#investments

One of the reasons why Volkswagen is hitting on all cylinders (don’t be U.S. myopic – always measure a car company by global success) is that they did not stop investing in the wake of the 2008 crash. They did not have to: Sales in the U.S. were low, and where you don’t have a lot, you can’t lose a lot. At the same time, VW had the big luck of being a major player in China. While U.S. and Japanese car companies stopped or severely dialed back their investments into R&D and capacities, Volkswagen kept on spending. This has a delayed effect of 3 to 5 years, and what we are seeing now is just the beginning of this effect. It is also the beginning of an even greater spending spree.

The Russian government offered foreign automakers a deal which would be very costly to refuse: Invest heavily into the Russian auto industry, and Mother Russia will let you import parts and components at negligible or zero duty rates. Present your plans no later than July 1. Miss the deadline, and you may as well kiss the Russian auto market good-bye. Ti ponemaesh?

The rescue of Chrysler is making great strides. Sergio Marchionne today presented union officials an audacious plan. Powered by an investment of $1.3b, Chrysler and Fiat will build Alfa Romeos and Jeeps under one huge roof. The roof is in Mirafiori, Italy. Also known as the Fiat factory in Torino. And who will pay for all that? Fiat will pay 60 percent. Chrysler will pay 40 percent.

GM is tired of playing third fiddle in the growth market of Brazil. Come on, being outdone by Italians and Germans? Gotta pay to play, so GM do Brasil announced a new investment package for operations in Brazil. That according to car site Webmotors. The money will be pouring in to the tune of R$2 billion or US$1.1b. GM corporate honchos said R$1.4 billion (US$777 million) will go to raise production capacity and modernize its plant in Gravataí, Rio Grande do Sul. The gaúcho plant now produces the Celta and derivatives. The objective, according to the suits, is to (finally!) retire the Celta line in Brazil and other emerging markets and substitute it with the Onyx family line. Will that get GM ahead?

In the world of automobiles, it appears that China isn’t the only fruit ripe for the plucking. Brazil is buzzing. They’re weathering the current economic fragility very well, and companies are looking to invest in there. Down in Brazil, economically speaking, it’s car-naval time!

For some weeks, we have been following the steamy nampa between Japanese and European auto makers with more than prurient interest. First Mitsubishi and PSA (TBD), then Suzuki and VW (marriage consummated.) Now what? Now who? Suddenly, all eyes are on Mazda, the former wallflower of Nipponese car makers.