Posts tagged ‘GM’


Could this happen one day at GM?

22.02.2020


The MG line-up in New Zealand. Could it be part of a bigger portfolio of brands later this decade?

In the context of what has happened with Holden, and Peter Hanenberger’s thoughts on the direction of GM, I wonder how far away we are from seeing these headlines:

Cash-strapped GM sells passenger car brands to SAIC to focus on trucks and SUVs

and:

SAIC builds passenger-car brand portfolio with Wuling, Baojun, Chevrolet, Roewe, MG, Buick and Cadillac

You can almost think of MG as Pontiac and Roewe as Oldsmobile … With the decimation of the GM line-up globally, and the segments they no longer field (e.g. C-segment cars in many markets), will they even have the investment needed to sustain the car brands?
   I know they are saying this was all necessary to fund the electrification of the range and autonomous tech, but isn’t this the same company that nixed the EV1 and failed to make the Volt a Prius-beater?
   The Chinese state wasn’t about creating “Chinese Leyland” when they forced SAIC and NAC to merge. They had much grander plans.

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


Peter Hanenberger’s unintended post mortem of Holden

19.02.2020


The 2009 Chevrolet Caprice SS, sold in the Middle East but made in Australia.

I came across a 2017 interview with former Holden chairman Peter Hanenberger, who was in charge when the company had its last number-one sales’ position in Australia. His words are prescient and everything he said then still applies today.
   He spent over four and a half decades at GM so he knows the company better than most. Since he departed in 2003 he had seven successors at the time of the interview; and I believe there have been a couple more since.
   A few interesting quotes.

‘It’s [now] a very short-sighted company.’
It feels like it. The sort of retreating it’s done, the dismantling of global operations, and the failure to see how global platforms can achieve economies of scale is something only a company beholden to quarterly stock price results will do. And it doesn’t help its longevity.
   Even Holden, which looked like it was going to simply depart the passenger-car sector at the end of last year before a full withdrawal now, tells us that there doesn’t appear to be a long-term plan in place that the US management is committed to. Not long ago they were going on about the two dozen models they planned to launch to field a competitive line-up.

‘For me General Motors was a global player. Today General Motors is shrinking to an American company with no foresight, which is in very bad shape, which has missed the market.’
Remember Hanenberger said this in 2017, when it still had presences in many Asian countries. In 2020 it very much looks like GM will be in the Americas (where it still fields reasonably complete line-ups, although God knows if they have anything in the pipeline to replace the existing models) and China. Russia, India, Australia, New Zealand and Thailand are gone or going, and western Europe went in 2017 before the interview.

‘Maybe it fits into the vision of Trump; America first. But how the world is going to work also in the future is not because of America first and America only. It’s global. I think there will be no GM in the near-future.’
Everyone else is desperate to do tie-ups while GM retreats. I think GM will still be around but it’ll be a Chinese firm.

‘I couldn’t give a shit what they thought in America.’
I don’t mean this as an anti-American quote, but I see it as a dig against bean counters (whatever their nationality) fixated on the short term and not motorheads who know their sector well.

‘For me Holden didn’t have enough product, and the second one [priority] was I wanted to get these cars they had into export. For me it was very clear the products they had could be exported and they should go on to export.’
You saw the failure of this in the early 2010s when Holden failed to keep its Middle Eastern deals, and the US models returned. It could have been so different, though I realize GM was very cash-strapped when they needed the US taxpayer to bail them out.
   Bruce Newton, who wrote the piece, says that the Middle East was worth up to 40,000 units per annum, with A$10,000 profit per car. It cost Holden A$20 million to develop them for left-hand drive. I’d have held on to that sort of opportunity for dear life.

‘There was nothing going on that was creative towards the future of Holden as in Australia, New Zealand and toward the export market. They just neglected this whole thing.’
That was Hanenberger when he visited his old workplace in 2006. With product development cycles the way they are, it’s no wonder they were so ill placed when the Middle Eastern markets lost interest in the VE Commodore and WM Caprice (as the Chevrolet Lumina and Caprice), and China in the Buick Park Avenue.
   It’s an interesting interview and perhaps one of the best post mortems for Holden, even if it wasn’t intended to be so three years ago.

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Posted in business, cars, China, leadership, USA | 1 Comment »


The death of Holden

17.02.2020

GM pulled out of Russia and India, so with hindsight, those of us Down Under, with a far smaller total population, shouldn’t have thought we were particularly special.
   Even where GM remains, such as South Korea, there’s a broken model range, with a big gap where the Cruze used to be.
   It’s becoming apparent that GM, with no more right-hand-drive markets to cater for, will be a company that only offers full lines in China and the Americas.
   Some GM-watchers have been calling for the demise of Holden for years, just as they had called for the deaths of Oldsmobile and Pontiac years before. But as I argued in a letter published in the (also-defunct) Condé Nast Portfolio, each brand occupies unique territory, and, had they not been diluted, could still appeal to certain buyers that more mainstream ones, e.g. Chevrolet, cannot reach.
   Holden was always a tough case in Australia, where we noted it was very tied to nationalism. Once local manufacture finished, its sales plummeted.
   It wasn’t the case in New Zealand, where all cars had been imported for decades and we never had the sense that Holden was our ‘own car’. However, GM New Zealand (as it then was) had created a handful of Holdens unique to this market that the Australians never saw. Once upon a time, it was a more independent beast.
   When Holden ceased Australian manufacture, sales didn’t drop the same way in this country. With Kiwis loving entries in the CD market, the Commodore isn’t an uncommon sight, and remains the choice of the police.
   But the same argument of economies of scale applies to New Zealand, a country with a population of five million: GM had no desire to allow this country much wiggle room compared with Australia. Whatever happened there would necessarily happen here.
   Those 600 jobs that are going include redundancies in New Zealand.
   Over the years it had seemed Holden was on life support. There was a golden age where the HQ series and its derivatives flew the Holden flag high, but after the oil crises, there was a real possibility the company could have bit the dust in the mid-1980s, becoming an import-only operation.
   A plan circulated within GM to replace the top Holdens with Cadillacs, while the rest of the range would be made up of cars from around the GM empire—which, in those days, included Opel and Isuzu.
   But the Australians won the day and the VN Commodore got the green light. By the end of the 1990s, Holden was in great shape, including an export programme for cars based off the VT Commodore.
   You could say history repeated itself with the global financial crisis in the late 2000s—where GM, keen to continue, asked for US$50,000 million from the US taxpayer. But perhaps more importantly, it sold the controlling stake in its venture with SAIC of China to its Chinese partner for a mere US$85 million. That was one deal that allowed GM to raise funds elsewhere, but it also saw the beginning of a technological transfer to China. Even after GM bought back the share, SAIC would get control of the JV’s sales’ company.
   Numerous SAIC cars were built on GM platforms—the Roewe 950, for example. Cars made by GM ventures began appearing with SAIC-owned brands—the MG Hector in India, a rebadged Baojun 530, for one; it also appears as the second-generation Chevrolet Captiva in some other markets. Once upon a time GM might have earned a royalty for any car built on its tech, but it’s unlikely here as the two companies share in the profits.
   While SAIC hasn’t succeeded with MG Down Under, you notice more of a push these days, and it has already made an impact in New Zealand with the Maxus commercial line-up, rebadged LDV. Export sales aren’t a big deal for the Chinese giant, but with the Chinese economy slowing, they could be eyeing up more international markets.
   With SAIC keen to get more of the action for themselves, GM’s operations in many of its outposts became irrelevant.
   Holden held on for dear life and arguably had one of its more competitive ranges for years—but in this context, GM might not have had much choice.
   It has little to do with the consolidation of markets and all to do with much higher-level strategic decisions. After all, hardly anyone in China will have grown up with idea of Holden being Australia’s own car.

This post also appears in Drivetribe and Lucire Men.

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Posted in business, cars, China, New Zealand, USA | 2 Comments »


In the 1980s, I thought society would evolve to become more efficient and smarter

15.02.2020

Growing up in a relatively wealthy country in the 1980s, after getting through most of the 1970s, you’d be forgiven for thinking that the world would just keep getting better and things would make more sense as humans evolved.
   From a teenager’s perspective: home computers, with a modulator–demodulator (modem), could bring you information instantaneously and from around the world. As an immigrant kid, that excited me: contact with people “back home” and from other places, making communication quicker. You could hear from others, and you could help others who needed you. And if you didn’t have a computer that could connect to a bulletin board, there was Teletext, which gave you regularly updated information through your TV set.
   Cars were getting more aerodynamic, which meant they would use less fuel, and that was understood universally to be a good thing. MPVs were very practical vehicles that had small footprints yet fitted a lot of people, or stuff, inside. Here in New Zealand, natural gas-powered dual-fuel cars were mainstream, and that meant we weren’t reliant on overseas oil. They also didn’t pollute anywhere near what petrol did—they burned cleanly.
   And since saving energy was understood to be a good thing, who knew? Before long solar power would be the norm for new homes and we’d be putting electricity back into the grid.


Alex Snyder/Wayne National Forest/Creative Commons

   I also heard about recycling for the first time as a teen, and that seemed like a good thing—all that old paper and plastic could have a second life.
   People were interested in being more efficient because no one wanted a repeat of the oil shocks of the 1970s. Nor did we want the government imposing carless days on us again.
   That same teenager would have thought that by the dawn of the 21st century—if the US and Soviet Union behaved—we’d have evolved to have recognized that we had the tools to make things better.
   When the internet came to our house in the 1990s, I saw it as a direct evolution of the 1980s’ optimism. It made sense.
   So through that lens, a lot of what the world looks like today doesn’t make sense.
   We have connected computers, milliards which are handheld, yet some of us are addicted to them and others use them to express outrage, rather than delight in having any contact at all with people thousands of miles away.
   SUVs outsell regular cars in some size segments. They are less aerodynamic, use more fuel, and are less efficient. We have American companies—Ford in the US and Holden here—saying that they’ll stop selling cars in most segments in favour of utility trucks, crossovers and SUVs. Petrol is expensive, and I complain about it, but I guess no one else thinks it’s expensive. Dual-fuel cars are a thing of the past here, for the most part, yet lots of people marvel at hybrids, conveniently forgetting we were decades ahead in the 1980s.
   And solar power isn’t the norm.
   We still, happily, recycle—but not everything we collect winds up being recycled. We have an awareness, but if we kept on progressing as I expected us to when I was Greta Thunberg’s age, then we wouldn’t have Greta Thunberg reminding us that we haven’t.
   I wonder if others in middle age realize that humans have the potential to go forward, and in many respects we do—but collectively there are enough of us who go backward and prevent any real advance in society.
   I like to have the same optimism as teenage me about the future. In terms of myself, many things bring me happiness, particularly in my personal and work lives. Yet in terms of society, I wonder if I can be as optimistic. I know deep down that we are interested in efficiency and treating our planet better (or we say we are), so then who are the ones holding us back, and what are we doing that stops us moving forward? Is it personal greed, hoping others will pick up the slack? Many of us choose products and services from companies that align with our views about what we want—yet are we doing the same when it comes to politicians?

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Posted in leadership, New Zealand, politics, social responsibility, Sweden, technology, TV, Wellington | No Comments »


GM’s Holden to abandon C and D car segments, delivering them on a silver platter to competitors

23.01.2020


Stuart Cowley for Lucire

I haven’t spoken to Holden New Zealand to see if we’re following suit, but as far as Australia’s concerned, 2020 will be the final year for the Astra and Commodore, as Holden transitions to selling only trucks (utes) and SUVs.
   Here we are, with its most competitive C- and D-segment models for a long time, and Holden decides to abandon them.
   New Zealand did briefly chart its own course recently with the Holden Spark, which it secured supply for even after its cancellation in Australia, but it’s unlikely to depart from what’s happening in Australia.
   Beyond the obvious question of ‘What will the cops drive now?’ it’s a sad development for a brand that’s been part of the Australasian motoring landscape for decades, even before 1948 if you count the Holden coachbuilt bodies before the war.
   Holden points to the rise in truck and SUV sales and the decline in passenger car ones, and, unlike Ford, it can’t blame a lack of marketing for them—over here, it’s been fairly consistent in promoting each one of its lines.
   Over in Australia, Holden sales collapsed when domestic production ended, but in New Zealand, where we have no such allegiance to ‘Buy Australian’, I saw some reasonable sales’ figures for the Opel Insignia B-based Commodore. And it is a good car.
   The chief reason, I imagine, is that after GM sold Opel to PSA, which seeks now to merge with FCA, it didn’t really want to buy cars off a competitor. And PSA really didn’t want to be paying royalties off each car it sold back to GM. Basically, the supply chain ain’t what it used to be.
   By 2021, PSA will launch a new Astra based on a platform to be shared with the third-generation Peugeot 308, and Insignia B’s days are numbered, too, as it transitions that to a PSA platform (if PSA doesn’t just cancel it altogether). GM would earn nothing from this 2021 model, so there would be no point going forth with it.
   GM has also killed off the Cruze in Korea, the US and México, leaving Argentina the only country that still makes it, so it wasn’t as though it had anything else in the C-segment that it could bring in to Australasia. Many of its Chinese-market models are on the GEM platform, regarded as too basic for our needs, and there seemed to be little point to getting them complied with our standards or having them engineered for right-hand drive. Basically, there isn’t an alternative.
   This frankly strikes me as all a bit defeatist, not unlike Ford’s decision to kill off all passenger car lines (bar Mustang) in the US a few years ago.
   Toyota will have you know that the C- (Corolla) and D- (Camry) segments are doing quite well for them, and they are quite happy to pick up some conquest sales from the Americans.
   I’m not sure if ‘We’re not doing that well there. Oh well, let’s give up,’ is much of an attitude to adopt when certain segments could reignite as consumer tastes shift. And if one really wanted to compete—if there was a will—then one could.
   What I fear is that GM isn’t Mystic Meg and even though my previous post was in jest, there is a serious point to it: people might wake up to the big frontal areas and poor aerodynamics and high centres of gravity and general irrelevance and inefficiency of the SUV for everyday use. I mean, I still can’t reconcile people complaining that petrol prices are too high while sitting in a stationary SUV with the engine on awaiting someone, anyone, to leave a spot so they can park right outside the shop they wish to go to. While claiming they are concerned about the planet. I have a C-segment car because I do think petrol is expensive. And even if you had an electric-powered SUV, you’re still affected by the laws of physics and your charge won’t go as far if the aerodynamics are poor. I thought we got all these lessons in the 1970s and 1980s.
   Just as I warned that killing Plymouth was a mistake for DaimlerChrysler—because recessions can come and people want budget brands—I question whether becoming the vendor of ‘Australia’s own truck’ is a smart tactic. There are some segments that have a base level of demand, or so I thought.

Of course, this leaves PSA to do the inevitable: launch Opel as a brand in this part of the world.
   Opel CEO Michael Lohscheller said as much when PSA bought the firm, and while his eyes were probably on China, they could apply equally here.
   I realize Opel flopped in Australia when an attempt was made a few years ago, but unlike Australia, Opel has a reasonable history here, with its Kadett GSis and a full line of Vectra As sold in the 1980s and 1990s. Kiwis know that the Opel Vectra and Holden Vectra are part of the same lineage. And I have to wonder if the brand, with its German heritage, would do well here.
   Imagine the scenario where Opel launches here in 2022 with not just Astra and Insignia (because Kiwis love their D-segment wagons, unlike the UK), but with the Crossland X and Grandland X as well.
   They’d have the goodwill of the Astra name (just as GM predicted), and there may be enough Kiwis who have positive impressions of their Vectra As. Even our family one sold recently to a South Islander after my friend, who bought it off me, decided to part ways with it. Mechanics still think highly of the Family II units those cars had.
   And somehow, I think being independent of GM is a good thing in this case—no conflict of interest, no wondering whether Mokka might cannibalize Trax, resulting in stunted marketing.
   The new design language is looking sharp and I think it would find favour among New Zealanders who are currently buying Volkswagens and Škodas. They’d also be a darn sight more reliable, too.
   If you’re thinking the market is too crowded, remember VW didn’t think so when it determined SEAT could have another crack in the late 2010s.
   I can’t be alone in thinking this—certainly Australian media were speculating if Inchcape could bring Opel in to their country this time last year. Who’ll take it on?

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Replacing Po.st with Addtoany, outside of Wordpress

17.01.2020

Some of you will have noticed that Po.st went out of business, so all the Po.st sharing links disappeared from our websites.
   The replacement: addtoany.com offers a similar service without the hassle of header codes. Just customize at their website, grab the code, and insert it where you want it. It’s now on the main Lucire website, Autocade (at least on the desktop version), and this blog (desktop as well). Strangely, the plug-in for Wordpress didn’t work for us, and the HTML code with Javascript is far more practical.
   There are fewer customization options but it’s a remarkably quick and handy way to replace the old code.

Despite providing a sharing gadget, I wonder how much I’ll use one. It’s been seven days since I last Instagrammed and I don’t miss it. Granted, something major happened in my life but organic sharing had been dwindling through 2019, and if their algorithms aren’t providing you with the dopamine hit that you seek, and you’re unlikely to pay for it like a junkie (which is what Facebook wants you to do), then you have to wonder what the point is. It might, like Facebook, just become one of those things one uses for work—and that’s not something I could have predicted even a year ago.
   I see Twitter is introducing features where responses can be limited by the user. The logical outcome of this is Tweets that are directed at limited audience members only, maybe even one-to-one. That looks remarkably like email. And these days I seem to be more productive there than I am on any social network.

With a fresh browser to kick off the year, I surfed to the popular page listing at Autocade. Unsurprisingly, there is some grandfathering going on: the first pages added in 2008 have had more views than the latest pages. That much is logical.
   But if there’s a model line page in the top 10 that wasn’t first authored in 2008, that would be, at least to me, interesting. That honour goes to the 2010-authored page on the Opel Astra J, at over 21,000 views.
   Once upon a time, the Nissan Bluebird (910) page was top among the individual model lines, thanks to a link from Wikipedia. It’s since slipped to third, after the Ford Fiesta Mk VII and Nissan Sunny (B14). The Toyota Corolla (E100) page, once in second place, is now fourth, followed by the E120. The Ford Taunus TC, Taunus 80 and Cortina Mk III are sixth, seventh and ninth respectively—all 2008 pages. The Opel Astra J, coming in at eighth, is an anomaly among the top 10. (The Renault Mégane II finishes the top 10.)
   Something’s driving interest in this model, and I’m very happy it is.

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Posted in cars, design, internet, media, publishing | No Comments »


It took a while: Autocade hits 4,000 models

08.01.2020

The Chinese-market Buick Enclave became Autocade’s 4,000th model today. It wasn’t planned: in fact, I had readied a photograph of the Hyundai Tiburon (RD), expecting that would be the 4,000th. But, as happens with this site, you spot something, and you want that clarified. I haven’t been methodical about Autocade, ever—it has always been about what took my fancy and whether my reference books on the topic were around. (After the move, a few still aren’t, so fans of smog-era US cars may have some waiting before they see those increase in numbers again.)
   Just as I do with each millionth page view, I thought I’d see how the entry numbers had progressed:

December 2009: 1,000 models (21 months to first 1,000)
December 2012: 2,000 models (three years to second 1,000)
December 2014: 3,000 models (two years to third 1,000)
January 2020: 4,000 models (six years and one month to fourth 1,000)

   In other words, these last 1,000 took ages, and I suspect it’s a mixture of busy-ness on other ventures and the fact that a lot of modern cars that get entered aren’t that inspiring.
   When many entries of new models into Autocade are of SUVs, especially Chinese ones that have little to distinguish themselves, then it’s not as fun as adding those models that you’ve had some connection with from your youth. The first 1,000 were easy: I remembered many of the details (cubic capacities and prices, for instance—I am that much of an anorak when it came to stuff from my childhood) and while I still checked with books, they didn’t take that long to write. But how many of us care about the difference between the Honda Pilot and Passport, or the links between the Beijing X3, Changhe Q35, BAIC X35 and Senova Zhixing anyway?
   I imagine that there’s more editing that goes on today, too. When a current model gets entered, you just put the start of production and ‘to date’. But there’s no guarantee we’ll revisit that page when the car ends production; and often there’s no announcement of the cessation anyway. Naturally with more pages on the database, the more time you’ll spend editing and correcting existing content than creating brand-new stuff. China’s massive boom in the late 2000s and most of the 2010s meant a plethora of models got entered, and with the market the way it is there, cannibalization of your own model lines hasn’t struck some car makers as an issue yet.
   There’s also the issue of translation: you want to go to a Chinese resource when writing about Chinese cars, and my literacy hasn’t really kept up with my age.
   A middle-aged man uses, in part, nostalgia to make sense of the car world—I buy Octane and Classic and Sportscar more than Autocar and Car these days—and while it’s easy to understand Kas, Fiestas, Focuses and Mondeos, it’s not as second-nature to utter EcoSport, Puma, Escape and Mustang Mach-E. It is no surprise to see Mercedes-Benz stick with its A, B, C, E and S pecking order, even for its SUVs (prepend GL). The next generation of motorhead will have no such issue: they’re used to these big line-ups and where everything sits.
   I’ll keep building, and there is plenty of exotica that hasn’t been entered. Perhaps between those and the Chinese crossovers, it can remain interesting.

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Posted in cars, China, interests, internet, media, New Zealand, publishing, Wellington | No Comments »


Baojun doesn’t scream ‘premium’ and ‘next-gen tech’ to me

10.10.2019

I have to agree with Yang Jian, managing editor of Automotive News China, that Baojun’s new models ‘obviously’ failed to reverse the brand’s sales’ decline.
   It is obvious given that the vehicles are priced considerably above the previous ones, and despite its next-gen tech, there’s no real alignment with what Baojun stands for.
   There might be a new logo (débuted January 2019) but GM expects that this, the new premium products, and (I would expect) other retail updates would undo nearly nine years of brand equity.
   The associations of Baojun as an entry-level brand run deeply, and the new models are like, if you’ll pardon the analogy and the use of another car group, taking the next Audis and sticking a Škoda badge on them. Except even stylistically, the new Baojuns bear little resemblance to the old ones—they’re that radical a departure.
   I wonder if it would be wiser to keep Baojun exactly where it was, and let it decline, while launching the new models under a more upscale GM brand, even one perceived as ‘foreign’ or ‘joint venture’ by Chinese consumers.
   DaimlerChrysler made the mistake of killing Plymouth when it was surplus to requirements, then found itself without a budget brand when the late 2000s’ recession hit. Chrysler, once the upper-middle marque, had to fill the void.
   There’s a reason companies like GM and Volkswagen have brands spanning the market: they feed buyers into the corporation, and there’s something for everyone.
   And while it’s possible to move brands upscale, creating four lines where the base model prices exceed the highest price you have ever charged for your other base models is just too sudden a shift.

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Posted in branding, cars, China, technology, USA | No Comments »


Another milestone: 16 million page views for Autocade

02.06.2019

Looks like the viewing rate has picked up again for Autocade despite a relative lack of updates over the last six months (in no small part due to our move). Tomorrow it’ll exceed 16 million page views.
   Some of the last few entries have been about filling in gaps: the Renault Clio V is out, yet only entered into the database on May 29; the Singaporean Holden Calais (and corresponding Malaysian Opel Calais) the day after, with Autocade possibly the only website which corrects another well propagated error by Wikipedia on this car; the fifth-generation Toyota RAV4, which made its motor show appearance over a year ago; and the Nissan 180SX of 1989.
   Autocade doesn’t profess to be a complete encyclopædia, since it’s an ongoing, developing work, though it does surprise me where the gaps are sometimes. I often have the photos filed away, but wait till the mood hits. Or, in the present case, waiting till some of my reference books re-emerge as I’m still, three weeks later, living out of boxes.
   As with each million before, here’s a summary of how the traffic has developed:

March 2008: launch
April 2011: 1,000,000 (three years for first million)
March 2012: 2,000,000 (11 months for second million)
May 2013: 3,000,000 (14 months for third million)
January 2014: 4,000,000 (eight months for fourth million)
September 2014: 5,000,000 (eight months for fifth million)
May 2015: 6,000,000 (eight months for sixth million)
October 2015: 7,000,000 (five months for seventh million)
March 2016: 8,000,000 (five months for eighth million)
August 2016: 9,000,000 (five months for ninth million)
February 2017: 10,000,000 (six months for tenth million)
June 2017: 11,000,000 (four months for eleventh million)
January 2018: 12,000,000 (seven months for twelfth million)
May 2018: 13,000,000 (four months for thirteenth million)
September 2018: 14,000,000 (four months for fourteenth million)
February 2019: 15,000,000 (five months for fifteenth million)
June 2019: 16,000,000 (four months for sixteenth million)

   It’s interesting to note that Autocade has had five million more page views since June 2017; yet it took six years (three times as long) to get the site’s first five million. At the time of writing, the database has 3,813 models, an increase of just 32 since the site gained its 15 millionth page view.

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Posted in cars, internet, media, publishing | 1 Comment »


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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