Thought, you’d seen the last of Renault in North America? Well, think again and this time, they’re bringing their big guns! The Wall Street Journal [sub] reports that Gerard Detourbet, head of Renault’s entry level division is contemplating selling their low cost cars in South East Asia and North America. “We’re looking at Southeast Asia closely,” he said “We ended up not going there for a variety of reasons. But the idea is that we won’t remain absent from that territory.”
As the world recedes, South Korea grows. First Hyundai registers double digit growth in the United States and now other automakers want a piece of the South Korean action. The Korean Times reports that Renault-Nissan announced that they will increase the amount of their South Korean parts suppliers from 28 to 100 by 2013. 108 major subcontractors took part in a conference along with officials from Renault-Nissan’s purchasing organisation.
A few days ago, TTAC reported that PSA and Mitsubishi were looking to forge closer ties with either a cross holding format, like Renault-Nissan, or by PSA taking a 30-50 percent stake in Mitsubishi. According to Bloomberg, analysts like Oppenheim’s Jens Schattner are ruling out equity acquisitions, saying the two firms should concentrate more on co-operation. “Peugeot doesn’t have the liquidity to take a major Mitsubishi stake in cash” he says, and he’s not the only one splashing cold water on the hook-up. Eric-Alain Michelis, an analyst at Societe Generale adds that PSA may have to issue new shares to pay for that stake in Mitsubishi they want, which will not please the Peugeot family as it will dilute their holding. Otherwise, “raising the finance would not be a walk in the park,” he reminds. Were PSA to issue shares to cover €1 billion of the $3.7billion needed for a 50% stake in Mitsubishi Motors, it would reduce the Peugeot family’s investment to 25%. Quelle horror!
Asiaone Motoring reports that Toyota are now pushing forward on their constructions of plants in the United States and China which had previously been put on hold. It should come as no surprise that part of the reasoning behind this decision is to meet growing demand in China. More importantly, Toyota needs to protect itself from the strong yen, a consideration that now apparently outweighs weakness in the US market. The report says that Toyota is expected to invest and additional 100 billion yen (about $1.1b) to get these plants completed. Although these plants will increase capacity by 200,000 units, Toyota plan on halting production on lines in Japan and the UK, as the firm must still reduce capacity by 1 million units in order for this investment to work. Though the move is a clever one, it highlights the enormous pressure the world’s number one automaker finds itself under: overcapacity is bad enough, but when so much of its production is based in Japan, it deal with reduced production while paying for expansions in cheaper production zones. The upside? This plan could lead to US production of the Prius at the under-construction Mississippi plant sooner than expected.
I was watching the classic British gangster film “The Long Good Friday” the other day. For those not in the know, it’s a story about how Harold Shand, the kingpin gangster of London, struggles to keep his grip in the London underworld when the IRA try to muscle in on his patch. I won’t spoil it for you, but suffice to say, it isn’t pretty. Shortly after watching the film, I came across an article in the Wall Street Journal detailing yet another Toyota quality problem. From Floormatgate to the 110,000 Tundras which allegedly rust prematurely, to this most recent headline, “Corolla and Matrix face U.S safety probe,” there’s clearly something rotten in Toyota City. Much like the aforementioned Harold Shand, Toyota built an empire on the foundation of quality and reliability, but now, subsidence and rot are affecting that foundation. The question for the Best and Brightest is this: Are Toyota in danger of losing their crown of quality and reliability in the minds of consumers? Or are these recent cases statistical outliers that car buyers take for granted?
For most of the last 20 years, Ford and Mazda have enjoyed a symbiotic relationship which worked quite well. Ford needed Mazda’s engineering and Mazda needed Ford’s volume to keep their profit margins. In short, everyone was happy. Then came the recession. Ford needed money and it needed it fast, so they mortgaged their logo, cut staff and closed factories. But curiously, Ford divested a huge chunk of Mazda which netted them, in the auto world, very little money. Ford reduced their 33.4% stake in Mazda to 13.4%, netting $540 million, but effectively losing Mazda. Not that Ford’s Mark Fields is worried.
See this ad for Lancia and/or world peace? Now check out the first post-bankruptcy Chrysler brand advertisement here. Noticing any similarities? It seems that there’s trouble brewing in the Fiat family, and “Don” Marchionne has strongly suggested that the new boy to the family, Chrysler, could take over some of Lancia’s profile. Automotive News [sub] reports that the Chrysler brand will appear on Lancias (A.K.A rebadging) in many international markets, and that Lancias could become a niche marque.
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After writing about Spyker transferring production from the Netherlands to the United Kingdom, I thought I’d seen it all. Well, now I have. Production going OUT of Germany and into the United States. After much debating, Daimler have finally decided to switch some production from Germany to the United States. According to Reuters, roughly a fifth of Mercedes-Benz C-Class models will be built in Alabama by 2014, in hopes of protecting against currency fluctuations and maintaining profit margin. Naturally, the unions weren’t happy, in fact they downed tools in protest, claiming it was a “blatantly wrong decision.” Dr Z saw it differently, especially considering the move is said to be worth $100m in incentives from the state of Alabama.
Renault may be playing Russian Roulette, but at least it seems the French automaker is finally playing nicely with Avtovaz and the Kremlin. Maybe the thought of ending up like Mikhail Khodorkovsky spurred Carlos Ghosn into action? Or maybe Ghosn came around when he found out that the Kremlin is going to put $1.7 billion into the ailing Russian car maker. The St. Petersburg Times reports that Renault will invest a mere €300 million in the form of of a technology transfer so that Avtovaz can start building the Logan, Renault’s smash hit in Eastern Europe. It’s like the Fiat-Chrysler deal, only cheaper! Renault will also help Avtovaz develop a new car to replace the Zhiguli (I’d never heard of it, either). Some of this production will happen in Russia’s far east and Renault’s Japanese subsidiary is there to help!
Nissan’s UK plant could lose the production contract for Nissan’s Leaf EV, thanks to the London 2012 Olympics’ committee. Production of the Leaf at Nissan UK’s Sunderland plant would almost certainly have been confirmed, sources tell Autocar, had the Olympics picked Nissan’s bid, creating instant demand for some 2,000 Leafs. Because they chose BMW to sponsor the 2012 Games, production of the Leaf in the UK is no longer a sure thing. Though Sunderland is still said to be in the running as the European Leaf production site, Nissan have plants in Portugal and Spain that are bidding for the job. And after the London Olympic committee’s implication that Nissan’s bid lost because they couldn’t rely on its EVs, Nissan seems ready to make all of England pay for the insult.
The Brazilian-American Chamber of Commerce reports that Volkswagen AG has announced it plans to build (cue “Dr Evil” voice) 1 million vehicles in Brazil by 2014. To help this grand notion become a reality Volkswagen will invest €2.3 billion (about $3.5b) into the endeavour benefiting its two assembly plants in Anchieta & Taubate and its engine plant in Sao Carlos. Volkswagen aren’t far off this target; this year Volkswagen expects to manufacture 800,000 vehicles in Brazil. Brazil is also Volkswagen’s third largest market after China and Germany, respectively, so there’s plenty of demand for the Wolfsburg Warriors’ offerings, with deliveries to customers up 70% since 2005. If Volkswagen cars are suffering from alleged reliability issues, it doesn’t seem to be bothering our Brazilian friends.
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North of your border (not mine), GM dealers are slightly annoyed. In fact, they’re fuming. Topnews.us reports that Bob Slessor, owner of a dealership for GM has sued the firm after he was informed that his dealership would be closed before the end of 2009. And don’t think he’s the only one, 12 dealers are submitting multi million dollar lawsuits against the automotive arm of the U.S government. The lawsuits hinge on the way GM approached these dealer closures. Bob Slessor claim that GM used “high handed and oppressive” tactics. The plaintiffs are looking for a permanent injunction against their terminations and $1.5 million in punitive damages. The report didn’t state whether that figure was in U.S or Canadian dollars.
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Ratan Tata is unmarried and has no children. So he’s now on the hunt for a successor and because of the lack of Tata scions (Toyota joke here) he’s looking outside of the family. Very far outside the family. NDTV Profit reports that Ratan Tata and Carlos Ghosn had a closed-door meeting in Mumbai a few weeks ago and Ghosn is a likely candidate. After all, Ghosn presided over the launch of the Dacia Logan which was a success in India (not to mention Europe), and now Renault-Nissan are gunning for Tata’s Nano in a link-up with Bajaj. Sounds like Ratan Tata is trying to hire away the enemy general. But is Ghosn the man to tackle Jaguar-Land Rover? And how would Ghosn’s Nissan-Renault empire cope without him?
Magna’s abortive attempt at buying Opel burned a few bridges for its supplier business, most notably drawing the ire of Volkswagen. But now that the deal is off, Magna has been forgiven by VW, and it seems even GM is ready to bury the hatchet. Reuters reports that GM has awarded the manufacture of their 3rd generation frames for full-size light-duty pickups and sport utility vehicles to Magna’s division Cosma International. “This is the third generation of frame business that we’ve been awarded by General Motors,” said Tracy Fuerst, a Magna spokeswoman. “To keep that business is certainly a win for us.” Curiously, the value of the contract wasn’t disclosed and no new jobs would be created but it sent the value of Magna’s share up by 1.9%. Life, and business go on… meanwhile, this is the first sign that GM is actively investing in a new generation of body-on-frame vehicles.
Comedian Frankie Boyle once said “So the best tennis player in Britain is Scottish? I’m not up to speed on my Nostradamus but isn’t that one of the harbingers of the apocalypse or something?”. Well, here’s another unlikely scenario, manufacturing jobs flowing INTO the U.K. The BBC report that Dutch luxury car maker, Spyker, is calling it a day in Zeewolde, The Netherlands and moving all manufacturing to Coventry, West Midlands, UK. Spyker warned that 45 out of the 135 jobs would be at risk during the transfer, although, the headquarters would stay in The Netherlands. The main reason behind this shift is that Spyker want to be closer to its main parts supplier, CPP Manufacturing LTD. Victor Muller, Spyker Cars chief executive, said “With approximately half of our vehicles’ parts and components sourced in the UK, and virtually all key suppliers being located there, moving closer to our suppliers and engineering partners will result in substantial savings and tangible efficiency improvements.” While all those reasons are sound, could another big reason for the move be the UK pound nearly reaching parity with the Euro? Who cares? We’re just grateful for the jobs. Dank u.
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