VOLVO CUTTING 2 000 JOBS

Volvo Cars is cutting 2 000 jobs, mainly at its HQ in Gothenburg, Sweden, -
1 400 white collar and 600 factory workers – as part of a $663m cost reduction programme. Another 500 jobs will go as agreements with consultants and contractors are cancelled.

Meanwhile the current owner of Volvo Cars, Ford Motor Company, was reportedly in talks with Shanghai Automotive Industry Corporation, one of the Big 3 Chinese motor manufacturers about selling the Swedish subsidiary. Cash-strapped Ford is denying that talks are taking place, but with Volvo running at a loss and Ford having scrapped its objective of returning to profit in 2009 it is a likely scenario.

Shanghai already owns the MG brand and sells the former Rover 75 as the Roewe, besides owning 51 per cent of Korean vehicle maker, SsangYong. The Chinese company also has joint ventures in China with General Motors and Volkswagen.

A Russian investor is also reported to be interested in buying Volvo.

Ford bought Volvo in 1999 for $7,5bn when it was establishing the Premier Automotive Group. This organisation is no more, with Aston Martin, Jaguar and Land Rover having been sold off already. Previously Volvo was linked with take-overs by BMW and Mazda.

BLACK IS THE NEW SILVER IN EUROPE

Black is the top colour choice for Europe’s car buyers according to a recent survey by automotive paint supplier, DuPont. About a quarter of all cars sold in Europe are now black. Previously silver was No. 1.

Black is particularly popular with European SUV buyers, accounting for 30per cent of new car sales, and for top end luxury cars. European buyers appear to be out of step with the rest of the world. Globally white replaced silver as the most popular colour seven years ago.

The UK’s Royal Automobile Club might have an explanation for the swing to black in Europe: it says white cars are more likely to be stolen because they are easier to repaint.

RECORD TURNOUT OF ALFA ROMEOS AT KYALAMI

A turnout of 240 Alfa Romeos at Kyalami on June 29 has been submitted to the Guinness Book of Records for ratification as the biggest ever turnout of Alfas at one place and one time in the world.

The occasion proved a big attraction to Alfa fans too, with 7 000 people attending the record attempt in 2 300 cars.

The Alfa Romeo 8C Spider that was unveiled at the Geneva Motor Show earlier this year was paraded around the track. On display in the “brand tunnel;” was a star-studded cast of 18 classic Alfa Romeos, dating from the 1950’s. This included a priceless specimen that had been driven by the late JF Kennedy.

More than 40 classic Alfas participated in two Trofeo races around the circuit.

DORBYL TEAMS UP WITH ITALIAN WHEEL MAKER

Dorbyl, the listed engineering group which is now focused on manufacturing automotive components, has sold 50% of its interest in wholly owned subsidiary Guestro Wheels to Italian firm Magnetto Wheels for R50m.

Guestro produces almost one million steel passenger car and truck wheels annually and the intention with the new venture is to grow this yearly number to two million.

Magnetto believes steel wheels will win back some of the market share lost to aluminium wheels as the latest steel wheels, using modern materials, are lighter than aluminium wheels and more energy efficient to produce.

NO VW BAKKIE FOR EUROPE

Volkswagen’s truck division has announced that it will no longer build a pick-up truck in Europe. This is due to the soaring fuel prices and general economic pressures. A bakkie was scheduled to be produced in Hannover from 2010.

However, the VW group is continuing with its programme to build a bakkie, the Robust, at a plant in Pacheco, Argentina, for South America and “emerging markets”, which will no doubt include South Africa, where the local company needs such a model to tackle arch-rival Toyota for overall market leadership.

Production of the VW Robust is scheduled to start at Pacheco next year, following an investment programme of €223m, with an in initial annual volume of 90 000 units.

DEALERS STRUGGLING

Most of SA’s retail motor dealers are struggling financially as their sales move back to 2004 levels, while virtually all of them have re-invested heavily in new or upgraded facilities during the past four years in anticipation of sales and service volume growth. This is according to Eric Scoble, who heads up the National Automobile Dealers' Association (NADA).

He added that human resource costs have moved ahead of inflation as the dealers try and secure technicians and other skills that are in short supply. Government “red tape” and franchisor requirements have pushed up administration costs.

Scoble said dealerships on average are operating at below 0,5per cent profit after tax as a percentage of turnover and as many as half the dealers in SA would not have been profitable in June.

ENGLISH CHOOSE DIESEL

Sales of diesel vehicles in Britain rose 4.5per cent to 89 470 units in June, taking a 42,8per cent of the total market in a new car market that fell 6.1per cent to 209 90 units.

Sales of “A Band” cars (emitting less than 120g/km CO2) are increase in popularity as the economic pressures bite and sales in this segment have jumped tenfold in the past year.

These cars pay almost no road tax and do not pay congestion tax in central London. In contrast, cars in the highest tax band pay ₤4 500 a year and if it’s a company car the driver will also pay the maximum company car tax.

CHRYSLER TIES UP WITH SECOND CHINESE VEHICLE MAKER

Cash-strapped Chrysler, which rapidly needs to add more small cars to its model line-up, has signed a co-operation agreement with a second Chinese vehicle maker – Great Wall Motors (GWM). It already has embarked on a joint venture with Chery Automotive.

EUROPEAN BUYERS SWITCH TO SMALLER MODELS

Sales of large sports utility vehicles (SUVs) are falling fast in Europe as the downturn in the economy and rising fuel and other costs rise. Sales of models such as the Hyundai Santé Fe and Volvo XC90 are reportedly more than 40 per cent down when compared with the same period last year.

CAR REPOSSESSIONS DOUBLE

The rate of car repossessions is climbing steeply as the economic downturn bites even harder. It is estimated that repossessions are now double the rate they were a year ago. Some auction houses are holding up to seven auctions a week, with about 100 vehicles up for sale at each auction.

FLOORPLAN FINANCIER THRIVES

While most financiers are battling in the increasingly depressed economic climate, floorplan-financing specialist, Resource Motor Finance (RMF), is going strong. It has grown its revenue more than tenfold in its 18 months of existence, increasing from R5m a month to R55m.

The firm lends money to small and medium dealers in the new and used vehicle market, motorcycle, commercial, yellow goods (such as earthmoving equipment), boat and leisure industries.

Gavin Howse, MD of RMF, which is part of the Regent group of companies,  says his operation differs from that of the banks in the way RMF does its risk assessment, and claim to approve deals within 24 hours and pay out the money in four days, whereas competitions sometimes take months to pay dealers.

The target market is dealers with title deeds and turnover ranging from R6m to R60m a year. RMF currently has 45 clients on its books, 40 per cent of which are empowerment companies. The firm is targeting to achieve R1bn in annual revenue within five years.

CAR RENTAL COMPANIES UNDER PRESSURE

Car rental companies are coming under increasing pressure as crime and climbing accident rates are destroying profits. This in a business already hit by rising interest rates, vehicle price increases, falling resale values and a general rise in operating costs makes it harder than ever to be profitable. It is estimated there are almost 50 000 vehicles in the national rental fleet.

At least three companies that are members of SAVRALA have evidently gone out of business recently, while a number of smaller, impendent rental outlets have been forced to close. Last year the accident rate for vehicles owned by SAVRALA members rose by 63 per cent with repairs costs going up 26 per cent to R478m.