Automotive News Europe - January 5, 2009 - 2

PAGE 2 · www.autonewseurope.com January 5, 2009 Automotive News Europe Inside this issue Why it all went wrong 4 Ford’s leadership of Volvo and GM’s guidance of Saab failed because the US automakers never gave the automakers the attention they needed Any takers for these Swedes? To the ends of the earth 8 Bosch has found a location that most people would rather avoid because of its brutal cold, but Inner Mongolia is perfect for winter-testing new technology Cold is good Manfred Wennemer (left) was out, Maria-Elisabeth Schaeffler was in. Jaguar and Land Rover joined Tata. The electric car gained power. 2008: Up, down and then … A look back at the key events that made last year memorable Arjen Bongard Automotive News Europe In the first half of 2008, before things started to take a decisive turn for the worse, there was good news and bad news in the global auto industry. There were expectations that full-year sales would rise. Tata unveiled its $2,500 Nano in January. Two months later the Indian automaker acquired Jaguar and Land Rover from Ford. BMW expanded its US car production, but also increased US reserves to deal with falling used-car prices European carmakers fought to get a better deal from Brussels on CO2 At the Geneva auto show in March, the focus was clearly on green cars. Here’s a quarter-by-quarter review of a year that was a turning point for the industry. Safety first 12 Starting in February, new crash test procedures will mean fewer cars will earn EuroNCAP’s coveted 5-star rating Cars seats must do better at preventing whiplash First quarter The year started with a sharp decline on Wall Street, triggering fears of a major US economic slowdown. In Europe, German contract manufacturer Karmann cut its work force by 580. In the US, General Motors announced plans to cut 74,000 workers. But the outlook remained generally upbeat, with many carmakers counting on new products to help them through difficult times. Tata’s unveiling of the Nano was soon followed by an announcement by Renault and its partner Nissan that they would build a small, cheap car with India’s Bajaj. Other carmakers also planned new, ultra-low-cost models. At the Geneva auto show, with much fanfare, Volkswagen showed its Scirocco coupe. And in March, news that Tata would acquire Jaguar and Land Rover raised expectations for the future of the venerable British brands. Time to downsize 23 Hyundai expects that 20% of the people who buy the new India-built i20 will move down from bigger, more costly cars Hyundai’s answer to the credit crisis smaller cars amid expectations that CO2 related taxes would penalize big cars with big engines. France’s system of tax penalties and rewards based on CO2 emissions set an example for other countries to follow. In Sweden, expectations rose that – sooner rather than later – Ford Motor would sell Volvo and General Motors would offload Saab. And in June, BMW successfully stopped China Automobile Deutschland from selling its Shuanghuan CEO in Germany. The large SUV looks similar to the previous-generation BMW X5. started to cut product plans. But before the end of the summer, there were still some surprises. The biggest one: Privately held ballbearings maker Schaeffler Group made a surprise – and ultimately successful – bid for Continental. Following the announcement of the deal, Conti CEO Manfred Wennemer announced he would leave the company. In late August, Karl-Thomas Neumann succeeded Wennemer. Fourth quarter At the time of the Paris auto show in early October, it was clear that the auto industry was in crisis mode. Though the companies used the show to present a dazzling display of electric cars, sexy new products and state-of-the-art new automotive technology, all that the executives were talking about was the uncertain outlook for 2009 and beyond. That worried sentiment was echoed by suppliers gathering in Wolfsburg, Germany, in late October at the International Supplier Fair there. As the year drew to a close, automakers and suppliers were cutting production forecasts, curtailing all non-essential expenditures and taking other steps to prepare for a tough 2009. And in an Automotive News Europe interview published December 8, Fiat group CEO Sergio Marchionne predicted that, by the end of 2010, there might only be five or six global volume ANE carmakers left. 3 Predictions for 2009, Page 10 Third quarter Summer in Europe provided the first clear indications that 2008 would be different, both for the world economy and for the auto industry. In July, it was clear that markets were stagnant, the model mix continued to shift downward, raw materials prices stayed sky-high and US profits remained elusive because of the weak dollar. In Europe, sales of big SUVs and large cars were plummeting as the price of oil – and gasoline – hit record highs. Major markets such as Spain, Italy and the UK showed double-digit sales declines in August. First-half new-car sales dropped 2.7 percent in western Europe and, throughout the summer, there were growing signs that companies would start issuing profit warnings before year-end. Market researchers began to predict that 2009 sales would hit 10-year lows and carmakers Correction DAF’s passenger car division was sold to Volvo in 1975 and the company’s truck division went to Paccar in 1996. A story in the November 24 edition misstated the years of the transactions. Jaguar will attend this month’s Detroit auto show. A column on Page 10 of the December 8, 2008, edition misstated the automaker’s plans for the event. An interview with Toyota Motor Europe CEO Tadashi Arashima took place in Milan, Italy. A story on Page 13 of the December 8, 2008, edition misstated the location of the meeting. Things changed fast Then, in the middle of the year, the horizon darkened. A global credit crunch hit consumer confidence. People stopped buying cars. Full-year sales projections dropped. Car companies announced temporary production cuts. US automakers seemed on a one-way street to disaster. Toward the end of the year, automakers on both sides of the Atlantic were asking for government help and the industry looked destined for one of the toughest years in recent memory. Second quarter In the spring of 2008, carmakers and suppliers still expected a good year, despite high raw materials costs and an anemic dollar. The US currency’s persistent weakness was making sales of European-made cars unprofitable in the US. This affected Volvo, Porsche, BMW and others. The European industry saw the beginning of a shift to Company Index These companies appear in stories in this issue of Automotive News Europe Alfa Romeo . . . . . . . . . . . . .20 Autoliv . . . . . . . . . . . . . . . . .13 BMW . . . . . . . . .13. 15, 18,21 Bosch . . . . . . . . . . . . .8, 13, 18 Continental . . . . . . . . .13, 18 Daimler . .3, 6, 13, 15, 18, 22 Fiat . . . . . . . . . . . . . . . . . . . .15 Ford . . . . . . . . . . .7, 11, 15, 22 General Motors . . . . . . .7, 15 Gentex . . . . . . . . . . . . . . . . .18 Honda . . . . . . . . . . . . . . . . . . .6 Hyundai . . . . . . . . . . . . . .8, 23 Jaguar Land Rover . .1, 11, 13 Kia . . . . . . . . . . . . . . . . . . . . . .8 Lexus . . . . . . . . . . . . . . . . . .11 Vol. 14 No. 1. Automotive News Europe is published bi-weekly by Crain Communications GmbH, Argelsrieder Feld 13, 82234 Oberpfaffenhofen, Germany. Periodicals postage paid at Detroit, MI. Postmaster: Send address changes to Automotive News Europe, 1155 Gratiot Avenue, Detroit, MI 48207, USA. Magna Donelly . . . . . . . . . .18 Martin Motors . . . . . . . . . . . .3 Mini . . . . . . . . . . . . . . . . . . . . .6 Nissan . . . . . . . . . . . . . . .5, 18 Opel . . . . . . . . . . . . . . . . . .4,12 Porsche . . . . . . . . . . . . . . . .15 PSA . . . . . . . . . . . . . . . .1, 7, 15 Renault . . . . . . . . . . . .1, 5, 15 Saab . . . . . . . . . . . . . .4, 10, 22 Toyota . . . . . . . . . . . . . . .6, 15 Vauxhall . . . . . . . . . . . . . . . . .4 Volkswagen . . .1, 5, 6, 11, 15 Volvo . . . . . . . . . . .4, 6, 10, 13 ZF Friedrichshafen . . . . . . . . .7 Subscription per year: Europe: €109 Outside Europe: $189 Customer Service Europe and all other countries: PSA purchasing team seeks more cuts From Page 1 with an operating margin in the 5.5 percent to 6 percent range. Last October, PSA said it expected its 2008 operating margin to be 1.3 percent. Raw material prices and a sales slump across the industry have slowed progress toward these goals, Quemard said. “Due to unforeseen factors beyond our control, we’re not on a trajectory to meet the initial objectives. But the transformation is continuing, across the product line and across the supply chain,” Quemard said. PSA has already cut costs by more than ¤2 billion over the last 18 months. ing division. The procurement team has been able to cut costs by negotiating new contracts for travel, advertising, mobile phones and telecommunications. Streiff aimed to cut general and administrative expenses by 30 percent in 2010 compared with the 2007 level. Due to the economic downturn, Quemard has been asked to achieve the 30 percent reduction by the end of 2009. Quemard predicted an acceleration of general-expense reductions this year as existing contracts are renegotiated and new contracts are made more favorable. PSA also plans to ask suppliers – and particularly a new, core group of 13 large strategic suppliers – to accelerate cost-cutting and quality improvements through better manufacturing techniques and product development. Said Quemard: “There are a number of places where we think this can be done and savings could be hundreds of euANE ros per-car.” Cutting general expenses While most of these savings stem from lower warranty costs, “hundreds of millions” have come from reductions in general and administrative expenses piloted by the purchas- Phone: (44) 1444 475651 or (44) 8456 777803 Fax: (44) 8456 777804 e-mail: autonewseurope.subs@quadrantsubs.com Customer

http://www.autonewseurope.com http://www.autonewseurope.com

Automotive News Europe - January 5, 2009

Table of Contents for the Digital Edition of Automotive News Europe - January 5, 2009