22 May 2017

GM India/South Africa : A Disappointment

This bakkie wasn't enough to save Chevrolet South Africa

GM has decided to stop selling cars in India but keep on making them there. I find that hard to fathom. By making cars there, surely that avoids import duty and allows the cars to be sold profitably. Despite being in the market over 20 years, it still had less that 1% market share. For that reason the plug has been pulled.

At the same time, the decision has been made to leave South Africa, both in manufacturing and sales. The plant will be taken over by Isuzu, who currently share it. This means Chevrolet will leave the RSA after over 90 years there. As for the Opel brand, it will be up to PSA to take that over if they wish.

Sales of Chev have been in free fall while Opel has held up better. Market share for passenger cars dropped from 7.7% in 2012 to 3.3% for 2016. The decline would have been worse but for Opel. Light commercial vehicles fared slightly better, from 12.1% in 2012 to 7.9% in 2016.

GM Passenger Car Sales : RSA

Make/Yr 2012 2013 2014 2015 2016

Chevrolet 31,183 23,328 21,621 14,389 7,847

Opel 2,704 2,603 3,598 6,486 4,101

Total 33,887 25,931 25,219 20,875 11,948

Share 7.7% 5.8% 5.7% 5.1% 3.3%

GM LCV Sales : RSA

Chevrolet 19,556 18,484 16,865 16,693 12,578

Share 12.1% 11.0% 9.7% 9.6% 7.9%

There is no point in running operations that are losing money. However, as to why GM struggles to make money while other succeed is a valid question. Whatever the reasons, GM has decided to terminate its problem areas rather than continue to try fix them.

Data source: Naamsa.

20 May 2017

VW Profit Per Brand : 2016

Car sales going upward look impressive but profit is the important - but often unseen - element of a business. Without it, a company will not survive very long. The VW Group has made plenty of money out gaining an unfair advantage with its defeat device but now it is having to pay for that now. Despite that, it is big enough to cope with the consequences.

So how did the various divisions manage in 2016? They all made money to some degree. Below they are listed according to per unit profit, the strongest first:

Porsche: €16,222 per unit (+4.4%), sales 239,000.

Porsche only goes back to 2012 with the VW Group listings and this was the second best year. The per unit profit is impressive. 

Bentley: €10,182 per unit (+1.8%), sales 11,000. 

Despite getting hit by a sales halt in Korea, it still held up well. The new Bentayga may add to the bottom line in 2017.

Audi: €3,159 per unit (-5.9%), sales 1,534,000. 

This is the lowest p.u. profit since 2010, despite total sales only being eclipsed in 2011 (by a tiny margin at that). So while p.u. profit is good, one would think the VW Group would rather see improved profit than greater sales in 2017. 

Škoda: €1,471 per unit (+28.6%), sales 814,000. 

With record profit up 28.6% nearly €1,500 p.u, things are looking good. Sales didn't increase that much either. It's larger models are no doubt a big help here in maximising a solid bottom line.

VW LCV: €952 per unit (+13.6%), sales 478,000. 

I would have thought the €952 p.u figure was a little low for light commercial vehicles but at least it's going the right way, up.

VW Car: €430 per unit (-9.5%), sales 4,347,000. 

This was the lowest p.u. figure since 2008 and the fifth consecutive year of reduction. Clearly too much emphasis was on volume and saloon cars. More SUV's are on the way and the need for a stronger bottom line performance should be the major focus moving forward. Recent concessions from German workers will help too.

SEAT: €279 per unit (% n/a), sales 548,000. 

SEAT doesn't do profit, so to be in the black is a novelty, one the brand will no doubt repeat more often. It's reliance on smaller cars and no SUVs has been at the root of the problem, not mention modest volumes. It now has an SUV and two to follow so it seems it has a future. So while the €279 p.u figure may have you spluttering into your morning coffee, bear in mind this is historically a fine result.

Summary: Profit is king in a capitalist society so with all the recent dramas with the VW Group, it will be aiming to get that sorted. After all, growing sales looks impressive but healthy profit keeps you in business.

Data source: VW Group.

18 May 2017

Ford South Africa : A Success Story

Way back in 2002, Ford had fallen to the 12th ranked passenger car brand in the RSA. Since then, it gradually clawed its way up to 3rd by 2014, where it has stayed since. The market share in '02 was 2.2% and by 2016, was 11%. So what has Ford been doing right?

It sources models that are sold in mature markets as well as for emerging ones. The RSA is an mixture of such customers so Ford has something for all. Of course other car companies do the same but not to the level that Ford does.

It has started assembly of the Everest large SUV, previously imported from Thailand. It joins its sibling Ranger pick-up as a second locally sourced vehicle and that should help that model's sales grow. So let's look at what it sells there, the top 3 ranked by 2016 sales:

Fiesta: A model well known globally, it sells well here too. I'm not sure where it is sourced from but probably Thailand.

EcoSport: A small SUV that comes from India and is mainly aimed at emerging markets. It has found many customers in a short period of time.

Figo: It was an older model Fiesta but from 2015 based on the mini sized Ka and comes from India as well.

So it becomes clear that having the right models is critical for success. Ford has used it's Indian market especially to make the most of that. Moving in on the top two passenger car brands - VW and Toyota - will be tough as they are well ahead and well established. Ford has done well to get this far and future gains will be a big ask. Still, the point of the article is that Ford has done really well in getting to where it is now. It has been a success story.

Below are sales from 2012 to 2016 by model.

Model 2012 2013 2014 2015 2016

Fiesta 5,595 8,443 8,516 10,462 12,204

EcoSport - 2,585 7,674 11,627 11,442

Figo 14,376 15,255 13,937 9,899 5,480

Focus 3,515 5,365 2,985 3,948 4,291

Kuga 883 3,631 4,152 4,047 2,441

Everest 702 1,172 291 543 2,117

Mustang - - - - 860

B-Max - - - 198 438

Tourneo - - - 451 412

Fusion - - - 403 229

Ikon 844 1,298 3,315 1,496 1

Total 25,915 37,749 40,870 43,074 39,915

Share 5.9% 8.4% 9.3% 10.4% 11.0%

Data source: Naamsa.