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Episode 564 – Where’s the Profit in China? The Biggest Assembly Plants, Uh-Oh Parts Shortages

January 25th, 2011 at 12:11pm

Runtime 7:54

GM’s selling more cars in China than in the United States, but guess where most the profit comes from. Speaking of “most” where do the most vehicles get built in North America? We have the answer. Ford is closing a plant due to a supply shortage, and you can expect to see it happen again. All that and more, plus we get some track time in the Dodge Challenger 392.

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This is Autoline Daily for January 25, 2011. And now, the news.

CHINA IS GM’S #1 MARKET
Six years ago General Motors hit quite a milestone. In 2005, for first time ever, GM sold more cars overseas than it did in the American market. And now GM has reached another milestone. Last year GM sold more cars in China than it sold in the US, specifically 2.3 million vehicles in China versus 2.2 million in the US. And that’s important. However, here’s my Autoline Insight. GM doesn’t make nearly as much profit in China as it does in the US. The company doesn’t break out its profits in China and there is a good reason for that. There isn’t much to report. In fact, in the third quarter of 2010 GM’s North American operations made three and half times more profit than the rest of GM’s international operations, excluding Europe. I sure would love to see any of the major automakers report their revenue and profits from China. But so far none of them are doing it.

CHINESE LOVE IMPORTED SUVs
Speaking of China, it imported a record number of new vehicles last year. Gasgoo reports that China imported 650,000 vehicles in 2010, an increase of 80%. Interestingly nearly 60% of those imports were SUVs, mostly luxury SUVs from Mercedes, BMW, and Lexus. Hello! That ought to be a wake up call to the Detroit Three. They make more SUVs than anybody else. Not only should they be exporting them to China, they ought to introduce their full-size pickup trucks to Chinese consumers. Now that could be a game changer.

GM ADDS TRUCK SHIFT
Speaking of full-size pickup trucks, GM is adding a third shift at its truck plant in Flint, Michigan and hiring 750 line workers to build more heavy-duty versions of the Chevrolet Silverado and GMC Sierra. Those are true work trucks, typically bought by contractors and construction workers, and that’s another sign the US economy is recovering.

FORD’S PARTS SHORTAGE
But in related news, Ford is going to close its truck assembly plant in Dearborn, Michigan for a week due to a shortage in engine parts. The Detroit Free Press reports the shortages are in electric motors and wiring harnesses and the affected engines are Ford’s 3.7 L V-6 and its 3.5 L Eco-Boost engine for pickups. Here’s more Autoline Insight. We’re going to see a lot more of these part shortages as the year goes on. In fact this is going to limit any increase in sales. You may have heard some analysts predict that SAAR rate will hit 15 million units by the end of the year. Uh-uh. Ain’t gonna happen. The supplier industry can’t keep up. Remember, you only need one component missing to shut a plant down.

NORTH AMERICA’S BIGGEST ASSEMBLY PLANTS(subscription required)
As long as we’re talking about assembly plants, Wards just published some interesting numbers. The highest volume assembly complex in North America is Volkswagen’s plant in Puebla, Mexico. It makes the Jetta, Bora and Beetle and last year it made over 434,000 of them. Toyota’s assembly complex in Georgetown, Kentucky is the second largest in North America. It makes the Camry, Avalon and Venza and it made more than 371,000 of them. The third largest plant is Nissan’s in Aguascalientes, Mexico. It makes the Sentra, Platina, Renault Clio and Versa/Tilda. Last year it made over 334,000.

Coming up next, I’ll take you for some track time in what they’re calling the 392 version of the Dodge Challenger.

I recently got a chance to take a Dodge 392 Challenger out for some laps at Sears point Raceway in California. The 392 is part of the SRT-8 package on the Challenger. Dodge just kicked it up a notch by dropping in a 6.4 L hemi V-8. That’s bigger than the 6.1 L that used to be in this car. And they’re calling it the 392 because that’s the cubic inch displacement. Here’s what I’ve found during my test drive.

Let me tell you driving the car on the track felt a lot faster than what this video captures. The 392 packs 90 more foot pounds of torque than the prior engine. All told, the engine bangs out 470 hp and 470 pound feet of torque. Maybe they should’ve called it the 470.

If you live in the Washington, DC area, and are interested in going to the Washington Auto Show, we’ve got free tickets to hand out. Let us know if you want any by dropping us an e-mail addressed to viewermail@autolinedetroit.tv. We’ve got lots to give away, so don’t be shy.

And that brings us to the end of today’s report on the top news in the global automotive industry. Thanks for watching we’ll see you tomorrow.

Thanks to our Partners for embedding Autoline Daily on their websites: Autoblog, WardsAuto.com and WWJ Newsradio 950

43 Comments to “Episode 564 – Where’s the Profit in China? The Biggest Assembly Plants, Uh-Oh Parts Shortages”

  1. HtG Says:

    Hey, they don’t trust you journalists to go up the hill and make that down hill left? Couldn’t be the car don’t like it either?

  2. tj Martin Says:

    John ;

    Get Chrysler to give you a spin in the Viper powered Challenger Drag Pack . Then convince Marchionne and company to do a Road Version as Ford has done with the BOSS 302 .

    BOSS 302

    Viper powered Challenger

    Get a new ZR1 powered Z28 Camaro and we’ll be rockin down the highway

    Bet those Chinese might like these as well !

  3. Tony Gray Says:

    Oh boy, just what we need. If China falls in love with our full size pickups the resulting rise in consumption will cause the global price of oil to skyrocket even faster than it is now! Be careful what you wish for.

  4. Tony Gray Says:

    Oh, nice ride at Sears Point John.

    Open face helmet, no firesuit or HANS device…old school buddy!

  5. tj Martin Says:

    @ Tony Gray ;

    Well it seems there’s no stopping them ( China and India’s obsession with getting everyone into an automobile , more often than not when it comes to the ruling classes , some large gas sucking Luxury or SUV beast )

    So I figure we might as well have a bit of fun while we still can . Till the Well Runs Dry that is .

    If you can’t beat them , why not have some fun in the mean time ?

  6. Kit Gerhart Says:

    For those not old enough to know the significance, the largest of the “old” hemis of 1951-1958 were 392 cubic inch. ’57 and ’58 New Yorkers, and the 300C and 300D of those years had 392′s.

  7. bob Says:

    http://www.autoblog.com/2011/01/25/volkswagen-brings-xl1-concept-a-step-closer-to-reality/

    Volkswagen has taken another step towards making the one-liter car a reality, and this 200 mile-per-gallon dream could be on the roads within the next few years.

    “The Formula XL1 Concept combines a two cylinder TDI engine, electric motor, lithium-ion battery pack and a seven-speed dual-clutch transmission to achieve an astonishing 0.9L/100 km – just over 260 mpg to us Yanks. The included plug-in system, along with the XL1′s low drag and extensive use of lightweight materials has the potential to make the concept the most efficient vehicle to ever grace public roads.”

  8. Bob in Atlanta Says:

    So it appears that US consumers are also subsidizing GM’s China strategy in more ways than just owning the company. Sounds like the old GM plan to me – lose money on each sale, but make it up on high volume. That worked great!

  9. bob Says:

    http://www.thetruthaboutcars.com/2011/01/vw-updates-the-one-liter-235-mpg-car/

    When a gas tank less than 3 gallons gives you a 341 MILE range!!!!!

    You can’t top this even with the skinniest of scooters

  10. bob Says:

    2.6 gallons to be exact, 341 mile range!

  11. Carlos Says:

    Hi John,
    I have been watching the succes of the Hyundai Sonata in US market for quite a while and I wonder: why Hyundai does not sell this model in Europe ?

    Carlos from Portugal.

  12. Dale Leonard-Lakewood,Oh Says:

    Hey John,Loved the test ride. Now lets do one,Full Throttle, in a Leguna-Seca Mustang.

  13. dcars Says:

    It didn’t sound like GM was loosing money on China, just not making very much. With so many choices it sounds like it is a very competitive market. I hope that’s the case.

  14. Bob in Atlanta Says:

    In “racing” news, the AP reports the FOX Sports chairman thinks NASCAR “races” are too long. See: http://www.google.com/hostednews/ap/article/ALeqM5h715XYHdpmIQCwKYLlFg-Y5iMq5Q?docId=dfa4df75ecce4241bdbe034836b4dfc7
    I agree – they are typically 300 to 500 miles too long. Driving I-285 around Atlanta is more exciting.

  15. dcars Says:

    Driving nearly identical vehicles isn’t very exciting either.

  16. pedro fernandez Says:

    From yesterday no Bob I was not joking I do find the Crosstour interesting and a poor man’s X6. The way things are going the Chinese might donated their discarded bikes to us, if their increased demand for oil push up the price even more. #13 I always knew that, people just tune in for the crashes and the finish if it’s close

  17. pedro fernandez Says:

    This weekend I’m going to a Nissan Leaf demo at a local mall, I want to see if there’s a diff between the Leaf and my crippled uncle’s electric hover-around thingy.

  18. Gary Paul Says:

    Yes the “392″ refers to the cubic inch size and makes a connection to the hemis last offered in that size in the 1958 model year. With power like this it would be great if Dodge kept working on the Hemi and used it in the Viper (as has been speculated). Personally I wish they would ash can the V-10, develop the hemi (even though it is hardly a hemi design (but a very good marketing move all along calling it that)). With amortizing costs using this engine the Viper could then live on with traditional V8 type American power. With the $$ saved they could spend more on developing the performance potential, producing fully beyond 500 hp (and sounding better than the Viper’s V-10), & pass down the performance upgrades to the Challenger/Charger/300/etc. But that would make too much economic sense–and it’s not “exotic” enough to please the guys who want people to see them as they drive the car up to a whole 2000 miles a year. :-)

  19. XA351GT Says:

    That is Bullsh!t about NASCAR races being too long. Just because most people have short attention spans doesn’t mean that they should change the race distances. Back when they started NASCAR these 500 mile races lasted over 6 hours. NASCAR is endurance racing. If you want shorter races watch Indycar. Fox needs to look at those numbers . Indycar races are 2 hours long in most cases and their rating suck worse than NASCAR. The problem was over saturation. You had all these new NASCAR fans that drove up the numbers. Attendance at the races is way down ,but has nothing to do with race distances it is ticket prices . The economy has tanked and taken auto racing down with it. No other sport is so dependent on advertising and merchandising. So Fox quit trying to place everything in a nice little box. If you don’t like the package then don’t buy it.

  20. Kit Gerhart Says:

    I’ve heard that TV viewership is down for NASCAR, but, in my case, there is a very good reason. Most of the races aren’t on broadcast TV any more.

    When I’m in Indiana over the summer, I get TV over the air, and none, or almost none of the races are broadcast. A few years ago, all of the races were on broadcast TV.

  21. Bob in Atlanta Says:

    XA351GT has some valid points about NASCAR.
    First, yes, the health of the economy does impact auto racing more than other “sports”.
    Second, a NASCAR race was an event to be experienced in person – qualifying day, then raceday. It was a destination event. TV popularized NASCAR at first – showing fans the competition and the fun. Then TV took over – now the media folks want a neat 3 hour time slot to fill, and NASCAR tried to provide the programming the networks wanted. Now we have “Dancing With the Cars”! It ain’t racing anymore.

  22. Alex Kovnat Says:

    >Oh boy, just what we need. If
    >China falls in love with our
    >full size pickups the resulting
    >rise in consumption will cause
    >the global price of oil to
    >skyrocket even faster than it
    >is now!

    I am reminded that years ago, one part of our government lambasted the way cigarette companies were hooking our young on smoking, with all its dangers to health. But another part of our government was actively promoting the export of tobacco to consumers outside the USA, so tobacco farmers would have jobs.

    In more recent years it has seemed to me that one part of government lambasts the exhaustion of petroleum resorces and the death of 50,000 (more recently though, not so many as that) Americans in motor vehicle accidents. But then, another part of us wants to export big, profitable vehicles to China. Just like the Department of Agriculture once promoted cigarette sales to Asians.

  23. Bob in Atlanta Says:

    Alex Kovnat: A quote from my favorite economist of all times: “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.” – Milton Friedman

  24. XA351GT Says:

    The other thing this Fox mouth piece didn’t say is it is okay to fill 15 hours of SpeedChannel programming with all things NASCAR. I mean come on NASCAR Chef ,you have to be kidding. Fox owns the network and rams this crap down motorsports fans throats instead of broadcasting real racing from a another series of racing.

  25. C-tech Says:

    Exports of the big SUV’s may mean greater oil consumption, but let’s face it, either GM Ford or Chrysler does it or Toyota Nissan or VW does it. Where do you want the jobs to go?

  26. XA351GT Says:

    Oh and when Fox broadcasts the Super bowl it’s okay to use 12 hours of programming between pregame ,post game and halftime and if there is time left maybe the damn game.

  27. HyundaiSmoke Says:

    I’d rather drive a Chinese car over a Toyota!! :D

  28. Ross in Australia Says:

    Hey John, you mentioned the vehicles built by Nissan in Mexico, and called one of them ‘Tilda’.
    Its actually called ‘Tiida’.
    Cheers for a great site.

  29. bob Says:

    “pedro fernandez Says:
    January 25th, 2011 at 4:34 pm

    From yesterday no Bob I was not joking I do find the Crosstour interesting and a poor man’s X6.”

    I find the XCrosstour AS WELL AS the god-awful, Obese, impractical, no rear seat room X6, REPULSIVE.

    But the Crosstour is one order of magnitude uglier than even the X6. You are in PONTIAC AZTEC territory. Don’t defend the AWFUL Crosstour, it will only make it worse.

    And what does this have to do with that oft-repeated Chino-phobic rant you inserted in the middle of your reply? NOTHING.

  30. bob Says:

    # Bob in Atlanta Says:
    January 25th, 2011 at 9:44 pm

    Alex Kovnat: A quote from my favorite economist of all times: “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.” – Milton Friedman

    OUTSTANDING Quote, and this GIANT of an Economist, despite his small stature when he was alive, is also my own favorite economist, the others do not even come close.

  31. HtG Says:

    Yesterday I had the pleasure of driving behind the famed Pontiac Aztek. Directly in front of it was an X5. Those cars just looked so similar in shape, size, and purpose, I couldn’t help wondering what would have been had the Aztek not been stripped by the bean counters. Man was the Aztek stunningly, nauseously ugly. Today, not so bad.

    And you’re going to have to put me on your brown list, bob. I actually like the looks of the Crosstour. Kind of elegant-ugly. Same for ZDX, which I walked around for 15 minutes. It’s really well executed, inside and out. I know these cars are ugly ugly ugly, but I like them.

    Now don’t get me started on X6. That thing makes me angry enough to get my keys out.

  32. HtG Says:

    I can’t imagine how hard it is to drive those two Hondas, with that rear three-quarters.

  33. bob Says:

    And BTW pedro, why even bother to look at that ugly Crosstour from Honda, when you have the far better looking AND more practical Toyota VENZA, which also gets far better MPG AND costs less than the Aztec-X6-Crosstour? I rest my case.

  34. bob Says:

    And no, the Crosstour is not elegant-ugly, it is obese-ugly and also front overhang-ugly. Not an efficient design.

  35. bob Says:

    CHINA. The TRUE land of OPPORTUNITY EVEn for the VW Phaeton!!!!!

    “The recession must have come to a sudden end. Volkswagen can’t make enough Phaetons to meet demand. Last year, Volkswagen sold 7,000 of the facelifted Über-VW. This year, all indicators say “mehr.” You probably suspect who’s buying most of those Phaetons:

    The Chinese.

    China has become the biggest market of the Phaeton. It is being built in what must be the world’s fanciest car factory. Imagine shiny parquet floor. Bright wood where no tires touch the floor. Dark wood where the car come down to earth. To fill the sudden demand, the Phaeton factory in Dresden is switching from one to two shifts, reports Automobilwoche [sub]. It can now crank out 48 hand-built Phaetons per day…”

  36. bob Says:

    http://www.autoextremist.com/

    Peter De Lorenzo is VERY Critical of the clowns at GM, and its clueless CEO Anderson in particular.

  37. bob Says:

    I am not too worried about SUVs in China. Gas is expensive there, and much more expensive if you consider wages are far lower than here. SO the average Joe there will NOT be able to afford to own a large SUV, much less be able to DRIVE it for any serious number of miles every year.

    No. Chinese demand for gas will increase, depending on its future price always (I bet the govt there will increase prices to cut demand if it goes out of hand), but not due to the few large SUVs sold there, but du eto the 17 million OTHER, far more fuel efficient, smaller cars they buy every year!!!

  38. bob Says:

    “HtG Says:
    January 26th, 2011 at 8:11 am

    Yesterday I had the pleasure of driving behind the famed Pontiac Aztek. Directly in front of it was an X5. Those cars just looked so similar in shape, size, and purpose,”

    You are pulling my leg, right? If not, try new glasses.

  39. Kit Gerhart Says:

    Won’t the Chinese government just ban the sale of large SUV’s and pickups, except maybe to the top party bosses?

  40. pedro fernandez Says:

    Bob, the Crosstour is more of a man car while the Venza like most minivans is a chic/soccer mom type vehicle. I am surprised that you would put down a Honda product, aren’t you fond of Hondas?

  41. Kit Gerhart Says:

    Venza isn’t quite as tall as Crosstour, and is available with a 4 cyl. and less “stuff.” Venza is obese, though, like Crosstour. Both are over 4000 pounds.

  42. bob Says:

    Come on guys, the Crosstour is an automotive atrocity. PS No “man” would want to be seen driving it,let alone owning it.

    I appreciate many different cars, I am not a Honda spokesperson, I have often stated that Honda and esp. Acura have lost their way for more than a decade.

  43. bob Says:

    PS Venza may not be as tall as the Crosstour but it has a much fuller back than the crosstour’s sloping back and can take much more useful cargo