Toronto, Ontario — September 2, 2019 — In this week’s Tuesday Ticker: a strong economy keeps interest rates stable despite dealership dreams, Safelite absorbs a major rival and BASF makes some quick cash with a major sell-off.
While fears of a self-inflicted recession striking the world’s largest economies–the U.S. and China–continue to worry automakers south of the border, in Canada, they may be victims of the country’s economic success.
News Canada’s economy grew by more than 3.7 percent — 0.7 more than the consensus expectation of experts — make it unlikely that Canadians will see an interest rate cut. The Bank of Canada, which exercises a degree of control over the nation’s interest rates, will likely make no moves to reduce levels below the current two percent rate.
While a hot economy will likely be a boon to most sectors, some auto dealers had banked on a cut from the central bank–which would likely have caused an increase in vehicle sales.
Auto repairers, however, can take more comfort from Canada’s exceptional economic output. The cost of the nation’s auto insurance premiums are rising faster than inflation–which indicates that insurance companies are readjusting their business models to accommodate another cost growing faster than inflation–auto repairs.
Safelite absorbs TruRoad
TruRoad, North America’s second-largest automotive glass and claims-management company has been sold to the largest, Safelite.
Until the acquisition, Safelite, a subsidiary of Belron, owned 7,800 glass shops in the U.S.
With the absorption of TruRoad’s network is 5,000 independent auto glass facilities, Safelite branding is set to appear on close to 13,000 locations.
Safelite has yet to confirm if any layoffs or shop closures will result from the buyout.
A Japanese firm, DIC, has bought German chemical firm BASF’s pigment division for 1.15 billion euros (1.7 billion cdn). The news comes a few weeks after BASF’s second-quarter results left shareholders shaken by a 47 percent drop in profits over the same quarter of the previous year.
The pigments unit generates profits of more than $1.5 billion in per-annum sales, and employs more than 2,500 people across the globe.
The German group’s director Markus Kamieth said the company had been looking for “an owner who considers pigments a core strategic business. DIC pursues ambitious growth plans… to further develop the business in the coming years.”