Welcome back to ongoing coverage of the latest transcontinental tale of romance and betrayal, in which Volkswagen and Suzuki’s young-but-troubled relationship is put to the test while the world watches. Last time we checked in, a piece of pricey gossip suggested what the rumors had been saying for weeks: VW and Suzuki were headed for Splitsville. But despite the angry blogging outbursts and talk of “reviewing the relationship,” Volkswagen is standing by its Japanese bride, telling Automotive News Europe [sub] that the latest gossip that the “relationship is headed for dissolution” is “nonsense.” Suzuki joined the show of support, saying it had no plans to leave. But all the while, an Italian temptress is putting even more pressure on this relationship, as Bertel reported last month: (Read More…)
Tag: alliances
Edmunds Autoobserver reports that Tesla CEO Elon Musk revealed in today’s Q2 analyst call that
“we’re in discussions with [Toyota] for a deal that is an order of magnitude larger than [the previous, $100m deal].” A Tesla official later confirmed to AutoObserver that by “order of magnitude,” Musk was stating that the 8-year-old company was discussing a $1 billion deal with the world’s largest automaker.
Holy Shnikeys! Check out Tesla’s Q2 shareholder letter here.
[UPDATE: So, what’s going on? Toyota Japan reps are on break until Saturday, and we’re still waiting on word from ToMoCo’s US operations. Ask us to speculate, and we’d guess it has something to do with the NUMMI plant Toyota sold Tesla (the joint Tesla-Toyota RAV4 EV will be produced and sold to the public, but a plant has not yet been named. A joint venture at NUMMI makes sense because Tesla can’t fill it to capacity alone. On the other hand, Wards reports that Toyota may be leaning towards Ontario as a production site for the RAV4 EV). Tesla and its CEO Elon Musk aren’t saying anything for now either. Musk was last seen talking about saving humanity by helping it become a multiplanetary species… let’s just hope we find out something else about this “billion dollar” deal before Elon decamps for Burning Man later this month.]
[UPDATE: Fiat press release outlining the complete new management structure added]
The awaited consolidation of Fiat and Chrysler operations is complete, reports Bloomberg, and CEO Sergio Marchionne is taking the North American job for himself. Joining Marchionne at the top of the company’s new regionally-based divisions, are Gianni Coda, former head of purchasing at Fiat and now the boss of European, African and Middle East operation; Cledorvino Belini, erstwhile head of Fiat in Brazil is now in charge of all of South America; Michael Manley, previously boss of the Jeep brand, will be leading the firm’s effort Asia. These four regional bosses will be part of a 22-member “group executive council” which will manage all of Fiat and Chrysler’s operations. The details of the council’s makeup still haven’t been released, but the big news is well encapsulated by a quote from Gianluca Spina, chairman of the business school at Polytechnic University of Milan.
Marchionne’s decision to keep the role of overseeing the business in North America shows that the center of gravity of the combined entity will be in the U.S… The integration process is going extremely fast, as is Marchionne’s style.
Video from Chrysler’s last “new day,” shortly after being bought by Cerberus in 2007
According to Chrysler Group’s latest 8K, filed with the SEC today
On July 21, 2011, Fiat North America LLC, a wholly-owned subsidiary of Fiat S.p.A. (collectively, “Fiat”), acquired beneficial ownership of the membership interests in Chrysler Group LLC (the “Company”) held by the U.S. Department of the Treasury (“U.S. Treasury”) and the Canadian government’s special purpose entity, the Canada Development Investment Corporation (“Canadian government”). Fiat acquired 98,461 Class A membership interests in the Company from the U.S. Treasury, representing approximately 6 percent of the fully-diluted ownership interest in the Company for cash consideration of $500 million. Pursuant to a separate agreement, Fiat paid $125 million to acquire 24,615 Class A membership interests in the Company from the Canadian government, representing approximately 1.5% of the fully-diluted ownership interest.
Pursuant to these self-funded transactions, Fiat became the owner of a majority of the membership interests in the Company. Fiat now holds 55.3% of the Company’s outstanding equity, or 53.5% on a fully-diluted basis, taking into account the occurrence of the third and final Class B Event described in the LLC Operating Agreement which is expected to occur by the end of 2011. The remaining equity in the Company is owned by the UAW Retiree Medical Benefits Trust, a voluntary employees’ beneficiary association trust (the “VEBA”).
That’s right, the United States taxpayers are now fully-divested from their “investment” in Chrysler, which is now a majority-owned division of Fiat. Once the EPA certifies that Dodge’s new Fiat-based compact car gets 40 MPG unadjusted combined (about 30 MPG in “window sticker” EPA mileage), Fiat will get another 5% of Chrysler’s equity, bringing its stake in the company to 58.3%. In a statement, the Treasury estimated the final cost of the bailout to be $1.3b (as it does not expect any meaningful recovery from Old Chrysler’s liquidation), although that does not include several taxpayer outlays, without which the rescue of Chrysler would not have been possible. By our math, the total bill for Chrysler’s rescue is closer to $4.7b.
So, after all the drama was it worth it? For now I’ll leave that one to the comment section… and history.
Tesla will begin supplying Toyota with components for its electric RAV4 a year earlier than previously planned, reports Bloomberg, a move that will have Toyota paying $100m for the drivetrains rather than the previously-agreed-upon $60m. According to a Tesla SEC filing, the EV specialist firm will supply Toyota with
a validated electric powertrain system, including a battery, charging system, inverter, motor, gearbox and associated software which will be integrated into an electric vehicle version of the Toyota RAV4. Additionally, Tesla will provide TMC with certain services related to the supply of the Tesla Battery and Powertrain.
There’s still no word about how many of these RAV4s is Toyota planning on selling over those two years, or where will they be assembled, but it sounds like Toyota isn’t trying to launch quite the EV offensive that some green car blogs seem to be hoping for. As one analyst puts it to Bloomberg, $100 million “isn’t a huge amount for Toyota, so this allows them, with only modest downside risk, to participate in what Tesla is doing.” That sounds about right…
Smell that? It’s the gathering scent of a new industry trend towards natural gas. Honda’s expanded its pioneering Civic GX to 50 states, Sergio Marchionne wants to replicate his Italian CNG success at Chrysler (eventually), and now GM is jumping on the bandwagon while it’s still relatively uncrowded. The Winnepeg Free Press reports that GM has signed a development deal with Vancouver, B.C.-based Westport Innovations which could see a prototype light-duty natural gas-powered engine completed “within 18 months” if preliminary study proves promising. A Westport spokesman boasts
If both parties agree to move ahead with commercialization this would be one of the first pure OEM [natural gas-powered] products
You know, except the Civic GX which has been prowling American streets since 1998. Still, with Chrysler targeting CNG commercialization no earlier than 2017, GM could have a strong head-start on a fuel technology that promises to be a viable and promising gasoline alternative, especially if the NatGas Bill [PDF] passes, expanding $7,500 plug-in tax credits to natural gas vehicles. And GM’s got a strong partner in Westport, which has heavy-duty commercial deals with Cummins and Caterpillar. With Nissan all-in on EVs and years ahead of the competition in terms of global EV production capacity, look for other competitors to hedge their alt-energy bets… and natural gas is rapidly becoming the most popular alternative.
Strap on the man-pants, Saab fans, because there’s another heaping load of bad news for the Swedish brand this morning. First off, Saab’s mysterious Russian backer Vladimir Antonov has backed out of a deal in which he was to buy property at Saab’s Trollhättan plant and lease it back to the company, stabilizing its short-term cash position. Automotive News [sub] quotes an Antonov rep as saying
The property sale is now being discussed with external investors
Apparently the Swedish real estate investor Hemfosa has stepped into the breach and sources say a deal could happen quickly. Antonov’s man added that his boss was still interested in securing a shareholding in Saab, a move that has been awaiting approval by the European Investment Bank for some time now. But despite Antonov’s insistence that he’s not going anywhere, the real estate deal pullout is troubling. After all, if Antonov were really the Saab zealot he claims to be, willing to support and revamp the brand at any cost, wouldn’t he want to own the Trollhättan plant? Wouldn’t he want deed to the factory in case Saab, as it exists now, goes into bankruptcy? This is the first indication that Antonov is treating his Saab involvement as an investment rather than a crusade, which is frankly a bad sign for what’s left of the Swedish brand. On the other hand, with Chinese firms chopping up Saab, what’s a businessman to do?
With €30m from PangDa and €30m from Gemini Investments, Saab restarted production today at its Trollhättan factory. According to SaabsUnited, the line will run at 80% speed today and Monday, before moving to 100% (over 200 cars per day) by the middle of next week. Speaking at a press conference, CEO Victor Muller reflected:
It’s been an interesting lesson. A company like Saab, that lives in a glass house, should never be caught in a situation where there is not enough cash to withstand the storm as the one we have seen now. What happened seemed like a very insignificant situation became a very significant situation, and next thing you know, you are losing six weeks of production… it was very, very tough and we’ve had some very adverse circumstances that we’ve had to live with, but we got out of it. I think that if you got through 2009-2010 as Saab has been, anything else is relatively easy. We will definitely ensure that this will not happen again. This means that we will be on a quest to ensure that we have sufficient funds at all times to overcome adveersities like this because we can’t afford to have another production stoppage with all the relating downsides, such as disappointed customers, upset suppliers and media attention… that is definitely not in our interests.
We still have not heard from Saab and there have been six weeks without production. It eventually reaches a point when you have to make a decision
Johan Andersson of the Swedish unit of supplier giant Lear in the WSJ, on why his employers just laid off all 160 workers of its Trollhättan-based Saab workforce. Apparently Mr Andersson and Lear aren’t any more encouraged by Saab’s PangDa deal than TTAC. And considering that the Chinese dealer group is telling Gasgoo that “production has already restarted” at Saab, the fleeing suppliers who haven’t even heard from Saab yet create some credibility problems for the PangDa-Saab alliance (even if PangDa was referencing GM production of the 9-4X at Ramos Arizpe). Which makes the dire rumors that the deal has not, nor will be, blessed by the Chinese government a little more worrying. Sounds like the rotund lady is warming up her vocal cords…
Saab’s deal with the Chinese automaker Hawtai has failed in a predictable manner, as the struggling Chinese partner apparently didn’t receive government approval for the deal. Saab-Spyker’s announcement of the deal’s collapse explains [via AN [sub]]
Since it became clear that Hawtai was not able to obtain all the necessary consents, the parties were forced to terminate the agreement with Saab Automobile and Spyker with immediate effect. The parties will continue their discussions about a possible cooperation, however now on a non-exclusive basis
This isn’t the first time that the Chinese takeover of a Western brand failed due to the Chinese government’s insistence on industry consolidation, as the Hummer-to-China deal failed for similar reasons. Meanwhile, we should have seen this coming a mile away…
Mazda may be free from its less-than-entirely-successful relationship with Ford, but when it comes to US production, Mazda is still very much stuck in its Ford-dependent past. B-Series pickup production has ended in St Paul, but Tribute is still built alongside Escape in Kansas City (for the moment), and the majority of Mazda’s US production is still accounted for by Mazda6, which is also built alongside Fords at the shared Flat Rock “Auto Alliance” plant. But AutoWeek‘s Hans Greiml reports that the Nikkan Kogyo newspaper believes Mazda could be looking to pull out from Flat Rock.
the Mazda6 is a big reason Mazda can’t turn a regional operating profit in North America–one of its most important markets.
The company planned to produce 100,000 Mazda6 units annually at the Flat Rock, Mich., plant, when the redesigned sedan was launched there in mid-2008. Then the financial crisis hit.
Last year the plant built only 45,168 units.
Mazda is cagey about what options it is mulling. If it quits producing the Mazda6, it could bring in another vehicle–or Mazda could quit the plant completely. Speculation abounds in Japan that Mazda is eyeing a new, lower cost North American production base in Mexico.
Saab and the Chinese automaker Hawtai will announce “an exciting strategic partnership between both parties” at a press conference scheduled for tomorrow, reports MarketWatch. According to Saab/Spyker CEO Victor Muller,
the deal involves “investing in Spyker.”
Hawtai was previously a joint venture partner of Hyundai, and had been approached by Chrysler as a possible partner. The firm reportedly has an annual production capacity of 350k vehicles, 450k automatic transmissions and 300k (Euro IV and V-compliant) diesel engines built under license from VM Motori. The B11 (above) is the firm’s first own-brand sedan, although over the next three years the firm has “plans to launch six more diesel or diesel-electric hybrid passenger cars.” According to chinaautoweb, Hawtai’s gamble on its giant diesel engine plant, the largest and most sophisticated in Asia, may not be panning out as diesel availability has been an issue in the Chinese market, due to high demand from the trucking industry.
Saab’s got a new short-term lease on life, as Automotive News Europe [sub] reports that the Swedish brand has secured a €30m, six-month convertible loan from Gemini Investment Fund. Saab is also requesting a €29.1 drawdown of its EIB loan, and when that is approved next week, Saab will reach the €59.1m in liquidity it needs to restart production. According to another piece by Automotive News [sub], Saab is still in talks with the Chinese automakers Great Wall Motor Co., China Youngman Automobile Group Co. and Jiangsu Yueda Group Co. in hopes of securing an additional investment in the struggling Swedish automaker, as well as a joint venture for Chinese production of the next-generation 9-3, and a possible Chinese market distribution deal.
Meanwhile, Saabsunited reports that several companies have been told to stop development on that next-gen 9-3 while the company gets back on its feet, meaning it could be delayed into the 2013 timeframe. And while Saab sacrifices long-term development for short-term survival, the recent production shutdown is taking its toll: Swedish sales of the 9-3 are up, but the new 9-5 is falling off (128 sold last month) as stocks dry up. The drama continues…
The Swedish National Debt Office has approved Saab’s deal to sell property to its Russian backer, Vladimir Antonov, but the Swedish firm is still waiting on approval of the deal from the European Investment Bank. Saab’s production operations have been shut down for two weeks, since the automaker began having trouble paying its suppliers. The EIB says its must simply review the deal, which would include the sale of Saab’s property to an Antonov-owned bank as well as the release of the remainder of Saab’s EIB loan, although GM gets to review the deal as well before it goes through according to thelocal.se. And since GM has long opposed Antonov taking a large share of Saab, which owns rights to some of its latest technology, Saab is reportedly also talking to several Chinese firms about partnerships that could save the struggling automaker.
The German Manager Magazin will write in its print edition that Volkswagen is considering buying all or part of Isuzu, the diesel-centric Japanese truck and commercial vehicle manufacturer. Volkswagen even has a codename for the deal: “Irene.” Another possibility: the truck firm MAN, which VW owns 30% of, could buy up an Isuzu stake, allowing VW to craft a three-part truck alliance between MAN, Scania and Isuzu. VW’s board member in charge of commercial trucks, Jochem Heizmann, is reportedly in Tokyo pursuing the acquisition and has inspected Isuzu. Toyota’s six percent stake in Isuzu (not to mention VW’s distractions integrating its Porsche and Suzuki alliances) could be serious obstacles. As VW and Toyota battle for the position of world’s largest automaker, Isuzu could become a symbolic battleground for the outsized ambitions of these two industry titans.
UPDATE: VW tells Automotive News [sub] that an Isuzu takeover is “not on the agenda.” Does that mean they’re not looking into the possibility? At this point, it’s not clear.
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