Tesla fans: Study Ford’s China joint venture very carefully

Send in the clones: Zotye’s Macan left, Porsche’s Macan right – Pictures Carnewschina.com

Hopping on the Chinese EV bandwagon, and trying to comply with looming tough EV mandates in China, U.S. carmaker Ford has signed a joint venture agreement with Zotye Auto to make low-cost electric cars in China. Investors in Californian carmaker Tesla should closely study this agreement.

The jointly produced cars won’t be sold as Ford cars, but under “a new brand,” Ford group vice president Peter Fleet told Reuters. Why would Ford give up the strong brand cachet it has, and embark on the long, arduous, and expensive schlep to build a new brand nobody has ever heard of? Simple answer: [Continue Reading]

List of carmakers poisoned by Russia’s toxic market

Like a BRIC into the wall

Like a BRIC into the wall

“Hit by a plunge in the Russian rouble and increased buying incentives in the United States,” (an interesting combination of events, presented by Reuters) Hyundai’s net profit took a 19 percent plunge for the October to December quarter. Will other carmakers meet a similar fate? Check out their exposure to the double toxic Russian market. [Continue Reading]

Ford is scared

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Last week, a freshly minted Ford CEO Mark Fields paid an inaugural visit to Capitol Hill, and he arrived singing a familiar tune. He blasted the nasty Nips for currency manipulation. Fields “urged lawmakers to take a tough line with Japan in ongoing trade talks as part of the proposed Trans-Pacific Partnership,” said the DetN. To rile against alleged Japanese currency manipulation appears to be part of the job description of any Ford exec. In February, Ford Americas president Joe Hinrichs “took Japan and specifically Toyota to task for benefiting unfairly from currency manipulation,” wrote Automotive News. A year ago, it fell to then Ford CEO Alan Mulally to “chide Japan for currency manipulation.” Take one look at the chart above, and you begin to understand Ford’s obsession with Japan and specifically Toyota.

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Strong Australian dollar kills its domestic car industry, while Ford kills the truth and the American farmer

Picture courtesy motorink.com

“The end of Australia’s car manufacturing industry has arrived,” writes the Sydney Morning Herald after Toyota announced today that it will no longer make cars in Australia beyond 2017. “various negative factors such as an extremely competitive market and a strong Australian dollar, together with forecasts of a reduction in the total scale of vehicle production in Australia, have forced us to make this painful decision,” Toyota’s CEO Akio Toyoda said today.

With 22 million people, Australia has about the population of Beijing or Shanghai, and nobody would expect one city to carry three automakers. Cars had to be exported for volume, and they used to be a lucrative Australian export – until the Aussie dollar became too strong. Australians bought 1.14 million units last year, but most of them were imported from lower cost, cheaper currency markets.

What may have sounded like a bit of overdramatic copywriting on part of the Herald is actually true. All large automakers operating in Australia have called it quits. [Continue Reading]

Sold for cash and left for dead, Mazda and Mitsubishi return to profitability

About $100, but buys much less

 

Last year, the Japanese yen returned to barely normal from vastly overrated (those who call the Japanese currency “undervalued” are invited to Tokyo to see how far those allegedly cheap yen go – taking the subway to the press conference and back costs $10). No one was more relieved about this than Japan’s second-tier automakers. With most of their production still in Japan, companies like Mazda or Mitsubishi suffered the most from the obscenely high currency. Now suddenly, it is possible again to make a profit by making cars at home. For the first nine months of its fiscal, Mazda booked an operating income of 124.6 billion yen ($1.23 billion), up 534%. Mitsubishi Motors delivered operating income of 55.4 billion yen ($548 million) in the same period, an increase of 135%. [Continue Reading]

US Car Sales On Fire… But Who Is Doing The Buying?

Bought... but not paid-for.

Bought… but not paid-for.

With America’s Seasonally Adjusted Annual Selling Rate (SAAR) creeping  above 16 million units in November, driving the market to new post-bailout highs, the usual cheerleaders are out in force to celebrate the strength of the US auto sales. But in the rush to spread the good news, few are looking at the troubling data underlying these frothy sales numbers. In the US, automakers count sales upon delivery to dealers rather than consumers. When times get tough and demand shrinks, OEMs often force dealers to take on more inventory in order to temporarily improve sales numbers. We saw both GM and Chrysler dump huge amounts of inventory on dealers in the leadup to their 2008 collapses, and we’ve reported on a similar dynamic at play in the current European downturn.

We won’t know the extent to which dealers are stacking up inventory until we see a full December 1 report from Automotive News, but initial signs are not promising. Already in October, Wards Auto saw an uncomfortable build-up in inventories across the industry that has apparently only grown among the worst offenders. At the time Wards predicted that “the excess will be alleviated in November, when most of the lost sales are recouped,” but although pricing discipline has remained high the inventories are continuing to build as we head into December.

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J.D.Power: “Chinese domestic brands achieve tremendous improvement.” Beat Buick, Chevrolet, Ford, Nissan, Honda in IQS

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Chinese cars have long been derided as dangerous contraptions that would not stand a chance on the world markets. Graybeard industry insiders warned that that’s what they said about Japanese cars back in the Sixties, and that’s what they said again about Korean cars a few decades later, and look where they are now. Erudite graybeards sometimes predict that when the Chinese finally turn the quality corner, that process will be much faster than in Japan and Korea.

These warnings are commonly ignored, and – hubris comes before the fall – they will continue to be ignored until it will be too late, yet again. Chinese cars are quickly getting better, they receive stars at NCAP, and today, a usually ignored Chinese carmaker, and a brand with a droll name, did beat reputable global brands in the closely watched J.D.Power 2013 IQS.    [Continue Reading]

Ford’s growth causes dropped jaws in China

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When Ford belatedly entered the Chinese market in earnest ten years ago after having wasted its time with commercial vans, people sneered. Recently, the sneers changed into dropped jaws. In a come-from-behind move, Fords now “appears likely to sell more vehicles in China this year than two of its main Japanese rivals – Toyota and Honda,” says Nori Shirouzu of Reuters. [Continue Reading]