Check Your Mirrors

Odds and Ends About Cars and the Car Business

By Brendan Moore

11.10.2006

BRAZIL doesn’t get a lot of ink here in the United States in terms of it’s auto market, but a lot of car manufacturers sell a substantial amount of vehicles there, including some small domestic car companies you may not have heard of, but are well known in-country despite being very low-volume producers. One such company is Troller, which makes approximately 100 vehicles a month, and produces only two models; a small, tough 4WD named the T4 which is based on the original Willys Jeep, and a pickup truck called the Pantanal. And now Troller (full name Troller Veiculos Especias) has announced that it is currently in discussions to sell itself to Ford, a market giant in Brazil. The deal is not done, and in fact, may not get done, but it interesting that Ford would see value in acquiring such a small producer, albeit one with a strong positive brand.

CHRYSLER is subventing their leases like crazy in the U.S., and this means that it is a very good time indeed to lease a 2006 Chrysler Corporation product. When lessors subvent a lease, they typically bump up the residual value of the vehicle leased, or, lower the lease finance rates, or, lower the FICO credit scores needed in order to be approved for the lease. Faced with ridiculous amounts of unsold inventory, Chrysler is employing all three methods simultaneously on their captive (through Chrysler Finance) leases, making a lease on a new 2006 Dodge, Jeep, or Chrysler very inexpensive. If you are in the market for a Chrysler product, and also want to lease, this is very much a magic moment in time.

GEELY of China has made another acquisition of another venerable British company. This time it’s Manganese Bronze Holdings Plc, which produces the familiar black London taxicabs. Geely paid $54.3 million for a controlling interest and two board seats in the company, which will be disbursed by way of Geely investing the same amount in a joint manufacturing facility in China, and giving 48% ownership of this joint venture to Manganese. Geely, which also bought MG and the some of the tooling for now defunct Rover last year, said that it intends to make the taxicabs in China for the purpose of both domestic and international sales. Geely also announced recently that it will produce the MG line of automobiles in a not-yet-built manufacturing plant in Ardmore, Oklahoma, starting in 2010.

GM launched four new Cadillac models in China on November 10, and said in a press release that they expect the luxury car market there to grow to 300,000 units annually by 2010. These are heady times for GM in China, with nothing but good news and good numbers every month. While production is cut back in the U.S., the China market is growing at breakneck speed, with GM owning five vehicle manufacturing plants, an engine factory, a growing consumer finance company, and GM dealerships springing up everywhere.

TURKEY is where you can buy a 2007 DeSoto, except that it’s a truck, and a big one at that. It’s a long story, but the short version is that Askam Kamyon Imalat ve Ticaret A.S, the manufacturing company had a deal with Chrysler in the 50’s to make, sell and distribute Chrysler products, which a little later (60’s and 70’s) included AMC which included Rambler, Willys, Desoto, etc. and so the company in Turkey had a lot of brand names to choose from when selling their cars and trucks. The company made trucks under the DeSoto name. When the Daimler-Chrysler merger happened in 2002, Chrysler dissolved the joint venture, took all of their current brands and set up their own company in Turkey. The DeSoto brand stayed behind in the deal, and is still used on new trucks today.

SMART says it will be profitable in 2008. The redesign of the ForTwo model will cut production costs by 25%, says the company, and the additional sales expected as a result of the Smart ForTwo availability in the United States will combine to put Smart in the black, a place it’s never been in its history, despite selling over 750,000 cars in the past eight years of production. The Smart ForTwo is expected to be available for sale in the U.S in early 2008 calendar year.

FORMER aerospace CEOs seem to be popular replacements at car companies now. The former boss of Airbus, Christian Streiff, has been named as the new CEO of PSA/Peugeot-Citroen. Sales at the auto maker have settled in at around 3.3 million units, which is a long way from the goal of 4 million units in 2006, which was set in 2002. The previous CEO, Jean-Martin Folz, is credited with some operational improvements, a renewed emphasis on design, and better financial oversight, but none of these incremental improvements were enough to move the sales needle enough in the right direction. Now it’s Streiff’s turn.

TOYOTA has bought 5.9% of Isuzu for $373 million. Toyota wishes to leverage Isuzu’s expertise in trucks and diesel engines with an eye towards producing a possible diesel hybrid engine in the near future. Such an engine would be everything a gas hybrid is, except more so, with even better fuel mileage. Toyota seems to do OK shopping in GM’s bargain bin – first they bought a controlling interest in Subaru after GM cut their Japanese affiliate loose, and by all accounts, got a good deal. Toyota now buys a stake in struggling Isuzu, at what appears to again be a bargain price.

IN what may or may not be the first sign of the coming Apocalypse, car manufacturers are now marketing directly to children in an effort to get those future entry-level young buyers first, and, to exercise influence over the current buying decisions of adults by using their children as proxies in the marketing wars. Jennifer Saranow writes in the Wall Street Journal that the car companies are actively marketing to children as young as pre-school age through various methods, including McDonalds Happy Meals, online communities, print posters at schools, and of course, the tried and true children’s television programming.

VOLVO has a new car coming out next year called the C30. The new model is a good-looking (and different-looking) hot 218 HP hatchback that promises to give the VW GTI a run for its money in the U.S. marketplace. Volvo has set conservative sales goals for the C30 (fully and completely loaded at $26,000), forecasting only 6000 units going across the curb in the first year. After looking at the car, and looking at the performance/luxury/safety specifications of the car, I would say they’ll crack 6000 units pretty easily.

HONDA has developed a diesel engine that runs much cleaner than current diesels and meets future emissions requirements now. As an example, it meets the emissions and particulate requirements of all 50 states in the U.S., even the very tough California requirements. The engine has excellent power per liter and is considered internally at Honda to have the same sort of importance as the giant leap Honda made with the CVCC engines of the 1970’s. Expect to see these engines very, very soon.

LANCIA is ready for its close-up. Once on death’s door, Lancia is being treated with respect once again by Fiat, its parent company, and the commensurate funding for new models that respect brings. Fans of the storied badge can expect to see wonderful new models with the wonderful old names of Delta, Aurelia, and Fulvia, and Fiat’s internal projections show production of over 300,000 units under the Lancia name by 2011. It is not known whether the marque will be blessed with a rear-wheel drive platform for the high-end offerings, but Lancia fans are hopeful that this will occur, since a RWD platform loan from extended family member Maserati could be easily managed at some point.

IN California, I have noticed that people are having their clear OEM bulbs taken out of the fog light/driving light assemblies and replaced with yellow bulbs. The clear OEM lens remains with yellow bulb inside. I talked with some of these (20-something) guys, and from their point of view, this accomplishes two things; 1) it gives their vehicle a distinctive front look when the lights are on, and 2) they gain greater lighting efficiency in fog conditions since they believe the yellow light results in less reflection off the fog. Obviously the first reason is more important, with the second reason a rationalization, but a good rationalization always helps when you change something on your car. Besides, they are not alone in that point of view – many vehicle lighting engineers believe that yellow light is much better in fog conditions for the same reason, that is, it reflects less than a clear bulb. This change mimics the factory look of many sports cars and luxury cars from the 70’s, 80’s and early 90’s, i.e., Mercedes-Benz, Acura, Ferrari, etc., and I must say, is attractive to these eyes. Since trends like this tend to start on the West Coast and go east, you have now been given the early heads-up.

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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