While America Slept. Saturday, January 24, 2009

Bertel Schmitt
by Bertel Schmitt
while america slept saturday january 24 2009
Definitely infrequent for a few weeks while I’m in Europe, hunting the elusive Euro: An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. WAS is being filed from Berlin – when I’m in Berlin.

Idle chatter: More and more drivers of Japanese cars will have their rides die on them at an intersection, only to miraculously re-start once they mash the pedal. “Japanese carmakers have been equipping more and more of their passenger cars with a function that automatically kills the engine when the vehicle is stationary,” the Nikkei (sub) writes. Mazda aims to make the idling stop function available with some configurations of its fully remodeled Axela to be launched this summer. Toyota started offering a newly developed idling stop system on some of its Crown Comfort sedans in August. Toyota plans to install the system in a wider range of its passenger cars in the future, with a focus on Europe. Mitsubishi aims to offer some of its European model Colt cars with an idling stop system starting this year.

Ready, set, fire: Toyota plans to reduce its full-time work forces in North America and the U.K., by more than 1,000 jobs, the Nikkei (sub) says. The move is unprecedented for the automaker, which has protected full-time jobs even in tough times. A rare exception was in 1950, when it let go roughly 1,600 workers in Japan through early retirement programs. Toyota employs nearly 30,000 in North America, mainly at seven assembly plants, and about 5,000 in the U.K., where it has one assembly facility. The scope of the job reductions there will likely be finalized as early as this month. Toyota is considering pay cuts as well.

Nissan joins club of lost profits: Nissan joins other Japanese car makers such as Toyotay and will most likely ost a group operating loss of more than 100 billion yen for the year ending March 31, its first dip into the red since fiscal 1994, the Nikkei (sub) says. Depending on car sales for the January-March quarter, the loss could even swell to around 200 billion yen. The automaker logged an operating profit of 790.8 billion yen for the year ended March 2008. Sinc January, “the situation has grown more dire each day,” a company official says. Depressed demand alone will eat into operating profit by more than 200 billion yen. In addition, the yen’s appreciation against the dollar, the euro and emerging-market currencies is seen dragging down the result by some 100 billion yen.

Less idle pay at Mazda: Roughly 10,000 full-time workers at two Mazda factories in Japan will see their base pay lowered by 30 percent for the days that their factories close for production adjustments, the Nikkei (sub) reports. They currently take a 20% cut for each of their mandatory days off. The 30% reduction will kick in from next month and last through March. Mazda stopped nighttime operations at two factories this month. Beginning in February, the company plans to resume night operations and instead close the plants on Fridays.

Hitachi cable pulls the plug: Facing a sharp fall in demand from Detroit, Hitachi Cable will close by 2011 two of its five North American factories that manufacture autoparts such as wiring harnesses, the Nikkei (sub) reports. The factories targeted for closure are in the states of Indiana and Kentucky.

Bridgestone’s US tire plant slashed: Japanese tire manufacturer Bridgestone will stop producing tires for passenger cars and light trucks at its factory in LaVergne, Tennessee, by the end of June, the Nikkei (sub) says. The production halt will be Bridgestone’s first since 2006, when it closed factories in Chile and the U.S. state of Oklahoma. Employing around 1,700 workers, the LaVergne plant has the highest payroll of the firm’s five North American facilities.

China hearts Audi: Volkswagen’s Audi announced that its sales in Chinancreased 17 percent in 2008 to 119,598 vehicles in 2008, Gasgoo reports. Construction of a new assembly plant in Changchun has started for even more production capacity. Sales of Audi cars locally made by FAW VW in Changchun increased 14 percent to 105,958 units. Sales of imported Audi vehicles grew 55 percent. Sales of the Audi A8 rose 35 percent to 4,608 units, making China the world’s largest sales market for the Audi A8. Global sales of Audi broke through the one million barrier in 2008 at 1,003,400 units.

China hearts Skoda, too: Volkswagen’s Skoda sold 59,284 cars in China last year, representing a gain of 117 percent from a year earlier, Gasgoo writes. Skoda, which is in a joint venture agreement with SAIC, expects sales to rise another 50 percent to 90,000 units this year, according to Fu Qiang, deputy director of Skoda Marketing & Sales Business of Shanghai Volkswagen Co.

FAW is raking it in: While other Chinese car makers are facing dire numbers, FAW Car Co, a unit of one of China’s three largest auto makers, is looking at 2008 net profits between 90 and 120 percent higher than 2007. FAW is especially proud because archrival SAIC is expecting an estimated profit slump of more than 50 percent, Gasgoo reports.

Changan and SAIC guide down: Chongqing Changan Auto Co. warned that there will be a sharp drop in its 2008 net profit, Gasgoo reports. Changan, Ford Motor’s China partner, said unaudited 2008 net profit was at roughly 38.93 million yuan ($5.7 million), down from 666.89 million yuan a year earlier. Changan Auto makes cars in a three way tie-up with Ford and Mazda Motor. It was hit badly as car sales at the joint venture fell by 20,000 vehicles, or 5.9 percent, this year, after a 60 percent jump in 2007. The sales of Changan Auto’s own-brand vehicles dropped by 27,000 units last year from 2007. China’s biggest automaker SAIC Motor, has also warned about a nosedive in last year’s net profit. SAIC expects a 50 percent fall in unaudited net profit in 2008, hit in part by its investment in Korea’s Ssangyong Motor, which has filed for bankruptcy protection due to severe liquidity problems.

Benz hybrids coming to China: This year, Mercedes-Benz, or “Benz” as they are called in China, will launch its first hybrid model S400 BlueHYBRID, a gasoline-electric hybrid based on the S-Class sedan, and a more advanced diesel-electric hybrid version of the M-Class SUV, Gasoo reports. The two Mercedes-Benz hybrid models will be introduced to China later this year. The new S400 BlueHYBRID is scheduled for launch in Europe this June, with China to follow in August and the U.S. by September. The diesel-electric version of the M-Class SUV should follow shortly after.

VW expecting Q1 loss: Volkswagen thinks global car sales of all manufacturers will be down 15 percent in 2009 compared to 2008. VW wants to beat that, but they still budget own sales to be 10 percent less that 2008. After positive results in 2008, VW is guiding for a minus in the first quarter of 2009, Automobilwoche (sub) reports. VW’s CFO Hans Dieter Pötsch is not worried about running out of cash anytime soon. He’s expecting a “substantial liquidity for 2009.”

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  • Bertel Schmitt Bertel Schmitt on Jan 26, 2009

    @FromBrazil: Germany produced 6m vehicles in 2007. Domestic sales approx 3m in 2008. Any hopes of getting surpassed by Brazil are premature. But don't give up the hope. The future definitely is in the BRIC countries.

  • FromBrazil FromBrazil on Jan 26, 2009

    Mr. Schmitt Yeah, when I posted the first time I just knew my memmory and hence, my numbers were off. Thanks for your follow up comment which led me to do some digging and finding the right numbers, and thanks also for keeping me honest (as discussions in this site should always be). So production-wise there's still a distance to go. But maybe in the next 3 yrs if all is well and as is natural (due to differences in population) we could pass you in terms of consumption. Germany's demand is relatively inelastic and Brazil's is pent up. So the trend is clear. In terms of production I guess it will follow closely internal demand. The real is very strong (good 'cause it killed inflation) and Brazil has specialized in producing small cars. Which is all fine and well but leads to the postion where our producers (mainly from Europe) have to compete in Latin America, Mexico (maybe US and Canada with Fiat in future?), Africa, poor Middle East and Central and Eastern Europe (AFAIK Brazil doesn't export cars to Far East Asia). And who is setting up shop in these places? Yes, the Chinese. That I think is an interesting story and will forecast how the European companies will fare against that competition.

  • Redapple2 I m OK with State Inspections, OF 7 , 8 OR HOWEVER OLD CARS. I get a new car every 3-5 years. Well, that aint right. When I lived in NY, it would really fry my butt to be compelled to have my new car inspected. Add in 9% sales tax ( after i ve already paid ~50% on the money when I made it - so- i had to make $2 to have $1 in my pocket- So, net it back upward? > it s a 18% tax.) Add in massive property tax, state income tax. Brutal winters. I voted with my feet. Off topic a little. Sorry.
  • Adamscotthi Thanks a lot for article!
  • MaintenanceCosts This class of car competes hard with Chargers/Challengers and modded diesel pickups for the douchey-driving crown.
  • 28-Cars-Later Corey - I think I am going to issue a fatwa demanding a cool kids car meetup in July somewhere in the Ohio region.
  • Master Baiter Might as well light 50 $100 bills on fire.