Volkswagen

VW in an effort to promote the tons of eco-friendlier cars launched at IAA in Frankfurt in September has decided to pursue eco-sales with a new eco-friendly racing series. The company is starting a single-make racing series where all of the cars run on bio-produced compressed natural gas. The model used in the series is the new Scirocco and should reduce racetrack CO2 output by 80 per cent over today’s racing fuels. The 2.0-liter 4-cylinder cars will have 220 horsepower on tap. Not bad for an alt fuel car!

Source: http://www.wired.com/autopia/2009/10/volkswagen-cng/

On other green fronts, VW Group is working with Stanford University in California in a US$5.75 million project to make VW the largest carmaker with R&D in Silicon Valley. Already the two companies have produced autonomous (read self-driving) versions of the VW Passat and now the Audi TT-S. The Audi TT-S will attempt to drive itself up the 14,110-foot Pike’s Peak next year, according Wired.

Source: http://www.wired.com/autopia/2009/10/vw-vail/

Audi’s Johan de Nysschen, critical of the Chevy Volt, took an interview with Time recently to express his views on the state of the luxury auto industry. He stated that Audi’s goal is to be the “top” German luxury manufacturer, but not necessarily in terms of sales. He also reiterated the push for more fuel-efficient vehicles leading to Zero emissions cars in the not so distant future.

Source: http://www.time.com/time/business/article/0,8599,1933906,00.html

Bugatti

Bugatti has unleashed a new concept car the 4-seat, 4-door (can you believe it???) Galibier 16C. Autocar magazine claims the production will start in 2013 at £900,000. We will believe it when we see it! Interestingly, the car’s engine will be the same as in the Veyron but will only sport 800BHP. Apparently, 200 get lost when adding 2 doors.

http://www.autocar.co.uk/News/NewsArticle.aspx?AR=244753

Caterham

Rarely does Caterham make the news, except when they unleash new, wildly fun lightweight roadster, but unfortunately, Caterham’s found Graham Nearn died in late October. Nearn has been selling the then-titled Lotus 7 since its introduction in 1959, and then when the car was discontinued in 1973, Nearn bought the rights and has been producing the car ever since and in more exciting, evolving versions. You can even buy a kit and put a Caterham 7 together yourself. If you are not familiar with this brand, you should be!

Top Gear featured it in a segment awhile back:

http://www.youtube.com/watch?v=cOxHV6QfJkg

Source: http://www.autocar.co.uk/News/NewsArticle.aspx?AR=244398

Ferrari

Beyond the KM has previously marveled at the sales resiliency of the Ferrari nameplate. But even THIS economy has the prancing stallion kow-towing to the bear market of Wall Street.

Its third quarter results for 2009 showed revenues of 396 million euros (£359m) – down from 450m euros (£408m) in the same period last year. It sold 1454 cars, down 4.3 per cent year on year.

However, Ferrari announced that it has grown its market share in every market it monitors, against a drop in supercar sales of around 40 per cent.

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Oh those crazy French ads…always the same end, but always a different means…

It should come as no surprise to most that Renault’s number have been “off” in the EU. Many have argued that earlier success by Carlos Ghosn was due to lucky timing. At his arrival, Renault was in the midst of a product renaissance of sorts. The result of the company-wide product refresh was impressive sales, which included large profits. Fast forward to 2007 and the honeymoon is all but over for Ghosn.

Renault announced today that EU sales for March 2007 dropped 5.6% from March 2006. Sales for the Renault brand worldwide dropped 7.2%. Despite this, Renault still continues to have its largest market penetration in two EU countries, Romania and France.

While Renault struggled in the EU, the results were not so disappointing worldwide. In fact marketing and sales executives should be pleased that Renault has performed best in non-EU countries. On a Russian market that rose 11.5%, Renault confirmed its remarkable sales growth with a 63.2% increase thanks to the success of the Logan and the entire product line. Renault reported record sales in Algeria in the first quarter, up 29%. Renault continued to advance in the Americas, with sales rising by 10.6%. Sales were up 20% in Brazil and 75.1% in Venezuela. The biggest growth in the first quarter came from Argentina (+50.2%) and Venezuela (+87.8%).

The overall result may be disappointing to some at Renault but it is good news that European manufacturers can thrive outside of the EU. While the USA has long been a key market for the Germans, the French have long been outsiders in the USA, and show no signs of returning. Of course, Renault can always rely on Nissan if they need help across the pond. We would expect sales to be strong for the next months due to the latest product announcements, but Renault will have to improve in the EU, its core market, if it expects the year to go well.

Sources: Renault

You probably knew that Renault has been responsible for championships in F1 during the last two seasons. But did you know that Renault’s F1 team spends just one-fifth of other F1 teams?

Check out this link: http://news.com.com/2100-11389_3-6169931.html?part=rss&tag=2547-1_3-0-5&subj=news

The big news today was of course DaimlerChrysler has announced massive layoffs – 16% or 13,000 – of their total US workforce at the Chrysler division. One article here. The layoffs come as Chrysler division struggles to bring costs under control and at the same time roll out highly successful products. Of late, Daimler’s US brand has successfully rolled out well-designed products, some of which have certain cachet to American buyers. Still, they have struggled to find mass-market appeal in key vehicles such as the Chrysler Crossfire and the Aspen. Most successful has been the 300C. A large part of this success can attributed to the designers – and the customizers who seem to “pimp” nearly every Black 300C to hit the road. God knows they aren’t buying the car for the amazing handling and braking (perhaps the 300C is meant to be a drag racer).

To return to the main point, European manufacturers are looking to cut costs. Most notably the changes are affecting Peugeot. Both Renault and PSA Peugeot-Citroën have gone from strong product lineups a few years ago to abysmal performance today. Sales are off and both companies are working to improve. Renault with the key ownership of Nissan is in a much different position than Peugeot. 2006 results showed that Peugeot sales slipped .7% to 1,960,000 from 1,995,000 the year prior. In line with these results Peugeot axed the CEO at the beginning of the year and has installed former Airbus and Saint-Gobain executive Christian Streiff.

Unlike Nissan-Renault’s Carlos Ghosn, who seeks to develop broad global alliances, Streiff is seen as a master of cost cutting. It is widely speculated that such cost cutting could come in the form of plant closure in France, Spain, or the UK as noted by the Financial Times earlier this month. Streiff could take two different approaches or a hybrid. One option would be to sell or spin off certain parts of Peugeot’s vertically integrated infrastructure, thus freeing up cash flow and at the same time driving cost competition among suppliers. A second, less likely, approach would be to adopt the aforementioned alliance schematic that Ghosn has adopted at Nissan-Renault.

We will continue to research and write about this topic for future articles, but we would close by noting that the auto industry is nearly cyclical in nature. VW with its governance problems, and Fiat with problems in every area, were considered in recent years to be quite poor off. VW has made a great comeback with 9.3% sales increase and Fiat’s turn around is also worth noting. Bottom-line is that the French automakers may be a bit down, but they are certainly not out.

Sources: Financial Times, January 9, 2007.
Examples of the latest Peugeot

Maybe ING saw our posting and saw the benefit of a sponsorship with the Renault Formula 1 team. Maybe they are just making too much money and need to “make an investment.” Either way the Dutch Banking and Insurance giant has signed a 3-year deal with team Renault for some prime ad space, and name sponsorship, on the next series of cars.

It is quite clear that Formula One reaches far more people than NASCAR in the US or GT racing in Europe. Despite running 2007 sans Fernando Alonso (two-time F1 champion), Renault has a full-sponsorship. ING CEO Michel Tilmant is right to think that F1 is an opportunity to build the ING brand globally in a quick way. The Shell-Ferrari relationship is a similar example.

Lessons in brand management that when you spend marketing dollars, they should be spent to gain positive exposure for the brand. The idea is to associate the brand with a winning concept. Renault has certainly proven itself a winner the last two years. It is estimated that the contract was equivalent to 5% of ING’s global marketing budget. We estimate that such a deal is worth over $85 million per annum.

One final note: our earlier analysis stated that sponsorship opportunities would come as a result of big tobacco being forced out of F1 racing in most countries. That foresight has proven correct as ING will replace a number of previous Renault sponsors, including Japanese Tobacco.