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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 3: Nordstmb Family, they're going to acquire all the outstanding common

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Speaker 3: stock not already owned by them. And here with more

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Speaker 3: is Bloomberg's Emily Cone. Emily, thank you so much for

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Speaker 3: joining us here in studio. Nordstrom. Why are they going private?

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Speaker 4: So we have Nordstrom here, a retail giant that's really

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Speaker 4: been struggling. It's been struggling to compete with fast fashion,

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Speaker 4: it's been struggling to compete with discount chains like TJ Max.

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Speaker 4: So we have the company saying that they think they

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Speaker 4: can do a better job navigating this tough retail landscape,

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Speaker 4: taking the company private without the scrutiny from Wall Street

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Speaker 4: so they can really focus on their operations.

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Speaker 5: What does that look like, Emini? Does that mean cost cots?

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Speaker 5: Does that mean job cots? Does that mean a tough

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Speaker 5: a payod to come. I feel pot of Nordstrum.

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Speaker 1: I think that's still to come.

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Speaker 4: I think we don't know, but I think probably all

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Speaker 4: those things around the table this company has. You know,

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Speaker 4: it was once worth fifteen billion dollars I believe in

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Speaker 4: twenty nineteen. Now it's going for six point two five billion.

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Speaker 4: The stock price has plunged forty percent in the last

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Speaker 4: five years, so there's a lot that needs to change.

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Speaker 3: Emily, there's a lot of Nordstroms in this management team,

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Speaker 3: in this ownership. How does the street view this family

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Speaker 3: ownership in terms of being managers?

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Speaker 6: That's a good question. I think there's a lot there,

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Speaker 6: you know.

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Speaker 1: I think the.

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Speaker 4: Company has invested a lot in its rack business, that's

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Speaker 4: the discount chain that's competing with TJ Max. I think

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Speaker 4: they've seen a lot of growth from Max in recent years.

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Speaker 4: I think you might be seeing more investment in that.

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Speaker 4: That's definitely been better than expected part of the business.

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Speaker 4: That's the part that competes with the TJ Max and

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Speaker 4: you get stuff that is very discounted, and that's sort

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Speaker 4: of like what consumers these days are looking for when

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Speaker 4: they're shopping.

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Speaker 6: They sure are.

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Speaker 5: Let's just talk a little bit about a Mexican involvement,

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Speaker 5: because fifty point one percent is going to be held

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Speaker 5: by the nord Strom family, but then a Mexican department

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Speaker 5: store owner is coming in and taking up the rest.

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Speaker 6: Is that about agility?

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Speaker 5: Is that about finding strategic investors here who know how

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Speaker 5: to operate?

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Speaker 1: Yeah?

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Speaker 4: I mean I think it's also about the cash. And

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Speaker 4: this is a big department searchain in Mexico and they're

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Speaker 4: they're helping finance the deal.

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Speaker 5: Okay, money on the table always helps us a little

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Speaker 5: bit of operational flexibility.

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Speaker 6: I'm sure great to have time with you. Thank you

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Speaker 6: so much, Emi Cone.

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Speaker 5: All over this story, big six point twenty five billion

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Speaker 5: dollar deal for Nordstrom.

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Speaker 6: Let's just brunen this out, Paul. Let's talk about.

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Speaker 5: The retail industry going into twenty twenty five when we

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Speaker 5: get those pretty ugly consumer numbers in terms of confidence

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Speaker 5: today and what please to welcome Jennifer Bartasha.

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Speaker 6: She can do that with us.

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Speaker 5: Of course, she is of BlueBag Intelligence, and Jenniva push

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Speaker 5: us forward as to what we're looking like from we've

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Speaker 5: got a Nordstrom signaling that they want to go private,

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Speaker 5: they need to rework and re energize their business. How

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Speaker 5: is the rest of the High Streets set up for

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Speaker 5: twenty twenty five.

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Speaker 7: Good morning. So one of the things that we're looking

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Speaker 7: at is really the consumer is doing well, but it's

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Speaker 7: about where is their focus, And the focus is on value.

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Speaker 7: And so what we're seeing is across the entire industry

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Speaker 7: a lot of retailers trying to re orient them their

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Speaker 7: operations in a way that presents a value. However that

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Speaker 7: might mean to their core consumer. So for nord Stream,

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Speaker 7: you may see that pivoting in terms of the way

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Speaker 7: they do their assortment. But for retailers like Walmart and Target,

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Speaker 7: it's about price and it's about selection.

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Speaker 3: And there's a great story on that general in the

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Speaker 3: Bloomberg terminal today, Leslie Patten and Jay Won Kang have

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Speaker 3: this story. The headline's just a great headland Kirkland for

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Speaker 3: Christmas shoppers ditch logos for store brands. That kind of

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Speaker 3: goes to your value argument. How do you see that

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Speaker 3: with the stores you cover?

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Speaker 7: Yeah, value is, as I said, it's utmost importance. But

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Speaker 7: private Label had a great year in twenty twenty four,

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Speaker 7: and we actually see that momentum just continuing in twenty

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Speaker 7: twenty five. So Kirkland is Costco's own brand. It is

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Speaker 7: over thirty percent, almost thirty five percent of their sales,

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Speaker 7: and it is just a trusted brand to the point

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Speaker 7: where consumers no longer think of it as a private

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Speaker 7: label alternative to national brands.

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Speaker 1: They just see it as a brand in and of itself.

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Speaker 7: Walmart, Target, Kroger, Albertson's, these companies have all invested in

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Speaker 7: private label in the last year couple like the last

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Speaker 7: several years, and it's really starting to pay dividends because

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Speaker 7: it's value, it's novelty, and it's something consumers are really

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Speaker 7: resonating with.

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Speaker 5: To get that data to understand that it's resonating with

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Speaker 5: a consumer, they're having to be leaning into all the

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Speaker 5: data points, largely through digital investment.

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Speaker 6: I'm sure, and through artificial intelligence.

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Speaker 5: How is that something that they're not just plowing money

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Speaker 5: in by getting the rewards back.

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Speaker 7: Yeah, the rise of retail media is really the answer

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Speaker 7: to that question. And when we look at the industry,

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Speaker 7: actually last year we made a prediction that retail media

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Speaker 7: would be up by over twenty percent the revenue associated

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Speaker 7: with it for twenty twenty four, and it looks like

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Speaker 7: we're going to exceed that and it's on pace to

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Speaker 7: continue that kind of momentum into twenty twenty five. So

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Speaker 7: retail media is really advertising, and it's the selling of

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Speaker 7: ad space, it's the selling of search results, and it's

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Speaker 7: the digital products such as you see online as well

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Speaker 7: as digital screens that you see in stores. And so

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Speaker 7: retailers have really been unlocking the value of that and

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Speaker 7: are finding that it's a way to bring a high margin,

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Speaker 7: very low overhead business into their mainstream core.

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Speaker 3: You know, Jen, that's a business for better or worse,

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Speaker 3: I have experienced with back in my banking days. We

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Speaker 3: tried to finance a bunch of those companies because we

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Speaker 3: felt like, you know, just like you said, they're captured customers,

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Speaker 3: they're at the point of buying. What a great time

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Speaker 3: for video to be introduced there in terms of advertising.

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Speaker 3: What does it mean for the big retailers? What are

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Speaker 3: the economics to the big retailers for this media?

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Speaker 7: So this media carries a margin of eighty percent, and

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Speaker 7: when you think about when you think about retail staples,

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Speaker 7: you're talking about operating margins in the three to five

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Speaker 7: percent range, right, You're talking about gross margins in the

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Speaker 7: high teens, low twenties. So the ability to have a

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Speaker 7: revenue stream with such a high margin is very appealing

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Speaker 7: to these companies.

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Speaker 1: And they have the data.

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Speaker 7: They have all this first party data that they can monetize,

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Speaker 7: and so it really is a very effective partnering. And

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Speaker 7: one of the interesting things that we're finding is that

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Speaker 7: there's always been historically investment from say, packaged food companies

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Speaker 7: into retailers for placement on shelves and things like that,

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Speaker 7: but we're finding that retail media is actually incremental spend.

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Speaker 7: So that's actually an even bigger tailwind for these retailers

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Speaker 7: as they get deeper into this new revenue stream.

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Speaker 5: In many ways, everyone takes a leaf out of Amazon's book.

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Speaker 5: In the end, I'm interested in Jane a little bit

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Speaker 5: more about the pure data side of it and the

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Speaker 5: forecasting side of it. We go to you to help

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Speaker 5: us forecast what the retail looks like. How are the

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Speaker 5: companies themsells forecasting in twenty twenty five.

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Speaker 7: Well, it's been interesting because what we've really seen were

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Speaker 7: in twenty twenty three and twenty twenty four we saw

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Speaker 7: some initial pilot cases of the use of AI, for example,

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Speaker 7: to help with demand forecasting, and we're seeing that those

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Speaker 7: pilot programs have been successful and are being more widely

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Speaker 7: rolled out across organizations at places like Kroger and Walmart

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Speaker 7: and Target. And you know what that really means is

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Speaker 7: that they're getting more efficient and smarter about understanding when

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Speaker 7: they need product and where they need product. That then

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Speaker 7: goes all the way back up to supply chain and

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Speaker 7: makes them more efficient as an organization. And so, you know,

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Speaker 7: that kind of cost cutting initiative is good from a

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Speaker 7: operational perspective, but it's also good for customers because that

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Speaker 7: means that what they want will be in the stores

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Speaker 7: or online available at the time they want it.

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Speaker 3: And Jen, what I learned from you a while backward

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Speaker 3: shocked me. It still shocks me. Who's the number one

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Speaker 3: supermarket in the United States.

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Speaker 7: That would be Walmart. Over fifty percent of Walmart's sales

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Speaker 7: come from groceries and they hold a little over thirty

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Speaker 7: percent of total market share in the United States, which

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Speaker 7: is pretty significant.

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Speaker 3: And yet the regulators won't let Albertson's and Kroger get together.

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Speaker 7: You know, it's the end of a two year saga.

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Speaker 7: You know, when we first heard the announcement of that merger,

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Speaker 7: we thought it was actually good for both organizations, but

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Speaker 7: in this instance, the FTC prevailed, the merger is now dead,

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Speaker 7: and Kroger and Albertson we'll just have to continue on

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Speaker 7: their own individual strategies and we'll see how that unfalls.

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Speaker 6: Jennifer about hash. Just great to check in with you all.

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Speaker 5: An important look ahead to twenty twenty five retail and

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Speaker 5: a bit of a look behind us at that M

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Speaker 5: and a deal that went very sour.

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Speaker 6: Thank you so much for Blue Big Intelligence.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Apple, card Play and

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Speaker 2: and Bright Outo with the Bloomberg Business. You can also

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Speaker 2: Just say Alexa Play Bloomberg eleven thirty.

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Speaker 5: Juna Coronado's with us macro policy perspectives. President and of

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Speaker 5: course you're the founder. To you once upon a time,

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Speaker 5: we're a key researcher over at the FED, so point

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Speaker 5: us into twenty twenty five and the charity we need

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Speaker 5: because Friday a bit of a relief in terms of

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Speaker 5: the inflationary signals that we got, but certainly we'd all

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Speaker 5: been rocked by what the FED had been telling us.

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Speaker 6: Earlier.

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Speaker 8: Yeah, that's right, they're messaging that we got at the

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Speaker 8: December meeting was a lot sterner than expected, with only

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Speaker 8: two cuts and just a general tone of concern about inflation.

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Speaker 8: And I think, you know, when we look at the

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Speaker 8: data that's come in, it's fair for President Daily to

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Speaker 8: say that, you know, it's the data have been disappointing

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Speaker 8: on the inflation front. But this wouldn't have really happened

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Speaker 8: if it weren't for the risks to inflation in the outlook.

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Speaker 8: And they can't really pinpoint them or put too fine

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Speaker 8: a point on what's likely to happen, but every major

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Speaker 8: policy prong of the incoming Trump administration could potentially be inflationary.

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Speaker 8: So you can see they released their assessment of risks

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Speaker 8: to inflation and unemployment, and the change in upside risks

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Speaker 8: to inflation really moved at the December meeting. So we

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Speaker 8: don't know the specifics on policy. Yes, we have to

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Speaker 8: wait and see what materializes and how that feeds into

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Speaker 8: the data.

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Speaker 6: But there's a direction of travel.

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Speaker 8: Here that's of concern to the FMC. Broadly speaking, this

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Speaker 8: was a big move across a lot of participants, and

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Speaker 8: so you know they want us to be on watch

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Speaker 8: for that.

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Speaker 5: Have you been running the numbers and with the best case,

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Speaker 5: worst case scenario. Yes, we don't know the direction exactly

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Speaker 5: of where policy will go. But we've been on this

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Speaker 5: rodeo before, and there's been tough talk about taris in

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Speaker 5: the past.

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Speaker 8: Yes, and we got tariffs in the past, and we

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Speaker 8: did see them flow through into goods prices. The difference

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Speaker 8: was that we were in an environment in the Trump

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Speaker 8: the first Trump administration, where inflation was running low and

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Speaker 8: in fact below the Fed's target, so they could be

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Speaker 8: very sanguine and patient and sort of accommodate the increase

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Speaker 8: in goods prices that came with the trade war. This

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Speaker 8: time around, we're in a different environment. They've just re

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Speaker 8: established credibility, They've just brought inflation back down, not even

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Speaker 8: to their target yet, and so you know the threat

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Speaker 8: of a round of tariffs and an impulse into goods

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Speaker 8: prices is more meaningful now. The thing that they're going

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Speaker 8: to have to grapple with and we saw that also

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Speaker 8: in last trade war is trade wars also destroyed demand.

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Speaker 8: That spike and prices isn't good for consumer purchasing power,

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Speaker 8: and it's unlikely to be accommodated like it was during

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Speaker 8: the pandemic, with a lot of fiscal support to households

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Speaker 8: directly to households, which helped the economy weather the inflationary

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Speaker 8: shock during the pandemic and sort of stay on track.

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Speaker 8: In the first Strump administration, we actually saw the trade

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Speaker 8: war damp in economic activity, put the global manufacturing sector

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Speaker 8: into a recession, and the FED actually ended up cutting

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Speaker 8: rates in twenty nineteen to take out some insurance against

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Speaker 8: that manufacturing recession broadening into the service sector. So, you know,

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Speaker 8: very different circumstances. This could weaken the economy, it could

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Speaker 8: cause inflation, It could do both, and then the Fed's

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Speaker 8: mandates go in different directions and they have to make

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Speaker 8: a judgment.

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Speaker 3: So, you know, tariffs are clearly an issue. What I've

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Speaker 3: heard from a lot of folks is restrictive immigration policies,

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Speaker 3: perhaps forced deportations that impact on the labor market that

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Speaker 3: might even be even more inflationary going forward.

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Speaker 1: How do you view that risk?

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Speaker 8: Yeah, no, absolutely, and I think that is definitely something

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Speaker 8: we are likely to see. That is one of the

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Speaker 8: main promises of the campaign, and we can already see

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Speaker 8: the appointees and the plans being put in place to

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Speaker 8: implement this policy. And let's not forget that immigration, that

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Speaker 8: plentiful flow of immigration. While it became a political hot

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Speaker 8: potato during the election, it's unambiguously positive from a macroeconomic standpoint.

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Speaker 8: We had abundant labor supply. It helped growth, it helped demand.

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Speaker 8: So immigration is good for the economy. And to even

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Speaker 8: just turn off this bigot, let alone turn around and

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Speaker 8: you know, cast a shadow over the labor market and

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Speaker 8: deport some workers, it's going to change the macro environment.

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Speaker 8: And yes, in areas where the most targeted population, the

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Speaker 8: undocumented workers are employed, food services, construction. I have conversations

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Speaker 8: with people here in Texas, people in the real estate

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Speaker 8: industry that are pretty worried about the availability of workers

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Speaker 8: as as early as next year, as early as the

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Speaker 8: spring building season. So this could be very material. It

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Speaker 8: could bring higher prices. It could also just slow down

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Speaker 8: building activity because you just don't have the people that

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Speaker 8: you need. Similarly, for food, availability of certain crops and

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Speaker 8: the prices of those would likely spike. So leisure and

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Speaker 8: hospitality another industry that relies heavily on an immigrant workforce.

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Speaker 8: So yeah, we could see that ripple across numerous sectors

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Speaker 8: in the economy, and it could be you know, by

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Speaker 8: mid year we're seeing some material constraints and some price

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Speaker 8: increases on the back of that, you.

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Speaker 3: Know, and Julie, it kind of goes to that consumer

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Speaker 3: confidence number we got today came in, you know, weaker

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Speaker 3: than expected, and the expectations looking forward were weaker than expected.

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Speaker 3: That actually surprised me because I've been talking to a

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Speaker 3: lot of our guests since the election about a palpable

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Speaker 3: sense of optimism in this country since the election, particularly

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Speaker 3: as it relates to economic outlook, reduced taxes and so

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Speaker 3: on and so forth. How do you think about the

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Speaker 3: consumer consumer confidence?

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Speaker 8: That data surprised you today, So I was just digging

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Speaker 8: through those details, And of course the optimism depends on

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Speaker 8: who you ask. So you're probably talking to a lot

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Speaker 8: of market participants who have experienced the rally and are

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Speaker 8: looking forward to maybe reduced regulation in the finance industry,

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Speaker 8: maybe some corporate tax cuts. But when you look at consumers, well,

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Speaker 8: there's a lot of uncertainty as to how this mix

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Speaker 8: of tariffs and immigration and is going to affect more

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Speaker 8: the average consumer. And when I looked at actually what

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Speaker 8: was interesting you could see a little bit of a

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Speaker 8: political footprint here when you look at it by region.

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Speaker 8: The Conference Board doesn't have the breakdown by political party

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Speaker 8: like the Michigan Sentiment Measure does, but you can clearly

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Speaker 8: see sort of the South confidence going up, in the

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Speaker 8: West and the Northeast the confidence going down. So, you know,

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Speaker 8: we are a fifty to fifty country. We always have been.

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Speaker 8: Some people are feeling better, some people are feeling a

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Speaker 8: lot worse, and it really depends on who you ask.

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Speaker 5: What about stockholders, because boy, twenty twenty four should have

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Speaker 5: been the year that made everyone feel pretty good. It's

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Speaker 5: if you've been long AI, if you've been long S

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Speaker 5: and p as that big of benchmarks and then it

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Speaker 5: just tails off in the last couple of weeks. So

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Speaker 5: how does sentiment around being an asset holder right now feel?

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Speaker 1: Yeah?

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Speaker 8: Yeah, well, that's what was interesting about the numbers, right

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Speaker 8: It was the expectations component, not the present situation. We

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Speaker 8: have been on quite a tear in the stock market,

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Speaker 8: and of course you all know that it's been very,

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Speaker 8: very concentrated in a handful of names that are related

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Speaker 8: to the AI. You know, sort of euphoria.

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Speaker 6: But you know now we're.

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Speaker 8: Moving into the expectations meets reality phase of change in administration.

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Speaker 8: So by the end of January, we're going to know

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Speaker 8: a lot more about this mix of policies. And yeah,

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Speaker 8: some are growth positive and some are growth negative, and

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Speaker 8: so different industries are going to experience that differently. The

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Speaker 8: tax cuts, I think one of the things that we

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Speaker 8: just saw with the budget dog fight is that it's

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Speaker 8: a lot easier to talk about tax cuts on the

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Speaker 8: campaign trail than implement them in a very closely divided Congress,

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Speaker 8: and even within the Republican Party, while they hold majorities

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Speaker 8: in both houses. Uh, there's a lot of different views

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Speaker 8: on the right the correct direction of fiscal policy. So

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Speaker 8: I we sort of imagine it's going to take most

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Speaker 8: of the year to legislate anything meaningful on the fiscal front.

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Speaker 8: They want to push forward a border a package early.

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Speaker 8: We'll see how that plays out.

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Speaker 1: I'm sure.

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Speaker 8: I assume they're going to be able to get a

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Speaker 8: lot done. But remember, like again, very different from last

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Speaker 8: time budget wise, the US fiscal position is a lot

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Speaker 8: worse than last time, and so that room for maneuvering

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Speaker 8: is a little tighter, and their ability to enact something

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Speaker 8: that's really going to change. The backdrop is more limited.

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Speaker 3: Enjoy about a minute left. How do you put in

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Speaker 3: Elon Musk into your calculus here?

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Speaker 8: Elon Musk is going to be a noise generator at

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Speaker 8: a minimum, and certainly will be as we saw with

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Speaker 8: his budget fight, fighting for things that are good for

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Speaker 8: his companies. But I think what we also saw in

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Speaker 8: the last last week is that he's not going to

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Speaker 8: just get his way. He's going to talk a lot.

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Speaker 8: Do I think he's actually going to be successful eliminating

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Speaker 8: the VA health care system? No?

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Speaker 1: I do not.

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Speaker 8: So you know he's going to run into constraints. He's

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Speaker 8: not an elected official. He actually doesn't have any sort

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Speaker 8: of direct lever that he can pull. And these elected

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Speaker 8: officials have a lot of views about the programs that

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Speaker 8: they want to protect and their constituents that they want

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Speaker 8: to serve. So I think it's going to be messy

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Speaker 8: and loud and harder to extract the signal from the noise.

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Speaker 5: Currently, his eyes are on the FED, absurdly overstaffed.

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Speaker 6: Certainly overstate.

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Speaker 8: How I looked at this number the Federal Reserve entire

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Speaker 8: system employees point one two percent of the zero point

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Speaker 8: one two percent of the workforce.

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Speaker 1: That's tiny.

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Speaker 6: What do we get for that?

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Speaker 8: We get over so the banking system, monetary policy, we need.

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Speaker 6: To leave it there. Okay, people weigh in good context.

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Speaker 6: It's everything here. That's Julia Cornardo. This is a Bloomberg.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Apple Card playing Android

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Speaker 2: Otto with the Bloomberg Business App. Listen on demand wherever

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Speaker 2: you get your podcasts, or watch us live on YouTube.

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Speaker 6: Let's turn our attention though to Auto's now.

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Speaker 5: Because there is a big deal now being confirmed.

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Speaker 6: Over in Japan, Paul, and it's.

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Speaker 5: Not coming till twenty twenty six, but it's going to

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Speaker 5: take a long hard time. There's also a lot to

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Speaker 5: talk about in Europe as well. We do it all

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Speaker 5: with Craig Triddell, who's sat here in.

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Speaker 6: London at the moment. And Craig just take us over

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Speaker 6: to Nissan and Honda. A deal done.

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Speaker 9: Yeah, this is going to play out over quite a while.

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Speaker 9: As you alluded to, I think, you know, real questions

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Speaker 9: about you know, just how happy shareholders across the various

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Speaker 9: companies involved are going to be with this. You know,

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Speaker 9: to put it plainly, I mean, this is really Honda

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Speaker 9: coming to Nissan's rescue, and that that is sort of

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Speaker 9: you know, the writing is on the wall there. In

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Speaker 9: terms of looking at the terms that these companies talked

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Speaker 9: about in Tokyo Monday, Honda will you know, take the

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Speaker 9: lead and forming this holding company that Nissan will be

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Speaker 9: a part of. Maybe Mitsubishi Motors will join. And the

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Speaker 9: big question is, you know, where does Renault stand in

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Speaker 9: all this as as Nissan's biggest shareholder, will they be

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Speaker 9: content to move forward with this style of deal?

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Speaker 3: So, Craig, how are the how's Honda and Nissan? How

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Speaker 3: are they positioning this new co? Is this going to

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Speaker 3: be competitive with the Fords, the Gms, the vulksh legends

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Speaker 3: of the world. Where does it want to be?

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Speaker 9: I mean in terms of scale, it will be, you know,

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Speaker 9: one of the bigger carmakers in the world. I think,

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Speaker 9: you know, if we just look at you know, annual sales,

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Speaker 9: I mean maybe somewhere in the third or fourth largest.

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Speaker 9: But in terms of you know where it's it's you know,

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Speaker 9: directionally heading. You know, Nissan in particular is shrinking in

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Speaker 9: dramatic fashion. Mitsubishi Motors is far and away the smallest

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Speaker 9: of the three, and there's real concerns about the state

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Speaker 9: of Nissan, and you know, just to what extent Honda

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Speaker 9: would want to sort of, you know, hitch its wagon

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Speaker 9: to Nissan, given the track record that it's had. You know, really,

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Speaker 9: since we're talking about you know, Carlos Gon leaving the

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Speaker 9: picture in twenty eighteen, we've really seen just a steady

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Speaker 9: deterioration in the state of that company. And you know,

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Speaker 9: the product portfolio is not in good shape.

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Speaker 1: There's not a whole lot of reason for optimism.

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Speaker 9: And so this is you know, potentially a distraction within

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Speaker 9: an industry that is just you know, extremely extremely competitive

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Speaker 9: and getting more so with the rise of Chinese companies

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Speaker 9: like BYD.

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Speaker 5: And look, since twenty eighteen, there has been significant disruption

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Speaker 5: around the world for autos, the rise of evs, the

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Speaker 5: rise of Tesla in the United States, the right of

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Speaker 5: them coming into China and taking Tesla's lunch there. And

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Speaker 5: then you think of Europe and you think of Germany,

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Speaker 5: that had been you know, the beauty spot for all

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Speaker 5: things autos. VW clearly showing that this time is still hurting.

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Speaker 9: Yeah, and we saw that toward the end of last week,

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Speaker 9: where for months now management has been pushing for restructuring

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Speaker 9: of the VW brand, which you know has long clearly

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Speaker 9: been an issue for the company.

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Speaker 1: It's just not been competitive.

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Speaker 9: It has you know, long had really really sort of

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00:23:40,800 --> 00:23:44,280
Speaker 9: thin thin profit margins. Management wanted to knit that in

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00:23:44,320 --> 00:23:47,320
Speaker 9: the butt and really, you know, do something that is

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00:23:47,359 --> 00:23:50,760
Speaker 9: long overdue. They were not able to do that. They

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Speaker 9: wanted to close as many as three plants. All the

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Speaker 9: factories in Germany for VW will remain open, but there's

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Speaker 9: there's you know, yes, there's going to be some capacity reductions,

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00:24:02,119 --> 00:24:04,800
Speaker 9: but I think we've seen the shares react in a

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00:24:04,840 --> 00:24:07,560
Speaker 9: way that's you know, sort of suggests a bit of

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00:24:07,560 --> 00:24:10,520
Speaker 9: a letdown in terms of what management was pushing for

450
00:24:10,800 --> 00:24:13,920
Speaker 9: versus what they were actually able to extract from labor,

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Speaker 9: which you know, as we know, they are structurally in

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Speaker 9: an extremely strong negotiating position in Germany.

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Speaker 3: Craig, as we step back from twenty twenty four to

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Speaker 3: think about twenty twenty five, what's the feeling within the

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Speaker 3: global auto industry about how this evolution to electric vehicles

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Speaker 3: is going to take place? Because I would argue that

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Speaker 3: twenty twenty four wasn't necessarily a great year. It felt

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Speaker 3: like momentum in certain parts of the world, particularly here

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Speaker 3: in the US, might have slipped a little bit. What's

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00:24:41,720 --> 00:24:44,800
Speaker 3: the feeling within the global industry about this transition to EBS.

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Speaker 1: I think that's a really important point.

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Speaker 9: That's sort of, you know, part of the broader landscape

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00:24:50,560 --> 00:24:53,080
Speaker 9: here right where it is both the case that the

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00:24:53,119 --> 00:24:56,879
Speaker 9: industry needs to move in this direction, regulators are really

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00:24:56,960 --> 00:24:59,640
Speaker 9: you know, continuing to put the pressure on these companies

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Speaker 9: to make that switch, and yet we have a situation

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Speaker 9: where the consumer I think really kind of was reluctant.

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Speaker 9: In twenty twenty four, to your point, we saw a

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Speaker 9: real slowdown and momentum for electric vehicles, some real questions

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00:25:12,960 --> 00:25:17,000
Speaker 9: about you know, just how you know, keen car buyers

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00:25:17,040 --> 00:25:20,760
Speaker 9: are to go fully electric. In the US market, hybrids

472
00:25:20,800 --> 00:25:24,159
Speaker 9: have have had a banner year, and I do think

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Speaker 9: that that's part of what's coming into play here for

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Speaker 9: Nissan is this is a company that you know, years ago,

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00:25:30,880 --> 00:25:33,919
Speaker 9: you know, was actually in a pretty competitive position. It

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00:25:34,000 --> 00:25:36,520
Speaker 9: was out there out front with the Leaf. However, that

477
00:25:36,680 --> 00:25:39,800
Speaker 9: car really sort of flopped, and you know, the company

478
00:25:39,840 --> 00:25:43,720
Speaker 9: has has not really reinforced that bet with you know,

479
00:25:43,800 --> 00:25:47,399
Speaker 9: competitive evs and so, you know, I think we're seeing

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00:25:47,960 --> 00:25:51,600
Speaker 9: drastic measures to try and deal with this really uncertain

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00:25:51,680 --> 00:25:54,360
Speaker 9: environment and future for this industry.

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Speaker 5: But Craig, briefly, government's taking drastic measures as well. Just

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00:25:58,840 --> 00:26:04,199
Speaker 5: think of the numbers Chinese imports into Europe absolutely curtailed

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Speaker 5: at the back of these thirty five percent taris by

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Speaker 5: the EU.

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Speaker 1: Yeah, that's absolutely right.

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Speaker 9: I think, you know, government is likely behind this Honda

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Speaker 9: Nissan combination. We may see in Europe some softening of targets.

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Speaker 9: We may see that in the UK as well, in

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Speaker 9: terms of CO two emissions reductions and ev you know mandates.

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Speaker 9: So it's it's definitely I think we're in for a

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Speaker 9: turbulent twenty twenty five.

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Speaker 1: Hi, Craig Judell, Thank you so much. We appreciate that.

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Speaker 3: Craig Judelle covers all the autos for Bloomberg News based

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Speaker 3: over there in London.

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Speaker 2: This is the Bloomberg Intelligence podcast, available on apples, Spotify,

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00:26:45,040 --> 00:26:47,920
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00:26:48,040 --> 00:26:51,640
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00:26:51,760 --> 00:26:55,120
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