David Leggett's automotive industry blog - from just-auto.com

Conti-Schaeffler

Fri, 22 Aug 2008 15:33:00 GMT

I guess it was inevitable that a deal would eventually be struck and it has. Schaeffler takes a stake in Conti that gives it a big say, but it won't be able to do any of the more radical things it might have been eyeing (like selling tyres) for another four years at least. It does however, get access to Conti technology through this alliance.

And former German Chancellor Schroder acting as referee ought to provide some reassurance to Conti employees. The offer from Schaeffler has been upped and the shareholders ought to accept it.

I guess the only person not smiling is the Conti CEO who has very honourably fallen on his sword. He said some things that probably made it difficult for him to continue in the role. Mind you, he will probably be well looked after with a golden handshake which might just take the edge off any bad taste in his mouth.

GERMANY: Deal buries Conti-Schaeffler hatchet as CEO quits

China business perspectives

Fri, 22 Aug 2008 12:20:00 GMT

Watching the coverage of the Olympics in Beijing has been rewarding on lots of levels. There's the raw excitement of the events themselves, of course - plenty of drama and much to marvel at in terms of human endeavour and application. Imagine training for years for an event that will be over in a matter of seconds. That's pressure (and you have to feel for the guys who made mistakes in the 4x100m relays yesterday).

But there's also the mind-boggling fascination in seeing how the Chinese are staging the event. It's a spectacular with the organisers keen to leave nothing to chance. There's a kind of Orwellian and totalitarian feel to some of what has gone on. I expect the London Olympics in 2012 will have a very different vibe.

If you do business in China, you might find this article of interest.

7 Deadly Perceptions About Doing Business with China

Sign o' the times

Fri, 22 Aug 2008 10:59:00 GMT

Sounds like Honda has a major hit on its hands with its Fit (Jazz) in the US. I think this reviewer in the LA Times liked the car. 'Man-Maximum ergonomics'?

Honda Fit review in LA Times

Diesels - you mean there's a downside?

Fri, 22 Aug 2008 10:28:00 GMT

Diesel engines these days are - in their (relative) cleanliness, performance and technological sophistication - very different animals from the clattering beasts of yesteryear. And their low CO2 ratings continue to draw new buyers in Europe - despite the recent spike in diesel fuel prices. But you do pay a premium for a diesel car and the payback period in terms of lower fuel bills may be longer than people think. Some reviewers have complained also that the increasing technological wizadry inside the diesel engine is creating reliability issues. And I have heard some talk that the public health concern associated with very small (nano) particulates may be about to rear its head again. Those traps don't catch everything.

Diesel: the truth about running costs

Dig that cool eco-car, man

Wed, 20 Aug 2008 15:56:00 GMT

Hemp? That's a cannabis-related organic material that hippies harvest for clothes and carpets isn't it? Yes, maybe it is those things. But it's a strong renewable material and it can also have application in cars. Lotus has produced an 'Eco-Elise' concept which incorporates the use of hemp. Seat fabrics you're probably already thinking - and maybe the carpets perhaps. Yes on the seats but Lotus has employed another renewable crop for the carpet. It's an interesting exercise and points to some future possibilities with organic materials.

And get this; hemp has been used as the primary constituent material in some of the car's composite body panels - such as the hardtop roof and spoiler. Far out, as Fat Freddy might have said. A whole new take on that 'new car smell'.

Okay, where have I read about the Eco-Elise - in the latest issue of proActive, that's where. It is now available for free download (if you haven't already, you just have to register - 30 secs tops - to read it).

In the latest edition there is also an interview I did with Victor Muller, main man at Spyker Cars. He's an interesting fellow, to be sure. His involvement in Formula One must have been fun, if ultimately traumatic - a real rollercoaster. Was it Eddie Jordan who once said something like this: how do you make a small fortune in F1? Answer: start off with a big fortune.

If you aren't registered for the alert email, you can download the latest proActive as a pdf by following the link below.

Lotus proActive

Clarkson for PM?

Wed, 20 Aug 2008 14:46:00 GMT

It's the silly season and news is thin on the ground. In London's Westminster district - from where the UK is supposedly governed - politicians, lobbyists and civil servants are either on holiday in Tuscany or looking for creative ways to fill the dog days of August. Some officials in the Prime Minister's office have been busy with video content for the Number 10 website.

There's an amusing video clip response to the slightly barking idea of having no-nonsense libertarian and Top Gear presenter Jeremy Clarkson as PM (though he shades it over Gordy in my book). The YouTube clip is below. There's also a link to the coverage of the item on the BBC which goes on to describe how some test stuff material made it on to the Number 10 public website - an unfortunate individual being lampooned as a 'prat' (a Brit colloquialism meaning stupid idiot). Well, it made me laugh. Good to know that we are getting value for money from our civil service. Actually, it is good to know that the people working in there have a sense of humour - they probably would go nuts without it.

No 10's Clarkson video a 'joke'

'Ebony and Ovary'

Wed, 20 Aug 2008 11:26:00 GMT

Must admit I enjoyed John Voelcker's take on the annual Traverse City auto execs' pow-wow that recently took place. I think he has captured the mood and flavour of the event in his review for just-auto. The 'singing political satirist group' certainly sounded a surreal note or two...

FEATURE: Traverse City - perspectives

Petite cars become big players

Mon, 18 Aug 2008 19:35:00 GMT

Even Toyota is experiencing problems in North America and has resorted to playing 'musical factories' there to adjust its manufacturing footprint in line with changed demand for particular models. There is a structural shift taking place in the market which impacts everyone, shining corporate stars and laggards alike. Big trucks and SUVs are clearly not the thing to be big in, going forward.

I guess the game for the OEMs is to make the necessary adjustments as quickly as possible to be big in the product areas that are becoming hot. In this respect, Detroit has further to move than the Asians and will incur more pain in making that adjustment - and that's been happening.

But Ford and GM are realising that they have some important strengths to play to. They can call on their considerable global resources to help make that adjustment happen and there was a speech by Mark Fields last week describing Ford's medium-term strategy that illustrated the scale of the shift taking place. It is absolutely what Ford needs to be doing and it obviously needs to get the execution spot on with its upcoming small cars.

Mr Fields also referred to the need for Ford's small cars to be stylish in order to appeal to a new breed of buyers - the 'Millennials'. They are a growing demographic and are tech-savvy, placing value on things like connectivity and digital radio. Again, Ford illustrated that it is planning for the future in thinking about what its new small cars need to have to appeal to these customers.

Mark Fields certainly talks a good game and the annual Traverse City auto execs golfing get-together in August is the perfect setting for that. The proof of the pudding, as ever, will be in the eating. And the cars themselves will be one part of the story. Ford also has to have a decent profit margin on them.

US: Ford outlines NA small car strategy

McKinsey supply chain survey

Thu, 14 Aug 2008 16:52:00 GMT

I'm not sure if my viewing of the results of a 'McKinsey Quarterly' supply chain survey of execs is cookie enabled or not (perhaps I registered for this eons ago - can't remember, but they send me emails from time to time with links that work for me). I thought it worth a look, so here's the link. The McKinsey Quarterly is worth registering for, actually. Apologies if the link doesn't work for you.

McKinsey Quarterly article

Ford at Traverse City; Davos for autos

Thu, 14 Aug 2008 16:35:00 GMT

I often wonder whether going to Traverse City in August would be a worthwhile use of my time. There are certainly some grand fromages circulating there and it is reputedly a good event for networking at. Maybe next year. Does much hard news come out of it? No, not generally, but some use it as a convenient platform to speak to the industry about corporate direction. One such this year was Ford's Mark Fields who spoke about Ford's strategy to shift into small cars in North America.

I reckon the Focus-sized C-car platform is indeed the right one to concentrate on for NA. Sure, there will be an increase in sales of Fiesta-sized cars in the US but the US is not going to transmogrify (I could use the word morph but I haven't used that particular word for some time and I am rather fond of it) into a European segmented market. For all sorts of reasons that I don't have time to list here, the US light vehicle market is changing and changing fast, but it will remain different from Europe's in terms of segmentation. US consumers' needs and circs are different to those of European consumers.

US: Ford outlines NA small car strategy

And here's an interesting link to something written by a friend who attended one of the sessions. The final para very succintly lays it on the line for Detroit - OEMs and suppliers. And if you are unaware of the wonderfully named 'Rocky Mountain Institute' and the Hypercar, read on...

Auto Execs Hit Links, Talk Climate

Balance of power shift

Thu, 14 Aug 2008 14:57:00 GMT

It's not 1968 is it? Condoleezza Rice was bang on there. But there has been a shift in the international balance of power with the rise of an economically more powerful Russia that is now starting to 'assert' its interests - and the West seems to be in some disarray in terms of knowing how to deal with today's Russia. One thing is obvious though: Western firms are falling over themselves to get presence in Russia, one of the few places where the business barometer is looking up at the moment. Western carmakers are at the front of that wave, suppliers looking on and ready to follow. The OEMs have invested considerable sums and don't want that investment - or the returns from it - endangered.

What business leaders will likely be saying to politicians is that they would rather see Russia brought more into the international community as a positive participant, than see Russia marginalised or isolated.

After the Bush administration has gone, it makes sense for the new one to build bridges with Russia and do things like help Russia into the WTO. That would be beneficial on a number of levels. On a cynical level, the more Russia becomes a part of international organisations and institutions, the more leverage there might be down the line if Putin and Medvedev are replaced by people even more instinctively hostile to the West. But also, more engagement should turn out to be economically advantageous for everyone - not least ordinary Russians who ought to see the eventual emergence of a healthier free market economy alongside the legal and democratic institutions and safeguards that we take for granted (largely absent in Russia).

And a more Western friendly and internationally active Russia might be less likely to flex its muscles the way we have just seen in Georgia (a spat that is a lot more complex than Western media headlines sometimes suggested).

The suggestion that a Russian oligarch might be interested in buying Hummer off GM is certainly an interesting counterpoint today to the comments coming out from the US government about Russia risking international isolation (big deal, many Russians will think). The reality is that Russia, after a long post-communist period feeling cowed, is now much more economically powerful and self-confident. It is sitting on massive energy reserves that Europe needs. Maybe there's a tendency in some quarters to think back to an age when the world was effectively a chess game between two superpowers. But it's a lot different now (and there's the emergence of China, also). Russians are becoming enthusiastic consumers of material goods with a penchant for upscale Western brands and international travel. Hummers - brash statements with US military associations - are extremely popular there.

None of the above excuses bad behaviour, but do we want an isolated Russian bear with a sore head that might lash out again or a bear that can see the long-run benefits in a more cooperative and collaborative path ahead? It's not 1968. But also, it's not the mid-seventies arms race Brezhnev era or the more slavishly pro-Western 1990s Yeltsin ('just one more drink and then I'll stop dancing') period either. It's something else and it requires some smart thinking by Western politicians.

RUSSIA: Russian Machines denies Hummer buy plans

How many coins for that truck?

Thu, 14 Aug 2008 12:26:00 GMT

It's a bizarre one and another take on the idea of not trusting the banks and stuffing your life savings under the mattress. There's a chap in America who's taken it a step further: he just doesn't trust paper money. Well, it can burn but you need more than a match to melt a dime. Anyway, the eccentric fellow walks into a dealership with some $8,000 in coins to put down for a new truck. Is he an eccentric to marvel at or an individual in need of some professional help and counselling?

Man buys Chevy with small change

Flavio flaunts it

Wed, 13 Aug 2008 15:20:00 GMT

Here's an unusual item I have come across. Is F1 dripping with money? Of course. I guess some people flaunt their wealth more than others. Sounds like Flavio Briatore has no qualms about flaunting it a bit and and Italian newspapers have reported an incident at a beach which sounds a bit bizarre. Luxury yachts can be so difficult to park sometimes. Out of my way plebs!

Angry bathers throw water at Flavio Briatore and WAG

China's market cooling

Wed, 13 Aug 2008 14:54:00 GMT

I see China's car market is cooling off a little according to the July sales numbers. If China's economy is slowing in response to an uptick in inflation and as part of the worldwide effects of the credit crunch and stockmarket falls, maybe it's not all bad. It might herald a 'soft landing' rather than a hard one - with inflation under control and sustainable growth able to resume at some point. It's certainly something to keep an eye on though, given how important China has become, both as a market in its own right and a place from which to source parts.

CHINA: Chinese car market down 17% in July

Punch & Judy - saved by Chevrolet

Wed, 13 Aug 2008 12:30:00 GMT

Well, it is summer (though you would hardly believe it with the weather here) and I guess some car company PRs are having some fun while it is quiet. Chevrolet in the UK has issued an eye-catching press release today. Chevy wants to save the quaint old British beach puppet-show theatre known as 'Punch & Judy'. For the benefit of non-Brits, P&J's history is ancient and it's a fairly crude one-man ('professor') operated thing employing some very loose narrative, very few characters and - I seem to remember - one of them hitting the other one on the head with a hammer rather a lot.

It's designed for young children who enjoy the timeless amusement to be had from one character hitting another hapless one on the head with a great big hammer. It's what kids relied on in the days before X-Box and Playstation when they went on the annual pilgrimage to 'The Seaside'.

Anyway, Chevrolet's release made me smile (some pics to follow):

BRITISH BEACHES LOSING THEIR PUNCH (& JUDY)

The once familiar sight of a red and white striped booth is in danger of disappearing from British beaches with over one in three children (37 per cent) saying they have never experienced a Punch & Judy show. In comparison, 78 per cent of adults used to watch at least one show a year when they were children.

In an effort to save the show, Chevrolet, the car maker synonymous with value for money, has created the world's first in-car Punch & Judy theatre. The custom-made booth fits onto the side of a Chevrolet Captiva allowing Punch & Judy Professors to perform from the back seat of the car. The free mobile show will tour up and down the country this summer bringing the fun of old-fashioned entertainment to a new generation of beach goers.

The research of over 1,000 UK families revealed that as well as the Punch & Judy show falling out of favour, other traditional beach entertainment is also in decline with 41 per cent of today's children have never been on a donkey ride (compared to 26 per cent of their parents) and 73 per cent have never taken part in a sand castle competition.

UK parents will take at least three trips to the British seaside this summer, but with a day's beach entertainment costing an average of �73 it could be an expensive outing. Indeed, three quarters (74 per cent) of parents say they feel anxious about the cost of keeping the family entertained over the summer holidays.

Susan Kalair from Chevrolet comments:
"Parents are feeling the finanicial pinch more than most this summer so it's a shame to see traditional, value for money entertainment disappearing from our beaches. Hopefully our specially-created mobile Punch & Judy car will bring back fond memories for parents and create new ones for the huge number of children who have never even seen the show. As Punch would say: "that's the way to do it!"

New Golf

Mon, 11 Aug 2008 12:32:00 GMT

We caught a glimpse of the new - generation six - Volkswagen Golf last week and it clearly follows the well-trodden VW Golf 'evolutionary' path in terms of its external design. Much about what's interesting with this car is under the skin. It sounds like it will be packed with innovation and, presumably, a lower cost/price than the outgoing model.

It will be interesting to see how the model performs in a segment in which the bar has most certainly been raised over the last five years.

I wonder if the next Golf has grown bigger though? That's one of the things that continually amazes me in this industry - that cars keep on getting bigger and heavier. It seems that with each generational change, the designers cannot resist a few dimensional 'improvements' to underline the new car's superiority over what it replaces. A Golf Mk 1 is a very, very different car in terms of size to the current one. So's the Mk 3 come to think of it.

And then there's the added weight associated with all the regulatory and market pressures to pack even more in to the new car.

I am sure the new Golf will be impressive on many levels. But how much bigger and heavier will it be than the one it replaces?

Does it matter if it's heavier and bigger than its predecessor? In a sense, perhaps it doesn't. Anyone who feels it's become too big can downsize to the Polo and maybe the bigger size plays well into the mid-sized family car area in which many owners of larger cars will be looking to downsize over the next couple of years - the larger C-segment cars perhaps hitting a new sweet spot where D-segment once ruled.

But isn't it a little odd that cars are apparently putting on weight in these energy cost and CO2 conscious times?

GERMANY: Volkswagen 'officially' unveils sixth generation Golf

Jeff Daniels

Mon, 11 Aug 2008 09:47:00 GMT

Thoughts this morning are with the untimely loss of hugely respected journalist and book writer Jeff Daniels earlier this year. I found myself last week writing an intro to a collection of articles published on just-auto - including one extracted from Jeff's last report for just-auto on 'future fuels'. His name has cropped up again this morning as someone else who knew him has just found out what happened. As I said before, he'll be much missed - and that includes as an intelligent contributor on websites/forums where his real identity may not have been known. I don't want to dwell further on Jeff's demise here, but thought I'd mention the fact that people are still finding out that he's gone and being upset by the news.

While we're on the chirpy subject of death, it was a bit shocking to hear that Andrea Pininfarina bought it last week in a freakish sounding accident while riding his Vespa scooter on the way to the office just outside Turin. It's obviously a tragedy and the guy was just 51 - our sympathies go out to the family. Sounds like a down to earth guy, riding a scooter to the office when, presumably, he had some pretty tasty four wheel transport to choose from.

Tailfins and vertical tail-lamps

Thu, 07 Aug 2008 18:39:00 GMT

Cadillac doesn't do tailfins these days, but there are some intriguing exterior design idents like vertical tail-lamps and the very distinctive grille and face. I found myself liking the look and feel of the CTS earlier today when I drove it. There's a nice job inside, too. The car's not bad at all though the ride was a bit choppy in the 3.6L compared with the 2.7L (they have different suspension set-ups - but while the 2.7L gives a firmer ride, the 3.6L engine is better at moving what is a fairly heavy lump of metal).

Anyway, the car's basically a good job. But that's half the story. The much-needed diesel is still a year away. And how many potential customers are out there in Britain for Cadillac and a high-end car like the CTS? When I spoke to Jonathan Nash, he acknowledged that timing isn't ideal, what with the credit crunch and all. But GM seems keen to press on and get the product out there. How long will it take for people who 'want something that isn't German' to put Cadillac in the mix for consideration? It won't be an overnight job, but you have to start with the right product. Planned sales volumes look low, but CTS could go much higher if the VM Motori diesel engine is a hit and people's perception of Cadillac starts to align with a product that is more sophisticated than many would expect.

But a growing economy would help, with the sort of people classed as 'high achievers' keen on making statements with their vehicle purchase choice feeling a bit more confident than they do today. And there's also the small matter of distribution in Britain. I believe Pendragon - the current distributor of Cadillacs in the UK (via a handful of Stratstone outlets) - is on the brink of going under.

The CTS planning numbers for UK are small, and that's a double-edged sword. The modest numbers may be achievable, but while Cadillac is positioned as such a marginal player a wider acceptance and understanding of the brand might prove a little elusive (there's not much word-of-mouth recommendation for example, and the perception of the brand values may remain confused). And a return on the engineering investment on RHD for a car like the CTS (okay, not just the UK market, I know - there are other RHD markets out there) might be a long time coming.

Separately, an interesting thought popped up over lunch. Are Americans going to shift out of SUVs and into sports wagons/estates? There is an image issue to overcome generally (soccer moms), but John Manoogian suggested that the combination of some utility and lower gas bills might cause many SUV owners to replace them with modern estate cars.

UK: Cadillac launches CTS in UK amid market gloom

Cadillac CTS

Wed, 06 Aug 2008 17:40:00 GMT

I am heading out to a country hotel this evening where GM is hosting a Cadillac CTS event. There's a presentation and dinner and an opportunity to drive the car tomorrow and speak to the designer. Must be tough for GM's UK people. It's not exactly a brand that is flying, the CTS flagship finally arrives in RHD (requiring investment) and then you launch as the credit crunch bites (and used car residuals go through the floor, along with house prices). But there it is guys. Now go sell. Actually, the volumes look pretty cautious, so maybe it's not quite as big an ask as it sounds.

THE EDITOR'S INTERVIEW: Jonathan Nash, MD Saab GB and GM UK's Caddy man

Natural gas?

Wed, 06 Aug 2008 10:06:00 GMT

I see Larry Burns has flown a kite for natural gas on GM's corporate blog. It opens yet another avenue for discussion and there's nothing wrong with that, in principle. Let's get the debates going, no stone left unturned. And there are serious reserves of the stuff in North America.

One thing occurs though. Surely at some point a single vision has to be grabbed with quite a bit of commitment, total commitment even, the strategy for the future crystal clear to all concerned. Will the potential outcomes be better if everyone works and focusses on one goal or several? It's a question of how far you spread your resources. But there are horses to be backed and at some point, someone has to say - that's where we're going with most of our investment resources in the long-term (maybe not unlike Carlos Ghosn and his electric car vision).

If the range-extended Volt is to be the car that eventually saves GM and sends us into a greener and cleaner future (kind of how some of the hyperbole implies), maybe the continual chatter about all the alternatives out there undermines that goal a little. Or perhaps the on-board range extending engine on Volt can be CNG powered?

Larry Burns on gas