What a GM-FCA alliance could represent in terms of production?

 

Would a GM-FCA alliance (desired by Sergio Marchionne, CEO of the FCA group) be relevant? If the strategy of FCA’s leader is mainly focused on scale economies (on the production and platforms development), it is interesting to see what is the current position of these two groups in the global market.

In terms of sales volume, GM group has sold 9.92 million vehicles in 2014, placing it in third place worldwide behind Toyota and VW. The FCA group for its part sold 4.75 million vehicles in 2014 (two times less than the GM group), placing it in seventh place behind Ford.

By adding up the sales of both groups, GM and FCA would hypothetically become the world leader. However competition between the brands of the two groups exist as they are placed on the same market segments, with a significant number of brands to manage. For example, in the US, the Pick-ups Chevrolet Silverado (GM) produced at 625 000 units in 2014, GMC Sierra (GM) produced at 275 000 units in 2014 and Dodge RAM (FCA) produced 565 000 units in 2014 are in strong competition.

Geographically, the main markets for GM are the USA and China (2.9 million and 3.3 million vehicles in 2014, respectively) representing 62.5% of its sales. FCA's main markets are the USA and Europe (2.1 million and 1.1 million vehicles in 2014, respectively) representing 67.5% of sales. In South America, the two groups are equal. Except for Asia, the areas of influence of the two carmakers are fairly complementary.

15-23-6   

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Product Trends in Malaysia

 

In Malaysia, small passenger vehicle models of the A and B segments are launched primarily by the country's two national carmaker Perodua and Proton, drawing attention to new models which are scheduled to be released in 2016. Inaddition, foreign automakers are actively launching new SUVs, a trend which is expected to speed up in the coming years.

Perodua is scheduled to launch a small sedan (codenamed D63D) in 2016. The model is based on the Axia which wasreleased in September 2014. The addition of this small sedan to its three-model lineup is intended to gain access to the Proton Saga segment which enjoys strong demand.

Proton, which has been hastily revising its product competitiveness, plans to start CKD assembly of a Suzuki model, possibly the Celerio, by October 2016 and sell it under the Proton brand. According to information collected by our partner based in China, Proton is considering local assembly of a 1.0Lengine to set foot in the A segment which is Perodua's stronghold.

Foreign carmakers are stepping up SUV launches. The Nissan X-Trail was released in December 2014, followed by the Honda HR-V in February 2015. In the coming months, the Mazda CX-3 is scheduled to be launched at the end of 2015 and the Honda BR-V is set to be released in 2016. Toyota may also launch a small SUV which is expected to further intensify competition in the SUV segment.

15-23-3   

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In China, new registration, driving regulations impact market growth

 

In an effort to realize a GDP growth rate of around seven percent in 2015, China is increasing public investments and devalued the national currency to boost export. While the government is trying to revive the economyto boost automobile sales, there are other factors which are expected to negatively impact the market in the medium to long term.

Seven cities, including Beijing and Tianjin, implemented registration restriction on passenger vehicles to ease traffic congestion and air pollution; however, such measures result in less automobile sales.

Tianjin, which introduced registration restriction at the end of 2013, saw a 48percent decline in passenger vehicle demand in 2014. Chongqing, Suzhou and other cities are also considering registration restrictions which may trigger an overall decline of the passenger vehicle market in the future.

In addition, the increasing number of driving restrictions introduced by local governments across China could also affect consumer sentiment in the long term.

15-23-1   

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Renault-Nissan and Daimler will open their joint plant in Mexico early 2016

 

Renault-Nissan and Daimler will begin in 2016 the production at their new joint plant in Aguascalientes, Mexico, two years after the start of its construction (see Auto Analyses n°2013-39). This plant is located near an existing Nissan plant (located in Aguascalientes) and will be 50% owned by Renault-Nissan and 50% owned by Daimler.

The initial capacity of the new plant will be 230 000 vehicles a year for a range of compact C-segment models sold under the Nissan and Mercedes brands. This will probably be the next generation of Mercedes A Class and a variant of the Infiniti Q30,  which just start its production on Nissan plant located at Sunderland (UK).

The start of production of new Nissan models is planned in 2016 and 2018 will mark the start of the new generation of Mercedes A-Class launched in both Europe and Mexico. The models produced in Mexico will be only exported to North America and South America.

Let us recall that Mercedes had already produced A Class sedans in Brazil between 1999 and 2005 for the North American continent and the South American continent, but without success, as less than 65 000 units had been produced in six years. This time, Mercedes' objective is to produce at least 100 000 Class A every year in the new Aguascalientes plant in Mexico.

15-23-4   

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Progression of premium brands in several countries

 

The share of premium brands hasn’t stopped growing globally since early 2000. In 2014, premium carmakers sold over 7,5 million vehicles, approximatively 10% of passenger cars total sales. Which countries made the most progression in these 10 years? Which countries are their biggest market?

It is in Europe that premium brands are the most present  (20% of the PC market), ahead of the USA (12% of the market), Korea and China (8.5% of the market). In Europe premium brands (especially German ones) have a very large product range (from A segment to F segment, from a standard hatchback to an SUV) that can not be found in other markets (especially compact sedans), which partly explains their significant market share in this region.

In sales volumes, three markets clearly stand out: Europe bought more than 2.6 million premium cars in 2014, closely followed by the US (2 million units) and China (1.6 million units). Followed far behind by Japan, Russia, Korea and Brazil. India which is not on the graph below achieves even lower results.

The strongest volume growth is recorded by China, that could overtake the United States in 2015 or 2016, and Europe in 2018 or 2019, even by taking into account a possible slowdown of the Chinese market over the next years.

15-23-2   

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