Industry News
Week Commencing 13th March 2006
17th March 2006
16th March 2006
15th March 2006
14th March 2006
13th March 2006
MAN to sell majority stake in Roland print business to Allianz Capital Partners
The German truck, engineering and printing machinery conglomerate MAN and Allianz Capital Partners, a wholly owned subsidiary of the Allianz Group, are founding a joint venture with the purpose to purchase MAN Roland Druckmaschinen AG. The intention is to further develop what is already the world's second largest manufacturer of printing machinery with a view to a flotation in several years’ time.
MAN AG will retain 35% equity in the joint venture and continue to be involved in the company's development. Both parties have agreed to maintain strict confidentiality on all details of the agreement until final completion.
MAN's CEO Håkan Samuelsson said of the deal, "We thus reduce our core activities to four and can focus the MAN Group on high-growth transport related engineering business sectors."
Generating a business volume of €15-16bn (75% abroad), MAN employs some 60,000 people. After the spin-off of the printing machinery business, it will be focused on commercial vehicles, industrial services, diesel engines and turbo manufacture.
In the UK, MAN is a truck importer and also operates the ERF truck business acquired from DaimlerChrysler shortly after the latter bought it from Western Star.
Franchised car dealers’ average profitability falls to record low – Trevor Jones
According to the motor trade chartered accountancy and consulting practice Trevor Jones, the profitability of UK car dealerships has fallen to a record low, with dealer operations within the M25 now trading at an average loss.
The firm’s analysis of the financial performance of hundreds of dealerships across the country, reported by Motor Trader online today, 17 March, indicates that franchised dealers in London are now trading at an average negative return on sales of 0.6 per cent, compared with an average break-even level recorded in 2004. These dealers are also reported to have recorded the lowest ever average annual sales per salesperson, 125 cars. Nationally, the average return on sales of the franchise dealers surveyed was 0.6 per cent.
(www.motortrader.co.uk)
Hydrogen hybrid Prius shown at US National Hydrogen Association’s annual conference
New automotive technology featured at this week’s National Hydrogen Association Annual Conference in Southern California includes a hydrogen hybrid version of Toyota’s Prius from Energy Conversion Devices, Inc. (ECD Ovonics), which has now started fleet testing at the South Coast Air Quality Management District (AQMD) in California.
A project of Ovonic Hydrogen Systems LLC, a subsidiary of ECD Ovonics, the vehicle is a test bed designed to prove that hydrogen hybrids can be practical in daily use and to showcase Ovonic solid metal hydride hydrogen storage technology. Based on a production petrol-electric hybrid Prius, it is part of a five year, $7 million multi-vehicle hydrogen hybrid demonstration at AQMD.
ECD Ovonics' hydrogen hybrid has been equipped with hydrogen storage tanks using the company's proprietary solid metal hydride technology, which enables hydrogen to bond at the atomic level with a powdered metal alloy inside the tanks. This technology allows storage of hydrogen at much lower pressures than the 5,000 to 10,000 psi tanks typically used in other hydrogen vehicle applications. In the Prius on show, the result is the ability to carry enough hydrogen on-board to provide an operating range of just under 200 miles.
ECD Ovonics' hydrogen hybrid has been turbocharged, unlike the standard Toyota model, to compensate for hydrogen's lower-than-petrol energy density.
GM 2005 results will be hit by GMAC mortgage accounting error
General Motors Corp. will delay filing its annual report on Form 10-K with the Securities and Exchange Commission due to an accounting issue regarding the classification of cash flows at ResCap, the residential mortgage arm of the financial services subsidiary GMAC, in which GM is hoping to sell a 51% stake.
The ResCap accounting issue relates to the erroneous classification of cash flows from certain mortgage loan transactions as cash flows from operations instead of cash flows from investment activities.
Although the company says it has not completed its review of this matter, the issue will not impact either net income or the balance sheet presentation but is expected to impact the presentation of cash flows from operating and investing activities. This issue may impact the statements of cash flows for 2005 and prior periods at ResCap, GMAC and GM, and the impact may be material in some or all of the affected periods.
With the exception of the ResCap accounting issue, GM is otherwise prepared to file its 2005 Form 10-K and intends to do so within the next two weeks. At that time, GM also intends to report restated results for the years ended Dec. 31, 2000 to Dec. 31, 2004
Hyundai to begin Chinese hybrid production before 2008 Beijing Olympics
Xu Heyi, chairman of Hyundai's joint venture with Beijing Automotive Industry Corp, has told the China Daily newspaper that it plans to begin commercial production of petrol-electric hybrid cars before the Beijing Olympic Games in 2008 – and that it will be building hydrogen fuel-cell cars by 2010. Toyota Motor began production in China of its Prius hybrid at its joint venture with First Automotive Works (FAW) in Jilin Province, North-East China.
(People’s Daily, 17 March)
Volvo Trucks plans bio-synthetic gas to supply Umeå cab factory
Volvo Trucks’ Umeå cab factory in northern Sweden has signed an agreement with Umeå University and utility supplier Umeå Energi for a preliminary study on the development of a process for replacing liquefied petroleum gas (LPG) with locally produced bio-synthetic gas.
The aim of the agreement is for a preliminary study to develop a new gasification process together with Umeå University. A gasification plant is planned for the Volvo Trucks cab plant for the production of bio-synthetic gas. The technology whereby the forestry industry’s residual by-products are ground down and gasified in a flow reactor, was developed by Umeå University.
Having launched its proprietary hybrid diesel-electric powertrain technology this month, Volvo Trucks has issued a release underlining its aim of global leadership in hybrid technology for heavy trucks – a field which could become a key differentiator between otherwise generally competitive heavy truck manufacturers worldwide.
Corus reports £451 net profit in preliminary 2005 results: plans to sell downstream aluminium rolled products business
The Anglo-Dutch metals group has reported a full year profit after tax of £451m and earnings per share of 10.17 pence for 2005, and a group operating profit of £680m. EBITDA was £1,027m and underlying operating profit £720m. Corus’ net debt was reduced to £821m by the end of last year and its gearing to 25%.
While announcing these preliminary results, Corus also announced it had signed a letter of intent for Aleris International Inc. to acquire its Aluminium rolled products and extrusions businesses for €826m (c. £570m).
On steel prices, Corus reported that the downward pressure on steel selling prices experienced during the third quarter eased towards the end of the year leaving fourth quarter selling prices broadly unchanged. Reduced steel production throughout Europe, combined with lower imports, gradually restored the balance between supply and demand in the second half of 2005. European inventory levels returned to normal and demand began to improve towards the end of the year.
For 2005, Corus’ financial performance showed further improvement over 2004. The Group operating profit increased to £680m, compared to £662m in 2004. The underlying operating profit, excluding restructuring and impairment costs and profit on disposals, increased by £89m to £720m, 14% higher than the previous year. An overall increase of 16% in average steel selling prices compared to 2004, combined with benefits from the Group’s ‘Restoring Success’ programme, more than offset a 5% reduction in steel deliveries and the progressive impact of significantly higher raw material and energy costs.
As market conditions deteriorated during the year, the Restoring Success programme is estimated to have generated incremental benefits of some £220m in 2005 when compared to 2004.
Corus has used the EBITDA-to-sales ratio as a measure of the competitive gap between its performance and that of the European operations of its peers, and says this gap has reduced from 6% in 2003 to 4.5% in 2005, although it widened in the last 12 months when compared to 2004.
An investment of £153m was made last year at IJmuiden, Corus’ lowest cost facility, to expand the Group’s product range capabilities for the automotive and construction markets.
Corus says it will target at least 60% of its deliveries to be value added, differentiated products, by the end of 2008, a one-third increase over 2003, when the Restoring Success programme was first launched.
Concerning the proposed acquisition by Aleris, Inc. of Corus’ downstream aluminium rolled products and extrusions businesses, Corus’ equity stakes in its Canadian and Chinese joint ventures are also included within the proposed transaction. If the sale is concluded after regulatory approvals, Corus’ aluminium smelting operations would remain within Corus and would supply Aleris under a long-term agreement. Corus and Aleris would also enter into an agreement related to research, development and technology.
Aleris International Inc. is a major North American manufacturer of rolled aluminium products and a global leader in aluminium recycling. It operates 42 production facilities in the US, Brazil, Germany, Mexico and Wales.
Twenty per cent annual growth to 2010 forecast for automotive RFID market - VDC report
According to Venture Development Corporation's new automotive market report in its annual RFID Business Planning Service, the global market for radio frequency identification (RFID) systems in the automotive sector reached an estimated $312 million in 2005. Hardware accounted for nearly 56% of the market (excluding transponder revenues for automobile immobilization and keyless entry). VDC anticipates a compounded annual growth rate (CAGR) of 20% through 2010, with revenue shipments projected to exceed $765 million within five years.
The automotive industry has primarily used RFID for vehicle immobilisation. However, as economies of scale are attained and improvements in performances are achieved, deployments to support supply chain, shop floor, and asset management applications are expected to increase significantly. Automotive companies expect to reap the following benefits from using RFID within supply chain and shop floor applications:
- Improved visibility of products, assets, and materials within the enterprise;
- Automated tracking and inventory management of goods and materials;
- Increased operational efficiency and decreased resource expenses;
- Enhanced security and shrinkage reduction;
- Improved cradle-to-grave tracking capability;
- Removal of limited human interaction generally required with bar code systems;
- Improved supply chain collaboration (i.e., reduced warranty cost, shorter response time to open issues); and
- Compliance with current and future industry and customer mandates (NHTSA, AIAG, ODETTE, JAMA/JAPIA, Wal-Mart, etc).
Users in the automotive market are described as highly experienced with RFID, and are expected to rapidly integrate new solutions as they become technologically and financially feasible. Small in number and requiring a diversity of suppliers to support massive inventories of unique parts, vehicle assembly and parts/components firms wield significant clout in driving the entire supply chain to implement new technologies.
Venture Development Corporation is an independent technology market research and consulting firm based in the US. (www.vdc-corp.com)
British International Motor Show’s Business Day uprated with International Business Wales sponsorship
The organisers of the British International Motor Show, in partnership with Lloyds TSB Insurance, have announced plans to a re-invigorated trade day. International Business Day will be on Wednesday 19 July, between Press Day and Public Preview Day, and feature a programme of themed free conference sessions throughout the day, covering sectors including fleet, retail, management and tyres. This will also be the first time a trade day has had a dedicated sponsor - International Business Wales, part of the Welsh Development Agency.
(www.britishmotorshow.com)
February European new car registrations rose 2.1% year on year
Total new passenger cars registrations in Europe (EU-23 + EFTA) in February 2006 amounted to 1,079,101 units, a year-on-year increase of +2.1% (and +2.3% in the EU-15). With an almost equal number of working days throughout the region (only Portugal had one extra trading day), the ACEA said today the figures seemed to confirm an encouraging start of the year. The total registrations figures for the first two months of the year show an increase of +2.5% for Europe and of +2.7% for the EU-15.
The positive February total was reached despite the loss reported by three out of the five main markets. Spain (-2.3%), Germany (-1.9%) and the UK (-1.4%) suffered losses, while Italy (+6%) and France (+0.6%) reported growth. Among the EU-15, only three other countries posted losses, while the remaining seven ended the month with increases, comprised between +20.8% in Belgium (still under the boosting effect of the Brussels Motor Show) and +3.5% in Greece.
EFTA countries ended the month with an increase of +1.8%, while new EU Member States reported a marginal loss of –1%, showing some signs of improvement compared to recent demand decline. While Latvia (+39%) remains the best performer in the region, car sales in Poland (-8.8%) are still declining, but at a slowing rate. Cumulative figures show an increase of +1.5% for the EFTA countries and a loss of –2.1% for the new EU Member States.
Fiat’s new Grande Punto became Europe’s best selling car last month, helping increase the Fiat Group’s market share for the month (to 9%) and for the first two months of the year.
Data by country and by manufacturer are posted on www.acea.be.
New US EPA 2011 emissions reduction proposals to cost less than a dollar a car
Proposed new toxic emissions standards announced by the US Environment Protection Agency are expected to reduce toxic emissions from passenger vehicles to 80 percent below 1999 levels by 2030. The proposal launched earlier this month and currently be consulted on would set new benzene standards for petrol, hydrocarbon emissions standards for passenger vehicles at cold temperatures, and evaporative standards for fuel containers.
Once the new standards are fully implemented in 2030, they are expected to reduce emissions of mobile source air toxics annually by 350,000 tons, including 65,000 tons of benzene. The estimated annual cost for the entire proposal would be $205 million. EPA estimates annual health benefits from the particulate matter reductions of the vehicle standards to total $6 billion in 2030.
The new federal rules would also harmonise federal and Californian evaporative emission standards for cars and light trucks, and take effect in 2011 for fuel requirements, in 2010 for passenger vehicles, and in 2009 for fuel containers.
A 60-day comment period will begin when the proposal is published in the Federal Register. The proposal can be seen on online at: www.epa.gov/otaq/toxics.htm#mobile.
According to a report on Autoweek.com, federal officials expect compliance with the proposed new standards to cost the automotive industry less than $1 per vehicle, requiring only the recalibration of engine management units and upgrading of cold weather emissions testing facilities. The changes would be phased in during the 2010-15 model years. EPA officials say most of the cost to the automotive manufacturers would be in R&D and in upgrading facilities for testing under cold conditions, and that fuel refiners would spend an estimated $500 million to reduce benzene in petrol, raising the cost of petrol a little more than one-tenth of a cent per gallon.
Autoweek says the Alliance of Automobile Manufacturers, which represents nine OEMs present in the US market, does not dispute EPA's compliance cost estimate but has yet to respond formally to the EPA consultation.
(www.epa.gov, autoweek.com)
BMW forecasts 2006 sales of nearly 1.4 billion cars and 22% rise in pre-tax profit
At a meeting for financial analysts in Munich yesterday, BMW chairman Helmut Panke told them BMW Group was forecasting a record €4bn (£2.8bn) pre-tax profit for 2006, up 22% on 2005, and that the group expecteld to come close to its 1.4m 2008 sales volume target this year. BMW's profits were flat last year. Sales in 2005 were 1.33m units, ahead of nearest rival Mercedes-Benz. The buoyant profit forecast relates in part to an easing of raw materials prices.
- BMW mentioned yesterday that it had received expressions of interest in the use of the MG Rover brand name, including approaches from the two Chinese manufacturers which have acquired former MG Rover assets; but BMW will consult Land Rover brand owner Ford before accepting any offers.
Fresh consortium bid for GMAC reported
General Electric, Merill Lynch and Bank of Nova Scotia have reportedly joined with the US private equity firm Kohlberg Kravis Roberts (KKR) and the Wachovia bank to engineer a fresh bid for General Motors Acceptance Corp (GMAC), of which parent GM has been discussing sale terms with another consortium, of Citigroup’s private equity arm and Cerberus Capital Management. GM itself has yet to confirm the story.
The KKR group has, according to sources quoted by the Financial Times, made a non-binding bid worth about $13bn for a majority stake in GMAC; the 51% on offer from General Motors had been expected by analysts to fetch over $11bn. GMAC’s borrowing costs have been raised by its non-investment grade ratings from credit rating agencies, reflecting the risks attached to parent GM’s liabilities.
GM withdraws appeal in steel contract price case
General Motors has withdrawn its appeal of a Michigan trial court's August 2004 dismissal, with prejudice, of GM's March 2004 breach of contract lawsuit against Steel Dynamics, reports the latter. The Court had ruled in favour of Steel Dynamics, that a January 2003 GM multi-year ‘award letter’ issued to Steel Dynamics was not an enforceable contract and that GM could not compel the firm to sell it steel throughout 2004 at January 2003 prices.
Porsche to host April AMS Europe Manufacturing Conference at Leipzig
The next Automotive Manufacturing Solutions (AMS) Europe conference will be held at the Porsche plant in Leipzig between 3 - 5 April, organised by Automotive Manufacturing Solutions magazine.
The programme includes production development and the rise of virtual modelling for plant layout to manufacturing cell design and visualising programmes. Other topics include flexible production systems and the increasing complexity of robotic interfaces, stamping and joining technologies, and integrators and process designers, among others.
Session speakers will include: Nikolaus Bauer, Director of Logistics, IT, BMW; Roland Luethen, Department Head, Frame Production, BMW-Motorrad; Prof. Dr. Ing. Ralf Kolleck, Professor for Tools & Forming, Technical University Graz; Pierre Gambardella, General Manager, Production Control, Toyota Manufacturing France; Günter Walz, Vice President and Head of Production Planning, Mercedes-Benz; Klaus Huber, Project Leader, Improvement of Flexibility for Paintshop for Add-on Parts, AUDI; David Jenkinson, Manager, Body Assembly Systems, Lotus Engineering; Wolfgang Zitz, General Manager, Paintshop, Magna Steyr; Reiner Tunger, Cost Center and Planning Leader, Volkswagen Sachsen; Felix Bozsar, Purchasing Manager, Delphi-Calsonic; Rick Johnson, Vice President, IT, Europe, South Africa and South America, Johnson Controls and Denis Barbier, Vice President, Industrial System Performance, Renault.
The AMS Europe conference includes plant visits to BMW Leipzig or VW Dresden and Porsche Leipzig and on- and off-road test driving in Porsches.
The conference is supported by Volkswagen, BMW Leipzig, Porsche Leipzig, City of Leipzig, the Saxony region and IIC, along with sponsors Schneider Electric (gold) and silver sponsors inos Automationssoftware, KabelTrax Europe, Kuka, Porsche Consulting, QAD, Uddeholm and Vizendo.
(www.amsconferences.com/europe)
New directors appointed at Ford of Britain
Ford of Britain has announced two director-level changes, both of which come into effect on April 1. Mark Ovenden has been appointed director of marketing and replaces Steve Hood, who joins Ford Retail as director marketing and strategy. Gary Whittam, commercial vehicle director, Ford of Britain, has elected to retire and will be replaced by Steve Kimber.
Mark Ovenden joins Ford of Britain from Ford of Europe where he was European small car brand manager, based at the Dunton research and development centre in Essex. Steve Kimber was manager of Ford's field operations and latterly manager of Ford’s European CV marketing team.
What Car? magazine adopts carbon offset policy
What Car? magazine has announced that it is the first car magazine to go carbon-neutral, having donated to the Climate Care charity to offset all the carbon dioxide emissions it produces while assessing cars, by its office energy needs and its travel around the world attending global car launches.
Road pricing is losing public support - RAC Foundation study
Attitudes are hardening against road pricing, warns the RAC Foundation today, on publication of a new study comparing changes in motorists’ attitudes to road pricing since 2002. The Foundation claims that motorists are not being swayed by the current debate and that Government needs to agree to certain safeguards if it is to persuade motorists that the concept will be of national benefit.
The study, based on surveys carried out by GfK Automotive, part of GfK NOP, shows that there is less than 50 percent support for road pricing on its own, and that support has fallen since 2002:
- In city centres: the number of motorists willing to pay a charge to drive in city centres has fallen by 7 percent since 2002.
- On all roads: the number of motorists willing to pay to use the whole road network has fallen by 5 percent since 2002.
- On motorways: the number of motorists willing to pay to use motorways has remained broadly the same, falling by just 1 percent since 2002.
In 2002, the survey found that more than three quarters of motorists would accept charging if there were equivalent reductions in fuel duty, and over 70 percent would accept them if part of a package of transport improvements. But the 2005 survey shows that motorists are now less willing to be persuaded by concessions in these areas:
- The number of motorists agreeing that tolls would be acceptable if other motoring taxes came down has fallen by 3.5 percent but is still supported by 71 percent.
- The number of motorists agreeing that tolls would be acceptable if roads were improved to guarantee better journeys has fallen by 11 percent but is still supported by 60 percent.
- The number of motorists agreeing that tolls would be acceptable if they were introduced as a package including better roads, better public transport and better traffic management, has fallen by 10 percent and is now supported by 61 percent.
One of the aspects that appears to worry drivers, according to the study, is privacy. More motorists are now concerned that the use of satellites to monitor the location of cars to calculate road charges could be an infringement of personal liberty than when the research was first conducted.
The RAC Foundation is warning that the window of opportunity to persuade motorists of the benefits of road charging is closing. The full study will be available on the RAC Foundation’s website, www.racfoundation.org.
US company GXS launches B2B hub for China’s automotive industry
The Maryland, US-based B2B e-commerce specialist GXS and China Entercom, a Government-approved telecoms firm, are launching China e-Auto Hub, a B2B e-commerce solution for more than 8,000 companies in China’s automotive sector, to enable OEMs, parts and raw materials suppliers, automotive dealers, aftermarket retailers and third party logistics providers to exchange information related to design specifications, production planning and materials management online.
BVRLA urges DVLA to issue free digital tachograph driver cards
With the imminent introduction of digital tachographs the BVRLA is concerned about the ‘’extremely low’ take-up of driver cards. Only 45,000 cards have so far been issued by the DVLA. To make up the anticipated shortfall, the BVRLA is suggesting that the DVLA provide the cards free of charge for a limited period for certain categories of driver. These include agency drivers – essential given the current driver shortage – multi-vehicle drivers, and those wanting to use rental vehicles which will be among the first to be equipped with the new technology.
Japanese ‘Big Three’ raise basic pay for first time in five years
Toyota and Honda have agreed to raise the basic pay of their workers for the first time in five years, and Nissan Motor Co. will also raise wages for the year starting 1st April, following union demands, reported the Bloomberg news agency today.
Toyota is reportedly awarding a 7,900 yen (US$67.2) monthly pay increase, and paying an annual bonus of 2.37 million yen. Nissan’s workers will get an average 7,000 yen monthly rise, while Honda’s will reportedly see 600 yen more in their monthly wages.
German high performance car firm establishes Gulf’s first car manufacturing plant
RUF GmbH, a German high performance ‘sports car boutique’ manufacturer is to set up a joint venture factory in Bahrain, the first car manufacturing plant in the Arab Region. The new full service RUF manufacturing, assembly and marketing base in Bahrain will be the first such facility outside RUF's Pfaffenhausen facility in Germany. Included in the design of the building are an approximate 3.5 km race track and research and development facilities.
RUF produces its own derivatives of Porsche cars on a tailor-made basis, turning out only about 35 a year. The new RUF Bahrain manufacturing and assembly facility will more than double its output. “We are looking at annual gross revenue over the first five years of US$12-20 million dollars,” said owner Alois Ruf of the Bahrain investment.
February figures show Chinese vehicle output and demand still growing fast
China’s vehicle sales reached 528,100 units last month, up 58.7% y-o-y although down 9.7% month on month, according to the China Association of Automobile Manufacturers. Domestically-manufactured vehicle sales rose by 50.7%, fuelled by new models and incentives on older ones. Passenger vehicle output skyrocketed by 75.4% to 377,700 units and sales rose 61.4% to 344,500 units. February commercial vehicle output of 150,400 units was up 28.03% y-o-y. and CV sales rose 28.7% to 135,500.
Year-to-date Chinese vehicle output and sales during the first two months of this year totalled 1.05 million and 1.01 million units respectively, up 42.3% and 47.7% y-o-y.
The combined sales of China's top five manufacturers, SAIC, FAW, Dongfeng Motor, and Beijing Automotive Industry Corp. totalled 676,400 units.
(Source: China Daily, 14 March)
- While China’s new car market grew by 23% to 3.1m units last year, the profits of the combined wholly domestic and joint-venture owned manufacturers, at U$2.2bn, were 38% down y-o-y, according to Michael Dunne of Automotive Resources Asia, quoted in another China Daily report reviewed by the Detroit News.
Before 2002 when China’s automotive industry was ‘one of the most protected industries in the world’ upper medium (D segment)cars could yield profits per unit of US$5,000.
Declining prices have since dented such margins, as has the Chinese market’s migration towards smaller cars, priced below US$12,000, now the country’s fastest-growing segment. The Geely Merrie model reportedly makes its wholly Chinese manufacturer US$190 per unit. Nevertheless, the share prices of Chinese manufacturers have risen by between 40% and 400% in the first two months of this year, buoyed by evidence of still-growing domestic demand.
EU car price survey: Central European prices converging towards those of EU 15
The latest pre-taxes new car price survey report from the European Commission shows that Germany remains the Euro zone’s most expensive new car market, with 38 of the 87 models studied more expensive in Germany than the Euro zone average. Finland offers the lowest new car prices in the Euro Zone, while Denmark, which levies Europe’s highest car purchase taxes, boasts the lowest pre-tax prices among the EU 25 member states.
The European Commission reports that car price convergence is not taking place at a rapid rate; prices in the new Member States are being aligned to those of Western Member States, leading to notably steep price increases in Poland.
Spain ‘asks for delay in Euro 5 implementation’ - report
José Montilla, Spain’s industry and energy minister, has requested that the European Union delay the planned 2009 introduction of Euro 5 vehicle emissions limits on the grounds that they could damage the country’s automotive manufacturing sector, reports the Spanish newspaper El Mundo. Spain wants the schedule for Euro 5 to take into account not only the technical feasibility of its planned noxious emissions reductions, but also its economic implications for vehicle manufacturers.
(El Mundo, 14 March)
Renault outlines how it will launch 26 models by 2009
Jean-Louis Ricaud, Renault’s director for engineering and quality, has explained to Le Monde how the company’s alliance with Nissan will allow it to launch 26 new models in 3-4 years through joint components utilisation. All engines and transmissions are already shared by both manufacturers.
Developing two or three derivatives of one body shell saves 30-40% of labour cost compared to doubling it with an entirely new shell. From 2007 Renault will offer several variants of the Kangoo van-based MPV and of the Laguna, including a coupé version of the latter. The next iteration of the Mégane range will come in ten derivative versions, against seven for the current Mégane.
A major source of model development savings will be standardisation of platforms and common components across this increased range of relatively low-volume variations within high-volume overall platform production.
Renault has also separated technical and commercial functions in new product development, and has in M. Ricaud’s words reached a stage of ‘industrialisation’ of the engineering process, which helps prevent decisions which could lead to cost over-runs.
(Le Monde, 14 March)
Fuji Heavy Industries-Toyota manufacturing and technology collaboration outlined
Toyota and Subaru manufacturer Fuji Heavy Industries (FHI) have announced that the Toyota Camry is to be built at Subaru of Indiana Automotive, Inc., FHI’s North American production base. The two companies also announced that FHI will develop Toyota vehicles and that they will further consider the development of an FHI hybrid vehicle based on the Toyota Hybrid System.
Subaru’s Indiana plant, which currently produces the Subaru Legacy, Outback, Baja and Tribeca on two production lines, will shift all Subaru output to one line and produce the Camry on the other for the North American market ,with a production capacity of 100,000 units a year, starting around spring 2007. Allowing the plant to achieve an annual production capacity of about 240,000 vehicles, the new arrangement is expected to create about 1,000 additional jobs once full Camry production is in place.
Concerning Toyota vehicle development by FHI, both companies intend to promptly decide on an R&D project expected to involve about 100 FHI engineers working with Toyota colleagues, while the development of a Subaru using Toyota’s Hybrid System is to be put in train.
Both companies say they recognize the need to continue discussion on a ‘comprehensive business cooperation framework, made possible through even stronger ties and geared toward advancing their long-term mutual competitiveness’.
This week’s announcement follows a memorandum of understanding signed by FHI and Toyota last October.
UK Chrysler-Jeep dealer network signs up for Dodge brand
Britain's 89 Chrysler and Jeep dealerships have signed contracts this week to retail a third DaimlerChrysler US brand – Dodge. The first right-hand drive model, to be launched in July, is the Dodge Caliber, a five-door hatchback powered by a choice of 1.8-litre and 2.0-litre petrol or 2.0-litre diesel engines.
New MD to be appointed at Land Rover
Mathew Taylor has resigned as managing director of Land Rover, according to Autowired, which reported yesterday that he was moving at Easter to a job outside the automotive sector. He is to be replaced by Phil Popham.
Nationwide Autocentres buys Telford service outlet
Nationwide Autocentres, the UK's largest independent garage group, has bought a new 14-bay service centre in Telford, bring its wholly-owned outlets to 212.
The former Universal Motor Services at Court Works Industrial Estate in Madeley, Telford, is a large unit licensed to carry out MOTs for classes one, four, five and seven, amongst other standard repair work. Following an audit by the AA whose own former outlets form a large number of Nationwide’s, the Telford centre will become part of the 'AA Approved' Nationwide Autocentre network. In February Nationwide Autocentres was sold to Phoenix Equity Partners for £49m.
LTI confirms to OFT that black cabs can be serviced using non-OE parts
Black cab manufacturer LTI Limited has explained to its dealers that they can use non-LTI approved spare parts following a complaint from a cab driver which prompted the OFT to carry out a survey amongst LTI dealers regarding the use of spare parts.
Many of them believed wrongly that only LTI-approved parts could be used when carrying out routine maintenance and repair work without invalidating the vehicle warranty. After being contacted by the OFT, LTI has confirmed that it does not restrict the use of 'original spare parts' and 'spare parts of matching quality' by its dealers in such circumstances. Normally it will only invalidate a warranty if non-LTI approved parts are seen to have been the cause of a problem.
Around £10m of LTI-approved replacement parts are sold each year.
Aside from the spare parts provisions of the European block exemption Regulation, manufacturers of safety-critical replacement components such as steering, braking and suspension systems must apply to the Public Carriage Office for authorisation of their use on licensed taxis. The PCO also requires that only authorised 'taximeters', approved taxi tyres and taximeter-related parts are fitted, and insists on approving accessories for taxis such as satellite navigation units.
The OFT advises that black cab owners should, in general, ensure that garages (whether authorised or independent) carry out servicing work in line with a manufacturer's servicing schedules, that maintenance records are completed and receipts for work done and parts used, including any lubricants, retained in case problems arise with a warranty claim.
Experian buys Catalist forecourt data supplier
Experian, the consumer, property and vehicle data company which operates Car Data Check and is a licensed DVLA data supplier, has acquired Catalist, a UK-based supplier of data on international retail petroleum and garage forecourt markets.
Catalist maintains information on fourcourt outlets in over 20 countries across four continents, maintains a team of some 200 surveyors and has collected information on over 130,000 retail sites with more than 100 key data items per site in every country surveyed. Its databases cover most of Western Europe, India, Japan and South East Asia.
Catalist will become part of Experian’s Business Strategies division, which is already a leading provider of European retail property data, analysis and consultancy.
- Experian has made two new appointments in its automotive division to focus on alliances and partnership relationships. Bob Smith and Alison McKenzie-Blyth will manage and develop the Automotive division’s relationships with original equipment manufacturers and other organisations.
Morrisons opens UK’s first BioEthanol E85 fuel pump
Morrisons supermarket will today open the UK?s first BioEthanol E85 filling pump, tying in with the first deliveries of the Saab 9-5 BioPower flex-fuel car. The fuel will be branded as Harvest BioEthanol E85, and priced 2p per litre below petrol at the same forecourt.
Morrisons, the UK?s fourth largest supermarket chain (with 274 petrol forecourts across the UK), will locate its first BioEthanol E85 pump at its Albion Way, Norwich site, then at another four of its sites in the East of England – at East Dereham, Lowestoft, Diss and Ipswich, and at five sites in Somerset. Morrisons has earmarked several other sites across the UK, but has chosen East Anglia for the launch because of the region’s role in spearheading the emerging UK biofuels industry.
Morrison’s launch of BioEthanol E85 has been timed to coincide with the first customer deliveries of the Saab 9-5 BioPower, which was officially launched in the UK in November 2005. The car can run on BioEthanol E85, a blend of 85% BioEthanol and 15% petrol, or on pure petrol, without any adjustment required by the driver.
- The Shropshire B5 Biodiesel initiative, co-ordinated by Energy West Midlands, a new Government-backed regional energy office, with Marches Energy Agency, a Shropshire-based charity and Garage Watch, an association of 400 independent fuel retailers has pioneered biodiesel retail distribution, having so far opened seven forecourts across Shropshire.
(Morrisons, Autowired, 14 March)
Pension deficits push Armstrong Fastenings, Willenhall Manufacturing, Caparo Automotive, Armstrong Equipment into receivership
Matthew Hammond and Rob Hunt of PricewaterhouseCoopers LLP have been appointed joint administrative receivers of Armstrong Fastenings Limited, Willenhall Manufacturing Limited, Caparo Automotive Limited and Armstrong Equipment Limited. Caparo Automotive Limited and Armstrong Equipment Limited operate as holding companies for these trading companies. Armstrong Fastenings Limited has two divisions: Armstrong Fastening Systems and Armstrong Fastening Technologies.
The parent company of all of the businesses, Caparo Group Limited, and the rest of the Caparo Group, have separate financial affairs, are not affected by the appointment and continue to trade normally.
Armstrong Fastening Systems manufactures wire thread insert systems, mainly for the aerospace sector, with an annual turnover of approximately £3 million. The business operates from a base in Hull, East Yorkshire and employs 50 staff.
Armstrong Fastening Technologies designs, develops and manufactures specialist fasteners for the automotive sector with an annual turnover of approximately £25 million. The business operates from a base in Darlaston in the West Midlands and employs 330 staff on two sites in Darlaston and Wolverhampton.
Willenhall Manufacturing Limited manufactures metal pressings for the automotive OE and aftermarket, with an annual turnover of approximately £5.4 million. The business operates from Willenhall in the West Midlands and has 100 employees.
Matthew Hammond, joint administrative receiver, PricewaterhouseCoopers LLP, said: “In common with many companies at this time, Armstrong Fastenings Limited and Willenhall Manufacturing Limited have suffered from the difficulties of a significant pension deficit. The ongoing funding of this was the predominant factor in the appointment of administrative receivers.
“The businesses are currently operating with a full order book and manufacturing is ongoing. With the support of employees, key customers and suppliers we hope to receive interest in the businesses from third parties with the objective of achieving a sale of all or part of the businesses, safeguarding the jobs of the workforce.”
European Commission closes investigations into GM and BMW dealer contracts
The European Commission has closed its investigation into General Motors’ and BMW’s distribution and servicing agreements following changes to bring them into line with the car distribution block exemption Regulation 1400/2002.
The changes introduced by GM ensure that dealers and repairers are not restricted in selling or servicing cars of competing brands (multi-branding), and that all repair shops which fulfil the necessary quality standards can become members of the authorised network. The case followed complaints from the French, German, Spanish and Italian Opel dealers’ associations.
With regard to GM’s dealer contracts, the Commission was concerned that they deterred dealers who wished to diversify their portfolio of brands.
In particular, dealer performance was measured in terms of so-called “registration effectiveness” (a proxy for market share), and dealers were assessed against GM brands’ national market share. GM has now removed the penalty for non-fulfilment of these performance targets and clarified that the setting of sales targets will, in all circumstances, require dealers’ agreement, and will take account of their local business circumstances, including the decision to sell competing brands. GM has also confirmed that dealers have the right to seek arbitration in case of a dispute regarding sales targets and performance.
Other contract provisions were hindering GM dealers and repairers from using existing facilities to sell or service cars of competing brands. To remedy this, GM has in particular clarified that the Dealer Management System can be generic, provided that it has the same quality and functionality as the GM-recommended product, and that the compatibility of its interfaces with key GM software is approved by a third party. GM has also clarified that dealers are not required to reveal commercially sensitive information on other brands through its reporting systems.
GM has also clarified that new entrants to its authorised repairer network will only have minimum capacity requirements for personnel and work bays as are required to provide a good quality service, taking into account the actual work order history of each individual repairer. Moreover, work bays and other facilities, as well as personnel, may be used to service cars of competing brands, and staff not working on GM vehicles will not be required to undergo GM-specific training. Furthermore, a new “opening clause” states that repairers are free to source all workshop equipment, tools and IT hardware and software from non GM-designated suppliers provided that equivalent functionality and quality is assured.
Finally, repairers can group together to buy and warehouse spare parts. GM has also reduced the core list of tools which have to be kept on site, while allowing all other tools to be shared between authorised repairers.
GM implemented the changes in December 2005 and January this year.
The similar case involving BMW, which has also been closed, followed a complaint lodged by the European BMW Dealers’ Association against several aspects of BMW’s distribution and servicing agreements in June 2003. BMW implemented adjustments to, and clarifications of, its distribution and servicing agreements at the end of January 2006, to over 2,500 BMW and MINI dealers and repairers in the EU.
In respect of aftersales, the issues covered minimum capacity requirements over and above what is objectively necessary for ensuring high quality repair and maintenance services, and BMW abandoned all quantitative requirements that limited the number of authorised repairers in a given area. In addition, a new “opening clause” states that, as with GM contracts, repairers are free to source all workshop equipment, tools and IT hardware and software from alternative suppliers provided that equivalent functionality and quality is assured.
BMW now also allows cooperation by authorised repairers to jointly warehouse and purchase spare parts. The Commission also took note that certain discriminatory practices against “stand-alone” repairers (i.e. garages who do not sell new BMW cars) were abandoned by BMW during the proceedings. This included, in some Member States, the omission of stand-alone authorised repairers from the directory of official BMW repairers on BMW’s website, the on-board service booklets and from the navigation systems installed in BMW cars.
With regard to multi-brand sales and servicing, various provisions in the contracts were hindering BMW dealers and repairers from using their existing facilities to sell or service cars of competing brands, without having to unnecessarily duplicate investments. BMW has clearly accepted that its dealers and repairers use their premises for multi-brand distribution and servicing.
BMW has also clarified that dealers and repairers can use generic (multi-brand) IT infrastructure and management systems, including accounting methodology and accounting framework and that they are not required to disclose to BMW commercially-sensitive information on their business with other brands. This provides dealers with the opportunity to be innovative and more efficient, so that consumers can benefit from better commercial conditions.
EU Environment Council debates post Euro 5 emissions controls
Pending the opinion of the European Parliament, the European Environment Council held a policy debate last week on a proposal for a Regulation on type-approval of motor vehicles with respect to emissions and on access to vehicle repair information, amending Directives 72/306/EEC and Directive EC (EURO 5) (5163/06).
The proposal establishes requirements for the type approval of motor vehicles and replacement parts, such as replacement catalytic converters, with regard to their emissions. In addition it lays down rules for the in-use compliance durability of anti-pollution devices, on-board diagnostic systems, measurement of fuel consumption and accessibility of vehicles repair information. The emission limits for particulate matter foreseen by the proposal would require the installation of particulate filters in diesel cars.
The debate covered, in particular, whether the new (Euro 5) Regulation should provide a longer-term perspective and therefore already include a second stage of significantly lower emission limits, in particular with regard to NOx emissions.
A majority of the delegations present was in favour of inserting long term limits into the present proposal, buthe European Commission responded that any further limits should be technologically and economically feasible, and might require a specific impact assessment.
(www.ue.eu.int/ueDocs/cms_Data/docs/pressData/en/envir/88721.pdf)
Engine re-manufacturers give cautious welcome to SMMT report
The Federation of Engine Re-Manufacturers has given a cautious welcome to the SMMT’s latest report, ‘Re-Manufacture in the UK Automotive Aftermarket’, which raises the profile of a sector of the industry that the Federation says has too long been regarded as a second-class activity.
“The report shows that there are clear opportunities for the remanufacturing industry in the future. It also draws attention to the potential threats to the sector posed by the growing influence of car supermarkets, the falling prices of new cars and the ELV Directive (which hands ultimate control of that impetus to the manufacturers),” said FER secretary Brian Ludford. The FER believes that the report leans too heavily towards the vehicle manufacturers’ perspective and relies too greatly on information, statistics and views drawn from those in the heavy volume production end of the re-manufacturing market.
“The reality is that the sector is dominated by a large number of small companies that produce the product – often acting for and on behalf of the vehicle manufacturers themselves.”
The FER’s view is that although the SMMT document provides a good initial platform for further research, it has missed the opportunity to provide a broad European perspective. It has also regenerated confusion within the sector as a result of several unhelpful references, to ‘remanufacturing’ and ‘reconditioning’. The BSI Code of Practice BS AU 257:2002 states clearly that the terms are in fact synonymous, says the FER.
BVRLA calls for company car tax changes in budget submission
The BVRLA has called for changes in company car tax, vehicle excise duty and corporation tax allowances in its 2006/7 Budget submission. Critical of the way Euro 4 was implemented at the turn of 2004/5, John Lewis, the BVRLA’s Director General said a more sensitive regime to incentivise fleets to acquire greener cars was needed for Euro 5: “We have to have incentives to encourage early adopters, especially as Euro V for cars is just around the corner. Without incentives there will be an inevitable last minute panic to meet the new regime instead of a smooth and orderly transition”
On VED, the BVRLA is lobbying for multi-year licences for fleets, while on corporation tax, the BVRLA acknowledges that it had a substantial impact on the decision last August not to transfer capital allowances from the lessor to the lessee, but it is now looking for reform of the way that corporation tax is applied to vehicles:
“At the moment corporation tax, as it applies to vehicles, is the only non-emissions based tax and importantly for the fleet industry, it actively discriminates against contract hire. We need to see the back of the £12,000 capital allowance limit and the scrapping of the rental disallowance. We believe these should be replaced by a banded set of allowances based on CO2 emissions applied to all business cars. In one move we could help the government meet CO2 targets, even out the funding method decision process and reduce the burdensome administration of the present corporation tax arrangements.”
SAIC to procure more Ssangyong components through Chinese subsidiary
In a move likely to be seen as politically sensitive by South Korean 4x4 maker Ssangyong’s trade unions, SAIC, the Chinese SAICwhich took a majority share in Ssangyong Motor since last year, is set to replace a number of Korean suppliers with procurement managed by its own Auto Parts Sourcing International Service (APSIS) subsidiary, reported the Korea Times yesterday.
APSIS provides SAIC’s joint ventures Shanghai-GM and Shanghai-Volkswagen with imported components, as an internal procurement agency. SAIC has already has been accused by the main Ssangyong union of taking 800 designs of components and fully built-up vehicles, including the recently-launched Kyron, from its Korean subsidiary. Ssangyong vehicles are imported to the UK by an independently owned official importer.
- Ssangyong parent SAIC received Chinese Government permission to begin production of the Rover 75 in China earlier this month.
(www.koreatimes.co.kr, 13.March)
Chinese manufacturer sets up UK importer for 3.5 tonne trucks
A new UK commercial vehicle importer, Yuejin UK, plans to import a Nissan Cabstar-derived range of 3.5 tonne trucks with dropside bodies from China later this year, reports the SMMT’s ‘CV Newsbrief’ newsletter. Tipper and box-bodied models will follow later in the year.
The trucks, based on a Nissan Cabstar model and to be exhibited at the forthcoming CV show, are powered by a Toyota-based LPG-fuelled engine, a factor which leads Steven Kusytsch, the importer’s business development manager, to expect opportunities to sell to local authorities. Mr. Kusytsch is seeking to appoint dealers in the UK before extending marketing effort to continental EU markets in the next two to three years.
Yuejin can be contacted via Steve Kusytsch on Tel 0870 206 6632, or via email at steve.kusytsch@yuejin.co.uk
Court decision delayed on Tower Automotive labour contracts
US tier one supplier Tower Automotive, Inc., which announced on 2 February 2005 that it and some of its subsidiaries had filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code, is continuing discussions with its unions to reach a deal on labour cost reductions, following a delay in a New York bankruptcy judge’s decision, due today, on whether to approve the cancellation of Tower’s employment contracts. More than half of Tower's 4,500 workers have voted to strike if the judge approves Tower's request.
- On 13 March Tower announced the appointment of ex-Visteon purchasing executive Paul Radkoski as Senior Vice President, Global Purchasing.
(www.towerautomotive.com)
Renault and the Japanese NTN to resume talks on bearings partnership
Renault and NTN have agreed to resume talks regarding a partnership in the bearings business, aimed at exploring the possibility for NTN, a leading global bearings manufacturer, to use Renault’s SNR Roulement subsidiary, as their joint centre for future developments, mainly in Europe.
The talks will address especially the issues of the optimum use of SNR manufacturing capacities, the choice of Annecy as the major NTN centre for bearing R&D in Europe, and the role of Renault in this partnership. Renault says that “In a very competitive market, requiring increasing R&D efforts, the contemplated partnership would allow the consolidation of existing employment.”
- Another bearings manufacturer, The Timken Company, has received a Supplier Quality Award from Renault, and is one of only three companies among Renault’s 600-odd global suppliers to do so. Timken supplies Renault with roller finger followers for engine valvetrains and bearings for gearboxes and wheel ends.
Caparo creates advanced UK vehicle technology group
Caparo - the UK-based multinational group with interests in aluminium and steel processing and vehicle structural components - is to create an advanced automotive technology and engineering design company to be called Caparo Vehicle Technologies, focused on providing technology development, materials engineering and design services to the mainstream automotive, motorsport and aerospace markets. Caparo aims in particular to accelerate the use of lightweight materials in vehicle structures.
To launch the company Caparo has acquired the automotive consultancy recently established by Ben Scott-Geddes and Graham Halstead, both ex-members of the team that developed the McLaren F1 and Mercedes SLR McLaren, and developers of the Freestream T1 performance car currently in prototype build, which will now be launched as the Caparo Freestream.
Ben Scott-Geddes becomes design director of the new company, and Graham Halstead engineering director. Caparo has recruited ex-Ricardo head of computer-aided engineering Mark Findlay as managing director, whose first task is to recruit a team of around 30 engineers to handle contracts with OEMs and first tier suppliers. Caparo group chief executive Angad Paul will be chairman while fellow Caparo main board director Richard Butler, who brought the two parties together, becomes commercial director.
The Caparo Freestream car will feature a bespoke 2.4-litre V8 engine delivering 480bhp at 10,500rpm, which combined with a small motorsport transmission produces a powertrain weighing approximately 130kg, helping, along with composite structural materials to achieve a total vehicle mass of 465kg. This has enabled the company to be the first in the world to produce a road and track car able to exceed 1,000bhp per tonne. The car will claim Le Mans prototype performance along with a range of 400-500 miles from its 70-litre fuel tank.
- Caparo (www.caparo.co.uk) is a £650 million-turnover company with interests in steel and automotive components in Britain, Spain, the US, Canada and India, supplying OEMs including Honda, Maruti, GM and Ford. The group is the largest single-owner business in the UK with a variety of steel production facilities employing 4,500 people, and was founded in 1968 by the British Asian industrialist and Labour peer Lord Swraj Paul.
Kia chooses Georgia for first US assembly plant
West Point, Georgia beat off an alternative offer from Mississippi to attract Kia Motors Corp. to construct a $1.2 billion automotive assembly and manufacturing plant, in West Point, Troup County, the company announced yesterday. The facility will be Kia’s first manufacturing plant in the U.S and will begin production in 2009. It is expected to produce 300,000 vehicles per year at maximum capacity and will be built on 2,200 acres. The plant will employ approximately 2,500 local workers, while 5-6 suppliers are expected to set up operations in Troup County and the surrounding areas, creating an additional 2,000 local jobs.
Wagon plc agrees acquisition of Oxford Automotive ApS
Further to its announcement on 20 February 2006, the UK-based supplier Wagon plc yesterday announced it had entered into an agreement to acquire Oxford Automotive ApS through the issue of new Wagon shares, in a deal which values Oxford at £128.4 million.
The directors of Wagon believe that the acquisition “achieves a key strategic goal through a step change in Wagon's market positioning. The Enlarged Group will benefit from the greater scale it will enjoy in the European automotive market, from the broader technological expertise that will enable it to compete more effectively for larger projects and provide complete module offerings, and ts increased financial capacity.
(www.wagonplc.com)
Chinese manufacturing approvals for SAIC and Nanjing Automobile to put two Rover 75 derivates on Chinese roads
Shanghai Automotive Industry Corp., which acquired design rights to the Rover 75 before MG Rover collapsed, won permission from China’s National Development and Reform Commission (NDRC), two weeks ago to start building the car in China later this year, but that permission has now been followed by the go-ahead given to Nanjing Automobile, the owner of MG ZT rights and plant acquired from MG Rover’s administrators, to start assembly of up to 200,000 units a year at a new plant in Nanjing.
It appears, reports the FT, that SAIC may take legal action to defend its claimed exclusive IP rights to to its near-identical vehicle platform: "SAIC will defend what it has acquired," a London-based spokesman for SAIC told the paper yesterday. "But until they infringe the rights there is nothing that can be done."
Nanjing paid £53m for the assets of MG Rover, and has argued that its purchase gave it the rights to the 98 per cent of Rover and MG models that shared common designs - a position supported by PwC, MG Rover’s administrators, while SAIC has reportedly claimed Nanjing had bought only the 2 per cent of the group’s designs that were exclusive to the MG brand.
(FT, Xinhua agency)
BVRLA members’ fleets reach new record volume
Led by contract hire, BVRLA Members’ fleets increased in size in 2005 by over 5% overall to a new record total of 2.639 million vehicles. Car contract hire now forms more than 57% of the total membership fleet with light commercial vehicles and trucks adding a further 9.5%. Contract hire for cars increased by 166,000 units to a new high of 1.507 million units, while contracts in commercial vehicle sectors also rose, to a new combined total of 251,318 units.
The number BVRLA members’ personal contracts, including ECOS schemes, rose by some 16,000 units, while vehicles operated under fleet management dropped by 74,000 units or 17% last year.
BVRLA director-general John Lewis said, “The rental fleet for cars has remained virtually unchanged, a good performance in light of the difficult trading conditions experienced by the sector. The commercial vehicle rental fleet has also maintained its position, although there has been a switch from LCVs to HGVs, possibly as a result of operators maximising their driver utilisation.
“BVRLA members now provide more than 65% of all company cars, buy more than one million vehicles a year and contribute more than £2.5 billion in VAT to the Exchequer in doing so.”
Land Rover goes up, BMW down in latest RMIF Dealer Attitude Survey
Sue Robinson, the Retail Motor Industry Federation's (RMIF) National Franchised Dealers Association director, reports on the organisation’s latest member survey that “Despite sales in 2005 up by more than 5%on the previous year, BMW dealers are clearly worried, with their confidence at its lowest ebb since the RMIF Dealer Attitude Survey began 17 years ago.” Lexus held its now six-year lead in the survey, and Land Rover reached second place in the most valued franchise league table.
The franchise performs badly in most categories in the latest survey, with BMW dealers displaying concern about most areas of their business and reporting their lowest ever scores for marketing, profit potential, vehicle supply and distribution and manufacturer requirements. The franchise, traditionally one of the most profitable and sought after in the UK, came bottom in marketing stance, profit potential and future profit potential.
Hyundai dealers also returned downward ratings in most tracked categories compared to the last survey six months ago; the importer was acquired from Lex (now RAC) by Hyundai recently, and saw sales drop nearly 3% last year.
Robinson adds: “There is evidence that Chevrolet has been listening to its dealer network, with retailers' confidence in their franchise making rapid strides since the last survey.” She added, “Perhaps the biggest success story is Land Rover, which this winter makes a surprise entry at number two in the all dealer index for value of franchise, moving up five places since the summer.
Land Rover dealers returned positive ratings in most categories and the franchise performed best of all its rivals in dealer profit potential and retained margins. Indeed, Land Rover dealers are the only network to show confidence in their retained margins.
SupplierBusiness completes publication of “Supplying OEM” report series
The British automotive industry publisher has announced the publication of all the "Supplying OEM" Reports in a series providing insight into OEM relations with their supply base, identifying the demands and challenges presented by each manufacturer.
Features of each report include:
- Purchasing strategy, including interviews with senior purchasing executives
- Directory of senior purchasing executives at each OEM
- Plant and model mix: full global listing of plants by model and models by plant
- Forward model programs: tables of model production programs from 2005-2012
- Outsourcing and systems strategy
- Production strategy: OEM production plants profiled in detail
- OEM Supplier Ranking
- Results from our surveys of supplier experience of working with the OEM
- A list of the suppliers of major systems and components on recent major models
The reports in the series look at the purchasing strategies of: BMW / DaimlerChrysler / Ford / GM / Honda / Hyundai / Peugeot-Citroën / Renault-Nissan / Toyota and Volkswagen.
A subscription to each 80-page report costs €600 or €4,000 for all ten reports. Samples can be downloaded from:
www.supplierbusiness.com/reports_endpoint.asp?id=35&TC=oem_w_100306
Enquiries to SupplierBusiness.com on tel. +44 (0) 1780 481 712.
SMMT warns on red tape and rising tax burden in budget submission
Higher taxes and more red tape could see more vehicle and component production moving to low-cost eastern European markets, says the SMMT in its pre-budget submission released on 10 March.
SMMT chief executive Christopher Macgowan said, “Government must not burden automotive manufacturing in the UK off the European map. Manufacturers must have the confidence to develop their operations and government must help us meet the competitiveness challenge. That means a light regulatory touch and an integrated approach to regulation in environmental and transport policy.”
The SMMT specifically asks the Government to avoid loading the UK automotive sector’s regulatory cost burden by including surface transport in the EU Emissions Trading Scheme,noting that the number of European type approval directives alone has risen by 25 per cent in the last decade. Manufacturers are therefore said to be anxious that major UK policy reviews in areas like pensions, energy and transport do not impose additional costs.
The SMMT submission laments the collapse of Powershift more than a year ago, and says grants are still vital to kick-start the market for low carbon vehicles, and also urges incentives for the early introduction of Euro 4 trucks.
Christopher Macgowan said, “Government has to embrace the concept of incentives in driving the market for the cleanest vehicles. Beating car buyers and commercial vehicle customers with tax penalties, while ignoring incentives, is absolutely counter-productive.”
On costs to motorists, the SMMT says consumers need time to adjust to the new car label tying VED rates to six colour-coded bands, introduced in July 2005, and says, “Government would be wise not to change the number of bands or increase VED for those already penalised through fuel taxation by choosing larger-engined vehicles … The precise effect on the market is unclear, but any move to increase tax could affect the commercial basis for some to manufacture in the UK.'
(www.smmt.co.uk)
GM and Ford “face extraordinary challenges in 2006” - S&P report
General Motors and Ford will continue to face this year the same triple threat that produced poor results in 2005: excess capacity, high legacy costs, and changing customer preferences, as evidenced by the declining sales of higher-profit SUVs, said the credit ratings agency Standard & Poors in a statement issued on 9 March, which noted that both companies currently have substantial liquidity but also prospective calls on that liquidity.
Standard & Poor's believes that if they cannot reverse the negative trends that have buffeted them, General Motors could ultimately have to restructure its debt and contractual obligations, while a somewhat healthier Ford could suffer from the price actions of its competitors.
The recently published special S&P report, "GM And Ford Need Traction On North American Turnaround in 2006" is part of a collection of reports on the global automotive industry that will be the cover story of Standard & Poor's March 13 CreditWeek weekly magazine.
S&P expects Ford’s and GM’s negotiations on labour costs with the UAW to be difficult, and would not be surprised to see some sort of work stoppage at one of them, but while cognisant of the possibility of a strike, does not incorporate such a negative event into its current GM or Ford ratings.
UAW denies reports of progress in Delphi-GM negotiations
Responding to media reports last week that Delphi, GM and UAW, were close to completing an agreement on the issues in the Delphi bankruptcy, the United Auto Workers Union said in a news release of 9 March that “Nothing could be further from the truth. The parties are not close to working out such an agreement. There are many, many, significant issues to be resolved.” The UAW statement says further that while discussions on an early retirement incentive programme have been constructive, there are significant issues still to be resolved.”
Lookers board unanimously rejects hostile Pendragon bid
Lookers plc’s board added on 10 March to its initial ‘take no action’ advice to shareholders on the announcement of a bid from Pendragon by saying, “The board of Lookers, as advised by Rothschild, has no hesitation in unanimously rejecting this inadequate all share offer.”
The Lookers board found the bid significantly undervalued the company, said it was confident of achieving growth and growth through acquisitions under its existing management, and that Pendragon’s all-share offer presented “considerable risk for Lookers shareholders in so far as a three-way merger with Pendragon so soon after Pendragon's acquisition of Reg Vardy would involve major operational risk. In addition, the board believes that there would be a high degree of commercial risk for shareholders in the enlarged Pendragon group if the Offer were successful, with regard to the likely reaction from manufacturers and other stakeholders.
The board of Lookers also said, countering comments to the contrary from Pendragon plc’s chief executive Trevor Finn that it had always been open to discuss matters with Pendragon, but at the time of Pendragon’s initial approaches, shareholders representing a significant proportion of Lookers’ shares indicated that they would not be receptive to an approach on the terms set out by Pendragon.
Arnold Clark Automobiles raises 2005 operating profits on sales up 4.9%
The privately-owned Scottish dealer group Arnold Clark Automobiles has reported 2005 net profits of £54.1m, down from £57m in 2004 when it enjoyed one-off gains on the sale of property and a VAT refund. The 2005 figure included exceptional charges incurred in connection with the closure of MG Rover.
2005 operating profit of £64.8m rose from £61.5m a year earlier, on turnover up 4.9% to £1.7bn. Retail new car sales volume in 2005 was 44,200 units excluding fleet sales, and used car sales totalled 102,000, up from 96,000 the year before.
(Autowired, 10 March)
Antolin to close loss-making Bavarian interiors plant
The Spanish-owned multinational tier one supplier Grupo Antolin plans to close one of its 12 German plants, in Bavaria, which has supplied interior mouldings to BMW and Audi for several years, on the grounds that it could no longer compete with Eastern European suppliers, and had accumulated losses of €10m over the past two years. Negotiations have begun with unions on the future of its employees.
(El Mundo, 10 March)
PSA Peugeot Citroën and Plastic Omnium sign innovation agreement
At the Geneva Motor Show, PSA Peugeot Citroën signed a partnership agreement with Plastic Omnium to establish a joint technological innovation plan ‘to drive shared improvements in perceived quality, safety, comfort and weight reduction’. Plastic Omnium’s automotive expertise lies principally in exterior plastic components, and the plan is particularly focused on opening modules, roof modules, bumpers, front ends and fascias.
Three-fold increase in online motor insurance sales in static, price-dominated market
According to the AA's British Insurance Premium Index, the average premium quoted for car insurance has been fairly static over the past five years - and typical comprehensive cover is a little cheaper than three years ago at an average premium of £760. The AA’s insurance arm reports that about 15% of all car insurance is now bought on the internet, representing an almost three-fold increase over 12 months.
The motor insurance sector is said to have spent £164m on advertising last year - four times more than in 1999. The Association of British Insurers estimates that accident claims inflation is rising by up to 6% per year because of increasing repair labour costs and the growing complexity of modern cars, while personal injury claims have added 12% per year to claims inflation. These costs, suggests an article in The Scotsman, must ultimately find their way to insurance premiums, while the £500m cost of uninsured drivers’ accidents is already borne by honest drivers at an average £30 p.a.
In 2004, the insurance industry is said to have taken in about £9.5bn in premiums - but paid out £9.6bn.
(www. business.scotsman.com)
Borealis to increase automotive polypropylene prices by €150/tonne
The Danish plastics manufacturer Borealis AS announced on 10 March that it will increase the price of its polypropylene used in automotive and appliances applications in Europe by €150 per tonne as of April 1, 2006.
“Over the last two years, we have experienced a structural shift in the cost from oil-based feedstock which has only been partly passed through the value chain. The announced price increase is necessary to keep Borealis’ automotive and appliances businesses profitable,” according to Paul Turner, the company’s vice president, Business Unit Engineering Applications.
Borealis’ polypropylene solutions are supplied inter alia for interior, exterior and under-the-bonnet automotive applications.
- Borealis AS also announced on 10 March it would close its high density polyethylene (HDPE) plant in Bamble, Norway, to focus on improving the competitiveness of its low density polyethylene (LDPE) and polypropylene (PP) plants there.
Indian government proclaims: ‘We’ll be the world’s top small car maker’
The Indian finance minister P Chidambaram said on Friday, during an announcement on the government’s Budget, that India can be a world leader in at least a dozen manufacturing industries such as automobiles, textiles, leather, handicrafts, food processing, steel and petroleum products. “See in the automobile revolution that is happening around us, we can be the world’s largest producer of small cars in three to five years,” he said.
Mr Chidambaram added that an excise duty cut to 8% in the Budget would trigger more manufacturing investment.
(www.financialexpress.com, 11 March)
Toyota and Fuji Heavy expected to announced details of alliance today
Reuters has reported that Toyota and Fuji Heavy, newly allied following the sale of GM’s stake in Subaru car manufacturer Fuji Heavy Industries, are to announce details of their planned joint operations today.
Volvo Truck Corporation unveils new hybrid heavy truck engine technology
Volvo Group last week presented a hybrid solution for heavy vehicles, likely to be in operation “in a few years”, which promises fuel savings of up to 35 percent, with maximum fuel savings on routes with frequent braking and acceleration, for example in refuse collection, city bus traffic and urban distribution. The system also offers reduced maintenance costs through reduced wear on the braking system.
The hybrid concept, majoring on regenerative braking and designated I-SAM, consists of a combined starter motor, drive motor and alternator, along with an electronic control unit. I-SAM interacts with Volvo’s I-Shift automatic gearbox system. The batteries are recharged by the diesel engine and whenever the brakes are applied, and allow a truck to accelerate under electric power alone, and cut the diesel engine automatically when the truck stops. Auxiliary functions such as the servo pump, AC compressor and so on are driven electrically instead of by the diesel engine, which is smaller than it would be in a conventional vehicle without performance compromise.
Volvo CEO Leif Johansson said, “The diesel engine in our hybrid solution can also be operated using biofuels, and consequently, transport activities can be conducted without carbon dioxide emissions. This paves the way for interesting developments toward long-term sustainable transport solutions.”
The Volvo Group is also participating in the development of a new type of battery, Effpower, which is based on lead-acid technology used in start batteries in today's vehicles. Through this new technology, battery power output has been doubled, while at the same time manufacturing costs for the batteries can, says Volvo, be significantly reduced compared with alternatives.
The Volvo Truck Corporation’s new hybrid truck will now undergo a wide range of tests; the company predicts that hybrid trucks wearing the Volvo badge will be available on the market “within a few years”.
