Check Your Mirrors
Odds and Ends about Cars and the Car Business
By Brendan Moore
HONDA announced their quarterly earnings on the 25th and those announced earnings came in above the market estimates, but Honda still lowered their 2008 outlook. Honda earnings for the quarter came in with an 8% rise, surprising most analysts. But Honda cut their sales forecast in the U.S. and worldwide by 1.4% each, citing rising costs for raw materials and a sickly U.S. consumer market. Honda could sell a lot more Civics in the U.S. if it had them to sell, thereby eliminating some of the expected sales losses from declines in sales of the Ridgeline and Pilot trucks, but Civic production is running flat out. There are no more Civics to be had for the short-term. The situation will be alleviated somewhat when the new Civic production line starts up in Indiana this fall, but those cars won’t start showing up on dealers’ lots until after January 2009. The outlook is for extra Fit production is even more constrained; every Fit sold in the U.S. is made overseas and production volume is maxed out. You can be certain that executives at the other auto companies in the U.S. feel just awful that Honda cannot make enough of two of the hottest-selling cars in the U.S. market.
GM is allowing U.S. employees to offer GM employee pricing to one non-employee until the end of July. The savings are pretty substantial for a lot of the vehicles in the GM lineup. Of course, it’s to clear out inventories, not because GM likes you so much, but whatever the reason, if you’re in the market for a GM car or truck, it might be just the ticket for you.
KIA is doing it’s best to be somebody in the States; the Kia Soul will be sold here in April 2009 and the Kia Coupe will be sold here in September 2009. Both vehicles are better than Kia’s bland current offerings by a factor of at least 5. The 5-door hatchback Soul looks a lot like its distant corporate cousin, the Scion xB, and comes with either a 1.6 liter or a 2.0 liter four-cylinder engine. The Coupe, based off the Koup Concept shown recently, will replace the current Spectra, and will spawn a sedan, which will show up before the Coupe, sometime in July 2009. Kia says they may change the name to something other than Spectra, but no word on what that might be if indeed it happens. Both vehicles were designed by Kia’s stylists in the U.S.
GAZ is apparently getting ready to sign a deal with GM to create a 1 billion dollar (USD) joint venture in Russia. The head of light vehicles at the Russian automaker let the cat out of the bag to a Reuters reporter last week, but GM has remained tight-lipped about any possible joint venture. It is well-known that GM has been on the prowl in Russia for a deal ever since Renault’s blockbuster deal with AvtoVAZ, the other Russian auto giant. In fact, GM was the frustrated suitor left behind when AvtoVAZ signed with Renault in a surprise move. GAZ is also very keen on such a tie-up, as it wants a big brother to protect it from the newly-muscular AvtoVAZ in the Russian market. The Reuters report said the joint venture will churn out 300,000 vehicles a year. The Russian auto market is expected to become the largest auto market in Europe next year as it will post 3 million sales this year to Germany’s 3.2 million sales, and is forecasted to blow by Germany in 2009. Just as in China, every Western automaker sees a chance for sales salvation in Russia, since sales are declining in their mature markets.
TATA had a few things to say at their recent shareholders meeting in Mumbai, India; the first was that demand for the $2500 (USD) Nano is expected to outpace supply considerably the first twelve months of production. The Nano will be launched in October 2008. The second was that Tata is considering building both an electric version of the car as well as a version that uses an engine that runs on compressed air. This engine was designed by a French technology firm and has been shown off to the press the last couple of years. The third thing was the fact that they have been in preliminary discussions with Chrysler LLC about a Chrysler-branded version of the Nano that may be offered with two different types of propulsion systems. They also mentioned to the shareholders that Tata Motors plans to raise $1.7 billion from three rights issues to help fund its acquisition of Jaguar and Land Rover, and gave reassurance that these issuances would not be delayed by a volatile market.
BMW stated that it sold 28.1% more cars in China during the first half of this year then the company sold in 2007. Sales for January to June came to 30,325 units, up from 23,667 units, with strong increases in 3-Series, 5-Series and MINI sales. The Chinese have recently discovered luxury cars and BMW is well-positioned to benefit from the new Chinese appetite for foreign luxury. BMW has a manufacturing venture with Brilliance Automobiles, the much-maligned Chinese manufacturer, to produce BMWs in China.
THERE was an interesting article in The New York Times this morning about the changes in the love affair between Americans and their cars. Regardless of whether you agree with the premise, it is an interesting read. The title of the piece is “Putting the Dream Car Out to Pasture”.
TOYOTA is planning to increase production of its Prius hybrid 70% in 2009, bringing worldwide production to approximately 480,000 units. The sizzling sales of the Prius in the U.S. would be much higher if dealers could get all the units they’re crying for; but Toyota cannot make any more. By juggling production at different plants next year, Toyota intends to meet the demands of the U.S. market a little better, and when the plant in Mississippi comes on line in 2010, the waiting times for the Prius should ease considerably. Toyota has a goal of selling at least 1 million hybrid vehicles annually by 2011, with most of those unit sales forecasted to take place in America.
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