David Leggett's automotive industry blog - from just-auto.com
- Sounded good at the time
<P>Remember that Chrysler <A href="http://www.just-auto.com/article.aspx?id=94855&lk=s">incentive that involved guaranteeing customers' gas at US$2.99 </A>a gallon for three years? When the price was nudging $5 a gallon it sounded like a good offer. The pump price is now just over $2 rendering the relevant card useless. It will swing the other way again, but probably not for a while. Ironic though, to think of that handful of Jeep and Dodge customers actually hoping for the price of oil to go up.</P><p><a href=http://industry.bnet.com/auto/1000382/sounded-good-at-the-time-the-299-gas-card/ target=_blank>Sounded Good at the Time: The $2.99 Gas Card</a></p>
- Get a plan
<P>It sounds like an eminently sensible step. Before you get the bailout, can we please see some sort of plan of what you are planning to do with the cash and how you intend to make your businesses viable? Yep, that's sensible and the least taxpayers deserve. </P>
<P>These will be the most important reports these companies have worked on, period. And there will have to be some serious work done to get something credible ready by early December. As ever, it's a shame that things have to get to a survival threatening level before minds are properly focussed on what's gone wrong and putting it right. But this could be (ought to be, even) a defining moment if the analysis of the situation and what needs to be done are really up to scratch. </P><p><a href=http://www.just-auto.com/article.aspx?id=96880 target=_blank>US: Congress wants auto industry plan</a></p>
- Surreal times?
<P>That was a little out of left-field, eh? Was it a clever PR stunt yesterday by SolarWorld to say that it is planning a bid for Opel's German facilities or is it really serious? Before we all laugh it off as a cheeky stunt, let's just reflect on how desperate for cash certain companies are. GM is to <A href="http://www.just-auto.com/article.aspx?id=96796&lk=s">sell a 3% stake in Suzuki </A>to raise a bit over $200m. SolarWorld is talking about a billion euros for four factories, the products produced (royalties and rights would surely be negotiable) and Russlesheim's R&D (more tricky, but might be a way to share). Mad?</P><p><a href=http://www.just-auto.com/article.aspx?id=96852 target=_blank>GERMANY: SolarWorld AG 'planning to submit Opel offer to GM'</a></p>
- Detroit deadlock
<P>I was just catching up on the latest news. Asian stock markets have followed the Dow Jones downwards, there's still political deadlock in Washington over the Detroit bailout and worries have intensified over the recessionary outlook for 2009. </P>
<P>It would seem that the markets have taken fright partly because of the deadlock over the US auto industry and are considering the implications for the US economy if no 'bailout' is forthcoming. </P>
<P>I reckon it will be, but politicians want to give the leaders of the Big 3 (or Big 2.5) a bit of a public going over first. </P>
<P>It's almost painful to watch as Wagoner/Mulally/Nardelli put up a united front and are subject to some fairly predictable barbs. It was inevitable though.</P>
<P>They may well have to offer their heads up, but I'm not sure that would be the right thing to happen. Wagoner was actually doing the right things before the rug was pulled by the financial crisis and the GM recovery plan was blown off course. Is one person to blame for an allegedly complacent corporate culture and the mistakes (always easy to identify with the benefit of hindsight) of the past ten years or longer? </P>
<P>Whatever the rights and wrongs of GM's leadership, the big picture is not throwing the baby out with the bathwater or political point scoring right now. It has to be loans with conditions and a commitment from all parties to deal with underlying structural problems so that lawmakers are reassured the money isn't being wasted. And that's in everyone's interests. I'd work it so they can access the USD25bn retooling loans already agreed to stave off immediate cash problems. And then a commission, or something like that, takes it from there with a more in-depth look in terms of what's next.</P>
- HuffPost item
<P>There's a good point made below by Pieter van Rosmalen about the impact of exchange rates on published profitability figures. What exactly is the underlying picture at GM in Europe? Hmm. I guess that could cut the other way in other examples where profits are exaggerated. One for the accountants.</P>
<P>A blogger at the Huffington Post, Diane Tucker, has been in touch to refer me to an interview with Peter DeLorenzo (the sometimes provocative and very readable <EM>Auto Extremist</EM> blogger). It's quite a neat summary of the (for want of a better term) pro-Detroit line.</P><p><a href=http://www.huffingtonpost.com/diane-tucker/journalist-to-gop-youre-1_b_144481.html target=_blank>Journalist to GOP: You're 100 Percent Wrong About U.S. Automakers</a></p>
- The new game in town: 'What If?'
<P>The turmoil in Detroit is now causing bigger waves to ripple elsewhere. And it's not just, 'We want a fat soft loan like wot they got' which was the rather crude, if brutally honest, message that recently came out of the European automakers' trade association ACEA. </P>
<P>I spent a bit of time yesterday on the phone with a journalist in Brazil and his questions were the same as many doing the rounds this week in Brussels, Berlin, Stockholm and I dare say plenty of other places across the globe. They boil down to this: what if? What if GM or Ford really goes down? What happens to the local factory that makes GM/Ford cars?</P>
<P>I was having another conversation with someone recently about Delphi. It's still in Chapter 11, but I was told you wouldn't know it to talk to the European Delphi people who haven't really been much affected. And, the Delphi Euro-people maintain, it's actually been a positive thing for their business in the round. Maybe.</P>
<P>But car companies in Ch 11? There has to be a strong suspicion that it isn't exactly a marketing positive. As a core brand value it kind of sucks. In fact, just the continual discussion in the media of how GM is near to bankruptcy in the US will be almost as bad as actually being bankrupt. Which is why something that looks credible needs to be mapped out in the US double-quick, all relevant parties - companies, UAW and lawmakers - appreciating the urgency of the situation.</P>
<P>Okay, back to ops outside the US. Units that lose money within a bigger group enjoy a certain degree of protection from the elements. Losses can be absorbed, quietly even. The shareholders might buy into the idea that, say, turning around Saab is not an overnight job (yup, it could take two decades I guess...). Jam tomorrow. Be patient. And there's the vague but nevertheless seductive and weighty idea in the background that maybe it's a truly great brand that will one day fly, value finally unlocked. </P>
<P>But, abruptly take away the parent and maybe you have something that is a little bit exposed to the elements. If you're in standalone profit, it might not be too bad initially, disentanglement issues notwithstanding. However, loss-making firms may suddenly be faced with severe liquidity issues. It could get messy, financial flows needed to sustain operations severed, unseemly arguments developing over who owes who what. </P>
<P>GM Europe lost USD1bn in the third quarter of this year. Hence, alarm bells have been ringing in Zurich and Russelsheim now that GM is in such dire straits. </P>
<P>One curious strand to this whole thing is that it brings to a head certain political realities.</P>
<P>Yes, maybe the EU Commission should be involved in assessing the pan-European industrial position and brokering/funding loans to automakers. But when it comes to crunching the sums and looking at where the companies and jobs are, another stone presents itself that no-one in the thick of it wants to leave unturned - national governments. Opel has been <A href="http://www.just-auto.com/article.aspx?id=96811">quick off the mark to extract a guarantee </A>from Germany's government. If GM goes belly up, there will be German government money for Opel (only for the German bits though). </P>
<P>There's an even more potentially <A href="http://www.just-auto.com/article.aspx?id=96829">intriguing situation developing in Sweden</A>. Think about it. Ford wants to sell Volvo but cannot (though it has perhaps not considered that a nation would buy it). GM might not argue too much if someone were to present a fat cheque for Saab. Governments, as we have seen with the banks, appear to access bottomless pits of money when push comes to shove (or they borrow). The Swedes are historically not exactly averse to a bit of state involvement in their economy. What are they waiting for! Perhaps the Swedish government might look for a Swedish solution that also involves, say, the Wallenbergs to spread the risk about. And by the way, before you say I'm barking mad to even entertain such outlandish possibilities in here, a German academic institution said earlier today that <A href="http://www.just-auto.com/article.aspx?id=96814">Opel should be nationalised</A>.</P>
<P>Okay, maybe thngs will calm down a bit. But this 'what if?' game perhaps gets people thinking and pushing parameters for discussion way beyond where they were just a few months ago. Governments and the people in the car companies want to stay ahead of the curve, be ready for the worst, not get caught with their pants down. And there is an industrial atmosphere developing generally that isn't necessarily for the best in the long run: 'You gave all that to the banks! What about us? C'mon!'</P>
<P>Strange times and the 'what if?' game in the auto industry globally has got legs I reckon.</P><p><a href=http://www.just-auto.com/article.aspx?id=96825 target=_blank>EU: Automakers wait on financial aid decision</a></p>
- Tough calls
<P>The downbeat news just keeps on coming. It seems relentless at the moment, but we are at that stage in the cycle when everyone is reassessing the demand outlook for next year and adjusting operations accordingly. Economies are on the way down, so good news will be in short supply, few looking ahead to the recovery phase at this point. The storm's still blowing in. And there's the underlying elephant in the room which is the whole credit situation and how quickly we'll have a return to credit being more available.</P>
<P>While the spotlight is very much on Detroit, it's perhaps worth noting that Europe isn't looking too pretty either. Renault's Patrick Pelata has said he sees a 20% decline next year. Gulp. That's perhaps a measure of how far people are taking their market forecasts down right now. It's downward revisions all round. </P>
<P>But, if the credit situation is gradually 'resolved' in the first half of next year the outlook might start to look a bit brighter given where interest rates are going, tax cuts on top, some degree of pent-up new vehicle demand and inflationary pressures remaining subdued (especially oil). It could even be a V-shaped recession with quite a sharp upturn. Well, it could. That's the optimistic scenario.</P>
<P>I know there's an alternative scenario in which consumer confidence stays on the floor and credit markets stay pretty much locked up, a deep economic slump persisting into 2010. But the credit element and banking crisis behind this recession is new territory. This recession is not quite like previous ones. </P>
<P>In short, it's still a very uncertain picture, the uncertainties much bigger than we might usually expect, though they are always pretty big at this stage of a down cycle. </P>
<P>As an automaker though, it makes sense to be prepared for the worst obviously, with a plan in place if the recovery to demand is early and sharp. Not being ready to turn the taps on when demand picks up can also be costly and result in lost share.</P>
<P>There's also a tricky judgement call in trimming cost. Take too much out and the patient may be permanently incapacitated. Areas like R&D might look like a luxury, but if there's no hot new product in time period t+5, that big cost saving made might be regretted. Equally, if that cost cut is really necessary for survival, there's no argument. Tough calls. </P><p><a href=http://www.just-auto.com/article.aspx?id=96790 target=_blank>FRANCE: European auto market to fall 20% - Renault's Pelata</a></p>
- RTE news
<P>A young lady who works at the Irish national broadcaster RTE on their newsdesk called me the other day. Would I care to be interviewed in a programme slot about the problems facing Detroit? Er, yes, I guess I could, I said. I've a face for radio and I was assuming that was what we were talking about, RTE being based, I also assumed (correctly), in Dublin. The great thing about radio interviews is you can do them down the phone or, these days, on high quality Skype, disruption to daily routine kept to a minimum. I've done loads on BBC World Service radio over the years. </P>
<P>The RTE lady asked very nicely and I was on my cell at the BMW thing (see below posting). I said yes and that was that. It turned out to be TV. It's not that I don't like doing TV stuff - I do, actually - but you normally have to physically get yourself to a studio and that's a slight hassle whichever way you look at it. If you're wondering, do they find a helicopter and fly me to Dublin, the answer to that, unfortunately, is no. They book a slot in a BBC studio in London and I go there instead. </P>
<P>So, I'll be dropping into the studio tomorrow on the way to my Aunt's birthday bash in Acton, West London. It's all part of the fun. Sometimes you have to get out of your comfort zone and try things, stretch yourself in a way that you haven't for a while. Anyway, I wish all of you out there a good weekend, wherever you are.</P>
- Cars that last
<P>Here's a thought. There's a vibe around that is changing the way consumers behave across the board. Even if you are not directly impacted by harder economic times, you may start to behave differently, feel that you should be cautious with your spending 'just in case'. And lots of people are eschewing conspicuous consumption; you, perhaps, are being carried along on that tide a little, even if you are unaware of it. </P>
<P>It might mean shopping for bargains online, a renewed enthusiasm for camping holidays, buying groceries at Lidl or hanging on to your car a little longer before replacing it. And if you do hang on to your car, you may be very pleasantly surprised that not much goes wrong with it. They're well built these days. In fact, the whole financial merry-go-round that involves finding the money to spend on an expensive asset that rapidly loses value might be called increasingly into question.</P>
<P>That thought was brought into focus while thinking of developments at the top end of the market yesterday when I was driving the new BMW 7 Series. I know many are corporate purchases, but the depreciation they come in for is astonishing.</P>
<P>Anyway, I have written something up: <A href="http://www.just-auto.com/article.aspx?id=96774">FEATURE: BMW keeps its head with new Seven [includes audio]</A></P>
<P>I drove with <A href="http://www.am-online.com/">AM</A>'s Tim Rose who features at the wheel in the below clip. The route took us as far as Wiltshire and the <A href="http://www.nationaltrust.org.uk/main/w-avebury">Avebury stones</A>. They were pretty impressive. Car was good. Well, it should be for sixty grand plus (sterling), eh? As Tim says, the diesel is the one to have in Europe. And go for the head-up display; it works really well with the nav and once you get used to it you wonder how you ever lived without it. You will never recoup anything like the GBP915 it costs as an option new when you sell the car on - it'll be absorbed into the rapidly diminishing residual. But if that's an issue why on earth are you buying a car like this? If you must, do it properly. Anyone reckon HUDs might transition to higher volume segments of the car market anytime soon? </P>
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- BMW 7
<P>I'm out to a drive event for the new BMW 7 Series tomorrow. That's some vehicle to be going to the market with right now. It looks a lot like the old one, the Bangle dial turned down a tad. Is iDrive easier to use? I hope so. But however good the car is, I wonder what the volume outlook for it looks like. The UK market could be tricky, along with some others, company directors and the like feeling the pinch and tightening belts.</P>
<P>But BMW has managed to make it lighter, greener and still more powerful than the one it replaces. That's not a bad achievement is it? What say you Mercedes?</P><p><a href=http://www.just-auto.com/article.aspx?id=96237&lk=s target=_blank>GOLDING'S TALK: The man who sewed together the new 7 Series</a></p>
- Flip side of the coin
<P>It's funny how some market characteristics that look like negatives, can turn out - in certain circumstances - to act as positives. So, consumer credit is not very well developed in China and most vehicle sales there are for cash. Until recently, that was seen as an area to be worked on and as something of an opportunity. Just think of all those additional car sales that will happen when consumer credit infrastructure is in place, the thinking went.</P>
<P>And then credit availability dried up worldwide. Credit availability is an issue for both dealers (who can't get finance to buy stock; that's hitting in places like India and Russia) as well as consumers. But if the market has been driven by financed sales, then look out when credit is squeezed. The market takes a tumble.</P>
<P>In China's car market, paradoxically, such financial strains won't be felt as much because credit finance for car purchases is only a small part of the picture. </P><p><a href=http://www.just-auto.com/article.aspx?id=96743 target=_blank>CHINA: SAIC to expand car financing</a></p>
- Lada 2116
<P>We have just published another feature that has resulted from Mark Bursa's recent trip to AvtoVAZ. The first feature put the place in historical context and the latest says more about current developments and the future. I must say, the Lada 2116 - off the new AvtoVAZ C-platform - doesn't look half bad; ditto the upcoming CUV. As ever, Mark's honed eye for the unusual brings us something a little offbeat - in this case his observations on the portraits in reception (have a look in the article gallery). </P>
<P>Included there is Vladimir Kadannikov having a puff on a ciggy outside AvtoVAZ HQ, leaning against a Samara. Nice picture. The image file Mark sent through was called....wait for it...Vlad the inhaler.jpg. He can be very droll that Mr Coolbear. </P>
<P>As myself and Matthew Beecham agreed yesterday while reviewing the <A href="http://www.just-auto.com/article.aspx?id=96700&lk=s">3M Q&A</A> (and more particularly the 'bonding' puns at the top), we have to get our laughs wherever we can. </P><p><a href=http://www.just-auto.com/article.aspx?id=96724 target=_blank>EMERGING MARKETS ANALYSIS: Fixing AvtoVAZ starts with new product</a></p>
- Russia's president is a GM St Pete plant fan
<P>I see Russia's president Dmitry Medvedev was at the GM Russia plant opening ceremony last week, along with the US ambassador to Russia. Medvedev may have made some icy remarks about the US recently, but it sounds like he appreciates investment by US companies in his country. </P>
<P>"This is a great example of investment cooperation between Russia and the United States," Medvedev said at the ceremony on Friday.</P>
<P>Medvedev - who hails from St Petersburg - was also at the groundbreaking ceremony for the plant two years ago, as first deputy prime minister.</P>
<P>"I was given a shovel as a souvenir, which I still keep at my dacha with other gardening tools," Medvedev said before inspecting the interior of a Chevy Captiva off the line.</P>
<P>Practical chap. Gets given a shovel at a groundbreaking ceremony and hangs on to it. I like the idea that it's got a great big GM logo on the handle, perhaps alongside a slick representation of the two nations' flags. It's certainly a lot more useful than a paperweight. </P>
<P>To be serious for a moment, economic ties like this one - a US car company investing in Russia, unthinkable not so long ago - are an important positive for the world's economy and the notion of human interdependence. Globalisation isn't all a force for good, but, on the day we remember those who have given their lives for their country in military service, it's perhaps worth remembering the positives it brings. People across the globe can feel closer, at least, our welfare and interests increasingly collectively intertwined. If Russia's president comes over all warm and fuzzy when he thinks of GM's St Pete plant and the rather magnificent shovel at his dacha, that's maybe a measure of how far we have come, even if the Cold War-like rhetoric still gets an airing on some days. </P><p><a href=http://www.just-auto.com/article.aspx?id=96660&lk=s target=_blank>RUSSIA: GM opens new plant</a></p>
- GM and Chapter 11
<P>The enormity of the seismic shift happening in Detroit is still sinking in. There's not much time and it's quite a dilemma for the US government. Would a 'bailout' be the right thing to do? What would it really mean and would it just be delaying the inevitable, throwing good money after bad?</P>
<P>Is Chapter 11 actually what GM needs to get its US house in order? Would that enable it to slim down, reduce cost (and shake up the UAW deals further) and eventually emerge leaner and fitter? What would US ops in Ch 11 mean for the rest of the company outside US? Business as usual?</P>
<P>There's the oft-cited case of the US airlines emerging from Ch 11 restructured and able to carry on, but what about a car company in Ch 11? What would that mean for customers (and perceptions) and would it really be workable?</P>
<P>There are lots of questions being looked into now and I get the impression we have moved on a little since Friday. It's become 'what are the implications of Ch 11 and what does it really mean?' rather than simply 'how is it avoided?'. And for the new administration in the White House, it's a time for careful evaluation of options rather than a rush of blood. </P>
<P>How do you avoid the full disappearance of 'Detroit', maximise retention of the good, remove what's bad or diseased and end up with companies that are commercially viable, making competitive products that people actually want and can believe in? Ah, that last thing, 'belief'. That will take some doing, whichever scenario we're talking about. </P><p><a href=http://www.just-auto.com/article.aspx?id=96718 target=_blank>US: GM shares plunge on gloomy analysis</a></p>
- 'Bionic legs' for factory workers
<P>There have been some interesting innovations to help improve the lot of the assembly line worker over the years. Here's something that Honda has come up with that redistributes the weight and makes it easier to crouch or stand for long periods. I am sure it's ergonomically very clever, but the word <A href="http://en.wikipedia.org/wiki/Wedgie">'wedgie'</A> springs to mind. </P>
- Hindsight is a wonderful thing
<P>Amid all the analysis and comment about Detroit results today - Ford (not too bad) and GM (very bad and liquidity is a big worry) - Chrysler's future has been thrown into further uncertainty. What will happen at Chrysler if GM doesn't take it? How do we take Wagoner's comments today that the talks are off? Is that really final or are there further acts to be played out involving US government money? </P>
<P>I'll just say this: what a state. I know people are saying (with the all-seeing benefit of hindsight) that this was a car crash waitiing to happen, but few could have predicted what's going on now. While Chrysler (seen by some as the US Rover) was perhaps always a bit vulnerable, it strikes me as ironic that GM and Ford outside of the US are still doing very well. And they have been doing the right things to rebalance and resize in North America, painful though it is. </P>
<P>I guess the 1990s/early-2000s drift into relying on truck sales in North America has ultimately been proven to be a costly error, along with the laid-back culture that went with those easy sales. The error wasn't identified until very late in the day, but you'd have been locked up back then if you had suggested anything different. Companies exist to make profits and those vehicles did the business for some years. Hindsight is a wonderful thing. Tonight, thoughts are very much with everyone in the US auto industry in these extremely difficult times. </P>
<P>In the week when Obama won the presidential election, GM paints a very bleak picture. It is a grim situation obviously, but if you wanted more federal help, well, that glass is perhaps half-empty rather than half-full. Have we enough cash? Maybe not. Ooh, it's real, real bad Mr Obama. Got your chequebook handy?</P>
<P>(There's an interesting thought <A href="http://www.just-auto.com/forums/topicView.aspx?pg=1&catid=11&topicid=7884">here</A> on US auto market prospects for 2009.)</P><p><a href=http://www.just-auto.com/article.aspx?id=96674 target=_blank>US: Chrysler could be broken up</a></p>
- BMW and Daimler under pressure
<P>If you make prestige products that come with a hefty price tag, you might well be feeling a bit nervous at the moment. Here in Britain you can buy a great big fully loaded three-year-old Mercedes luxobarge for the price of a bag of sugar. Horrific residuals are a part of an unfolding story that looks set to get worse in 2009. </P>
<P>What do you do if you're a bit typecast with product that isn't all that fashionable in credit crunched and energy cost conscious times? In Munich and Stuttgart they have long known that they need to have a strategy in case the market moves away from large, high-margin premium cars. Make hay while the sun shines, but have a plan for when it doesn't and don't have all your eggs in the premium car basket. There are other tricks to perform that can act as a kind of hedging for when bad times come. </P>
<P>There are options. One thing you can do is develop alternative brands. This has worked well for the two prestige German companies (if we forget about BMW's unhappy adventure with Rover). Mercedes has Smart and BMW has Mini. For a long time, Smart looked like a millstone around the M-B/DCX neck, but no longer. Its time seems to have come and it will be providing Daimler some welcome support as its sales continue to grow. And BMW has pulled off something very, very clever with Mini, but it's hard to see how much more it can do with that brand (a Mini SUV might be stretching the product envelope about as far as it can go). Mini is a relatively mature brand. Watch how those brands perform in 2009; it will be interesting. BMW is also investigating new small cars and may well see a need for a completely new small car brand.</P>
<P>As well as looking at other parts of the car market to get into, you can also do your level best to convince the consumer that your product is different from the rest and not quite as it appears. It may look like a rather ungainly and overfed swan, but actually it's a super-efficient goose underneath (sorry for that slightly rubbish analogy). Thus, your BMW with its high-tech 'efficient dynamics' delivers tree-hugging and wallet preserving economy, while also managing to put a smile on your face with an engine and chassis set-up designed to deliver performance and driver appeal. You can have your cake and eat it. BMW is putting a lot of effort into this approach. </P>
<P>But, at the end of the day, a BMW is a BMW. I'm not saying the strategy isn't clever, but if big cars take a collective walloping, BMW won't be excused to leave the room simply because its cars are a bit cleaner and greener than the rest.</P>
<P><A href="http://www.just-auto.com/article.aspx?id=96680">GERMANY: BMW October sales fall prompting full year uncertainty</A></P>
<P><A href="http://www.just-auto.com/article.aspx?id=96683">GERMANY: Daimler car brand sales off 18% in October</A></P>
<P> </P>
- Motorsport
<P>I know it's a little at the margins, but the interview I did with Spyker's CEO Victor Muller (it first appeared in the Lotus e-magazine <A href="http://www.just-auto.com/proActive/"><EM>proActive</EM></A>) did unearth a few things.</P>
<P>For one thing, I was reminded of that old joke: Q: How do you make a small fortune in Formula 1? A: Start off with a large one. Spyker's F1 involvement was a financial nightmare and Muller simply admits that he made a mess of it (well he says 'we' but he is the boss). </P>
<P>The volumes may be small, but it is interesting to reflect on how the business model works (or not) in the world of exotic sports car manufacture. Where does Spyker sit in the market? This quote is a beauty. I love the way Victor Muller kind of looks down on Ferrari. I know, they are rather everyman aren't they?</P>
<P>"We are not competing with Ferrari or Aston Martin. When you have made your first million pounds then you go and buy a Ferrari, not a Spyker - not yet. That will take quite some time. Typically a Spyker buyer already owns or has owned well-known brand supercars and wants something that is different from that experience. We are on average the seventh car in their collection."</P>
<P>Picking up on the theme of motorsport, we had an interesting feature today that shed a little light on how some F1 technology can make it to the volume end of the automotive business (proper volume that is, not Ferraris!). Technology transfer from motorsport to the general auto industry gets puffed up from time to time (typically by motorsport people who see an increasing need to justify their existence - and perhaps rightly so given Max Mosley's recent comments about the growing budgetary pressures on F1) but we did find a company that could give us a sort of case study.</P>
<P>Incidentally, jumping back to Spyker, I have found a feature in the archive about product placement (a C8 Laviolette starred in the rather forgettable movie Basic Instinct 2). Yes, there's a great big gi-normous archive of quality material on just-auto, don't you know. And how prophetic was this from the article dated April 2006: <EM>'Spyker cannot afford to run its own Formula 1 team or indulge in the high-end marketing projects that other, more established, marques get involved in.'</EM> Perhaps Mr Muller should have read it...</P>
<P><A href="http://www.just-auto.com/article.aspx?id=87408">FEATURE: The rise of product placement in marketing strategies</A></P>
<P><A href="http://www.just-auto.com/article.aspx?id=96653">INTERVIEW: Victor Muller, CEO of Spyker Cars N.V.</A></P>
<P><A href="http://www.just-auto.com/article.aspx?id=96675">FEATURE: Motorsport and the auto industry - a case study in technology transfer</A></P>
- AvtoVAZ
<P>When Mark Bursa went to visit AvtoVAZ in Russia, he was bound to get quite a bit out of it. For one thing, he's interested in the history of a manufacturing operation like that beyond just the nuts and bolts of what it produces. He's also interested in the political and economic context of what he finds, different ways of doing things. And that ties in, of course, to the unique political culture and history of a place like Russia. </P>
<P>The flavour certainly comes across in a piece he has just done for us. He's also interested in all things engineering and that includes aircraft and maritme vessels (spacecraft, too, probably). He must have been like a kid in a sweet shop when he saw some of the stuff outside the AvtoVAZ automotive plant. It's not every day you see a submarine or a whirlybird like that....fortunately, the <A href="http://www.just-auto.com/blogdetail.aspx?id=1496&lk=s">Coolbear</A> had his camera with him and so can share...</P>
<P>And they are still making the Fiat 124-based 'Zhiguli' (the old three box Lada Riva in Britain). That's quite reassuring in a way. Some things just carry on regardless and that's one of them. It's probably one of the most profitable cars of all time (production costs like tooling amortised a long, long time ago). I don't know why exactly, but that car has always seemed weirdly cool to me, anti-fashion and the more battered the better. There's still a market for them in Russia among those who can't stretch financially to a Western brand or one of the newer AvtoVAZ models. And the good thing about the 'Zhiguli' is that it's easy to take to a local workshop to get fixed cheaply when it goes wrong. </P><p><a href=http://www.just-auto.com/article.aspx?id=96623 target=_blank>EMERGING MARKETS ANALYSIS: Renault's mighty task - fixing the Togliatti timewarp</a></p>
- Obama - good for Detroit?
<P>As the news sinks in that the next US president will be Barack Obama after all, I must admit that I am wondering how Detroit feels about it from the rather narrow viewpoint of whether or not he's good for the auto industry - or at least a net gain over what the alternative would have been. </P>
<P>Of course, there's the wider debate about economic policy and dealing with depressed demand. That debate will run and run, but I guess a Democrat administration might be more inclined to use the lever of public spending to stimulate economic activity in times of recession. And that, the conventional theory goes, means a bigger market for lots of capital and consumer goods, including vehicles. But then Republicans might say that is counter-productive because it means higher taxes and that chokes the economy. Hey, let's put that to one side. If anything, maybe we're into crisis management on the US economy given the backdrop of the deep financial crisis, traumatised consumers and some of the structural economic problems faced by the US, regardless of who's in charge. And it sounds like the state of the economy was a pretty decisive factor in this election (I would guess any Republican candidate would have had a tough job convincing voters that the economy requires more of the same direction it has been getting - whether that is fair or not).</P>
<P>But what about auto industry specifics? I understand Obama may be pretty sympathetic to the use of federal support for Detroit - the US$25bn cheap credit to 'aid investment in more fuel efficient vehicles' may be doubled for starters. What other initiatives might there be? And what about GM-Chrysler? Will federal funds be found to help make that deal happen and pay for the huge restructuring costs (and now the election is out of the way, the next wave of job losses can be rolled out)? </P>
<P>After what has happened to the US market and the decline of the Big Three, the situation is looking a little desperate. Folding Chrysler into GM might look like the best way to preserve something, with federal funds in the background (if trillions can be spared to support banks, the man on the street says, what about protecting auto industry jobs? - fine, except that loads of jobs still have to go anyway because there <A href="http://www.just-auto.com/article.aspx?id=96598">simply aren't enough sales out there</A> - and it's still structural not just cyclical - and that's never an easy pill to swallow). </P>
<P>For any politician, talking the talk in opposition is one thing. But once you are voted in, expectations at a slightly hysterical high, it's time to start walking the walk. There's still a recession coming. BO might want to get busy with some of the bad stuff quickly so that memories of that are fading in the hoped for better times four years out when re-election is due. </P>
<P>I wonder if he's planning a grand initiative on electric cars and renewable energy? Didn't George W do some mighty fine political grandstanding on hydrogen cars a while back? What happened to that?</P><p><a href=http://www.just-auto.com/article.aspx?id=96625 target=_blank>US: New president seen as automaker ally</a></p>
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