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Episode 666 – Mazda Reverses on Mexico, Where Will Mustang Go?, Senate Ends Ethanol Subsidies

June 17th, 2011 at 12:00pm

Runtime 9:43

Last week Mazda denied it would build a plant in Mexico, today the company announced it will build a factory in Mexico. And with Mazda dropping out of the Flat Rock plant in Michigan and moving to Mexico, Ford may want to move the Mustang which is also made in Flat Rock. Just a few days after blocking a bill that would drop subsidies for ethanol, the U.S. Senate turned right around and approved a bill that would end them. All that and more, plus a preview of this week’s Autoline Detroit with special guest Bob Lutz.

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This is Autoline Daily for June17, 2011. This is episode 666 for Autoline Daily, so if I say anything evil, the devil made me do it!

MAZDA WILL BUILD A PLANT IN MEXICO
Last week Mazda denied it would build a plant in Mexico. Today Mazda announced it will build a factory in Mexico, along with the Sumitomo Corporation. The Mexican factory will open in two to three years with an annual capacity of 140,000 units. The Mazda2 and 3 models will be built there and mainly be sold in Central and South America. The two companies will also establish a sales company in Brazil that will start operations next year. Sumitomo supplies Mazda with raw materials, components and equipment.

WHERE WILL THE MUSTANG GO?
With Mazda dropping out of the Flat Rock plant in Michigan and moving to Mexico, you have to wonder what will happen with the Mustang, which is also made in Flat Rock. The Mustang is on track to sell about 72,000 units this year, but the Flat Rock plant is tooled up to make about 240,000 cars a year. That’s a money-losing proposition, which suggests Ford would want to move the Mustang, but to where? Here’s my Autoline Insight. If Ford decides to move the Mustang it would be easier to put it in a plant that already makes rear-drive vehicles. The Dearborn Truck Plant, just up the road, would be ideal, except it’s running flat-out to make F-150s. But if Ford could move some of that truck production to its plants in Kansas City or Kentucky, it might be able to make room for the Mustang. The Dearborn plant, located in the famous Rouge manufacturing complex, is the only one where Ford allows public tours. It’s also where the Mustang used to be built, so I would not be surprised if it ends up going back there.

HAWTAI GROSSLY EXAGGERATES SALES
Automakers are often suspicious of the sales numbers their competitors report. Some years back Cadillac falsified its numbers to look better than Lincoln. Now Chinese automaker Hawtai has taken it to a new level. According to China Auto Web, the company has been inflating its sales for years. The China Association of Automobile Manufacturers checked registrations against sales claims and found that since 2008 Hawtai claimed it sold over 180,000 vehicles, while only 45,000 cars were registered. This chart shows how much it’s been exaggerating sales, Hawtai’s claims are in red and the actual sales are in blue. You could say Hawtai was caught Red Handed.

U.S. SENATE ENDS ETHANOL SUBSIDIES
Just a few days after blocking a bill that would drop subsidies for ethanol, the U.S. Senate turned right around and approved a bill that would drop them. By a wide margin the Senate voted to drop a 45 cent-per-gallon subsidy and drop a tariff on imported ethanol. Here’s some of my Autoline Insight. Most people don’t realize that the 45 cent subsidy goes to gasoline blenders who blend ethanol with gasoline. That’s mostly done by the oil companies, not the ethanol producers. If this bill goes into law you can expect an immediate increase in the price of gasoline. But we can expect more political wrangling over this issue. The White House says it’s interested in reducing the subsidy, but not eliminating it altogether. As far as dropping the import tariff on ethanol goes, it won’t have much immediate impact. Right now the U.S. is producing so much ethanol it’s actually exporting some of it, including to Brazil.

FORD BETS BIG ON ASIA
Ford is betting big on Asia. Last week it announced plans to increase its global sales by 50 percent – aiming for 8 million vehicles a year by 2020. China and India play huge roles in its strategy. According The Wall Street Journal, Ford will expand its Chinese model range (subscription required) from just five vehicles today to 15 over the next four years. Some of those new offerings will sell for less than $14,500, a segment that makes up about 70 percent of the Chinese market. The story is almost identical in India. It’s jumping from three vehicles to eight, some of which will cost less than $8,500 – a price point that makes up about 70 percent of the Indian market. But Bloomberg reports sales of the Figo, introduced last year, are starting to falter. The hatchback accounts for 80 percent of Ford’s sales in India. Part of its plan includes bringing the Fiesta to India (subscription required). But with a price almost twice that of the Figo it may not help stem the tide. Ford is the No. 4 automaker in India behind Maruti, Hyundai and Tata.

SAUDI WOMEN FIGHT THE POWER
Big day in Saudi Arabia. Women are taking to the roads today – illegally – to protest the fact that they’re not allowed to drive. They’re also using social networks like Facebook and Twitter to spread the word. Many of these women have international driver’s licenses because they like to drive when they’re out of the country. All I can say is, You go, girls!

Coming up next, Bob Lutz lashes out at business schools, and blames them for much of the problems in American business.

THIS WEEK ON AUTOLINE
As you know we’ve been giving out a free and autographed copy of Bob Lutz’s new book every Friday this month. Well, he’s my guest on Autoline Detroit this weekend, and as you’ll hear in the following clip, he’s really glad that China is furiously building as many business schools as it can.

Peter De Lorenzo and Csaba Csere are also on this show with me, which you can watch on our website, or hopefully on your local public-television station. Autoline is now carried in more than 30 major markets across the United States, and it’s widely available in Canada. In fact, that’s how you can win the last free copy of Bob’s book, “Car Guys vs. Bean Counters.” Write to your local public-television station and tell them you’d like them to carry Autoline. If they already do carry it, thank them for doing so, and send us a cop of the email. We’ll select the lucky winner from one of those emails. And this week’s winner is Scott Hood who wrote to WEDU in Florida. Thanks Scott, and you’re really going to enjoy this book.

Hey, check out RoundAbout, tonight, for a fun start to the weekend. The crew’s special guest this week is Zach Bowman from Autoblog. Watch the LIVE broadcast on our website, AutolineDetroit.tv, starting at 6:30 p.m. Eastern Time. Don’t miss it!

Whew!  We made it all the way through episode 666. See you Monday.

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

39 Comments to “Episode 666 – Mazda Reverses on Mexico, Where Will Mustang Go?, Senate Ends Ethanol Subsidies”

  1. munsondon Says:

    Why not just move some F-150 production to Flat Rock

  2. Mark Says:

    John, why the picture of the car crash when you had the segment on Saudi women driving? Harmless mistake or intentional?

  3. dcars Says:

    I’m going to buy Lutz’s book and read it. Bob is a good car guy, but……. read this article:
    http://www.businessweek.com/managing/content/jun2009/ca2009061_966638.htm
    Maybe blaming outside institutions is an easy way to sooth the mind.

  4. len simpson Says:

    subsidy is a dirty word

  5. pedro fernandez Says:

    I fail to see the humor of China building more business schools while we’re left with more McDonald’s Institutes of burger flipping, I am shocked how we just sit back and watch these commie bastards take over international business.

  6. Artimus77 Says:

    Mustang needs to move to a RWD factory? Like the St. Paul Ranger factory? I’m taking to you Ford!!

  7. tj Martin Says:

    @ pedro

    # 4

    If you read Bobs book you’ll see that he hates what the graduates of Business Schools have done to the US Automotive industry : so the humor in that comment is Bob hoping that the graduates of the Chinese Business Schools do the same for their Automotive Industry .

  8. pedro fernandez Says:

    TJ I suppose then the Chinese will buy GM and Ford and run them more efficiently than their American counterparts have?? BTW will Chihuahua become the new Detroit?

  9. Paul Knight Says:

    How about moving the MUSTANG to the St. Thomas, Ontario Crown Vic plant that has won numerous awards and makes rear wheel drive performance (police interceptor) vehicles for fleet use and is down to one shift and possibly going to close soon.

  10. Phoenix Mark Says:

    How about moving some truck production to Flat Rock.

  11. dcars Says:

    #10 Yeah I thought the same thing. this could be union negotiation comment.

  12. dcars Says:

    Just a thought here about future GM/Ford management, it seams like the current group Mullaly and Akerson are engineers first and they picked up the business and economics degrees later. Marchionne is different, he’s a lawyer!

  13. Chuck Grenci Says:

    Just got finished watching Autoline Detroit (with Bob Lutz); wishing that Autoline Detroit was an hour show (or least, like other shows, they kept the cameras rolling). It was a great show IMO. Bob sure made a lot of sense to me. As winning a copy would be great, reality is that that is not going to happen, so I’m heading out to get a copy of Bob’s book. Two thumbs up for this weeks show.

  14. HtG Says:

    Did PDL ask a question during the Lutz interview? Can that Dude talk, or what?

  15. tj Martin Says:

    Bob Lutz Interview

    Phew ! The only thing better than reading Bob Lutz is listening to Bob Lutz .

    But I am surprised that in neither his book or the interview does Bob bring up the subtle fact that as the Bean Counters rush to move production into Mexico etc . costing Americans their jobs left and Right ….. the Bean Counters are removing the Buying Power of the very audience that would normally purchase most of their cars ( the working class )

    Thereby shooting themselves ( Bean Counters & Manufacture they work for ) in the Foot .

    Brilliant Eh !

    All I can say in closing is if thats what an MBA gets you these days I’m sure glad none of my Money Guys have one !

  16. HtG Says:

    CAFE and the Yen exchange rate did some of that heavy lifting, tj

  17. pedro fernandez Says:

    No Tj you don’t understand, just like Sybill explained here many times, we have now a service-oriented economy, it doesn’t matter if all those crappy, low paying jobs move overseas, the people that count, the elite and the academics is what important, the rest can go work the fields, or in the lodging or restaurant industry.

  18. pedro fernandez Says:

    So GM announced the new Vette will also be turbo, hooray for all you turbo lovers out there, Tj aren’t you glad you got your GLK?

  19. cwolf Says:

    John Mc: According to a broadcast on public radio, it was said that there was no law prohibiting women drivers in Saudi Arabia, but it was,rather, a relgious law. who’s right?

    Bean counters should either have limited influence in new product developement or,better yet,only provide spending guidelines. In this manner,strides toward improved quality and continuous improvement can be implimented,then measures of success can be weighed by the numbers/cost trends. In short, let the product speak for itself and not by some bean-head!

  20. tj Martin Says:

    A Simple Formula ( for the MBA’s , Cybils etc out there )

    If Daddy aint got no job – Mommy aint buyin no Mini Van – an if Mommy aint buyin no Mini Van Daddy aint gettin no new Camaro meaning – Junior aint gettin Daddy’s hand me down and you just lost an entire generation of customers . Brilliant !

    @ pedro – A resounding YES !!!

  21. tj Martin Says:

    @ cwolf

    Its Sharia Law prohibiting Female drivers , which is in essence Religious , but in Saudi Arabia is also the law of the land .

    I’ll let you suss that mess out before I give myself a migraine :(

  22. cwolf Says:

    @tj
    Yep! That’s what was said; more or less, no separation between church and state,Correct?

  23. John Says:

    Here is some more good CNG news.

    NJNG Hopes to Invest Millions in Natural Gas Vehicle Fueling Stations

    Company awaiting approval from state Board of Public Utilities for $15 million investment

    “New Jersey Natural Gas wants permission from the state to begin building the infrastructure in three counties for expanded use of compressed natural gas-fueled vehicles.” …

    http://wall.patch.com/articles/njng-hopes-to-invest-millions-in-natural-gas-vehicle-fueling-stations

  24. tj Martin Says:

    @cwolf

    re; #22

    Yes …… but……. its complicated . Here’s how a Saudi ex pat explained it to me . Fair warning … grab the Excedrin bottle cause if this rattles around in your head long enough well…

    Sharia Law is Religious Law – Except it directly impacts Civil Law – So its more than Religious Law – Except its not Civil Law – But all Civil Law is based on Sharia Law – So .. ( just keep the loop going endlessly )

    Now where’s the Excedrin ? I’ve done it to myself :(

  25. Ret Says:

    Move the Mustang to the St. Paul plant and build both RWD trucks and cars in the same plant. Build a Mustang along with an updated Ranger with the new Mustang V-6 motor or build the Mustang along with the V-6 F150′s as they have the same engine.

    There Ford, wasn’t that easy? I’m so glad that I dropped by and was able to help you with this.

  26. Kit Gerhart Says:

    If they move Mustang production to St. Thomas, all of the “pony cars” will be Canadian.

  27. Kit Gerhart Says:

    The small displacement, high-reving turbo V8 is only one of the engines planned for the C7 Corvette. They will continue to have large displacement pushrod engines for Corvette “traditionalists.”

  28. tj Martin Says:

    Corvette

    The Turbo V8 is still an unsubstantiated rumor ( Corvette News )

  29. Paul Knight Says:

    Kit G ….WOULDN’T THAT BE GREAT!!! Most POLICE vehicles are made by CANADIAN hands!!!

  30. Kit Gerhart Says:

    Yep, the Crown Vics, and now the Chargers and Impalas are all Canadian.

  31. HyundaiSmoke Says:

    The World’s population is growing faster than thought. At this Rate there will be 9 Billion by 2030, and 70% of that growth will be in Africa.

    Ethanol USAGE much less Subsidies is impractical, and immoral. However, if you want population control/reduction and World war over food and commodities then give the ethanol makers the treasury.

  32. HyundaiSmoke Says:

    We have 7 Billion today, and previous estimates thought that it would take until 2016 to get to that point. That’s how much faster the global population is growing that thought.

  33. HyundaiSmoke Says:

    The American Native (White, Black, Native American, Multi Gen Hispanic/Asian) population is starting to grow much slowly because of this economy, but I estimate that there will be 50 Million more immigrants and soon.

    The US state within the North American Union will have 450- 500 Million by 2030 and that’s just because of immigration. With soon to be transparent borders, the United States will have a massive Immigration influx.

    I also suspect that there will be 100% legal government schemes/initiatives to bring in Immigrants to build the economy, like the schemes that brought in Millions of Irish and Italians after the 1890s Depression. I see more Latin American and Asian immigration, but I also see much higher African Immigration too.

  34. HyundaiSmoke Says:

    That’s why ethanol subsidies will fail. The Future is electric cars powered from the grid or fuel cells in the actual car itself using cold fusion nuclear generation.

    Cars will either have a traditional electric powertrain, or 1/64th scale Navy Ship engines.

  35. John Says:

    CNG News from New Mexico…

    “Gas up your CNG car in Socorro for $1 per gallon ”

    Written by Suzanne Barteau
    Saturday, 18 June 2011 07:00

    “If you think you need a time machine to pay $1 per gallon for gas, think again — at the city of Socorro’s CNG filling station, that’s about what you’ll pay right now. There’s just one catch — you need a vehicle that runs on compressed natural gas.”

    http://www.dchieftain.com/dc/index.php/news/3441-gas-up-your-cng-car-in-socorro-for-1-per-gallon.html

  36. pedro fernandez Says:

    I know what this world needs, a gas powered line up of H/K vehicles and we’ll have two very happy bloggers!!

  37. tj Martin Says:

    @ pedro

    Well …… close !

    More like CNG powered Hyundai/KIA’s being driven around by all Neo Con Conspiracy Theorists with Multiple Personality Disorder

    Thennnnnnn .. they’d be happy …….. maybe ………. well ……… probably not but…………. well… you know !

    :o

  38. John Says:

    Heavy trucks gain from CNG too !

    John McElroy, Here is a CNG fuel tank Technology worth investigating.

    “RVINE, Calif., June 20, 2011 /PRNewswire/ — Quantum Fuel Systems Technologies Worldwide, Inc. (Nasdaq: QTWW) announced today that it has received a contract in the amount of $434,000 for high capacity natural gas on-board storage tanks from Agility Fuel Systems for use in Class 8 renewable natural gas powered dairy trucks. ”

    “Quantum’s ultra light weight carbon composite Compressed Natural Gas (CNG) storage system are enabling Class 7 and 8 heavy duty trucks to support typical fleet applications while reducing operating costs in excess of 30% compared to diesel fuel. Since natural Gas costs at about $2.00/gallon equivalent and gasoline/diesel at $4.00/gallon, fleets can save 30% of the operating costs by just changing their fuel. Quantum continues to offer the lightest weight tanks in the market which enables heavy duty trucks to carry significantly more fuel on board and operate for long distances without reducing their payload as is required with heavier tanks. ”

    http://www.prnewswire.com/news-releases/quantum-technologies-and-agility-make-dairy-farm-trucks-run-cleaner-124180669.html

  39. Doug Says:

    Why doesn’t Ford sell its Mexico plant where it makes the Fusion to Mazda/Sumitomo and move Fusion production to Flat Rock? The Mazda 6 which is made in flat rock is built on the same platform as the 6. That would seem to preserve that plant’s operations.