The Truth About Cars » joint ventures http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Mon, 29 Sep 2014 21:20:29 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.2 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 » joint ventures http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Toyota Camry To Have Aluminum Hoods By 2018 http://www.thetruthaboutcars.com/2014/09/toyota-camry-aluminum-hoods-2018/ http://www.thetruthaboutcars.com/2014/09/toyota-camry-aluminum-hoods-2018/#comments Tue, 23 Sep 2014 12:00:32 +0000 http://www.thetruthaboutcars.com/?p=916882 As Ford prepares to stake its future on an aluminum F-150, Toyota is looking to do the same for at least a single part on its best-selling vehicle. Automotive News reports the automaker will begin stamping aluminum hoods for the Camry in 2018, introducing the metal to its customers in North America with the hood […]

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As Ford prepares to stake its future on an aluminum F-150, Toyota is looking to do the same for at least a single part on its best-selling vehicle.

Automotive News reports the automaker will begin stamping aluminum hoods for the Camry in 2018, introducing the metal to its customers in North America with the hood and liftgate of the Lexus RX 350 in 2015. The move is part of an overall plan “to use aluminum on future vehicles for hood, closures and parts for lightweighting,” according to representative Jana Hartline, who adds the automaker will “increase usage of mix metals and resin materials to enhance lightweighting efforts.”

The plan will be enacted through a joint venture between its trading company, Toyota Tsusho Corp., and Kobe Steel, with Toyota being one of the JV’s first clients. The venture aims to produce 100,000 tons of aluminum sheet annually, and plans to build its operation near producer Wise Alloys of Muscle Shoals, Ala. to help tackle constraints resulting from the increased popularity — a result of tightening CAFE regulations — of the metal.

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Tesla, Toyota May Develop New Project Within Three Years http://www.thetruthaboutcars.com/2014/09/tesla-toyota-may-develop-new-project-within-three-years/ http://www.thetruthaboutcars.com/2014/09/tesla-toyota-may-develop-new-project-within-three-years/#comments Tue, 09 Sep 2014 12:00:25 +0000 http://www.thetruthaboutcars.com/?p=909122 Though Toyota and Tesla have, to paraphrase Fleetwood Mac, gone their own way while their RAV4 EV project draws to a close, Tesla CEO Elon Musk says he sees his company working with Toyota in two to three years’ time. Automotive News says Musk made the proclamation during a ceremony for the first Model S […]

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Tesla Toyota RAV4 EV

Though Toyota and Tesla have, to paraphrase Fleetwood Mac, gone their own way while their RAV4 EV project draws to a close, Tesla CEO Elon Musk says he sees his company working with Toyota in two to three years’ time.

Automotive News says Musk made the proclamation during a ceremony for the first Model S sedans delivered in Japan Monday, stating the project “would probably be something significant, maybe on a much higher volume level.” He added that Tesla loved working with Toyota, and held great respect for the automaker.

When the gesture was brought up with Toyota, however, representative Dion Corbett said the automaker had “nothing to say.” This is likely in part due to recent comments between the two companies over their respective paths toward a greener future; Toyota sees EVs as impractical, Tesla believes FCVs are for fools.

The RAV4 EV joint venture is expected to end once the last of the 2,500 crossovers are sold by the end of the year; Toyota has sold 2,130 RAV4 EVs through August 2014.

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Mahindra Seeking Alliances With Global Players http://www.thetruthaboutcars.com/2014/09/mahindra-seeking-alliances-global-players/ http://www.thetruthaboutcars.com/2014/09/mahindra-seeking-alliances-global-players/#comments Tue, 09 Sep 2014 11:00:27 +0000 http://www.thetruthaboutcars.com/?p=909098 Despite its struggles in its native market — and, perhaps, because of said struggles — Mahindra & Mahindra is seeking to build alliances with a trio of automakers to develop its global presence. The Economic Times reports M&M is joining up with its South Korean brand Ssangyong Motor in their entries into Russia and China […]

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Despite its struggles in its native market — and, perhaps, because of said struggles — Mahindra & Mahindra is seeking to build alliances with a trio of automakers to develop its global presence.

The Economic Times reports M&M is joining up with its South Korean brand Ssangyong Motor in their entries into Russia and China as part of a “coordinated global branding strategy” between the parent company’s two brands. The United States — where Mahindra has had a difficult time selling more than tractors — and Europe — where Ssangyong lost some of its footing prior to M&M’s purchase in 2011 — are also on the radar.

Speaking of Europe, M&M is in alliance talks with both PSA Peugeot Citroën and SAAB AB as far as branding and technology-sharing are concerned. Regarding the former, Mahindra is interested in PSA’s diesel- and compressed air-hybrid technology, with the aim of jumping “into the future generation,” according to French analyst Gautam Sen. In turn, PSA could piggyback on Mahindra into the Indian market it had abandoned in the 1990s. The company attempted to return in 2011 by breaking ground on a new factory in Sanand, only to be undermined by financial difficulties.

As for SAAB, Sen says Mahindra would like to acquire the Saab brand and resurrect it as another way to enter markets in Europe and the U.S. The strategy would involve rebranding and redesigning Mahindra and Ssangyong products into Saabs, but only if “quality and design can come up to the expectations of the typically discerning Saab enthusiast.” That said, he adds that relaunching the Saab brand would be easier said than done, as both Spyker and National Electric Vehicle Sweden can attest.

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Sixt-BMW DriveNow Partnership Exceeds Membership Expectations http://www.thetruthaboutcars.com/2014/08/sixt-bmw-drivenow-partnership-exceeds-membership-expectations/ http://www.thetruthaboutcars.com/2014/08/sixt-bmw-drivenow-partnership-exceeds-membership-expectations/#comments Thu, 21 Aug 2014 12:00:12 +0000 http://www.thetruthaboutcars.com/?p=897258 Germany-based rental car company Sixt SE announced its DriveNow car-sharing venture with BMW has exceeded expectations, with profits to match. Autoblog reports DriveNow’s success is linked to cities where the service has been in operation for at least a year, with new subscriptions coming online in a manner that completely caught CEO Erich Sixt off-guard: […]

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Germany-based rental car company Sixt SE announced its DriveNow car-sharing venture with BMW has exceeded expectations, with profits to match.

Autoblog reports DriveNow’s success is linked to cities where the service has been in operation for at least a year, with new subscriptions coming online in a manner that completely caught CEO Erich Sixt off-guard:

We’ve been surprised about the explosion of new subscriptions, which has helped boost revenue. We didn’t expect such a dramatic rise in membership.

DriveNow, operating in five German cities and San Francisco, saw its membership jump from 215,000 at the end of 2013, to 300,000 at present. However, COO Julian zu Putlitz expects the service — which allows members to rent BMW’s X1 and 1 Series vehicles, as well as models from MINI — to see a “small-to-medium, single-digit” million-euro loss in 2014 due to startup costs.

As for the future, Sixt and BMW are in talks to expand DriveNow to 25 locations in Europe and the United States within the next five years.

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Daimler-Nissan JV To Build Next-Gen CLA, Unnamed A-Class At Mexican Plant http://www.thetruthaboutcars.com/2014/06/daimler-nissan-jv-to-build-next-gen-cla-unnamed-a-class-at-mexican-plant/ http://www.thetruthaboutcars.com/2014/06/daimler-nissan-jv-to-build-next-gen-cla-unnamed-a-class-at-mexican-plant/#comments Tue, 24 Jun 2014 11:00:16 +0000 http://www.thetruthaboutcars.com/?p=850794 Aside from Infiniti sharing engines with Mercedes, the Daimler-Nissan joint venture will also lead to production of the next-gen CLA and an A-Class sedan at Nissan’s plant in Aguascalientes, Mexico. Automotive News Europe reports Daimler’s board will approve the decision within the next two weeks. Although the GLA crossover was supposed to go over to […]

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2014 Mercedes CLA

Aside from Infiniti sharing engines with Mercedes, the Daimler-Nissan joint venture will also lead to production of the next-gen CLA and an A-Class sedan at Nissan’s plant in Aguascalientes, Mexico.

Automotive News Europe reports Daimler’s board will approve the decision within the next two weeks. Although the GLA crossover was supposed to go over to Mexico originally, insiders claim that the CLA and the unnamed A-Class will take its place.

Production is set to begin in time for exportation to the United States in 2017, with an Infiniti compact — built upon Mercedes’ FWD bones — to join the CLA and A-Class. Annual output is expected to be around 100,000 to 150,000 units.

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Renault, Caterham Part Ways Over Direction Of Alpine Joint Venture http://www.thetruthaboutcars.com/2014/06/renault-caterham-part-ways-over-direction-of-alpine-joint-venture/ http://www.thetruthaboutcars.com/2014/06/renault-caterham-part-ways-over-direction-of-alpine-joint-venture/#comments Wed, 11 Jun 2014 13:00:01 +0000 http://www.thetruthaboutcars.com/?p=842033 Though a new Alpine is set to come out in 2016, the new car will be lacking in English blood: Renault and Caterham have broken off their engagement to revive the historic French marque. Autoblog reports the joint venture dissolved amid tensions over development of a pair of sports cars that were set to debut […]

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Though a new Alpine is set to come out in 2016, the new car will be lacking in English blood: Renault and Caterham have broken off their engagement to revive the historic French marque.

Autoblog reports the joint venture dissolved amid tensions over development of a pair of sports cars that were set to debut in 2016. Renault and Caterham first came together to build the cars in November 2012. At the time, the latter’s Formula One team ran the former’s engines, and team owner Tony Fernandes wanted to do the same for the Caterham 7. From there, the Société des Automobiles Alpine Caterham was formed under the roof of the Alpine factory in Dieppe, France, and had delivered the A110-50 concept in the brief time the two entities worked together.

Regarding the future, both automakers will pursue building their sports cars separately, though they hinted that “other forms of cooperation” could come about given the right conditions. The joint venture will be renamed Société des Automobiles Alpine during a general meeting this month.

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Renault, LG Chem Sign MOU To Develop Long-Range Battery Technology http://www.thetruthaboutcars.com/2014/05/renault-lg-chem-sign-mou-to-develop-long-range-battery-technology/ http://www.thetruthaboutcars.com/2014/05/renault-lg-chem-sign-mou-to-develop-long-range-battery-technology/#comments Wed, 28 May 2014 11:00:52 +0000 http://www.thetruthaboutcars.com/?p=833473 With most EVs getting around 100 miles on a single charge from their battery packs, such vehicles are more suited for the downtown core than a trip to the mountains. However, Renault and LG Chem are looking toward boosting range toward Tesla-like levels, together. Autoblog Green reports Renault’s CCO Thierry Bolloré and LG Chem’s battery […]

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Renault LG Signing Ceremony

With most EVs getting around 100 miles on a single charge from their battery packs, such vehicles are more suited for the downtown core than a trip to the mountains. However, Renault and LG Chem are looking toward boosting range toward Tesla-like levels, together.

Autoblog Green reports Renault’s CCO Thierry Bolloré and LG Chem’s battery chief Kwon Young-soo signed a memorandum of understanding to develop battery range technology through the use of the latter company’s high-energy-density batteries. LG makes the batteries for EVs and PHEVs, including the Chevrolet Volt, and will supply packs to 20 automakers in 2015, double the business it does currently.

Meanwhile, Renault may use the results of its joint-venture with LG Chem to improve the range — and therefore, potential sales — of its Twingo and other Z.E. EVs. The Twingo was recently shelved in part to less-than-expected demand for the city car, with no word on when the EV will go back on sale.

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BAIC, Siemens Team Up For Green Joint Venture In Beijing http://www.thetruthaboutcars.com/2014/04/baic-siemens-team-up-for-green-joint-venture-in-beijing/ http://www.thetruthaboutcars.com/2014/04/baic-siemens-team-up-for-green-joint-venture-in-beijing/#comments Thu, 24 Apr 2014 13:00:32 +0000 http://www.thetruthaboutcars.com/?p=809266 Though Siemens won’t be putting their name upon the body of BAIC C70G for a DTM entry anytime soon, the Chinese automaker and German industrial giant will come together for an green vehicle-related joint venture in Beijing. Automotive News Europe reports the joint venture — Beijing Siemens Automotive E-Drive System Company — will mass produce […]

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Siemens Audi A4 DTM

Though Siemens won’t be putting their name upon the body of BAIC C70G for a DTM entry anytime soon, the Chinese automaker and German industrial giant will come together for an green vehicle-related joint venture in Beijing.

Automotive News Europe reports the joint venture — Beijing Siemens Automotive E-Drive System Company — will mass produce motors and inverters for hybrid and electric vehicles beginning in 2015, with small-batch and prototype production coming online sometime this year.

Once underway in full, the joint venture will push 100,000 inverters out the door annually, with BAIC being the first recipients of the Sino-German technology. There, the inverters will find a home in the automaker’s S, C and L series vehicles, and projected power output for each model will range from 45 to 200 kW (60 to 268 horsepower).

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New PSA Boss Tavares Prepares To Rebuild Company http://www.thetruthaboutcars.com/2014/04/new-psa-boss-tavares-prepares-to-rebuild-company/ http://www.thetruthaboutcars.com/2014/04/new-psa-boss-tavares-prepares-to-rebuild-company/#comments Mon, 14 Apr 2014 14:15:58 +0000 http://www.thetruthaboutcars.com/?p=797482 Though PSA Peugeot Citroen secured funding in a three-way deal between itself, the French government and Dongfeng, new boss and former Renault COO Carlos Tavares has a hard road ahead of him as he rebuilds the ailing automaker. Reuters reports Tavares will focus using the joint venture it shares with Dongfeng to go after 1.5 […]

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Carlos Tavares

Though PSA Peugeot Citroen secured funding in a three-way deal between itself, the French government and Dongfeng, new boss and former Renault COO Carlos Tavares has a hard road ahead of him as he rebuilds the ailing automaker.

Reuters reports Tavares will focus using the joint venture it shares with Dongfeng to go after 1.5 million sales by 2020, bring exports to Southeast Asia and establish a research center. He will also tighten up both working capital and the number of models sold in each market, as well as squeeze savings from PSA’s suppliers.

However, development woes, pricing issues on some models, and the use of heavy discounts and incentives are all roadblocks on Tavares’ “Back in the Race” plan expected to be issued in full Monday, as well as currency challenges in Latin America and Russia and lower-cost products from around Asia.

As part of the plan, Tavares is expected to halve the number of models it currently offers. On the bright side, the 308 and 2008 both delivered a combined 5.2 percent sales increase in the first two months of 2014, as well as an 8.5 percent Q1 2014 gain over PSA’s home market.

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Ford Cuts 950 Jobs In Russia Due To Weakening Ruble, Demand http://www.thetruthaboutcars.com/2014/04/ford-cuts-950-jobs-in-russia-due-to-weakening-ruble-demand/ http://www.thetruthaboutcars.com/2014/04/ford-cuts-950-jobs-in-russia-due-to-weakening-ruble-demand/#comments Thu, 03 Apr 2014 13:21:10 +0000 http://www.thetruthaboutcars.com/?p=786689 Two plants in Ford’s joint venture with Russian manufacturer OAO Sollers will experience job cuts as a result of a weakening ruble and decreasing demand by customers in the local market. Bloomberg says 700 positions in St. Petersburg and 250 temporary positions in the Tartarstan region will be let go by June, while production in […]

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Two plants in Ford’s joint venture with Russian manufacturer OAO Sollers will experience job cuts as a result of a weakening ruble and decreasing demand by customers in the local market.

Bloomberg says 700 positions in St. Petersburg and 250 temporary positions in the Tartarstan region will be let go by June, while production in the former will lose one shift. The cuts were caused by “the rapid and significant depreciation of the ruble, falling industry sales and a consumer shift away” from small cars toward large SUVs according to Ford, who also reassured that the joint venture would continue to remain committed to the Russian market.

As for the current state of things, sales fell 4 percent in the first two months of 2014, following a 5.5 percent decline in 2013 to 2.78 million vehicles, while the ruble lost 13 percent of its value against the dollar within the last 12 months.

The St. Petersberg plant will also shut down for over four weeks before single-shift production and painting begin June 9. The plant currently builds the Mondeo and Focus.

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Volvo, Geely Aiming For BMW, Mercedes With A-Segment Lineup http://www.thetruthaboutcars.com/2014/03/volvo-geely-aiming-for-bmw-mercedes-with-a-segment-lineup/ http://www.thetruthaboutcars.com/2014/03/volvo-geely-aiming-for-bmw-mercedes-with-a-segment-lineup/#comments Fri, 07 Mar 2014 17:52:49 +0000 http://www.thetruthaboutcars.com/?p=767329 Volvo, with parent company Geely, is developing a lineup of premium A-segment vehicles aimed at the BMW 1 Series and Mercedes A-Class. Edmunds reports the upcoming lineup will include a five-door crossover, a sedan and a hatchback, and will also offer the opportunity for Geely to sell their wares in the United States while offering […]

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Volvo, with parent company Geely, is developing a lineup of premium A-segment vehicles aimed at the BMW 1 Series and Mercedes A-Class.

Edmunds reports the upcoming lineup will include a five-door crossover, a sedan and a hatchback, and will also offer the opportunity for Geely to sell their wares in the United States while offering a similar lineup in its home market.

Under the bonnet will be a range of engines driving either the front or all four wheels, including gasoline, diesel and their respective hybrid pairings, all based upon Volvo’s current four-cylinder engine family.

The A-segment joint venture will be based upon the upcoming Compact Modular Architecture developed in their China Euro Vehicle Technology research and development center, with the first cars due in 2017 at the earliest.

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China To Relax Restrictions On Foreign Joint Venture Ownerships http://www.thetruthaboutcars.com/2014/02/china-to-relax-restrictions-on-foreign-joint-venture-ownerships/ http://www.thetruthaboutcars.com/2014/02/china-to-relax-restrictions-on-foreign-joint-venture-ownerships/#comments Fri, 21 Feb 2014 18:00:41 +0000 http://www.thetruthaboutcars.com/?p=750969 China’s Ministry of Industry and Information Technology, in line with President Xi Jinping’s desire for opening the domestic economy to private and foreign investors, plans to relax restrictions on foreign ownership of joint ventures with local automakers in the face of those warning such a move would be the beginning of the end of the […]

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China’s Ministry of Industry and Information Technology, in line with President Xi Jinping’s desire for opening the domestic economy to private and foreign investors, plans to relax restrictions on foreign ownership of joint ventures with local automakers in the face of those warning such a move would be the beginning of the end of the Chinese local auto industry.

Automotive News China reports the organization will join their fellow ministries in developing a plan to implement the proposed deregulation sometime in the future. Currently, foreign companies are mandated to form joint ventures with local companies in order to do business in China, while foreign shareholders are barred from owning more than half of said ventures.

Meanwhile, the China Association of Automobile Manufacturers, representing local interests, voiced their opposition in a statement following the announcement by ministry spokesman Xiao Chunquan:

Relaxing the current foreign ownership restrictions will wipe out Chinese brands. Foreign companies can totally use the competitive advantage of their global supply chains to support a price strategy to kill Chinese brands in the cradle.

The death spiral may have already begun, however, as Chinese consumers opt for foreign makes such as Buick, Volkswagen and Peugeot. Local brands lost 4.9 percent market share in 2013 from the year before, hovering around 38.4 percent as Volkswagen AG became the No. 1 foreign automaker over General Motors during a prosperous run by all foreign manufacturers bolstered by higher industry sales.

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PSA Peugeot Citroen, Dongfeng, France Reach Outline Deal http://www.thetruthaboutcars.com/2014/02/psa-peugeot-citroen-dongfeng-france-reach-outline-deal/ http://www.thetruthaboutcars.com/2014/02/psa-peugeot-citroen-dongfeng-france-reach-outline-deal/#comments Thu, 13 Feb 2014 16:30:36 +0000 http://www.thetruthaboutcars.com/?p=740649 PSA Peugeot Citroen, Dongfeng and the French government have reached an outline deal to raise $5.5 billion in capital through a planned share sale in a last-ditch effort by PSA to remain alive after General Motors walked out of a similar deal over the Iranian market last year. Reuters reports the deal will be presented […]

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PSA Peugeot Citroen, Dongfeng and the French government have reached an outline deal to raise $5.5 billion in capital through a planned share sale in a last-ditch effort by PSA to remain alive after General Motors walked out of a similar deal over the Iranian market last year.

Reuters reports the deal will be presented to the Peugeot board February 18, at which point the board will sign a non-binding memorandum of understanding that same day according to sources closest to the matter. The plan would allow Dongfeng and the French government to each own 14 percent of PSA, while the two automakers retain and expand upon their alliance toward their goal of penetrating further into the Southeast Asia market.

With most of the plan settled, the only item needed to pull everything together is an independent chairman who will oversee the plan’s implementation. The French government wants senior civil servant Louis Gallois, brought aboard under the existing agreement between the state and PSA since 2012, as their champion, while Dongfeng is pushing for French businesswoman and independent Peugeot director Patricia Barbiezt to fulfill the role.

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Automotive Lobbyists in China Opposing Rule Change in Foreign Ownership http://www.thetruthaboutcars.com/2013/12/automotive-lobbyists-in-china-opposing-rule-change-in-foreign-ownership/ http://www.thetruthaboutcars.com/2013/12/automotive-lobbyists-in-china-opposing-rule-change-in-foreign-ownership/#comments Fri, 06 Dec 2013 12:00:18 +0000 http://www.thetruthaboutcars.com/?p=672618 The automotive industry lobby group China Association of Automobile Manufacturers is at loggerheads with Beijing over a rule change proposal that would ease restrictions on foreign ownership of auto manufacturing ventures. The fear, according to CAAM Secretary General Dong Yang, is that should the restraining bolt be removed, the local industry would lose control of […]

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2014 Buick Regal GS

The automotive industry lobby group China Association of Automobile Manufacturers is at loggerheads with Beijing over a rule change proposal that would ease restrictions on foreign ownership of auto manufacturing ventures. The fear, according to CAAM Secretary General Dong Yang, is that should the restraining bolt be removed, the local industry would lose control of the joint ventures they currently hold, if not the Chinese auto industry itself.

China’s Ministry of Commerce announced that they are considering relaxing foreign investment rules in the country’s automotive sector. Currently, foreign manufacturers must form a joint partnership with local automakers in order to build their cars for the Chinese market, all in the hope that the locals learn a thing or two about technology and management expertise so that they may, in turn, be competitive on a global scale. On top of this, foreign automakers are only allowed to own up to half of said joint partnerships, a framework that is not mandated for doing business in other countries.

While the ministry sees the current setup as imbalanced, Dong views relaxing the rules would be the difference between life and death, urging Beijing to carefully and deliberately reconsider. Alas, the point may be moot: only 30 percent of Chinese consumers choose the home team when it comes to car ownership.

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Geely & Volvo to Jointly Develop Cars, Volvo Pilot Production Begins in Chengdu, Two More Chinese Volvo Factories Approved http://www.thetruthaboutcars.com/2013/08/geely-volvo-to-jointly-develop-cars-volvo-pilot-production-begins-in-chengdu-two-more-chinese-volvo-factories-approved/ http://www.thetruthaboutcars.com/2013/08/geely-volvo-to-jointly-develop-cars-volvo-pilot-production-begins-in-chengdu-two-more-chinese-volvo-factories-approved/#comments Fri, 23 Aug 2013 20:50:56 +0000 http://www.thetruthaboutcars.com/?p=500630 Geely Automobile Holdings Ltd., owned by the same Chinese company that bought Volvo Cars in 2010, announced that it will soon start developing cars jointly with the Swedish company. The cars will be intended for the Chinese and export markets and will go on sale in 2015. Geely has ambitions to be China’s largest car […]

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Pilot production begins at Volvo's Chengdu plant in China

Pilot production begins at Volvo’s Chengdu plant in China

Geely Automobile Holdings Ltd., owned by the same Chinese company that bought Volvo Cars in 2010, announced that it will soon start developing cars jointly with the Swedish company. The cars will be intended for the Chinese and export markets and will go on sale in 2015. Geely has ambitions to be China’s largest car exporter. Working jointly with Volvo is seen as giving Geely products some of Volvo’s reputation for safety and reliability.

“We have entered into actual research and development stage and I believe we can see the new product in the year after next,” said Geely Chief Executive Officer Gui Sheng Yue yesterday in Hong Kong.

Zhejiang Geely Holding Group Co., bought Volvo from Ford for $1.8 billion and last year the two companies signed a memorandum to “leverage its full access” to technology to develop vehicles. Earlier this year, Volvo announced that it was going to build a joint R&D center with Geely in Gothenburg. Volvo has also started assembling test builds at its first factory in China, in Chengdu, which will have an annual capacity of 120,000 cars.

Volvo Cars also announced today that it has received approval from the Chinese national government to build two more factories in China. The assembly plant in Daqing, in northeast China, will have a capacity of 80,000 units a year and is hoped to be fully operational some time next year. The facility in Zhangjiakou will be an engine plant and it will supply the Chengdu assembly operation where actual production will begin in Q4 2013. The two assembly plants are not expected to reach capacity for a few years.

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Not Quite Live From Chengdu http://www.thetruthaboutcars.com/2011/10/not-quite-live-from-chengdu/ http://www.thetruthaboutcars.com/2011/10/not-quite-live-from-chengdu/#comments Fri, 14 Oct 2011 09:55:27 +0000 http://www.thetruthaboutcars.com/?p=414712   My fleeting 15:21  minutes of dubious fame.

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My fleeting 15:21  minutes of dubious fame.

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China: Big But Weak, Attack On The West Postponed For 5 Years http://www.thetruthaboutcars.com/2011/10/china-big-but-weak-attack-on-the-west-postponed-for-5-years/ http://www.thetruthaboutcars.com/2011/10/china-big-but-weak-attack-on-the-west-postponed-for-5-years/#comments Tue, 11 Oct 2011 13:55:48 +0000 http://www.thetruthaboutcars.com/?p=414386 The Global Automotive Forum is an annual confab of Chinese politicos, functionaries, industry leaders and wonks of the world. This year, it is in Chengdu, and the motto is “From volume leader to innovation leader.” The subhead could very well be: “What now?” Speaker after speaker bemoans the fact that China is winning by sheer […]

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The Global Automotive Forum is an annual confab of Chinese politicos, functionaries, industry leaders and wonks of the world. This year, it is in Chengdu, and the motto is “From volume leader to innovation leader.” The subhead could very well be: “What now?”

Speaker after speaker bemoans the fact that China is winning by sheer numbers, but is falling behind in the innovation race. The fractionalized Chinese car industry simply does not have the wherewithal to keep up with the big multinationals. No longer are the multinationals afraid of being frozen out. The power shift towards  the multinationals is so pronounced that Jay Kunkel, China chief of German systems supplier Continental, can smugly remark: “Strategies are one thing, but the secret is in the doing.”

Continental had nearly been taken down after a not so friendly takeover by Schaeffler Group in 2008 – definitely the wrong time for such a maneuver. Now, Continental’s Chinese CEO can dispense haughty advice, and the audience applauds.

Speaker after speaker says that the ICE will likely be around for a while, and that incremental improvements in efficiency, weight, rolling resistance etc. are beyond the grasp of Chinese companies. Functionaries of Chinese ministries openly remark that the Chinese car industry is “big but weak” – no lightning strikes from the sky, and nobody drags them off to a slave labor camp. Instead, the audience applauds.

The Chinese car industry is being out-researched, out-developed, and out-engineered by the big industry behemoths. Most of all, China is being outspent. The big companies usually spend 5 percent of sales for R&D, we hear today. Chinese makers spend maybe 2 percent of their much smaller sales, and that “mostly on application research and rarely on future technologies, “ as one panelist remarks. (Applause.)

Even the wages aren’t as low as they used to be. One panelist comments that an engineer hour in Shanghai now costs the same as in Rüsselsheim. Another says that German carmakers don’t have to go all the way to China for low wages. They get the same in Slovakia, 8 truck hours from Frankfurt. None of the Chinese registers a veto. Someone adds: “Yes, and most of those Chinese engineers are under 25.” The Chinese industrial giant looks a bit pale around the nose today in Chengdu.

As far as the feared Chinese exports go, they simply aren’t happening. Last year, China exported less than 3 percent of its car production. This year will be about the same. China imports more cars than it exports. The big joint ventures say they don’t need exports, China is a big enough market. Smaller makers like Chery must export to round out the small domestic volume. They focus on markets like South America and Russia, while admitting that their sales and service networks there are weak. Lu Jian Hui, Deputy General Manager of Chery says any push into Europe or America has to wait “until after the end of the 12th Five Year Plan.” That ends in 2015.

One thing is utterly perplexing: Functionary after functionary demands more local brands, both from the independents and from the joint ventures. China is awash in car brands. There are small carmakers that have more brands than GM in the bad old days. We are in a land where the exact number of car makers remains a mystery (the guesstimate used to be somewhere above 100, today, it grows to 150 without anybody complaining). We are at a meeting where frequent mentions of “consolidation” elicit round after round of applause. Nevertheless, they demand more brands. Privately, Western wonks say that establishing a car brand takes many decades and untold sums of money and patience. They snicker that Western makers shed brands instead of adding them. Publicly, nobody questions the sanity of the avalanche of Chinese brands. Except for one speaker, who coyly shows a slide that has Saturn on it, as an example that new brands don’t have assured success. Too subtle. Applause from the audience.

PS: On Thursday, yours truly will host a roundtable with members of the Chinese and foreign press. We’ll discuss how the foreign media sees the Chinese auto industry – if it sees it at all.

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Surprise: Foreigners Get The Upper Hand In China http://www.thetruthaboutcars.com/2011/08/surprise-foreigners-get-the-upper-hand-in-china/ http://www.thetruthaboutcars.com/2011/08/surprise-foreigners-get-the-upper-hand-in-china/#comments Tue, 23 Aug 2011 18:42:33 +0000 http://www.thetruthaboutcars.com/?p=408472 Conventional wisdom says that the Chinese will suck all the know-how out of their foreign joint venture partners, and once they are through with them, they’ll discard them like Dracula a bloodless virgin. As a thank you, the Chinese will flood foreign countries with cheap Chinese cars. The trouble with conventional wisdom is that it […]

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Conventional wisdom says that the Chinese will suck all the know-how out of their foreign joint venture partners, and once they are through with them, they’ll discard them like Dracula a bloodless virgin. As a thank you, the Chinese will flood foreign countries with cheap Chinese cars. The trouble with conventional wisdom is that it is rarely true, or wise. Actually, the Chinese are now worried that the foreigners amass too much power. “Foreign car producers have begun to take more control of their joint ventures in China, sidelining their Chinese counterparts from business partners to factory providers,” China Daily writes today. China Daily is owned by the Chinese government.

When I came here in 2004, executives of German car companies cried into their third beer at Schindler’s Tankstelle or Paulaner Bräuhaus in Beijing: “In eight years, they’ll throw us all out.” Seven years later, nobody is thrown out. More joint ventures are forged, lately with PSA and Fiat. The contract between Volkswagen and SAIC, signed in October 1984 in  Beijing’s Great Hall of The People with Chinese Premier Zhao Ziyang and German Chancellor Helmut Kohl watching, was for 25 years. It did not come due until 2010. Nevertheless, in 2002, the two parties already had quietly extended the contract for another 20 years, which now lasts until 2030. Nobody is going anywhere.

Last week, when we reported about Volkswagen extending its 40 percent holdings in the joint venture with FAW (founded 1990) to 49 percent, China Daily was complaining that the foreigners are flexing their muscles. They cited Zeng Zhiling, director of JD Power Asia Pacific Forecasting who said that “Chinese automakers are still in the weaker position at their joint ventures.”

According to Chinese rules, you need to form a joint venture for car manufacturing. Two crucial areas of the business do not need a joint venture: Parts manufacturing and the selling of cars. If I would be crazy enough, I could buy 100 percent of a Chinese parts manufacturer or a Chinese car dealership tomorrow. Being a Wholly Foreign Owned Enterprise (WFOE), I can transfer money in, and most importantly out of China at will. Once Chinese taxes are paid, profits can be sent out of the country. I don’t have to share my IP with nobody.

Foreign carmakers have built their own parts in their own Chinese plants for a long time. The whole Delphi operation was GM’s  100 percent owned Chinese operation. Too bad that they lost most of Delphi in bankruptcy and had to sell the morsels to the Chinese. Ford’s Visteon is doing great in China, France’s Valeo is doing great in China, Toyota’s Denso is doing great in China. Many foreign car companies operate 100 percent owned parts makers in China and sell the parts to their own JVs.

Now, foreign carmakers are tightening the grip on the other side of the Chinese car business: Car wholesale and retail.

According to China Daily, “FAW-VW Automobile Co plans to establish its own logistic and sales networks, a key indicator of a potential takeover. The company has already started to reassess contracts with secondary dealers in more than 30 cities.”

The paper heard that “Mercedes-Benz’s Beijing unit and Mercedes-Benz China are also rumored to have started a restructuring of their sales channels. Industry insiders believe that Daimler AG has played a key role in the process.”

Daimler has always been big on controlling the retail channel. Volkswagen has been quietly buying up its wholesalers in many key markets and owns several large dealer groups in Europe. When Volkswagen bought Porsche Holding in Salzburg, they bought one of the largest car dealer groups in Europe. The PHS network covers all of Europe and reaches all the way to China. Last year, PHS alone moved 565,000 vehicles worth €12.78 billion. That’s more than what Russia’s Avotovaz or China’s BYD produced last year.

Carmakers always feared the purchasing power of large dealer chains. Before they get too big and too powerful, automakers rather sell their own cars and control the value chain from making parts to the final crusher. Most of the money is not made making and selling cars, but financing them, insuring them, fixing them, providing parts for them, servicing them, reselling them as used cars. In Europe, China, and many other countries, no law is keeping automakers from entering that field.  The foreigners have always controlled the technology. Once they control the parts supply and the retail end, assembling the cars turns into a technicality.

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Financial Times Reveals New Franco-Chinese Car Collusion http://www.thetruthaboutcars.com/2011/03/financial-times-reveals-new-franco-chinese-car-collusion/ http://www.thetruthaboutcars.com/2011/03/financial-times-reveals-new-franco-chinese-car-collusion/#comments Wed, 23 Mar 2011 17:27:17 +0000 http://www.thetruthaboutcars.com/?p=388395 The Financial Times has revealed an insidious plot: “Foreign carmakers wishing to build new plants or add capacity in China’s burgeoning car market are being told by the government that if they wish to expand, they must develop a low-cost local car brand.” It must be a REALLY slow news day (it is). Our esteemed […]

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The Financial Times has revealed an insidious plot: “Foreign carmakers wishing to build new plants or add capacity in China’s burgeoning car market are being told by the government that if they wish to expand, they must develop a low-cost local car brand.”

It must be a REALLY slow news day (it is). Our esteemed readers have known of this trend for a long time. First out of the gate with a local car brand actually was GM, which started the BaoJun  brand last year at their SAIC-GM-Wuling joint venture.  Ford has been rumored to be working on a standalone Chinese brand also. Nissan and Honda are in the game. Volkswagen is rumored to be working on a Chinese brand. Actually, it came so thick that in December, we couldn’t help it and headlined: “From Venus to Everus: Foreign Makers Create Fake Chinese Brands.”

There sure has been a lot of talk and action on this front for a long time.  But “must”? I haven’t heard of any guns put to the heads of captains of joint ventures.

Indeed, the FT could find no smoking gun and writes: “While Beijing has spoken of promoting local car brands, no central government ruling or written policy is known to exist on the subject. “

According to the  FT: “French producer PSA Peugeot Citroën, which is pushing its cars upmarket globally and, until recently, rejected the notion of producing low-cost cars, confirms that it is now studying the possibilities.”

That also is old hat. TTAC readers have long known of a not very enlightened make-low-cost-PSA-cars-in-China-and-export-them-to Russia project since last year. And doesn’t PSA want to revive SIMCA?

Anyway, it sure looks like the FT fell victim to a gabby Frenchman again.

Says the FT: “Philippe Varin, the group’s chief executive, recently told the Financial Times that developing a local brand was “part of the deal” in its new joint venture with Chongqing-based producer Chang’an, which is installing capacity to produce up to 200,000 cars a year from 2012 in Shenzhen. He said that Peugeot was considering offering some of the low-cost cars for export to other markets, but added that the French group had yet to make a final decision.”

Folks, I’ve said it before and I say it again: These “low cost Chinese cars” are not for China’s farmers. They are (read Varin’s last sentence) for export. One of my first articles I wrote for TTAC in 2008 was headlined “Chinese Government: Our Car Exports Suck.” Exports still suck, now more than in 2008. The Chinese Government is anything but stupid. They are well aware that their own car companies are yet unable to build a car that will survive in the murderous world market.  Enter the fake Chinese brand. Cars built with approved overseas technology. But the car is no longer licensed from a foreign entity that forbids export. Bingo.

Now please, FT, write it down. Thank you.

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China Thinks Aloud About Dropping The Joint Venture Requirement http://www.thetruthaboutcars.com/2010/11/china-thinks-aloud-about-dropping-the-joint-venture-requirement/ http://www.thetruthaboutcars.com/2010/11/china-thinks-aloud-about-dropping-the-joint-venture-requirement/#comments Wed, 10 Nov 2010 16:11:49 +0000 http://www.thetruthaboutcars.com/?p=372060 I came to China first in 2004 on a job for Volkswagen. Back when, and years thereafter, the foreigners at the joint ventures agreed (latest after the third beer at Paulaner) that eventually, their days will be numbered. “Once the Chinese have learned enough, they’ll kick us out,” was the lament. That was six years […]

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I came to China first in 2004 on a job for Volkswagen. Back when, and years thereafter, the foreigners at the joint ventures agreed (latest after the third beer at Paulaner) that eventually, their days will be numbered. “Once the Chinese have learned enough, they’ll kick us out,” was the lament. That was six years ago, and no sign of an expulsion from the Chinese paradise yet. On the contrary: The Chinese might invite the foreigners in for good. They are thinking about dropping the 50:50 joint venture requirement that forces foreign automakers to team up with local manufacturers.

Liu Shijin, Deputy Director of the State Council Development Research Center, said at the “Sino-German automobile industry forum” that getting rid of the 50:50 joint venture requirement would enhance market competition. Forming a joint venture by a new entrant is already quite hard, simply due to the fact that all the attractive Chinese brides are married.

A Deputy Director of a Chinese State Council Development Research Center usually doesn’t make off-the-cuff remarks. Gregoire Olivier, President of PSA Asia-Pacific Operations, immediately signaled that he would be very pleased if that would happen. And he’s not alone.

The 50:50 rule had been in place since 1994. “An expert with the State Council making such remarks in public possibly indicates that senior government officials have changed their attitude toward the rule,” muses Gasgoo, and they are right.

According to Gasgoo “foreign vehicle manufacturers all start to criticize the policy, saying that the 50:50 equity proportion is another protective behavior in international trade.” I haven’t heard them openly criticizing the rule, but if a Chinese news outlet says so …

Executives of foreign vehicle manufacturers often said the policy has decreased the efficiency of joint venture investment. The complex, and often byzantine decision-making process in a JV is not conducive to making quick decisions necessary to seize market opportunities.

Large domestic manufacturers, of course are against it. They are worried that foreign manufacturers will be able to control the Chinese market more easily.

The thinking is that in the long run, efficiency and expediency will win, and that the 50:50 rule will fall. This would open the door to more innovation (the juicy parts of technology are often kept from JV partners) and it would also open the gates to Chinese exports of cars with foreign brand cachet. Making cars is one of the few areas where a joint venture is required. You can make parts all by yourself, for instance. The Chinese are first and foremost business people, “and if it works, we’ll call it socialism,” or so the saying goes.  And of course, this being China, no favor granted goes without another favor expected. What will be the price for such a decision?

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The Beginning Of The End Of Foreign Car Joint Ventures In China? http://www.thetruthaboutcars.com/2010/04/the-beginning-of-the-end-of-foreign-car-joint-ventures-in-china/ http://www.thetruthaboutcars.com/2010/04/the-beginning-of-the-end-of-foreign-car-joint-ventures-in-china/#comments Sun, 18 Apr 2010 20:44:45 +0000 http://www.thetruthaboutcars.com/?p=353136 End of last year, we reported that the Chinese government was publicly thinking about new regulations to shift a large chunk of cars bought by the government to home-grown brands. We are talking about a serious amount of money here. The government is the biggest customer of cars in China, with an annual budget of […]

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End of last year, we reported that the Chinese government was publicly thinking about new regulations to shift a large chunk of cars bought by the government to home-grown brands. We are talking about a serious amount of money here. The government is the biggest customer of cars in China, with an annual budget of around $15b. Government purchases influence the whole market. To buy Chinese.

The way laws are written in China is a bit byzantine, but sometimes more democratic than one might imagine. An idea is floated in the media. Discussions ensue. The temperature is taken. If people salute when the flag goes up the pole, a law becomes reality. If there is opposition from all corners, the law quietly goes away and isn’t heard of any longer. Which happens with regularity.

The “buy domestic” law was dormant until a few days ago. “Chinese officials will never give up their Audi or Mercedes” was the popular wisdom amongst foreign car executives. Until last Friday, that is. Then, an article appeared in China Daily, which is pretty much the voice of the government. According to this article, the authorities are no longer “mulling new regulations” as the code for testing the waters goes. Now, the government “prepares revisions to regulations on official car procurement.”

Uh, oh. There will be a lot of hectic meetings at foreign joint ventures on Monday.

When the Chinese government is beyond the “mulling” stage, it’s pretty much a done deal. And when China Daily says “the new regulation is slated to be launched in June,” then you can be 90 percent sure that it will happen in June.

The new regulation will mandate that government offices “purchase more than 50 percent domestically branded cars for their fleets in the future.” Sounds benign so far. But there is some fine print, dictating what kind of cars government offices may or may not buy.

Those guidelines, says China Daily, “basically exclude most brands made by joint ventures.”

Ooops.

For instance, current regulations, issued in 2004, require ministerial level cars to have an engine displacement of not more than 3.0 liter and a price lower than 450,000 yuan ($66,000) per unit. A vice-ministerial level car can also have 3 liters of displacement, but should cost less than 350,000 yuan ($51,000).

The new rules would degrade the engine of a ministerial-level official cars to 2.5 liters max. The price must be below 350,000 yuan ($51,000) per unit. A vice-ministerial level official may only be driven around in a 2.5 liter car that costs not more than 300,000 yuan ($44,000).

Lower ranking officials must economize down from currently 250,000 yuan ($37,000) to 160,000 yuan ($23,000) and must make do with an engine no larger than 1.8 liter. We are talking serious volume here. This will hurt.

With those new regulations in place, foreign producers will lose interest in bidding,” said Xue Xu, professor at the school of economics of Peking University.

“The new regulation will provide domestic brands a golden opportunity to expand and compete with foreign rivals in the world’s biggest auto market,” said Dong Yang, secretary-general of the China Association of Automobile Manufacturers.

Discrimination of foreigners? The interesting part of this is that the government hurts itself. Nearly all of the major joint ventures with foreign brands are in the hands of state owned companies. The home-grown brands are to a large degree in private hands.

Take the Audi’s A6. It pretty much turned into the official car of China. As Business Week writes: “Spend any time in Beijing, and you will doubtless see Communist Party bigwigs getting chauffeured around in black Audi A6 sedans. A big government and consumer following for the A6 has turned Volkwagen’s high-end brand into the luxury market leader.”

The Audis are made locally in a joint venture with FAW, a state owned company. Audi said that China would be its biggest market at the end of this year. Next year will be different, if the new law goes into effect.

The proposed law also sheds new light on the Volvo purchase by Geely. When the deal was announced, we commented that “a Volvo owned by Geely may profit big from a possible edict by the Chinese government.” A Volvo owned by a Chinese company is a Chinese company.

After the deal was signed, Li Shufu, chairman of Zhejiang Geely, said that he would use Audi’s business model in China to foster Volvo’s future development here. China Daily interprets this as “a new focus on the world’s biggest government procurement cake.” Statistics from China Machinery Industry Federation show that in 2008, cars accounted for 20 percent of the government’s shopping list.

Government purchases not only account for 8 percent of the Chinese car market. The is a huge knock-on effect. A car driven by high ranking officials gives face to other customers. “Rich Chinese prefer the officials’ car models which indicate car owners’ prestige and provide them with more psychological satisfaction, and demonstrate the difference between them and ordinary people on the street,” said Xiang Hansong, an auto industry watcher cited in China Daily.

Domestic brands like Chery, Geely, Chang’an, Great Wall and BYD are jockeying for slices of the government pie. The edict-in-the-making also explains why government owned auto makers, which so far mostly relied on joint ventures, suddenly display a great interest in developing their own brands. The law also will prod carmakers to go on an acquisition tour in the West, to buy brands that have high prestige and can be made locally without half of the profits going to the joint venture partner.

The law can mean two things: It can move joint ventures to giving the government a better deal, good old Chinese bargaining. Or it could be the first step towards slowly freezing the joint venture partners out of the country.

When I came here 6 years ago, high ranking executives in foreign joint ventures declared after the 5th beer: “In eight years, the Chinese government will want us out.” Well, we have two more years to go on this prediction, inebriated or not.

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(When) Will China Boot Foreign Car Manufacturers? http://www.thetruthaboutcars.com/2009/12/when-will-china-boot-foreign-car-manufacturers/ http://www.thetruthaboutcars.com/2009/12/when-will-china-boot-foreign-car-manufacturers/#comments Thu, 17 Dec 2009 11:11:06 +0000 http://www.thetruthaboutcars.com/?p=339449 When I came to China for the first time in 2004, after-work congregations of foreign executives who worked for Chinese auto joint ventures usually went like this: Someone muttered into his Tsingtao beer, or something stronger: “The Chinese will want us out within eight years.” Upon hearing this, all others around him nodded gravely, and […]

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NOFORN in Chinese. Picture courtesy angelgracia.com

When I came to China for the first time in 2004, after-work congregations of foreign executives who worked for Chinese auto joint ventures usually went like this: Someone muttered into his Tsingtao beer, or something stronger: “The Chinese will want us out within eight years.” Upon hearing this, all others around him nodded gravely, and another round was ordered. Over the years, more and more expats were sent home to Detroit, Wolfsburg, and Aichi. The silly “twin” system (a foreigner and a Chinese on the same job) stopped. Of course, the open secret was never officially discussed, but the outcome appeared to be inevitable: The days of the foreigners are numbered.

It will be 2010 within a few weeks, and the foreign (U.S., European; Japanese) joint ventures are still seemingly safely ensconced in China. As reported umpteen times at TTAC, China has become a strategically important market for most auto manufacturers. Nobody thinks anymore that come 2012, China will kick all joint venture partners out.

Yet, here is the first step in that general direction:

By 2015, China wants half of passenger cars, including sport utility vehicles, sold in China to be self-developed by Chinese automakers, the Shanghai Securities News says (via Gasgoo.) No sources are named, but the paper is owned by the Chinese government.

50 percent homegrown by 2015 is no ambitious goal. Currently, 44 percent of all passenger cars sold in China don’t carry a foreign badge. Six percent more in 5 years, big deal.

With sedans, the matter becomes more interesting. Indigenous sedans hold a 29 percent share of the Chinese market, according to official data cited in the report. The Chinese government wants to see that share grow to 40 percent of the market by 2015.

In the first half of 2010, the Chinese government is expected to publish guidelines to the above effect. The guidelines are also expected to demand that Chinese companies hold at least 50 percent of any newly-formed joint ventures that make alternative energy cars, batteries and key components. This pours water on the hopes of foreign automakers that they could some day be the sole owner of a Chinese car manufacturer. It’s going in the opposite direction.

The bottom line is that the car executives who were crying in their beers were wrong (again…) and that the status quo will continue in the foreseeable future, albeit with a gradual, step-by-step Sinofication..

Anyway, many supposedly “domestic” cars rely heavily on foreign platforms, foreign technology, and sometimes heavy foreign design inspirations. Witness the parts of Saab being carted off to Beijing, where they will emerge as allegedly domestic cars. The total domestication of the Chinese car industry will take much, much longer. But one thing becomes clear: In the long run, China wants to stand on its own four wheels when it comes to cars. The guidelines (if they will be as reported …) will be the first official step in that direction.

Will China Boot Foreign Car Manufacturers?

When I came to China for the first time in 2004, after-work congregations of foreign executives who worked for Chinese auto joint ventures usually went like this: Someone muttered into his Tsingtao beer, or something stronger: “The Chinese will want us out within eight years.” Upon hearing this, all others around him nodded gravely, and another round was ordered. Over the years, more and more expats were sent home to Detroit, Wolfsburg, and Aichi. The silly “twin” system (a foreigner and a Chinese on the same job) stopped. Of course, the open secret was never officially discussed, but the outcome appeared to be inevitable: The days of the foreigners are numbered.

It will be 2010 within a few weeks, and the foreign (U.S., European; Japanese) joint ventures are still seemingly safely ensconced in China. As reported umpteen times at TTAC, China has become a strategically important market for most auto manufacturers. Nobody thinks anymore that come 2012, China will kick all joint venture partners out.

Yet, here is the first small step in that general direction:

By 2015, China wants half of passenger cars, including sport utility vehicles, sold in China to be self-developed by Chinese automakers, the Shanghai Securities News says (via Gasgoo.) No sources are named, but the paper is owned by the Chinese government.

50 percent homegrown by 2015 is no ambitious goal. Currently, 44 percent of all passenger cars sold in China don’t carry a foreign badge. Six percent more in 5 years, big deal.

With sedans, the matter becomes more interesting. Indigenous sedans hold a 29 percent share of the Chinese market, according to official data cited in the report. The Chinese government wants to see that share grow to 40 percent of the market by 2015.

In the first half of 2010, the Chinese government is expected to publish guidelines to the above effect. The guidelines are also expected to demand that Chinese companies hold at least 50 percent of any newly-formed joint ventures that make alternative energy cars, batteries and key components. This pours water on the hopes of foreign automakers that they could some day be the sole owner of a Chinese car manufacturer. It’s going in the opposite direction.

The bottom line is that the car executives who were crying in their beers were wrong (again…) and that the status quo will continue in the foreseeable future, albeit with a gradual, step-by-step Chinesification..

Anyway, many supposedly “domestic” cars rely heavily on foreign platforms, foreign technology, and sometimes heavy foreign design inspirations. Witness the parts of Saab being carted off to Beijing, where they will emerge as allegedly domestic cars. The total domestication of the Chinese car industry will take much, much longer. But one thing becomes clear: In the long run, China wants to stand on its own four wheels when it comes to cars. The guidelines (if they will be as reported …) will be the first official step in that direction.

NOFORN in Chinese. Picture courtesy angelgracia.com

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