News : September 2007
Up close and personal with the XF
If ever there was a make or break car for Jaguar – this one’s it. Not only does it have to revive sales hemorrhaged by the lame duck S-TYPE, but it also needs to capture the imagination of executive car buyers who’ve tuned into the offerings from the German ‘Big Three’. Is the XF the car good enough to raise Jaguar’s stock and entice the aspirational? Alexander Boucke takes a closer look…
IT goes without saying that the star of this year’s Frankfurt Motor Show was the new Jaguar XF – there had been plenty of talk about this being the sort of car that William Lyons himself would have appreciated, and how buyers would turn to it in their droves. But it’s first impressions that count, and where better to gauge its chances of capturing the imagination than in deepest Germany – the home of the executive motor?
To give you an idea of how much importance Jaguar was heaping on this car, it did all it could to make a positive impression. There were three new XFs gracing the stand, while the ‘volume’ selling X-TYPE was rather embarrassingly relegated to a hidden corner, away from the public glare.
But then, the XF represents all the hopes that Jaguar has for its future – company big wigs are very proud of their new creation, and are hoping it will turn around the disappointing sales of the last few years.
The first impressions are all good: light colours highlight the simple shape very well, and the minimal external decoration creates a purposeful, elegant look – and it helps you concentrate on the important points of substance that can’t be seen on the press images.
A long lingering look reveals that the quality is indeed impressive – the bright window surround is finished in anodized alloy; a single pressing on the rear door. Allied to the excellent paint finish and even shut lines, we’re looking at near-Germanic levels of exterior fit and finish.
Inside, it’s good news too. There’s plenty of room, despite the low roofline, and the cabin feels wide, light and airy. As opposed to the S-TYPE, where those travelling in the back went Economy Class, the new XF is a true luxury effort. Jaguar history has taken a fresh turn with the XF, going off on a tangent from where its predecessor left off. Instead of mimicking classic styling cues – with their inherent quality issues, the XF’s interior leaves the competition behind: the authenticity of the materials defines this place.
The silver trim inserts are not just alloy-effect; they’re the real thing. The door-tops and dashboard are covered in soft leather, and those wooden panels on the doors and centre console have a deep and lustrous veneer. Just like the exterior, the simple shapes and high quality materials blend to create an exclusive ambience.
The slowly rising gear selector and hide’n’seek air vents might smack of visual effects that don’t enhance the usability of the car, but they make it so much nicer to live with. But there ‘surprise and delight’ features that enhance your daily drive: To illuminate the reading or interior lamps, for instance, there’s no need to search for a switch – just give the lamp a slight tap and it will go on or off…
If the car really does ‘capture the imagination’ as designer Ian Callum said, there’s not much to keep buyers from ordering. The equipment levels and quality are very good, making the starting price of about £35,000 very competitive. Again, this is true to Jaguar history, and is in line with Jaguar founder William Lyons’ aim to offer the highest possible quality for the very best price.
First contact with the MINI Clubman
The new MINI Clubman was not really an unknown car, when officially lauched in Frankfurt last week, but the IAA gave the broad public the first chance to get a closer look. As with most estate cars, the front end of the car is just the same as the base car, in the case of the MINI this means that everything from the front number plate to the rear edge of the doors has not been changed. When viewed alongside the not-yet updated cabriolet, the changed headlamps and new dashboard with the rather huge central instrument are the most obvious changes introduced with the R56 MINI’ last year.
So we need to focus on the rear end of the Clubman. First, and most obvious, are the ‘split doors’ gracing the 24cm longer and squarer rear end. The panels surrounding the doors are coloured in a contrasting paint to the remaining bodywork – either black or silver – matching the roof. Two massive chromed handles give access to the load area, if the nicely trimmed boot can be described as such. Compared to the standard MINIs it is indeed much larger at 260 litres and offers a lot more practicality.
But anyone expecting some of the clever load space concepts currently spreading throughout the industry, will probably be disappointed. There’s only a removable boot floor available, creating an even load area if wished and a small hidden partition beneath it. The split doors, citing the original MINI Estate, have the obvious disadvantage of the need of more space behind the car for loading and will offer less protection from the elements compared to a top hinged door.
Rear seat space has also been increased noticeably to an acceptable amount, although there are quite a few offerings within the MINI Clubman’s sized sector that will offer better accomodation. But the lack of rear doors do indicate that the MINI Clubman has never been intended as a family car.
To create an easier entrance to the rear seat, the aptly named ‘Clubdoor’ has been added to the right hand side of the car. Similar to the door extensions as found on the Mazda RX8, this will only open, when the front – or better – main door is already opened. The entrance that opens up for the rear passengers is quite generous due to the fact that no ‘B’-pillar hinders the entry. But being available on the right hand side only, the use of the ‘Clubdoor’ will be somewhat limited to people driving on the left.
It is very obvious that BMW chose style over functionality, and a set of colour schemes exclusive to the Clubman will further enhance the stylish appearance. Although we did not have the chance to drive it, the longer wheelbase and slightly higher weight promise a slightly more comfortable ride compared to the standard One and Cooper models. New to the full range is a set of measures to lower the petrol consumption and thus the CO2 emissions, these are in line with BMW’s ‘Efficient Dynamics’ package and include things like a start-stop circuit to cut off the engine at stops or alternator charging control incorporating the use of engine braking periods.
The MINI Clubman will hit showrooms in ‘Cooper’, ‘Cooper D’ and ‘Cooper S’ forms in November, featuring the otherwise known engine and equipment levels of the saloon at slightly higher prices.
Paul Stowe speaks…
In an exclusive interview for AR, Paul Stowe tells us what’s been happening, and where he’s going next…
By CLIVE GOLDTHORP
Paul remained upbeat at the recent re-opening ceremony at Longbridge, but frustration with the UK government’s lack of commitment was never far beneath the surface…
It’s been a couple of weeks since the bombshell announcement that Paul Stowe had resigned from his post as NAC-MG’s Quality Director, and would be moving on to become heavily involved in the sales and development of LTI’s black cabs in China. The dust has now begun to settle, and Paul’s been able to answer our questions, and fill us in on what’s been going on in China…
AR: AR’s readers are probably familiar with your Blog but, for the benefit of any who are not, please explain why you originally moved to China and were, until recently, working for Nanjing Automobile (Group) Corporation (NAC).
PS: I moved to China in early 2006 as Quality Director for NAC MG. I decided that the move would provide a great opportunity for me professionally and culturally for my family. I feel that China is becoming the epicentre of everything manufacturing, and in particular the automotive industry – an industry that I have had running through my veins for almost my entire working life. For my family it offered an opportunity to learn a new language and taste a completely different culture – enabling my two young children to experience something more that just the Three Rs.
AR: Many of the nascent OEMs in the Chinese Automotive Industry appear to have complex corporate structures. Please, if possible, clarify the relationship between Yuejin Motor (Group) Corporation and NAC and identify each company’s main JV and/or subsidiary companies.
PS: Wow what a complicated question! I am sure that there are better people than me that have tried and failed (to answer that one)! So I am not sure if I can provide the answers you are looking for. If you want to compare with the MGR days, I guess Yuejin is Techtonic, NAC Group is PVH and MG – is, well, MG-Rover. As for the other ventures, well there are dozens including JVs with multiple international part suppliers, tooling companies and of course IVECO and FIAT. These are all entwined with complex asset and share systems that would take experienced financier months to map out!
AR: Your job title at NAC was Quality Director but, in reality, what did your role actually cover?
PS: Well the role included the familiar responsibilities for a western OEM Quality Director, including Part and Product Standard definition, measurement and validation, manufacturing product control, engineering change control, quality systems management and audit, quality improvement activities – from pre-production samples through to warranty improvement, metrology, product audit and part approval. However, I also covered aspects that would necessarily be covered in any other company – such as International Public Relations, the occasional proof reading of English releases, British Heritage, Culture training, Marketing event organizing and anything that would help the company improve its international appeal.
AR: What were the most challenging aspects of your job as Quality Director?
PS: Apart from the physical difficulties of localizing the 3500 parts that go into making the current vehicles produced by NAC MG and NAC MG UK, the hardest task has been to communicate the need for building a vehicle that not only looks good when it is picked up from the dealership – but the fact that it needs to last and, above all, be safe.
In a country where warranty bills are only 10 per cent of those in Europe, it ¡s difficult to explain the importance of using quality materials for reliability and durability – especially when low cost, low quality alternatives are readily available.
My greatest concern throughout the projects was the safety of the vehicles. We have been hearing a lot about the poor safety records of Chinese manufacturers recently, and I did not want either MG’s or my own personal reputation being tainted with any concerns over the safety of the vehicles.
AR: SAIC Group and Yuejin Motor (Group) Corporation signed a Memorandum of Understanding on 27th July, 2007 and are reportedly moving towards ‘full co-operation’ with each other. The parties apparently aim to finalise (if not complete) an agreement by 30th September, 2007. However, in the meantime, please give our readers your current take on how you expect the combined NAC-MG/SAIC/Roewe’s Brand Development Strategy and Future Model Programme(s) to evolve with particular reference to the likely impact on Longbridge’s short, medium and long term future.
PS: Well you may have read in my BLOG that I felt SAIC’s involvement was a great move for NAC MG. This was based on the fact that NAC had no NEW vehicles in the pipeline. From what I understand, SAIC have invested heavily in designing and engineering world class vehicles for a world market, the team in Leamington consists of some of the best engineers MG Rover had, and I am sure that the product’s developed there, and in Shanghai, will enhance both SAIC’s and now MG’s future product plans.
I am unsure of what it all means for Longbridge, but would expect that we will see more products being engineered and built out of the existing facilities – NAC still occupies much of the original design and development buildings and, of course, the Rover 75 / MGZT vehicle assembly line is still in place. I think we have all witnessed the recent problems China is facing with convincing a Western audience that it can supply quality and safe products so, if the merged company has any immediate plans to sell cars in Europe, a local, well established production facility should be key to those plans.
I have heard two sides to the issue of Brands. The first is that SAIC will continue with the Roewe brand and use it as the luxury level brand, while MG will be played as the low level cheap brand! (You can guess what I thought of this!). The second discussion was based on SAIC keeping the Roewe brand for China, and the MG brand used outside of the PRC. I can see this working better – although it would be a shame to deny all those eager prospective Chinese MG purchasers.
My personal view is that they will continue to use both brands in China. MG already has a big following and the Chinese like to think they are buying western brands. My concern would be that branding some of Roewe’s new vehicles with an MG badge may not work as well in Europe – the cars were never designed with MG in mind and do not have that sports car essence which is crucial for the brand’s identity in Europe. I hope that, if they do release them as MGs, they will tweak the styling and performance and try to maintain the brand’s identity.
AR: You are, as mentioned in your Blog dated 9th September, 2007, now working for the MBH/GEELY JV company which will be responsible for the manufacture and sale of the famous LTI TX4 taxi in China. However, what is your new role and what are the key challenges now facing you in that role?
PS: The company is called Shanghai LTI and you quite rightly suggest that the first of many projects will be the creation of a manufacturing facility to see ‘London Taxis’ rolling around the streets of China as early as 2008. However, this is only one of many projects over the next few years, projects that will see a number of Taxi and passenger vehicles becoming available for sale here in China, and across the world. I have been employed to basically oversee all aspects of the projects, from procurement, engineering, manufacturing, quality and marketing – so it is certainly a big challenge!
One of the main challenges is to develop and sell an icon rather than a brand – which is a very different concept from my time at MG. The Chinese Taxi market is dominated by the VW Santana and similar priced alternatives, an incredibly cheap vehicle in terms of initial outlay, repairs and servicing costs. However, they offer very little for the consumer. We intend to offer a more upmarket service and hope that we can persuade large hotels, airlines, golf courses etc. to run the iconic London Taxis as a VIP service to guests who want something a little different. That is not to say that we would love to see a day when you can hail a black cab from Tiananmen Square!
Jaguar XF unveiled at Frankfurt
By KEITH ADAMS
New XF enjoyed its first public airing at the IAA in Frankfurt.
WE’VE all seen the pictures, but for many, the moment XF designer Ian Callum pulled the covers off the XF at the Frankfurt Motor Show was the first time to see the vitally important new car at first hand. The general concensus in the world’s media is that Jaguar has produced an utterly contemporary executive motor, but one which fits in with the ethos of the brand.
The XF won’t be taking the fight to the entry level midline execs, such as the Audi A6 2.0T and BMW 523i, as the range encompasses an all six-cylinder and V8 engine line-up. Prices have been confirmed and will start at £33,900 when the XF goes on sale in March 2008 – and the good news is that there will no small-engined and wheeled ‘poverty’ versions to sully the XF when you start seeing it on the roads.
Although it’s early days, the XF does look like it’s been an instant early success, with the company already taking over 1000 orders – and that’s before any of its customers have even seen the car.
New John Cooper Works car is most Challenging MINI ever
MUCH more than a MINI Cooper with stickers, the new John Cooper Works CHALLENGE is the hottest R56 yet to appear – and although it’s fellow Brit, the Jaguar XF overshadowed it, there was plenty of interest in this new firecracker.
The MINI Cooper S is built specifically for track use and ready to race, and made its first public appearance at the IAA Show. deliveries of the new car will take place from spring 2008, and with a higher top speed, increased torque, improved acceleration and optimised traction, it’s sure to provide thrills on the race track.
As well as a re-developed twin-scroll turbocharger, the standard MINI Cooper S engine receives modified pistons, air filter, air intake passage, catalytic converter, exhaust components, electronic sensors and engine management system. Numerous chassis and suspension tweaks add to what is a finely-tuned racing package. The new suspension system features adjustable damper units from KW Automotive, designed specifically for motorsport. A six-speed manual gearbox transmits power to 17″ front wheels made by Borbet and shod with exclusive new racing tyres manufactured by Dunlop.
Although the car is designed for race participation, private owners may find owning a MINI CHALLENGE car a compelling prospect. However, the car will not be licensed for public roads and as such is expected to maintain its appeal among racing enthusiasts. The MINI Challenge race series is fast gaining presence and popularity around the world. Since 2004, Challenge races have been staged in Germany, the Netherlands, Belgium, Austria and New Zealand. In 2008, MINI Australia will also hold a Challenge competition.
Frankfurt also saw the public unveiling of the new Clubman, which MINI hopes will raise production at Oxford (nee Cowley) to a record breaking 240,000 per year…
Clubman: a vitally important addition to the MINI armoury…
Land Rover ‘sneek peek’ hints at new concept…
By KEITH ADAMS
It looks like a Range Stormer Concept, but could it be the next new Land Rover?
There’s nothing more mysterious than receiving a lightly obscured image of a car you’ve not seen before – leaving you wondering what it’s all about. That’s exactly what happened at Frankfurt – this image, and hints that the real thing would be appearing at the Detroit show next year.
The car in question looks very similar to the handsome Range Stormer concept, but given that Land Rover is in need of a new model to fit in the range beneath the Freelander, it’s a good bet that this is what the new rendering is all about. The new Landie won’t affect sales of the Defender, though, as that car appeals to an entirely different clientele – the new model promises to be be ultra-clean, also majoring on A-road performance.
MG wows the crowds in Russia
By MG Enthusiast magazine
MG on show at the Moscow International Motor Show
NAC-MG’s decision to exhibit the 7-Series saloon at the recent Moscow International Motor Show at the Corcus Expo, has heightened speculation that the company is ploughing ahead with its plans to set up a production facility in the country’s western-most region, Kaliningrad.
The MG7 saloon, MG7L limousine as well as the MG TF convertible were on display, and generated significant interest from showgoers – a sure sign that NAC-MG can build on the small but enthusiastic following that MG (and Rover) has in the country.
The deputy general manager of NAC, Cao Xinping, said at the show: “In the Future, NAC will seek quality Russian partners to provide production, sales, maintenance and parts supply services to the customers, and introduce MG brand and products to Russia.”
MG will enter the Russian market as upper-tier car manufacturer with international standard of quality. What we provide to the Russian customers is a complete set of high quality automotive products and services, not just a mere car.”
Compiled by CLIVE GOLDTHORP
The SAIC/Yuejin Motor (Group) Corporation Merger.
Further personnel movements, and potential market clashes mar the lead-up to the official announcement of SAIC’s takeover of NAC-MG.
Financial Times 8th September, 2007
“Chrysler names new Asia head”, by Geoff Dyer
Chrysler announced another high-profile management appointment yesterday after it persuaded Phil Murtaugh, the former head of General Motors’ successful China business, to run its Asian operations. The news comes a day after the US group, which was taken private by Cerberus Capital Management last month, announced that Toyota’s respected North American head Jim Press was joining its senior management team.
For the past year Mr Murtaugh has been an executive vice-president at Shanghai Automotive Industrial CorporationSAIC, one of China’s largest and most ambitious carmakers. His departure will be a blow to the international expansion plans of the Chinese group, which two years ago bought some of the assets of the UK’s Rover group and has since launched its first own-brand car in the Chinese market.
Mr Murtaugh said the Chrysler job was “an offer I just cannot turn down”.
Before joining SAIC, Mr Murtaugh was chairman of GM’s China operations for five years and played a central role in building up the business from nearly scratch to the second-largest brand in the Chinese market. He was instrumental in forging GM’s successful joint venture with SAIC. Chrysler has a MINImal presence in the Chinese market, selling just over 5000 cars in the first half of the year. However, it recently signed a manufacturing joint venture with Chery, another of the country’s most ambitious carmakers, to make small cars for both the Chinese market and overseas.
Bob Nardelli, Chrysler’s new chairman, has made striking new international alliances one of the priorities for the US carmaker and Mr Murtaugh will have the task of building new partnerships in Asian markets. He has close knowledge of Chery, especially after GM launched a lawsuit against the Chinese company for allegedly copying one of its small-car models, which was later settled out of court. When SAIC first acquired assets from Rover, the Chinese group set an ambitious target for beginning exports of the new models.
However, after Mr Murtaugh arrived at the company, SAIC set a more cautious path, saying it would focus on its home market first. Mr Murtaugh’s main responsibility was trying to turn round Ssangyong, the struggling Korean carmaker that SAIC controls.
China Daily 10th September, 2007
“The role of international managers” by You Nuo
The London Financial Times is right in describing the departure of Phil Murtaugh, former vice-president of Shanghai Automative Industrial Corporation (SAIC), as a ‘blow’ to the Chinese company. Murtaugh is joining Chrysler, taken over by Cerberus Capital management last month, to be the new head of its Asian operations. The announcement came only one day after Chrysler enlisted Toyota’s former North American head to join its senior management team.
But what about SAIC, China’s largest carmaker? What will happen, in particular, to its ambitious international plans? Business observers are eager to learn from SAIC’s executive team about the necessary adjustments it is going to make. Rarely does one person’s change of job arouse so much interest. It shows how rules in the world of business have changed. A successful regional operation, especially in a rapidly growing area of global business, can be more important for an international company than many of its other operations.
Extensive regional expertise, which Murtaugh gained from heading GM’s China operations in the 1990s and from facilitating SAIC’s buying of some of the assets of the British company, Rover, two years ago, and managing its investment interests in the South Korea carmaker Ssangyong, will be strategically important for a company that is considerably weak in its Asian operations.
But what can SAIC learn from this development? It has nothing to regret, of course. It did the right thing. By hiring a professional it made much progress in building up its business. As reported widely in the Chinese language press, it may be close to a merger deal with Nanjing Automotive by relying on the strength it has gained from its acquisition of Rover’s assets. If the company had one team of international executives, instead of just one, it would perhaps be doing even better in international expansion.
This year has been an auspicious one, due to capital market fluctuations and the cheap dollar, for foreign companies, including those from developing countries, to buy assets in the United States. The Indians and Arabs are doing it. However, few Chinese companies, especially the private ones, are seen to be as active as their counterparts in other parts of Asia. One reason is that Chinese companies do not usually have a team of international managers. Few of them have high-profile foreign executives as SAIC, a State-owned enterprise, once had.
Indeed, except for Lenovo, China’s largest computer manufacturer, very little has been heard from the companies that are operating overseas about their international management teams. The most incomprehensible case may be TCL, one of China’s largest television and home appliance makers with its headquarters in South China’s Pearl River Delta. Ever since its acquisition of some French corporate assets (supposedly useful for expanding into the EU market), the company has yet to report any progress in building up its international team. The information that it has given to the public so far, other than discouraging financial figures, is about frequent changes to its Chinese executive team.
To compete in the global market, Chinese companies need to learn to keep not just one or two, but hundreds or thousands of international managers.
China Car Times 10th September, 2007.
“The right hand fights the left hand – Roewe 750 vs. MG 7” by Ashley Sutcliffe.
Possible co-operation Between BMW And Mercedes-Benz On Next MINI Generation
BMW and Mercedes-Benz both need to produce more lower-CO2 models in the future – co-operation, and wider use of the excellent MINI platform would be the way to achieve these aims…
Autonews.com, 11th September, 2007
“BMW CEO confident about 2007 profits”, REUTERS
BMW CEO Norbert Reithofer said today he was confident about third-quarter earnings and said the company was poised to post a 2007 operating profit above its 2006 result.
Reithofer also said Munich-based BMW was considering introducing a car smaller than its 1-series. “A step like that can’t be ruled out,” he said.
Reithofer told a group of journalists at the IAA in Frankfurt that if one-off factors in 2006 are excluded, operating profit this year should exceed the 3.75 billion euros ($5.17 billion) earned in 2006. “We’re striving for an operating profit in 2007 that will be above 2006,” he said, adding that all three of its brands would post record unit sales in 2007. “I’m confident we can reach our goal. And as far as the profit in third quarter goes, I’m also very confident.”
Reithofer said negative currency effects in 2007 would be less than in 2006 (666 million euros) while raw materials costs will be about the same as in 2006 (178 million euros). He said almost all key currencies had been secured through hedging for 2007. “We’re assuming that the raw materials costs will be at the same level as last year while the [negative] currency impact will be less,” he said.
In other news…
The arrival of me-too Chinese cars in Europe could potentially cause problems – as this Frontera, we mean Landwind, clearly demonstrates…
The Independent, 9th September, 2007
“Road rage in the West as copycat cars from China start to make their marque overseas”, by David Brierley
When the Frankfurt Motor Show opens on Thursday, it will not be the glittering new cars from Europe, Japan and the US that attract the most attention; hogging the headlights will be the motor manufacturers of China. Their latest models are accused of copying the world’s finest. Shuanghuan’s Ufo off-roader does bear some resemblance to Toyota’s Rav4, its lar-ger Ceo has a distinct whiff of the BMW X5, and its Noble makes the Smart Fortwo seem not quite so unique.
“If a car suddenly appears that looks like a Smart, yet is not one but a copy which was produced not quite legally, then that is not great,” observed German Chancellor Angela Merkel, noting that Chinese product piracy “is a relatively big issue”. The world’s car companies – particularly in Germany – are less diplomatic. A BMW spokesman said: “We are looking at taking legal measures. This is the first time that this has happened.”
Mark Binder, a Smart spokesman, said: “We saw the Shuanghuan vehicle at Auto Shanghai … It is a blatant attempt to copy the design of the Smart Fortwo. We reserve the right to pursue legal action – also with regard to a possible exhibition of the car at the Frankfurt motor show.” Meanwhile, DaimlerChrysler, Smart’s parent company, is outraged the Noble is to be distributed in Europe. “Some car distributors wanted to take our cars to the show but we have not allowed that,” a Shuanghuan spokesman said. “The Noble and Ceo cars, approved by the Chinese government, are legal products.”
Shuanghuan insists there is no case to answer and that the car industry depends on copying technology to make progress. Perhaps that explains the similarity of its Laibao SR-V to the Honda CR-V, which did lead to successful court action in China. Honda has fought dozens of similar legal battles to protect its designs and patents. Shuanghuan is not alone in finding inspiration elsewhere. The Hongqi HQD bears the stature of the Rolls-Royce Phantom, while the Geely’s Merry seems to imitate the Mercedes-Benz C-Class.
GM, the largest car maker in China through two joint ventures, claims its Spark has been very precisely copied by Chery’s QQ. Their doors are said to be interchangeable. Yet GM has still to find help from China’s courts. Meanwhile, the QQ is undercutting and outselling the Spark. In truth, none of the world’s largest motor companies can take too hard a line on China. Rick Wagoner, chief executive of GM, said: “We’ve gone in China from almost no sales, 10 or 12 years ago, to this year [when] … we’ll sell more than a million units. And it’s been a good, profitable business too.”
China is the world’s second- largest and fastest-growing car market, its production of 5.2 million vehicles in 2006 exceeding that of the US, having increased 16-fold in a decade. Billions of pounds are being invested by overseas groups and some 140 new cars are to be launched this year. All the leading car makers now have one or more local joint ventures. You can even buy a Chinese-built Series 5 BMW. Eric Thun of Said Business School, Oxford, an expert on the Chinese motor industry, identifies two key weaknesses: “Process skills they learn from working with foreign groups; design skills will take a long time. Right now, there is no Chinese company able to develop its own vehicles. Copying is a short-term solution which works in the domestic market.”
China already insists on a high level of local content, so ensuring the creation of a thriving, indeed crowded, indigenous industry. The market share of domestic brands has risen to 25 per cent from 10 per cent within a year. Yet because of fierce domestic competition and small margins, these companies are being forced to export to make money. As a result, cheap, robust and simple Chinese cars are already successfully finding customers in Russia, the Far East and Africa. Nevertheless, the car majors clearly fear China will soon create a great national champion and export seriously, using technological expertise gained from joint ventures, licensing agreements or inspired guesswork.
Small wonder that the car majors react strongly when Chinese companies enter their domestic markets with copies. Karl Schlössel who imports Chinese cars into Germany, including the Ceo, is surprised: “My God, I can understand the anger but it had to happen one day. [The attacks from] BMW astounded us. The Ceo is on the road for three years – it is available in Portugal, Spain and Russia – and then BMW wakes up and says we face competition and product confusion. “From a car that costs one third of their price?” Mr Schlössel admits it will soon be possible to export Chinese small cars and offer them extremely cheaply, considerably undercutting European manufacturers.
The British car industry is more than just an onlooker. Our last domestic mass-car pro-ducer, Rover, was broken up and acquired by Shanghai Automotive Industry Corporation and Nanjing Auto. The Chinese versions of the MG sports car and the Rover 75 (now called the “Roewe 750”) are already in production and on the streets of China. Yet SAIC also retained Rover’s British design centre. Mr Thun pointed out: “They are using British engineers, along with engineers in Shanghai and Korea, to create an independent design capability.”
The Birmingham Post 11th September, 2007
The failure of MG Rover
“Blame crummy managers, not Thatcher, By John Duckers, Business Editor
Jon Moulton, managing partner of Alchemy Partners, has confirmed what I always suspected. A significant reason for the decline of manufacturing over the last 40 years or so has been bad management. Not then just the efforts of Baroness Thatcher, the self-destruct of the then trade union leadership or indeed global competition.
The West Midlands, he noted on a visit to Birmingham last week, was not the birthplace of buyouts for nothing. And recalling how appalled he had been on visits to some factories, he complained that the sector had largely been run by “crummy managers” who looked like coronary cases. Indeed, if we go back 15-20 years or so, to what he described as the era of “terrible Midlands conglomerates” – there were indeed quite a lot around at that time – he complained that they were “diabolically” run.
Have we improved any today?
I think we have, albeit MG Rover was probably a pretty good example of modern “crummy” management. As was the demise of Marconi. And poor management decision making is partly to blame for the terrible troubles of Jaguar. So still plenty of room for improvement and lots of scope for the likes of Warwick University and the Institute of Directors in their efforts to do something about it. Mind you, Mr Moulton, who hails from Stoke-on-Trent, also admitted his private equity sector had its issues.
He described the typical private equity executive as aged 34, American, with an MBA, who had never worked in industry. Such people were “paid a fortune” yet were “extremely distant” from the companies they actually ran. Could do better must still be the appraisal of our current executive breed.
MINI to form the basis for sub 1-Series BMW?
By KEITH ADAMS
ACCORDING to rumours doing the rounds in Germany, upper management is considering the introduction of an entry level model to slot in beneath the 1-Series. The idea has been floated around the press for some time now, and seems a logical direction for BMW to take in order to continue lowering the overall CO2 output of its range, although initial reports by Autocar magazine hinted that this car would be produced in conjunction with Mercedes-Benz.
However, according to reports by Stern in Germany, BMW could now be favouring using the MINI’s platform as a starting point for the ‘0.5-Series’. BMW’s management is keen to reduce its small car overheads, and at the R56 launch, one engineer was heard to say that the company’s engineers were looking closely at the beam-axle suspension layout of the new Corsa – the inference being that this could be the way forwards for the MINI.
However, if the platform could be shared across two models, volumes could be raised significantly – and BMW’s top-heavy range starts looking more eco-friendly.
It will be interesting to see if this rumour develops into something more concrete – and if it does, what implications it will have for the factory formerly known as Cowley. Could the new car be produced here alongside its British cousin – capacity permitting?
Welcome to our new News Editor
By KEITH ADAMS
Clive Goldthorp has been a fan of this website for some time now and has previously contributed several Blogs and news items. Clive now joins the Austin-Rover.Co.UK Team in order to enhance our news coverage and add value to what many already regard as an important resource for British Automotive Industry stories past, present and future.
Clive aims to bring Austin-Rover.Co.UK’s readers all the BMC>MG related news stories as they happen and enjoys using his forensic skills to get to the heart of each one so, if you have any Jaguar, Land Rover, MINI and, especially, NAC-MG or SAIC/Roewe stories, then drop Clive a line at firstname.lastname@example.org.
Compiled by CLIVE GOLDTHORP
The Sale Of Jaguar/Land Rover.
Without doubt, the proposed sale of Jaguar and Land Rover has generated a fair bit of informed speculation in the press. The seriousness of TATA’s potential bid isn’t in doubt, but with the prospect of venture capitalists making a serious pitch, this is not going to be a straightforward sale.
The Birmingham Post 5th September, 2007.
“Jaguar/Land Rover ‘better off in trade hands’” by John Revill
A private equity turnaround of Jaguar and Land Rover would be painful and unpleasant – and more difficult than a similar rescue of MG Rover, it was claimed yesterday. Jon Moulton, managing partner of Alchemy Partners, said the two companies would be better off in the hands of a “deep pocketed” trade buyer – although job losses would be inevitable.
But he thought only private equity companies would come to the fore in the sale by the luxury carmakers’ parent Ford. Four private equity groups – TPG, Ripplewood, Cerberus and One Equity – are in the race to buy Jaguar and Land Rover, in competition with Indian industrial conglomerates Mahindra & Mahindra and Tata. Mr Moulton, who had failed in his bid to buy MG Rover from BMW in 2000, thought it would be a struggle for the Indians to buy Jaguar-Land Rover, which have a price tag of around £1.5 billion.
He said: “This is a very big, very difficult deal. Jaguar is very cash negative and has been for a very long time and looks like it will continue to be for some years forward. Land Rover has a more mixed financial history, but also isn’t very cash positive going forward. Whoever buys it is going to be taking on one whacking great pension fund, a large number of people and a guaranteed need for a lot of fresh funding. I cannot see anyone but private equity who will buy it; I don’t think anyone else can. None of the trade buyers seem interested.”
Mr Moulton – whose firm is not among the private equity bidders – thought the companies could be turned around, albeit not without pain. “The politics might be harder than when we looked at Rover. Rover was in some ways easier because you were admitting you couldn’t solve the problem, and trying to save the piece that was viable – the MG sports car business. “The Rover plan was easier and more credible than anything I can write down for Jaguar. “There is such a tremendous amount to do, and you don’t have the benefit like we had with Rover of an enormous dowry.”
Mr Moulton thought Jaguar and Land Rover would be bought by an American distress specialist like Cerberus. “They seem to have more of an appetite and scale for it. Cerberus bought Chrysler, which is a very gutsy deal too; that has large legacy problems and is in need of large amounts of cash. They have got the risk tolerance for it; whether they have the competence for it, time will tell. Most things can be turned around; you could of course raise the Titanic.”
But any rescue was bound to involve job losses at the two firms which together employ 15,000 people in the Midlands. “It is very hard to see any medium term plan which does not involve very substantial loss of jobs. Probably one or more plants would have to go, which would be very painful. The number of models produced by Jaguar probably has to be constrained. They need to probably make it smaller in the case of Jaguar, get it to be more exclusive machines again and try to restore the cache they lost when the downmarket Jaguars appeared to be Mondeos with a Jaguar badge.”
New models and technology could also help, although this would prove expensive said Mr Moulton, who was speaking before he addressed the Institute of Chartered Accountants of England and Wales in Birmingham yesterday. “Land Rover is much easier – it has a clear market position, but faces formidable competition. It could be done. It is still a daunting job even with doing some pretty unpleasant and tough things.” Even after such measures, a private equity buyout could fail to revive the two marques, he said.
“There is a very fair chance of failure. The ideal solution from the point of view of the people who work there is one of the more prosperous automotive firms buys it. At the moment that seems to be an unlikely event. They will have very deep pockets to make sure the thing worked in some form or another. Toyota can’t buy it, but if they did, they have enormous cash flow, tremendous technical resource, they can route engines, gearboxes, suspensions, from the rest of the group. It would open up so many more options that the survival of some or the greater part of the business would seem more likely.”
Daily Telegraph 7th September, 2007
“Fiat in talks with Tata over bid for Jaguar and Land Rover” by Russell Hotten and Ben Harrington
Italian carmaker Fiat is in talks to team up with India’s Tata Motors in a joint bid for Jaguar and Land Rover, the UK marques put up for sale by owner Ford. It is understood that Fiat may take a minority stake in the UK businesses at a later date if Tata’s bid is successful. Tata and a number of other companies have tabled first-round bids and are currently going through a series of meetings and management presentations with executives from Jaguar and Land Rover.
Tata is being advised and financed on its bid for Jaguar and Land Rover by investment banks Citi and JP Morgan. The other bidders include Indian automotive group Mahindra & Mahindra, and private equity firms TPG, Ripplewood Holdings, JP Morgan’s buyout arm One Equity Partners, and Cerberus, which recently bought US carmaker Chrysler. Some of the private equity bidders have teamed up with former high-profile Ford executives to advise them on their offers.
TPG recently recruited Bob Dover, and Ripplewood is working with Sir Nick Scheele, while Jac Nasser, the former Ford chief, is a managing director at One Equity Partners. Sources said that second-round bids are due by mid-October, by which time Tata and Fiat are expected to have finalised any plans for joint investment and co-operation. The Italian and Indian companies already have several joint ventures, including an alliance to share production facilities in India where versions of the Palio compact vehicle will be produced under both Fiat and Tata badges.
Earlier this year the companies were reportedly working together on a possible bid for US truckmaker Paccar. Analysts said there was strategic logic behind Fiat and Tata co-operating on a bid for the two UK brands. Motor industry experts at Italian bank Mediobanca believe that Tata could get valuable synergies and technology from Land Rover, but Jaguar could be of less importance to the Indian company. However Fiat, the company behind Ferrari, Maserati and Alfa Romeo, understands luxury brands and may see more potential for the loss-making UK company.
Buying Jaguar and Land Rover, as well as deepening the relationship with Fiat, would help Tata Motors achieve the global reach it aims for. Also, the current crisis in the credit markets means that an investment link with Fiat would help reduce the financial risk of taking over the two companies. Fiat is emerging from a long restructuring and its financial health has been transformed.
The SAIC/Yuejin Motor (Group) Corporation Merger.
The prospect of the creation of a ‘Chinese Leyland’ by the end of the month comes ever closer thanks to the confirmation that a letter of intent has been signed by both NAC and SAIC. How that affects Longbridge remains to be seen, but the lack of activity at the factory currently hints at a hiatus until the situation has been clarified…
China Daily 5th September, 2007
“Former rivals on road to merger” by Wang Zhenghua
China’s largest carmaker Shanghai Automotive Industry Corp (SAIC) is moving toward “full cooperation” with smaller rival Nanjing Automobile Group. SAIC representatives will visit Nanjing Auto’s British plant in mid-September as part of the due diligence process. The two-week investigation is the final stage of a much-anticipated merger of the two carmakers. SAIC investigators will focus on manufacturing and research and development (R&D) at the British workshop.
Nanjing Auto, in need of capital to roll out its Rover platform, is confident about the value of its assets and has high hopes for the UK plant, regarded as an outpost for the overseas expansion of its MG models. Two years ago, the carmakers were making rival bids for Britain’s collapsed MG Rover Group. Now, Nanjing Auto’s MG models and SAIC’s Roewe have been integrated – using the Rover platform. Late last month, the first 4S dealer for MG debuted in Nanjing, capital of East China’s Jiangsu Province. But the letter of intent for full cooperation signed in late July prompted the Nanjing carmaker to cancel a promotion campaign for the prototype.
The two parties have also reached agreement on brands, R&D and engine manufacture for Roewe and MG. A dual brand strategy will see Roewe, developed by SAIC using part of the intellectual property rights it acquired from Rover in 2004, positioned as a mid- to high-end brand, according to sources. Meanwhile, MG will mainly target the lower segment of the market – similar to the positioning of Chrysler and Dodge. But there are also reports that MG will be mainly exported and made a high-end brand within the country, while Roewe will target the mid-to-high and mid-to-low markets in China. SAIC will coordinate all resources in terms of R&D, as both sides will be involved in producing engines.
ANE Daily News Update:
“Murtaugh quits China’s SAIC to join Chrysler”
Phil Murtaugh, a veteran American executive who has helped develop China’s auto industry, said today that he was leaving the biggest Chinese car maker to join US auto giant Chrysler LLC. Murtaugh said in a statement that he was leaving the post of executive vice president at SAIC Motor, where he had worked since June 2006, and had accepted a post at Chrysler.
He did not say what his position would be at Chrysler. DaimlerChrysler sold off a majority stake in the U.S. company to Cerberus Capital Management in May. SAIC Motor, previously known as Shanghai Automotive Co, said it appreciated Murtaugh’s contribution to the company, which has two major joint ventures making cars in China with General Motors and Volkswagen. Murtaugh joined SAIC after unexpectedly quitting his previous position as General Motors’ China chief.
Catching up: Paul Stowe resigns
Paul Stowe has resigned from his post of NAC-MG’s Quality Director after a short, and fruitful, period of work for the Chinese company. In his time in Nanjing, Paul has been the human face of a sometimes inscrutable operation – and has delighted journalists and MG enthusiasts alike with his candid observations on his online blog.
He said: “Following weeks of discussions I confirmed my resignation with Mr Zhang Xin, General Manager of NAC-MG. I had offered my resignation several weeks ago, and have been working with NAC to try and find a solution to the issues that have driven me away from a company, and a brand I love so dearly.
“However after countless nights without sleep and days with mixed emotions I feel that I can no longer continue in my position as NAC MG’s Quality Director.”
Paul is now overseeing the launch of the locally produced LTI black cab in China.
Mahindra steps up interest in Jaguar and Land Rover
By Amy Yee in New Delhi, FINANCIAL TIMES
Mahindra & Mahindra is conducting due diligence on Jaguar and Land Rover, put up for sale by Ford, but its preference is for the UK utility vehicle-maker rather than the luxury marque, say people close to the situation.
As well as the Indian carmaker, other potential bidders include private equity groups TPG Capital, Cerberus Capital Management, Ripplewood Holdings and One Equity Partners. Tata Motors of India is also in the fray, Ratan Tata, head ofthe Tata Group, said last week. Some industry observers are sceptical about how luxury brand Jaguar would mesh with an Indian manufacturer known for low-cost vehicles. Others argue a bid for Land Rover would fit well with Mahindra’s legacy and its ambitions to bring a sports utility vehicle to the US and UK.
Mahindra declined to comment.
However, Ford plans to bundle the sale of Land Rover and Jaguar together, leaving out the option of buying only Land Rover, people close to the situation report. Terms of a deal would very likely prevent the spinning off of Jaguar. Mahindra intends to bring a low-cost, fuel-efficient SUV to North America by 2009 and aims to launch its Scorpio SUV in the UK this year. Land Rover’s sales network would give it a foothold in competitive new markets.
“Mahindra is known as a utility-vehicle manufacturer. It could be a very good move,” said Mohit Arora, senior director with JD Power. The company launched the Scorpio – the first Indian-designed and engineered SUV – in India in 2002. Mahindra has exported SUVs to South Africa – its biggest foreign market – and it has limited sales in Italy, France and Spain, where the vehicles are sold under the Goa brand.
Mahindra is part of one of India’s biggest industrial houses. It claims about half of the Indian market for utility vehicles. While Land Rover seems a logical fit for Mahindra, Jaguar is not in line with the group’s portfolio. “With Jaguar, I don’t see a lot of synergies,” said Mr Arora.
The new Jaguar XF
Numerous spyshots have caught Jaguar’s new XF being tested recently, clearly showing that the launch of this car, one so important for Jaguar, is getting closer. Today Jaguar has released the first official pictures showing details of the car. Jaguar claims that this is the beginning of a new era for the car maker.
The new design language first shown with the XK sports cars, has been extended to a saloon car with coupé-like lines. Jaguar’s design director Ian Callum: “The XF is a stage in a personal journey for me. It has always been my career goal to return Jaguar to its rightful place as leader in automotive design. Cars like the original XJ6 left a lasting legacy and my ambition has been to create something as seminal. The XF is that car.”
Evolved from the sleek concept C-XF, that was shown last year, the new XF combines the flowing lines and efficient aerodynamics of the XK with space and comfort of a large saloon. A low drag coefficient of 0.29 and a long wheelbase of 2909mm indicate that this is truely achieved. Following the industry trend of ever growing cars, the XF is now the largest competitor in its class, being 4961mm long and 1877mm wide, a position previously held by the Audi A6.
The new grille, including the position of the badge, pays homage to the original XJ6 by being sunk into the front panel rather than sitting on top of it. The integrated headlamps mark a departure from the traditional quad-lamp arrangement of Jaguar saloons, although again the eye-brow shape above the main beam is citing a traditional Jaguar design element. The high rear end is a departure from Jaguar’s traditional more rounded, low shape, but there’s also a good practical reason for this change of shape, as it provides good aerodynamics and a well sized boot.
The range of engines consist of Jaguar’s familiar V6 and V8 engines in petrol or diesel form as found in Jaguar’s current range. The transmission is an electronically controlled six-speed unit, similar to the one found in the XK, including the use of gearshift paddles for manual intervention.
Most innovation centres around the interior and controls of the car. Similar to BMW, the design majors on a reduction of control units, but uses a different approach. Instead of a controller on the centre console, the main unit is a touch screen display, coupled with voice control for things like climate control, navigation or entertainment. The traditional gear selector has give way to a novel controller for the gearbox on top of the centre console next to the start button. This controller sits flush with the console until the engine is started, when it raises to the functional position. The face-level air-vents are hidden in a similar way when not in use, creating a clean and simple looking dashboard, covered in an aluminium finsher that continues right into the doors.
There is a choice of different leathers and traditional burr walnut as well as contemporary straight grain veneers, combined with all sorts of little helpers, from fully electrically adjustable seats to Bluetooth and iPod connectivity.
Ian Callum summarises: “It’s a joy to look at it and that to me is one of the most important aspects of a Jaguar”