By Andy Bannister

11.27.2007

Unlikely as it may seem, the three-pointed star is one of the biggest players in the hard-fought market for panel vans in Europe.

North American customers have tasted a little of what the company has to offer in the shape of the Dodge Sprinter, based on a Mercedes van of the same name. The company also offers an attractive smaller van in two wheelbases, the Vito.

Whilst most of these vehicles, built at the company’s Spanish van plant, will spend a fairly mundane life trundling around the city, the same is unlikely to be the fate of the new limited edition Vito Sport-X the company is now selling in the UK to special order.

Powered by a turbocharged 3.0-litre V6 diesel engine, producing a massive 204bhp, the Sport-X can reach 60mph in just 8.3 seconds, and a maximum speed of 122mph.

Available in red, silver and black, the Sport-X is quietly understated but has a few clues to show this is no ordinary load-carrier. It features Brabus 18″ alloys and an aggressive Brabus-designed front spoiler. Chrome detailing on the vehicle includes distinctive side bars.

Inside there is a long list of standard equipment including smart leather-trimmed seats, steering wheel and gearshift, cruise control with Speedtronic speed limiter and air-conditioning.

As well as the Panel Van, there is a Dualiner version with rear seats, complete with privacy glass.

How much for this ultimate delivery van? In the UK the Sport-X costs just under £25,000 ($50,000) as long as it is being purchased for business use. Private customers pay an additional 17.5% in Value Added Tax.

Those people who might turn their noses up at being seen in a delivery van should remember that Mercedes offer basically the same vehicle to European consumers as the Viano, an 8-seater MPV which is basically a fully glazed and trimmed Vito with a much steeper price tag, but minus the 122mph version.

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By Brendan Moore

11.26.2007

The Reuters Auto Summit was held last week in Detroit, and among the many speakers during the summit were three veteran auto industry investors – Thomas Stallkamp, former president of Chrysler and now a partner with Ripplewood Holdings, a private equity firm, Jerry York, current advisor to billionaire investor Kirk Kerkorian, and finally, financier Wilber Ross.

All three men saw a lousy sales year coming in 2008 for the American new car market, with Stallkamp forecasting a possible 14.5 million new vehicles sold next year. The last time that happened in the U.S. was in 1993, which was a very bad year for the auto industry, for new-car auto franchises, auto finance companies, etc. I know – I was at a large auto finance company in 1993 and it was a tough, ugly year for us in terms of sales and financial results.

The three investors’ views of the United States 2008 new vehicle sales market contrasts with the various automakers’ predictions for 2008 sales, which range from a little more than 16 million units down to the lowest forecast (from Nissan) at 15.5 million. New passenger-vehicle sale in calendar year 2006 were approximately 16.5 million units; 2007 sales are currently trending to end up at around 16 million.

From Reuters (in italics):

“While I am very negative on the autos sector over the next 12 to 18 months, I’m just not sure how bad it could be,” York, a former board member of General Motors and former chief financial officer of Chrysler, said at the Reuters Autos Summit in Detroit. “We all know housing is a debacle.”U.S. light auto sales could slip to 15.5 million or less next year, York said. That would be down from near 16 million this year, a drop of 3 percent to mark the second consecutive annual decline and the lowest tally since 1998.

Stallkamp, a partner at private equity firm Ripplewood Holdings, which owns several auto parts makers, said the market could slump to 14.5 million, the lowest level since 1993.”I’d say it’s somewhere between 14.5 (million) and 15 (million), somewhere in there and it’s hard to tell,” he said. “Today, I’m a little more towards 14.5 (million).

“Such a decline would be felt throughout the sector, CSM Worldwide auto analyst Michael Robinet said.

“That would certainly be one of the worst years on record given the gravity of the industry,” he said.

For those of you younger than me, the trigger event for the brutal 1993 result was the economic recession in 1991. It was bad for auto sales in 1991, worse in 1992, and registered its full negative impact in 1993. Which more or less begs the question: If we have a recession in the United States in 2008, and sales are at 14.5 million to 15 million, then what will they be like in 2009? Or, for that matter, 2010?

Surprisingly, the most pessimistic of the investors, Stallkamp, sees U.S. auto sales bouncing back quickly in 2009. That sort of quick recovery from such a severe slump would be unusual, but that’s the way he’s calling it.

None of the three investors see massive discounting or rebates by the manufacturers if 2008 goes south in terms of sales; what they see is production cuts for the U.S. market, and for those that have the ability to sell overseas, a concerted effort to make up for some of the loss by selling more in other countries, particularly developing markets.

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By Brendan Moore

11.26.2007

Dubai, United Arab Emirates (UAE):

Are you ever curious as to what people elsewhere lust for in terms of automotive iron? Well, it’s not so different elsewhere as desire for expensive performance cars seems to transcend cultural differences.

Mawarid Finance, a finance company that makes auto loans in the Mideast through Sayyarat Mawarid, an auto finance unit that abides by Islamic principles, recently conducted a survey among visitors to the Middle East International Motor Show in Dubai asking the question, “What is your dream car?”

The answer from the largest number of visitors came back, “BMW”.

BMW garnered the most votes with 13.4%, Mercedes came in second at 12.2% and Lamborghini grabbed third place. The other choices spanned the usual theoretical dream car lineup of Porsche, Jaguar, Audi, Aston Martin, Ferrari, etc.

Respondents at the auto show were asked about their dream car, model, color, and the most common means of payment, whether installment auto finance loans or cash. Participants’ nationalities were all over the place, as is the UAE’s multi-cultural population, with only one-third of the survey respondents being UAE nationals. As you might expect in the male-dominated society, male respondents were 82.7% of the sample.

“Interaction with all community groups ranks highly in Mawarid’s strategy to reach the widest consumer bases and develop innovative products that better meet their different needs,” said Chief Executive Officer Mohamed Musabbeh Al Neaimi. “The ‘dream car’ survey is the first among many such initiatives that our company will launch in the future.

“Our platinum sponsorship generated enormous benefits for Mawarid Finance in introducing our company and innovative products, and launch Sayarat Mawarid as a competitive and appealing auto finance scheme.”

In order to comply with Islamic principles, Sayarat Mawarid first buys the car, and then resells it to the buyer through installment periods as long as 72 months.

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By Brendan Moore

11.23.2007

Fiat has told Brazilian government officials that it will build the company’s largest production facility ever in the company’s Betim factory in Brazil, outside Belo Horizonte in southeastern Minas Gerais state. The expansion of the existing plant there will cost approximately $2.8 billion USD and is forecast to be completed by the end of 2010.

The Italian automaker is doing its best to leverage it already-strong presence in Brazil.The Brazilian auto market has been growing quickly and is expected to keep growing at breakneck speed for at least the next decade. Anfavea, the national automakers association of Brazil, says that Brazil should see yet another record year of sales at 2.4 million to 2.45 million cars this year, which is a jump of 25 percent from last year. In-country vehicle production is expected to increase 13 percent to 2.96 million cars this calendar year.

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2007 SEAT Altea Freetrack

VW group has great plans to continue its global success story, spurred on by its Volkswagen and Audi marques winning over new customers and markets. Backing them up is Skoda, its Czech arm which caters to more value-conscious motorists, and the enigmatic SEAT.

I say enigmatic because no-one seems quite that sure what Seat represents. In case you haven’t heard of it, SEAT (officially pronounced Say-at) is VW’s Spanish-based marque. Its acronym stands for Sociedad Española de Automóviles de Turismo, the Spanish Private Car Company.

SEAT has been fully owned by VW since 1990. Prior to 1990, it had a few years of independence, having up to 1981 being intimately linked to Fiat of Italy. In earlier times it manufactured a range of that company’s vehicles, some with significant Spanish design input, and mostly small and rear-engined.

SEAT vehicles in the 1980s did well across Europe based largely on their low price, Spanish car factories being considerably cheaper places to assemble cars than places like Germany. SEAT also deployed some successful sales gimmicks, making much of styling by Giugiaro of Italy, and promoting a range of Porsche-designed engines, which led to early versions of the SEAT Ibiza hatchback being sold with prominent “System Porsche” stickers although their little 1200cc and 1500cc powerplants hardly set the track on fire.

The growing success of Skoda as VW’s low-priced brand, however, has forced a gradual change of tack at SEAT, in favour of a sportier image. Models which didn’t fit the brand image, like the Arosa city car and the Inca van, have simply been dumped without replacement.

The company has instead concentrated on offering a slightly sportier take on mainstream VW platforms and mechanicals, as well as imposing a corporate look to its styling. So much so that – with the exception of the rather dumpy Ibiza small hatchback and the ancient Alhambra MPV – all the company’s models now look so similar it is hard to tell them apart.

The best of the bunch is undoubtedly the Ford Focus-sized Leon hatchback, which has low and aggressive styling hiding what are largely VW Golf underpinnings. Particularly in its hotter 197bhp FR and 237bhp Cupra versions, these are undoubtedly very desirable hot hatches indeed.

Unfortunately the car’s impact is severely diluted by it being so easily confused with other less desirable models in the line-up. First up is a small MPV, the Altea, which looks like a slightly taller Leon and has little more room inside, prompting the recent launch of another slightly stretched clone, this time called the Altea XL. There’s also a “soft roader” version, the Altea Freetrack 4, which does at least look a little more distinctive with its jacked-up stance and huge black plastic bumpers.

The biggest missed opportunity of the range, though, is Seat’s flagship, the Toledo. In its first generation, based on the VW Jetta, the Toledo was the first Seat to be taken seriously, and the second generation model was a really handsome and successful sporting saloon.

The latest Toledo is more or less an Altea with a giant rear bustle which makes it look ungainly from almost every angle. Doubtless it’s a fine enough car to drive, with VW mechanicals and build quality, but who on earth would want to be seen in such a thing? Buyers have stayed away in droves.

At this year’s Frankfurt Motor Show, a possible new direction for Seat was signalled with the unveiling of the Tribu SUV concept. This is the first model wholly designed by new SEAT Design Director Luc Donckerwolke and his team since his arrival from VW’s Lamborghini division.

Any injection of Lamborghini brio into Seat could well be good news. While no beauty the Tribu does introduce some new design themes for future SEATs, notably the trapezoidal shape of the headlamps, grille and air vents, and the new grille-mesh design. Let’s just hope this time they remember not to make the cars look quite so identical to each other.

The other question is whether SEAT will remain a brand with most of its volume confined to Europe, with a few small pockets of sales worldwide. Sharing so many genes with VW and Audi the next generation of cars should be able to compete in a global market. While the potentially silly name to English speakers hasn’t put off buyers in the UK, where the brand is a modest success, would it work in North America I wonder?

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Tata gains a small advantage in quest to buy Jaguar and Land Rover

By Brendan Moore

11.21.2007

A meeting of 60 senior shop stewards earlier today at Land Rover’s Solihull production facility in England voted to support Tata Motors Ltd.’s bid to purchase Jaguar and Land Rover from Ford.

Jaguar and Land Rover combined employ around 16,000 people in England, and the union leaders are intent on not losing a single one of those jobs if and when Ford follows through on its stated desire to sell the two British car companies.

The union, Unite, met with all three of the companies on Ford’s short list of final bidders – Tata, fellow Indian car manufacturer Mahindra and Mahindra and One Equity Partners, a private equity group headed up by Jac Nasser, former CEO of Ford.

The general secretary of Unite, Tony Woodley, made a public statement that the union’s shop stewards had clearly stated their preference to stay as a part of Ford. However, if a sale was decided, the workforce’s best interests “would be served by finding a partner with an established presence and background in manufacturing”.

The union said further: “Based on serving the best interests of the union members at Jaguar Land Rover, the stewards agreed that Tata best fit these criteria.”

The endorsement of Tata by Unite will not figure prominently in Ford’s calculations regarding the sale of Jaguar and Land Rover, but on the other hand, it certainly cannot hurt Tata’s cause. The union still has some political power in England, and its approval would mean one less troublesome hurdle for the acquisition by Tata.

Tata has never made a secret of its desire to buy the two Ford units, and promised the unions today that it was in for the long run, and would not only not cut jobs, but provide investment to increase the size of both companies.

Mahindra and Mahindra has been far more coy about their interest in Jaguar and Land Rover, first saying it had some interest, but only on the right terms, then saying publicly that it had removed itself from the bidding, and then, re-inserting itself as a contender in the process. They too have apparently made promises of investment, etc. to the unions, but whatever was said was not as convincing as what Tata managing director Ravi Kant said.

One Equity is a private equity group and the union is reportedly quite leery of having them as the new owners of Jaguar and Land Rover, fearing the pressure of their business will require short-term results and the potential scenario of “flip and strip” whereby One Equity will fire workers, reduce costs, break the companies up and sell those pieces to the highest bidders.

Estimates of what the companies might actually sell for are all over the map, with suggested sale prices of anywhere from $1.5 billion USD to $3 billion USD. If I’m guessing, I say it will come in at approximately $2 billion actual price, after sale credits, etc. Just as an aside, everyone was all atwitter when Chrysler was sold for $7.4 billion, and then it quickly became apparent that Daimler had actually paid Cerberus approximately $700 million to tow Chrysler away. It was not a sale, but rather, simply a transaction (although, amazingly, the occasional news article still makes reference to the $7.4 billion sale price).

Either Indian company could easily realize the benefits they seek in buying Jaguar and Land Rover; acquisition of a global brand, overseas sales networks, high-end vehicle technology, state-of-the-art production facilities, the ability to transfer expertise to their home market products, and lastly, the thing that is never said, but understood by all, and that is the respect and prestige within the automotive world and the consumer market that go with the brands.

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By Brendan Moore

11.21.2007

Proton Holdings, the Malaysian government-owned parent company of Proton, has announced that it is ending talks with Volkswagen over a cooperation agreement. Proton also ended similar talks with General Motors recently.

Partnership discussions in the past have included other auto makers such as PSA/Peuget-Citroen.

Proton stated that it would no longer seek a partner and was confident that its new models and domestic growth combined with overseas expansion would generate the profit it so desperately needs.

There are no auto industry analysts that agree with this scenario, however, and the consensus is that Proton needs a partner not only to save it from building negative market forces, but mostly from itself.

Proton has lost market share steadily ever since the Malaysian government removed protective tariffs that stymied other automakers efforts in Malaysia. Proton had over 52% market share in Malaysia just six years ago, but they are now down to 31% and could still drop more.

The Malaysian government has resisted bailing Proton out with new investment funding, and Proton has found it difficult to raise the money it needs for a new product portfolio, capital funding to enter new markets, technology and operational efficiencies.

This cash-poor situation has led to some curious actions from Proton recently, such as last week’s company press release that Proton had entered into an agreement to build an “Islamic” car, with funding to be supplied by Iran and Turkey. The car, according to Proton, “will incorporate features such as a compass to determine the direction of Mecca for prayers as well as compartments for storing the Koran and headscarves”.

Supporters of the plan to acquire a foreign partner are crestfallen as they see that now-discarded plan as the only practical solution to Proton’s many problems. The preferred outcome for the boosters of the cooperation scenario was that VW would have transformed Proton much like they did with Skoda, or that GM would have taken Proton and performed the same sort of magic they pulled off with Daewoo, bringing that company back from the dead.

2007 Proton Satria GTi

But that’s not going to happen, at least not any time soon. The Malaysian government may reconsider their stance at some point in the near future, but who can say?

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