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G.M. Goes to Germany to Reaffirm Support for Opel

April 10, 2013 by Leave a Comment

“We are more convinced than ever that G.M. must have a strong presence in Europe generally and particularly — especially — here in Germany,” Dan Akerson, the chairman of G.M., said Wednesday at Opel headquarters in Rüsselsheim, near Frankfurt.

Several hundred Opel employees crowded onto balconies overlooking an atrium in the office building where Mr. Akerson and other G.M. executives spoke. The workers applauded after Karl-Thomas Neumann, Opel’s fourth chief executive since 2010, vowed that, “Opel is back!”

G.M. is the fourth-largest automaker in the European Union measured by number of cars sold, including the Chevrolet brand. But Opel, sold under the Vauxhall brand in Britain, has been among the manufacturers hardest hit by a relentless downturn in European auto sales that began in 2011.

Sales of Opel and Vauxhall in Europe fell 16 percent in February compared to a year earlier, according to the European Automobile Manufacturers’ Association, while market share slipped to 6.1 percent from 6.4 percent, less than half of what the market leader, Volkswagen, claims.

A few months ago some auto executives were predicting that European sales were close to hitting bottom, but there is no sign of a revival yet. Daimler, the German maker of Mercedes-Benz cars, said Wednesday that it may need to reassess its sales forecasts for 2013 because of the prolonged slump in Europe.

G.M.’s board of directors held a regularly scheduled meeting Wednesday in Rüsselsheim, site of a large Opel factory and design center. It was the first time the board had met in Germany for at least two decades, company representatives said. The board’s presence was probably intended to help correct the widespread impression among Germans that G.M. regarded Opel as an unwanted stepchild.

Mr. Akerson’s appearance had the quality of a state visit. He arrived for a press event in Rüsselsheim with an entourage that included the U.S. ambassador to Germany, Philip D. Murphy, and the prime minister of the state of Hesse, Volker Bouffier. Mr. Akerson will meet Thursday with Ms. Merkel, but neither G.M. nor the chancellor’s office has said what is on the agenda.

Mr. Akerson repeated a promise to invest €4 billion, or $5.2 billion in Europe through 2016. The money will be used to introduce 23 new models and variants of existing models, as well as 13 new engines.

“Opel is paving the way for the biggest turnaround in the history of the European auto industry,” Stephen J. Girsky, vice chairman of G.M., said at the event Wednesday.

But Opel has yet to prove that the latest turnaround attempt will achieve better results than previous efforts. Opel has not reported a profit since the 1990s. Its employees have suffered waves of job cuts and there is currently a wage freeze in effect at German plants. Opel plans to close down vehicle production at a plant in Bochum, Germany, as early as next year.

However, Opel appears, at least, to have finally achieved détente with workers after years of strife that helped tarnish the brand’s image. Wolfgang Schäfer-Klug, chairman of the workers council at Opel, spoke at the event Wednesday, expressing gratitude for what he said was a clear commitment from G.M.

Mr. Bouffier, the state prime minister, noted that many previous turnaround plans failed. “We have often had hopes that a short time later were disappointed,” he said at the event. But he expressed optimism that this time could be different.

“No company invests €4 billion in such a short time unless it believes in the future,” Mr. Bouffier said.

After the speeches were over, the executives and political leaders moved outdoors where they stood in a stiff wind and revealed a slab of concrete that was once part of the Berlin Wall. The graffiti-covered slab will stand in front of the headquarters to encourage workers to overcome obstacles, Opel said.

Article source: http://www.nytimes.com/2013/04/11/business/global/gm-goes-to-germany-to-reaffirm-support-for-opel.html?partner=rss&emc=rss

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U.S. and Europe Seek Support for Trade Pact

March 13, 2013 by Leave a Comment

BRUSSELS — President Barack Obama and the top trade official for the European Union sought to rally support Tuesday for a landmark trans-Atlantic free trade deal, saying it would benefit a wide variety of exporters and offer a significant boost to growth.

Karel De Gucht, the E.U. trade commissioner, said one of the biggest beneficiaries of a trade deal with the United States would be automobile manufacturers like BMW that have long rankled at tariffs.

Mr. De Gucht was shoring up support for a mandate to negotiate on behalf of E.U. member states — like Germany, home to a powerful auto sector — and whose governments still must agree to let him lead the talks. He called on the bloc to “now quickly decide to open negotiations so work can begin with the United States before the summer break.”

Mr. De Gucht also sought to assuage France, where there is widespread skepticism about the benefits of free trade, by suggesting that Paris would not have to dismantle quotas and subsidies designed to promote French films and other cultural products.

His comments came as Mr. Obama spoke in Washington, signaling the challenges that lay ahead, indicating that “we’re going to need the help of industry and labor” to get a deal done.

“One of the things that we’ve also been trying to do during the course of this process is to make sure that it’s not just the Xeroxes and the Dow Chemicals that are benefiting from this,” Mr. Obama said, “although we want our Fortune 100 companies to be selling as much as possible.”

“We actually think that there’s room for small and medium-size businesses to export directly — not just supplying large businesses, but also to break open and enter into these markets,” Mr. Obama told the President’s Export Council, his main trade advisory committee on international trade, made up of lawmakers and other officials.

Exports of motor vehicles from Europe to the United States could increase 149 percent if a deal removed existing tariffs and harmonized different safety standards, according to a study conducted by the Center for Economic Policy Research in London and released Tuesday by Mr. De Gucht’s office.

“I feel just as safe when I drive a car in the U.S. as I do when I drive in Europe, so we should find ways to align our systems to find ways to cut costs,” Mr. De Gucht said at a news conference.

He also said that product tariffs, currently 4 percent on average, should be dropped to zero, either immediately or over an agreed period of time.

A surge in trans-Atlantic trade would increase the Union’s vehicle manufacturing sector 1.5 percent, according to the study issued by his office. Other sectors in Europe likely to see significant increases in sales included metal products, processed foods, chemicals and transport equipment, the study said.

European auto companies, particularly German ones, want to make it easier to sell cars they now make in the United States in their home markets. An agreement could add hundreds of millions of euros annually to BMW’s revenue, in part by easing restrictions that now add tariffs to the cars the company makes in Spartanburg, South Carolina, but ships back to sell in Germany and other European countries.

Between them, the United States and Europe already account for about half of global economic output and one-third of world trade. Bilateral trade in 2011 amounted to €455 billion, or about $593 billion, with a positive balance for the Union of more than €72 billion, according to Mr. De Gucht’s office. The United States is the bloc’s main export market, buying €264 billion of goods, or about 17 percent of total E.U. exports, according to his office.

But previous attempts to forge a free trade deal have failed.

Government officials and industrialists who support such a pact say it is different this time, partly because Europe is seeking ways to accelerate growth without raising domestic spending in the wake of its sovereign debt crisis, and partly because the United States is eager to set global standards with Europe that giant emerging economies like China would have to follow.

Mr. Obama gave the talks added impetus last month when he pledged to “launch talks on a comprehensive Trans-Atlantic Trade and Investment Partnership with the European Union” during his State of the Union address.

Mr. Obama’s pronouncement at the time met with a frenzy of enthusiasm from large swathes of the business community on both sides of the Atlantic. On Tuesday, he reiterated that he wanted “to lock in” a deal.

But there are huge obstacles, largely because the biggest gains will not come from the relatively easy goal of dropping tariffs but from bulldozing “behind the border” restrictions like customs procedures that create bureaucratic hurdles.

In particular, the Union wants to pry open so-called public procurement markets and scrap “Buy American” clauses that restrict the ability of European companies to sell goods and services to states and cities. The Europeans also have long complained about restrictions on foreign ownership of U.S. airlines.

The Americans are eager to see a reduction in barriers to exports of agricultural goods including produce from genetically modified organisms and cloning, opposed by many Europeans.

The talks also could run into difficulties over European initiatives like privacy restrictions on major online operators like Facebook and Google, and a tax on financial transactions aimed at recouping money from bankers.

Mr. De Gucht said there still should be a “comprehensive agreement” covering a wide variety of sectors, but he also said it was possible to reach a “living agreement with a number of approaches in it for the future that you then develop once the agreement is in place.”

“I’m not saying every topic and every comma should be finally and in a definite way resolved,” he said.

Jack Ewing contributed reporting from Frankfurt and Brian Knowlton contributed reporting from Washington.

Article source: http://www.nytimes.com/2013/03/13/business/global/us-and-europe-seek-backing-for-landmark-trade-pact.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

French Automakers’ Biggest Problem Is the French Consumer

January 30, 2013 by Leave a Comment

Two of the workers were busy refining their already considerable skills at an auto-racing video game.

Down the avenue at the Renault showroom, business was hardly brisker.

Only at the nearby Mercedes-Benz showroom, displaying German automotive arts, was there much sign of life.

The dormant French dealerships signify the main problem facing the country’s auto industry: Consumers in France do not seem very interested in French cars. Or any cars at all, in many cases.

In France, vehicle sales last year were the lowest in 15 years, falling below 1.9 million from a 2009 peak of 2.3 million, according to Georges Dieng, an analyst at Natixis Securities. And even those who are prospective buyers often prefer non-French makes.

Esther Cintract, 40, a banker who takes the Métro to commute into Paris, owns a 10-year-old Citroën. For her next car, she said, she would consider switching to a German model: a Volkswagen, a BMW or a Mercedes.

But many younger French people have other priorities. “I’ve never had a car,” said Jean-Victor Mareschal, 30, who works at a bookstore in Paris. “I don’t need one. I ride a bike, walk or take the Métro.”

In contrast to the United States, where carmakers had a bumper year, France’s 2012 sales fell by 13.9 percent, outpacing the 8.2 percent decline in the overall European market, according to the European Automobile Manufacturers’ Association. Industry officials expect another gloomy year in 2013.

The flagging appetite of consumers is a significant economic problem for France. Its auto industry, dominated by Citroën’s parent, PSA Peugeot Citroën, and Renault, directly employs about 220,000 people; thousands more jobs depend on it indirectly. The government, which owns a 15 percent stake in Renault, has called the sector a strategic priority, and plays an active role — some might say actively meddles — in the industry’s affairs.

The downturn is not France’s alone. In 2007, before the global financial crisis, the overall European market peaked at just under 16 million newly registered passenger vehicles. Last year, the figure had fallen to just over 12 million, according to the European Automobile Manufacturers’ Association.

Wherever the market bottoms out, French automakers, like many European manufacturers, have more factory capacity and workers than they can profitably use. And that may be the case for years to come — especially in France, where the job-cutting plans announced so far by Renault and PSA Peugeot Citroën have been criticized by many analysts as insufficiently daring, even as they encounter fierce resistance from workers and, in some cases, government officials.

But it is a showdown that appears to be increasingly unrelated to the French market’s demands. Philippe Houchois, head of European auto industry research at UBS in London, noted that most vehicle purchases in the developed world over the last five years had been to replace older cars, with only 2 percent of car sales in the United States and Europe representing net additions to those regions’ consumer fleets. In emerging markets, by contrast, 70 percent of new-car sales represented additions to the total stock, Mr. Houchois said.

But even replacement demand is under threat in Europe. As the population ages, car owners drive less, reducing wear on their vehicles. And today’s cars last much longer than they did a few decades ago.

Generational change also bodes ill for the industry. Carmakers can be confident that many of those who adopt the car-based lifestyle early will stick with it for life. But the younger customers the industry covets are less interested in driving than they used to be — particularly, it seems, in France and especially in trendsetting Paris.

“In my parents’ generation, pretty much everyone drives,” said Mr. Mareschal, the bookstore employee. “With my generation, it’s a lot less important. I’m not anti-car, but it’s something I just don’t care about.”

Being able to go without a car may seem like a luxury available mainly to city dwellers, but even outside the cities, interest in auto ownership seems to have flagged.

Article source: http://www.nytimes.com/2013/01/30/business/global/french-automakers-biggest-problem-french-consumers.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

French Automakers’ Biggest Problem? French Consumers

January 29, 2013 by Leave a Comment

Down the avenue at the Renault showroom, business was hardly brisker. Only at the nearby Mercedes-Benz showroom, displaying German automotive arts, was there much sign of life.

The dormant French dealerships signify the main problem facing this country’s auto industry: Consumers in France do not seem very interested in French cars. Or any cars at all, in many cases.

In France, vehicle sales last year were the lowest in 15 years, falling below 1.9 million from a 2009 peak of 2.3 million, according to Georges Dieng, an analyst at Natixis Securities. And even those who are prospective buyers often prefer non-French makes.

Esther Cintract, 40, a banker who takes the Métro to commute into Paris, owns a 10-year-old Citroën. For her next car, she said, she would look at switching to a German model: a Volkswagen, a BMW or a Mercedes.

But many younger French people have other priorities. “I’ve never had a car,” said Jean-Victor Mareschal, 30, who works at a bookstore in Paris. “I don’t need one. I ride a bike, walk, or take the Métro.”

In contrast to the United States, where carmakers had a bumper year in 2012, France’s 2012 sales fell by 13.9 percent, outpacing the 8.2 percent decline in the overall European market, according to the European Automobile Manufacturers’ Association. Industry officials expect another gloomy year in 2013.

Consumers’ flagging appetite is a significant economic problem for France. Its auto industry, dominated by Citroën’s parent, PSA Peugeot Citroën, and Renault, directly employs about 220,000 people; thousands more jobs depend on it indirectly. The government, which owns a 15 percent stake in Renault, has identified the sector as a strategic priority, and plays an active role in — some might say actively meddles in — the industry’s affairs.

The downturn is not France’s alone. In 2007, before the onset of the global financial crisis that merged into the current euro zone economic slump, the overall European market peaked at just under 16 million newly registered vehicles. Last year, the figure had fallen to just over 12 million, according to the European Automobile Manufacturers’ Association.

Wherever the market ultimately bottoms out, French automakers, like many European manufacturers, have more factory capacity and workers than they can profitably use. And that may be the case for years to come — especially in France, where the job-cutting plans announced so far by Renault and PSA Peugeot Citroën have been criticized by many analysts as insufficiently daring, even as they encounter fierce resistance from workers and, in some cases, government officials.

But it is a showdown that appears to be increasingly unrelated to the French market’s demands.

Philippe Houchois, head of European auto industry research at UBS in London, noted that most vehicle purchases in the developed world over the last five years had been to replace older cars, with only 2 percent of car sales in the United States and Europe representing net additions to those regions’ consumer fleets. In emerging markets, by contrast, 70 percent of new car sales represented additions to the total stock, Mr. Houchois said.

But even replacement demand is under threat in Europe. As the population ages, car owners drive less, reducing wear on their vehicles. And today’s cars last much longer than was the case just a few decades ago.

Generational change also bodes ill for the industry. Carmakers can be confident that many of those who adopt the car-based lifestyle early will stick with it for life. But the younger customers the industry covets are less interested in driving than they used to be — particularly, it seems, in France and especially in trend-setting Paris.

“In my parents’ generation, pretty much everyone drives,” said Mr. Mareschal, the bookstore employee. “With my generation, it’s a lot less important. I’m not anti-car, but it’s something I just don’t care about.”

Being able to go without a car may seem like a luxury available mainly to city dwellers, but even outside the cities, interest in auto ownership seems to have flagged.

Article source: http://www.nytimes.com/2013/01/30/business/global/french-automakers-biggest-problem-french-consumers.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Off the Charts: In Debt-Laden Europe, New Cars Stay in Showroom

January 20, 2012 by Leave a Comment

Total new registrations of passenger cars in the European Union fell by nearly 2 percent in 2011, the European Automobile Manufacturers’ Association reported this week. It was the fourth consecutive year of declines.

The sales performance varied widely from country to country, reflecting the diverging economic fortunes on the Continent. New-car registrations set records in Belgium and Austria. German registrations were up nearly 9 percent, although they remain below their levels before the credit crisis.

But in troubled Greece, fewer than 100,000 new passenger cars were registered. That had not happened since at least 1990. In 2007, nearly 280,000 new cars were registered.

In Belgium, more than 50 new cars were registered for every 1,000 people. In Greece, the number was under nine. In Hungary, where new car registrations are less than half their level of four years ago, the figure is about half the Greek level.

New-car registrations in Europe provide an economic barometer of national conditions because no one really needs a new car. A family may need a replacement vehicle, but a used car can be purchased. Within the Common Market, it is easy to fill demand for used cars in struggling countries with trade-ins from customers in more prosperous economies.

The accompanying charts show the trends. Levels of wealth in the European Union were never close to equal, but the disparities have grown rapidly since the credit crisis began. Signs of a recovery in automobile demand in late 2009 vanished as the sovereign debt crisis emerged, first in Greece and then in other countries.

Over all, the 13.1 million cars registered in 25 members of the European Union was the smallest figure for any 12 months since data for the enlarged union began to be calculated in 2003. For the first 15 members of the European Union, data goes back much further. This was the lowest year for them since 1997, a year before the euro became the common currency for many countries.

The charts show the rapid decline in new-car registrations in the countries most hurt in the sovereign debt crisis. In 2007, Spain had 36 registrations per 1,000 residents, well above the European Union average of nearly 32. In 2011, the Spanish figure had dropped by half, and it was well below the European Union average. Ireland fell just as rapidly, although registrations did begin to pick up in 2011.

The figures reflect registrations of new passenger cars, and do not include small trucks. Figures for the United States, which do include such vehicles, are not directly comparable. But they showed increases in both 2010 and 2011.

All told, the countries in the European Union registered 15.8 percent fewer new passenger cars in 2011 than they had registered in 2007, the last full year before the credit crisis. The figure was up in seven countries, but down by 50 percent or more in eight nations.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Article source: http://feeds.nytimes.com/click.phdo?i=05964fc28f615a2ba3f31203d9d12be3

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In China, Car Brands Evoke an Unexpected Set of Stereotypes

November 15, 2011 by Leave a Comment

In China, where the market for imported passenger cars dates back only about three decades, an entirely alternate set of stereotypes is taking root — and the stakes have never been higher for foreign carmakers.

Take, for example, Mercedes-Benz, a brand that in much of the world suggests moneyed respectability. In China, many people think Mercedes-Benz is the domain of the retiree.

The Buick, long associated in the United States with drivers who have a soft spot for the early-bird special, is by contrast one of the hottest luxury cars in China.

But no vehicle in China has developed as ironclad a reputation as the Audi A6, the semiofficial choice of Chinese bureaucrats. From the country’s southern reaches to its northern capital, the A6’s slick frame and invariably tinted windows exude an aura of state privilege, authority and, to many ordinary citizens, a whiff of corruption.

“Audi is still the de facto car for government officials,” said Wang Zhi, a Beijing taxi driver who has been plying the capital’s gridlocked streets for 18 years. “It’s always best to yield to an Audi — you never know who you’re messing with, but chances are it’s someone self-important.”

With annual growth hovering above 30 percent in recent years, the Chinese auto market is rapidly surpassing the United States’ as the world’s most lucrative and strategically important. Last year alone, the Chinese bought an estimated 13.8 million passenger vehicles, handily topping the 11.6 million units sold in the United States. Foreign-origin brands, most of which are manufactured in China through joint ventures, accounted for 64 percent of total sales in 2010, according to the China Association of Automobile Manufacturers.

Even if Chinese brand associations can seem remote and perhaps amusing to those outside the country, Zhang Yu, managing director of Automotive Foresight, a Shanghai industry consultancy, says they will prove decisive to sales in coming decades. “China is already the largest automobile market in the world. No car company can afford to overlook its Chinese brand,” he said.

The lower rungs of the Chinese market are still dominated by domestic brands like Chery, whose name and numerous models suggest more than a passing resemblance to Chevy. The affluent, however, are flocking to an increasingly diverse array of foreign luxury offerings. The rapid market expansion has presented some foreign carmakers with a chance for brand reinvention, while posing public relations challenges to others.

“Because the market is so young, brand perceptions and a car’s face” — an idiom meaning prestige or repute — “are both critical,” said Mr. Zhang, pointing out that 80 percent of car purchases are made by first-time buyers.

Audi’s party technocrat associations are a result partly of the car’s early market entry and its longstanding place on the government’s coveted purchasing list. Audi, the German automaker, gained access to the Chinese market in 1988 when its owner, Volkswagen, struck a joint venture with Yiqi, a Chinese carmaker. By contrast, BMW’s first domestic factory opened in 2003, giving Audi 15 years to establish itself as the premier vehicle for China’s elite.

This early advantage has helped Audi to dominate China’s lucrative government-car market, with 20 percent of its China revenue in 2009 drawn directly from government sales. Each year, the Procurement Center of the Central People’s Government releases a list of the cars and models acceptable for government purchase. While the A6 has long been a mainstay on the list, which had 38 brands in 2010, BMW made the cut only in 2009.

Article source: http://feeds.nytimes.com/click.phdo?i=dd9636d3465254c43464ba64adf219d6

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