Posts tagged ‘car industry’


If FCA kills Chrysler today, then it’s another chapter of a company weakening its brands

01.06.2018

There’s a rumour circulating that Fiat (specifically, Fiat Chrysler Automobiles, or FCA) will kill the Chrysler marque today.
   The range currently consists of two models: the ageing 300 and the relatively fresh Pacifica.
   It seems to be another step in the mismanagement of car marques, especially US ones, something I wrote about many years ago when Condé Nast Portfolio was still running. (Note: it was a published letter to the editor, not an article.)
   Marques do disappear, but when the wrong ones get killed off, long-term it leaves the company in a weaker state.
   DaimlerChrysler found that out in the early 2000s when it decided Plymouth was surplus to requirements. Suddenly, its entry-level budget brand was gone—a very bad move when the recession hit later that decade. Plymouth had been conceived as a low-priced line that kept Chrysler afloat during the Depression.
   DaimlerChrysler then found itself having to sell Plymouth products under the Chrysler marque, which was traditionally the priciest between Plymouth, Dodge and Chrysler.
   Today’s Chrysler resembles, at least in market ambition, the one of old, where it offers reasonably good quality vehicles, with Plymouth a distant memory.
   It also offers Fiat a relatively premium brand in the US market. It’s not Jeep, Ram or Dodge, all of which have very different brands, messages and brand equity.
   The fact it is light on product could have been solved long ago if Fiat had adopted the sort of platform-sharing that is now commonplace in the car world—you only have to look at Volkswagen and the Renault–Nissan Alliance, now Renault Nissan Mitsubishi. Even Jaguar Land Rover is realizing economies of scale with Jaguar SUVs and a car-like Range Rover (the Velar).
   While Chrysler found that the 200 had flopped, there was always room for a premium, American SUV to take over from the Aspen, for example. If Jeep can build SUVs on Punto and Giulietta platforms, why couldn’t Chrysler, aimed at very different buyers?
   The truth is that Fiat has a very confusing platform strategy, something I alluded to in earlier posts both here and in Drivetribe, and there appear to be no signs of bringing any harmony to the mess.
   The firm hasn’t been properly merged, and not enough thought has been given to reducing platforms, and sharing them between marques. There’s more in common on this front between Fiat and British Leyland than between Fiat and Volkswagen, which it once vied with to be Europe’s number-one.
   The domestic range has cars on platforms shared with Ford, Chrysler and GM, not to mention OEM vehicles from Mazda, Mitsubishi and Peugeot. I might not love SUVs, but the public does, and the Fiat range is light on them. There’s not enough of a global effort, either: the Ottimo and Viaggio are Italian-styled, based on the Alfa Romeo Giulietta (or more specifically the Dodge Dart), and they are only sold in China—a ridiculous situation when Fiat doesn’t have a CD-segment saloon in any other market. The rationalization of the range in South America has helped, with the Argo and Cronos streamlining a confusing array of Palio, Linea, Siena and Grand Siena models, but they bear little resemblance to the models on offer in Europe.
   Lancia, which had benefited from Fiat platforms, is practically dead, its 500-based, Polish-made Ypsilon being deleted this year. As models at Lancia died out, they were not replaced. Yet things could have been so much better, had Fiat allowed Lancia the sort of freedom it needed to sell Italian luxury and innovation. Those values are different from Alfa Romeo’s, yet through its conduct, Fiat seems to think that if Alfa and Lancia have similar prices, then they must vie for similar buyers. They never did. It seems to believe that costs will be saved through axing marques and model lines, which can be true in some cases—but those cases tend to presume that what remains, or what replaces them, is stronger.
   I’m not being a Luddite or pining for the “good old days” when it comes to Chrysler. I hold no romantic notions for the brand. But I do know that once they’re gone, the firm doesn’t necessarily find its resources are freed up to pursue surviving lines. It finds that it’s lost a segment that it once fielded.
   It’s sadder to realize that Chrysler, as a group, was much stronger in the early 1990s, with record development times and good platform-sharing. Plymouth was in the process of developing its own identity—the PT Cruiser and Prowler heralded a new retromodern design language that was to spread throughout the range, while utilizing the same platforms as Chryslers and Dodges.
   Fiat itself, too, was a strong company at this same period, riding high on great styling, with a reinvigorated line-up. Think Bravo, Brava, Barchetta, Coupé Fiat, 456, Quattroporte, Delta, Dedra, Kappa, 145, 146, GTV and Spider. A lot of these vehicles were talked-about, and considered some of the most stylish in Europe.
   Last year, in Europe, luxury marques Mercedes-Benz, BMW and Audi all outsold Fiat, supposedly a mass-market brand. Its market share in Italy and Brazil, traditionally places where it was strong, has continued to dip.
   In the US, it’s the same story, with Mercedes-Benz, BMW and Audi all outselling Chrysler both last year and year-to-date.
   It’s all very romantic, and good press, to show off premium Alfa Romeos and Maseratis, or money-making Jeeps, but many of these models don’t donate any of their architecture to Fiat’s troubled brands.
   In 2018, when you see that certain Fiat marques aren’t getting access to platforms, you have to wonder why—especially when so many other big players don’t place such restrictions on their brands.
   A new 500 and Panda might be around the corner, but we’ll need to see far more logic applied to the business, especially with Alfa’s Mito and Giulietta looking more dated, Fiat’s range in a mess, and Chrysler barely making an effort in China, a market where its sort of positioning would have attracted luxury-conscious buyers who might prefer foreign brands, such as Buick.
   Even if Chrysler gets a stay of execution, Sergio Marchionne’s successor will have a very tough job ahead.

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Posted in branding, business, cars, China, marketing, USA | No Comments »


Ford to stop selling passenger cars in the US and Canada, save for Mustang and Focus Active

26.04.2018


The Ford Focus Active: by the turn of the decade, this will be the only four-door passenger car Ford will sell in the US and Canada

In a surprise move, Ford has announced that it will cease selling passenger cars in the US and Canada by the early 2020s, excepting the Mustang and the Focus Active.
   The announcement was actually for ‘North America’ but as Ford of México does a reasonable trade on Figos and Fiestas, it’s hard to see the policy be uniform right across the continent.
   It’s a cost-cutting exercise, designed to save $25,500 million in five years, and trucks and SUVs simply make more money for them. Small cars mean small profits. In fact, car sales lag those of the F-series, Escape and Explorer in the US. Shares have risen on the news.
   That means Americans and Canadians will say goodbye to the Fiesta, Fusion (the four-door sedan counterpart to the Mondeo) and Taurus, the last of which is already superseded in China. If you liked the cooking RS and STs, then too bad. Lincolns are losing money for Ford, too, so maybe the Continental will vanish—given the Fusion is history, the MKZ will follow. That doesn’t leave much in the Lincoln line-up.
   My initial reaction was that the economies of scale would worsen: if you’re not developing for a global market, will development costs be successfully amortized in the same period? We have, however, seen the Japanese do reasonably well with products strictly for the North American market, e.g. certain Acuras and Hondas that are sold only in their neck of the woods. We also know most of the costs of the car are in the platform and architecture, and Ford has shown decent adaptability, particularly with the C519 Focus (the recently released Mk IV).
   Ford says the cuts will come from sales and marketing, engineering and product development, as well as material costs, manufacturing and IT, in that order, according to Automotive News.
   The fact that product development and engineering rank so highly there is worrying to me.
   They’re bandying the word efficiency about a lot, and that always has me worried. That’s the word you used to hear from corporate raiders like Slater Walker. Things can look efficient while they’re being weakened.
   CEO Jim Hackett says he’s feeding the healthy parts of the business, ‘and deal decisively with the parts that destroy value.’
   While it’s true that the crossover, SUV and truck markets are strong, as they are in many parts of the world, I can’t help but think that Ford isn’t preparing itself for tougher future scenarios.
   Energy crises can come unpredictably, for one. Ford was late to the downsizing game in the 1970s because it saw the dollar signs with big cars. By 1977, GM had stolen a real march on Ford. By the turn of the decade, Chrysler was back from the brink with fuel-efficient cars while Ford sailed into the red.
   Chrysler found itself too truck- and SUV-heavy with the recession of the late 2000s, and its entry-level nameplate Plymouth had already vanished, thanks to mismanagement by Daimler earlier in the century.
   While there’s not always a need for a full line—AMC taught us that extending yourself too far isn’t always wise—I wonder if Ford is leaving itself vulnerable.
   Crossovers like the Escape, which might outsell the Fusion, are being beaten in the market-place by the likes of the Toyota RAV4, so it’s not as though Ford is that strong in all the markets it wishes to remain in.
   GM, having pulled out of Europe and Russia, might be in better shape because of its position in China. Ford trails GM when it comes to its Chinese footprint, although it will remain in Europe.
   Ford’s Jim Farley says the company is looking at new types of vehicles that are spacious, versatile and economical, which hopefully will fill the gap should economic surprises surface. Because you need something cheap to hook buyers and get them to the brand. That’s not going to happen if Focus Active is the smallest car in the line-up.
   Ford is likely to have these on global platforms. But that signals to me a real need to remain strong in R&D. Failing that, Ford is looking to partner up with someone, and it may already have an idea who that is.
   I am speculating here, since I don’t have any figures outlining what proportion of revenue is devoted to that area.
   Nevertheless, this sounds like an appeasement of Wall Street.
   That leaves one concern over nameplates. Ford has successfully introduced nameplates over the years because the product was right: Cortina, Mustang, Escort, Capri, Fiesta and Focus among them. But it has also failed by killing nameplates and replacing them with ones that had no real goodwill, such as Five Hundred and Freestyle.
   Whatever Ford has in mind, I hope for their sake that the new product is compelling, as much as the Mustang and Fiesta were when they appeared on the market. Both emerged in the wake of economic recessions, with Ford innovating because it had to.
   In this century, Alan Mulally’s time at Ford had a measured, sensible approach, where you could understand the future. There are question marks over what Hackett has planned, and usually we have some clue what these new products will be four years out. All I know of is that the Ranger will make it to the US again, boosting truck sales, but that’s hardly an innovation. That’s just filling a market niche with familiar product.
   Will Ford do Brasil come up with something that can be sold in both North and South America? Perhaps the next-generation Ecosport?
   There are lessons in history that shouldn’t be ignored, and Ford has one of the most interesting pasts of any car maker. There is, however, a feeling from the announcement that this heralds a time of retrenchment, as its profits fall globally, and net income in the US rising for the first quarter in part due to a lower tax rate.
   Remember, Isuzu also once thought it was a good idea to stop selling passenger cars and focus on SUVs and trucks. And they’re no longer around in North America.

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


Wikipedia corrects serious error after 12 years

05.11.2017

Well done, Wikipedia, you got something right. It only took you 12 years.
   Nick, who appears to be a senior editor at the site, fixed up the complete fabrication that a user called ApolloBoy entered about the ‘Ford CE14 platform’ in 2005, after I wrote a pretty scathing piece on Drivetribe about Wikipedia’s inadequacies, in part based on an earlier blog post I wrote here.
   I am grateful to Nick who I expect saw my story.
   However, errors still abound, and as I pointed out in Drivetribe, another user called Pmeisel, who appears to have been an automotive industry professional, said back in February 2005 there was a real confusion between development codes and platforms on Wikipedia.
   While Nick has largely fixed the problem—he has noted that it was the European Ford Escort of 1990 and its derivatives that CE14 should refer to, and not much earlier American cars—there remains the lesser one that there is still no such thing as a ‘Ford CE14 platform’, just as there is no such thing as a ‘Ford C170 platform’, and so on.
   Ford did not use these codes to refer to platforms, they used them to refer to specific models.
   Let’s see if the Wikiality of this page will at least begin to disappear from the ’net, 12 years after ApolloBoy made up some crap and allowed it to propagate to the extent that some people regard it as fact.
   I have enquired into Wikipedia from time to time, enough to know it is full of mistakes. But the errors do seem to happen far more often in the Anglophone one. Perhaps those of us who speak English are more willing to commit fictions to publication. Goodness knows we have seen an example in print, too. Does this culture lend us to being far less precise with a poorer concern for the truth—and does that in turn lead to the ease with which “fake news” winds up in our media?

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Posted in cars, culture, internet, publishing | 4 Comments »


Too many white cars make fake news

17.09.2017


A photo taken in Wellington with a test car I had for Lucire. White cars aren’t the over-represented colour in New Zealand: guess from this photo what is.

A friend of mine put me on to this Fairfax Press Stuff article, entitled ‘Silly Car Question #16: Why are there so many white cars?’. It’s a silly question all right, because I haven’t noticed this phenomenon in New Zealand at all, and if any colour is over-represented, it’s the silver–grey tones. It seems like “fake news”, and if you read on, then there’s more to support that assertion.
   ‘It’s because every second car imported from Asia is white – literally. Latest research tells us that 48 per cent of all vehicles manufactured in Asia, particularly Japan, are painted white.’ (My friend, of Chinese descent, summarized jokingly, ‘It’s our fault,’ and my thought was, ‘Not again.’)
   Let’s break this one sentence down. The author says that we source a lot of our used cars from Japan, hence this 48 per cent figure is reflected in the New Zealand fleet. But you only need to ask yourself a simple question here: how many of those white cars made in Japan (or Korea, or India, or Thailand) stay in those countries to become used imports to New Zealand? These nations are net exporters of cars, so whatever trickles on to the Japanese home market will be a smaller percentage of that 48. How many are white—we don’t have that statistic, but, as I noted, it’s certainly not reflected in the cars on our roads. Now, if we’re talking Tahiti, where there are a lot of white cars, then that’s another story—and that is likely to do with white reflecting light in a hot climate. As this is a foreign-owned newspaper group, then perhaps the author does not live in New Zealand, or if he does, maybe he hangs around taxi ranks a lot.
   Let’s go a bit further: ‘Statistics gathered by Axalta Coating Sytems, a leading global supplier of liquid and powder coatings, showed that worldwide 37 per cent of all new vehicles built during 2016 were painted white, which was up two percentage points on 2015’ and ‘All this leads to the next obvious question: why are all these cars painted white? / It may be because that’s what the manufacturers want.’
   From what I can tell, this article was cobbled together from two sets of statistics. A bit of research wouldn’t have been remiss. However, it is a sign of the times, and even we’re guilty of taking a release at face value to get news out. But the result on Stuff just doesn’t make much sense.
   James Newburrie, a car enthusiast and IT security specialist, has a far more reasonable answer to the high number of silver (and dull-coloured, which includes white) cars, which he gave me permission to quote in May 2016:

Car colours are fairly well correlated with consumer confidence. In an environment where consumer confidence is high, regular cars are likely to be available in all sorts of bright and lurid colours (purple, green, yellow, etc). As consumer confidence tanks, people start to think more about resale value and they chose more “universal” colours (the kind of colours no one hates: Silver, conservative blues, etc).
   Cars directed at young people tend to be cheaper and maintain strong colours throughout the cycle – but to keep costs down they tend to stay around red, black, white, blue and silver, perhaps with one “girly” colour if it is a small car. Cars directed to financially secure people as second cars, like sports cars for instance, tend to be more vibrantly coloured, because your buying into the dream.
   So, in the 1950s while the economy was good, people bought cars in bright colours with lots of colours, the oil crisis comes along and they go to white and beige, the 80s come along and we all vomit from car colours, the recession we had to have leads to boredom, then everything is awesome again and you can buy a metallic purple Falcon, or a metallic orange commodore – then the great recession and we’re all bored to death again.
   Consumer confidence probably is just starting to recover now. If history is any indication, there will be a point where people just go “oh screw worrying” and then they will see that other people aren’t worried anymore and they’ll say “screw worrying” etc … and we will snap back.

   Follow that up with what car dealers are now selling, and bingo, you might have a serviceable article.

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Posted in business, cars, media, New Zealand | No Comments »


Fun for car anoraks—till you get to the factual errors

08.07.2017

I bought Steven Parissien’s The Life of the Automobile: a New History of the Motor Car, which started off as a good history. I’m 300-odd pages in now and the mistakes are really worrying. There’s also a shocking lack of editing (one part repeated, albeit in different language, and spelling and grammatical mistakes) in the parts I’ve got to now; it’s as though the editor got tired after the first 10 chapters and stopped caring. But the biggest errors are factual.
   I am astonished to learn, for instance, that Harley Earl was responsible for the concept of the Ford Thunderbird (p. 255), that Triumph TR7 production was transferred to Speke in 1982 (p. 293, though Parissien later contradicts himself with the correct fact), and that John Z. de Lorean was a protégé of Lee Iacocca (p. 309). I really have no idea how, but as far as I know, de Lorean was never at Ford, and he had a Chrysler stint long before Iacocca got there. I also never knew that ‘In 1968 the Toyota Corolla became the first Japanese car to be manufactured in the US’ (p. 314; that was the year it went on sale there, and from memory the Corolla didn’t get built there till the NUMMI deal in the 1980s) or that the Opel Ascona C was also sold as the Opel Vectra (p. 337). The Italian Job was released in 1969, not 1967 (p. 224).
   I am frustrated with this book—and now it makes me wonder if the stuff earlier on, which I know less about, was accurate.
   I can understand an editor not grasping the subject as well as the author but there is less excuse in professional publishing for the other problems. Maybe there are few professional proofreaders left, now that spellchecks have been around for a generation or more. I was prepared to recommend this book even a week ago and tolerated the spelling and grammar, but these factual mistakes are worse than what can be found in Wikipedia, and I often label parts of that site as fiction.

PS. (September 17): How much worse can it get, as I continued through? A lot.
   On p. 320, we get an admission that Parissien was wrong on p. 314: the Honda Accord was the first Japanese-branded car to be made Stateside. At least an earlier error was corrected. But they begin again on p. 321: Parissien claims the V30 Toyota Camry dominated the US mid-size car market (it was never sold outside Japan; he’s thinking of the XV10, or the Japanese-market Scepter, which was badged Camry). Correcting his error on p. 322, the Camry was not specifically targeted at the US; it was Toyota’s attempt to create an efficient car from the ground up, and it was not done in 1980, but 1982 (the 1980 Celica Camry was not sold outside Japan). The Paykan deal was cemented long before George Turnbull got to Iran (p. 324), though local content rose in the 1970s for it to be truly Iranian-made and Parissien might mean the shifting of the engine tooling there, if I’m being generous. There is only one world, not multiple ones (also p. 324), unless Parissien knows something about parallel universes that the rest of us don’t. Surely Chrysler managed to launch its T-115 minivan (Dodge Caravan, Plymouth Voyager) before Renault launched the Espace (p. 330), and the Triumph Acclaim was never called the ‘Ronda’ (p. 334), though its successor was.
   On p. 360, in a single paragraph, Parissien makes several errors. The MG 6 launched as a five-door car, not his claimed four. There is no such thing as the Roewe 150, in China or elsewhere. The MG 3 has five doors and is not a three-door counterpart to the 6. The five-door MG 6 launched not in 2011, but in 2010, and the Magnette name was only used in the UK for the four-door. The founder of Chrysler was Walter Chrysler, not Walther (p. 364). The Lancia Delta only became a Chrysler in the UK and Éire, as far as I know (p. 365), and remained a Lancia in most countries. The Belgian designer is Dirk van Braeckel, not van Braeckl (p. 368); Mercedes-Benz never bought an 18·53 per cent stake in Volkswagen (p. 369); and Citroën’s BX was not the last car in that range to have ‘pneumatic suspension’ (p. 372). The Malibu was not a Saturn, but a Chevrolet (p. 375), and Buick was never sold off (p. 376). The Ford Mondeo did not replace the Telstar in all Asian markets (p. 377), and it shared far more than the ‘windscreen, front doors and rear’ with the Contour and Mystique (in fact, the rear was not shared, though there were common engines, platform, and plenty more). It’s not entirely certain that the US market judged the Contour to be too small (p. 378), but there was a lack of marketing (which would have made an even better story than the one Parissien writes about). Ford subsequently filled the Contour’s niche with the smaller Focus Stateside. The CD338 Fusion was never sold in Australia (also p. 378). Ford never resurrected the Taunus in Germany under Alan Mulally (p. 381)—this invention is incredible. VAZ did follow up the 2101 with something similar after it ended production in 1983 (not 1984, p. 382), viz. the 2105, which was about as similar as one could get to the 2101.
   On p. 384, Parissien claims Acura’s Legend sales were ‘disappointing’, after saying they were ‘beginning to sell rather well’ 50 pp. before. The Hindustan Ambassador was not based on the 1954 Morris Oxford (p. 389): that car was actually the Hindusthan Landmaster. The Ambassador was based on the 1957 Morris Oxford III, and was in production from 1959, not 1958. The Red Flag (or Hongqi) marque was not reborn on an Audi A6 (p. 391), but the marque had been used on a version of the Audi 100 C3 from 1988, and no Hongqi bore an Audi–Chrysler–Hongqi brand name. The Chinese company is Dongfeng, not Dongfen (p. 391), and Parissien’s claim that the Everus was sold in the west (p. 392) is news to me, as I am sure it is to its own management. I’ll stop there for now.

P.PS. (September 18): Some bedtime reading, or should I say error-finding, last night. On p. 394, Toyota and Aston Martin did not jointly develop the Cygnet: Toyota developed the IQ in 2008, and Aston Martin converted that car to become its Cygnet, and ‘hot hatch’ is a very optimistic description for a city car. Toyota did not launch the Cygnet in 2008 as Parissien claims, nor did it have a say in what customers were expected to purchase the Cygnet: it was aimed specifically at existing Aston Martin owners, not ‘Toyota and Aston expected initial demand to be limited to those who already owned an Aston Martin sports car.’ It was certainly no ‘eccentric experiment’ of Toyota, but of Aston Martin. Volvo never made a model called the A40 (p. 395), and I bet Nissan is surprised to find that the original Qashqai was designed ‘at the firm’s Milan design centre’ (p. 397) when it was designed in London. Maserati never launched a Jeep-based SUV called the Kubang (p. 397), but it did have a concept of that name, and the Levante appeared in 2016 after the book was published. There is no such car as the Porsche Cajun, and if Parissien refers to the smaller Porsche crossover, then that is called the Macan, and it has five doors, not the claimed three (p. 397). The Volkswagen New Beetle was not on a Polo platform (p. 399), but a Golf one, as was its successor (though a newer Golf); and Ford would dispute that its Mustang is a sedan (p. 401). If J Mays’s first name is J (as footnoted), then there is no need to refer to him as ‘J. Mays’ (p. 401). The Ford Ka’s name is not derived from StreetKa (p. 402): that was a model spun off from the Ka in 2002; and some would regard the Mk II model was being superior to the Fiat 500 on which it is based (especially as Fiat adopted some of the changes for its own model). I have yet to see a Smart with a Mercedes-Benz three-pointed star or marque anywhere, unlike Parissien who seems to think they are badged Mercedes (p. 403), and a Smart SUV does not exist unless Parissien is reporting again from his parallel universe (p. 403). There is also no such car as the Kia Exclusive (p. 410).

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Posted in cars, design, interests, publishing, UK, USA | 1 Comment »


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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Posted in branding, cars, China, culture, design, leadership, marketing, media, USA | No Comments »


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


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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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 | 2 Comments »