
by Dr. Iain Corness |
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PAG looks to the USA for its
salvation
It is no secret that CEO Bill Ford expects
each section of the FoMoCo empire to pull its weight and
produce a profit. One group that has not, in fact quite the
reverse, has been the Premier Automotive Group (PAG)
comprising Jaguar, Land Rover, Volvo and Aston Martin. To turn
this around, new blood was brought in, after the old blood was
spilled (previous PAG CEO Reitzle).

Mark
Fields
Mark Fields, previously in Mazda, was named
CEO of Ford’s Premier Automotive Group in July 2002 and has
spent the first six months on the job learning the differences
between his four luxury brands and setting priorities for
cross-brand efficiencies (in corporate-speak). In other words,
he now knows the differences between a Land Rover and an Aston
Martin, and whether you can get a Landy engine in a Jag and
vice versa.
After his speech to the Automotive News
World Congress, Fields said he plans to implement at least the
top three of his priorities this year. They are to launch
products flawlessly, secondly to reach efficiency and
cost-saving goals and thirdly to balance its marketing
equation of vehicle volume, marketing costs and pricing.
According to Automotive News, Fields would
not disclose specific goals for efficiency and cost savings
among his four brands, nor would he say how much PAG is
expected to contribute to FoMoCo’s earnings goal of 70 cents
a share for 2003.
However, he did elaborate on a few areas.
“In the United States, just on facilities costs alone,
we’ve saved about 6 percent,” Fields said. “As you look
at logistics, there are huge opportunities there. We kind of
combined port logistics here in the U.S., and that saved us
about 7 percent. Depending on the issue, you can get some
quick wins. Other things will take more time.”
Examples of cost savings that will take
longer are parts sharing between the brands. For example, he
said that versions of Volvo’s 6-cylinder engine will be
shared among the group, commencing around 2005. Volvo engined
Jaguars are on their way.
Bunging all the four brands under one
dealership roof, will not necessarily occur, though in some
regions this will happen, but Fields would not be specific on
this.
In his prepared remarks, Fields told the
World Congress attendees that he is particularly focused on
the United States, PAG’s most important market. “Strong
premium and luxury credentials give our brands great
potential,” Fields said. “But if we are to realize that
potential, and make our full contribution to Ford’s
revitalization, we still have a lot of work to do.”
Brighter
future?
At the same Automotive News World Congress,
the GM Vice Chairman Robert Lutz gave his views on the way the
American auto scene was headed, and the tough old car man
acknowledged there were problems, but none that the industry
couldn’t take care of, in his opinion.
Bob
Lutz
In his speech, Lutz listed four guidelines
the industry could follow to reach a new Golden Age:
1. “The world is what it is: Deal with
it.” Companies must remain calm while dealing with change
and difficult market conditions. “Companies with common
sense of purpose will be able to swiftly adapt to all sorts of
market conditions, and those that cannot will suffer because
of it.”
2. “Like humans, all companies are
different; do what’s best for your particular situation.”
Each company must find its own formula for success, based on
its own strengths, markets and culture. “We all have a
tremendous opportunity to build the best vehicles that have
ever been built. And part of the reason why is these diverging
product philosophies that result from the diverse, creative
talent pool at our collective disposal.”
3. “The love affair with the automobile
is not dead - but maybe we just forgot how to do it!”
Resurgent automotive design, power train innovation and
advanced technology, such as hybrid vehicles and cylinder
deactivation, will win back customers’ affection. “The
automobile is still the most emotional product on the market
today.”
4. “Seventeen million buyers can’t be
wrong.” Four years of 17-million U.S. vehicle sales show
that buyers still crave cars. “The demand and attraction
still exist,” Lutz said. “If the passion part of the
equation has stagnated a bit - well, that’s going to
change.”
Lutz is certainly the man who is putting the passion back
into the GM line-up, with the Pontiac GTO and the Cadillac
V16, 1000 horsepower, concept car being shown at the Detroit
show.
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What will really happen with
Eff Wun
Since last week and the FIA’s bombshell
to the Grand Prix circus teams, the team owners have come out
of their foxholes and we are now in the situation of seeing
the real situation.
Just recapping, the main parts of the FIA
decree was to eliminate driver aids - make the expensive
parking jockey change his own gears, get off the line by
himself and watch his own instruments and drive accordingly if
the engine oil temperature was getting too high, instead of
having the engineers limit engine revs and such, all done
electronically from the pit wall. There was also the edict
that spare cars were to be a no-no as was driver to pit
communication and pit to driver radio.

2003
Renault F1
The constructors have a body called the
Technical Working Group, and this has helped iron out some of
the more ambiguous proposals put forward by the FIA President
Max Mosley.
One of the main problematical areas was
when exactly were most of the driver aids to be dumped?
Although all driver aids are banned for 2004, the FIA seemed
to leave it up to the individual teams to decide when, or even
if, the devices should be removed this season. Knowing the F1
teams, this did not seem to be all that bright!
The FIA has now clarified some of the
rulings, stating that traction control and automatic gearbox
will be outlawed from the British GP onwards, six months
hence. Launch control will also be banned after the British
GP, providing all teams can operate their clutches manually.
Eh? Has Michael Schumacher forgotten how to use the left side
pedal? And he gets 30 million big ones a year? Come on!
Spare cars, which were originally going to
be banned, will now be allowed, but only if a car is seriously
damaged in practice or qualifying. The spare car will also be
released for use if the race is red flagged during the first
two laps. The spare car will also be allowed if one of the
main cars fails just before the race. In both instances the
spare car will start from the pit lane. This is a little bit
more sensible. The spectators (us) want to see the maximum
number of cars out there.
Although pit-to-car telemetry remains
banned, car-to-pit telemetry is now allowed. Furthermore,
contrary to the FIA’s earlier ruling, radio communication
between the pits and drivers will be allowed providing the
communication is left open to the FIA and the media. So now we
should be able to hear just what goes on, like, “Michael,
let Rooby Baby win this one, go on. You won the last one, be
fair!”
Ah well, we shall see, but don’t expect
drivers to be using their clutches and changing gears by
themselves in Melbourne!
Gloom and Doom ahead?
Morgan Stanley Managing Director Stephen
Girsky told the Automotive News World Congress that slumping
markets overseas and declining domestic sales are likely to
create a tough year. While the US markets have continued to
experience 17 million car sales a year, this is a false
barometer of the true situation says Girsky. He cites the fact
that competition has grown even stronger between automakers
and much of the sales has been brought about by decreasing
profit margins, keeping prices artificially low.
Morgan Stanley projects 2003 US sales of
15.9 million - low compared with most other industry
estimates, which are in the 16 million to 16.5 million range,
and much below the previous marks. In addition, Girsky said
poor sales in markets such as Japan and Brazil are likely to
prompt automakers to ship vehicles built in those markets to
the United States. “We expect Japanese sales to be up about
1 percent this year,” he said. “The worry is that demand
is weak in Japan and that capacity is going to find its way
over here.”
He also pointed to other indicators for a
bad year ahead with hikes in interest rates, petrol prices,
consumer confidence, used-car values and unemployment rates.
He also said that the downturn in leasing and the upsurge in
low interest car loans would not be beneficial to the
industry. “Fewer consumers are going to be force-fed back to
the dealership,” he said.
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Autotrivia Quiz
Last week I said let’s go across the pond
to the UK and specifically Jaguar, even though it is now owned
by FoMoCo. The XK 120, a classic, was the result of a cock-up
by the bodywork company that had been assigned to build the Mk
VII Jaguar sedans. They were unable to deliver on time for the
1948 London MoShow, and the boss of Jaguar, Sir William Lyons,
said that if nothing else, the new chassis would go on
display. To make an impact, he designed a spectacular 2 seater
bodywork to go on the chassis. This was called the XK 120. Now
I am coming to the question - I asked how did they pick on
that designation for the 2 seater Jaguar? A clue - there was
one reason for the XK part and another for the 120 bit. This
was easy, the experimental engines were designated XA, XB, XC
etc and the one in the final mock-up was the XK version. The
120 came from the estimated top speed of the car - 120 mph.
Simple!
So to this week. Another easy one and
let’s stick with the XK 120 Jaguar. What speed did it do?
For the Automania FREE beer this week, be
the first correct answer to email [email protected]
Good luck!
Buying a car
on the drip. How long before you can sell it?
Hire purchase, low interest, long term
agreements are all the rage, both here and overseas. You can
buy most vehicles these days on minimum deposit and sometimes
zero percent interest rates. This looks attractive, bringing
many new cars into the “affordable” region for many wage
earners. But there is a catch.
As soon as you drive out of the dealership,
the value of your “new” car just fell - alarmingly! In
simple terms, you now owe more on the car than you can get for
it if you try and sell it. Financially, you are now caught. If
something happens and you cannot afford the repays any more,
you are sunk. Get out and cop a big loss.
I came across some interesting statistics,
in America in the fourth quarter of 2001, it took 26 months
for consumers to get “above water” on their car loans, but
that figure had risen to 33 months by last August.
Frightening. And worth remembering!
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