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The AutoGuide News Blog is your source for breaking stories from the auto industry. Delivering news immediately, the AutoGuide Blog is constantly updated with the latest information, photos and video from manufacturers, auto shows, the aftermarket and professional racing.
China is the wild, wild east of the automotive industry. Home to more than 1 billion people and counting, it’s a hugely important market for car companies. There are many domestic brands over there but curiously foreign companies are making significant headway.
General Motors might have already come to a final decision about the future of its vehicle manufacturing operation in Australia.
Michigan, it’s more than just Great Lakes, the Big Three and the largest municipal bankruptcy in U.S. history. To the surprise of many, GM, Ford and Chrysler aren’t the only games in town. Practically every major OEM and supplier company has offices, technical centers or test facilities in the mitten state, and Toyota is making a major investment its facilities.
Although in recent times, there’s been much talk from automakers on delivering the vehicles that consumers want, at least when it comes to options, perhaps such statements should be taken with a pinch of salt.
If we take a look at current trends, it appears that many OE vehicle manufacturers are drastically reducing the number of options available, in an effort to simplify production as well as ordering processes for dealers.
For example, Volkswagen has reduced the number of options on the Passat from 148 to just 15, while over at General Motors, Buick division only offers 18 different combinations of different trim and model variations on the compact Verano sedan (shown above). Even Toyota, which has prided itself on listening to consumers and delivering vehicles based on their requirements is taking drastic steps – the Sienna minivan has seen order complexity reduced by a whopping 80 percent.
While some industry analysts believe this new emphasis on reduced ordering options actually results in potential buyers ending up with features they don’t want or need, automakers who’ve embraced the trend believe that besides a simplified ordering process, the result is a lower cost per vehicle, which can be passed on to buyers.
In fact, according to some, offering fewer options can also prove ultimately beneficial to consumers, who end up liking features they might not have previously considered. Kristen Andersson, a senior analyst for True Car.com says, “it’s actually a relief. They are removing the work of trying to figure out what I want.”
However, despite this apparent trend, particularly as it relates to mainstream vehicle brands, there are some, notably more higher-end, luxury nameplates who are sticking to the idea of an a la carte menu when it comes to options. Porsche, for example, says that around 30 percent of buyers still custom order their cars. ”It’s expensive to do it the way we do and it slows down the assembly line,” says company spokesman Dave Engelman, though when you’re dealing with more discerning buyers it often pays to take such an approach, especially as it adds to the aura of exclusivity.
That said, some mainstream brands are also taking a multi-option approach when it comes to ordering new vehicles, Chrysler for example, lists no fewer than 100,000 different factory combinations for the new 2013 Dodge Dart, designed to broaden the vehicle’s appeal among a wider potential customer base. Will it work? Only time will tell, nevertheless it doesn’t hurt to give things a try.
[Source: Detroit Free Press]
We’ve already got the Renault/Nissan Alliance, so why not a General Motors/ PSA Peugeot-Citroen one? Well according to PSA Chief Executive Philippe Varin that might just be a possibility, at least from a manufacturing standpoint.
Varin says that PSA is currently in talks with General Motors, discussing the possibility of GM teaming up with the French automaker to help stem the latter’s stagnant sales in Europe (on which it heavily relies) as well as helping reduce manufacturing costs.
The idea is to see both automakers develop and manufacture cars and powertrains through a joint effort in Europe, though each manufacturer would retain its separate branding, marketing and distribution network.
This is seen as adding benefits to both PSA and Opel, GM’s European arm which, like Peugeot, is currently struggling to compete against giants like Volkswagen and Renault, thanks to high labor costs and limited manufacturing capacity.
The venture will also give Peugeot improved access to overseas markets such as China and South America; it could possibly even witness a return of the brand to the US for the first time since 1992.
However, any joint venture between the two companies will have to receive the blessing of the Peugeot family, which still controls some 30 percent of PSA stock. In addition with failed merger talks between Peugeot and Mitsubishi still relatively fresh on some minds, Varin is understandably cautious about any future alliances, though with European sales dropping by 8.8 percent last year and Peugeot stock halving in value over the last 12 months, any joint venture would certainly be welcome news.
In the meantime while discussions take place, Peugeot is doing what it can to weather the current economic storm, Varin having recently announced that the company will be selling some 1.5 billion euros ($1.98 billion) in assets to help alleviate debt, which currently stands at around 3.4 billion euros ($4.5 billion).
[Source: Auto News]
Of the major Japanese Automakers, Nissan Motors has been one of the least affected by natural disasters and the strengthening yen, effectively minimizing exposure to regional risks by erecting facilities overseas.
Nissan has announced plans to build another manufacturing complex in Aguascalientes, Mexico, to expand North American production. An investment worth $2.0 billion USD, the new facility will be joining two other Mexican Nissan factories already in place. When construction is completed, operations are projected to begin late in 2013, with an initial production capacity of 175,000 vehicles annually.
Operations in the new complex include body, trim, and chassis installation, paint manufacturing, associated parts warehousing, as well as an on-site test track for quality assurance tests of new vehicles. All this means that the manufacturing complex will provide up to 3,000 new jobs at the facility, and approximately 9,000 new jobs from supply chain and wider community. All in all, Nissan’s expansion will allow a total of 13,500 jobs provided for Aguascalientes.
Nissan currently makes up six of the ten most popular vehicles sold in Mexico. Nissan CEO Carlos Ghosn said, “Mexico is a key engine for Nissan’s growth in the Americas. Together with our new plant in Brazil, this new manufacturing facility in Aguascalientes is an important pillar in our strategy to ensure that Nissan has the capacity it needs to increase sales volume and market share across the Americas.”
Jose Munoz, president and general director of Nissan Mexico adds, “No other automaker is investing in Mexico more than Nissan. Nissan’s investment in new manufacturing, engineering and technology resources in Aguascalientes validates what thousands of our employees, suppliers, and customers already know. Behind our market leadership is an unparalleled commitment to deliver the best vehicles for Mexico and more than 100 international markets.”
At least that’s the findings from Evalueserve’s White Paper, entitled “Platform Strategy Will Shape the Future of OEMs.” Like many facets of the auto industry, the concept of platform sharing is nothing new, automakers have been doing it for decades.
Yet, the realities of doing business in the 21st century mean that not only is it no longer acceptable for automakers to offer a range of badge engineered models (think back to GM’s J-cars of the 1980s), it simply isn’t financially feasible to have a range of unique, dedicated platforms either.
According to Evalueserve’s own analysis, last year, the top 20 global passenger car platforms accounted for some 40 percent of global sales, with realistic projections set to see these top 20 account for almost 50 percent of all global vehicle sales by 2015.
Yet as we move forward and automakers seek to maintain economies of scale, the number of vehicle architectures is expected to shrink still further, even as many brands aim to proliferate their model offerings as well as adding localized production, all in an effort to make their products appeal to a wider range of consumers in different global markets, while minimizing supply and tariff issues.
Evalueserve estimates that by 2020, the major vehicle manufacturers; Daimler AG, Fiat/Chrysler, Ford, General Motors, Honda, PSA Peugeot/Citroen, Renault/Nissan, Toyota and Volkswagen Group will have reduced the total number of vehicle architectures they use by a third.
In fact, not too long ago, GM declared that by 2018, it will have reduced its number of global vehicle architectures to just 14, down from 30 in 2010. The company also said this strategy should help it save some $1 billion each year, money that’s primarily contributed by product development programs.
Cutting costs these days seems to be all about building factories in the country meant to buy your products. Audi is following that mantra by announcing designs to build a plant in North America.
Doing so would help the brand avoid the pitfalls of the European economy and make the actual act of bringing vehicles to market much simpler.
“It’s not a matter of if we will do a plant in North America, but when,” Audi of America president Johan de Nysschen told WardsAuto. “The decision to do a plant, technically we’ve reached that conclusion. It’s a matter now of waiting to pull the trigger.” So that means we, and most everyone concerned with the auto industry, are asking just that— when? Though there isn’t a date settled, Audi might be motivated to move quickly in an effort to meet their 150,000 U.S. unit sales goal by 2015.
“One advantage of Mexico is that you could support the growing markets down in South America, Brazil,” said De Nysschen. “More so, you have the benefit of exporting cars into Europe duty-free.” Despite that, Mexico isn’t a definite destination. He also said there are definite advantages to building the plant in the U.S., though using Volkswagen‘s Chattanooga, TN plant isn’t an option because it is expected to be running at maximum capacity.
“Getting a plant allows us to have a higher degree of U.S. content. It allows us to have a natural hedge against that,” he said.
Even with such discussions, the fact remains heavily on Audi’s radar that their sales don’t currently justify building such a plant.
“We’ve got to build our business to get to the point where, with a combination of production for the U.S. and some exports to other markets, we can get the economies of scale to make that factory work.” In other words, the company is looking for much greater sales before staking out territory for their North American plant.
[Source: Wards Auto]
Ohio Governor John Kasich and Missouri Governor Jay Nixon made a visit to Detroit this week during the North American International Auto Show in an effort to bring U.S. automotive manufacturing to their respective states.
John Kasich said, “Contrary to popular opinion, the auto industry is getting stronger.” Ohio currently possesses the second-largest automotive industry work force in the nation behind neighboring Michigan. Home to Chrysler Group, Ford Motors and Gerneral Motors, Michigan also is the home to most of the world’s automotive parts suppliers. It is also in Michigan where government regulators are tasked with policy making in auto safety, emissions and fuel economy.
The chief engineer of Honda Research and Development in Detroit, Toshiaki Shimizu said, “People may have the wrong idea. Detroit is not becoming less important. It is more important. It remains the center of the automotive industry. We all come here because we must.”
Well aware of Michigan’s relevance, Ohio Governor John Kasich and Missouri Governor Jay Nixon spoke to a number of auto executives to reach agreements that prove to be mutually beneficial. Ford committed to $1 billion over a span of four years to upgrade Ohio’s driveline manufacturing plants. Honda will invest $400 million in improvements to its Ohio facilities to prepare for the production of its new Acura NSX hybrid sports car. Chrysler will add another 1,100 jobs and invest $1.7 billion into its Jeep plants of Toledo, Ohio. GM continues to build its Chevrolet Cruze in the Lordstown, Ohio, plant and will put in another $204,000 to upgrade its Toledo transmission plant.
On his first day in office, Missouri Governor Jay Nixon assembled the Automotive Jobs Task Force to attract investments to the state. In October, Ford announced that it will spend $1.1 billion and add another 1,600 workers to assemble the Transit van alongside the F-150 Ford pickup trucks at the Kansas City, Missouri plant. GM will also invest $380 million into its Wentzville, Missouri plant, adding another 1,660 jobs as it expands assembly to include the Chevrolet Colorado and GMC Canyon.
Nixon explains, “we are here not just to talk to the manufacturers, but also to the suppliers. As the manufacturers invest and production rises, we are asking the suppliers what we can do to help them make the investments they need to make to support this.”
[Source: Detroit News]
It’s no secret that General Motors’ European arm, Opel/Vauxhall has been struggling. With an ongoing debt crisis in Europe, high labor costs in Germany and regional status, Opel is finding the going difficult against many rival automakers in its homeland, including traditional competitor VW, whose tentacles stretch far beyond the boundaries of Europe.
Last year, Adam Opel AG lost some $1.6 billion and although GM has been looking at plans to sell the ailing company, recent news suggests that it plans to keep Opel under it’s wing, at least for the time being. One aspect which would appear to confirm that is the appointment of Stephen Girsky to the role of chairman of the board, replacing Nick Reilly who is officially retiring.
During a recent statement, Girsky said that “in order to fully leverage [Opel's] potential we will continue to work on optimizing the cost structure, improve margins and make use of economies of scale within the group.”
One of the biggest obstacles is very high assembly costs, which have continued to put a major dent in Opel’s profitability even though its research and development arm remains first rate. In order to help deal with that issue, as well as Germany’s powerful IG Metall manufacturing union, GM is bringing in Peter Thom as it’s Opel manufacturing chief. Thom’s is armed with experience working in China and a mandate to significantly cut costs, two things that will no doubt have far reaching effects.