While America Slept. Tuesday, February 24th, 2009
Chinese government orders consolidation: The Chinese government issued its plan to consolidate the auto sector. It includes decisions to merge the country’s major auto-making groups to from 14 to 10, and to subsidize rural buyers of new vehicles, China Securities Journal reports via Gasgoo. According to the plan, the current 14 Chinese carmakers, which together hold 90 percent market share, will be reduced to 10 or less through mergers. The government wants to see two or three big Chinese groups with annual production each exceeding 2 million vehicles, plus four or five groups making over 1 million vehicles.
Japan going down, down, down: Japan’s domestic auto sales may fall below 3 million vehicles this year, the Nikkei [sub] reports. Japan Automobile Dealers Association Chairman Yoichi Amano predicts Japanese sales could sink to the lowest level since 1971. “The projection made last year that sales would decline below 3 million vehicles some time between 2015 and 2020 might come true as early as this year,” Amano told a general meeting of association members, expressing concern that the economic downturn may further depress demand.
Honda sees flat sales: Unfazed by the dire predictions, Honda aims to sell about 550,000 vehicles domestically in fiscal 2009, roughly the same as projected for this fiscal year, by strengthening sales of hybrid and other fuel-efficient cars, company sources told the Nikkei [sub]. Although domestic demand contracted about 20 percent on the year in January, Honda aims to expand sales of its Insight hybrid and other eco-friendly vehicles on the back of their strong appeal and tax incentives for buyers.
Nissan downgraded: Standard & Poor’s downgraded Nissan Motor Co.’s long-term credit rating one notch from BBB+ to BBB, citing concerns over the automaker’s finances, the Nikkei [sub] reports.
Mitsubishi cranks up the lines: Mitsubishi Motors said its March production cutbacks at domestic factories will be smaller than those in February, as sharp output reductions this month have significantly pushed down inventory levels, the Nikkei [sub] says.
SUVs on the rise in China: Following the rapid growth its SUV market in 2008, China may see the sales of SUV models grow by nearly 20 percent this year, more than double the average auto market growth rate, xinhuanet.com said today, citing the forecast of an industry survey firm. In 2009, more than ten SUV models will be launched to the Chinese auto market
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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I read elsewhere that the Chinese government really wants just two or three big players in every industry where now there are sometimes dozens of smaller companies involved. I wonder how this consolidation of companies will ultimately affect the balance of power between Chinese automakers and their foreign manufacturing "partners." At the very least, it seems the terms of new agreements may become much dearer, and the Chinese companies will have significantly more resources and negotiating power. Any thoughts, Bertel?