Chery axes Rely's business division

Chery has announced that it will be axing the business division of its Rely brand, the Beijing Times reported yesterday. The division was created last September as part of the manufacturer's management restructuring program. Chery will now take direct responsibility for marketing and sales for the Rely and Riich brands.

Ma Deji, Chery's deputy general manager and head of sales, said that Chery's decision to axe the department was done in order to better allocate resources, and was not indicative of a change in the manufacturer's brand restructuring policy.

The Rely brand's business division was under the control of Chery's Qilin Sales Company before gaining independence. According to the manufacturer, the Rely brand's sales are still too small to warrant having an independent division, which led to yesterday's decision.

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Domestic auto demand remains strong despite sales decline

China Economic Net -In February 2011, China's vehicle production and sales volume was 1.2603 million and 1.2670 million respectively, down by 29.89 percent and 33.09 percent than that in January. Among the auto enterprises, the top ten best-selling ones are listed in order as follow: SAIC Motor, Dongfeng, Changan, FAW, BAW, Guangzhou Automobile, JAC, Brilliance Auto, Chery and Geely. Said ten enterprises had completed an aggregate sales volume of 1.0945 million, accounting for 86 percent of the total vehicle sales.

Affected by the long Spring Festival Holiday, vehicle consumption in February has always been at a low level. Although the sales volume of vehicle companies widely had a sharp month-on-month decrease, the production and sales volume still increased by 4.48 percent and 4.57 percent respectively compared with the same period of last year. In general, there is not a trend of obvious demand decline in the market.

The production and sales volume of passenger vehicle in February was 969.3 thousand and 967.2 thousand respectively, decreasing by 30.67 percent and 36.74 percent than that in January while increasing by 5.42 percent and 2.57 percent year-on-year. The month-on-month production and sales volume of all passenger vehicle types both witnessed a decrease, and the declining rate was both around 30 percent, in which the sales volume of sedan declined by 40.80 percent, being the biggest decline among all passenger vehicle types. As far as year-on-year figure is concerned, except for the cross passenger cars, other vehicle types all achieved a growth to a different extent. Multi-purpose vehicle (MPV) and sport utility vehicle (SUV) grew rapidly and performed quite well.

The order of top ten best-selling passenger vehicle companies in February is: SAIC-GM-Wuling, Shanghai-Volkswagen, Shanghai GM, Chongqing Changan, Beijing Hyundai, Dongfeng-Nissan, Faw-Volkswagen, Chery, Dongfeng and FAW Toyota. The above-mentioned ten companies sold a total of 548.2 thousand passenger vehicles, accounting for 57 percent of total passenger vehicle sales.

The production and sales volume of commercial vehicle was 291 thousand and 299.8 thousand respectively, down 27.14 percent and 17.81 percent month-on-month and up 1.46 percent and 11.59 percent year-on-year. The production and sales volume of all commercial vehicle types had different degrees of decrease than that in January, in which bus and incomplete bus declined most severely, both the production and sales volume went down by over 40 percent. Looking at the year-on-year figure, some vehicle types increased while some decreased, in which truck and incomplete bus grew markedly, while the production and sales volume of semi trailer towing vehicle and incomplete truck was lower than that in the same period of last year. The order of top ten best-selling commercial manufacturers is: Foton, Dongfeng, JAC, FAW, Jinbei, Sinotruk, JMC, Chongqing Changan, Nanjun and Shanxi Automobile. The sales volume of these ten companies was 211.8 thousand, taking up 71 percent of total commercial vehicle sales.

The market share of passenger vehicle with an engine displacement of 1.6L and below witnessed a setback too. In February, the sales volume of passenger vehicle with an engine displacement of 1.6L and below was 681.1 thousand, decreasing by 36.88 percent than that in January while increasing by 0.80 percent year-on-year. Passenger vehicles with an engine displacement of 1.6L and below account for 70.41 percent of total passenger vehicles, down by 0.16 percent month-on-month and 1.25 percent year on year.

In February, the total sales volume of Chinese passenger vehicle with independent brands was 456.9 thousand, accounting for 47.24 percent of total passenger vehicle sales; the percentage increased by 1.23 percent month-on-month but went down by 3.39 percent year-on-year. Independent brand car sales volume was 196.6 thousand, accounting for 31.02 percent of total car sales; the percentage went down by 1.67 percent than that in January and 1.43 percent year on year.

Vehicle export declined month on month while maintaining rapid growth year on year. According to statistics from China Association of Automobile Manufactures, the vehicle export volume in February was 43.4 thousand, down 16.51 percent than that in previous month and up 63.56 percent year on year. In which the passenger vehicle export volume was 25.6 thousand, decreasing by 6.16 percent month on month; commercial vehicle export volume was 17.8 thousand, down 27.90 percent month on month. The export volume of the above-mentioned two vehicle types increased by 96.48 percent and 31.91 percent respectively compared with the same period of the previous year.

According to the accumulated figure of the first two months, China's vehicle production and sales volume has reached 3.0681 million and 3.1554 million respectively, increasing by 8.75 percent and 9.71 percent, and the increasing rate has dropped to be lower than 10 percent. After two years' rapid development, the vehicle production and sales volume has reached a considerable scale, the base figure has been relatively big. There are signs that indicate the"blowout" market as has been two years ago will be unlikely to happen again, however, it is still worthwhile to expect a steady growth.

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Porsche launches 5b euro capital increase

AFP(Frankfurt) -German luxury car maker Porsche said that it would issue a total of 131 million ordinary and preferred shares for 38 euros ($53.2) per share.

The total of almost five billion euros corresponds to the amount of the capital increase Porsche had already announced for this year.

Current Porsche shareholders will be be able to buy 0.75 new shares of the same class for each share they hold at present, a statement said.

Porsche is working to cut debt of 6.34 billion euros so it can be integrated into the Volkswagen group.

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China Dongfeng Automobile net profit up 79% last year

Xinhua (Beijing) -China's Dongfeng Automobile, the listed arm of Dongfeng Motor Company, said Saturday its net profit in 2010 surged 79.54 percent year on year on robust auto sales.

The Shanghai-listed company, based in Wuhan City in central China's Hubei Province, saw net profit reach 570.82 million yuan last year, compared to 317.94 million yuan in 2009, according to the company's annual business report filed with the Shanghai Stock Exchange.

Business revenues hit 19.8 billion yuan, a rise of 38.35 percent year on year.

Earnings per share stood at 0.2854 yuan, up 79.54 percent.

Vehicle sales of the company topped 300,000 units in 2010, up 44.8 percent, along with the fast auto sales growth in China, the world's largest car market with vehicle sales up more than 32 percent to top 18 million units last year.

Dongfeng Motor Corp., one of Dongfeng Automobile's major controlling shareholders, sold 2.7248 million vehicles in 2010, ranking second in sales volume in the Chinese auto market.
 

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Ford expected to retake top spot in US auto sales in March

Los Angeles Times -Ford Motor Co. is poised to be the top U.S. auto seller in March, surpassing General Motors Co. for only the second time since 1998, according to projections by auto information company Edmunds.com.

Ford, which has steadily gained market share in recent years, knocking Toyota Motor Corp. from the second spot, last led the nation in sales back in February 2010.

Last year Ford surged to the top briefly as consumers deserted Toyota because of its millions of recalls and brief sales suspension and GM was still struggling as it emerged from its 2009 bankruptcy reorganization.

This month, Ford is benefiting from GM ratcheting back the large sales incentives and discounts it had used to juice sales in the first two months of the year and grab market share.

"This has more to do with GM falling than Ford gaining," said Jessica Caldwell, an analyst at Edmunds.com.

Consumers are expected to buy about 1 million vehicles this month, about 12% more than the same month a year earlier, according to J.D. Power and Associates.

“Retail sales in March are exhibiting strength… despite increasing gas prices and falling inventory levels,” said Jeff Schuster, a J.D. Power analyst.

March retail car sales may be benefitting from the uncertainty about inventory levels caused by production shutdowns after the March 11 earthquake and tsunami in Japan“as consumers flock to dealerships to secure their choice of vehicle as availability decreases,” he said.

J.D. Power also is seeing a shift in what types of vehicles people are purchasing as gas prices rise. Subcompact and compact cars now account for 24.2% of retail vehicle purchases, up from 20.2% in February. The retail figures don’t include so-called fleet sales to rental car companies, commercial businesses and governments.
 

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Nissan considers Infiniti brand in New Zealand

nzherald.co.nz -Infiniti will open shop in Australia next year with models like the FX sports utility vehicle.

Nissan is looking at introducing its premium Infiniti brand to New Zealand next year, most likely beginning with a stand-alone dealership in Auckland offering three core products: the mid-size FX sports utility vehicle, large M-series sedan and the smaller G37 Convertible and Coupe.

"It's only a feasibility study at this stage to assess the potential of Infiniti here," said Nissan NZ managing director John Manley.

"But it is an exciting brand and is growing massively in the United States. It has really attractive vehicles and we believe people here would be interested in what it has to offer."

Infiniti is to open up shop in Australia next year with three high-end showrooms in Melbourne, Sydney and Brisbane, thereafter expanding into smaller outlets in Adelaide, Perth and Queensland's Gold Coast.

Manley said he would see how preparation for Infinity went in Australia before deciding on its future here.

"We will work closely with Australia on Infiniti, as we do with most of the Nissan product," he said.

"But we will not open before Australia."

"If we decide to go ahead with Infiniti in New Zealand we will offer the same model line-up as Australia."

Manley said he had not looked at a possible site for an Infinity outlet."We are not at that stage at all. But Infiniti is a luxury brand all its own and it would be Auckland-based."

Infiniti will open for business in Australia from September 2012 with the FX, M-series sedan, and G37 range.

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Serbia begins using Chery police cars

Gasgoo.com (Shanghai March 24) -Chery Automobile's first shipment of 17 specially designed police vehicles was officially accepted by Serbian Police in Belgrade, auto.sohu.com reported today. The shipment of 15 A3 sedans and two Tiggo SUVs marks the first time Chinese vehicles have been officially used by a European government. It also marks further representation for Chery in the European marketplace.

The Belgrade bid for police vehicles saw Chery facing heavy competition from both European brands such as Skoda, Peugeot, Fiat and VW, as well as other Asian brands including Toyota and Hyundai. Chery, which has only been in the Serbian market for one year, has been able to rely on superior quality and comprehensive service to secure the bid.

Chery, China's largest automobile exporter, has had previous success stories in Egypt and Iraq, with both countries utilizing the manufacturer's vehicles for government use. With already twelve factories and over a thousand dealers overseas opened, Chery's brand awareness has been constantly increasing

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Parts for Toyota, Honda's south China JVs enough till mid-April

Reuters (Beijing) -Toyota Motor and Honda Motor car ventures in southern China have enough parts inventory to sustain normal production until the middle of next month, a senior Chinese executive said on Wednesday.

"The earthquake is having a big impact on Japanese automakers at home. But the impact on Guangzhou Toyota and Guangqi Honda are relatively limited as both ventures get most of the parts supply from China," Zeng Qinghong, president of Guangzhou Automobile Group Co (GAC) , told analysts in Hong Kong.

"Flagship models such as Accord and Camry made at the ventures get 90-95 percent of their parts from China and we have enough inventory for imported parts till the middle of April," Zeng said.

GAC and its Japanese partners may evaluate the option to get some help from Japanese suppliers in other markets, he added.

Jack Yeung, an auto analyst at BNP Paribas, said Guangzhou Auto would probably be affected by the earthquake because some of its components are sourced from Japan.

Toyota makes cars in China in partnership with GAC and FAW Group. Honda also has a manufacturing tie with Dongfeng Motor Group .

Unlike other foreign auto makers, the top Japanese manufacturers export their luxury cars to China rather than producing them locally. With Toyota, Honda and Nissan having shut all of their plants in Japan after the earthquake and tsunami, exports to China will suffer, at least temporarily.

A Toyota spokesman in China told Reuters its inventory for Lexus is enough to sustain sales for two months but declined to elaborate. Executives at Nissan Motor and Honda could not be reached.

GAC plans to seek a listing on the Shanghai stock exchange through a 5.23 billion yuan ($766 million) merger with GAC Changfeng Motor Co Ltd .

GAC will subsequently set up a 50-50 venture with Mitsubishi Motors Corp , a move seen to shore up GAC's sport utility vehicle business, company executives said.

Mitsubishi currently has a small venture with Changfeng, with an annual capacity of 50,000 units. The capacity will be raised to 300,000 units eventually, company executives have said, without giving a time table.

Earlier, GAC set up a 5 billion yuan ($763 million)manufacturing venture with Fiat , making mid-sized cars.

The venture will start operations in July 2012, with a capacity of 140,000 units initially, rising to 250,000 units eventually, Zeng added.
 

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State Grid Corp of China says to jointly tap EV market with CNOOC

Reuters (Beijing) -State Grid Corp of China (SGCC) and the parent of China National Offshore Oil Corp (CNOOC) are seeking cooperative opportunities to tap China's fledgling electric car market, SGCC said on Tuesday.

The central government aims to lift electric vehicle output to 1 million units by 2020 as part of a broader move to cut emissions in the world's most populous country. But a lack of charging facilities and national specifications for electric vehicles have hampered the growth of the country's green car industry.

SGCC, the dominant Chinese power distributor, has been building charging facilities and battery swap stops nationwide, while CNOOC has invested heavily in battery technologies, hoping to gain entry to the green car business.

The top managers of the two companies had pledged to team up on electric vehicle technologies, SGCC said in a statement on its website, without elaborating.

Many auto makers, including Nissan Motor Co Ltd and Warren Buffett backed BYD Co Ltd , are also working closely with local governments to promote emission-free cars.
 

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Foreign groups told to make Chinese cars

Financial Times -Foreign carmakers wishing to build new plants or add capacity in China’s burgeoning car market are being told by the government that if they wish to expand, they must develop a low-cost local car brand.

While Beijing has spoken of promoting local car brands, no central government ruling or written policy is known to exist on the subject.

However, automakers confirm that the issue is cropping up in their negotiations to expand existing plants or build new ones.

French producer PSA Peugeot Citroën, which is pushing its cars upmarket globally and, until recently, rejected the notion of producing low-cost cars, confirms that it is now studying the possibilities.

Philippe Varin, the group’s chief executive, recently told the Financial Times that developing a local brand was“part of the deal” in its new joint venture with Chongqing-based producer Chang’an, which is installing capacity to produce up to 200,000 cars a year from 2012 in Shenzhen.

He said that Peugeot was considering offering some of the low-cost cars for export to other markets, but added that the French group had yet to make a final decision.

Volkswagen, which is seeking to build a new 300,000-vehicle plant in Foshan, southern China, confirms that it is in talks with its Chinese partners FAW and SAIC to develop local brands.

Industry analysts say that the local brand issue has been specifically linked in the expansion talks, but VW– said to be reluctant to roll out a new brand– declined to confirm this.

“I believe there are changes to the policy coming,” said the head of China operations of one foreign carmaker, who asked not to be named.

“All the multinational companies are working with their joint venture partners on what the ramifications are.”

Some reports suggest that as much as 30 per cent of additional capacity would have to be devoted to the indigenous brand.

In most countries, governments bend over backwards for automakers, dangling tax breaks or other sweeteners to carmakers to induce them to build plants.

But amid blistering competition by producers to cash in on China’s booming car market– due to grow 10 to 15 per cent in the current“slow” year– the deck is stacked in the government’s favour.

Mike Dunne, president of Dunne& Co, an industry consultancy, said:“Nothing is written down, but when automakers go to apply for capacity expansion, in their application it’s clear that they should have a plan for an indigenous brand with jointly owned product rights and some provision for new energy vehicles.

“Foreigners want more capacity; China is saying:‘We want more own brands’.”

From China’s perspective, co-operation with foreign carmakers has yielded little in terms of development of local brands or transfer of intellectual property.

Lang Xuehong, automotive analyst with Sinotrust , said:“During 10 years of trying, China has become a big factory for foreign companies, and their Chinese partners didn’t get advanced technology.

“Through this industrial policy they would like Chinese carmakers to get IP in order to own this market”.

Some foreign carmakers believe a drive into local brands makes questionable business sense at a time when most are trying to reduce complexity.

“None of the manufacturers freely opted for having local brands added to a complex brand portfolio that they all already had,” said Engelbert Wimmer of PA Consulting, which advises the industry.

“It’s clearly something driven out of the political class in China with long-term interests in mind.”

But General Motors, which recently launched its Baojun local brand, insists it is the right move commercially for the company.

“We made this decision a number of years ago that it made sense to play in this area of the market,” said Kevin Wale, head of GM in China.

He predicts that GM can sell 4m-6m Baojun-branded cars in the next five years.“By itself, it is a bigger market than Germany,” he said.

VW, meanwhile, said that it sees a local brand as“an opportunity to get into new market segments, especially those we have not been able to get into so far”.

However, the carmaker said that the discussion is at an“early stage”.
 

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Great Wall Motor’s net income more than doubles as China car sales surge

Bloomberg News -Great Wall Motor Co., China’s largest maker of pickup trucks, said profit last year more than doubled as government incentives stoked demand for vehicles.

Net income rose to 2.7 billion yuan ($411 million), or 0.99 yuan a share, from 1.02 billion, or 0.37 yuan, in 2009 according to a Hong Kong stock exchange filing yesterday evening. Sales gained 79 percent to 22.2 billion yuan. The company proposed a final dividend of 0.2 yuan a share.

Sales at Great Wall, maker of the Hover H sport-utility vehicle, were boosted last year by government subsidies and tax cuts in the world’s largest auto market. The incentives helped China’s vehicle sales climb 32 percent to a record 18.06 million, according to the China Association of Automobile Manufacturers.

“Sport-utility vehicles have been selling very well, outperforming the market, and Great Wall has been able to enjoy good growth in other key products, such as pickup trucks and sedans,” Alice Leung, Hong Kong-based deputy head of research at ICBC International Research Ltd., said before the statement.

The Baoding, Hebei province-based company said unit sales last year increased 73 percent to 363,482 vehicles.

Great Wall said this month it plans to spend 3 billion yuan over the next five years to develop more than 30 new models, adding to its existing lineup of Voleex C30 cars and Wingle pickups. The company, China’s third-largest vehicle exporter, sold 55,000 units overseas last year, according to its website.

Buy Local 

General Manager Wang Fengying, a member of the advisory body to China’s National People’s Congress, said March 6 that government agencies should take the lead in buying more locally developed automobiles to boost consumer confidence in domestic brands. She also called on the government to give financial support to auto exporters to offset a rising yuan that is making them less competitive.

Great Wall, which exports to regions including the Middle East, Africa and South America, had said it planned to sell 60,000 vehicles overseas last year. It will start a 4.2 billion yuan passenger-car plant in the northern Chinese city of Tianjin that will raise production capacity by 300,000 vehicles by 2015.

Great Wall fell 3.2 percent to HK$12.22 in Hong Kong trading yesterday, before the announcement. The stock has risen 27 percent this year, compared with a 1.6 percent drop in the benchmark Hang Seng index.
 

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Chinese production of Subarus to wait

Gasgoo.com (Shanghai March 16) -Chinese production of Subaru vehicles will be put on a hold as the company tries to recover from last week's devastating earthquake, Subaru's parent company Fuji Heavy Industries (FHI) announced today. According to a report on auto.sina.com.cn, FHI will be delaying its so-called 'new marketing strategy' originally set to be implemented next week for an undetermined amount of time.

Reports circulating among local Japanese media said that FHI's primary goal in wake of the earthquake, which caused many automakers to completely halt operation, is to revive production. The earthquake saw FHI closing five factories, with no set time table for their reopening. According to the reports FHI's plans to begin Chinese Subaru production will also be delayed.

Rumors had been floating around of Subaru's partnership with Chery Automobiles, with the Chinese manufacturer confirming the news. FHI and Chery were to jointly invest 30 billion yen ($368.9m) to construct a new facility in Dalian, Liaoning. The new plant would yield production capability of 50,000 vehicles after the first phase of construction was completed and 150,000 vehicles after final construction, allowing China to become second largest foreign producer of Subaru automobiles after the US.

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GM planning for possible supply disruptions out of Japan

Detroit Free Press -Mark Reuss, General Motors’ North American president, today gave a glimpse into how the Japanese earthquake and nuclear crisis is changing the planning inside Detroit automakers.

Some of the most high-tech automotive components come from Japan, Reuss told students at the University of Detroit Mercy, including some in the Chevrolet Volt’s electric drive unit. So while automakers such as GM are still waiting to hear the full extent of the damage in Japan, they’re already creating contingency plans. Of particular concern is the possibility that Japan would put a hold on its shipping ports due to high levels of radiation from affected nuclear reactors, Reuss said.

“I think the whole world changed,” he said, calling the Japanese earthquake“the event of a lifetime.”

“The industry doesn’t know what’s going to happen next when you have a massive supply disruption like that out of Japan,” he said.

Reuss brought up his concerns about Japan after a question about GM’s previously announced plans to hire 1,000 electric vehicle engineers and researchers in Michigan over the next two years. He said GM’s hiring plan was in place today, but he declined to comment on whether GM might change that plan in the future.

“I don’t have an assessment on that,” he said.“It’s about the future… That’s what we’ve got to go take a look at.”

The constant change and confusion in Japan makes contingency planning more difficult, Reuss said.

“It’s hard to pinpoint what’s coming out of there from a media and news standpoint,” he said.“When you have an event like this and you have this many days afterward where it’s still very hard to get that assessment on it, you can look at this in a completely different way.”

Compared with the crisis in Japan, the turmoil in oil-rich Libya is“almost episodic,” Reuss said.

Still, the restuctured auto industry is better prepared to handle a disruption in Japan than it was a few years ago because of improved liquidity and agility, Reuss said.
 

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SGWM's new Baojun 630 to make its debut at Auto Shanghai 2011

Gasgoo.com (Shanghai March 17) -SAIC-GM-Wuling (SGWM) is to debut the Baojun 630, its first midsize, at this year's Shanghai Automobile Exhibition (Auto Shanghai 2011), Gasgoo.com (Chinese) reported today.

Company President Shen Yang said that he hopes to take advantage of the exhibition's international platform in order to help expand the SGWM brand's awareness. However, when asked specific questions about the 630 (pictured), Mr. Shen only answered that the vehicle's price would meet the standards of an international family car.

In addition to SGWM, Guangqi Honda's S1 and several other joint venture vehicles will be making their debut at Auto Shanghai 2011. FAW Group, another Chinese manufacturer, announced that it will be introducing its new own brand at the show.

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Japanese auto output curbed in North America

Associated Press (Detroit) -Two Japanese automakers are scaling back production at North American plants as they assess their ability to get parts from Japan after that country's devastating earthquake and tsunami.

Subaru of America said Tuesday it has suspended overtime at its only North American plant in Lafayette, Ind. Toyota Motor Corp. also said it was suspending overtime and Saturday production at its 10 plants in the region.

So far, other Japanese automakers say their North American plants are unaffected. Nissan Motor Co., Honda Motor Co., Mitsubishi Motors and Mazda Motor Corp. all say they have not changed their production plans.

But that could change if lingering damage from Friday's earthquake prevents parts shipments. Mitsubishi, for example, has enough parts on hand or en route to operate its Illinois assembly plant through April 3, spokesman Dan Irwin said.

“The situation is fluid, so we continue to monitor our supply chain and logistics,” he said.

Toyota, Honda and Nissan halted production in Japan for most of the week.

The companies are suspending production to assess damage to plants, ports and roads after the natural disaster, centered in northern Japan. It killed thousands, destroyed towns and wrecked the infrastructure of the world's second-largest auto producer.

Auto companies had said earlier that U.S. supplies of some fuel-efficient cars such as the Toyota Prius hybrid, Toyota Yaris and Honda Fit, may be affected because they are built exclusively in Japan and could become more desirable if U.S. gasoline prices reach $4 a gallon.

Top U.S. sellers such as the Toyota Camry, Honda Accord and Nissan Altima are made in North America. Barclays Capital analyst Brian Johnson said he expects the companies“to maintain adequate inventory for most vehicles.”

Japan made nearly 7.9 million vehicles in 2009, or about 13 percent of the 61.7 million vehicles produced worldwide that year, according to the International Organization of Motor Vehicle Manufacturers. The U.S. is its largest market, taking in 1.2 million Japanese vehicle imports, according to the Japan Automobile Manufacturers Association.

In Japan, Toyota, the world's biggest automaker, said it was shutting down production at its 12 wholly owned factories through today and suspending factories that it partly owns. The closures are expected to affect production of 40,000 vehicles.

About 1,300 Nissan vehicles bound for the U.S. were damaged at Japan's Port of Hitachi, along with 1,000 vehicles being stored in Miyagi, the company said.

A shipment of more than 600 U.S.-bound Nissan Leaf electric cars left Japan on March 10, just before the earthquake, and the company said the cars will arrive on schedule.
 

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US says gas prices could top $4 a gallon this summer

Associated Press (New York) -Pump prices will average $3.70 per gallon this spring and summer with a barrel of oil averaging $102 this year, the U.S. Department of Energy said Tuesday.

Conflict in the Middle East and fighting in Libya prompted government analysts to raise expectations for gasoline prices by 50 cents a gallon for the peak driving season in the Energy Information Administration's monthly Short-Term Energy Outlook. The EIA boosted its per-barrel oil estimate by $9 for the year.

EIA sees pump prices peaking at $3.75 a gallon in June. But its report said there is"significant uncertainty surrounding the forecast" and pump prices could spike above $4 this summer, which would threaten the all-time high of $4.11 a gallon reached in July 2008.

On Tuesday the national average for a gallon of regular hit $3.52, according to AAA.
 

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Japanese auto stocks extend losses

MarketWatch (San Francisco) -Japanese automobile makers initially avoided a big share-price drop after last week’s devastating earthquake in their homeland, but, as the stark reality sinks in, sellers have taken over.

U.S.-listed shares of Toyota Motor Corp. (TM 81.37, -4.28, -3.00%) and Honda Motor Co. (HMC 38.22, -1.52, -3.83%) fell 5% each early Monday, while Nissan Motors (NSANY 17.64, -1.36, -7.16%) took an even bigger hit, off almost 8%.

The auto industry’s production in Japan has ground to a halt and will likely stay that way for much of the week. The standstill will cost Toyota 6 billion yen ($73 million) a day, according to a Goldman Sachs estimate. Honda and Nissan could lose¥2 billion each day.

Goldman Sachs analyst Kota Yuzawa said he believes the negative impact on automobile manufacturers will likely be short-lived.

"Production at domestic plants is also not particularly high at present, so, from a medium-term standpoint, we do not expect the stoppage to create major opportunity losses," Yuzawa said in a note to clients.

For now, and through at least March 16, Toyota will idle all 12 of its facilities in Japan, it said, resulting in lost production of about 13,000 vehicles each day. In total, almost 45% of Toyota’s global production has been halted.

"Not only is the struck region one of our production bases, {but} those directly hit and vastly affected include our dealers, suppliers and numerous other partners," Toyota President Akio Toyoda said in a statement.

Nissan said four of its plants will remain closed through March 16, while two others will be suspended all week or longer. Honda has halted all output through March 20. The closures will cost each company about 4,000 vehicles a day in production, according to Goldman Sachs forecasts.

Shares of the Japanese trio also took hard hits in their home market, where the blue-chip Nikkei Stock Average closed Monday down 6.2% at 9,620.49, its worst one-day performance since late 2008.
 

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Warning that Warren Buffett's bet on Chinese copycat BYD could 'backfire'

CNBC -A lengthy"special report" by Reuters today warns that Berkshire Hathaway's high-profile investment in BYD, a Chinese electric car maker, could"backfire" on Warren Buffett and his company.

BYD is criticized for"stealing designs from rivals, using those savings to undercut competitors on price and scrimping on safety."

Among other sources, the article quotes from a diplomatic cable"revealed by WikiLeaks and provided to Reuters by a third party." In October of 2009, Guangzhou Consul-General wrote:

"While BYD has certainly achieved a measure of success based on a business approach of copying and then modifying car designs just enough to convince Chinese courts that the company has not infringed on patents, it is far less certain that foreign courts will be as sympathetic."

Reuters notes that while analysts say BYD may be"broadly typical" of Chinese automakers,"even in that context, BYD stands out, and there are questions about whether the company's much-ballyhooed— and oft-delayed— e6 all-electric car will ever make it to the U.S. market."

A BYD America executive tells Reuters that no one can match BYD's"genius" battery technology.

Berkshire's 2008 investment in BYD is now worth around $1 billion, five times what it spent for the stake. That's down, however, from just under $2 billion at the end of 2009.

Reuters suggests that if the deal goes"ultimately sour" it will be a"black mark" for David Sokol, the Berkshire exec who"spearheaded it."

Sokol is widely seen as the lead candidate to eventually take over from Buffett as Berkshire's CEO.
 

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Automobile industry growth to decrease this year, CPCA says

Gasgoo.com (Shanghai March 9) -February is bound to be a rough month for the Chinese automobile market, statistics released by the China Passenger Car Association (CPCA) revealed. According to a story by theBeijing Morning Posttoday, growth in the market is expected to be lower then 10 percent, a drop of more than 35 percent from last month.

CPCA Deputy Secretary-General Cui Dongshu said that the rapid unveiling of purchase restriction policies in Beijing last December were the biggest factor in putting a halt to Chinese car sales. Many other cities were now considering implementing similar measures.

Mr. Cui pointed out that due to Beijing'sprominent position in the Chinese automobile market, with 7 percent of all domestically produced and approximately 11 percent of all imported vehicles being sold there, the sudden introduction of new purchase restriction legislation there were of great importance to the entire country. Overallgrowth in the national automobile industry is expected to have dropped 3 percent as a result.

Largesales orders placed last year that are still waiting to be fulfilled are also a large factor behind the slow growth in 2011. Mr. Cui predicted the post-holiday drop in sales to last until around August of this year. With buyers losing interest in the market this year, price wars may again start between automobile manufacturers, further contributing to decrease in growth.

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Volvo planning large scale factory in western China

Associated Press (Shanghai) -Chinese officials say Volvo Car Corp. plans a manufacturing base in the western Chinese city of Chengdu as it aims for expansion in the world's biggest auto market following its buyout by independent automaker Geely.

An official with the city's Automotive Industry Investment Bureau confirmed a report Tuesday that the Swedish carmaker has chosen Chengdu as a manufacturing base, but would not give further details.

The Volvo factory reportedly will be focused on making compact and economy cars on a large scale. Shanghai and the northern city of Daqing also had been vying for new Volvo factories following the acquisition last year by Geely.

Volvo plans a news conference to announce its strategy in China later this week in Beijing, the Chengdu Overseas Media Service, a local, nongovernmental media group, reported, citing officials from the city's trade development zone.

Ning Shuyong, a Geely spokesman, would not confirm the report but said a decision was pending.

Chengdu, capital of populous Sichuan province, is among many Chinese cities aspiring to become major automobile manufacturing hubs and is one of the country's biggest inland markets. While overall sales of autos are forecast to slow slightly from their torrid growth in recent years, sales in the provinces are surging as increasingly affluent families buy their first cars or trade up.

Chinese media reports say the factory in Chengdu is already under construction and is due to begin production by 2013, with an initial capacity of 125,000.

Privately-owned Geely Holding Group agreed in March 2010 to buy Volvo Car from Ford Motor Co. for $1.8 billion, the biggest acquisition by a major Chinese automaker so far.

The buyout gave small but ambitious Geely access to a prestigious brand and top-tier technology and enabled Ford to unload the loss-making automaker to raise cash and focus on its core Ford and Lincoln brands.

Industry analysts have expressed doubts over 13-year-old Geely's ability to make a success of Volvo, an older, perennially money-losing manufacturer on another continent. Geely, based in the eastern city of Hangzhou, has built a business selling cars, motorcycles and scooters with little government support.

Volvo recently set up a new China headquarters in Shanghai.

Geely has said it plans to keep its production arrangements in Europe and contracts for assembling 15,000 cars a year by a Ford joint venture, Changan Ford Mazda Automobile Co., in Chongqing. The longest of those contracts runs until 2018.

The Swedish automaker sold 22,400 vehicles in China in 2009, up 80 percent from the year before, but has trailed behind rivals like BMW and Audi.

 

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Foreign Carmakers Try Brands Just for China

Chinese tour guide Chen Libin drives about 300 kilometers each day around the Inner Mongolia grasslands for work, so reliability is a key consideration in determining how he'll spend up to 80,000 yuan ($12,153) on a new car. Chen says models by domestic automakers such as Tianjin FAW Xiali Automobile start breaking down after two years, while foreign cars go at least five years without major problems. That's why he's holding on to his aging Xiali A sedan until General Motors (GM) and Honda Motor (HMC) roll out their new China-only cars later this year."These brands are definitely something I will consider," says Chen of GM's upcoming Baojun and Honda's Li Nian."Foreign technology offers drivers more comfort, fuel efficiency, and a lower cost of maintenance."

Car shoppers such as Chen are the holy grail for GM, Honda, and Nissan Motor, which are creating brands targeted specially for the world's biggest car market. Their goal is to boost sales in China's interior, where incomes rose almost 11 percent last year. The cheaper brands will help them compete on price against local manufacturers without diluting the cachet their core brands enjoy in more affluent regions of China, says John Zeng, an industry analyst at J.D. Power& Associates (MHP) in Shanghai."It's a win-win situation," he says."Consumers pay a lower price for foreign-brand technology, and the foreign makers benefit from an increase in sales volume without hurting their brand image."

These made-for-China brands will use older model platforms and have few extra features, says Leah Jiang, an analyst with Macquarie Research in Shanghai. Automatic transmissions, antilock brakes, auto-climate control, and reclining seats may be left out to keep prices as low as 50,000 yuan ($7,600), says Koji Endo, an auto analyst at Advanced Research Japan.

The market for low-cost cars in China is dominated by domestic automakers BYD, Geely Automobile Holdings, and Chery Automobile. Local brands sell three of every four cars priced below 50,000 yuan and more than half of those costing between 50,000 and 80,000, says Jiang."I'm not worried about these new brands at all," says Jin Yibo, assistant general manager for Chery, which enjoyed a 36 percent sales increase last year."Chinese cars offer better value for money, and we understand the local market and consumer very well." Still, BYD on Feb. 25 said it slashed prices on five car models to boost its competitiveness.

Vehicle sales in China grew more than 32 percent in 2010, to almost 18.1 million. Sales are expected to increase about 15 percent this year, with two-thirds of buyers coming from cities where the average annual income is less than $5,000, according to J.D. Power."If these brands are successful, they are going to have a much higher growth rate," says Bill Russo, a Beijing-based senior adviser at Booz& Co."The number of people that can shop at that price point is much larger."

GM, the largest foreign automaker in China, will start selling the four-door Baojun 630 compact sedan this spring through its SAIC-GM-Wuling Automotive joint venture. The car will be available at more than 100 dealers, the company says. GM, which hasn't announced Baojun prices, is targeting 15 percent growth next year, following a 29 percent increase last year, to 2.35 million vehicles. Baojun means"treasured horse."

Volkswagen, China's second-largest foreign car manufacturer, and local partners SAIC Motor and FAW Group may create a China-specific brand, said the company's China chief executive, Karl-Thomas Neumann, in January. Honda, Japan's second-largest carmaker, and local partner Guangzhou Automobile Group expect to start selling the Li Nian S1 sedan early this year. Pricing has not been announced. The brand, based on the City model Honda sells in other emerging markets, will have small engines and will be aimed at entry-level buyers."We are aiming that these Li Nian users will step up to the Honda brand," says Takayuki Fujii, a Beijing-based spokesman for Honda. Honda sales in China increased 12 percent last year and are expected to grow 10 percent this year, the company says.

Nissan, Japan's second-largest automaker, and local partner Dongfeng Motor Group say their upcoming Qi Chen, or"morning star," is intended to meet demand for cheaper models. Endo says it likely will be priced between 50,000 and 70,000 yuan. The car will have the"technologies, quality level, engineering standards" of a foreign brand, says Nissan Chief Operating Officer Toshiyuki Shiga."I can see some optimistic forecast in this market."

The bottom line:As cars become commonplace in China's coastal regions, foreign automakers are launching cheaper brands for the nation's interior.

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Toyota rides surge in US auto market

The Japan Times (New York) -New car sales in the United States in February surged 27.3 percent for the sixth straight month of year-on-year increase on the back of an economic recovery, with Toyota Motor Corp. enjoying solid growth following the U.S. government's safety endorsement, data released Tuesday by a U.S. research firm showed.

Overall new car sales totaled 993,387 units, of which Toyota sold 141,846, up 41.8 percent, according to Autodata Corp. The top automaker is apparently shaking off the impact of worldwide recalls after the U.S. Transportation Department's probe found no electronic glitches in its vehicles.

Toyota remained the third-largest in the U.S. market with a 14.3 percent share, behind General Motors Co. and Ford Motor Co.

General Motors sold 207,028 vehicles, up 46.4 percent, for a market share of 20.8 percent. The sharp increase, both in pickup trucks and cars, highlighted GM's steady recovery since it filed for Chapter 11 bankruptcy protection in 2009.

Ford Motor sales rose 13.7 percent to 156,232 vehicles, with its market share standing at 15.7 percent.

The other Detroit Three automaker, Chrysler Group LLC, saw its sales grow 12.6 percent to 95,102 units, remaining the fifth-biggest automaker in the U.S. market, with a share of 9.6 percent, just behind Honda Motor Co., which sold 98,059 units, up 21.6 percent, for a market share of 9.9 percent.

The combined sales of the Detroit Three increased 26.2 percent to 458,362 units, commanding a 46.1 percent share of the U.S. new-car market in February, compared with 46.6 percent a year earlier.

Japan's other carmakers also posted double-digit growth, with Nissan Motor Co. registering a 31.6 percent jump in sales to 92,370 units. Sales grew 19.8 percent to 21,683 units at Fuji Heavy Industries Ltd., known for its Subaru brand, and 13.7 percent to 19,387 units at Mazda Motor Corp.

Posts EV deal fails

GIFU (Kyodo) A startup firm in Gifu Prefecture that was to provide a Japan Post Holdings Co. company with about 1,000 electric vehicles is planning to file for protection from creditors under the weight of about¥1.18 billion in debts.

Japan Post Service Co. notified Zero Sports Co. in mid-January that it was terminating the contract for the supply of environmentally friendly mail-delivery vehicles because the startup failed to deliver them on time.

The postal service provider also called for¥700 million for breach of contract, according to Zero Sports, based in Kakamigahara.

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French new-car registrations surge 14% In February

Dow Jones Newswires (Paris) -Automobile sales in France in February surged 14% year-on-year as orders remained strong, buoyed by discounting, commercial fleet renewals and deliveries of cars ordered in December before government incentives expired.

The French automobile manufacturers association, known by the French-language acronym CCFA, Tuesday said new-car registrations rose to 204,486 passenger cars last month. Registrations rose 8.2% in January for the same reasons.

A senior CCFA official told Dow Jones Newswires car registration data will remain strong at least through March, although given the high volume of cars sold in the second half of last year there should be a weaker year-on-year sales trend in the last six months of 2011.

CCFA's director of communications Francois Roudier said in a telephone interview that this year had been expected to be strong. But French car manufacturer order books have been stronger than predicted. Orders also have been helped by pent-up commercial fleet renewals as the economy and business prospects improve.

Roudier revised expectations for French car sales this year to more than 2 million units from less than 2 million units seen a month ago. The revised figure still is below the bumper automotive year in 2010, when 2.25 million vehicles were sold.

France's biggest and Europe's second-largest automaker PSA Peugeot-Citroen SA (UG.FR) said the outlook for the European automobile market was slightly better than previously expected.

"We're starting the year more strongly than we expected," said Jean-Marc Gales, the head of the company's two brands."We haven't seen the drop in orders in France that we expected" following the withdrawal of a government scrapping incentive at the end of last year."We can't rule out a pleasant surprise" in terms of sales for the full year, Gales told reporters at the Geneva international auto show.

The CCFA said PSA's French registrations jumped 11% last month, with the Peugeot brand alone boosting sales 12% on the year, with those of Citroen up 10%.

French market chief at the country's No. 2 automaker Renault SA (RNO.FR), Bernard Cambier, said in a statement that despite supply constraints, the company's French business in the first months of this year was on track to meet the 2011 sales objective of a market share similar to that of last year. Cambier said the group's order book for passenger cars and light-commercial vehicles were brimming.

Renault pushed up group sales in France 14% last month from a year earlier, with those under the Renault brand alone up 18%. Renault's Dacia Romanian-based budget car unit saw French registrations drop 8.9%, hurt by supply the constraints. A Renault spokeswoman said the company overall was prevented from delivering some cars because of difficulties in obtaining parts. The models affected include the Megane, Clio and Dacia Duster, she said, although she declined to identify the supplier or suppliers."We are helping them solve the problem," she said.

Another positive signal from the market was the 14% rise in light-commercial vehicle sales in France last month after softness last year and the year before."LCVs are doing well and that shows the economy is performing," Roudier said. In the first two months of this year, light-vehicle sales were up 11%, the CCFA data show.

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Daimler and BYD's new JV gains official approval

Gasgoo.com (Shanghai March 5) -The ShenzhenBYDDaimler New Technology Company, a 50-50 joint venture between international automobile giant Daimler AG and Chinese automobile manufacturer BYD , was officially granted a business license by Shenzhen's Market Supervision Administration yesterday, sina.com.cn reported yesterday.

The company will specialize in development of a brand new electric vehicle to make its official Chinese debut in 2013. A new brand will be created for the car, which will be property of both Daimler and BYD.

Dieter Zetsche, CEO of Daimler AG, said that he was very pleased that the new company was able to gain approval after applying only two months ago."This is a good step towards developing cooperation {between our two companies}," Dr. Zetsche stated, adding that the approval will be of great use for the company to further penetrate the Chinese automobile market.

BYDCEO Wang Chuanfu made similar comments, saying that the new center had already brought together Chinese and German engineering and design experts, and that they will begin investment to recruit more talent."We are truly looking forward to show off both companies' strong sides, and will unite towards creating a brand new electric vehicle brand forChina," Mr. Wang said.

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Detroit Venue, home to auto show, to get face lift

The Wall Street Journal (Detroit) -The home of the North American International Auto Show is getting a major face lift, with expanded floor space and riverfront vistas, according to plans unveiled by a regional authority charged with improving the aging facility.

The plans call for a three-year, $221 million renovation of Cobo Conference and Exhibition Center, financed by bonds. Wednesday's announcement came after years of complaints from auto makers that the downtown facility was too small and dilapidated to host the industry's annual January showcase.

The adjacent Cobo Arena—a storied sports and concert venue where Mayor Dave Bing once played professional basketball—will be converted into a 40,000-square-foot ballroom, and a three-story atrium will connect the center's main floor to a new entrance facing the Detroit River. Cobo's front facade will be remade with a digital"media mesh" billboard to announce the latest conventioneers.

The project is expected to be largely completed by the January 2014 auto show. The 2.4 million-square-foot facility was last updated in 1989.

Control of Cobo shifted to a regional authority in 2009 under a long-term lease with the city, after show organizers threatened to pull out of the venue amid a political debate over funding its future needs.

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Subaru and Chery to jointly construct new factory in Dalian

Gasgoo.com (Shanghai March 3) -Chery Automobiles is to invest 3.66 billion yen ($365.7m) with Subaru to jointly construct a new factory in Dalian, Liaoning, theBeijing Dailyreported today. The news, which has been circulating through several Japanese papers, caused stock prices for Subaru's parent company Fuji Heavy Industries to hit 658 yen ($8.037), a new record for the company.

According to information fromNihon Keizai Shimbun, the Dalian site is expected to produce 50,000 vehicles by the end of primary construction, with final construction increasing that amount to 150,000. The factory will market the second overseas construction site for Subaru, after the United States.

Subaru's recent performance in the Chinese market has been exemplary, with total 2010 sales reaching 57,000 vehicles, an increase of 62.9%. The Japanese automaker plans to sell 600,000 this year. Subaru has been previously linked with other Chinese companies including BAIC, SAIC and Lifan.

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Toyota's US sales may withstand recall of 2.2m cars, analysts say

Bloomberg News -Toyota Motor Corp.'s February U.S. sales gain may be its second-biggest since last year's record recalls, even after the world's largest carmaker said it will have to fix more flawed vehicles.

The automaker may report a 27 percent increase in deliveries of Toyota, Lexus and Scion cars and light trucks for the month, based on the average of four analyst estimates compiled by Bloomberg. At most, the recall of 2.2 million vehicles last week may cost Toyota"a couple thousand units" of sales in February, said Jessica Caldwell, an analyst at industry researcher Edmunds.com in Santa Monica, California.

Toyota has spent 15 months reassuring consumers about quality after calling back more than 10 million vehicles for defects related to unintended acceleration. Along with assessing complaints faster, the carmaker added two years of no-cost maintenance as standard on new U.S. models and raised incentives to draw buyers.

Following the company's sales suspension in late January and early February 2010,"this February was easy," said Caldwell."It still looks like they'll be up 28 or 29 percent. And we're conservative with Toyota."

Toyota rose 0.8 percent to 3,850 yen at 10:30 a.m. in Tokyo Stock Exchange trading. The shares have gained 20 percent this year.

2010 Decline

Toyota's U.S. sales fell 0.4 percent in 2010, making it the only major automaker to post a full-year decline.

To boost sales, the company is offering no-interest financing for 60 months on Camry sedans and $500 in down-payment assistance to all customers, Bob Carter, Toyota's U.S. group vice president of sales, said last month.

Toyota is also offering an extra $500 to current Camry buyers who buy a new model, he said.

On most models, including Corolla compacts, Prius hybrids, RAV4 crossovers and Tundra pickup trucks, Toyota is offering discounted leases and loan interest rates of between 0 percent and 2.9 percent in February, according to its website.

"Their incentives were up from January, but not as much as we expected," Caldwell said. Toyota spent an average of $2,041 per vehicle in February, compared with $1,942 in January, according to Edmunds.com.

That's below the industry average of $2,558 for the month, Caldwell said.

Rising Confidence

Toyota and other automakers will release February sales results today. Industrywide deliveries are likely to rise 19 percent from a year earlier, the average of five analyst estimates compiled by Bloomberg, as rising consumer confidence spurs buying.

Confidence among U.S. consumers increased in February to the highest in three years, according to separate reports from the Conference Board and Thomson Reuters/University of Michigan last week. The percentage of consumers planning to buy a new vehicle within six months increased to 4.6 percent from 3.1 percent at the end of last year, the New York-based Conference Board said.

U.S. sales for the Toyota City, Japan-based company fell 8.7 percent in February 2010, pulled down by a sales suspension affecting models including the Camry, Corolla and RAV4.

February will be good for overall U.S. auto sales, owing to poor weather that curtailed some sales a year ago, Rod Lache, an auto analyst for Deutsche Bank AG, said in a Feb. 24 report. Toyota will further benefit because it only began to lift its sales stoppage on Feb. 5, 2010, he said.

The Japanese automaker's monthly U.S. sales rose 41 percent in March 2010, its best monthly gain for the year.

'Things Have Changed'

Toyota also benefited from the National Highway Traffic Safety Administration's report that found mechanical flaws, rather than electronic defects, were the only likely cause of unintended acceleration in Toyota vehicles.

"Things have changed" at Toyota, U.S. Transportation Secretary Ray LaHood told Bloomberg in an interview last month. The company is investing more in safety, he said."They get it, and I think Toyotas are safe to drive."

Toyota's Feb. 25 recall included 1.38 million vehicles being added to its November 2009 recall to fix floor mats that could shift out of position. The company also said it would recall 769,000 Highlander and Lexus RX sport-utility vehicles to fix driver’s side floor-carpet covers and retention clips.

Last week's recall was"unexpected, but it is more of the same," said John Humphrey, senior vice president of automotive operations at J.D. Power and Associates in Troy, Michigan."Last year, there were more unknowns about the causes of unintended acceleration."

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