Competitive Connection

January 22, 2008

Around the globe
India’s $2,500 car generating buzz
The most-talked-about car at the Detroit auto show this year isn't even present: Tata Motors's $2,500 Nano.
    
Tata's unveiling of a prototype of the Nano, India's cheapest car is forcing established automakers to decide whether they want to go head-to-head with such entrants, said John Casesa, managing partner at Casesa Shapiro Group in New York.
    
``The reason why it's important for the GMs and the Toyotas of the world is because if these products are successful, they will give these new companies scale, earnings and experience to
move farther upmarket where they would compete directly against the European, Japanese and U.S. models,'' Casesa said.
    
The cheapest car in the U.S. is the $9,995 Chevrolet Aveo from GM. In Japan that distinction goes to the Daihatsu Esse at about $6,000. In Europe the Dacia Logan from Renault SA starts
at just under $11,900.—Source: Bloomberg, January 15, 2008
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A look at the competition
The cost of being green
From plug-in hybrids to biofueled supercars, automakers say they know how to build environmentally conscious vehicles. What they don't know is how many customers will buy them, and at what price.

Every automaker has given a glimpse of its strategies for dealing with tougher U.S. fuel economy regulations, rising oil prices and a surge of global warming rules around the globe. While Toyota and Honda have pledged new hybrids, General Motors and Chrysler have touted a variety of approaches. Ford has bet big on a single technology.

Detroit executives said the technical hurdles to meeting a 35-m.p.g. standard by 2020 were less difficult than getting customers to accept the changes and extra costs that come along with the goal.

GM Vice Chairman Bob Lutz told reporters at the show that the new U.S. rules would cost the industry $5,000 to $7,000 per vehicle, with much higher costs possible for some models.—Source: The Detroit Free Press, January 15, 2008
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A look at the competition
Toyota to take on the Volt
Toyota pledged to match General Motors' goal to deliver capable plug-in hybrid vehicles to customers by 2010.

Toyota CEO Katsuaki Watanabe outlined the Japanese automaker's commitment, reflecting the tense rivalry between the two automakers.  Toyota and GM are competing for both technological and global sales leadership.

"From the beginning, going for 2010 was a stretch, and it is still a stretch," GM Chairman and CEO Rick Wagoner said. "But we're putting resources like crazy into it and we haven't seen anything yet that says we've hit a glitch."

In a speech outlining Toyota's environmental strategy, Watanabe said the company planned to accelerate its plug-in hybrid program by 2010. "As part of this plan, we will deliver a significant fleet of plug-ins powered by lithium-ion batteries to global customers, with many coming to the U.S." --Source: The Detroit News, January 14, 2008
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Then and Now
Challenging times ahead
U.S. auto production will drop below 10 million cars and trucks this year for the first time since the 1992 recession, said Sean McAlinden, vice president of research at the Center for Automotive Research.

Despite deep production cuts, he said, domestic carmakers continue to operate too far below production capacity.   Even after massive employee buyout programs in 2006 and 2007, General Motors, Ford and Chrysler were still below plant operating capacity, he said. In 2007, he said, GM's U.S. factories operated at 85 percent of capacity, Ford at 78 percent and Chrysler at 81 percent.

"You don't make money in this business until you're operating at 90 percent," he said.—Source: The Detroit News, January 12, 2008
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A look at the competition
Nissan and Chrysler team up
Nissan will build a small car for Chrysler to sell in South America under a deal, which might be expanded to include further cooperation in vehicle production.

Nissan will build about 20,000 cars based on its Versa subcompact for Chrysler next year.

"This kind of tactical partnership allows us to maximize product offerings yet minimize costly investments," Chrysler President and Co-chairman Tom LaSorda said. "This partnership will give Chrysler nearly immediate access to vehicle segments in which we do not currently compete."

The deal with Nissan also will help Chrysler in its effort to expand faster outside North America, a region where it generates more than 80 percent of its sales.--Source: The Detroit News, January 12, 2008
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What others are saying . . .
National healthcare costs topped $2 trillion in 2006
The nation's healthcare bill climbed above $2 trillion in 2006, averaging a record $7,026 per person, according to a government report.

Costs increased 6.7%, the report by Medicare's actuaries said -- only slightly more than the 6.5% rate in 2005. But it was still well above the overall rate of inflation.

Most of those costs are incurred by the sickest patients. For example, about 10% of the population accounts for more than 60% of healthcare costs.–Source: The Los Angeles Times, January 8, 2008
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Around the globe
GM Europe increases sales
General Motors boosted European sales 8.9 percent to a record last year.  Volume in Europe rose to 2.18 million vehicles, GM said. The biggest advances were in the U.K., Russia, Greece, Italy and Ukraine.

“Outside of North America, GM is doing quite well: They're expanding sales, production and research facilities,'' Michael Robinet, an analyst at CSM Worldwide in Northville, Michigan, said. “The goal in North America is not so much increasing volume, but getting profitable volume.''--Source: Bloomberg, January 9, 2008

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