VeeDub in Germany has just issued their numbers for the past nine months of 2008. Viewed through the prevailing “the world is coming to an end” perspective, VW’s financial results are financial pornography, performing better than the male lead in a Russ Meyer movie. We’re talking a 15 percent gain, a money shot of more than $6b pretax. From January to September 2008, VW moved 4.8m units and grabbed a 10.1 percent share of the world market, according to the usually reliable Automobilwoche [sub]. Despite of what’s happening elsewhere in the piston business, Volkswagen’s CFO Hans-Dieter Pötsch stands by his bullish guidance for 2008: the predicted numbers will come true. Elsewhere, China’s automakers have also released profit reports for the third quarter.

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“Was uns nicht umbringt, macht uns härter.” Martin Winterkorn’s may not have quoted Freddy in his speech at the International Zulieferer Börse (IZB), related to us via Automobilwoche [sub]. But the CEO of Volkswagen’s theme was clear. “Don’t panic!” Winterkorn said (in German). VW will emerge from the crisis “stronger than ever.” Winterkorn pointed to growth markets such as China– which did little to calm suppliers’ fears (unless they were Chinese). “In China, 100 million people have a driver’s license,” VW’s capo di tutti capi said. Correct. “Only 10 million have a private car,” he added. Wrong. As a matter of fact, nobody really knows how many private cars there are in China. Gasgoo.com once had two numbers in the same article:  “The total number of private cars in China jumps 32.5% to 15.22 million units by the end of 2007,” Gasgoo wrote.  A paragraph later.. “35.34 million are private cars, an increase of 20.8% from one year earlier.” It’s easy to get confused in China. But if VW, China’s largest auto manufacturer doesn’t know the market’s size, who does? OK, now you can panic. [NB: the IZB is an ingenious cost-cutting measure of VW Purchasing whereby parts suppliers meet in Volkswagen’s Autostadt— and pay for the privilege.]

Things must be really bad in Deutschland. Before, any German government of any persuasion raised taxes when times were good, and raised them more when times were bad. Debates before important elections usually are about how much taxes should be raised. Imagine McCain saying: “My friends, I will tax you more than that guy.” He’d get the vote in Deutschland. Well, the German government is now worried about auto sales. Scared scheissless is probably the better term. So scared they want to abolish the tax on cars. Totally. Well, at least for a while. And in a discreet green wrapper.  Says so in today’s report by the German magazine Der Spiegel. Berlin’s cabinet left it to their Minister of the Environment, Sigmar Gabriel, to give the car crazy Germans the good news this morning: No tax on environmentally friendly cars for the next two years. Zilch. Nada. Nichts. “Environmentally friendly” is defined as compliance with the Euro 5 and Euro 6 norm. Which, for all intents and purposes, means no tax for all new cars coming to the market.

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Reacting to happier talk around the world, every stock on Germany’s DAX closed higher today. All stock but one: Volkswagen. After blowing through the rafters yesterday, the VeeDub share price boomeranged. Result: This morning, the DAX was in the tank by more than 7 percent.  All other shares rose and did shine, but Volkswagen single-handedly brought the whole ship down. The Deutsche Börse, Germany’s stock exchange, is exasperated by Volkswagen’s wild gyrations. The Deutsche Börse is mad as hell and won’t take it anymore. As of this coming week, the VeeDub share will only make up 10 percent of the DAX, Germany’s equivalent of the Dow Jones, the Deutsche Börse decreed. Yesterday, VW represented 27 percent of Germany’s most watched index. The Euro Stoxx 50 will also reduce the weight of Wolfsburg’s shares. The German government loosed its dogs of watch to follow a trail of insider trading and market manipulation.

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While TTAC has Tesla on a Death Watch, aspiring Chinese EV-automaker BYD is getting massive street cred in The People’s Republic. In case you’ve got something called a life, BYD stands for “Build Your Dreams.” Since late September, “BYD” also stands for “Buffet’s Yankee Dollars.” Omaha’s Oracle liked the company so much he wrote a check for $230m for a 9.89 percent stake. [NB: Buffet knows the tax consequences lurking in a CFC— and we’re not talking chlorofluorocarbons.] Based in Shenzen, BYD is one of the world’s largest manufacturers of rechargeable batteries for cell phones. According to The New York Times, “the company also has a fast-growing auto-making unit that accounts for nearly a third of its revenue and makes fuel-efficient compact and subcompact cars for the Chinese market.” They have some bitchin hybrid and plug-in cars in the works with specs that scare the BYDickens out of the competition– if they’re half true. OK, make the jump for today’s BYDispatches.

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Market crash? Say what? Volkswagen’s stock price continue to defy market malaise and Newtonian physics. After wild gyrations last week, the Volkswagen stock– better known as WKN: 766400 / ISIN: DE0007664005– went berserk today. It opened at €500, and then more than doubled its value to €1005. At the time of this typing, it stands at €670. At its high, VW had a market cap of €296b ($369,272,943,612.85). For a while, VW was the most expensive corporation on the planet. VW represented half of the DAX, the German version of the Dow Jones. Again, it was the shorts that were caught with their pants down and the stock up. According to Automobilwoche (sub), when Porsche announced they’d raised their share in Volkswagen, it dawned on the traders “that only 6 percent of the shares are still available on the open market.” What’s more, funds that get compared with the DAX are now forced to buy Das Auto, Newton be damned. If someone played their options right, buying Volkswagen didn’t need the measly profits from a few Cayennes. While the financial world is falling apart, there is a tulip craze, Wolfsburg style. Detroit, eat your heart out.

For the few past years, European and American automakers looked to Chinese carmakers with hope and trepidation. They hoped the booming Chinese market would lift their worldwide sales. It did. They feared the Chinese would export cars en masse, swamping Europe and the U.S. with cheap vehicles. They did not.  For various reasons (crash tests, emissions, the economy), the arrival of the four-wheeled Yellow Peril was a non-starter.  What little exports the Chinese managed went to second- or third-tier markets like Africa or South America. Even those are are going down, down, down. In August, China exported a mere 44,400 units, a decline of 22.18 percent month-on-month and 11.29 percent year-on-year. This according to numbers straight from the China Association of Automobile Manufacturers, quoted in Gasgoo, which calls the news “discouraging.”

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The People’s Republic of China has decided to drop some serious money on digging the country out of a hole. We’re not talking namby-pamby bailout money for distressed banks and auto companies that may actually go up in price (yeah, sure.) We’re talking real hard asset investment. China’s State Council has approved $300b for large scale construction projects to seriously boost economic growth, China Daily reports. Everybody had been banking on concrete measures to expand China’s clogged roads. But to the abject horror of China’s motorists, the government’s money will be working on the railroad. “In 1997, we dealt with the Asian financial crisis by stimulating domestic economic growth by investing in the construction of highways.” Zheng Xinli, a senior government policy advisor, said. “This time the money will go on improving the rail network.” Using the CIA Factbook’s numbers, 1/10th of GDP will be railroaded through China’s economy. Somebody’s making out this BIG STYLE. Bulldog, bulldog; bow wow wow!

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April 10, 1945. American troops advance towards the Elbe. Russian troops prepare their encirclement of Berlin. WW II will last less than a month. On this day, a man packs up 10 million Reichsmark at the Volkswagenwerk GmbH and heads for Austria. This man is Anton Piech, Chief of Operations at Volkswagen, and Ferdinand Porsche’s son-in-law. Ferdinand Porsche had designed the Volkswagen for Hitler. The 10 million Reichsmark were Volkswagen’s war chest. Piech says he will keep the money from the enemy. Keep he did: The money was used to found Porsche KG. Nobody complained.

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Last Thursday, the cargo ship CSCC Shanghai left Ventura County’s Port Hueneme with a load of near-extinct species bound for Shanghai, China: 2,100 GM big bore Buicks and Cadillacs. A lot of cargo space was also taken-up by gas-gulping Cadillac Escalades. China’s importing the American behemoths like they are going out of style (which, of course, they are). According to China’s General Administration of Customs, SUV imports from January to August surged a whopping 75 percent year-on-year, to 147k units. In fact, SUVs amount for half of the total imported vehicles. (Imported sedans only increased 17 percent.) Even higher gasoline prices and punitive taxes slapped on big displacement vehicles could not suppress China’s appetite for cubic inches. As far as GM’s concerned, China won’t go hungry. GM logistics specialist Don Asdell told the Associated Press that he’s looking at one or two boatloads a month for the Chinese market. Needless to say, there’s more (says so right there).
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“Brakes come off auto sales” the semi-official, English-writing Chinese newspaper China Daily headlines today. “Beijing car sales, which account for about a tenth of the national tally, are surging this month after the end of Olympic traffic controls and because of rumors about new caps on vehicle numbers, ” reports the newspaper, citing the head of China’s largest car dealer. Beijing Asian Games Village Automobile Exchange, an 80k unit megadealer in China’s capital, has seen sales increases of 30 percent this month, and there’s still another week to go. Beijing’s buyers are stampeding back to the showrooms, after half of the cars had been banned from Beijing’s streets during the Olympics. Following the Olympics, a Kafkaesque car ban on Beijing’s byways and highways was instated, driving demand for second cars. Or for two cars at a time. Rumors that Beijing’s city government could limit new vehicle registrations to 100k a year, about a third of the city’s average annual vehicle sales, also unleashed a storming of the showrooms. “We don’t know how the rumor started or whether it’s true, but it’s certainly working in terms of boosting sales,”  said Su Hui, General Manager of the megadealer.
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There are a lot of confusing numbers coming out of China. They get spun a thousand different ways. In the Pictures-Speak-Louder-Than-Words Dept., here is the January-September hit parade of sedans that sell in China. And to give you the current snapshot, right underneath are September only sales. Data are straight from the China Passenger Car Association (CPCA,) and they are as good as they get in China. Excel chart courtesy of our our friends at gasgoo.com The clunkers, the FAW-VW Jetta, and the SVW Santana just won’t die. They are ugly. There is no marketing support behind them. And they just keep on outselling everything. With the Excelle, GM still is well positioned, whatever detractors may say. The September numbers say GM still can fight the fight.

Shocked by growth rates below the usual double digits, Chinese automakers are postponing plans for new car launches. China’s National Business Daily reports that Great Wall Motor has put off the rollout date for its Coolbear sedan to ’09. (The Coolbear made headlines for being a more or less exact copy of Toyota’s Scion xB.) FAW’s own luxury brand Besturn has moved the launch of its long awaited  A-class car B50 to the beginning of next year. Besturn hasn’t done much yet, except become the target of caustic remarks. “Separate the two words,” says  China Car Times, “and you get Best Urn – not the worlds most confidence inspiring name for an auto.” Hyundai’s NF and Ford’s new Fiesta will also be postponed. More delayed launches are being expected from China’s 60-odd car brands. Analysts fear that the lack of new models will put an even bigger dent into the already sluggish sales. Rao Da, Secretary General of China Passenger Car Association, estimates the year-on-year growth for Chinese auto sales may slow to five percent in 2008. J.D. Power disagrees. They reckon it will be 9.7 percent. Whoever is right, 2008 growth rates in China will be a far cry from the 24.1 percentage growth achieved in 2007.

It’s an open secret in Chinese industry circles: within the next six to eight years, the domestic auto industry wants to stand on its own technological feet, instead of relying on U.S., European and Japanese joint venture partners. At after-work hangouts, such as “Schindler’s Anlegestelle” around the corner from Volkswagen Group China’s headquarters in Beijing’s bar and embassy district Sanlitun, fare-well parties for managers heading home are already decreasing. In the name of the almighty efficiency, most foreigners have already been replaced by supposedly cheaper Chinese. And now, no more pussy-footing around. According to Gasgoo.com, which read it in the Beijing News, which cited a faceless industry analyst, Chinese industry giant FAW is “focusing its human, financial and material resources on making cars of its independent brands.” The joint venture partner of Volkswagen,  Mazda, and Toyota “aims to sell two million vehicles by 2010, and half of them must be FAW’s own-brand vehicles.”

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China’s official news agency Xinhua reports that General Motors has kicked-off their “2009 promotional tour” of China for their Chevrolet Equinox hydrogen fuel cell car. Starting in China’s capital Beijing, GM will send the Equinox across the world’s fourth largest country to drum-up interest for the mid-size crossover SUV that uses the same alt propl as the elusive Chevrolet Sequel. China is no stranger to the technology. Researchers at the Anting Automotive College of Shanghai’s Tongji University developed China’s first working fuel cell car– based on a venerable Santana 2000– in 2003. GM claims that they will introduce several Chevrolet Equinox hydrogen-fuel cell cars to China in the next two years. (NB: that’s “cars”  not “models.”) Nobody knows what this alleged car or cars will cost, or where GM may place the necessary hydrogen refuelling stations within the vast reaches of the middle kingdom. (No small point that; the Chevy Equinox needs a fill-up every 200 miles. Or less.) For the foreseeable future, in China at least, GM’s zero emission car of the future will continue to be what comes out of its exhaust pipe: vapor.