By 19 October 2008 0 Comments Read More →

News : 19 October 2008

News digest

Compiled by Clive Goldthorp

1) SAIC Motor/MG and Roewe

Plans to double Longbridge workforce
Jon Griffin, Birmingham Mail 10th October, 2008

LONGBRIDGE is back up and running with a vengeance with plans to more than double the MG UK workforce at the car factory within 12 months. The Chinese owners of the famous Birmingham car plant aim to beat the financial downturn with proposals to hire more production, paintshop, sales and marketing staff and others during 2009.

And discussions are under way over the transfer of around 250 designers and engineers currently based at the Shanghai Motor Technical Centre in Leamington – a wholly-owned subsidiary of SAIC/Nanjing – to Longbridge. The recruitment plans would more than double the current workforce of around 200 based at Longbridge, at a time when motor industry jobs are under severe threat from the worst UK sales slump for over 40 years.

Meanwhile, the standard version of the two-seater MG TF will be on the road by the end of the year following a sell-out of the limited edition version, the TF LE500. NAC MG UK Corporate Communications Manager Eleanor de le Haye said the car firm was set to recruit across all areas.

“At the time of the launch, it was 180 to 190 people but the workforce is creeping up all the time,” she said. “There are 27 people being recruited over the course of 2009 for sales and marketing, for example. There are plans to recruit more business staff, paintshop staff, production staff. The TF LE500 has been a huge success and we do not think that it would be any different for the standard car. We have a standard specification model, MG TF, and there will be standard cars on the road by the end of the year.”

Ms De La Haye confirmed that plans to transfer the SMTC UK Ltd operation – which provides engineering and design skills for MG and the Shanghai-built Roewe model – were under consideration. The new Longbridge-built MG is being sold through a network of 50-plus UK dealerships nationwide from £16,399 on the road and SAIC/Nanjing aim for an output of around 3700 vehicles next year.

MG brings automatic to China, sees expansion in Britain
Namrita Chow, Automotive News China 14th October, 2008

SHANGHAI — Nanjing Automobile Corp. MG has launched an automatic version of its MG7 sedan in China to boost sluggish sales. It is also looking to expand its line up in Britain and export more to Europe and South Africa. The MG7 was first introduced with a manual-only transmission in August 2007 and sold 3131 units last year. But this year, sales are slipping with only 2416 units moving off lots in the first eight months.

The MG7 also trails the Roewe 750, which shares the same platform and some parts and is made by NAC MG’s parent company, Shanghai Automotive Industry Corp. The Roewe 750 sold 10,061 units through August, according to Automotive Resources Asia, a division of JD Power. NAC hopes to boost MG7 sales in China with the addition of the automatic version, says NAC MG. But a spokesperson for parent company SAIC declined to offer a sales target for the model.

Both automatic and manual versions of the MG7 are produced at the NAC MG plant in Nanjing. The automatic went on sale September. The MG7 is one of three models NAC MG sells in China. The other two are the MG TF roadster and the MG3 SW. In Britain, the company launched the MG TF LE500 last month and is expected to introduce the standard MG TF soon.

Georgina Delahaye, a NAC MG spokesperson for the United Kingdom, says NAC MG wants to expand the UK line up to three models in four years. “An upper medium car, a super mini and a C-segment car,” says Delahaye. NAC MG also hopes to start exporting cars from its Longbridge plant in Britain. Those vehicles are only on sale in Britain right now.

Says Delahaye: “We are speaking to various importers in Europe and South Africa.”

2) Jaguar and Land Rover

Jaguar Land Rover to shed 200 UK jobs
Duncan Tift, Birmingham Post 15th October, 2008

Jaguar Land Rover is to shed 200 jobs across its UK operations. The announcement came on Wednesday although the company stressed the redundancies were nothing to do with the current economic downturn or the slump in new car sales. The company, now owned by India’s Tata Motors, has carried out a voluntary redundancy scheme for several years now, each time around this time of year.

Spokesman Don Hume said: “It is a small redundancy programme and it affects 198 staff across all our manufacturing sites, including Halewood. It affects hourly paid employees and is part of the company’s on going drive to improve efficiency.”

The employees will each receive a nine-month lump sum based on current salary and any over 60 will be entitled to their full pension allowance. The redundancies are planned to take effect by the end of next month and the company said it was not intending to make any compulsory cuts in workforce. While on a small scale, the redundancies come at what is a difficult time for the firm.

After basking in a sales boost courtesy of its award-winning XF, the company has been brought down to earth with a bump due to falling demand for its luxury 4x4s in its established markets in Europe and the United States. Last month, the firm announced it was easing output of Jaguar models at its Castle Bromwich plant, while Land Rover has axed a night shift at its Lode Lane factory in Solihull and put some models on a four-day week production cycle.

Halewood, which employs around 2500 people and builds the Jaguar X-type saloon and the Land Rover Freelander, is to close for a week at the end of the month to try and ease over-capacity. Staff will continue to be paid. The firm also said that workers on Jaguar’s XJ and XK production lines are likely to stay on a four-day week for the rest of 2008.

Up until the Christmas and New Year shutdown, Fridays will be dedicated to training and maintenance work with workers undertaking courses on new techniques such as lean manufacturing. It is understood that the four-day week will reduce XJ and XK production by a maximum of 400 models. The situation will be reviewed early next year.

Ironically, Jaguar bucked the trend for declining sales last month, with the XF still winning new customers.

Jaguar Land Rover to cut UK jobs
John Revill, Automotive News Europe 17th October, 2008

Jaguar Land Rover will cut 198 jobs from its UK workforce, the company said Friday.

The automaker, which employs about 16,000 people in the UK, will seek voluntary layoffs of production workers at its plants on Merseyside, northern England, and in Birmingham and Solihull, central England. Engineering and design centers at Whitley and Gaydon, central England, will be unaffected, the company said.

Don Hume, director of corporate affairs at Jaguar Land Rover, said the job cuts were part of an ongoing drive to improve efficiencies at the company’s factories. “It is aimed at achieving greater efficiencies in the business,” Hume said. “It is not a reaction to the economic slowdown or falling sales.”

Hume said global Jaguar sales were up 12.9 percent in the first nine months of 2008 and Land Rover sales were down 9.6 per cent, but declined to give figures. “Despite the downturn, we still expect this year to be the second most successful year in Land Rover’s history,” Hume said. The company expects Land Rover sales of around 200,000 units this year.

According to the European Manufacturers Association, ACEA, combined Jaguar Land Rover sales in Europe for the first nine months of 2008 are down 17.2 percent to 89,285. Hume said he expected the job cuts to be completed by the end of November and was optimistic the target could be achieved.

He said no further job cuts are planned. Ford Motor sold the British luxury brands to India’s Tata Motors for $2.3 billion (about 1.5 billion euros at the time of the sale). The deal was completed on June 2.

Jaguar Land Rover workers offered three-month break
Birmingham Post 17th October, 2008

Thousands of production workers at Jaguar Land Rover are being offered leave of up to three months in exchange for a temporary 20 per cent pay cut. And employees at Solihull, Castle Bromwich and Browns Lane, Coventry, can even apply for new jobs during their sabbaticals from car manufacturing. The innovative scheme has been drawn up by the Tata-owned company to help stave off the continuing downturn in consumer demand facing the UK car sector.

Night shifts are being cut at Land Rover and workers on the XJ and XK lines at Jaguar are on a four-day production week until the New Year as Tata fights to avoid potential stockpiling of vehicles. Now JLR bosses have made the sabbatical offer in a move thought to be a first for the UK car industry, which is facing its toughest sales environment for many years.

Land Rover spokesman Mark Foster said: “We see this as an innovative response to current market conditions. Under previous lay-offs, people would have had 24 hours notice to return to work. We are saying here that you can have a period where it will be treated like a sabbatical. You can have 80 per cent of your pay and you are not going to be required at 24 hours notice to return to work. We are testing the water here and we will have to see what response there is.”

In a statement, JLR said: “It is both prudent and essential for our business that we continue to respond quickly to change. Therefore to assist employees and aid operational efficiency during the current disturbances to production schedules, Jaguar Land Rover has made available a short-term sabbatical programme at the Solihull, Castle Bromwich or Browns Lane production facilities. The programme provides an opportunity for hourly-paid employees to volunteer for leave of absence for a minimum of four weeks. During the period of the sabbatical, they will not be required to attend work and will also be able, should they wish, to take up alternative employment. All participants will be retained by Jaguar Land Rover on the basis of 80 per cent of basic pay.”

The sabbatical offer was announced to JLR employees hard on the heels of a new voluntary redundancy programme, with nearly 200 jobs to be shed across the group. A Land Rover worker, who asked not to be named, said: “In over 20 years of working here, this sabbatical scheme is unprecedented – we have been taken totally by surprise, and I have never heard of such an offer in the car industry before. It’s hard to say what the take-up will be. It’s obviously down to the individual but people here are still very fearful for the future.”


Spied: Electric Mini 15th October, 2008

OUR spy photographers have caught images of a groundbreaking new all-electric Mini being tested for the first time – and this is no concept car. Instead the Mini EV is a top-secret project that BMW has been quietly developing in Oxford and Munich. Autocar understands from well-placed BMW insiders that the electric Mini will make a surprise debut at the LA motor show next month, going on sale in limited numbers shortly afterwards.

The electric Mini isn’t intended to be a global product. Initially it is likely to be piloted in US cities where recharging infrastructure is already available, although a small batch of the cars could be offered to selected customers in London. Technical details are scarce, but its interior will have to be dramatically altered to fit a battery pack – possibly even losing the rear seats. Using modern lithium-ion batteries, the electric Mini is expected to have a range of between 100 and 135 miles after a full recharge.

Seamless drive – as we’ve sampled in other modern electric cars – should also make this Mini a spirited performer off the line. We expect a 0-60mph time below nine seconds.

Spied: Mini Cross 17th October, 2008

Our spy photographers have captured Mini’s forthcoming SUV being tested ahead of launch in 2010. We’ve already seen the car as the Crossman concept at the Paris show, but these are the best pictures of a production version. It’s clear that this is going to be the biggest car to wear a Mini badge so far, likely to be more than 4.0 metres in length.

The Paris show car was badged as the Mini Crossman, but BMW insiders say the production car will be sold as the Mini Cross. The finished car will also lose most of the Paris show concept’s more outlandish details, including the sliding ‘parallelogram’ hinges of its rear doors.

But it’s possible that the production version will keep the concept’s wind-down tailgate windows, which make it easier to carry longer loads. Although the Mini Cross is almost as big as BMW’s forthcoming X1 compact SUV, the two cars will not share mechanical components. Instead the Cross will use a developed version of the platform and powertrains already offered in the existing Mini and Mini Clubman.

The production Mini Cross will be built in Austria by Magna Steyr, which builds European versions of the current BMW X3. Autocar has also learned that a lower, less aggressively styled, two-wheel-drive variant will be launched shortly after the 4×4 version.

4) India Watch

Tata to launch EV next year 14th October, 2008

Tata Motors Chairman Ratan Tata and Managing Director Ravi Kant with the electric Indica when it was
displayed at the SIAM Annual Convention in September 2008.

Tata Motors’ UK subsidiary, Tata Motors European Technical Centre plc, has bought a 50.3% holding in electric vehicle technology firm Miljø Grenland/Innovasjon of Norway for NOK12m (GBP1.12m; US$1.93m) and plans to launch an electric Indica hatchback in Europe next year.

Miljø Grenland/Innovasjon specialises in developing technology for electric vehicles. The balance of shares will be retained by existing stakeholders who will remain associated with the venture. Miljø will produce electric vehicles based on Tata Motors’ products, alongside polymer lithium ion batteries and its ongoing development of related technologies.

“Tata Motors believes that this investment in Miljo will help the company realise its strategy to develop convenient, affordable and sustainable mobility solutions through electric and hybrid vehicles,” the automaker said in a statement on Tuesday. The Indica EV will be the first Tata EV on sale, with launch in Europe scheduled for 2009.

“Unlike existing electric vehicles, Indica EV will be a more practicable option for the consumer: capable of carrying four people, adequate luggage space, with a predicted range of up to 200km (120 miles) and acceleration of 0-60 km/h in under 10 seconds,” Tata said. “As in the Nano, Tata Motors continues its innovative approach with Indica EV too, using super polymer lithium ion batteries which will have superior energy density compared to the current best-in-class electric vehicles.”

5) China Watch

State ownership slows much needed industry consolidation
Yang Jian,
Automotive News China, 14th October, 2008

Last December, when Shanghai Automotive Industry Corp. (SAIC) acquired another state-owned company, Nanjing Automobile Corp., expectations were high among industry observers that more such deals would soon follow in China’s auto industry. But 10 months have passed, and nothing has happened. How could that be?

The thing is, as long as Chinese automakers remain mostly state owned, consolidation in China’s highly fragmented auto sector is bound to be painfully slow. Currently, China has more than 20 passenger vehicle manufacturers. Among them, two thirds are state-owned companies.

Many state-owned automakers are small and financially weak. Allowing these companies to be bought by healthy competitors would create bigger and more competitive players through economies of scale and operational synergies. However, it is never easy to acquire an automaker in China, especially a state-owned one.

A state-owned automaker answers to the government, not to the market. That means political considerations often override financial ones in forging corporate partnerships. Further complicating the situation, different state-owned auto manufacturers in China are controlled by different governments. As long as different governments cannot align their interests, there is no way for state-owned automakers under their jurisdiction to tie a corporate knot.

That is why Dongfeng Motor Corp.’s long-anticipated acquisition of Hafei Automobile Group Corp. has stalled. In March this year, a Hong Kong-listed company related to Hafei disclosed that Dongfeng would soon acquire Hafei’s auto manufacturing assets. Dongfeng is known for its commercial vehicle manufacturing business, while Hafei is mainly a minivan maker. Both are state-owned companies.

The deal would give Dongfeng a long sought after passenger vehicle business, but Hafei and Dongfeng are controlled by different departments of the central Chinese government. And that, say industry sources, is the reason negotiations on the deal have been postponed. They charge that the Commission of Science, Technology, and Industry for National Defense, the department ultimately controlling Hafei, loathes letting go of its auto business.

Another example is Shenyang Brilliance Jinbei Automotive Co., a state-owned medium-sized car maker located in northeast China’s Liaoning province. Some industry observers say China FAW Group Corp. in Liaoning’s neighboring province of Jilin, is likely to acquire Brilliance. Also a state-owned company, FAW is China’s largest auto manufacturer.

But a senior Brilliance executive at the recent Paris auto show told Automotive News Europe, the sister publication of Automotive News China, that possibility does not exist. “Up until now, we have never heard of such a discussion. We have a promise from the government to help us get stronger and to develop into a famous, strong Chinese brand,” says the executive.

In China, provincial authorities hold great sway over their local economic resources. And Liaoning province is hardly alone in providing full government support for state-owned auto manufacturers under its control. In 2006, it was the backing of the Jiangsu provincial government that enabled Nanjing Auto to borrow heavily from local banks to finance its purchase of MG and Rover’s Longbridge plant in England.

Tremendous financial pressure eventually forced Nanjing into the arms of SAIC. Auto manufacturing is deemed to a “pillar” industry by governments at all different levels in China. They expect it to create jobs and pay taxes to local coffers. To maintain their control on local state-owned automakers, governments are happy to provide cheap land and secure easy loans from state-owned banks for these automakers.

Their unquestioning support is shoring up poor-performing car makers and prompting many to build excess capacity. And in the end, it all combines to slow down the much needed consolidation of China’s auto industry and threaten the healthy development of the industry in the long term.

Auto industry likely to consolidate
China Daily 17th October, 2008

China’s auto industry, the world’s most competitive, will likely consolidate from next year as slowing demand and rising material costs crimp margins, an official from the National Development and Reform Commission (NDRC) said. “Some weak brands and less competitive players will start to be pushed out next year,” Cheng Xiaodong, head of the vehicle-price monitoring arm of the NDRC, said. “Local carmakers with small profit margins will be hit first.”

Chinese carmakers have been forced to slash prices, even as steel costs rise, to stand out among the 52 brands on sale, the most in any country. Car sales in Asia’s largest auto market have also fallen for the last two months as rising fuel prices and a 64 percent stock market slump curb demand. “In a downturn, only strong players can survive,” said Huang Zherui, an analyst at CSM Asia in Shanghai. “Local carmakers may be hit the most by slowing demand as buyers of their vehicles have less purchasing powers than motorists opting for higher-end products.”

Still, combining with money-losing rivals may damp earnings at profitable carmakers. Dongfeng Motor Group Co, the country’s second biggest listed carmaker, plunged the most in a year in Hong Kong trading on concerns it will have to buy rivals. “It will be a painful process for major carmakers like Dongfeng to absorb smaller players,” said Vivien Chan, an analyst at Sinopac Securities Asia Ltd in Hong Kong. “They will have to go that way though, given that it’s the direction set by the government.”

Local brands are being squeezed in China as rising wages enable drivers to buy more expensive overseas models. Chery Automobile Co, the country’s largest carmaker without an international partner, ranked sixth in car sales in the first nine months, compared with fourth for the whole of last year. The top two spots were taken by Volkswagen AG ventures in both periods.

China’s domestic carmakers face more competition as overseas rivals including General Motors Corp and Toyota Motor Corp have boosted investments in the country to offset slowdowns in the United States, Europe and Japan. China’s car sales doubled in the five years to 2007, and rose 11 percent to 5.1 million in the first nine months of this year. In the US, vehicle sales dropped 13 percent in the first nine months. European sales sank 4.4 per cent.

The competition may force carmakers to cut prices as much as 3 percent this year, Cheng said. The country’s stockpile of unsold new vehicles stood at a four-year high of 170,000 at the end of last month, he added. Prices fell 2.1 percent in the first nine months, he said. Toyota and Mazda Motor Corp have both made temporary production cuts because of slowing demand.

Consolidation among Chinese carmakers has already begun. SAIC Motor Corp, the country’s largest automaker, took over Nanjing Automobile Group Corp’s automaking assets, including the MG Car brand last year. Still, other attempts at combinations have been hindered by the fact that most major carmakers are owned by the central or local governments, said Huang.

Jiangxi Changhe Automobile Co and Hafei Automobile Group, two State-owned carmakers, have spent seven years looking for partners to help them improve their competitiveness, China Business Journal said on Oct 6. Their latest efforts failed because the two companies didn’t have full control over the negotiations, the report added.

Posted in: AROnline News
Keith Adams

About the Author:

Created in 2001 and watched it steadily grow into AROnline. Is the Editor of Classic Car Weekly, and has contributed to various motoring titles including Octane, Evo, Honest John, CAR magazine, Autocar, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, Classic Car Weekly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, and the the Motoring Independent... Likes 'conditionally challenged' motors and taking them on unfeasable adventures all across Europe.

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