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Entries in auto industry (20)

12:30PM

Big GM investment in China

 

GM reached out to China's auto firm SAIC in the late 1990s, and the fruits of that JV continue to pile up, according to the WSJ last Thursday:

General Motors C. and Chinese joint-venture partners agreed to build a third commercial vehicle factory in southwest China to meet growing demand and protect GM's status as the largest auto maker by volume in the country.

$1b plant looking to crank 400k vehicles by 2015, giving GM and its partners a total capacity of 2m vehicles. China's light vehicles market will top 20m next year, while the US remains around 15m.  600 or so new dealerships planned across China, bringing the volume to 3500 total.

Nothing marks you more fully as globalization's demand center than to have the car market.  That was America in the 20th century, and it's China in the 21st.

 

 

10:43AM

Fascinating article on GM-SAIC partnership in China

From WSJ.

The USG could learn much from GM on this:  the Detroit automaker sought out SAIC about 15 years ago, which is when the US should have made its moves as well.  They embraced genuine partnership with the Chinese automaker, and worked hard to bring it up to global standards.  In the process, GM became the biggest foreign player in China's exploding auto market.

But yeah, now SAIC wants to go global with GM and somewhat on its own at the same time, and that's where the relationship gets trickier.

But my point is, GM has the right problems to manage right now, while the USG is still stuck in a host of aging issues with Beijing.

As the piece says, "SAIC wants more from its partnership with GM; GM has yet to decide how far it will go."

The great quote from GM chief exec Dan Akerson:

It's kind of like a marriage.  We have a good and viable relationship and partnership.  But to make it work, you have to have needs on both sides of the table, not just wants.

That, in a nutshell, is the big constraint on Washington's approach to Beijing:  we constantly focus on our wants and denigrate China's needs.

Would that national security strategists had the breadth of vision that GM has so ably demonstrated in this long-term engagement.

Again, that's where the US and China should be:  we facilitated China's rise and then got scared right when we should have moved closer in.

10:04AM

Chart of the day: Why GM and SAIC naturally decided to pair up

Pretty obvious, actually. 

Far short of merger, but the same logic holds:  you are weak where I am strong and vice versa.  Why not ally and crush all opposition on global basis.

This would-be globally integrated enterprise as a preview of globalization's coming attractions.

From an Economist story on Chinese carmakers.

12:03AM

GM casts its global lot with Shanghai Automotive

Favorite subject of mine, that I highlight in the current brief: the creation of what fmr IMB CEO Sam Palmisano calls "globally integrated enterprises."

GM links itself up with Shanghai Automotive Industry Corp to create a GIE that looks to take on Honda, Tata, VW, etc on a global basis while cementing GM's participation in China's booming domestic car market.

GM's tie-up with SAIC is considered one of the region's most successful. GM and its partners in China have a 14% share of the auto market, the world's largest. The company's sales volumes have grown 41% since 2009.

GM chief exec: "SAIC is the principal relationship that we have around the globe now [italics mine] and we expect that to be the case in the future."

GM and SAIC are now jointly eyeing exports to LATAM and eventual production there.

Amazing stuff, as GM impresses with its bold global vision and execution.

8:29AM

The displacement effect of all that new US natural gas

See it already in how natural gas deals are proceeding internationally: the flow out of North America alters things, regionalizing flows more as Japan and Germany move off nukes and seek to ramp up their use of gas to generate electricity, and as emerging markets in general ramp up their gas use.

But another displacement raised in the recent Wikistrat crowd-sourced online simulation on the North American Energy Export Boom was the notion that the long-term abundance of cheap gas in NorthAm would encourage a crowding out of oil in transportation:

 

  • Encouraging hybrids by making electricity cheaper long term;
  • Enabling more direct natural gas fueling of vehicles (typically trucks); and 
  • Pushing refiners to take NG, process it into syngas and then into gasoline.

WSJ story cited here:" "Natural gas to power pickups." US auto makers introducing trucks powered by NG "as they look to catch the growing wave of interest in the fuel as an alternative to gasoline." So here we're talking either pure compressed natural gas (CNG) or vehicles, like the one Chrysler is working, that will run on a combo of gasoline and CNG.

Exciting stuff.

 

12:02AM

Most expansive number on global auto population yet

Plenty of recent talk about reaching 7B people ("crack out yer Soylent Green!"), but here's Bill Ford saying the number of cars in the world - just now reaching 1B - will quadruple to 4B by 2050.

No, there won't be enough oil for all that transpo, or - more truthfully - we won't want to go to that effort.

So the age of post-gas-combustion awaits.  Ultimat driver is oil availability, but proximate driver is local air pollution.

10:20AM

Chart of the day: GM is the true globally integrative enterprise

WSJ chart and story on Toyota's struggles.

Whole point about being a globally integrated enterprise:  you source, R&D, manufacture and sell locally - all over the world, meaning your production isn't concentrated in your home country (reducing the perception of you being a "foreign" car everywhere you sell - to your advantage).

Check out the stats and you see that GM is the least concentrated in its home country.  I've always held up Toyota as prime example of what Sam Palmisano, CEO of IBM, means when he uses the term GIE, but to my surprise, GM is already more "there" than Toyota.

And yes, I am impressed by that.

9:05AM

Being the global demand center has its perks

FT story on how "China influence on design growing fast."

Fundamental tenant of my vision since the late 1990s:  when the global demand center shifts in an industry, everything changes for that industry.  Now, it's Chinese tastes and desires that shape design, not so much the American consumer.   Yes, some customization by market, but the underlying dynamics shift.

At the Shanghai car show that opens today, General Motors and PSA Peugeot Citroën will both launch global models for the first time in China, a symbol of how the car industry’s centre of gravity continues to shift to the mainland, the largest car market.

But it is not just about launching the new-generation Chevrolet Malibu or Citroën DS-5 first in China, to attract more Chinese buyers.

The shift goes both ways.

When GM on Monday unveiled its Buick Envision SUV concept car, it revealed a car designed in China, for the world.

Chinese tastes are increasingly influencing the design of cars driven not just in China, but around the world.

China is having the greatest influence on luxury cars.

Demand for premium cars is soaring in China, making it crucial for luxury carmakers to satisfy them first.

When Mercedes-Benz set out to design a new S-Class luxury saloon, to hit showrooms in 2014, Daimler flew 100 Chinese consumers to customer clinics in Germany and the US to ensure they had input in the car’s design.

But the Chinese car boom is shaping the look of some mass-market cars too.

When General Motors designed its LaCrosse saloon, the brand, which is popular in China, devised a roomy and plush rear seat of the kind that Chinese owners – many of whom have chauffeurs – prefer.


“It’s a natural extension of the size and importance of the China market,” Kevin Wale, head of GM in China, says.

Ed Welburn, GM head of global design, says: “The trends here in China are having an influence on the design of our brands, but it is not a case of China dictating what cars are driven in Detroit.

“The influence is more subtle.”

Mr Welburn says one of the reasons Buick has become so successful in China – where owning a Buick is a status symbol – is that its fluid lines are more oriental in feel than the angular shapes of some other global auto models.

“China connected with Buick in a very positive way because . . . Buicks have a lot of flow in their design and Chinese artwork and calligraphy have a lot of flow,” he says.

“I’ve encouraged the design team here to . . . continue to play that up, and they have used that aesthetic in every detail [of the Envision SUV concept car], to give the same kind of feeling you get with a jade sculpture.”

Mike Dunne of Dunne & Co, an Asian motor industry consultancy, says: “Five years ago, no one would have imagined that China would have surpassed the US as the largest market.

“But now it’s natural that these cars are being developed for Chinese customers and sold globally.

This is such an amazing change in just a decade, but it signals globalization's immense power.  It is evidence such as this that always makes me laugh when people posit globalization's retreat because of this or that policy in the West, or the dividing up of the internet, etc.  There are some profound forces at work here and they mostly have to do with greed for a better life.  It's a demand function - not a supply one.

10:26AM

This week in globalization

 

Clearing out my files for the week:

 

  • Martin Wolf on why the US is going to win the global currency battle:  "To put it crudely, the US wants to inflate the rest of the world, while the latter is trying to deflate the US."  We win because we have infinite ammo.  But better that we come, per my Monday column, to some agreement at the G-20. 
  • Sebastian Mallaby, also in FT, says that, despite the current currency struggles, the "genie of global finance is out of the bottle" and not to be stuffed back in.  Wolf had noted $800B capital inflows to emerging markets 2010-2011, which is gargantuan, thus the crazy struggle of some places to keep their currencies low.  As for America stopping China from buying US bonds in retaliation for our not being able to buy Chinese assets?  China holds only about one-third of the US T-bonds abroad ($3T total), so it can buy all its wants from others in the system.  There is no turning back, he says.
  • Meanwhile, the Pentagon makes plans to turn back the clock on the globalization of defense manufacturing.  A new spending bill provision--inserted at DoD's request--includes the power to exclude foreign parts suppliers (read China). Just about every US-based defense firm uses offshore suppliers, so this is going to get very expensive very fast.  It'll be a lot harder to find that $100B in savings over five years. This is almost a fifth generation warfare version of shooting yourself in the foot--first, before the other guy can.  China does nothing here, that frankly we shouldn't be able to handle, but we move down a path that instantly adds a significant tax to everything we buy in the growing-by-leaps-and-bounds IT realm.  One hopes there's a half-billion for that American rare earths mining co. that's looking for a new investor.  Interesting how China's becoming vulnerable to, and dependent on, so many unstable parts of the world for resources, and we're going to cut off the tip of our IT nose to spite our face.  I can imagine a cheaper way, but that would be so naive in comparison to spending all this extra money.
  • China continues to buy low, as a ruthless capitalist should. Giving us a taste of what it could be like if we don't get too protectionist, it's buying up Greece's "toxic government bonds."--and plenty more in Europe. All of the EU is getting a taste, says Newsweek, as Chinese investors are snapping up bankrupt enterprises and--apparently--putting people back to work.  China also, like a ruthless capitalist, seeks to make bilats reduce the chance of EU-wide restrictions on its trade. Old American trick.
  • Another sign of globalization on the march:  emerging economies buying up food and beverage companies in the West that would otherwise naturally be targeting them for future expansion. Bankers expect the trend to continue.  Gotta feed and water that global middle class that keeps emerging at 70-75m a year.  Emerging economies are buying up the companies from equity firms that had previously bought them during down times.
  • Great FT story on how Turkey has the Iranian middle class in its sights.  Long history of smuggling inTurkey dips a toe in, would like to drink entire tub eastern Turkey.  Sanctions hold up what could be a major trade, so the black-marketing local Turks mostly smuggle gasoline--and a certain amount of heroin.  But the official goal is clear enough:  be ready to take advantage whenever Iran opens up.  A local Turkish chamber of commerce official floats the notion of a free trade zone at the border. Those 70m underserved Iranian consumers beckon.
  • India's airline industry can't keep up with demand generated by itsGet me planes and pilots--now! booming middle class. Boeing says Indian airlines will buy over 1,000 jets in the next two decades. Already they're forced to have one-in-five pilots be foreigners.
  • Fascinating WSJ story on how China's car economy is going wild, with ordinary Chinese exploring the freedom of the road.  Drive-in service is taking off, weekend jaunts mean hotel business, etc. In past visits I saw a lot of this coming down the pike.  Just like when America's car culture went crazy after WWII, this is a serious social revolution.


Don't forget your meal of eternal happiness!

  • Funny thing about all this South China Sea hubbub: "Corporate ties linking China and Japan have never been stronger," says the WSJ.  Serious driver?  Japan is exporting its mania for golf to China--the fastest growing market for the sport.  It's what middle-class guys do.


Coming soon: the "golf wars"

 

  • WSJ story on Vietnam creating its own Facebook to keep a closer eye on its netizens.  Defeat the anti-capitalist insurgents!What caught my attention: "The team has added online English tests and several state-approved video games, including a violent multi-player contest featuring a band of militants bent on stopping the spread of global capitalism."  I would say we finally won the Vietnam War.

 

12:50PM

Israel plays start-up to China's big firm

Tweeted this one earlier this week, but want to post as well.

WSJ technology columnist Peter Stein noting how Israeli private equity firm is specializing in marketing intellectual property from small local high-tech companies to big Chinese manufacturing firms.

You read Baumol et. al's "Good Capitalism, Bad Capitalism," and you come away with the argument that the best mix is to have big go-to-market firms surrounded by a sea of small, innovative high-tech firms that feed the beasts. The authors claimed that America was basically there, in terms of that evolution, having added the high-tech small firms with the IT revolution energizing our innovation base in a number of industries.  Their addition evolved our economy past the big-firm era that marked the post-WWII decades through the difficult 1970s.  The authors also argued that big-firm China was trying to make a similar evolution happen and was succeeding somewhat.

Now with the Great Recession, we get two counter-arguments coming to the fore:  1) globalization is slowly robbing America of its industrial base through off-shoring of manufacturing and losing the proximity between innovation and manufacturing is making us less competitive; and 2) China's increasing reliance on/championing of national flagship companies signals a retreat from further marketization.

My sense is always that linear projections usually fail, so waxing and waning is the norm.  You go too fast down one path, so you pull your foot off the pedal for a period.  I think some American companies in some sectors are recognizing the need to more closely tie innovation with manufacturing.  But in others, like automotive, you don't have a whole lot of choice given the market expansion going on in Asia and Latin America.  

In general, I'm a big believer in IBM CEO Sam Palmisano's notion of a globally-integrated enterprise that sources local, R&Ds local, hires local, manufactures local and sells local--just all over the world.  It's the truly globalized or truly distributed version of the old multinational.  I think companies that do that will fare best over the long haul, understanding that, as countries "rise," they're naturally going to want to carve out space in their expanding domestic market for national flagship companies.  To me, this is China's path right now, along with a firm desire to lock-in access to raw materials around the world through their state-run extractive industries and farm land leasing/purchases.  I think that mindset is a bit 20th century (supply risk oriented versus price risk oriented), but there you have it when a single-party state remains in power.  

Now how China seeks to extend its evolution toward that big firm/small firm mix is to force foreign companies who seek entry into its expanding domestic market to turn over their technologies in joint ventures, something that's naturally going to create a lot of friction.

Less friction filled is what this Israeli private-equity firm is doing. Infinity Group is simply treating China like one giant big firm to which new technologies can be sold, with it playing matchmaker. The process reminds some of when Silicon Valley did the same for Taiwan way back when. Like Taiwan, China wants--nay, NEEDS--to move up the food chain rapidly in order to bring similar development to its better-than-a-half-billion interior rural pool that it has to-date achieved with the urbanized coastal provinces. Then there's China's demographic clock ticking, reflected in the long-term loss of 100m workers by 2050 and the piling up of 400m-plus elders by then.

To me, this is a next, natural phase for globalization, with smart small countries becoming more Israel-like and big, labor-filled developing countries emulating China's strategy, which, quite frankly, isn't unique whatsoever and really is just an updating of what Japan did (the Michael Pettis argument).  If China were to achieve the same per capita GDP growth that Japan did, it could grow rapidly for another quarter century, says Martin Wolf, but . . .

The most interestingly pessimistic view comes from Michael Pettis of Peking University’s Guanghua School of Management. The characteristic of Chinese growth is that it is “unbalanced”, as Mr Wen notes: it is highly dependent on investment as a source of demand and driver of supply (see charts). It is, in a sense, the most “capitalist” economy ever.

Thus, between 1997 and 2009, gross investment rose from 32 per cent to 46 per cent of GDP, while household consumption fell from 45 per cent of GDP to a mere 36 per cent. This must be the lowest share of consumption in any significant economy ever. In a country with hundreds of millions of poor people, it is even shocking. Meanwhile, the rising investment rate has been the main driver of growth. In the early 2000s, “total factor productivity” – increases in output per unit of input – were also important. But the contribution of higher efficiency has been waning.

This, Prof Pettis argues, is a “souped-up version” of the Asian development model we saw in Japan and South Korea in earlier decades. The characteristics of this production-oriented approach are:

  • transfers from households to manufacturing, via low interest rates on savings
  • repressed wages and a depressed exchange rate
  • very high investment
  • rapid growth of exports; and 
  • high external surpluses. 
China is “Japan plus”: its investment rate is higher, trade surpluses larger, rate of consumption lower and exchange rate intervention bigger.


This has been an extraordinarily successful development model, but, notes Prof Pettis, it eventually runs into the constraints of “massive over-investment and misallocated capital”. He continues: “In every case I can think of it has been very difficult to change the growth model because too much of the economy depends on hidden subsidies.” Moreover, China’s scale will shift the price of imports, particularly raw materials, against it, so accelerating the decline in profits.

In China, a rising rate of investment is needed to maintain a given rate of economic growth. At some point, investment will stop rising and growth will slow. China will then face the Japanese challenge: how to sustain demand as the required rate of investment collapses. If, for example, the gross investment needed to sustain a 10 per cent rate of growth is 50 per cent of GDP, then the rate of investment required to sustain 6 per cent growth might be just 30 per cent of GDP. With its massive dependence on investment as a source of demand, any decline in expected growth threatens a huge recession.

One answer would be another government-driven investment surge, however low the returns. The more attractive answer is faster growth of consumption. There is evidence of that during the past two years. But, as Prof Pettis notes, for consumption to grow consistently faster than GDP, household disposable income must also do so. Yet if this is to happen, income must be shifted from the corporate sector. That implies a squeeze on profits, through higher interest rates, higher real wages or a higher exchange rate. But that increases the risk of an investment collapse, with dire consequences for demand. As Prof Pettis argues, in China “growth is high ... because consumption is low”. Rebalancing the economy towards household consumption could undermine the ability to sustain growth itself. If so, China is on an investment treadmill.

Old story:  there ain't no such thing as a free lunch.  How China has grown makes it harder--with each passing year--to get off the investment treadmill. But that investment level, and the requirements of a trade surplus to feed it, creates it own negative feedback look, which China is just beginning to encounter.  Can it run a huge trade imbalance with the developing world like it did with the West, using renminbi this time around?  Pretty tall order considering its resource draw.  Pettis's point isn't that China can't rebalance, just that it won't be a smooth journey.

But I can't help thinking that the work of Infinity Group is a big plus on this score:  helping move China up for the production/labor wage chain by outsourcing the start-up function to a certain extent while it slowly builds that capacity at home.  Naturally, if you're already a big firm and have amassed a lot of IP, you don't want to hand it over to China as price of admission, but if you're a start-up high-tech firm who needs a go-to-market partner, I can see you being indifferent on the nationality, meaning I think we'll see this become a significant trend in the global economy.  Like Baumol et. al's preferred model, I think we'll see something similar in terms of small and large states.  In a globalized world, tech firms in small states have no choice but to go global because the domestic market is so small (why Israel is such a high-tech incubator).  

On that basis, I become even more convinced that the "clash of civilizations" will end up being a big nothing in retrospect, meaning merely a fraidy-cat capture of when globalization starting truly opening up previously-closed civilizations, triggering a totally natural uptick in cultural friction.  But you look at an Israel making this happen with China and you say to yourself, in a clash-of-civilization world, this shouldn't work--yes?  And yet it does, because Israel needs to do this and China needs to do this and that economic logic surmounts all.

12:09AM

The delicate dance: EU carmakers and PRC wheelmakers

WSJ story on how European rim makers (not the tires but the metal wheels) want antidumping protection from China, whereas European car makers fear they'll get caught up in the fray and lose market share there.

Good quote that captures China's rapid move up the production chain:

"Trade disputes with China used to be about bras, T-shirts, shoes and ironing boards," says Simon Evenett, a professor of trade economics at the University of St. Gallen in Switzerland.  "Now they're moving downstream, and increasingly, they're going to be about cars."

America coming out of the Civil War sold basic consumers goods like that overseas (shoes were a biggie), but by the end of the century, we were likewise elevated to complex manufactured goods, thus increasingly the complexity of our trade relations with the world.

12:07AM

China: eager to sell to the bottom-of-the-pyramid and confident of emissions advantage

image here

FT story on how Chinese low-end truck makers, having protected their own turf from foreign competition, are now looking to move aggressively into Gap markets (SE Asia and Africa).  Last year China produced almost half of the world's heavy and medium commercial trucks.  

China's manufacturers don't do so well in the Old Core West because they can't meet emissions standards--not a problem across the Gap.

12:01AM

Chart of the day: Worst traffic woes found mostly in New Core economies

Bloomberg Businessweek blurb on global traffic (image blow-up below).

The numbers suggest a profound shifting of woes from Old Core to New.

The US adds 2% more cars from 2003 to 2007, while China adds 113%, for example, so the traffic-suffering indices presented here show America's worst case, NYC, coming nowhere near the complaint level of your average New Core capital, whose woes are only going to get dramatically worse in coming years.

12:02AM

GM: reversal of fortune

Double-dipping on Charts of the Day because this one so stark and such a stunning fast transition from one familiar reality to an unprecedented one.

In the first half of 2008, GM sells 2.5X more cars in the US than in China, and in the first half of 2010, sales in China top those of the US, which have declined while China’s shot up.

Buicks rule in China.  Why?  The article notes that China’s last emperor really dug them.  Plus, they’re considered a sign of arriving, money-wise, in China, just like they used to be here, before they became “your Dad’s car.”

And yeah, my Dad loved Buicks.  I turned Japanese and have stuck with Hondas.

12:02AM

India's new "Detroit"

WSJ story on “new Detroit” arising in Chennai, a major metro in India’s south.  Hyundai, Ford, Nissan/Renault, Mercedes are all there, cranking vehicles.

They are spending billions of dollars to make Chennai one of the world’s biggest hubs of small cars for export as well as for increasingly affluent Indians. Soon, the city will turn out cloe to 1.5 million autos a year, more than any one U.S. state made last year.

Car-parts suppliers also are placing big bets on the city, formerly known as Madras . . .

Totally natural:  automobile (French word) begins in Europe, is perfected in mass manufacturing in the US, and now shifts to Asia.

This is simply the successful expansion of globalization, and we all win when there are more consumers with more income to spend.

India’s economy grows 9% this year—so very Chinese.

Yes, higher labor costs eventually come to pass here too, but the upward swing in production will be profound and last for quite a stretch.

12:04AM

Car market robust enough that Ford investing in tumultuous Thailand

Pic here

WSJ story on Ford dropping $450m into a new car plant in Thailand, one that will crank the Focus, a mid-size model so much in demand across Asia.

Get this:  already Thailand exports more pickup trucks than any country in the world and produces more than any outside of the US.

So Thailand attracts FDI despite its restive citizenry, and over time, all those factory jobs will only make the citizenry more demanding.

Not exactly a circle, but virtuous nonetheless.

12:02AM

The terrific strains caused by a rising car culture in emerging economies

NYT story on rising traffic fatalities in India, where, like China, the car culture explodes.

It is a little-known truth that when you travel in the Gap or in New Core pillars even, the biggest danger you face is not illness or bad water-food or terrorism.  The most likely route to death is a car accident.

This totally corresponds to all the travel I've done in my life (almost forty countries in all, about 2/3rds New Core/Gap): the illnesses and the security stuff were nothing to the routine dangers of automobile travel.

And yeah, I think of that as we contemplate our travels around Ethiopia in coming weeks (thanks for that third donated otoscope, though!).

But India's got it bad:

India overtook China to top the world in road fatalities in 2006 and has continued to pull steadily ahead, despite a heavily agrarian population, fewer people than China and far fewer cars than many Western countries.

See, the Chinese can't be #1 in everything!

But it's not just a size-matters argument, because a lot of New Core/emerging economies are seeing car fatalities level off or even decline as they upgrade fleets and roads and technology, but not India:

While road deaths in many other big emerging markets have declined or stabilized in recent years, even as vehicle sales jumped, in India, fatalities are skyrocketing — up 40 percent in five years to more than 118,000 in 2008, the last figure available.

The World Health Org says India's government is slow to wake up to the issue, but even hearing that is kind of amazing to me:  the notion that rising India needs to focus more government attention on such prosaic things when, of course, it could be waging resource wars across the planet, right?

Ah, the details of globalization's advance.

Certain biases don't help:  new car drivers seems to despise motorcyclists, pedestrians, etc. (not exactly an Asia-specific bias, I might add); helmet laws for motorcyclists are only for men, as women are apparently expendable; etc.  But if you've spent any time being driven or driving in places like China and India, you're probably like me and have to squint a lot so as to not flinch constantly at all the close calls with those not wearing wrap-around steel. 

So as the BRIC continue to balloon their domestic car fleets, expect these tensions to rise, triggering greater government responses.

The world stands at the bottom of a very steep curve.  About a century to get the first billion cars; maybe 1/4 that to get the second!

12:02AM

The BRIC car market: zero to 60

chart here

FT front-pager.

Brazilians per car sat at 9.1 in 1997 and is expected to drop to just 4.3 by 2014, meaning by then everybody ought to be able to fit in a vehicle!

VW, GM and Fiat all with about 1/5th shares, Ford at 1/10th.

When Brazil passes Germany (possibly this year), it'll be:

 

  1. China
  2. US
  3. Japan
  4. Brazil
  5. Germany.

GM expects 5% annual growth for next five years, with some thanks due to World Cup 2014 and Olympics 2016--the kind of things that define New Core membership along with lots more cars.

12:02AM

India-US car makers: warming up to each other's markets

Mahindra & Mahindra aims to become the first company to sell an Indian-made truck in the U.S.  (factory pic-->).

Meanwhile, GM is doing boffo business in India:

Sparks fly and robotic machines buzz and hum. Assembly-line workers in coveralls, the sons of peanut and rice farmers, seal windshields and weld doors. They're making zippy little cars called Beat and Spark in the gleaming new General Motors plant here -- and they're making boatloads of money.

The iconic American carmaker went bankrupt last year, but its Indian operations have never been busier, evidence of India'sbooming economic growth and the rising prosperity of middle classes that are increasingly demanding first-world trappings in one of the fastest-rising countries.

"The new generation wants to hold the steering wheel in their hands," said Prabhjot Singh, manager of a driving school who said young Indians who used to go to him to learn how to drive scooters are now flooding in to learn how to drive cars.

GM builds for Indians in India.  Mahindra plans on doing the same as soon as possible.

I like GM's chances better.  America's truck market is stuffed, while there is only 10 cars per 1,000 Indians (America's numbers are more like 830-40).

But great to see the connectivity and ambition moving in both directions.

12:09AM

China's car market: The global race to the middle

Beijing Auto Show photo found here

WSJ story on how, up to now, the foreign car companies operating inside China have focused on the upscale end of the market while the domestic firms have focused on the lower-end market.  As China's middle class emerges, a new middle-ground battlespace opens up, with both sides--foreign and domestic--increasingly bumping into one another, chasing the same customers.

This is intense competition.  Just like in politics, where the first vote in college tends to stamp the voter for life in terms of Dem versus GOP, when it comes to car buying, the first choice usually leads to a lifetime of brand devotion.  Good example:  I've bought 9 Hondas over the last two decades.  Started with a VW Fox and hated it, and then went to a Honda Civic and loved it.  One Audi GT Coupe in there, provided by my mother-in-law, but once I settled on Honda, it's been Hondas ever since in terms of purchases.

Well, imagine all those first-time buyers in China.

So look for the foreign companies to move aggressively downmarket and the domestics to move aggressively upmarket, which is why a Geely buys Volvo--for example.