The trade war that erupted between the US and China late last summer may have cooled to an angry simmer, but its effects are once again being noticed in the automotive industry. After President Obama slapped a 35% tariff on imports of Chinese-produced tires, the Chinese government started casting around for potential objects of retaliation, and, as Bertel reported, US auto exports to China made “a good tit-for-tat.” The US imported $1.8b worth of Chinese tires in 2009, while China imported $1.1b worth of US-built cars (including transplant brands) in 2008. You shoot our dog, we’ll kill your cat.”
Now, the Chinese Ministry of Commerce has concluded its “investigation” into US auto dumping and illegal subsidies in the Chinese market, and it just so happens to single out the two automakers who are partially owned by the US. Coincidence? Not so much. [Hat Tip: Michael Banovsky]
On Tuesday, UAW leaders meeting here described plans to reach out to foreign unions and consumers in what would be their first major campaign since failed efforts in the last decade at Nissan Motor Co. and auto-parts supplier Denso Corp. They hope to be more successful by reaching out to foreign unions at the auto makers’ overseas plants and bringing pressure from prayer vigils, fasts or protests at dealerships.
A person familiar with the matter said the union is now planning to target one foreign auto maker and has narrowed its list to three or four companies. Inside the union, much of the talk centers on targeting the now-struggling Japanese auto maker Toyota or Korea’s Hyundai, this person said.
The UAW has set aside tens of millions of dollars from its strike fund to bankroll its campaign. International actions are to be coordinated with foreign unions and run by some three dozen student interns recruited globally, UAW officials said. When the interns return to their home countries after learning about the UAW efforts in the U.S., they’ll be expected to organize protests against the auto maker, UAW officials said.
OK, so it’s a little bit strange that the UAW is entrusting a campaign that UAW President Bob King calls “the single most important thing we can do for our members ” to a bunch of interns. Still, with “tens of millions of dollars” allocated towards the campaign, some automaker somewhere will be feeling the union’s hot breath on its neck in due course. So, which automaker will the UAW target? Which automaker should they target? And with the UAW apparently refusing to fight the two-tier wage structure, will any transplant or foreign workforce want to join up?
Ruh Roh! A press release from the Made In USA Foundation [via theautochannel] picks the kind of fight that GM has been assiduously avoiding for years (but especially since the bailout):
General Motors, bailed out by U.S. taxpayers and still owned in part by the federal government, is stripping country of origin labels off of its cars at auto shows around the country, says the Made in the USA Foundation. The Made in the USA Foundation has charged GM with violating the American Automobile Labeling Act (AALA) which requires all new cars that are offered for sale to include country of origin information.
The AALA requires new cars to provide information on the window sticker, including where the car was assembled, the U.S. and other country content, where the engine was made and where the transmission was made.
Joel D. Joseph, Chairman of the Made in the USA Foundation, said, “General Motors wants to hide the fact that, even after the government bailout, it has moved production of vehicles offshore. The Cadillac SRX is now made in Mexico. The Buick Regal is made in Germany.”
GM claims that the AALA only applies to cars for sale at dealers not at auto shows. Joseph stated that he worked with Senator Barbara Mikulski, who wrote the law, and that the intent of the law was to inform consumers about the country of origin of new cars. Joseph said, “Millions of consumers get their first look at cars at auto shows. The law applies to cars that are ‘for sale’ and auto show cars, except concept cars. Identical GM cars are for sale at thousands of dealers across the nation, and display vehicles should include country of origin information. The U.S. government saved GM and still owns one-third of the company. General Motors should comply with the intent of the law.”
At a press conference announcing new cooperation between Nissan and Mitsubishi, Nissan’s Carlos Ghosn presented the tie-up as a far-sighted move that will help both sides prosper. The Renault/Nissan boss explained
In the global auto industry, cooperation on specific projects among automakers is becoming increasingly common. It is a signal of how our industry is evolving to sustain success over the long term
But if his words were saying “cooperation,” Ghosn’s body language said “I’m hungry and your company looks bite-sized.”
When you think of cars and Saudi Arabia, you’d be forgiven for thinking of incredibly expensive European cars, typically modified in a particularly distasteful fashion by one of the more crass tuning houses. And indeed, the first Saudi-designed vehicle was a fairly garish SUV known as the Ghazal. But the second-ever Saudi-developed vehicle is actually a very modest, entry-level compact car, known as the Aseela (“Original” in Arabic). This strange little vehicle was developed by the King Abdul Aziz City for Science and Technology’s National Program for Automobile Technology, and debuted this week at the Riyad Auto Show. According to themedialine.com
officials said it was to serve as the basis for a domestic auto manufacturing industry that Saudi Arabia is trying to develop
Yes Virginia, Saudi Arabia is trying to develop an auto manufacturing industry. Well, sort of. According to the report, the Saudis plan on building a $16m production line which will build between 2,000 and 5,000 of the $13,000 Aseelas per year… which makes this more of a “hobby project” than a true “industry.” By contrast, the plan is to build 20k of the ghastly Ghazals over the next three years, at a cost of about half a billion dollars. But then, Saudi Arabia might be one of the few countries where an ugly SUV would fare better than an inoffensive little compact.
On-road fatalities per vehicle-mile-traveled in the United States have fallen to their lowest level in recorded history (and dropping fast)… so safety advocates must be thrilled with the success, right? Wrong. After all, success is almost more dangerous to a crusade than failure. Luckily for the hand-wringing faction, a study by the National Research Council has re-defined what it means to be safe enough on America’s roads: rather than comparing fatalities to America’s past (which makes the current environment seem great), the key is comparing America’s safety record to completely different countries. Take it away, New York Times:
While France and 15 other high-income nations cut their traffic fatalities by half from 1995 to 2009, the United States showed only a 19 percent reduction over that same time period. Britain dropped the number of fatal accidents by 39 percent over the last 15 years, and Australia by 25 percent.
And what makes the US different than these other countries (other than the fact that we apparently don’t care about traffic deaths)? The problem, it turns out, is our insufficiently intrusive government.
Some say the future of the car business is in China… and for certain employees of Jaguar Land Rover, the maxim seems to apply awfully literally. The Telegraph reports:
Des Thurlby, human resources (HR) director at [JLR], said he had held “pointed” discussions with up to five of the company’s best employees urging them to consider moving “out of leafy Warwickshire” to China to help the company capitalise on emerging markets. Those who refused had less chance of being shortlisted for a future top job at the company…
Mr Thurlby said: “We’re getting to the point where we’re having some quite pointed conversations with people, where we’re saying, ‘listen matey, if you want to go to the top you’re going to have to go to China, Russia or the US. We’re an international business, we’re 70pc overseas. It’s critical you move out of leafy Warwickshire.’”
Oh dear… this is what happens when you stop designing your interiors like a 19th Century club room, isn’t it?
With news that GM’s IPO price could be headed as high as $33/share (only $10.67 more per share to taxpayer payback!), boosting the offering to some $12b, some might think that the decks have been cleared of skeptics. Not so. Though GM has emphasized its international flavor during its IPO pitch, it’s stayed away from the fact that its overseas operations haven’t been immune to trouble. Take Opel (please). Though invaluable as a development center for GM’s upscale global products, Opel is miles of bad road away from actual profitability. Just ask the guy who tried to buy Opel back when the General was trying to fire-sale its European operations.
There is a lot of euphoria about the IPO, but if you dig into the numbers, they still have a problem in Europe. They are doing worse than when we looked at them two years ago, and it’s going to take a lot of cash to fix Opel. That’s my concern on the IPO.
Yesterday we suggested that this line drawing of a smaller-than-full-size Chevrolet pickup meant that Chevy would be “recommitting” to the US market for compact pickup trucks. Today, however, Bloomberg reports that Chevy is planning a mid-sized truck for production in Thailand, and that GM is focusing its smaller pickup efforts on the developing markets in South East Asia and Brazil (importation to Europe is also planned). GM’s Martin Apfel explains
The logical consequence is to build where the customer wants it, as that keeps your costs down. [Thailand and Brazil are] the two centers of gravity for midsize trucks
What, you didn’t know that Amarok is Inuit for “Wolf”? Anyway, Forget Mahindra. Third-world compact diesel pickup fetishists can move their misplaced hopes for US-market salvation on Volkswagen’s Amarok. Not because VW is particularly likely to bring it to the United States, but because Auto Motor und Sport just posted a bunch of photos of the new single-cab version. Plus this sweet angle on the double-cab model. All this Eskimo wolf needs is a fire hydrant. And some magical way of passing EPA tests without an expensive diesel-scrubbing system. Not to mention a free pass on the Chicken Tax.
Possibly worried that SUVs are falling out of favor along with the dinosaur juice that keeps their desert kingdom afloat, Saudi Arabia is getting into the SUV business, with this Ghazal 1. Personally approved by King Abdullah, some 20,000 of these peculiarly-styled utes will be sold around the Gulf Region each year, according to Top Gear. The project started life as a Mercedes G-Wagen, which was re-skinned by students at King Saud University. Apparently the king was so impressed with the design (or just bored enough with his Escalade) that he approved the thing for production. Pricing, equipment and options are not available at the moment, but don’t expect the Ghazal 1 to do particularly well outside of the circle of Saudi Royal Family dependents. On the other hand, that is one hell of a market right there…
So, this was all about new markets where the Chevrolet brand is relatively unknown. In other words, the markets where consumers are just as likely to call their Chevrolet a “ChevWoo” or “Daewoo” as a “Chevy.” The reality is that nothing hurts the Chevrolet brand abroad more than the continued existence of the Daewoo brand… by comparison the use of a familiar nickname is a minor issue. And what is going to be easier for a non-English-speaker to say, Chevrolet or Chevy? Anyway, based on the harried, apologetic tone in this video, it’s pretty clear that GM would rather this controversy had never started. So why did the new ad boys feel like dropping “Chevy” was so important?
Having recently hooked up with firms like BYD and Suzuki, Volkswagen is continuing its rampage across the developing world’s markets, as Reuters reports that the VW’s leadership is in talks with the Malaysian state-owned (42 percent) automaker Proton. VW had previously sought an alliance with Proton, but talks broke off without an agreement in 2007. According to Bloomberg BusinessWeek, VW is not likely to take a stake in Proton despite last year’s policy shift by the Malaysian government allowing foreign firms to own majority stakes in mainstream Malaysian automakers. Proton was founded as a joint venture between the Malaysian state-owned firm Khazanah Nasional Berhad, and Mitsubishi. Read More >
Whereas Chrysler’s surprise operating profit in the first quarter of this year was achieved mainly through cost-cutting, GM’s just-announced Q1 profit comes on the strength of sales increases in most of its global markets. Though The General’s sales numbers are still lower than they need to be, momentum is headed in the right direction… albeit somewhat more slowly than had been hoped.
Give up? The answer is that they’re giving South Korea a headache. OK, let’s go back a bit. The Korea Times reports that something funny is happening to the South Korean car market. Effectively, for years, the South Korean car market used to be closed off to foreign competition, thus, keeping domestic production and sales high. The market for foreign was only for the exclusively rich who didn’t mind paying the tariffs. But now, even the proletariat is getting in on the act. In spite of a global slump in the market, the Korea Automobile Importers and Distributors Association (KAIDA) reports that foreign imports rose, month on month, by 51.1 percent, to 7,208 units in April. Still a drop in the water: Korea makes 3.5m cars in a good year, of which 2.5m are exported. But it’s a start. Read More >