Why GM Failed In India
CNBC:
Over the last 20 years, the
Indian automotive market has grown from
about 500,000 new passenger cars,
hatchbacks, sedans and utilities to
about 3.5
million in 2018.
The market has an expected compound annual
growth rate of about 5 to
6 percent over the next 10 years.
But, some automakers have struggled
to make it work.
Among them is General
Motors, the largest U.S.
car company. GM stopped selling cars in
India in 2017 after years of
declining market share.
It's a striking move for GM, which
in recent years has also closed
shop in other regions around the
world, as leadership focuses on
maximizing profits and making investments
in new technologies such as
electric power trains
and mobility services.
With a population of more than
1 billion people, India is becoming
one of the world's
largest automotive markets.
The country is poised to surpass
Japan as the world's third biggest
new car market in 2021.
So while there is ample
opportunity for automakers, the Indian
landscape has been particularly difficult
to navigate, especially for
American firms. GM watched its share
of the Indian market erode
steadily over several years, bottoming out
at about one percent in
2016 just before the
automaker pulled out.
So if the Indian market is
growing, why did GM struggle, especially
when GM has been
so successful in China?
To be fair, quite a few automakers
tend to have difficulty in the
Indian market. First of all, India
is a massive country with a
diverse population of roughly 1.3
billion people.
India, I think, we are
definitely a complex market.
The income levels
are quite heterogeneous.
We are divided, actually into
urban India and rural India.
The consumer requirements are actually
different even the needs are
different in both these markets.
There are a few criteria a
mass market automaker ought to meet.
They are fuel efficiency, resale
value, proximity of service stations
and the affordability of parts
and low servicing costs.
I think first thing is price.
We are a country with a
very low per capita income.
Indians are very price sensitive.
But price is not the only factor.
So now the customer also needs
some more value, for example, with
styling elements. And then, I think,
the consumer also wants a global
brand. They want a
brand which is aspirational.
The consumer wants an overall combination of
all P's, you know it may
be product, it may be
price, it may be positioning.
Which makes the things
quite complicated for OEMs.
These might seem pretty attainable,
but many automakers have
struggled to meet these
in the country.
There are a couple of companies who
have managed to crack that code
and there are several more with shares
of the market ranging in size
from small to smaller.
By far, the most successful automaker
in India is the Japanese firm
Suzuki, which alone owns
half the Indian market.
Suzuki has enjoyed something of
a first mover advantage.
It was the first major automaker to
enter India, and it did so
through a joint venture
with Indian manufacturer Maruti.
Suzuki also specializes in highly
fuel efficient vehicles, which are
extremely important in
the Indian market.
After Suzuki, Korean maker Hyundai is
the second largest with 16
percent of the Indian market.
After that, Indian, Japanese and Korean
makers such as Honda, Tata,
Kia and Mahindra all more or less
have equal degrees of market share.
Kia in particular, is a relatively
late coming brand that has been
able to succeed in India.
I think an excellent example is
Kia Motors which recently entered, it
was a new brand and
they gave a great proposition.
They were in an SUV segment and
I think suddenly right from the month
one, we saw a great success
for this OEM, in India.
Then the remaining 10 percent of the
market is made up of others such
as Ford, Renault, BMW and Nissan.
Early on, GM entered the India market
with its Opel brand, a mass
market brand GM had
owned in Europe.
While Opel cars tended to be
affordable, they failed to resonate with
Indian buyers.
I think later on they realized that's
not a brand which is really
going to work well in India because
that was not a value proposition
which they were offering
to their customers.
But then GM introduced its Chevrolet
brand to the country, which
brought it more success.
It was a great success.
They launched a few great
products like Chevrolet Cruze Chevrolet
Beat. They had that start which
they were really looking forward.
Despite these efforts, the automaker had
trouble taking share in the
Indian market. It was the first
automaker to introduce a diesel fuel
powered car of its size.
At the time, the Chevrolet beat
was the smallest diesel powered car
customers could buy in India.
It was a strong proposition and
benefited from a government subsidy
on diesel engines.
But in the end, the
diesel Beat had few takers.
The company may also have made a
misstep by trying to introduce a
low-cost vehicle GM manufactured with
its Chinese partner SAIC called
the Chevrolet Sail.
Their plan got derailed with the
introduction of Sail because I think
they underestimated the consumer aspiration
and then, I think, the
decline started. GM also fell victim
to a kind of self-reinforcing
cycle. One challenge it struggled with
was the lack of an adequate
dealer and servicing network.
More premium brands such as Mercedes
and BMW often attract customers
with the means to travel
further for service and sales.
But, mass market brands such as
GM's Chevrolet are targeting middle
class buyers who value convenience.
Dealerships in India often sell a
single brand so GM's low sales
volumes meant a single dealer might sell
only a handful of cars in a
month and risk taking losses on
the costs of running the business.
In the end, such low market share
made it difficult for GM to justify
maintaining a presence
in the country.
The automaker officially stopped selling
cars in India on December
31, 2017.
GM told CNBC it explored many
options for its India business, but
ultimately withdrew after it
determined the increased investment
originally planned for the country would
not deliver the returns of
other global opportunities.
It continues to operate services
for existing Chevrolet customers in
the country. In September, the
automaker entered a long-term
partnership with Tata Consultancy Services,
which will do engineering
design for GM vehicles meant
for markets around the world.
The move out of India was part
of a larger pullback GM has been
making around the world as
it restructures its business.
We're seeing other automakers follow
suit as they're pruning.
They're pruning the dead branches and
focusing on where they can be
strong. For GM, this is a huge shift
because GM of old used to be all
things to everyone everywhere.
And, it has now decided that
is not the proper strategy.
The automaker told CNBC if it doesn't
see a clear path to leadership
and long term sustained profits in
a particular market, it will look
at opportunities to focus its resources
on areas that will lead to
the greatest results. It added that this
is the same approach it has
taken elsewhere.
The automaker also sold its
European operations to French carmaker
PSA in 2017.
At the time it pulled out of India
GM had two factories there, one in
the Gujarati city of Halol
and another in Talegaon.
The Halol plant was acquired by
MG Motor, the once famed British
brand now owned by Chinese
automaker SAIC Motor Corporation.
GM has a joint venture with
SAIC to produce cars in China.
Reports surfaced in November 2019 that
SAIC is also in talks to
acquire GM's Talegaon plant, along
with fellow Chinese automaker
Great Wall. GM told CNBC it
is exploring strategic options for the
plant. The move out of India was
a retreat for GM and for American
auto industry. Ford is starting
to do the same.
It's trimming some
of its offerings.
Global economy and global auto
market is slowing some.
Certainly true here in the
US, it's true in China.
There's just not enough money to
go around to every single market,
too every single vehicle line.
Look at Daimler and BMW,
they've announced major employee cuts.
But in some ways it might
have been a shrewd move.
The other thing that is happening
in the market that has never
happened before is we are on the
verge of massive disruption of the
industry. You know, we're going to
have a future of electric
vehicles, autonomous vehicles and new
ways to acquire personal
transportation and now
mobility service.
There's all kinds of things.
Nobody knows when that's going to happen
or how it's going to happen,
but it's requiring a
lot of investment.
Companies like GM just can't keep putting
a ton of money into the
future as well as a ton
of money in today's stuff.
While analysts do expect the
Indian automotive market to continue
growing in the foreseeable future, it
did hit a slump in 2019.
Maruti Suzuki sales were growing
until February 2019, but have
slipped every month, year
over year, until October.
Suzuki said in November that the slowing
Indian market was one of the
factors behind the company's falling overall
sales and net income in
its second fiscal quarter.
So I think right now the
market is going through turmoil.
Our economy is struggling and if
we only talk about the automotive
market we are talking about a decline
of minus 14 percent in 2019
calendar year light vehicles.
So obviously this year is the
kind of degrowth happening, which has
not happened in last
two decades, in India.
2020, we are just talking about a
kind of a flat growth but then
going forward, in 2021, '22, '23,
the assumption that our economy
should be back, you know, the
GDP growth rate will start growing
above seven percent. Indian
automotive analysts note the country's
auto industry has to contend
with the relatively recent rise of
mobility services such as ride
hailing. The potential of these
competing technologies is still
unknown, but could affect how
interested in car ownership Indians
remain in the future.
In the end, GM did make some of
the right choices when trying to go
into India. GM was right in
terms of localizing their products
typically for the Indian market, making
it, in line with the taxation
because they were able to save tax.
But, at the end of their day, were
really not able to match with what
the competitors were offering.
If the Indian economy picks back up,
GM may find itself trying to
profitably re-enter the country.
GM's rival Ford, which has been in
India since 1995, said in October
2019 it will create a new
joint venture with Indian manufacturer
Mahindra, which Ford said will help
it develop new products faster
and drive profitable growth.
Why General Motors Left Europe
CNBC:
In 2017, General Motors,
the largest U.S.
automaker with brands known around the
world made perhaps one of
its boldest moves in its history.
It sold its European Opel and
Vauxhall brands to the French
automaker PSA known for brands
such as Peugeot and Citroen.
It was the end of an era
for GM which had first ventured into
Europe nearly 90 years before.
It also marked the end of nearly
two decades of losses for the
brands under GM's stewardship.
GM executives said the deal
would unload a difficult and
struggling business and allow the company
to focus on its more
profitable North American market and free
up cash to make needed
investments in new technologies such
as electric cars and
autonomous driving.
But the move came with risks.
The European new car market is about
as large as that of the
United States and leaving it would
not only hit GM's volume but
also increase its exposure to the
ups and downs of the U.S.
auto market.
The sale of the unit
also racked up huge costs.
GM took a $3.9 billion
loss in 2017 owing
mostly to the $6.2
billion in costs it had to
shell out for the sale.
So why did GM leave?
Did the automaker simply
screw up or fail?
Was it wise to get out of Europe?
And what does it mean for GM's
future and the future of the auto
industry?
The decision actually says a lot about
how difficult it is to be a
global automaker today and the
sometimes subtle ways markets
around the world increasingly favor
local players who can tailor
their products to
specific markets.
In the end GM may have failed
in Europe in part because it just
isn't European.
The numbers show General Motors was
having a rough time on the
continent in the nine years or
so before the divestiture of GM's
European business.
It bled money at the EBIT line
every single year for a total of
about $14 billion in
losses on $208.4
billion dollars in sales it's nine
year weighted loss of 6.9
percent.
EBIT stands for earnings before interest
and taxation and is the
metric GM uses to report
the money its international business
divisions make.
Its worst year during that time
was during the financial crisis in
2009.
Where GM incurred a 15
percent loss of $3.6
billion dollars.
The best year in that period was
2016 where it still had a 1.4
percent loss totaling
about $257 million.
Now that sounds like an improvement
and in absolute terms it was.
But consider that over the same
nine year period GM turned a
profit in North America of
$28 billion on $823.7
point billion in sales.
That's a nine year
weighted gain of 3.4
percent an automaker generally tries to
target an 8 percent EBIT
for any given region and for
the world as a whole.
GM's rival, Ford for example has an
8 percent EBIT target for its
European business.
The automobiles never really
sold well with consumers.
And one of the reasons they
weren't able to achieve profitability
is because what they did sell
were primarily passenger cars and
not the higher margin trucks and SUVs
that they saw a lot of in
the U.S..
So that's that's a
big part of it.
There's also a lot of headwinds that
they faced on the cost side
of the equation with with the
cost of labor, unions, and
also more stringent regulation
particularly from an emissions
standpoint.
So a lot of those reasons are
why they had such mixed results and
from a market share perspective when
they pulled out they were
they only had about 6
to 7 percent market share.
So it wasn't really a
dominant market for them.
And GM was losing ground
during that time to competitors.
Consider that the automaker
had a 9.3
percent share of the European car
market in 2008 but that fell
below 7 percent in 2014 and stayed
there for two years and then
fell again to around
6 percent in 2016.
Meanwhile European competitors seem
to be faring better.
And once GM sold off its
European business its earnings shot up.
The automaker earned a
global EBIT of 9.9
percent in 2017 and 8.4
percent in 2018.
But why was GM struggling in Europe
when it does so well in the
United States and is
even leading U.S.
automakers in China a market that is
by no means easy to do
business in.
One reason is that
Europe is pretty unique.
To be fair to GM it is not
the only automaker that has had trouble
there.
American cars have never been an
easy sell in the European market.
Ford for example has dialed back
its presence in the region.
Gm is not alone
in their struggles.
You see Ford pulling out of
Europe and American cars just never
have really sold very well there.
That market is really dominated
by the big three German
manufacturers and others.
But it's also a
fairly fragmented market.
So they just really were never
able to compete and consumers just
didn't really like their cars.
There were larger economic and political
factors such as the great
recession and tightening emissions
regulations that made it
tougher for companies to
do business there.
Another factor is the
distinctiveness of European tastes.
At the time GM CEO Mary Barra
said 80 percent of the vehicles in
the Opel portfolio didn't share
parts or platforms with those
sold in any of
GM's other markets.
When we look at the portfolio
going forward from a vehicle
perspective or a portfolio perspective
only 20 percent of the
portfolio overlapped with the rest
of the General Motors
portfolio.
So we think the real opportunity
for PSA is to leverage that
Europe specific scale.
That put the company
in a tough position.
Major automakers generally want to
build flexible platforms and
parts that can be used in
a variety of models in different
markets.
This helps them keep costs low
and achieve those highly desired
economies of scale.
There are forces however that make
it difficult to share parts and
platforms.
Automobiles tend to be highly regulated
products and many of the
markets where they are sold
and the regulations can vary
sometimes widely from
region to region.
One example of this is
fuel economy and emissions regulations.
Both the U.S.
and Europe have them.
But they tend to differ and
producing cars to meet each
regulatory regime costs
more money.
It requires that the company engineer
and test every vehicle to
fit every set of rules.
But many industry observers say GM
made a number of missteps over
the years that contributed to
the brand's struggles in Europe.
Opel and Vauxhall are often thought
of as sensible cars but they
do not have the glamorous
reputations of more premium brands.
GM typically sold Opels and Vauxhalls
in high volumes usually to
keep costs low.
But simple supply and demand shows this
has a way of driving down
prices.
And while GM produced a lot of cars
it was hard for it to make
money on the cars it made.
It also introduced its Chevrolet brand
into Europe which had the
effect of undermining sales
of Opel and Vauxhall.
Both brands already had
difficulty distinguishing themselves in
Europe's competitive landscape and
selling highly similar
Chevrolets right next to
them further confused buyers.
Furthermore the company didn't
have the right products.
Opels portfolio was heavily
weighted toward traditional passenger
cars such as
subcompact and sedans.
And the brand missed the boom
in crossover and small SUV sales.
At the end of the day Europe is
a large market but it is a mature
one and does not offer the
opportunities for growth companies can
find in China and other emerging
markets or even the kinds of
opportunity in the U.S..
A lot of it is really reflection
of the economic growth in Europe
relative to China.
You have one of the fastest growing
countries in the world and the
U.S. which is growing stronger a
lot stronger than Europe now.
You know if you look at European
GDP over the last several years
just has really lagged the
North American market in Asia.
China is now the world's largest
car market with 28 million new
vehicles sold in 2018.
That number is likely to continue
to rise as the auto market
continues to grow.
In North America particularly the
United States, is becoming an
ever more profitable market as
consumers turn toward higher
priced crossovers, SUVs,
and pickup trucks.
So GM cut the cord in Europe and
said it would use the money to
focus more on its strong business
selling trucks in North America
while sinking piles of cash
into its investments in electric
vehicles and self-driving cars.
Those aren't cheap aspirations and it may
be a long time before GM
or anyone else makes
money off them.
Meanwhile GM's North American sales
have grown pretty consistently
from 56 billion dollars in 2009
to 113 billion dollars in 2018
according to FactSet.
Meanwhile it was able to sell the
business to Peugeot and a large
automaker that has been successful
focusing on Europe but who
also has plans to
return to the U.S..
They've been very open over the
last few months about their
interest in specifically
Fiat Chrysler.
Which I think they view as a
opportunity to gain a foothold in the
North American market and obviously
you know that company has
said some very well-received brands with
Jeep and a lot of the
new products that
they're introducing.
In a comment to
CNBC, General Motors
said:
Peugeot surprised the industry by saying
it had restored the Opel
and Vauxhall brands to profitability in
part by cutting costs and
introducing new more
profitable models.
Why Ford And Other American Cars Don’t Sell In Japan
CNBC:
When it comes to cars, Americans
seem to love the Japanese.
But the Japanese don't seem
to love Americans back.
Japanese brands sell remarkably well
in the United States.
Several of the best-selling automakers in
America are from Japan, and
their products seem to dominate entire
segments in sales and critical
acclaim. Japanese automakers sell so
many cars in the U.S.
that they actually employ vast numbers
of American workers in factories
around the country.
Japanese automakers actually build a third of
all the vehicles made in the
U.S. But the Japanese don't seem
to be interested in America's SUVs,
pickup trucks, muscle cars or just
about any vehicle made by Detroit.
Ford left Japan entirely in 2017.
General Motors keeps a presence there, but
it is tiny — the largest U.S.
automaker sold only 700 cars
in Japan in 2018.
And people are divided as to why
and what, if anything, should be done
about it.
President Donald Trump has criticized the
imbalance, but so have U.S.
automotive trade associations, who
blame Japanese protectionism.
While there are no
Japanese tariffs on U.S.
imports, a number of critics say there
are all kinds of technical barriers
that make it harder for U.S.
companies to sell in Japan.
Here in the United States, when we
set regulations for fuel economy or
safety or communications standards or whatever,
all of the automakers that
sell and produce in the United
States are party to that conversation.
In Japan, it's a much more
closed process for regulatory compliance.
It's "these are the rules and
you will meet the rules."
Japanese producers have input into that
and suppliers, but it's pretty
closed to any external companies that
would be doing business there.
But some industry experts say
that really isn't the problem.
Instead, the reasons U.S.
cars are so rare in Japan, which
is the world's third-largest car market,
have more to do with Japanese
consumer tastes, the abiding if outdated
stereotypes the Japanese have about the
quality of American cars, and the
very different way customers shop
for vehicles in Japan.
It is first important to note
that Japanese brands all but completely
dominate local roads.
More than 95 percent of all cars
sold in the country are Japanese.
Imports make up the balance and
most of those are higher-end European
luxury vehicles and sports cars.
This is partly because the
Japanese have pretty specific needs.
For one thing, space
is incredibly tight.
Wildly popular in Japan are these
so-called Kei cars, which are tiny
vehicles preferred by drivers who have
to thread their way through narrow
streets and crowded cities.
Kei Cars alone make up
40 percent of the Japanese
market and U.S.
automakers don't make them.
Americans, on the other hand, tend
to excel in making big vehicles,
particularly pickup trucks and
large sport utilities.
In recent years, American automakers have
scaled back or even entirely
killed off their own lines of
compact vehicles, which are often still
bigger than their
Japanese counterparts.
In fact, many of the Japanese vehicles
sold in America — from sedans such
as the Toyota Camry all the way up
to the pickups — are not even
particularly popular in Japan.
All three Detroit automakers have less
than 1 percent market share.
One of the bestsellers, Jeep, sells about
10,000 vehicles in Japan a year.
The Japanese car buying experience would
also likely shock many Americans,
who often view a trip to the
dealership as one of life's necessary evils.
Much of Japanese business culture is
built around service and hospitality,
and auto dealerships
are no exception.
Japanese dealerships offer customers nearly
white glove service, and the
way buyers choose cars is entirely
different from the traditional buying
experience in the U.S.
Whereas American shoppers will often choose
a car from what is available
on a dealer lot, Japanese buyers can
often custom-build a car out of a
catalog and then have it made for
them in a matter of weeks.
A strong local supply chain and
local factories allow Japanese automakers
to do this.
Furthermore, quality of service
is often quite high.
Dealerships frequently have amenities such
as cafes and complimentary car
washes. They will also follow up
with customers sometimes even years after
a purchase.
Foreign automakers overall have had difficulty
adapting to this way of
selling. Moreover, the Japanese have
longstanding perceptions of American
cars as inefficient and unreliable.
This somewhat outdated view originates in
the decades from the 1960s
through the 1980s, when Japanese
brands were ascending and American
automakers were plagued with criticism and
scandal over vehicles such as
the Chevrolet Vega, the AMC Gremlin,
the Ford Pinto and the Chevrolet
Corvair.
And though American manufacturers have
made far more fuel-efficient engines
in recent years, the U.S.
has historically made some gas guzzlers
when compared with cars made
elsewhere.
Yeah, I think there is
a hangover for American vehicles.
You know, what does an American
car say about you in Japan.
That baggage is carried with that.
Meanwhile, the Japanese rose to power in
the auto industry in large part on
their reputation for building solid, efficient
cars that don't break down.
Of course, many observers note that American
autos have done a lot to
close the reliability gap over the years,
and cars overall are able to log
far more miles on the road than
they did even a decade ago.
And U.S.
automakers are adamant that they would be
better able to compete in Japan
if the country removes barriers
that make doing business difficult.
The trouble for Detroit is that Japan
is just one of the international
markets where U.S.
automakers have struggled.
All three Detroit automakers have had
challenges in South America and
Europe. While China which is the world's
largest car market could become a
tougher place to do business
with slowing economic growth, increased
competition, and trade disputes.
If something doesn't change, U.S.
automakers could become just that: American
companies that sell trucks and
SUVs to Americans.
Why Ford and GM Scaled Back in Europe | WSJ
Wall Street Journal:
(thoughtful music)
- [Narrator] Take a look at this map.
It shows 23 plants that Ford
has in Europe from the UK to Russia,
but recently, Ford laid out plans
to cut six of these European factories.
- So six of 'em, they're gonna sell one.
They're closing several,
they're gonna lay off about 20%
of their workforce there,
which is about 12,000 people.
- [Narrator] But Ford is
not the only U.S. automaker
that's scaling back in
Europe, two years ago
General Motors pulled out of
the market almost entirely,
selling their European brands
to French car maker Peugeot.
Both companies expanded
to Europe decades ago
as a wider strategy to scale globally,
but they both had trouble
making money in the region.
Let's take a look at these two charts.
This one shows Ford's operating costs
in Europe over the past six years.
The gray is profits overall,
and the red is profits in Europe.
Now let's go to GM, this chart
shows GM's losses in Europe
over the 20 years before they
pulled out of the region.
So, why has it been so hard
for these two auto makers
to turn a profit in the European market?
- So the first reason is that
Europe's always been a real tough market.
Ford and GM have always been sort of
middle of the pack there,
I mean the real powerhouses
are Volkswagen, Renault, Peugeot,
and when you're sort of a
middling player in Europe,
when you already have
small profit margins,
it just makes life a lot
harder for the U.S. brands.
GM is making a decision to only compete
in markets where they're the number one
or number two operator,
and so they felt like
they've lost money there for 20 years,
and they didn't wanna continue to do that.
- [Narrator] And while GM has largely
pulled away from Europe, Ford is looking
to scale back and shift focus.
- What's behind this is a
change of business strategy.
They're selling fewer passenger
cars to individual buyers,
and they're focusing more
on their commercial market
where they're strong, which
is cargo vans and trucks
to business buyers and governments.
Bigger vehicles generally
equate to bigger margins.
There's less competition,
they're the number one commercial
van auto maker there, so they
already are more profitable
in that space and they
feel like if they focus
on growing that, they could
boost margins even more.
- [Narrator] The second
reason U.S. auto makers
are scaling back has to do
with Europe's tight environmental rules.
- Another big factor that
GM talked about a lot,
when it pulled out, was
emissions standards.
Europe has some of the most
stringent in the world,
and they're only gonna get tougher,
and that's gonna cost a lot of money
for the car companies to comply
because they're gonna have to invest in
hybrids and battery electric cars.
It's mostly battery technology.
Battery cells, the costs
have come down some,
but most experts think we're still
six, eight, 10 years
out from an electric car
being sort of on-parative cost
wise with a gas powered car.
- [Narrative] The last major reason
is that Ford and GM are gravitating
back to their sweet spot, SUVs and trucks.
- I mean these U.S. car
companies are really good
at making big SUVs and big pickup trucks.
I mean Ford's, the best
selling truck in the U.S.
is Ford's F150, it has
been for years and years.
GM sells the Chevy Silverado,
and the Chevy Suburban.
These are huge vehicles
that aren't sold in Europe.
The gas prices are too expensive.
You know, the streets are narrower.
People don't have as many big
garages like we do in the U.S.
And so, I mean that's what
Detroit has focused on,
and that's where they make
virtually all their money.
And that's why they've never
really been all that great
at making small cars,
and the European brands
have a big advantage over
the U.S. brands there.
So they're playing to their strength.
Companies like GM and Ford, for decades
they tried to build
scale, not only in Europe,
all around the world because it's
a really capital intensive
business, and you need scale.
And now what you're seeing is,
they've got other needs to
spend that capital elsewhere.
Electric vehicles, autonomous vehicles.
So they realize they can't
be all things to all people
in all markets, and they've
gotta pick their battles.
They've gotta choose where
they're gonna spend their money.
(soft music)
Ford's Fight To Remain An American Icon
CNBC:
Ford Motor Companyis the oldest U.S. automaker. More than one century old,
it is the only one to have survived the
Great Depression, two World Wars and the 2008 financial
crisis without having to sell to a foreign buyer or file for bankruptcy. After one hundred fifteen years,
Ford is now at a critical juncture in its storied history.
Global auto sales peaked in 2016.
The entire industry is struggling with higher interest rates more expensive material costs and a global trade war.
Then there's Uber, Waymo, Tesla and
other new startups and companies that are
upping the pressure on the industry
to keep up with the latest technology.
Autonomous driving, electric vehicles, hybrids, all of which will take billions of
dollars in investment and years to
develop before any real payoff comes.
The automaker's stock sank below 10
dollars a share in July 2018 for
the first time since emerging from
the financial crisis in late 2009.
Under former CEO Alan Mulally. Since his departure in 2014 Ford, has struggled with his successors.
Mark Fields who was an executive with Ford for nearly three decades held the top job for just three years before
the board replaced him with current CEO Jim Hackett, a company outsider in April 2017.
And Hackett is already under pressure sales in China have plummete.
Falling 45 percent in October 2018 over
the same quarter in the previous year.
Ford's European business has deteriorated and it has long struggled in Latin America.
Hackett's promised $11 billion turnaround plan hadn't fully materialized by late 2018.
Although, investors have become impatient, analysts say
Hackett still has the backing of Henry Ford's great grandson.
Ford was founded at the turn of the 20th century by Henry Ford, a mechanically inclined young man from a
farm outside Detroit, Michigan. Uninterested in farming, He worked as an engineer at the Edison Illuminating Company,
where Thomas Edison encouraged the young entrepreneur to experiment with automobile designs.
Ford ultimately teamed up with a Detroit coal dealer and founded the Ford Motor Company in 1903.
I think it's important to know that Ford was not afraid of failure in fact he embraced and welcomed failure.
He would talk about how his first two car companies failed.
He would have rather setbacks along the way but he saw each failure as a to lessen a chance to learn something
and do better with the next attempt. So I think that was important.
At that time, cars were assembled slowly by teams of skilled craftsmen. Ford saw the potential to streamline the process.
He adapted assembly line techniques learned from other industries, such as brewing and canning.
This dramatically sped up production and reduced costs.
Henry's Model T car was the first automobile produced on a mass scale would turn him into a legend.
Its initial price in 1908 of $825, under $23,000 in today's currency, gave it widespread appeal.
By 1916, Model T production rose to more than 585,000 units and the price fell to $360. During their lifetime,
Model Ts represented half of all the cars on the road worldwide.
In 1917, the company made its
first foray into producing the vehicles, it is perhaps best known for today,
the pickup truck.
The truck was based on the Model T
and was a sturdy frame with a cab in the front.
Ford sold roughly 4 million pickups
before stopping production during World War II.
In the postwar period, the company would release a number of now classic cars, including the legendary Thunderbird.
Ford rolled out the Mustang, a two door pony muscle car in 1964.
Steve McQueen would turn it into an icon in the 1968 film, Bullet.
By the early 1980s though, Ford had suffered a number of bad years
and executives at the company began
looking for challenging and inspiring new designs.
The company rocked the automotive world in 1985 when it released the Taurus, a front wheel drive sedan with
rounded edges, that was strikingly different from what sedans looked like at the time.
The car is often credited with saving the company and its so-called Jelly Bean shape influenced auto designs for more than a decade.
But Ford would later face other challenges.
Reports started surfacing in the late 1990s of accidents involving the tires on Ford Explorer sport utility vehicles.
The scandal resulted in more than 270 deaths and 800 injuries in the United States alone prompted congressional investigations.
Millions of dollars in settlements and legal costs forced several executives to resign and severely damaged Ford's reputation.
Just as Ford was putting the scandal behind it,
Cracks started showing in the auto lending market in late 2005 and early 2006, foreshadowing the crisis to come.
Ford which made $1.6 billion in 2005 lost an astounding $12.6 billion the next year.
At the height of the financial crisis in 2008, it booked a record loss of $14.7 billion.
The big three Detroit automakers: Ford, General Motors, and Chrysler would go to Washington hat in hand for a combined $34 billion in loans that December.
But Ford was spared the fates of its rivals. Then CEO Mulally, who had been hired from Boeing in 2006,
was credited with having the foresight to see the credit markets tightening.
He amassed a $20 billion war chest
through borrowing before the crisis was in full swing.
The gamble paid off.
Ford was the only Detroit automaker that didn't take federal assistance or file for bankruptcy and has booked annual profits ever since.
But since Malawi's departure in 2014, the company has seen its fortunes sink.
Some industry watchers say Mulally, like other auto executives, missteps
by realigning Ford's portfolio around passenger sedans and compact cars,
missing the dramatic consumer shift toward SUV and pickups.
Hackett has inherited a challenge.
With U.S. auto sales down from their 2016 peak of 17.5 million vehicles sold,
the industry has been increasingly relying on high priced trucks and SUV fees to bolster profits.
The company has to slim down its operation, remain profitable, invest in new products for
the short term, and still show it is looking further ahead into the future.
And it has to do this while fending off competition from not only traditional automakers but a whole new ecosystem of companies,
from industries such as technology.
Some of which have very deep pockets.
They are in this transitional challenging place right now and and taking a lot of criticism.
But let us not forget it is not a company that's on the verge of bankruptcy.
They are still very profitable.
They have a lot of cash. So, it's not a company that's going away tomorrow as Ramos said it wouldn't.
Ford wouldn't make it through the next recession. That couldn't be further from the truth.
Of course Ford certainly has its strengths.
It has a strong brand, loyal customers and good products among other things.
But the auto industry could look very different in just a few years.
Investors aren't yet convinced Hackett can navigate through these choppy waters.
Whether Ford will see another century as an American icon remains to be seen.
How Chevrolet Started, Grew & Became $11.5 Billion Company
Success Secrets TV:
How Chevrolet Started, Grew & Became $11.5
Billion Company
The name Chevrolet originated from a Swiss-born
American racer Louis-Joseph Chevrolet, who
founded his company with William Durant in
1911, stayed for four years and then left
his own company to Durant in 1915.
The Chevrolet Company previously called the
Chevrolet Division of General Motors Company
and simply called the Chevy is the automobile
department of General Motors, a manufacturing
company in the United States.
How Chevrolet Began
Twenty years before Chevrolet, Durant was
the founder of a successful Durant-Dort Carriage
Company which manufactured horse-drawn vehicles.
And so Durant wouldn't even touch a car with
a ten-foot pole, let alone allow his daughter
to ride in what he called, "loud and dangerous
horseless carriages."
But as time passed he realized that there
were more cars than carriages on the American
streets; an experience that did not settle
well with the relatively tentative public.
As the government regulated cars for their
safety, Durant had other ideas.
Why not improve the security of these cars
instead?
In 1904, Durant approached a struggling Buick
Motor Company and became its controlling investor.
Within a span of four years, Durant demonstrated
his salesman attitude and transformed Buick
into a leading automobile name amongst the
likes of Ford, Oldsmobile, and Cadillac.
For Durant, however, it was only the start.
Durant figured he could further improve his
odds in the industry if he built a holding
company that would control several automobile
divisions, with each division manufacturing
their own car.
With the Buick's outstanding profits, Durant
had sufficient capital to found the General
Motors Company in 1908.
A year later, General Motors acquired several
car brands like Buick, Oldsmobile, Cadillac,
Elmore, and others.
Unfortunately,Durant got so carried away in
his "automobile acquisition crusade" that
GM suffered cash shortage with their sales
losing to Ford's.
And so, in 1910, General Motors showed Durant
the exit door.
But Durant did not give up.
Having regained his bearings, he reunited
with an old colleague from the days of the
Buick motor company, Louis-Joseph Chevrolet.
Durant knew the Swiss-born American as a man
whose competency for car mechanics matched
his passion for racing.
In 1909, Louis had participated in the Giant
Despair Hillclimb.
An oddly apt name, considering the Hillclimb
race was less about the racers themselves
and more about test-driving the competing
car brands they drove.
Therefore, when Durant offered a chance to
build more automobiles, Louis couldn't resist
signing his name on the dotted line alongside
Durant's.
In 1911, Louis co-founded the Chevrolet Motor
Company with Durant.
Durant used Louis’ racing status as a means
of building a motor company, and his way of
getting back at General Motors.
The first Chevrolet car, the Series C Classic
Six was designed by Etienne Planche with directions
by Louis.
The prototype was ready before the company
was incorporated even though the production
didn’t happen until 1913 where it was introduced
at an auto show in New York.
In 1914, Chevrolet redesigned its logo.
And so a "bowtie emblem" logo was used on
Chevrolet’s first produced cars in 1914:
the Chevrolet H series and L series models.
That same year, Durant and Louis argued about
their differing intentions for Chevrolet’s
future car designs.
Durant wanted simple and affordable cars that
would surpass those of Fords.
On the other hand, Louis preferred playing
it fast and loose, with luxury or racing cars.
These differences split these two associates
and Louis sold his shares of the company to
Durant.
Now alone at the helm, Durant was able to
focus on his next winning car design.
He achieved this in 1916 when the cheaper
Chevrolet Series 490 finally outpaced Ford
in sales and cemented Chevrolet’s place
among the big automobile names.
To say Chevrolet made huge profits during
this period would be a severe understatement.
Durant revisited General Motors as a controlling
investor, purchasing their stocks, which gave
him the leverage to launching himself into
leading General Motors once more.
By 1917, Durant had become the president of
General Motors.
All was right, now that Durant's "big automobile"
dream was back on track.
And of course, his first directive was merging
the highly successful Chevrolet into the parent
company General Motors as a separate division.
How Chevrolet Grew
In 1918, Chevrolet launched a new V8 powered
model, the Series D for open two-seat cars
and the touring cars that could seat 5 passengers.
These models didn't sell well though and they
were scrapped by the next year.
Given Chevrolet's successful track record
in the market, General Motors rebranded and
sold their commercial grade cars and trucks
as Chevrolet with similar appearances with
the Chevrolet’s vehicles in 1919 from Chevrolet
factories located in Flint, Michigan.
The automobile company built several branch
assembly plants in New York, Ohio, Missouri,
California, Texas, and Canada.
Somewhere between the 1920s and 1940s, Chevrolet
would see Durant's vision for "producing simple
and affordable cars" come true.
In fact, Chevrolet, Ford and Plymouth were
known to Americans as "the low priced three".
During this period, one of Chevrolet's most
notable cars was the Stovebolt introduced
in 1929, which was tag-lined "a six for the
price of four".
This and several generations of the car model
blew away the competition of Ford and Plymouth.
In 1953, the Chevy Corvette, a sport’s car
with two seats and a fiberglass body debuted
to become the first mass-produced sports car
in the United States, championing the "America's
Sports Car" appeal.
The appeal of the Corvette and other Chevrolet
passenger cars would be enhanced with the
first-time introduction of Rochester Ramjet
fuel-injection engine as a high-performance
option for the price of $484.
The Chevrolet small block V8 car design made
its debut in 1955 and remained in circulation
longer than other mass produced engines around
the world.
Modifications to the V8 engine including the
aluminum block and heads, the electronic engine
management and the port fuel injection gave
birth to the designs in production today.
In 1958, Chevrolet introduced the Impala series,
which went on to become one of the best-selling
American cars in history experiencing popularity
during the 60s and 70s.
The parent company General Motors introduced
Chevrolet to Europe in 2005.
With rebranded cars manufactured from the
General Motors branch in Korea acquired Daewoo
Motors.
The economic depression between 2007 and 2010
hit Chevrolet hard.
But the road to recovery began in 2010 with
the introduction of fuel-efficient cars and
trucks to compete with foreign automobile
manufacturers.
Within the same year, Chevrolet introduced
the plug-in hybrid electric vehicles, Chevrolet
Volt in America, which was sold under the
name Opel/Vauxhall Ampera throughout Europe
with a record 5,268 units soldand became the
world's best-selling plug-in hybrid electric
vehicle (PHEV) car in 2012, winning the award
for the North American Car of the Year, European
Car of the Year and World Green of the Year.
The series was then named the combined Volt/Ampera
that was sold across the world.
It exceeded the 100,000 unit sales milestone
in late 2005 and eleven years later the Volt
family of vehicles had become the world's
best-selling plug-in hybrid as well as the
third best selling electric car after the
Tesla Model S and the Nissan Leaf cars.
In 2011, Chevrolet set a global sales record
of 4.76 million vehicles sold worldwide
In late 2013, the Chevy brand was withdrawn
from Europe by General Motors leaving the
Corvette and Camero lines.
In 2016, Chevrolet unveiled the first affordable
mass-produced all-electric car the Chevrolet
Bolt EV.
This car too has won several awards.
Where Chevrolet Is Today
Chevrolet now has its headquarters in Detroit,
Michigan, and operates throughout 140 countries
in North and South America, Asia, Australia,
South Africa, and Europe with over two million
vehicles sold annually in the US alone and
a brand value of $11.5 billion.
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Why GM And Ford Are Worried About RAM
CNBC:
American automakers take their
trucks extremely seriously.
And the ongoing battles for dominance
among the Detroit three are
often called the "Truck wars".
General Motors, the largest U.S.
automaker overall, sells the most trucks,
if you count full-size and
mid-sized pickups.
Ford F-Series is the best
selling line of full-size trucks.
But, third place challenger Ram has
made its own waves in recent
years, snagging major industry awards
and stealing market share from
rivals. Ram is killing it.
U.S. sales of Fiat Chrysler's truck
brand have roughly tripled in the
last decade, and the brand seems to
be taking food out of its rivals
mouths. After taking the helm
of Fiat Chrysler in 2018,
new CEO Mike Manley said he
wanted to make Ram the second-best
selling full-size pickup brand
in the U.S.
In the first three
quarters of 2019,
Ram surprised the automotive world by
passing Chevrolet in sales, and
some think Ram could very well
stay in second place, fulfilling
Manley's goal. To be fair, others are
quick to note the timing has
been in Ram's favor and that the
game is too early to call.
What is certain is that this upstart
is now posing a more serious
threat to its rivals
than ever before.
It's a stunning rise for a brand
some in the industry thought Fiat
Chrysler was foolish to create in
the first place. The
Ram brand was once actually part of
Dodge, but the two were separated
as Chrysler emerged from bankruptcy under
the oversight of the late
Sergio Marchionne.
The idea was that the split would
allow Ram to focus exclusively on
trucks while permitting Dodge to
focus on developing performance
vehicles, including its popular Challenger
and Charger, as well as
sport utility vehicles and
its long-running Caravan minivan.
Some in the industry questioned the
wisdom of spinning the Ram brand
out at a time when cross-town
rival General Motors was axing several
of its own brands.
First of all, the Ram name has
a long history with Dodge itself.
The company first started using the Ram
logo on its cars in 1932, and
it was still used on Dodge models
until FCA began rolling out new
logos sometime after the
brand's split in 2009.
As one of the four American
full-sized pickup brands, Rams sold
reasonably well, but were often
known as a more affordable
alternative to those offered
by GM and Ford.
The audio you're about to hear
is distorted due to recording issues.
They were less expensive, the
interiors weren't that great.
They were pretty basic.
It wasn't the kind of truck that
GM or Ford had on the road.
Ram simply could not compete with
the capability offered by rivals.
But after Fiat took over and
the company began to emerge from
bankruptcy, Ram came out swinging.
In 2010, GM and Ford were roughly
tied and pickup market share, each
with just over 38 percent with Ram
solidly in third place at just
14.6 percent.
But, over the next eight years, Ram
grew its share of the market to
more than 22 percent, while Ford lost
one percent of its share and GM
lost nearly five.
To be fair, Japanese import brand Toyota
also lost some share at that
time from 6.8
percent of the market to 4.9
percent and fellow Japanese maker Nissan
gained a sliver of market
share. But Ram is now threatening
to displace Chevrolet as these
second best selling full-size pickup
brand in the United States.
So how did it do this?
By offering something different,
say industry analysts?
So I think Ram's idea then was
OK, then maybe, our strategy should be
to build a really, really
good all around truck.
Let's make it comfortable.
Let's make the interiors nice.
Let's make the ride
quality really good.
Two areas where Ram really
shines our interiors and technology.
The interior of the truck
is just unbelievably great.
The technology is unbelievable.
They've got the biggest screen,
it looks like a laptop.
Ram made a bet that seems
particularly suited to the times.
Owners are more accepting of technology
than they ever have before.
There's examples of new technology being
put into pickup trucks that
kind of fell flat. General Motors
had a four-wheel steering system
for their pickup trucks,
which was terrific.
But the problem was that it was
an expensive option, and at that
time, pickup truck owners, their feedback
was, I already know how to
move my truck. I already
know how to tow.
I already know how
to do this stuff.
I don't need to spend the man's
money that you're asking to have this
technology help me do that.
But times have changed.
Now we have buyers of every demographic
that are far more willing to
let technology help them do things.
And as a result, the big screen in
the Ram has drawn a lot of
attention. As a result, some of
the technology that General Motors
has brought it to their Chevrolet and
to the GMC, there's a lot more
cameras on board.
There's ways to save your towing
of your trailer information to your
truck so that if you have three
trailers, every time you hook it up,
you just call up that information and
you don't have to reset it.
There's lots of things in both of
those trucks that make it easier to
work with them. And the Ram got
out into the market a little bit
earlier. One feature in the 2019 Ram
1500 truck that has had the
automotive world buzzing is the large
12 inch touchscreen in the
center of the console.
Ram boasted that the screen was the
largest found in any truck in its
class. If you asked a pickup truck
owner, before they had the big
screen in the Ram if they wanted
a big screen, they'd probably said,
no. I don't want that.
I don't need that. I
don't need to do that.
But now that it's there,
they're reacting to it strongly.
FCA's new strategy was well-timed.
The pickup market has changed over
the last decade as truck sales
have risen. Along with the boom
in sport, utilities and crossovers,
pickup trucks have become popular options
for drivers who might have
a wider range of uses in
mind then in previous eras.
For instance, there has been a rise
in the portion of four seat and
four door models in
the pickup market.
Ram said more than 50 percent
of its pickups are "family trucks".
FCA has also used a tactic
that some industry observers say has
contributed to the brand's sales success
- selling an outgoing model
along a newly redesigned one,
typically at a lower price.
Ram's rise is partly notable
because pickup truck buyers have
historically been considered among the
most brand-loyal in the
automotive market.
Ford buyers typically don't buy GM
trucks, and just the opposite, GM
buyers typically don't buy Ford
trucks, but what's interesting is
either one of those buyers
will consider a Ram truck.
Dealer
Don "K" Kaltschmidt, who sells both
Chevrolet and Ram and owns
products from both GM and Fiat Chrysler,
said that in some ways Ram
does outdo the Chevrolets, but he
thinks it isn't over yet.
The GM truck product is very,
very strong here for good reason.
It is important to understand the
timing has also worked in Ram's
favor. The Ram went into production
roughly eight months before the
Chevrolet product did.
So, there was a bit of a head
start and sort of building it and
having it online and having
it available for the dealerships.
Another element is that Ram has
kept the previous generation of
production longer than
Chevrolet has.
A spokesman for General Motors told
CNBC, the launch of our Chevrolet
Silverado has gone exceptionally well
and combined with the GMC
Sierra, we are quite pleased with
the quality of our market share.
As of November 2019, Ford said
its F-Series lineup outsold Ram by
225,000 trucks for the year, a lead
the company expected to widen by
the end of 2019,
a spokesman told CNBC.
Ford has so far been the best selling
line of pickups in the US for
the last 42 years.
The "Blue Oval" has also been
hyping its upcoming hybrid and fully
electric versions of the F-series.
Electric vehicles are important and
they're happening and they're
coming, but they're
also coming slowly.
That's kind of
important to remember.
Even as Ford and GM are
talking and start talking about electric
pickup trucks, once they're here, the
sales ramp up is probably going
to be a pretty slow.
Pickup truck battles are fierce in
ways that fights in other segments
are not. You get excited about a
pickup truck because it either helps
you feed your family,
or you're into horses.
It's an enabler to do something
that you truly care about.
And, that makes it much more
important emotionally than I'm going
back and forth to work and
it's just a mode of transportation.
There are also a huge
source of profits for automakers.
So industry watchers aren't expecting this
one to be over anytime
soon. If you think about building a
small car and you need so
much amount of steel or so much
amount of wiring harness, or so much
amount of leather or cloth to cover
the seats and you can charge
$20,000 for a small car.
You need more of all of those
materials to build a pickup truck, but
you're charging four
times the cost.
It's an interesting element
of the market too.
Smaller products are not as
profitable, as larger products.
They will Never Buy KIA CAR Again | Engine Change in Just 20 Days of New Seltos GTX+ India
Arun Panwar:
Hello Brothers, I am Arun Panwar
I booked kia seltos gtx+ 6MT Petrol on july 23rd from Prayagraj (ALLAHABAD)
I also told them the date of delivery that was 25th October (generally gtx version of car has 3 months waiting )
and thanks to KIA it was delivered on time and it was first Black gtx+ of ALLAHABAD.
Everything was good and car had no problem 100km done, 300km done
Since I had my exams and dad do not use the car much on 25th day mark car has successfully managed to touch a whopping 550km mark
now on 25th day that is 20th November or nearest sunday ,dont remember the date exactly,
They went hardly 4-5 kilometers and by the time they were returning the engine would start but only for a minute and it was like the engine choked
he fuel has ended but the fuel tank was more than half so after trying multiple times to start engine
Now again thanks to Kia’s responsible service men they towed away the car in 45 mins to service station and after 10 days from then
then that is December 1 KIA unprofessional technical staff could not deduce the real problem
Finally they were saying that the fuel sample in the car failed and they blamed that the fuel was adulterated
Now again thanks a lot to KIA for they ordered an all new engine for my car and import it from south korea
but which car engine was opened in just 25 days how can I trust a company for 10 years
And I filed a law case against the company and they have mere 4 days left to whether provide a new car or they will fight the case in which case I am liable of defamation of company to any extent.
They will Never Buy Kia Car Again | Engine Change in Just 20 Days of New Seltos India
Kia seltos breakdown just after 25 days of purchase
Request to Kia Motors India
Thanks for watching
Plz subscribe
Signs the Water Pump Is Going Bad
1A Auto Parts:
Small overlap crash test stymies most midsize SUVs - IIHS News
IIHS:
The Insurance Institute for Highway
Safety is releasing new small front
overlap crash test ratings for nine
midsize SUVs. The front small overlap
crash test is more demanding of vehicles
crash worthiness than the flat barrier
test used by the government or the
moderate overlap crash test conducted by
the Institute since 1995. The Chevrolet
Equinox and its twin the GMC Terrain
were the only midsize SUVs to earn a
good rating in the front small overlap
crash test. The Toyota Highlander was
rated acceptable but the other six
midsize suvs were rated marginal or poor.
General Motors engineers modified the
Equinox and trained to beef up the front
structure including the driver hinge
pillar. During the crash the driver space
was well maintained. Both the Terrain and
the Equinox earned good ratings in all
aspects of the small overlap crash test.
Structure is key in the small front
overlap crash test and is the downfall for 6
midsize SUVs in this group. In the Mazda
CX-9 the hinge pillar was pushed
backwards 17 inches and the door frame
was pushed so far inside the occupant
compartment that the dummies head hit it
after sliding off the front airbag.
The Honda Pilot was the worst performing mid
sized SUV in this group. The driver space
was seriously compromised by intruding
structure, in fact the parking brake
pedal moved inward 16 inches and the
steering column moved to the right 5
inches which contributed to the dummy's
head sliding right off the driver airbag.
The front small overlap crash test is
challenging for a lot of new vehicle
designs but automakers realize that
safety is a key selling point so they're
all making changes to improve crash
worthiness to earn good ratings in this test.
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