Industry News
News for 19th September 2006
ACEA: August European new car registrations down 1.4%
Total new passenger car registrations in Europe (EU-23 + EFTA) in August 2006 amounted to 886,824 units, which represent a decline of 1.4% on August 2005. In July 2006 registrations in Europe amounted to 1,220,753 units, 4.5% down on July 2005.
With the same number of working days across Europe, the ACEA said this decrease – reduced in August – seemed to be influenced by general uncertainty about economic conditions (rising fuel prices, growing interest rates in some countries). However, the cumulative result for the first eight months of the year (+0.4%) indicates European new car demand is still on a positive trend.
In July 2006 all the five main markets experienced decreases, reaching –2.7% in Germany, – 4.1 % in UK, –5% in France, –5.1% in Spain and –11.1% in Italy. Only four EU15 countries posted growth, ranging from 1% in Greece to 9.9% in Sweden. EFTA countries reported a drop of –3.6%. The negative result of the New Member States (–3.2%) was caused by a slowdown in registrations in Poland (–3.2%), Hungary (–10.5%), Czech Republic (–1.4%) and Slovakia (–10.4%). Baltic countries were leading with Lithuania as the best performer (+33.5%). In August 2006 there was a clear sign of recovery.
The decreases were weaker on the main markets: in Germany (–1.3%), Italy (–2.3%) and Spain (–3.8%), except for UK (–6.1%), while there was a tiny upturn in France (+0.1%). Other six EU15 countries posted growth, with the higest value again in Sweden (+9.2%). EFTA countries also reduced their loss (–2.5%). New Member States performed better (–0.7%) than EU15, with Lithuania again at the top (+70%) and Poland reducing its loss to –1.4%.
Cumulative results for the first eight months are positive for 14 countries, including Germany (+0.6%) and Italy (+4.8%). Results were again negative for France (–1.9%), Spain (–2%) and UK (–4.3%). EFTA countries performed slightly better (+0.9%) than EU 23 (+0.4%) and New Member States experienced a slight slowdown (–0.8%), mainly influenced by Polish (–6.3%) and Czech (–4.4%) result.
EU Parliament Environment Committee votes on Euro 5 standards
The European Parliament’s Committee on the Environment, Public Health and Food Safety has voted in favour of introducing Euro 5 emission standards for new cars from 1 September 2009. All new vehicles with a maximum laden weight of over 2.5 tonnes, those designed to meet specific social needs, such as those with wheelchair access or to seat seven or more people, and LCVs will have a further year to comply.
The Euro 5 legislation also requires information on vehicle repairs associated with emissions control to be easily available to independent repairers, following submissions from independent aftermarket trade bodies.
Following transition periods extending up to 1 January 2011 (for cars) and 1 January 2012 (for LCVs and PSVs as above respectively), EU Member States must refuse to grant EC or national type approval to new vehicles which do not comply with the Euro 5 limits on emissions or fuel consumption.
MEPs are already urging that dates should be set for the introduction of Euro 6 standards, suggesting 1 September 2014 for private cars and 1 September 2015 for light commercial vehicles. MEPs also agreed a compromise stating that manufacturers must give independent operators access to information equivalent to that available to their authorised dealers and repair shops by means of databases.
The plenary session vote at first reading in the European Parliament will take place next month.
(www.europarl.europa.eu/news)
DfT publishes consultation on successor to ACEA voluntary 140g/km CO2 commitment
The Department for Transport has published an informal consultation on options for a successor to the new car voluntary agreement on CO2 emissions whereby the ACEA committed to achieving an average 140g/km CO2 emissions for European new cars by 2008, and JAMA and KAMA by 2009 for cars imported to the EU from Japan and Korea respectively.
The DfT is now seeking views on suitable options for a successor policy post-2008, in the light of the failure, widely considered inevitable, for the current 2008/9 target to be met.
In the document the DfT details a new voluntary agreement; mandatory targets; and the inclusion of car manufacturers in the EU Emissions Trading Scheme. The SMMT is to hold a meeting with members ahead of the DfT’s 8 November deadline for comments. A full consultation document, with a Regulatory Impact Assessment of proposals, will be published in 2007.
Whatever the UK government’s ultimate policy decision is, it will contribute to further policy-making on the issue within the EU as a whole.
www.dft.gov.uk/stellent/groups/dft_roads/documents/divisionhomepage/612500.hcsp
GM and Ford have held alliance/merger talks – Automotive News
General Motors and Ford have discussed, but are no longer discussing, a partnership and possible merger, according to Automotive News’ 18th September issue, which quoted unnamed sources ‘familiar with the talks’. An alliance of GM and Ford would be the global light vehicle industry leader, with a big lead over Toyota. Meanwhile, GM is currently acknowledged publicly to be discussing possibly joining the Renault-Nissan alliance at the insistence of shareholder Kirk Kerkorian.
DaimlerChrysler cuts 2006 profit forecast as Chrysler heads for $1.2bn loss
DaimlerChrysler has lowered its operating profit forecast for full-year 2006 to ca. €5 billion based on an expected full-year operating loss of approximately €1.0 billion ($1.2 billion) for Chrysler Group. Chrysler Group had earlier announced an anticipated operating loss of up to €0.5 billion ($0.6 billion) in the third quarter which is now expected to be at €1.2 billion ($1.5 billion).
Chrysler Group blames excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, it says key competitors have further increased margin and volume pressures – particularly on light trucks – by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses.
Chrysler Group will make additional production cuts in the third and fourth quarters to reduce dealer inventories and make way for its current product offensive. It will introduce a total of eight new vehicles by year-end. After the anticipated loss of €1.2 billion ($1.5 billion) in the third quarter Chrysler Group says it “strives” to achieve positive results in the fourth quarter. DaimlerChrysler is forecasting that the Chrysler Group will end 2006 as a whole with a loss of approximately €1 billion ($1.2 billion). Earnings at the Mercedes Car Group, the Truck Group, Financial Services and Van, Bus, Other segment are fully in line with planning.
DCX says measures to increase Chrysler Group sales and cut costs in the short term are being examined at all stages of the value chain, and structural changes being considered.
- DaimlerChrysler opened its new Beijing JV plant on 15 September. Beijing Benz-DaimlerChrysler Automotive (BBDC), co-owned by DCX and Beijing Automotive Industry (BAIC) in equal proportions, has begun production of the Mercedes-Benz E Class and Chrysler 300C, and will begin assembling the C Class and Chrysler Sebring saloons next year, ultimately aiming for output of 11,000 C Class and 15,000 E Class per annum. JV partner BAIC, which has just announced it is considering an IPO with DaimlerChrysler’s support, expects the joint venture plant to reach capacity of 300,000 units a year, against 105,000 now.
SMMT publishes 2006 sustainability report
UK-based vehicle manufacturers have cut energy use, waste and CO2 emissions by half in four years, according to the SMMT’s latest sustainability report published yesterday.
“We have embraced our responsibility and delivered a clear, clean message; the motor industry is willing, capable and open about being part of the solution to the issue of sustainable motoring,” said Christopher Macgowan, SMMT chief executive. “Our modern, high-tech motor industry should be given credit for this dramatic progress.”
From 2001 to 2005 the automotive industry cut the average energy use from 6.2 to 3.2 MWh per vehicle. The corresponding CO2 figure per vehicle is down from 1.3 tonnes to 0.6 tonnes, waste to landfill per vehicle cut by 78% from 66.4 kg to 14.5 kg and water use almost halved from 6.2 m3 to 3.2 m3.
DEFRA data show C02 emissions from cars account for less than 13% of man-made CO2 emissions in Britain compared with 36.9% for the energy industry and 15.7% from domestic homes. Average CO2 emissions from all new cars have dropped by 11% in six years, although registrations of 4x4s have risen by more than 40%, against overall market growth of 10%.
Published on www.smmt.co.uk on Monday 18 September, the report lists sector-wide progress on economic goals, environmental performance and social responsibility measures.
University of Michigan report: Better fuel economy is Detroit’s safest route to financial health
Financially strapped domestic US manufacturers could turn their losses to profits at the expense of foreign car companies by improving fuel economy performance across their model line-ups -- with Ford reaping the greatest profits, according to a new study by the University of Michigan's Transportation Research Institute (UMTRI). Conversely, Ford, General Motors Corp. and DaimlerChrysler Corp. stand to lose billions if they do not.
"Even the Big Three now acknowledge that high gas prices and their overdependence on fuel-inefficient SUVs and pickup trucks have accelerated their financial freefall," said Walter McManus, head of UMTRI's auto analysis division. "The findings of our report prove in sharp detail Detroit automakers' long-term vulnerability to volatile gas prices and show that improved fuel economy fleet-wide -- above and beyond current regulation - is the key not just to their survival but their success, even if the price of gas goes down."
Looking ahead to the 2010 model year, the study, "Can Proactive Fuel- Economy Strategies Help Mitigate Fuel-Price Risks?" uses three fuel price scenarios -- $3.10, $2.30 and $2 per gallon. McManus asks what would happen if manufacturers used a business-as-usual approach making only fuel-economy improvements mandated by law, or a proactive strategy using off-the-shelf technology to make more ambitious increases to fuel economy, without changing their projected model mix.
If all manufacturers follow a proactive strategy, the report finds that:
- Ford has more opportunities to improve fuel economy fleet-wide than do GM or DaimlerChrysler and can narrow its fuel-economy disadvantage against the Japanese automakers more than their U.S. rivals.
- At $3.10 a gallon, the Big Three could increase profits by $2 billion collectively, with an annual profit increase of $1.4 billion at Ford, $500 million at GM and $100 million at DaimlerChrysler.
- At $3.10 a gallon, Japanese manufacturers could lose up to $600 million.
- Even at $2 per gallon, the Big Three could increase profits by $1.3 billion, while the Japanese could lose $300 million.
If all automakers follow a business-as-usual approach, the study shows that:
- At $3.10 a gallon, U.S. automakers could lose as much as $3.6 billion in profits, compared with a smaller loss of $800 million for Japanese manufacturers.
- At $2 a gallon, the Big Three would fare better than their Japanese counterparts, with profits between $1.2 billion to $1.4 billion, compared to $300 million for the Japanese.
"What is surprising is that each automaker is financially safer if they follow a proactive fuel-economy strategy, regardless of what their competitors do," McManus said. "Sure, Ford might not capture sales if their competitors make a better car that has high fuel economy, but what is certain is that Ford cannot capture those sales without higher fuel economy."
The study also estimated the impact of strategic choices by manufacturers on US employment. At $3.10 a gallon, a market-wide proactive fuel economy strategy could save nearly 35,000 jobs at GM, Ford and DaimlerChrysler, while costing foreign manufacturers with plants in North America more than 19,000 jobs. By contrast, a business-as-usual approach could result in Big Three job losses of nearly 43,000, compared to less than 1,900 job cuts at the foreign transplants.
McManus says his report delivers important information to policy-makers, as well as to automobile company management, unions and shareholders, who have resisted increases to fuel economy requirements for years.
His recommendations include:
- Establishing a formal coalition of industry, labour, government and nonprofits with a mandate to develop federal policies designed to dramatically increase the fuel economy of all vehicles in the United States.
- Enhancing regulatory rationality and certainty.
- Supporting development of advanced technologies.
- Building domestic supply chain for advanced technology fuel-efficient vehicles.
"Automakers must decide their fuel economy strategies for 2010 today, knowing neither the future fuel prices nor the decisions their competitors have made," McManus said. "With only cash on hand for one cycle of product development, as gas prices dip - for the moment - will these struggling automakers be tempted to remain dependent on their once-profitable gas guzzlers? Our report provides stark evidence that the riskiest thing domestic automakers could do is continue business as usual.
"Deploying new technologies takes time and money to accomplish, and time and money are in short supply in Detroit. While management is currently focused on cutting capacity through massive layoffs, they need to undertake a deep transformation to much more fuel-efficient fleets to avoid going under. The dilemma the Detroit automakers face is that while they may believe that they cannot afford to make fuel economy a high priority, in actuality, it turns out that they cannot afford not to."
The UMTRI study can be found at www.osat.umich.edu.
Mitsubishi Corp. is now Isuzu’s biggest shareholder
Mitsubishi Corp. is to convert its special shares in the Japanese truck and SUV maker Isuzu to ordinary shares next month, bringing its equity from 3.7% to 12.8%, a larger holding than that of the trading house Itochu’s 10%. In April this year GM severed its financial ties to Isuzu, selling its shares to Mitsubishi Corp., Itochu and a Japanese bank. Mitsubishi Corp. is also the major shareholder in Mitsubishi Motors Corp., with which DaimlerChrysler was allied until 2005.
(Nihon Keizai, 16 September)
Ford takes up first refusal on use of Rover brand name
BMW has confirmed it is to sell the Rover brand name to Ford. Ford acquired right of first refusal on the brand when it acquired Land Rover from BMW in 2000, to protect Land Rover’s brand value. Ford’s decision may be a blow to SAIC, according to reports unconfirmed by the companies concerned that it had negotiated an £11m deal on the use of the Rover brand for its Rover 75-derived model, subject to Ford’s say-so.
J.D. Power shows tough US market depressing new car prices
Competitive pressures are nearly eliminating new vehicle price increases during a model year, according to real-time retail (excl. fleet) transaction data from the Power Information Network (PIN), a division of J.D. Power and Associates.
During the 2006 model year, new-vehicle retail transaction prices for 44 of 50 high-volume models on the US market have declined. This pricing includes powertrain and body type, normalized for all months. The prices for the remaining six models have increased slightly since the beginning of the year. Four of the six models exhibiting price increases had an actual retail transaction price increase of less than 2%.
"The mid-year price increases to cover increased costs, once commonplace in the industry, have disappeared," said Tom Libby, senior director of industry analysis at PIN. "Intense competition, fuelled in part by the continued expansion of Asian and European manufacturers into new segments, as well as shortened product life cycles that are bringing new models to market faster than ever, has kept downward pressure on new-vehicle prices."
There are more than 286 new-vehicle models available on the US market today, compared to 257 five years ago. The 50 models used in the PIN analysis represent 48% of total U.S. new-vehicle sales volume.
(www.powerinfonet.com/)
Two main Scania shareholders reject MAN bid
The German truck manufacturer MAN has encountered opposition to its €9.6bn bid for Scania from the Swedish shareholder Investor and from Volkswagen, which jointly control over half the voting rights in Scania AB, and the Financial Times reported yesterday that some of its own non-executive directors had warned that MAN’s bid could put the company itself at risk of a takeover attempt by Scania with Investor’s and VW’s support.
Håkan Samuelsson, MAN’s chief executive, himself a Swede who worked for Scania for 23 years, said yesterday: “We are committed to making this (bid for Scania) happen.”
Renault yesterday announced it had agreed to sell its 2.8% stake in Scania, held since 2004 and representing 5.18% of voting rights to MAN.
MAN’s bid for Scania announced yesterday is conditional on 90% shareholder acceptance.
IAA truck show opens on 21 September in Hanover
This year’s IAA show, Europe’s biggest commercial vehicle show, opens on Thursday 21 September and continues to 28 September. The organiser, the German Association of the Automotive Industry (VDA) expects a record 253 world premieres and 1,526 exhibitors, 11% up on the last such event two years ago. Virtually every European LCV, truck and bus manufacturer is represented, with many trailer makers, body-builders and other equipment suppliers.
(www.iaa.de)
Unipart Logistics deploys RFID to track Jaguar parts from UK to US
The logistics arm of Unipart recently began tracking Jaguar car parts in real-time while they're transported in cargo containers from the UK to the US. Under the Jaguar Tradelane Project, the containers are tracked by using SaviTrak, a Radio Frequency Identification-based (RFID) information service provided by Savi Networks.
Unipart and Savi Networks will monitor the location, security status and condition of container shipments when they pass by readers at factories, ports (Felixstowe, New York and Oakland, Ca.), distribution facilities and other supply chain nodes. Savi Networks is a joint venture between Savi Technology, Inc., a Lockheed Martin company, and Hutchison Port Holdings, the world's biggest port operator.
The SaviTrak information service is built on an open-technology network that captures data from devices including bar codes, sensors, passive and active RFID and GPS satellite location systems. The information service generates real-time reports and exception-based alerts to each customer, including routes, missed shipments, or environmental conditions.
ThyssenKrupp close to selling US body and chassis business
ThyssenKrupp AG expects to reach an agreement on the sale of Thyssenkrupp Budd, the $1.3 billion-sales body and chassis operations of its US automotive unit with one of two unnamed Tier 1 suppliers by the end of this year, ThyssenKrupp executive board member Olaf Berlien told reporters at an event in Athens last weekend. ThyssenKrupp had announced in August that it would sell the business and merge the remaining US automotive operations into ThyssenKrupp Technologies AG.
(International Herald Tribune, www.thyssenkrupp.com)
Orbital and Bajaj sign new licence for LPG and CNG auto-rickshaw
The Australian fuel injection system developer Orbital Corporation Ltd and India’s Bajaj Auto Ltd have announced an expansion of their licensing arrangements to cover liquid petroleum gas (LPG) and compressed natural gas (CNG) applications. In May 2004, the parties announced a agreement that will see Orbital's fuel injection technology applied to Bajaj's auto-rickshaw three wheeler vehicles. The new arrangement will enable the addition of two new gas models to the three wheeler range.
Bajaj, based in Pune, is one of India's largest producers of two- and three-wheelers and dominates the auto-rickshaw market in Asia. The auto-rickshaw is the ubiquitous form of transport throughout India and much of Asia and is currently enjoying strong growth, but the Indian market is increasingly emissions-conscious with more stringent emissions standards introduced in 2005 and further strengthening due in 2010.
Orbital's gas direct injection technology is claimed to provide significantly improved fuel economy and vehicle operating costs, in addition to fuel flexibility and emissions reduction. India is making significant investments in the LPG and CNG delivery infrastructure and has mandated the exclusive use of CNG fuel for Commercial Vehicles in the city of Delhi.
- Orbital has settled a dispute with Coles Myer Ltd and subsidiaries concerning the joint venture R&D syndicated arrangements Orbital and CML entered into in 1995 and 1996. The JV arrangements required payment of licence fees for the use of Orbital's technology by the CML/Orbital JV and this provided CML with tax reductions of some $21.0 million. CML asserted that Orbital had warranted these tax reductions to it, though the Australian tax commission has denied CML part of them. Orbital denies any liability with respect to the CML assertions, but has agreed to pay CML A$500,000 in full and final settlement.
Automotive sector accounts for 20% of China’s industrial output
Delegates at an automotive industry forum held last weekend in Beijing heard that China's automotive industry accounted for about 20% of the country’s total industrial output, and has become the area of Chinese industry with the biggest growth potential.
Following the motorisation of increasing numbers of the Chinese population, China's motor insurance premium market reached 70.6 billion yuan (US$8.8 billion) in the first eight months this of this year, up 18.9% on the same period of 2005, according to figures issued by China’s Insurance Regulatory Commission.
Its figures show motor insurance premium income accounted for 67.7% of the country’s total non-life insurance industry, and revenue from compulsory motor insurance premiums, introduced from 1 July this year, represented 8.09% of the total motor insurance business.
China’s vehicle parc now comprises 130 million vehicles, including cars, motorcycles and tractors.
Source: Xinhua news agency.
German Tier 1 suppliers upbeat about aftermarket at Automechanika
A report in yesterday’s SupplierBusiness.com newsletter says leading first-tier suppliers at last week’s Automechanika aftermarket show in Frankfurt were much more upbeat about their aftermarket operations than they had been two years ago.
The German engine parts maker Mahle expects to raise aftermarket sales from €383 million in 2005 to €478 million in 2006 – and in the medium term, raise the share of the company’s €4.3 million business accounted for by aftermarket to 15-20%, according to Professor Dr Junker, Mahle CEO.
ZF Trading has seen aftermarket sales rise from just over €600 million in 2004 to €650 million in 2005, and expects them to grow by another 20% by 2010, according to Alois Ludwig, chairman of the board of ZF Trading GmbH. ZF is seeing strong growth in eastern Europe, where the aftermarket operations of larger suppliers appear able to capture the business generated by the growth in the new vehicle market and flow of used vehicles from Western Europe.
Bosch, whose aftermarket sales of €3.3 billion in 2005 represented around 9% of its total automotive sales, sees big opportunities in the growing need of the independent aftermarket channels for electronic testing equipment. It is rapidly expanding its branded aftermarket distribution and service chain in China and Russia.
MAGNA Electronics signs agreement with IBM on embedded vehicle electronics
Magna Electronics, an operating unit of Magna International Inc., and IBM have signed a five-year collaborative agreement for IBM to support Magna’s entry into the vehicle electronic systems market. Magna Electronics and IBM’s Technology Collaboration Solutions will partner in systems design, software development and engineering to enhance Magna Electronics’ vehicle-based computing systems.
Magna Electronics was formed in 2005 to combine the electronics expertise of Magna’s automotive units and provide driver assistance systems, safety systems, wireless connectivity, power systems and body electronics.
(www.magna.com)
Mahindra Systems & Technologies ‘close to acquiring European components supplier’
Mahindra Systems & Technologies, the automotive components arm of Mahindra & Mahindra (M&M), India’s biggest light utility 4x4 manufacturer, is close to buying a European parts firm, according its president Hemant Luthra, quoted yesterday by the India Times, who said, “We are looking at overseas acquisitions of the size $300-400m, which will give us access to technology and customer bases.”
Mr Luthra added, “We are intimidated by the prospects for US Tier 1 OEMs (original equipment manufacturers), given the difficult conditions in the local market,” he said.
More than 400 components firms supply India’s $15-bn vehicle industry, and the domestic components sector is forecast to grow nearly five-fold to a value of $33-40bn by 2015, including $20-25bn in exports, according to a McKinsey & Co. forecast reported by the paper.
MSAT comprises engineering services, sourcing and components manufacture, and supplies OEMs including Tata Motors, GM and Ford. From 2007, it will produce trucks and buses in a joint venture with Navistar International Corp and manufacture a basic saloon car in a JV with Renault.
(www.economictimes.indiatimes.com, 13 September)
Inchcape Fleet Solutions named Fleet Management Company 2006 by Institute of Transport Management
Inchcape Fleet Solutions has been named ‘Fleet Management Company 2006’ by the Institute of Transport Management. It is Inchcape Fleet Solutions’ fifth ITM award in the last decade with the Portsmouth-based company having most recently been named ‘UK Fleet Services Company’ in 2005 and ‘Best Online Fleet Solutions Company’ in 2003. Inchcape Fleet Solutions operates a fleet of more than 50,000 vehicles.
