Beijing’s sizable German community congregated today at the annual Weihnachtsmarkt. At the German Embassy inside the People’s Republic of China, party-goers loaded-up on Bratwurst, Christstollen and got seasonably drunk. Volkswagen China, headquartered ’round the corner, sponsored a stand at the festival. Not to sell cars. No, they were hawking their fabled “VW-Currywurst,” a culinary delight served every Thursday to the working classes at Wolfsburg’s cafeterias. At the sidelines of the event, and under the influence of truth serums such as Radeberger Pilsner or Glühwein, leading Volkswagen of China execs reiterated what had been the talk around Sanlitun for months: VeeDub is defying gravity in China. In fact, they’ll probably sell more cars in China this year than their parent sells in Germany. According to Gasgoo, Jörg Müller, CFO of VGC (Volkswagen Group China) made the prediction in August. In October, VGC pronounced themselves over target.
Category: News Blog
Thank God it’s the weekend-edition of While America Slept. That’s pretty much all we have reason to be thankful for. WAS is a daily round-up of the news that happened in other continents and time-zones. TTAC provides round-the-clock coverage of everything that has wheels. Or that has its wheels coming off. If you hate bad news, don’t tread it.
Japanese car market commits seppuku: Japanese domestic new car sales are likely to drop by around one-third in November, “raising the odds that the full-year tally will be the lowest since 1974,” writes The Nikkei (sub.) Folks, Japan has it worse than back home, so cheer up! Full-year sales of all types of cars, including mini vehicles, are forecast at around 5.1 million units — the lowest total in 28 years. Japan gave up its rank as the world’s second largest auto market to China in 2007, but remained the world’s second largest producing nation. It is expected to relinquish that rank also to China in 2008. That spells major itai (pain) for Nippon. Soon they’ll complain about exporting all those jobs to gaijin America.
It’s all in the brand: To add insult to injury, China’s Guangzhou Automobile Industry Group (GAIG) announced that its two subsidiaries “Guangzhou Toyota” and “Guangzhou Honda” will be renamed as “GAIG Toyota” and “GAIG Honda.” Harmless so far. Here comes the unusual part: Toyota and Honda will be required to pay for the honor of carrying the GAIG trademark, Gasgoo reports. It used to be the other way. The two brands will be sold through one “GAIG” sales channel. GAIG’s chairman Zhang Fangyou said his focus will “shift to brand marketing.” Of the GAIG brand.
GM says bondage no fun: GM is trying to talk their debt holders into exchanging bonds for stock, the WSJ (sub) says. That would help GM avoid C11. The proposal, along with the daring assumption that doubtful investors will accept it, will make its way into the business plan due in DC on Tuesday.
GM BOD to sacrifice Wagoner? The WSJ (sub) also picked up indications from GM’s BOD that the directors may be increasingly inclined to serve Wagoner’s head on a platter to mollify the angry gods of the Beltway. More than one-fourth of the automaker’s 14 directors have already privately expressed frustration with Wagoner, the WSJ says. COO Fritz Henderson is being floated as a successor.
CNN Money’s Chris Isidore writes that if all the stars aligned, the Big Three could return to profitability by 2010. He qualifies his comments often, with phrases like “if they make it to 2010,” but the bigger issue is the specious nature of his explanations for how the companies would return to profitability. Isidore’s claims are essentially underpinned by the philosophy of “cutting your way to profitability” — as such, he highlights the Big Three’s smaller workforces, supposedly reduced pension obligations, and cuts in overcapacity. The only actual increase in income Isidore speculates about is increased new car sales, an argument barely more sophisticated than “they’re really bad now, so obviously they have to get a lot better.” This kind of journalism is dangerous, not just because it’s overly optimistic (in spite of its own acknowledgements to the contrary), but because it’s wrong. There is no reason to believe sales will be up to 14 million units in the US by 2010; there’s even less reason to believe that GM’s share of those 14 million units would be the same percent that it was in 2007. Isidore’s math on the potential savings from cost cutting is calling the glass 1/8 full at best, by assuming the UAW will allow GM to just defer its contribution to the pooled-benefit VEBA account to another year. That might work in accounting ledgers, but the bottom line is that this is the kind of nonsense that contributed to GM’s collapse in the first place.
This is what I get for taking a moment to check in at GM-Volt.com. The angry young Volt-lovers are freaking out about the possibility of GM not surviving until the Volt’s launch date, and the prospect of losing their beloved fetish object has folks in a “pay any price, bear any burden, meet any hardship” kind of mood. The emotional fervor that these people feel towards this nonexistant vehicle is such that their suggestions make handing a blank check to Detroit look like a good idea. The “GM-Volt.com Viability Plan Suggestion,” was put forward by semi-retired NASA engineer Phil Toney, and man is it a doozy. The plan boils down to congress legislating that the entire government fleet (600k+ vehicles) be replaced with, you guessed it, Chevy Volts. But that’s not all…
MINI has sent out the press release and photo pack for its new MINI convertible, and I have to say “eh.” It the same looks as the MINI hatchback, and the first generation new MINI convertible. The interior is still cartoonish, the back seat appears to be of about the same usefulness as the first gen convertible (which would be nearly none) and the trunk still has the funny fold-down tailgate. MINI says they’ve made incremental improvements (in addition to the new platform for the car, which is now the same as the hatch has had for the last two years). The roof also slides back to function as a moonroof without actually folding the whole top down, like on the last model, and now the roll hoops don’t stick out as much. Engines are the same as the MINI Cooper and Cooper S hatchback versions, so 118 or 172 ponies are your options. As for me, I’d rather have a Miata. Fortunately for MINI, loads of people won’t agree. I’d bet on a waiting list.
As Farago wrote, the Caravan of Love broke down before it even left Motown. Supposedly, it went virtual, and took the information superhighway instead of routes 76 and 70 as even the most half-witted GPS would recommend. Jeez, they can’t even do what a 3 year old can do in 10 minutes: Build a website. TheEngineOfDemocracy.com displays the dreaded “Our site is currently under construction.” It promises: “We will be back online Monday, December 1st as promised.” What do they mean with “back?” Where they ever on-line before?
And then, that logo: I bet, trademark lawyers in Wolfsburg are right this minute arguing with Volkswagen top management: “We recommend sending a cease and desist. They are diluting our Autostadt mark.” “It might not be politically expedient. They’ll say we hate them.” “If you don’t send the letter, we may lose our mark.” Anyway, the thing on the site looks terribly like Volkswagen’s Autostadt logo. The Autostadt logo looks back at a long line of German Heritage: It was purloined from Volkswagen’s New Beetle, which was inspired by the old VW Bug, which was ordered by old Adolf himself. But at least: It was all in the family. The Engine Of Democracy: In the ass, and cooled by hot air?
“The caravan bound from Detroit to Washington, D.C., to support federal bridge loans [a.k.a. bailout] for Detroit’s Big Three automakers will take the information superhighway instead of the interstate… Grand plans of an automotive cavalcade to the nation’s Capitol grew to the point of impossible once the idea was floated last week by a number of influential people in Detroit.” And so The Detroit News pronounces the T.O.D. for the Caravan of Love. “The outpouring of support was huge,” said Jason Vines, Compuware Corp.’s vice president, TTAC podcaster and former chief spokesman for Chrysler LLC. “We’ve changed this into a virtual march, in part because we didn’t want to become targets for environmental groups or others.” Whoa! Hold on there. First, GM CEO Rick Wagoner can’t drive to DC with his $25b bailout bowl because of “security concerns.” Now the Caravan of Love is bummed-out by possible bad vibes from whacko tree huggers? Talk about a bad trip! So… now what? The bridge builders are launching a site called TheEngineofDemocracy.com. “There, people can share their stories about how the auto industry impacts their lives.” Customers too?
How was your Thanksgiving? Get ready for turkey sandwiches, turkey soup and a dose of turkey news from all over the world. While America Slept (WAS) is a daily round-up of the news that happened in other continents and time-zones. TTAC provides round-the-clock coverage of everything that has wheels. And that has its wheels coming off. Soup to nuts, all the news that would be unfit to eat on an empty stomach.
Indian market blows up. The emerging Indian auto industry hasn’t quite emerged yet. Now, it’s getting it in the shins, big-time. After Toyota’s debt rating was cut, “Indian automobile stocks were lower tracking the fall in Asian peers,” the India Times has it. “Due to lower demand, automobile companies have been forced to shut down plants.” Now, shell-shocked investors take their money and go home. “The attacks in Mumbai could accelerate the trend,” the Nikkei (sub) writes, citing Mitsushige Akino of Ichiyoshi Investment who said: “Worldwide economic downturns have historically triggered wars and political instability.” Not what they call an investor-friendly environment. The Mumbai attack is already called “India’s 9/11.” Say ta-ta to Tata for a while. Internationals have advised expats to keep indoors, or better, get out.
Hyundai declares war on Nissan: Speaking of wars, “Hyundai has made its 2009 Accent the cheapest new car on sale in America by lopping $1,100 from its MSRP, so the numbers on the screen now read $9,970“ the LA Times reports. That’s a price-war to the tune of $20 less than the $9,990 Nissan Versa 1.6 – but every penny counts these days. Wars have erupted about less. Considerable fine print applies. Check with your dealer, or the LA Times for details.
Wagoner squeezes Forster, Forster squeezes Opel: GM Europe must wants to save $750m in labor costs at Opel. Forster sent a letter to all workers and announced less work, less pay. Opel’s union boss Klaus Franz signaled to Forster to insert letter in pipe and smoke it. Or choose other dark cavities. According to Automobilwoche (sub,) Franz asked six questions from Forster, the most salient being “what are your plans to protect the European business from an insolvency of GM?” Franz doesn’t expect any answers. The cosmopolitical Franz even paraphrases Nancy Pelosi: “If you don’t show us the plans, we won’t show you the money.” Wait, it’s getting worse …
Everything looks better sitting in the Ritz. So I’m in a magnanimous mood, surfing the web on TTAC readers’ behalf. Needless to say, I wandered into “Top Ten Things Autoblog is Thankful For.” Normally, I’d pour sarcastic sprinkles on AB’s vanilla prose, and then smother it in chastising chocolate. In fact, AB inspired me to write my own top ten higher power hat tips. And here they are, in descending order. Feel free to add yours. Or, just to tweak Stephan Wilkinson, not.
According to Bloomberg, who has it from people supposedly familiar with the matter, GM “is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer.”
So assuming that they do: Will they just dump the brands? As in throw them away? Or will they sell them? If the latter, who do you think will be the successful bidder?
Euro NCAP crashed 12 cars, and caused surprisingly little damage. Eight out of the 12 demolished vehicles received the coveted 5 star rating. Mercedes Viano and Ford Ka have four stars, the Dacia Sandero has three. The Ford Ranger limped out of the testing lab with only 2 stars: Bad boy! Results can be found here.
Next year, Euro NCAP will use a new, more stringent method. Cars without ESP won’t stand a chance to receive 5 stars. Seats will receive special attention. As a warning to manufacturers, Euro NCAP published results of its rear impact (whiplash) test which hadn’t been part of this year’s star ratings. It will be next year. Automakers better get off their duffs and start working on those seats now. Only 4 out of 25 received good marks. The rest are marginal or poor. Results here. Doing nothing will result in major demotions next year.
As gas is down, the behemoths roar back.
There’s a small rash of stories spreading through the media with a single common thread: everyone’s going to pull together to get GM through until the government picks up the tab. So, is it feel-good holiday rumormongering, or something more? Let’s take a look. The first story comes from Automotive News [sub], and it quotes GM purchasing boss Bo Anderson as saying suppliers aren’t demanding cash. And why would they? It’s not like things are tight right now. “Our suppliers are behind us,”Anderson tells AN, “We keep our terms of payments. They are contractual, something we negotiate with suppliers, and we think it is important to be a prompt payer. We are doing our best to hold the current terms.” Doth the gentelman protest too much? “It is very important to be very transparent and be open about the changes we see in the workplace with production schedules, product delay and any product changeovers,” says Anderson, while acknowledging that supplier CEOs face difficult conversations with their nervous directors, who worry about GM’s ability to pay as it suffers a liquidity squeeze and delays in getting financial aid from Congress. But anyone who has watched supplier after supplier go bankrupt over the past several years knows that suppliers have little choice in these matters. The UAW though? Read More >
The Washington Post notes a lesson in unintended consequences: a US government initiative to reduce gasoline consumption has been a miserable failure. The Energy Policy Act of 1992 (EPAct) mandated that government agencies purchase flex-fuel vehicles for 75 percent of light duty fleets, hoping to spur automakers into building more fuel efficient vehicles and decrease gasoline consumption. And they were built: the Ford Taurus FFV 3.0 and Ranger pickup, GM compact pickups, Chrysler minivans, among many others. For years, agencies ignored EPAct; enforcement came in 1999 after environmental groups Sierra Club and Bluewater Network sued to force compliance. Problem was, replacement flex-fuel vehicles had larger engines in their predecessors and often ran on gasoline, usually due to difficulty obtaining E85. For the 2008-2009 period, fully 61% of vehicles had exemptions to run on gasoline. The mandate resulted in flex-fuel vehicles purchased for Puerto Rico and Hawaii, where E85 pumps don’t exist as it’s quite expensive to ship large quantities of ethanol. In some locations, said pumps are nearby but don’t accept government credit cards. So, despite all good intentions, the result is an increase in government gasoline consumption. Not mentioned in the article was that the billions of dollars in purchases went almost, if not wholly to the Detroit 2.8, as import manufacturers (still) don’t offer many flex-fuel cars or trucks.
This is what passes for good news these days, so pass the turkey and keep smiling. Edmunds (via Dow Jones Newswires) estimates that the American new car market is down 28 percent in November, but up 1.9 percent from October. “Sales improved slightly over October thanks to near record high incentives and perhaps a sense of relief that the presidential election is over,” said Edmunds’ executive director of industry analysis, Jesse Toprak. Many analysts had forseen a bloodbath in November, after a disastrous October. In November’s 25 selling days, Chrysler LLC’s sales are seen dropping 42%, with Ford posting a 33% slide and GM reporting a 28% skid. And it’s not just Detroit firms losing ground. Toyota sales are expected to drop 24%, with Honda sales down 21% and Nissan sliding 29% on the month. Detroit’s market share is estimated to be 47% in November, down from 51% a year earlier and flat from October. These numbers could easily have been much, much worse given the record low consumer confidence. But is cheap gas helping, and if so, how long will it last? Stay tuned, as we get official numbers out at the end of the month.
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