Industry News

• Car sales in Western Europe grew by 5.8% in July
• Caparo Group invests in more Indian engineering capacity
• New Birmingham University project researches hydrogen reforming from exhaust gas
• German manufacturers "back CO2 to replace HRC-134a"
• UK new car market rose 4.9% in July
• Nissan develops SULEV-standard clean diesel technology
• Delphi agrees tentative deals with unions
• CAW president says labour concessions won't save the Big Three
• GM to join Model Fuels Consortium
• NFDA tells car dealers to act on VAT reclaims
• July Ford CV sales strongest for six years

J.D. Power Automotive Forecasting reports that July’s new car market in Western Europe reached 1,247,477 units last month, a rise of 5.8% over July 2006, although the largest national market, Germany, was down 2.7%, only Finland among other national markets also dropped, and the French market grew by 21.0%, albeit from a very weak July 2006.

For the year to date, the Western European market was down by 0.1%. Continued weakness in Germany has resulted in a downgrade to expectations for full-year 2007 with West

European sales now expected to come in 0.1% behind last year. J.D. Power Automotive Forecasting expects 2008 to show 0.5% growth on this year.

The Caparo Group headed by Lord Swraj Paul has acquired 100 acres of land in Bawal in the Indian state of Haryana for of six new engineering ventures for its Vehicle Products India division, reports India’s Economic Times. The company already operates two stamping plants in Haryana through a joint venture with Maruti Suzuki. The total projected investment of the six new ventures is Rs 510 crore and they are expected to generate jobs for 2,000 people.

Caparo India currently operates on 15 sites but expects to complete construction of a further 16 plants by the end of 2008. The new development responds to increasing demand from OEM customers in northern India which include Honda, Mazda and New Holland, and new markets such as aerospace, Angad Paul, Chief Executive Officer of Caparo plc said.

Angad Paul said: "The site will encompass sheet metal stamping facilities and will be complemented by our Tailor welded Blanking factory, which is also situated in Bawal. Plans are in place to develop a Steel Service Centre offering value added services like cutting, blanking and slitting to suppliers with 'Just in Time' requirements and a steel tube plant will also be constructed to cater for the needs of the automotive and non-automotive engineering industry."

Sunil Pahilajani, Country Head for India, said: "We also look forward to leveraging technology from UK sister companies Caparo Tube Components and Caparo AP Braking. Our aim is to develop a sophisticated braking system facility as well as a suspension system facility, which will provide local OEMs with endurance testing and simulation; a much needed resource".

Caparo has become a global group with a turnover of about US$1.5bn, and operates from over 50 sites in the UK, India, North America, Spain and Poland, predominantly in the manufacture of steel, automotive and engineering products.

Caparo has appointed KPMG to attract private equity investment into its Indian division.

(Economic Times, 5 August)

In the August issue of Automotive World’s Environmental Analyst newsletter Alan Bunting reports that a new lab dedicated to future fuels and combustion technologies at Birmingham University is to work on onboard hydrogen reforming from vehicles’ exhaust gases.

Land Rover and Jaguar, Shell and Johnson Matthey are among companies supporting the new laboratory’s work, which also includes the development of an engine dedicated to biofuels, and a Foresight Vehicle programme project on homogeneous charge compression ignition involving a consortium led by Jaguar Cars. Both DaimlerChrysler and VW are developing their own, different HCCI engine prototypes.

(Automotive World Environmental Analyst, August)

The CFC refrigerant HFC-134a will be banned from the EU market from 2011 under the EU mobile air conditioning directive and it seems, according to undisclosed industry sources reported by an alliance advancing the cause of CO2, that CO2 will become the standard refrigerant in vehicle air conditioning systems; German vehicle manufacturers have reportedly already agreed to suspend further research on alternative chemical refrigerants.

The Alliance for CO2 Solutions, a body dedicated to advancing the cause of CO2 for mobile air conditioning, has in its membership Greenpeace, Deutsche Umwelthilfe, ixetic, Konvekta, SINTEF and Shecco.

(Source: www.alliance-co2-solutions.org/ENDS Europe Daily)

The UK new car market rose higher than forecast by the SMMT in July – by 4.9%, the best year on year gain this year since January, to reach 176,277 units. July's gain did come on top of a 4.1% decline last year, but maintained the growth momentum seen over the first half of the year. Registrations were up 33,640 units or 2,4% over the first seven months of 2007, to 1,433,576. The total for July was just under the 1999-2006 average for July of 177,349 units.

In July the SMMT revised upwards the full year forecast by 20,000 units to 2.355mn units, with the market now expected to post modest growth this year. It says the outlook remains cautious, after the base rate rose to 5.75 per cent in July. Consumer spending and GDP growth is expected to moderate in the second half of the year and offset the positive impact of new models and enticing deals.

Business demand showed a second successive double digit gain in the month. Fleet demand rose by 5.8%, after two months of modest declines. Over the year-to-date the fleet/business market was up 3.4%.

Private demand was also up for a fifth time this year, despite concerns over consumer spending and the impact of higher base rates. Private sector growth over the first seven months, however, remains only modest at 1.1%.

After being displaced as the top selling new model in June by the Vauxhall Astra, the Ford Focus was back in pole position in July. VW's Passat made a rare top 10 appearance, but it was MPVs which showed the best growth. MPV volumes were up 34.2% in the month and 16.4% over the year-to-date, as Ford and Vauxhall ranges did well.

Supermini demand has risen by 5% over the first seven months of 2007.

Growth in demand for diesel-powered cars jumped to its highest rate since January. Diesel penetration passed 40% for the first time this year and at 41.2% (562,917 units) was well above last July's 38.9% rate. Diesel penetration over the first seven months of 2007 has climbed to 39.0%, compared with 37.5% a year ago. VW's Passat was the best selling diesel model in July. The Focus remains top over the year-to-date.

The SMMT noted that base rates have risen five times in the past year, to 5.75% in July, their highest level since spring 2001. Expectations are that rates will be raised at least once more this year, and may squeeze spending on discretionary items, like cars. New car demand is accordingly expected to moderate this year and next in response to higher base rates.

Nissan Motor Co., Ltd yesterday announced that a new clean diesel technology using high-performance catalysts shows great promise and may be able to meet the State of California's standard for super-ultra-low emission vehicles (SULEVs), equivalent to the U.S. federal Tier2Bin2 emissions requirements. Nissan plans to do further R&D of the technology.

Three components work together in Nissan's new technology to reduce diesel emissions: modulated-kinetic (MK) combustion, high-performance catalysts, and advanced engine control systems.

Nissan's HC-NOx trap catalyst technology features a breakthrough construction which incorporates a HC-trap layer in the NOx-trap catalyst. The HC-trap layer serves to trap the HC which is oxidized to generate hydrogen (H2) and carbon monoxide (CO), which in turn react with the NOx gases trapped by the NOx-trap layer to produce nitrogen (N2) and carbon dioxide (CO2) gases, in addition to water vapour (H2O) as end products. The chemical reactions effectively reduce HC and NOx resulting in cleaner tail-pipe emissions.

The company had previously announced clean diesel technology that met the U.S. Tier2Bin5 emissions standards. With this new HC-NOx trap catalyst technology, Nissan believes it will be able to achieve cleaner diesel emissions in future vehicles that will meet the more stringent SULEV-standards set by the state of California. In order to meet the SULEV-standards, hydrocarbons in vehicle emissions must be exhaust reduced by about 90% and NOx levels must be reduced by 70% versus Tier2Bin5 standards.

Delphi has reached agreements with negotiators representing the International Association of Machinists, International Brotherhood of Electrical Workers and International Union of Operating Engineers, subject to membership ballots, which will be required for the company to exit Chapter 11 bankruptcy protection.

"This series of tentative labour agreements demonstrates Delphi's continued commitment to achieving a consensual resolution with all parties in its Chapter 11 cases," said John Sheehan, Delphi's chief restructuring officer.

The IUE-CWA's committee has unanimously recommended that its members give the proposal the go-ahead later this month. Delphi had already concluded a labour agreement with its largest union, the United Auto Workers. The company hopes to emerge from bankruptcy before the year is over. A consortium of private equity investors recently injected $2.55bn (£1.24bn) into Delphi to fund its Chapter 11 exit.

Canadian Auto Workers President Buzz Hargrove told a group of automotive investors yesterday morning that the current focus by the Big Three on labour concessions is futile and won't help the overall picture of the North American producers.

"Labour concessions cannot possibly have any meaningful effect on the Big Three's market share in their home market," said Hargrove in a speech to the JP Morgan Automotive Investment Conference in Detroit. "Even if the Big Three get everything they are asking for from the UAW, that would reduce the average production costs of a vehicle they sell in North America by only $500," said Hargrove.

He said, "This is equal to less than 2 per cent of the average selling price of a new vehicle in the U.S.”, and “One-sixth the current sales incentives which the Big Three are currently using to sell new vehicle”.

Mr Hargrove said the aforementioned $500 represented “just 5% of what Toyota saves on the import of a Lexus due to the artificial suppression of the Japanese foreign exchange rate”, and “Less than one-quarter of Toyota's current per-vehicle profit margin on North American sales."

Hargrove said all the focus on trying to extract labour concessions diverts attention from the North American industry's real problems, which derive from the falling market shares of domestic producers, which was is the end result of a “huge and growing automotive trade imbalance with the rest of the world”.

Source: Canadian Auto Workers

General Motors recently announced its intention to join the Model Fuels Consortium (MFC), a group dedicated to the development, validation and application of advanced simulation methods to improve engine and fuel design, resulting in increased fuel efficiencies and reduced emmissions.

The consortium, which was founded by the U.S. clean technology company Reaction Design, also includes Chevron, Conoco-Phillips, Cummins Engine Company, Dow Chemical Company, Ford Motor Company, Honda, L'Institut Français du Pétrole, Mazda, Mitsubishi Motors, Nissan, PSA Peugeot Citroën and Toyota.

Launched in 2005, the MFC directs the expertise and resources of fuel producers, engine manufacturers and vehicle manufacturers to develop the model fuels essential to accurate simulation of the complex chemical processes that drive combustion.

(www.reactiondesign.com, 6 August)

Car dealers could face missing out on repayments for VAT incorrectly levied on demonstrator vehicles unless they act now to check on entitlement, according to the National Franchised Dealers Association (NFDA). The recent House of Lords judgement on Sempra Metals Ltd related to the premature payment of corporation tax, but the decision may have a direct impact on VAT. The NFDA, which has been receiving detailed advice from PwC on the issue for some time, believes action should be taken.

Sue Robinson, NFDA director, commented: “The NFDA is urging its members to contact either us, or their own professional tax advisers as soon as possible, in order to consider the prospects and merits of a claim for compound interest and the procedures to be adopted to protect their potential claim.”

A Group Litigation Order (GLO) that could lead to car dealers receiving substantial repayments for VAT incorrectly levied on demonstrator vehicles has been organised and the NFDA is investigating its scope.

“Our initial understanding is that the GLO claim is based on a claim under European law. However, there may be alternative arguments which can be pursued and this is currently being considered in consultation with PricewaterhouseCoopers,” said Robinson

However, Robinson believes that businesses should not wait for the outcome, but instead act now: “It may not be enough for potential claimants to simply wait and see what happens as various other lead cases make their way through the courts.”

Ford commercial vehicles are leading the company's charge towards next month's 57-plate debut by notching up the best sales results for six years, says the company, ahead of the SMMT’s release of July new CV registrations data.

Performing at their strongest since 2001, Ford commercial vehicles including the Southampton-built Transit have sold 56,682 units in the first seven months of this year, and 14,000 new owners have been won over during the past six years. Ford’s UK LCV market share, at a quarter of the market, resembles its historic share of the UK car market of the 1970s and 80s.

In the used CV market, however, poor weather and interest rate rises have been cited by commercial vehicles dealers as factors contributing to a period of patchy sales over recent weeks.

According to EurotaxGlass’s, publisher of Glass’s Guide to Used Commercial Vehicle Values, sales of used vans and trucks in May and June were particularly slow for many dealers, and are now following the normal pattern of weaker demand during summer.