Episode 298 – India Is Booming, U.S. Car Sales Picking Up, Hyundai Preps For Luxury Brand
January 4th, 2010 at 12:00pm
Runtime 6:58
2010 might be the year that the car industry in India really breaks out. Sales look stronger in the American market. Hyundai will have U.S. dealers create a “showroom within a showroom” for its luxury models. All that and more, plus a look at Volkswagen’s amazing “transparent factory.”
Transcript and Story Links after the jump . . .
Here are today’s top headlines. 2010 might be the year that India really breaks out. Sales look stronger in the American market. And Hyundai lays the groundwork to start a new luxury brand.
Up next, we’ll be back with the news behind the headlines.
This is Autoline Daily for Monday, January 4, 2010. We’re back, baby! And now, the news.
In what is sure to be an ongoing story in 2010, the car industry in India is booming. Bloomberg reports Toyota, Honda and others are introducing six new models there this week. Ford, GM and VW are all building new plants in the country. General Motors says its sales will surge by 43 percent. Even though there is a lot of poverty in India, with a population of 1.1 billion people, there are also a lot of people with money. Indeed, India now has 120,000 millionaires. That’s why Mercedes will introduce five new cars there this year, while BMW, Jaguar and Land Rover also have new models in the pipeline. Amazingly, the auto show in Delhi in India which starts this week is expected to attract 1.8 million visitors.
And things are starting to look a whole lot better in the American market. We won’t have December sales in until tomorrow, but the Wall Street Journal says, it looks like automakers ended the year on a high note (subscription required). But it also looks like some of that strength could be the result of more sales incentives from automakers, particularly from GM, that offered blowout deals to clear out Pontiacs and Saturns. GM knocked $7,000 off the price of those vehicles.
To kick off the New Year, Chrysler is introducing a new corporate advertising campaign. Entitled “Coming Home,” the 60-second spot was created at the request of dealers because they’ve found that many people don’t realize the company is out of bankruptcy and that it has a new partner, Fiat. The ad uses a big dose of nostalgia to make its point, featuring historically significant cars like the Airflow and old Jeeps, even the original minivan.
Hyundai will have U.S. dealers create a “showroom within a showroom” for its luxury models (subscription required). According to Wards, dealers will have a special section for the Genesis and Equus models. This will allow Hyundai to sell its luxury models without creating a separate dealer channel which will save money but as one dealer predicts, it will still cost “hundreds of thousands of dollars.” Dealers will have more stringent training and certification requirements for their employees and dealers could also add valet and concierge services for their luxury customers.
2010 may be a tough year for biodiesel producers. The Detroit News reports that a federal tax credit for the eco-friendly fuel expired on January first. The subsidy provided $1 for every gallon of biodiesel produced, but a cut in government spending isn’t the industry’s only problem. The price of regular diesel is low, and last year the EU placed import tariffs on the oily fuel. According to the National Biodiesel Board, the industry is only operating at 15 percent capacity. In the U.S. there are nearly 180 biodiesel manufacturing facilities in about 40 states.
Total miles driven by U.S. citizens likely dropped last year. According to the Wall Street Journal, through October, miles driven in both passenger and commercial vehicles was 2.93 trillion miles compared with 2.94 trillion last year, mainly due to unemployment. And since 2007, gas consumption has dropped 3 percent due to unemployment as well. Fewer miles driven also means that there will be fewer traffic fatalities, and I predict that safety advocates will claim the credit. Traffic fatalities always drop when miles driven go down.
Coming up next, a look at Volkswagen’s amazing “transparent factory,” we’ll be back right after this.
On our trip to Germany last year to test drive the new Golf, Volkswagen took us through its Gläserne Manufactur, or transparent factory. This is where the company assembles its Phaeton luxury car. That’s right; VW still builds the Phaeton even though it’s not sold in the U.S. anymore.
This unique facility opened in 2002, and it’s unlike any other car factory in the world. Located in the historic city of Dresden in former East Germany, it looks more like an art gallery than an auto plant. It features vast expanses of glass and wood floors throughout. Accentuating the museum-like atmosphere, there’s almost no noise when the assembly line is running.
Keeping production moving, parts and sub-assemblies are transported to the plant via an electric tram that snakes its way through the city, while robots silently deliver parts to line workers wearing overalls and white gloves. Attention to detail even extends to the machinery, some of which tucks away under the floor.
The factory also features an on-site bar and restaurant, as well as a studio where buyers can customize their Phaetons in a variety of ways. Here clients can coordinate things like paint color, wood trim and wheels to match their taste.
Of course the car comes with all the luxury amenities you’d expect in a top-shelf sedan, and at least one you don’t. Volkswagen’s Phaeton is probably the only luxury car in the world that’s built in a luxury factory.
And that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you tomorrow.
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Comments (43)
January 4th, 2010 at 12:19 pm
Hey John,
Happy New Year.
Nice show today.
Re traffic fatalities, they are always given in deaths per 100,000,000 miles driven as well as in absolute numbers. Anyway, using your own numbers, what is the diff between 2.93 and 2.94 trillion miles? It might well be NONE, if the 2.93 was 2.934 rounded off to 2.93, and the 2.94 was 2.936 rounded off to 2.94! They are basically IDENTICAL!
Re India, you mentioned this and that stat, but you forgot the 800 lb gorilla in the room: While the population of india is about the same as that of China, Auto sales in India are STILL a PITTANCE compared to auto sales in China, which may well have surpassed the 10 or so million sales in the US for the first time in 2009!!!
By comparison, India auto sales are a laughable 1-1.5 million a year, barely ONE SEVENTH of Chinese sales!
And in addition, most cars sold in india are cheapo basic mod4ls with tiny engines and arounf $5k prices, until the $2k nano is sold in serious numbers (will take a while..)
January 4th, 2010 at 12:21 pm
With 1/3 the size of the US, a billion plus people, horrendous roads and traffic, the most popular car in India should be a bumper car. Their pedestrian fatalities should be very high.
January 4th, 2010 at 12:22 pm
PS $7,000 could make some already good GM bargains, such as the excellent Pontiac G8, esp. the 6.2 lt 400+ HP variety, interesting…but I wonder how many g8s are in the inventory.. they will go fast..
January 4th, 2010 at 12:24 pm
Pedro, I’m sure they have a ton of fatalities in india, largely due to millions of motorcycles loaded with families hanging from them like a bunch of grapes, but they would be much higher if they went at a higher speed, most indian traffic goes very slow, on many roads until recently you have not only cars, but… cows, (holy cows!), humans and other farm animals going at a snail’s pace and not caring they are in the middle of an highway.
January 4th, 2010 at 12:32 pm
Can’t wait to get the Tata Nano over here, they should call it the “ultimate suicide machine”.
January 4th, 2010 at 1:20 pm
Happy 2010 John:
If what the Detroit News reports that a federal tax credit for the eco-friendly fuel expired on January first, and National Biodiesel Board reports that their industry is only operating at 15 percent of total capacity. This must mean that the Obama Adminstration and Congress have been too busy with Healthcare Reform that everything other agenda has fallen to wayside.
The Petroleum Industry Lobbyists must be loving this one! If Obama and Congress do not act quickly we could see the failure of the entire Biodiesel industry in a few short months or weeks. This will mean the lose of countless American Jobs!
Yes, The price of regular diesel is low, and last year the EU placed import tariffs on the oily fuel. The United States needs to be concerned with our own Energy Independence Policy which helps us get out from under the
thumb of those who hate Western Society in those Oil Rich Countries. The EU also needs to develop an Energy Independence Policy in partnership with the US. We both need to foster renewable feedstock to increase the production of Biofuels and not impose misguided tariffs on “Oily Fuels”.
The US, UK and EU need to work together on formulating a energy strategy which promotes the creation of Biofuels from BioWaste and other renewable feedstocks. This idea has a three fold benefits: First is Job Creation, Second is Waste / Landfill Reduction and Reducted Waste Disposal Expense, Third is Energy Independence. This three things sound good to me. I would rather have fuel made from waste than spend my money to get rid of my waste.
January 4th, 2010 at 1:24 pm
if something makes economic SENSE, the markets will DO IT WITHOUT the MORONS in Government having to WASTE our hard-earned taxpayer dollars to do it. If something, like STUPID, STUPID Ethanol (sep. the CORN based ethanol we use here) makes NO econ sense, then the markets will IGNORE it, and all the hard-earned BILLIONS of our tax dollars SUBSIDIZING it will go down the effing drain.
I am all for higher gas taxes as a way to more efficient auto fleets, every SERIOUS economist knows that they will work, and that the wimpy irrelevant CAFE, an excuse for th ecowards in congress, has NOT worked ever.
I hope this remains a site for AUTO ENTHUSIASTS and does NOT become a site for crusading environut ENERGY ILLITERATES.
January 4th, 2010 at 1:28 pm
“# Pedro Fernandez Says:
January 4th, 2010 at 12:32 pm
Can’t wait to get the Tata Nano over here,”
There is ZERO point to bring it here. The nanos exported even to Europe will NOT be the base $2k nanos but upscale and safer vehicles selling fro twice the price, $4k, which is still dirt-cheap.
” they should call it the “ultimate suicide machine”.”
In india, if used as intended (at low speeds in traffic) it is NOTHING of the sort, and it is much, much safer than the little 50 cc scooters it replaces. I am an enthusiastic supporter of the Nano as India’s VW beetle or Corolla. It can also be exprorted to very poor nations and ALSO be a major improvement over the scooters and urban rickshaws used there.
Finally, there is a TON of GOLF CARTS in the US that are LESS safe than the nano. But nobody drives them at 60 MPH. When used as intended, both them and the nano are perfectly safe.
January 4th, 2010 at 1:32 pm
“The Petroleum Industry Lobbyists…”
The clueless fanatic who wrote the above must think that the CEOS of the oil majors are worse than Genghis Khan and Tamerlane (but probably has no clue how terrible they were)…
There should be NO SHAME for anybody to work in the international Energy industry, whether it is FOSSIL fuels or Wind or Solar, or even COAL! They all provide INVALUABLE services to the world, and allow most of its 6 billion to be able to work and live without wearing animal skins and beating each other over the head with clubs, as they USED TO before this terrible International Energy industry used Oil and gas to the benefit of mankind.
January 4th, 2010 at 2:38 pm
@Nick:
>There should be NO SHAME for anybody
>to work in the international Energy
>industry, whether it is FOSSIL fuels
>or Wind or Solar, or even COAL!
Or, nuclear energy.
January 4th, 2010 at 2:52 pm
Or, nuclear energy
I agree 100%.
While the US for 30 years was scared by irresponsible Journalism about the 3mi incident (and by the more real chernobyl disaster) and built no new nuclear plants, France has gone all-out nuclear and now is polluting less and profiting by selling its excess electricity to its neighbors. it also uses breeder reactors that reuse fuel instead of expensive and controversial storage as here.
We currently have 28 applications for new nuke plants in the US, a rennaisance of Nuke power was at hand, but in practice, due to the very high cost of modern, safe nuke plants (up to $10 billion each), probably not many of the 28 will be built. Another reason could be the recent huge natural gas US reserves that may make electricity from nat gas cheaper and substitute coal.
January 4th, 2010 at 3:13 pm
Hey, JohnMc; Happy New Year to you and everyone at Autoline.
1. I guess GM solve manage to solve that strike problem over in India during this pass holidays and that’s why they expect to have a good year.
2. I can’t believe for the life of me, that there is people who are that remove and don’t know which company is selling them a car.
3. Man, I wish I could work for Hyundai.
Sometimes I wish I wasn’t so lazy.
4. Finally, that German factory sure is impressive; too bad the Phaeton is not as good or quiet or efficient or modern or cool or name Pheaton.
January 4th, 2010 at 3:21 pm
Oh I forgot-
5. JohnMc. Why is it that the biodiesels producers, didn’t even bother to ask for an extension before the year was over?… considering that they must had known when their tax credit would end.
January 4th, 2010 at 4:10 pm
It’s too bad about bio-diesel hitting the skids.Just as diesel engine makers are trying to make them all compatible for B-20.By MANDATING B-20,that will really help out all that want and need a diesel powered vehicle.But I guess the boy king thought it more important to bail out the useless/greedy banks.Smooth move….exlax.
January 4th, 2010 at 4:11 pm
Using natural gas for generating electricity in large centralized power stations, is like using a luxury limousine to haul garbage. I’d rather use natural gas directly as a transportation fuel, or as feedstock for various synthetic fuel processes.
January 4th, 2010 at 4:49 pm
Nick wrote:
“Finally, there is a TON of GOLF CARTS in the US that are LESS safe than the nano. But nobody drives them at 60 MPH. When used as intended, both them and the nano are perfectly safe.”
The trouble with golf carts on public streets is that they don’t keep up with even low-speed city traffic. A few people drive them here in places where they are a real hazard, both to their occupants and to everyone else. The Nano wouldn’t have this problem. It would keep up with traffic on SR A1A here on the Florida coast, and would be much safer than a motorcycle. The motorcycle is more fun, though.
January 4th, 2010 at 4:53 pm
Alex Kovnat Says:
January 4th, 2010 at 4:11 pm
“Using natural gas for generating electricity in large centralized power stations, is like using a luxury limousine to haul garbage. I’d rather use natural gas directly as a transportation fuel, or as feedstock for various synthetic fuel processes.”
Natural gas is at its very best for home heating, where 80% and higher efficency furnaces are now the norm. I doubt if efficency is even 50% by the time you burn gas in turbines running generators, and then distribute it in the form of electricity.
January 4th, 2010 at 5:19 pm
john what do you mean disel feul is cheep? I just payed 2.89 a gallon!! why dont thay just make more of the stuff and give up a break?
January 4th, 2010 at 7:22 pm
I know that people say that there is alot of Nat gas, but live where it gets cold and snow and my home heating gas bill does NOT Need to be any higher. I still say that if we use nat gas more and more in power plants or to fuel cars it WILL drive up the price across the board.
That is about the only thing about the EU that is good…nuke power is used alot more than in the US
January 4th, 2010 at 7:25 pm
Stressing over which energy technology will be used as man’s next temporary energy “FIX” ignores history. Cooking on a wood fired stove 150 years ago was the energy “IT”. In many 3rd world countries today wood fire cooking still is “IT”. We need the power cell which energized the “Back To The Future” Delorean flux capacitor, yeah, fueled with banana peals and beer cans. Suddenly rubbish becomes a commodity. ……. All the “ultimate energy source” arguments posed here are just variations of the same old song. We need to look at this problem trough a prism which shows new options as yet to be found.
January 4th, 2010 at 7:31 pm
There is a lot good about the EU, nuke power, high motor fuel tax, universal health care, and other things too numerous to list. There is a lot good about America too. I guess all of this is kind of off-topic, though.
January 4th, 2010 at 8:35 pm
I don’t know if it will sell cars, but I really like the “nostalgia” Chrysler ad. I suspect I like it because I was once a hard core Mopar buff, and it was neat to see the old cars I’m familiar with.
January 4th, 2010 at 8:36 pm
High fuel tax is a good thing? Fair taxes to pay for roads, police services, garbage collection etc….
January 4th, 2010 at 8:48 pm
John, You might want to talk to the Itunes folks.It is nearly 2100 and today’s Autoline Daily has not been released. I had to come here to the website to watch it. Thought you’d want to know.
January 4th, 2010 at 8:54 pm
One caveat about nuclear power is that in the process of building the plant (think concrete) and refining the uranium (think spinning centrifuges) quite a bit of CO2 is released. If memory serves, a nuke will release one-third the CO2 of a conventional power station. My numbers are probably off, though.\
January 4th, 2010 at 9:29 pm
Anything is better, CO2-wise, than coal which now produces about half the power in the US.
January 5th, 2010 at 2:27 am
John, I think its a bad idea right now for Hyundai to start a 3rd luxury channel, and this is a heavy debate in the Hyundai community. Should we have Hyundai as Near Luxury, and Genesis products as a Separate Luxury Brand? Or should we act like a cheap Korean Benz with Affordable Near Luury Front wheel Drive products from Azera on down, and have RWD Luxury Sedans above Azera? Or, should we wait and buy a weak upper Tier Luxury make like Jaguar the day TATA sells it on the cheap.
The reasons why I think its a bad idea for a 3rd brand right now.
1. Genesis/Equus helps give the Hyundai brand a boost, and additional credibility when guys like Krafick say they want Hyundai to be an “Aspriational” Brand, and uses examples like New Sonata of its “Premium” Aspirations for the rest of the line-up.
2. You say it would cost Hyundai Hundred of Thousands of Dollars to make these showroom changes, but Hyundai says it would cost close to $2 Billion for a separate Luxury Channel. What’s better 2 Billion, or a few hundred Thousand Dollars?
3. Gas Prices here may be lower than the rest of the world, but for American Stadards they are high. Another RWD executive Sedan Marque would only give Hyundai/KIA more work to do as they want to always
I thik they should wait 5 years, build the Hyundai name up to a Chrysler like Brand, and if and only if market conditions: Fuel prices, Economy, etc… permit, then do an upper tier Luxury brand. Hyundai conducted a hostile takeover of KIA, and I think wth Hyundai’s very conservative business culture, they will play it safe, and decide to treat Genesis/Equus owners differently than Sonata/Accent owners. Or, they will bulid credibility and wait until a make like Jag is vulnerable, then pounce. Hyundai Practices business like Walmart, then again the entire Hyundai Industrial Conglomerate is almost as big as Walmart. Hyundai maybe the worlds 4th largest Automake, but their Auto buiness is Peanuts to this company. By the way, Im starting to see many Hyundai Buldozers, and Cranes on US construction sites now.
A SAAB or Volvo Purchase would be impossible as Hyundai as a whole is headed for that kind of lower tier premium positioning. They would have to purchase something more “Upmarket” than that to make their goals possible. However, I think Hyundai making a 3rd brand from scratch is too outlandish too risky a business practice for this Ultra Conservative company.
January 5th, 2010 at 3:28 am
So John, in essence I think HMA is doing a Lincoln-Mercury type strategy. Genesis stuff on top and the Hyundai stuff as Filler between Genesis Products and KIA. Hey, they got an old Ford guy there in Krafcik, so its seems quite coincidental.
January 5th, 2010 at 3:33 am
By the way, that Cadenza that KIA plans on dropping in Detroit will give some nice but diferent Competition to the Non-Taurus SHO variants, well for now.
They have a 4.0L (TOP SECRET POWER) V8 they plan on suprising us with at some time in the future.
January 5th, 2010 at 7:05 am
regarding the EU Kit, you forgot super high umemployment, riots, setting car on fire, and tring not to report anything in the news. Well….The US and the EU share more than I thought
January 5th, 2010 at 9:15 am
http://www.detnews.com/article/20091231/OPINION03/912310364/1149/AUTO01/Best-and-worst-vehicles-of-the-decade
Best and worst vehicles accordign to Detroit News Journalist
I find myself, surprisingly, in full agreement for the segments I care, and for the overall worst (AZTEC, how can you top that!).
I am pleased to see he has the so-called “SMART” as the WORST in its segment, and PRIUS as the best in its. Also that the god-awful sissy car the Jaguar X-type Ford clone was also listed as the worst in its class (near-luxury subcio mpact wannabe?). And the Sebring gets hit hard too, no surprise there except maybe for… Max.
Also note there was no Hyundai or Kia at the worst list, but not at the best either. Makes sense.
January 5th, 2010 at 9:40 am
I think Hyundai should use the name Genesis for one car, their top luxury sedan, just as Toyota should have used the Lexus name for the LS, and called all these other Lexi Toyotas. It works for Mercedes in Europe to use one name plate for everything they sell from A-Class to S-Class.
January 5th, 2010 at 9:47 am
“Kit Gerhart Says:
January 4th, 2010 at 7:31 pm
There is a lot good about the EU, nuke power, high motor fuel tax, universal health care, and other things too numerous to list.”
Re Nukes, Only France went nuke in a big way, and maybe one or two small euro nations, but all others, incl the biggies Germany, Italy and the UK closed dowm more nuke plants than they opened.
An old friend and colleague discussed this with me (he’s a BErliner!) and admitted they were qwrong not to go nuclear, because now, despite all the alt energy and renewables the germans use, they use too much polluting fossil fuels to generate power and the EU enviros are after them.
January 5th, 2010 at 9:50 am
“Natural gas is at its very best for home heating, where 80% and higher efficency furnaces are now the norm. I doubt if efficency is even 50% by the time you burn gas in turbines running generators, and then distribute it in the form of electricity.”
That has been exactly my own position, that nat gas is a noble fuel and we should not use it to generate power instead of coal and nukes, but the recent claims of unlimited gas reserves in the US (enough for 90 years at the current high rate of use) suggest we may be able to do both and prices will not go up (may come down even)
January 5th, 2010 at 9:52 am
“Alex Kovnat Says:
January 4th, 2010 at 4:11 pm
Using natural gas for generating electricity in large centralized power stations, is like using a luxury limousine to haul garbage. I’d rather use natural gas directly as a transportation fuel,”
Using nat gas to power private autos is not efficient, the tank takes half the trunk and the range is a paltry 250 miles or less. But nat gas cars would be good city vehicles for fleets that do no tneed a lot of trunk space. Also as Boone Pickens proposed last year, we could use nat gas to power 18-wheelers, space is not an issue there to put the huge cylindrical tanks that will be necessary.
January 5th, 2010 at 9:54 am
The Aztec wasn’t that bad of car, but it was so UGLY that most people would be embarrassed to drive one, even if it would serve their purposes well. I also had a problem with the name. I don’t like the use of deliberately misspelled real words as car names. GM has used a lot of them, like Prizm, Savana, Ciera, and Aztec. Of course, GM is not alone. KIA doesn’t know how to spell Sorrento.
January 5th, 2010 at 10:05 am
Top users of nuke power in Europe in 2008:
France 76.2%
Lithuania 72.9%
Slovakia 54.4%
Belgium 53.8%
Sweden 42%
The article listing the above also gave the number of plants under construction. All of the new plants are in the old Eastern Bloc except one plant each in France and Finland.
January 5th, 2010 at 10:10 am
If natural gas is really as plentiful as some are saying, the fuel would make sense for commuter cars which are refueled at home. It would be pretty easy to set up a fueling system in an attached garage which already has a gas furnace and water heater. I would have to be done right, though, or there would be some house bombs going off.
January 5th, 2010 at 11:03 am
Most working people cannot afford two cars per member of a family. The commuter car should be able to double up as a weekend car and as a long trip car. which disqualifies the nat gas cars for private owners. But there are almost millions of fleet cars in cities that can be either hybrid, plug-in hybrid, or nat gas powered, as long as they do not need the big trunk space.
I read an interesting statistic today,
In 2009, 10 million new vehicles were sold in the US, but 14 million were scrapped (only 700,000 of these were CFC), which means that the US vehicle fleet (light vehicles) went down by 4 million units!
Tjhe article went further to ask if this means the 100-yr love affair of the US with the car is over, a rather extreme claim. Most likely the cars scrapped were not used a whole lot and became uneconomical to pay insurance and license fees for them, so they scrapped them.
January 5th, 2010 at 11:17 am
Well, I’m not surprised at all, as people lose their jobs and income they have to eat, need a roof over their head, but you don’t need 2 cars in the family garage. Keep the old one sell the newer one and take the bus or a taxi or even rent a car if you have a trip coming.
January 5th, 2010 at 12:27 pm
Nick Stevens Says:
January 5th, 2010 at 11:03 am
“In 2009, 10 million new vehicles were sold in the US, but 14 million were scrapped (only 700,000 of these were CFC), which means that the US vehicle fleet (light vehicles) went down by 4 million units!”
I suspect there are fewer cases like myself, of one driver with 4 cars.
January 5th, 2010 at 12:33 pm
Nick Stevens Says:
January 5th, 2010 at 11:03 am
“Most working people cannot afford two cars per member of a family. The commuter car should be able to double up as a weekend car and as a long trip car.”
At some point, I suspect more people will buy what they need “most of the time,” and rent something else for the one long trip they take in a year. Also, there are a lot of households where two cars are needed, but one can be strictly a “commuter car,” and the other something larger.
January 6th, 2010 at 1:11 am
What’s up with the iTunes audio feed?
Has anyone updated the RSS file?
BTW you would save a lot of bandwidth if you only listed the last 20 or 50 or even 100 shows in the RSS feed instead of all 300.