TSLA Tesla Inc

By Paul Page 

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The automobile industry, which has helped prop up the U.S. economíc recovery, is facing an inventory glut. Car sales unexpectedly slid in March, the WSJ's Adrienne Roberts reports, heightening concerns about bloated dealer stocks and raising worries that the market weakness will spread back through the supply chain to factories. Auto makers sold 1.55 million vehicles in March, down 1.6% from a year ago, according to Autodata Corp., suggesting the market is poised to end a seven-year growth streak. Meanwhile, J.D. Power says the number of days a vehicle sat on a dealer lot before being sold hit 70 days in March, the highest level since July 2009. Inventories have been excessive since the end of 2016, and WardsAuto.com says more than 4 million unsold vehicles crammed dealer lots as of Feb. 28. Deeper discounting is on the way, and car-company earnings may take a hit and that could trigger new cost-paring production cuts.

There's no talk at Tesla Inc. about a slowdown in automobile demand , and certainly no suggestion of restraint in production. The upstart Silicon Valley electric-car maker is marking a milestone in surpassing Ford Motor Co. in market capitalization this week, the WSJ's Tim Higgins and Christina Rogers report, just as the company is preparing to scale up its manufacturing and distribution capabilities. Tesla seems to be defying fears that the auto industry is heading toward a downturn, reporting skyrocketing sales of its electric cars -- although sales remain relatively modest -- even as low gasoline prices have sunk demand for other electric vehicles. Its global sales rose 69% in the first quarter, putting the car maker on the path to meet its goal of 50,000 deliveries in the first half of this year. Tesla delivered 76,000 cars last year -- about a third of what Ford sold in this year's first quarter alone. But for the moment, it looks like investors are betting on new technology over the internal combustion engine.

Apple Inc. is getting sharp pushback from a small but critical supplier as the electronics giant tries to take greater control of its supply chain. The U.K.-based Imagination Technologies Group PLC is signaling a possible patent fight after Apple said it was working on its own design for the technology to process graphics in its iPhones and other devices. The WSJ's Stu Woo report's that Imagination's shares are taking a big hit in London trading on the news that it would lose its biggest customer, a sign of the heavy shadow Apple's big business casts across its suppliers. In this case, Imagination says Apple also depends heavily on the company for graphic processing units that Imagination insists would be "extremely challenging" to duplicate without infringing on the company's design. That could bring Apple its second intellectual property dispute with a supplier this year, following its suit in January against chip supplier Qualcomm Inc.

SUPPLY CHAIN STRATEGIES

The political climate around the world may test the resilience of supply chains on a grand scale. In a WSJ Logistics Report Guest Voices commentary, Yossi Sheffi, the director of the Massachusetts Institute of Technology's Center for Transportation & Logistics, writes that the early months of President Donald Trump's administration raise critical questions over risk and uncertainty for supply chains that companies should address in their planning. Potential changes in trade and taxation are coursing through policy circles in Washington, and those issues along with talk of changes in immigration policies, may upend ties between suppliers and vendors deep in distribution channels. Mr. Sheffi writes that the potential scenarios and outcomes are too numerous to prepare for fully, however, and that companies watching the very heated political debates underway must focus on separating rhetoric from real potential impact on operations and finances.

QUOTABLE

IN OTHER NEWS

U.S. manufacturing growth slipped in March but remained in strong expansion territory. (WSJ)

An Ocean Rig UDW Inc. creditor is trying to halt the offshore drilling contractor's restructuring, arguing Chief Executive George Economou is using the business as a piggy bank for his other shipping enterprises. (WSJ)

The global aviation community remains hamstrung by technical, marketing and jurisdictional disputes in attempts to update flight-data recorder technology. (WSJ)

The U.K.'s Office of Financial Sanctions Implementation added financial penalties as part of changes in how it enforces sanctions. (WSJ)

Tight ocean shipping capacity is triggering a surge in air freight demand between Asia and Europe. (Lloyd's Loading List)

Japan's Kawasaki Heavy Industries will cut its struggling shipbuilding and offshore business by nearly a third. (Nikkei Asian Review)

United Parcel Service Inc. is launching ground delivery and pickup service on Saturdays to speed up delivery of e-commerce shipments. (MarketWatch)

Peloton Technology will start testing its truck platooning system this spring on the Ohio Turnpike. (Cleveland Plain-Dealer)

The White House nominated Kevin K. McAleenan, the acting Customs and Border Protection deputy commissioner, as permanent commissioner. (American Shipper)

Competition authorities in Norway scuttled shipping company Eimskip's proposed acquisition of rival Nor Lines. (IHS Fairplay)

China Merchants Port Holdings Co. reported a 14.5% year-on-year rise in container throughput in 2016. (Container Management)

A prosecutor is investigating payments the South Carolina Ports Authority made to a political consultant without bidding or review. (Charleston Post & Courier)

Cutlery maker Wüsthof is cracking down on discount resellers on Amazon's marketplace in part by barring them from storing its goods at Amazon warehouses and using the company's fulfillment service. (Internet Retailer)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @jensmithWSJ and @EEPhillips_WSJ and follow the WSJ Logistics Report on Twitter at @WSJLogistics.

Subscribe to this email newsletter by clicking here: http://on.wsj.com/Logisticsnewsletter .

Write to Paul Page at paul.page@wsj.com

(END) Dow Jones Newswires

April 04, 2017 06:52 ET (10:52 GMT)

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