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Hyundai Sales Goals: If You Don’t Succeed Several Times, Try Again
Jan31

Hyundai Sales Goals: If You Don’t Succeed Several Times, Try Again

By Chris Haak

01.31.2008

Hyundai’s South Korean executives have had some ambitious sales goals in the US for several years. However, it has become apparent that either the bump in sales attributable to Hyundai’s improved quality and solid value message that occurred over in the earlier part of the decade has likely plateaued. Until this year, the company’s management in Korean didn’t quite grasp the idea that their expectations for continued breakneck sales growth in the most competitive automobile market in the world might have been unrealistic. The result was inevitably missed sales targets and a revolving door in the executive offices of Hyundai’s US subsidiary.

Last year, Hyundai hoped to sell 550,000 vehicles in the US. When it became apparent that goal wasn’t going to happen partway through 2007, the target was revised downward to 512,000. After the numbers were tallied in early January, Hyundai even missed that goal by a mile. In fact, it even missed the half a million milestone, with sales coming in at 467,009.

In 2007, Hyundai dealers primarily blamed the product mix – a shortage of the smallest, most fuel efficient models, the Accent and Elantra. This is being addressed for 2008 by increasing the supply of both models to the US by 25%. Additional dealer incentive programs are planned which will enhance dealer profit margins and encourage greater sales volume and customer satisfaction.

The product cadence will also continue at Hyundai for 2008. The big launch is the large Genesis sedan, with its optional V8 and rear wheel drive. The car will be uncharted territory for Hyundai, but at least that means that it is probably unlikely to cannibalize many sales of its sister models. However, I’m guessing that the Genesis will be more or less a niche product, in spite of how great it looks on paper. Customers just won’t be looking to Hyundai for an alternative to a Dodge Charger, Chrysler 300, Infiniti M35/45, or others. Another higher volume launch for 2008 is the five door Elantra Touring, which is intended to compete with the Toyota Matrix, Pontiac Vibe, and other stylish five-door compact hatches. Lastly, a revised Sonata sedan, with allegedly a much improved interior, arrives in the spring as an early 2009 model. Hyundai has been crowing about how the base Sonata’s interior will be superior in design and materials to the high-end Chevy Malibu LTZ’s, saying nothing for the base Malibu.

The goal for 2008 is 500,000 units. Hyundai has avoided some of the quality missteps that accompanied Toyota’s rapid growth, so they may be able to pull it off, but some dealers are concerned that the efforts to move upmarket to the Genesis may cost the company some volume, as Genesis development was done at the expense of more “bread and butter” models. If they can’t meet the goal, look for another “help wanted” sign again outside the executive offices of Hyundai USA later in the year.

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Isuzu Will Finally Pull Out of North America Next Year
Jan30

Isuzu Will Finally Pull Out of North America Next Year

Isuzu plans to stop selling vehicles here in 2009

By Brendan Moore

01.30.2008

The other shoe has finally dropped.

Isuzu Motors Ltd. has released a statement saying it will discontinue distributing new passenger vehicles in North America, effective Jan. 31, 2009.

The action is the short-term consequence of General Motors Corp. ending production of the Ascender sport utility vehicle and the i-290 and i-370 pickup trucks, which Isuzu has been re-badging as Isuzu vehicles. GM has recorded no sales to Isuzu since July of 2007, while 2007 calendar year sales dropped 50% to a pitiful 7,098. Isuzu has sold only trucks in the U.S. since 1993, when it stopped selling its last North American car model, the Impulse.

But, the retreat from the North American market has been a long time coming, with sales ebbing away every year. Isuzu once sold as many as 100,000 vehicles a year in the market, but they slowly became a mere curiosity in the market, with nothing of their own to sell, and no real competitive advantage over any of the vehicles it competed against. It could have been revived at one point, and , but apparently it is not to be.

“It has always been our intention to remain in the U.S. market,” said Terry Maloney, president of Isuzu’s North American operations. “However, we were unable to secure any commercially viable replacements for these vehicles.”

Isuzu will continue to honor all product warranties and roadside assistance programs. It also will maintain its owner-relations call center.

And what will happen to the small number of Isuzu dealers that stuck it out with Isuzu until the bitter end? Those U.S. Isuzu vehicle dealers have been offered the opportunity to continue on as service dealerships. They may realize more profit from that, frankly, after it’s all said and done.

Mr. Maloney stated, “Our parts and service operation will remain fully functional. We expect the vast majority of our dealers will continue as service-only dealers.”

Let us shed a single tear for Isuzu. At so many points in its history there are “if only” moments where the company could have taken another path, but they didn’t, and now they will gone from these shores soon. The car business is tough.

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Tata Will Fully Control Jaguar and Land Rover
Jan30

Tata Will Fully Control Jaguar and Land Rover

Ford bids adieu to its British ties

By Blake Muntzinger

01.30.2008

Tata Motors Ltd. will purchase all Jaguar and Land Rover, according to a Reuters article on Wednesday. Previous reports stated Ford Motor Company would continue owning a portion of both makes. However, Ford now appears confident both brands will thrive under Tata’s ownership.

Both companies remain tight-lipped over details about the pending agreement, which should be finalized sometime this year. Analysts state the deal is worth up to $2.0 billion – a small price to pay for two classic British brands. Once this agreement clears, Tata will be well on the road to being a formidable player in the industry.

Tata has been making a splash in the international auto scene in the last six months. In October, it announced a joint venture with the Fiat Group to build passenger vehicles, transmissions, and engines in India. Tata’s Nano – its game-changing $2,500 “people’s car” – , and ink is still drying from the deal with Chrysler LLC to build electric vehicles.

From Tata’s first car to buying Jaguar and Land Rover in 10 years – not bad.

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Ford Transit Connect Now Will Come to the US
Jan30

Ford Transit Connect Now Will Come to the US

By Chris Haak

01.30.2008

According to today’s Wall Street Journal, “people familiar with the company’s plans” have confirmed that Ford will, in fact, bring the Transit Connect European commercial van to the US. The move is expected to be announced at next week’s Chicago Auto Show, with Ford expecting to sell about 20,000 units toward the end of 2009.

The Transit Connect, although it looks similar to Dodge’s Sprinter (another European commercial van), is a smaller vehicle. In Europe, it is powered by a range of 1.8 liter common-rail turbo diesels, and the vans are actually assembled in Turkey.

The Transit Connect (or whatever name it has once its US sales begin) will be an interesting addition to Ford’s lineup. Many people in the US have been pining for some of Ford’s excellent European and Australian products, so this experiment will prove interesting to observers like me. Even more interesting, however, is the fact that Ford either really had a difficult time deciding whether to offer the Transit Connect in the US, or knew they were going to and just denied it to throw off journalists. Mark Fields, Ford’s President of the Americas, told that it would be a long time before the US saw the Transit Connect, if ever:

I asked Mark Fields, Ford’s President of the Americas, about the Transit Connect in the States, and his answer was that it would not happen anytime soon. Pressed for a timeline, he would not commit to the Transit Connect coming here soon, or for that matter, ever. One has to assume that the dollar’s devaluation has made the prospect of importing foreign-built vehicles somewhat ridiculous for Ford. It cannot make economic sense at this point. To his credit, Fields seemed very familiar with the Transit Connect and then turned the tables on me, asking me what I thought the market was for the van here in the States, and how that would break out between commercial and consumer buyers. I responded as above. Fields was very gracious and polite, but I got the feeling Ford doesn’t think there would be any consumer demand for the Transit Connect; that the vehicle would sink of swim solely on its commercial appeal.

So, was Fields being incredibly coy, or was the on again/off again Transit Connect program off in December and on again just a month later? It’s impossible to tell right now. On one hand, Ford’s product planning was in something of a state of disarray when the company came to the realization that some of their ideas weren’t likely to be met with success in the marketplace. On the other hand, has anything really fundamentally changed since December? CAFE fuel economy standards had already been increased by then, so Ford should have known that it would need more fuel efficient commercial vehicles. Regardless, the arrival of the Transit Connect in the US will likely be the first of many moves by Ford to better leverage its global assets and achieve better economies of scale.

At any rate, it will be interesting to see how Ford presents the Transit Connect to the US in Chicago, and even more interesting to see how well Americans take to it. Apparently, Ford will market the van primarily to commercial customers, such as caterers. But will they also sell versions configured as passenger haulers to the retail consumer? Will they only offer diesel power, or will a gasoline engine be added to the mix as well?

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Seat Will Cut Jobs and Add Models Simultaneously
Jan30

Seat Will Cut Jobs and Add Models Simultaneously

Oh, and also grow like crazy at the same time

By Brendan Moore

01.30.2008

Erich Schmitt, CEO of Volkswagen’s Spanish brand, told the German newspaper Frankfurter Allgemeine Zeitung that Seat will both cuts jobs and add more car models in its drive to hit its ambitious 2018 targets.

Schmitt says Seat will cut 700 more jobs in addition to the 900 that have gone away already and also perform the alchemy of reducing production time for the popular Seat Ibiza to 18 hours from 27, when the next-generation model is launched.

Schmitt added, “We will be finished with the staff reductions in this year.”

But, wait there’s more.

“Our targets for 2018 are doubling vehicle sales to 800,000 … while … expanding our model range as well as a return on investment of more than 15 percent,” Seat Chief Executive Erich Schmitt said in the interview published on Tuesday.

Seat Leon Cupra

“Today, Seat offers only seven cars in three segments. In the next three to four years, we will have 15 vehicles in eight segments. By the year 2018, it will be 40,” Schmitt said.
Schmitt intends to retain the Toledo and add a new model called the Bolero, which comes from the Audi A4 platform and will be more substantial than the Leon.

Whew! That’s a lot of magic to be performed by Seat, but they seem confident, if nothing else. VW has huge growth goals and Seat seems to have gotten the same optimism injected into its plans.

Schmitt also added that he expected a decision from VW, the corporate parent, in the next 180 days, on whether to enter the South American market.

“Mexico and Brazil are … locations where (we) can build cars for Latin America without currency risk,” he said.

And finally, Schmitt shrugged off the suggestion that Porsche, the recently-ascendant majority shareholder of VW, was unhappy with Seat, and wanted to jettison the brand. There has been a lot of speculation that Porsche loved Skoda, , hated Seat, and saw no reason to keep Seat around in the new regime. Schmitt said none of that chatter was true, and in fact, that Wendelin Wiedeking, the CEO of Porsche was one of Seat’s biggest supporters.

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GM May Use Wuling of China to Compete in Low-Cost Segment
Jan29

GM May Use Wuling of China to Compete in Low-Cost Segment

By Brendan Moore

01.29.2008

General Motors has signaled that it may consider purchasing more of an ownership stake in SAIC-GM-Wuling Automobile Company if a decision is made to compete with companies like Tata in the ultra-low cost segment. The Tata Nano was introduced recently with a starting retail price of approximately $2500.

Bob Lutz, Vice Chairman of Product Development for GM, noted that in China, several producers sell cars “at 2,500 bucks all day long.” Regarding the possibility that cheap cars from Wuling might eventually find their way to the U.S. through its partner GM, he added that there are also plenty of $2,500 cars in the United States today. “They’re called used cars.”

Lutz stated that GM has already put aside budget funding to develop a line of cheap cars that would be sold in developing markets like China, India and Africa. If such a line were to be developed, Wuling would certainly be a possibility as the manufacturer, although Lutz stressed that no decision has been made yet in that regard.


Wuling currently produces only trucks and vans for both the Chinese domestic market and some export markets in other countries, which typically sell for around $3000.

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BMW Production and Sales in China Jump
Jan29

BMW Production and Sales in China Jump

By Brendan Moore

01.29.2008

The official Xinhua news service in China reported two days ago that BMW Brilliance, BMW’s in-country joint venture in China, manufactured a record 30,600 automobiles in 2007. That number represents a 36% increase from 2006 production figures.

Some notable components of that overall number were 22,500 units comprised of 3-Series and 5-Series sales. And a whopping 17,647 of that 22.500 were stretched-wheelbase 5-Series cars, a very popular car among corporate customers.

A clear indicator of China’s growing appetite for luxury cars, BMW’s all-in sales number in China in 2007 was a record 51,588 units, with the additional sales above the 30,600 in-country production coming from imports into China from BMW plants in Germany.

BMW Brilliance was established in 2003 as a joint manufacturing venture between BMW and Brilliance, China’s eighth-largest auto manufacturer.

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Struggling Alfa Romeo Proves Sex Appeal Doesn’t (Always) Sell
Jan28

Struggling Alfa Romeo Proves Sex Appeal Doesn’t (Always) Sell

By Andy Bannister

01.28.2008

If there was a prize for the most evocative-sounding car company on the planet, Italy’s Alfa Romeo would be in with a pretty good chance of snapping it up.

Just pronouncing the name is a pleasure for the tongue, and the company’s cars have their own designer label in the shape of the classy Alfa badge with its two symbols of the style-obsessed city of Milan: the serpent emblem of the Visconti family, and a red cross on a white background.

After a 14-year absence, the plan is for Americans to experience the magic of Alfa Romeo again next year as part of a plan to double overall Alfa Romeo’s global sales to around 300,000 annually within three years. Currently they are stalled with many European buyers loving the appearance and prestige of the cars but suspicious of persistent problems with quality and reliability.

Sexy styling is one definite for Alfa, exemplified by its new “halo model”, the gorgeous $200,000 8C. Only 500 examples of this sporting flagship are being made. The name consciously pays homage to Alfa Romeo’s heritage, recalling the legendary pre-war 8C designed by Vittorio Jano, one of the greatest automotive engineers of all time.

Alfa could certainly do with all the good publicity it can get just now. The Fiat-owned company is currently said to be losing an estimated 1 million euros ($1.47 million) each day. Most Alfas are no longer made in Milan, and the main Alfa assembly plant in southern Italy is closed until March, underlining how grim things are looking just now.

By rights Alfa Romeo should have died long ago. For years it limped on, propped up by the Italian government and lurching from disaster to disaster. Back in the 1970s Alfa Romeo launched the brilliant handling and technically advanced Alfasud small car, which should have been a world beater but was ineptly built at the-then brand-new plant near Naples by a cheap-to-hire but inexperienced and strike-prone workforce.

Alfa’s real low point came in 1984, though, when they launched possibly the most miserable product of a joint venture ever, the disastrous Alfa Romeo Arna and its equally unspeakable twin the Nissan Cherry Europe.

In theory it should have been a world beating small car – as good-looking and fun-to-drive as an Alfa but with the reliability of a Nissan. Unfortunately it all went horribly wrong and the unfortunate citizens of Europe were faced with the blandest-looking Nissan body imaginable powered by dodgy Alfa mechanicals and all loosely screwed together by the workforce in Naples. Both versions bombed hugely and Nissan quickly abandoned its Italian adventure forever

After that, things could only go up. With the government finally off-loading Alfa on to Fiat a new era began. Whilst Fiat’s resources have been useful to Alfa Romeo and have resulted in major investment in new models, Alfa also acquired Italy’s other prestige volume make, Lancia, as a corporate sister. This has not been to the advantage of either of the two former rivals, with both persistently performing below their potential.


Today’s staple Alfas are the 147 hatchback (which costs around $30,000 in 1.6-litre form in the UK) and the 159 in saloon and sportwagon models, aimed directly at the BMW 3-series and starting at around $37,000. The 147 is now ageing and will not be replaced for another year, whilst the 159 hasn’t been as big a success in Europe so far as Alfa had hoped.


Further up the range are two wonderful coupés, the Bertone-styled GT and the Giugiaro-styled Brera, both of which in their different ways look as Italian as can be and every inch worthy of the badge, although as they are close in size and price the marketing is somewhat confused. There’s also an attractive open-top Spider.

Looking to the future, Alfa is pinning hopes for significant sales growth on a new small hatchback, dubbed Junior, which is seen as a Mini competitor. Derived from the successful Fiat Grande Punto, it is likely to be a reasonable hit and could add 70,000 sales.

Americans may be more interested in plans for an SUV by 2010 – not the usual sector of the market for Alfa or any Italian marque – and a replacement for the company’s moribund large saloon, the 166. Plans for the US market suggest an initially modest sales target of 20,000 units for Alfa as a whole, rising quickly to 50,000.


If that’s ever going to happen Alfa’s management need to get to grips once and for all with the Naples factory – there’s talk of retraining all 5,000 staff – as well as upping standards for the quality and service offered by dealerships. So many times before with new car launches Alfa Romeo has nearly been there but failed to deliver.

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