2007 European Sales Are a Tale of Two Continents

Or perhaps, a tale of two distinct parts of one continent.

By Chris Haak

01.31.2008

According to ACEA, the European automakers’ association, in 2007, auto sales in Europe were more or less flat – up 1.1% overall (from 15,782,959 to 15,958,871). But the real story is the drastic contrast between how automakers fared in western Europe against how they did in the developing markets in eastern Europe.

Auto sales in western Europe grew just 0.2% – but made up about 93% of the total European vehicle market. Germany is the largest new car market, but saw its sales drop by 9.2%, while the second-largest market, Italy, saw a 7.1% sales growth. Rounding out the top three was the UK, where sales grew 2.5%. Sales in Germany were hurt by consumer uncertainty about possible CO2 taxes, while they were helped in the UK by private demand for diesels and small cars, and in Italy by government incentives.

In eastern Europe, rising personal wealth in countries such as Poland, Romania, and the Czech Republic led to a 14.5% increase in new vehicle registrations in eastern Europe. The fastest growing eastern European country’s auto sales in 2007 was Latvia, at 26.8% growth (but a low number in overall sales), followed by Romania, at a healthy 26.3% clip. In fact, Romania passed Sweden, Austria and Greece in 2007 to move from the 12th spot to the 8th spot. Rounding out the top three eastern European nations in terms of sales growth was Poland, at a healthy 22.9% sales growth.

For manufacturers, there was both good news and bad news. Volkswagen AG (which includes VW, Audi, Seat, Skoda, Bentley, Lamborghini and others) is the largest automaker in Europe, but saw its sales fall by 1.1%. The second-largest automaker in Europe is PSA Group, which includes Peugeot and Citroen. Its sales went up by 0.6%. The rest of the top six companies were Ford, GM, Renault and Fiat, respectively. Fiat led the large companies in sales growth at 7.1%.

To me, there are a few takeaways from this data. One is that government actions can clearly cause harm or benefit to auto sales (Such as Germany’s sales declines and Italy’s increases), so government officials need to be aware that their actions will have a real impact on both the economy overall and the livelihood of those who depend on their auto industry for employment. Another point is that although eastern Europe’s sales grew far faster than western Europe’s did, western Europe is by far driving the auto industry in the near term, with over 90% of all sales in Europe. Whether the eastern European automobile market continues to grow briskly will depend on a number of factors, but having the appropriate vehicle mix for the stage of development that these former Iron Curtain nations are in should go a long way toward continued momentum.

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GM Holden Confirms Diesel Commodore Within 18 Months
Jan31

GM Holden Confirms Diesel Commodore Within 18 Months

By Chris Haak

01.31.2008

According to Australian website GoAuto, GM’s Holden subsidiary in Australia is expected to offer the same 2.9 liter V6 turbodiesel (pictured) that GM will also offer in the Cadillac CTS in Europe (and possibly/likely in the US as well) in its VE platform vehicles. Among others, these include the Commodore, which is the vehicle that became the Pontiac G8 in the US.

Of course, since GM North America needs to improve fleet fuel economy, and because the G8 is built in Australia alongside the Commodore, it seems like a reasonable assumption that the G8 may eventually offer the same engine as an option. The V6 diesel’s output is approximately 250 horsepower and 406 lb-ft of torque.

The same article said that it expects the South African-built (and Australia-sold) Hummer H3 to offer the same engine at some point.

Even more interesting would be whether GM took a play from Audi’s playbook and fitted the upcoming 4.5 liter Duramax V8 turbodiesel into a high-performance HSV variant of the Commodore or G8. This “Baby Duramax” is intended for light duty trucks and SUV such as the Suburban/Tahoe/Yukon and half ton pickups, and is designed to fit into the space occupied by a small block Chevy V8. Imagine this engine, which will produce “at least” 310 horsepower and 510 lb-ft of torque in a sporty car!

I’m all for consumer choice and fuel-saving technology, so I hope to see more powertrain diversity from GM and others in the coming years. High economy/high performance diesels sound like a great combination.

For more on upcoming diesel offerings, click here.

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Hyundai Sales Goals: If You Don’t Succeed Several Times, Try Again
Jan31

Hyundai Sales Goals: If You Don’t Succeed Several Times, Try Again

By Chris Haak

01.31.2008

Hyundai’s South Korean executives have had some ambitious sales goals in the US for several years. However, it has become apparent that either the bump in sales attributable to Hyundai’s improved quality and solid value message that occurred over in the earlier part of the decade has likely plateaued. Until this year, the company’s management in Korean didn’t quite grasp the idea that their expectations for continued breakneck sales growth in the most competitive automobile market in the world might have been unrealistic. The result was inevitably missed sales targets and a revolving door in the executive offices of Hyundai’s US subsidiary.

Last year, Hyundai hoped to sell 550,000 vehicles in the US. When it became apparent that goal wasn’t going to happen partway through 2007, the target was revised downward to 512,000. After the numbers were tallied in early January, Hyundai even missed that goal by a mile. In fact, it even missed the half a million milestone, with sales coming in at 467,009.

In 2007, Hyundai dealers primarily blamed the product mix – a shortage of the smallest, most fuel efficient models, the Accent and Elantra. This is being addressed for 2008 by increasing the supply of both models to the US by 25%. Additional dealer incentive programs are planned which will enhance dealer profit margins and encourage greater sales volume and customer satisfaction.

The product cadence will also continue at Hyundai for 2008. The big launch is the large Genesis sedan, with its optional V8 and rear wheel drive. The car will be uncharted territory for Hyundai, but at least that means that it is probably unlikely to cannibalize many sales of its sister models. However, I’m guessing that the Genesis will be more or less a niche product, in spite of how great it looks on paper. Customers just won’t be looking to Hyundai for an alternative to a Dodge Charger, Chrysler 300, Infiniti M35/45, or others. Another higher volume launch for 2008 is the five door Elantra Touring, which is intended to compete with the Toyota Matrix, Pontiac Vibe, and other stylish five-door compact hatches. Lastly, a revised Sonata sedan, with allegedly a much improved interior, arrives in the spring as an early 2009 model. Hyundai has been crowing about how the base Sonata’s interior will be superior in design and materials to the high-end Chevy Malibu LTZ’s, saying nothing for the base Malibu.

The goal for 2008 is 500,000 units. Hyundai has avoided some of the quality missteps that accompanied Toyota’s rapid growth, so they may be able to pull it off, but some dealers are concerned that the efforts to move upmarket to the Genesis may cost the company some volume, as Genesis development was done at the expense of more “bread and butter” models. If they can’t meet the goal, look for another “help wanted” sign again outside the executive offices of Hyundai USA later in the year.

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Isuzu Will Finally Pull Out of North America Next Year
Jan30

Isuzu Will Finally Pull Out of North America Next Year

Isuzu plans to stop selling vehicles here in 2009

By Brendan Moore

01.30.2008

The other shoe has finally dropped.

Isuzu Motors Ltd. has released a statement saying it will discontinue distributing new passenger vehicles in North America, effective Jan. 31, 2009.

The action is the short-term consequence of General Motors Corp. ending production of the Ascender sport utility vehicle and the i-290 and i-370 pickup trucks, which Isuzu has been re-badging as Isuzu vehicles. GM has recorded no sales to Isuzu since July of 2007, while 2007 calendar year sales dropped 50% to a pitiful 7,098. Isuzu has sold only trucks in the U.S. since 1993, when it stopped selling its last North American car model, the Impulse.

But, the retreat from the North American market has been a long time coming, with sales ebbing away every year. Isuzu once sold as many as 100,000 vehicles a year in the market, but they slowly became a mere curiosity in the market, with nothing of their own to sell, and no real competitive advantage over any of the vehicles it competed against. It could have been revived at one point, and some thought that Toyota’s recent acquisition of the company from GM might signal such a revival, but apparently it is not to be.

“It has always been our intention to remain in the U.S. market,” said Terry Maloney, president of Isuzu’s North American operations. “However, we were unable to secure any commercially viable replacements for these vehicles.”

Isuzu will continue to honor all product warranties and roadside assistance programs. It also will maintain its owner-relations call center.

And what will happen to the small number of Isuzu dealers that stuck it out with Isuzu until the bitter end? Those U.S. Isuzu vehicle dealers have been offered the opportunity to continue on as service dealerships. They may realize more profit from that, frankly, after it’s all said and done.

Mr. Maloney stated, “Our parts and service operation will remain fully functional. We expect the vast majority of our dealers will continue as service-only dealers.”

Let us shed a single tear for Isuzu. At so many points in its history there are “if only” moments where the company could have taken another path, but they didn’t, and now they will gone from these shores soon. The car business is tough.

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Tata Will Fully Control Jaguar and Land Rover
Jan30

Tata Will Fully Control Jaguar and Land Rover

Ford bids adieu to its British ties

By Blake Muntzinger

01.30.2008

Tata Motors Ltd. will purchase all Jaguar and Land Rover, according to a Reuters article on Wednesday. Previous reports stated Ford Motor Company would continue owning a portion of both makes. However, Ford now appears confident both brands will thrive under Tata’s ownership.

Both companies remain tight-lipped over details about the pending agreement, which should be finalized sometime this year. Analysts state the deal is worth up to $2.0 billion – a small price to pay for two classic British brands. Once this agreement clears, Tata will be well on the road to being a formidable player in the industry.

Tata has been making a splash in the international auto scene in the last six months. In October, it announced a joint venture with the Fiat Group to build passenger vehicles, transmissions, and engines in India. Tata’s Nano – its game-changing $2,500 “people’s car” – was released at the 9th Auto Expo in New Delhi, and ink is still drying from the deal with Chrysler LLC to build electric vehicles.

From Tata’s first car to buying Jaguar and Land Rover in 10 years – not bad.

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