Peugeot breaks tradition with Tavares

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Philippe Varin swept into PSA in 2009 to prepare to prepare the French OEM for the current European economic malaise, and now his tenure is up.  In a move that is surely printing as much ink in the gossip pages in Paris as the economic journals, PSA has signed former Renault COO Carlos Tavares to take over.  This is just not done in Paris where niceties may be superficial, but are strong.  Well it’s been done now.  It may not be GM or Ford as Tavares had suggested in an August Automotive News interview, but leading a revival of near dead PSA presents a tantalizing and potentially highly rewarding challenge to the international auto veteran.

While Tavares may lack some of the product flair of his Nissan predecessor Patrickimages (2) Pelata, he corralled a Nissan organization that was lacking any top-level direction below CEO Carlos Ghosn.  At Nissan, he cemented the importance of U.S, product and sales discipline, and balanced Ghosn’s quest for market share Continue reading

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China August Auto Sales view; relax

The “China Slowdown” is running right behind the Europe morass and the U.S. fiscal cliff have been the big news for the US market. Now, August sees the China auto market rate of growth slow again, growing concern for automakers.  Here are a couple of thoughts on the impact on global Auto OEMs:

The biggest concern I’ve heard is over Toyota’s two months of decline in the market; -15% for August after a -5% in July.  Toyota says this is more a technical issue resulting form unseasonably big increased in July and August 2011 as it ramped local sales back up after the Japan crises. Both Toyota and local dealers dismissed suggestions that local pushback on Japan-China politics was not  Continue reading

China first half auto sales: still on two tracks

China auto sales are in for the first half and they are slightly ahead of the consensus of 5% growth for the year.  Overall PV sales are up 7.1% over last year, and again we see a two-tiered level of performance.

First-half growth was driven largely by a rebound on the Japanese brands after their hit from last year’s earthquake impact, and a push from luxury brands 2012 actions to move overbuilt inventory.  Overall GM + the Japanese brands lead the increase while locals were relatively flat.  June sales were extremely strong +16%, I see this as mainly driven against the constricted J3 sales post earthquake in 2011.

The Japanese brands drove market growth with newly stocked inventory.  June sales were extremely strong for Honda in particular, up 84%.  Nissan and Toyota had more regular supply last year leading to results more in line with YTD numbers.

However, all international brands are not the same Continue reading

Used cars in China: risks but VER¥ BIG opportunities

No, I don’t speak the language, but I do recognize that the development of the used cars (Èrshǒu chē) market marks a milestone in the maturity of the Chinese auto sector. In 2011. China passed the US as the largest new car market with 14.5 million passenger vehicle sales and from 2007-2011 the market saw more than 50 million new cars sold.

Going forward, the market may slow, but will remain at least in the 20 million range with foreign brands growing faster and more consistently than the overall market. During the first quarter of 2012, domestic brands fell 8.1% while foreign brands picked up 3.2 pts of market share, now accounting for 42.9% of total sales.

This trend could push the development of a local used car market as international brands work to import their experience in managing used car markets in the US, Japan and European markets. Among other pressures on the demand side are tightening emissions restrictions. Wholesale buyers are avoiding older, low-end units in favor or more recent mid-to-high-end and luxury cars. While there is currently a net oversupply of used vehicles in Beijing, luxury models such a used Mercedes have seen double-digit growth in China.

The steady growth has built a considerable park of existing vehicles in China. While there is no solidly reliable data on how long a first buyer (and more than two-thirds of buyers today are first time buyers) hold onto a car, we are seeing a burgeoning used car market. In 2009, the state had already begun efforts to reform the used market including standards for city and regional used car exchanges. Today, market participants are waiting for additional reforms to establish a uniform system on pricing, terms of sales as well as  protection and guarantees for consumers. These reforms should bolster the opportunity for dealers, supporting higher prices that would allow buyers to feel more confident in paying for the pricier non domestic used cars.

This foreshadows a tremendous opportunity and risk for foreign brands in China. If they can corral the used car market, Continue reading

China 2012 Auto market, another two tiered year.

When I saw that China Q1 2012 auto sales were down 1.2%, I wondered was this the “soft landing” or just the beginning. After growing 32% in 2010, the market slowed to a “modest” 5.4% uptick for 2011, Q1 may be disheartening; however, March sales were “up a tad.” Well, I had the chance last week to spend some time last week with executives from the Chinese auto retail sector and looked a little deeper with a front-line perspective.

Following some takeaways from my listening:

  • The PV market is and has been bifurcated. The 2010 incentives to spur growth of local brands accelerated the spread versus global brands. This explains why 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