The predominant critique of the cash-for-clunkers programs that have proven so popular in the US and Europe is that they cause unsustainable demand bubbles which cause sales to collapse after they expire. Sure enough, a look at the German market’s Q1 performance shows that the OEMs who most benefited from the program (primarily firms who focus on low-cost cars) are seeing far more significant declines than US-market firms have seen. In the first three months of this year, firms like Hyundai (-40%), Fiat (-58%), Suzuki (-54.6%) and Kia (-49.4%) have been suffering mightily from a hangover caused by the world’s most generous cash-for-clunker program. But the big news isn’t this small-car bust: it’s the fact that these firms’ success last year have caused the percentage of cars on German roads with electronic stability programs (ESP/ESC) to fall.
Category: Europe
It’s tough to be a European car maker with a governmental sugar daddy. First you have to make nice with your sugar daddy, and commit unspeakable acts until he shakes loose a few hundred million Euro. Then, the prudes from Brussels shoot the stipend down. Your sugar daddy can say: “Darling, I tried.” He then can go on with the business of bailing out Mediterranean states. So it happened with Renault. So it might happen with Opel. Read More >
Fiat has released photos of its new super-mini Uno, which will initially be produced in Brazil, and may, or may not, eventually be sold in Europe as well. The emphasis is on room and a “crossover look”, not unlike Toyota’s Urban Cruiser (Scion xD). It certainly isn’t on the handsome good looks Fiats were once known for. Times change. Read More >
One by one, European countries will scrap their scrappage incentives this year (if they haven’t already.) With predictable results: Without the governmental amphetamine, the market will be down. How much? Read More >
When German car sales exploded in 2009, fueled by government incentives, everybody knew there would be hell to pay in 2010. Sure enough, the market cratered in January and February. In March, new car registrations were down 26.6 percent, but at least, they had caught up with 2008 pre-carmageddon levels. So the thinking went: If the market continues that way, it might get back to its old normal, and the pull-forward theorists will be proven wrong. Then came awful April … Read More >
GM’s restructuring of its Opel division has long been seen as one of the greatest threats to The General’s US taxpayer-supplied cash pile, and the bleeding has now officially started. Reuters reports that GM has agreed to pay four hundred million Euros ($532,000) for worker termination benefits as it closes operations at its Opel plant in Antwerp, Belgium. The 2,600 employees who once built Opel Astras at the factory will be out of work by the end of the year, with about 1,250 planned to be terminated by June. The Flemish government has until September to find a new investor for the plant location; if it is successful, and the new tenant rehires the former Opel workers, GM could be off the hook for some of their termination costs. Considering that Europe has some of the worst auto overcapacity around though, the odds of another automaker taking over the plant don’t look good. Which means the fate of Opel’s Flemish workers, and the health of GM’s cash pile are likely in the hands of a non-auto industry investor. Meanwhile, with Opel planning on cutting 20 percent of its European capacity, the bleeding is only just beginning. But hey, is there a better use for American tax dollars than paying off European workers to the tune of $205k per job?
To stay alive, Opel wants to scale down. The factory in Antwerp is being closed. With amazing results for Opel’s bottom line: Closing the factory costs GM around €400m ($532m) in termination benefits. GM and the unions reached an agreement on the termination benefits earlier this week, reports Reuters. There are 2,600 workers in Antwerp. Now do the math: $532m divvied up amongst 2600 workers is a little bit over $200,000 per worker. Ouch! Wait, there is more pain … Read More >
We knew Brilliance’s plan to export 158,000 sedans to Europe had taken a bit of a beating when the Chinese automaker’s European export partner folded back in November. Even before then, the ADAC’s now-infamous crash tests of Briliance’s BS6 and BS4 seemed likely to doom the brand’s early attempt at the European market. And now, according to Reuters, it’s official. Brilliance execs admit:
We have stopped exports to Europe. For now, we have no timetable for resuming the business
Alfa-Romeo is turning 100 this year, and to celebrate, all the famous Italian design houses are showing their own conceptual expressions of Alfa-ness. And strangely, from Pininfarina’s buttoned-up (and bizarrely-named) 2uettottanta, to Bertone’s over-the-top Pandion, the entries thus far have felt a little… lackluster. Have Alfa’s recent problems killed the mystique? As it turns out, Pinin and Bertone were just getting us warmed up for Zagato’s stab at an Alfa tribute, this stunning TZ3 Corsa. Loosely based on 8C running gear, the TZ3 Corsa is not only an Alfa tribute, it’s also a racing special commissioned by German collector Martin Knapp, and homologated to FIA GT2 spec. Which means it doesn’t just look good. You know, TTAC’s birthday is coming up too…
Yes, Ferrari recorded the fastest “production-based, non-street-legal” lap of the Nürburgring today, breaking the hallowed 7-minute mark with a 6:48:16 time in its 599XX. The only question I have is why did they bother? Is it possible that Ferrari is having trouble selling enough copies of the $2m+, track-only version of the 599 GTB? Not likely, considering the Scuderia won’t sell you one (regardless of how much you’re willing to pay for it), unless you’re on an exclusive invite list for the Enzo-powered track toy. So why trumpet a non-production record at all? Isn’t the very significance of a Ring rooted in the idea that it’s the ultimate test of a road car, packing nearly every imaginable on-road condition into each wrenching lap? Shouldn’t Ferrari have at least tried for lap time in its new fastest road-legal car, the 599 GTO? Especially considering it’s debuting today, at the Beijing Auto Show? Oh well, at least the 599XX makes some serious earcandy noises… if only for six minutes, 48 seconds and change.
Much of the speculation in the leadup to Fiat’s five year plan announcement centered on a long-rumored spin-off of Fiat’s auto business from the rest of the industrial conglomerate. Speculators even drove up Fiat’s share price considerably yesterday on hopes that the long-awaited spin-off would be announced today. And sure enough, Fiat did announce today that it would be spinning off part of its business. The only problem, according to Automotive News [sub], is that the newly-formed unit isn’t made up of Fiat, Alfa and Lancia, but Iveco and New Case Holland. Instead of its car operations, Fiat is bundling off its heavy commercial truck and tractor business into a new entity known as Fiat Industrial S.p.A. (Fiat-branded light commercial vehicles and Fiat Powertrain will remain behind).
Given Ferrari’s pricing politics, it seems safe to assume that Ferrari/Maserati is a fairly profitable enterprise for its 85 percent owner, Fiat. Indeed, with over $2.5b in combined revenues last year and an 11.5 percent operating margin, the Italian sportscar brands aren’t exactly dying of economic downturn-related causes. But at today’s presentation of Fiat’s five year plan, CEO Sergio Marchionne revealed that his firm has big plans for Ferrari/Maserati, and gave unprecedented planning details as proof of the brands’ path towards even greater profitability.
Let's carry out the five year plan in 4 years! Picture courtesy nhikmetran at flickr.com
Today is the day. Today, Sergio Marchionne will present his 5 year plan for Fiat. 5 year plans are usually reserved for a reunion of unreformed communist party elders. But Fiat respects traditional values.
In his opening remarks, Marchionne took a shot at the mongers of gloom and doom. He had two words for analyst reports that dissed Chrysler’s operating profits: “Boulevard press.” This is Euro-slang for tabloids, or the business section of the National Enquirer.
“As we all know,” said Sergio, “in business it is ultimately only facts that prevail.”
Then, the facts were presented. Read More >
Should your travels bring you to Wolfsburg in the near future, do yourself a favor, don’t mention “Cologne.” Don’t say anything about “Köln.” For goodness gracious, don’t mention Ford. Even colloquialisms such as “ich mach mich fort” (“I’m outta here”) should be avoided. Any of the above would get you an icy stare at a minimum. Or a uniformed Werkschutz escort to the factory gate at Wache Sandkamp. The boys in Wolfsburg carry a deep grudge against Ford. Ford beat Volkswagen at Golf. Read More >
Analysts will have a lot of uncomfortable questions tomorrow when Chrysler reports post-bankruptcy financial results, while Fiat unveils “la strategia grande” domani in Italy. They will finally unveil their long-awaited 5 year plan.
According to Reuters, “more questions than answers could still remain about Chief Executive Sergio Marchionne’s turnaround strategy.” The most uncomforting question will be: “Are you sure?” Read More >
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