The Truth About Cars » global http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Tue, 29 Jul 2014 21:42:50 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » global http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com GM Reports $1b Q1 Profit, Still Seeking “Competitive Levels Of Profitability” http://www.thetruthaboutcars.com/2012/05/gm-reports-1b-q1-profit-still-seeking-competitive-levels-of-profitability/ http://www.thetruthaboutcars.com/2012/05/gm-reports-1b-q1-profit-still-seeking-competitive-levels-of-profitability/#comments Thu, 03 May 2012 19:01:42 +0000 http://www.thetruthaboutcars.com/?p=442797

Once upon a time, GM’s North American operations spewed red ink across the firm’s balance sheet, with the whole mess kept afloat by relatively strong overseas operations. Now GM makes most of its money at home while its international divisions limp along. No, really: in its just-released Q1 financial report, GM reveals that some $1.7b of its $2.2b global EBIT came from its once-troubled home markets. What a difference a bailout makes!

GM CEO Dan Akerson sums up the situation with refreshing candor, noting

New products are starting to make a difference in South America, but Europe remains a work in progress. We’ll continue to work on both revenue and cost opportunities until we have brought GM to competitive levels of profitability. [emphasis added]

That GM is not yet experiencing the kind of hot streak one might expect from a global titan that’s been stripped of debt and loaded with government cash is self-evident. Like its share price, GM’s performance in the last quarter has been merely adequate. A billion dollars in profit is always a good thing, but around the world GM is still underperforming the market. In fact, The General lost .3% global market share. in Q1 2012, the third straight quarter of such declines, and GM’s share of the world market is now a full point lower than it was in Q2 of last year.

Even in the US market that now provides the lion’s share of its profit, GM is losing ground to the competition. North American market share has also fallen for the last three quarters, now standing at 16.4%, some 2.4% lower than Q2 2011. US dealer inventories jumped dramatically in the quarter as well, from 583,000 to 713,000. All this in the face of above-average incentives (as a % of average transaction price) and subprime financing (8.2% compared to an industry average of 6%). In light of these developments, GM’s ability to earn the majority of its profits in North America speaks to its bailout-streamlined cost structure. Still, there’s no denying that things are not headed in the right direction.

GM Europe continues to be the source of the most serious bad news, although its $300m loss is half of the Q4 2011 number. Still, restructuring and plant shutdowns will cost GM a pretty penny at some point in the not-to-distant future, and until that bitter medicine is administered, GME can only try to control its losses. GM South America turned the corner into profitability, yielding a $100m gain on its lowest production volume in over a year (albeit with steady market share).

But GM’s opaque “International Operations,” which include Korea, Australia and the crown jewel of China show some of the most troubling signs of malaise. With costs rising faster than volume and pricing gains could make up for, GMIO’s EBIT declined by $100m compared to Q1 2011. With the Chinese market cooling off, GMIO is also losing market share at a steady .1% per quarter for the last three quarters. Given how crucial China is to GM’s global future, this is not a promising development.

This is not a return to “Deathwatch” territory by a long shot, as GM still has $31.5b of government cash and equivalents on hand, and $37.3b of available liquidity. But the premise that GM simply needed a bailout in order to soar to global dominance is certainly wearing thin. And with the government waiting for an uptick in GM’s stock price to sell its stock at a politically-palatable price, mediocre results like this will allow the stigma of government ownership to linger.

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Blind Spot: Catching Up With Chrysler http://www.thetruthaboutcars.com/2012/03/blind-spot-catching-up-with-chrysler/ http://www.thetruthaboutcars.com/2012/03/blind-spot-catching-up-with-chrysler/#comments Tue, 27 Mar 2012 22:26:30 +0000 http://www.thetruthaboutcars.com/?p=436754

With the government still waiting to see how much it will get out of its equity in General Motors, The General seems to be attracting more of the media commentary than Chrysler these days. And not without good reason: GM saw the greatest drop in market share last month of any Detroit automaker, its government-hyped Volt is flopping, Opel continues to be an open sore and it can’t help but flaunt its cluelessness about youth marketing. But interest in GM’s shortcomings seems to be driven by little more than election-year political implications, which Chrysler was able to avoid by borrowing cash and misleadingly claiming to have squared up with the American taxpayer. After all, Chrysler is facing just as many challenges as GM, if not more. And despite having formally closed the bailout chapter of its history, Chrysler’s performance still bears on the decision to rescue America’s weakest major automaker.

Evidence that Chrysler is receiving something of a free pass from the media is not difficult to find, with Sunday’s CBS interview with CEO Sergio Marchionne serving as Exhibit A. A fluffy profile of the Fiat/Chrysler boss, the CBS piece is so lacking in journalistic rigor that ends up providing more misinformation than verifiable facts. The “paid back the loans with interest” line makes an appearance, without any qualifications that might have explained the full truth of Chrysler’s “payback.” Another straight-up whopper: Sergio’s assessment that Chrysler can “afford” to screw up on a single car. Chrysler only has one new post-Fiat car on the immediate horizon, the 2013 Dodge Dart… if Chrysler has “screwed up” that car, it will be a PR disaster that the company might not survive. Besides, with Fiat 500s piling up on dealer lots (82 days supply as of 3/1, down from 132 days supply on 2/1) despite $500 rebates or 0% financing, it seems that Fiat/Chrysler has already used up the one “screw up” that Marchionne says it can afford.

Speaking of the Dart, Marchionne claims that the crucial compact is “mechanically outstanding” and has “nothing to apologize for”… and yet, it appears that it’s already facing some challenges. Earlier this month, Marchionne said he was bumping the Dart’s rollout from April 1 to “avoid being jinxed” by April Fool’s day (Allpar notes that the April 1 launch was a “delay” from the planned January launch). That excuse is flimsy on face value, but the fact that Mopar will only build 2,000 Darts in May and that full dealer availability won’t finalize until June shows that there are probably bigger problems under the surface than mere superstition. And Dodge boss Reid Bigland seems to already be turning down the wick on expectations, saying the delay is

“not a concern. Given the size of the segment throughout North America and the enthusiasm for the Dart, we think it’s going to go OK.”

What Bigland leaves out is that, although the segment is large, the competition among compact sedans is fierce. And the Dart is likely not as well-positioned as CBS implies when it claims its “base price just under $16,000 with 40 miles to the gallon.” The EPA doesn’t have fuel economy numbers for the Dart, but with an efficient 1.4 Turbo engine listed as an option, it seems highly unlikely that a 40 MPG highway version of the Dart will be available at the base price (at least until a 9-speed transmission becomes available next year). Oh, and the government’s condition that Fiat build a 40 MPG Chrysler only requires 40 MPG combined unadjusted, a benchmark that is far less than 40 MPG EPA, and barely competitive with compact sedans already on the market. And with only 120,000 or so units of production planned at Belvidere, and exports planned from there to 40 different markets, it seems that Chrysler isn’t banking on competitive sales figures (Focus and Cruze have been selling over 20k units per month).

But if you dig deeper, you find that the mainstream media’s breathless boosterism is sharply contradicted in the online press, where rumors of trouble in Auburn Hills are starting to pile up. Over at Autoextremist, the auto industry insider’s outsider is posting emails from sources like “Anonymous in Auburn Hills,” which indicate that there are either a few truly bad apples at Chrysler or (as the Autoextremist himself concludes) the Fiat-Chrysler marriage is facing serious issues. “Anonymous” writes

All you need to do is work at CTC [Chrysler Technical Center] and you will see just how correct AE [Autoextremist] is on this Fiat issue.

In that building resides a morass of poor decisions, poor planning, poor time management, and ass backwards 80′s era engineering think…

…They want to build good cars but can’t make a decision to save their live.

My God, they can’t even get their CAD system figured out! I mean who is stupid enough to introduce a new CAD system on a whim?? did they not think you need time to integrate all of the other computer related systems?

It is a joke of epic proportions.

Another AE reader adds:

Arrogant. Irrational. Belligerent. Such a perfect description of Fiat management, [Autoextremist] must be moonlighting within the walls of CTC somewhere…

…Fiat practices finger-snap management as its true core philosophy. Cut product development time in half! How? Just cut it in half, easy! What testing should be eliminated? What efficiencies should/will allow this? No answer. Build a new production line but with half the capital funding! How? Easy, just spend half as much! You get the picture.

In an industry that so closely controls its PR, this burst of leaks is evidence enough that some serious dissatisfaction is brewing at Fiat/Chrysler. Add the Dart’s delay to this, and the emerging picture at Chrysler is not of a company bound for great things. More troubling still is the counterpoint between these worrying signs and the dizzying ambition of Fiat/Chrysler’s new product development plans. The Dart is built on a widened version of Fiat’s C-EVO platform, but according to Allpar, that platform will be stretched further and converted to rear-drive to accommodate the forthcoming midsized Alfa Giulia and Dodge Avenger replacement. Oh, and the LX platform also has a front/rear-drive replacement under development as well, the E-EVO, which will underpin everything from minivans to an Alfa sports sedan. According to an Allpar source,

This new D architecture is a joint project, but it’s being developed in Detroit with Fiat engineers who have been flown over to be embedded permanently in the project. … This decision (having a RWD D-segment architecture) was a costly proposition, and they took a good two years of tinkering between finance and marketing before they finally reached the decision to go ahead with this. … E-Evo was discarded [for this purpose] last year, when it became obvious that if you shorten it too much you can’t produce an aerodynamic, sexy looking D-segment car, on that huge beast.

So, an apparently-dysfunctional, trans-Atlantic team is developing expensive, complex D- and an E-segment platforms that are convertible between front-drive, rear-drive and all-wheel-drive, and will underpin mass-market offerings as well as premium cars. If this sounds oddly familiar, it should: it’s like a worst-of mashup of the cross-cultural issues of the DCX days and the engineering overreach of the early LH platform development (which Bob Lutz describes as having been “trapped in the classical ‘more is more’ planning maze”). And at the root of this mind-boggling complexity is yet another unsolved issue: Fiat/Chrysler’s bloated brand portfolio, which demands this ultimate (and expensive) platform flexibility.

Meanwhile, the context for all this is even worse, as Fiat faces a crushing downturn in the European market, made worse by the fact that Fiat is dependent on the Mediterranean markets that are being hit the hardest. Fiat lost half a billion dollars last year, its stock is on a 12-month downward spiral, it has frozen European investments, and it is grappling with numerous union issues (including a hauler strike that could cost it 10% market share in Italy). And with essentially no presence in China to offset European contraction, Marchionne’s solution is another alliance with yet another struggling automaker, like Mazda or Suzuki. But the “tying two rocks together to see if they float” plan clearly isn’t a path forward, and more merging will only wreak further havoc on Fiat/Chrysler’s troubled culture. Meanwhile, Fiat is only just starting [sub] its third attempt at a Chinese production JV (building Fiat-branded Darts), and it’s moving into Russia just as that market’s growth slows.

With huge losses likely to come out of Europe, and giant outlays likely on both Chinese and Russian expansion as well as investments in complex, multi-purpose platforms, Fiat-Chrysler has a seriously tough row to hoe over the next year or so. Successes will have to come from its stronghold in Brazil, which is seeing disappointing sales numbers so far this year, or from the US. With only the Dart coming down the pike, one hopes that its delays yielded serious results and that it makes an unequivocal case for Chrysler’s Fiat-led future. Otherwise, we could easily find ourselves here a year from now, wondering once again if Fiat/Chrysler is going to make it through another 12 months.

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Data Nugget: Chevy’s Best Sellers Around The World http://www.thetruthaboutcars.com/2012/01/data-nugget-chevy%e2%80%99s-best-sellers-around-the-world/ http://www.thetruthaboutcars.com/2012/01/data-nugget-chevy%e2%80%99s-best-sellers-around-the-world/#comments Fri, 20 Jan 2012 20:04:48 +0000 http://www.thetruthaboutcars.com/?p=427561 I always encourage my young and old colleagues to research TTAC the ancient way: By phone, not by email or Twitter. (Not to mention the common research method invented by Messrs. Cut & Paste.) You find the oddest things when calling around.

Today, while researching the alleged Volkswagen v.v. GM catfight, a source at GM handed me this cute little table of bestselling Chevrolets around the world.

Market Top selling GM vehicle
United States Silverado
Brazil Celta
China Cruze
Russia Viva
Mexico Aveo
Canada Silverado
Argentina Corsa Classic
Uzbekistan Nubira
India Beat
Colombia Aveo
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NAIAS Preview: Ford Serves Up Some Global Fusion http://www.thetruthaboutcars.com/2012/01/naias-preview-new-ford-fusion-global/ http://www.thetruthaboutcars.com/2012/01/naias-preview-new-ford-fusion-global/#comments Sun, 08 Jan 2012 18:50:23 +0000 http://www.thetruthaboutcars.com/?p=424773

Ever since the ill-fated Contour experiment, Ford has maintained a strict separation in its global midsized offerings: Fusion for the Americas and Mondeo for Europe (let’s ignore, for the moment, Australia’s Falcon as the doomed atavism it is). But under the global “One Ford” strategy, a fusion (ahem) of The Blue Oval’s midsized offerings was inevitable, and Ford has signaled for some time that the Fusion and Mondeo are on the verge of becoming one. And here, courtesy of the autoforum.cz, is the first leaked image of Ford’s unified, world-wide midsized contender: though the Fusion and Mondeo names will continue to be used in their respective markets, this car will carry both badges. But are we looking at a revolution in the oft-troubled “world car” game, or a repeat of the Contour’s compromises? Only time will tell…

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Dodge Brand Phase-Out Watch: There Will Be No Dodge Viper http://www.thetruthaboutcars.com/2011/12/dodge-brand-phase-out-watch-there-will-be-no-dodge-viper/ http://www.thetruthaboutcars.com/2011/12/dodge-brand-phase-out-watch-there-will-be-no-dodge-viper/#comments Tue, 27 Dec 2011 19:08:52 +0000 http://www.thetruthaboutcars.com/?p=423611

Once upon a time, the Dodge brand was brimming with pride. In the mid-to-late 1990s, Dodge had it all: affordable compacts, big front-drive cruisers, the hottest trucks on the market, and of course, the Viper. And when the times were good, all of those part melded into one brash, exciting, quintessentially American brand. From Neons and Intrepids, from Rams to Vipers, Dodge could do it all, as long as “it all” included a healthy dash of in-your-face attitude. But over the years, as Dodge’s shining moment faded into memory, the brand has managed to become both less viscerally appealing and less well-rounded. And when Fiat’s leadership stripped Dodge of the Ram “brand,” shucked its designs of their truckish cues, and repositioned Dodge as a more “youthful” and “refined” sporting brand, it seemed as if Dodge as we knew it was dying. Since hearing of Fiat’s plans to bring Alfa stateside, and with Dodge appearing to have lost out in brand alignment product battles, we’ve been wondering for some time now if Dodge isn’t headed out to pasture. Now there’s even more evidence that Dodge is being hollowed out en route to replacement with Alfa, as Automotive News [sub] reports

Absent from the redesigned SRT Viper will be the name Dodge… Viper has been linked to Dodge since the Dodge Viper RT/10 concept debuted in 1989. The first Dodge Viper SRT-10 went on sale in 1992, and over the years 28,056 Vipers were produced, according to Chrysler.

Not any more. Essentially, SRT becomes a brand with its own vehicle, in this case the SRT Viper.

That’s right, Dodge won’t have a Viper or a Ram (or, more prosaically, an Avenger or Caravan). Some might argue that, absent these components, the Dodge name doesn’t mean much of anything anymore. Certainly it doesn’t seem that Dodge can have a particularly bright future without any links to its last moment of glory.

Chrysler Group insists that the branding shift has nothing, NOTHING, to do with any elimination of the Dodge brand. In the words of a Chrysler Group spokesman,

SRT is the high-performance end of the company. The whole brand philosophy and the branding separation between Dodge and SRT will evolve over time. This is kind of that first step establishing what SRT means to the company and what that car means to the brand.

The other side of the company’s argument: the Dodge brand has “baggage” in some global markets, and by branding it as an SRT, the Viper can have a unified global brand and be sold (theoretically) at Alfa and Maserati stores. On the downside, these kinds of sleight-of-brand moves don’t tend to fool anybody, and more to the point, how many consumers know anything about the SRT “brand”? But all that aside, the mere existence of an SRT brand seems to trade off directly with Dodge’s continued success. After all, without trucks or performance halos, what exactly is Dodge again? And with Dodge’s post-Fiat-takeover brand boss Ralph Gilles jumping from Dodge to SRT, it seems that the corporate winds are blowing the once-proud Dodge brand towards oblivion. Perhaps Alfa will ultimately prove to be the more compelling performance brand, but in the short term, Fiat-Chrysler seems to be trading in one potentially strong brand for two relative unknowns.

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Lotus Investors: Sell! Sell! Sell! http://www.thetruthaboutcars.com/2011/12/lotus-investors-sell-sell-sell/ http://www.thetruthaboutcars.com/2011/12/lotus-investors-sell-sell-sell/#comments Tue, 27 Dec 2011 16:53:02 +0000 http://www.thetruthaboutcars.com/?p=423575

Lotus is one of those brands that every auto enthusiast loved to lionize, despite (or possibly because of) the fact that it hasn’t made a profit for its owner, Proton, in 15 years. But now things are changing. Lotus itself is in the midst of a makeover, seeking to transition from niche sports- and track-car company to a Ferrari and Porsche-rivaling aspirational brand. Meanwhile, back in Malaysia, its owner, Proton, is undergoing a few changes itself. Having been founded as a state-backed business, Proton may soon be privatized, reports Bloomberg. And as a result, Protons private investors could push for a quick divestment of the firm’s Lotus holdings. One such investor, Gan Eng Peng of HwangDBS Investment Management, tells Bloomberg

It will make sense for them to sell it. Proton and Lotus are not a good fit. They are in different market segments, both in terms of geography and product.

Chinese automaker SAIC and Genii Capital have been rumored as possible buyers, although Proton denies all rumors that Lotus is for sale. The problem is that Lotus won’t be worth much until 2014, the brand’s earliest projected break-even date. And even then, Bloomberg’s analysis shows that Lotus’s highest possible value then still wouldn’t be enough to return Proton to profitability, in light of increased competition in its home market of Malaysia. But in the meantime, Proton has no (useful) synergies with Lotus, and as the automaker emerges from the warm embrace of government ownership into the harsh light of the global market, it seems that selling off Lotus may be unavoidable.

Which leads to an interesting question: which automaker seems most likely to buy up Lotus? My money is on VW, who might buy the brand for no other reason than to kill off Alfa, after Fiat refused to sell. Of course, then it might create branding challenges with Porsche, but Alfa would have done so anyway. Another possible buyer: Toyota, which supplied Lotus with engines for years. In any case, we can probably count GM out of the picture, after their abortive relationship with the British brand.

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North Korea Diary: All Roads Lead To Pyongyang http://www.thetruthaboutcars.com/2011/12/north-korea-diary-all-roads-lead-to-pyongyang/ http://www.thetruthaboutcars.com/2011/12/north-korea-diary-all-roads-lead-to-pyongyang/#comments Sun, 25 Dec 2011 13:00:27 +0000 http://www.thetruthaboutcars.com/?p=423442

The familiar wail of a police siren cuts through the chilly early winter morning air rudely snapping me out of a cold-induced slumber. Our minibus slows to a crawl as our minder winds down the window to wave his papers at a bunch of stern-faced traffic policemen.

The officer that checked the papers gave the 17 university students on the bus a once-over before waving to his partner to turn off the siren. It seems that a Toyota Coaster minibus filled with students is a rare sight in this part of the world.

Then I caught sight of a little round badge bearing the smiling face of the “Eternal President” Kim Il-Sung on the officer’s coat.

“Toto, I’ve a feeling we’re not in Kansas anymore,” the voice in my head whispered.

Welcome to the Democratic People’s Republic of Korea (DPRK), or better known as Communist North Korea.

In the capital city of Pyongyang, the roads are wide but not as empty as you might think. An eclectic mix of cars ply the six-lane dual carriageways, sharing space with run-down electric trolley buses and trams.

The most common car seen on the streets is the Romanian-built Dacia 1310. Most of them are part of the city’s taxi network though our minders were quick to add that these taxis are expensive to take and most citizens only take them as a last resort.

How expensive is an average cab ride?

According to one of our minders, Mr. Kim Mun-Chol, the fare upon flag-down is 3 USD and a 15-minute ride would set you back nearly 20 USD. The international exchange rate stands at 1 USD : 133.75 North Korean Won (KPW) but the local exchange rate is closer to 1: 100, presumably for easier rip-offcalculation. Foreigners are explicitly forbidden to use or even hold onto the local currency and are only allowed to deal in USD or Euros.

Most other Dacia 1310s seem to be private vehicles barely kept in running condition with homemade parts and the owners’ tenacious will to get by. I saw a local attempt to change a wheel on his Romanian love just outside the restaurant that we were about the have lunch at.

The pins holding the brakes together were roughly cut bolts that looked seemingly as if they were scavenged pieces of metal put together. The amount of welding done within the wheel well also hinted at the numerous repairs that have been performed to keep this car going in a country where getting spare parts is difficult to say the least.

Just as I was about to take a photograph of the man working, another of our minders appeared in front of my camera and said with an almost too cheery a grin: “This way please, we are having lunch here.”

He refused to budge till I entered the restaurant.

With housing issued by the state, where you stay is a poignant reminder of your social status. For the roughly three million citizens living in the city, they consider themselves amongst the fortunate ones in the country with barely acceptable access to electricity, food, and running water.

Whilst some struggle to keep their cars going, others indulge in conspicuous consumption with Mercedes Benz topping the unofficial chart of most popular marque in the city.

Mercedes of various models and age serve as the premium mode of transport for the rich and powerful. Parked right outside the Koryo Hotel, a North Korean rated five-star hotel where we stayed, is a fleet of presumably armoured S-Classes wearing the Red Star marked diplomatic plates.

And it is not just the stereotypical “dictator special” S-Class that is the mark of a made man here. More modern products like the GL-Class and the latest E-Class models are occasionally seen barreling down the road at speeds well above the legal limits with relative immunity from the local law enforcement.

For those just a few rungs beneath the top of the social ladder, Volkswagens, in particular, the Passat and Jetta are choice picks. Further down, citizens seem to shower their favour equally between locally made Pyeonghwa Motors products and Chinese-made Brillance, BYD, and FAW products.

The roads in Pyongyang are never packed enough to cause any real traffic jams and drivers mostly subscribe to the driving style of the right-of-horn. But that is not to say that they disregard lights at junctions. At the few working traffic lights in the city, drivers, regardless of how expensive the car they are driving, placidly wait out the change of lights.

At junctions without traffic lights, and there are quite a few in a city with hardly enough electricity to go around, there are female traffic police officers conducting traffic. One of our minders joked that these ladies are picked for their attractiveness and dedication to the job. Judging from the officers’ rosily made up faces, it seems that there is a seed of truth in his jest.

And as I wonder how these ladies keep traffic flowing all day while bearing the brunt of the sub-zero winter cold, our driver pulls into a petrol station to top up the tank. North Korea imports most of its oil from neighbouring China at “friendly prices,” said one of our minders and declined to elaborate on further enquiry. His carefully worded reply did little to prepare me for the biggest surprise of the trip.

Total fuel bill: 50 Won

The price of diesel is one Won per litre.

And I doubt the price of petrol is any more expensive.

 

The author was part of a team of 16 journalism students from the Wee Kim Wee School of Communication and Information at Singapore’s Nanyang Technological University chosen to tour the country from Dec 3 to 10 on a reporting practicum offered by the school.

The trip is fully funded by the Wee Kim Wee legacy fund.

All images courtesy: Wong Kang Wei & Edwin Loh

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Chinese Cars Have Arrived, As Honda Imports Fits From The Middle Kingdom http://www.thetruthaboutcars.com/2011/12/chinese-cars-have-arrived-as-honda-imports-fits-from-the-middle-kingdom/ http://www.thetruthaboutcars.com/2011/12/chinese-cars-have-arrived-as-honda-imports-fits-from-the-middle-kingdom/#comments Wed, 21 Dec 2011 18:46:01 +0000 http://www.thetruthaboutcars.com/?p=423148

One question that Bertel and I find ourselves returning to again and again in our regular conversations is “what will be the first Chinese-made car sold in North America?” We’ve agreed for some time that the groundbreaking first Chinese-made import would come from an established non-Chinese brand, rather than one of the many newer Chinese brands, but our usual suspects typically ranged from GM to Volvo (EV maker Coda builds what are essentially “knock down” Chinese made-cars, but technically they qualify as US assembled, as does Wheego). I don’t think the name “Honda” ever came up in these discussions, but sure enough, the NY Times reports

the Japanese automaker Honda is crossing the threshold by importing subcompact cars into Canada from one of its plants in China. This month, Honda Canada began receiving its smallest model, the Fit, from China instead of Japan, as part of a strategy to produce more vehicles outside its home country.

The decision allows Honda to eke out higher profit in a segment of the auto market where margins are extremely thin, especially since the high value of the yen cuts into all Japanese automakers’ overseas operations.

“The yen has been getting stronger and stronger,” Jerry Chenkin, executive vice president of Honda Canada, said on Tuesday.

Of course, Honda has yet to bring a Chinese-made Fit to the US, where antipathy towards Chinese products is greater and automotive diversity is lesser than in the Great White North. Also, the importation of Chinese Fits is seen as a temporary response to the high Yen, while Honda builds a new plant in Mexico for Fit production, scheduled to open in 2014. Still, this is a significant development, presaging the inevitable importation to the US of Chinese-built vehicles.

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Trade War Watch 20: China Slaps Tariffs On American-Built Large Cars And SUVs http://www.thetruthaboutcars.com/2011/12/trade-war-watch-20-china-slaps-tariffs-on-american-built-large-cars-and-suvs/ http://www.thetruthaboutcars.com/2011/12/trade-war-watch-20-china-slaps-tariffs-on-american-built-large-cars-and-suvs/#comments Fri, 16 Dec 2011 00:32:07 +0000 http://www.thetruthaboutcars.com/?p=422589

When we last checked in on the low-level trade war between China and the US, which was sparked by President Obama’s 35% tariff on Chinese tires, the Chinese government had ruled that American large cars and SUVs were being “dumped” on the Chinese market, but wasn’t doing anything about it. Now, Reuters reports that China is doing something about it, namely saying that it plans to impose tariffs of up to 22% on imports of American-built large cars and SUVs. And the “up to” is key: GM and Chrysler are being hit hardest (unsurprisingly), while American-made BMW, Mercedes and Acuras are receiving considerably lower tariffs.

Still, China only imports $1.1b worth of vehicles in this category, whereas the US imported some $1.8b worth of Chinese tires prior to the Obama tariffs.  Like most of the news around Chinese-American relations, this is more saber-rattling than substance. But with economic conditions still shaky in the US, and a Presidential election getting into full swing, small spats can escalate into larger confrontations. And with China surpassing the US as the largest market for cars in the world, it’s probably no coincidence that this simmering conflict largely involves cars and car-related products.

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UAW Backs Off Transplant Organizing Goal, Attacks Hyundai http://www.thetruthaboutcars.com/2011/11/uaw-backs-off-transplant-organizing-goal-attacks-hyundai/ http://www.thetruthaboutcars.com/2011/11/uaw-backs-off-transplant-organizing-goal-attacks-hyundai/#comments Wed, 30 Nov 2011 20:23:15 +0000 http://www.thetruthaboutcars.com/?p=420851

At the beginning of this year, the United Auto Workers pledged that it would launch a campaign to organize the foreign-owned, non-union “transplant” factories in the US, threatening to tar uncooperative automakers as “human right abusers.” The campaign initially lost steam, but the UAW stuck to its pledge, re-iterating on several occasions that it would organize “at least one” transplant factory by the end of 2011. With one month left to accomplish that goal and no signs of progress in sight, the UAW has officially called off that goal. In fact, the UAW now hopes to simply pick an automaker to target by the end of 2011. Spokeswoman Michelle Martin tells Bloomberg

At this point, our hope is to make a decision about who we’re going to target by the end of the year. But obviously, we won’t have the organizing campaign completed by the end of the year.

This is not too surprising, considering the UAW announced last week that it would be focusing on dealership pickets initially rather than factory organizing. And sure enough, the first dealership picket has begun, targeting Hyundai dealerships. And yet, says Martin

This has nothing to do with the domestic organizing campaign. Hyundai is not the target.

Huh? If the UAW is not committing to organizing Hyundai’s assembly workers, why picket Hyundai dealerships?

The Freep explains that the union is targeting 75 Hyundai dealerships, in order to show international solidarity, a recurring theme in the presidency of UAW boss Bob King. Says King

The UAW has embraced a global vision of social justice and will mobilize its membership to defend labor rights here and in other parts of the world

So, what is the UAW picketing in solidarity with? Martin tells the Freep that Hyundai’s Korean unions are picketing across Korea to protest the firing of a worker whistleblower. According to Martin

The worker, who is employed by a Hyundai subcontractor, was fired after she reported the sexual harassment in 2010 to Korea’s National Human Rights Commission… The commission ruled in the worker’s favor and ordered the subcontractor to pay damages and rehire the worker, but the subcontractor has refused.

A UAW statement adds

Holding banners that read, “Stop Sex Discrimination at Hyundai” and “Reinstate Ms. Park,” UAW members from Los Angeles to New York, at more than 75 different dealerships, informed American auto buyers about an injustice to an autoworker on the other side of the globe.

“Though we may work for different companies and in different countries, as workers, we support each other’s struggles and know that one of the best ways to hold our employers accountable is through consumer action at dealerships,” said Mike O’Rourke, an 33-year employee and president of UAW Local 1853 at General Motors’ Manufacturing Facility in Spring Hill, Tenn.

Hyundai Motor America’s response: the worker was an employee of a subcontractor at Glovis, a Hyundai “affiliate,” therefore

the issue has nothing to do with Hyundai Motor Company

In other words, the UAW will be alienating itself from Hyundai’s US workers and dealers over one person who doesn’t even work for Hyundai. Standing on principle is great, but trying to block sales of cars will not exactly endear Hyundai’s assembly workers to the union. Meanwhile, similarly to the UAW’s last protest against Hyundai, there doesn’t seem to be as much moral clarity on this issue as the UAW would like it to appear. Of course sexual harassment has no place in the workplace, and  the circumstances of this case in particular do not sound good, but by hammering on the treatment of contracted employees, and by associating the contracter “affiliates” with the automakers they work for, the UAW opens itself up to criticism along the same lines.

The Freep is also reporting today that the UAW has called off a protest that was planned at GM’s Orion Assembly plant, over contract negotiations with a supplier at that plant. Workers at the GM affiliate supplier LINC, who organize and deliver parts for the Orion plant, make ten dollars per hour, less even than the “Tier Two” wages that most Orion assembly workers make. And yet, with GM’s stock (which funds part of the UAW’s VEBA account) remaining weak, it seems unlikely that the union will actually protest, let alone strike, over the LINC wages. Which raises a tough question for the union: why are they so concerned about transplant workers making $14.50 per hour and up when they are working alongside folks making $10 per hour? And if workers at a Hyundai supplier are Hyundai’s responsibility, why isn’t the UAW livid at GM for allowing LINC to hire workers for such low wages? And in light of these fundamental contradictions, a single case of apparent injustice half the world away seems even less relevant.

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Mitsubishi: It’s A Mundane, Mundane, Mundane World (Car) http://www.thetruthaboutcars.com/2011/11/mitsubishi-its-a-mundane-mundane-mundane-world-car/ http://www.thetruthaboutcars.com/2011/11/mitsubishi-its-a-mundane-mundane-mundane-world-car/#comments Sat, 12 Nov 2011 17:32:09 +0000 http://www.thetruthaboutcars.com/?p=417970 Mitsubishi didn’t exactly light the world on fire when it released its Global Small concept (left) at this year’s Geneva Auto Show… but now that concept has become reality (right), it’s even more clear that Mitsu’s mojo has been lost in the unglamorous world of basic transportation for emerging markets. It’s not clear if the Thai-built Colt/Mirage will make it to the brand’s US lineup, but if it does i certainly won’t help turn around Mitsubishi’s dowdy image here. The only way to make this car any more mundane  would be to debadge it completely. Slightly less prosaic but still quite underwhelming: the Grand Cherokee-meets-Range Rover Evoque update to the Outlander, shown in the plug-in hybrid concept PX-MIEV II. Though none of Mitsu’s new designs are actively offensive, their dullness speaks to some serious creative malaise… especially in contrast to the vibrantly creative Japanese designs that are headed to the Tokyo Auto Show. Perhaps we’ve solved the mystery of Mitsubishi’s disappearing US sales staff?

Zemanta Related Posts Thumbnail Wake me up when... never mind, just let me sleep. mitsuconceptglobalsmall mitsuconcept1 mitsuconcept

 

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What’s Wrong With This Picture: No Country For Old-School SUVs Edition http://www.thetruthaboutcars.com/2011/11/whats-wrong-with-this-picture-no-country-for-old-school-suvs/ http://www.thetruthaboutcars.com/2011/11/whats-wrong-with-this-picture-no-country-for-old-school-suvs/#comments Thu, 10 Nov 2011 19:10:51 +0000 http://www.thetruthaboutcars.com/?p=417687 Based on Chevy’s new Global Colorado, this Trailblazer is an old-school, body-on-frame, SUV… which won’t be sold in this, the erstwhile capital of body-on-frame SUVs. Even though the Colorado will be produced in the US, which would make the Trailblazer an easy addition to the US lineup, Chevy seems determined to keep it out of the US. Because, as GM’s midsized truck VLE (vehicle line engineer) Brad Merkel puts it

The growing markets of the world want flexibility. That means power and capability combined with comfort and efficiency. TrailBlazer does it all. You can tow anything, go anywhere, comfortably seat seven people, and do so with the fuel efficiency associated with a smaller, less capable vehicle. It’s the complete package

But Americans don’t want any of that. Americans want a nice, car-based Equinox or Traverse. And that’s just what they’ll continue to get…

Zemanta Related Posts Thumbnail No Country for Old School SUVs 2013 Chevrolet TrailBlazer 2013 Chevrolet TrailBlazer 2013 Chevrolet TrailBlazer 2013 Chevrolet TrailBlazer 2013 Chevrolet TrailBlazer 2013 Chevrolet TrailBlazer

 

 

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These 2013 Hyundai Genesis Pictures Are As Real As They Come http://www.thetruthaboutcars.com/2011/11/these-2013-hyundai-genesis-pictures-are-as-real-as-they-come/ http://www.thetruthaboutcars.com/2011/11/these-2013-hyundai-genesis-pictures-are-as-real-as-they-come/#comments Wed, 09 Nov 2011 00:16:28 +0000 http://www.thetruthaboutcars.com/?p=417266 The last time we posted a photo of the forthcoming Genesis Coupe facelift, we soon found that Hyundai Motor America staff were quietly informing other blogs that it was a photoshopped fake. I inserted a warning into the post, cursed myself for having been had, and moved on. So, how do I know these pictures are real? Probably because they come from the URL blog.hyundai.com (the leaked (non-press) shots are from Gencoupe.com, and don’t look as though they could possibly be faked). It turns out that Hyundai is showing off the new coupe to either drift fans or ice skating aficionados (Google Translate is hilariously unhelpful with Korean) this Saturday at something called the Chonnam National Yeongam F1 Speed ​​Festival. Hyundai will “officially” show the car to the American market a week later at the LA Auto Show… at the earliest. More likely, Hyundai will continue to pretend that this car doesn’t exist until January, at the Detroit show. And they’d have gotten away with it too, if it weren’t for those meddling internets!

[H/T: Our man in Korea, Walter Foreman]

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The Fiat-Chrysler Strategy: Now Featuring Jeep And Alfa http://www.thetruthaboutcars.com/2011/10/the-fiat-chrysler-strategy-now-featuring-jeep-and-alfa/ http://www.thetruthaboutcars.com/2011/10/the-fiat-chrysler-strategy-now-featuring-jeep-and-alfa/#comments Sat, 29 Oct 2011 19:44:20 +0000 http://www.thetruthaboutcars.com/?p=416057

It’s becoming increasingly clear as time goes on that the Chrysler five year plan promulgated in November 2009 was merely a stopgap strategy aimed at stabilizing the then-recently-acquired firm while CEO Sergio Marchionne plotted a strategic course globally. Now, with news that Alfa is going to be re-launched with the US as its major focus (possibly replacing Dodge), we’re getting a better and better picture of where the Sergio Show is headed with his transatlantic alliance. In an interview with Automotive News Europe [sub], Marchionne gives the latest snapshot

In his vision, Alfa Romeo and Jeep both have the DNA and the rich history capable to make them the alliance’s two global brands. “We need to continue to globalize Jeep and Alfa, so the development of architectures and engines that are designed to support these two brands is crucial, and everything else becomes almost secondary,” he said.

Chrysler clearly won’t be a global brand, as its products are rebadged as Lancias in Italy. Fiat will offer full lineups in Europe and South America, but only the Fiat 500 will be a truly global brand, in a role Marchionne compares to BMW’s MINI. Dodge doesn’t even rate a mention in this interview, which can only be interpreted as more evidence that it will be lucky to survive at all.

Though the alliance’s two namesake brands, Fiat and Chrysler, won’t be used on a global basis, branding will be extremely important to the company’s future. In Marchionne’s words:

By 2014, we expect Fiat-Chrysler to reach 5.9 million units and we will have just three main architectures that drive more than 80 percent of that total volume. I have never lived through a period with this level of complexity and this level of optionality

It’s not surprising that Marchionne has chosen Alfa and Jeep to represent his cobbled-together empire globally; clearly they are the two strongest brands in what is now a somewhat bloated portfolio. But this latest development raises two fundamental questions: first, what happens to Chrysler/Lancia and Ram/Dodge, and second, can Alfa and Jeep really move 80% of their volume to three common platforms and maintain their brand integrity? Because if not, it won’t take long before Marchionne finds himself with three platforms and a whole mess of compromised, past-their-prime brands. It’s good to see that Fiat-Chrysler global strategy is beginning to take shape, but this one is clearly not without its risks.

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European Market Volt Gets EV-Only “Hold Mode,” Should The US Version? http://www.thetruthaboutcars.com/2011/10/european-market-volt-gets-ev-only-hold-mode-should-the-us-version/ http://www.thetruthaboutcars.com/2011/10/european-market-volt-gets-ev-only-hold-mode-should-the-us-version/#comments Wed, 19 Oct 2011 20:32:25 +0000 http://www.thetruthaboutcars.com/?p=415258

In an era of increasingly-globalized automobiles, the “market-to-market adjustments” which modify a global vehicle to “local tastes” are becoming an interesting source of insight into a company’s perspective. And  Chevrolet Europe boss Wayne Brannon revealed one of the more significant adjustments in recent memory (because nobody reads the press releases), when he told Automotive News [sub]‘s Dave Guilford

I just switch it into extended range mode, and I drive on fuel until I get there. When I drive in the little villages and towns, I drive in electric mode.

The reason it was important here is we have cities — like London — where you don’t have to pay a congestion charge if you’re running purely on battery. You save the battery for when you need it.

Gosh, that’s an interesting idea. It would certainly help clear up some of the confusion in the marketplace about why the Chevy Volt is the way it is. Imagine the tagline: “Gas or electric? You decide.” So, how about it, GM? Will that feature come to the US?

According to GM’s Volt spokesman Rob Peterson,

There are no plans to add this feature in the U.S., as regulations require the vehicle to operate in its most fuel-efficient/ lowest emission mode first.

But as Guilford points out, Fisker’s Karma can switch between all-EV and range-extended modes (more on the Karma’s efficiency shortly)… and the EPA can’t think of any reason why GM couldn’t include this mode. The problem, it seems, is that it would lower the Volt’s already weak-for-a-green-halo-car range-extended efficiency. European fuel economy numbers for the Volt aren’t yet available to confirm that theory, but Chevrolet Europe claims “over” 500 km from the Volt’s 9.3 gallon gas tank, working to about 7 l/100 km, or 33.4 MPG. That seems roughly in line with EPA numbers, but even when official European numbers are released, differences in testing methods will make apples-to-apples comparisons difficult.

At its heart, the Volt is a car that appeals to an emotional conundrum: the desire for gas-free driving without the range limitations of EVs. Instead of relying on computers to continually adjust the gas-electric mix as a Prius does, it empowers drivers to use it as efficiently as possible, plugging in as often as possible. And yet, as this European-market feature reminds us, that uncoupling of pure-EV and gas-dependent modes is actually an illusion. This reality, along with a grandstanding media culture, explains why so many people freaked out when they found out that the Volt’s gas engine gets more involved in “EV mode” than GM had let on.

Here’s the point: nobody is going to change their mind about the Volt over a few range-extended mode MPGs. But giving the power of pure-EV driving (or not) to consumers can’t help but help the Volt’s marketing effort with the “I want an EV, sort of” crowd. The Volt has never been about pure efficiency, it’s a source of psychological satisfaction. The choice of gas or electric power seems to play right into that positioning. And now we know it’s possible. Over to you, GM…

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Where Will The Chevrolet Spark EV Be Built? http://www.thetruthaboutcars.com/2011/10/where-will-the-chevrolet-spark-ev-be-built/ http://www.thetruthaboutcars.com/2011/10/where-will-the-chevrolet-spark-ev-be-built/#comments Fri, 14 Oct 2011 17:26:09 +0000 http://www.thetruthaboutcars.com/?p=414741

As I noted earlier this week, GM’s decision to bring a pure-electric version of the Chevy Spark to the US opens up an interesting challenge to its “range anxiety”-centric marketing approach. But WardsAuto reports that there’s another challenging question coming out of the decision: where will the baby EV be built? And as I’ve found, GM’s reticence on the topic of the Spark EV program only deepens the mystery for Wards, which writes

Some media are reporting the EV will come from South Korea, where gasoline- and diesel-powered Sparks currently are produced. If so, that’s news to the folks at GM Korea.

GM Korea does not have a prototype of the Spark EV, and “no location of production has been decided yet,” a spokesman tells WardsAuto. He also says there is no EV activity at the GM minicar production complex, located in Changwon, the sole source for the Spark.

Nor is there a Spark EV prototype at the main engineering and vehicle-production complex in Bupyeong, where GM Korea is headquartered.

The Spark is built in Korea, India and Uzbekistan, and EV development of the previous-generation Spark took place in India, initially under REVA and later in-house at GM. An EV version of the Chevy New Sail has also been developed in China, while an EV Cruze is being tested in Korea. But GM won’t say which of its global divisions is developing the new Spark EV, let alone where it will eventually be made. One thing seems certain though: unlike the Volt, this forthcoming EV won’t enjoy the benefits of a “Made in USA” sticker (even though the Volt’s battery cells, transmission and range-extending engine are currently built in Korea, Japan and Austria respectively). In fact, the Spark EV could just be the first Indian- or Chinese-built car to go on sale in the US.

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Steel Industry: Replace Tailpipe Emissions Testing With Lifecycle Analysis http://www.thetruthaboutcars.com/2011/10/steel-industry-replace-tailpipe-emissions/ http://www.thetruthaboutcars.com/2011/10/steel-industry-replace-tailpipe-emissions/#comments Fri, 14 Oct 2011 17:00:43 +0000 http://www.thetruthaboutcars.com/?p=414737
Light-weight materials such as carbon-fiber, aluminum and magnesium are widely touted as key components of the drive towards greater fuel economy. Which explains why the automotive steel supplier industry is suddenly calling for an end to tailpipe emissions testing and a switch to the more holistic life cycle analysis testing. According to a press release from WorldAutoSteel, an industry group, the production of steel alternatives can create up to 20 times the carbon emissions of steel.

Director Cees ten Broek explains

When vehicle emissions assessments are focused solely on the emissions produced during the driving phase (tailpipe), it encourages the use of greenhouse gas-intensive materials in the effort to reduce vehicle weight and fuel consumption. However, this may have the unintended consequence of increasing greenhouse gas emissions during the vehicle’s total life cycle. Regulations that focus only on one part of the vehicle’s life cycle will become immediately out of date as the electric vehicle becomes more prominent on the road. We are only shifting the problem to other vehicle life cycle phases.

It’s always interesting to watch industries react when their self-interest suddenly aligns with idealism, but steel industry self-interest isn’t a reason to reject this idea out of hand. A study by the engineering firm Ricardo [PDF here] shows that as batteries and lightweight materials increase the amount of “embedded carbon” in cars, the production-side emissions are expected to reach 57% of life cycle emissions. In light of this trend, it’s not difficult to see why regulating tailpipe emissions alone makes little sense in a comprehensive carbon-regulation scheme. But, as the Ricardo study also shows, life cycle analysis is difficult and complicated. Imagining those complex calculations being fed into the complexity of a CAFE-style program literally makes the mind boggle.

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Chevrolet Global Colorado Debuts In Thailand http://www.thetruthaboutcars.com/2011/10/chevrolet-global-colorado-debuts-in-thailand/ http://www.thetruthaboutcars.com/2011/10/chevrolet-global-colorado-debuts-in-thailand/#comments Mon, 10 Oct 2011 19:09:16 +0000 http://www.thetruthaboutcars.com/?p=414323

Editor’s note: GM has officially confirmed what the UAW already let slip: Chevy’s new midsized Colorado pickup will be built at the Wentzville, MO plant and sold in the US. More details on that decision are forthcoming, but in the meantime, here’s Edd Ellison’s report from the global launch of the Colorado in Bangkok, Thailand.

Chevrolet has launched its new-generation Colorado in Thailand where it will be built and exported to 60 global markets. In true GM style, the ceremony was lavish – a cluster of truck ploughed their way through a large field of crops planted in a Bangkok exhibition hall watched by the media, dealers and VIPs packed into several grandstands – and the message was just as upbeat, the automaker feeling it has a product that can compete in the crowded mid-size segment.

In ten days time Thai customers will be able to pass judgment on whether GM have got this right, quickly followed by Malaysia, Indonesia and the Philippines. The New Colorado has to make up ground – the outgoing model, introduced seven years ago, never gained traction with consumers, particularly in the U.S. where robust initial sales tailed off very quickly. In the developing world, customers continued to prefer offerings from Toyota, Mitsubishi, Nissan and Isuzu – the latter somewhat ironically, as it shares its architecture with the Colorado.

GM is confident it has dotted all the ‘i’s and crossed the ‘t’s in developing the new Colorado. It has been a long and expensive project, involving the refitting of the Rayong factory, the construction of new engine plant next door to produce the new family of diesel engines, while styling was carried out in the carmaker’s Sao Paulo studios and extensive R&D was undertaken in Thailand and elsewhere. “It’s the most clean-sheet mid-size truck programme,” in GM history, said Martin Apfel, President GM Thailand/South East Asia.

According to Brad Merkel, GM Global Vehicle Line Executive, the big lesson which came from listening to customers was that they perceive pickups as “rough and tough” – but they don’t want “rough” to be a fundamental characteristic anymore, or even see why it should be. Growing aspirations and consumer demand that sees half of all pickups in Thailand bought as private cars has seen all OEMs scurrying to improve the comfort and luxury of their trucks. Toyota, the mid-size market leader, improved its Hilux this summer, and the others are following suit. Merkel says that the truck is now “refined” and points to the lack of vibrations, improved stability, and the dialing out of wind noise and rattles as key achievements. “It feels car-like,” he reckons.

The new Colorado will start from a low base here – 7,347 sales for the year to the end of August. That compares with 100,187 Hilux sales for tsunami-hit Toyota, 91,161 for the Colorado’s twin, Isuzu’s D-Max, 41,508 for Mitsubishi’s Triton and 16,032 for the Nissan Navara.

GM is anxious to emphasise the new project hasn’t been conducted in tandem with Isuzu, the two focusing on different directions after developing a common architecture. Addressing perceptions that the Colorado is more expensive to run has been a priority – the new model will go 20,000 km before its first scheduled service, while 100,000 km of running should be achieveable for a cost of no more than 20,000 baht.

Styling-wise, much of the design language has been carried over from the acclaimed Colorado “show truck” displayed at several major motor shows this year; however, some of that impact has been lost in the translation to production reality. The front end is dominated by Chevrolet’s twin-grille ‘family’ look which works quite well on what aims to be a big, butch pickup. It’s grown, too – the Colorado is now 5347mm long and there is a healthy choice of seven body colours. Inside the cabin is quite well laid out, but – as is to be expected with a pickup – there is a lot of hard plastic. The air-con controls are nicely laid out and backlit, there are umpteen storage areas and decent seats, but a number of areas, such as the instruments and door catches, feel basic and a bit clumsy.

The new four-cylinder diesel engines are based on the 6.6-litre V8 Duramax. They come in 2.5 and 2.8 litres and can be mated to 5-speed manual or 6-speed auto transmissions. The 2.5 (which should account for 75-80 percent of Thai sales) develops 150 HP and 350 Nm while the 2.8 has 180 HP on tap and 440 Nm (manual) or 470 Nm (auto).

Underneath, the body-on-frame chassis has been stiffened in torsion, and there are the expected safety features including front airbags, ESP, ABS, BA, CBC, HBFA and a deformable steering column.

GM is cautious about putting numbers on targets. The Rayong plant will assemble 12,000 new Colorados up to the end of this year, but management say they will be following demand. Capacity is likely to be around 100,000 units a year with a split between domestic and export. Only the 2.5 has been priced so far; it starts at 537,000 baht for the single cab, rising through extended/double cab, low/high ride and 2/4WD before reaching a range-topping 808,000 baht. That leaves the Colorado pretty much in line with existing pickup pricing here.

Edd Ellison is a Thailand-based auto journalist, covering the ASEAN markets and beyond. He can be contacted at edd@interfuture-media.com Zemanta Related Posts Thumbnail Soon to be available in Colorado... (All images courtesy: Edd Ellison) IMG_4795_resize IMG_4767_resize IMG_4765_resize IMG_4700_resize IMG_4661_resize IMG_4653_resize IMG_4597_resize IMG_4454_resize

 

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Global EV Demand Stuck At 2%-4%. Unless… http://www.thetruthaboutcars.com/2011/10/global-ev-demand-stuck-at-2-4-unless/ http://www.thetruthaboutcars.com/2011/10/global-ev-demand-stuck-at-2-4-unless/#comments Wed, 05 Oct 2011 19:58:55 +0000 http://www.thetruthaboutcars.com/?p=413693 Of all the persistent questions faced by the auto industry in these tumultuous times, perhaps the most pressing is: how many consumers would actually consider buying an electric car? There’s no single answer to this question, but we do have one new perspective on it today, courtesy of a study by Deloitte [PDF] which analyzed potential EV demand around the world through some 13,000 survey respondents. The major takeaway?

The reality is that when consumers actual expectations for range, charge time, and purchase price (in every country around the world included in this study) are compared to the actual market offerings available today, no more than 2 to 4 percent of the population in any country would have their expectations met today based on a data analysis of all 13,000 individual responses to the survey.

That assessment is well in line with other studies we’ve seen, most of which estimate global EV demand at somewhere between one and five percent of the market. But because potential EV demand has a lot of moving parts, from government regulations to the state of EV technology, there’s more to the study than that conclusion alone…

One of the most unexpected lessons from the Deloitte study: you can’t rely on self-identified “early adopters” to drive the market by acting differently than “typical” consumers.

Regardless of whether they thought of themselves as potential first movers, might be willing to consider an electric vehicle, or even those that are not likely to consider an electric vehicle, their expectations for range, charge time and purchase price are extremely similar – and consistently and significantly different from what automobile manufacturers can offer today

Though the appeal of the EV’s environmental benefits vary globally, that appeal never outweighs three factors: range, price and charge time. In the conclusion, the study authors note that their work

suggests that while common consumer expectations have helped the automotive industry globalize, it also means that when it comes to alternative power train technology such as EVs, the globalized consumer will be less willing to deviate from their wellestablished expectations. What’s more, with the rapid development of new markets for automobiles in Asia and the rest of the developing world, millions of new consumers are entering the market with the same set of well-established expectations. This helps explain why the survey found that consumer expectations regarding electric vehicles were so out of line with what can be offered by manufacturers today.

The counterpoint to this argument was laid out by Shai Agassi of Project Better Place, in a recent speech given at the APEC 2011 conference, in which he argued that this influx of new drivers would place enough strain on global oil production that it makes an EV boom not only necessary but inevitable. But then, the Deloitte study doesn’t look into the kinds of services offered by Better Place, which include both battery-swapping (thus eliminating “range anxiety,” as well as an cost benefit that stems from its “end-to-end” business model, which decouples battery costs from the upfront expense of an EV. The Deloitte study implicitly leaves room for Agassi’s alternate scenario when it notes

The current collection of hybrids is better equipped to meld consumer expectations with environmental consciousness and government calls for cleaner forms of personal transportation. While manufactured costs of these dual powertrain hybrids will continue to be a significant challenge, it is expected hybrids will be much more readily adopted by consumers than pure EVs. Ultimately which technology enjoys the most success will depend on ever changing consumer expectations and preferences coupled with effective government policies… Government policy is more so than any other aspect that will likely determine the adoption rate of EVs over the next decade and beyond.

But there’s even more evidence that a Better Place-style infrastructure solution is what the EV market needs, as the study notes

It is clear from the survey that consumers’ expectations for EVs are much higher than anything manufacturers can deliver today. But consumers are also notorious for being fickle and changing their mind; and doing so fairly quickly. Electric utility infrastructure can play a significant role in electric vehicle adoption. Plentiful electric power generated through stable, dependable, clean and cost-efficient sources (and delivered over smart grids with acceptable economics for consumers), coupled with easily accessible and economical charge stations can make consumer concerns about range and charge time dramatically less – even if EV technology does not demonstrate any significant improvements over the next decade. Higher oil prices (anywhere from a 40 to 70 percent increase) would also likely lessen the concerns consumers have today about electric vehicle range, charge time, and price.

This is Agassi’s scenario: higher oil prices coupled with a smart infrastructure supported by government policies. After all, it seems unlikely that the “wait for a technological fix” scenario will deliver the desired improvements in range, cost, and charge time, as the Deloitte study notes that expecting huge declines in battery prices (which affect all of these factors) is not realistic.

But to break out of their small test markets in Israel and Denmark, Better Place needs partners to emerge from the global automakers (currently only Renault is partnered with BP). And, argues Deloitte, the automakers hold the keys to the EV’s success.

Though the tipping points may vary slightly from country to country, the study found that across the globe consumers will be less likely to consider purchasing an electric vehicle as the fuel efficiency of ICEs improves. As a result automotive manufacturers will need to carefully plan their investments to maximize sales of fuel efficient technologies consumers are willing to purchase.

Another way of putting this: with plenty of efficiency improvements to be found in the Internal Combustion Engine, automakers will continue to emphasize those technologies, in effect relegating the EV to the niche role that this study sees for it. An “end-to-end” EV servicing/infrastructure firm like Better Place might be able to significantly broaden the global appeal of EVs, but why take on a partner when you can keep trickling out ICE technology that keeps EVs from being a necessity? Agassi acknowledges this challenge by arguing that he’s asking automakers to take a gamble not unlike that made by Jeff Bezos and Amazon.com with its Kindle e-reader. Amazon had to kill off its traditional book selling business in order to take its book (and content more generally) business to a new level. And, as this study shows, the car business has plenty of incentive to not take that leap… yet. And until automakers actually try to make EVs capable of overcoming the range, cost and charge-time concerns that consumers globally share, we can expect assessments of global EV demand to continue to be as pessimistic as this one.

 

 

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Sibling Rivalry Watch: Is Kia Outshining Hyundai? http://www.thetruthaboutcars.com/2011/10/sibling-rivalry-watch-is-kia-outshining-hyundai/ http://www.thetruthaboutcars.com/2011/10/sibling-rivalry-watch-is-kia-outshining-hyundai/#comments Wed, 05 Oct 2011 16:01:38 +0000 http://www.thetruthaboutcars.com/?p=413590

Hyundai and Kia are technically separate companies, with Hyundai owning less than 50% of its junior partner. But as the two major divisions of the Hyundai-Kia Motor Group, the two firms share resources and align their strategies through carefully-maintained relationships in the classic Korean chaebol (conglomerate) fashion. Hyundai has long been the senior partner in the relationship, getting the newest technologies and the most expensive new cars. But in both Korea and abroad, Kia is beginning to catch up with its big brother, raising questions about the future shape of its delicate relationship. Together, Hyundai and Kia enjoy a dominant position in Korea, earning 45.2% and 33.2% of the overall Korean market in 2010 (including commercial vehicles).  But if you just look at sedans and SUVs, the Korea Herald reports that their 2010 market share numbers are much closer: 39.6% and 35/7% respectively, and converging

Hyundai Motor Group is focusing on the possibility that Kia will catch up with Hyundai within one year in terms of monthly market share ― for sales of sedans and sport utility vehicles ― domestically for the first time…

The gap for sales of sedans and SUVs have continued to narrow ― 22.9 percentage points in 2007, 17 percentage points in 2008, 15.4 percentage points in 2009 and 3.9 percentage points in 2010.

And this fresh-brewed sibling rivalry isn’t just about Korea: around the world, Kia is catching up. And this shifting relationship is shaking things up at the highest levels of the group’s leadership.

Fox Business reports that, last month in Korea

Kia’s domestic sales rose 4.4% but Hyundai’s slid 1.1%.

And that differential could be higher if it weren’t for the company’s single largest “problem”: demand is outstripping supply. The Korea Herald notes

“Some purchasers of Kia cars have to wait two or three months to see their products due to the weaker production capacity,” a local dealer said.

So, why is Kia pulling ahead of Hyundai in Korea? The Herald opines

Automobile dealers attributed Kia’s noteworthy sales performance in the local market to growing popularity of four models ― K5, K7, Sorento R and Sportage R.

Kia Motors has been successful in attracting Korean consumers by launching cars with innovative designs after the company scouted Peter Schreyer, a car designer known for helping to create the New Beetle and the Audi TT, in 2006.

And Automotive News [sub]‘s Rick Kranz has a similar interpretation

While the styling for the Sonata has been a home run in the United States, the Korean market initially was turned off by what some buyers might say is the car’s audacious design language, which Hyundai calls “fluidic sculpture.”

Simply, the Korean market apparently prefers something less radical; judging from Hyundai’s past model line, maybe “ultraconservative” is a better term.

“There are some people who are very critical of our (design) activities” in Korea, Cho Won Hong, Hyundai Motor’s chief marketing officer, told Beene. “However, we believe we should continue to apply this design identity.”

And because both firms are seling more vehicles than they can produce, a decision will have to be made at the top of the group’s leadership in order to determine how to invest in future production capacity. And because that decision will define relations between the two firms, it has huge political implications. The Herald notes

Executives of Hyundai Motor Group, however, are allegedly taking the situation seriously.

Should Hyundai be overtaken by Kia at home, the automaker will see its brand image as the long-standing No. 1 carmaker of Korea undermined and overseas sales damaged.

“It is quite interesting whether Hyundai Motor Group chairman Chung Mong-koo and his only son Eui-sun, CEO of Kia Motors, will tolerate the scenario,” a dealer said.

Meanwhile, there are already signs of change at the top of the chaebol. Last week, the WSJ [sub] reported

Hyundai announced Friday the retirement of Chief Executive Yang Seung-suk, who ended a nearly three-year stint in the post, during which time the car maker outpaced the competition in one of the industry’s worst downturns. In March, Lee Hyun-soon, Hyundai’s head of research and designer of the company’s first engine, also retired abruptly.

Hyundai’s ability to absorb such high-profile departures is rooted in a complex management structure built around Chairman Chung Mong-koo, the son of the company’s founder. Its day-to-day operations are handled by a suite of executives, the most visible of which in recent years has been Mr. Yang, known outside of South Korea as Steve Yang.

Mr. Yang was chiefly responsible for nondomestic operations and global marketing for Hyundai, which, with its affiliate Kia Motors Co., is the world’s fifth-largest car maker by unit sales.

In a statement, Hyundai said Mr. Yang’s duties would be divided among two executives, Mr. Chung and Kim Eok-jo, but neither would immediately receive the CEO designation.

The consolidation of power around Mr Chung, and the rise of executives with strong ties to Kia (which Mr Chung personally oversees), caused Wards Auto [sub] to report

Some analysts say Kia has outperformed Hyundai in the domestic and some overseas markets, speculating the two executives initially were brought over to provide a spark.

Is Kia coming into its own? Certainly US sales of the brand are nowhere near Hyundai’s blazing growth, but globally the balance of power appears to be shifting. We’ll certainly be keeping an eye on this emerging sibling rivalry.

 

 

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As The World Shrinks: 2013 Chevy Malibu Debuts In Korea http://www.thetruthaboutcars.com/2011/10/malibus-korean-debut/ http://www.thetruthaboutcars.com/2011/10/malibus-korean-debut/#comments Wed, 05 Oct 2011 15:08:26 +0000 http://www.thetruthaboutcars.com/?p=413556 Like the Chevrolet Cruze before it, the new Malibu was supposed to debut in Korea (probably as a Daewoo) a good year before it arrived in the US. But a few things have changed in GM’s relationship with its Korean unit, no longer called Daewoo but GM Korea. The Daewoo brand is gone, for one, replaced by the Chevrolet bowtie. And with Bob Lutz’s blessing, GM CEO Dan Akerson pulled forward the US Malibu launch by some six months, which means we should be getting it in the first quarter next year.

And though the possibility of a simultaneous global launch is still out of reach (video of the Korean launch can be found here), this model is a key element in GM’s globalizing effort, replacing not only the US Malibu, but also the Daewoo Tosca (a.k.a Chevy/Holden Epica). We knew GM has way too many architectures across its global lineup, but were you aware that the Tosca/Epica had optional Porsche-designed transverse straight-six engines, in 2.0 and 2.5 liter configurations? Neither did I. But with the new Malibu, it’s straight-up-and-down GM: the Epsilon II platform, with 2.0 or 2.4 Ecotec engines (in Korea, anyway… an all-new 2.5 liter engine is on tap fro the US). We may be quick with the Daewoo jokes, but this new Malibu is doubtless making the automotive world a much smaller, more homogenous place. Welcome to the future… [Hat Tip to our man in Korea, Walter Foreman}

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Sergio Marchionne: International Union-Buster http://www.thetruthaboutcars.com/2011/10/sergio-marchionne-international-union-buster/ http://www.thetruthaboutcars.com/2011/10/sergio-marchionne-international-union-buster/#comments Tue, 04 Oct 2011 16:37:39 +0000 http://www.thetruthaboutcars.com/?p=413462

Considering the United Auto Workers’ VEBA fund is still Chrysler’s second-largest shareholder, CEO Sergio Marchionne is taking an amazingly hard line with the union. With a GM deal long done, and Ford’s deal moving towards approval, Chrysler is the last automaker on the UAW’s to-do list… and Marchionne tells Bloomberg he’s up for a fight if necessary, saying

I sincerely hope that we don’t have to get to arbitration. But if necessary, Chrysler will go there. We and GM are completely different

Marchionne is reportedly pushing the UAW for a number of tough concessions, including a mere $3,500 signing bonus (compared to $5k at GM and a reported $6k at Ford), and the elimination of a planned 2015 cap on entry-level “Tier Two” workers (at 25%). And though both of these are tough asks, he’s using UAW boss Bob King’s concept of union internationalism as a cudgel against the UAW, playing Italian unions off their American counterparts. And as a result, he could earn Chrysler a favored place among America’s unionized autoworkers.

The key to Marchionne’s Italian strategy was to threaten Italian unions with the prospect of Fiat pulling out of its home market and retrenching in lower-cost production centers like Poland and Brazil. That agreement eventually went through, and, as Bloomberg reports

Marchionne reached three labor agreements in less than a year as part of his strategy of raising productivity at Fiat’s domestic plants. The deals at all three factories include measures to limit strikes and curtail absenteeism.

Fiat also won approval to introduce longer shifts and run plants on a six-day workweek. In addition to more hours, workers get shorter breaks and postpone lunch until their shift’s end.

The changes at Mirafiori, Fiat’s oldest plant, in January were won with a 54 percent majority and set a milestone in Italian labor relations.

And to prove how serious he is, Marchionne has even withdrawn Fiat from Confindustria, Italy’s largest business organization, over difficulties in applying those reforms uniformly across its Italian production base. Says Marchionne in his withdrawal letter

Fiat, which is engaged in the creation of a major international group with 181 plants in 30 countries, cannot afford to operate in Italy in an environment of uncertainty that is so incongruous with the conditions that exist elsewhere in the industrialized world

And, having manhandled the Italian unions, Marchionne is not only asking the UAW for tough concessions, but he’s also setting a deadline that could send negotiations into arbitration (since the UAW has a no-strike agreement with Chrysler). Which gives Berkley professor and UAW mouthpiece Harley Shaiken cause to warn Marchionne that

He’s rolling the dice

But with Marchionne approving new products, including a 5-door Alfa-Romeo MiTo, and small Fiat and Jeep SUVs, for the Mirafiori plant, he’s offering carrots as well as sticks. And the longer the UAW waits to get a deal with Chrysler, the more carrots could be distributed around the globe… which means fewer carrots for the UAW. And at this point, the UAW’s Chrysler employees can’t afford to hurt their employer, which has largely funded their benefits with its own stock. Look for Marchionne to come out of this negotiation looking like the smartest guy to ever take on the UAW.

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“In many ways, the marriage between the Indian middle class and the automobile culture has been disastrous.” http://www.thetruthaboutcars.com/2011/09/in-many-ways-the-marriage-between-the-indian-middle-class-and-the-automobile-culture-has-been-disastrous/ http://www.thetruthaboutcars.com/2011/09/in-many-ways-the-marriage-between-the-indian-middle-class-and-the-automobile-culture-has-been-disastrous/#comments Fri, 30 Sep 2011 16:31:24 +0000 http://www.thetruthaboutcars.com/?p=413053

The NYT’s opinion page has a provocative piece by Siddhartha Deb today. It explores the role that automobiles play in the class dynamics of a modernizing India. Deb writes

Until the mid-1990s, cars had been mainly available in two models in India: the unglamorous, onion-shaped, sturdy Ambassador and the more aerodynamic Maruti 800. Both were produced by state-run companies (though the latter had a partnership with the Japanese company Suzuki). But when India began to open its markets, a wide range of cars became available, just as rising middle-class incomes and cheap consumer credit made buying such cars feasible.

In many ways, the marriage between the Indian middle class and the automobile culture has been disastrous. Roads remain awful, drivers continue to be erratic, and traffic in cities like Delhi and Bangalore is worse than ever. And yet the car has become deeply enmeshed with upward mobility, while also complicating that mobility. In the India of the Ambassador and the Maruti, the distinction was largely between those who owned cars and those who did not. In the India of Ford, Fiat, Hyundai and Mahindra — where there is even a very cheap indigenous model called the Tata Nano — distinctions are parsed in terms of the model one owns.

Drom the Bollywood producer’s suit-matched Bentley Continental to a struggling middle class couple’s divorce over the wife’s aspirations to a red Mitsubishi Pajero, Deb documents the cars, and other forms of transportation, which help define the emerging class order in India. It’s a brief but intriguing glimpse into the social impact of cars in a rapidly-growing economy, and it illustrates how cars both affect and reflect the fabric of social order. Give the whole thing a read if you’ve got a spare minute.

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Fun With Youtube: Woman Drives Car. Gets Beaten. http://www.thetruthaboutcars.com/2011/09/fun-with-youtube-woman-drives-car-gets-beaten/ http://www.thetruthaboutcars.com/2011/09/fun-with-youtube-woman-drives-car-gets-beaten/#comments Thu, 29 Sep 2011 19:25:57 +0000 http://www.thetruthaboutcars.com/?p=412977

[Editor's note: I want to be clear that, despite the unconventional, somewhat light-hearted tone of this post, the editors of TTAC take the right to drive very seriously. Sometimes, however, the absurdity of injustice can only be captured with more absurdity]

Najalaa Harriri lives in a sad little world where women are still forced to dress like Halloween ghosts. Besides spending a miserable lifetime as someone else’s property, Ms. Harriri was sentenced to ten lashes for the ultimate sin of driving an automobile in Saudi Arabia (the sentence has since been suspended by the king). I have to wonder about this. Was it a Yugo? A souped up Corolla that did powerslides? A car imported from Zionist occupiers who still give Muslims more rights than the Saudi monarchy?

No to all the above.

She was just drivingA carA machine that offers freedom in ways that infuriate ass sitting mullahs who have nothing better to do than to rarely shower and treat women like obedient sex objects.

On the brighter side of life though,  at least she won’t have to worry about getting stoned.

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Is China’s Cheap Labor A Thing Of The Past? http://www.thetruthaboutcars.com/2011/09/is-chinas-cheap-labor-a-thing-of-the-past/ http://www.thetruthaboutcars.com/2011/09/is-chinas-cheap-labor-a-thing-of-the-past/#comments Thu, 29 Sep 2011 17:13:33 +0000 http://www.thetruthaboutcars.com/?p=412966

The prospect of a Chinese auto industry growing at insane speed thanks to a booming market and resiliently low wages has long kept auto industry execs up at night, most notably inspiring Sergio Marchionne’s acquisition of Chrysler. But basic economic principles dictate that you can have a high rate of growth or low wages… but not both. Growth inevitably drives inflation, which drives up wages, which in turn slows growth. And according to a report in the Wall Street Journal [sub], that dynamic is already taking hold.

Jae-Man Noh, head of Hyundai’s joint-venture operations in China, said average manufacturing-worker wages in China—about 27,000 yuan ($4,200) a year per worker in 2009—are likely to double by 2015 from current levels.

Auto makers are expected to be affected as much as other industries by the trend, if not more, Mr. Noh said, adding that wage costs for many foreign auto manufacturers already have doubled in less than a decade. He said that a rival foreign auto maker that Hyundai has researched has seen worker wages in China rise to 49,000 yuan a year per worker in 2010, up from 24,500 yuan a year in 2003.

“We need to let go of our perception that the Chinese market is a low-cost production base,” Mr. Noh told a group of reporters at Hyundai’s office in Beijing. He didn’t offer specifics on Hyundai’s wage costs in China.

 And though the laws of supply and demand made this development inevitable, the story of the decline of China’s low-wage manufacturing base is a lot more interesting than you might think. After all, economic and historical forces may seem mechanical in the abstract, but on the ground level they work in dramatic, disruptive ways.
Anyone who has spent the last decade or so in China will have witnessed incredible economic growth, but along with it has come a creeping inflation. Despite widespread accusations of currency manipulation, certain commodities like food and real estate have driven prices incredibly high in recent years. This selective inflation was already underway when I visited China in 2007, and according to Frau Schmitto-san, grocery shopping in Beijing has become nearly as expensive as it is in Tokyo. And in another sign of how bad inflation for basic consumer goods has become, China recently opened its “strategic pork reserve” in an effort to keep prices affordable. Another dynamic playing into Chinese inflation: the penetration of economic development and infrastructure into the country’s interior has reduced the  wage and opportunity differential between the coast and the interior, reducing supplies of cheap migrant labor.
But the tipping point for the auto industry came last year, when a series of strikes hit Honda and Toyota assembly plants in China as part of a wave labor unrest that has its own Wikipedia entry. Work was halted at Honda and Toyota plants, as well as at key suppliers like Denso and Omron, and production ground to a halt for weeks. Calling the strikes, which were largely triggered by demands for better wages and working conditions, a “wake up call for Japan,” the NY Times reported

Japanese companies see the Chinese as crucial consumers of their goods to make up for a shrinking and aging market at home. Some of the most profitable Japanese companies, like Fast Retailing, which runs the budget clothing line Uniqlo, have relied on production in China since the 1990s to keep prices low.

“Japan is starting to realize that the age of cheap wages in China is coming to an end, and companies that looked to China only for lower costs need to change course,” said Tomoo Marukawa, a specialist on the Chinese economy at Tokyo University.

And make no mistake, foreign firms clearly have more to lose from newly-empowered workers, as the BBC reported
The BBC’s China editor Shirong Chen says the government has tolerated strikes at foreign-owned plants, which are obliged to respect workers’ rights, but maintains strict control at Chinese-owned factories for fear of widespread social unrest.

But for foreign firms, the protest must have seemed like “widespread unrest.” As LaborNotes documents, in an in-depth study of the strike wave

the events at Honda Nanhai triggered a chain reaction among workers in auto supply and electronics factories throughout the Pearl River Delta. According to the Guangzhou Federation of Trade Unions, more than 100 strikes occurred, of which only a small number were reported in the media. Around Toyota’s ultramodern factory in Guangzhou Nansha, eight of 14 core suppliers had labor conflicts. And action spread to other areas: workers in several electronics factories near Shanghai and at a Toyota supplier in Tianjin struck for several days.

The strike movement not only scared multinational corporations in China, it challenged the system of labor control. Typically, tacit coalitions between capitalists and local government rule over conditions inside the factories. Unions play a role in former state-owned enterprises and flagship joint ventures, but not in most private companies. Often, local governments back up violations of labor law by major investors, as has been documented in many cases for suppliers to multinationals such as Wal-Mart, Apple, and Nike.

But under conditions of rapid growth and highly modern production, the methods of control have become ineffective. Hundreds of labor conflicts occurred in the wake of the global economic crisis, affecting millions of Chinese workers in 2008 and 2009. Following the recovery, workers are seeking a voice. Workers’ wages have been falling continuously as a share of China’s national income since the 1990s, when the shift toward capitalism really took off, and the government is now officially calling for higher wages in order to raise domestic demand.

If underlying economic fundamentals have been pushing China towards wage inflation for some time, the dam broke in last summer’s wave of strikes. Now Hyundai is publicly acknowledging the reality that every foreign auto firm must face: low costs alone aren’t reason enough to be in China. But as the WSJ notes, even though the glory days of cheap Chinese labor may be over, Hyundai (and others) still have plenty of incentive to stick with their Chinese market plans.

China still offers other draws, including strong economic growth, an increasingly affluent population and a quickly growing car culture.

Plus, Hyundai’s average factory labor cost in China is still one-fifth of that in South Korea, Mr. Noh said. What concerns him most is the dramatic rate of increase, he said.

This trend is “inevitable” as the Chinese economy grows and society improves, Mr. Noh said.

Despite rising labor costs, China’s auto exports will continue to increase in part because of excess auto-production capacity in the country, he said. China’s central government will also continue to focus on automotive exports, he said.

The growth of the Chinese car market in recent years has been nothing short of freakish, and was overdue for this kind of correction. But even though costs are increasing, China’s continued growth and still-low costs relative to other manufacturing centers continue to make it an attractive target. Foreign firms just have to work a little harder than they used to, and as Chinese wages rise, workers there and around the world will only benefit from a narrowing assembly cost gap.

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