Mitsubishi presents ambitious plan for growth, neglects Europe

Mitsubishi_Eclipse_CrossMitsubishi Motors has presented an ambitious growth plan for the next three years, called “Drive for Growth”. According to this plan, the brand will invest more than 600 billion Yen (€ 4,5 billion / US$ 5.3 billion), of which R&D spending will increase by 50% to € 1 billion (US$ 1.2 billion) to develop six all-new models (including the recently launched Eclipse Cross crossover for the US and Europe, and the Xpander MPV for Indonesia) and significantly update five existing models. As a result of this product offensive, worldwide sales should increase by 40% to 1,3 million units in 2020 and the company expects to return to profitability with a profit margin of 6% by the 2019 fiscal year. This is the first business plan by Mitsubishi since Nissan took a controlling 34% share in its struggling rival in 2016. According to Mitsubishi CEO Osamu Masuko “this is an ambitious program to maximize our strengths in growing product segments, especially four-wheel drive, and to pursue growth in markets where our brand has strong potential, particularly the ASEAN region.”… Continue Reading …

MG to expand to mainland Europe, what does it need to become successful?

Auto-sales-statistics-China-MG_ZS-SUVAfter almost 10 years of UK-only sales, SAIC MG is ready to start exports of its cars from China to other countries in Europe as well. Recently, Shanghai Automotive Industry Corporation (SAIC) has successfully launched a few crossovers in the domestic market (Roewe RX5, MG ZS), which puts its two passenger car brands among the fastest growing brands in China at the moment. This would be a great moment to expand its footprint to new markets as it can launch there with fresh product, and more importantly: the right product. MG is the designated export brand for passenger cars from SAIC, whereas Roewe is and will remain a China-only brand and Maxus is the LCV brand of the company. MG is already available in a number of countries in the Asia-Pacific, South America and Africa regions, and since 2009 in the UK where it reached a peak of just under 4.200 sales last year. With its expansion into continental Europe, the brand is looking to become the first Chinese brand to successfully enter a mature market, but a number of other players have set similar goals, among others Geely with its newly launched Lynk & Co brand and the resurrected Borgward brand, which both also have concrete plans to enter the European car market.… Continue Reading …

Ford to switch US Focus production to China instead of Mexico

Donald_Trump-Mark_Fields-FordFord has announced that the next generation Focus sedan will be imported from China, now that other automakers have proven there’s little public backslash nor customer hesitation over quality from cars produced in China. Buick already imports the Enclave from China, Cadillac will follow with the CT6 PHEV and Volvo sells the Chinese made S60L in the US and S90 in Europe. So not a lot of breaking news there, except that the Focus will be the highest volume model so far that will be shipped from China to the US. The big story about this announcement is Ford’s decision to pick China instead of Mexico as the new production base for the Focus. Ford originally planned to move Focus production to a new $1.6 billion plant in San Luis Potosi, Mexico. Those plans were canceled in January, less than a year after announcing them, under public pressure from then-president-elect Donald Trump. Trump singled out Ford for its decision to move production from Michigan to Mexico, which he claimed would cost US jobs. Then-Ford-CEO Mark Fields called Bullshit on Trump as the Focus would make room for production of the Bronco SUV and Ranger midsize pickup at Ford’s Michigan Assembly Plant in 2018, and no US jobs would be lost as a result of this move, but it was too little too late against the media-savvy populist who never let truth get in the way of headline-grabbing claims.

Eager not to let Trump take any credit for the decision not to invest in extra capacity in Mexico, Ford cited cost savings of $500 million as the reason to change its mind and build the next gen Focus at its existing plant in Hermosillo, Mexico instead of investing in the new plant in San Luis Potosi. Now there’s a new CEO at the helm at Ford and plans have changed again: Mexican production is off the table altogether. Again, cost savings of another $500 million are quoted as the reason for the shift of production across the Pacific. These plans were already in the making under Mark Fields, but it was the new boss Jim Hackett who eventually pulled the trigger.… Continue Reading …

Global car sales analysis 2017-Q1

In the first quarter of 2017, worldwide sales of passenger cars and light commercial vehicles increased almost 5%, according to JATO Dynamics figures, based on their data of 52 markets. Almost a million additional vehicle sales (+962.000) compared to the first quarter of 2016 make for a new total of 21,24 million global sales. Disclaimer: this total excludes some major markets like Iran, the Middle East, Magreb, Pakistan, Philippines and a few South American countries. Still, this should give a reasonably accurate picture of the global car market this year.

Worldwide-car-sales-by-manufacturer-2017-Q1In terms of manufacturers, Renault-Nissan is the big winner at the top, entering the top-3 thanks to a 10,4% increase and reaching within a spitting distance (just 1.500 units) of Toyota (+7,8%). Keep in mind that Renault is relatively strong in Iran and the Magreb countries, while Toyota is dominant in the Middle East and Philippines, so even accounting for those markets the gap between the two companies will be small. Volkswagen still leads despite growing slower than the industry at just +1,7%. GM is down to fourth due to the sale of its European unit Opel/Vauxhall to PSA.… Continue Reading …

Ford replaces CEO with autonomous car guru

In a somewhat surprising move Ford has ousted CEO Mark Fields after only three years, a period in which he oversaw the company losing 40% of its market value and being overtaken by Tesla in market capitalization terms. His replacement, Jim Hackett, comes from within Ford and has recently headed Ford’s Smart Mobility division, in charge of developing the blue oval’s autonomous car technology and ride-sharing business models.

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March 2017 was a record month for 26 brands in Europe

March 2017 was a record month for European car sales, with 1,92 million units it was only 100.000 sales behind China, the world’s largest single car market. Helped by strong UK volume, March is traditionally the biggest selling month of the year, with about 11,5% of full year sales, so records are usually set this month. If the market as a whole sets a new volume record, a number of individual brands are naturally bound to do the same. And indeed, no less than 26 brands break their monthly volume record, which is half of all the brands currently on sale. I guess that may be a record by itself, although I didn’t check it. Especially luxury and exotic brands had a blockbuster month, with 17 record breakers out of 24 brands, compared to 9 new sales records out of 28 mainstream brands.… Continue Reading …

If the Americans shun Mexico, the Chinese will gladly step in

Mexican-car-marketPresident Donald Trump has offended the Mexicans in more than one way, and building even a virtual wall between the US and Mexico will affect trade between the two powers in a negative way, which would greatly affect the automotive industry, perhaps more than any other. Thanks to the North American Free Trade Agreement, a great number of carmakers have set up manufacturing facilities south of the Rio Grande to benefit from more than just lower wages to produce their lowest-margin vehicles. Any disturbance in the free trade agreement, most likely import duties, would increase costs for these manufacturers and have a negative impact on consumer prices in the US. Ford has already withdrawn plans to build a new US$1.6 billion plant in central Mexico’s San Luis Potosi in January in favor of a US$700 million upgrade to its Flat Rock, Michigan plant and others may think twice before becoming the target of one of Trump’s Twitter rages. However, as the US is shunning Mexico, the Chinese are more than happy to step in and invest in the growing market.

The success of Mexico

But first we need to look at what made Mexico such a phenomenal automotive production hub, and why automakers from outside North America have invested more than US$13.3 billion in Mexico since 2010, which is more than half of the US$24 billion invested in total. Ironically, Mexico’s low wages make up only a small portion of the explanation, as the biggest reason to build in Mexico is that the country has freer trade with the rest of the world than the US does: Mexican-made cars can be exported duty-free to 44 countries compared to just 20 for US-made cars, which make up only 9% of global car sales.… Continue Reading …

PSA may buy Opel/Vauxhall, but does it make sense? [w/poll]

Peugeot-Opel-logoThis week it became apparent that PSA Peugeot-Citroën and General Motors are having talks about the possible takeover of GM’s European division by the French automaker. This includes the Opel and Vauxhall brands, which have been a decade-long money drain on General Motors. The two automakers have been working together closely on the development of a handful of models and are looking for opportunities to boost each company’s profitability, which includes a sale of the two brands. GM has had a stake in PSA until 2013 when it became apparent that projected savings from their cooperation and platform sharing would fall short of expectations. After this breakup, the French company had to be bailed out by the French government and its Chinese partner Dongfeng Motor, which each control 14% of the shares.

Would a new, more intense cooperation bring the promised synergies? And does this mark the start of a much-needed wave of consolidations in the European car market? Or will it only cause PSA to lose focus on its own financial recovery and resurrection of its brands? Let’s look a the pros and cons for both parties involved:

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The only way I think Chrysler can survive and why it won’t happen

Chrysler 200With production of the Chrysler 200 midsized sedan set to end next December, the illustrious brand will be down to just two models: the now almost elderly 300 large sedan, which shares its platform with the Dodge Charger and Challenger, and the brand new minivan Pacifica. That means the two namesake brands of Fiat Chrysler Automobiles are also its weakest volume brands in the North American market. And considering Chrysler cars are sold almost exclusively in the US and Canada, the brand doesn’t seem all that relevant anymore. That’s unfortunate for a brand which used to be one of America’s most innovative brands with a number of important technological breakthroughs to its name and which of course is credited with the creation of the minivan. However, for the past decades Chrysler has let its image crumble by selling mediocre cars and ongoing financial uncertainty under multiple owners as it has gone through a number of (near-)bankruptcies.
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China’s new EV plans: sell them or risk not selling anything

New-Energy-Vehicles-ChinaAfter the Chinese government exposed a large-scale fraude with its subsidies for New Energy Vehicles, Beijing has now developed and proposed two new system to stimulate manufacturers to produce and sell EVs and PHEVs in the world’s largest car market. China surpassed the US as the largest market for electric cars in 2015 and has set a target of 3 million new-energy vehicle sales by 2025. To encourage manufacturers to step into this market, central and local governments have already spent 15 billion yuan (€ 2 billion / US$ 2.25 billion) on subsidies since 2009, but plans to phase them out after 2020. The carrot will be replaced by a stick: the first proposal features a carbon credit scheme which should be introduced in the next two years, with strict enforcement from 2018. A second proposal puts a cap on average fleet fuel consumption, with extra credits for New Energy Vehicles. To enforce this limit, this new scheme will require any automaker to sell EVs and PHEVs in China if they want to keep selling gasoline-powered cars in the country, similar to California’s system. This means foreign automakers, for whom the subsidies provided too little incentive to launch electrified cars in China until now, will have to get into the New Energy Vehicle market as well.… Continue Reading …