What Happened With Carlos Ghosn?
Business / Auto, Aviation & Transportation
This whole incident redefines the term ‘hostile takeover’ :).
There were two contemporaries who in their own ways rescued the global auto industry – Carlos Ghosn and Sergio Marchionne. They are now both gone, for all the vaunted manufacturing efficiency of Japan, and the reputation is generally well earned, Mr. Ghosn managed to bring something to the table.
Furthermore, not to mention Japanese heavy industry employment has enjoyed a couple of decades of free money. Obviously, Ghosn managed to unfriend a few people along the way, and this appears as payback.
In the meantime, Tesla’s (and its ilk’s) technological onslaught continues.
A handful of companies such as BMW and Daimler can keep up with the level of R&D involved, but all the legacy companies are heavily leveraged from customer to parts manufacturer. At the present cost of capital, TSLA shares may have been cut in half. However, the rest, but for political backing, should be flirting with zero, again.
For example, Ford owes $150bn on the balance sheet, its reward for avoiding bankruptcy in 2008. At 7%, the interest would wipe out FCF!
If, as a car company, you have neither Tesla’s technological edge nor Mercedes’ passenger experience, then the race is pretty brutal, setting aside a handful of brands with niche history, from Mustang to McLaren.
No recession is pretty, but for car makers, the shocking upswing in capital cost in this one may finish the job 2008 started. Governments are much too levered this time to be able to repeat the generosity they assembled with Lehman’s bankruptcy as an excuse for an extraneous shock.
Written by Manish Aurora
What Happened With Carlos Ghosn?
