GLOBAL MANUFACTURERS SEE SALES SLUMP
Ford Motor Company last month reported an unexpected second-quarter sales loss. It reported a net loss of $123 million, compared with a profit of $946 million in the same period last year. Following the announcement, CEO Bill Ford announced that more, and faster, cost cuts would be needed to aid the company's revival.

Nissan Motor Corporation also posted an unanticipated 26 per cent slump in its second quarter operating profit, but maintained its 2006 forecast of a marginal profit increase.

REGULAR CAR PRICE INCREASES EXPECTED
It has been predicted that the three year car price hike "holiday" is over and regular price increases will be common practice again. There have not been general price increases since April 2003, but it is expected that prices could rise by as much as 7 per cent by the end of the year. The main contributor to this situation is the drop in the value of the rand against the euro and yen.

MG BACK ON TRACK
China's Nanjing Automobile Group of China has announced its plans to base its MG production at three sites around the globe. A Nanjing plant in China will build three sedans, MG's former Longbridge factory will manufacture the TF roadster, and a US plant will assemble a redesigned TF coupe. It plans produce between 12 000 and 16 000 units per year.

CRUMBLING ROADS
A recent report says that roads have deteriorated by 40 per cent since the early 1990s and the Automobile Association estimates that it will require R200-billion to repair and upgrade the road system. According to the SA National Roads Agency, at least 62 per cent of the country's roads are more than 20 years old - the average design life of a road. Adding to the road infrastructure problem is the fact that the local motor industry is putting about 50 000 new vehicles onto the road each month. It is also estimated that up to 75 per cent of goods are now transported by road.

PUMPING UP TO LOWER SULPHUR
Engen has announced plans to spend R2,4 billion on the second phase of its cleaner fuels project, which will produce diesel fuel that complies with the European standard of 50 parts per million of sulphur. The fuel company estimates that the new programme would take between four to five years to complete. The previous project of slashing sulphur content from 3 000 to 500 parts per million cost roughly R286 million. A number of fuel companies - Sasol, Exel, Total and Shell - already offer diesel fuel with 50 parts per million sulphur contents.

HONDA TAKES TO THE SKIES
Honda Motor Corporation has announced plans to enter the aviation industry. The seven-person micro-jet with a wing-mounted engine design will be produced in the US.

GM'S GLOBAL STRATEGY "A COSTLY FLOP"
Apart from the $300-million cash injection, General Motors' April deal to sell its 7,9 per cent shareholding in Isuzu has also marked the end of the company's ambitious plan for world domination through its network of alliance partners.

GM's partnerships with Isuzu, Fuji Heavy Industries (maker of Subaru vehicles), Suzuki, Fiat Auto and Saab were to have provided economies of scale and product offerings that would have ensured that GM and its partners controlled 35 per cent of global sales. Only Swedish niche automaker Saab and tenuous Japanese ally Suzuki remain in the fold, as much of GM's new strategy is being invested in the success of its GM Daewoo venture, producing Chevrolet products.

SHEDDING WORKERS ISN'T SO EASY IN GERMANY
Volkswagen is finding it difficult to shed excess workers in Germany. After it announced that up to 20 000 jobs could be cut in its German factories over the past three years, only about 1 000 workers have opted for the severance package.

GM, which has found itself in a position which seems as dire, has found 35 000 employees willing to take the voluntary package as "The General" aims to cuts its global workforce of 327 000 by 10 per cent. The company is on track to meet its target of cutting 30 000 production line jobs by 2007 - two years ahead of schedule.

ASIAN BRANDS DOMINATE GLOBAL SALES
Information revealed in Automotive News Europe recently showed that Asia-based manufacturers are currently holding the upper hand in the automotive "balance of power".

In 2005, makers from Korea, China, Japan and India sold 28,6 million cars, trucks and buses, or 44,5 per cent of the world's total. That was up from 36,8 per cent in 2000. Europe-based manufacturers sold 20,8 million vehicles for a 32,3 per cent share

Ironically, US-based General Motors held on to first place because of its association with GM DAT, in which it holds a majority (50,9 per cent) share. The top 20 rankings for 2005 were: General Motors, Toyota, Ford, Volkswagen, DaimlerChrysler, Hyundai-Kia, Nissan, PSA/Peugeot-Citroen, Honda, Renault-Dacia-Samsung, Suzuki-Maruti, Fiat-Iveco-Irisbus, Mitsubishi, BMW, Mazda, Daihatsu, Avtovaz, Dongfeng, Fuji (Subaru) and Beijing AIG.

FIAT AND PEUGEOT EXTEND PARTNERSHIP
Fiat Auto and PSA Peugeot-Citroen have extended their partnership by spending R8,5-billion on a new range of commercial vehicles (Peugeot Boxer, Citroen Jumper and Fiat Ducato) to be built in Italy and agreed to a joint gearbox manufacturing venture in Argentina. The companies have had a partnership since 1978.

BULLISH TALK BY MAHINDRA
Indian conglomerate Mahindra & Mahindra claims that investment in a manufacturing plant in South Africa is still on the cards and would be considered seriously when monthly sales reached 1 000 units, compared with the current level of about 300 sales a month. The local company has sold roughly 3 000 units in South Africa since its formation in June 2004. Currently the company offers the cut price Bolero bakkies and Scorpio 4x4s.

Mahindra say that South Africa is the their most important market outside India with good growth potential. Mahindra is the leading manufacturer in the Indian utility market with a 50 per cent share.

FASA ON FUTURE PLANT IN S.A.
Fiat Auto South Africa is "making progress" with its plans to find an alternative manufacturing site when its assembly contract with Nissan SA expires in July 2008. Nissan has said it will not renew the agreement, which was signed in July 1998. The company has denied that Fiat Auto SA will only act as an importer for products from Brazil (after its merge with Fiat Auto Brazil) or other global Fiat plants.

FORD TO MAKE BIG INVESTMENT IN HYBRIDS
Ford will invest R13-billion in Britain over the next six years to develop fuel-efficient hybrid cars. Meanwhile Ford has said it will fall short of its original forecast to produce 250 000 hybrid cars a year globally by 2010.

CORRUPTION PROBE AT DAIMLERCHRYSLER
Former DaimlerChrysler staff are among those being investigated for bribes totalling R900 000 linked to the company's operations in Poland and Ghana. The offences were allegedly committed in 2003 and 2004.

VEHICLE FINANCING BRINGS IN THE PROFITS FOR CAR MAKERS
Vehicle financing is proving a major source of revenue for local vehicle manufacturers and importers. Wesbank is the largest single provider of vehicle finance with an estimated 35 per cent of the market and a finance book worth R77-billion (including non-vehicular equipment and aircraft).

Wesbank's financing partnerships with manufacturers and importers account for 44 per cent of its total finance book. Major partners are Toyota, Nissan, General Motors, Volkswagen and the McCarthy Group.

BMW Financial Services and DaimlerChrysler Financial Services are the only two stand alone operations in the automotive manufacturing sector. Ford is linked to Absa and the Imperial Group has an association with Nedbank.

"NEW CAR BUYERS CAN TAKE ON MORE DEBT" - BANK REPORT
Contrary to some opinions on the current spending spree in South Africa, a Standard Bank report says consumers still have capacity to take on additional debt before debt levels impact on vehicle sales.

"Compared to the debt crisis in 1998 the current situation is healthy, with room for additional debt," the report says. According to the bank, the low interest rate levels had been the major driver for entrants into the market, together with stable car prices and the increased number of cars below the R100 000-mark.

AUTOMOTIVE INDUSTRY SHINES
The automotive sector is one of the most progressive and forward thinking industries in terms of supply chain management. This was one of the findings from the third national study of the South African supply chain industry, sponsored by Barloworld Logistics, which showed a greater commitment to the strategic advances that can be gained from supply chain reform in the automotive sector than other industries.

TOYOTA'S TAZZ CALLS IT A DAY
After a very successful stint in the essential budget market, the last Toyota Tazz came off the company's Prospecton production line on July 5, signalling the end of an era in the only country where this derivative of the sixth-generation Corolla had still been in production. Toyota SA has announced that the Tazz will be replaced with a number of new models priced under R100 000, starting with a 1,0-litre version of its popular Yaris. The budget Yaris becomes available mid-August.

GETTING THE PRODUCT TO MARKET
Spoornet has increased its capacity for railing vehicles from Durban to Gauteng by 60 per cent. The parastatal spent R10-million converting 50 unused wagons into car carriers to increase its capacity and when the additional car carriers are done, seven 34-wagon trains will operate along the route each week. Spoornet is also working on a new generation car carrier that can be used as a single- or double-decker, depending on the size of the vehicle.

NEW CAR TERMINAL FOR DURBAN
The Durban port is expected to have a new car terminal by early 2009. It will be able to accommodate 12 500 cars and there will be berths for two car carriers at any one time. The site will be on Salisbury Island. The existing car terminal was expanded in 2004 at a cost of R100-million. It currently handles an average of 25 000 vehicles a month.

MORE JOBS IN THE MOTOR INDUSTRY
Employment in the motor industry grew by 1 047 jobs (3 per cent) in the first quarter of 2006, compared to the end of 2005. The use of production capacity was running at well over 90 per cent for cars, MCVs and HCVs, with some slack (76 per cent) in the LCV segment. Total capacity utilisation in South Africa - the best performing market in 2005 - is running well above its international benchmarks.

SHORTAGE OF TECHNICIANS
A dire shortage of automotive technicians is looming according to the Automobile Association of SA, as it reported that 15 per cent of its current pool of 20 250 technicians would retire or leave every year. But a small pool of learnerships is feeding the industry, and about 1 600 technicians are being trained each year.

VEHICLE PRODUCTION LABOUR COSTS DOWN
The direct labour costs of producing vehicles in South Africa had decreased by 35 per cent in the past eight years, according to consulting firm KPMG. This was due to increased efficiencies in the manufacturing plants linked to training and skills development of the employees. The company also added that the improvement, linked to local market growth and increased exports, made South Africa an interesting proposition for vehicle manufacture. The country was responsible for 84 per cent of Africa's total vehicle production.

GMSA GETS THE MIDAS TOUCH
General Motors South Africa has acquired a "sizeable minority stake" in Midas, the automotive parts distributor and franchiser for an undisclosed sum. GMSA was introduced as a value-adding global procurement partner and provided Midas with the exclusive distribution rights for GM's ACDelco all-makes after-market range of products. Midas has 330 franchised outlets.

METAIR ON THE TAKEOVER TRAIL
Automotive component manufacturer Metair is expected to dip into its cash reserves to acquire more subsidiaries. Metair, which is 39,4 per cent owned by Wesco which, in turn, owns 25 per cent of Toyota SA, increased profit by six per cent to R171-million in the 2005/6 financial year.

It wants to continue its strategy of converting wholly owned subsidiaries that produce components under licence to foreign companies into subsidiaries part-owned by the licencees. Two such deals have already been wrapped up, with Japanese companies Denso and Yazaki buying a 25 per cent share in Metair subsidiaries Smiths Manufacturing and Hesto Harnesses. Metair hopes to convert another two subsidiaries in the same manner within the next 18 to 24 months.