28 November 2009

Nervous Car Makers

Why are they nervous? Well, car makers that make small, fuel efficient ones are anyway. The reason is the 'cash for clunkers' are coming to an end and they were designed to promote environmentally friendly cars. The UK has just extended its scheme, but generally early 2010 will see a slump for makers of fuel efficient vehicles as the offers run out. No one knows by how much, but most pundits agree that the pain of 2009 has simply been moved back a year and there will be a slump. It's like putting off going to the dentist when you have bad tooth ache. Pain killers put off the pain for now, but you can't keep treating that way. You might as well get it over and done with.

Likewise, rather than car makers pleading for extensions of the schemes as they have been, they need to bite the bullet. The sooner they do, then the sooner things will improve. I'm sure some thought that the world economy would pick up by the time the offers ran out, but who really believed that? Wishful thinking me thinks.

So how will car manufacturers deal with it? I imagine some discounting will be used once the schemes are over to entice punters into the showrooms. This will soften the blow for the consumer and car maker alike. It will also reduce cars piling up on disused runways and the like.

The bottom line: 2010 will be tough for small car makers, their nervousness is well justified.

20 November 2009

2010 Land Rovers


For the MY 2010, Land Rover has greatly improved the Discovery (LR4) and both Range Rovers.

This involves new exterior styling styling and much improved interiors.

Engines are more powerful and yet, more frugal. They are now better on the road, and unbelievably, better off too.


The bottom line: They are the best 4X4s by far....including the best looking too.

18 November 2009

Tata's Direction For Jaguar/Land Rover

When JLR were part of Ford, they had much they could share with the Ford group of companies that kept costs down. The bad part was that things didn't happen quickly with Ford and that JLR had to wait too long for approval to do things. Now Tata is allowing decisions to happen quicker. Unfortunately, JLR have lost access to cost savings of sharing within Ford. So there are plus and minus points for the company.
One thing that is certain is that costs must be reduced. By doing so, JLR can achieve its break even point profit wise with fewer sales. How to do that is a problem, as this I think involves moving some production away from the UK and closing at least one of its three UK factories.

For example, the Defender sells about 25,000 units per year, is a basic vehicle and is quite expensive to make in the UK. If production was moved to India, it would be cheaper to make and therefore have economic benefits. Another option involves the Jaguar X-Type. It is just being phased out of production in the UK. If the tooling was moved to India, the car could then be made for emerging markets and even some like Australia that really do still sell the car in reasonable numbers. Oh, of course the unions would protest and the doomsday howlers regarding UK industry would say it's the tip of the iceberg. Soon, the whole JLR company will be in India. That would be a stupid thing to do as many people buy JLR because they are British. The majority of production must stay in the UK, but the examples I mentioned could go to India without affecting UK manufacturing much at all. It would get JLR back in the black sooner and protect British jobs.

The bottom line: Tata needs to close a UK factory and move Defender and/or X-Type production (or its successor) to India to give JLR a more profitable future.

17 November 2009

The Worst Of 2009

In various motoring fields, there are those that fall on their face for some reason. To make note of these failures, this is my 'Worst' list:

Least Reliable. Renault usually battles with Peugeot for this dishonour in being at the wrong end of lists when owners are quizzed about it.

Worst Value. Porsche. Just because they build cars well and have a loyal following does not make them value for money. It just proves that people are prepared to pay too much for something, if they really want it. Even wealthy ones.


Ugliest. Porsche. No, this isn't pick on Porsche day. Their cars are from a design going back to before we were born. Things have moved on but Porsche hasn't. The Cayenne is a shocker and the new Panamera an elongated 911. Ugggh. German car design is about engineering, not grace or style and Porsche sets the standard in this.

Weakest Brand. Lada or Proton. Ladas are not sold in NZ and Protons have just started trickling in. Neither have ever had a good name and poor quality is a hard tag to shake off.

Worst Selling. Saab. Sales just about everywhere are in free fall. Only two models in the range and both look about twenty years past their use by date. A new 9-5 is about to arrive and it looks good. Saab needs it to be.

Worst Prospects. Ssangyong. They make ugly vehicles, have enormous worker unrest and seem to be rudderless. I don't know what the future is for this brand, but things are in meltdown.

Most Over rated. Any German premium marque. They are generally unattractive and over priced. They are marketed strongly and well made, which seems to make their ugliness and cost worth it to many. Not me, however, the 'value for money' guru.

Least Safe. Any Chinese brand. Chery, Geely, Great Wall, BYD, Landwing (pictured) etc. Even when sneezed on, they crumple like tissue paper. You and your families' welfare has got to be more precious than to buy one of these. Currently, they sell in China and some emerging nations, although Australasia has started getting Great Wall Utes (Trucks in US). They may be cheap, but is anyone so desperate to buy a new car that they would risk their life and the lives of their families to have one?

The bottom line: What this list proves that even if my assertions are correct, it doesn't bear much co relation to how they will sell. It is all about perception and if you get that right, you can sell most things.

15 November 2009

Audi Production: 2008


Audi has benefitting from sharing car develoment costs with the VW Group. This has helped it to now threaten the more established German marques in the premium sector. Is it only a matter of time before it dominates this segment?

In 2005, Audi made only 800,000 cars, for 1.3% of the world market. By '08 however, that had climbed to 1,025,000 units and 1.5% share. In '05, 95% of production was in Germany, totally unacceptable for any company with global aspirations. Things are a little better now in that regard, as 2008 figures reveal. 2008 production as follows:

Germany 85% 875,000
Hungary 6% 60,000
Slovakia 5.7% 59,000
Belgium 3% 32,000

Again I know they make cars in China but this is not showing up in the figures. It could be for the same reason as for BMW, not enough local content, so are classed as German made.

Audi has put emphasis on quality interiors although the driving experience through the range of vehicles is a little hit and miss for the standard the premium segment buyer expects. It's emphasis has worked well so far, but Audis need more consistency in the driving experience to achieve on its premium car supremacy ambitions. It is strongest in Europe by far, but lacks true international success to overtake Mercedes or BMW. Taking the next step in growth will be a challenge for Audi, but I suspect VW will accept nothing less from its premium mass produced brand.

The bottom line: I'm surprised Audi have been so successful.

09 November 2009

BMW Production: 2008


I would rate BMW as one of the most aggressive car companies there are. They seek sales and new market niches with the goal of being the world's largest selling premium brand. In this they are proving very successful. Their PR department is very active and the company is very open about sales figures. In this I am very impressed and other car makers could learn a thing or two by watching how they go about it. Jaguar/Land Rover for example, take note.

In 2005, 1,125,000 cars were made, for 1.8% of world production. By 2008, it had risen slightly to 1,200,000 but world market shared remained the same. I know they make cars in China, but they do not appear in OICA figures for some reason. Perhaps they are only assembled there, so are included in the German production figures. Little changed from '05 to '08 as to where cars were made, and in what numbers. For 2008 production:

Germany 75% 900,000
USA 14% 170,000
Austria 7% 83,000
South Africa 4% 48,000

On the surface, it all looks good, but it isn't. All premium makers are struggling with sales presently. Competition is stiff too, especially from 'on the up' Audi. And unlike Audi, BMW do not share platforms so each expensive platform is for one car brand only. There are moves to share engines with the likes of PSA, but they are all front wheel drive so platform sharing is out. BMWs are too expensive but people happily pay over the odds for a prestige badge. Most of the range is rather ugly in appearance and they had until recently a much hated iDrive car management system, neither of which put potential buyers off.
The bottom line: They have the determination and foresight to continue succeeding in difficult times.

Car Test - Honda City


A new model from Thailand has joined the NZ car market, the Honda City. It's a smallish sedan, just a tad under the Civic. I drove one the other day and my overall impressions were favourable.

Positive: Fit and finish is good, as is comfort. You can plug in an mp3 player too. Fuel consumption is low, especially cruising on the open road sedately. It has a large boot (trunk) for a car this size.

Neutral: Handling and performance are only adequate. The 1500cc motor manages to pull it around reasonably well. The price is fair, but I feel it could be sold profitably at a lower price still, but that would make the Jazz (Fit) and Civic seem too expensive.

Negative: Access to the large boot is limited due to the intrusive tail lights. When the rear seat backs are pushed forward to create a bigger boot, the seat backs are 4 inches or so higher than the boot floor. Sliding longer items into the car would then be difficult or impossible. It is a dull car to drive and nothing excites. An older demographic would be its main target.

The bottom line: Reasonably roomy and well screwed together, priced quite well and fuel efficient. Ideal for the retired among us.

07 November 2009

Mitsubishi Production: 2008


By rights Mitsubishi shouldn't be here. In the early part of this decade, it was saddled with debt. However, with its returning to Japanese ownership, tough decisions being made, and the model line up quickly revamped, profitablity soon returned after years of losses. In 2005, Mitsubishi made 1.325,000 cars/LCVs, 2.1% of the world market. Just 50% were made in Japan, 10.5% manufactured in Thailand, 10% in Malasia & nearly 7% in th US. That has changed quite a bit by 2008, as the figures below testify. Total 2008 production was 1,315,000 (2% of worldwide production):

Japan 65% 850,000
Thailand 13% 175,000
USA & The Netherlands 4.5% 59,000 each
China 3.5% 46,500
Brazil 3% 39,000
Indonesia & Taiwan 2.4% 32,000 each
Rest 2% 26,000

Heavy reliance on Asia is not healthy, and Mitsubishi was hurt by a slump in Asia area in the late 1990s. The Japanese won't easily allow brands to fail, both to save face and reputation, so it was rescued by Japanese money. In most other countries, Mitsubishi would have gone, but it is doing OK now. It also has started to make SUVs for PSA and that type of deal could be a good way forward.

Frankly, its cars are not quite up to the standard of other Japanese brands. It had nearly 7% (290,000) of the Japanese car market in 2001, but has now slumped to a tad over 3% in the ten months of 2009 (92,000). Times are tough too and it cannot be easy for a company placed where Mitsubishi is, making mass produced cars in modest volumes.

The bottom line: I personally wouldn't buy one.

04 November 2009

Mazda Production: 2008

With Ford having a share of Mazda, much product sharing goes between the companies, a very useful arrangement for both of them. This has helped Mazda to be competitive, despite it's relatively small scale of operation. 1,285,000 cars/LCVs were made in 2005 and 1,350,000 in 2008, for about 2% world market share.


Unlike many other auto makers, Mazda has increased local production at the expense of overseas car making. Japan made 67% of the vehicles back in '05, but is now 80%! As to why this shift has been made and if it will continue in that direction, I do not know. I wouldn't have thought it the way to go if you want to be a global player.

Car making by country for '08:

Japan 80% 1,075,000
China 8% 105,000
USA 6.7% 91,000
Thailand 3.6% 48,000
Rest 2% 27,000


The heavy reliance on Japanese made cars isn't good. Japan traditionally kept the Yen low to help manufacturing, but the US downturn saw money fleeing to Japan like a tidal wave. The Yen soared and Japan suddenly was not a good place to make cars. Mazda must have felt that badly. Too many eggs in one basket is never a good idea. The cars themselves are sporting and different, but not as robust as some other Japanese brands. On the Japanese market, Mazda is a minnow, with less than 5% of the domestic market, and slipping.

The bottom line: If not for Ford, Mazda would be really struggling.