According to the officious, English-language China Daily, “Chinese automakers are facing their toughest challenge in three years as demand is falling and profitability is plunging amid rising costs.” And that’s because “China’s car sales rose 11 percent in the first nine months, compared with a 22 percent increase for the whole of last year.” So, even before the U.S. of A. can open the federal bra on behalf of Detroit’s automakers, the Chinese government has swung into action. “China’s government is discussing policies to help automakers boost sales and fend off the global financial crisis.” Policies being considered in Beijing include… “Consumption-tax breaks” – The PRC plans to give the little guy a break and money in his hand, instead of giving billions to three (or maybe just two) big guys. “Subsidies to automakers that develop vehicles powered by alternative energies” – that has a familiar ring to it. Because alternative energies are still mostly a gleam in the eye of a few believers, the real plan consists a hefty tax break with a green top coat finish. Chinese consumption tax (nothing to do with TB) can be as low as one percent for a (non-)car with a displacement of less than a liter, and as high as 40 percent for a bigger-bore vehicle of more than four liters. China Daily’s source is Chen Jianguo, himself “deputy head of the industrial coordination department of the National Development and Reform Commission.” If China Daily quotes a guy with a title that long, you can consider the plan as good as done.
Posts By: Bertel Schmitt
Hedge fund fornicator Luxury car maker Porsche has just announced their numbers for their last 2007/2008 fiscal. You guessed it: while the rest of the world is retching in the WC, Porsche’s profits are up a pornographic 52 percent. “The Stuttgart-based maker of the ass-engined sports car 911, IMS- challenged Boxster/Cayman and Cayenne SUV reported a net profit of nearly 6.4b Euros ($8.2b) for the year that ended July 31. That’s compared to the 4.2b Euros Porsche earned in the 2006-2007 year,” tickers The Associated Press to the world’s flabbergasted financial editors. The numbers are so mind-blowing that there are different accounts of the accounting data. The Wall Street Journal has on its wire that Porsche’s profits “soared 46% to €8.57 billion Euros, or about $10.9 billion.” (The €8.57b number is repeated by Deutsche Welle, the €6.4b figure is popular with Bloomberg. We’ll see. A few billion more or less don’t matter, we guess. Mum’s the word on Porsche’s Investors Relations page. We’ll probably have to wait until Monday, after they are done partying. Meanwhile…
Bad news (or, if compared to anorexic America, good news) from J.D. Power: Western European auto sales fell by 15.5 percent to 1,035,243 million units in October from a year earlier, reports Automotive News Europe [sub]. They say, the decline in new-car sales in Western Europe could be worse than a slump in the early 1990s. Contrast that to “the worst sales month in the post World War II era,” which GM’s Chief (Non-) Sales Analyst just saw for his employer in NA. Everything being relative, our relatives in the Old Country still have it relatively good. If J.D.Power’s crystal ball is still functioning, the Western European car market may decline by 8 percent in 2008, and go down between 10 and 11 percent in 2009. J.D.Power came to the not all to surprising conclusion that this would “place major strains on the European auto industry.” As opposed to the end of the world, as if we don’t know it already. Note: As long as VW stock goes for between €500 and €1000, depending what time of day it is, or the whims of Porsche may be, as long as BMW’s owneresse can afford millions to pay a gigolo, the European market will be just fine. All things, considered, of course.
Who says the little guy can’t profit from Porsche’s mucking-around with the Volkswagen stock? Jochem Heizmann, a lowly member of Volkswagen AG’s BOD and head of Group Production (which doesn’t mean he’s in charge of producing rock groups) just sold a measly 2000 shares of VeeDub stock for a paltry €537.93 a piece, clearing a trifling $1.39m, Automotive News Europe [sub] says. They unearthed this inconvenient truth after reading the disclosure statements which are now obligatory even in Germany. Previously, Dr. Prof. Heizmann (we are at Volkswagen, after all, which must have more professors than MIT) worked at Audi. He ran VeeDub’s plant in Zwickau, then was responsible for production at Audi again. Just your average engineer. If a guy like him can clear a mil in a few days, anyone can. Or not.
Fornication seems to be part and parcel of the heavy metal business: Salesmen do it to their customers, corporations do it to taxpayers, fornication-for-euros helped VeeDub bring the unions in check (and jail,) Porsche fornicates hedge funds, F1 Mosely caught being spanked by dominatrixes (link NSFW, especially THAT one) and the list goes on. What do you think the deeper meaning of “Fahrvergnügen” really was? How could someone who owns a good chunk of BMW stand aside when everybody’s doing it? And so it happened: Susanne Klatten, born as Susanne Hanna Ursula Quandt on 28 April 1962 in Bad Homburg in Germany, is, according to Bloomberg, the wealthiest woman of Germany. Forbes has her on #55 of their list of the world’s billiopersons. Married, three kids. Germany’s average soccer mom. And why would TTAC express an interest in the lady? The interest is strictly professional: Together with her mother Johanna and her brother Stephan, Frau Klatten owns 46 percent of BMW. Susanne’s father, Herbert Quandt, made headlines and a lot of money in 1959, when he bought the near bankrupt BMW for a song. Daughter Susie, commonly painted as “shy” and “withdrawn,” also owned a nagging desire for more nookie. Husband Jan Klatten, himself a BMW engineer when the couple met, apparently was more interested in propshaft couplings than in the biblical sense of the part. And then the void was filled. So to speak…
Memo to Ford: recall your Taiwanese head honcho and put him in charge of Detroit’s pimp-machine. Jeffery Nemeth, Prez. Of Ford Taiwan, a.k.a. Lio Ho Motor Co., found an ingenious rationale for sagging sales: too many people are leaving the country. The Taipei Times reports that Nemetz is pissed that 1.3m Taiwanese have moved to mainland China; it’s getting worse, it’s bad for auto sales, and it’s gotta stop. His warnings come on the heels of the latest government statistics that counted a paltry 17,324 units being sold last month- – the crappiest October level in 20 years. If this trend continues, two million Taiwanese move to China next year, it could cost Taiwan 150k units, Nemetz predicted. Judging from October’s insipid new car sales rates, fleeing Taiwanese could wipe out the island’s entire car market. Of course, it’s pure coincidence that there are rumors of yet another prospective emigrant: Ford itself. Nemetz immediately denied that his company would forego Formosa. “Ford does not plan to leave or end our operations in Taiwan.” Likewise not true: industry-protective measures of Taiwan’s government might cancel all citizens’ passports to prevent an extenuation of the exodus. Dear DHS: Please, don’t get any ideas, ok?
Ever since it lost its new hotness, TTAC has been reporting that the Chinese car market has lost its new hotness. TTAC also gave its readers a heads-up that China won’t save U.S. carmakers’ butts, as the Middle Kingdom had done in the past, when skyrocketing sales in China buttressed anorexic auto sales elsewhere on the planet (i.e. North America). Yesterday, that bit of news finally reached The Wall Street Journal [sub]. “China’s Car Market Loses Luster for Foreign Firms,” alliterates the WSJ, surprising everybody except TTAC’s B&B. “Growth in China’s once-roaring auto market has slowed to a near-crawl, casting doubt on the country’s status as industry savior,” writes Patricia Jiayi Ho. Previously, Patricia penned articles titled “Ex-Tuskeege Airman Moore dies at age 82,” or “Badminton club to open in Arcadia,” so she’s clearly qualified to report on expiring markets, and the back-and-forth of the world economy. Patricia’s prose continues: “Foreign giants like General Motors and Ford Motor Co. have increasingly been looking to emerging markets like China and India to provide a much needed fillip to declining sales at home.” And look they did…
Goldman Sachs is preparing the public for horrific news: a possible loss in the fourth quarter. At least that’s what Merrill Lynch analyst Guy Moszkowski told Reuters. Since Goldman Sachs went public, they’ve never had a loss. Merrill’s Guy fingered the usual suspects: “large corporate private-equity portfolio, equity proprietary trading business and exposure to Chinese equities.” Yadda yadda yadda. Bloomberg said that “a Goldman Sachs Group Inc. fund has lost $990 million since it started in January.” Wall Street has been abuzz with speculation that Goldman Sachs and Morgan Stanley may have a large exposure to the Porsche/Volkswagen machinations. Last Wednesday, Morgan Stanley fell as much as 26 percent in New York trading; rival Goldman Sachs dropped as much as 11 percent “amid speculation a surge in Volkswagen AG shares may have saddled some banks with losses” as Bloomberg put it. When that hit the wire, CNBC called the usual “unidentified Goldman employees with knowledge of the situation,” and they said it’s all wrong: “No significant losses tied to Volkswagen.” Yeah right…
Things must be really, really, really bad if someone goes on strike in China. But striking cabbies striking policemen? Unheard of. Speaking of which: Ever heard of China’s largest municipality? It’s Chongqing, population 31,442,300 (as of 2005, Buddha knows how many today). Yesterday, in Chongqing, the doomsday scenario unfolded. Hundreds of perturbed taxi drivers took to the streets (on foot) and smashed vehicles to protest “shortages of fuel and high fines for traffic violations,” as the official Xinhua News Agency has it. The enraged cabbies gathered on a business street, destroyed 20 vehicles, including three police cars. Scab cab drivers who refused to join the protest were pulled out of their cars, along with the petrified passengers. A spokesman for the Chongqing police bureau confirmed the violence, and said the situation was now “under control.” 800 cab drivers returned to work by Monday afternoon. Downtown Chongqing has 9000 taxis. American car drivers: Don’t try this at home.
How about this for tell me how you really feel: Volkswagen AG, China’s biggest car maker, told Bloomberg (of all people) that “the worst may yet to come” for China’s car market. This cheerful prediction was uttered by Soh Weiming, Volkswagen Group China’s Executive Vice President. Soh Weiming is no stranger to an uncertain future. The imminent ouster of the cigar-loving VP had been floated for years in Beijing and Wolfsburg. But like the Energizer Bunny, he keeps on going and going. And there he was to say that it would be “too early to estimate” the losses caused by the economic slowdown in China’s auto industry.
So you thought Porsche financed the VW takeover by foisting overpriced floormats and trucks on their well-heeled buyers? Yesterday’s issue of Die Welt, Germany’s conservative newspaper, thinks different. They undug the dirt on Porsche’s takeover-machinations of Volkswagen. It’s a story that makes Cerberus look like a frisky puppy. It’s an account that makes banks and hedge funds look like morons.
Never a dull moment in the ant-eats-elephant soap, a.k.a. Porsche’s takeover of VeeDub. On the heels of what the newspaper Die Welt called the “craziest week in the history of the German benchmark index DAX,” VW’s stock makes headlines again today. Or, rather, the headlines are made by a minority owner, the state of Lower Saxony. Nearly forgotten in the broo-haha, that German province, home of Volkswagen’s headquarters Wolfsburg, owns 20.1 percent of VeeDub’s stock. By the dubious virtue of the so-called “Volkswagen-Gesetz” (VW law), Wolfburg’s stake gives the state of Lower Saxony veto power over just about anything they like or dislike. Originally, that law was intended to ward-off hostile takeovers by foreign powers. (Remember GM?) Now, it provides the legal means for provincial politics. Niedersachsen’s Governor Christian Wulff declared yesterday: “Profits going to Porsche? Not if you ask me.” And Porsche will have to ask Mr. Wulff. The thick plottenz…
Chinese mothers don’t admonish their one-and-only child to “eat up, there are children starving back in America.” But we’re getting there. Case in point: This weekend, another Rolls-Royce showroom opened in Shenzen, Gasgoo reports. It’s the seventh Rolls Royce retail location in China. Another one, located in China’s industrial center Ningbo, will open its doors in a few months. Rollers are on a roll in China. I counted two Phantoms alone in the underground garage of my Beijing building. At the Shenzen opening, Rolls presented their new Rolls-Royce Phantom Coupé to the Chinese public. It’s their entry model. “Nearly two-thirds of Coupé customers worldwide have not owned a Rolls-Royce before,” said Jenny Zheng, Rolls-Royce Motor Cars’ General Manager for Greater China. BMW are thanking their lucky stars…
“Toyota Motor Corp. trumped General Motors (GM) in total car sales during the first nine months of 2008 to become the world’s top car producer for the first time,” the Mainichi Shimbun reports from Tokyo. “Huh,” say you, “hasn’t ToMoCo trampled GM already?” Not exactly, and not officially. But they are kicking ass and GM to the bottom. Unstoppably, one may add. “GM’s sales between January and September in 2008 were down 5.8 percent to 6,655,751, according to figures released by the company on Wednesday. Toyota’s sales for the same period, including those of subsidiaries Daihatsu Motor Co. and Hino Motors, were 7,051,029, almost unchanged from last year,” writes the Tokyo broadsheet with a kuso-eating grin on their faces, in the same sentence dispelling rumors that ToMoCo had contracted the galloping auto trade tuberculosis. [NB: Mainichi is one of the top three Nipponese papers,thick with Japanese politicos. Two of Mainichi’s CEOs became Prime Ministers of the Land of the Rising Corolla.] And yet the fat lady has not sung…
Reacting to the recent dervish dance of the VW stock, Germany’s stock exchange put their foot down hard yesterday. Any more funny business, and VW will be kicked out of the DAX, Germany’s equivalent to the Dow Jones. As of Monday, if a stock reflects more than 10 percent of the index, and if its volatility exceeds more than 250 percent in the preceding month, the exchange will punt the stock from the DAX. Last Tuesday, the weight of the VW stock in the DAX was 27 percent; the 30-day volatility had redlined at 388 percent. If the new rules had applied, VW would long be evicted by now. Come Monday, VW will be represented in the index with 10 percent (Achtung!) and if there’s any more hip-hop like last week, then it’s “raus, raus, mach schnell!” The German Exchange sugar coats the new rules as “preventative measures.” Not a lot of people are buying the carbohydrate. “I think, they are setting the stage for kicking VW out of the DAX,” quoth an expert, who’s name Automobilwoche did not reveal. So will they or won’t they?
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