Friday, October 02, 2009
Lexus to step up profitability push
Lexus is to issue termination notices to its network as part of a continuing drive for profitability that's taking precedence over concerns around market share.
Lexus has a network of 50 sales outlets plus five service centres. Lexus GB director Belinda Poole said: "We believe that number gives us the right geographical spread, but we are looking at each centre's territory and will be issuing new contracts, including the postcodes we want them to cover."
Termination notices will be issued in December. The changes will come into effect in January 2011. "We will talk through the changes with the network. They have the choice not to work with us, but I believe they have confidence in the brand," said Ms Poole.
The purpose of some centres will change from sales to service, she said. Year-to-date Lexus' has a 2.1% share of the premium market down from 2.3% last year.
"We don't chase volume because we want to be profitable. Our key message is that we have to have a profitable network that delivers customer satisfaction," said Ms Poole.
Car Shop opens in Doncaster
Used car supermarket The Car Shop will open a site in Doncaster in mid-November.
The company , which already has sites in Northampton, Cardiff and Swindon, said it aims to sell more than 6,000 used cars and vans a year at the new site, which will open with a stock of up to 1,000 vehicles in and around a 140,000 sq ft warehouse.
One hundred jobs will be created from the move.
The Car Shop joint operations director Jonathan Dunkley said: "These are difficult times for most but, so far, 2009 has been a record year for us due to our proactive approach.
"We looked at various areas but chose Doncaster because of the enormous opportunities it presents in sales and staffing potential. We are really pleased to be branching out into Yorkshire and look forward to bringing our brand and business strategy to the region."
DATED: 02.10.09
FEED: AM
Ford Motor has room for steady growth in its share of the North American and European auto markets, chief executive Alan Mulally said yesterday. F
Ford Motor has room for steady growth in its share of the North American and European auto markets, chief executive Alan Mulally said yesterday.
Ford, the only large U.S. automaker not to reorganize in 2009 under a government-supported bankruptcy, has increased its market share in the US this year as rivals General Motors and Chrysler stumbled towards bankruptcy.
As Ford continues to bring on small and mid-sized vehicles "I think we have room to grow, profitably of course, in the United States," Mulally said in a webcast with industry analysts.
Ford also has room to grow in Russia and Europe, he said.
"Two very large mature markets, so growth will be steady, but not real dramatic," Mulally said of the U.S. and Europe. "If you look at Asia-Pacific we have a lot of room to grow."
Ford, which has posted losses totalling about £18bn for the years 2006 through 2008, expects to be at least break-even in 2011 consistent with a gradual recovery in the economy that would also bring an increase in industry sales.
DATED: 02.10.09
FEED: AM
New car sales expected to show September drop
Total UK new car registrations for September are likely to be down by a quarter compared to the last pre-recession September plate-change.
The official SMMT figures are not released until Tuesday (October 6) but an industry source said he expected registrations to show a 2.3 per cent dip on September 2008's results, unless there was a significant push on the final few trading days. That would mean a total new car market of around 322,000 units.
However, when compared to the pre-recession 57-plate launch month, when 419,290 cars were registered in September 2007, the total decline amounts to 23 per cent.
GM set to wind down Saturn brand
The Penske Automotive Group said it was unable to find a manufacturer to build the cars beyond a supply deal it had struck with GM.
GM had been in discussions with Penske since June and described the breakdown of talks as "very disappointing".
GM emerged from bankruptcy protection in July and is selling some brands.
"This is very disappointing news and comes after months of hard work by hundreds of dedicated employees and Saturn retailers who tried hard to make the new Saturn a reality," said GM.
As a result, the carmaker said it would be "winding down the Saturn brand and dealership network."
Saturn has 350 dealerships and 13,000 employees.
GM has already announced that it is discontinuing the Pontiac brand, and is close to finalising the sale of its European brands Saab, Opel and Vauxhall.
It is also in the process of selling its Hummer brand to China's Sichuan Tengzhong Heavy Industrial Machinery.
Wednesday, September 30, 2009
Lookers plc Board Changes
As previously announced, Ken Surgenor retires from the Board of Lookers today, having served eight years as CEO and worked for the company for 23 years. He is replaced by Peter Jones, currently Managing Director of the Motor Division, who joined the Board in May 2008. Peter, 52, has extensive motor trade experience having been CEO of CD Bramall plc for six years and more recently as co-owner of Bramall & Jones Limited.
Phil White, Chairman of Lookers, commented: "Ken Surgenor was the architect of Lookers' recent growth including the acquisition of FPS, which was a transformational deal for the Group. Ken's own particular style and passion for the business have made Lookers one of the most reputable companies in the sector. I am therefore delighted that he will be staying with the Group overseeing our Northern Ireland operations.
"I am pleased to announce that Peter Jones is stepping up to the position of Chief Executive. Peter has a great track record in the industry and has done a tremendous job for us since joining Lookers and we look forward to him leading the Group in its next stage of development."
DATED: 30.09.09
FEED: Hemscott
Credit market decline slows
The consumer credit market appears to have stabilised but remains down by almost £11 billion on last year, according to new figures published today by the Finance & Leasing Association (FLA).
The figures show that new business written by FLA members, who provide secured and unsecured loans, credit and store cards, and motor finance, fell by 17% in July 2009 compared with the same month in 2008.
The rate of contraction in new business is showing signs of stabilising. Overall, new consumer finance business in the three months to July was 16% lower than in the same period a year earlier. This is similar to the rates reported in May and June. But the FLA cautions that the pressures that led to shrinkage in the consumer credit market continue to pose a risk, not least the problem of access to affordable wholesale funding. The raft of proposed consumer regulation in the Consumer White Paper, published in July, could also affect the size of the market, warned Geraldine Kilkelly, Head of Research and Chief Economist:
"Our figures suggest that the rate at which consumer credit provided by our members is contracting has stabilised. But over the last year, FLA members provided £10.9 billion less than they provided in 2008. There is a risk that if the burden of new regulation drives credit providers out of the market, consumers will be faced with a limited choice of lenders. This could affect the rate of economic recovery."
The FLA figures show that the lack of affordable wholesale credit has made it very difficult for consumers to get a secured loan, with lending in this market down 83% in the last three months. Consumers continue to take advantage of finance deals in the high street, which has led instalment credit levels to grow by 4% over the same period.
Table 1: New business extracts, July 2009
| July 2009 | % change | 3 months to July 09 | % change | 12 months to July 2009 | % change |
Total FLA consumer finance (£m) | 4,375 | -17 | 13,364 | -16 | 54,529 | -17 |
Store instalment credit (£m) | 214 | 0 | 657 | +4 | 2,532 | +3 |
Secured loans (£m) | 46 | -80 | 137 | -83 | 952 | -79 |
Credit cards (£m) | 2,706 | -10 | 8,148 | -8 | 33,093 | -7 |
Store cards (£m) | 208 | -27 | 620 | -17 | 2,631 | -12 |
Car finance (£m) | 902 | -8 | 2,791 | -11 | 10,728 | -15 |
Tuesday, September 29, 2009
Magna takeover under threat
Magna International's takeover of Opel/Vauxhall could be threatened amid mounting criticism from across Europe, according to sources close to the negotiations.
The agreement with General Motors needs heavy financing from European governments, especially Germany, as well as union support, and legal rubber-stamping.
Insiders emphasise that talks remain complex and 'it is not a done deal' as the European Commission scrutinises the state funding.
A rival bid from RHJ International required less funding than Magna and sources believe that the situation could change following Sunday's general election result in Germany.
Germany is set to provide 4.5 billion euros of financial support for the deal as part of Angela Merkel's efforts to protect 25,000 German jobs.
Magna's plans for Opel/Vauxhall involve cutting a significantly smaller percentage of jobs in Germany than in Britain and Belgium.
Despite the 4,000 German job cuts being the largest part of the overall 10,500 losses, Lord Mandelson, the Business Secretary, and other European leaders have expressed anger at the plans.
Lord Mandelson, who was also due financially to support the Magna deal, suggested it was not 'commercially the most viable plan'.
Production figures reveal that the British and Spanish plants under threat of closure produce vehicles more efficiently than two of the carmakers' three German factories.
The European Commission is believed to have sent a list of 100-200 questions to Germany to answer on the financial support it is making.
Meanwhile, Magna remains confident that the deal will be signed with GM soon. It is believed to be frustrated at the 'politics' being played, given that it has been in contact with the EC throughout the process.
Aston's owner given reprieve by banks
The Middle Eastern owner of Aston Martin has been awarded a standstill agreement by its banks after being forced into restructuring by its lenders following a default on a $100 million Islamic bond.
Kuwait's Investment Dar, which owns 50 per cent of Aston Martin along with Adeem Investment, is one of several Kuwaiti investment houses to be hit by the global economic meltdown.
The company said that a standstill agreement had been reached and that as part of that deal it had vowed to complete 'a variety of undertakings to the consenting banks and investors, including the appointment of a chief restructuring officer'.
Scrappage Scheme extended - NFDA responds
"The extension of the Vehicle Scrappage Scheme by Government is a victory for common sense over dogma" says Paul Williams, Chairman of the National Franchised Dealers Association, commenting on today's announcement from Lord Mandelson that the scrappage scheme is going to be extended.
"With the scheme now being a revenue source, a great many jobs will now be safeguarded"
SMMT reaction to vehicle Scrappage Incentive Scheme extension
Commenting on the Department for Business Innovation and Skills' announcement of an extension to the vehicle scrappage scheme, SMMT chief executive Paul Everitt said,
"Lord Mandelson's announcement of an extension to the car scrappage scheme is an extremely important decision that will inspire consumer and business confidence. It will help to stimulate demand, giving more consumers access to it, and create a bridge to a period when economic growth is strengthened and more sustainable.
"The additional 100,000 vehicles should help to counter the likely negative impacts of a return to the higher rate of VAT and the introduction of first year VED rates."
Trade bodies welcome scrappage extension
News that scrappage has been extended and now includes eight-year-old vans has been welcomed by trade assocations.
SMMT chief executive Paul Everitt said the extension was a decision "that will inspire consumer and business confidence".
He added: "It will help to stimulate demand, giving more consumers access to it, and create a bridge to a period when economic growth is strengthened and more sustainable.
“The additional 100,000 vehicles should help to counter the likely negative impacts of a return to the higher rate of VAT and the introduction of first year VED rates.”
At the RMIF, Paul Williams, chairman of the National Franchised Dealers Association, said the extension would safeguard many jobs in the retail and manufacturing sectors.
He described the extension as "a victory for common sense over dogma".
The rules on the trade-in vehicle have been amended to include cars registered before February 28, 2000, and vans registered before February 28, 2002.
DATED: 29.09.09
FEED: AM
New MD targets consumer awareness at Kia
The new managing director of Kia Motors UK plans to build on the strong relationships with dealers founded by predecessor Paul Philpott.
Michael Cole is looking forward to meeting retail partners at a network meeting on October 1, when the facelifted Cee’d goes on sale.
His first few weeks in the post have already included a comprehensive handover from Philpott, an introduction to the national dealer council and a visit to Kia’s headquarters and R&D facilities in Korea to meet its global management.
Like Philpott, Cole was a Toyota GB senior executive before being attracted to Kia. He began a career in motor retail at Ford dealerships with Lex Retail Group, Swan National Motors and Godfrey Davis.
He’s pleased with dealer profitability – return on sale was typically around 2.5% at the half-year point. Dealers are making good profits from new car sales, he said, but service absorption is below average. Absorption and customer retention are subjects he will tackle at the dealer meeting.
Medium-term, the greatest challenge for KMUK and its dealers will be building consumer awareness of the Kia brand. Cole tells the story of informing one friend recently about his move from Toyota, at which the friend mistook his new employer for Ikea.
Cee’d, Soul and the next generation Sorento are evidence of its huge improvements in quality and design, but Cole agrees that Kia doesn’t feature on enough car buyers’ radar.
He said: “We don’t want to be a company that people buy from because it’s cheap. That’s not a sustainable position. Ask the question is a Kia today perceived as an aspirational choice of car and the answer is no from the vast majority of the British public. That’s the perception, not the reality. There is no doubt that the quality of our products is as high as it needs to be.”
Scrappage extension announcement
Lord Mandelson has just confirmed that the UK's scrappage scheme will fund another 100,000 vehicles.
The rules on the trade-in vehicle are also being amended to include cars registered before February 28, 2000, and vans registered before February 28, 2002.
The scrappage scheme will still expire on February 28, 2010, or sooner if the Government's money, now a total of £400m, is spent out before then.
He told the Labour Party Conference this afternoon that the Labour Government was one that "will stand by" workers at Vauxhall and Jaguar Land Rover.
The Business Secretary said: "All this only makes sense if we invest in our country for growth, growth that will see off recession, growth that will pay down debt."
Commenting on the announcement SMMT chief executive Paul Everittsaid: “Lord Mandelson’s announcement of an extension to the car scrappage scheme is an extremely important decision that will inspire consumer and business confidence.
"It will help to stimulate demand, giving more consumers access to it, and create a bridge to a period when economic growth is strengthened and more sustainable.
“The additional 100,000 vehicles should help to counter the likely negative impacts of a return to the higher rate of VAT and the introduction of first year VED rates.”
Paul Williams, chairman of the National Franchised Dealer Association, said: ""The extension of the vehicle scrappage scheme by the Government is a victory for common sense over dogma."
"With the scheme now being a revenue source, a great many jobs will now be safeguarded in both the retail and manufacturing sectors"
The Government's initial pledge when launching the scrappage incentive scheme was for £300m of funding, equating to around 300,000 new car and van registrations.
DATED: 29.09.09
FEED: AM
Scrappage scheme to be extended
The government is to extend its car scrappage scheme, Lord Mandelson said.
He said the scheme, which started in May and gives consumers £2,000 off a new car if they trade in one at least 10 years old, was running out of money.
The business secretary announced the move, called for by the car industry, in his speech to Labour's conference.
He said that "while we can't do everything we can do something" and said the scheme would be extended to cover 100,000 more cars and vans.
The initiative had been due to end in February, or when the £300m the government has allocated towards the scheme runs out, whichever happens first.
'Risks'
Unions and Labour MPs have urged ministers to extend the scheme to help save manufacturing jobs amid concerns car sales would fall sharply without continued incentives to boost demand.
Unite General Secretary Derek Simpson told the conference that extending the scheme was the kind of move which Labour must make to help "reconnect" with working people.
And Labour backbencher Lindsay Hoyle said it was "important" the scheme was extended soon.
Manufacturing associations recently wrote to Chancellor Alistair Darling about the "clear risks" of ending the scheme, saying demand for new cars would be hard to maintain without the incentives currently in place.
The letter was signed by the EEF, UK Steel, the Manufacturing Technologies Association and British Plastics Federation.
The 5bn-euro German scheme, the largest of any government, ran out early this month. It encouraged almost two million motorists to scrap their old cars and exchange them for new ones.
The US version spent its $3bn allocation in a matter of weeks. The UK, US and German governments have spent a total of 8bn euros ($11.4bn; £7bn) on similar scrappage schemes.
Call for UK car scrappage renewal
A manufacturers' body has called for the UK government to continue its car scrappage scheme.
The EEF said in a letter to Chancellor Alistair Darling that the scheme had helped to save manufacturing jobs.
Motorists receive a £2,000 discount if they scrap a car more than 10 years old to buy a new one, under the scheme.
It is currently due to end in February, or when the £300m the government has allocated towards the scheme runs out; whichever happens first.
A total of more than 8bn euros ($11.4bn; £7bn) has been spent by the UK, German and US governments on car scrappage.
Carmakers have been calling for governments to extend the schemes.
Sales risk
There are concerns that car sales will now fall sharply without incentives as the various scrappage programmes come to an end.
"It is far from certain that consumer demand for motor vehicles can remain at these levels without government and industry providing incentives to replace older vehicles," said EEF head Giles Toppin in the letter.
"There are, therefore, clear risks that the recent upward trend will go into reverse once the current scrappage scheme expires."
The letter was also signed by heads of other groups including UK Steel, the Manufacturing Technologies Association and British Plastics Federation.
Last week, Ford and Toyota were among carmakers that told the BBC they wanted governments to extend their scrappage schemes.
The 5bn-euro German scheme, the largest of any government, ran out early this month. It encouraged almost two million motorists to scrap their old cars and exchange them for new ones.
The US version spent its $3bn allocation in a matter of weeks.
Tata Chairman wins Innovation Award
The statement from the Economist is as follows:
The Economist is pleased to announce that Ratan Tata, Chairman of the Tata Group, is the winner of this year's Business Process Innovation Award. Tata has forged a company that is shaping businesses across the globe and changing the way Indian companies conduct business. The company is also responsible for inventing the Tata Nano, the world's lowest-cost car. Innovative methods through which the car is designed and manufactured enable Tata Motors to offer a more affordable, safe and efficient form of mobility to families in emerging markets.
"Innovative ideas are everywhere," said Mark Langley, executive vice president and COO of the Project Management Institute. "What we salute with the Business Process Award is rarer: the implementation, through effective projects and programs that translates ideas into lasting change. Tata Motors' Nano challenges the way automobiles have been made and marketed for a hundred years. The application of project management is testimony to Tata Group's record of refining its processes, from boardroom to manufacturing floor, and promises transformation of an industry facing a billion new customers over the next generation."
Monday, September 28, 2009
HPI gets new RRG contract
Renault Retail Group has contracted HPI for its vehicle provenance checks.
It has renewed its relationship with HPI for two years.
In the latest deal, HPI will also provide RRG dealers with additional services, including the 7-day free insurance product Driveaway.
Renault Retail Group is a national network of over 20 automotive dealerships and sells 1 in every 4 Renaults in the UK.
Daniel Burgess, director of automotive for HPI, described it as a "significant win for HPI".
DATED: 28.09.09
FEED: AM
German scrappage scheme ends
"A number of German dealers could be facing bankruptcy in 2010."
At last week’s Frankfurt Motor Show, there was lots of talk about the future of the European car market. However, scratching the surface showed that what car industry executives really meant was the future of the German car market.
Germany has just come to the end of a mini-boom thanks to a generous €2,500 scrappage scheme (August sales were up 28%), but it is now staring over the edge of a cliff.
If it falls, it could drag the whole European market with it. In 2009, the German market is expected to hit 3.8 million sales, but that could fall to 2.8 million in 2010.
A decline of one million units is likely to dwarf any recovery elsewhere in Europe – even assuming other markets do recover.
This is seriously worrying car bosses. Only a few weeks ago, the boss of the German VDA (the German industry association) said: “We are not demanding any new subsidies after the scrapping bonus.”
Yet, at Frankfurt car companies were openly calling for just that.
The boss of one car company said a significant number of German dealers could be facing bankruptcy in 2010 and added that they were lobbying hard for a transitional arrangement that would give the German market a soft landing.
However, speaking privately, another top executive said the German government was unlikely to help: “They feel they have done quite enough for the car industry one way and another and feel it is time they stood on their own two feet.”
So what effect does that have on Britain? Clearly a major decline in Germany will affect demand for British-built cars such as the Astra and the Civic, not to mention component suppliers, including Ford’s big engine plant.
That is one of the reasons the industry is now lobbying Peter Mandelson to extend the British scrappage scheme – anything that can partially offset problems in Germany is welcome.
On this front, quite a few executives sounded cautiously optimistic: “What else can the Government point to that has been an economic success in the last year?” was one barbed comment from a chief executive.
Given the scheme is at least self-financing in cash terms (the VAT received is as high as the subsidy), even before the employment benefits are taken into account, the hope is that the Government will relent.
DATED: 28.09.09
FEED: AM
