Sunday, April 23, 2006

U.S. automakers push more products; Is it enough to survive?

Toyota debuted its 2007 Toyota Tundra full-size pickup in Chicago, while Jeep brought out the first four-door version of its iconic Jeep Wrangler in New York. Ford announced that racing fans will be able to rent a souped-up version of the Ford Mustang - with its fuel-burning V8 - at Hertz this summer.
Design was another area in which brands tried to stand apart. Chrysler, whose recent turnaround has been largely fueled by successful designs including the Chrysler 300 sedan, debuted the Chrysler Imperial, a haughty sedan with the look of a Rolls Royce. Honda unveiled an Element concept redesigned for urban drivers, with larger tires and a carpeted interior. Saab, which is trying to recapture its reputation as a performance brand, showed the Aero X concept, designed to look like a jet fighter.
GM won praise for its updated take on an icon with its Chevrolet Camaro concept as well as its revamped lineup for the Saturn brand, including the Outlook crossover, Aura sedan and Sky coupe. The accolades come at a critical time for the automaker, which is depending on new models to arrest its U.S. sales declines.
"Every time GM gets a new product they sparkle," Sanfilippo said.
But every big automaker has another smaller company nipping at its heels. Hyundai Motor Co. said it will go head-to-head with Toyota and Honda with the redesigned 2007 Elantra sedan, while Mazda Motor Co. added another crossover to its lineup to compete with stodgier versions from other automakers. And in Detroit was likely the biggest threat yet: China's Geely Automobile Co., which showed a small sedan that will go on sale in the United States by 2008.
"The speed at which the markets and products are changing is just remarkable," Sanfilippo said
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GM expects Chinese sales to rise 20%

General Motors is likely to boost its share of the Chinese market further in 2006 with sales growth of at least 20 per cent, a senior executive says.
Kevin Wale, GM's managing director for China, said that the company, which is planning to launch two to three new models a year, is likely to enjoy sales growth higher than the projected 2006 market average of 15 per cent to 20 per cent.
"We're not sure if we'll be able to maintain the same level of growth (as last year) but we're looking forward to a very strong year," Wale told Reuters.
Sales in China jumped 35 per cent last year, catapulting it above Volkswagen AG as the top foreign auto seller.
China is a bright spot for the world's largest auto maker, which has turned in six straight quarters of losses, stemming largely from its troubled North American operations.
"Conservatively, we're looking at 20 per cent as solid growth for the year," Wale said on the sidelines of the Boao Forum, an annual gathering of business and political leaders on Hainan island off China's south coast.
GM's market share, defined as sales of passenger cars and commercial vehicles, including small vans and trucks, rose to 11.2 per cent at the end of 2005 from 9.4 per cent a year earlier.
Helped by the launch of two new car models, market share jumped further in the first quarter to between 13 per cent and 13.5 per cent, Wale said.
But he said GM was unlikely to sustain a share of more than 13 per cent for 2006 as a whole, even though the company plans to launch one or two more entirely new models later this year, as well as several upgrades of existing vehicles.
Apart from aiming to launch two to three new models in China every year, Wale said another objective is to expand the firm's network of about 1,000 dealerships around China.
Wale said GM, which manufactures cars in five cities in China, now had the capacity to ramp up production without building any more greenfield plants.
"We will continue investing in China over the next few years as our volume grows, but it would be in existing facilities primarily," he said.
Asked whether plans by GM's Chinese partner, SAIC Motor Corp, to roll out cars it has developed itself would have any impact on their joint venture, Wale said: "Not at all. We have a very strong relationship with SAIC.

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Monday, April 10, 2006

Are Chinese cars coming to America?



The man who brought Subaru here thinks so
By WARREN BROWNThe Washington Post
here-->April 09. 2006 12:00PM
The automotive industry has its characters. One of the most notable is Malcolm Bricklin, an entrepreneur variously identified as the man who brought Subaru and Yugo to America, a dauntless visionary and an impractical dreamer.
Perhaps he's simply a clever person who sees the inevitable and takes advantage of it before it occurs.
That is what he seems to be doing with Chinese cars. They are coming to America, sooner or later, despite any opposition from American car companies, their unions or the politicians who have sworn to protect their collective interests.
It's a version of the Wal-Mart Effect - the tendency of consumers to ignore nationalism, politics or product origin in pursuit of the best deal. Bricklin understands that motivation, and he sees what he believes is a good deal in the prospective importing of mid-priced cars from Chery Automobile Co., of Wuhu, China, into the United States.
People with money apparently believe that Bricklin is on to something good. He has secured $225 million in initial funding from Atlantic-Pacific Capital Inc., a venture capital company founded in 1995 that has raised, by its own estimate, $21 billion to help startup businesses.

To put it in perspective, $225 million is not much money in the automobile industry. It barely covers the cost of a modest cosmetic change on an existing line of cars, or a marketing campaign for a new model. It certainly is nowhere near enough money to do everything that has to be done - safety and emissions compliances being two of the most important items - to get a little-known foreign car ready for U.S. entry.
But none of that technical stuff is really Bricklin's concern. He is first and foremost a salesman, and his New York-based Visionary Vehicles LLC is primarily a retail operation currently without any known ability to service any cars it might sell.
Bricklin, ever the optimist, sees no obstacle there either. Publicly, at least, he still contends that Visionary can start bringing Chery-made cars to the United States in 2007 - a formidable undertaking, considering all of the things that have to be done to make that a reality.
Ultimately, Bricklin hopes to have 250 Chery dealerships in the United States with annual sales of 250,000 cars. Early planning has those dealerships doing much of the servicing, using parts sourced from overseas, possibly even stocked by general retail outlets such as Wal-Mart, according to several sources.
Clearly, Bricklin recognizes that 250 dealerships are not enough to service several hundred thousand cars being used all over America. So, he is floating the idea of certifying independent repair shops to handle warranty-covered Chery repair work. That could be an interesting and, perhaps, beneficial development for consumers. But the nation's traditional franchised new-car dealerships, nearly 20,000 of them represented by the National Automobile Dealers Association (NADA), are not likely to be amused.
NADA, for the moment, is keeping mum on the entire Bricklin-China venture. But NADA officials privately concede that they will have to deal with him eventually. "If he is successful, we won't be able to ignore him," one NADA official said at a recent national dealers meeting in Orlando, Fla.
Ignoring Bricklin has never been in any rival's best interest, although the man has had more than his share of spectacular, even laughable flops.
Mention of the Yugoslavian-made Yugo, which Bricklin started bringing into the United States in the early 1980s, still brings chuckles. And eyes roll skyward north of the border when anyone talks about the Bricklin SV-1, a dramatically ill-fated, gull-winged sports car backed by the Canadian government and produced in St. John, New Brunswick, from 1974 to 1976.
Some 2,854 Bricklin SV-1 cars were produced before the Canadian business went bankrupt.
But there was also Subaru, an automotive subsidiary of Japan's Fuji Heavy Industries, which Bricklin helped to establish in the United States in the late 1960s and early 1970s. Bricklin is no longer a part of Subaru. But the people who were laughing at him back then are not laughing at the highly successful Subaru of America now.


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Sunday, April 09, 2006

China's SAIC plans 600,000 own-brand vehicles a year by 2010



ELAINE KURTENBACH
Associated Press
SHANGHAI, China - SAIC Motor Corp., a partner of both Volkswagen and General Motors Corp. in China, is gearing up to begin making its own brand of cars, with an initial target of 600,000 SAIC vehicles a year by 2010.
The plan is part of the auto group's overall plan to reach an annual production of 2 million units, for both passenger and commercial vehicles, by then, said Zhu Xiangjun, a SAIC spokeswoman.
Most of the cars now made by SAIC are produced in its joint ventures with GM and Germany's Volkswagen AG, and all those cars carry the foreign partners' brands.
State-owned SAIC was due to disclose key details of its plan to develop its own brand vehicles later Monday, part of the Chinese government's push to develop a domestic auto industry able to compete in international markets.
The newly announced target is much more ambitious than SAIC's 2007 annual production target of 50,000 own-brand vehicles.
Earlier this year, SAIC Motor set up SAIC Motor Manufacturing Co. to push ahead with the development of passenger cars with its own brand.
SAIC Motor Manufacturing has begun work on a factory originally meant to be used in its joint venture with VW, but handed over to the Shanghai-based manufacturer after the market slowed, reducing the need for an increase in capacity, executives at VW China Group and SAIC said.
SAIC has said it plans to use technology purchased from the Britain's MG Rover Group Ltd. to manufacture most of the cars. Plans for the company's brand name have not yet been announced.
The Chinese company owns the intellectual property rights to two Rover models, the 25 and 75. However, it does not hold the right to the brand name, which is owned by BMW, said Hawk Huang, an SAIC spokesman.
Rival automaker Nanjing Automobile Group salvaged MG Rover after it declared bankruptcy last year, and it remains unclear exactly what Rover technology it owns, said Hawk Huang, an SAIC spokesman.
Huang credited SAIC's 20-year partnership with VW, and its shorter alliance with GM, for helping it cultivate the managerial skills and talent it needs to compete in an increasingly competitive home market.
The company's debut as a major passenger car maker in its own right comes amid a revival in sales for the industry. Automakers saw sales soar by 75 percent year-on-year in 2003. Growth slowed to 15 percent in 2003 and about 10 percent in 2004, but rebounded to 27 percent for full-year 2005.
However, the newly revived demand coincides with a prolonged decline in profit margins due to price cuts and rising costs for materials.
That pinch has hurt automakers like VW, which is staging its own comeback in China after seeing its market share plummet from over 50 percent in the mid-1990s to about 17 percent now.
"The next couple years are going to be really challenging for all of us," Weiming Soh, VW Group China's executive vice president for sales and marketing, said Sunday in announcing a new mid-size model for the Chinese market, the Sagitar.
Soh said VW supported SAIC's independent push into the market, though he acknowledged it will further boost competition.
"We would consider that we are healthy competitors," Soh said. "We need competitors."

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Friday, April 07, 2006

China's Sedan Sale Hits Record High in 1Q



2006-04-08 10:40:18 Xinhua
China's booming sedan sale hit a record high of 890,000 units in the first quarter, about one thirdof the total sale in 2005, the China Association of Automobile Manufacturers said here Friday.
Jetta, manufactured by Faw Volkswagen, ranked the top in the first quarter with a total sale of 17,500, an increase of 79.57 percent year-on-year. Elantra of Beijing Hyundai followed with a sale of 14,000, up 21.7 percent over last month.
The home-brand Chery also saw a rise of its major models in March, due to its price cuts of auto parts last month. The sale of QQ, one of its flagship autos, hit 1,1700 in March.
In the sector of medium and top grade sedans, Lingyu, a new series of Passat of Shanghai Volkswagen, the joint venture of Germany's Volkswagen in China General Motors, topped with a sale of 10,600, followed by Hongda of Guangzhou Honda Automobile Corporation and Corolla of Faw Toyota Motor.
Experts said that the sedan sale is expected to moderate in the second quarter due to the rise of oil price.
China's growing middle class is expected to make the mainland the world's third largest automobile market by 2008, surpassing France and Germany.
The association also released the sale information of sport-utility vehicles and multi-purpose vehicles last month, which witnessed a cheering rise compared with that of February.
The association attributed the rising sale of SUV and MPV to China's new tax on luxury cars, taking effect on April 1, as well as the anticipative climbing prices of luxury cars.
China has taken various measures to prompt the development of environment-friendly cars nationwide, including new tax on luxury cars and the release of restrictions on cars with low emissions in some large cities.
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Chinese Cars Coming To A Dealership Near You!

The Chinese Cars wont survive in US markets! This is what people have been saying for the past year and continue to say, but are these people really keeping track of Chinese Auto manufacturers. The truth is they are growing fast and making strategic business development decisions to gain international exposure.

Lets begin with Nanjing Automobile. Nanjing Automobile creates its own brand of cars in China as well as joint ventures with bigger carmakers from Japan and US. Recently, they actually bought the highly respected MG Rover brand, which is situated in the UK and actually began a manufacturing plant in China for these cars. Another big player is Chery, which recently produced more than a half-million cars independently. They have dealerships all over the Middle East, Africa, Asia and Eastern Europe and currently are in the process of going to Australia.

However, after knowing these basic facts some critics continue to say the chances of these two or three Chinese carmakers meeting US safety standards is quite slim. Well the answer to this is firstly there are many fast growing Chinese carmakers trying to come to the US, for example Geely Automobile, Lifan, Brilliance China Automotive etc (you can view the whole list at https://www.chinacarforums.com). Secondly, many of these companies are new and have recently entered abroad car markets, so it is natural that they need some time to gain capital and work on their home-technologies to meet US standards. But surely you can expect a Chinese car at a dealership near you in the next few years. They are coming!

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Thursday, April 06, 2006

China's SAIC Motor hires former GM designer


BEIJING (AFX) - SAIC Motor Corp Ltd, one of China's largest automakers, said it has appointed Wang Dazong, a former chief engineer and design manager at General Motors, as its vice president. Wang will be in charge of technical management and product development at the Chinese automaker, including establishing R&D capabilities for launching its own brand vehicles, said SAIC Motor in a statement. Yale Zhang, head of auto consultancy CSM Worldwide's China operations, told XFN-Asia that there is a growing trend among Chinese automakers to employ more and more overseas professionals to bring in production and management expertise. Zhang said that most Chinese firms, including Chery and Lifan, already have key R&D personnel who have worked for major international automakers. 'But it is hard to measure how much value these personnel can create for the Chinese automakers in developing their own cars,' Zhang added. SAIC Motor Corp Ltd said in February that it has set up a company -- SAIC Motor Manufacturing Co Ltd -- to produce automobiles of its own design with an investment of 3.68 bln yuan. The first model, which was designed based on the Rover 75, is scheduled to be released in the second half of the year. State media reported earlier this year that SAIC Motor may hire GM China's former president Phil Murtaugh to head SAIC Motor Manufacturing Co Ltd.
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