Peugeot breaks tradition with Tavares

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 Patrick 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

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 have 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

Euro Auto Capacity Reduction: a snapshot and thoughts

Ford’s announcement today that the company will cut it’s Euro capacity by 15% or 350,000 units shows that Alan Mulally has shown the same courage he used to save Ford from the US auto bailout to his Euro operations.  Rather than prolonging the agony of Euro restructuring like so many other players, Ford has taken a decisive step.

Despite almost two years of bluster from continental players, no other make has closed more than one plant.  Even PSA, in its dire straights 

Europe outlook: worry about 2013 not 2012

After spending the past 2 days talking with auto execs and investors in NY, it struck me as odd that the question of the day was “What’s your full year Europe outlook?” The real question is, what’s in store for 2013 in Europe.  It’s clear that the industry is in sync with a market down 6% for 2012, with more conservative companies looking closer to the 9-10% drop.

Clearly the drop is fueled by the Latin collapse in Italy, Spain and France and given July and August  — where France turned in a weak -11% performance — I think a negative 6-8% will remain the outlook, even through the Paris Auto Show at the end of this month. The real issue is not 2012.  I am hearing more and more concerns over continuing decline in

Q2 2012 Global Auto Earnings: four not so obvious thoughts

While everyone is laser focused on the imploding European auto industry and we ponder the sustainability of the US volume recovery, there are a few things to keep an eye on that may not be top-of-mind:

1) Latin America: The meteoric growth of the Brazilian market has slowed to standstill and surrounding markets have stalled as well.  While the industry has expected the flattening market, a steep rise in  low-cost imports has created pricing pressure.  Companies like Fiat, GM and VW who had been enjoying the tailwinds of strong double-digit margins over the past decade will feel

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

Europe at the quarter

After 3 months we’re down 7.7% for Europe (27) markets. A bit worse than my -5% expectations and the bifurcation of German and Latin are even wider than I expected.

Germany +1.9%
UK +0.9%
Spain -1.9%
Italy -21%
France -21.6%

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.  

Euro car plants in the cross-hairs

Reports today of GM taking a 7% stake in PSA aren’t bad news in the long-term. GM has a great reputation for petrol engine development, and needs to focus its products in Eur. PSA has great product and top class diesel, but lacks scale. But the real sticking point remains: Too much capacity in Europe! Any credible PSA/GM plan would need:

• Aulnay — already fully expected that PSA will announce the closure post April election in France.Rumors of this closing have drawn virulent protest for the past year or more.  If not, I am suspect on PSA “recovery”
• Ellesmere Port (UK), the UK government has drawn a line in the sand to keep GM’s two plants open.  British politicians and labor successfully lobbied to stay open during GM’s tumultuous 2009 restructuring of Opel, and are already mobilizing.
• Bochum (North Rhine-Westphalia, Germany): This one is not so easy. The German auto market has been strong, and the German public has been pushed far in recent months with labor gearing up again to pressure politicians in the

2012 pricing –v- volume and — oh yeah, sustainable profit?

Looking at January results I am seeing talk of the competition for the “Crown” of volume king in sales for 2012.  Will it be GM, VW or will Toyota come back and take the title.  Who cares?  You shouldn’t.  This is ink fodder for the auto press, what matters is profit and in the long run, pricing will make or break profit.

Ignore the headlines on how many GM, VW or Toyota sold and look for the news on pricing, new or used.  If you check Edmunds TCI chart, you see that of the US big six players, pricing has been stable – this is good – but take notice that Toyota and Honda are lurking in the bottom of the chart.

If you ask Toyota, Nissan and Honda who they fear will push for more volume with higher incentives, two of them (guess who) will say