Will Asean Become Major Market for Parts Makers in India and China?

Ammar Photo

Ammar Master

The realization of the Asean Economic Community in 2015* presents opportunities and challenges in the changing automotive landscape of the Southeast Asian region.

Foremost, a successful Asean integration will support the long‐term goal of creating a region with free movement of goods, services, investment, and skilled labor, in addition to a freer flow of capital. This in turn is likely to lead to faster economic growth and an ever‐expanding middle class.

May Arthapan, director of Asia Pacific forecasting at LMC Automotive in Bangkok, indicated in an aptly titled recent presentation that Asean could well become “Another BRIC in the Wall,”** given the region’s emergence in Asia. Not only are there opportunities for vehicle makers to expand sales in a big way, but component makers also are going to benefit from increasing manufacturing activity in Asean countries, led by Thailand and Indonesia.

Japan’s Suppliers Have Long-Term Presence in Southeast Asia

Japan’s component makers have had a long-established presence in the Asean countries, and will clearly be the biggest beneficiaries. However, there are also opportunities for companies in India and China. These companies have been eyeing the Asean region as a new market for a while. This has been evident from increased participation, especially by companies in China, at Asean region trade shows.Yet, component makers from both nations have been wary to enter unfamiliar territory and face strong Japanese competition. Continue reading ›

February U.S. Auto Sales Remain Strong with Robust 13.1 Million-Unit Pace

2012 WAC Humphrey-27-MNew-vehicle sales are expected to remain resilient through the rest of February even though the retail selling rate is weaker than it was in January of this year, according to the monthly sales forecast update from our Power Information Network® (PIN) and LMC Automotive. The forecast is based on analysis of transaction data during the first 14 selling days of the month.

Retail light-vehicle sales this month are projected to reach 931,100 units, which would be 9% higher than in February 2012 and would translate to a seasonally adjusted annual rate (SAAR) of 12.1 million units, up from last February’s 11.7 million unit pace, but weaker than the 13.1 million-unit retail pace in January 2013.

Total light-vehicle sales (retail and fleet) this month are estimated to reach 1.176 million units—up 7% from deliveries in February 2012 on a selling-day-adjusted basis.* Fleet deliveries are expected to remain at the same level as in January—accounting for 21% of the sales mix. The total light-vehicle SAAR is projected to reach 15.2 million units, which is the fourth straight month at or above 15.2 million units. Continue reading ›

North American Production Posts Double-Digit Year-to-Date Increase

Through the first seven months of 2012, North American light-vehicle production volume has climbed 23% (up by nearly 1.7 million units) from the same period in 2011, mainly due to major increases in production for Honda and Toyota Groups, post-recovery from setbacks related to the March earthquake and tsunami in Japan in 2011. Honda’s . . . Continue Reading North American Production Posts Double-Digit Year-to-Date Increase

Chevrolet Pushes Sales in Southeast Asia with Trailblazer, Sonic

General Motors’ Chevrolet brand has begun a major push to increase its small 2% market share in Southeast Asia with the introduction of the Trailblazer midsize SUV and Sonic sub-compact. Both models went on sale in Thailand in July, and will also be subsequently released across the region.

The Trailblazer, priced from US $34,000-$47,000, is offered with two engine choices: a 2.5-liter engine with output of 150 hp and a 2.8-liter engine producing 180 hp. Both versions are mated to a 6‐speed automatic transmission with manual shift mode. The Trailblazer will be facing stronger competition from models including the Toyota Fortuner and Isuzu Mu‐7. Continue reading ›

Ford Aims Big with New Thailand Plant

Two years ago, Ford jumpstarted its Southeast Asia sales with the introduction of the Fiesta sedan and hatchback models. The introduction in the second half of 2010 expanded Ford’s annual sales in the region by 81%, up from just 39,000 units in 2010 to 71,000 units in 2011.

Importantly, the Fiesta launch also signaled Ford’s renewed focus to be a prominent manufacturer in a growing region of 500 million people, now more integrated since the ASEAN Free Trade Area (AFTA) became fully functional in January 2010. And the region is moving toward further integration by 2015 under the ASEAN Economic Community (AEC) agreement.*

No doubt China will remain at the core of Ford’s Asia Pacific and Africa operations. However, other emerging markets in Asia, including India and the Asean, are gaining resonance. Continue reading ›

How Subaru Lost its Joint Venture in China

Marvin Zhu

A year ago, Fuji Heavy Industries, as well as several other global carmakers, chose not to locally produce vehicles in China. Fuji Heavy was said to be seeking a local partner to establish a joint venture. According to rumor, Great Wall, well known for its SUVs, was one possible candidate, as Subaru’s most popular model in China is also an SUV—the Forester.

Beijing Auto (BAIC) was also closely linked because the company needed to expand its product portfolio to compete against other state‐owned giants, such as SAIC, FAW and Dongfeng. In addition, some smaller players—such as Huatai,Youngman and several others— were also mentioned.

However, it was eventually revealed that Chery was the last remaining company in the running to partner with Subaru. A JV would use Chery’s new plant in Dalian to make the first model, which was likely to be the Forester. Chery could learn a lot from Subaru’s engine technology, and might even develop a new brand based on the new technology.

Unfortunately, according to a recent announcement from Fuji, the company has dropped plans to manufacture vehicles in China, after failing to secure the Chinese government’s approval for a joint venture. Since then, Fuji Heavy cut its global sales targets and instead decided to increase its manufacturing capacity in the United States and in Japan. Continue reading ›

Some Unexpected Brands May Gain Sales with Engine Downsizing

Tyson Jominy

As we see new-vehicle buyers and lessees continue to shift from large to midsize vehicle segments and from midsize to small or compact segments, there has been a decrease in the size of engines. In addition, we are seeing that consumers who do not downsize are finding more fuel-efficient powertrain options at the segment and model level, according to our Power Information Network® (PIN) retail transaction data.

Detroit Automakers will Not be Left in the Lurch

An interesting change related to the shift to smaller engines this time around is who is leading the charge, and therefore who will stand to reap the gains. Two Detroit automaker brands, Ford and Chevrolet, are exclusively offering 4-cylinder engines in their freshened midsize cars—Fusion and Malibu, respectively. In addition, Ford offers 4-cylinder powertrains in their midsize crossovers and now offers a V-6 in the F-150 that is selling very briskly. In fact, the Ford EcoBoost powertrain sub-brand is turning out to be one of the early automotive successes of the decade. Continue reading ›

China’s Auto Exports: Small but Posting Strong Growth

Marvin Zhu

In 2011, China’s automakers shipped nearly 850,000 vehicles from different harbors in China to other world regions. Exports were up 50% from the previous year and contributed US $11 billion (69.55 billion RMB) to the country’s trade balance, which was an increase of 57% from 2010.

While most of the Chinese home-grown brands are suffering to some extent from declining market share in the domestic market, surging exports might help local automakers to counter this decline, according to Marvin Zhu, senior automotive analyst with LMC Automotive.* Recently, he wrote about how China’s local automakers are making inroads in other countries’ auto markets in China Automotive Monthly, published for J.D. Power Asia Pacific. The article is excerpted:

Some Local Companies are Already Overseas Players

Chery, China’s largest local carmaker, recorded sales of 642,000 units in 2011, down 6% year over year. Its export volume reached 160,000 units, which amounted to one-fourth of the company’s total sales. Last July, Chery set up a US $400 million (2.54 billion RMB), fully-owned factory with a complete production line in Brazil. It became the Wuhu-based carmaker’s 17th overseas plant. While this growth and investment is happening internationally, the company announced it would drastically reduce its investments for ongoing R&D projects for the local market. Continue reading ›

BMW and Hyundai Execs Discuss Possible Engine Tie-Up

David Sargent

Recently, Automotive News and German trade newsletter Automobil Produktion reported that German luxury automaker BMW and South Korea’s Hyundai Group are discussing a possible tie-up or alliance to develop and produce engines, where both automakers would share costs equally.

Of course, any engineering tie-up can be a smart move in principle as it allows automakers to share development and purchasing costs. The benefits are generally greatest for high-cost items, such as engines, and also where the shared parts are “invisible” to customers, and engines would generally also qualify here. Continue reading ›

Will a Factory Alliance Help Peugeot and GM in Europe?

David Sargent

In late February, Automotive News and wire services reported that a possible alliance between General Motors and PSA Peugeot Citroen* was in the works. It would feature a broadening factory alliance. In another recent report, Peugeot, which is Europe’s second-largest automaker after the Volkswagen Group, also announced plans for a stock rights offer of 1 billion euro ($1.34 billion) to raise cash to offset a significant increase in its debt. GM will likely buy shares equal to a 7% stake in Peugeot when stock is offered, Reuters reports. Like Peugeot, GM is looking for ways to turn around its unprofitable Opel Division in Germany.

Sharing Vehicle Development, Platforms and Parts Will Lower Costs

Is an alliance between PSA Peugeot and GM a good idea? The concept of sharing vehicle development, platforms and parts is, in principle, a good one. Both automakers have very similar lineups and so there is considerable room for sharing costs across multiple vehicle lines. The key concern would be if the co-developed models become so similar that they simply cannibalize sales from each other and/or either automaker’s products lose their “identity.” Continue reading ›