An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. WAS is being filed from Beijing until further notice.
After Saab, will Opel be next? GM’s decision to push its Saab unit into bankruptcy protection puts pressure on Germany, the UK and Spain to come up with funding to save the rest of GM’s European business, Bloomberg reports. Hours after Saab filed for creditor protection, Opel supervisory-board member, Armin Schild, said the Ruesselsheim, Germany-based unit needs a rescue package that may exceed 3.3b euros ($4.23b). GM has set March 31 for deciding on all its European divisions’ future as the carmaker seeks as much as $16.6b in new U.S. federal loans. Saab’s move to seek protection from creditors “creates a sense of urgency” at Opel, said Laurenz Meyer, a lawmaker and economics spokesman with Chancellor Angela Merkel’s ruling Christian Democrats. On the dark side: some members of Merkel’s Christian Democrats oppose government guarantees for Opel. They say Opel won’t operate profitably in the long term because it lacks an effective business model. They’re also worried that aid would go directly to the US. On the bright side: should Trollhättan-based Saab survive a three-month “reconstruction” under court supervision, the Swedish company may play a role in a more independent Opel. As GM’s only European brand with market recognition in the US, Saab could offer Opel a chance to “re-skin” its products for the world’s biggest auto market. On the sinister side: Most European automakers wouldn’t mind Opel fading away.
Opel out of money in May? Opel may not be able to pay its bills as early as May or June, Automobilwoche [sub] says. That’s the conclusion of the credit guarantee committee formed by the German states with Opel factories.
Hillary hearts China: Freshly-minted US Secretary of State Hillary Clinton and Chinese Foreign Minister Yang Jiechi met in Beijing to conduct “high-level talks on economic and strategic issues and pledged to work together to combat the worldwide depression,” Bloomberg reports. The meeting was devoid of any “Buy American” rhetoric– which seems to have been cooked up for internal consumption. Instead, Hillary “thanked China for its continued purchases of U.S. Treasury notes, demand for which is needed to pay for Obama’s $787 billion stimulus plan.” Yang said China, the world’s largest holder of US T-bills, will invest its almost $2t in foreign-currency reserves based on the principles of ensuring liquidity and protecting value. “I appreciate greatly the Chinese government’s continuing confidence in US Treasuries,” Clinton said. “I think that’s a well-grounded confidence.”
Red ink flowing in Japan: Seven major automakers had a combined negative free cash flow of 1.92t yen for the nine months ended Dec. 31, already exceeding levels for all of fiscal 2007 by a wide margin, the Nikkei [sub] reports. The seven firms are: Toyota , Honda, Nissan, Suzuki, Mazda, Mitsubishi Motors, and Fuji Heavy. They expect to sell 18.45m vehicles worldwide in fiscal 2008 (ending March 31, 2009) undershooting initial targets by 3.74m units for a drop of slightly more than 10 percent from a year earlier. The industry faces tumbling profits and swelling inventories as a result. With the sales decline becoming more pronounced in the January-March quarter, their combined negative free cash flow may balloon to 2 trillion yen for the full year ending March 31.
No worries in China: Despite the layoffs and restructuring in the rest of the world, it’s business as usual in Chinese joint ventures. “Employees in their China units have not much to worry on the job front,” Gasgoo writes. PSA is the only foreign automaker which has said it would trim its headcount in China. The other major international auto companies, including Volkswagen, Nissan, Toyota and Honda, all said they would not cut jobs in China although they have decided to trim workforce in other regions. Compared with the sales fall in the US and Europe, analysts believe there would be a slight increase in China’s automobile market this year. In January, China has for the first time topped the US in auto sales, with 735,500 vehicles sold domestically. In contrast monthly sales in the US declined 37 percent in January to 656,693 vehicles.
Survey says: Freep lost it: US customers are blissfully unaware of Chinese cars in the USA, a Morpace survey cited by the Freep says. No wonder, there aren’t any. Says the Freep: “Only 28 percent of consumers surveyed say they have heard about Chinese automakers’ intention to enter the US market, and only 12 percent are willing to consider a Chinese-made vehicle.” Only 12 percent? China would be ecstatic if they would sell 1.2m units a year in the USA.
How about an independent Saab/Opel/Saturn deal? Saturn could shift the entire european line-up of Opels for the US. Saab could be their up-market entry. It’s a win-win.
That “While America Slept” picture always conjures up my imagination that America went on a date with bib business – and he slipped her a daterape drug.
How about an independent Saab/Opel/Saturn deal? Saturn could shift the entire european line-up of Opels for the US. Saab could be their up-market entry. It’s a win-win.
I dunno…at this point, I think that the only one with a slim chance of survival is Opel. Joining forces with Saturn and Saab who are proven money drains would ensure death. Opel is too weak to even think about supporting those.
Also, Opel wouldn’t need an up-market entry like Saab, the Insignia proves that they can do it on their own. The business model of having several brands for different customers is clearly a failed one in this day and age. Only Volkswagen seems to be able to make it work. The Japanes may have upmarket brands themselves, but these only seem to catch on in the US.
Although, having said all that, Opel on its own seems like a death sentence to come as well. I could see them making it through these tough times, but it’s much more likely that Opel will go away as well.
Am I the only one that thinks if Opel brought back the mini vet from the early seventy’s that it would sell like hot cakes in any country?
“On the sinister side: Most European automakers wouldn’t mind Opel fading away.”
That’s a key point. Too many factories and too many companies. Everyone would like the other guy to be the one to go away. It reminds me of what an old retired Navy pilot told me once about wartime indoctrination. At some point during training, the new pilots were gathered up and reminded that half of them weren’t going to make it home. Every one of the guys thought how sad that was for the poor bastard sitting next to them.
The fact that only 28% of Americas knew of Chinese automakers is telling. Maybe Americans don’t want to buy Chinese cars. But if the Chinese sold cars here, would the average American even know?
Saabs been a “money-drain” solely because GMNA made it that way. Compared to big step-brother Cadillac(which most Euro car buyers wont consider)over the past decades, look at the disparity.
Saabs been a “money-drain” solely because GMNA made it that way. Compared to big step-brother Cadillac(which most Euro car buyers wont consider)over the past decades, look at the disparity.
Well, yeah. But the fact of the matter is that Saab’s a money drain, no matter who’s responsible.
In order to turn this around, you need someone who believes in Saab and has enough money and time. Opel has neither of that.
Would GM be worse off if it canned Saab, Opel, Vauxhall, and Holden?
Would GM be worse off if it canned Saab, Opel, Vauxhall, and Holden?
I don’t know about Holden, but Saab is definitely a money drain. It hasn’t made a profit in 20 years.
Opel/Vauxhall has made money in the past, but in 2008, they also lost some money – but probably no more than GMNA loses within a month (nobody knows exactly how much, as there are no individual numbers for Opel/Vauxhall).
So at this point, GM would be slightly better off without them, as GM would lose slightly less money. However, don’t forget that it would be a problem in the future (if GM had one) because a lot of R&D is done by Opel.
The Gamma, Delta and Epsilon platforms are being developed in Germany, although I think that the Gamma platform will be transferred to Daewoo for future development. And also the Volt development has been masterminded by Opel but has since been transferred to GMNA.
But at this point, for GM it’s all about surviving the next day, so R&D is suffering anyway. The letter by Opel’s workers representatives clearly said that apart from the Volt, GM has pretty much given up on R&D.
An important factor here is that both Saab and Volvo almost always have been unprofitable. When Saab was owned by the Wallenbergs, it was paired up with truck manufacturer Scania. Both Scania and Volvo Trucks are very profitable businesses, with profits in the billions every year. And the trucks held the cars up by its arms. At the end, either the Wallenbergs would have killed Saab because they were losing so much money on it, but then GM went in and bought it for cheap, some 1 billion kronor, or roughly a couple of hundred million dollars in todays money. Volvo separated their car business from their truck businesses and sold the cars to Ford.
Volvo Trucks soldiers on as a profitable company to this day, as do Scania without the burden of their cars. I don’t have figures, but I have heard something about Saab made losses for the Wallenbergs for a straight thirty years in a row before they sold. When Volvo Cars was sold for some larger money, what they got paid for was everything that was in the pipeline, that effectively underpins half of Fords lineup of today.
Holden runs a bit hot and cold. In the 80s GM nearly killed them off because they were a money drain. In the end GM tipped in lots of cash and turned things around.
Now they’re back to losing money again.
The Australian car industry only exists at all because of government support. The current left-leaning administration seems keen to continue/increase, that support.
I’m not sure GM management has really worked through what would happen if you split GM into national fiefs. GM losing Opel would gut almost all CAR development in the US. Granted, with the new flex fuel CAFE waivers a reborn GM could just sell CUV/SUVs, but that isn’t a great step either. The US market is screwed for the next three years and selling more SUVs isn’t going to save the remnants of GM.
Separating Opel (or Holden) would also destroy GM sales in China, which will be a huge growth market.
if Opel wanted US dealers, they could find $200 to buy out Saturn, which is fairly unsuccessful in selling re-badged Opels in the US.
I guess they could look at the JV in China as a model and sell of minority holdings in Opel/Holden (or take local governments on as partners). But my guess is GM brass is so focused on getting on big check from Uncle Sam they haven’t though about what will happen when they gut the company…
Holden has accumulated losses of around 300 million in the years 06,07 and 08. I’m thinking 2009 is going to be scary bad. Our financial year is the 30/6 btw.
In Holden’s defence it reports the design and dev costs of Zeta(1 billion) in house. Exports of same platform are not that good, read G8.
Its biggest seller(VE),consists of fleet sales of around 73% and total sales numbers of approx 51000 units for the calendar year, down from approx 90000 units 10 years ago. In truth it would not have achieved those numbers, but slashed 25% of retail in Nov & and Dec of 08.
Holdens market share had declined from approx 23% 10 years ago, to around 13% today. It is slowly being whittled away, as an aside, Toyota has increased their market share from 13% to almost 24% in those same 10 years.
Holden recently received Federal non-repayables of 150 million(green funding) and state non repayables of 30 million(more will be given) to build a small 4 cylinder fuel efficient car. Yes, its okay, we laughed here a well.
Make what you will of the above, but we are sick of giving them money as well.
Auto Repair Mechanic : Am I the only one that thinks if Opel brought back the mini vet from the early seventy’s that it would sell like hot cakes in any country?
Yes, you’re the only one.
Besides, Opel is already selling a rebadged version of the (made in America) Saturn Sky as the current Opel GT and it’s selling like cold cow pies.
With SAAB and Opel out of the way, Ford Europe will face a new spingtime. And they need the SAAB factory (and crew) for their exploding market share.
There is no room for GM in Europe because the Japanese are now there. It is a somewhat belated view of what already happened in the US. As long as Volkswagen, fiat, and Renault were the competition, Opel could survive (but not prosper). With Toyota et al. those days are over for GM. Remember the capacity for building cars is double the sales rates and that is world wide. The European govts. will have to let GM go under now or later their choice.