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By Joseph White, Global Automotive Correspondent

Greetings from the Motor City!

Happy Cinco de Mayo! And a merry coronation weekend to readers and colleagues in the United Kingdom.  Before you slip out to hoist a pint to the King – or enjoy a La Bandera – there’s news from the world of cars.

Today –

• • Carvana bounces back 

  • Ferrari’s Purosangue runs wild

  • Auto suppliers are optimistic-ish

     

A Carvana vending machine.

Shares in online used car retailer Carvana jumped by as much as a third in pre-market trading Friday after the company showed evidence that cost-cutting and smarter inventory management are pulling the operation out of its nosedive.

Carvana’s combination of a slick online sales portal with a smooth home delivery system (disclosure: I purchased a vehicle from Carvana) was a pandemic-era winner. Rival auto retailers rushed to emulate Carvana’s methods. General Motors went so far as to set up a used car sales brand called….CarBravo!

But Carvana shares collapsed by more than 90% last year as the company got whipsawed by volatile used vehicle prices, the high cost of its operations (including relentless advertising) and run-ins with state regulators.

A durable turnaround at Carvana could re-focus attention on its innovative online retailing system and the challenge it poses to legacy auto dealers. CEO Ernie Garcia promised positive earnings before interest, taxes and amortization (EBITDA) in the second quarter – a major step on the road to recovery. Stay tuned.

No, you can’t have one.

Ferrari is known for ultra-high performance sports cars and Formula One racing (though it’s been a tough year for the latter.)

As of this week, Ferrari is also the Purosangue SUV company – despite itself. The Italian icon’s shares surged to a new record after it reported core profits jumped by 27% during the first quarter as it began delivering the first 12-cylinder, petrol-fueled Purosangues.

Ferrari CEO Benedetto Vigna says he will limit the Purosangue to just 20% of Ferrari’s production. Customers have other ideas. The waiting list for the 390,000-euro super-SUV now extends to 2026.

Auto parts: Want to bet how many we’ll need this year?

Here are some takeaways from first quarter financial reports this week by several big automotive parts and technology suppliers – Aptiv, Magna, Adient and BorgWarner among them. (Lear, a big player in electronics and seating, reported in late April.)

• The outlook for vehicle demand in North America and Europe is better than expected earlier this year.
• Chinese automakers are revving to expand exports, confident their technology and quality can compete.
• Legacy automakers are forging ahead with electrification and software-development programs, despite the painful costs.
• Supply chain bottlenecks are getting better, but high materials costs are still a challenge.

Investors were tough on companies – such as Aptiv – that argued the outlooks for their lines of business (automated driving, electrification) are solid, but opted not to lift their 2023 profit targets, blaming the dicey macro-economic outlook.

The caution among suppliers reflects the nervousness at big automakers. BMW reported strong Q1 results but did not raise its full-year profit forecast. 

Volkswagen warned that competition will intensify as semiconductor supplies and vehicle production increase. VW’s electric vehicle deliveries in Q1 jumped 42% to 141,000 vehicles. But sales in China dropped 14.5% in the quarter from a year ago.

(Read more from Breakingviews on VW’s tricky road ahead.)

Manufacturers selling connected vehicles in China could not transmit abroad the data collected from on-board sensors, according to draft proposals put out by China’s Ministry of Industry and Information Technology.

Chinese policy has been headed in this direction since officials imposed limits on where Teslas could operate. The new proposals make it clear that automakers will have to create China-only smart vehicle infrastructures.

Separately, Chinese state media reported that central government policymakers want to expand EV charging, under a new set of policies previewed Friday.

The U.S. Environmental Protection Agency on May 9 will start a round of hearings that will allow interest groups to sound off on the Biden Administration’s proposals to get carbon out of the U.S. vehicle industry.

Never mind the declarations from automakers that they are committed to going all-in on EVs.

The hearings will likely expose the extent to which industry groups and the United Auto Workers are not sold on the administration’s proposals to push electric vehicles to 67% of U.S. light vehicle sales by 2032. A companion proposal would use emissions limits to push medium and heavy trucks and buses toward electrification.

The hearings will offer a reminder of the sprawling diversity of the U.S. auto sector. Consider the hundreds of small companies that make performance and repair parts for combustion engines, many of them members of the Specialty Equipment Manufacturers Association (SEMA).

“We think the future is several different technologies, not just one,” said SEMA’s President Mike Spagnola, who said he intends to testify next week.

“Our industry and others are going to rally,” he said, to argue that the EPA proposals are “too strict, too soon.”

Scientists and environmental groups concerned about climate change worry the proposals are not enough, and too late.

California heavy truck fleet operators faced with mandates to buy electric or hydrogen vehicles could opt to keep old trucks running longer instead, Liane Randolph, the chair of the California Air Resources Board said this week during a talk in Brussels.  

California laws allow truck fleets to keep vehicles for as long as 18 years – notwithstanding $40,000 in federal tax credits to encourage buying clean trucks, and billions in California subsidies for charging infrastructure. Randolph said that’s a concern, and her agency plans to revisit what to do about old trucks, according to my colleague Julia Payne who listened in.

California policymakers are focused on cleaning up specific trucking routes, such as the runs from the state’s big ports to inland warehouses.

“The transition is not all going to happen tomorrow,” she said.

The company that makes London cabs plans to push into the electric commercial vehicle business. The London Electric Vehicle Company, a unit of Chinese automaker Geely, said it is developing a large EV architecture to branch out beyond black taxis.

Lyft shares took a beating in early trading Friday after the distant No. 2 U.S. ride hailing company dismayed analysts with a downbeat profit outlook and talk of cutting prices to claw back riders from Uber. Lyft’s market cap was on track to fall to $3.3 billion – a long way down from the peak of $24 billion, and even farther away from Uber’s $75-billion-plus market valuation.

In U.S. ride sharing, we have a winner.

Volvo Cars will cut 1,300 jobs to offset rising costs.

Lordstown Motors could stop building its Endurance pickup trucks as it scrambles to avoid bankruptcy, the company said. Lordstown reported a wider loss and said it had $108.1 million in cash as of March 31, down from $203.6 million a year earlier. Lordstown said it is still in talks with Foxconn, which has refused to go forward with a promised investment.

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