Archive for the ‘cars’ category


Selling Opel: what’s good for China is good for General Motors

15.02.2017


Above: The Opel Astra K: on the roster.

I’m not so sure that GM going into talks to sell Opel and Vauxhall to PSA (Peugeot–Citroën) is that big a surprise.
   We obviously hold a lot of nostalgia for these brands, and it’s only right that we perceive GM as selling its family jewels. Opel has made some great cars over the years, and Buick in China and the US, Vauxhall in the UK, and Holden in Australia rely on this division to provide it with product.
   But it wasn’t long ago that I said I foresaw the next Holden Commodore being a four-door booted model based on a Chinese Buick Regal that’s on the same platform. While I’ve been proved wrong with scoop photos and inside information from journalists in the immediate term, longer-term this doesn’t look so far-fetched, in a future where Peugeot owns Opel–Vauxhall and GM has no choice but to consider Chinese sourcing seriously.
   Therefore, GM isn’t thinking that it’s selling off the family jewels, at least the GM where Chinese partner SAIC is overwhelmingly calling the shots.
   What they are thinking is this: ‘We should be able to develop the whole lot in China.’ They weren’t nostalgic over Holden, and they won’t be thrilled with the losses at Opel. It’s willing to sacrifice it to make its own position stronger. We’ve already seen that SAIC has called it quits when it comes to British assembly at Longbridge—that’s now all done back in China.
   There’s been such a massive technology transfer from the US to China over the last few years that Europe is seen as surplus by the folks in Shanghai. They have all the platforms on which they can make products globally. They may even, rightly or wrongly, think that the remaining brands can get them into Europe, even if GM had pulled its Korean-made Chevrolets out of there.
   Holden can be used to westernize the product and the Australians have shown they can do it well.
   I’m not saying I agree with this, as a long-time Opel fan. I was looking forward to the new Commodores coming out of Rüsselsheim. The car looks the business, it’s roughly the size of the recently deleted Ford Falcon (therefore, I’m not sure why people are so upset about its size), and the majority of buyers don’t even know which set of wheels the power’s going to. I’ve got an Astra K coming in a few months at Lucire.
   What you’re going to see is GM basically being a Shanghai-run firm with China supplying global markets and the US operations kept going for their brand cachet.
   In the meantime, a hypothetical PSA-run Opel will continue with the existing plans till the end of these models’ life cycles, then China will become the manufacturing hub for numerous markets.
   SAIC already makes a load of Cadillacs, Buicks and Chevrolets for the domestic market, and they’ll want to pump them out more widely.
   They’ve also shown that they can take new GM platforms and turn them into Roewes—or old GM platforms and turn them into Baojuns.
   PSA, meanwhile, with 14 per cent controlled by Chinese firm Dongfeng, will pursue a strategy of streamlining platforms and be focused more on Europe. It could pay off as cross-town rival Renault has done well with Nissan, Mitsubishi, Samsung, Dacia and AvtoVAZ, but it won’t nearly be as secure. The two French groups have been obsessed with one another for as long as I can remember, for years spending more time rivalling each other than actually coming up with what customers wanted.
   Dongfeng may have to cough up more lolly and it could become a larger shareholder than the Peugeot family or the French government. But will it have the sort of geographical coverage that Renault has?
   That’ll be what PSA will be asking itself, knowing that it’s reasonably strong in China—but also realizing that it hasn’t been clever at creating models that can be sold globally (the current Citroën C6, DS 5LS and the DS 6 among them, sold exclusively in China). Nevertheless, there are savings to be had, though the most obvious fear is that Opel and Vauxhall will go the way of Panhard and Talbot, brands that fell into either Peugeot or Citroën’s hands over the years and become defunct at the expense of the parent companies’. Is there a desire to extend the group’s brand portfolio beyond Peugeot, Citroën, DS, the various Dongfeng lines, and the ex-Hindustan Ambassador?
   The official statement is non-committal enough and gives nothing away: ‘PSA Group and General Motors confirm they are exploring numerous strategic initiatives aiming at improving profitability and operational efficiency, including a potential acquisition of Opel Vauxhall by PSA.
   ‘There can be no assurance that an agreement will be reached.’
   In any case, we always said that SAIC was playing a long game. MG was a toe in the water. GM is the real deal.
   Controlling GM means they can do as they please, and what’s good for China is good for General Motors.

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Autocade passes 10,000,000 page views

13.02.2017

Some time in the last couple of weeks, Autocade managed its 10,000,000th page view.
   I was too busy to notice when it hit 9,000,000, but a quick calculation when views hovered around the 9,500,000 mark suggested it made the milestone some time around August 2016, keeping the growth rate at around 1,000,000 every five months.
   February 2017 does mean the last million came about over six months since August 2016, so it’s not heartening that the growth has slowed a little. When I last blogged about Autocade’s stats, in March 2016, I had hoped it’d see in 10,000,000 before the Gregorian year’s end.
   Nevertheless, I’m proud this little automotive encyclopædia managed this feat, with a few banner ads scattered about the place, a very lately opened and seldom updated Facebook page, and some mentions on Drivetribe. But it’s had none of the support I would normally devote to a venture, such as doing newsworthy things that would involve the press. It’s an under-the-radar site to some degree, known by car aficionados. It is what it is, and I never felt there was any need to go beyond its original mission.
   Last time I took a screen shot from the stats’ page for this blog, the top cars being searched for were the Ford Fiesta Mk VII, the Nissan Bluebird (910), Nissan Sunny (B14), Toyota Corolla (E100) and Ford Focus (C307). Right now, the Ford Taunus TC has made it on to the leaderboard, pushing the Corolla down. These pages have been grandfathered though: they were some of the earliest on the site so of course they have been read more.
   In the time I’ve taken to write these paragraphs, Autocade has logged another 102 page views. Here’s hoping the rate remains healthy and the site becomes a more decent earner. Not bad for a hobby.

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Building a car anorak’s encyclopædia

28.12.2016


Above: The first-generation Mitsubishi Minica, though this isn’t the 1962 model. Now on Autocade—though hardly an iconic model.

It’s the end of the Gregorian year, which means I get a bit of time to update Autocade. Since 2008, it’s mostly been a labour of love, and typically, the period after Christmas is when I get a bit of down time to put on models that should have been done during the year.
   But because it’s a hobby site—albeit one that has turned into a oft-referenced online guide—it’s not done with any real discipline. That I leave to others—and you’re all more captured by the flashy photography of magazine sites anyway. Autocade was started as a quick reference, and unless we really decide to branch out into a magazine format, it’ll remain that.
   To give you an idea of the anorak nature of the website, over the break, all of Mitsubishi’s kei cars were added to the site. Some had already been there, such as the eK and certain Minicas, but I decided the rest should go up.
   Why these? You may ask, yet I don’t really have an answer. Often it’s over to one’s mood. Sometimes it’s to offer something online that others don’t, or at least not comprehensively. And when you realize you have 80 or 90 per cent of the models added, you think: I only need a few more, why not succumb to OCD and do the lot?
   Therefore, now, Autocade has all the Minicas, Pajero Minis, Ios and Jrs, Toppos and eKs that the once-mighty manufacturer made before it fell out of favour with its repeated scandals. I’m not a fan of any of them, but that’s not relevant: it’s about objectively providing the public with information, and my own like or dislike of a model has nothing to do with it.
   It’s not even a commercial decision. If it was, Autocade would have filled up the gaps in the US automotive industry a lot sooner. And there are still plenty of them. Americans make up a huge chunk of the browsing public, although for me it takes a while to make sure the engine capacities [for post-1980 US models] are recorded in metric—not something you can readily come by in US books (yes, Autocade is still dependent in some part to the printed word, not the transmitted electron).
   The other area where we’re missing cars is in the flash stuff: Mercedes-Benzes, Maseratis, Ferraris. Now these I actually like. But they can also prove difficult: the convention of the site is that the names of the cars are entered first, and Mercs can be time-consuming by the time you figure out what numbers go after A, C, E and S all around the world. The exotica are fun but there’s often no logic to the product cycles or market niches—which does, of course, make them more interesting, but from an encyclopædic point-of-view, more difficult to compartmentalize and recall. For those who have visited the site, there are links to each model’s predecessor and successor (where applicable), and that makes for particularly entertaining surfing.
   One model takes, on average, 15 to 20 minutes to do, and that’s when I already know about it. There’s some time involved in getting a press photo, writing it up, checking the specs (again using printed matter). When you research in certain languages, it takes even longer (South African online resources are scarce, for instance, and anything Chinese before 2008 or so is also hard to track down). The Mitsubishi kei cars, beginning with the 1962 Minica, represent hours of work, and when you multiply 15–20 minutes by 3,440, that’s a lot of hours since the site started. Occasionally I’m helped along by readers who suggest models, and two UK friends, Keith Adams and Pete Jobes, have made changes and additions along the way that have really benefited the site.
   I’m glad that Autocade is heading toward 10 million views, a milestone which it will reach in the next couple of months, and the increase in viewership is thanks to all of you finding it a useful enough resource. If you want something less exotic and more mundane (after all, some of us can only have so much of supercars and luxury cars), it’s the place to pop over to at autocade.net, hit ‘Random page’ at the top, and see what comes up.

Originally published at Drivetribe.

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Why the next Holden Commodore will have a traditional boot

01.12.2016


Above: The Holden Commodore SS-V, facing its last year of manufacture.

The current wisdom appears to be that when the Holden Commodore VF leaves production in 2017, it’ll be replaced by the liftback version of the Opel Insignia B. After all, the only big sedan Ford Australia’s offering in place of the now-defunct Falcon is the liftback version of the Mondeo, a car that’s wider, taller, and with a longer wheelbase than the supposedly larger Falcon. I think the crystal ball-gazers are wrong.
   I could say that the Australian and New Zealand big car buyer is very traditional and would balk at the idea of the big Holden being a hatch. But that’s not the only reason. There’s a bigger one: China.


Above: GM currently makes the Opel Insignia A-based Buick Regal in China, after initially beginning with German production.

   At the moment, China makes a version of the Opel Insignia A locally, and it’s a four-door sedan with a traditional boot. They badge it as a Buick Regal, a nameplate that’s arguably got stronger goodwill in the Middle Kingdom than in the US, even if it’s been running Stateside since Kojak drove it on the streets of Manhattan. And the Chinese like their traditional sedans: it’s a market where liftbacks aren’t kosher.
   While Holden says the next Commodore will be sourced from Germany, and the media speculate that the Germans won’t get a four-door sedan, it’s not to say that one hasn’t been developed. And we’re not exactly missing precedent for a country to tool up for a body style that isn’t offered domestically. We need look no further than GM itself, which was selling the Opel Antara into Europe, exporting it from Korea, years before the same model was available domestically as a Daewoo.
   While Australia and New Zealand will account for quite tiny numbers, you have to think about where else a Stufenheck Opel Insignia B might sell. How about the Middle East, where it could complement the Chevrolet Malibu and Impala as a sportier counterpart? Or South Africa, which would also welcome right-hand drive? Could China take some as Regals in advance of SAIC–GM tooling up for its own version? It’s all conceivable.
   There’s also a possibility that Holden will start off sourcing the next Commodore from Germany, and switch to Chinese production when the Buick Regal is ready. SAIC owns the majority of its venture with GM these days, and calls the shots. What’s good for General Motors is good for China, as the saying goes. And it could well determine that one of its plants, either in China or in Thailand, where plenty of Australasian-market cars are sourced from, could be the production site of the 2019 or 2020 model. (Korea has been ruled out already, according to The Wall Street Journal.)
   GM has switched sources mid-run before, and happily used the goodwill of German engineering when introducing a vehicle made with cheaper labour. Forty years ago, after selling German Opels for years, it began selling the Opel Isuzu from Japan: it was the Isuzu Gemini, the Japanese counterpart to the Opel Kadett C world car. The following year, 1977, the Opel Isuzu became the Buick/Opel. The Japanese origins were eventually hidden. The 2008 Regal, meanwhile, was originally sourced from Germany until SAIC was ready with its locally made version.
   In this day and age, when global-market Renaults and Fords come from Turkey, Nissans and Suzukis from India, and Fiats and Volkswagens from México, no such name changes will be needed. If the quality is good enough, ‘made in China’ won’t be that strange a concept. No one seems to have much of an opinion, or a stereotype, over ‘made in Thailand’—yet we buy plenty of product from them.
   GM isn’t likely to sleepwalk into this transition as it did pre-GFC. Then, the company was ill-prepared, prepared to splash money around on different platforms. The leaner 2010s GM will want to grab every sale it can, and I don’t think Aussie or Kiwi buyers are going to flock to the showrooms for a Commodore hatch, even if it looks like a Porsche Panamera.
   They won’t necessarily care that the new model is a better handler, with powerful engines, better economy, a lighter weight, and a decent interior. They could notice that shoulder room has gone down a fraction. There’s a certain conservatism to this market, and the idea of a hatchback just might be too foreign for this group.
   And if they can supply it, with the Chinese Buick Regal waiting in the wings, then why not maximize sales?
   When the four-door Commodore débuts in Australia next year, after its début in Genève as the Opel Insignia, the General will again have one over arch-rival Ford when it comes to big cars.

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Drivetribe will be a mecca for motorheads—Autocade readers welcome

22.11.2016

Now that the first episode of The Grand Tour has aired, and we’re nearing the official launch of Drivetribe (November 28), we’re beginning to see just how good an investment £160 million was for Amazon when it picked up the cast of The Goodies, I mean, Top Gear (sorry, I get those BBC shows mixed up, and they do have the same initials), along with producer Andy Wilman (who himself presented Top Gear segments many years ago, but we are now spared his nude scenes).
   Essentially, you can’t do a show these days without an internet community, so what did the four men do? Create their own. They’ve put their money into Drivetribe, which has attracted an eight-figure investment from additional parties, chief among which is 21st Century Fox—that’s right, Rupert Murdoch. Amazon’s reportedly quite happy with the arrangement—and it certainly helps boost their show.
   There are already signs that Drivetribe is going to succeed as a motoring portal–social network, for those of us who have been playing with it. Maybe the Murdoch Press has learned from Myspace? Or, it’s put their money in, but it’s letting experts do their job–among whom is none other than Cate Sevilla, formerly of Buzzfeed UK, and whose blog I followed even before she arrived in the UK the good part of a decade ago. It isn’t a surprise that Cate would do well in social media—she had a knack for it, even back then.
   Car enthusiasts were invited to pitch their ideas for tribes some months back, recognizing that we’re not all the same. Additionally, there’s a bunch of us who work in some aspect of the industry, and looking through the tribes, we’re the ones whose ideas have been adopted. For those of you who use Autocade, there’s one linked to that very venture.
   As many of you who follow this blog know, I founded Autocade in 2008, a car encyclopædia that wouldn’t have the fictions of Wikipedia (or ‘Wikiality’, as Stephen Colbert calls it). Eventually, I succumbed to modern marketing trends and very lately started a Facebook page on it, at least to post some behind-the-scenes thinking and publicity photos. While it proved all right, my blog posts were here and things were all over the place.
   When I first proposed doing a Drivetribe tribe many months ago, I centred it around the marketing of cars, and the result, the Global Motorshow, can be found here. And now that it’s started, it’s become clear that I can put all the content in one place and have it appreciated by other motorheads. In a week and a half it’s grown to about a third of the following of the Facebook page, and Drivetribe hasn’t even officially launched yet. Those members are either other tribe leaders or those who signed up early on. The question must be asked: why on earth would I bother continuing with Facebook?
   In addition to Cate, Drivetribe is not faceless. The support crew respond, and there are humans working here. I’m impressed with how quickly they get back to us, and how the site is reasonably robust. On all these points, Drivetribe is the opposite of Facebook.
   Granted, I don’t know the other members there, and some I only know through reputation. But then I didn’t know a lot of the people I now find familiar on Facebook car groups. Nor did I know the people on Vox back in 2006, or some of the folks at Blogcozy in 2016. Communities build up, often thanks to common interests, and here’s one that already has a massive online community ready to flock to it. Having three celebrities helps, too, and all three Grand Tour presenters post to the site.
   If you’re interested, the scope of the Global Motorshow (originally without the definite article, but when I saw the GM initials in the icon, I rethought it) is a bit wider than Autocade. I thought it might be fun to post some of the marketing materials we come across, the odd industry analyses that have appeared at this blog (updated in some cases), and even commercial vehicles, which aren’t part of Autocade. I’ve chosen to keep the tribe public, so anyone can post if they find something interesting. Let’s hope Drivetribe can keep the spammers at bay: something that the old Vox.com failed to do, and Facebook is desperately failing to do now as well.
   Come November 28, we’ll know just how good things are looking, but I’m erring on the side of the positive—something I was not prepared to do for sites such as Ello or Google Plus.

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Snapped on Instagram

11.10.2016

This wasn’t taken by me, but by another car enthusiast, who goes by Kiwi_cars on Instagram. They (I don’t know the gender though one shadow in one photo suggests it could be a male) photograph some of the more interesting cars in New Zealand, and I was flattered to have mine spotted and posted on my birthday last month. They knew the car was mine, but the timing was auspicious, in my book, and I like to think that it would have featured anyway. Also nice to see the Mégane photographed and appreciated by another motorhead—Kiwi_cars owns a Fiat 500 (the current variety), nicknamed Luigi.

   It’s an old point, but the prevalence of cellphone cameras means it’s going to be increasingly hard to deny where you were on any given day. In this case, Kiwi_cars asked for permission to feature my number plate, as they usually blank it out. I gave my blessing, since my own rule is: if you can spot something publicly, you don’t need to censor. If you photograph something where the subject expects a level of privacy (e.g. through their home windows, even if you can see them from a public vantage-point; or when something is on private land), then you do.
   And don’t we often buy a car for it to be admired? Since prewar days we’ve been conditioned into thinking how a car is not a durable good, but a fashion item that expresses who we are. It would seem hypocritical if someone does admire yours and you don’t permit it. If we weren’t interested in that, we’d all be driving Nissan Tiidas in a monochrome shade. And even some of those Tiida owners are very, very proud of their motors.

An edited version of this post originally appeared at Blogcozy.

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Finding the heart on Top Gear again

09.06.2016


Above: Chris Evans and Rory Reid talk about the McLaren F1 in Extra Gear.

Now that the new new Top Gear has aired in New Zealand, I have to say that it isn’t really there yet. But unlike much of the UK, I’m not going to dis Chris Evans, who is a consummate gearhead. The reason: I have a memory that goes back beyond February 2016.
   When Jeremy Clarkson and Andy Wilman brought Top Gear back in its current form in 2002, it was actually disappointing. People seem to forget James May, who originally replaced Clarkson in the original Top Gear, wasn’t even on the show. My memory of the studio audience was that there were about four people hanging around Clarkson as he introduced … wait for it … the Citroën Berlingo. Which he took to France (insert Clarkson pause) to buy cheese.
   The idea of a show with a perfect complement of three hosts who got on well with each other, each playing a caricature of himself, did not exist for the first year, and even after May replaced Jason Dawe, it took a while for those personalities to emerge. It’s rare to get three hosts to play those roles as well from the get-go—Top Gear France (which is actually made by the BBC) is an exception, and every other foreign edition of Top Gear that I’ve seen doesn’t quite have it.
   But Clarkson was a ratings’ winner. When he first quit Top Gear (or ‘old Top Gear’), the series which started with Angela Rippon as its host in the 1970s, ratings fell from six million to three million. The TV environment was different a decade and a half ago. And the BBC persevered because at that time he hadn’t offended Mexicans or Argentinians, or assaulted an Irishman, or Piers Morgan.
   However, importantly, the public was quite happy letting things develop. They could have gone and watched Fifth Gear with its familiar line-up of ex-Top Gear presenters, but they stuck with Clarkson, Hammond, and whomever the third man was.
   Twenty sixteen. Enter Chris Evans and Matt Le Blanc (somewhere between the ending of Friends and today, the space seems to have disappeared in his surname), both personalities who love cars. They are disadvantaged by not having been motoring journalists, but they are entertaining. The show doesn’t flow well with the studio segments, the stars introducing each other doesn’t work, and I’m nostalgic for the reasonably priced car—although at least the French have continued la tradition. However, because everyone expects the show to remain on a high, the internet jury has been nasty. No one demanded an overnight success before, but they’re out for blood now. It’s an unfair position to put Evans in.
   The absence of motoring journalism experience could have been filled quite easily. We were originally told of a huge line-up of Top Gear presenters, to which I thought: great, the BBC is going to give a big roster a go again, something that we hadn’t seen since the 1990s. In there we saw names such as Chris Harris. Yet Chris Harris and Rory Reid have been relegated to an internet-only show called Extra Gear, which is meant to serve Top Gear in the way Doctor Who Confidential served Doctor Who, with a bit of behind-the-scenes stuff, deleted footage, and some sensible road testing around the test track of models not covered in the main show.
   Here’s the thing, and this has been said in the British press: these two guys have great rapport, and come across better than Evans and Le Blanc. I vote for them to be on the main Top Gear. They are more personable, humorous, and relatable. I wouldn’t be surprised if they found a way to work them both in next season, and why not four hosts?
   One thing Harris and Reid have is that they know their stuff after serving in motoring journalism. They aren’t rich guys who happen to love cars, but guys who have worked that passion into careers. Harris, in particular, put integrity ahead of kissing up to Ferrari and Lamborghini. I have tremendous respect for these two guys, and there’s simply more heart in Extra Gear than Top Gear, which at present feels a bit empty and by-the-numbers.
   I don’t blame Evans at all—the man had a herculean task. The producers probably tried to reduce Top Gear into formulaic chunks and believed that by cooking with those ingredients, they’d have a winner. This is a reminder that you cannot create heart from a formula: you can’t predict where it surfaces. Now that we know it’s there with Reid and Harris, the BBC would be wise to capture it. Let Top Gear evolve—after all, it did between 2002 and 2015—but also let these personalities do their thing.

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Where did all the manual transmissions go?

08.05.2016


Above: The gear selector in the BMW i3, as tested in Lucire. See here for the full road test.

When I was searching for a car to buy after my previous one was written off in an accident, one no-brainer was that it had to be a manual. It can’t be that hard, right? After all, when I bought my earlier Renault Mégane in 2004, about 70 per cent of the market was manual.
   It turns out that in 11 years, things changed a lot in New Zealand. Somewhere along the line we became the United States or Japan, places where you get the impression people are afraid of manual gearboxes. We also changed our laws so that someone who is licensed to drive an automatic is permitted to drive a manual, so unlike the UK, manuals no longer became the default option for someone who wanted the freedom to drive both.
   I had the sense that New Zealand had become 80 per cent automatic, based on scanning car sales’ periodicals and websites. A quick scan of Auto Trader NZ last week, where there were 27,925 cars for sale, gave this break-down:

Automatic: 21,380 (76·6%)
CVT: 546 (2·0%)
Manual: 3,036 (10·9%)
Tiptronic: 2,963 (10·6%)

In fact, a traditional manual, one with gears you change with a clutch, comprises considerably less than 20 per cent.
   One friend, like me, specifically sought a manual in 2015, and asked me to scan through websites. In the greater Wellington region, cars matching his other criteria on engine size and price numbered a grand total of two, one in Eastbourne and the other in Upper Hutt. He eventually had to go outside his criteria to buy a manual.
   I visited one dealership in Lower Hutt where one of the senior salespeople told me that was what the market demanded, so they followed suit, as he tried to sell me an automatic, Turkish-made car. This claim was, based on my own research, bollocks.
   Granted, this research was of a sample of my 2,300 Facebook friends, but of those who responded, it appeared to be evenly divided. Some of the comments were along the lines of, ‘I wanted a manual, but I had no choice, so I bought an automatic.’
   If I didn’t have a second car (since sold to a friend who also preferred manuals), I could have found myself looking at doing the same—just because I needed wheels in a hurry. Or I could have bought a car that did not meet all my needs, one that was “near enough”. But if you are spending a five-figure sum, and you intend to hold on to the car for the next decade, is this such a wise thing to do? A car is an investment for me, not a fashion item.
   That earlier Renault took me four months to find in a market that wasn’t so heavily biased against manuals in the mid-2000s, and this time out, I wound up searching for eight. Most people don’t have that luxury.
   The most evident explanation for the overwhelming numbers of automatics is that so many used cars are sourced from Japan, but it’s really not what all people want.
   I’ve nothing against the half of the population who prefer automatics, but they are just not my sort of thing. These days, the most advanced automatics are more economical than manuals, but generally, you still get a few more mpg from a car you shift yourself. I enjoy driving, and automatics blunt that enjoyment for me, but I’m sure others don’t mind them as much.
   In future blog posts I’ll touch on this subject again, and I’ll be penning a story for Classic Car Weekly in the UK on the whole saga of buying a new car. Who knew that, despite being armed with money, it would be such an uphill task to find someone to give it to?
   It also suggests that if someone wishes to specialize in manuals, they would be tapping in to a large, unserved chunk of the New Zealand market.

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Mitsubishi’s latest scandal: enough to shake it right out of the passenger-car market?

26.04.2016


Above: The Mitsubishi eK Wagon, one of the cars at the centre of the company’s latest scandal.

One thing about creating and running Autocade is that you gain an appreciation for corporate history. Recently, I blogged about Fiat, and the troubles the company is in; it wasn’t that long ago that Fiat was the designers’ darling, the company known for creating incredibly stylish vehicles for all its brands and showing how you could use Italian flair to generate sales.
   That was the 1990s; by the turn of the century, Fiat had lost some of its mojo, and by the time I got to Milano in the early 2000s, the taxi ranks had plenty of German and French cars. Once upon a time, they would have been nearly exclusively Italian. Today, a lot of Fiat’s range is either made by, or on platforms shared with, Ford, GM, Chrysler (which it now owns), Peugeot, Mitsubishi and Mazda. Sharing platforms isn’t a sin, but a necessity, but Fiat seems to have taken it to a new level, looking like a OEM brand whose logo is freely slapped on others’ products.
   Mitsubishi is the other car company to find itself in trouble in recent weeks. The company admitted that it had lied about the fuel economy figures for its kei cars, the micro-cars that it sells predominantly in Japan.
   It wasn’t as troublesome as Volkswagen’s defeat device which fooled the US EPA, running differently when it knew the engine was being tested. Mitsubishi kept things simple, and overinflated tyre pressures.
   It would have got away with it, too, if it weren’t for Nissan, a company to which Mitsubishi supplied, under an OEM deal, kei cars. The customer started to ask questions and tested the cars for itself.
   Mitsubishi had supplied 468,000 cars to Nissan, all of which are affected. It had only sold 157,000 under its own marque. Production of the cars, from the eK range, and the OEM equivalent for Nissan, the Dayz, is now suspended, while Mitsubishi’s shares plunged 15 per cent on the news last week.
   Sankei, the Japanese newspaper, believes that Mitsubishi used the wrong test method on the I-MIEV electric car, RVR (ASX), Outlander, and Pajero, which are exported.
   You have to wonder what the corporate culture must be like for these matters to recur so regularly. But then, collectively, people tend to forget very rapidly, and companies like Volkswagen and Mitsubishi must bank on these.
   VW isn’t the first to cheat the EPA—US car makers have attempted less sophisticated defeat devices in the latter half of the 20th century—though it has had a chequered past. Just over 10 years ago, there was a scandal involving VW colluding with a union leader to keep wage demands down, and a few low-level employees took the rap. Go back to the 1980s and the company found itself in a foreign exchange scandal. But these were known mainly among specialist circles, principally those following car industry news.
   Mitsubishi’s scandals, meanwhile, were more severe in terms of the headlines generated. Last decade, when the media called Mitsubishi Japan’s fourth-largest car maker—these days they call it the sixth—the company was implicated in a cover-up over the safety of its vehicles. Japanese authorities raided the company in 2004, and revealed that Mitsubishi Motors Corp. hid defects that affected 800,000 vehicles, and had done so since 1977. Nearly a million vehicles were recalled. Affected vehicles were sold domestically as well as in Europe and Asia. Top execs were arrested that time, including the company president, although it was hard under Japanese law to punish Mitsubishi severely. There was no disincentive to conducting business as usual. The company was ultimately bailed out by its parent, the giant Mitsubishi Group, when it found itself facing potential bankruptcy.
   People were killed as a result of Mitsubishi’s cover-ups, and at the time it was considered one of the biggest corporate scandals in Japan.
   Go back a bit further and Mitsubishi Materials Corp., a related company, had used slave labour in World War II, including US troops—something the company did not apologize for till 2015, even though the Japanese government itself had issued apologies in 2009 and 2010. While it was a first among Japanese corporations, and US POWs got what they had long awaited, descendants of Chinese slave labourers still have a lawsuit pending against a connected Mitsubishi subsidiary.
   The other major difference between Volkswagen and Mitsubishi is that the Japanese marque is relatively weak in terms of covering its market segments. It’s SUV- and truck-heavy, and its kei cars had sold well (till now), but it has little in the passenger car segments, which it had once fielded strongly. The Mirage (and the booted Attrage) and the Galant Fortis (exported as the Lancer to many markets) are what’s left: the latter is now nine years old, though still fairly competitive, and in desperate need of replacement. Its only other car is its Taiwan-only Colt Plus, still selling there as an entry-level model despite having been withdrawn from every other market. In the big-car segments, Mitsubishi is actually supplied by Nissan in Japan, but doesn’t make its own any more. ‘Sixth-largest’ is shorthand for third-smallest, at least among the big Japanese car companies.
   Mitsubishi looks set to quit the C-segment (Galant Fortis) since neither Renault nor Nissan, which it had approached, wanted a tie-up. And the company survives on tie-ups for economies of scale, and there’s now a big question mark over whether potential partners want to work with it. Automotive News’s Hans Greimel questions whether the Mitsubishi–Fiat truck deal will go ahead (though I had thought it was an inked fait accompli).
   But, most seriously, Mitsubishi hasn’t completely recovered from its earlier scandal.
   It is within living memory, and the timing and nature of the latest one, tying so closely to what rocked Volkswagen, ensured that it would get global press again, even if the bulk of the affected cars were only sold domestically. And when consumers see a pattern, they begin wondering if there’s a toxic corporate culture at play here.
   We’re too connected in 2016 not to know, and while Mitsubishi is likely to be bailed out again, it will face the prospect of shrinking car sales—and sooner or later one will have to question whether the company will stay in the passenger-car business. Isuzu exited in the 1990s, focusing on SUVs, pick-ups and heavy trucks, forced by an economic downturn. Since Mitsubishi’s own portfolio is looking similarly weighted, it wouldn’t surprise me if it chose to follow suit, its brand too tarnished, with too little brand equity, to continue.

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How will things play out at Fiat?

02.04.2016


Above: The current Fiat 500. A year shy of its 10th anniversary, is it still cool in 2016?

The Detroit News reports that Fiat has been having trouble Stateside, with dealers now permitted to sell the cars alongside Chrysler, Jeep, Dodge and Ram instead of at stand-alone showrooms.
   It’s been worrying seeing Fiat’s plans unfold since it decided to take control of Chrysler, a firm that was once the darling of the US car industry, with its industry-leading R&D times, to one that was starved of investment in the 2000s.
   Those initial plans, sold as a long-term strategy, turned out to be a short-term Band-Aid. With hindsight, maybe it wasn’t too much of a surprise, since Fiat was still grappling with understanding just what it was taking on.
   Fiat needed to do something given that things at home weren’t looking too good, with a model range that wasn’t very cohesive, and with its entries into the Chinese market having faltered a few times. To the casual observer, Fiat saved Chrysler, but there’s some truth in saying that having the company that controls the Jeep brand was a lifeline to Fiat itself.
   What we’ve seen since those days was the failure of the strategy of twinning Chrysler and Lancia. While this was a marriage of convenience, I could see this having some long-term gains with Lancia focusing on smaller cars and Chrysler on larger ones, but the result in 2016 is that Lancia has been reduced to an Italy-only marque, the equivalent of what Autobianchi was a few decades ago. Once the Ypsilon is deleted, then Lancia is consigned to the history books.
   The winner has been Alfa Romeo. It has only just returned to the junior executive segment with the new Giulia, after an absence of several years, and its 4C is a cracking sports car. Things are looking up, and rumours that Alfa and Dodge would be paired up in the same way Lancia and Chrysler were mercifully haven’t come true. The Giulia platform could be used for future models. Jeep has benefited from Fiat platforms, and Ram has gained some Fiat vans.
   But the parent brand, Fiat, has looked very uncertain for a while.
   For a start, there’s little uniformity globally. Fiat has the opportunity to offer the Viaggio and Ottimo in more places than China, slotting above the Ægea, for example. While having unique models for South America makes some sense, because of Fiat’s strength there, there’s an opportunity to globalize, with the Toro pick-up truck looking very appealing.
   Without having more of its self-developed products, the Fiat range in Europe doesn’t inspire too much confidence. While most manufacturers have one or two joint-venture models, Fiat’s range is almost exclusively made up of vehicles that have shared tech. The famous 500 and Panda are on a Fiat platform which has Chrysler input (before the takeover), and is shared with Ford for its B420 Ka. The Punto, 500X and 500L are on another platform shared with GM. The Doblò is also offered to GM. The Qubo is the product of a joint venture with Peugeot. The Freemont is a rebadged Dodge Journey from México, which Fiat gained after the takeover. The 124 Spider is based on the Mazda MX-5, and built in Japan by that firm. The Fullback pick-up is a Mitsubishi Triton twin and made in Thailand by that Japanese firm.
   Fiat, in other words, is holding down more relationships than Casanova.
   As a casual observer, there’s an opportunity for a massive streamlining of platforms, and offer more in-house models. That may well be happening, and let’s hope its current strategy is more long-term than its last.
   Secondly, as mentioned earlier, Fiat hasn’t had a great reputation of being able to carry out long-term sales’ strategies in many of its markets. Take New Zealand, for example, where Fiat was offering its (Grande) Punto and Bravo models, before it decided to pull everything and offer only the 500.
   The Punto has returned after a hiatus, this time as a budget model, along with the Tipo 139 Panda, but those who bought Puntos in the 2000s might think twice about returning to a company that abandoned them and offered no direct replacement for their car when it came to trading up.
   That lack of continuity could have some buyers worried, and Fiat needs to regain their trust in a big way.
   Being the Five Hundred Car Company, which Fiat certainly was in the US, cannot help, if buyers expect Fiat to offer more. We’ve seen it fail here, and Fiat’s had to back-track. Even in Hong Kong, where Fiat had also been reduced to flogging only the 500, it has had to add the Freemont.
   Fiat will argue that as it had been absent from North America for so long, it could re-enter the market-place with a single, fashionable model: after all, Mini and Smart have done.
   The trouble is that Fiat isn’t known as a niche brand: there was enough in the US media to indicate that this was an Italian giant, and the perception of such a large company didn’t gel with it offering a niche range anywhere. It lacked the cachet of a brand that was created to be fashionable and funky from the outset. You just can’t do it when that’s the name of the owner (think: can you sell “cool” cars with GM as the brand—that had been tried in New Zealand and failed dismally; or, going back a generation, Leyland? Volkswagen surely is the sole exception with its Beetle), and FCA, which the parent company is called, isn’t a consumer-facing brand. It’s just a company name with no brand equity.
   In the same vein, average punters might not know of BMW’s connection with Mini, or Daimler AG’s connection with Smart. They stand alone with plenty of brand equity, helped by identifiable products, and, in Mini’s case, even helped by its image outside North America.
   I also question whether the 500X and 500L are cute cars in the same vein as the original 500. Getting Ben Stiller’s Derek Zoolander character to advertise the 500X seemed good in theory—till it dawned on the public that the new Zoolander film was a bit naff, cashing in on last-decade nostalgia. I’m not a fan of retro design, either, and I would have hoped that Fiat would have renewed its 500 by now, since we’re on to newer versions of the Beetle, Mini, and Smart. It’s no surprise that Fiat sales are down 14·6 per cent so far this year.
   If Toyota could not sustain Scion with all its muscle, then Fiat retail really should be integrated into dealerships selling Chrysler, Dodge, Jeep and Ram Stateside. And I’d argue that Scion couldn’t remain because the brand had lost its coolness among the college kids who bought the XB in the first place. Buyers in this consumerist game, and at the fashion end it is more a game than in any other, are notoriously fickle.
   I don’t know how it’s going to play out. Fiat’s a brand I’ve grown up with, and I’ve been visiting their dealerships since I was two years old. Back in the 1970s the showroom in Homantin, Kowloon had everything from 127s to 130s. Fiat was doing a brisk trade on 124s. I came close to buying various Fiat Group cars over the years, including a Tipo and a Lancia Delta, and more recently I had considered Alfa Romeo Mitos and Giuliettas. I briefly toyed with importing a Tipo 844 Lancia Delta from the UK badged as a Chrysler, but decided having a $75 1:43-scale one was enough.
   To see Lancia decimated and now on life support as Fiat concentrated on making Chrysler and Dodge work, to see the home brand filled with other people’s products in the interim, and to receive news that US buyers weren’t flocking to its showrooms in the same numbers any more, all make me concerned. Go to Italy and the taxi ranks no longer are dominated by Fiat Group cars: the cabbies have gone French and German. It’s all very well Maserati and Ferrari doing well but the former’s volumes won’t have a huge impact, while the latter has been separated and now has a different parent. The only continent where I think Fiat is making a decent bash of things is South America. I don’t want to paint a doom-and-gloom picture, not least because I have fondness for all the brands that now fall under the Fiat umbrella. But the weaknesses, at least to an outsider looking in, outnumber the strengths. My gut says Fiat will work through it all, but will it do it in a fast enough fashion, or is there more pain to come?

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Posted in branding, business, cars, China, globalization, marketing, USA | 1 Comment »