Is Ineos in financial woes?

[Gaffer]

That is a bit on the misleading side though as costs of development were still ongoing and they had not ramped up product yet.

Lynn Calder stated earlier this year that IA is now running cash positive. So, whilst development losses will still be baked in, it does suggest that they daily running is positive.

Thanks. I was wondering about the cash flow. I hope that the non-cash expenses are distorting its current financial condition.

 

[LeeroyJ]

Ineos is in a unique position in the car industry that I think could end up being its salvation: basically, Ineos could stop almost all future development and just keep the Grenadier and Quartermaster as they are today with only minor tweaks to improve issues and stay compliant with evolving regulations.

Most car companies couldn't do that and survive. Imagine Toyota deciding that the current version of the Camery is the last "evolution" of the model and they were just going to keep building that for as long as customers were willing. The typical life cycle for a new car model in the USA involves a completely new design ("redesign") every 5 to 7 years and a mid-cycle "facelift" or refresh with minor updates about 3 years into the model's run. In order to support that cycle car manufacturers have to devote huge resources in designing and testing to develop the new models, a process that typically starts 5+ years in advance. There is also often huge costs associated with re-tooling the production lines to accommodate these new models.

So if Ineos just keeps making what they make now, with very little to no development, all those additional design and development costs disappear and the longer this goes on, the more profit per unit Ineos would enjoy.

I suspect consumer demand would support this. But the big unknowns are the move to electric vehicles (and accompanying legislation) and the potential for an unexpected competitor. Right now there really isn't a direct competitor.

 

[NQ94]

Has there been any suggestion of an estimated time frame IA would become profitable recovering development costs and become cash positive without excessive creative accounting or reporting? Grenadier is a relatively niche product that has come to market in a time where there is less money being spent on luxury goods and the auto industry as a whole is having financial and sales issues.
Most of the long established niche brand like Rolls Royce, Ferrari etc have been bought by big auto conglomerates to remain viable, is there any suggestion in any media that Ineos Automotive may be heading in a similar direction to rein in costs?

 

[parb]

Its not clear to me what costs that would reduce? Ineos has been incredibly clever by licensing the BMW engine, transmission and electronic management system. This by itself is likely reducing the majority of the cost. Everything else is mostly integration of suppliers in the supply chain which is costly but nowhere near as costly as bringing out your own drive train and transmission.
I doubt you'd cut cost much more than what they have already done by being owned by one of the big OEM's. Maybe you can reduce some structural cost related to importation and certification that a bigger company has nailed down but i am doubtful its a huge cost drivers.

Think of it differently, what synergies would you find if lets say BMW purchased Ineos? Most of the obvious synergies are already there.
Maybe an EV? Maybe the better reach of BMW service centers? Better lawyers to deal with the government?

 

[NQ94]

Its not clear to me what costs that would reduce? Ineos has been incredibly clever by licensing the BMW engine, transmission and electronic management system. This by itself is likely reducing the majority of the cost. Everything else is mostly integration of suppliers in the supply chain which is costly but nowhere near as costly as bringing out your own drive train and transmission.
I doubt you'd cut cost much more than what they have already done by being owned by one of the big OEM's. Maybe you can reduce some structural cost related to importation and certification that a bigger company has nailed down but i am doubtful its a huge cost drivers.

Think of it differently, what synergies would you find if lets say BMW purchased Ineos? Most of the obvious synergies are already there.
Maybe an EV? Maybe the better reach of BMW service centers? Better lawyers to deal with the government?

I probably should reword the question. More questioning would Ineos sell IA to rein in costs and debts for the parent company.
The car is developed, short of changing to other major component manufacturers there is not much they could currently do to rein in the costs of the car.

 

[Zimm]

Ineos is in a unique position in the car industry that I think could end up being its salvation: basically, Ineos could stop almost all future development and just keep the Grenadier and Quartermaster as they are today with only minor tweaks to improve issues and stay compliant with evolving regulations.

Most car companies couldn't do that and survive. Imagine Toyota deciding that the current version of the Camery is the last "evolution" of the model and they were just going to keep building that for as long as customers were willing. The typical life cycle for a new car model in the USA involves a completely new design ("redesign") every 5 to 7 years and a mid-cycle "facelift" or refresh with minor updates about 3 years into the model's run. In order to support that cycle car manufacturers have to devote huge resources in designing and testing to develop the new models, a process that typically starts 5+ years in advance. There is also often huge costs associated with re-tooling the production lines to accommodate these new models.

So if Ineos just keeps making what they make now, with very little to no development, all those additional design and development costs disappear and the longer this goes on, the more profit per unit Ineos would enjoy.

I suspect consumer demand would support this. But the big unknowns are the move to electric vehicles (and accompanying legislation) and the potential for an unexpected competitor. Right now there really isn't a direct competitor.

Other car companies hedge their bets with various models that are available depending on the market conditions. Gas goes up, that small margin eco car that looked like a waste, saves the day. Unfortunately INEOS made a consumer car, not a work truck that people will buy because its a wearable item, and needs replaced, market conditions or not. Such as empty vans. And at 15mpg, the next fuel crunch, sales will tank, and since IA doens't have bags of credit, and is self financed for operating expenditures, that will be the end. Sorry. They need something else that will sell when this won't.

 

[Zimm]

I probably should reword the question. More questioning would Ineos sell IA to rein in costs and debts for the parent company.
The car is developed, short of changing to other major component manufacturers there is not much they could currently do to rein in the costs of the car.

Costs are contained by keeping major components withing existing supply networks. The truck isn't a sales "hit". The volume will never be profitable enough to cover integration for anyone. Even BMW is better off starting with a clean sheet if they want a G competitor. Why try to revive a consumer car who's buzz has faded?

This was supposed to be the "Slate" of the utility truck world. Just pure function.