News digest
Compiled by Clive Goldthorp
1) SAIC Motor/MG and Roewe
Mike Whitby: SAIC and Nanjing will not let Birmingham down
Birmingham Post 1st August, 2008
As full-scale production of the MG TF begins, council leader Mike Whitby
remembers the dark days of MG Rover's collapse in 2005 and the work that was
done to try to secure a future for automotive manufacturing in Longbridge.
For me – and I am sure many thousands of people in Birmingham – MG Rover's
dramatic collapse on April 7th 2005 was a defining moment.
That evening I was dining with business colleagues at Simpson’s
Restaurant, and by 10pm was winding down and looking forward to a good night’s
rest (as it turned out, it would be weeks before I would get to have this).
We were interrupted, however, by the council’s Director of Planning &
Regeneration, Clive Dutton, who had only joined us a few weeks earlier.
Unable to reach me on the phone he had tracked me down to deliver
an urgent message. On the crowded restaurant floor he could say no more than
there was breaking news concerning Longbridge and that we needed to discuss
this somewhere privately. The owner kindly directed us to the only private space
they had available – one of their empty guest bedrooms upstairs.
It’s strange how humour finds its way into even the darkest
moments, and stepping into the room I remember saying “before we begin
Clive I want you to know – this will be the first and last time we share
a bedroom together!” The joke, however, was short-lived as Clive quickly
explained that the then Trade Secretary, Patricia Hewitt, had just announced
MG Rover’s appointment of administrators. From those few words I was left
stunned.
I had been watching MG Rover’s plight with close concern
for months. I knew only too well the significant amount of money they were losing
and that they needed equally substantial investment for their next model range.
I understood also that its future might well depend on the outcome of talks
in China about a mooted joint venture with Shanghai Automotive Industry Corporation
(SAIC) but, like everyone, still expected a positive announcement.
Certainly I did not foresee such an abrupt and complete collapse,
and hearing that more than 6,000 skilled jobs, in the industrial heart of our
city, were seemingly lost was heartbreaking. A few seconds passed in stunned
silence as I grappled with the reality that MG Rover, a British symbol, was
gone. Then we launched into action.
I knew there would be global interest in what happened next. Rover
was much more than a car company. It was the national face of our proud manufacturing
heritage, and an international symbol of our economy. It was vital that we made
an immediate commitment to the workers, and their families. I rushed with Clive
to the BBC’s Birmingham offices in the Mailbox, which were closed, but
banging on the doors we alerted the security guard who let us in.
Nick Owen, the news presenter, had earlier finished the evening
bulletin and with him we received further confirmation that this was happening,
watching the story scroll past from Reuters. I gave an immediate interview for
radio and the next day’s television, firmly supporting everyone affected
by this tragedy. Not wanting to lose any momentum, we then raced to Longbridge
with a BBC film crew and reporter, Robin Punt.
The plant was silent inside, but outside there was a swell of workers
and their families, hoping against hope that a show of their shock and frustration
might reverse this tragedy. Hearing their views, and feeling their pain, was
a profoundly moving experience and I personally gave them Birmingham City Council’s
support before going back to head up discussions on delivering relief and tackling
this crisis.
We moved swiftly and the following morning started to roll out
our programme of tangible support; pledging a £10 million package of aid
for Rover employees and communities affected across the city. Within 24 hours
we had established a telephone helpline for the workers and their families,
offering around the clock support and advice. By Saturday we had organised a
day-long event at Cofton Park, next to the site. There was a social element
to this event but more important was the presence of staff from the Citizens
Advice Bureau; the social services department; emergency services; employment
advisers; and many others offering practical assistance to Rover workers and
their families.
And on the Sunday I sent an open letter to the then Prime Minister,
Tony Blair, (which was published on the front page of the Post with the headline
"Save our City") demanding that Central Government recognised the
scale of this event, the consequences for our city region, and the level of
support which was needed to manage it. Because this threatened the foundations
of our local economy, interventions would have to be of a scale capable of delivering
growth and replacing Longbridge’s prosperity, and my demands included
funding for New Street Station and Birmingham Airport, and massive investment
in south west Birmingham.
In just three busy days, therefore, we had begun to try and ease
some of the immediate suffering by leveraging in massive financial support from
the council, and had started to build on a crisis with a long-term strategic
vision. This was a genuine disaster for Birmingham. The likely loss of 6,000
jobs, the ending of motor production at Longbridge after 100 years and the knock-on
across Rover’s supply chain throughout the region would be devastating.
So we were operating on full disaster-relief mode and had to commit all our
resources to reducing the impact.
Hard work, of course, continued across the spectrum for a long
time after those first few days. At the regional level, a Rover Task Force was
established, with Advantage West Midlands, the Engineering Employers Federation,
the Learning & Skills Council and the unions working together to create
new employment opportunities. At the national level, we continued to pressure
the government for financial support and I travelled to Downing Street and met
Tony Blair on several occasions.
At the global level, it was equally important that we continued
to support the interest in Rover from both SAIC, and its rival auto-maker, Nanjing
Automobile Corporation (NAC). The complex story of how their initial interest
ultimately led to today’s momentous news has been well-documented. For
me though, the journey of the last three years has been an intensely personal
experience.
I knew on the first occasion I met NAC’s directors, in the
summer of 2005, that they were decent people, who would honour their commitments.
There was a good deal of scepticism about their intentions, but only from those
with their own personal and political agendas, who were relying on whispers,
gossip and rumour. Good leadership is about meeting people face-to-face and
being able to judge their character, and I knew we could trust NAC.
Unfortunately, the government agencies did not, and they wouldn’t
even give them the time of day. But we did. We treated them with the respect
they deserved and extended them all the warmth and friendship of Birmingham
because we knew how important their plans would be to the future of our city.
When NAC invested £53 million to acquire MG Rover’s assets from
the administrators, I was impressed by the open way they conducted their negotiations.
I spend a great deal of time trying to persuade overseas firms
to come to Birmingham and, to be honest, the first thing most ask is how much
financial support they can get from central government, from us, and from other
public sector agencies. As a businessman myself, I don’t blame anyone
for trying to get the best deal possible but it was such a refreshing contrast
to meet NAC. They knew Rover’s history, understood the strength of the
MG Rover brand, and were very eager to come to Longbridge. Asking for grants
simply was not on their agenda.
Nothing could happen swiftly, largely because of the need to educate
NAC about UK business practices. It was a constant frustration to hear critics
complaining, as if it was simply a matter of someone driving up to Q-Gate at
Longbridge, walking inside and setting up production lines. This was NAC’s
first venture outside China and the business world over here was a completely
new experience for them.
They didn’t understand the planning regime, had never encountered
a challenging media and had no concept of the public sector in the UK. However,
from the very beginning our relationship was excellent and I went to great lengths
to strengthen it with a whole raft of high-profile activities. Perhaps most
significant of these were the two delegations I lead to Nanjing in 2006 and
2007.
On the first day of the first of these visits we met the city’s
mayor, the president of NAC and the Party Secretary of the Chinese government
in Nanjing. It was very clear that even from 5,000 miles away, China’s
political leaders had an acute interest in the Longbridge project. The social
and economic parallels between Birmingham and the city of Nanjing were equally
evident.
They were the major population centre in their province in the
Yangtze River Delta – one of the most dynamic economic regions in China.
They had a long history of industrial production and had been forced to re-invent
themselves as a modern business centre after tough economic times during the
late 1960s and 70s. Nanjing also had a fast-expanding international airport
and was very eager to position itself on the global stage.It almost felt as
if we were in another Birmingham …albeit one five times larger than our
own.
On our second visit, we toured NAC’s new manufacturing plant
and were impressed by their extraordinary ability to deliver what they said,
on time and to budget. I knew that boded well for their plans to restart MG
production at Longbridge and when SAIC acquired NAC it was refreshing to witness
their equally solid commitment. The sniping from some observers about perceived
delays was probably inevitable but it was certainly frustrating for me, particularly
having the benefit of seeing the bigger picture.
Sensitive international business negotiations can never be conducted
in public, so we kept our counsel, always confident of a positive outcome. Whilst
these delegations grabbed headlines, much more work went on in the background.
We were literally creating a new vision for Birmingham, with investment into
Longbridge as a shining example of the quality of international investment we
could attract.
In order to make this a success it was essential I developed strong
personal relationships as foundations for economic growth, and for three years
have worked tirelessly to make this happen. There have been a continuous stream
of delegates from China. I have had numerous meetings with the top executives
of SAIC and NAC, have met with senior Chinese politicians - local and national
- and have become a firm friend with the Chinese Ambassador to the UK, Madam
Fu Ying. Rover’s collapse, therefore, was the catalyst for new and dynamic
links between ourselves and China, at the widest corporate and political level.
This has happened to the extent that in October 2006 Birmingham
hosted the state visit of Mr Jia Qinglin, Chairman of the China Peoples Political
Consultative Conference and the fourth most powerful person in China. This was
the very first visit to Birmingham at this level since the G8 summit in 1998,
and remains an almost unprecedented move for a Chinese political leader to go
anywhere other than London. Mr Jia even elected to visit me before going to
see Tony Blair!
We created a sophisticated sister-city relationship with Guangzhou
in 2006, signed a Memorandum of Understanding with Nanjing in 2007 and formed
the Birmingham-China Business Forum, which underlined our commitment to stimulating
two-way trading links. That venture alone has now been backed by 40 companies
and organisations based in Birmingham, and in November I am taking a trade mission
to China to underpin the progress made by our combined efforts. I have also
created a dedicated China desk at the council, headed by international officer
Kelly Wu, to enrich relationships between Birmingham’s business community
and the world’s fastest-growing economy.
Kelly also proved invaluable during the negotiations with NAC and
SAIC, and continues to make an exceptional contribution to our China strategy.
Indeed, more than just a catalyst for relations with China this has underlined
my vision for Birmingham – as a Global City with a Local Heart –
demonstrating the importance we place on the individuals in our communities,
whilst proving we can operate independently at the very top of the global stage.
The collapse of Rover was, therefore, a seismic event which changed the lives
of thousands of our citizens and the future of our city.
It caused immense pain and suffering, which people still feel acutely
today, and I am under no illusion that today’s announcement makes everything
immediately alright again. However, with courage, determination and vision we
were able to find a silver-lining in what could have just been a catastrophic
blow and, unintentionally, the biggest single blow to our economy for decades
became the catalyst for our links with China, and helped drive a new vision
for Birmingham. The announcement of resumption of car production at Longbridge
is, therefore, an excellent piece of news – one which we will all hopefully
remember – and combined with Tata’s recent acquisition of Jaguar
and Land Rover and the Russian investment in LDV, perhaps this hints towards
a renaissance of the automotive industry in the West Midlands.
Either way, I welcome today’s news and, as someone who has
been on this long journey from the beginning, recognise its significance. There
is still a long way to go and a lot more to be done in Longbridge and Birmingham
but this is a landmark well worth celebrating. To borrow a phrase from Winston
Churchill, someone I have admired greatly, “this is not the end. It is
not even the beginning of the end. But it is, perhaps, the end of the beginning”.
My best wishes go to SAIC and NAC MG UK Ltd. I know that they will
not let Birmingham down.
Burden accuses Whitby of egomania over Longbridge claims
Paul Dale, Public Affairs Editor, Birmingham Post 4th August, 2008
Birmingham MP Richard Burden has launched an extraordinary attack
on city council leader Mike Whitby, accusing him of hijacking the resumption
of car production at Longbridge in a personal glory-trip. Mr Burden described
an an article by Coun Whitby in the Birmingham Post, in which he appeared to
take personal credit for getting the track rolling again, as a “triumph
of ego over memory”.
He said the many people involved in a rescue attempt after MG Rover
went out of business in 2005 “would not recognise Mike’s claim to
have been the personal inspiration behind pretty well everything that was achieved
in the hours, days and weeks which followed the collapse of the company”.
In his article, Coun Whitby (Con Harborne) described how he took charge in the
immediate aftermath of the crisis – which saw 6,000 jobs disappear –
and personally encouraged Chinese firm NAC to invest in Longbridge and start
producing MG sports cars again.
Production began on the first of a limited edition of models last
week. But Mr Burden (Lab Northfield) said many organisations and individuals
were involved in a joint effort to secure the future of the car plant. He added:
“No politician should claim personal credit for the actions of so many
people.” Mr Burden also accused Coun Whitby of organising “premature
media launches” of NAC’s plans in order to produce photo opportunities
for himself. He added: “Encouraging NAC to over-hype things in the early
stages did not make their task any easier.”
Longbridge revival has seen hard work from many people
Birmingham Post 4th August, 2008
After Birmingham City Council leader Mike Whitby outlined
his role in the aftermath of the collapse of MG Rover, Longbridge MP Richard
Burden gives his version of events.
Mike Whitby's article on Longbridge appears to be a triumph of ego over
memory. As leader of Birmingham City Council, he did indeed make a
contribution to the way the West Midlands' responded to the collapse of MG
Rover in 2005, just as I hope I made a contribution as the MP for the area.
However, many people who were involved will not recognise Mike’s
claim to have been the personal inspiration behind pretty well everything that
was achieved in the hours, days and weeks which followed the collapse of the
company. The truth is that a lot of different individuals and organisations
provided the emergency assistance that was given to MG Rover workers and their
families at the time. The list included statutory bodies like Advantage West
Midlands and the Learning and Skills Council. It included the private sector
– from Birmingham Chamber of Commerce and Industry, Industry Forum and
the Engineering Employers Federation to individual companies.
It included government ministers from the Prime Minister downwards
and the staff of their departments. It included the trade unions at national,
regional and local levels. And it included people from the local community;
people who came to the fore because of what they did in practice rather than
because they held any official position.
And, of course, there were the local authorities involved –
and particularly Birmingham City Council. The extra hours which neighbourhood
staff put in with others to establish emergency advice mechanisms deserves at
least as much mention as do the efforts of the council leadership. No politician
should claim personal credit for the actions of so many people. Mike also over-eggs
his pudding when it comes to the story of China’s investment in Longbridge.
He deserves the praise he gives himself for the way in which the City Council
has fostered relations between Birmingham and China and for the supportive attitude
he has personally shown to both Nanjing Automobile Corporation (NAC) and Shanghai
Automotive Industry Corporation (SAIC). But he does his case no credit by simultaneously
denying or decrying the efforts of others in this area.
We should remember that the most effective encouragement we can
give to Chinese investment and partnership with our region is not necessarily
that which is most loudly publicised. Everyone should welcome the announcement
that production of MG sports cars is once again underway at Longbridge. But
NAC/SAIC were also wise to make the announcement in understated tones. The City
Council’s previous encouragement of a series of overblown, but premature,
media launches of NAC’s plans for Longbridge over the last two years may
have produced photo opportunities for council leaders, but did little in practice
to build confidence in the industry or the market when they were inevitably
followed by further delays. These delays should not have adversely reflected
on the Chinese company’s commitment.
It is a huge challenge to produce a car for the first time in a
foreign country and for an unfamiliar market. Encouraging NAC to over-hype things
in the early stages did not make its task any easier. To recognise the real
potential of what NAC/SAIC can bring to Longbridge we need to keep a sense of
perspective on what is happening here. Last week’s announcement is not
the return of mass car production or anything like it. As Professor David Bailey
of Birmingham Business School has said in The Birmingham Post, this is small-scale
production of niche sports cars. There is nothing wrong with that and the business
can indeed expand in the coming years.
However, the significance of NAC/SAIC investment to jobs in Longbridge
and the wider West Midlands should not be equated with the number of cars which
roll of the production line. Far more relevant will be the extent to which we
can encourage the Chinese to expand at Longbridge the research and development
base which SAIC already has in the Midlands and how we can develop further investment
and job opportunities from it.
Our region already has world class skills in performance engineering.
Our universities and specialist firms can provide the innovative automotive
environmental technologies which China needs to tackle its own pollution problems.
In doing so Longbridge can help our region reinvent itself as a global leader
in environmental engineering and create quality jobs for the future. That is
why the dialogue which has already begun between Midland and Chinese Universities
should be nurtured.
At Longbridge itself, this means remembering that the NAC/SAIC
operation takes up only part of the former MG Rover site and that the redevelopment
of the whole site can contribute to this process. The planned relocation of
Bournville College to Longbridge could be a great start. By building on existing
co-operation between schools and colleges in the area we can also stimulate
the skills and ambition that local young people now at school will need to achieve
their potential in the job markets of the future.
We should ensure that new buildings at Longbridge should be exemplars
of new environmentally sensitive ways of living and working. The public transport
links within the Longbridge area should promote that vision. It is difficult
to find anybody who disagrees with this vision for Longbridge. But the theory
is rarely matched by practical action by the agencies that can make a difference.
For example, both the City Council and Centro regularly claim to
support the creation of a new rail station and a state-of-the-art transport
interchange at Longbridge. But the project is less than prominent in their list
of priorities for securing public transport investment in the region. The result
could be that the Longbridge public transport vision ends up being little more
than a park and ride scheme with a few more bus stops.
Longbridge is the biggest redevelopment project in our region.
But, compared to other regeneration schemes such as the Big City Plan for Birmingham
city centre, insufficient effort has so far been put in to securing the national
or international profile that Longbridge deserves. For example, a few months
ago, Longbridge was chosen as the venue to launch a new economic strategy for
the entire West Midlands.
The Minister for the West Midlands was present, as were key public
and private sector partners from across the region. It was a great opportunity
to showcase the potential of Longbridge. Other local authorities were represented,
but senior figures from Birmingham’s own City Council were thin on the
ground. All too often, the City Council’s leaders seem to lose interest
when they don’t think they are going to be the centre of attention.
Whatever the reasons, it has to change. In a couple of months,
the joint Birmingham/Bromsgrove Planning framework for Longbridge will be the
subject of a statutory Pubic Inquiry. That framework embodies much of the vision
outlined above, but it will not implement itself. On the ground, St Modwen,
the site developers, have already spent millions in clearing and restoring the
site for redevelopment. But the real test will be what happens from now on.
And as we rise to this challenge, we should make sure that local
people also benefit from the fruits of the redevelopment. The financial proceeds
from planning gain at Longbridge should not only go into the City Council’s
coffers to fund their own – no doubt worthwhile – priority projects
for the area. For the last three years, the community of south west Birmingham
has lived with the consequences of the collapse of MG Rover. They deserve a
direct stake in the future of Longbridge.
2) Jaguar and Land Rover
Tata gives Jaguar Land Rover the freedom to cruise
John Griffiths, Financial Times 4th August, 2008
Ratan Tata, the 71-year-old Indian industrial patriarch whose Tata
group now owns Jaguar and Land Rover, had personal experience of the importance
of Jaguar's "heritage" during a visit to the British company in mid-July.
He mentioned that, more than half a century ago, his father had bought one of
Jaguar's best-loved early cars, an XK120. This casual remark caused the gears
to grind in the Jaguar Daimler Heritage Trust archives. Later Mr Tata - whose
enthusiasm for cars extends well beyond Tata Automotive's balance sheet - was
presented with his father's order number from within the brown-leaved ledgers.
The link is a sign of continuity in a relationship that is in all
other senses pioneering, as the Indian conglomerate takes control of the historic
British carmaker. The union between Tata and Jaguar Land Rover, which it bought
from Ford in April for $2bn (£1bn), appears to be getting off to a well-oiled
start. David Smith, the new permanent chief executive, believes JLR will be
faster on its feet under Tata than Ford, where “financial constraints made life much more
difficult.” Just how much harder was driven home less than
24 hours after Mr Smith was speaking to the Financial Times, with Ford announcing
a second-quarter loss of $8.7bn and a large restructuring of its product lines.
More important to Mr Smith, however, is JLR's opportunity to think
as a smaller and more agile business. "Tata wants us to be autonomous -
I've got all the executive authority I need to make both the day-to-day and
the long-term executive decisions without having to consult with Ratan [Tata]
and Ravi [Kant, Tata Automotive's chief executive], my fellow board members.
We can make decisions quickly - that's what will be most different from life
at Ford . . . What we have seen of Tata is that it is a very principled organisation,
with corporate social responsibility high on the agenda, but which works differently
from the US or European model.
"In terms of governance, we have set up a small strategy board
- Ratan, Ravi and me - and we will meet every couple of months and review progress
on plans, strategies and future products." He expects plenty of ideas from
Mr Tata on products - Tata's recently launched $2,000 Nano car aimed at motorising
India's less well-off masses was a deeply committed, personal mission for him
- and from Mr Kant on cost-effective engineering.
However, he sees no risk that their input might turn out to be intrusive
and, he stresses, the day-to-day executive committee set up to run the
company will be strictly JLR's - “it will not have any Tata secondees.” That
said, he envisages that “there are two or three areas where it would be good
to bring in their expertise,” such as cutting costs and making use of Tata's
extensive information technology resources through its globe-spanning Tata
Consultancy Services division, which employs more than 110,000, with 800
client companies.
Some new initiatives are already emerging, including the recruitment
of 600 more engineers as well as plans to extend Jaguar's presence upwards into
the £100,000-plus market. Although Mr Smith stresses that this will be
a gradual process rather than any quick new model launches. Mr Tata has also
expressed some interest in reviving the Jaguar-owned Daimler brand and returning
Jaguar to the race tracks; but for the moment they remain very much on a wish
list.
The situation is helped by Jaguar moving, albeit slowly, out of
financial crisis and years of losses. Although both Jaguar and Land Rover now
face much harsher market conditions, at least in Europe and North America as
they confront soaring fuel prices and much tighter environmental legislation.
In spite of this, Mr Smith predicts that their combined sales this year will
be little changed from last year's 286,000, thanks to strong growth in new markets
such as China. "Land Rover is on an improving trend while Jaguar is making
great strides and getting close [to profitability]." Together they made
$650m in pre-tax profit last year and $300m in this year's first quarter (the
individual performances of Land Rover and Jaguar are not separated out).
After years of cuts and job losses, Mr Smith indicates that no
further large-scale restructuring is in sight. He also suggests the UK components
industry's fears of a big shift of sourcing to India are exaggerated. "We
have a strong emphasis on the UK automotive sector. It is very important to
have local supply," says Mr Smith, who is working with the Society of Motor
Manufacturers and Traders and the former Ford design chief Richard Parry-Jones
on ways of strengthening the UK supplier base.
"Besides, I'm also a dyed-in-the wool Midlander, and it is
really important to me that the business succeeds."
Jaguar Land Rover hires Tata affiliate for IT work
Andrew Grossman, Automotive News Europe 6th August, 2008
Jaguar Land Rover will turn to its fellow Tata Group unit INCAT
for two information technology services, the companies said today. INCAT will
help Jaguar Land Rover move its IT applications from Ford Motor's systems to
its own. INCAT also will provide support for those applications for five years.
Terms of the contracts were not released.
Jaguar Land Rover, which was purchased from Ford Motor by Tata
Group in June, said INCAT didn't get any help in the bidding because of its
affiliation. "Recognizing that INCAT is also owned by Tata, we have been
particularly sensitive to the need to treat them as we would any other vendor,"
said Alan Weeks, the IT transition manager for Jaguar Land Rover, in a statement.
"No advantageous insight has been available to the INCAT team, who worked
with us in a very professional manner throughout the research phase."
INCAT has headquarters in suburban Detroit; Luton, England; and
Pune, India. Most of the work will take place in Jaguar Land Rover's British
facilities and in India.
Jaguar sales rise again
Birmingham Post 7th August, 2008
Latest figures show that the luxury marque increased its sales
by almost 30 per cent last month compared with July last year and that in the
year to date sales are up almost 14.5 per cent. The popularity of the new XF
and XK models is the principal reason for the growth and with September’s
58 registration plate due next month this may provide an additional spur to
the encouraging sales figures.
However, stablemate Land Rover is not enjoying such success. Tough
comparables from last year and the year before together with consumer concerns
about rising fuel prices and harmful emissions have cast an air of gloom over
the Solihull company. Sales were down almost 40 per cent in July compared with
the same month last year while in the year to date, sales have fallen more than
14 per cent.
The latest figures from the Society of Motor Manufacturers and Traders show
that just 1,764 of the 4x4s left showrooms last month. This compares with
2,863 in July 2007. The company's share of the UK market has declined from
1.62 per cent to 1.15 per cent. In the year to date, 23,629 models have been
sold, compared with 27,501 at the same stage last year.
Ironically, Jaguar's share of the UK market now stands at 1.15 per cent,
although it was just 0.77 per cent this time last year. In all, 1,764 cars
were sold last month, compared with 1,363 in July 2007. In the year to date,
13,165 models have been snapped up, compared with 11,502 at the same stage
last year. Even the resilient Mini appears to be on the wane with UK
consumers. The BMW favourite sold 2,522 models last month, compared with
3,336 in July last year - a decline of 24.4 per cent.
Former JLR parent Ford, possibly looking for something to cheer
itself up after its woes in the US, saw its sales increase by 8.5 per cent last
month. The SMMT statistics also show that Longbridge-based MG has sold three
models so far this year, despite the company not having any models in the showrooms.
Bizarrely, the sales statistics also show that the Chinese-owned company had
managed to sell 123 by this time last year, meaning in theory that it faces
tough comparables.
Indeed, if the figures are taken at face value, it has suffered
a 97.5 per cent fall in business this year. Quite where the 123 cars from last
year had come from is not clear. An agreement was signed between Nanjing Automobile
and a network of dealers but it was thought none ever found their way onto forecourts.
The MG TF models may have been left over from the aborted start of production
heralded in July last year.
3) MINI
End of the line for Mini convertible
just-auto.com 8th August, 2008
After 164,000 units produced at its plant in Oxford, England, BMW
has called time on its first generation Mini convertible line. 'Job Last' was
a metallic white silver Cooper S Convertible Sidewalk destined for the USA,
the second-largest market for the little drop-top after Britain and Ireland.
Around 77% of total sales over the four-year production run were
made in Mini's five major markets - UK and Ireland, the US, Germany, Italy and
Japan. Australia and Canada were also in the top 10 and high growth rates had
recently been recorded in China and Russia. "In chilly Scandinavia, almost
twice as many people drive the Mini Convertible than in fair-weathered Greece;
in Austria, there are at least five-times as many drivers than in sunny Portugal,"
Mini said.
A replacement is not imminent due to strong demand for the second
generation hatchback and new Clubman 'wagon' model line. "For us, this
is the end of an era", said Oxford plant director Oliver Zipse. Due to
the constant rise in demand, the British plant has until further notice reserved
its manufacturing capacities for the hatchback and Clubman, Mini said.
The best selling convertible was the 85kW/115bhp petrol Cooper
Convertible at around 56,500 units.
4) India Watch
Nano costs could leave Tata out of pocket
Rhys Blakely in Bombay, The Times 5th August, 2008
The Nano, the world's cheapest car, is threatening to be a commercial
flop as surging raw material costs scramble its low-cost business model, according
to industry insiders. Analysts and rival manufacturers expect Tata, the conglomerate
behind the Nano, to suffer heavy losses on the car as its promise to sell a
basic model for only 100,000 rupees (£1,250) - a price calculated to tempt
India's middle classes away from their motorcycles - proves unexpectedly costly.
Ratan Tata, the chairman of Tata, has admitted that he faces a
dilemma. “If we pass on all costs to the consumer, it will affect demand,
and if we don't, it will affect margins,” he told investors recently.
The economics underpinning the Nano, which is due to go on sale this autumn,
make it especially vulnerable to commodity market moves. Since Tata began to
develop the Nano in 2003, raw material costs have risen from about 13 per cent
to about 23 per cent of its price before taxes, according to an estimate by
Global Insight, the consultancy. By contrast, the cost of raw materials account
for about 7 per cent of the average American car - or about $1,600 (£815),
up from about $800 five years ago.
Ian Fletcher, of Global Insight, said: “I can't see the 100,000
rupee price being maintained for more than three months, largely to let Ratan
Tata keep his price promise, before the company raises it.” Potential
Indian buyers are also facing interest-rate rises, which have made financing
packages dearer, and increases in fuel costs, making motorbike mileage figures
more attractive than the Nano's 50 miles per gallon.
Poor Nano sales may force a rethink across the industry. With oil
prices at historic highs, carmakers have drawn up plans to follow Tata's lead
by targeting developing markets with a new generation of cheap runabouts. Within
eight years, 100million households in countries such as India and China will
be able to afford cars priced under £3,000, according to Boston Consulting
Group.
Whether manufacturers will be able to reap sufficient profits from
ultra-cheap cars is in doubt. Hyundai Motor, the South Korean company, said
last month that it had scrapped plans for a $5,000 saloon in China because the
model would not be profitable. Renault-Nissan said in May that it had joined
forces with Bajaj Auto, an Indian motorbike manufacturer, to sell an “ultra-low-cost”
car at the Nano's price-point in India. Now, both sides are understood to doubt
the project's viability.
To mitigate losses, rivals are suggesting that Tata will limit
sales of the basic version of the Nano and seek to make money back by pushing
upgraded models. Protests over the ownership of the land on which the Nano factory
is being built have also raised doubts over whether the car will be ready on
time in the volumes that Tata had planned.
Indian analysts forecast that Tata will need to produce nearly
400,000 Nanos a year to make a profit, above a planned initial capacity of 250,000.
Tata has not commented on the margins that it expects to make on the Nano, saying
only that the car will be profitable over the long term.
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