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G.M. Says Weakness in Asia Leads to Drop in Profit

July 25, 2013 by Leave a Comment

G.M. said it earned $1.2 billion in the quarter, compared with $1.49 billion in the same period a year ago, although it narrowed its losses considerably in Europe, where weak economic conditions have driven new-car sales to their lowest levels since the 1990s.

The company said that its global revenue was up 4 percent to $39 billion, and that worldwide vehicle sales, including joint ventures, increased 4 percent to 2.49 million.

In North America, G.M. benefited from new products and a steadily improving market for new cars and trucks.

The company said it earned $1.97 billion in pretax income in the region during the quarter, a 4 percent gain from $1.89 billion a year ago.

G.M. said it had a pretax lost of $110 million in Europe, compared with a loss of $394 million in the same period in 2012.

Its performance in Asia declined, however. General Motors said that it earned a pretax profit of $228 million in the region, a 63 percent decrease from $627 million a year ago.

South American results improved to a $54 million pretax profit, compared to $16 million a year ago.

G.M.’s chief executive, Daniel F. Akerson, said the automaker is making progress in Europe, where it has lost money for more than a decade. The company has revamped its European management team with outside hires and stepped up new products in the region.

The company is also trying to increase the presence of its two best-known American brands, Chevrolet and Cadillac, in other parts of the world.

“We continue to perform well in the two most important markets, the U.S. and China,” Mr. Akerson said in a statement. “We also made progress in our European business and saw the steady performance of our global brands, Chevrolet and Cadillac.”

While G.M. continued to grow in China, it faced increased competition and pricing pressure from Japanese automakers in other Asian markets as well as Australia.

G.M. said its market share in North America dropped slightly to 17.3 percent, down from 17.4 percent last year.

Its global market share also slipped to 11.5 percent, compared to 11.6 percent in the second quarter of 2012.

The company increased vehicle sales in every region other than Europe, where sales fell about 7 percent during the quarter.

Article source: http://www.nytimes.com/2013/07/26/business/gm-says-weakness-in-asia-leads-to-drop-in-profit.html?partner=rss&emc=rss

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Chinese Automakers Quietly Build a Detroit Presence

May 13, 2013 by Leave a Comment

DETROIT — Dozens of companies from China are putting down roots in Detroit, part of the country’s steady push into the American auto industry.

Chinese-owned companies are investing in American businesses and new vehicle technology, selling everything from seat belts to shock absorbers in retail stores, and hiring experienced engineers and designers in an effort to soak up the talent and expertise of domestic automakers and their suppliers.

While starting with batteries and auto parts, the spread of Chinese business is expected to result eventually in the sale of Chinese cars in the United States.

“The Chinese are well behind the Japanese when they hit our shores 30 years ago,” said David E. Cole, a founder of the Center for Automotive Research in Ann Arbor, Mich. “They lack the know-how, and they’re coming here to get it.”

As businesses sprout up with little fanfare, Chinese companies seem to be trying to avoid the type of public opposition experienced by the Japanese automakers Toyota and Honda in the 1980s, when the sudden influx of foreign cars competing head-on with cars from General Motors, Ford and Chrysler was perceived as a threat to American jobs.

In contrast to the Japanese, Chinese auto companies are assiduously avoiding the spotlight. Last year, the biggest carmaker in China, Shanghai Automotive Industries, opened new offices in suburban Detroit without any publicity, which is almost unheard-of in an industry that thrives on media coverage.

But China’s growth in the American auto industry is drawing notice in Washington. Last year, the Obama administration filed a complaint with the World Trade Organization that China’s government was unfairly subsidizing the production of some parts shipped to America. And the country’s inroads into American-made batteries and electric vehicles have drawn scrutiny because that sector of the industry has been heavily subsidized by the United States government.

The American industry’s overall resurgence has drawn a growing Chinese population to Detroit, with Chinese-owned suppliers bringing executives from their country and American automakers adding new talent. About 50,000 Chinese, many of them engineers and other professionals who work at General Motors and the Ford Motor Company, live in the metropolitan area.

Business networks are growing too. The Detroit Chinese Business Association boasts a flourishing membership, and counts about 100 Chinese-owned businesses, mostly auto-related, in the region.

The Ford Chinese Association, with 650 white-collar workers, predominantly from mainland China, has become one of the largest employee groups at the company. Its president, Raymond Xu, recalled that in 1999, when he came to Detroit to attend college, there were very few Chinese in the area.

“I think people are going to get more and more comfortable with it,” Mr. Xu said.

Typical of the Chinese expansion are the nondescript offices of Changan Automotive in an industrial park in the suburban city of Plymouth. Changan, a major carmaker in China, set up a research center to better understand the structural chassis of a vehicle — then hired about 20 Detroit engineers, some of whom had been laid off from Detroit’s auto companies, to staff the project.

“Most of the engineers are very young in China,” said Hong Su, the Changan executive heading the American facility. “They know how to make vehicles, but they don’t know how to develop them.”One of his employees is Alan Wall, 54, a former contract engineer at Chrysler who lost his job during the recession.

“It was an opportunity,” he said. “And those tend to come from a company that is trying to expand.”

Last year, China exported about $13 billion in automotive goods to the United States — tires, wheels and radios that are sold as replacement parts — according to AlixPartners, a consulting firm.

But many Chinese suppliers are pursuing direct business with the Detroit car companies, which now get many of their most common parts from low-wage nations like Mexico. One supplier, Brilliance Auto, an industrial giant with about 500,000 employees in the city of Shenyang in northeast China, is still an underdog in Detroit, trying to crack an intricate network of suppliers that have long relationships with G.M. and the other carmakers.

“We have been exporting our parts to North America for 15 years for the aftermarket,” said Dongbin Chen, a Brilliance executive, referring to retail sales of replacement parts. “Now our biggest opportunity is with G.M. and the other big companies.”

Brilliance scored a coup last year by supplying lightweight engine mounts for the new Cadillac ATS sedan made by G.M. in Lansing, Mich., which has whetted the company’s appetite for more.

At a United States-China conference held here in November, Brilliance displayed a large exhibit showcasing a range of mundane parts — including seat belts, steering wheels and shock absorbers — that it hopes to export to America.

“We have the ability and the capacity to supply these kinds of parts,” Mr. Chen said. “And I think right now, it is very important for us to be here.”

Article source: http://www.nytimes.com/2013/05/13/business/global/chinese-automakers-quietly-build-a-detroit-presence.html?partner=rss&emc=rss

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Nissan Quarterly Profit Dives on China Sales Slump

February 8, 2013 by Leave a Comment

TOKYO (AP) — Nissan Motor Co. suffered a 35 percent plunge in October-December profit to 54.1 billion yen ($579 million) as global sales languished, especially in China, where anti-Japanese sentiment flared over a territorial dispute.

Quarterly sales dipped 5.3 percent from a year earlier to 2.2 trillion yen ($23.5 billion), Yokohama-based Nissan said Friday. Nissan’s earnings fell short of the 61 billion yen ($652 million) profit forecast by a FactSet survey of analysts.

All the Japanese automakers have reported sales declines in China, where a territorial dispute set off anti-Japanese riots and boycotts in the last months of 2012. A slowdown in Europe added to Nissan’s woes. Nissan also struggled in the key U.S. market, which was booming for rival Toyota Motor Corp.

Corporate Vice President Joji Tagawa acknowledged Nissan’s performance had not reached its targets, but promised a recovery.

China sales in January showed some recovery and Nissan was also planning new models in the U.S., he told reporters.

Nissan’s sales were strong in other parts of the world, including Brazil, the Middle East and Asia excluding China as well as Japan.

Nissan, based in the port city of Yokohama, stuck to its forecasts for a 320 billion yen ($3.4 billion) profit on 9.82 trillion yen ($105 billion) sales in the fiscal year ending March, despite the solid perk it is getting from a weaker yen.

Nissan, which makes the Leaf electric car, the Infiniti luxury model and March subcompact, gained 21.9 billion yen ($234 million) in operating profit for the latest quarter from the weakening yen. Earlier this week, the yen was a near three-year low against the dollar on expectations of super easy monetary policy under Prime Minister Shinzo Abe.

“This should work as a plus for our business,” Tagawa told reporters of the cheap yen. “The overly expensive yen is finally getting corrected.”

Nissan left unchanged its global vehicle sales forecast for the fiscal year at 5.08 million vehicles, up 5 percent from the previous year, when Japanese automakers were hurt by parts supply disruptions caused by the earthquake and tsunami in northeastern Japan.

Other Japanese automakers have also reported upbeat quarterly results, helped by the yen.

Toyota raised its fiscal year profit forecast after reporting its October-December profit jumped 23 percent to 99.91 billion yen ($1.09 billion). Toyota is now expecting annual profit of 860 billion yen ($9.3 billion). It had initially expected a 780 billion yen ($8.5 billion) profit for the fiscal year ending March.

Earlier this week, Mazda Motor Corp. raised its annual profit forecast to 26 billion yen ($278 million) from 10 billion yen ($107 million).

Tokyo-based Honda Motor Co.’s quarterly profit surged nearly 63 percent to 77.4 billion yen ($850 million), but it lowered its full-year profit forecast slightly because of sales losses in China.

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Article source: http://www.nytimes.com/aponline/2013/02/08/business/ap-as-japan-earns-nissan.html?partner=rss&emc=rss

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Honda’s Quarterly Profit Plunges on Disaster

August 1, 2011 by Leave a Comment

TOKYO (AP) — Honda’s quarterly profit plunged nearly 90 percent after the quake in northeastern Japan hammered production and sales, but the automaker raised full-year forecasts as its confidence in a recovery mounts.

Honda Motor Co. said Monday its April-June profit tumbled to 31.7 billion yen ($406 million) from 272.4 billion yen a year earlier. Japan’s No. 3 automaker said it managed to remain in the black thanks to its growing motorcycle business.

Tokyo-based Honda, which makes the Odyssey minivan and Fit subcompact, now expects a 230 billion yen ($2.9 billion) profit for the fiscal year ending March 2012.

That is less than half of Honda’s 534 billion yen profit in the previous fiscal year, but is better than the 195 billion yen ($2.5 billion) it forecast in June.

Honda also raised its annual sales projection to 8.7 trillion yen ($112 billion), down 3 percent from the previous year, but better than the 8.3 trillion yen ($106 billion) it expected in June.

The manufacturer expects to sell 3.435 million vehicles worldwide, some 135,000 more than it had given as its forecast in June. It sold 3.512 million vehicles the previous fiscal year.

Honda’s motorcycle business is booming, and the automaker expects to sell 12.7 million motorcycles for the fiscal year through March 2012, up from 11.45 million the previous year. That’s also better than its earlier forecast to sell 12.645 million motorcycles this fiscal year.

Production at all of Japan’s automakers was disrupted after parts suppliers were damaged in northeastern Japan by the March 11 earthquake and tsunami.

Honda’s quarterly sales dropped 27 percent to 1.7 trillion yen ($22 billion).

Weighing on the bottom line of Japanese automakers is the strong yen, which erodes the value of overseas earnings.

Honda is counting on the dollar trading at 80 yen for this fiscal year, but the greenback has slid to below 80 yen in recent weeks. An unfavorable exchange rate erased 22.5 billion yen ($288 million) from Honda’s operating profit in the latest quarter.

But Honda and others are saying that recovery from the disasters is coming quicker than expected, and production levels are projected to return to normal later this year. Strong growth momentum from markets such as China, Southeast Asia and India is also helping.

Mitsubishi Motors, which also released results Monday, said it sprang back into the black for the first quarter as growth in emerging markets offset quake damage. It posted a 4.3 billion yen ($55 million) profit for the April-June period compared with a loss of 11.8 billion yen a year earlier.

The Tokyo-based manufacturer of the i-MiEV electric car left its annual forecast unchanged at a 20 billion yen ($256 million) profit, pointing to uncertainties in the global economy.

Last week, Nissan Motor Co., Japan’s No. 2 automaker, reported a smaller-than-expected 20 percent drop in quarterly profit at 85 billion yen ($1 billion). Chief Executive Carlos Ghosn said the result showed Nissan’s resilience despite the odds.

Nissan, based in Yokohama, stuck to its forecast for annual profit to fall 15.4 percent to 270 billion yen ($3.5 billion) in the fiscal year ending March 2012. But it is expecting vehicle sales to rise 9.9 percent to 4.6 million vehicles, a record for Nissan.

Mazda reported its third straight quarter of red ink, suffering a 25.5 billion yen ($327 million) loss, but expects to return to the black in the fiscal year ending March 2012.

The maker of the Miata and RX-8 sportscars expects to sell more vehicles than the previous year at 1.3 million vehicles, up 2.6 percent on year, with much of the momentum coming from China.

Toyota Motor Corp., the world’s biggest automaker, reports earnings Tuesday.

A possible electricity shortage is another concern for Japanese automakers, but they appear to be keeping that under control by taking Thursday and Friday off and cranking up their assembly lines on weekends.

Japanese companies are trying to reduce electricity consumption by 15 percent after the March disaster sent several reactors at Fukushima Dai-ichi nuclear plant into meltdown. Another plant in central Japan has also been temporarily shut down because of quake concerns.

Honda stock rose 1.5 percent to 3,125 yen, while Mitsubishi Motors gained nearly 2 percent to 103 yen. Both companies’ earnings were announced after trading ended in Tokyo.

Article source: http://www.nytimes.com/aponline/2011/08/01/business/AP-AS-Japan-Earns-Honda.html?partner=rss&emc=rss

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Piecing Together a Supply Chain

May 13, 2011 by Leave a Comment

Toyota, which gets up to 15 percent of the parts used in its North American plants from Japan, is experiencing shortages of 150 critical parts. The company is operating at about 30 percent of normal capacity in the United States, with full operations not expected before November or December.

But American automakers are mostly winding down their disaster response operations — and though some supply problems remain, they are taking stock of a crisis averted. Analysts said the near-term outlook remained bleak for the Japanese automakers, while their rivals in Detroit, Korea and Europe are past the most difficult period.

The largest American automaker, General Motors, which spends about 2 percent of its parts-buying budget in Japan, identified 118 products that it needed to monitor for shortages but has resolved problems with all but five. The company’s chief executive, Daniel F. Akerson, predicted last week that the Japanese disruptions would have no material impact on G.M.’s earnings.

That is a big change from the early weeks after the March 11 disaster, a period Mr. Akerson described as “white-knuckle time” when numerous plants came close to halting work and just one of the potential supply problems could have prevented G.M. from building 75,000 vehicles.

“It was pretty tense,” he recalled in an interview.

Though G.M. obtains considerably fewer parts from companies in troubled areas than its Japanese competitors, its handling of the problems, as recounted by executives and employees involved in the effort, reveals how closely Detroit teetered toward disaster.

Four days after the earthquake, G.M. had assembled hundreds of employees into a team that began working around the clock to manage what has turned out to be the biggest catastrophe to hit the auto industry’s complex supply chain. G.M. regularly creates contingency plans for supply disruptions, “but nothing on this kind of scale or scope,” Stephen J. Girsky, a G.M. vice chairman, said. Through what it called “Project J,” General Motors briefly idled two plants to conserve supplies but otherwise found alternative sources for some parts and helped many suppliers get back online quickly enough to keep car and truck assembly lines running. The outstanding problems are essentially limited to semiconductors and other electronics. Because these devices are widely used in vehicles and substitution options are generally limited, G.M. executives said they were not entirely in the clear.

“We still have issues,” said Robert E. Socia, G.M.’s vice president for global purchasing and supply chain, “and the issues we have now are getting tougher to solve.”

General Motors has coordinated its disaster response from three “crisis rooms” at its Vehicle Engineering Center in Warren, Mich. Early on, dozens of people crowded into two windowless, seventh-floor conference rooms — one of which is devoted solely to monitoring the many critical electronic components that G.M. buys from Japan — while engineers filled a room in the basement.

Maps and dry-erase boards on the walls track the status of each affected supplier, the parts G.M. buys from them and the plants that need those parts to stay open. Using a color code, suppliers out of commission were labeled in red. Any that were unscathed but lacked reliable power and water supplies were labeled in yellow. The goal was to turn them all green.

The team, which requested and quickly received portable air-conditioners to fight the heat created by working long days in close quarters, ultimately identified the 118 problematic products, Bill Hurles, the executive director of G.M.’s global supply chain, said. Issues with 33 of those did not become known until early April, mostly because they involved disruptions at sub-suppliers that G.M. rarely interacted with directly.

Article source: http://feeds.nytimes.com/click.phdo?i=05a6a974a8072ace5feb491de2dbb7fa

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Small Cars Help Lift April Auto Sales

May 3, 2011 by Leave a Comment

General Motors led the Detroit automakers last month with a 27 percent gain in American sales, led by strong demand for its Chevrolet Cruze compact sedan and smaller, more fuel-efficient sport utility vehicles.

The auto companies directly attributed the surge in small-car sales to gas prices approaching $4 a gallon. “Rising fuel prices have led many to rethink their vehicle of choice,” said Don Johnson, G.M.’s vice president for United States sales.

The higher demand for small cars has caused shortages of some models, particularly at Toyota, which is struggling to maintain an adequate supply because of production disruptions from the earthquake in Japan.

But overall, the demand for compact and subcompact cars is keeping the industry on track for a slow but steady recovery from recession-era sales levels.

The auto companies said sales for the year are running at an annual rate above 13 million vehicles for the third consecutive month. The results are more impressive considering that incentive spending has dropped an average of $500 a vehicle from the period a year ago.

“Pent-up demand has been building in the industry for the last few years,” Mr. Johnson said. “The average age of vehicles is now above 10 years, the highest level ever.”

The hottest car company during April was Hyundai, which rode the success of its new Elantra sedan to a 40 percent overall improvement in sales. The Korean carmaker sold more than 22,000 Elantras in the month — up from 9,600 a year ago.

All three Japanese automakers lagged the market, particularly Toyota, which saw its sales increase about one percent. A Toyota executive said that the company was running low on inventories of two of its most fuel-efficient cars, the Prius hybrid and Corolla subcompact, because of factory shutdowns in the aftermath of the earthquake and tsunami in northern Japan.

“We’re feeling it in some models already,” said Bob Carter, head of Toyota’s sales operations in the United States. “There was an interruption in the flow of Corolla and Prius inventory from Japan.”

Toyota has less than a 10-day supply of Priuses, and about a 40-day supply of Corollas, he said. Other hybrid models, like the Lexus RX cross-over, have been affected by major parts shortages because of the disaster in Japan.

Mr. Carter said that Toyota’s North American assembly plants are running at about 30 percent capacity. Japanese factories are closed for holidays, but are expected to reopen next week at half-speed.

“We will be ramping up this summer and be reaching normal production levels before the end of the year,” he said.

Honda’s sales increased 10 percent in April, and Nissan reported a 12 percent increase.

Nissan said it sold 573 Leafs in April, the best month so far for the all-electric sedan that has been available in limited numbers. By comparison, G.M. sold 493 Volts, its plug-in hybrid.

The performance by General Motors was built on a substantial increase in passenger-car sales, which were up 50 percent in April from a year earlier. Sales of its full-size pickups increased only 2 percent in the month.

Ford reported a 16 percent jump in sales, with high demand for its new Fiesta and Focus small cars and its new, lighter-weight version of the Explorer S.U.V.

A Ford executive said that the company was hard-pressed to keep up with orders for the new Focus.

“Dealers were telling us they were selling them right off of the convoy truck,” said Ken Czubay, Ford’s head of United States sales and marketing.

The smallest of Detroit’s Big Three, Chrysler, appears to finally be seeing the benefits of an overhaul of its product lineup since emerging from bankruptcy two years ago.

Chrysler said its sales increased 22 percent for the month, and its car sales went up 41 percent from a year ago. The company also sold 882 Fiat 500 micro-cars, the first models it has introduced in the United States from its Italian partner.

The overall increase in sales came as incentive levels continued to fall. Automakers spent an average of $2,100 on incentives during the month, compared to $2,600 in April of last year.

The largest rebates — about $3,200 a vehicle — were found on large trucks, according to the auto-research Web site Edmunds.com.

“Demand has shifted toward smaller cars just as car companies are experiencing inventory shortages of those very vehicles,” said Jeremy Anwyl, chief executive of Edmunds. “They are focusing their dollars where there are gaps between demand and supply, such as in the pickup-truck segment.”

Article source: http://feeds.nytimes.com/click.phdo?i=aa5449ea958c3fc185eae33924fa990d

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