Thursday, October 30, 2008
VW defies the economic slowdown
Volkswagen has resisted the economic slowdown and reported growing three-month profits.
Net profit from July to September rose 28% to 1.2bn euros ($1.6bn; £950m) boosted by sales in emerging markets.
Improved demand in China, Russia and India helped offset slackening sales in Europe and the US.
VW says it continues to believe that its deliveries, sales and profits will exceed last year's levels despite the "difficult environment".
"We are confirming our forecast for 2008, despite the dramatic deterioration in global economic conditions and the automotive industry environment in recent months," said VW's chief financial officer Hans Dieter Poetsch.
The company, which is in the process of being taken over by Porsche, said its diverse range of brands had given it a competitive advantage.
VW owns marques such as Audi, Lamborghini, Bentley, Skoda and Seat.
Its shares have had a bizarre week of trading since Porsche announced on Sunday that it had options to take its ownership of VW up to 74%.
The shortage of available shares left hedge funds scrambling to close their short positions and sent the share price soaring, briefly making it the world's most valuable company by market capitalisation.
Jobs cut as car firm axes shift
Luxury car maker Bentley is cutting up to 300 jobs as it ends its nightshift in Crewe.
Shift workers on the Continental sports car production line are switching to a four day week instead of the current three days.
A spokesman said most jobs will be absorbed but expects between 200 and 300 workers to be left over.
The firm hopes to redeploy some jobs elsewhere in the firm and will be asking for voluntary redundancies. The spokesman said the firm's global sales continue to decline.
Renault shelve Espace plans
Surprise legislative changes across several key European markets have prompted Renault to shelve plans for its next Espace multi-purpose vehicle range.
Due to reach showrooms next year, the new version of the trendsetting MPV, which sold 2,100 units in the UK last year, has been postponed after fresh research findings shunted the business case for the model into 'borderline' territory.
Tax revisions linked to CO2 emissions in France, Britain and Spain dealt the final blow and have put the next-generation Espace back on the drawing board.
"As part of the plans to revitalise Renault, we planned to launch 26 new models before the end of next year. Despite the poor economic situation, investment is in the pipeline for all of our new models except the Espace," said Patrick Pelata, the French company's newly appointed chief operating officer and second in command to chief executive Carlos Ghosn.
"We have been forced to postpone this product because of rapid and unexpected changes in market conditions," he added.
"On paper, our plans for the Espace were fine, but revised anticipated volumes made them borderline. Pressure from taxation linked to exhaust emissions was far more than we had imagined - it's forced us to re-evaluate our ambitions in the upper part of the market."
Pelata said the new tax regime had also prompted a rethink of two other high-end models with retail prices in excess of ?30,000 (£24,000).
"The game has changed since we laid our plans," he added. "We're in a challenging part of the market and have to be innovative."
Lookers in Cost Cutting Review
"Ken Surgenor: "Trading conditions are currently very difficult and the outlook for the industry for the remainder of the year remains challenging.""
Job cuts, closures of marginal satellite dealerships and multi-franchises all form part of Lookers' strategy to ride out the recession.
The top10 AM100 dealer group informed shareholders this morning that it is focused on improving the performance of its franchised dealerships.
However it reassured investors the business is cash generative and has adequate banking facilities for the medium term.
The group suffered a decline in third quarter new car sales similar to the national drop of 19%, said its statement to the London Stock Exchange.
Dual franchising
But its aftersales businesses, which include the parts distributor FPS, have performed strongly, it saidAction being taken to improve the performance of its franchised dealerships include removing the fixed costs of marginal satellite operations and redirecting volume back to main hubs, reviewing dual franchising opportunities where the facilities are larger than the market opportunity, exiting underperforming businesses and reducing the cost base and investment in working capital.
Ken Surgenor, chief executive, said: "Trading conditions are currently very difficult and the outlook for the industry for the remainder of the year remains challenging."
DATED: 30.10.08
FEED: AM
GM and Chrysler merger talks progress
The carmakers have reportedly agreed that GM chief executive Rick Wagoner will head the enlarged company if a merger were to take place. Despite the talks moving forward, funding remains a major obstacle to closing the deal. GM has requested $10bn in US government aid to support the deal, while Cerberus Capital, the owner of Chrysler, is reportedly trying to refinance billions of dollars in Chrysler debt. Should the merger go ahead it would create the world's largest and biggest-selling car company. DATED: 30.10.08 FEED: MT |
Lada to return to UK?
 Lada cars could make a return to the UK on the back of a new range of modern cars still under development, so it will not be any time soon.The Russian cars have not been seen here since 1996 when the Riva saloon, Samara hatchback and Niva 4x4 were phased out - models so old that even the addition of fuel injection a couple of years before that was deemed high tech. The Riva, based on an ancient Fiat, dates back to the factory's beginning in 1966 and, amazingly, is still being made and now called the Lada Classic. The Samara is also still being turned out at the vast AvtoVAZ plant in Togliatti, 1000kms south east of Moscow. The Niva is now made under a joint venture with General Motors in Togliatti and wears a Chevrolet badge. There are also a couple of other more modern cars, the Kalina and the Priora which are made in hatch, saloon and estate form. Earlier this year, however, Renault, with an eye on the fast-growing Russian market, took a 25 per cent stake in AvtoVAZ and is helping the Russians develop new cars. One, the Lada 2116, has been seen as Concept C, but now looks a very different three-box saloon sitting in the company's technical centre. Although it looks ready for production, the reality is still a long way off, waiting for the construction of a new line at the factory to build Renault 1.4- and 1.6-litre engines under licence. This platform, developed by AvtoVAZ, will also carry a 4x4 crossover vehicle which is under development. When will the 2116 go into production? "Not soon enough," says chief operating officer Yann Vincent, a former Renault purchasing chief shipped in to head up the factory business. First up, however, will be an all-new MPV developed off the platform of the Dacia Logan, another affiliate of the French company. AvtoVAZ also has a licence to use this platform and according to the company's new head of design, Brit Anthony Grade, an all new body look has already been signed off. Again, production details await the arrival of the new engines. The AvtoVAZ business is also being overhauled. Company president Boris Aleshin says some non-core business will be sold off and the vast 105,000 workforce trimmed by up to 25,000, many of whom will work for newly formed independent businesses. The company's business portfolio includes vehicle components, plastics moulding and even hotels, construction and recreational facilities. Aleshin said: "Our focus will be on design, development, assembly, sales, service and financial services. We will look to divest some of the other business areas and they will have to seek their own investors or mergers." The factory last year built 683,830 vehicles but has a capacity of more than 1.2 million a year. COO Vincent said his plan is to reach that target by uncorking the bottlenecks in the foundry and stamping plants. He added that any spare production capacity could be soaked up in future by making Renault and Nissan brand models in Togliatti. That seems a long way off at the moment. Vincent added: "The factory is huge and some of the machinery is 40 years old, but it has been incredibly well maintained." While the company awaits the new manufacturing and vehicle technology, the Fiat based cars live on. Aleshin said: "They still sell. They may not have a future, and perhaps by 2011 they will be gone, but in the present market they are in demand and cheap." DATED: 30.10.08 FEED: MT |
Car sales to bounce back in 2009?
 New and used car sales could bounce back in 2009 despite the prospect of a recession.EurotaxGlass's said there were grounds for "cautious optimism" about car sales next year. The analysts predict the used car market will be the first to recover from its current lows and - fleet registrations aside - new car sales will also record a modest upturn. "In the short term, conditions will remain difficult for car dealers, reinforced by the usual seasonal decline in demand that accompanies the latter months of the year," said Adrian Rushmore, managing editor at EurotaxGlass's. "However, we believe the swift and painful downturn we saw in the summer months of 2008 was probably a one-off event. "The arrival of the '09'-plate next March will clearly be an acid test for both new and used sales, and analysis of the current market indicators suggests there are reasons for cautious optimism." DATED: 30.10.08 FEED: MT |
Lookers issues trading warning
 Lookers has warned that current trading in the UK car market is "very difficult" and predicted a challenging end to the year.In an interim management statement the Manchester-based dealer group said weak September sales had hit the industry and it had suffered a 19 per cent fall in new car sales in the third quarter. The company claimed its "diversified business model" had helped it to weather the downturn and its parts distribution and servicing divisions had performed well during the same period. It said it would now focus on areas in which it could improve its franchised car dealerships, including selling underperforming businesses and reviewing dual franchising opportunities. "Trading conditions are currently very difficult and the outlook for the industry for the remainder of the year remains challenging," said Lookers chief executive Ken Surgenor. "However, we have a strong presence in aftersales and a proven management team with huge experience of successfully trading through previous market slowdowns." DATED: 30.10.08 FEED: MT |
Gupta joins Marshall as CEO
Ridgeway’s group managing director Daksh Gupta will become Marshall Motor Group’s next CEO from November 1.
Gupta joined Ridgeway as group managing director in April this year, but will stay as a non-executive director.
David Newman, chairman of Ridgeway Motor Group, gave his blessing to the appointment.
He said: “Daksh has done a fantastic job for us in the time he has been with us. He has helped to re-engineer our business and made us fitter, not only for the current climate but also for the future.
“While we are sad to be losing Daksh full time, he will still be supporting Ridgeway which we are pleased about. He joins Marshall with our blessing, support and best wishes.”
Gupta will continue to work with Ridgeway one day a month to carry on assisting the group on processes, reporting, supplier relationships and business advantage strategies'.
Ridgeway CEO John O’Hanlon will resume full operational control for the group following Gupta’s departure as group managing director.
Robert Marshall, Marshall executive chairman, told AM that he had chosen Gupta for his ‘ambition, not because he will do what I tell him to do’.
Marshall said: “I don’t want a safe pair of hands, I want someone who will kick us into the next stage of motor history. I expect the appointment will raise some eyebrows."
Gupta said: "The company has a strong pedigree and history and to be leading the business into a new era is hugely exciting. Marshall and I are very much aligned with our core values, we understand the importance of relationships which I am committed to maintaining and developing.
“There is no question in my mind that this is one of the best jobs in the retail automotive industry and I look forward to helping Marshall achieve the substantial growth opportunities which clearly exist for this company. In addition, I am also delighted to be continuing my association with Ridgeway as non-executive director.
DATED: 30.10.08
FEED: AM
Hedge funds make £18bn loss on VW
Hedge funds have lost £18bn in two days of trading in Volkswagen (VW) shares that briefly saw the carmaker become the world's most valuable company.
VW shares rose 348% over Monday and Tuesday after it emerged that only about 5% of its shares were available.
Funds that had bet on the shares falling desperately needed to buy the shares to close their positions.
But VW shares fell 37% in trading on Wednesday as Porsche said it would help to solve the hedge funds' problems.
"In order to avoid further market distortions and the resulting consequences for those involved, Porsche SE intends - depending on the state of the market - to settle hedging transactions in the amount of up to 5% of the Volkswagen ordinary shares," Porsche said in a statement.
"This may result in an increase in the liquidity of the Volkswagen ordinary shares."
Controlling stakes
On Sunday, Porsche announced it controlled more than 74% of VW shares.
VW's home state of Lower Saxony owns another 20%.
The panic buying was caused by traders who had short-sold VW shares desperately trying to buy them back so they could close their positions.
Before Porsche's announcement, many traders had been betting on VW's shares falling.
They had borrowed VW shares and sold them in the market, planning to buy them back when the shares had fallen, return them to the lender and pocket the difference.
But what actually happened was that the shares rose as a result of Porsche's effective takeover and the traders found themselves forced to buy the shares at any price.
"Each and any short-seller in the world is trying to close up their position and there is no way they can do it, except for trying to buy like mad," said Heino Ruland, an analyst at FrankfurtFinanz.
What is upsetting the hedge funds is that if between 10% and 15% of VW shares were on loan to be shorted and only just over 5% were available in the market, it is likely that many of the funds that shorted VW had borrowed the shares from Porsche.
It meant that because Porsche had not declared the proportion of VW shares it controlled, traders may have been indirectly and inadvertently borrowing shares from Porsche, selling them to Porsche, buying them back from Porsche and then returning them to Porsche.
None of this is currently outlawed by German authorities, but many commentators have described it as bringing German capital markets into disrepute.
The affair shows reform is needed in the way stock markets operate, according to Chris Day, chief executive of the hedge fund infrastructure providers PCE Investors.
"While there has been much talk that hedge funds should improve their transparency, perhaps the issue should be widened to include stock exchanges to help stop this sort of thing happening," he said.
Bigger than Exxon
VW's shares peaked on Tuesday at 1,005 euros, valuing the company at 296bn euros ($370bn; £237bn), which is well over the $343bn value of Exxon Mobil - previously the world's most valuable company.
Last Friday, VW's shares closed below 200 euros.
As an indication of how extreme the market valuation is, last year Exxon made profits of $41bn on sales of $390bn while Volkswagen managed profits of about $8bn on sales of $136bn.
Honda cuts production at UK plant
Car production is to be cut at Honda's Swindon plant due to the economic downturn. The Japanese car giant said annual manufacturing at the factory would be reduced by a further 10,000 units at the beginning of next year.
This is over and above the 22,000-vehicle reduction announced at the end of the summer and is equivalent to 11 non-production days at Swindon where Honda makes the Civic model as well as the CR-V 4x4.
However, the company said that there would be no job cuts as a result of the reduction which will be carried out between January and March 2009.
Also, Honda still intends to start production of its Jazz model at Swindon in autumn 2009 as planned.
Announcing the cut-back, Honda blamed the world economic conditions and a lack of consumer confidence for its decision to slash production. The manufacturer is the latest in a line of companies to announce production cuts.
Roger Maddison, national officer of Unite, said: "Honda is suffering the same as everybody else in the car business but they are not making lay offs, which is to be commended. Instead, they are holding on to skills and people for the time when the market turns up. We urge others in the sector to follow suit and take the same long term view."
GM may delay new models to cut costs
General Motors may delay or cancel several new models as part of an increasingly urgent drive to control costs.
The cash-strapped carmaker said: "We're evaluating all our product programmes. Things are changing and evolving every day."
The product review has sent shockwaves thought the global automotive parts industry, which could also be hit by the prospect of car company consolidation as demand for new cars continues to fall worldwide.
Wednesday, October 29, 2008
Sharp fall in profits for Honda
Honda Motor has reported a 41% drop in three-month profits, hit by falling sales and the strengthening yen.
Net profit came in at 123bn yen ($1.3bn; £829m) for the three months from July to September.
Japan's second-biggest carmaker has cut its profit forecast for the full year to 485bn yen, down 19% on last year.
Honda is considered one of the better-placed carmakers to deal with the global downturn, thanks to its line-up of smaller, more fuel-efficient models.
But it is vulnerable to the strong yen, estimating that a fall of one yen in the dollar exchange rate cuts about 20bn yen from its operating profit.
The dollar has fallen by about 16% against the yen since the start of the year.
The strong yen makes Honda's vehicles more expensive in the US, where its customers are already struggling with the economic downturn.
Honda has predicted that its US sales in October will be more than 20% below the level for the same month last year.
Its executive vice president Koichi Kondo said the fall in sales was not just across its light trucks and SUVs, which have been struggling as a result of higher petrol prices.
"Now passenger cars have started to fall too, and that seems to suggest that the desire to consume is being hurt by the credit crisis," he told a news conference.
Credit crunch may drive Ford to sell Volvo
Ford may sell Swedish carmaker Volvo to BMW as part of a drive to save cash, according to senior car industry resources.
The Sunday Times has reported that sources close to Ford and BMW say that the two manufacturers have held preliminary talks, although that has been denied by the companies.
Nissan hit by Watchdog’s exploding Navara claims
 Nissan has been stung by claims on the BBC's Watchdog programme that its Navara pick-up suffers from a fault that causes the engine to explode.Several owners of the D22 variant, which was built before August 2006, complained to the consumer affairs show about the problem after their engine blew up whilst they were behind the wheel. Following tests by the BBC, a problem with the con-rods and the bearing that propel the drive shaft were discovered. It is thought up to 16,000 vehicles may be affected. Nissan insists the problem is not a safety issue but a durability one, although it did extend the warranty on the Navara from three years to five in May after receiving hundreds of complaints about the problem. But when Watchdog phoned ten Nissan dealers around the country and told them they had an engine failure on a four-year-old Nissan D22, six out of the ten said they had not heard about an extended warranty. In a statement to the BBC Nissan said: "Nissan has openly stated for some time that the durability of a small number of D22 pickup engines, produced before August 2006, have not performed to our exacting standards. "As a result, Nissan launched a five-year 93,000 miles extended warranty in May to formalise the support we were already providing to our customers." Following the programme the carmaker has also now written to D22 customers affected by the fault. Concerned owners should either email Nissan atcustomer.support_d22@nissan.co.uk or call the company on 01923 899 334. DATED: 29.10.08 FEED: MT |
Car buyers use the internet now more than ever
 Car buyers across the globe are using the internet more than ever before when it comes to researching a vehicle purchase.Capgemini's annual research report - Cars Online 08/09 ¬- analysed consumer vehicle buying patterns in both emerging and mature markets in eight countries across the world. "Manufacturers and dealers cannot afford to ignore the opportunities for growth presented by the internet as a direct sales channel," said Nick Gill, head of automotive at Capgemini. The report also found that car buyers in India and Russia, alongside buyers in the mature western markets, were most likely to use the internet when researching a car. DATED: 29.10.08 FEED: MT |
Monday, October 27, 2008
Porsche moves closer to full VW control
Porsche has announced that it has increased its stake in Volkswagen Group to nearly 75%, an amount which will allow the sportscar maker to gain full control of VW’s cash flow.
The German state of Lower Saxony still owns 20% of the company which, alongside Porsche’s increased holding, means that only around 5% of VW shares are still in ‘free float’.
Under German law, taking a 75% stake will allow Porsche to impose a ‘domination agreement’, allowing it to put Volkswagen’s assets and revenues onto its balance sheets. Porsche has stated that it intends to reach this figure next year.
Porsche said: “We made the announcement after it became clear the disclosure should give so called short sellers – meaning financial institutions which have betted or are still betting on a falling share price in Volkswagen – the opportunity to settle their relevant positions without rush and without facing major risks.”
DATED: 27.10.08
FEED: AM
Marshall Group stays local
"Better, not bigger, as family business puts customers’ needs at top of its priorities."
Three years ago Marshall Motor Group chief executive Roger Knight told AM about his plans to expand the regional group further afield. “We will go anywhere in the UK with the right franchise – that’s a new position for us,” he said. That move didn’t happen.
Although the company expanded, it stayed firmly rooted in the east of England. With Knight now retired, Robert Marshall, great grandson of Marshall founder David and son of current chairman Michael, has no plans to fulfil Knight’s aspirations.
“When I came into the business two years ago we had undergone a period of acquisition and we needed to implement a better regional structure,” Marshall says.
“We decided on the mantra ‘get better, not bigger’, which is all about margins and process, not expanding.”
His focus is on a back to basics strategy with the company recognising and celebrating its strengths as an owner-driver business that aims to satisfy customers in its five core market areas – Cambridge, Peterborough, Suffolk, Herts/Beds (through the Lisles acquisition last year) and east Midlands (via TMS). Building the brand is a key element.
He won’t reveal details of his successor yet, other than to say the person has been chosen for their ambition.
“I want someone who will kick us into the next stage of motor history. I expect the appointment will raise some eyebrows.”
DATED: 27.10.08
FEED: AM
Car parts firm announces closures
An automotive firm has announced it is cutting staff and shutting down plants across its global operations.
GKN has 2,500 automotive staff in the UK with headquarters in Worcestershire and two plants in Birmingham and another in Telford, Shropshire.
It is not yet clear how many of the automotive workforce will be affected.
The firm has said it is taking action to stop a predicted pre-tax profits plunge. Its 2,500 strong UK aerospace division is thought to be unaffected.
'Difficult period'
A spokesman for GKN said: "We are now finalising plans to reposition our businesses to deliver acceptable profitability and cash generation through this difficult period."
He added car and light vehicle sales had dropped across the world, hitting its production schedules.
GMB Union spokesman Keith Hodgkinson said the union had been aware for some time of the firm's precarious situation.
"We have in place an agreement with the company that members who wish to opt to leave the company via voluntary redundancy are free to do so and over the last few quarters over 100 workers have taken up this option," he said.
The union was seeking further information from the company, he added.
The company employs 42,000 people worldwide.
Britain leads green motoring revolution
New initiatives to put Britain at the forefront of a green motoring revolution by encouraging a mass market in electric and hybrid cars have been announced today.
With the potential to create up to 10,000 new British jobs and help preserve many thousands more; this comes as part of wider Government plans to make the most of the low carbon economy, with estimates that around a million green jobs could be generated by 2030.
Fulfilling Gordon Brown's pledge this summer to speed up the delivery of low carbon and electric vehicles for ordinary motorists, experts from across the globe are gathered in Whitehall today to examine how to turn this into a reality.
Speaking at this International Experts Meeting, Transport Secretary Geoff Hoon set out the next steps across Government to deliver a £100 million commitment to accelerate the emergence of the greener vehicles of tomorrow. As part of this 100 electric cars will be provided in UK towns and cities to allow families and other motorists the opportunity to feedback the practical steps needed to make greener motoring an everyday reality.
He said: "Electric cars and other low carbon vehicles, like plug-in hybrids, cut fuel costs and reduce harmful emissions. If we can inspire more people to use them, it will help us to make a positive impact on climate change.
"Alongside this, their research and manufacture is an emerging industry with the potential to create new jobs and safeguard existing employment in the UK. Therefore exploring how to ensure they are a practical and affordable everyday option makes sense all round. That is what the cross Government package of measures announced today will do."
Motor manufacturers will be invited to bid for the opportunity to participate in a £10 million project to run electric car and ultra low carbon vehicle demonstration projects, overseen by the Technology Strategy Board. This will see around 100 electric cars provided to allow families and other motorists the opportunity to feedback the practical steps needed to make greener motoring an everyday reality.
At the same time, up to £20m has been dedicated to UK research into improving technology that could make electric and other green cars more practical and affordable.
This follows the publication of important new research which concludes that, correctly managed, the UK power system could support widespread use of electric cars and their charging needs without requiring large numbers of new power stations.
Secretary of State for Business, Lord Mandelson, said:
"Investment in greener motoring forms part of our plan to put the UK at the forefront of the new low carbon revolution. We know our automotive sector has a global reputation for taking forward new technology and we want the UK to be at the heart of new developments in electric vehicles.
"In the recent Manufacturing Strategy we made clear our determination to support the next generation of low carbon cars and today we are delivering on our promises. Work will continue next year when we produce our low carbon industrial strategy."
Lord Drayson, Minister of State for Science and Innovation, added:
"The technologies for low carbon vehicles are developing fast, whether for all-electric, hybrid or alternative fuels. The challenge for the UK is to ensure industry takes full advantage of this shift and explores opportunities now, to position itself as a world leader in low carbon vehicle technology in the long term.
"To do this, the Government-funded Technology Strategy Board is providing further investment of up to £30m to support industry R&D and demonstrations of electric and other low carbon vehicles. This investment will accelerate the development of these vehicles and bring benefits to UK businesses and, ultimately, help to meet the UK's emissions targets."
The Government has already committed to removing the barriers that could slow a changeover to greener motoring. This includes a commitment to facilitate the roll-out of charging infrastructure through the planning system and to collaborating with other countries to develop international standards and consider how best to encourage the right consumer market to promote electric and other low carbon vehicles.
Work also continues with energy companies and the National Grid to assess the impact on the electricity system of the widespread use of electric drive vehicles.
To encourage the mass production of green vans for the first time, the Department for Transport also announced today that 10 companies have been shortlisted to bid to provide electric and low carbon vans to some councils and other public sector bodies, like the Royal Mail, as part of a £20m programme to ensure all road transport emissions are reduced. Liverpool, Newcastle, Gateshead, Coventry, Glasgow and Leeds will be among the first councils to trial green vans on their streets.
The 10 companies are: Ford; Mercedes Benz; Citroen; Ashwoods; Land Rover, Modec; Smiths; Electric Vehicles; LDV; Nissan and Allied Vehicles. A list of the public sector bodies are provided in the notes to editors. Transport Secretary Geoff Hoon added:
"Vans make up around 15% of road transport emissions in the UK, and their emissions are rising more than any other mode of road transport.
"That's why we are committed to this new programme to help kick-start the market. In the public sector there is considerable demand for vans so we want to use our spending power to lead the way in developing lower carbon options that will appeal across the board.
Mini sales soar in United States
Sales in the United States of the UK-produced Mini have soared ahead of those in Britain for the first time.
A 27% rise in US sales in the year to September led to 40,694 Minis being sold. Over the same period in Britain, some 35,496 Minis were sold. The soaring price of petrol has fuelled the car's American success.
About 80% of the 240,000 Minis produced annually at the company's plant in Oxford are exported.
Porsche raises Volkswagen stake
Porsche has increased its stake in Volkswagen, saying it hopes to have a majority holding in Europe's biggest carmaker by the end of the year.
Porsche revealed its stake had risen to 42.6% - saying it had chosen to make the announcement because of uncertainty in the car market.
It had previously already been been the largest shareholder, holding about 35%.
Porsche has said it did not want to merge with VW - but create an alliance that could take on competition.
It has also argued that it needs a strong influence at VW, which makes components for a third of Porsche cars.
The car industry, which is often seen as a barometer of the world economy, is entering a deep recession, with sales and profits tumbling.
Manufacturing plants are closing, production is being cut back, jobs are being axed and car company share prices are tumbling as a consequence.
United plans
Last week Porsche said disagreements between family members in the company had been resolved.
Two cousins, Wolfgang Porsche and Ferdinand Piech, have held conflicting opinions on how to take over VW.
Mr Piech - who is both the Porsche boss and head of the VW supervisory board - has backed unions who object to the takeover of their company.
But Mr Porsche said that the families were "united" on plans including the idea of co-management of both companies.
The so-called "VW Law" - which essentially gives German authorities the right to veto strategic decisions Volkswagen - will also be scrapped.
Chrysler puts a hold on car dealer recruitment
September sales were dramatically down for Chrysler, falling 69 per cent with just 467 sales, while Jeep tumbled 61 per cent to 660 units. Year-to-date sales for both brands were down by around 30 per cent. During the month the fledgling Dodge brand actually outsold Chrysler with 598 registrations. Federico Goretti, who was appointed managing director in August, said his main priority is to get his 71-strong network back on track after an unsettling period which saw him become the third boss in under 12 months. "Dealer recruitment is on the back burner. To achieve profitability you need to grow average throughput rather than grow the network," he said. He has already hosted a dealer conference and met with a number of retailers to try and re-energise the UK operation. "We have some good sized dealers and need to increase their average throughput. We need to get closer to an average of 400 sales per site; we're currently on about 200," he said. "It's important for our dealers to look at their cost structure and rationalise whatever they can. Their fixed costs are around 7 per cent; if they could get that down to 6.5 per cent that would help," he said. He also confirmed the brand has no interest in opening its own sites. "Carmakers should not get involved in retailing. We need to concentrate on developing new cars and technologies and retailing should be left to the professionals," he said. "There is some nervousness as there has been a lack of continuity and these changes have not been positive. "I'm optimistic but the next 12-18 months will be tough especially when you consider global events. My approach to dealers is to understand their problems and assure them that I'm rolling up my sleeves and working hard," he said. DATED: 27.10.08 FEED: MT |
Chrysler's new UK boss has put a hold on dealer recruitment as the brand moves to turnaround a business battered by falling sales.Porsche aiming for 75% Volkswagen stake
The luxury carmaker said it currently holds a 42.6 per cent - up from around 35 per cent due to recent purchases - and reiterated its plan to to gain a direct equity stake of more than 50 per cent by December. Porsche said it has once again outlined its plans due to the volatility of the global markets and the announcement has come at a particularly interesting time for VW. Its stock has shot up in recent trading, making the world's third largest carmaker worth more than all the other US and European carmakers combined. Porsche's gradual acquisition of the brand has not been easy amid resistance within the company's workforce and the opposition of the state of Lower Saxony, that German state that holds a blocking minority in VW. DATED: 27.10.08 FEED: MT |
Porsche yesterday announced plans to raise its stake in Volkswagen to 75 per cent in 2009.Hyundai records massive profits drop
Falling demand, rising overseas warranty costs and strikes have all hurt the South Korean carmaker's business. Despite this drop and gloomy predictions for the industry as a whole, Hyundai's results were better than anticipated. The carmaker's shares were up 1.2 per cent on Friday, a drop significantly less significant than that of the wider market, which fell 7.5 per cent on the same day. Where its Japanese rivals have been hurt by the rising Yen, the South Korean Won's drop against the dollar has helped Hyundai improve its price competitiveness abroad. Despite shrinking demand in the US Hyundai managed to maintain a 3 per cent market share. The company's focus on fuel-efficient compact cars has also helped it compete against other manufacturers. DATED: 27.10.08 FEED: MT |
Hyundai has reported a 38 per cent drop in quarterly profits.Chrysler reports massive quarterly losses
As a consequence Daimler, which has a 20 per cent stake in the American carmaker, has reported a charge of €351m in its third quarter, blaming Chrysler's second quarter struggles. Chrysler said €76m of the charge was within its automotive business. The other losses were reportedly due to adjustments, such as the reconciliation between US and international accounting standards. The beleaguered carmaker remains in talks with fellow American manufacturer General Motors regarding a possible merger. DATED: 27.10.08 FEED: MT |
Saturday, October 25, 2008
Peugeot to launch 'massive' cuts
French car company Peugeot Citroen has said it will cut its 2008 profitability outlook and start "massive" production cuts, in the wake of a global downturn.
The news came as figures showed third-quarter sales declined 5.2%, underlining slowing demand.
Separately, truck companies Scania and Volvo both saw orders in Western Europe slump for the quarter.
A day earlier, Chrysler said it would cut 1,825 jobs in the US, while Renault said production would be cut sharply.
Correctly positioned Peugeot chief executive Christian Streiff said the firm was reacting to the "collapse" in Europe's car market. By cutting production, it would avoid a surplus stock of cars building up.
Third-quarter sales dropped to 13.301bn euros (£10.7bn; $17.09bn), missing forecasts.
Shares in the car firm were 12% lower in Paris.
"Massive production cuts will be made in the fourth quarter, as it is vital that we are correctly positioned to face 2009," said Mr Streiff, although exact details were not available.
Meanwhile, both Scania and Volvo saw earnings miss forecasts.
Volvo pre-tax earnings dropped to 2.9bn Swedish kronor from 4.57bn Swedish kronor a year earlier, while Scania saw pre-tax profit of 2.51bn Swedish kronor from 2.38bn Swedish kronor the year before.
Other automotive firms to be hit by the downturn include Germany's Daimler, which has seen North American sales fall, while Italy's Fiat said sales could drop 20% in 2009.
Ford prepares to sell Mazda stake to raise cash
Ford is close to selling its 33.4% stake in Mazda as part of a desperate race to raise cash in a further sign of the crisis gripping the American automotive industry.
Ford is off-loading about 5% of its existing stake in the Japanese carmaker to Hiroshima Bank, but is also believes to have found buyers for much of its remaining shareholding.
Ford's $11 billion cash pile is thought to be fast running out as vehicle sales slump. However, selling about 5% in Mazda will probably only raise about $200 million, according to analysts.
Renault, Fiat and Daimler slash sales forecasts
 Renault, Daimler, and Fiat have scaled down their profits forecasts amid further signs of slowing economies and falling demand from car buyers.Having seen its third quarter revenue fall 2.2 per cent, Renault predicted a revised operating margin of around 3 per cent, down from the previous figure of 4.5 per cent. The carmaker also announced thenumber of vehicles sold will barely top last year's 2.49 million, confirming its original 5 per cent growth target would not be met. DATED: 25.10.08 FEED: MT |
Vertu Motors boss seeks expansion
Chief executive Robert Forester said the group is planning further growth by acquisition although this is not likely to happen until next year. "We don't want to be a group off 44 dealerships - it's not the right size for us in the medium term," said Forester. "Our focus has to be on the existing business and in six months time we'll have a better idea of when we are likely to be coming out of the recession - then we'll look at acquisition opportunities." Forrester would not say how many sites he wants to grow the group by but said the fall in freehold values over the coming months would provide the group with an opportunity to expand. Expansion into the north of England is of particular interest to Vertu but he said he is not currently talking to any dealers about future purchases. "The board is committed to an acquisition strategy to grow the market share of the group's operations in order to enhance shareholder value," added Forester. "The board believes that acquisition opportunities, and the value to be created from them, will increase as the current economic slowdown progresses." DATED: 25.10.08 FEED: MT |
Vertu Motors claims it has ambitious plans to grow its Bristol Street Motors business despite the downturn in the economy.Car dealers' future is under threat
PricewaterhouseCoopers said the severe drop would be a result ofvehicle manufacturers tightening control over dealership standards. Chris Kent, a director in the automotive team at the PricewaterhouseCoopers, said he expected many more dealers to fold than had already this year. "Manufacturers have introduced ever-stricter standards for those who hold franchise agreements in an effort to exercise closer control over their brand's corporate identity," he said. "Such restrictions will cause some dealers to resign the franchise while others will be forced out, leading to a smaller pool of businesses representing each marque. "With current economic conditions already a serious threat to the viability of some dealerships, further closures seem inevitable." Kent added that competition for sales will remain fierce, however, with a broader range of car brands chasing what could be a shrinking pool of prospective buyers. He said despite the factors of consumer and manufacturer demand, the wider economy was possibly the biggest influence at the moment. DATED: 25.10.08 FEED: MT |
Car companies look beyond recession
The car industry, which is often seen as a barometer of the world economy, is storming headfirst into a deep recession, with sales and profits tumbling.
Manufacturing plants are closing, production is being cut back, jobs are being axed and car company share prices are tumbling as a consequence.
"We didn't really expect the market to go down so quickly," says Toyota Motor Europe's head of sales and marketing, Thierry Dombreval. "The market has become increasingly competitive."
Nevertheless, while top executives at the top carmakers admit times are tough, they have told the BBC that they expect to emerge from the recession stronger than ever.
"To use motorcycling terminology, when you enter a corner you don't look into the corner, you look at where you want to be when you get out of that corner," says BMW's board member in charge of sales and marketing, Ian Robertson.
Immediate pain
But first, the automotive sector must prepare for 2009, which is expected to be even tougher than this year.
"Customers are relying on financing, so the credit squeeze is affecting all markets," adds John Fleming, president and chief executive of Ford Europe. "Sales are going down and markets are softening".
In the US, Detroit's Big Three - General Motors (GM), Ford and Chrysler - recently secured a $25bn government cash injection into the industry and may soon return for more.
European policy makers are considering similar action to help an industry in crisis.
Prepared for a slump
But when in a more contemplative mood, many of the industry's top executives are looking beyond the recession, and there they see gold.
Leaning confidently back in his chair, Bentley Motors chief Franz-Josef Paefgen says he is "very optimistic", even though the Crewe-based luxury car maker has seen sales drop by about a third since spring.
"Although we are having difficult times and the market is in a terrible condition, we are prepared for it," he says, pointing out that, even following the sales slump, Bentley is producing many more cars than it did five years ago.
Bentley sales rose from about 1,000 cars a year to about 10,000 cars between 2003 and last year, and there is no telling when demand will be revived, Mr Paefgen points out.
"It will come back one way or another," he declares. "We continue to invest in new product. We are investing at the highest level since Volkswagen bought Bentley a decade ago."
Jim Wright, vice president of Nissan's luxury-subsidiary Infiniti, which has just entered Europe, is also eagerly looking beyond the recession.
Brand-building during a downturn should lead to strong sales growth once the economy recovers, he believes.
American bounce?
Weaker oil prices should help, according to both economists and industry officials.
Oil prices should average $60 a barrel in 2009 and slip towards $50 by the end of the year, Deutsche Bank's energy analysts predict.
This could provide some short-term relief for US automotive firms as lower prices at the pump might slow down the shift towards smaller, more fuel-efficient cars.
In the short-run, this might make it easier for companies such as GM, Chrysler and Ford to get rid of their backlog of gas-guzzling models, and thus give them more time to change both the way they make cars and the way they are structured.
Rolls-Royce Motor Cars' new chief executive Tom Purves, who headed up BMW's North America division for almost a decade, predicts that the world's largest car market could bounce back quickly.
"The US is a much more immediately responsive market," he says.
"It goes down and up simply faster and people react more instantaneously. The systems and structures are more organised."
Fast-growing demand
Mitsuo Kinoshita, executive vice-president of Toyota Motor Corporation, is also confident that demand will pick up in the medium- to long-term.
"Cars are indispensible anywhere in the world for people to move, and the current financial situation does not change that," he grins.
Dieter Zetsche, chairman of the management board at Daimler and head of Mercedes Cars, agrees.
"There are many studies that say it took 120 years to get to 800 million cars around the globe, and that it will take only another 30 years to double that volume," he says.
"If that is true, the best is still ahead of us."
Even Fritz Henderson, chief operating officer of loss-making GM, is optimistic.
"We certainly still think the long-term prospects are very attractive," he says.
Adds BMW's Mr Robertson: "This industry is very resilient. This industry has seen difficult times before.
"The change has occurred unbelievably quickly. What was seen as a one way track - 'you'd better get in quick' - has gone down," he observes.
"But we need to keep reminding ourselves that things can turn quickly once again."
New markets
Hence, rather than shrink, the global car industry is still expected to grow dramatically in the long-run - though this is unlikely to happen in an orderly fashion.
In the future, the strongest sales growth is unlikely to come in the US and Europe, where manufacturing is currently strong. Instead sales growth will come from the Middle East, Russia, China and India.
"Our basic philosophy is to manufacture where demand is and the major demand now is in emerging markets," says Toyota's Mr Kinoshita.
Hence, although the future may be bright for the car industry at large, it looks gloomier for those working in factories, for suppliers or in dealerships in the US and Western Europe.
Here, job cuts may well pick up pace and temporary closures of factories may become permanent.
In turn, some companies - and certainly some brands owned by large automotive groups - may fail and disappear during the downturn, with others being acquired by rivals.
But this, says Mr Zetsche, should not boost anyone's overall market power.
"Even though there might be more consolidation, and potentially even the demise of one or two companies of today, those will be replaced by new players from China and India," he says.
And in a decade or two, he predicts, there will be a "a relatively similar automotive landscape to today's".
Employment Law Changes
Motor trade bosses will have to take a softer approach to their employees from April next year, when new workplace legislation is likely to be introduced.
The proposed Employment Act will introduce a code of practice which encourages simple procedures for early resolution of workplace disagreements.
The proposed legislation is in response to the Gibbons Report on Workplace Dispute Resolution in the UK, which concluded that 2004 Dispute Resolution Regulations had failed.
While formal procedures such as written warnings and official meetings will continue, employers will have to take a more personal and softer approach when dealing with workers.
In particular, there will be a greater need for mediation, especially informal mediation carried out internally by human resources staff.
Melvin Rogers, Sytner Group head of HR, said the company already had provisions in place for the new law, which will includes an anonymous hotline for employees to air any unresolved problems and field-based HR managers who visit dealerships to deal with problems informally.
He said the legislation would certainly assist some motor industry businesses.
“It’s a better approach because issues can be resolved at an earlier stage. If problems are left, they can fester when the chances are that it could have been sorted out amicably.”
He added: “Mediation is a much stronger way of dealing with things.”
Cash-strapped Treasury looks to increase fuel duty
Motorists could face a 2p a litre rise in fuel duty by April with an announcement due before the end of the year, it has been claimed.
Motoring industry leaders who have met Treasury Minister Angela Eagle in the run-up to the autumn's Pre Budget Report say they have been left 'in no doubt' that a fuel duty rise is on the agenda.
They said their pleas to continue a seven-month-long duty freeze 'fell on deaf ears' as the Treasury looked to replenish depleted financial coffers.
Chancellor of the Exchequer Alistair Darling has already given a commitment not to change fuel duty until next April at the earliest - although an announcement could be made before that date.
Thursday, October 23, 2008
Car companies look beyond recession
The car industry, which is often seen as a barometer of the world economy, is storming headfirst into a deep recession, with sales and profits tumbling.
Manufacturing plants are closing, production is being cut back, jobs are being axed and car company share prices are tumbling as a consequence.
"We didn't really expect the market to go down so quickly," says Toyota Motor Europe's head of sales and marketing, Thierry Dombreval. "The market has become increasingly competitive."
Nevertheless, while top executives at the top carmakers admit times are tough, they have told the BBC that they expect to emerge from the recession stronger than ever.
"To use motorcycling terminology, when you enter a corner you don't look into the corner, you look at where you want to be when you get out of that corner," says BMW's board member in charge of sales and marketing, Ian Robertson.
Immediate pain
But first, the automotive sector must prepare for 2009, which is expected to be even tougher than this year.
"Customers are relying on financing, so the credit squeeze is affecting all markets," adds John Fleming, president and chief executive of Ford Europe. "Sales are going down and markets are softening".
In the US, Detroit's Big Three - General Motors (GM), Ford and Chrysler - recently secured a $25bn government cash injection into the industry and may soon return for more.
European policy makers are considering similar action to help an industry in crisis.
Prepared for a slump
But when in a more contemplative mood, many of the industry's top executives are looking beyond the recession, and there they see gold.
Leaning confidently back in his chair, Bentley Motors chief Franz-Josef Paefgen says he is "very optimistic", even though the Crewe-based luxury car maker has seen sales drop by about a third since spring.
"Although we are having difficult times and the market is in a terrible condition, we are prepared for it," he says, pointing out that, even following the sales slump, Bentley is producing many more cars than it did five years ago.
Bentley sales rose from about 1,000 cars a year to about 10,000 cars between 2003 and last year, and there is no telling when demand will be revived, Mr Paefgen points out.
"It will come back one way or another," he declares. "We continue to invest in new product. We are investing at the highest level since Volkswagen bought Bentley a decade ago."
Jim Wright, vice president of Nissan's luxury-subsidiary Infiniti, which has just entered Europe, is also eagerly looking beyond the recession.
Brand-building during a downturn should lead to strong sales growth once the economy recovers, he believes.
American bounce?
Weaker oil prices should help, according to both economists and industry officials.
Oil prices should average $60 a barrel in 2009 and slip towards $50 by the end of the year, Deutsche Bank's energy analysts predict.
This could provide some short-term relief for US automotive firms as lower prices at the pump might slow down the shift towards smaller, more fuel-efficient cars.
In the short-run, this might make it easier for companies such as GM, Chrysler and Ford to get rid of their backlog of gas-guzzling models, and thus give them more time to change both the way they make cars and the way they are structured.
Rolls-Royce Motor Cars' new chief executive Tom Purves, who headed up BMW's North America division for almost a decade, predicts that the world's largest car market could bounce back quickly.
"The US is a much more immediately responsive market," he says.
"It goes down and up simply faster and people react more instantaneously. The systems and structures are more organised."
Fast-growing demand
Mitsuo Kinoshita, executive vice-president of Toyota Motor Corporation, is also confident that demand will pick up in the medium- to long-term.
"Cars are indispensible anywhere in the world for people to move, and the current financial situation does not change that," he grins.
Dieter Zetsche, chairman of the management board at Daimler and head of Mercedes Cars, agrees.
"There are many studies that say it took 120 years to get to 800 million cars around the globe, and that it will take only another 30 years to double that volume," he says.
"If that is true, the best is still ahead of us."
Even Fritz Henderson, chief operating officer of loss-making GM, is optimistic.
"We certainly still think the long-term prospects are very attractive," he says.
Adds BMW's Mr Robertson: "This industry is very resilient. This industry has seen difficult times before.
"The change has occurred unbelievably quickly. What was seen as a one way track - 'you'd better get in quick' - has gone down," he observes.
"But we need to keep reminding ourselves that things can turn quickly once again."
New markets
Hence, rather than shrink, the global car industry is still expected to grow dramatically in the long-run - though this is unlikely to happen in an orderly fashion.
In the future, the strongest sales growth is unlikely to come in the US and Europe, where manufacturing is currently strong. Instead sales growth will come from the Middle East, Russia, China and India.
"Our basic philosophy is to manufacture where demand is and the major demand now is in emerging markets," says Toyota's Mr Kinoshita.
Hence, although the future may be bright for the car industry at large, it looks gloomier for those working in factories, for suppliers or in dealerships in the US and Western Europe.
Here, job cuts may well pick up pace and temporary closures of factories may become permanent.
In turn, some companies - and certainly some brands owned by large automotive groups - may fail and disappear during the downturn, with others being acquired by rivals.
But this, says Mr Zetsche, should not boost anyone's overall market power.
"Even though there might be more consolidation, and potentially even the demise of one or two companies of today, those will be replaced by new players from China and India," he says.
And in a decade or two, he predicts, there will be a "a relatively similar automotive landscape to today's".
Carmakers to crackdown on companies who sell-on discounted cars
Vehicle leasing companies and brokers have been warned that their contracts will be terminated immediately if they are caught selling on discounted new cars.
There are industry-wide fears that pseudo contract hire companies and brokers are posing as buying vehicles for fleet customers and then immediately selling the cars on websites for cash.
Ford says it is monitoring websites that advertise heavily-discounted cars in a bid to discover the sources of the vehicles.
The company says that 'in a handful of cases we have terminated dealers' and rival General Motors says it has also 'taken action' against brokers who have breached their agreements.
The practice is illegal, but Ford said it had decided not to take legal action. The manufacturer said it had recovered the cars and ended the contracts.
Nissan and Volkswagen are among other manufacturers that say they would take 'very seriously' any action that resulted in their brands being damaged as a consequence of cars being disposed of before the required retention period.
The British Vehicle Rental and Leasing Association's broker committee says it has established compulsory standards for members.
BVRLA director general John Lewis said: "We will do everything in our power to stop people posing as leasing brokers or contract hire companies in order to obtain discounted cars that they can sell on at a profit."
Experts predict UK will have fewer car dealers
There will be significantly fewer car retailers operating in the UK in the years to come, as a result of vehicle manufacturers tightening control over dealership standards, according to analysts PricewaterhouseCoopers.
Chris Kent, a director in the automotive team at PricewaterhouseCoopers, will be presenting at the forthcoming EurotaxGlass's conference entitled 'Driving Business - opportunities for profit and growth in an uncertain market'. Speaking ahead of the event, he said that many more dealers are expected to follow those that have already closed their doors this year. The theme will be explored in greater detail at the event, being staged on 13 November at the National Motorcycle Museum in Birmingham.
"Manufacturers have introduced ever-stricter standards for those who hold franchise agreements, in an effort to exercise closer control over their brand's corporate identity," said Kent. "Such restrictions will cause some dealers to resign the franchise while others will be forced out, leading to a smaller pool of businesses representing each marque. Competition for sales will remain fierce, however, with a broader range of car brands chasing what may well be a dwindling number of prospective buyers.
"With current economic conditions already a serious threat to the viability of some dealerships, further closures seem inevitable."
Kent will speak at the conference alongside representatives from some of the biggest companies in the world, including Google and YouTube.
"Input from PricewaterhouseCoopers will give our conference a real sense of relevance, at a time when dealers are under greater pressure than ever," said David Burdett, Managing Director at EurotaxGlass's.
"The demands of consumers, manufacturers and legislators all shape a dealer's business, but the wider economy is possibly the greatest influence at present. Delegates will receive constructive advice on maximising profitability during these challenging times."
Carmakers fear hard times ahead
Carmakers have forecast a tough year ahead, as the financial crisis takes its toll on the car industry.
Italian carmaker Fiat said in a worst-case scenario its 2009 profits could fall by 65%, while global demand for its products could drop 10 to 20%.
South Korea's Hyundai reported a fall in third-quarter profits of 38%, but said it should meet most of its targets, though conditions were tough.
Daimler posted a profit for the quarter but said vehicle sales had fallen 3%.
As the global economy slows, consumers are shying away from making major purchases.
Italian gloom
Even though Fiat made clear that its forecasts were a worst-case scenario, analysts took them as a profit warning.
The Italian company added that it believed the "erratic" conditions in financial markets were temporary and insisted they would not affect the "overall substance" of its turnaround target for 2010.
In recent years, Fiat has successfully turned around its business, helped by the revival of the cult Fiat 500 car.
Fiat's third-quarter earnings were better than expected, with profit 8% higher at 802m euros (£632m), a performance it attributed to strong sales of farm machinery.
Korean realism
Hyundai Motor Company reported a 38% fall in third-quarter net profit, which was slightly better than expected.
It expects to sell slightly fewer vehicles - 3.02 million versus an earlier forecast of 3.11 million - this year, but said it should meet other sales and operating targets, in part because of increased demand for more compact cars.
"Demand for smaller cars is rising, although global auto demand is shrinking," said Park Dong-wook, a director at Hyundai's treasury division.
"The market situation in emerging countries is much worse than expected," he added.
Daimler
German carmaker Daimler reported a 213m-euro profit for the quarter, a dramatic turnaround from the 1.5bn-euro loss it saw in the same period a year ago.
Last year's loss reflected "special effects from the Chrysler transaction", the statement said, alluding to Daimler's sale of 80% of Chrysler to Cerberus, a US private equity group, in May 2007.
But Daimler saw plenty of evidence of the impact of the banking crisis on consumer confidence, as sales fell.
Daimler sold 522,500 passenger cars and commercial vehicles in the third quarter, down 3% from the 537,000 sold in the same period last year. Its revenues were 23.8bn euros, down from 25.7bn euros.
"We recognise that the situation is very challenging indeed," said Dieter Zetsche, chairman of Daimler's board of management.
Car prices are slashed online
Simon Empson, managing director of dealer intermediary website Broadspeed.com, said dealers were offering heavily discounted cars through his site. "I can't name the make or manufacturer, but I've had £20,000 knocked off one car this week," he claimed. "I've had more than a few under half-price cars as well. He said Mercedes models were the most heavily discounted from the prestige sector while Vauxhall dealers were offering the biggest cuts among volume brands. Empson said this situation complicated matters for brands such as Toyota and Honda, which were steering a comparatively steady course through the economic storm. "I've had Toyota and Honda dealers asking, ‘Why aren't my cars selling on Broadspeed.com?' It's because they're just not offering the competitive prices that some brands are out of desperation," he said. According to Empson, Broadspeed was attracting three types of buyers. They include former executives who have lost their jobs and are looking to replace their company car, usually by downgrading; those changing their vehicles due to changes to tax disc costs coming up in March and those he calls "deep-sea fishermen", who are out for a bargain in a buyers' market. Most other customers had withdrawn from the market, he said. Empson said many dealers had complained of being pressured by manufacturers who refused to be flexible about sales targets, despite the economic downturn and warned some could be forced out of business. "In my view there are going to be a lot of dealer failures because manufacturers aren't being flexible," he said. "They're asking dealers to meet boom-time levels and it's certainly not boom-time at the moment." Sue Robinson, director of the RMI National Franchised Dealers Association, said: "While we are aware some manufacturers have re-negotiated sales targets with their dealer networks in view of the more difficult trading conditions, dealers still face financial pressure from all angles, including manufacturers, due to the fragility of the current economic climate." DATED: 23.10.08 FEED: MT |
Nissan backs return of large car sales
The Japanese carmaker's vice president for product planning Pierre Loing said long term demand for bigger cars would endure the current economic conditions. Loing maintained that supermini and smaller sized cars couldn't meet all buyers' needs. "There is a debate in the industry whether it (downsizing) is a fundamental trend," he said. "My belief is that sentiment explains the collapse of the market. Cars are about individual mobility, and not everybody can have individual mobility in a car like the Nissan Pixo." He said that established technologies were already in place to bring down CO2 for bigger models, and that in the longer term sales would be driven by customer needs. "The volume decreases are very much due to economic conditions. If the economy rebounds they will improve." Despite a precipitous decline in sales, he suggested that the British market would not become as polarised as Spain, where new car sales have dropped dramatically, and "you don't sell big cars". DATED: 23.10.08 FEED: MT |
Nissan believes the demand for larger cars will return and the sector will survive the economic downturn.Wednesday, October 22, 2008
Ford shares hit after Kerkorian cuts stake
The decline follows billionaire investor Kirk Kerkorian's decision tosell 6.5 per cent of his stake in the US carmaker. Kerkorian still holds 1.33.5 million shares but may yet dispose of more after talks of a merger between General Motors and Chrysler intensified. He has a long association with GM and for a time Kerkorian's investment vehicle, the Tracinda Corporation, was its biggest shareholder. In April Kerkorian bought 140.8 million Ford shares for around $7 each for around $1bn. Yesterday, Kerkorian sold 7.3 million of those shares for about $2.43 each - an immediate $17m loss. DATED: 22.10.08 FEED: MT |
Ford's share price fell more than 6 per cent to close at $2.17 (£1.33) in New York yesterday.Vertu boosts profits and stays on acquisition trail
The group, which trades as Bristol Street Motors and is rated 11 in the Motor Trader Top 200, posted a £1.9m pre-tax profit on revenues of £423m. Both figures were significantly up on its inaugural reporting period which spanned the 10 months from 1 November 2006 - when Vertu was formed as a buying vehicle - and included the period from 27 March when trading commenced with the acquisition of Bristol Street, through to 31 August 2007. Revenues for that period were £290.3m with a loss of £0.4m. The group saw new retail car sales rise by 13.5 per cent on a like-for-like basis in a market which fell by 7.3 per cent. While used volumes rose by 15.1 per cent in its franchised dealerships they fell by 8.8 per cent in its Motor Nation car supermarket outlets. Here operating profit fell from breakeven to a loss of £0.1m and resulted in the group closing the "significantly loss making" Coventry Motor Nation site at the beginning of September. "The group has delivered a performance which is above last year's profit level on a pro-forma basis and the group has continued to gain market share with strong new and used like-for-like volume growth," said chief executive Robert Forrester. Forrester also said the group had performed well during last month's plate change when the market fell by 21.2 per cent. "The UK economic environment is increasingly challenging for the motor industry as a whole, however, despite this economic backdrop, we have maintained tight cost control over the business and continued to outperform the market in September. "We continue to anticipate further market weakness as the consumer adjusts to the economic environment," he said. Forester confirmed the group is planning further growth by acquisition. "The board is committed to an acquisition strategy to grow the market share of the group's operations in order to enhance shareholder value. "The board believes that acquisition opportunities, and the value to be created from them, will increase as the current economic slowdown progresses," he said. DATED: 22.10.08 FEED: MT |
Vertu Motors defied the downturn in the car retailing sector with a rise in profits for the six months to the end of August and restated its intention to grow by further acquisitions.Skoda and Lookers scoop best website honours
Skoda's website has taken the top car manufacturer honours in Auto Trader's Click Awards 2008. The annual awards also named Lookers as the Motor Dealer Website of the Year while The Car People won the inaugural Car Supermarket of the Year honours. The Click Awards are based on the views of over 600 car buyers who were questioned about their web usage in August as part of Auto Trader's Website Usability Study, carried out by eDigitalResearch. The awards cover 18 categories recognising best practice across manufacturer, dealer and car supermarket sites. The research, claimed to be the largest of its kind in the UK, polled the views of motorists thinking about buying a new or used car. The websites were judged on a range of criteria, measuring the quality of customer service online; design; the use of animation and engagement with the customer; ease of navigation; as well as the search tools and features available. Click Awards 2008 winners: Manufacturers: •Best Motor Manufacturer Home Page...........Renault •Best Motor Manufacturer Customer Service: .....Jaguar •Best Motor Manufacturer for Purchase Intent.........Audi •Best Motor Manufacturer New Car Configurator: .......Saab •Best Motor Manufacturer Used Car Locator: ........Jaguar •Best Motor Manufacturer Communication Of Environmental Credentials: ........Renault •Most Improved Motor Manufacturer Website: ...............Renault •Motor Manufacturer Website Of The Year 2008:..............Skoda •Best Motor Dealer Homepage: ................Lookers •Best Motor Dealer Customer Service: .............Mercedes-Benz Direct •Best Motor Dealer For Purchase Intent: .............Hartwell •Best Motor Dealer Used Car Locator: .............Arnold Clark •Most Improved Motor Dealer Website: .............Ford Retail •Motor Dealer Website Of The Year 2008: ..................Lookers •Best Car Supermarket Used Car Locator: ...............Available Car •Best Car Supermarket Customer Service: ..................Motorhouse •Best Car Supermarket For Purchase Intent: ................Car Giant •Car Supermarket Website Of The Year 2008: ................The Car People DATED: 22.10.08 FEED: MT |
Vertu posts £3m half year profits
Vertu Motors this morning reported a swing from a £100,000 operating loss to a £3m operating profit.
The dealer group's half-year results show turnover up to £423.5m, compared to the £290.3m sales in its first five months of trading.
Although much of that growth was through acquisitions, £26m of organic growth was achieved at its Bristol Street Motors dealerships.
Chief executive Robert Forrester reported that new car registrations at the franchised dealerships increased 13.5% on a like for like basis, and used car volumes rose 15.1%.
Coventry closure
In contrast, its Motor Nation used car outlets have been hit by the challenging market, with volumes down 8.8% and the operation slipping from breakeven to a £100,000 loss in the period.
Following a review, Vertu closed its Coventry Motor Nation site at the start of September due to significant losses.
It also closed a used van centre in Birmingham, and said cost review programmes are in place across the group.
Improvements have been made to stock turn, and Vertu has improved fleet sales profitability, although seen a 3.4% drop in fleet volumes, due to a shift away from lower margin fleet volume.
DATED: 22.10.08
FEED: AM
HR Owen to stay in profit
HR Owen said last night that it still expects to post a trading profit at the end of the year, despite difficult market conditions.
The listed dealer group told investors that the outlook for the remainder of the year remains difficult to predict, but its board is satisfied the group will remain profitable.
It reported its recent proposal to surrender and lease back its Bentley aftersales site at Nine Elms has received support from 74% of shareholders, and, if passed at a forthcoming EGM, will net £1m this year for the group and up to a further £9m in future.
DATED: 22.10.08
FEED: AM
Tuesday, October 21, 2008
Independent Training Values
But luckily for us at Profit Training we consider the ups outweigh the downs. As an independent training company when we meet with a dealer client we have to introduce ourselves and our offering, qualify, sell the benefits, trial close, handle objections and close the deal. We then have to do what we promised to do, ensure the client is happy with the results and their return on investment, and then we have to make sure we get paid. I am sure every one of you reading this article will recognise the similarity of our sales process to your own on the sales floor.
But these aren't the advantages of being an independent training company. The real advantages are the simple, uncluttered ability to offer unbiased recommendations without evasion or reservation of any kind. We can offer our dealer clients a cast iron guarantee that any recommendations made or advice given is delivered without any politics or third-party agenda.
Our aims are to deliver a measurable return on investment for clients, to improve their businesses profitability, to improve their income per retail unit, to improve their sales processes, and to ensure that everybody in their sales function has a clear understanding of the businesses objectives, aims and aspirations.
At Profit Training we tend to summarise this process with two important key words:
Confident Competence.
Way too many training providers deliver training courses to dealer delegates that only satisfies the competence aspect of development. The vast majority of these training providers are manufacturer or finance house linked. Critically, their primary agenda is the transfer of knowledge to prove competence in a specific area, an example of which would be a manufacturer running a training course on a particular model roll out or event, or a dealer group buying half a dozen CD-ROMs to ensure their staff have provable technical competence within the guidelines of the FSA to sell general insurance products.
The section that is missing from most of these training courses is confidence, and sadly all too many delegates leave training courses with new knowledge, skills, or abilities that through a lack of confidence they will never use. It is this sort of training which presents independent training companies with an unfair negative image, and a clear and open marketplace.
It is no coincidence that the dealerships or dealer groups that are most profitable have a clear focus on delivering professional independent training to their selling teams, ensuring that all delegates that attend regular training programmes are confidently competent in the areas in which they are expected to sell.
We have recently delivered a training programme for a large dealer group that was a rerun of a failed programme delivered by another provider. When we interviewed the sales staff at one of the group’s dealerships it immediately became apparent that the training had been 100% effective at imparting knowledge, and 0% effective at imparting skills or confidence in delivering that knowledge to clients.
In a nutshell, the delegates knew their stuff, they just weren't sharing it with customers, and the impact on the businesses F&I profitability was clear to see. We were able to enthuse, energise and encourage the sales teams to use their knowledge to sell products, and improve their income per retail unit from ancillary sales.
I remember when I first came into the motor industry, and F&I profits were often considered to be the icing on the cake, but times have changed and this revenue stream is no longer an option, but a ‘must have’ to ensure ongoing business viability and profitability.
The inordinate amount of regulation via the consumer credit act, the data protection act and the insurance mediation directive (FSA), along with a whole host of associated bureaucracy and red tape has all but suffocated that traditional revenue stream. But those dealers and dealer groups that understand, value and deliver professional independent training are still enjoying a healthy return, good finance profitability, FSA compliance and happy F&I provider partners.
So, in summary if you want your sales teams to understand the products they sell then get those product providers into your business to deliver training. But if you want to profit from your business, and you want your sales teams to have the skills and confidence to work around regulation, understand the requirements and deliver profitable product sales compliantly, then get in touch, we will be delighted to help.
Do you know what your customers think they know?
Do you know what your customers think they know?
Ahh the age old chestnut, you know what you know about finance and loans, but your customers tell you that they know what you know because they’ve ‘got the internet at home’
Let me tell you, the vast majority of your customers don’t have a clue about the difference between finance and a personal loan, the burning question is, do you?
I have spoken to a few sales execs in the last few days, and conducted my own straw poll based on the differences between finance and direct lending, and I have to tell you the results were totally unsurprising – the lack of knowledge in our own industry never ceases to amaze me.
Firstly, your customers are being educated by your competitors, the Banks and direct lenders. The common theme they use is that of APR. Honestly now, how many of you in the last month have had to counter and sell against an APR objection proffered by a customer? I suspect quite a few of you at the coal face would say yes, and its pretty bloody difficult to sell against when you’re on the back foot from the off.
The reason that your finance competitors educate customers to use APR is really simple; they know you can’t compete on rate. Ah well, might as well switch off the lights and go home eh?
NO.
Your F&I products are streets ahead of the generic, bland and flaccid loans that your customers are offered by the big boys in the high street, here’s why;
APR: Finance APR is calculated after assessing all fees, charges, interest, admin & documentation costs that COULD be charged to the loan, IF the loan was to run, unblemished and on time every month without fail, until the LAST payment is made. The Banks APR only reflects the INTEREST levied on the amount of money borrowed, on an annualised basis. Hence the acronym – Annual Percentage Rate – what is annual about your APR’s?
We all know that a Finance APR incorporates the Maximum cost to the client – the direct lenders APR reflects the Minimum. We all knew that, we just didn’t know that we knew it.
SECURITY: We all know that personal loans are unsecured right ? WRONG.
Personal loans remain unsecured whilst repayments are made at the agreed amount on the agreed date, deviate from that schedule and the loan can be converted within minutes to being secured on your home, property or assets. FAIL to pay your ‘unsecured personal loan’ and your goods and chattels to the value of the outstanding loan plus any additional fees or disbursements (translation – massive profit opportunities) are forfeit.
Finance is secured on the car, fail to pay and we take the car, block it, redeem the loan from the proceeds that were the best that could be secured, and reschedule a loan to repay any outstanding balance.
UNDERWRITING: If your customers borrow £10k from the Bank, then they are the security on the loan; accordingly the principal sum borrowed plus interest will be listed on their credit report. Experian, Equifax, Call Credit, CDMS, and other credit bureaux will show this as them owing £14,000 to the direct lender, enough to scare off future sources of credit, as the balance often stays constant until the loan is repaid.
Finance houses do not as a rule show the balance, some may show the original loan amount, but most just record £250 per month going out of your clients bank, with a series of 0’s and 1’s for on-time or late payments.
So, by offering your clients secured finance on the vehicle, you are helping them preserve their credit rating for the next few years, absolutely critical for the future.
EARLY SETTLEMENT: We have all done it, some of us a million times, contacting a lender for an early settlement quote, and then it pops through the PC / Email / Fax / Local Rep, the customer owes us £xxxx, but for early settlement before such a date, we will accept the reduced figure of £xxx. Ahh, isn’t that nice of the Finance company to do that, knocking off the remaining interest from the loan as an incentive to repay early.
NO.
It is the law, they have to do it. The Law is the Consumer Credit Act, which clearly stipulates that in the event of a request for early settlement, all outstanding fees and charges be rebated off the agreement, as the client no longer wishes to borrow the money. This calculation used to be called the ‘rule of 78’, the new calculation method is Actuarial. The commercial reality is that you can ask your customers if they would like the remaining unpaid interest knocked of if they want to settle early, if they say yes, sell ‘em finance, because this protection does NOT COVER PERSONAL LOANS.
Please have a look back at the APR paragraph, does it make sense now?
Oh, one final point, a number of you may write to me, as has been done before, questioning my claim that the CCA doesn’t cover Personal Loans, so in anticipation ask yourselves the following questions,
Do PL documents claim to give coverage under the CCA ? (answer – yes )
Do Direct lenders take security in the asset?
Do Direct lenders need a dealer invoice?
Do Direct lenders offer halves and thirds?
Do you seriously believe that a Bank would give away loan profit on an early settlement if they don’t have to ?
The Banks wrote the Consumer Credit Act in 1974, it took 10 years to gain statute, it was a piece of regulation that they engineered to regulate all lenders but themselves, don’t you think that’s a little unfair ?
To close, give your customers the peace of mind that comes with a secured finance agreement, protect their rights, protect their credit ratings, guarantee them an early settlement for the future if they need it, and in doing all of these things for them, make additional profits for yourself and your dealership.
BUSINESS OWNERS & DIRECTORS; If you would like me to help your team make the most of every profit opportunity, please give me a call, or drop me a line, I guarantee to add value and confidence to your team, and I’m not as expensive as I appear.
DATED: 21.10.08
FEED: PTL
Recession, what Recession ?
If I hear another “expert” telling me that the UK is in recession, shows signs of Incremental Inflation or whatever buzz phrase the financial gods deign to spit at us, I am highly likely to lamp someone.
Can we perhaps grab these people by the throats and explain to them in words of few syllables the idea of a self fulfilling prophecy, and how much damage they are causing by proclaiming how dire the situation is?
These difficult trading conditions are created 50% by actual events and the other 50% by those whose sole agenda is to sell their story or to get their 5 minutes of fame on the telly.
This morning I had to stop and watch ( with mouth gaping open ) at some young woman from a top flight Accountants firm telling us that the economy will shrink, job losses will be substantial, and we are all in deep dirt until 2011.
Firstly, can I point out that I’ve been getting dirty in the motor trade long before she was soiling her nappies, and I am by no means a veteran in the business, there are many more of us out there proud of our industry, but watching it stall due to the comments made by academically brilliant young people who have absolutely no perception of the damage of their words. Not surprising really, as I suspect most of these experts have never experienced ‘work’.
Secondly, if the media hold someone out to be an ‘expert’ in a particular field, and that person proclaims doom and disaster, the effect that has on this and other industries can be profound, and not just the core deliverers, but all the ancillary industries that feed into our Motor Trade. Our customers and prospects listen to these ‘experts’, and their response is to stall buying decisions.
Here are some wise words for us all;
“If you think you can do a thing, or you think you can’t do a thing, you’re right”. (Henry Ford)
Here’s a quote that comes from my first DP, Tom Booth (evenin’ guv..).
“Improve what you can, don’t waste time on what you can’t change”.
It doesn’t matter whether you’re a Steve Archer, driving a group the size of Inchcape, or a Sales Exec at a small independent dealer – we have a choice right now to look at each and every opportunity to do business. Now is the time to be creative in the ways we do business, and now is the time to stop believing the hype of the media – reality makes it hard enough to deal profitably, lets not get sucked into the mire of attention grabbing headlines.
The stark reality is this, people are less confident about making a choice purchase right now, such as a car, boat, caravan or motorbike. In the same way that we are seeing the Banking fraternity’s reluctance to lend to each other, the domestic customer is doing exactly the same, hoarding their cash ‘just in case’.
So here’s the deal:
If you’re a Director or Manager of your business, lift your team, stop them worrying about things they can’t change. Get your team charged up and positive about your stock, model mix, location, prospect database and opportunities to do business.
Explain to them that every single walk in is a potential customer, get their chins lifted, dust their best smiles off and get them back into selling themselves, the dealership and the products.
If you’re in Sales, be proud of what you do, expect every customer to be real and genuine, take a few knocks on the chin, knowing that each time you swallow a no, you are one step closer to a deal.
If you believe the industry is on its bum, it is.
If you believe that each customer is a timewaster, they are.
And if you believe that you can sell, now is the time to prove it.
Look after each customer as if they were your Granny, listen to what they need, and give it to them. They are in your showroom for two reasons, they want to change their car, and they want your help to do it.
To close, a final quote from Our ‘Enry:
“It is not the employer that pays the wages, they only handle the money, It’s the customer who pays the wages”.
DATED: 21.10.08
FEED: PTL
Norton back in British hands
"Stuart Garner a UK based businessman and owner of Norton Racing Ltd has bought back all the trademarks and development work relating to the Norton, Manx, Atlas, Commando and Dominator brands. "
After nearly 15 years of US ownership, Norton is back in British hands.
Stuart Garner a UK based businessman and owner of Norton Racing Ltd has bought back all the trademarks and development work relating to the Norton, Manx, Atlas, Commando and Dominator brands.
Garner said: ““This has been a challenging and exciting period for us.
“We are proud to have brought the brands back home and we now intend to focus on re-establishing Norton as a premier motorcycling brand across the World.”
Norton Racing Ltd is currently developing a new rotary engined race bike and now with ownership of the brand, plans are being developed to introduce a new road bike for 2009.
The company has a new 15,000 sq ft factory and office complex at Donington Park and plans to have a strong presence on the track and road.
Garner said: “Our trade marks and brand have incredible strength and value. We will strongly enforce our position as the new owners of these world famous brands and ensure our new partners benefit from a robust protection programme going forward.”
“This is the beginning of a new and exciting era in a brand that was started over 100 years ago by James Lansdowne Norton. It has sustained ups and downs over the years but still stands for performance and excellence. These will be the standards we live by from now on.”
DATED: 21.10.08
FEED: AM
Motor charity Ben announces new head
Motor trade charity BEN has announced that its new chief executive will be David Main.
Main is currently chief executive of the Civil Service Benevolent Fund, and will take over from interim chief executive Christopher Macgowan on January 26.
A qualified accountant, Main has held senior roles in the healthcare, software, legal and charitable sectors.
Macgowan said: "I am delighted that David has agreed to join BEN's professional executive and I look forward to working alongside him as I return to my position on the board.
"BEN's executive team and board have a vast knowledge of the automotive industry and the charitable sector and David brings his business skills and experience to complement our existing strengths.
"Together we will review the strategic
direction of BEN to ensure that we continue to provide quality support to those in the industry."
DATED: 21.10.08
FEED: AM
Inchcape announcement prompts share price collapse
Inchcape's share price nosedived 38 per cent last week after the dealer group confirmed 2009 earnings would be below forecast. Its stock market value fell to 78 pence - the lowest level in seven years. Pendragon shares dropped 6.3 per cent to 5.62 pence - a new 12-month low which surpassed the previous record of 7.5 pence. The latest decline means that so far this year the giant dealer group's stock has plummeted by 84per cent. Lookers' shares also fell sharply to a five-year low, dropping 12 per cent to 30 pence. The fall prompted the dealer group to announce it would now focus on growing its parts business. Elsewhere, Caffyns saw its stock market value fall to a yearly low of 440 pence and it was the same scenario for Vertu Motors, which has a current share price of 17.5 pence. DATED: 21.10.08 FEED: MT |
In the wake of Nissan announces production cuts
Production of the Micra and Note will be suspended for two weeks between late October and November and shorter working times will be introduced for a three week period. Manufacturing of the well-received Qashqai remains unaffected due to a 12-month waiting list in Russia , which has kept the line open. The Japanese carmaker's plant in Barcelona, which recently suffered 1,680 jobs losses, will also reduce its production capacity. Nissan said it was introducing the measures in order to "manage volume, reduce existing inventory and prevent over supply to a weakening market." Employees at both plants will receive training during the non-production days. The production cuts follow the carmaker's announcement last week that it was looking to make redundancies at its Sunderland factory. It has introduced a voluntary redundancy scheme but Nissan warned it would axe temporary workers if too few come forward. DATED: 21.10.08 FEED: MT |
Nissan has cut production at its car plant in Sunderland to avoid stockpiling GM finds out what women want
Satnav is the most popular option with almost a third of females drivers wanting to see it fitted as standard on their next car. According to a survey by GM Fleet, an iPod or MP3 dock was the next most popular add-on, followed by climate control. Other attractive options included a sun roof, parking sensors and infotainment systems. Less than 10 per cent of the 1,000 women surveyed listed environmental credentials or fuel consumption as factors in the car buying process. DATED: 21.10.08 FEED: MT |
Women rate comfort and entertainment as key to helping them make their next car purchase.Friday, October 17, 2008
Inchcape Restructure & Profit Warning
Inchcape has informed dealers this morning of its intentions to streamline the business following a profit warning to the City this morning.
Inchcape has revealed that its results for 2008 will be “below consensus” and 2009 will also be “significantly below our previous expectations”.
In a statement to the stock market, the dealer group said: “Trading conditions have deteriorated significantly in the UK and are weakening in a number of our other markets.”
Ken Lee, Inchcape group communications director, said: “The first nine months of the year produced a pleasing set of results for us. However, since quarter three there has been a drop off in consumer confidence.
“We’re looking at the size of the organisation and we’re about to step into consultation on a site by site basis across the country, including our group head office.”
Inchcape wants to make a group saving of £55 million as a result of the restructuring and are focussing on reducing overheads, particularly in the back office.
Lee confirmed that jobs are likely to be lost but he could not confirm how many.
He said: “We have contacted dealers this morning about streamlining the business and that’s a process we’ll be stepping into over the coming days.
“We’re looking closely at the back office but we don’t want the restructuring process to affect our customer service focus.”
Lee added that it was a difficult message to deliver during difficult times, but it was an opportunity for Inchcape to differentiate itself from other auto retail businesses.Trading for the nine months ended September 30, 2008 showed group sales were up by 6.7% and in line with the same period last year in constant currency.
Like for like group sales were down 1% and the group's operating margin was in line with last year at 4.8%.
The group's underlying pre-tax profit for the nine months was up 2.2% in sterling terms and down 7% in constant currency compared to the same period last year.
Inchcape's share price fell from 50p to 39p in reaction to the news.
DATED: 17.10.08
FEED: AM
Dealers set for stormy times
At one point midway through September, retailers were talking about new car registrations down on September 2007 by 20, 25, even 35% in a couple of instances.
The figures, due out next week, will no doubt show a far smaller drop – though don’t be surprised if it is close to 20% – after the usual flurry of late-month registrations fuelled by pack deals.
However, the volume of ‘sales’ going through the book in the final two to three days of trading could be quite a bit smaller than usual.
Why? Because some carmakers have adjusted their sales targets to take into account the growing economic worries. It has eased ever so slightly the pressure on dealers to hit numbers in order to secure bonuses.
Honda has already cut its targets for the first half of the year by 10%, and it isn’t the only one; others are looking at third-quarter targets.
But with many marques likely to show red figures of -20% and more in September, even that action could be in vain for many dealers.
With 17 of 22 trading days completed, the figures stood at a little over 250,000, some way off the SMMT’s full-month forecast of 390,000 and not even in the same ball-park of September 2007’s 419,290.
End of year slowdown
On the back of an awful third quarter comes the traditional end-of-year slowdown. It’s a time when many dealers are reliant on friendly bank managers to help tide them over to the New Year.
Consider the fact that average return on sales was just 0.6% for the first seven months of the year, down from 0.9% over the same period last year.
But the traditional slowdown pulled last year’s returns down to 0.7% for the full 12 months, so expect the 0.6% to be similarly whittled down. How many dealers will be trading in the red come December?
With the ongoing banking crisis, credit lines are going to shorten, if not disappear, and any company that has not been able to make sufficient provisions will face a difficult time.
It’s a cheerless prediction, but I fear that we are going to see a lot of dealer failures. By January we could see far fewer dealerships than the 5,500-odd we started 2008 with.
DATED: 17.10.08
FEED: AM
Thursday, October 16, 2008
Merger talks boost GM and Ford
Shares in General Motors and Ford have accelerated after weekend reports that they had held merger talks with each other and with Chrysler.
Although, no firm link is thought to be imminent, investors were buoyed by the prospect of a giant American carmaker that could withstand better the intense pressure of a weak global market.
In the first official comment on developments, Bob Nardelli, Chrysler's chief executive, told staff that he was talking to a number of parties about potential tie-ups.
Ford declined to comment, but a GM spokesman said: "GM officials routinely discuss issues of mutual interest with other automakers. As a policy, we do not confirm or comment publicly on those private discussions, which, in many cases, do not lead anywhere."
However, the Daily Telegraph has reported that talks between GM and Cerberus, which owns 80% of Chrysler, and fuelled the weekend merger speculation had stalled.
F&I Wake up Call to VW Dealers
"Dealers can set up the scheme online at the time of the sale. Volkswagen allows customers up to 90 days to buy a policy, giving dealers a reason to contact customers."
Volkswagen Group has urged its dealers to make up for falling revenue on sales and aftersales by selling insurance products.
Improved and more flexible asset protection is now available to VW, Audi, Skoda, Seat and commercial vehicle franchise holders.
David Maloney, business development director, said: “This is a wake-up call to dealers to mitigate some of the difficulties created by the decline in the economy.
“Some of our dealers are improving their income from GAP (guaranteed asset protection) products,” said Maloney.
“We used to have a ‘one size fits all’ product, but we now take account of changes, such as car buyers’ greater awareness of the scale of depreciation on vehicles.”
Dealers in the group’s franchised networks can sell other F&I products, and Maloney said the changes were in part made because of competition.
Another is his expectation that the Financial Services Authority will soon take a closer look at GAP insurance following its enquiry into PPI (payment protection insurance).
Volkswagen estimates the UK retail value of GAP insurance is around £60 million. About 200,000 policies are sold annually.
On average, dealers sell the products for around £300 each.
Dealers can fix their own showroom price after buying the products from Volkswagen.
New product structure
Maloney said the new product structure was worked out in consultation with dealer councils.
The basic asset protection covers the difference – in the event of accidental damage, fire or theft – between the price paid for the vehicle and the amount owed on the finance agreement, up to £10,000.
A ‘plus’ product covers the gap between the purchase price and the insurance pay out. Volkswagen now allows claims of up to £25,000 for vehicles priced over £30,000 – an increase of £10,000.
Maloney said the group now enabled customers to buy the cover they needed. The claim limit has been halved to £7,500 for vehicles priced up to £10,000. It is now £10,000 for vehicles costing £10,000-£20,000.
Dealers can set up the scheme online at the time of the sale.
Volkswagen allows customers up to 90 days to buy a policy, giving dealers a reason to contact customers.
DATED: 16.10.08
FEED: AM
Tata to bring electric vehicle to Europe in 2009
Tata Motors’ UK subsidiary, Tata Motors European Technical Centre, will bring an electric vehicle to Europe next year.
The announcement follows Tata’s acquisition of a 50.3% stake in Norwegian company Miljo Grenland Innovasjon which specialises in the development of electric vehicles.
Miljo will produce electric vehicles based on Tata Motors’ products, as well as super polymer lithium ion batteries to power the cars.
The first vehicle to be developed by the company will be the Indica EV, which will go on sale in Europe next year.
Tata is expecting the Indica EV to have a range of 125 miles and will be able to carry four passengers.
A spokesman for the Indian manufacturer could not confirm if the Indica EV would be coming to the UK despite the fact that it's Tata's UK subsidiary that is bringing the model to Europe.
DATED: 16.10.08
FEED: AM
Gaz confirms rebrand to Maxus
"GAZ recently acquired a 50% stake in Italian diesel engine maker VM Motori. The other 50% is owned by General Motors, and one option would be to partner with GM on light vans. "
GAZ, the Russian manufacturer that bought van maker LDV two years ago, has confirmed that it will rebrand the company Maxus “in the near future”.
The plans will include the black and orange corporate identity already used on the Maxus product range.
The new CI will be in place across the UK network of 72 dealerships and 123 service centres by the end of next year.
“The UK dealer council is supporting the change to Maxus,” said marketing director Guy Jones.
He likened the rebrand to Mini, where the brand and the product are the same.
But clearer model-specific branding is likely to be added, as LDV wants to add more models to its range, particularly a smaller van to plug the gap left by the Cub model, a rebadged Nissan Vanette that was sold from 1996 to 2002.
A suitable vehicle could be produced as a partnership with an existing van maker, or could be acquired.
Earlier this year GAZ bought the production line of the Dodge Stratus from Chrysler, shipped it to Russia and now builds the car as the GAZ Siber.
It could do a similar deal with a European van maker. Alternatively it could source vans from an existing plant or even acquire a plant.
GAZ recently acquired a 50% stake in Italian diesel engine maker VM Motori. The other 50% is owned by General Motors, and one option would be to partner with GM on light vans.
DATED: 16.10.08
FEED: AM
GM and Chrysler merger meets with opposition
Ron Gettelfinger, president of the UAW, said he was against the move because it would cost workers their jobs. He added that he believed any reports of the merger to be "pure speculation". Gettelfinger said the union had not had any formal discussions with either manufacturer, but that the UAW had done much to help Detroit's automakers survive with health care concessions in 2005 and a new cost-reducing contract last year. GM has been exploring its options to counteract sales downturns, considering mergers with Ford and Chrysler and bidding for federal funding. DATED: 16.10.08 FEED: MT |
Economic meltdown hits car dealer shares
Inchcape's stocks suffered the heaviest fall, down 27.5 per cent during the course of the month to 187.5 pence, giving the global group a market capitalisation of £863m. Philip Wylie, head of automotive at corporate finance firm Houlihan Lokey, said the group lost value after it sold five of its six Volvo franchises in the UK to Mill Garages for £3m but was unable to dispose of the properties as part of the deal. Houlihan Lokey said this highlighted that the buyer's funding banks were not willing to lend on this element of the deal, not that Inchcape wished to retain ownership of the premises. "Inchcape would have preferred to sell the whole shebang," said Wylie. "The banks are being very cautious, they won't lend money if they can possibly help it." Lookers' shares got a shot in the arm in early September from investment research company Edison, which drew attention to the advantage of the group's strong aftermarket focus in the current climate. Aftersales contribute about 60 per cent of Lookers's operating profit despite accounting for only around 20 per cent of turnover. However, having risen to 62 pence by 10 September from August's closing price of 56 pence, the group's share price closed September down 17 per cent at 46.5 pence. Pendragon saw a marginal decline of 6 per cent in September to 8.9 pence - managing to stay clear of its 12-month low of 7.5 pence. Houlihan Lokey said the group benefited in early September from speculation of stakebuilding activity. Luxury marque group HR Owen suffered a 31 per cent downturn in its share price last month to close at 70.5 pence. Wylie speculated that crashes in the Russian stock market could have led to investor concerns that "its rich Russian customers might suddenly desert them". Vertu, which operates in the volume brand sector as Bristol Street Motors, saw 10 per cent knocked off its share price in September to finish at 24 pence and Caffyns was down 8 per cent to 487 pence. DATED: 16.10.08 FEED: MT |
Volvo appoints new UK boss
Rask replaces Stuart Kerr who has been promoted to the position of Volvo's regional president for Europe with immediate effect. Rask has been with Volvo for eleven years and is currently president of Volvo Cars Switzerland. He previously worked in the carmaker's marketing division and headed up its Greek sales operation. Kerr, who has been in charge of Volvo UK since October 2006, will combine his new role with his current responsibilities until Rask takes on his new role in January 2009. DATED: 16.10.08 FEED: MT |
Volvo has appointed Peter Rask as the new managing director of its UK operation and as president of its UK, Ireland and Iceland divisions.GMAC restricts new car finance offer
 US car finance sales could plunge in the coming months following the announcement by GMAC Financial Solutions that it will only lend to prime borrowers with credit scores of over 700 points.The finance company also said it will restrict contracts with higher advance rates and longer terms. With the vast market share the company commands in the USA, some analysts believe these new restrictions could result in one in four car loans being refused. This problem could be further exacerbated because dealers may have trouble finding alternative lenders if they continue to pass their best contracts to GMAC. A GMAC statement said: "These changes in pricing and underwriting are elated to the current market environment, which has reduced access to funds and increased the cost of funds." DATED: 16.10.08 FEED: MT |
Tuesday, October 14, 2008
Arnold Clark Motorstore opens doors
The latest Arnold Clark Motorstore has opened at Stafford.
The site, just off junction four of the M6, is the largest Motorstore in the dealer group, with 200 staff and more than 1,000 vehicles stocked.
Arnold Clark management will join VIPs for a champagne reception at the dealership on November 13.
The site includes a 13-bay service department, two MOT ramps, a brake tester bay, a car and van rental department, a valet service and parts department.
There is also a cafe, a soft play area for children and an area for teenagers featuring computer consoles and wide-screen TVs.
DATED: 14.10.08
FEED: AM
Credit Crunch claims TVR Dealership
Henley Heritage TVR has ceased trading and entered voluntary liquidation.
The dealership held the TVR franchise until the Blackpool carmaker closed in December 2006, after which it specialised in used TVR and Lotus sports cars.
DATED: 14.10.08
FEED: AM
Mansfield Subaru dealer closes
Lucas of Mansfield, a Subaru, Proton, Isuzu and Daihatsu dealership, has gone into administration.
Management said a recent drop in cars sales has left them with no alternative but to call in administrators.
However, the showrooms will be kept open temporarily to sell the remaining stock of cars.
The business founded in 1918 and based on Nottingham Road, Mansfield, employed 27 people.
DATED: 14.10.08
FEED: AM
GM and Ford shares surge
 General Motors and Ford shares swelled yesterday following reports of talks between the two manufacturers, as well as between GM and Chrysler, about a possible merger.GM shares closed yesterday $1.62 (£0.93) up - a 33 per cent rise to $6.51. Ford shares also saw a jump with a 24 per cent rise to $2.47 at closing. The rises come despite the scepticism of analysts regarding the possible mergers discussed over the weekend. All three American companies have been struggling to stay afloat since the financial turmoil in their home market as well as abroad. GM shares are down 80 per cent for the year and Ford shares have dropped 70 per cent. DATED: 14.10.08 FEED: MT |
General Motors and Chrysler in merger talks?
General Motors has reportedly been in talks with rival American manufacturer Chrysler about a possible merger. The Wall Street Journal reported that GM was in talks with Cerberus Capital Management, which owns 80.1 per cent of Chrysler, about trading its stake in the auto lender GMAC Financial Services for Cerberus's automotive operations. GM Europe has publically opposed the move but both companies are struggling, with GM reportedly losing $1bn (£588m) per month and Chrysler's debt around 30 cents in the dollar. Last week, GM's share price slumped to a 60-year low. Klaus Franz, GM Europe's top labour representative, told the Handelsblatt newspaper the merger would be "an absolute catastrophe". He said both companies were struggling and neither would help the other out of its current predicament. DATED: 14.10.08 FEED: MT |
Renault boss warns of reduced dealership numbers
Renault UK's managing director Roland Bouchara has warned that the economic slump will result in an industry-wide reduction in UK showroom numbers and an increase in smaller outlets with fewer staff. Bouchara was speaking at the Paris show, where the company launched the third Megane and coupe versions of the bigger Laguna. "If the situation is going to continue this way, and it is difficult to see any improvement at this stage, the network has to be adapted. Dealers will be resized. Generally, there will be less outlets overall," he said, insisting this trend would impact on all franchises. Bouchara believed Renault had achieved comfortable stock levels and that its January 2008-launched ‘Renault Twenty' plan to reduce dealer distribution costs had proved successful. He said the latest Megane, launched in five and three door versions, with the latter marketed as a coupe, would still build on volumes achieved by the outgoing bustle backed models. The range would be further expanded with cabriolet and Scenic compact people carrier derivatives next year. In 2009 the company will also bring in three door Bebop mini estate versions of its remodelled Kangoo van-derived estate. Sales are expected to start next Spring, and Bouchara described it as a niche product. He confirmed that Renault had been hit by a big fall off in light commercial sales, until recently an area of success for the company, but in 2009 would be launching a replacement for its Master panel van range, which is also marketed with Nissan and Vauxhall badges. However, he said that the company was unlikely to start right hand drive sales of its Romanian made Dacia cars and light vans next year. These are being sold in other Western European markets, but Bouchara said Renault would concentrate its UK activities next year on launching products like the Megane. DATED: 14.10.08 FEED: MT |
Credit Crunch Humour.....
Following the problems in the sub-prime lending market in America and the run on Banks in the UK, uncertainty has now hit Japan. In the last 7 days Origami Bank has folded, Sumo Bank has gone belly up and Bonsai Bank announced plans to cut some of its branches. Yesterday, it was announced that Karaoke Bank is up for sale and will likely go for a song while today shares in Kamikaze Bank were suspended after they nose-dived. While Samurai Bank are soldiering on following sharp cutbacks, Ninja Bank are reported to have taken a hit, but they remain in the black. Furthermore, 500 staff at Karate Bank got the chop and analysts report that there is something fishy going on at Sushi Bank where it is feared that staff may get a raw deal.
How do you define optimism? A banker who irons 5 shirts on a Sunday.
An elderly lady receives an e-mail from the son of a deceased (but wealthy) African general, asking whether he could transfer millions of pounds into her bank account in return for a 20% cut. All the son needs is the sort code and account number. Not realising she is the victim of a Nigerian 419 fraud, she e-mails back the details. A couple of minutes later she receives an e-mail back from the general's son: 'Icesave?!' What is this, some sort of scam?"
Resolving to surprise her husband, an investment banker's wife pops by his office. She finds him in an unorthodox position, with his secretary sitting in his lap. Without hesitation, he starts dictating, "...and in conclusion, gentlemen, credit crunch or no credit crunch, I cannot continue to operate this office with just one chair!"
What's the difference between Investment Bankers and London Pigeons? The Pigeons are still capable of making deposits on new BMW's
What's the difference between an investment banker and a large pizza? A large pizza can feed a family of four.
The last time Iceland had a crash like this aisle three was closed all day.
Q: Why are all MBAs going back to school?
A: To ask for their money back.
I had a cheque returned earlier. "Insufficient Funds" Mine or the banks?
Latest news, the Isle of Dogs Building Society has collapsed. They've called in the retrievers.
Quote of the day (from a trader): "This is worse than a divorce. I've lost half my net worth and I still have a wife."
Talked to my bank manager last month and he said he was going to concentrate on the big issues from now on. He sold me one outside Boots yesterday
Masked man holding a bank cashier up with a gun. Says: 'I don't want any money - I just want you to start lending to each other...
DATED: 14.10.08
FEED: PTL
Monday, October 13, 2008
GM and Chrysler in possible merger talks
General Motors and Chrysler are in talks about a possible merger.
Reports from the US media say talks have been going on for a month but details of the deal vary from a merger to an acquisition by GM of Chrysler.
Neither of the parties have made any direct official comment.
Sources told the Wall Street Journal that Cerberus Capital Management, which owns 80.1% of Chrysler had proposed trading its automotive operations to GM in return for GM's stake in the auto lender GMAC Financial Services.
The New York Times's sources spoke of a merger that was a "50-50" possibility, although it could take weeks to finalise and had been stalled by the turmoil in the financial markets.
GM will only say that it “routinely discusses issues of mutual interest with other automakers”.
DATED: 13.10.08
FEED: AM
Hyundai to increase separation with Kia
Hyundai is becoming more sophisticated, but it will not give up its ‘value' position says the company's European chief, Allan Ruthforth.
Ruthforth said the differentiation between the South Korean car company and its sister brand Kia is emerging and will accelerate over the next few years.
He said: "Kia will be more sporty and Hyundai more sophisticated.
"Both brands now have their own European factories and the cars we build, the Hyundai i30 and the Kia Cee'd are in healthy competition.
"They are both designed and developed for European tastes and roads but you will see the two companies developing their own definite identities and this process is accelerating - we don't want to spend 20 or 30 years establishing brands.”
Ruthforth said that the new i30 factory in the Czech Republic improves the availability of the car across Europe and also means customers can get their new car more quickly rather than having to wait for a ship from Korea.
He added that key to the success of the car is its penetration into fleets in Europe.
Ruthforth said: "Traditionally Hyundai has been seen as an SUV manufacturer and our Sante Fe and Tucson models have been very successful - but SUVs don't penetrate the fleet markets that deeply.
"With our new range of ‘i' models we are re-engineering the business to balance our product offering to be able to offer more mainstream models to compete with the likes of Vauxhall, Ford and Volkswagen."
DATED: 13.10.08
FEED: AM
Rumours of bankruptcies, mergers and sales
The US media said that General Motors and Chrysler are in possible merger or partnership talks while reports from Japan added that Ford is ready to sell its controlling stake in Mazda to raise cash. Meanwhile an analyst at the Standard & Poor's rating organisation warned that all three North American car companies may be forced into bankruptcy by slowing economies and the steep fall in the North American car market. S&P analyst Robert Schulz told Bloomberg that "macro factors could overwhelm" the Big Three with 2009 sales falling to the lowest since 1992. US sales fell 27 per cent in September, the most in 17 years. Forecaster J.D. Power & Associates estimates that US sales will fall to 13.6 million this year and 13.2 million in 2009 against last year's total of 16.1 million. GM and Ford lost a combined $24.1 billion (£14.1 billion) last quarter. GM last posted an annual profit in 2004, while Ford hasn't had a full-year profit since 2005. GM said that bankruptcy is not an option and "not in the interests of employees, stockholders, suppliers or customers". The US media, citing several unnamed sources, said that GM and Chrysler are talking about a possible merger or partnership and that Cerberus Capital Management, which owns Chrysler, is also talking to Renault SA, although the negotiations with GM are "the most serious". Talks between Cerberus and GM are said to have started several weeks ago and were apparently initiated by the private equity fund. Cerberus acquired 80.1 per cent of Chrysler from Germany's Daimler in August 2007 and last month said it was trying to buy the rest. GM and Chrysler accounted for a third of US sales in the first nine months, with GM's 22.3 per cent market share twice as large as Chrysler's. Most of their lineups overlap. Both have saloons, pickups and sport-utility vehicles, and both depend on SUVs for more than half of their sales In Japan Nikkei business news and broadcaster NHK reported that Ford may sell its 33 per cent share in Mazda naming trading houses Sumitomo Corp. and Itochu Corp., along with India's Tata Motors, as possible buyers. Based on Friday's closing price in Tokyo, Ford's Mazda holding was valued at $1.36 billion (£800 million) Ford has lost $23.9 billion (£14 billion) since the end of 2005. The company's 35 per cent fall in U.S. sales last month outpaced the 27 per cent industry drop as the credit crisis damped auto demand, especially for the pickups and sport-utility vehicles that provided most of Ford's 1990s profits. Ford has invested in Mazda for almost three decades and as well as developing common platforms and components, the Japanese company has also been a grooming ground for top executives such as Mark Fields, head of Ford's North American operations and Brit Lewis Booth, president of Ford of Europe and soon to take over as the company's chief financial officer. Neither company commented on the reports. Ford originally formed an automatic-transmission joint venture with Mazda in 1969 and acquired a 25 per cent stake in 1979, expanding the holding to 33.4 per cent in 1996, giving it effective control. Ford and Mazda jointly own factories in the U.S. and Asia, including a Flat Rock, Michigan, plant that produces the Mazda6 and Mustang. Earlier this year Ford sold Jaguar and Land Rover to India's Tata Motors. DATED: 13.10.08 FEED: MT |
A weekend of turmoil in the US brought rumours of car industry bankruptcies and mergers as the global credit crisis and plummeting sales plunge the big three auto makers into crisis.Ford to sell stake in Mazda?
Reuters reported this weekend that the struggling American compqny was considering the sale of its Mazda shares. A source told Reuters Ford was thinking of selling about 20 per cent of its 33.4 per cent stake in Mazda and that it had approached Japanese companies about a possible sale. "Mazda has not announced anything and nothing has been decided," a Mazda spokesman said. "As far as we're concerned it's pure speculation," added a spokesman from Ford. According to the report, Mazda is likely to be interested in acquiring some of the shares. Ford's sales figures have plummeted due to the recent financial crisis, hitting a 26-year low. Mazda has a market capitalisation of $4.1bn (£2.4bn), with Ford's stake valued at around $1.36bn. DATED: 13.10.08 FEED: MT |
Mercedes boss in credit crunch warning
"We as an industry as well as our retailers have an opportunity to rebuild our business model and adapt it for the future," said Steffen. "We've seen deteriorating relationships between retailers, manufactures and customers." He said that the ready availability of cheap money in the last 2/3 years and competing high street finance deals had isolated dealers from profit opportunities, and that there would be potential to market their expertise as ‘one stop shop' vehicle retailers. "There's a chance to go back to the market and say ‘here's what we're good at.' We need to play the customer service card stronger than ever before." Steffen added that car makers needed to understand that dealers needed decent margins to survive. However, his forecast for demand in the medium term remained downbeat. "I think the (state of the) car market a reflection of the overall retail market. It's not isolated. It's fair to say that all of 2009 will be challenging." Steffen said that both car makers and dealers were also suffering because many sources of finance had dried up, making it difficult for some people who still wanted to buy vehicles to afford them. He said that car makers with strong business plans that had been "focussing on all the revenue generators" would be better placed than those in difficulty before the current economic malaise, which described as "unprecedented" in his lifetime. He said those who remembered economic difficulties in the 1970s and early 1990s were more sanguine. DATED: 13.10.08 FEED: MT |
Saturday, October 11, 2008
Rolls on a roll as it beats the credit crunch
The credit crunch appears to be bypassing Rolls-Royce, which is seeing sales soar and is recruiting more workers.
Last month, Rolls-Royce delivered 129 cars, up 7.5% on 12 months ago and marking a 42.8% rise in deliveries since the start of the year to 827 cars.
Emerging economies, such as India, where Rolls-Royce opened a second showroom this year, continue to be the company's best markets. In addition, demand in the Middle East continues to be buoyant.
The size of the manufacturer's current order book has not been disclosed, but the company said that it remained confident about the future.
Underlining that confidence is the fact that at last week's Paris Motor Show the company confirmed that a £170,000 'baby' Rolls-Royce would go into production and enter showrooms in 2010.
And a further indication has come with confirmation that the Goodwood-based carmaker has hired 200 additional staff this year and will add a further 200 jobs in 2009.
Other luxury car manufacturers, including Ferrari and Lamborghini, are also seeing sales rise.
Rolls-Royce chief executive Tom Purves commenting on the economic situation said: "We've had a very good year. Nobody's immune, and we certainly don't think we're immune, but we do think we have a certain degree of insulation."
Aston Martin to sell shares in the Middle East
Aston Martin, the sports carmaker controlled by Kuwait's Investment Dar, plans to sell shares in a new Middle East company, which could be later listed.
Ulrich Bez, chief executive of Aston Martin, would own a majority stake in the new company, while the rest of the shares would be sold to investors in the Gulf in a private placement worth 500 million dinars (£980m).
The new company, which will help revamp Aston Martin's operations in the Gulf, could be listed after three years depending on market regulations.
In tough times, its the survival of the fittest
When times are tough, only the fittest survive. We’re seeing that in the world’s banking markets and we’ll see it in the motor industry too.
It’s only a few short years since MG Rover went belly up and many pundits reckon we’ll see more casualties before we stop hearing the words ‘credit crunch’ on every other news bulletin.
Barely a day goes by when we don’t hear of jihad at GM, crisis at Chrysler or a slump in sales. It’s small wonder people building, selling and servicing cars are worried for their jobs.
Some may sink, but others will swim. After all, hardship breeds ingenuity. Just flick through the history books and see who’s pulled off a blinder when their backs are against the wall.
Ford memorably banished memories of the woeful Escort with the feisty Focus Mk1. Chrysler has frequently pulled itself out of a hole with sexy or ingenious products like the 300C hot rod or Voyager minivan.
And then there’s Lotus, which wouldn’t be here today were it not for the timeless appeal of the Elise.
These were companies playing brinkmanship with financial meltdown which fought back with sensational new products.
And at the end of the day, that’s the only answer to the problems besetting today’s industry.
Where are the saviour cars of 2008?
There aren’t many about. The only model at next month’s Paris Motor Show with any chance of saving the ranch is the Chevrolet Volt – one of the first production plug-in hybrids, that could just redefine modern transport and pull GM out of a rather big hole.
Forget propping up stuttering factories with government subsidies – the great leveller of the modern marketplace is the quality of your wares. Cars people want will sell; duds won’t.
That’s always been true, but never truer than when times are tight.
DATED: 11.10.08
FEED: AM
Fords LeClair makes way for Booth
In a statement, Ford said Leclair and Booth will work together over the next few weeks to make sure there's a smooth transition. Leclair, 56, joined Ford in 1976. He was named executive vice president and CFO in August 2003.
Booth, 59, takes over as CFO amid one of the worst financial crises in recent history.
Ford's stock has been in a virtual free-fall with the rest of the stock markets for the past week, trading near historic lows. As recently as last month, stock traded for more than $5 a share but today were trading as low as $2.05
Skoda site in Bristol shuts
The site, in Albert Road, near St Philip's Causeway, was the only representation for the brand in that area and a spokeswoman for the carmaker said Skoda had been talking to parties interested in taking up the brand there. "It's obviously a strategic location for Skoda, so we've been in contact with half a dozen interested parties," she said. Clist and Rattle Skoda of Flax Burton has taken in cars ordered by customers in the meantime, though dealer principal Paul Clist said they would be unable to hand any of the vehicles over until certain legalities have been ironed out. "We're still not sure who they belong to," he said. A spokesman from BDO Stoy Hayward, a business services firm, confirmed that while BDO was assisting Streets directors, it had not been appointed as administrator. Clist emphasised Clist and Rattle had been working hard with Skoda to make sure no customers lost their money and that they were trying to resolve the situation as quickly as possible. DATED: 11.10.08 FEED: MT |
Streets Skoda in Bristol has shut, resulting in the loss of 18 jobs.Ford appoints new UK directors
Simpson has taken the role from Mark Ovendon, who has moved to Russia as marketing, sales and service director. Simpson came to the job from his position as marketing communications director for Ford of Europe. He previously held senior management positions in the US for six years, most recently as Lincoln Mercury's regional manager in New York, and before that he was managing director of Ford Hungary. Prior to leading sales teams for five years in the eastern district and Scotland, Northern Ireland and the north, Barratt was Ford Focus brand manager. Roelant de Waard, Ford of Britain chairman and managing director, said: "Mark and Andy bring a wealth of experience both internationally and from other functions within the company." DATED: 11.10.08 FEED: MT |
Ford of Britain has appointed two new directors.Pelata becomes Ghosns No 2
The appointment will free Renault-Nissan CEO Carlos Ghosn to concentrate on the French carmaker's strategic decision-making, as well as finance and public affairs activities.
In the newly-created post, Pelata, 53, will have authority over all members of Renault's executive committee, as well as the leaders of its various regional management groups.
At Nissan, Ghosn appointed Toshiyuki Shiga in 2005 to hold a similar chief operating officer post to the one Pelata will assume October 13.
Pelata's promotion is the latest step up the corporate ladder for the 24-year Renault veteran
Fords warning shot for Contract Hire firms
Ford has warned contract hire companies that it is keeping a close eye on websites which advertise heavily discounted new cars and will terminate deals with any companies that are illegally selling on vehicles.
The carmaker audited its fleet business last year after discovering that some contract hire companies were offering cars for sale on discount websites within three months of purchase.
Companies were typically operating fleets of around 500 vehicles.
In some cases, an individual in the business had taken the decision to sell on cars; in other instances, it had been company strategy to sell on cars at profit.
Although the practice is illegal, Ford decided not to take legal action.
It recovered the cars and ended the deal.
“It isn’t worth taking it any further,” added de Waard.
“The problem will continue to pop up here and there.
"It is important that we prevent it because they are competing with our retail sales and using special terms.
“It’s not good for our business or for our dealers’ businesses and it’s illegal.”
However, de Waard said the practice raised an interesting consideration about added value services, pointing to experiences in the commercial vehicle sector.
“What’s the value that people are getting from using intermediaries?” he asked.
“If it’s only a lower price, then there is no value, but if it is a certain service, for example helping people to identify the manufacturers with the best financial services offer on short leases, then it might have a place in the market.
“Sometimes it’s a specialist function for finding the right vehicle at the right price – something the network doesn’t do everyday. We will need to look at whether our leasing products are perfectly suited to this.”
DATED: 11.10.08
FEED: AM
Falling sales halt car production
The Vauxhall car plant in Cheshire is to stop production for 14 days this month due to falling sales in Europe.
Vehicles will not be made at the Ellesmere Port plant for two days this week and next week, and will also shut for two working weeks from 20 October.
A spokesman for parent company General Motors (GM) said the stoppages were to accommodate changes in demand.
Jaguar Land Rover announced last month its Halewood plant in Merseyside would close for a week after orders fell.
A GM statement said: "General Motors Europe is carefully watching the development of the various car and van markets in Europe so that we can react quickly and efficiently to changes in demand.
"This way, we can increase production in times of rising demand, as we did this year when we added extra shifts to accommodate markets in Eastern Europe."
She added: "It follows, then, that in markets in which demand is reducing, in this case due to the current European economic situation, we must also adjust production.
"This flexibility is a strategy that shows GM Europe has learned from the past and will not simply keep building cars or vans for stock in changing markets."
A spokesman for the Unite union said the 2,200 workers at the plant would still get paid despite the stoppages.
Volvo to axe a quarter of workforce
Volvo is to cut another 4,000 jobs in Sweden and overseas in response to the rapidly deteriorating situation in the car industry.
The company announced 2,000 job cuts in June, and the latest cuts bring the total to 6,000, or about one-quarter of its global headcount before it began restructuring.
"The unstable economic environment has resulted in a very unpredictable situation, and the downturn in the global car industry is more drastic than expected," Stephen Odell, Volvo's chief executive, said in a statement.
The bulk of the blue-collar job cuts are in Sweden, where Volvo makes large vehicles - hit hardest by higher petrol prices and the credit crunch. The carmaker also builds smaller vehicles at a second plant in Belgium.
Volvo said the cuts would affect 2,000 blue-collar employees and 700 white-collar employees in Sweden. Abroad, another 600 employees would be made redundant and about 700 consultants would have their contracts terminated. Volvo did not say where the it planned to cut the jobs outside of Sweden.
Volvo said that it would negotiate the layoffs, together with those announced in the previous restructuring plan, and that its 'new organisation' would be in place by the end of the year.
Interest rate cut positive move, says RMIF
'The Bank of England's decision to cut the interest rate is positive news for the economy, and will hopefully help rebuild consumer confidence,' said Sue Robinson, Director of the Retail Motor Industry Federation (RMIF), representing the UK's retail motor sector, commenting on the announcement Wednesday 8 October 2008.
The UK interest rate has been reduced to 4.5 per cent from 5 per cent. The European Central Bank also reduced its rate, and the central banks of the USA, Canada, Sweden and Switzerland all took similar action in a co-ordinated move.
Robinson adds: 'Consumers desperately needed this long-awaited move, along with other bank support measures put in place by Government this morning. All these moves should help to instill consumer confidence and will also help businesses at this difficult time.'
Economic crisis threatens future of dealers
Britain's economic meltdown could claim dozens of dealerships in the next few months with closures imminent as businesses seek to cut the cost of vehicle marketing, according to Subaru UK managing director Lawrence Good.
He said: "A massive reduction in the size of retail networks seems to be the only way out of the terrible situation facing our industry. It's obvious the most popular marques are being the hardest hit.
"Brands suffering losses in both volume and margin will be forced to slim down. The credit crunch will change the face of car retailing and it will happen soon - I'm sure we will see a lot of closures in six months' time."
He suspects the casualties could include 'a couple' of Subaru dealerships which may be pulled down by collapsing sales of a bigger brand in the same showroom.
With the banking crisis and slump in new car sales leaving some dealers looking very vulnerable, Mr Good said: "My forecast is that in six month's time, areas now being served by five dealers will have only three and we'll see an increase in the number of authorised repair centres.
Wednesday, October 08, 2008
Economic Climate will lead to Dealer Closures
"A massive reduction in the size of retail networks seems to be the only way out of the terrible situation facing our industry" - Subaru UK managing director Lawrence Good
Britain’s economic meltdown could claim dozens of dealerships in the next few months.
Closures are imminent as businesses seek to cut the cost of vehicle marketing, believes Subaru UK managing director Lawrence Good.
“A massive reduction in the size of retail networks seems to be the only way out of the terrible situation facing our industry. It’s obvious the most popular marques are being the hardest hit.
"Brands suffering losses in both volume and margin will be forced to slim down.
“The credit crunch will change the face of car retailing and it will happen soon – I’m sure we will see a lot of closures in six months’ time,” Good told AM.
Casualties
He suspected the casualties could include “a couple” of Subaru dealerships which may be pulled down by collapsing sales of a bigger brand in the same showroom.
The banking crisis and slump in new car sales has left some dealers looking very vulnerable, said Good. “My forecast is that in six month’s time, areas now being served by five dealers will have only three and we’ll see an increase in the number of authorised repair centres.”
DATED: 08.10.08
FEED: AM
Interest Rates down by 10%
The Bank of England has slashed interest rates by half a percentage point from 5% to 4.5% to ease financial pressures on the UK’s economy.
The decision to cut rates by 10% was not expected until tomorrow.
Sue Robinson, director of the Retail Motor Industry Federation (RMIF), representing the UK’s retail motor sector, said: "The Bank of England’s decision to cut the interest rate is positive news for the economy, and will hopefully help rebuild consumer confidence.
"Consumers desperately needed this long-awaited move, along with other bank support measures put in place by Government this morning. All these moves should help to instill consumer confidence and will also help businesses at this difficult time."
The US Federal Reserve has also cut rates from 2% to 1.5%, while the European Central Bank trimmed its rate from 4.25% to 3.75%.
DATED: 08.10.08
FEED: AM
Carmakers ask for £31bn loan
The US congress last month approved $25bn of funding to help American companies develop greener technologies, prompting European manufacturers to ask for similar help. The move follows calls from Jaguar and Land Rover managing director David Smith and Ford of Britain boss Roelent de Waard for state aid for manufacturers to develop green technologies and safeguard production in the UK. Acea said the economic downturn had increased the pressure on European car production caused by the pending C02-reduction legislation and could trigger "a backlash to the transition to low-emission vehicles". Acea proposed EU policy makers should give carmakers a low interest Euro40bn (£31bn) loan to secure fuel-efficient technologies. It also called for incentives for motorists to scrap cars over eight years old and replace them with cleaner new vehicles. Christian Streiff, Acea president chief executive of PSA Peugeot Citroen, said: "Carmakers call on governments to stimulate the economy, relieve the credit crunch and restore consumer confidence. "Only then will consumers have the means to invest in new vehicles". DATED: 08.10.08 FEED: MT |
Acea, the European carmaker's association, has asked the European Union for a 40bn Euro (£31bn) loan.Car dealers steer clear of prestige cars
 Car dealers are refusing to part-exchange prestige vehicles and SUVs as forecourts begin to swell with unsold, undesirable stock, according to a survey by Auto Express.Following a record decrease in new car sales, dealers told the magazine a variety of cars were being shunned or they were only making derisory offers. Some traders openly admitted they were knocking £1,000 off the price guides of some 4x4 models in a bid to shift the metal. DATED: 08.10.08 FEED: MT |
Ford to take new Ka to US?
The company's chief executive officer Alan Mulally has told Detroit radio station WJR-AM that the company is revisiting an earlier decision not to take the Ka across the Atlantic. The Ka was first launched in 1996 and has been a bit hit across Europe. The all-new model was unveiled at the Paris Motor Show last week. It is due to go into production shortly and goes on sale towards the end of the year. Currently Ford's smallest U.S. offering is the Focus although it plans to add the new-generation Fiesta to the domestic lineup in 2010. The Ka will follow the tiny Smart ForTwo in trying to crash the US obsessions with big gas-guzzlers now that fuel is $4 (£2.30) a gallon and rising. Mulally did not say when a decision would be taken but added that one reason Ford remains uncertain about importing the Ka is that it isn't significantly more fuel-efficient than the Fiesta. The Ka is being built in Tychy, Poland, in a joint venture with Fiat that also produces the 500 city car. DATED: 08.10.08 FEED: MT |
Ford is thinking about taking its all-new Ka supermini to the USA as consumers there jump out of big SUVs and pick-ups into small, fuel-efficient cars.Tata announces new plant for Nano
Indian firm Tata Motors is to build the world's cheapest car in the western state of Gujarat.
Tata group chairman Ratan Tata said the Gujarat deal offered the best chance of making the car, the Nano, as quickly and cheaply as possible.
The move comes after Tata pulled out of its factory in West Bengal state in a row over land acquired from farmers.
The Nano is expected to cost about 100,000 rupees ($2,130) and was due to be launched this month.
A Tata Motors statement said "the mother plant for the Nano will be relocated to Sanand in Gujarat". Gujarat's government has offered about 1,100 acres for the site.
The Tata decision comes after offers of land from several Indian states.
"The company has concluded that the site at Sanand and the offer from the Gujarat government is in the best interest of the project," the statement said.
"While awaiting the Sanand plant's completion, Tata Motors will explore the possibility of manufacturing the Nano at its existing facilities at Pune and Pantnagar, and launch the car in the last quarter of this financial year."
The Sanand plant will make 250,000 Nanos a year, rising to 500,000, the company says. It is not clear when production at the plant will begin.
Ratan Tata told reporters that the fact the land was already in the possession of the Gujarat state government "will help Tata Motors establish a new dedicated mother plant with the shortest possible time lag and least possible incremental project cost".
Work at the plant in West Bengal had been suspended since August. Tata announced on Friday that it was finally pulling out.
The dispute highlights a wider problem between India's growing industry - which needs land - and its farmers who are unwilling to give it up.
A number of other car firms also plan vehicles to compete with the Nano but have not yet begun production.
The Tatas will be the second automobile company to set up their plant in Gujarat. Gujarat along with Maharashtra tops Indian states as a major investment destination
Fiat declares best month's results for four years
Fiat is celebrating its best monthly result in the UK for four years - since September 2004 - after posting 9818 sales to give the Fiat brand a 3.0 per cent UK market share.
The news comes as UK sales fell for the fifth month in a row. Society of Motor Manufacturers and Traders (SMMT) data shows that the September market closed 21.2 per cent down on last year, while Fiat's monthly retail sales figure (56.5 per cent up on the same period last year) boosted its market share by 15.4 per cent to 3.0 per cent.
Much of the success is attributed to the continuing appeal of the new Fiat 500, which was launched in the UK earlier this year. A total of 3624 examples of the award-winning supermini were sold in September alone.
"The Fiat brand is on the move," says Andrew Humberstone, managing director, Fiat Group Automobiles UK. "This fantastic result is testament not only to our eco-friendly cars and the overall desirability of the Fiat range, but to the number of key dealer partners who exceeded their sales targets by more than 150 per cent.
"We expect the fourth quarter to be challenging but, that said, we believe we are positioned to face these challenges. There has been a shift in consumer buying behaviour, and people are choosing to downsize into the small car sector - an area which is clearly one of our primary strengths."
UK Mini sales fall by one fifth
UK sales of the Oxfordshire-built Mini have fallen by almost one fifth on the same time last year.
In September, 7,116 of the Cowley-built cars were sold compared with 8,764 in the same month in 2007, which represents a fall of 18.8%.
It comes after the Society of Motor Manufacturers and Traders (SMMT) announced that new UK car registrations fell 21% in September.
But Mini, which is owned by BMW, said it had seen an increase in US sales.
September was the fifth consecutive month that the SMMT reported falls in new car sales.
Market situation
September is usually second only to March - the other month in which car registration letters change - as the most popular month for buying a new car.
So far this year, 34,816 Minis have been sold compared with 36,969 in the first nine months of 2007.
BMW spokeswoman Angela Stangroom, said the company was keeping a close eye on the market situation.
"We expect to build the same amount of cars this year at Cowley as last year, 237,000," she said.
"We have not cut any shifts."
Earlier this year, hundreds of staff at the Mini factory were laid off over a weekend due to Spanish fuel protests
Ford names new marketing and customer service directors
Ford of Britain has announced two new directors for its leadership team in the UK, which is Ford's second largest global market after the US.
Marketing move
Mark Simpson becomes marketing director this month, succeeding Mark Ovenden who moves to Russia as marketing, sales and service director in Europe's fastest growing market.
Mark Simpson had been marketing communications director, Ford of Europe, where he was responsible for developing the advertising and marketing campaigns for Europe's 51 markets. He previously held senior management positions in the US for six years, most recently as New York's Lincoln Mercury regional manager. From 1996 he was managing director of Ford Hungary.
Married with two children, Mark joined Ford in 1985 at the company's Daventry parts distribution centre. He lives in Essex and enjoys music and cooking.
Ford Customer Service Division (FCSD)
Effective this month, Ford customer service is directed by Andy Barratt, former district sales manager, taking over from John Cooper, who becomes FCSD's European operations director.
Prior to leading sales teams for five years in the eastern district most recently and Scotland, Northern Ireland and the North, Andy was Ford Focus brand manager - helping to establish the car as the UK's best seller.
Andy began his Ford career in 1980 as a Dagenham business technician. Living in Essex with his wife and two children, Andy enjoys anything on four wheels and spending time with his family.
Welcoming his colleagues to their new roles, Roelant de Waard, Ford of Britain chairman and managing director, said: "Mark and Andy bring a wealth of experience both internationally and from other functions within the company. Combined with our strongest-ever product line-up, we will continue to perform well in today's market."
Axe hangs over Citroën UK sales and marketing teams
Citroën is looking at axing its UK sales and marketing teams, with its £20m advertising account to be run from Paris, as part of major cost-cutting measures being considered by owner PSA Group.
At this stage, it is not known if the mooted plans will also affect its sister car marque Peugeot. Euro RSCG handles the advertising account for both marques, while OMD handles media planning and buying.
The move is part of global proposals being tabled as part of PSA Group's restructuring programme, CAP 2010, which was launched last year and is aimed at reducing costs within the company and boosting sales.
Senior sources at Citroën claim that following the consolidation, Citroën UK's marketing director Ian Hughes is likely to be moved to company headquarters in France and join a much smaller Europe Middle-East and Africa team.
A PSA Group spokesman confirmed that marketing activities would be considered as part of the CAP 2010 plan, but added any changes still needed to be finalised.
"PSA Peugeot Citroën has marketing operations in 150 countries. As part of our CAP 2010 plan, our marketing approach will give Peugeot and Citroën a real boost and we will look at our current marketing approaches," the spokesman says.
"We anticipate reducing marketing operations, though discussions on this are ongoing and no conclusions have been reached."
The CAP 2010 plans also includes the target of reaching a 30% reduction in overheads by 2010, supported by around 7,000 job cuts across the group.
Central banks cut interest rates
The UK rate move - which had not been expected until Thursday - puts interest rates at 4.5% from 5%.
The US Federal Reserve has cut rates from 2% to 1.5% and the European Central Bank trimmed its rate from 4.25% to 3.75%.
The central banks of Canada, China, Sweden and Switzerland all took similar action in the co-ordinated move.
The unprecedented step is aimed at steadying a faltering global economy and slumping stock markets.
The Fed said that it had acted "in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures".
DATED: 08.10.08
FEED: BoE
£50 Bn Rescue Plan announced
DATED: 08.10.08
FEED: IUK
Tuesday, October 07, 2008
Carmakers call for sales help from Government
DATED: 07.10.08
FEED: AW
Porsche plans new entry model with VW
DATED: 07.10.08
FEED: AW
Tata moves Nano production to Gujarat
The new plant in Sanand, near Ahmedabad, will have a capacity of 250,000 cars per year, which can be increased to 500,000, the company said.Tata originally planned to build the low-cost Nano in Singur, West Bengal and launch the car this month. But last week the carmaker said it was pulling out after work on building a Nano plant was disrupted for more than a month by farmers unhappy with the compensation offered for their land.Tata Chairman Ratan Tata and other company officials signed an agreement with Gujarat Chief Minister Narendra Modi today.
The site in Gujarat is already under the possession of the state government.
DATED: 07.10.08
FEED: ANE
Ford gives parents Speed Control
The system, only available in the US, will also give parents the option of programming their childrens’ keys to limit the volume of music and sound continuous alerts if the driver doesn't wear a seatbelt.
Jim Buczkowski, Ford's director of electronic and electrical systems engineering, said: "Our message to parents is, hey, we are providing you some conditions to give your new drivers that may allow you to feel a little more comfortable in giving them the car more often."
The feature, called MyKey, is limited at 80mph even though motorway speed limits are lower in most states because it wanted to leave a margin in case an unusual situation arises, Buczkowski said.
In some states, motorway speed limits are above 70mph.
DATED: 07.10.08
FEED: AM
Used car sales boost for September market
Figures show that year-on-year values were up by £212 (3.5 per cent) to £6,280 and volumes rose by four per cent.Lower price brackets, generally made up of part-exchange vehicles, also saw increases with vales up by 3.6 per cent or £62 in August to £1,787.First-time auction conversion rates were also up from 69 per cent to 74 per cent, indicating dealers should be able to find buyers for their part-exchanges if realistically priced."There has undoubtedly been more activity in the wholesale market in September as dealers anticipated an upturn in demand following the holiday period," said Mike Pilkington, managing director of Manheim Auctions and Remarketing.
"However, we still need to be very cautious about any long term recovery at the moment."
DATED: 07.10.08
FEED: MT
LSUK in administration as 600 jobs go
The announcement comes just five days after it was acquired by rival aftermarket firm Euro Car Parts.
ECP said the initial acquisition was made quickly to protect the 600 staff employed by LSUK, with it paying the due salaries and rent with immediate effect.
The company, however, was in a worse predicament than ECP had known.
ECP purchased LSUK for an undisclosed sum that a spokesman said would probably not be recovered.
"I don't think it was purchased for a huge amount because LSUK was obviously in trouble, but I think it's safe to say that Euro Car Parts has lost a lot of money in the past few days," the spokesman said.
"The problem was that LSUK was more poorly than they thought it was - they didn't want it to affect the Euro Car Parts business, which is doing very well."
ECP said the administrators, Tenon Recovery, was already in contact with several interested parties.
The acquisition included all 53 LSUK branches, including MT Diesel Products, Protech Automotive and Yeovil Rewind.
DATED: 07.10.08
FEED: MT
Volvo not for sale says Odell
He believes the Volvo brand is undervalued and needs time to show just what it can do. "I am an old fashioned sales guy," he said at the Paris Motor Show.
"All I want is for Volvo to have an unfair share of whatever the market is. My brief is to get Volvo back to sustainable profitability"
He admits Volvo, which is owned by Ford, is some way short of meeting its previously announced target of volumes in excess of 600,000 cars a year globally.
This year, he says, it will probably fall short of 400,000, down from around 440,000 in 2007.
Getting back to profitability is inevitably going to involve some pain, he said. The company already announced 2,000 job losses in June and a further 900 three weeks ago.
Odell, officially just two days into his new job as Volvo boss, said he will be looking at the cost base over the next month.
"We will be in a position to make further announcements at the end of October," he said.
He is not daunted by being the first foreigner in charge of the company.
He added: "Volvo is a national treasure and the decisions we make have to be good for the company and Sweden. In fact I have even asked the Swedish government how they feel about a Brit being in charge.
"If they thought it was a problem then I would have had to have a good, long look at what that meant."
Where does he see the brand going? Odell said: "Volvo cannot abandon safety as a key brand value and the environment is key - that's not just a marketing term, in Sweden it's a base assumption."
DATED: 07.10.08
FEED: MT
A&L Fined £7m for PPI failings
For three years from January 2005 to December 2007 A&L sold approximately 210,000 PPI policies to customers seeking a personal loan at an average price of £1,265, but there was a general failure by advisers to give customers details of the cost of PPI.
In addition A&L sought to find reasons to sell PPI without properly considering what customers needed. A&L did not make it sufficiently clear that PPI was optional and it trained its staff to put pressure on customers where they queried the inclusion of PPI in their quotation or challenged advisers’ recommendations.
These failings resulted in unacceptable levels of non-compliant sales and a high risk of unsuitable sales over the three year period. Margaret Cole, FSA Director of Enforcement, said: “The failings at A&L are the most serious we have found. This is reflected in the record PPI fine. It is very disappointing that after three years of regulation we are still finding serious problems in PPI sales. “This case shows that we will continue to step up the action we take when firms do not sell PPI properly. Customers should be able to rely on impartial advice based on their individual needs and demands. It is particularly unacceptable for a firm to train its advisers to put pressure on customers when recommending insurance cover which they have not asked for and may not need. Firms cannot rely on paperwork sent out later as an excuse for unclear or misleading statements given on the telephone. “As we said in our recent update on our PPI work, firms must ensure their