PSA, an existential outlook. UG or not UG

psa

Will PSA be here as a company in 5 years.  Sure it will, as a brand, company and equity.  But in what way shape or form seems to shift each day.  Six months ago the market was pretty hedged on that question, a couple of weeks ago they seemed to have a plan.  After Philippe Varin’s comments this week on “alliances” fear is creeping back.  So, is there an existential threat to PSA at least as an invest-able vehicle?

Worries over the partnership with GM dying out are overblown.  The real cost savings PSA-RADD2012-EN_01_img_58have always been closer to 2017-2018.  At the same time, Opel and PSA do have a number of areas where they can cooperate. Mr. Varin made it clear that while the B platform is “under review” the B- and C-MPV projects are Continue reading

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China 2013 Auto Sales: take the long term positive view

jcPassenger vehicle (PV)sales in China were up 7.1% in 2012.  If anyone thought the market would continue with double-digit growth they are 1) disappointed and 2) delusional.  In Tier 1 and 2 cities, the market is pretty much mature now.  As Tier 3 and 4 cities join the auto race, the overall PV market will continue to grow.  But high double-digit growth cannot be extrapolated ad infinitum and growth is not perfectly linear.

Look at chart 1 and you see that if we get only a 4% — very conservative – CAGR through the end of the decade we’ll see a market bigger than 20 million units.  China is firmly the biggest global auto market.  And remember from my past reports, global brands have at least half of this market.

china outlook

From a performance perspective, this modest assumption shows that we will have Continue reading

Saab death highlights latest variable in China autos: locals!

The latest in the Saab saga has Dong Feng Motor Ltd. Interested in picking up remaining assets from the defunct Swedish automaker.  I’m not sure what role GM will have in the final disposition, but this news highlights the latest trend of the big five Chinese auto groups; the development of spin-off local brands from their Sino-foreign partnerships.

After China auto sales grew at a blistering 32% rate for 2010, 2011 sales have pulled back, probably to mid single digit, and perhaps as low as 2-3%; this after averaging better than 20% CAGR over the past decade.  Much of this growth has come from the piling in of global automakers as they built JV production with the big 4 locals.  With the exception of a couple of legal scuffles Continue reading