Check Your Mirrors

Odds and Ends About Cars and the Car Business

By Brendan Moore

08.24.2008

TATA says that continued violent protests at the East Indian factory that is scheduled to start churning out the $2500 Nano may force the company to move the plant elsewhere in India. The protests are not new as Tata has been bearing the brunt of the locals’ anger in the area for sometime now. The dispute centers around the farmland gobbled up by Tata for the production facility. India still has a tremendous population of rural poor people who make a meager living from the land, and these people are unhappy that private farmland was simply taken over by the government and then transferred to Tata for the plant. The government offered what was considered by most observers to be fair compensation, but the farmers displaced by the land grab are still very unhappy and some of them have refused the compensation offered by the government. Tata states that their primary concern is the safety of Tata personnel, and that opponents of the factory are sorely mistaken if they believe that Tata won’t abandon their investment in the factory in order to move the factory somewhere else where their employees would be safe. Of course, anything along that course of action would have to delay the launch of the Nano, which is extremely important to Tata, so it remains to be seen if Tata is bluffing in this regard.

CHERY has started selling cars in Turkey and Argentina. Chery gets approximately 40% of it sales from exports, and aims to keep increasing the percentage every year. Chery is forecasting sales of 180,000 units overseas this year. Sales in both countries commenced last month. Only the Tiggo, Chery’s minicar, will be sold in Argentina at first, and the Tiggo and the company’s larger A5 sedan will be sold in Turkey. The company says more models will be added shortly. Chery views sales in Turkey as particularly important, seeing sales in that country as a beachhead from which to expand their sales network into Europe.

CHRYSLER announced that they have started production of hybrid versions of the Chrysler Aspen and the Dodge Durango. The hybrids are of the two-mode variety, developed in a joint effort between BMW, Daimler, GM and Chrysler. GM is having considerable difficulties making finding new homes for their current two-mode hybrid full-size trucks, so expect Chrysler LLC to find the going even tougher. The two-mode hybrid setup is wonderful engineering, and makes for a great finished product, but it’s expensive, and the public is shying away from buying anything as large as a full-size SUV or pickup. The fact that these full-size rigs are what consumers are mostly running away from, and, will cost an average of $45,000 does not bode well for Chrysler’s sales numbers in the future.

FEDERAL BAILOUTS have happened for the mortgage industry and Wall Street lately; how about the Big Three? According to reports out of Detroit, that is precisely the thinking these days, with the domestics looking to get about $40 billion in government-backed loans to hold them over until their engineering and manufacturing prowess can re-assert itself. Apparently intense lobbying has already started in Washington with this goal in mind, and with the state of Michigan very much in play in the upcoming election, the boys from Detroit are betting they can get the President, Congress, and the two presidential candidates all nodding together on this effort.

HONDA is giving their dealers the 2009 Fit a month early. According to Automotive News, Honda is completely sold out of the 2008 models, and Honda had to do something to fill that hole, so they moved the first shipments of the 2009 model up. Honda sold 52,053 Fits in the first seven months of the year, an increase of 72.9% over last year. Yes, of course it’s the price of gasoline, but even with the price of gasoline decreasing lately, the Fit sub-compact shows no signs of fatigue in terms of sales. Even with severe inventory constraints, Honda sold 12,266 Fits just in the month of July, which as the piece in Automotive News points out, almost equals the sales generated by the entire Acura lineup for the same month. The new 2009 Fit is a better car, and a better-looking car than its predecessor, and price went up by only $600, so you can expect the torrid sales pace to continue.

VW introduced its sixth-generation Golf to the press in Wolfsburg, with VW Martin Winterkorn proclaiming that “inside this car is all the love Volkswagen has”. Whew. Is it hot in here or is just me? No matter, the important thing is that they rolled it out and they expect it to remain Europe’s best-selling car. It has been 34 years, five generations and 26 million vehicles sold since the Golf debuted. The new Golf will be sold in Europe this fall, but not a peep from VW about when it might be sold in the U.S. VW is not making money on the Golf (nee Rabbit) here in the States as a result of the weak dollar-euro exchange rate, so it doesn’t make much sense to continue selling the car in the U.S. as long as that situation exists. VW does say that they expect to make 8% margin on this Golf as opposed to the 2% margin they made on the outgoing model. Again from Winterkorn: “This sixth generation of Golf cars will completely redefine the quality and comfort level of its class over broad categories, offering more customer value than ever before.”

FORD announced that there will be an RS version of the new Focus, and it will have 296 hp. Great news, but here’s the curious part: the car will be front-wheel-drive, not AWD. You might think that there would be enough torque steer in a car that small with 296 hp driving the front wheels to yank the steering wheel out of your hands, but Ford says, “nope”. Ford’s engineering unit developed something called RevoKnuckle, a new type of strut suspension that doesn’t turn with the front wheels and is almost devoid of torque steer. Jost Capito, director of Team RS, says the new car will be light (no heavy AWD system) and powerful and smooth. The car will cost somewhere around $47,000 USD, but you won’t be paying for it with dollars, because it will be sold only in Europe and in very limited numbers. Natch.

COPYRIGHT Autosavant – 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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5 Comments

  1. I don’t know how long the torrid sales of the Fit will continue, I guess it might less be torrid then planned, some noticed on other forums then the Fit 2009 is a bit bigger (looks like Honda had succombed to the “bigger,longer,wider” without a big fanfare) and some competitors will arrive soon like the Nissan Cube, Ford Fiesta, retouched Chevy Aveo, the upcoming Dodge based on the Nissan b-platform. However I don’t know if the Mazda 2 will arrive in North America, same for the European Suzuki Swift.

  2. Since Honda is selling Fits as fast as they can get them (the days’ supply even of the old 2008 model was in the single digits), I don’t see them having any problem selling as many as they can import to the US for the foreseeable future.

    Plus, in spite of the 2009 Fit being larger than the old one, it gets the same fuel economy or better with more engine power, and is only something like 44 pounds heavier. If I wasn’t such a car snob, I’d seriously consider a Fit. 🙂

  3. Maybe you might consider the Fiat 500 before the Fit when Fiat will bring it here (or its new relative sister Ford Ka who use now the Fiat 500 platform and there a rumor of an upcoming hybrid 500 version http://www.autounleashed.com/hybrid-fiat-500-in-the-works ), I think then Lupin the Third might choose the 500 before the Fit http://matteomazzali.wordpress.com/2008/04/13/the-new-fiat-500-worth-enough-for-lupin-iii/ 😉

    Meanwhile in South America, Renault presented a new variation of the Sandero (which itself is derivated from the Logan/Nissan Aprio) called Sandero Stepway, more info on the French site Le BlogAuto http://www.leblogauto.com/2008/08/renault-devoile-le-sandero-stepway.html The Sandero/Logan/Nissan Aprio might be another interesting choice if it came in Canada and the USA.

  4. $40B would be kid stuff compared to the amount already spent bailing out Wall Street and mortgage bankers. As if they need the money. I’d rather see it go to auto workers that are actually making something of value than to guys who securitized worthless mortgages.

  5. You know, I’m okay with the loans to the American car companies. As the previous poster, market hawk, pointed out, it’s a drop in the bucket compared to the money we’ve spent propping up other industries that don’t really produce anything. And the money that went to those white-collar industires (financial services, basically) was not a LOAN, it was a GIFT. At least these would be loans.

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