walsh says "there is nothing in the model US open skies agreement that would create any concern for me." IAG shares 0.1% higher. (robert.wall@wsj.com)

0841 GMT - A fire at Daimler's Michigan-based supplier Meridian Magnesium could eat up as much as EUR130 million of the German car maker's earnings, Evercore ISI says. The research firm estimates that, assuming production downtime of two-and-a-half to three weeks at Daimler's Tuscaloosa plant, the company could lose revenue of between EUR560 million and EUR850 million, translating to lost EBIT of EUR85 million to EUR130 million. The fire broke out on May 2, but Daimler was forced to shut down production only recently. Other car makers such as Ford, Fiat Chrysler and General Motors are also affected. (Max.Bernhard@dowjones.com; @mxbernhard)

(END) Dow Jones Newswires

May 19, 2018 04:20 ET (08:20 GMT)

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