And here’s the kicker: the French Interior Ministry described the night as “rather calm and without major incident.” Dow Jones [via NASDAQ] gives us the exact stats: “The interior ministry had earlier said 445 vehicles were set on fire overnight, but later revised that figure to 1,147. The number of arrests and cars torched topped last year’s tally of 259 people detained and 372 vehicles burned.” So, uh how could that possibly be construed as a calm? It all depends whose car is set alight. “‘There were very few targetings of fire trucks and clashes with security forces, in particular in the suburbs,’ noted the interior ministry in a statement. When clashes occurred, they were ‘brief and sporadic,’ it added. There was no damage to buildings.” Oh, that’s alright then. And how did the Parisians authorities accomplish this little feat? “France mobilized 35,000 police and 50,000 firefighters to maintain order during the New Year fete.”
Category: Overseas
According to Dubai’s Radio One, the credit crunch has dealt a serious blow to the venerated extravaganza of excess known as the Abu Dhabi Motor Show. Several major manufacturers have pulled out of the venue due to start on the seventeenth of this month, citing diminishing returns for the capital invested in the displays. BMW, Porsche (which just pulled out of the Canadian show as well) and the VW Group (most notably Audi and Skoda) all cut bait. Who’d a thunk it? The Cayennes, X5s and Q7s blasting down Dubai’s dusty but extremely smooth highways almost outnumber Nissan Tiidas and Toyota Corollas. General Motors, on the other hand, has upped their square footage to dominate the Exhibition Hall in downtown Abu Dhabi. They’ve also setup a test drive program (as long as you have a driver’s license, are 21 and don’t look dubious). GM offers easy financing: “0-new car in 60 Minutes.” As many of the potential customers of the various GM models in the UAE are ex-patriots, or imported slave labor with limited UAE credit, this prearranged financing should prove very successful. Manufacturers certain to display their wares: Lamborghini, Bentley, Rolls Royce, Ferrari, Aston Martin and Shelby, with the fastest production car in the world, the Ultimate Aero.
Dubai gas prices might reach parity with Oklahoma City prices in the near future, as the Emirates of Dubai and Abu Dhabi contemplate raising their standard prices from 6.2dhs per Imperial Gallon (or $1.38 per US Gallon). The rising gas prices only hint at the start of problems from plummeting oil prices in the UAE as ADNOC (Abu Dhabi National Oil Company) and ENOC (Emirates National Oil Company) have started to prohibit cars bearing plates from other Emirates from using their filling stations, as they are the cheapest areas in the UAE. Residents of Sharjah have created the greatest outcry thus far as they complain they are all citizens of the UAE, not one particular emirate, and should have equal filling opportunities no matter where they are. Other victims of the oil crash: the massive building sprees Dubai and Abu Dhabi went on trying to create a tourist destination paradise from a gravel parking lot covered in sand dunes.
According to the AP, Korea’s Yonhap news agency reported last week that work could be delayed at Kia’s new West Point, Georgia factory. A wait and see approach would make a lot of sense too, considering that Kia is cutting production worldwide and that the bottom appears to be falling out of the American car market (Hyundai sales being no exception). Except that the report was not true. “No change has been made to our schedule to complete the plant by the end of November and to start production in December (2009)”, says Kia’s Michael Choo. The $1.2b plant was announced in 2006, and will employ 2,500 workers building 300k vehicles annually at full capacity. The West Point factory is Kia’s first in the US, joining parent company Hyundai’s single factory in Alabama. This makes the Georgia Kia’s third overseas production center, joining China and Slovakia, the latter of which is the subject of a fascinating piece by the International Herald Tribune. In it the secretary general of the Automotive Industry Association of Slovakia brushes aside those who would call her country (which builds more cars per capita than any other) “the Detroit of Europe.” “We’re in a good position to grow,” Maria Novakova tells the IHT. “Frankly, we don’t want to be compared to Detroit because we don’t want to end up like Detroit.” An understandable sentiment, to be sure, and one that is poignantly underlined by Kia’s decision to build cars in the US.
I’m a bit gun-shy after mistakenly accusing NBC of pulling the SNL sketch pillorying the Big 2.8’s Congressional bailout begging from YouTube for ad revenue-related reasons. So I’m not going to raise the specter of conspiracy for a 404 message on The Australian newspaper. I’m sure the story on the Pontiac G8 disappeared due to technical reasons. Or something. Thankfully, one of our B&B cut and pasted the piece into an email. “Holden Exports Facing Stop Sign” contemplates the prospect of GM axing Pontiac as part of its pursuit of bailout billions. “The Holden-built Pontiac G8 is part of the problem, as it is struggling to find buyers. Just 13,000 have been bought since shipments began at the beginning of the year, and inventory levels exceed 11,000 cars — or 283 days’ supply — the third-worst for any GM model, according to specialist US website Automotive News. Potential Pontiac G8 buyers must now factor in an uncertain future for the brand. ‘It’s a challenging business environment for carmakers around the world,’ said a spokesman for GM Holden, Jonathan Rose. ‘We’re very proud of our export program.’ He denied Holden was adding to Pontiac’s woes, and said export shipments were continuing… The company expected US demand for Pontiac G8s to boost exports, but recently announced plans to shut its factory for 25 days in the first quarter next year, in addition to its four-week Christmas holiday closure.”
Seeking Alpha prides itself “the premier financial website for actionable stock market opinion and analysis.” When it comes to what should happen with GM, they are on our side: “Buyout better than bailout,” writes Seeking Alpha. Roger that. We have been picking-up indications that Chinese automakers SAIC and Dongfeng may have plans to buy assets of GM (and while they are at it, maybe even of Chrysler). China would get what it badly needs for its thriving domestic car industry to become an even more thriving international car industry: accepted brands, a worldwide distribution network and know-how necessary to comply with US and worldwide standards. Apparently, private equity firms are keen to aid this “transfer.” Behind all of this (of course) stands the Chinese government. The People’s Republic owns most of automakers SAIC and Dongfeng, along with a good chunk of the private equity firm Blackstone, a good chunk of Morgan, and a good chunk of T-bills (to the tune of $585b).
Like everyone, Honda is cutting production. The Financial Times reports that Honda’s Swindon, England plant is shutting down for the months of February and March. The Japanese company’s reputation for employee friendliness is taking a bit hit with the news that Honda’s “5,000 workers in Swindon will be laid off without pay during the shutdown.” The much lauded Japanese no layoff policy has gone by the wayside at Honda just as it has at Mazda and Isuzu. Toyota is likewise shoving people out the door of it’s Japanese factories without pay, but continues to hide behind the “contract workers” ruse which has long allowed them to in reality hire and fire to meet demand changes while claiming not to do so. Toyota “plans to reduce the number of contract workers on its Japanese payroll to about 3,000 by the first quarter of next year from more than 9,000 in the same period this year.” In simple terms, Toyota is laying off 6,000 people … without calling them layoffs. Meanwhile, “Fitch Ratings downgraded Nissan’s long-term debt rating on Friday from “A-minus” to “BBB-plus” and signaled that further cuts could follow.” Layoffs, plant shut-downs, debt rating downgrades and plunging profits. Sound familiar?
The Associated Press is reporting that General Motors now plans to sell back its 3.02 percent in Suzuki for $230m. Buckingham Research Group’s Joseph C Amaturo gets credit for pointing out that “while the sale is indicative of GM’s near-term liquidity challenges, the proceeds are not very meaningful.” In other words, it takes a lot of $230 millions to fill a $5b hole. “GM is expected to burn $4 billion to $5 billion in (the fourth-quarter) or roughly $1.5 billion per month. Hence, the cash proceeds from the sale of its equity stake will not even cover one week of expected cash burn,” Amaturo said. Not that it’s bothering Suzuki. “We fully understand the necessity for GM to raise cash,” Suzuki chairman and chief executive Osamu Suzuki noted dryly, adding that GM and Suzuki would continue to pursue a business partnership. Joint development of hybrid vehicles and a joint venture building sports utility vehicles in Canada are said to be on the collaboration agenda. The two automakers are also joint stakeholders in GM’s currently-stalled South Korean operations, GM-DAT. GM has owned portions of Suzuki since 1981, only selling off 17 percent in 2006. The saddest part of this story? It decreases the likelihood that GM will help bring Suzuki’s current (well-received) Swift to the states. Not that they needed a competitive small car or anything.
When we reported on the Bush-Obama meeting yesterday, we told you that the meeting was “friendly,” but ultimately unproductive. Well, we were right about half of that, and no prizes for guessing which half. The New York Times cited unidentified sources in its coverage as saying that Bush was ready to support accelerated support for the Detroit Three on the condition that Obama convince Senate Democrats to support passage of the Columbian Free Trade Agreement which they are currently blocking. Needless to say this was a non-starter. Obama has openly opposed the Columbian FTA throughout his campaign, not only to curry favor with the unions protect US jobs, but also because in his words “the violence against unions in Colombia would make a mockery of the very labor protections that we have insisted be included in these kinds of agreements.” Having made this human rights argument in no less public a venue than the presidential debates, was there ever any chance that he would accept Bush’s compromise? Of course not. But now Bush is steamed that this detail slipped out, blaming Obama aides for leaking the smoke-filled-room compromise to the press. Obama’s transition team now says that “there was no quid pro quo in the conversation,” but as the US News And World Report Political Bulletin reports (in exhaustive detail) this is turning into the first major rift between the outgoing and incoming presidents. As well as proving that even a bad compromise leaves everyone unhappy.
This is a big one. GM’s world-car ambitions over the last decade or so have been based on its former Daewoo plants in South Korea, which turned out 2m global-market econoboxes last year alone. Now the Financial Times reports that all five GM-DAT plants will be temporarily shut down in December, putting one of GM’s best-performing units on ice. Unfortunately for GM, this is not simply another symptom of its cash incineration and tightened credit. According to company officials, the shutdown stems from “slowing demand and GM’s need to manage production and rising inventories.” “The economic crisis is truly global,” Jay Cooney, GM Daewoo’s vice-president, said. “What we’re beginning to see here in Asia is no different from what is going on in Europe and what has already happened in the US.” Slowing markets across the Asia Pacific Rim mean the five GM-DAT factories will go from operating at 110 percent capacity to a full stop, as GM tries to sell off its remaining inventories of Korean-made Chevrolet, GM, Daewoo, Holden, Buick and Pontiac models. GM also announced that its entire Asian arm lost $6m in Q3 of this year, the first such loss in years for the usually profitable division. This also means that Asia will now be waiting (just like us) to even have a shot at buying a new Cruze which hit the streets as the Daewoo Lacetti last month.
Dig through the dire news about GM floating around this morning’s autoblogosphere, and you just might notice a story that doesn’t quite jive with all the doom and gloom. Bloomberg reports that GM is “in talks with a local partners” to increase its 34 percent stake in GM-SAIC-Wuling, a Chinese light-truck and van maker. As our man in Beijing reports, China is aggressively stimulating its car market (which has bottomed out, by Chinese standards, at 11 percent growth) and GM wants in on the action. Of course there are just a few issues with the move– beyond the fact that GM has no cash with which to make such a deal. SAIC currently owns 50.1 percent of the consortium, and its Chairman Hu Maoyuan tells Bloomberg that it won’t be giving up its majority. “GM and our partner in Guangxi (Wuling) are still discussing how to settle the share transfer,” says Hu. So GM wants to spend cash it doesn’t have to increase a non-majority stake in an overseas joint venture. Non-starter, right? Not according to Ricon Xia, an analyst with Daiwa Associate Holdings…
While GM, Ford and Chrysler put the squeeze on the taxpayer’s elected (and appointed) representatives, their shift of investment out of the U.S. and into other countries continues apace. This morning, for example, the Associated Press reports on the grand opening of General Motors newest $300mfactory… in St. Petersburg, Russia. “This plant is GM’s first in Russia, where demand for cheap, well-built cars has exploded amid a decade-long economic boom.” Similarly, last month GM opening it’s second factory in India and launched a new $250 million Shanghai, China R&D palace. For the life of me, I do not understand how GM executives can continue to pay themselves outrageous sums of money, shut down American factories, put development programs into the deep-freeze, toss American workers on the ash-heap, invest the company’s dwindling resources everywhere else AND demand financial bailouts from American taxpayers. Oh yeah, and don’t forget that bit about blaming American customers for un-patriotic buying decisions. Speaker Pelosi, are you paying attention? Can someone please tell her from whence cometh the Chevrolet Aveo?
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?
“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…
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