Saturday, July 18, 2009
Motor industry calls for flexibility in automotive funding
The Society of Motor Manufacturers and Traders has backed the findings of a Business and Enterprise Select Committee inquiry that expresses ‘serious concern’ about the effectiveness of the Automotive Assistance Programme (AAP).
The programme announced in January 2009 set out £2.3 billion in loans and loan guarantees for the motor industry, yet to date no companies have benefited from the scheme.
The inquiry also highlighted the importance of the UK’s dealers and the part they play as the face of the industry.
- To view and download the full Business and Enterprise Select Committee report as a PDF click here.
Paul Williams, chairman of the Retail Motor Industry Federation (RMIF), said: “It was refreshing to see that the House of Commons Business and Enterprise Committee’s Report recognised the significance of the motor retail sector and the part it plays in providing the conduit through which vehicles are sold, and the servicing back-up it provides to millions of UK motorists.”
Williams gave evidence before the committee in May.
He said: “It is important to remember that there is no point in making cars if there is no way to sell them. It is the retail motor sector that sells cars, and is the public face of the motor industry for consumers, with outlets in every town and city in the UK.
"It must be remembered that the annual turnover of the UK retail motor industry is £14 billion, and it employs 570,000 people in 70,000 businesses.”
Williams said the report recognised the help the scrappage scheme had provided but also warned that a long-term view was required and the RMIF would lobby for measures to enable further growth in the motor retail sector.
The SMMT called for greater flexibility in AAP eligibility to ensure quicker delivery of credit to companies throughout the automotive sector.
Paul Everitt, SMMT chief executive, said: “There is an urgent need for the Automotive Assistance Programme to start delivering the support the UK motor industry needs.
“The availability of affordable finance and credit remains the number one priority for companies at all levels of the supply chain. It is essential that a more flexible approach is adopted so that viable businesses can access the working capital they need in the short term and support investment in future technologies for the long term.
“Industry remains concerned that the reluctance of banks to provide direct support to the automotive sector is limiting the effectiveness of the programme and its benefit to companies in the supply chain.”
In giving evidence to the inquiry on the AAP, SMMT identified the following key issues:
- Banks remain reluctant to lend to the automotive sector
- The majority of companies need access to working capital above project finance
- The removal of trade credit insurance has further undermined the banks’ attitude to risk in the automotive sector
Car jobs 'could be lost abroad'
MPs have warned the government it risks car industry skills and jobs being lost to other countries if it does not get its strategy right.
They also criticised the government's automotive assistance programme which has yet to give out any money.
The government argues that it is working with several companies, but must ensure the taxpayer is protected.
Union boss Tony Woodley said good people lost their jobs while government departments "shuffled paper".
The Business and Enterprise Committee report also suggested there was a perception that the government's policy in this area lacked coherence.
So far in 2009, new car registrations are down by more than a quarter.
Smaller firms
The automotive assistance programme gives a government guarantee to loans taken out by the automotive industry so the lender knows most of its money is safe.
But the minimum size of the loan is £5m and the business and enterprise committee report argues this needs to be lowered urgently to £1m so that smaller companies can be helped too.
Tony Woodley, Unite joint general secretary, said: "This report hits the nail on the head. More than seven months on from the establishment of the automotive assistance programme, we are yet to see a penny paid out to car and components companies.
"The committee says it is astounded that it is taking so long to help to companies to save jobs and skills. Sadly, we've gone past being astounded and are beginning to get very angry that good people are losing their jobs while government departments shuffle paper."
Renault suffers sharp sales fall
Renault says that car sales in the first half of 2009 fell 16.5% as the downturn hit demand for vehicles.
It said it sold 1.106 million cars and light trucks in the first six months of the year, down from 1.326 million in the same period a year earlier.
Renault is getting a 3bn euro (£2.6bn;$4.24bn) rescue loan from the French government but it is conditional on not making forced redundancies.
Scrappage schemes have boosted sales of cars in some European countries.
Sales have picked up in Germany and the UK as governments have offered incentives to encourage consumers to junk their old cars and buy newer models.
Renault said its sales of passenger car sales fell 13.7%, a slower rate than the global market.
It added its share of the global vehicle market remained at 3.7%.
RMIF warns garages to beware the electric sting in the hybrid tail
Garage technicians risk injury or death if they undertake work on hybrid vehicles without making sure that all power is shut down, warns the Retail Motor Industry Federation (RMIF)
Hybrid vehicles carry a number of batteries to power their functions, and technicians must make sure that all power sources are isolated. Following this, the vehicle must be allowed to power down for at least an hour before any work is undertaken.
Mike Owen of the RMIF commented: 'Hybrid motor cars hide a sting in the tail for unsuspecting technicians. Anyone working on a hybrid vehicle must make sure that all power is disconnected, or risk injury or death. The voltage of the batteries on hybrid vehicles often exceeds 500 volts, much higher than the battery in a conventional car.
'Technicians should avoid using scan tools and oscilloscopes as these can unwittingly increase the risk of shock. Most of these vehicles use the orange code to signify high tension components and ultimate care must be used before working on any such component. This includes the use of gloves, footwear and insulated matting.'
Owen adds 'Six per cent of newly registered vehicles are hybrids, and this is growing. Repairers must train and equip their technicians as they are sure to encounter one of these vehicles in the future.'
RMIF members that require more information should contact the RMIF.
World's cheapest car to hit roads
The world's cheapest car, Nano, is set to hit the roads of India with the first customer receiving keys to the vehicle in the city of Mumbai.
Ratan Tata, the head of Tata Motors which manufactures the car, will personally deliver the first car to a customer at a showroom in the city.
Tata Motors says it has received over 200,000 orders for the car.
The basic Nano costs 1 lakh, or 100,000 rupees ($2,025; £1,340), and a 95,000 rupees deposit must be paid upfront.
Analysts say that if the car proves an immediate hit in its home market, Tata may struggle to meet demand.
This is because the main Nano factory in the western state of Gujarat, which will be able to build 250,000 cars a year, is not due to open until next year.
In the meantime, Tata will only be able to build about 50,000 Nanos at its existing plants.
'Significant'
Delays arose when Tata had to abandon plans to build the Nano in a new plant in the state of West Bengal due because of a row over land with farmers.
Analysts say that the delivery of the first car to the customer was "very significant" considering the fact that the launch had been delayed.
"They (Tata Motors) have been talking about delivering this car since last year and subsequently due to the problems they have had with moving the factory they have had to delay it by at least one year," automobile magazine editor Darius Lam told the AFP news agency.
"It really shows that now they are getting their production in hand and are able to start delivering."
The four-door Nano has a 33bhp, 624cc engine at the rear.
The basic model has no airbags, air conditioning, radio, or power steering. However, more luxurious versions will be available.
Reports say some 100,000 people have beebeen selected from a ballot to be the first recipients of the Nano.
Among them, the reports say, are a roadside cobbler from Mumbai, a 82-year-old former police officer, and India's first female photo journalist, Homi Vyarawalla, who is in her 90s.
Half of the orders were for the most deluxe version of the car, which comes with air conditioning and electric windows, and the remaining 30% for a mid-range model.
Tata said only 20% of customers opted for the cheapest version of the car.
The booking fee, or deposit, required for the deluxe model is 140,000 rupees, which has a full price of 185,000 rupees.
Tata hopes the low cost of the car will encourage millions of Indians to trade up from their motorcycles.
Currently, there are about nine cars per 1,000 people in India.
Environmentalists are warning that the Nano will add further clog up India's crowded roads, and pollution levels will soar. Tata says the Nano will be the least polluting car in India.
MPs astounded at delays in supporting motor industry
The Government has been criticised by the House of Commons business and enterprise select committee for dragging its heels in guaranteeing loans for the UK’s automotive sector.
Despite stating Jaguar Land Rover was a “top priority”, the Government has still failed to grant a single penny in loans from the £2.3bn Automotive Assistance Programme, almost six months since it was launched.
The committee said Jaguar Land Rover had already secured European Investment Bank funding yet it was “astounded” that it has taken so long for the UK Government to put its own guarantee in place.
“It is clear that the Government has taken a number of sensible steps to make the AAP successful. It is working with a wide range of people within the industry, it has not forgotten the need to reach the supply chain, and it is trying to involve the banks in the scheme.
“However, we cannot discount the industry’s complaints about the delays in agreeing support measures and we are profoundly disappointed that to date not one single penny has been advanced through the scheme. We hope that this will change rapidly,” states the committee’s report, The Automotive Industry in the UK, published today.
DATED: 18.07.09
FEED: AM
Friday, July 17, 2009
European car sales recovering
Sales of new cars across Europe rose for the first time in 14 months in June, buoyed by a number of national scrappage schemes, figures have shown.
New registrations across 28 European nations rose by 2.4% last month from a year ago, the European Automotive Manufacturers' Association said.
Germany, one of the first countries to pay drivers to trade in old cars, led the gains, with registrations up 41%. In the UK, the rate of decline in new car registrations has slowed, according to previously released figures from the Society of Motor Manufacturers and Traders.
Sales across the 28 European countries totalled 1.46 million in June, up from 1.43 million a year earlier.
UK motorists join car clubs in huge numbers due to recession
A recent survey has shown that UK motorists have joined car clubs in large numbers during the recession and there are now over 60,000 motorists in the UK.
Membership has more than doubled at City Car Club, one of the biggest UK clubs, in the past year since the credit crunch started mainly because car clubs are a much cheaper alternative to owning a car. But also the growth in broadband internet access in the UK has been a big factor because most people join and book the cars on the internet.
The survey by Transport Research Laboratory found that there are now 61,000 car club members across the UK and asked City Car Club members how they had changed their motoring habits since joining a club and found that 41% of existing members and 39% of new joiners said they had reduced their car ownership.
In total it amounts to a reduction of 24,400 cars off the UK roads, and the growth of car clubs shows no signs of slowing in 2009. Taken in addition with the fact that car sales have dropped by over 25% in the UK the survey shows a massive change in how UK motorists want to have access to a car.
Car Clubs are basically pay-as-you-go rental schemes where members can book locally parked cars for as little as £3.96 an hour and 50 miles free petrol every day. The cars are parked in local clusters on the streets in convenient locations near to residents and businesses and can be booked on the internet at www.citycarclub.co.uk or also at the car at a moment's notice.
Toyota to supply hybrid parts to Mazda
Toyota Motor is in talks to supply key components of its petrol-electric hybrid system to Mazda, the smaller Japanese manufacturer and longtime affiliate of Ford, people familiar with the situation said on Thursday.
A supply deal between Toyota and Mazda would amount to an indictment of Ford's ability to compete in hybrid technology, even as the US group seeks to expand production of environmentally friendly vehicles.
Last month, Ford secured $5.9bn in low-interest loans from the US government to develop next-generation low-emission cars.
Ford sold two-thirds of its 33.4 per cent stake in Mazda last November to raise cash but the companies remain partners in product development and production. Mazda uses Ford's hybrid system in its Tribute small sport-utility vehicle, which is based on the Ford Escape.
Buying core hybrid components such as batteries and motors from Toyota could allow Mazda to begin selling a small hybrid passenger car by 2012 or 2013, one of the people involved said. Relying on Ford, as either a supplier or co-developer of a new shared power train, would likely have taken longer.
"When it comes to the capacity to produce [hybrid systems], any choice between Toyota or Ford has to go to Toyota," said Masatoshi Nishimoto, analyst at CSM Worldwide, a research firm.
The Nikkei business daily said Mazda had asked Toyota to supply components for 100,000 vehicles a year, equivalent to 10 per cent of Mazda's sales volume before the recession.
In addition to revenues from the components sales, the added volume would help Toyota reduce production costs and shrink the price gap between its own hybrids and conventional petrol-driven models.
Mazda shares closed up 6.2 per cent at Y240 against a 0.8 per cent rise in the Nikkei 225 average on Thursday.
Banks role in Credit Crunch
The role of UK banks in the credit crisis is expected to come under scrutiny in a report due out later today.
Analysts say the review of corporate governance, by ex-City regulator Sir David Walker, may pave the way for boardroom practices to be overhauled.
The report, commissioned by the Treasury, is expected to focus on the way risk is managed at banks.
The issue of pay and how it is linked to risk is also likely to be addressed.
Walker has spoken to banks, institutional investors, and experts in remuneration and corporate governance in preparing the report.
He is expected to set out plans for directors to have higher levels of skill and to receive formal training.
The report will stress the need for banks to be run by bankers.
Responsibility
After Royal Bank of Scotland came close to collapse under Sir Fred Goodwin, it is also expected that Walker will recommend that bank boards be forced to show they are able to challenge a chief executive who they feel is endangering a bank.
Non-executive directors who do not have responsibility for the day-to-day management of the business are expected to keep a close eye on the overall risks being taken by banks.
Some feel that they failed in this responsibility prior to the financial crisis.
Transparency
There is widespread call for more transparency in pay. Many star traders, for example, can earn many times more than board members but there is no obligation for them to disclose their bonuses to shareholders.
The bonus culture is seen as encouraging excessive short-term risk taking at banks, which was a major factor in sparking the financial crisis, which in turn triggered the global economic slowdown.
There is genuine concern that big bonuses are making a comeback after US banking giant Goldman Sachs announced earlier this week that it set aside $6.65bn (£4.1bn) between April and May, more than $225,000 for each employee, for pay and bonuses.
DATED: 17.07.09
FEED: AM
Jones takes over Lookers reins from Surgenor
Lookers motor division managing director, Peter Jones, will become the group’s chief executive on September 30.
Current incumbent Ken Surgenor will step down from the board of the major AM100 dealer, after he reaches his 65th birthday in August.
However, Surgenor, CEO since 2002, will remain with Lookers, heading its Charles Hurst division in Northern Ireland.
The group, which is raising £81 million through a shares issue to cut its debts, recently hired FD Robin Gregson, a former colleague of Jones, and Lookers’ major stakeholder Tony Bramall from their days at CD Bramall.
DATED: 17.07.09
FEED: AM
Wednesday, July 15, 2009
Government to oppose release of MG Rover report
The Government is to contest a Freedom of Information Act request by the former directors of collapsed car company MG Rover.
The directors, John Towers, Peter Beale, John Edwards and Nick Stephenson, known as the 'Phoenix Four', have requested the release of a report by the Financial Reporting Review Panel into the collapse of the company they owned through parent company Phoenix Venture Holdings.
The request will be held in Manchester on August 10 and 11. The four hope that the release of the Government report will help them clear their names. They took millions of pounds in pay and pensions prior to the collapse of the business.
Bentley prepares parts sell-off
Bentley Motors is to make its entire back catalogue of parts and accessories available for sale.
The luxury car maker keeps some 7 million Rolls-Royce and Bentley parts in a warehouse near its Crewe factory.
The sale should clear space for parts for current models, Bentley's Richard Durbin told the BBC.
Bentley has halted production in recent months in response to falling sales, but Mr Durbin said the parts sale was not related to any commercial problems.
'Open day'
The parts will be offered for sale to enthusiasts, owners and professional traders at a one-off event on 26 and 27 September.
"We want to create better awareness of the fact that we are in a position to look after their cars," said Mr Durbin.
As such, the sale could be seen as a "friendly open day", said Mr Durbin. "It's about 'come and see what we've got'," he said.
In addition to some 55,000 part lines for Bentleys produced since 1955, the sale will also include parts for Rolls-Royce cars produced at Crewe between 1955 and 2002.
Jaguar announces 300 job losses
Car manufacturer Jaguar has announced it is to axe up to 300 jobs at its Halewood plant on Merseyside.
The job losses come as it plans to end production of its X-Type model at the Jaguar Land Rover factory, which employs more than 2,000 workers.
Voluntary redundancies will be followed by a three-week shutdown due to "ongoing weaknesses in the industry".
Prime Minister Gordon Brown said: "We are trying to do what we can to replace lost jobs."
Discussing the issue in the House of Commons, Mr Brown said he hoped the Halewood plant would have a long-term future.
The Prime Minister added: "We... want to secure a future for Halewood and we have offered Jaguar Land Rover a grant of £27m toward the development of what are low-carbon Land Rovers at this plant, they would be produced there."
Jaguar Land Rover said it would be seeking voluntary redundancies at the plant, which will close for three weeks as part of an extended summer shutdown starting in September.
David Smith, chief executive of Jaguar Land Rover, said the latest job cuts were "necessary to protect other investment plans".
He said: "Our industry has been especially badly hit by the recession and the premium sector more than others.
"Jaguar Land Rover's retail sales fell by 28% in the past 10 months.
"We have taken unprecedented actions to cut costs including reduced production volumes, significant cuts to investment plans and some 2,200 job losses.
"Ceasing production of the X-Type early, with further redundancies and temporary shutdowns at Halewood is necessary to protect our other investment plans."
Mr Smith confirmed that any further actions will be determined by the state of the market in the coming months.
Vauxhall convoy aims to save jobs
A convoy of Vauxhall cars driven by the company's workers will drive around Westminster in London as part of a campaign to safeguard their jobs.
The union Unite said it wanted to remind MPs about the uncertain future for the firm's factories in Ellesmere Port in Merseyside and Luton.
Negotiations continue over the sale of GM Europe's European arm Opel, which includes Vauxhall UK.
Potential buyer RHJ International said it would retain the group's UK plants.
Employs 5,000
The Brussels-based outfit is now one of three potential buyers alongside preferred bidder Magna International, the Canadian car parts group, and Beijing Automotive Industry Holding, another late entrant.
Vauxhall employs 5,000 people in the UK, with the Astra model made at its Ellesmere Port site and Vivaro commercial van made at its Luton plant, which is a joint venture with Renault.
A cloud of uncertainty has hung over the UK business after its US parent General Motors filed for bankruptcy protection earlier this summer, forcing it to break itself up and put the European arm up for sale.
Len McCluskey, Unite's assistant general secretary, said it was vital that MPs understood that the future of both plants still hung "very much" in the balance.
He added: "These workers are coming to Parliament today because they want MPs to show support for their fight not just for their future, but for the entire UK car industry.
"Vauxhall is at the heart of our car manufacturing in this country. An industry, entire workplaces and whole communities need it to thrive.
"It is vital that any deal done over the future of GM in Europe is the right deal for a secure and lasting industry in this country, which is why we are pressing for our government to carry on doing what it says it is doing and keep working towards a deal which protects our plants and jobs."
Vehicles in the convoy will include a 2009 black Vauxhall Vivaro, a silver Vauxhall Vivaro mini bus, a red five-door Astra, the Heritage centre van, a 1966 Viva, 1970 Viscount, 1980 Cavalier, 1982 Chevette and 2002 Vectra.
All will be emblazoned with a Save Vauxhall logo.
Automotive sector supports low carbon future
Government's plans to cut road transport emissions by 14% over the next decade have been welcomed by the Society of Motor Manufacturers and Traders (SMMT).
Announced today within government's Low Carbon Transport strategy which forms part of the Low Carbon Transition Plan mapping how government intends to meet its targets of reducing overall CO2 emissions by 34% by 2020 and at least 80% by 2050, the strategy outlines steps to be taken to decarbonise the UK and maximise the economic benefits of a low carbon industry.
Commenting on the White Paper, SMMT chief executive Paul Everitt said, "The UK motor industry has made significant progress in cutting CO2 emissions but greater achievements can be made in the short, medium and long-term by pursuing a portfolio of technologies, including traditional petrol and diesel engines right through to hydrogen fuel cell and electric vehicles.
"The industry has established a technology roadmap and researched priorities to deliver ultra-low carbon transport solutions and we are encouraged by the support government has given this within its strategy. Industry wants close collaboration with government to support a stronger automotive sector and a more sustainable environment."
Recognising the 19.8% drop in average new car emissions since 1997 and the forthcoming new car CO2 legislation, the strategy focuses on the impact of trucks and vans on overall road transport emissions.
"Vehicle manufacturers are committed to cutting CO2 emissions and commercial vehicles are a growing part of modern road transport," said Paul Everitt. "In partnership with government, SMMT has already implemented practical ways of informing van drivers of their environmental choices. These decisions will have a significant impact on the operating costs of all businesses making close consultation between industry, operators and government essential."
Monday, July 13, 2009
General Motors 'exits bankruptcy'
General Motors (GM) has emerged from bankruptcy after signing a deal allowing it to sell its best assets to a "new GM", reports say.
News agencies, quoting unnamed sources, reported that the US government and GM signed the documents at 1030 GMT, ending its 40-day bankruptcy.
Official confirmation is expected when GM holds a news conference later.
The new, leaner GM will own the company's key assets such as Buick and will be 61% owned by the US government.
GM is in the process of selling off its other brands such as Hummer, Saab and its GM Europe arm, which owns Vauxhall and Opel.
GM filed for bankruptcy protection on 1 June, saying it would be forced to liquidate if the plan was not approved.
Strongly supported by President Barack Obama, GM's bankruptcy process was two days faster than crosstown rival Chrysler Group.
Smaller and leaner
A new, smaller GM is being created with a reduced workforce, smaller dealer network and less debt.
It will operate the strongest parts of the old company, with only its Chevrolet, Cadillac, Buick and GMC brands remaining.
The firm is getting $60bn (£37.3bn) in financing from the US Treasury, which gives the US government a 61% share in the new GM, while the United Auto Workers union will have 17.5%.
Canada's government will have a 12% share and GM bondholders will own about 10% in the new company.
The US government has said it does not want to be involved in the day-to-day running of GM.
'More job cuts' at Aston Martin
Up to 95 Aston Martin workers are to lose their jobs, a union has said.
The Transport and General Workers' Union (TGWU) said the 1,200 workers at the plant, in Gaydon in Warwickshire, were told about the cuts on Monday.
The company, which saw a 28% drop in sales during 2008, has not confirmed the redundancies.
In January David Richards, the firm's owner, said he did not expect more job cuts after axing 600 staff - a third of the workforce - in December 2008.
Des Quinn, TGWU regional organiser, said he was concerned at the number of cuts but discussions with management were on-going.
Production line staff were put on a three-day week in January.
In March the firm unveiled its new £1m limited edition sports car - The One-77 - at the Geneva Motor Show.
Audi breaks through market gloom
Audi has offered a chink of light to the crisis hit global motor industry after announcing that sales increased last month for the first time this year.
Higher demand in China and Germany, where Audi's A3 profited from a state-sponsored scrapping incentive, spurred a 1.3 per cent year-on-year rise in global sales to 91,200 cars.
Peter Schwarzenbauer, Audi's head of sales, said the fall in demand had bottomed out. He said: "Since April we see that sales are stabilising. The trough of the crisis is reached."
The comments come in the wake of decisions by both BMW and Daimler to increase production at some of their plants.
However, Mr Schwarzenbauer, said he expected to see only 'slight growth' in the next few years. And, he warned, it would take another two or three years for Audi to return to its 2008 sales record of one million cars.
