For days, Fiat’s CEO Sergio Marchionne had made noises that his company cannot survive alone and is in urgent need of a strong partner to live to tell the tale in the nasty car business. He may have found a suitor, the Italian business paper Milano Finanza (sub) reports: PSA, maker of Peugeot and Citroen. According to the paper, the marriage is being arranged at the highest levels: Italian Prime Minister Silvio Berlusconi and French President Nicolas Sarkozy are discussing to tie the knot between their countries’ automakers. There could even be a dowry: Berlusconi is currently thinking about aid to the auto sector. Except for Fiat, Italy hasn’t much of an auto sector. PSA and Fiat are no strangers. They have two joint ventures, one for trucks and one for the “Eurovan” MPVs. Combined output of the two companies was 6.2m units last year. A combined Fiat-PSA would have a good shot at the number 4 slot, with Toyota first, GM second, and VW third. Fiat-PSA would have to duke it out with Ford and Renault-Nissan. What’s the prospective couple saying to all this?
Category: News Blog
Next time you’re driving, look around. Provided you’re one of TTAC’s North American readers, chances are you’ll see at least one third-gen Accord humming along happily– despite its tatty cosmetic condition. The late ’80’s Accords showcased perhaps the finest demonstration of Japanese manufacturing capability; Honda crafted a sedan rivaling the legendary Toyota Hilux’s affinity for destruction-resistance.
Perception: All Detroit needs is deep restructuring and federal bailout money for long-term viability.
Reality: Wrong. Detroit needs what America sorely needs — a Congress with the leadership chutzpah to devise and implement industrial and energy policies that will help to keep native manufacturing industries alive. Detroit’s problem isn’t poor products or lack of products. It’s a national government still wedded to the debilitating siren song of cheap gasoline. It’s a nationally collapsed financial system. And it’s governmental hypocrisy — our willingness to pour tax dollars into foreign enterprises, most of them not unionized, while griping about doing the same for homegrown, unionized manufacturers largely responsible for building America’s middle class.
Video re-enactment of last week’s attempts to get the bail-out plan through both chambers.
ToMoCo tightens belt hard: Toyota has put major capital investment projects on ice while sales tumble and the global economic condition looks grimmer by the day, the Nikkei (sub) says. Major projects affected: Chinese factory expansion delayed until sales recover. Capacity expansion in Brazil and India on halt. Mississippi plant opening delayed until 2011 or later. Revamping of production lines in Takaoka, Japan, pushed back to at least 2010. The Nikkei: “The recent postponements are likely to impact a wide range of entities, including part suppliers, materials makers and equipment manufacturers. Other automakers might follow Toyota’s lead in cutting capital expenditures amid the global sales downturn.”
VeeDub closes Chinese plants “for maintenance:” Volkswagen’s two Chinese joint ventures are planning to partly suspend production lines to “conduct maintenance work,” China Daily says, citing a Sunday report by state television. FAW-Volkswagen plans to suspend part of its production at their plant in Changchun at the end of the year. Shanghai Volkswagen will also suspend work at its production line for half a month from mid-December to early January. China Daily called Volkswagen’s office in Beijing and the two joint venture companies. The phones “rang unanswered on a Sunday,” writes China Daily.
Daimler cuts costs: Daimler aims to cut costs at its Mercedes-Benz Cars group by 10-15 percent in 2009, Reuters says. In the sales division, costs were to be reduced by up to 30 percent.
And it’s hitting the parts makers: Bosch plans to reduce costs in its automotive division by not renewing temporary workers’ contracts and possibly cutting jobs outside its German home market, a company spokesman said on Saturday to Reuters. Sales in October and November slumped by 20 percent.
“Sweet Jesus! You guys and your talk of blasphemy and not getting it. I bet your grand fathers would turn over in their graves if they about half of what you did to your rides. What in the hell do you guys think hot-rodding is all about. Everyone has his or her own vision of what they expect as they try to make their wheels an expression of themselves. Looks to me like this guy put a lot of work into his ride and just because YOU don’t like it doesn’t mean the entire world should. Next time before you make a comment try and imagine how you would feel if people began putting your ride down and all this after they took the time to post it on CarDomain. To each his own and if there is something you don’t like move on to something that does but thee’s no need to put down someone’s ride. In the mean time just try to remember, we’re all car guys and gals and while we may not all be equal in what we like or can afford we still owe it to each other to have some respect for what it is we all have in common… our wheels.”
“Yes, a long time. I’ve seen GM do a lot of things. Water pumps – massive failure in the late 60’s and early 70’s. Broken motor mounts – when they failed the throttle would go wide open… a fun ride. Implementation of emission controls – the plugging of the vacuum lines to the EGR valves. IMHO this is where everything started going bad. GM cars began to have more driveability problems than ever before. Worse, problems became harder to diagnosis. We sold a lot of cars during the 70’s; some good, some not so good. The Chevy Vega was the worst. Then came the X cars and we lost all direction.
“The new BMW Z4 is larger than its predecessor measuring 148mm longer at 4,239mm and 9mm wider at 1,790mm, and this results in greater interior space and luggage capacity. With the roof up, headroom has been increased by 44mm while the greater car width and design enhancements have led to 20mm more shoulder room and 43mm more elbow room.”
The Detroit News (of course) reports that Chet Czaplicka (real name) is doing a Ressler (i.e. conflating purchasing a Chrysler, Ford and/or GM product with patriotism). “The chief executive of a Livonia blood-processing firm is trying to do his part to give the automakers a little bump in sales. His medical firm, Comprehensive Care Services, is offering workers $1,000 toward the purchase of any new truck or car made by Detroit’s auto companies — a small gesture that Czaplicka hopes will make a big statement about just how important the Big Three’s survival is to businesses in the region.” Other than the MSM, Czaplicka’s offer has fallen on fertile ground with his employees– ish. “The incentive already has caught the attention of one employee in Florida, Sean Murtha, who is looking to replace his wife’s Lexus with a more fuel-efficient vehicle. The offer of an extra $1,000 got him to consider buying American. He and his wife are eyeing a Ford Edge.” Well, he would say that wouldn’t he? And Murtha sounds like a tire kicker to this former salesman… And it might be churlish of me to point it out, but Detroit’s automakers have been offering a grand off their vehicles (at least) for a long, long time– without stimulating much action down at the dealership. Still, makes a good story.
Yesterday, voters in the UK city of Manchester overwhelmingly rejected a congestion charging plan. Officials had spent millions promoting the scheme. And yet, with over one million votes counted, all ten boroughs said no to the plan– despite the promise of £2.8b ($4.2b) in mass transit spending from the central government upon approval. The final tally stood at 79 percent against and 21 percent in favor. Officials had hoped to have the complex congestion tax infrastructure in place by 2013 so that they could charge commuters an initial rate of £5 (US $7.50) to drive into Manchester city center during work hours. The average motorist would have paid an extra £1250 ($2500) per year, although once in place the rates would likely have increased.
One of the main improvements in future cars and associated global platforms: weight reduction. Thanks to new, stricter emissions and fuel consumption regulations, this trend is well underway. New cars have already stopped gaining weight. And manufacturers are redoubling their vehicular dieting efforts. Their progress has been predictably rapid. for example, future generations of the European compact class (e.g. Focus III, Golf VII) should shed We more than 100kg, using several strategies…
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.
Duh. After a month of increasing indications that mostly Chinese concerns may be interested in snapping up pieces of the D2.8, the MSM is cautiously warming up to the facts of life. It’s happening everywhere. Except at the stalwart Detroit News, which sticks to it’s “see no evil, hear no evil, write no evil” editorial policy, and where a search for “SAIC” produces “GM to offer OnStar service in China.” Good luck with that.
“Now, Americans will be introduced to car companies like Tata from India and SAIC Motor Corp. and Guangzhou Automobile Group Co. from China,” writes Robert Rector for the Pasadena Star-News. “Undoubtedly, they will likely follow the Japanese model and build factories in the United States because of the cost of transporting fleets of automobiles across the Pacific.” Points for not giving up the hope. But wrong, Mr. Rector. First, Tata is most likely out of the game for a while, for reasons we shall see further below. Second, the cost of transporting fleets of automobiles across the high seas is minor compared to the price of the car. Especially now where ships are sailing half empty. Factories are built when exchange and labor rates are unfavorable. The Chinese will most likely keep as much as possible in China. Even Motor Trend wakes up:
Looking for higher returns? How about 25 percent! That’s right 25 percent a month, every month. Plus penalties. Plus fees. Plus the entire value of any car you repo and sell off. Not a bad deal for aspiring deca-millionaires if you ask me. The minus? Well, you have to spend a few of your crumbs to have a well funded lobbying group pay off the politicians. Welcome to the Title Pawn industry in the great state of GA, and yes, the repo side of this business is becoming absolutely huge at the auctions. Thousands of cars have been ‘involuntarily donated’ to a group of hyenas that would make Jesus remove his flip-flops and wear steel tipped boots. As for the rest of us dealers and auctioneers? We just get a first glimpse of the collateral damage that comes with a bad economy and a well-funded government.
A short overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off.
Canada ready to help – if U.S. goes first: Canada’s industry minister Clement said that the Canadian government has agreed to provide aid to automakers – as soon as the U.S. government approves a rescue package, says Reuters. The amount of money Canada is proposing is based the country’s 20 percent share of the auto industry. The more the U.S. shakes loose, the more Canada’s 20 percent share will amount to.
Japanese strength hurts Japan: Japan’s automakers will lose $2.2b in profits in the current fiscal year if the yen remains at current high levels against the dollar, the Nikkei (sub) reports. Toyota’s full-year operating profit falls by $450m for every 1-yen decrease in the value of the dollar. Most automakers have an exchange rate of 100 yen to the dollar in their budgets. If the yen stays stronger than planned, it’ll mean itai-itai (major pain) for their books. The Japanese fiscal year usually ends in March. Markets have a perverse way of regulating themselves. And governments have a tendency towards tinkering with the market when they see fit. Some, amongst them the Financial Times, expect an engineered drop of the Yen before March.
Japanese unions want more: Toyota Motor Workers’ Union is unimpressed by the plight of the company, and is expected to demand steep pay increase in the upcoming spring wage negotiations, the Nikkei (sub) learned. That would be the fourth annual pay increase in a row. In tune with the current discussions, the union argues that the increase would “boost domestic demand” in addition to maintaining living standards.
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