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Luxury Carmakers Stabilizing In Europe – US-FOREX.US

Forex-Publisher — Tue, 28 Jul 2009 14:46:01 +0000

Luxury carmakers appear to be moving ahead of their mid-market counterparts in Europe. Analysts at investment bank JPMorgan say premium car sales in Western Europe are finally finding a bottom.”The share of total luxury car sales in Western Europe continues to improve, month-on-month, to 16.3% in June, versus 16.1% in May 2009 and 15.9% in April 2009,” JPMorgan said in a note to clients, adding that demand for the sector was stabilizing.Earlier this month, Ian Robertson, BMW’s sales and marketing head, said the company was “seeing the first signs of a slight recovery on automobile markets. We will have to wait and see if this trend is sustainable.” But the picture remains grim for the mass market, despite a pick-up in demand thanks to government scrapping schemes across the continent, JPMorgan said. “We expect results this week by PSA, Daimler, Renault and Volkswagen to be mostly positive, with auto profits likely helped by the volume boost from various European scrapping schemes,” the bank forecasts.Scrapping schemes, or the European version of the U.S. “cash for clunkers” program, have been introduced across the continent, slowing losses within the auto sector in France while boosting sales in Germany. .Yet the investment bank warned that the positive effect of these incentives were probably only temporary, and that demand for mid-range vehicles in Europe could start dropping towards the end of 2009. “We continue to expect car sales to moderate towards the end of the year, suggesting 2010 earnings may struggle to show significant year-on-year improvement,” the bank said.
JPMorgan doesn’t expect overall auto production to improve significantly in the fourth quarter of the year, despite estimates by CSM Worldwide, an automotive market forecasting service, that production will rise 3% above the second quarter figure. “Our bias is to think that production in the fourth quarter may not improve significantly versus the second quarter of 2009 given risks of a volume slowdown in Western Europe as the appetite for scrapping schemes moderates, especially in Germany,” JPMorgan wrote.Shares of Daimler
fell 1.1% while shares of BMW
fell 0.2% in Frankfurt on Tuesday. Renault
fell 1%, and shares of PSA Peugeot Citroen
fell 0.3% in Paris.

Renault Vive La Cash- US-FOREX.US

Forex-Publisher — Fri, 17 Jul 2009 14:46:07 +0000

Renault’s efforts to keep a tight rein on its cash seem to be paying off. The French carmaker said Friday that car sales fell 13.7% in the first half of the year, but it had also achieved “significantly positive free cash flow.” Other European carmakers like Volkswagen and BMW are expected to end the year with positive free cash flow, but on this front Renault is surpassing its main French rival, PSA Peaugeot Citroen, which is expected to end the year in negative territory.Shares of Renault
rose 1.3%, or 34 euro cents , to 25.92 euros during early morning trading. Analysts believe Renault’s business is likely to improve in the second half of the year. “The news on the cash flow shows Renault is keeping things tight on what it can control, despite a very negative operating performance,” said George Dieng, an analyst at Natixis Securities in Paris. “It has achieved that by sharply cutting capital expenditure and reducing inventories.”Last March, Renault’s chief operating officer, Patrick Pelata, told Forbes hewould “do everything” to keep cash flowing and avoid going back to the French government for another credit line. Renault is due to report net profit figures on July 30, but Dieng said that, based on the latest sales numbers, he expected the company to perform better in the second half, thanks partly to the incentives put in place by the French government to encourage drivers to get rid of old cars.
Renault said its global market share totaled 3.7%, but it lost 0.5% market share in France following a fall in short-term leasing sales in the first half of the year. The firm also lost market share in Italy by 0.5% and in the U.K. by 2.2%, following the decision to scale down sales after a slide in the value of the pound.Renault brand sales dropped 21.5% in the first six months, with car sales 19.1% lower and light commercial vehicles posting a 33.2% drop, the company said.
Thomson Reuters contributed to this article.

Porsche VW Seen Close To Deal – US-FOREX.US

Forex-Publisher — Thu, 16 Jul 2009 11:46:05 +0000

It looks like the auto industry’s biggest soap opera is almost over. German carmaker Volkswagen is on the verge of buying half of Porsche’s car-making business, according to German press reports, while the sheikh of Qatar is buying a stake in Porsche and options that control 20% of Volkswagen shares, from Porsche. This could put an end to months of bitter wrangling to reach an agreement over a tie-up involving the smaller sports car maker, which already owns a more than half of VW. The news comes a day after Porsche’s chief executive, Wendelin Wiedeking, delivered a speech to employees about the next steps in the company’s future. Porsche denied rumors that Wiedeking was leaving the company.Shares of Volkswagen fell 1.8% to 57.00 euros on Thursday morning in Frankfurt, while shares of Porsche rose 2.6%, to 51.63 euros Talks between the two carmakers have stalled several times in the last few months thanks to complicated family issues-the companies are chaired by two cousins-and two very different balance sheets. While Volkswagen
is cash rich, Porsche
has debts of around 10 billion euros , built up as part of its attempt to gradually take over its mass-market rival by buying stock options. Porsche has struggled financially. Its been unable to sell its options on the market lest it watch Volkswagen’s share value spiral downwards, while refinancing its debts by the skin of its teeth. Having abandoned plans to take over Volkswagen, Porsche’s chairman and co-owner, Ferdinand Piech, earlier this year started pushing for Volkswagen to buy Porsche’s sports car business and add a 10th brand to its lineup. The latest reports suggest Piech may well have got what he wanted.
The sticking point in talks has been over what sort of role Piech will play in the combined company, relative to his cousin and Porsche chairman Wolfgang Porsche. The carmakers’ supervisory boards are due to meet separately in Porsche’s home town of Stuttgart on July 23. Far from being the end of the soap opera, this could just be the beginning.

Fiat Eyes Another Struggling Carmaker – US-FOREX.US

Forex-Publisher — Wed, 15 Jul 2009 18:46:05 +0000

Fiat is going on another shopping spree of troubled auto companies. The Italian carmaker confirmed on Tuesday that it was interested in acquiring the struggling industrial arm of boutique car maker Bertone.
“We will express our interest in Bertone’s industrial assets before the deadline on Thursday,” a Fiat spokesman said. Berton is a boutique company that big auto players have used to outsource production to. Fiat is interested in the firm’s assets, which mainly consist of factories and real estate, and in particular its painting facilities. Fiat intends to offer around 20 million euros for Bertone’s Grugliasco plant, equipment and staff, but not the whole brand.
Fiat said the new assets could potentially be used for Chrysler cars now that the Italian car maker owns a 19.9% stake in its U.S. rival.
In recent weeks, there have also been other bidders for Bertone, whose industrial arm was put into administration-a form of Chapter 11 bankrupcty protection-in 2008 as the car industry witnessed a sales slump.
Bertone’s industrial arm was a specialist dedicated to produce limited runs of cars for European companies, including General Motors
. It’s troubles began late in 2005 after Bertone lost a contract with GM Europe. Since then, its only project was a 2,000-unit run of a limited-edition of BMW’s Mini in the summer of 2006. It used to produce between 30,000 to 34,000 units per year but its plants have now been virtually abandoned. The company also has a designer arm, which is not in any known financial difficulty.
According to Italian media reports, other bidders for Bertone include the former manager of Telecom Italia, Giandomenico Rossignolo, financier Domenico Reviglio and Lilli Bertone, wife of the founder Nuccio Bertone, the former owner.
A judge still needs to decide whether Fiat has a strong business case for the company before it gives the go-ahead for the second round of the bidding process.
Bertone’s industrial arm still has over 1,000 employees and some analysts are struggling to see why Fiat wants to buy the company. “There is no rationale for Fiat to buy 1,000 employees as it tries to fire roughly 2,000 in other plants,” said Guglielmo Manetti, an analyst with Intermonte SIM. Fiat would not comment.
Separately, Fiat’s new car sales were up 11.7% last month and its market share rose to 8.6% from 7.9% the year before. Shares of Fiat
rose 2.3%, to 7.17 euros in afternoon trading in Milan.
Thomson Reuters contributed to this article.

Someones Feeling Lucky On Opel – US-FOREX.US

Forex-Publisher — Mon, 13 Jul 2009 14:46:06 +0000

As Adam Opel, the struggling European arm of General Motors, runs out of time and options to find a buyer, it emerged on Monday that the investment fund RHJ International was aggressively seeking a deal to buy the firm.RHJ International has pledged to keep all of Opel’s German plants open and said it would also rely on less state funding than other bidders like Magna International
, whose tentative takeover deal for Opel has recently faltered over intellectual property concerns.Talks between Magna and GM were hindered by Magna’s demands to control distribution of GM’s Chevrolet brand in Russia and to use the GM’s intellectual property for uses that were not part of the original deal.Opel’s management and unions have been increasingly concerned that the deal with Magna has now been delayed for weeks. The company’s future has meanwhile become a hot political topic ahead of German elections in September, particularly given the dramatic deterioration of the labor market in Germany. RHJ’s intention to keep Opel’s German plants open would thus sit well with the German government. Chinese bidder Beijing Automotive Industries wants to halt production at Opel’s plant in Eisenach, Germany for two years, but unions fear this would effectively ruin productivity at the plant long term. RHJ International, an investment company based in Belgium, says General Motors’
European operations, which also include Vauxhall in the U.K., would “comfortably” fit its long-term investment strategy.
RHJ has managed three car-parts makers since March 2005, when it was publicly listed. The investments are Japan’s Asahi Tec and Niles and Germany’s Honsel, although RHJ admits that none are profitable. It dismissed the idea that this discredits its case to buy GM Europe: “There is not a single automotive company that earns money,” said said Arnaud Denis, an RHJ International spokesman in Belgium. “The automotive industry has gone through some turmoil but we have continued to support these companies.” Denis would not confirm reports that RHJ would cut 10,000 jobs at Opel and Vauxhall if it took over GM Europe, and he would not give a timeline for the negotiation process. “We are not in the driving seat… We are patient and can afford to wait.”

Collision Course – US-FOREX.US

Forex-Publisher — Mon, 29 Jun 2009 19:46:04 +0000

Hugo Spowers is an inventor with a dream-perhaps an impossible one.
After nearly a decade of mighty labor and no little expense, he has built a hydrogen-fuel cell car-albeit one so tiny it’s more like a buggy. If the money holds out, he intends to make 50 more of them and then test market the Riversimple Urban Car by leasing it out to residents in a British city center in just three years. “It’s the most exciting opportunity I’ve come across in my life,” enthuses Spowers, an excitable British auto engineer who started his carmaker Riversimple 10 years ago, with the idea of inventing a cheap and environmentally-friendly car. “We’re going to see more change in the next 10 years in the auto industry than in the last 80.”
Unlike Don Quixote, who tilted at a glamorized fictional past, Spowers is jousting with the future. But will that day ever come? Many industry experts dismiss hydrogen fuel cells as far too expensive and impractical – a realization years away, if at all. There are already far bigger players in this game like Honda and Daimler, with lots more staying power than Riversimple.
Yet Spowers, 49, is determined. A former motor racing engineer who quit the noisy smog-choked speedways, he’s convinced that Riversimple can lead the way to more environmentally-friendly driving. He got a degree in engineering science from Oxford University in the late 1970s, an M.B.A. when he was 38 and the idea for fuel cells in the late 1990s from Amory Lovins, chief scientist of the Rocky Mountain Institute. Lovins brought a whole-systems design approach to the vehicle-instead of merely putting a fuel cell in a car, designing a whole new car. “People don’t grasp how specifically cars have been optimized around a combustion engine,” says Spowers, whose own designs became a lower tech version of Lovins’ ideas.
For nine years he tinkered away on a car design and business model, with help from his friends in the motor racing world, Oxford and Cranfield University and the financial support of his wife, an executive at TBWA, the giant ad agency. He and a team of engineers eventually assembled a little black prototype.
Launched earlier this month, the Riversimple Urban Car looks like a Smart car with a pinched front. It takes two passengers, and weighs just 350 kg , compared with the 1,625 kg of the Honda Clarity . The car’s 6-kilowatt fuel cell is much tinier than other hydrogen fuel cells ranging from 85 to 100 kilowatts, possible because the car is so small, and beneficial because it drinks less hydrogen than other models. With a top speed of 50 miles per hour, Spower’s car is meant for urban driving, never to go on a highway.
How has he gotten even this far? Spowers received 1 million pounds from Porsche’s founding Piech family in 2005, thanks to a friendship he struck up with family scion Sebastian Piech a decade ago. Piech says Spowers’ ideas “immediately resonated” when he first heard them, particularly the flexibility of his leasing model. “I already had some ideas in my head on the problems of car distribution, but not the issue of how to solve them.” Piech, who spearheaded the entry of Austrian-based Porsche Holding into China in 2004 , is also executive director of Horizon Fuel Cells, which helped develop Riversimple’s hydrogen fuel cell, and the chairman of bScope Venture Partners, a venture capital group in Shanghai.
BOC, the industrial gas giant, also committed around 100,000 pounds towards the development of Spowers’ car-essentially paying for the refueling costs-and is ready to put more money into the next testing phase. “We’ve looked into the model and we’re happy to continue supporting it on the basis that it is viable,” says Nick Rolfe, director of business development at BOC. The company’s U.S. division is working with Wal-Mart to produce 65 forklift trucks that run on hydrogen, while in Germany it’s partnering with BMW and a small bus company.
Talk about faith in the unproven. Even President Obama has nixed federal funding for hydrogen fuel cells, while Ford and Renault recently halted their own programs. The fuel cell, which has been around for 50 years, generates electricity from hydrogen and oxygen. But there are good economic reasons why you don’t see a lot of hydrogen cars on the road. The fuel cell in the Honda Clarity costs 900,000 to make, according to Spowers; Toyota just announced a model it hopes to have ready by 2012.
But for any car maker, the costs of the production and transportation of hydrogen are huge. Spowers’ original prototype was nearly as expensive, at 500,000 pounds to build, and he estimates the cars in his city test run will run up to 80,000 pounds to produce; that’s 4.8 million pounds for the first 50, plus the ten that need to be road tested. BOC wants to find partners to help build its fuelling stations infrastructure, providing real estate for instance. Other methods of hydrogen generation – such as through solar panels or via natural gas – are still many years from coming to market.
The popularity of Smart Cars suggests that there is a market for tiny, two-seater cars that are ECO-friendly. Though expensive, electric cars are durable, closer to market and may satisfy a good deal of this need. Nevertheless, Spowers says there are buyers out there, and is looking for a small city council in Britain to launch a test run of 50 of his cars by 2012, partnering with BOC to pay for the fuelling station. Oxford and Peterborough have shown the most interest, apparently motivated by the pressure to show their green cred.
Spowers wants them to share the cost of a single fueling station for the cars with BOC, amounting to around 250,000 pounds to build, and a few thousand pounds a month to maintain. Riversimple wants to lease the cars for 200 pounds month, and says it will recycle the cars’ parts when they reaches the end of their 15 to 20-year lifespans, meaning the company misses out on recouping costs by re-selling like most car dealers.
“The leasing idea seems ideal for local city councils and governmental departments running small fleets,” says Andrew Fullbrook, a senior manager at automotive research group CSM Worldwide. But it also doesn’t make much business sense: even if all 50 cars are leased out in the first year, that only translates into a 12,000 pound initial return on the 4.8 million pounds building cost.
Still, Spowers is making full use of his best apostle to raise the 20 million pounds he needs to get him through the road and city tests: Sebastian Piech has been on the road throughout Britain and Europe, seeking investment, though he’s had no firm offers yet. Piech is adamant that Porsche, per se, is not behind Riversimple, but doesn’t rule out it getting involved in the future. Spowers laments, “People just do not realize how critical environmental issues are.” Right now, though, they’re watching their pocketbooks.

Jaguar Roars Into India – US-FOREX.US

Forex-Publisher — Mon, 29 Jun 2009 16:46:13 +0000

Indian carmaker Tata Motors is taking a gamble in its goal to revamp struggling British brands Jaguar and Land Rover, which it bought in June last year, after launching them with much fanfare in Mumbai on Sunday.Jaguar was previously a Ford Motor property, sold off in anticipation of a cash crunch. Ford’s Jaguar diverstiture is one reason why it isn’t seeking government help now.Tata has said that it wants to target India’s wealthy, but growth in the country’s luxury car market may be more limited than hoped, not least because of the global economic slowdown. “Tata’s challenge will be to carve out a niche in a market that overall is very tough and very competitive,” said David Leggett, managing editor at industry website Just-Auto.com. “Both brands have a historical brand appeal but it is never easy to establish a brand in new markets.”The Chinese market appears to have more potential for luxury car manufacturers, said Daniel Schwarz, an auto analyst with Commerzbank. “India offers better options for the mass segment this is why Tata has launched the Nano there.”Last year, sales of premium car brands in China represented 490,000 units, while only 7,000 units were sold in India, according to figures compiled by IHS
Global Insight. And while India is nowhere near the volumes of the Chinese market, Tata Motors
also faces the challenge of the import taxes in India, IHS Global Insight Ian Fletcher said. “Import duty taxes for cars being shipped into India represent 100% so that means they double the price of the car. There is a growing premium car sector in India but it is tiny in comparison with China’s luxury market.”The brands were officially launched at a ceremony in Mumbai on Sunday by Ratan Tata, the chairman of the Tata Group. “Jaguar Land Rover has been well received and well established in India, but over the years this brand has been disconnected from India,” he said.
Jaguar Land Rover’s chief executive, David Smith, also said Sunday that the company might cut more jobs if its slump in sales continued, in addition to the 2,000 job cuts announced last January.The two luxury brands do seem to have potential in emerging markets: While Jaguar and Land Rover sales fell by 35% in the U.S., U.K. and Europe between June 2008 and March 2009, sales increased by 8% in Russia and China over the same period, according the companies’ figures.Jaguar Land Rover has not performed well over the last 20 to 25 years in the U.K. due to “many failures of investment”, according to Howard Wheeldon of BCG Partners in London. The company has been in the hands of many owners, from the U.K. government to Ford Motor
, and has struggled with overcapacity. Since it produces cars that are less eco-friendly than other models, Jaguar Land Rover is also more exposed to higher fuel prices, as well as E.U. targets on carbon dioxide emissions that have put pressure on the research and development side of its business.”Although Jaguar has been helped by the new XF [sports car], which has propped up demand for its models, Land Rover has been hit badly, not helped by its dependency on sport utility vehicles , which are suffering something of a backlash, while surging crude oil prices during the early stages of Tata’s ownership undoubtedly did not help matters,” IHS Global Insight’s Fletcher said in a note to investors. “The matter of funding remains the highest priority for the two brands.”Last December, the company asked the British government for state aid to help it ride out the recession. Tata is also said to have injected capital to help the struggling company. Tata Motors
was down 0.4% in pre-market trading in New York on Monday.

Tata Wants Jaguar To Roar In India – US-FOREX.US

Forex-Publisher — Mon, 29 Jun 2009 13:46:10 +0000

Tata Motors may have launched Jaguar and Land Rover to much fanfare in Mumbai on Sunday, but the Indian carmaker is also taking a gamble in its goal to revamp the struggling British brands it bought in June last year.
Tata has said that it wants to target India’s wealthy, but growth in the country’s luxury car market may be more limited than hoped, not least because of the global economic slowdown. “Tata’s challenge will be to carve out a niche in a market that overall is very tough and very competitive,” said David Leggett, managing editor at industry website Just-Auto.com. “Both brands have a historical brand appeal but it is never easy to establish a brand in new markets.”The Chinese market appears to have more potential for luxury car manufacturers, said Daniel Schwarz, an auto analyst with Commerzbank. “India offers better options for the mass segment this is why Tata has launched the Nano there.”The brands were officially launched at a ceremony in Mumbai on Sunday by Ratan Tata, the chairman of the Tata Group. “Jaguar Land Rover has been well received and well established in India, but over the years this brand has been disconnected from India,” he said.Jaguar Land Rover’s chief executive, David Smith, also said Sunday that the company might cut more jobs if its slump in sales continued, in addition to the 2,000 job cuts announced last January. The two luxury brands do seem to have potential in emerging markets: While Jaguar and Land Rover sales fell by 35% in the U.S., U.K. and Europe between June 2008 and March 2009, sales increased by 8% in Russia and China over the same period, according the companies’ figures.Jaguar Land Rover has not performed well over the last 20 to 25 years in the U.K. due to “many failures of investment”, according to Howard Wheeldon of BCG Partners in London. The company has been in the hands of many owners, from the U.K. government to Ford Motor, and has struggled with overcapacity.
Since it produces cars that are less eco-friendly than other models, Jaguar Land Rover is also more exposed to higher fuel prices, as well as E.U. targets on carbon dioxide emissions that have put pressure on the research and development side of its business.
“This time Tata will give Jaguar Land Rover the support it needs, but for the moment it still needs the U.K. government assistance,” Wheeldon said. Last December, the company asked the British government for state aid to help it ride out the recession.
Tata is also said to have injected capital to help the struggling company. Tata Motors
was down 0.4% in pre-market trading in New York on Monday.