Car | ICT magazine

Posts Tagged ‘car’

Fiat in UK

July 2nd, 2009 | No Comments

I’m heading down to the south coast this afternoon for a Fiat 500C (the convertible) press launch event. Should be a good opportunity to hear about the car (and drive it) as well as get an update on how Fiat is doing in the UK. Fiat has put quite a bit of effort into transforming its UK dealer network in recent years (Fiat’s UK dealers were, to put it mildly, under performers). Is it getting the desired results? Hopefully, I can also ask someone at the sharp end about the UK car scrappage scheme – which is attracting some criticism in the industry.

Hope the fine weather holds.

Is small the new big?

June 29th, 2009 | No Comments

Are relatively mature car markets going to become fertile ground for highly specified small cars? It is perhaps a niche that has proven difficult to crack for manufacturers in the past. The Mercedes A-class, Daimler Smart and Audi A2 spring to mind. Each of those had a rough ride – for different reasons, perhaps – but the highly specced small car area is one to be treated with care.

BMW handled it well with Mini, but that success based on a modern take for a retro-brand is something of a special case and perhaps serves as a lesson on how difficult it is to hit the premium small car sweet spot.

However, markets change and it could be that the market environment is becoming better for well specified small cars. The regulatory/tax framework in urban areas, volatile/high fuel prices and changing societal attitudes to vehicles generally are all perhaps pointing towards higher sales of small cars.

And a proportion of the ‘new’ consumers who consider small(er) cars will want something comfortable and relatively highly specified. In the future, the argument goes, the small car area will be less dominated by low-cost driven ‘econoboxes’.

In this context, Toyota’s initiative with its IQ small car is certainly an interesting one. The car has attracted some flak on the basis of its relatively high price, but some people will be prepared to pay a little more for something that isn’t a low-cost Aygo. There are discrete customer sets for those two small cars with their different prices, spec and ‘feel’.

Things can get even more interesting when considering ‘sub-brands’, which is a part of Toyota’s strategy with IQ.

Even more intriguingly, Toyota is planning a collaboration with Aston Martin for a ‘luxury commuter vehicle’.

As ever, execution and properly aligning brand values with the product proposition and price will determine how successful future products will be. Is this a step too far for Aston Martin? Maybe not, but it is a gamble. If they get it wrong, it would be an expensive mistake with adverse consequences for brand image. At least they are trying new things and I think that is to be applauded. Collaborating like this also keeps costs down for Aston while Toyota gets an association that is potentially very positive indeed.

But the really big question is a great big fat unknown: just how many people out there will opt for a highly specced small car?

BELGIUM: Toyota gives Aston Martin an iQ boost

The range anxiety gamble

June 24th, 2009 | No Comments

This looks like a week in which electric cars are going to be very much in the news – in part due to government initiatives on both sides of the Atlantic. And there are plenty of announcements being made by the OEMs to coincide with that. Nissan’s yesterday about manufacturing electric plug-in vehicles – not hybrids – in the US is particularly intriguing.

It’s the latest news from Nissan on this subject and follows on from Carlos Ghosn’s consistently stated view that electric cars represent the long-term future for the automotive industry. He has perhaps stood out among car firm bosses as a real believer in electric drive technology and the opportunity presented – and on a business planning horizon that he earnestly believes is with us now. Working with partners like Project Better Place has demonstrated a serious intent to grapple with things like infrastructure, too.

At first sight, 100,000 units a year of production in the US sounds pretty ambitious. And maybe it is, given that we’re talking about electric drive vehicles that don’t come with a back-up gasoline engine. That raises the ‘range anxiety’ question alongside consumer acceptance of frequent battery charging rather than occasionally filling the tank with the black stuff.

How far can these cars really go on a single charge? (Nissan says the car will offer 100 miles of range, but what if the heater is on and there are hills to climb…); how often does it need charging?; how much will that cost me and just how robust is the battery? (And the truly environmentally aware may even ask how the juice coming out of the power socket was generated…but I suspect that question will be overlooked or fudged in the minds of many.)

Nissan will have to come up with a very good product to get initial consumer acceptance of this new technology. And – leaving aside the considerable product development and technology issues ahead – I’m sure there is a lot of discussion still to happen concerning the precise business model, too (like the retail price and how battery leasing might work in practice).

But that’s 100,000 units in a passenger vehicle market of almost 16m units (or wherever we are on the recovery path by 2012, when Nissan plans the start of US production). It’s way under a 1% share. Nissan can target sales in US cities where it thinks the car will sell.

Do Americans buy small, more energy-efficient cars? They are now buying more of them – look at the success of Smart’s Fortwo. And Nissan can be cute and look to market the car in places where city authorities are suddenly looking for more EV solutions (like Baltimore, for example).

Market analysts can argue about how quickly US market segmentation will shift, but there is a consensus that smaller and more energy-efficient vehicles will be growing in sales. Electric drive vehicles in various formats will clearly be a part of that broader trend, though it is far from clear exactly where the numbers will be and on what timescale (and the internal combustion engine is doing much to make itself more efficient).

But which way is the oil price wind blowing? I wouldn’t mind betting that in 2012, when global economic recovery is really kicking in, the price of a barrel will be a lot higher than today. That could provide a very fair wind to both hybrids and pure-electrics.

Is range anxiety really a big issue? Incremental improvements are helping, but the issue is not going away. Having said that, there is a point at which range becomes acceptable for many who would consider such a car primarily for relatively low-mileage daily use – the commute to the office, say.

And with that pattern of usage, range anxiety may not be as big an issue in America as in Europe because American households have more multi-vehicle ownership than Europe does.

Whereas a pure EV might be severely limiting in Western Europe (asking the single car household’s sole vehicle to do many jobs for the lowest cost explains why the C-segment is Europe’s largest – cars like the Volkswagen Golf are fine around town and for motorway cruising) US households are perhaps more likely to have a larger vehicle available for longer journeys. ‘I use the EV every day, but the F-150 is just great for the weekends.’

Ghosn is taking a gamble though, that he can lead investment in electric vehicles for ‘mass transportation’ and steal a march on rivals, who are playing much safer with hybrids and ‘range extenders’ (like the Volt) that deal with range anxiety up front. And it’s a pan-global strategy to spread the technology investment across as many units as possible under the Renault and Nissan brands. Later on, when scale economies permit, maybe a viable low-cost ‘Logan-style’ electric car can be developed for price-sensitive emerging markets – which will likely not be figuring too much early on.

If Ghosn gets it right, the EV push could leave Renault-Nissan as one of the most powerful groups in the global auto industry for a generation. But it could be an expensive drag on profitability at a time when the industry’s worst performers come under increasing pressure to cut capacity still further.

It’s a gamble. And Ghosn is perhaps a brave man. But you wouldn’t expect him to have a vision on where the industry is headed and not give it his best shot would you?

JAPAN: Nissan targets US for electric car push

Strange times

June 15th, 2009 | No Comments

There is something strange going on in the auto industry. Despite the talk of massive overcapacity, the impact of recession and the oft-heard conclusion that the industry will consolidate into fewer, bigger carmakers, the opposite seems to be happening.

Smaller brands – Hummer, Saturn, Saab, Volvo Cars – are being sold off by bigger groups and, apparently, finding no shortage of potential buyer interest.

And the deal that would have clearly signalled that consolidation in Europe is coming – Opel and Fiat – isn’t happening. Not only that, but the new CEO at PSA – a firm often identified as a potential alliance or merger suitor for Fiat – has more or less said that size isn’t everything and that PSA can survive as an international business by focussing on growth markets.

Is that it then? Consolidation and rationalisation of production isn’t as pressing as some have been saying?

I don’t think so. But it’s also a more complex situation than it appears at first sight.

For example, if GM, with all its resources, couldn’t make Saab work, why should anyone else? Fair question, but an alternative business model that recognises past weaknesses and that perhaps comes with a sizeable initial dowry of assets from GM, might just be able to work.

Similarly, in looking at Magna’s proposed deal to acquire Opel/Vauxhall, the position of New GM is highly significant. If a close relationship continues across the Atlantic concerns over the new European entity developing new product ease somewhat.

I can’t help thinking though, that with the industry’s total volume pie in Europe suddenly quite a bit smaller, the overcapacity bullet will have to be bitten somewhere, sooner or later.

A lot has to transpire before we can see the extent to which the pain is shared.

JD Power estimates that capacity utilisation at Europe’s car plants currently stands at around 50% – versus 80% as recently as 2007. JD Power’s baseline forecast has a return to an 80% capacity utilisation ‘norm’ in 2016. A rule of thumb is that car plants break even at 60-65% capacity utilisation.

There won’t be much recovery to capacity utilisation from the current 50% this year or next on current market assumptions (in 2010 Europe’s car market will likely decline after this year’s scrappage-inspired boost). Conditions are therefore clearly ripe for further capacity rationalisation.

Manufacturers who ignore these fundamentals impose higher costs on themselves and impair their ability to be competitive – a sure recipe for potential long-term decline and eventual exit from the industry.

ANALYSIS: The age of deconsolidation

What The Newspaper Industry Could Learn About Do Or Die Innovation From General Motors

July 21st, 2008 | No Comments

As newspaper companies lose billions in market capitalization and innovation-minded journalists battle newsroom “curmudgeons” shell-shocked by the rapid pace of change amid increasingly dire economic realities, a lesson in burn-the-rule-book transformation might come from an unexpected source: General Motors. That’s right, the once-dominate car maker, which missed every trend that has lead to Toyota’s dominance, [...]