Automotive News Europe - February 2, 2009 - 1

Automotive News Europe e Audi Q5 senses a heavy load 3 18 Get ready for a new type of auto show Maria-Elisabeth Schaeffler’s mountain of debt at Conti February 2, 2009 · Vol. 14 · No. 3 © Crain Communications GmbH. All rights reserved www.autonewseurope.com crain News Opel to show Ampera hybrid at Geneva General Motors’ Opel brand will call its own extended-range electric car the Ampera (shown). The car, which uses the rangeextending powertrain first shown in the Chevrolet Volt, will be shown at the Geneva auto show in March. The lower-medium car, which has four seats and five doors and shares a platform with the next generation Astra, will come in left- and righthand drive versions, indicating a planned Vauxhall version. The Ampera will enter production in 2011 and go on sale in Europe before the Chevrolet Volt. The Volt’s US launch is in late 2010. John Revill Citroen to launch global re-branding Plan includes upscale car line, dealer upgrades, better service Lawrence J. Speer Automotive News Europe PARIS Citroen will unveil this week a global re-branding initiative that introduces a new, “near-premium” product line and calls for wideranging changes across its 3,300dealer global network. Timed to coincide with Citroen’s 90th birthday, the project will bring the first update of the brand’s chevron logo since 1985. The rebranding also will introduce a new marketing slogan and a harmonized global Internet site. “The brand has been lagging behind the cars for some time,” marketing director Xavier Chardon told Automotive News Europe. “We’re taking action today so customers want to come to Citroen for what the brand represents and not just out of interest in a given model.” Code-named “three years to impress the world,” the initiative is the final legacy of former Citroen Managing Director Gilles Michel, who left the carmaker in December to head a government-run sovereign wealth fund. Michel, who has not yet been replaced, wanted Citroen to reduce its reliance on small cars, improve its brand image and grow its market share. the Citroen brand that have added value and carry elements of the premium sector,” PSA/Peugeot-Citroen styling director Jean-Pierre Ploue said. Industry sources say the new cars will mark a rebirth of the DS line, Citroen’s flagship range from the 1950s, 60s and 70s. The first model is expected to arrive in late 2009 or early 2010, and be called DS3. In 2008, Citroen’s global new-car sales fell 7.2 percent to 1.35 million. Its European market share was unchanged at 6.5 percent. The rollout of the premium line will run parallel with a five-year plan to overhaul the company’s global dealership network. “We will demand major changes in the architecture of the showrooms, but more than anything we want to see an evolution in our relationship with our customers,” Chardon said. Citroen will ask its dealers to sign Citroen’s new logo, teased at the Paris auto show, is less angular than before. a new charter laying out terms of the showroom overhaul, as well as better customer service standards and improved vehicle maintenance and repair operations. “We’ve been improving in customer service, but we have a long way to go,” Chardon said. Luca Ciferri contributed Rebirth of the DS line Chardon will present the re-branding project, which has been under development since mid-2007, to Citroen’s staff and dealers on February 4. The new range of upper-end Citroens will be a key element of the initiative. “We will offer products within Fiat-Chrysler alliance may help both survive Fiat’s proposed alliance with Chrysler is of critical importance to both companies. It could create the economies of scale that Fiat CEO Sergio Marchionne believes are necessary for big automakers to survive. Any tie-up would also give Fiat relatively smooth access to the US auto market – still the world’s largest. For Chrysler, the prospect of an alliance will strengthen its hand when setting out a viability plan to the US Treasury Department this month. 3 See stories, Pages 8, 9 Will Volvo’s loss make it harder to sell? John Revill Automotive News Europe Volvo posted a $1.47 billion pre-tax loss (¤1.15 billion) for 2008 last week, further complicating Ford Motor’s attempts to sell the Swedish brand. In the fourth quarter, Volvo’s loss was $736 million as revenue skidded from $5.1 billion to $3.1 billion. Ford hopes to sell Volvo for between $5 and $10 billion – figures unlikely to be achieved because of the global recession and Volvo’s losses. Volvo once was a jewel in Ford’s crown, earning a stable ¤500 million a year, according to insiders. But the global downturn, exchange rate difficulties and declining sales in key markets have combined to turn the company into a loss maker. Volvo’s global sales fell to 359,000 units in 2008 from 482,000. The company once had a target of 600,000 units. To counter the sales free-fall, Volvo will almost have production in 2009. It has already cut 6,000 jobs, to take its workforce down to 20,000, but has ruled out further cuts for now. There has been reported interest in the company from Chinese automakers, who would mostly be interested in Volvo’s safety technology, as well as the global prestige of the Swedish brand. But the latest losses likely will drive down any offering price. Volvo hopes it has done enough, but may have to review its costs again if sales do not increase, said spokesperson Maria Bohlin. Mikael Sallstrom, head of Volvo’s union, said the results underscored the gravity of the company’s problems. “With these kinds of figures, you cannot live in the long run,” he said. “Everyone is very concerned ANE about the future.” Quote “We have stopped all product investments except for environmental developments.” Mitsubishi Motors CEO Osamu Masuko 3 See Page 16 A big slump in new-car sales is forecast to push Europe’s automakers to a collective €2.3 billion loss in 2009. Cash burn accelerates Sparse credit, higher interest rates to drive automakers’ debt, losses in fiscal 2009 Luca Ciferri Automotive News Europe TURIN The accelerating cash burn by Europe’s automakers in 2009 could drive them deep into debt and put their income statements into the red. In 2007, the European auto industry held a ¤30 billion net cash position. But that is expected to swing to a combined ¤42 billion of net debt by the end of 2010, Morgan Stanley predicts. Combine that with slowing sales, and Europe’s automakers are expected to swing from a collective ¤17.5 billion operating profit in 2007 to a ¤2.3 billion loss in 2009. As a result, major capital expenditures, product development and dividend payments are being postponed or suspended in a desperate effort to conserve cash. Industry in crisis For the latest news on the uncertainty facing the automotive industry, log on to autonewseurope.com Also, coming this month: February 11-13 PSA, Renault, Fiat report 2008 financial results Register for ANE’s daily newsletter and news alerts autonews.com/anenewsletter Cancelled, delayed programs “In my view, 2009 is going to be the toughest year ever,” Fiat Group CEO Sergio Marchionne told a conference call with analysts. “I don’t think we’ve ever seen a combination of factors coming into play at this speed.” Among measures carmakers have taken to save cash are: BMW cancelled its new flagship CS model and a larger X7 SUV. Fiat cancelled its dividend payment and delayed the redesign of the Alfa Romeo 147, Fiat Panda and Lancia Ypsilon by a year. Renault and Nissan are delaying their participation in joint venture plants in India and Morocco. Renault has postponed the Espace minivan replacement. Many automakers are cutting back on marketing, such as pulling out of expensive auto show displays. Despite these measures, the lack of ready credit is accelerating the cash burn by automakers. “We anticipate the European auto industry will, as a whole, burn more than ¤90 million of cash per day in 3 See Page 2 Automotive News Europe, Postfach 1165, D-82230 Oberpfaffenhofen PVSt 64733 DPAG Entgelt bezahlt

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Automotive News Europe - February 2, 2009

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