PSA, an existential outlook. UG or not UG


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


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

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

Chinese autos landing everywhere!

Euro stocks lead an auto drop today on negative China news.   Overblown short term reaction, I think so.  Sure VW, BMW and DAI have enjoyed steady income from China and that reads through to GM here in NA, but the latest spat of negative outlooks for a hard landing is not news for automakers.

The volume international makes in China include Toyota, Honda, Nissan, Hyundai, VW, GM and PSA.  But even they play in the lucrative high-end of the Chinese market through their high-end brands; Lexus, Infiniti, Audi.

Today’s news that China auto sales won’t hit the targeted 8% for 2012 is a blow to the bulls, but most investors are already bears.  

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