Drivers are back on the road and more and more accidents and insurers are paying the bill
The accidents are back, sales of electric vehicles for VW and Tesla have risen sharply. All of that and more in The morning shift for July 20, 2021.
1st gear: Car accidents are back
The Wall Street Journal considers this in terms of the profitability of insurance companiesbecause the Wall Street Journal is written for stock investors.
The stage will be on Tuesday by Travelers TRV -3.28% Cos. prepares, one of the first large property and casualty insurers to announce its quarterly figures. It is a leading publisher of policies to protect small and medium-sized US businesses and is one of the top 10 sellers of private car insurance by premium volume.
Accidents have been increasing since last year. Last week, Progressive Corp. PGR -1.67% an increase in the volume of accidents by 47% compared to the previous year in the second quarter and an increase in claims costs by 8%.
“Our expectation is that the accident rate will increase over the course of 2021 as the number of vehicle kilometers traveled increases,” said James Shanahan, an analyst at Edward Jones. As a result, key profitability metrics are expected to be significantly weaker year over year, he said.
And yet more interesting is how driving behavior has changed.
Since last year, car insurers have been grappling with the higher severity of damage, the average cost of a claim. Part of the higher average cost was due to the fact that less serious fender benders were removed from the equation, industry executives and analysts said.
Policyholders drive more in their free time and many drive faster. Higher speed accidents result in more serious vehicle damage and injuries, analysts said.
Repair costs have risen, and the sharp rise in used car prices – coupled with bottlenecks in the supply chain in automobile manufacturing – is adding to the cost of damage to entire vehicles.
It’s a pretty complicated time to be a car owner when you need a car, to say the least the market is under pressure; when your car needs repairs, stores are struck and some parts are in short supply; the gas price it works too. Not that being a car owner was ever easy or cheap, but these days the hits keep coming.
2nd gear: Tesla chugs along in China
This is despite some new headwinds in the country, most of them were own goals. This is basically Tesla’s miniature story that, despite its botch, is growth and success.
Registrations of Model 3 sedans and Model Y crossovers made at Tesla’s Shanghai plant stood at 28,508 units in June, up 29 percent from May and more than double the number in April, such as Show data from China Automotive Information Net. Model 3 registrations rose to 16,995 while Model Y hit 11,513, a 10 percent decrease from May.
The strong performance of the Model 3 sedans can be attributed in part to Tesla promotions that included preferential credits and discounts on full prepayments, local media reported. The automaker began shipping the Model 3 from its Shanghai plant to the public in early 2020, with Model Y production to follow later.
It is also interesting that Telsa operates very differently in China than in the USA and offers discounts and incentives for goose sales. Of course, Tesla isn’t doing that in the US, presumably because it wasn’t really necessary – manufacturing capacity was a more pressing concern until recently. We’ll see what it looks like in a year or more when Tesla has a line of Model 3 to move quickly.
3rd Gear: Back to the masks at a GM facility outside of St. Louis
This is due to an increase in Covid cases in the region. The Wentzville, Missouri facility manufactures GMC Canyons and Savanas, as well as Chevy Colorados and Expresses.
Of the Detroit Free Press:
Nearly 4,000 workers at a General Motors plant near St. Louis will be forced to wear face masks and social distancing again as of late Monday due to an increase in COVID-19 cases in the area.
In a warning sent to the workers and received by the Free Press, the union informed the factory workers of the change on Monday afternoon.
The warning read: “We have been informed by the company and UAW International that due to the strong upward trend in COVID cases in the surrounding areas, all employees at the GM Wentzville Assembly Center will again have to wear masks when entering the plant from this evening third shift employees . ”
Less than half of the adult Missourians are completely vaccinatedwhich at this point says more about the unvaccinated than about the public health officials.
4th gear: Volkswagen’s battery-electric sales almost tripled in the first half of the year
This is in large part due to the strong demand for electric vehicles in Europe, where strict Emissions regulations are in force and where there are many incentives to go electric.
BEV deliveries rose to 170,939 in the first six months of the year.
“Our global electric offensive is making good progress and customer demand is high,” said Christian Dahlheim, Head of Group Sales at Volkswagen.
“We are planning to deliver around one million electrified vehicles for the first time this year and are confident that we will achieve the fleet targets for CO2 emissions in Europe.”
The 1 million target applies to both BEVs and plug-in hybrid electric vehicles (PHEVs). Volkswagen has not only set an annual target for BEVs.
5th Gear: AutoNation is sucking up profits due to the overheated auto market
The new and used dealer assumes that the market will remain roughly the same through 2022, which is a bleak forecast for consumers. I think that’s a little too pessimistic (or optimistic from AutoNation’s point of view) as the housing market, once overheated like the car market, has shown signs of slowing down in the past few days. But the thing about the pandemic is that things have proven impossible to predict.
The company announced Monday that new and used vehicle sales rose 42% and 37%, respectively, in the second quarter.
“Consumers buy vehicles before they arrive at our stores. We expect the current environment, in which demand exceeds supply, to continue until 2022, ”said Chief Executive Officer Mike Jackson in a statement.
Fort Lauderdale, Fla., Based AutoNation, gross profit increased 89% to $ 4,157 for the quarter ended June 30, while gross profit per used vehicle increased 24% to $ 2,240.
The company had 14 delivery days for new vehicles in the quarter compared to 49 in the previous year.
Adjusted net income from continuing operations hit a record $ 4.83 per share, slightly beating Refinitiv IBES ‘estimate of $ 2.81. Record sales of $ 6.98 billion were also above expectations.
I wouldn’t have guessed it back then, but I will remember the 2010s as a quiet, boring decade.
The other way round: to the moon
Jeff Bezos’ Blue Origin was launched today and is deliberately linked to this anniversary. I have a simple proposal, which is to send every billionaire into space and leave him there.
Neutral: How are you?
GEICO added $ 50 to my auto insurance premium for my next six month bill, which is nearly $ 700. It’s not clear why exactly as they haven’t sent me a full invoice yet, but that was still enough to get mad and get a quote from another insurance company. The one I picked was the highest rated auto insurance company (via Consumer Reports) that offers auto insurance in New York City called Amica. Well, I jumped through all the tires and their offer for a policy similar to the one I get from GEICO was almost double the premium. So it is GEICO as I have no complaints about the coverage itself. It’s impossible not to feel like you’re not in good hands when you take out car insurance.