January 21st, 2011 at 12:00pm
The price for raw materials used to make cars keeps going up which means the prices that we pay for new cars and trucks will continue to rise. The head of Mazda’s North American operations says the company will focus on diesels instead of hybrids. Mitsubishi plans to phase out all of the vehicles it currently builds in North America. All that and more, plus a preview of this week’s Autoline Detroit with Jim Farley, the group vice president of global marketing, sales and service at Ford.
This is Autoline Daily for January 21, 2011. And now, the news.
RAW MATERIAL PRICES RISE (subscription required)
For a number of months now we’ve been tracking the prices of raw materials and if you’re in the automotive business you’re not going to like these trends. Prices for rubber are skyrocketing. Palladium and platinum, which are needed to make catalytic converters are shooting up. Same for copper. Now the Wall Street Journal reports that iron ore producers are raising their prices . . . a lot! And that, of course, is driving up the price of steel. In North America, hot-rolled steel prices are up 20 percent just since November. And as we’ve been warning here on Autoline Daily for months now, this is definitely going to start driving up the prices that we pay for new cars and trucks.
NAVISTAR BATTLES SCR
Fascinating fight going on in the heavy truck industry. Navistar, the big truck and diesel engine maker, is getting killed in the class-eight segment for semis. That’s because it bet on exhaust gas recirculation, or EGR, to control diesel exhaust emissions. Everyone else bet on selective catalyst reduction, or SCR, which uses urea. And that’s what truckers are buying because it’s cheaper than EGR. But Navistar accuses truckers of filling their urea tanks with water instead of urea to get around those controls. Urea costs anywhere from $3 to $5 a gallon. Bloomberg reports the EPA is going to issue new guidelines on truck emissions that could help Navistar. But right now the company is losing market share to Volvo and Freightliner which use urea to control emissions.
MAZDA BETS ON DIESELS (subscription required)
But while Navistar may be having problems with diesels, Mazda is betting on them. Whereas most automakers are going with hybrids, Mazda is not jumping on the bandwagon. According to Ward’s, the head of Mazda’s North American operations, Jim O’Sullivan says the company will focus on diesels instead of hybrids. The company has developed what it calls its Sky family of powertrains and says that its diesel engine combined with its efficient transmission can get up to 43 MPG on the highway, that’s 5.5 l/100km. Mazda doesn’t have any plans to introduce a hybrid but says it can if needed, thanks to a licensing agreement with Toyota for its hybrid technology.
FORD EXPORTING CARS MADE IN CHINA?
Yesterday we reported Chinese automaker Changan Auto will set up an R&D center in Michigan. Now, the China Daily reports the company is in talks with Ford, its manufacturing partner in China, about exporting Chinese-made Fords to emerging markets. However, a Ford spokesman denies the plan. The two companies build the Fiesta, Mondeo, Focus and C-Max vehicles. Ford may deny it, but it makes sense that it will happen at some point. In fact, you have to wonder when Chinese-made cars will come to the U.S.
MITSUBISHI AXES N. AMERICAN BUILT CARS
Do you hear that? That’s the death knell tolling for many of Mitsubishi’s products. The AP reports the company plans to phase out all of the vehicles it currently builds in North America. The Galant, Eclipse, Eclipse Spyder and Endeavor – all of which are assembled at its plant in Normal, Illinois – are getting dropped. Going forward, the company says it WILL keep the facility open by building a yet-unannounced global vehicle. But here’s my Autoline insight. Last year Mitsubishi barely sold 55,000 vehicles in the American market. I don’t see how they’re going to be able to keep that plant open. In fact, I don’t’ see how Mitsubishi can survive in the North American market.
ASTON MARTIN CYGNET
Aston Martin just announced pricing for the Cygnet, and I hope you’re sitting down. According to Autoblog, this tiny two-door starts at a wince-inducing, eye-watering, cringe-worthy £31,000! That’s almost $50,000 and TOTALLY OUTRAGEOUS for a gussied-up Toyota iQ! Bringing to mind an Apple product, it’ll be offered in two colors at launch: Snow White and Magic Black. At that price you should be able to get it in ANY shade you want . . . like solid gold.
In related news, another British automaker has also announced some pricing information. McLaren’s bodacious MP4-12C can be yours for about $230,000. Sure, that ain’t cheap, but it’s right in line with its peers from Lamborghini and Ferrari. Isn’t that an interesting juxtaposition? The Cygnet at 50 grand is a total rip off, while the McLaren, at nearly a quarter of a million dollars, is actually quite reasonably priced.
Coming up next it’s Travels with Farley, Jim Farley. Ford’s top marketing man.
Recently I got a chance to drive around southern France in the new Ford C-Max with Jim Farley, Ford’s group vice president of global marketing, sales and service. As we drove through tiny French villages, through narrow twisting roads, we talked about all kinds of topics. It was a great conversation, and here’s a little taste of what that conversation was like, starting with advertising on cell phones.
You can catch the entire show, what we’re calling Travels with Farley on our website right now. And did you know, you can now watch Autoline on public television stations across the country? Check your local listings for Autoline in your area. And by the way, a big Autoline Thank You goes out to the folks at FremantleMedia North America who helped us with a portion of this week’s broadcast. Many thanks from the Autoline team.
And if you’re in the Washington D.C. area we have free tickets to give away to this year’s auto show. Just tune into next Tuesday’s Autoline Daily and leave a note in the comments section about the color of my shirt and we’ll contact you about the tickets.
But 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 Monday.