June 17th, 2011 at 12:00pm
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.
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.