Friday, September 25, 2009
All change at Inchcape
Promotions at Inchcape mean a change of leadership for its UK dealerships from October 1.
Connor McCormack, Inchcape UK Retail's finance director, will become its chief executive.
He takes over the post held since 2007 by Spencer Lock, who has been appointed chief executive of Inchcape Australiasia.
McCormack has been with Inchcape for four years, and had previously held senior management roles with Kingfisher, L'Oreal Group and Gillette.
Andre Lacroix, Inchcape group chief executive, said: “These two promotions represent very important steps forward for the group.
"In Spencer Lock and Connor McCormack we have outstanding individuals who both have a track record of excellence in their roles.
"Connor’s operational leadership skills and customer first attitude will build on the highly successful business we have here in the UK, where we continue to grow market share.”
DATED: 25.09.09
FEED: AM
An end to used-car price rises as winter lull beckons
"The balance of power may be shifting from seller to buyer for the first time this year"
Prices for used cars have stabilised, and there is now the prospect of falls in values during the final quarter of the year, according to the valuation team at Glass's. Tighter margins, the influx of September 'plate-change' trade-ins, and the onset of a quieter sales period have contributed to the halt in trade price rises, following an increase of 30 per cent for mainstream models during the last twelve months.
While prices have fluctuated with the seasons in 2009, the nature of the shifts is without parallel this century. The early spring peak in price rises was particularly exaggerated, and even the seasonal decline normally associated with the quiet summer months was replaced by further price hikes.
Adrian Rushmore, Managing Editor at Glass's, comments, "The improvement in prices this year was largely due to the much lower level of used-car supply. It is apparent that the correction is complete - in other words, the trade price of a car, plus a dealer margin, now equals the retail price that customers are willing to pay. However, there are already signs that some dealers are displaying vehicles with smaller margins in order to ensure that would-be buyers are not discouraged by price."
Dealers have reported concerns that retail sales are likely to slow from early October. "They will have paid very high prices for their stock and will be mindful that, if retail pricing action becomes necessary, they will be further reducing already-tight margins," says Rushmore.
The increase in used-car supply generated by sales of the '59'-plate will be relatively small compared to recent September plate changes. All the same, Rushmore observes, "The balance of power may be starting to shift from seller to buyer. The market is not set to destabilise, but there is now the threat of price falls for the first time this year."
In a typical year Glass's would record a fall of seven to eight per cent during the final quarter. "Though a decline is likely in the closing months of 2009, we expect it to be between two and four per cent - some way below the 'regular' trend," according to Rushmore.
Warning trade vendors to stay alert to the changing market, he says, "We are entering a more testing period of used-car trading, so vendors must read market conditions and react to whatever level of price the market moves to. If we are about to see the imminent arrival of fleet cars from extended contracts, vendors must recognise that high-mileage cars in need of refurbishment are not favoured by trade buyers in a less active market. Past experience has demonstrated that the rejection of realistic auction bids merely leads to lower bids at future sales. It is no one's interest to create a downward spiral of prices."
New car production falls 31.5%
The number of new cars made in the UK fell 31.5% in August from the same month a year earlier, industry figures have shown.
There were 56,737 vehicles made in the UK last month, the Society of Motor Manufacturers and Traders (SMMT) said.
But the number of cars built for the UK market reached a 4-year high as the car scrappage scheme boosted sales.
The SMMT called for the scheme, which was introduced in May, to be extended, saying recovery was still fragile.
The UK car scrappage scheme pays a £2,000 incentive to new car buyers who scrap a vehicle that is more than 10 years old.
It is currently due to end in February, or when the £300m the government has allocated towards the scheme runs out - whichever happens first.
The SMMT said the fund was likely to run out by the end of next month.
"The scrappage incentive scheme has had a positive impact on car production with one in three cars built in the UK last month for the home market and total volumes starting to stabilise," said SMMT chief executive Paul Everitt.
"However, underlying demand remains weak and the recovery is still extremely fragile. A continuation of the scrappage incentive scheme through to the original close date of 28 February 2010 would help to sustain growth and bridge uncertainties associated with the ending of VAT discount."
Lada carmaker to cut 27,600 jobs
Russia's largest carmaker, Avtovaz, is to cut up to 27,600 jobs as it tries to cope with the global slump in demand.
The job cuts are more than a quarter of the 102,000-strong workforce at Avtovaz, which makes Lada cars.
Reports had suggested that 36,000 job losses were considered, but the company said that it managed to "significantly lower the initial figure".
Russia had the fastest growing car market in Europe until the financial crisis hit demand.
Overhaul
"Today, 102,000 people work at Avtovaz," the carmaker said.
"Such a number cannot guarantee effective and profitable production, therefore we have agreed to reduce the personnel by 27,600 people."
This includes 5,000 job cuts in "white collar" jobs announced last week, it said.
Of the workers being eliminated, Avtovaz said 13,000 employees would retire with pensions while another 5,500 would be forced to take early retirement.
The remaining 9,100 employees would leave the firm, but Avtovaz said 6,000 of those would have the option to work at the carmaker again in 2012.
Sales have dropped 40% this year as consumers, hard hit by the financial crisis, have shunned the carmaker.
Production freezes
Avtovaz, which is 25%-owned by French automaker Renault, had imposed month-long production freezes while it tried to reduce levels of its unsold stock.
No cars were built in August and the plant will work two weeks in four from September to February, which meant that the workers will have to survive for six months on half pay of $300 (£176) a month.
The decision led to large worker protests.
The carmaker was set up with Italy's Fiat during the Soviet years.
It is a key employer in the southern city of Togliatti based by the Volga River, which has a population of 700,000.
In April, the company was on the verge of bankruptcy.
It was only after Prime Minister Vladimir Putin stepped in with a 20bn ruble (£400m; $600m) rescue package that the company survived.
Yet the package did not cover even half of the 44bn rubles that Avtovaz owed to its creditors.
Jaguar to shut one Midlands plant
Jaguar Land Rover has said it will close one of its West Midlands plants by the middle of the next decade.
The firm is considering the closure of either its Castle Bromwich plant in Birmingham or its factory in Solihull.
About 800 new jobs will be created at its Halewood plant on Merseyside, which will start building a new Range Rover.
The company, which is owned by Indian giant Tata, said there would be no net job losses, but unions said they would oppose the plans.
"We are now in a meeting with the company to hear details of their plans," said Bert Hill, regional officer at the GMB union.
"The GMB will be opposing everything we have heard so far. We will fight the company on this - of that I have no doubt," he added.
Jaguar Land Rover did say that there would be "natural wastage" of staff or transfers from one site to the other.
Increasing competitiveness
The firm said the new Range Rover model planned for Halewood, the LRX Concept, would be "the smallest, lightest and most efficient vehicle the company has ever produced".
BBC chief economics correspondent Hugh Pym said Jaguar Land Rover was seeking to consolidate its operations in the West Midlands.
One of the reasons for consolidating on the one site is because the firm wants to build a new production line for lightweight vehicles and it makes more sense to do that in one plant, rather than two, he said.
Jaguar Land Rover currently employs about 5,000 workers in Solihull, 2,000 in Castle Bromwich and 1,800 at Halewood.
The carmaker will decide in the next 12 to 18 months which plant it will close.
It said the plan was designed to increase the firm's competitiveness, drive growth and sustain profitability.
Commitment welcomed
"This is a plan that recognises the impact the economic collapse has had on our business, and at the same time the opportunities that lie ahead for these two great brands," said chief executive David Smith.
Business Secretary Lord Mandelson said he welcomed "the commitment that Tata is showing in the highly-skilled workforce employed by Jaguar Land Rover in the West Midlands and Merseyside, as well as the top-class models it produces".
Last month, Tata announced that it had secured private funding for Jaguar Land Rover and would not need government support.
It had previously spent months negotiating with the British government for state funding, but the two sides failed to agree terms.
UK queries Magna's Vauxhall plan
UK Business Secretary Lord Mandelson has said he does not believe Magna International's plan for Opel is "commercially the most viable".
In a letter to the European Competition Commissioner Neelie Kroes, Lord Mandelson said Magna's plan was more expensive than that of a rival bidder.
Canadian car parts maker Magna was chosen by General Motors earlier this month to buy Opel and Vauxhall.
There are fears that 1,100 jobs at Vauxhall could be lost under the plan.
Magna's co-chief executive Siegfried Wolf has signalled that the Canadian firm may cut as many as 10,500 jobs at Opel and Vauxhall in Europe.
About 4,000 of the cuts would be made in Germany.
A spokesperson for the Department for Business, Innovation and Skills confirmed Ms Kroes had spoken to Lord Mandelson since receiving the letter.
Lord Mandelson urged the European Commission "to ensure a commercially-based outcome rather than one determined by political intervention and subsidies".
Magna is seeking 4.5bn euros (£4.5bn; $6.5bn) from the German government, which Lord Mandelson says is more than a bid from investment group RHJ International would have cost.
GM to develop Indian electric car
US carmaker General Motors (GM) has said it is to develop a small cheap electric car for India.
The carmaker will develop the model in partnership with India's Reva Electric Car Company, and said it expected production to begin next year.
Reva's electric cars are sold in the UK as under the G-Wiz brand.
Karl Slym, president of GM's India unit, said the companies would work with the Indian government to build a network of charging stations.
Reva, based in Bangalore, sold its first electric car in India in 2001.
The announcement comes a day after US rival Ford announced that it was to make a new car, the Ford Figo, in India as part of its $500m (£304m) investment plan in the country.
Both cars will compete in India's small car segment, which makes up about 70% of the new vehicle market.
GM recently emerged from bankruptcy protection with the US government as its largest shareholder.
Mercedes-Benz Retail proves finance competency
Mercedes-Benz Retail is the latest dealer group to be recognised by the Finance & Leasing Association (FLA) as SAF Approved.
Specialist Automotive Finance (SAF) was launched by the FLA to raise standards and improve knowledge in showrooms and increase customer confidence in motor finance.
SAF certification has been available since October 2007 to individual dealership employees and around 7,000 dealer staff have passed the online SAF competence test, provided free-of-charge by the finance industry.
SAF Approved was introduced on August 1 to reward companies who have voluntarily improved their staff’s financial know-how.
Over 200 business managers in Mercedes-Benz franchised outlets have passed the SAF competence test, with a total of 35 dealerships now SAF Approved.
Fewer collapses among automotive businesses
Figures from Experian’s Insolvency and Distress Index, revealed that the total number of insolvencies in the automotive industry fell by 18% during August, compared to the same month in 2008.
The percentage of total automotive businesses in the UK that went bust during August this year fell to 0.09%, the lowest point in 20 months.
Experian said this is the first time since the beginning of 2008 that the rate of insolvency for the automotive industry has matched the rate of insolvency for the rest of the country. Previously, it had remained higher and more erratic than the national rate of insolvency.
Experian’s data also indicates a slight year-on-year improvement in the financial solidity of businesses in the automotive industry, as measured by its average distress score.
Mark Nuttall, general manager of Experian’s Automotive business, said: “This latest data suggests that automotive businesses are proving to be far more resilient than businesses in some other sectors. While the scrappage scheme has had a positive effect on the industry as a whole, these figures show that the financial distress levels among automotive businesses had started improving much earlier in the year.
“Many UK businesses are monitoring the health of suppliers, customers and partners, as well as themselves, in order to ensure they do not suffer from the impact of another business becoming insolvent. This is something that automotive businesses also need become more aware of.”
Thursday, September 24, 2009
Government makes millions from scrappage
The Government looks set to make at least £100 million profit out of the new vehicle scrappage scheme.
It will increase the pressure being put on ministers by manufacturers and trade associations to extend the scheme.
Scrappage has fufilled its goal of boosting a significantly depressed new car and LCV market, leading to an estimated 20% boost in sales.
However, the VAT the Government can take from a scrappage deal is greater than the £1,000 subsidy it gives to the owner of a 10-year-old car to buy a new model.
With VAT currently at 15%, the Treasury is in profit whenever a scrappage customer pays more than £7,600 for a car including tax.
The average price of cars bought under the scheme has been £9,000.
This means the Treasury is on course to net £405m in VAT receipts, £105m more than is being invested in the scheme, if the Government ceiling of 300,000 deals is reached.
The scheme looks likely to end in November.
According to the latest figures, more than 200,000 cars have been sold under the scheme and there is mounting pressure on the Government to extend the project.
"To say the scheme has been successful since its introduction would be a mass understatement," says Paul Williams, chairman of the National Franchised Dealers Association.
"But with the retail economic climate still fragile and an increase in VAT scheduled for January 1, 2010, an extension of the initiative is vital."
His call for an extension is shared by the Society of Motor Manufacturers and Traders and a number of manufacturers including Ford and Mazda.
But Prof David Bailey, motoring expert and professor at Coventry University Business School, said: "Much more could be done to help the industry - for example by making support available for the finance arms of car companies, and supporting exports through export credit guarantees. And the support for credit insurance has been heavily criticised.
"Given the fragility of the industry still (we're still a long way off recovery), it amazes me still that the Government has not done more. Remember that we have seen over 35,000 job losses in the car industry so far in the Uk this year.
"Meanwhile, not a penny of the Auto Assistance Programme has yet to reach a single UK based producer."
DATED: 24.09.09
FEED: AM
China carmaker gets Goldman cash
Chinese carmaker Geely Automotive has received a $334m (£204m) investment from major US bank Goldman Sachs to help fund expansion.
Geely's shares surged 26% after it said it was selling financial instruments to a unit of Goldman that could lead to it owning a 15.1% stake in the carmaker.
The move comes as Geely and other Chinese carmakers try to grow globally.
Geely used to make the cheapest cars in China but it has been moving towards appealing to more affluent customers.
It has previously said its parent company would bid for Volvo if Ford decides to sell the Swedish firm, a deal that could be worth about $2bn.
Geely, which is currently a relatively small domestic carmaker, already has a joint venture with Manganese Bronze to make 8,000 London taxis in China.
Global ambitions
"It's a wise move for Geely as it can use the money to build up capacity and free up capital for its parent, which has publicly announced its interest in Volvo," said Yi Junfeng, an analyst with Changjiang Securities.
Geely is selling the financial instruments, which give the buyer the option to be converted into shares at a future date, to GS Capital Partners VI Fund LP, an affiliate of Goldman.
Chinese carmakers have expressed a great deal of interest in buying international car brands - with Sichuan Tengzhong Heavy Industrial Machinery agreeing to buy the off-road Hummer brand from General Motors.
Nanjing Automobile bought the assets of MG Rover in 2006 and Shanghai Automotive may end up owning a stake in Saab Automobile as part of the takeover by the luxury carmaker Koenigsegg.
Ford to launch new car in India
Ford has announced that it is to make a new car in India, as part of its $500m (£304m) investment plan in the country.
Production will begin on the Ford Figo at the carmaker's plant in Chennai in the first quarter of 2010.
Ford has described the Figo - which is Italian slang for "cool" - as a "game changer" and said it was confident it would be popular with Indian consumers.
The Figo will compete in India's small car segment, which makes up about 70% of the new vehicle market.
The car will initially only be for sale in India, but there are plans to export it to other countries, Ford said.
In April, the world's cheapest car, the Tata Nano, went on sale in India. The Nano is 10 foot (3 metres) long.
"[The Figo] reflects our commitment to compete with great products in all segments of this car market," said Ford president and chief executive Alan Mulally.
"We are confident the Ford Figo will be a product that Indian consumers really want and value."
** 3000th Post **
Mandelson fights threat of Vauxhall cuts
The spectre of job losses hangs over Vauxhall's Luton and Ellesmere Port plants this morning after a European Union official reportedly said Canadian auto parts maker Magna's takeover of will involve "painful" cuts - and governments should stop using taxpayers' money to prevent them.
Magna is believed to be preparing to cut around 11,000 jobs in Europe, according to a business plan leaked to the Frankfurter Allgemeine Zeitung on Tuesday.
It plans to close the Opel Antwerp plant in Belgium and cut jobs in Britain and Spain but keep all four factories in Germany running.
"We should stop creating the impression that jobs can be saved with European taxpayers' money," said Guenter Verheugen, the EU's industry commissioner and vice-president of the EU executive.
"It is not the case. The loss of jobs is just pushed elsewhere," he said in an interview with ZDF television in Germany.
The Opel takeover and restructuring of the European automobile industry "is not going to happen without job losses and very painful cuts".
The EU competition authorities are looking into the takeover to see if it contravenes European antitrust regulations.
Business secretary Lord Mandelson has written to Neelie Kroes, the European competition commissioner, asking for an examination of the viability of Magna's plans for Vauxhall.
He is looking for pledges from Magna to minimise British job cuts in return for government loans.
Lord Mandelson was thought to have been ready to offer up to £400 million of government loans to Magna in return for commitments on Vauxhall jobs, subject to European approval.
About 5,500 workers are employed at the two Vauxhall factories. Magna is said to be preparing to cut up to 1,200 UK jobs.
"General Motors, which agreed in September to sell a majority stake in Opel to Magna, hopes to sign off on the deal in October, chief executive Fritz Henderson said last week.
DATED: 24.09.09
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Vauxhall 'could axe 1,100 jobs'
Some 1,100 Vauxhall jobs could be lost as part of Canadian parts maker Magna's restructuring of Opel, a source close to the talks has told BBC News.
Any job cuts could be shared between the plants at Luton and Ellesmere Port, the source said.
Earlier, a German newspaper said almost 1,400 jobs would be lost in the UK as part of 11,000 job cuts across Europe.
"Speculation on job losses... is unhelpful at such early stages of the negotiations," the UK government said.
"Every aspect of these negotiations is under very active discussion and the government is working to secure the best possible outcome for Vauxhall in the UK," a spokesperson from the Department for Business, Innovation & Skills (BIS) said.
"It's too early to quote numbers."
Uncertain future
General Motors recently agreed to sell a 55% stake in its European units to Magna and Russian bank Sberbank.
Last week at the Frankfurt Motor Show, where Opel/Vauxhall launched the new Astra, Magna's co-chief executive, Siegfried Wolf, told reporters as many as 10,500 jobs would have to go, with 4,000 of the cuts in Germany.
Mr Wolf said that the cuts could take more than a year to implement
Opel employs a total of 54,500 workers across Europe, with 25,000 based in Germany.
British unions are concerned about the long-term future of Vauxhall's 5,500 UK workers and its two plants in Luton and Ellesmere Port.
Tony Woodley, joint leader of the Unite union said he had "growing concerns" over Magna's plans for Vauxhall.
Mr Woodley repeated a warning he gave at the TUC Congress in Liverpool last week, saying "at last the truth is out about Magna's intention towards the UK plants at Ellesmere Port and Luton".
"If these plans to slash jobs at both sites and cut the volume of cars produced at Ellesmere Port are pushed through, then make no mistake, Vauxhall will cease to operate in this country in six years' time."
The BIS spokesperson said: "We have said that some re-structuring is inevitable, but we have had assurances from Magna that Ellesmere Port and Luton will remain open for the foreseeable future."
"The stitch-up with the German government means that in the long-term all the other countries are going to lose out in a big way," Mr Woodley told the BBC.
The BIS spokesperson said: "The European Commission has also said it will be looking closely at the business plans and the financial contributions by the various governments and will not accept anything that looks like a political fix or any requirement that links aid to job retention for any specific plant or country."
Dealer's suicide after police probe
The retired owner of a Yorkshire dealer group killed himself because he could no longer cope with being suspected of money laundering.
Stefan Osborne, who had run Osborne Motor Group in Barnsley for 35 years before retiring, gassed himself in his BMW, the Sheffield inquest heard.
Osborne had been subject of a five-year police investigation which alleged he was involved in money laundering.
He was aged 61 when he was discovered dead by his partner, Carol Melody, at their garage on June 8.
The inquest heard Osborne had been suffering from depression, claimed to be caused by the lengthy police investigation.
After the hearing his daughter Michelle and son-in-law Mark Selby told South Yorkshire newspaper The Star that the stress and pressure Osborne was under because of the five-investigation had taken the "ultimate toll".
In the investigation police froze his assets, bank accounts and property.
The couple said the police investigation centred on Mr Osborne's relationship with another car dealer in Leeds who was involved in drug dealing.
Osborne's daughter, Michelle, has been charged with money laundering and is due to stand trial. She denies the charges.
DATED: 24.09.09
FEED: AM
Why did we end up with glass palaces?
There have been some high- profile casualties of late, with last month seeing the closing of the Casey Group, a major midlands motor dealership, with the loss of more than 60 jobs.
That closure came just two months after the collapse of the Galway-based Tom Hogan Motor Group, with the loss of 190 jobs. With autumn traditionally being a particularly lean period for sales even in prosperous times, few are confident we have witnessed the last of the high closures in an industry where it’s all about survival.
One dealership that didn’t survive was White Bishop cars in Dublin 12. The Opel dealership went into liquidation earlier this year, but dealer principle Pat White is back in business, albeit at a smaller scale with Pat White cars, across the road from the now empty 11,241 sq ft showroom.
“We could see what was happening in the late 1990s, that the pressure was coming on to make the bigger showroom – the glass palace,” says White.
“In 2000, we were a small Seat dealer on the Drimnagh Road and we had sold 640 new cars that year. Over the years, we have sold 5,000 Seats, and we were forced to move with the standards that were set. So we looked around and we saw properties for sale on the Long Mile Road and then we bought the showrooms.
“Then a very large premises came up – which was the former OHM premises. And then after talking to Opel, they produced plans and told us that we would have to build a certain type of showroom, so we added €2 million on to our mortgage and built the new premises.
“We have been in the business for 25 years, we did everything right, there was no sharp practice. But to keep up with the standards, it put severe pressure on the company, and when the recession kicked in and the Green Party messed with taxes they knew nothing about, that was the icing on the cake.”
Changes to the VRT and road tax systems – to an emissions-based system – were announced in late 2007, but they weren’t introduced until July 2008 and this, in part, according to White, was a reason for the sharp drop in sales.
The seasonal time for buying cars was destroyed. There was total confusion. People held back and the cars that we sold in July were only the ones that we should have been selling in January of 2008. Many other people said they wouldnt buy a car mid-year, and then, in October 2008, we were in the full grip of a recession.
With a combination of a poor 2008, then the onset of a recession coupled with the huge costs associated with running a large dealership, the pressure on the business became a little too much.
“It is very hard thing to put your company into liquidation. We tried everything we could to prevent it, from selling off property and stock, but the company was like a leaking sieve. We were pouring money into it.”
This, however, wasn’t enough to beat White, who decided quickly that he would return to business. “I said, ‘to hell with it, I am going back and I am going to work’. White Bishop was gone but I was going to put my own name on the door.”
White asserts that more must be done by the Government to help businesspeople get back on their feet. “I think it should be a moral obligation for governments and banks to let people get back into business. When you do try to get back in, it is difficult because there are always question marks over your name and you have to open up new bank accounts and start again.
“I want to get back into business to put food on the table and pay my debts. When you close down, you owe people a lot of money and the only way to pay them back is to get into business. I took my medicine, dusted myself down and got back at it.”
White had 60 people working for him in the old premises, but had to make the difficult choice to bring just a handful. “I took five people with me, I’d love to bring them all, but I can’t. We are coming back in a small way doing servicing, we are selling second-hands and we are fighting back and we want to get back there.”
The demands being put in place by some manufacturers on dealerships are being blamed for putting car dealerships under financial pressure.
The motor industry block exemption is a set of EU-based rules that define the legal relationship between manufacturers and dealers in terms of how they sell, distribute, service and repair new cars.
It also relates to after-market provisions such as the supply of spare parts and technical information. The industry’s block exemption was last renewed in 2005. Under block exemption, car manufacturers can protect their brand image by requiring their vehicles to be displayed in a “brand-specific” area of the showroom, and it has been many of these requests, as well as perhaps vanity on the part of some motor dealers, which has added to the financial burdens.
“I’m not sure it was vanity,” says Paraic Mooney, owner and chief executive of EP Mooney Ltd. “We were set out a certain amount of guidelines and we adhered to them, but this applied to everyone. We all tried to do the best we could. Despite the facilities that we all offer, which you really do need to have in order to offer a proper service, the market simply isn’t there. We are planning for a similar year to this year in 2010.”
One dealer principle from a prestige brand, who didn’t want to be identified, told The Irish Times he was upset at the unreasonable demands being put in place by the manufacturer. “Having spent €3.5 million on a premises several months ago, I am now being asked to build a new standalone premises at a cost of €5.5 to €6 million. This is totally unreasonable.”
With conservative estimates of 55,000 car sales in 2009 and little prospect of a huge jump in 2010, it would appear likely that there will have to be a revision of operations for many car dealerships in Ireland.
White has a view. “I think a market of 150,000 cars would have kept a dealership like mine going, but it isn’t there. There are an awful lot of good people in the motor trade and they want to make a living. A lot of things have to change – the bank’s attitude for one and the negative equity out there in cars – and the Government needs to start listening.
“The Government put me out of business and before Christmas there is going to be a lot more going out of business. The Government need to stop playing with taxes they don’t understand. They kept taking the golden eggs and now they have killed the goose. Now they have killed the motor trade.”
A SALES campaign is underway to find buyers for garages in Galway, Ennis and Clonmel following the closure of the Tom Hogan Motor Group. DTZ Sherry FitzGerald is guiding over €15 million for the various properties, which are for sale in one lot or on an individual basis. But what about
many of the other premises to let around the country, what can be the future for these?
According to one property expert: “There was pressure to develop large showroom and now the car market has collapsed as well as the commercial market. There is so much glass in them that invariably they have to be redeveloped. Any of the electrical people could make use out of some of these car showrooms, but in most cases the showrooms can be incorporated into a larger development.”
Paraic Mooney has mixed experience of late with leasing premises. “We have successfully leased two premises to other car dealers, but we still have another which is proving a little slower to move. The difficulty is that it is possible to turn many of these showrooms into retail premises but retail is dead – it is on its knees,” says Mooney. “Each premises varies slightly according to its title, but in most cases it is reasonably easy to offer at least part of an existing car showroom as retail space and the rest as warehousing and storage. In some cases you do have to apply for planning again. There are different parameters in many cases.”
This article appears in the print edition of the Irish Times
DATED: 24.09.09FEED: Irish Times
Honda Jazz leads used car charge
Consumer demand in the used market for city cars and superminis has been described as "almost endless" by HPI, with the Honda Jazz leading the way.
HPI says the desirability for both sectors has been enhanced by people downsizing and the scrappage scheme.
“There is an almost endless demand for clean, low mileage models in the used market,” said Martin Keighley, HPI’s valuations expert.
“The traditional volume players such as Ford Fiesta, Vauxhall Corsa and the VW Polo have strong competition from the low volume players offering styles to suit everyone, from sporty to basic frugal models.
"Add this to their generally lower than average production of carbon emissions, and these cars offer guilt-free, greener motoring and good value.”
“The new Ford Fiesta has a seemingly endless queue of buyers, but don’t be fooled by its popularity, as its high list price doesn't make it, in terms of depreciation, the best buy,” said Keighley.
“The Honda Jazz is sensibly priced with a great reputation and good residuals, which is why it’s top of our league table."
Other worthwhile contenders include the Hyundai i20, "a bargain, but hard to get hold of".
One of the cheaper cars in this style is the Chevrolet Aveo, and coupled with its "reasonable" residual values, tops HPI's depreciation ranks.
The average three year/60,000 miles forecast for all cars is 31.2% and the supermini sector average is 31.7%, so all of the top ten are above average on both counts.
HPI'S top 10 superminisb by residual value %
1. Honda Jazz
2. Hyundai i20
3. SEAT Ibiza
4. Mazda2
5. Mitsubishi Colt
6. Suzuki Swift
7. Volkswagen Polo
8. Toyota Yaris
9. Chevrolet Aveo
10. = Renault Clio
10. = Ford Fiesta
10. = Kia Rio
DATED: 24.09.09
FEED: AM
Tuesday, September 22, 2009
Government publishes response on automotive industry support
Government is doing all it can to support the car industry helping it to adapt and survive so it can emerge stronger and better able to deal with future challenges, Business Minister Ian Lucas said today (21st September).
Mr Lucas made the comments as he published the Department for Business Innovation and Skills (BIS) response to the Business & Enterprise Select Committee's report, 'The Automotive Industry in the UK'.
Government has already taken substantial action to support the UK car industry and last week made the first loan from the Automotive Assistance Programme (AAP). Tata Motors TMETC has been given a £10 million loan to support the development and manufacture of electric vehicles in the UK.
Business Minister Ian Lucas said:
"These are tough times for the car industry and because it is one of the key sectors of our economy we must support it now and in the future.
"We have acted to support it in the short term through £300m support for the scrappage scheme, so far helping over 200,000 people to order a car now instead of waiting, and I have heard direct from the industry that it has benefitted enormously from the scheme.
"Our assistance does not stop there. It's not just about what we can do in the short term. We must invest in the future. That's why in addition to the AAP, we are helping the car industry to take advantage of the opportunities that moving to low carbon present. We have already set aside £250 million for consumer incentives and infrastructure and we will continue to support low carbon car development."
Ministers continue to consider a number of other bids for assistance from the programme's budget to help the industry meet consumer demand, protect it from the down turn and help it to become a world leader in low carbon cars. There are already on going negotiations with companies to fund projects with a total value of £2bn. The Government is also considering applications to the scheme that are below the £5m project limit in order to extend support to smaller companies in the supply chain.
Japanese cars make motorists happy but French cars backfire
Japanese cars make their owners happy but some French cars drive them to distraction, says Which? Car.
Five of the top 10 cars in the Which? Car owners' satisfaction table are Japanese: the current Mazda MX-5 (3rd with a customer satisfaction score** of 96%); Mazda MX-5 (1998-2005, 5th, 96%); Honda Jazz (6th, 95%); Toyota Yaris Verso (2000-2005, 7th, 95%); and Honda Jazz (2002-2008, 9th, 94%).
At the top of the table is the Audi A5 with an owner satisfaction score of 97%. Owners love its looks and performance despite it being the least dependable new sports / coupé with a reliability*** score of 76% (the joint least-reliable new car overall along with the current Ford Galaxy).
Other German cars also perform well in the satisfaction stakes with another two in the top 10: the Porsche Boxster (4th, 96%) and the Audi TT (8th, 94%). The Czech Skoda Superb (2002-2008) lives up to its name in second place with an impressive 96%, while the popular Italian Fiat 500 is tenth with 94%.
Down at the bottom of the table, six of the least popular 10 cars are French, including four Renaults, a Peugeot and a Citroën.
Bottom of the pile is the Renault Espace (1997-2003) with 57%. Owners of other Renaults aren't terribly impressed either. The Mégane (1996-2003) is described as "a pile of rubbish"; the Laguna (2001-2007) as "an impulse buy. regretted ever since"; and the Espace as a "fantastic car, if only it would work for longer than a month at a time."
Which? Car editor, Richard Headland, says:
"It's no surprise that owners love their Japanese cars. They're reliable, reasonably priced and cheap to run. But down in the Which? Car hall of shame, owners of some French cars seem to be less than enamoured with their motors.
"It's the honeymoon period for the relatively new Audi A5 - smitten owners may soon fall out of love with it if reliability doesn't improve."
**During January 2009, 77,000 Which? members reported on how satisfied they'd been with their cars over the past 12 months. This gave data on 84,119 cars up to eight years old (making it the biggest and most detailed car survey in the UK). Expressed as percentages, these figures give an instant picture of how happy people have been with their cars.
***An overall reliability score is based on the number of breakdowns, faults and niggles reported by owners (but heavily weighted towards breakdowns). Breakdowns are classed as 'something that leaves you unable to drive the car', faults 'a part failure that required a visit to the car dealer or local garage to fix' and niggles 'less urgent breakages or failures'.
German Chancellor shrugs off GM deal criticism
German Chancellor Angela Merkel has defended her government's financial support for General Motors' European division, while UK Business Secretary Lord Mandelson has called on the European Commission to ensure that a 'subsidy war' does not break out with countries using state aid to protect jobs.
Lord Mandelson has already warned of a 'political fix' following General Motors' decision to sell a 55 per cent stake in its European operations to a consortium led by Magna International - a move that has been financially backed by the German government.
But, Ms Merkel defended the move at the Frankfurt Motor Show where she said that Opel and Vauxhall would have struggled to survive without Germany's help.
"We thought it was important to give this company another chance. We are naturally determined to resolve the remaining problems in a spirit of European equality.
"If we had not intervened with a bridging loan when General Motors declared bankruptcy, many Europeans would have been in trouble. It was mutually beneficial."
The European Commission has said that it will analyse Germany's actions following complaints from other European countries. The German government provided a €1.5 billion bridging loan and is set to back the Magna deal with €4.5bn of further support.
Ms Merkel is facing a general election in Germany later this month and securing 25,000 jobs at GM Europe plants in the country would be a major boost to her campaign.
Meanwhile, Lord Mandelson's comments underline his concerns that Vauxhall jobs at factories in Ellesmere Port and Luton could be sacrificed to save German jobs.
Lord Mandelson said the European Commission should 'refuse to accept plant closures and restructuring that reflect the size of the chequebook, rather than commercial considerations'.
He says he wants to work with Magna but will fight to prevent any jobs-for-cash deal that allocates Magna's intended 10,500 Europe-wide job cuts on the basis of state aid, rather than commercial viability.
The UK government is due to meet Magna officials in London this week.
Accident Exchange takes legal action against consultants
Accident Exchange is taking automotive consultants Autofocus to court over allegations that it gave bad information in compensation cases going as far back as 2007.
Steve Evans, Accident Exchange chief executive, said cases which could make up millions in missing revenue to the company have been affected by “factually incorrect” evidence given by Autofocus on estimates on how much replacement vehicles would cost.
Accident Exchange says this evidence was often significantly undervalued, meaning it recovered less than it should have, affecting its financial results.
Accident Exchange posted a full year reported loss before tax of £55.4 million after exceptional charges in comparison to a £9.9m profit the year before in its financial results in July.
Evans said: “We didn’t realise the reason why we were suffering the way we were financially and when this problem came to light, suddenly all the planets came into alignment.
“We think that it involves about two or three thousand cases and the average value of a case might be three, four or five thousand pounds.”
Evans has a team of 16 investigative officers searching through a paper trail at Accident Exchange’s Birmingham head office.
Evans said there had been no disruption to operations because of the legal case and he was expecting a fairly quick turn around “in the next four to six weeks”.
Autofocus has been served for high court action today. It denied the allegations completely, adding it “rejects these allegations in the strongest possible terms and intends to defend itself and its reputation”.
The dispute boils down to “spot rates” – estimates of how much cars cost to replace. Accident Exchange said solicitors for insurance companies looking to minimise payouts were increasingly turning to low spot rate estimates from Autofocus.
It said recovery levels had dropped from the start of the year, which they originally put down to the recession and insurers trying harder to avoid payouts. But it said an internal investigation pointed to a different source.
In a statement to the stock exchange, Accident Exchange said: “Accident Exchange has recently discovered and obtained direct independent evidence that the lower rates awarded by the courts were, in some cases, based on the defendant producing evidence on spot hire rate from Autofocus.
“The findings of the investigation have been communicated to the insurers and solicitors of the ‘at fault’ driver (the defendant in these Court cases) and is expected to form the basis of an action for damages against Autofocus.”
Industry calls for scrappage scheme extension
The Society of Motor Manufacturers and Traders (SMMT), together with the Retail Motor Industry Federation believe the Government should increase its £300 million contribution to the scrappage scheme.
Since its launch in May, it has been responsible for 215,747 new car orders (as of September 13).
The voluntary discount scheme sees owners of cars or vans over 10-years-old offered £2,000 off the price of a new car: £1,000 each from the Government and manufacturer/dealer.
Business secretary Lord Mandelson has already ruled out an extension after the RMIF called for a meeting to discuss the matter.
The SMMT had initially remaining undecided over whether an extension was the best long term solution for the industry, but has called for an extension in a unified call from the manufacturers.
Paul Everitt, SMMT chief executive, said: “Consumer confidence is still weak and recovery remains extremely fragile. “Avoiding a relapse in demand is critical to the UK economy and an extension to the scrappage incentive scheme, which has already proven its credentials as a cost-effective support mechanism, will ensure a more stable outlook for vehicle demand.”
The SMMT is calling on the Government to extend the scheme through to the original close date of the end of February 2010, to counter the impact of a higher rate of VAT and the introduction of the first year vehicle excise duty rates.
The SMMT has written to the Government and highlighted the following points:
- Over 100,000 new vehicles have been registered under the scrappage scheme with an order bank of a further 100,000 suggesting the scheme will run out of funding in late October/early November.
- One fifth of the cars registered were either built in the UK or have an engine produced here.
- The scrappage scheme is largely self-funding with the 15% VAT paid on a car bought for £7,650 covering the £1,000 Government contribution.
- SMMT estimates that 70% of the cars bought under the scrappage scheme represent additional sales which would not otherwise have happened in 2009.
- The average CO2 emissions of a car bought under the scheme are 131.8g/km, 13.5% lower than the pre-scrappage market average of 152.3g/km.
- The average car scrapped under the scheme is 12.6 years old with estimated CO2 emissions of 181.9g/km – 27.6% higher than its replacement.
- 76% of cars bought under the scrappage scheme were classified in the mini or supermini segments.
- 85% of a vehicle’s lifetime CO2 emissions come through use meaning the scheme is likely to save some 2.7m tonnes of CO2.
- SMMT now forecasts the new car market to end 2009 at 1.85m units, above pre-scrappage forecasts but well below the 2.47m pre-recession five year average.
