Episode 246 – Magna Deal Runs Into Roadblocks, GM Sales Soar in China, VW Targets Toyota Camry

October 9th, 2009 at 11:30am

Runtime 7:20

General Motor’s deal to sell part of Opel to Magna could be running into trouble. GM’s sales in China are up 55% this year, blowing past the company’s own optimistic forecasts. VW puts the Camry in its crosshairs as it takes a bead on the American market. All that and more, plus a preview of this week’s Autoline Detroit with Doug Speck, the president of Volvo North America who spells out where he sees growth in the American market.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Magna’s deal to buy Opel runs into roadblocks. GM sees record sales in China. And VW puts the Camry in its crosshairs as it takes a bead on the American market.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Friday, October 9, 2009. And now, the news.

GM’s deal to sell part of Opel to Magna could be running into trouble. The Telegraph in London reports that Business Secretary Lord Mandelson refuses to support the deal as it’s currently structured. He hired PriceWaterhouseCoopers to examine the proposal and it found that Vauxhaul could lose up to one-quarter of its workforce. Bloomberg reports that Spain is also balking at the deal. Everyone in Europe seems to think that Germany is pushing the deal in a way that will protect German workers over others. And now the European Competition Commissioner is investigating the matter and threatening to seize any government aid to Opel if it does not meet regulations.

General Motors may be facing problems in Europe and America, but not in China. The AP reports that GM’s sales in China are up 55% this year to 1.3 million units, blowing past the company’s own optimistic forecasts. China is stimulating car sales with tax cuts and subsidies, and GM said first-time buyers in smaller cities played an important role in that increase. Meanwhile, Reuters reports that GM’s deal to sell Hummer to Tengzhong could be completed today.

Volkswagen has said it plans to be the largest automaker in the world next decade and to help reach that goal in the U.S. its going after the number one car in the market (subscription required), the Toyota Camry. According to Ward’s, the company says that the new Passat due out in 2011 will get three inches added to the wheelbase to become the same size as the Camry. VW will build the new Passat at its plant in Chattanooga, Tennessee.

While it’s not official, those attending this year’s SEMA show will get a good idea of what a production Camaro convertible will look like. According to Autoblog, Drop Top Customs, will show a Camaro SS Convertible they built themselves. So what are they charging to convert it into a convertible, why it’s only $18,000.

Autoblog reports that Daihatsu will have three concept cars at the Tokyo auto show. The first of these is called the Basket, which has a removable hard top, and a canvas cover for the back seat. Daihatsu says it’s perfect for trips to the family vegetable garden located out of the city. Then there’s the Deca Deca, which Daihatsu describes as a Super Box with a low, flat floor, slim fold-away seat, and a huge door on the passenger side. And then there’s the e:S, which stands for eco and smart. It’s a kei-class car that only weighs 700 kilos, which is just over 1500 pounds, and gets 30 kilometers per liter, or 70 miles to the gallon.

Coming up next, a preview of this week’s Autoline Detroit with Doug Speck, the president of Volvo North America who spells out where he sees growth in the American market.

Volvo is on the verge of being sold to new owners, and the company, like everyone else, has been through rough times. But Doug Speck, the president of Volvo North America is bullish on the company’s prospects. And in the following clip, he points out where Volvo is gong to grow in the American market.

You can watch the full interview with Doug Speck right now at AutolineDetroit.tv.

All right, it’s Friday that means it’s time for me to give you this week’s answer to our trivia question. We asked you to tell us what the auto industry term NVH stands for. And the correct answer is, Noise, Vibration and Harshness. As always we picked the winner’s name at random from all the correct answers and the winner is: Tom Hoban from New Wilmington, Pennsylvania. Congratulations Tom, you just won a Honda Fit baseball hat.

And that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you next week.

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

44 Comments to “Episode 246 – Magna Deal Runs Into Roadblocks, GM Sales Soar in China, VW Targets Toyota Camry”

  1. G.A.Branigan Says:

    “VW sets it’s sights on the camry”.This out to be good.I’ve always liked VW,I wonder if they will power it with one of their clean diesels?Hmm,interesting.

  2. hermann the german Says:

    …and awaaaay he goes!

  3. Pedro Fernandez Says:

    Why can’t automakers realize that bigger is not always better, example the EU Accord is smaller tnan the US version, but it’s better in my opinion, handling, mpg etc. The Passat got too big with the new model year and now it’s gonna be even bigger. STOP THE MADNESS. Note to VW:you want to take on Camry/Accord? seriously improve your reliability.

  4. Nick Stevens Says:

    VWs are far sportier and better handling than Camrys, why is VW targeting Camry instead of the obvious alternative to a Passat, the Honda Accord?

    VW reliability is an issue in the US ONLY! In Europe, VWs are considered top quality and reliability premium cars. Toyotas are still more reliable there than VWs, but VWs in the US have had a terrible reliab reputation.

    Why the gap? A colleague here, with wife and 3 kids, bought a Passat wagon 6 cyl in 2001 ,has 105,000 miles and claims he only did the service, and only one minor repair (rear differential or sth) the whole time. When I mentioned how surprised i was to hear that, he mentioned that the Passat was built in GERMANY and not in Mexico as most US VWs are.

  5. Nick Stevens Says:

    Also, I get depressed when I see loser makers like OPEL and VOLVO and SAAB still around. We will NEVER have a healthy auto industry until the FITTEST SURVIVE AND THE OTHERS GO EXTINCT!

    OVERCAPACITY has been a chronic problem for Automakers all over the world. As long as such losers just CHANGE HANDS and do NOT go extinct, THey and every other maker AND above all WE the taxpayers will keep SUFFERING.

    (This clueless volvo guy on the Sun show was pathetic, BTW.)

  6. Nick Stevens Says:

    “The Passat got too big with the new model year and now it’s gonna be even bigger. ”

    Pedro,

    VW sells very few Passats in the US, even compared to its own smaller Jetta, which also has grown in size over decades, and now satisfies most people’s needs. I have no idea why they keep making it bigger. But the US Accord is really big, now a “large” car. Maybe its demographics now include former Impala and Buick buyers, who do want the space and feel safer in the bigger car.

  7. dcars Says:

    I liked (owned 3) VW’s but found they are expensive to buy, expensive to repair and overly complicated. This leads to another question, if the US market is over saturated with production of cars why is VW allowed to build another plant here ? Isn’t the government picking up the cost of closing GM’s excess plants? Who else is closing down to accommodate VW’s expansion? Chrysler, Ford, Dodge Chevrolet, Honda …..? All these Brands have plans to grow their market share. Seems like the US needs an Industrial Policy.

  8. Nick Stevens Says:

    One of my first cars (or second, but the first I owned myself) was a VW Passat wagon (named Dasher back then) I bought at 4 years and 65k miles for $2,000, very good money back then in 79, and had to put another $2,000 in repairs while I only did another 10k miles in 3 years. I stayed away from german cars because of this, until very recently, when I got a bargain luxury performance German sedan, took a gamble, and it went far, far better than that VW.-still own it after 4 yrs.

  9. Chuck Says:

    Seems every car line has grown bigger in recent years. The models in the Honda line, for example, has grown larger and moved up a class with the introduction of the Fit, which itself is rather large for a so called “economy/entry” car. Now the new Civic is as large as my old 1990 Accord and the new Accord is as big as my current 2002 Acura 3.5RL.

    How are these companies ever going to meet the upcoming CAFE standards if the models continue to grow in size and weight? When is the bloating going to stop?

  10. Dave Says:

    I would buy the VW CC, that is very nice and has great style over the Camrys/Accords

  11. TomL Says:

    All manufacturers try to make as much money on OEM part sales as possible. Who wouldn’t? In spite of this the American brands and the Japanese I am familiar with are much lower in parts pricing than the Germans. Acura brake pads? About the same price as a Chevy’s. BMW, Audi, or Mercedes brake pads, about 4 -5 times the price. This is definite reason why many people avoid German makes. Having owned two Audi’s and now a BMW Mini Cooper I would never even consider keeping a German car after the warranty expires just for this reason.

  12. Nick Stevens Says:

    The CC is sure very stylish, and all VWs anyway have better styling than Hondas and TOyotas. But it is probably more expensive than the sedan Passat, and if you want to take adults, or even tall kids, in the back seat, they will suffer, while in the sedan there is plenty of room.

  13. Pedro Fernandez Says:

    It’s ironic that as the Feds increase cafe standards, automakers just insist on making future models larger and of course lower or maintain the same mpg as the current ones. The majority of other countries seem to be willing to put up with smaller vehicles for the sake of better fuel economy, but not here. This needs to change if we are to cut oil demand down.

  14. Kit Gerhart Says:

    If VW wants to compete with Camry, I suspect they will have a different “base” engine than the current direct injection turbo. They will probably have some kind of non-turbo 4 as base, or maybe the in-line 5 that they use in the Jetta.

    I’m hoping they offer a TDI. If things go like they usually do from my perspective, they will drop the wagon which is the only Passat I’d consider.

  15. Nick Stevens Says:

    # Pedro Fernandez Says:
    “October 9th, 2009 at 1:59 pm

    It’s ironic that as the Feds increase cafe standards, automakers just insist on making future models larger and of course lower or maintain the same mpg as the current ones. The majority of other countries seem to be willing to put up with smaller vehicles for the sake of better fuel economy, but not here. This needs to change if we are to cut oil demand down.”

    The problem is NOT the “size” but the weight and the HP of cars today. I wrote elsewhere about the 80s GM 1.8 lt 4s with 5-speed that only had 84 HP (and 102 Lbft Torque), 4-door, 5-passenger COMPACT cars, not tiny POSs, that weighed as much as a Kia Forte which has 156 HP! That is more than 100% more HP than it needs to go 95 MPH on the highway!

    There is NO need to have smaller cars with small interiors. The old lady that drives her obese Buick with the 200 HP to church or to see the grandkids or to shop in the mall, does NOT need 200 HP, but just the 100 HP Buicks USED to have in 1985. And when you use a smaller engine, you save EVEN MORE weight!

  16. Nick Stevens Says:

    PS and those GM J-cars got 40+ mpg highway easily, they were rated 46 HWY and 28 city. In fact a high fuel econ Pontiac coupe version (or hatch) J car was rated 52 MPG highway.

  17. Nick Stevens Says:

    Such cars will emerge quickly, as soon as $4 and $5 gas rear their ugly head again.

  18. Nick Stevens Says:

    Kit: today’s “small” Jetta is far heavier and roomier than the 70s Passat I once owned, AND even marger than an 80s or 90s Passat. And you cna have it in TDI and even Sportswagen Diesel form.

  19. Mouhamad A. Naboulsi Says:

    I agree that cars are growing in size and I do not see why. The larger the car the larger the engine and the more raw material fabricated and used. Where’s the Economonic-Ecohology in that?

    Most of thime I am drivinh (I do that for a Living-Research, I always see a single person in the car, uless there is a child in the back. This may not be the rule, but it is the majority of traffic I encounter.

    In the 80s cars like camry, vw and so on, used to have 100 to 120 horse power. The sentra and the like used to have 70-90 horse power. But since they began to grow, they began to loose fuel efficiency.

    With the correct hypermiling, my 83 nissan sentra used to get 49 MPG. This is no where where today’s sentra will get. 140 HP used to be reserved for the sporty cars, Nissan 28o, Mazda MX-6 and so on.

    The government should step in and help the automanufacturers by imposing a site limit, and not just MPG. Getting MPG on a car is easy by shaving weight (safety will suffer), but when weight is already packaged is a smaller size, the automakers wil have to look elsewere for savings.

  20. Kit Gerhart Says:

    I like the TDI Jetta wagon. I wish you could buy the “approved” oil somewhere other than from dealers, but maybe that will change if enough of them find their way to our roads.

  21. Kit Gerhart Says:

    Nick Stevens Says:
    October 9th, 2009 at 2:17 pm
    PS and those GM J-cars got 40+ mpg highway easily, they were rated 46 HWY and 28 city. In fact a high fuel econ Pontiac coupe version (or hatch) J car was rated 52 MPG highway.

    I had an ’84 Sunbird wagon with the Brazilian 1.8 and 5-speed manual. I got about 36 mpg on the highway, but I drove way too fast to get the best mileage. I got about the same highway mileage with a 2.5 “iron duke,” 5-speed manual Celebrity wagon. I suspect I could have gotten a little over 40 with the Sunbird at a steady 60 mph.

  22. Nick Stevens Says:

    “I had an ‘84 Sunbird wagon with the Brazilian 1.8 and 5-speed manual. ”

    I had the 83 2000 (former J2000, then Sunbird) sedan with no A/C 5-speed 1.8. On long trips with tires inflated to 1-2 psi above the recommended, and with just one passenger, it would go 40-42 back when the limit was 55. But I remember driving real fast thru PA when there were not as many cop cars as in OH. 80+ MPH at times.

    I believe EPA changed its ratings down around 84-85, later Sunbirds were rated much less than 46 highway, maybe not even 40, while they essentially were the same car. (except the 150 HP turbo)

  23. hermann the german Says:

    My 02 civic will get 43mpg going 75 if I do a little shadowing, ie driving on the lea side of all those big cars and SUVs. It weighs <2500lbs and has the exact side profile of a BMW 3series. What does Honda know?

  24. Pedro Fernandez Says:

    Now that GM dumped Hummer for $150 mil and they had predicted it would fetch $500 mil. during the BK filing, does this mean that the hapless taxpayers are stuck with the $350mil difference?

  25. Pedro Fernandez Says:

    Just read that BMW is developing a Mini-based,0 series car for production, I think that’s a big gamble, their 1 series has not sold well, besides how much of a premium are people willing to pay for a tiny car?

  26. Kit Gerhart Says:

    BMW should avoid getting too carried away with “mini” variants. I liked the first BMW “mini,” even though it is at least 10% bigger than a real mini. Beyond that, what they have done just doesn’t click with me, even the Clubman. BMW should stick with rear drive cars for anything they call BMW.

    I like the 1 series, especially the hatchbacks that they don’t sell in North America. Maybe the reason the 1 series hasn’t sold that well is that the price difference between it and the 3 series is small, when the cars are comparably equipped.

  27. Steve Says:

    People, none of those 80s cars – Camry’s, Sunbirds, Skyhawks, etc – none of them would pass today’s safety standards. NHTSA would rate them death-traps for roll-over, side-impact, offset, you name it.
    Also, none of them would meet quality standards, either.
    People today would be horrified to go to a dealership and find the product offerings we had in the 80s.
    These wonderfully solid, extremely stiff, much safer, squeak-free platforms we have today come at the cost of lots of weight.
    I’m not taking a side, I think we’ve gotten a bit ridiculous in our demands, myself – but the truth is the truth.

  28. Nick Stevens Says:

    “Now that GM dumped Hummer for $150 mil ”

    This is the estimate earlier, the eaxct amount should be close, and it is really ZERO, if you figure the billions of profit or loss (most likely LOSS) this brand cost GM at the end.

  29. Nick Stevens Says:

    The BMW mini is far, far bigger than the old, original Mini. It looks great from the outside but too plasticky and gimmicky on the inside, esp. the center-placed giant speedo (or is it tach?)

    The Clubman was probably a necessity, the convertible is OK, but the coupe and the crossover are exercises in silliness and look Fugly.

  30. Nick Stevens Says:

    Wealthy people will pay a premium to buy a city car like the mini that is luxurious inside, with leather and polished wood and all the luxury except size and perhaps the v8.

    A luxurious, not plasticky, mini derivative sold as BMW 0 may work. The 1 sold very well in Europe, but in the US it is still new, and if BMW wanted to sell many of them, it would have bgought the SMALLER ENGINES and the diesel, but it still refuses to do so.

    OF course they are not that many.. and the way the economy and the US dollar is going to hell, there will be even less in the future.

  31. Jim Sachetti Says:

    I just finish watching this volvo guy on this week’s Autoline.

    I really was not impressed. what a loser. (a good fit with his dying brand!) This must have been the poorest guest in memory, but if you remember a worse one, let me know.

  32. Jim Sachetti Says:

    Yaris-Fit size vehicle: 2,300 lbs, 75 HP, 110 MPH, 45 MPG highway, $12k

    Corolla -Civic -Focus size: 2,500 lbs, 100 HP, 115 MPH, 40-42 MPG highway, $14k

    Accord-Camry-Altima-malibu-Fusion size: 2,800 lbs, 125 HP, 125 MPH, 35-38 MPG highway, $17k

    Large Sedan: (Avalon-Buick): 3,000 lbs, 150 HP, 125 MPH, 32-35 MPG, $20k.

    These bread and butter cars together would sell almost half of the future 15 to 18 million annual sales. Many more people would buy them at the above prices and specs than will buy them today at far higher prices, weights and HPs.

    many automakers CAN make a profit at these specs IF they could build 400,000 units of each type a year, as Honda and Toyota (ONLY) do today with the Accord and Civic class.

  33. Pedro Fernandez Says:

    @Jim, do you realize that they would have to downsize these cars in order to achieve these figures? (using light weight materials is too costly) When you add all the government-mandated safety equipment plus society’s needs to have power everything and reach 60mph in 6 seconds, it’ almost impossible to achieve this. I long for the days of simpler cars, but I think I’m in the minority.

  34. D Says:

    The Smart only list mpg at 33/41 mpg, So how are the other car companies with real sized cars get that kind of mpg out of a gas engine…they will not. They stated back in the 70s that the avg. had to 25 mpg and that never happened..just like 35 will not. The only way is if fuel prices go off the chart and people dont want leather, GPS, Power everything, room of a family or equipment. I guess if someone was to make a small car out of carbon fiber and a real high tech engine it could come in at those lbs, but it would cost 50 grand or more, so it would sell just like the VOLT would sell in any kind of numbers to make dent in the use of fuel.

  35. Andrew Charles Says:

    Why do cars keep getting bigger and more powerful? Competition. Top speed is largely irrelevant in this argument. It’s acceleration that people notice and they use horsepower as a crude proxy to estimate this performance. Every generation each model tries to outdo its competition in space and power, getting larger and more powerful. Eventually of course they get too big and sales start to drop off, but all the while another model is moving up to take its place from below, and new models are introduced at the bottom end of the market, so in practice while the nameplates get bigger, the overall market remains fairly stable.

  36. Jim Sachetti Says:

    Pedro Fernandez Says:
    October 10th, 2009 at 2:02 pm

    @Jim, do you realize that they would have to downsize these cars in order to achieve these figures? (using light weight materials is too costly)”

    NO, YOU did not realize (because I did not say it) that my numbers are perfectly achievable WITHOUT ANY exotic materials, just plain STEEL, and WITHOUT ANY sacrifice in SIZE (I Specified the size). The extra reqs will only minimally increase weight, and the increased costs will go DOWN when they achieve the VOLUMES that are needed. AND I DID specify that.

    Car design can be FAR FAR Smarter than it IS now. You can have a car smaller EXTERIOR dimensions but far BIgger INSIDE by raising the roof a few inches. and the height is by far the Cheapest dimension to increase, while the length the most expensive (GEOMETRY 101!)

    But I do not expect the incompetents, “Can’t DO!” clowns at DETROIT to achieve what HONDA and partly Toyota HAVE achieved 20 and 25 years ago.

  37. Jim Sachetti Says:

    “Yaris-Fit size vehicle: 2,300 lbs, 75 HP, 110 MPH, 45 MPG highway, $12k

    Corolla -Civic -Focus size: 2,500 lbs, 100 HP, 115 MPH, 40-42 MPG highway, $14k

    Accord-Camry-Altima-malibu-Fusion size: 2,800 lbs, 125 HP, 125 MPH, 35-38 MPG highway, $17k

    Large Sedan: (Avalon-Buick): 3,000 lbs, 150 HP, 125 MPH, 32-35 MPG, $20k.”

    When inexperienced INDIANS at TATA were able to produce the NANO at $2,000 or $3,000 (say $4,000 loaded), a car a bit smaller than the Fit but far larger than the DUMB “Smart”, and one who can take 4 with plenty of room instead of the 2 and almost no trunk of the SMART,

    The above somehoe seem perfectly achievable.

    And we are so damned incompetent here, let them build them in BOMBAY!

    I am sick and effing tired of having my hard earned tax $ support GM and Chrysler, the WELFARE QUEENS, in the city which, 100 years ago, Henry FORD performed the “MIRACLE” of Mass production and PLUMMETING prices of the Model T.

  38. Pedro Fernandez Says:

    Andrew Charles is correct, car makers will just keep building them bigger, heavier, more powerful because that’s what buyers want.Ex. Camaro, Accord and now Passat. Then if gas goes up to $4 or $5 again, the whole market will have another collapse because the car makers were not prepared for this, That’s why you need mandated mpg goals, whether the public likes them or not.

  39. Kit Gerhart Says:

    Pedro Fernandez Says:
    October 11th, 2009 at 1:39 pm

    “That’s why you need mandated mpg goals, whether the public likes them or not.”

    …or maybe better yet, higher gas taxes. They would need to increase gradually so the market can adjust to the change, but high motor fuel taxes have worked very well to bring about a European car fleet about twice as efficient as that in the US.

  40. Pedro Fernandez Says:

    I must be different, I guess, but I don’t like paying higher taxes because history has shown that government mismanages it to the extreme, by increasing mpg standards across the board, you force car makers to improve drive-trains, lessen weight and downsize existing models to what they were 20 years ago. The BMW 1 should be their series 3 for example and today’s Corolla is the size and weight of the 1980′s Camry.

  41. D Says:

    If a company would build a striped out lite lbs car with nothing and it and slow, like the old bug, it would sell. Some would love it, but alot of people want power everything and some power under the hood. So, it the gov lets the market control what people want. Car companies will make what sells. I am not saying that I have money to burn, but if I want to buy a hight HP car or truck and I want to put gas in it so be it.

  42. Nick Stevens Says:

    When you sell JUNK, you have to deeply discount it. Hyundai’s success seems to have necessitated a FOURTY PRECENT increase of its incentives. Honda, as always, are the biggest cheapskates.

    Avg. incentive Change

    1. Chrysler Group $4,584 18%
    2. GM $3,796 6%
    3. Ford Motor Co. $3,451 2%
    4. Hyundai-Kia $2,998 40%

    (all manufacturers) $2,835 10%

    5. Nissan North America $2,511 19%
    6. Toyota Motor Sales $1,620 22%
    7. American Honda $1,310 9%
    Source: Edmunds.com

  43. Pedro Fernandez Says:

    @D. True what you’re saying, but the problem is we’re not being given a choice. It seems every car nowadays comes with power everything, not only we don’t want to shift gears anymore, we want our doors and hatches and trunk lids to open at the push of a button, computers to give us directions and to warn us if we get too close to a car, etc. I’m afraid the days of simple vehicles has come to an end.

  44. Nick Stevens Says:

    Is there going to be an ALDaily today, or will there be none due to the holiday?