August 15th, 2011 at 11:41am
The UAW is urging its colleagues to vote “no” on continuing the two-tier payment plan. The car market in China is cooling off faster than expected with one analyst expecting sales to grow just 1 percent this year. Heavy-truck sales in the U.S. and Canada were up over 30 percent last month. All that and more, plus we take a look at which car company spends the most amount of money on research and development.
This is Autoline Daily for August 15, 2011. And now, the news.
UAW FIGHTS TWO-TIER WAGES
The rank and file in the UAW don’t like the two-tier wage structure. According to The Detroit News, a dissident faction called “Auto Worker Caravan” is stirring things up. It even held a rally last weekend, which was not well attended. New workers only earn about half of what veteran employees make . . . and they’re not happy about it. They’re urging their colleagues to vote “no” on continuing the two-tier payment plan. But this could actually play into the hands of UAW president Bob King since it could give him leverage as he negotiates with the Detroit automakers.
CHINA SLOWING FASTER THAN EXPECTED (subscription required)
We’ve been following how car sales in China are slowing down this year but Ward’s reports the market is cooling off faster than expected. One analyst says sales may only grow 1 percent this year, compared to a 46 percent increase in 2009 and 32 percent in 2010. The low-end of the market is faring worse than the luxury segment, but it too could be hit by the end of the year. Overall, foreign joint-ventures are doing better than the domestic automakers. Despite the slowdown this year, the same analyst predicts double-digit increases in sales starting next year through 2015.
HAWTAI AND PROTON PARTNERSHIP
And sticking with the Chinese market for the moment. Hawtai Motors is in talks with Malaysian automaker Proton about a possible partnership. Not too many details are known because the tie-up isn’t official yet, but analysts speculate Proton is looking to get into the Chinese market and Hawtai is interested in building cars in Malaysia to avoid import fees. You might remember that Hawtai was one of the companies rumored to buy Saab and Proton owns Lotus. I think we’ll see more of these smaller players trying to become bigger players by joining forces.
HEAVY-TRUCK SALES SOAR (subscription required)
Heavy-truck sales are rolling strong in the North American market. They were up more than 30 percent in the U.S. and Canada last month. But do you know who the players are? In Class 7 and 8, the biggest semi-trucks, Daimler is the dominant player American market with four brands: Freightliner, Western Star, Fuso and Sterling, though Sterling is being phased out. Next comes International. In third spot is PACCAR, with two brands, Kenworth and Peterbilt. And then comes Volvo truck, which sells two brands, Mack and Volvo. Hino, which is part of the Toyota group, and UD Trucks round out the big truck brands in the North American market.
BMW DEALER WON’T SELL VINTAGE MODELS
Here’s a story for all you vintage Bimmer fans out there. Autoblog reports a BMW dealership in Ontario, Canada closed its doors in 1988. Ok, that’s not a very big deal, but here’s the kicker. Rather than selling-off all of the inventory, the owner left two pristine, brand-new cars in the showroom – a 635csi and an E25 5 Series, PLUS there’s allegedly an underground storage facility with even more vintage treasures. If you’re already foaming at the mouth don’t get too excited. Apparently the proprietor has ZERO interest in selling . . . I just thought we’d tease you today.
Coming up next, a look at which car company spends the most amount of money on research and development.
Car companies can’t come out with new products unless they spend the money to develop them. So we dug through piles of annual reports to find out which automaker invests the most money in R&D, which is where the car companies book their expense for new product development. We also looked at which companies spend the most on R&D as a percent of total revenue. So let’s take a look, shall we? Seamus McElroy filed this report.
It’s no surprise to see that the top three R&D spenders are also the three largest automakers in the world, Volkswagen, Toyota and General Motors. VW spent over $9.2 billion last year which is close to a billion more than Toyota, which spent a billion and a half more than GM. Looking at the rest of the list, there isn’t much variation between where a company ranked in R&D spending and how much revenue it brought in for the year.
But if you look at R&D as a percentage of revenue, only VW remains in the top three. BMW and Honda jump to the top of the list, each spending 5.5 percent of revenues on R&D, with VW just a tenth back from both. Perhaps the biggest shock is how far Toyota falls, nearly out of the top ten. It spends just 3.8 percent of revenues on R&D. Ford also takes a tumble, barely staying ahead of Toyota. Of course, Toyota is about to launch a product offensive, so these numbers could climb.
With all the success Hyundai and Kia have had recently, it’s surprising to see both companies at the bottom of the list in both categories. Does this mean Hyundai-Kia could lose its momentum over the next several years with so little spent on research? Or does it mean they simply get more bang for their buck? We suspect it’s the latter.
Fiat and Chrysler are also at the bottom of the lists. Maybe Chrysler was holding back on spending while it was still partly owned by the U.S. and Canadian governments. If you combine R&D spending for the two, they’re still middle of the pack. And as a percent of revenue, they’re still at the bottom.
Thanks for that report Seamus.
By the way, these are numbers the investment community tracks closely for a hint of who will have a stronger product line in the future. Click today’s show notes at our website, AutolineDetroit.tv, to download a file that contains all the R&D spending numbers for the automakers.
Before we go: don’t forget you can download an all-new episode of RoundAbout at AutolineDetroit.tv. This week: a new app that aggregates the world’s most fun roads, an unlikely actor who crashed his McLaren F1, and a scooter that can seat a whopping 25 passengers. All that and more right now in the John’s Journal of our website.
And on Thursday don’t miss Autoline After Hours from the Woodward Dream Cruise along with our Signature sponsor, MOPAR. That will be a great night.
But that wraps up this show, thanks for watching, we’ll see you tomorrow.