The news of Congress killing the bailout plan got Europe really worried about the survival of Opel and Saab. Work is afoot to keep them viable, even if GM should go under. Workers at Opel are willing to trade salary cuts for a stake in the company. One condition: Opel severs financial ties with GM. That according to Auto Motor und Sport via Reuters. AMS has access to internal documents from the IG Metall engineering sector union. Opel management is looking for $750m in costs savings. According to the paper, the unions are willing to give them the savings, in return for getting a part ownership of Opel. The union has told GM management that the plan “hinges on separating flows of finance between GM’s European business and struggling parent GM,” Reuters says. Otherwise, the danger of the money “disappearing in the big GM pot is too great,” the working paper says. Euphemisms aside, “separating financial ties” means separating ties, period. A month ago, the German metal workers union had already offered pay concessions, under the condition that Opel is being separated from GM. More money could be coming from governments. As reported in today’s WAS, the Swedish government already has offered financial support for Saab. The German government has been petitioned for $1.34b in loan guarantees. Now if Saturn goes to China, and if Opel gets liberated, what would be more logical than a Saturn-Opel-Saab pact, helped along by the Swedish, German, and Chinese governments? Meanwhile in the UK, Vauxhall offers workers 8 months off for 30 percent pay, the Times reports. Vauxhall made this offer to most of the 2200 workers at its Ellesmere Port in Merseyside.
Posts By: Bertel Schmitt
It’s high time to start a new TTAC category: China Buyout Watch. It’s good for at least a post a day. The latest: “SAIC is likely to be the potential buyer of Saturn,” says Gasgoo after reading the print edition of China Automotive Review. They cite an email letter that has told Saturn dealers that interested buyers were ready to buy Saturn. A Detroit-area dealer for Dodge and Saturn said GM was seeking buyers in China. According to the report, GM tries to package Saturn and Hummer together. A price has not been named.
After last night’s Congress cruelty, there might be government help after all. From the Chinese government. In China, the interest of Chinese automakers has grown far beyond the rumor stage. Today, government-controlled China Daily (THE English speaking news outlet for the official party-line) runs a long article on the Chinese aspirations to snap up juicy bits of Detroit. Actually, as China Daily sees it, it’s Detroit that’s making the advances to China. The headline says it all: “Big 3 look for Chinese medicine.”
After issuing the appropriate CYA cautionary notes, as in “Chinese companies should exercise caution when it comes to acquiring US assets,” China Daily lists a virtual speed-dating session between Chinese and Detroit automakers …
A short 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.
Congress sends Asian stock market to crapper: When Asia heard of the Detroit debacle in Congress, everybody called their broker and placed sell orders. Hong Kong was down 5.5 percent. Tokyo stocks fell 5.56 percent. Hardest hit were autos with Toyota down 10 percent, Honda lost 12 percent, The Nikkei (sub) reports. Investors fled the dollar for the safety of the Japanese Yen. The greenback fell to a 13-year low versus the yen Friday afternoon. This doesn’t make exporters happy, as their wares get more expensive in dollar terms.
Changan stock halted, pending “unprecedented” news. Changan, Ford Motor’s China partner, said on Friday it will continue to suspend trading in its shares “pending announcement of a major issue,” Gasgoo reports. In a statement, Changan did not specify the nature of an “unprecedented” issue, which it said the company’s management was still discussing. Its A shares, traded in Shenzhen, were suspended on Oct 10, a day after news of a possible purchase of Ford’s Volvo unit hit the wire.
Sweden bails out Volvo and Saab: At least for the time being. Sweden’s government approved a care-package of $3.4b for the two formerly Swedish makers, das Autohaus reports. They also reiterate: “Both brands are for sale.” Most of the money will be loans by the European Investment Bank, guaranteed by the Swedish government. Sweden’s finance minister Borg rules out a takeover by Sweden’s government.
Want to see something else than always the same tired parking lot at Long Beach? Go to Russia, tovaritch! There, car haulers are lining up for miles and miles and miles at the border. As reported yesterday, the Russians raised their car import duty to a prohibitive 30 percent, and whoever wanted to ship a car to Russia did it, before the new rate went into effect. Some at the end of the line didn’t quite make it.
Meanwhile in China, cars are waiting to be loaded at the port of Guangzhou. The LA Times had sent a photographer to China, hoping to find something worse than Long Beach. He aimed carefully, narrowed the field of view, and still came up with empty lots. The Chinese car trade isn’t hit hard by the export slump, because it’s so small, that it’s hard to hit. Other exports are way down, the LA Times reports while they are there. China’s exports to the U.S. dropped 6.1 percent in November as Americans avoided even Wal-Mart.
A short 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.
Volvo soap opera update: Indian farm tractor builder Mahindra & Mahindra denied media reports that they are considering to go for Volvo. Earlier, the Hindustan Times reported that the company was in discussions with private-equity players including Cerberus Capital and Texas Pacific Group to place a joint bid. TTAC didn’t believe the story. According to AFP, Mahindra & Mahindra said they “have to assess how to finance our mergers and acquisitions in times like these.” So the ball is back in China. Or outfield.
Changan expands Volvo range. Unfazed by the discussion about a possible sale of the Volvo mark, China’s Changan announced they want to widen their range of Volvo cars. They refused to comment on a newspaper report that Changan might acquire the Swedish brand. They want to build higher end cars, without naming specific cars, Gasgoo reports.
The story of Ford hawking Volvo to China is getting curiouser and curiouser. That story appeared first in China’s respected National Business Daily. Then, via TTAC, it hit the fan, the wires, and the MSM. The story made the rounds from Forbes to the Chicago Tribune, even the DetNews headlined: “Ford partner in China considering buying Volvo.” Ford’s partner in China is Changan. The codependent joint venture produces Volvo cars for the Chinese markets. Buying the Volvo brand outright would enable Changan to enter the lucrative export market with an established brand at a competitive price point. And now, the denials.
Today, Gasgoo reads the Wall Street Journal Asia. To everybody’s surprise, the WSJA found “a person familiar with the matter.” The familiar person says that Ford and Changan have not talked about a sale of Volvo. WSJA’s deep throat comes up with a rather flimsy story: According to Mr. Mole, Ford execs had met Changan execs simply to inform them “as a courtesy” that Ford was looking for a Volvo buyer. As in “We just happened to be in Chongqing, so we thought, we come by, say hello, and by the way, we are looking for a buyer for Volvo. Know anyone who might be interested?” A search of the WSJ database comes up empty. Strange. It’ll get stranger …
German VeeDub dealers want Wolfsburg bail-out: Most of VW’s dealers in Germany are in dire straits. They are looking to Wolfsburg for financial help. “Others can ask for government help, we need the help of Volkswagen and the Volkswagen Bank,” said Michael Lamlé, head of the VW/Audi dealer council to Automobnilwoche (sub.)
Stimulus, Russian style: To protect the nascent Russian car production, and to lure/blackmail more manufacturers into building in Russia, the country has raised its import duty on new cars to 30 percent, reports Automobilwoche (sub.)
Chinese VW workers get German Christmas holidays: Volkswagen’s two joint ventures in China are planning to give their workers 15 working days of vacation from mid-December until the beginning of January, Gasgoo reports. SAIC will make approximately 20,000 units less. VW’s second venture FAW-VW has similar plans. VW has already sold 931,000 cars in China through to the beginning of December this year and is determined to hit the 1m mark.
It’s a strange world. In the past, when China’s economy was down, most of the world (at least silently) cheered. Now, as China’s growth slows, the world gets worried. Suddenly, it’s news when China’s auto sales fall 10 percent in November. Suddenly, the world gets alarmed when for next year, growth rates of only 5 percent are being projected. Yet, China may be out of the slump much faster than many think, or some still silently hope.
Business Week predicts that in the second quarter of 2009, “the benefits of China’s massive $582 billion stimulus package could start to flow through, and the economy could kick into a higher gear once again.” The signs are everywhere, says Business Week.
(Read More…)
Good morning! Slept well? Here is what happened in the meantime. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off.
Running into a BRIC wall: The emerging BRIC markets (Brazil, Russia, India, China) are running low on gas, The Nikkei (sub) reports. Passenger-car sales in China dropped 10% on the year in November. Sales in Russia declined for the first time since 2002. Sales in Brazil and India are also falling. The Nikkei: “This is bad news for automakers, which had hoped to offset slower sales in Europe and the U.S. with growth in the emerging markets.” TTAC: The BRIC countries will save the numbers of the international automakers for 2008. For 2009, BRIC will be of as much help as an empty BIC.
Japan putting the brakes on BRIC: In related news, Japanese makers are stepping on their BRIC brakes, The Nikkei (sub) says. Nissan postponed the start of operations at a joint venture factory for small commercial vehicles in India. Honda delayed by more than one year the launch of their second plant in India. Toyota is modifying its overall investment plan and may change the starting date for a plant that it is building in China. In Russia, Nissan plans to start a new factory in 2009. Suzuki wants to follow in 2010, Mitsubishi in 2011. The Nikei: “These plans could be derailed by tepid demand.” For the seven Japanese manufacturers of passenger cars, sales in emerging markets totaled approximately $150b in fiscal 2007. Better luck for the Germans …
Yesterday, we reported that Ford is in a big hurry to unload Volvo to interested parties (preferably) in China. The article quoted a story in London’s Times. The Times had received information that Ford is talking with SAIC to take Volvo off Ford’s hands. There are more interested buyers: Top executives of Ford’s Chinese joint venture partner Changan are in talks with Ford to buy Volvo. This according to China’s National Business Daily which has it from an insider at Changan.
At the Guangzhou auto show last month, Volvo’s top executives had long talks with Changan Auto president Xu Liuping. When Ford Motor announced its plan to sell Volvo, the presidents of Ford Asia Pacific, Ford China, and Volvo China met Changan’s president at Changan’s HQ in Chongqing for closed-door talks. NBD’s source added that it is logical for financially troubled Ford Motor to consider Changan as a possible Chinese partner of its Volvo brand, because they have the Changan Ford Mazda joint venture which is also producing the Volvo S40 and S80 models. There are more reasons to buy …
The BS has landed, and WAS is back. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. Warning: If bad news give you heart or stomach conditions, refrain from reading.
Europe doubtful about bailout: Europe’s MSM says the fat lady hasn’t sung the aria of the bridge loan yet. Even if the Senate manages to finalize an agreement in principle on the $15b in short-term loans, it is “uncertain if it would become law,” Reuters says. “Skeptical Republicans could kill such a measure with a procedural hurdle that would need 60 votes to clear.” Germany’s Spiegel Magazine writes that bickering about the car czar is delaying a decision. The antichrist is in the details. In the meantime, the London Telegraph pours cold water on hopes of a quick turn-around. “The last recession, between 1989 and 1992, had a five-year impact on the car industry,” the Telegraph quotes Professor Garel Rhys of the Cardiff Business School.
Fiat too small to survive, enters dating game: Fiat CEO Sergio Marchionne said his company needs company. They are too small to survive alone, Reuters reports. Marchionne said that only six big players would be left following the crisis, and just one of those would be in the United States. After GM left Fiat in the dust and paid $2b to get out of their contract, there’s not much love left between Fiat and Detroit. As far as China goes, Fiat has made baby steps in joint ventures, but managed to step on toes big time with a commercial in which Richard Gere drove from Hollywood to Tibet in 30 seconds. Following that, Fiat had to “extend its apologies to the Government of the People’s Republic of China and to the Chinese people.”
European parts makers go under: Wagon, one of Britain’s largest car parts makers, “has gone into administration,” the Financial Times reports. That’s what the Brits call their bankruptcy. Wagon supplies car parts to Peugeot, Citroën, Mercedes Benz, Renault, Fiat and Audi. Meanwhile in Germany, TMD Friction went to bankruptcy court. “First large parts supplier goes bankrupt,” Manager Magazine writes. Obvious implication: First of many. As we shall see shortly …
The phone lines are running hot between Detroit and Shanghai. Ford is in talks with SAIC, China’s biggest car-maker, in what UK’s Times calls a “desperate attempt to sell its prestigious Volvo brand.” Ford has already tried before, and had been turned down by the Chinese. The Times quotes “a source close to the American motor giant” who says that earlier talks, which took place in summer, broke down over price. Ford had bought Volvo for $6.5b in 1999, and wanted to clear $5.9b. “Mei xi” (no dice) said the Chinese. The Detroit source that’s leaking to the Times (probably with a nod from higher up) says: “Now that Ford is in dire straits this would be a good opportunity for SAIC to snap up Volvo on the cheap. The price has dropped considerably since seeking a sale in the summer.”
According to Aaron Bragman, a car industry analyst with economic forecaster IHS Global Insight, “the sale of Volvo has become part of the conditions of Government assistance.” Ford is being advised by the investment bank JPMorgan Chase.
A spokesman for Ford confirmed that the company is in talks “with a Chinese car-maker,” but declined to name SAIC. SAIC likewise declined to comment. There are other suitors, just to keep SAIC from thinking they are the only game in town …
BS is on his way back from the Fatherland to Beijing. This Sunday will remain WAS-free. WAS will return tomorrow, after BS has returned. We need a day to digest last week’s news anyway.
Thank God that week is over! Any bets the next will be worse? TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. The night that WAS, week-end edition.
DC turns on drip for Detroit: Congressional Democrats and the White House have reached agreement on emergency aid for US carmakers of between $15bn and $17bn, two senior congressional aides said to Financial Times. “Congressional Democrats and the White House have reached an agreement,” a senior congressional aide said. Another source said negotiators had “agreed in principle to moving ahead but details have to be worked out.” The amount is far less than the $34bn requested this week by GM, Ford, and Chrysler, but it will keep them going into next year.
Going down? BMW and Daimler plummet: Both Daimler’s Zetsche and BMW’s Reithofer definitely said “it was nice having you” to their 2008 targets, Automobilwoche (sub) reports. BMW’s worldwide November sales dropped 25.4 percent. Mercedes-Banz did even worse: 28 percent down in November. BMW had been doing O.K. for most of the year, Jan-Nov they only lost 1.8 percent. Same at Daimler: Jan-Nov minus 4 percent, then the November shock. Worst markets for Daimler are Japan (minus 46 percent,) USA (minus 30 percent,) Europe West (minus 25 percent.) Even in the Chinese growth market Daimler lost more than 10 percent. The November numbers don’t bode well for 2009.
Recent Comments