VeeDub China: Scared That Batteries May Run Out

VeeDub traditionally had projected a green image, but in the darkness of their hearts, they are skeptical about alternative energies. Sure, Wolfsburg does research into fuel cells, but doesn’t truly believe in them. Despite occasional announcements, Hybrids are usually being left to the competition.

Ages ago, VeeDub had a “3 Liter Lupo,” a diesel-powered car that got 78.4 mpg. Introduced in 99, it was a rip-roaring failure: It was too expensive. To reduce weight, pricey aluminum and magnesium alloys had to be used. People loved the car and didn’t buy it. VeeDub managers soon realized: When faced with a questionnaire, customers obediently claim they want to save fuel and protect the environment. Back on the Autobahn, they don’t want to be left behind, the ozone hole be damned. If the environmentally friendly car is too expensive, it will rot in the showrooms. This conundrum besets many, if not most, cars powered by alternative energies. "Zero emission!" "1oo MPG!" Sounds good until you see the pricetag. "Gulp." And it's back to internal combustion.

The prevailing notion in Wolfsburg is to develop the Bluemotion line further, to make conventional gasoline and diesel engines more efficient, to lower displacement, and to add pep via wicked blowers. VW will also revisit the Stop/Start anti-idling technology. That’s likewise old hat, they had it in their mid 90’s Ecomatic Golf, which scared the dickens out of its owners by shutting off the engine at the red light. (A car with 200+ mpg is likewise on the drawing boards and being trotted out to green confabs as a concept. Nobody believes it will see the lights of the showrooms: Too lame with of 75MPH at WOT, too expensive to buy.)

That negative tendency towards alternate propulsion may change, at least in China (where, incidentally, VW makes more cars than at home.) On the sidelines of the 6th Annual China Automotive Industry Forum held in Shanghai on Nov. 6-7, China’s National Business Daily picked up a sudden interest in battery makers on VW’s part. We are not talking starter batteries here. The paper cornered Xu Jian, VW China’s VP, and Mr. Xu let it drop that Volkswagen is interested in pure plug-ins. Xu opined that purely electric cars will develop faster than the darned fuel cells. With Chinese battery makers, backed by Buffet, going into the car business, Volkswagen is now concerned that they might not find enough batteries in China. So they are reaching out to manufacturers and dangle joint ventures and other possibilities in front of them to charge-up the supply of batteries.

In the long run, VeeDub stands by its skepticism regarding exotic propulsion: Xu – reflecting popular Wolfsburg wisdom – thinks that by 2020, the good ole internal combustion engine will still putter away, holding an 80 percent market share. The rest will be divvied up amongst plug-ins, fuel cells and whatever other exotica an inventive world will come up with. Volkswagen was usually right with their long term predictions. In the 70’s, fresh on the job, I was introduced to a VW engineer. He said, he was working “on the car for the year 2000.” As an avid consumer of the Jetsons, I eagerly asked: “Oh yeah? What’s it look like?”

“For one thing, it will have four wheels. And the Sheiks will love it.”

Did he lie?

(Picture courtesy Mrdadvisdc @ flickr.com )

Hyunday And Chrysler? Not A Seoul In Sight

Preface: This article assumes that the dear reader is at least vaguely familiar with the on-again, off-again dalliance between Chrysler and General Motors, and the grim backdrop to this foreplay. Who isn’t these days?

Halt, off course, it’s pure coincidence: Whenever ChryCo’s consensual sex with GM is a wee of in doubt, out of the bodywork come other supposed suitors. And then there is that very disturbing sub-story. But before we get to that:

Last time GM had second thoughts about the not so pretty bride called Chrysler, a prospective suitor was leaked: Nissan, in a Grand Alliance with Renault. Then, suddenly, the threesome with the attractive Eurasian mixed couple was not consumed, “after Cerberus acknowledged preference for GM,” as the joint Detroit PR Department The Detroit News had it. The hellhounds at Cerberus focused again on an arraigned marriage with the (soon to be demoted to corporal) General. Then last Friday, again announced via the strike-through PR Department, GM said no to wedding bells with Chrysler. Guess the sound of GM’s own death knell was too overpowering for any nuptials.

Sure enough, while America slept, a new rumor hit the wires. As sweat-covered America was tossing and turning through a restless night, Reuters reported that Korean Hyundai is in talks with Chrysler LLC owner Cerberus Capital Management. According to people who claimed carnal knowledge of the discussions, Hyundai made advances to take the Jeep brand off ChryCo’s hands, along with “possibly other assets” of unknown provenience.

The sun rose over Seoul last Saturday morning, and outraged Hyundai spokespersons gave Reuters an earful, loudly denying any fling with the battered U.S. auto loss maker.

"We have no interest in whatsoever in acquiring Chrysler, including Jeep and have not engaged in any discussions with Cerberus on this matter," Hyundai Motor spokesman Jake Jang barked. Basically, Hyundai has other things to do than worry about Chrysler. "Our hands are full now." Jang groveled and hung up. Guess that means a no.

Here, the aforepromised sub-story: Why is it that always when GM says “not tonight, sweetie-pie, I’ve got a horrible headache,” foreign suitors are trotted out? And is it pure coincidence that it’s always suitors from lands that cause the synapses of the average American Joe to rapid-fire the association WAR? I mean, Japan, Korea, France (they were there twice to save the ungrateful frogs from getting eaten.) What’s next? A marriage of ChryCo with Germans? Ah, we nearly forgot: That has been tried before. Vietnamese car maker Mekong expresses interest? Iran Khodro Company gets into Dodge? The possibilities are endless.

(Picture courtesy U.S. Army. Looks like Hyundai doesn't want Jeeps back in Korea.)

When I Say Bad, I Mean Good: Europe Sees 8 Percent Slump

Bad news (or, if compared to anorexic America, good news) from J.D. Power: Western European auto sales fell by 15.5 percent to 1,035,243 million units in October from a year earlier, reports Automotive News (sub) . They say, the decline in new-car sales in Western Europe could be worse than a slump in the early 1990s. Contrast that to “the worst sales month in the post World War II era,” which GM’s Chief (Non-) Sales Analyst just saw for his employer in North America.

Everything being relative, America's relatives in the Old Country still have it relatively good. If J.D.Power’s crystal ball is still functioning, the Western European car market may decline by 8 percent in 2008, and go down between 10 and 11 percent in 2009. J.D.Power came to the not all too surprising conclusion that this would “place major strains on the European auto industry.” As opposed to the end of the world, which is generall being announced in the U.S. of A. Note: As long as the VW stock goes for between €500 and €1000, depending what time of day it is, or the whims of Porsche may be, as long as BMW’s owneresse can afford millions to pay a gigolo, the European market will be just fine. All things, considered, of course.

Chinese Car Dealers Cry, Close

Ever wondered why cars can be so cheap in China? Now we know why: More and more cars are being sold at a loss in China, Gasgoo reports. In WTO terms, this will probably be misinterpreted as domestic dump(l)ing. While Chinese dealers are accustomed to the same clear-the decks strategies at year’s end as their Western colleagues, the price cuts come a bit too early in the now Middling Kingdom.
Like their Western brethren, Chinese dealers are used to profit margins between 3 percent and zilch. But now, more often than not, it’s south of nada. No wonder many Chinese dealers are following the worldwide trend, close their lot, and seek other employment. Like teaching English (see picture.) A third of them are expected to close shop by year’s end. The more vociferous ones are blaming the manufacturers for overstocking and too demanding sales targets. A familiar song for Western experts. A survey says that over 40 percent of Chinese car dealers in China make no money. A familiar song for Western experts. Ah, the joys of capitalism!

(Picture courtesy d_j_kingpin @ flickr.com)

WSJ: China Won’t Save U.S. Automakers. Duh!

(First published by Bertel Schmitt in TheTruthAboutCars on November 5, 2008)

Ever since it lost its new hotness, this blog has been reporting that the Chinese car market has lost its new hotness. This blog also gave its readers a heads-up that China won’t save U.S. carmakers’ butts, as the Middle Kingdom had done in the past, when skyrocketing sales in China buttressed anorexic auto sales elsewhere on the planet (i.e. North America). That bit of news finally reached The Wall Street Journal [sub]. “China’s Car Market Loses Luster for Foreign Firms,” alliterates the WSJ, surprising everybody except this blog's readers. “Growth in China’s once-roaring auto market has slowed to a near-crawl, casting doubt on the country’s status as industry savior,” writes Patricia Jiayi Ho. Previously, Patricia penned articles titled “Ex-Tuskeege Airman Moore dies at age 82,” or “Badminton club to open in Arcadia,” so she’s clearly qualified to report on expiring markets, and the back-and-forth of the world economy. Patricia’s prose continues: “Foreign giants like General Motors and Ford Motor Co. have increasingly been looking to emerging markets like China and India to provide a much needed fillip to declining sales at home.” And look they did…

GM actually looked quite good for a while in China and had Volkswagen rattle in their jackboots in years’ past. Then, GM dropped the ball. Ford is a nobody in China. Ford’s feeble 240,879 units made in the first nine months don’t even rate a place amongst China’s top ten automakers. Officially, Ford doesn’t count at all in China, they hold only minority shares in two joint ventures. The WSJ wisely refrains from mentioning Chrysler. Chrysler was actually the first foreign carmaker in China. Kindof.

In 1983, then American Motors signed a deal with Beijing Automotive Works to replace its smoke belching Russian GAZ Jeeps with cheap Cherokees, a deal that makes some old-school Chinese still yearn for the Russian model. Chrysler let its first mover advantage fall fallow. “Its overall performance during the past two decades might politely be described as disappointing,” wrote Business Week, a year ago. Chrysler blames it on the Germans.Anyway, the Chinese car market is still growing.

Depending on who you ask or believe, growth is anywhere between 5 and 10 percent this year. Which sets China apart from waning Western Europe and especially from the atrophy formerly known as America. In GM’s Monday conference call, Mike DiGiovanni, GM’s chief sales analyst looked at the October figures, gulped, and said: “If you adjust for population growth, it’s the worst sales month in the post World War II era.” And then, in a rare case of clairvoyance, he muttered: “Clearly, we’re in a dire situation.” Message from China: “Sorry, can’t help ya! “

(Photo courtesy Otaku. Thank you!)

Going down? VeeDub China VP Gets Worried

(First published by Bertel Schmitt in TheTruthAboutCars on November 3, 2008)

How about this for tell me how you really feel: Volkswagen AG, China’s biggest car maker, told Bloomberg (of all people) that “the worst may yet to come” for China’s car market. This cheerful prediction was uttered by Soh Weiming, Volkswagen Group China’s Executive Vice President. Soh Weiming is no stranger to an uncertain future. The imminent ouster of the cigar-loving VP had been floated for years in Beijing and Wolfsburg. But like the Energizer Bunny, he keeps on going and going. And there he was to say that it would be “too early to estimate” the losses caused by the economic slowdown in China’s auto industry.

After a surge of 23 percent in the first two quarters of 2008, Volkswagen’s sales in China dropped 4.2 percent in the third quarter. SAIC, Volkswagen’s joint venture partner in China’s reported a 78 percent plunge in third-quarter profits. The company, which is also in bed with GM, said their vehicles sales growth was only nine percent in the first nine months. Last year, SAIC’s sales had ascended 24 percent. FAW, Volkswagen other joint venture partner, fared better; they reported a 62.39 percent rise in net profits for the first nine months. Soh Weiming made no predictions regarding Volkswagen’s sales in China. Which prompted Bloomberg to point to a government estimate that says that Volkswagen China sits on a pile of 170k unsold cars. Now we understand Soh Weiming’s feelings.

(Photo courtesy thestandard.com.hk. Thank you!)

How Porsche Buggered the Hedge Funds

(First published by Bertel Schmitt in TheTruthAboutCars on November 3, 2008)

So you thought Porsche financed the VW takeover by foisting overpriced floormats and trucks on their well-heeled buyers? Yesterday’s issue of Die Welt, Germany’s conservative newspaper, thinks different. They undug the dirt on Porsche’s takeover-machinations of Volkswagen. It’s a story that makes Cerberus look like a frisky puppy. It’s an account that makes banks and hedge funds look like morons.

In March 2005, Porsche Chief Wendelin Wiedeking, and his clever CFO Harald Härter traveled to the picturesque Salzburg. They presented to the Porsche/Piech clan their strategy to subjugate the auto giant Volkswagen. The cunning plan: Porsche buys VW for no money. Make that: Porsche bamboozles hedge funds– supposedly the smartest of the smart– into unwittingly forking over the cash.

The Porsche/Piech clan liked the plan, and it was set in motion. Unspoken, but obvious: that meeting included – virtually at least – Ferdinand Piech. As all car cognoscenti know, Ferdinand Piech owns a good chunk of Porsche, and serves as the head of Volkswagen’s Supervisory Board. Did he exercise the powers vested into him, and warned the shareholders of VW of the machinations? We don’t think so.

Using the whole arsenal of arbitrage, swaps, puts, straddles, fraptions, and butterflies, Porsche drove the VW share up, while the hedge funds, fixated on the fundamentals of the flopping auto market, sold short. Porsche used every available loophole of the German law: A swap for instance doesn’t need to be registered. Porsche owned more and more of VW without anyone noticing. Porsche/Piech controlled the news. They could buy low, sell high, and with leverage that would have put the awe in Archimedes. The proceeds were used to buy more stock (to move it) and more options (to make more money.)

Over the years, Porsche kept people guessing why they would invest into VW at all. Three years ago, Porsche announced to an astounded world that they bought 20 percent of VW’s stock. They positioned themselves as the benign white knight that kept VW’s vestigial virginity from being gang-raped by rabid Auslandskonzerne (foreign corporations.) If anybody asked where this would lead, no answers followed.

Did Porsche want just a small chunk of VW? Or a blocking minority of 25 percent? Or, gasp, would they go for 51 percent? When questioned, Wiedekind assuaged the markets: “We are not going for a blocking minority.” A few months later, Porsche had more than 25 percent. Reminded of what he had said before, Wiedekind smiled. He had not lied. A blocking minority was not what they had in mind. They wanted the whole kit and caboodle.

In the meantime, Porsche conducted the orchestra of financial instruments like a Kapital-Karajan. Their financial fiddling did not remain completely unnoticed. Says the Economist, a bit belatedly: “The risks of short selling should have been apparent to the brightest hedge-fund managers in Mayfair and Greenwich because of widespread suspicion that Porsche, a dab hand in currency-derivatives markets, was also mucking about with options on VW stock.”

Indeed, Morgan Stanley warned clients on October 8th to refrain from playing “billionaire’s poker” by betting against Porsche. Max Warburton of Alliance Bernstein correctly predicted Porsche could make billions by squeezing short-sellers of VW’s shares. Porsche’s answer? “A fairy-tale.”

Likewise, Porsche’s balance sheet got curiouser and curiouser: In fiscal 2005/2006, Porsche showed a profit of €2.1b before tax, and of that, a whopping €900m were “non recurring items” – an euphemism for gains from speculation. “Currently, Porsche makes only a quarter of its profits from building its luxury cars,” says Die Welt, “and it won’t be long before their profits exceed their annual sales.” Which stood at €7.4b as of the last fiscal year.

The stock yo-yo of last week may have brought Porsche close, if not beyond that elusive target. In an all-out final attack, Porsche drove the hedgies into panic-buying, psyched funds managers into loading up on VW at all cost. Then, Porsche sold their options and made an even bigger killing. With an utter deficiency of shame, they spun even that as “providing a greater free-float to a constrained market.”

The funny thing: Porsche may get away with the murder of the hedgies. Actually, in Germany, Porsche’s backs are being slapped with Schadenfreude. One CEO of another company that is part of the DAX, wisely said off the record: ”How Porsche engineered the financing of the VW takeover is exemplary. Ingenious!” Ulrich Hocker of the Deutsche Schutzgemeinschaft für Wertpapierbesitz (German Protective Association of Shareholders) grins: “The losers are no small stockholders. This time, it was professionals who should have known the risks.”

The losers see it different: “Stock manipulation” grumbles DWS, the fonds of Germany’s banking giant Deutsche Bank. Unless totally dead, losers have a tendency to get even. Sneers the Economist: “Porsche may struggle to sell 911s to hedge-fund managers for years and years to come.” That may be the most benign revenge of the many that are being hatched in the hedges.

(Photo - Porsche in Salzburg, Austria - courtesy MikeDowdNJ. Thank you!)

The Latest In The Porsche/VeeDub Soap

(First published by Bertel Schmitt in TheTruthAboutCars on November 3, 2008)

Never a dull moment in the ant-eats-elephant soap, a.k.a. Porsche’s takeover of VeeDub. On the heels of what the newspaper Die Welt called the “craziest week in the history of the German benchmark index DAX,” VW’s stock makes headlines again. Or, rather, the headlines are made by a minority owner, the state of Lower Saxony. Nearly forgotten in the broo-haha, that German province, home of Volkswagen’s headquarters Wolfsburg, owns 20.1 percent of VeeDub’s stock. By the dubious virtue of the so-called “Volkswagen-Gesetz” (VW law), Wolfburg’s stake gives the state of Lower Saxony veto power over just about anything they like or dislike. Originally, that law was intended to ward-off hostile takeovers by foreign powers. (Remember GM?) Now, it provides the legal means for provincial politics. Niedersachsen’s Governor Christian Wulff declared yesterday: “Profits going to Porsche? Not if you ask me.” And Porsche will have to ask Mr. Wulff.

If Porsche holds 75 percent, they can enter into what’s called a “controlling agreement.” They book all of VW’s profits as Porsche’s, and run VW from Stuttgart-Zuffenhausen. If there wouldn’t be that little detail called Volkswagen-Gesetz. Which the EU wants to abolish, BTW, to the applause of Porsche. Still, the law is on the books. And if Porsche doesn’t make nice with Lower Saxony, their best laid plans go the way of mice and men. In the meantime, Herr Wullf uses his minority position to throw gubernatorial dirt in Porsche’s direction: “It’s doubtful that Porsche can afford the 75% anyway.” Ha, take that, you upstart little dwarfs! (In the next installment of the saga from soapland: The inside story of how Porsche got VW on the cheap. Makes Cerberus look like a playful puppy.)

(Picture courtesy of  NDR. Thank you!)

Chinese High-Rollers High On Rollers

(First published in TheTruthAboutCars on November 2, 2008)

It’s not yet that Chinese mothers admonish their one-and-only child to “eat up, there are children starving back in America.” But it’s getting close. Case in point: This weekend, another Rolls-Royce showroom opened in Shenzen, Gasgoo reports. It’s the seventh Rolls Royce retail location in China. Another one, located in China’s industrial center Ningbo, will open its doors in a few months. Rollers are on a roll in China. I counted two Phantoms alone in the underground garage of my Beijing building.

At the Shenzen opening, Rolls presented their new Rolls-Royce Phantom Coupé to the Chinese public. It’s their entry model. “Nearly two-thirds of Coupé customers worldwide have not owned a Rolls-Royce before,” said Jenny Zheng, Rolls-Royce Motor Cars’ General Manager for Greater China. BMW are thanking their lucky stars…

While Rolls-Royce’s parent BMW saw its global sales slide by 15 percent in September, Rolls flipped their Emily at the flagging economy, and increased sales by seven percent in the same month. Year-to-date, Rolls-Royce sales rose a record 43 percent year-on-year. Granted, that total was only 827 cars. But in this economy, every car counts. Especially as each example retails at $415k base - and no true Roller proprietor will get caught in a riff-raff reeking base model. “There’s been an 80 per cent increase in the number of vehicles sold this year with some form of bespoke element,” says the British Autocarmagazine with the appropriate nasal accent. Not surprisingly, sales in the United Arab Emirates are up by around 70 per cent. China? Fifty percent rise.

You think it’s a fluke? Further in the same vein(ity), New Delhi’s Financial Express reports “that Mercedes Benz India has registered an impressive 47% growth in car sales for the first 10 months of the current calendar year.” Sales of C-class Benzes more than doubled. Holy cow! And by the way, Time Magazine already said two years ago that Chinese children are getting fat.

(Picture courtesy Kaeyau. Thank you!)

Old News Of The Day: Toyota Tops GM

(First published in TheTruthAboutCars on November 1, 2008)

“Toyota Motor Corp. trumped General Motors (GM) in total car sales during the first nine months of 2008 to become the world’s top car producer for the first time,” the Mainichi Shimbun reports from Tokyo. “Huh,” say you, “hasn’t ToMoCo trampled GM already?” Not exactly, and not officially. But they are kicking ass and GM to the bottom. Unstoppably, one may add.

“GM’s sales between January and September in 2008 were down 5.8 percent to 6,655,751, according to figures released by the company on Wednesday. Toyota’s sales for the same period, including those of subsidiaries Daihatsu Motor Co. and Hino Motors, were 7,051,029, almost unchanged from last year,” writes the Tokyo broadsheet with a kuso-eating grin on their faces, in the same sentence dispelling rumors that ToMoCo had contracted the galloping auto trade tuberculosis. [NB: Mainichi is one of the top three Nipponese papers,thick with Japanese politicos. Two of Mainichi’s CEOs became Prime Ministers of the Land of the Rising Corolla.]

Officially, and unbelievably, GM is still the world’s largest automaker. The official score keeper of all things auto is the oddly French-named “Organisation Internationale des Constructeurs d’Automobiles,” better known as OICA. In OICA’s 2007 tally of units sold, GM had edged-out Toyota by 800k units, and by creative bookkeeping, such as counting sales of companies where they had only a minority share. Immediately, Toyota shouted “foul!” (Politely.) They pointed to 9,497,754 units Toyota had made (as in produced) worldwide in 2007, versus 9,349,818 made by GM. Be it as it may, in the world according to OICA, GM is still the top dog until the fat lady sings the aria of the 2008 numbers.

With a deep bow towards Detroit, the Mainichi scribes now rub it in slicker than a Tokyo oily massage: “And while GM just beat out Toyota in total sales over 2007 as a whole, good first half figures and a relatively soft blow from the economic crisis compared to its American rival mean that Toyota is set to take the top spot this year.” You bet your ketsu they will.

(Picture courtesy of pictures.businessweek.com. Thank you!)

VW Profits Up 15%; China’s Automakers Also Doing Well

(First published in TheTruthAboutCars on October 31, 2008 )

VeeDub in Germany has just issued their numbers for the past nine months of 2008. Viewed through the prevailing “the world is coming to an end” perspective, VW’s financial results are financial pornography, performing better than the male lead in a Russ Meyer movie. We’re talking a 15 percent gain, a money shot of more than $6b pretax. From January to September 2008, VW moved 4.8m units and grabbed a 10.1 percent share of the world market, according to the usually reliable Automobilwoche [sub]. Despite of what’s happening elsewhere in the piston business, Volkswagen’s CFO Hans-Dieter Pötsch stands by his bullish guidance for 2008: the predicted numbers will ... come.

Elsewhere, China’s automakers have also released profit reports for the third quarter. From July to September, the 17 companies combined automotive revenues totaled 47.385b yuan ($6.93b), down a mere 2.9 percentage points from last year. Their net profits drooped to 747m yuan, down - oops - 62.4 percent year-on-year, laments the government’s news agency Xinhua via Gasgoo. Never mind. Profits aren’t a Chinese company’s main objective; they often leave that to their presence in Hong Kong, where taxes are low. The notable news: they ain’t losing money.
That said, China’s bad boys are from Detroit’s central casting: China’s former car giant Shanghai GM has completed only 54 percent of its 2008 sales goal. In a wise move, the joint venture reduced this year’s sales target of its Chevrolet brand by 25 percent. Likewise, big cheese Chinese automaker FAW reduced 2008 targets for its Magotan (think VW Passat B6 platform) to 70k units from the 90k target set in January. Which didn’t faze Wolfsburg one bit.

(Picture courtesy of alexisgentry.net. Thank you!)

VW’s Martin Winterkorn To World: “Don’t Panic!”

(First published in TheTruthAboutCars on October 30, 2008 )

“Was uns nicht umbringt, macht uns härter.” What doesn't kill us, make us stronger. Martin Winterkorn may not have quoted Friedrick Nietzsche in his speech at the International Zulieferer Börse (IZB), related to us via Automobilwoche [sub]. But the CEO of Volkswagen’s theme was clear. “Don’t panic!” Winterkorn said (in German). VW will emerge from the crisis “stronger than ever.” Winterkorn pointed to growth markets such as China– which did little to calm suppliers’ fears (unless they were Chinese). “In China, 100 million people have a driver’s license,” VW’s capo di tutti capi said. Correct. “Only 10 million have a private car,” he added.

Wrong. Matter of fact, nobody really knows how many private cars there are in China. Gasgoo.com once had two numbers in the same article: “The total number of private cars in China jumps 32.5% to 15.22 million units by the end of 2007,” Gasgoo wrote. A paragraph later.. “35.34 million are private cars, an increase of 20.8% from one year earlier.” It’s easy to get confused in China. But if VW, China’s largest auto manufacturer doesn’t know the market’s size, who does? OK, now you can panic. [NB: the IZB is an ingenious cost-cutting measure of VW Purchasing whereby parts suppliers meet in Volkswagen's Autostadt-- and pay for the privilege.]

(Picture courtesy of msnbcmedia4.msn.com . Thank you!)

China’s BYD EVs Headed to Europe. Then Stateside. Allegedly.

(First published in TheTruthAboutCars on October 29, 2008 )

While TTAC has Tesla on a Death Watch, aspiring Chinese EV-automaker BYD is getting massive street cred in The People’s Republic. In case you’ve got something called a life, BYD stands for “Build Your Dreams.” Since late September, “BYD” also stands for “Buffet’s Yankee Dollars.” Omaha’s Oracle liked the company so much he wrote a check for $230m for a 9.89 percent stake. [NB: Buffet knows the tax consequences lurking in a CFC-- and we're not talking chlorofluorocarbons.] Based in Shenzen, BYD is one of the world’s largest manufacturers of rechargeable batteries for cell phones. According to The New York Times, “the company also has a fast-growing auto-making unit that accounts for nearly a third of its revenue and makes fuel-efficient compact and subcompact cars for the Chinese market.” They have some bitchin hybrid and plug-in cars in the works with specs that scare the BYDickens out of the competition– if they’re half true.

Today's BYDispatches:

1.) Gasgoo reports that BYD is on course to sell 200k automotive units this year; double that next year. The F0 model (a clone of the Toyota Aygo/Citroen C1/Peugeot107) just made the Top Ten in China. The company will soon begin selling its first electric hybrid car in China, followed by an all-electric vehicle that could go 300 kilometers on a single full charge. [ED: or not.] The biggest break-through: fast-charging in 15 minutes to 80 percent capacity.

2.) Reuters reports that BYD has signed up 10 distributors for its plug-in hybrid car in Europe ahead of its targeted entry in 2010. Fleet buyers including Deutsche Post AG’s delivery arm DHL Express have indicated initial interest, or so BYD says. Henry Li, General Manager of BYD Auto’s export trade division is electrified by the news. “We’ll start selling in Europe before we get into the United States.”

3.) Motorauthority says that BYD hybrids and plug-ins will definitely be on sale in the U.S. in 2010, after BYD is done “talking to some third-party consulting and engineering companies to get a thorough understanding of the safety standards” in the U.S. Good thinking.

(Picture courtesy of Huffingtonpost. God knows where she got it from. Thank you all the same!)

They Are Starving In China - For Gas Guzzlers

(First published in TheTruthAboutCars on October 25, 2008 )

Last Thursday, the cargo ship CSCC Shanghai left Ventura County’s Port Hueneme with a load of near-extinct species bound for Shanghai, China: 2,100 GM big bore Buicks and Cadillacs. A lot of cargo space was also taken-up by gas-gulping Cadillac Escalades. China’s importing the American behemoths like they are going out of style (which, of course, they are). According to China’s General Administration of Customs, SUV imports from January to August surged a whopping 75 percent year-on-year, to 147k units. In fact, SUVs amount for half of the total imported vehicles.(Imported sedans only increased 17 percent.) Even higher gasoline prices and punitive taxes slapped on big displacement vehicles could not suppress China’s appetite for cubic inches. As far as GM’s concerned, China won’t go hungry. GM logistics specialist Don Asdell told the Associated Press that he’s looking at one or two boatloads a month for the Chinese market. Needless to say, there’s more (says so right there).

China will also import more foreign GM technology for domestic production and consumption. Gasgoo reports that GM will bolster its Chinese Buick line with European and American implants. Shanghai GM will use the Delta II platform (think Chevy Cruze) to make its new-generation Buick Excelle. Open source auto intelligence analysts scoured a new car model list recently released by China’s auto industry regulator. They found two new Shanghai GM models, code-named SGM7205 and SGM7241. Further prying revealed that these are longer-wheel based models of the Chinese Buick Regal and LaCrosse, made from the Epsilon II platform (a.k.a. Opel Insignia.) The new models are expected in China’s showrooms by year’s end.

Chinese Car Exports Retreat, Return Under Cover

(First published in TheTruthAboutCars on October 28, 2008 )

For the few past years, European and American automakers looked to Chinese carmakers with hope and trepidation. They hoped the booming Chinese market would lift their worldwide sales. It did. They feared the Chinese would export cars en masse, swamping Europe and the U.S. with cheap vehicles. They did not. For various reasons (crash tests, emissions, the economy), the arrival of the four-wheeled Yellow Peril was a non-starter. What little exports the Chinese managed went to second- or third-tier markets like Africa or South America. Even those are are going down, down, down. In August, China exported a mere 44,400 units, a decline of 22.18 percent month-on-month and 11.29 percent year-on-year. This according to numbers straight from the China Association of Automobile Manufacturers, quoted in Gasgoo, which calls the news “discouraging.”

Chinese companies who had Europe in their sights are holstering their guns. The German trade publication Autohaus reports that Chinese auto maker Geely is back-pedaling from prior announcements of an entry into the European market. With unusual candor, Jie Zhao, Vice President of the Zhejiang Geely Holding Group said: “Our products aren’t ready for the European market. We are realistic. We will not get ahead of ourselves.” According to Jie Zhao, they may reconsider a market entry “after 2010.”

Instead, Chinese exports are happening under cover. Under the cover of your car, to be exact. More and more parts in your American or European car are already made in China. Compared to 2002, exports of automotive products surged twentyfold to $41b last year. With cost cutting and job cutting being the mantra, this is just the beginning. Gasgoo reports that Daimler AG plans to increase its sourcing of automotive components from China nearly eight-fold within four years. The luxury car maker will buy $3.25b worth of car components per year in China, up from the $400m for this year. Will your next S-Class Merc be Made in China? Partly, at least.

(Picture courtesy europeancarweb.com. Thank you!)

I'm sorry, won't happen again, really, I swear

I was so busy writing for TheTruthAboutCars, that irrenverent site in America that was crazy enough to hire me as their (cheap, as in Chinese cheap) Man-In-China that I neglected my own blog. Which was promptly noticed by my only reader, Jennifer, who, by the way works for Gasgoo. It is Gasgoo where I turn to first in the morning to get the latest on Chinese cars. If Gasgoo complains, BS wakes up!

To make up for my past sins, here is a selection of articles recently posted at TheTruthAboutCars. They are written for an American readership, so please pardon the puns.

German Stock Exchange To VW: “One More, And You’re Toast”

Reacting to the recent dervish dance of the VW stock, Germany’s stock exchange put their foot down hard. Any more funny business, and VW will be kicked out of the DAX, Germany’s equivalent to the Dow Jones. As of Monday, if a stock reflects more than 10 percent of the index, and if its volatility did exceeded more than 250 percent in the preceding month, that stock will be a goner as far as the DAX is concerned.

To put things into perspective: Last Tuesday, the weight of the VW stock in the DAX was 27 percent, and the 30 day volatility had redlined to 388 percent. If the new rules had applied, VW would long be evicted by now. Come Monday, VW will be represented in the index with 10% (Achtung!) and if there’s any more hip-hop like last week, then it’s “raus, raus, mach schnell!”

The German Exchange sugar coats the new rules as “preventative measures.” Not a lot of people are buying the carbohydrate. “I think, they are setting the stage for kicking VW out of the DAX,” quoth an expert, who’s name Automobilwoche, wisely did not want to reveal.

The Handelsblatt, not quite Germany’s equivalent to the WSJ, doesn’t rule out further yo-yoing of the VW share. Demand is high, supply is limited, and the hedgies are still loaded with borrowed stock. The new rules may actually induce volatility. “If VW goes above 10 percent of the DAX, we must sell,” said Marc Brubeck of Barclays Global Investors. Their index fund alone holds €2b worth of VW stock.

If VW is out of the DAX, the price is set to collapse, and Porsche will be able to buy whatever shares they want at fire sale prices. At the time of this typing, on Friday evening, at 5:38pm Frankfurt time, the VW stock was well behaved. It stood at €504.99, a mere €4.89 higher than its previous day’s close. Good boy! Now sit.

(Photo courtesy kruhme. Thank you!)

It’s A Truckedy: Volvo’s Rigs Poofed

You think car sales are bad? Try trucks. If you are anywhere close to the big rig truck business, take a Valium, aggression management counseling, or a gun before reading further.

European truck maker Volvo admitted to an aghast London Evening Standard that European sales for new Volvo rigs have gone up. Gone up in smoke, that is. Volvo’s truck sales evaporated by 99.7 percent. Yes, you read right. We repeat: Volvo’s truck sales are a mere 0.3 percent shadow of themselves. Volvo took orders for just 115 new trucks in the last three months. In the third quarter of 2007, Volvo sold 41,970.

Global orders for Volvo imploded by 55 percent in the last three months. Truck maker Scania said its Western Europe truck orders collapsed by 69 percent. (Tut-tut to London: The Evening Standard says that “Volvo has majority control” of Scania. Apparently, the news by-passed the Brits that in July, VeeDub had raised its voting stake in Scania to 68.6 percent. Which they probably deeply regret in Wolfsburg. )

Volvo also makes trucks under the Renault and Mack brands. Volvo is Europe’s second biggest truck maker, after Germany’s Daimler AG. No word from Stuttgart yet on their sales, or utter lack thereof. But as goes Volvo, so goes the neighborhood. Volvo’s car division had been sold to Ford in 1999. (Higher learning trivia: “Volvo” is Latin and means “I roll.” In post-Lehman English, it auto-antomized to “I roll over.”)

(Picture courtesy jwood. Thank you!)