31 July 2017

UK Vehicle & Engine Production : Jan - Jun 2017

Engine plant, Wolverhampton, U.K.
The SMMT in the U.K. has released half year figures for production of the vehicle industry. So first up the hard facts:

Car:
Domestic 183,000 -9.5%.
Export 684,000 -1%.
Total 867,000 -3%.

CV:
Domestic 16,000 -30%.
Export 28,000 +12%.
Total 44,000 -8%.

Total Vehicle: Domestic 199,000. Export 711,000. Total 910,000 -3%.

Engine: Domestic 609,000. Export 801,000. Total 1,410,000. +4%.

What to make of it: 2017 was supposed to be a better year for U.K. production but predictions were overly optimistic. Any growth this year will be good. The U.K. market is coming off a prolonged buying boom which has ended. The U.S. market is in a similar situation. However, engine volumes are holding up well, probably due to JLR.

As to how U.K. manufacturers are faring, that's impossible to tell as there is no breakdown available. I assume of the main producers JLR is about the same as last year, Nissan down slightly as G.M. is probably too. Car production is subject to cyclical swings anyway.

What is good about the timing of this slowdown is that it comes prior to any political issues and decisions that would erroneously be used as a reason. The reality is that many who report on such matters twist the truth to suit their agenda, but that can't do that in this instance. We really have to inform ourselves and use discernment to know what's going on, because few sources of information are free from bias and self interest.

My prediction: U.K. vehicle production will be up slightly this year but future growth will challenging and largely dependant on consumer demand. Brexit will have little or no effect despite what you may hear to the contrary.

The U.K. publc will continue to ignore the domestic car industry - with the same blissful ignorance that it has shown for years - and care not a jot about the benefits it provides to the nation. Therefore exports will continue to underpin the industry, increasingly outside of Europe.

29 July 2017

Dirty Diesel


Just when you thought it was safe to go back to your VW Group dealer, it has been revealed that the Porsche Cayenne 3 litre diesel engine is spewing out much more noxious gas than the public was led to believe. Something like 22,000 are being recalled in Europe due to a cheating mechanism. Porsche said it was taking full responsibility. Nice. The VW Touareg with the same engine is now suspected of also being an offender, although that is yet to be confirmed.

A recent article I wrote mentioned that Mercedes Benz and Audi were recalling huge numbers of vehicles for software upgrades. It appears that BMW is now doing the same. The claim is it is to bring older cars up to speed with the latest technology. Clearly, there is concern that whether cheating devices are fitted or not, German premium car makers are trying to improve their environmentally unfriendly image.

Countries such as the UK and France are putting timetables in place for the end of fossil fuel vehicle sales. Germany hasn't and it makes you wonder how much power the car industry has in that country. An election looms so the need to allay fears. These recalls for software updates may ease pressure on a German government that is doing nothing.

In summary, companies that are purely focused on making money - and therefore by default lack moral integrity - will always end up paying for their greed at some stage. The public pay a price as well. People die due to pollution. Vehicles pollute. It's all very well fixing things up but why do things always need fixing? The diesel engine has been tinkered around with long enough to still be the polluter that it is.

25 July 2017

Where There's Smoke...

Where there's smoke, there's fire an old saying goes. With corruption sometimes the guilty are exposed. Then there are cases where there is a strong evidence of wrongdoing but proving it is quite another thing. Regarding the latter, it's a situation of smoke being seen but the cause of the fire wasn't proven.

Of course, corruption and dodgy dealing is part and parcel of business. However, when people do get caught, an inbuilt sense of justice is stirred within most of us. Yet the frequency and severity of the offending does vary. Why?

Well, each country has a culture that tends to squeeze its citzens into a certain mould. It influences us more than would we would often like to admit. I was brought up in the very British idea that playing by the rules was more important than winning. As to whether it is still a strong ideology in the UK, I'm not too sure. No doubt it still exists and influences people there. Fair play comes before winning.

The German culture regarding winning - I have come to believe - is win honestly, but if you can't do it that way you must still win. Winning comes before fair play. When I was young, there was a scandal regarding a deal done between an Auckland Regional Authority representative and a German company where personal gain was involved in a less than competitive transaction over buses. I was angry.

Recently VW was trying to beat its competitors with genuine technology but ended up doing so in a devious way. It couldn't win honestly but was determined to win. That was the culture inside a company but reflective of a broader attitude.

Now a claim has been made that the German car brands colluded for decades in an anti-competitive way. They may have set prices, agreed on suppliers, and used other forms of cooperation to gain an unfair advantage.This may have led to prices of cars being higher than they should have been. Another accusation states that in an attempt to stay ahead of foreign rivals, VW, BMW and Mercedes met regularly to discuss technology.

The companies involved deny the allegations or have not replied to them. I do see and irony in that at this very time Daimler is recalling 3 million diesel vehicles in Europe for a free emissions-system alteration. Audi has followed suit, with a similar offer to "improve" emissions behavior. Regardless, whether anything comes of these allegations we will have to wait and see. However, where there's smoke....

Europe Car Sales Jan-Jun 2017


Total sales for EU and EFTA markets were up 3.1% in June and +1.1% YTD. Of the larger nations, Italy is going the best (+13% and +9%). Overall not much happening in terms of growth but that was expected. Compared to last decade, sales are down but not by that much.

 VW took over the top spot from Renault in 2005 and never been challenged since. In 2012 VW was nearly running at a heady 13% share but has this years slipped below 11%, the first time since 2008. Renault's fall was only as low as fourth position and is comfortably second.

The chart below shows a % symbol that represents market share. The +/- column is increase or decrease based on the first six month's market share of 2017 against the full 2016 year. That lessens the movement so VW's 5% decline in market share is substantial at these volumes. Fiat has gone well with a +12% for that brand and a +25% for Alfa Romeo. New models have certainly helped. Toyota is doing well with a +9%.

13 14 15 16 17 Brand 2017 % +/-
2016 %
1 1 1 1 1 VW 912,132 10.8 -5%
1,720,829 11.4
4 4 3 2 2 Renault 627,846 7.4 2%
1,100,880 7.3
2 2 2 3 3 Ford 580,840 6.9 0%
1,043,295 6.9
3 3 4 4 4 Opel 527,787 6.2 -5%
993,494 6.6
5 5 5 5 5 Peugeot 500,041 5.9 3%
865,374 5.7
8 8 8 6 6 Mercedes 466,062 5.5 -1%
839,779 5.5
9 9 9 9 7 Fiat 465,847 5.5 12%
746,126 4.9
6 6 6 7 8 Audi 440,788 5.2 -5%
830,956 5.5
7 7 7 8 9 BMW 434,266 5.1 -5%
821,525 5.4
11 10 10 10 10 Škoda 370,285 4.4 0%
663,230 4.4
10 11 11 11 11 Toyota 368,982 4.4 9%
606,301 4.0
12 12 13 13 12 Citroën 323,194 3.8 7%
541,896 3.6
14 13 12 12 13 Nissan 316,688 3.7 3%
550,412 3.6
13 14 14 14 14 Hyundai 270,921 3.2 -4%
505,396 3.3
15 16 15 15 15 Kia 251,472 3.0 3%
435,316 2.9
16 15 16 16 16 Dacia 247,709 2.9 5%
421,749 2.8
17 17 17 17 17 Seat 212,720 2.5 9%
350,287 2.3
18 18 18 18 18 Volvo 160,836 1.9 -1%
290,227 1.9
20 20 21 21 19 Suzuki 127,385 1.5 12%
202,785 1.3
21 19 19 19 20 Mazda 120,171 1.4 -9%
237,202 1.6
19 21 20 20 21 MINI 110,404 1.3 -6%
209,209 1.4
25 23 22 23 22 Land Rover 83,338 1.0 -3%
153,071 1.0
23 22 24 22 23 Honda 77,070 0.9 -13%
159,126 1.1
26 24 23 24 24 Mitsubishi 62,126 0.7 -5%
117,216 0.8
33 30 26 26 25 Chrysler 53,948 0.6 -9%
105,598 0.7
28 28 25 25 26 smart 52,525 0.6 -11%
105,295 0.7
29 27 30 30 27 Alfa Romeo 46,150 0.5 25%
66,172 0.4
30 29 28 27 28 Porsche 40,476 0.5 2%
71,149 0.5
32 34 31 28 29 Jaguar 40,137 0.5 4%
68,687 0.5
27 26 29 29 30 Lancia 37,460 0.4 0%
67,225 0.4
24 25 27 31 31 DS 25,117 0.3 -32%
65,657 0.4
34 33 32 32 32 Lexus 22,781 0.3 -9%
44,898 0.3
31 32 33 33 33 Subaru 18,855 0.2 -13%
38,864 0.3

Others 65,117 0.8
92,493 0.6
Total 8,461,476
15,131,719

Data source: ACEA.