German brands to remain big winners

According to a survey by KPMG of 200 top automotive executives, VAG and BMW are expected to be the big winners over the next five years, with Toyota rebounding closely behind and Hyundai/Kia coming in fourth. At the other end of the survey Subaru, Mitsubishi, Mazda and Suzuki were all predicted to lose market share. Two fascinating insights to come out of the survey though are regarding overcapacity and electric vehicles (EVs). 64% of those polled said their companies will increase investment in new plants over the coming five years compared to only 55% last year even though more than 50% said there are overcapacity issues. However most did say that consolidation and joint ventures (JV) are the best way to solve this, so maybe the response about investment should be linked to the consolidation and JV approach. The other insight, albeit not really a surprise is that 71% expect internal combustion engine (ICE) improvements to bring lower pollution and better efficiency than any EV technology in the coming 6-10 years. Two-thirds of those surveyed also do not think EV car sales will exceed 15% before 2025.

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VAG breaking records

As if to emphasis the results of the poll and with a 31% sales jump in December VW saw its full year worldwide sales surge 13% to a record 5.74million vehicles and even in Europe it only suffered a 1% fall to 1.7 million. Meanwhile in China it saw sales jump 25% to 2.15 million. But VW wasn’t the only success in the family as even Skoda sales 6.8% up to just under 1 million making it the largest exporter in the Czech Republic.

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VW to grab full control of MAN

Whilst VAG’s stable of brands continue to shine, their ambition for a consolidated global automotive empire seems to continue unchecked as it seeks a domination agreement enabling it to take full control of MAN in which it already controls 75.03%.

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PSA and Fiat set to be the big losers

With OEMs’ sales, revenues and profits expected to come under pressure this year Fiat are predicted to be badly hit by its lack of new products due to CEO Sergio Marchionne’s decision to delay new product investment. Across the border into France and PSA’s target of breaking even in 2015 is in doubt according to ratings agency Fitch who says that on top of the continuing crisis in Europe worse than expected slowdowns in markets like China and Latin America will hit the French OEM. In a statement which will do nothing for struggling automakers but pile on the pressure Fitch also said it expects ratings for both PSA and Fiat to fall further.

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China could hit 20 million sales in 2013

Whilst the growth rate in China is expected to slow, compared to its 2010 heyday, it is still forecast to grow by 7% this year which would push wholesale deliveries up to 20.65 million. With VW posting a record 5.74 million car and SUV sales, 12.7% increase in vehicles sales in total, it is obvious why China is seen by global vehicle manufacturers as the top investment destination. By the end of 2011 there were 62.4 million private passenger vehicles compared to just 8.45 million at the end of 2003 and this is forecast to hit 200 million by 2020 so it is clearly a case of get there before it’s too late.

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Daimler takes a shine to BAIC

As VW see record results in China, Daimler is rumoured to be considering taking a bigger step into the market by taking a 10-20% stake in its Chinese partner BAIC. BAIC is planning to float its BAIC Motor unit which would pave the way for Daimler to take a stake in it. Whilst China is already Mercedes-Benz’s 3rd largest market it still trails BMW and Audi in sales terms.

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Ssanyong to get $900million investment

Whilst the Daimler investment in BAIC is said to be a rumour, Mahindra & Mahindra’s commitment to its Korean subsidiary Ssanyong Motor Co Ltd is anything but as it confirms a $900 million investment in products over the next four years.

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PSA to sign $7billion refinancing deal

Back to PSA and as it faces another tough year I am sure PSA will draw some comfort from the fact that lenders apparently offered it more money for its refinancing deal than it originally sought. Banks including, BNP Paribas, Societe Generale, Credit Agricole and Natixis are said to be leading the team of lenders, however PSA will have to pay 360 bps (basis points) more than benchmark rates if it does see its credit rating cut to non-investment grade which would be a real hit to their cashflows.

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PSA may sell parts division

In what is likely to be a related move, speculation is rife that PSA will be forced to dispose of its 57.4% stake in its parts making subsidiary Faurecia. Meanwhile there was further speculation that the French government may be poised to purchase a stake although I am sure any such move will quickly be scrutinised by the EU.

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Overcapacity issue spreading to Russia?

Whilst overcapacity remains a big issue for Europe, VW, Ford and Nissan have all been planning to increase capacity in Russia as it rose to 2.9 million sales in 2012 making it Europe’s second largest market after Germany. Meanwhile both Land Rover and Subaru have signed up with Avtotor’s and its joint venture with Magna to produce cars but the unexpectedly flat November is causing some to challenge the wisdom of adding too much capacity in Russia. With a track record of boom and bust, 2008-09 saw sales halve from one year to the next, Russia is more mature than other BRIC markets but appears to be far more volatile.

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Ford pay biggest dividend in seven years

With a confidence which indicates that it will not need as much money to stem its losses in Europe as anticipated Ford Motor Co has doubled its quarterly dividend to its highest in seven years.

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Falling demand costs 800 Honda jobs

But whilst Ford seem buoyant, Honda are struggling as it announced plans to shed 800 jobs at its UK Swindon plant due to falling European sales making it the first capacity cuts of 2013 and we are only in week two.

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Questions and Answers

Q: Do these name changes mean that countries are breaking away from the EurotaxGlass’s Group and becoming independent?

A: Absolutely not. EurotaxGlass's is one group and we intend to stay that way. We share knowledge and products across markets. This is about emphasising relevant or the local names by which our clients often still call us

Q: Where does the name Autovista come from?

A: It is a name that exists within the group and our Finnish company is also using it. France has chosen to take the name to signal a change as it re-launches with new products for the dealer sector.

Q: Does this mean all other countries are rebranding?

A: Other countries will return to their well-known local brands as appropriate. For many of our countries they are still known and called by their original names by their customers. Where this is the case we will reflect this.

About EurotaxGlass’s

EurotaxGlass's is a leading provider of automotive data, software solutions and business services to the automotive sector. We provide a secure point of reference in a complex market with our pan-European knowledge combined with consistent and comparable international data and innovative solutions.

Data is at the heart of the automotive industry. Access to the right information is key when making effective business decisions. Our data gives our customers the edge they need to compete in their markets – either through the data itself or through products we develop that enable them to solve business issues.

We use a combination of market analysis and statistical modelling to create comprehensive and reliable data and information. We pride ourselves in bringing clarity to a market that can be complex and confusing. We’ve built our business to be the best in our sector in the world.