Episode 928 – French Pres. Scolds PSA, Euro Car Sales, Hyundai Production Issues
July 16th, 2012 at 12:21pm
Runtime: 8:13
France’s president derides PSA’s cuts as too harsh and urges management to renegotiate. Also in the Old Country Ford and other automakers are reporting slumping sales in the first six months of 2012. Hyundai is hurting for vehicles to sell. With only 27-days’ supply in the U.S. and a corporate cap on production at 7 million vehicles. All that and more, plus a look at the Audi S5 coupe!
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Hello again and welcome to Autoline Daily. It’s Monday, the 16th of July, 2012. I’m John McElroy coming at you from the Land of Enchantment, New Mexico. Here’s the day’s top news.
FRENCH PRESIDENT SLAMS PSA CUTS
Last week we reported French automaker PSA is slashing some 8,000 jobs and shuttering a factory near Paris. The move is painful but necessary, although some analysts say the cuts don’t go deep enough, and they’re right. According to The Wall Street Journal, the closure will save the company between 100 million and 200 million Euros per year. But PSA’s automotive business just lost 700 million Euros in the first half of 2012! The move won’t slow the bleeding, much less get the company on the road to recovery. The job cuts and factory closing prompted French President François Hollande to scold Peugeot’s management team and urge them to renegotiate. He called the plan unacceptable. Hourly labor costs in France are 14 percent higher than in neighboring Germany and about 20 percent higher than the Euro-zone average.
EURO CAR SALES
More European trouble. Ford’s sales fell 10 percent in the first half of the year, helped by a 16 percent fall in June sales. The Dearborn automaker expects to lose money on its European operations this year, despite profits for the company as a whole. Overall demand for cars in the old world fell to their lowest levels since 1994, with predictions that sales for all cars could fall to 12.5 million. Ford’s results mirrored other brands’ sales, with Volkswagen off nearly six percent and Fiat down over 16 percent. GM bucked the trend, reporting sales up nearly 11 percent.
FROM THE OBVIOUS FACTS DEPT.
Where have we heard this one before? Reuters reports a study published by McKinsey & Company estimates the cost of lithium-ion batteries could plummet 70 percent by 2025. Today, automotive battery packs cost between $500 and $600 per kilowatt hour, but that could tumble to just 160 bucks by the middle of the next decade. Rising oil prices, stricter emissions standards and technological advancements are cited for the cost reduction. Really? No duh!
HYUNDAI PRODUCTION
Hyundai’s sales in the U.S. keep growing but production restraints are holding sales back. According to the Detroit Free Press, Hyundai dealers only have a 27-day supply of vehicles, less than half of the industry average. John Krafcik, the CEO of the Hyundai’s U.S. operations says he’s trying to get more vehicles exported from South Korea to the U.S. but the priority is to ship to faster growing emerging markets. Hyundai has also capped global production at 7 million vehicles to focus on quality. In the meantime, to boost U.S. sales, Hyundai will add a shift at its Alabama plant and will sell fewer cars to rental companies and fleets. Hyundai expects to sell over 700,000 cars in the U.S. this year.
MINI SUED OVER CVTs
It seems like automakers attract lawsuits more than honey attracts flies. Honda and Hyundai have been sued recently over fuel economy claims and now the Wall Street Journal reports MINI is being sued over its transmissions. The lawsuit, filed by attorneys in Florida, alleges a “manufacturing defect” in its CVT’s can cause premature failure. The suit says the problem affects 2002-2006 MINI Coopers and convertible versions built between 2005 and 2008. BMW, MINI’s parent company, had no comment.
Hey, in happier news after the break we’ll take a look at arguably one of the most beautiful cars on the road today.
2012 AUDI S5
(The Audi S5 review is only available in the video version of today’s program.)
And Craig’s not the only one that thinks the Audi A5 is beautiful. Walter de’Silva, the head of group design at Volkswagen agrees. In fact, of all the cars he’s been involved with it is his favorite. We interviewed him a couple years ago on “Autoline This Week,” show number 1534. If you want to hear the whole story you can check it out on our website, Autoline.tv. Again that’s show number 1534.
And that’ll do it for today’s report, comin’ at you from Santa Fe, New Mexico. I’m John McElroy, thanks for watching, and I’ll see you tomorrow.
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Comments (29)
July 16th, 2012 at 12:33 pm
When journalists tell me a car is beautiful, I scratch my head. Styling and aesthetics is largely subjective. I find the S5 boring and plain looking with an obnoxious grill. Will it age well? Yes. Boring looking cars do that especially well.
July 16th, 2012 at 12:50 pm
The A5 looked to me like a rubber boat when it first came out, bulges on the side that ran front to back, with slightly more bulging over and around the wheel openings. The newest one is more taught, with better surface tension, but the short, slotted greenhouse just makes it look gangster. I really don’t think this car will age well.
July 16th, 2012 at 12:55 pm
Arguably (as John mentioned) is ‘key’; as Mark mentioned, styling is the quintessential subjective factor when evaluating a vehicle. And as it does look athletic, and will ‘probably’ age pretty well, it does have some stylistic miscues in my mind as well (most of which were mentioned in post #1 and #2 (thanks Mark and Todd; pretty well said).
July 16th, 2012 at 12:59 pm
huh?
July 16th, 2012 at 1:11 pm
“The suit says the problem affects 2002-2006 MINI Coopers and convertible versions built between 2005 and 2008.”
I don’t understand. Were they still building 2006 model year cars in 2008?
Anyway, MINI replaced the CVT’s with 6-speed automatics for the 2007 model year, probably a good thing, given the market MINI goes after.
July 16th, 2012 at 1:15 pm
I remember when we got the Versa, I explained to the F&I guy that I didn’t have confidence in the long term reliability of the CVT, whereupon he just looked down. I’ll personally drive stick until I need a golf cart.
July 16th, 2012 at 1:25 pm
Personaly, I’d rather put up with the hassle of a stick than go for either a CVT or double clutch, don’t trust for long term reliability and durability. Re styling why is it that some cars seem to stay fresh looking years after eg. 90′s Passat, early 90′s Camry and Lexus LS, ANY BMW 3 series.
July 16th, 2012 at 2:01 pm
Here’s why, Pedro: 1.6180339887…
July 16th, 2012 at 2:35 pm
Huh?
July 16th, 2012 at 2:51 pm
I like the tranmission in my Prius that acts like a CVT, but has no clutches, bands, sliding gears, variable width pulleys, or any of those other things found in most transmissions.
July 16th, 2012 at 2:54 pm
I have to believe that Toyota would not risk their reputation with a crappy CVT for the Prius, have not heard of any issues with them, have you?
July 16th, 2012 at 3:02 pm
9 Huh?
http://www.youtube.com/watch?v=kkGeOWYOFoA
Uh huh
July 16th, 2012 at 3:36 pm
#4 huh?
Well, we the first three posts, were not accepting that the S-5 was/is beautiful, though allowing for subjective tastes it could be construed as such (beautiful).
Now, on the other hand, the video in #12, leaves me with a big huh? That’s because as a “C” student (at best
) in mathematics, I was totally lost in the video’s rendition. (you don’t think that has anything to do with my post #3………………., hmmm). 
July 16th, 2012 at 3:55 pm
“Hyundai has also capped global production at 7 million vehicles to focus on quality”
Hmmmm… Isn’t Quality designed into a vehicle, not dependent on operators at an assembly plant. Guess the Korean’s haven’t figured that one out yet…
July 16th, 2012 at 4:00 pm
#11,
I haven’t heard of any issues with them, or with the similar designs used in other Toyota aan Ford hybrids.
July 16th, 2012 at 4:54 pm
The excuse given why more Hyundais are not imported here is a bunch of crapola! Back home,those workers are on strike for higher wages and fewer work hours. Adding a 3 rd shift to its Alabana plant may not be a very wise idea either,despite lack of product. Car sales will soon decline significantly because of Europe,the US election and esp. China’s problems. Adding 100 proof fuel to the fire,the IMF just predicted a sizable reduction in global GDP. I predict all makers rebates will grow exponentially as the economy worstens. This is going to really hurt the VW group! Mark my words.
July 16th, 2012 at 4:58 pm
#14 This depends, when Fiat announced the 500 would be coming here, most people, myself included, thought that the Yugo for the 21st century was coming, well, low and behold, seems like the little Italian POS was not the turd most were expecting, either Sergio’s troops or the Mexican plant has to be credited for this.
July 16th, 2012 at 5:01 pm
pedro:
In regard to your ongoing comment about the transplants being more American than the American comanies. I was floored to learn that the Fiest was the least American car sold in the US at a paultry 15%!!! I I was Ford,I’d bury my head in the sand up to my ankles! Geesh!!!
July 16th, 2012 at 5:17 pm
I wonder how the Fusion stands as well, but you know since Ford did not get any bailout money, I guess that gives them Carte Blanche to build their cars wherever they feel they have to in order to maximize profits, when people’s idea of Ford finally comes down to earth they’re gonna realize Ford ain’t all its made out to be, in particular the Honda-like prices they want for their vehicles.
July 16th, 2012 at 5:25 pm
Just in: Ford recalls 2013 Escapes for carpet problem that could interfere with braking, carpets and pedals don’t mix, Toyota learned that the hard way!
July 16th, 2012 at 5:30 pm
Be still my beating heart . . .
I agree with Mark, Todd, Chuck (#1, #2, #3) as I never thought Audi even came close to getting the look of that grill that they copied from the Chrysler 300. Always thought that Chrysler designed it better – Audi didn’t even line up the cross-bar with the lines on either side (esp on the R8), it always made me shudder.
But styling is subjective and so each to their own
cwolf (#18) – isn’t there still a lot of misdirection still going on? For instance does Toyo still manufacturer the Tundra frame in Mexico and then ship in via rail to Texas, then add a single support bar and then claim that it is manuf in America?
July 16th, 2012 at 5:34 pm
pedro, I think Ford prematurely took the gamble their S.American slice of the pie would increase if the location of manufacture was equadistant. As it now stands,the US labor force,either union or non-union, is prooving to be more than competitive with the global work force. I have recently been reading and hearing Ford is re-inpossitioning themselves into the US labor market. We’ll see and how fast!
July 16th, 2012 at 5:36 pm
Well, in that case, Chrysler builds its engines for the 300/Charger/Challenger in Mexico and rails them across the US to Canada, where the vehicles are assembled, well, at least they pay for the US train engineers.
July 16th, 2012 at 6:33 pm
Again, I ask, why is throwing skilled workers out on the street to “take care of the bottom line” superior to giving them a competitive car to build and then compete successfully in the market place?
I find this dogmatic adoration of corporate-think disappointing.
July 16th, 2012 at 6:54 pm
#23 and on the flip-side,Chry has a plant in Dundee,Mi. that makes all of the 4 cyl. which are also used by Fiat and others. Does this ring with your comment? The fiat500 engines are shipped to Mexico for installation.
July 16th, 2012 at 7:05 pm
If there are a shortage of Hyundai/Kia’s this article in TTAC indicates otherwise:http://www.thetruthaboutcars.com/
July 16th, 2012 at 7:20 pm
Seems like Hyundai has the most factory fresh models around while Volvo has the oldest, I wonder how many of them have cobwebs in them there engine bays and wheel wells?
July 16th, 2012 at 7:35 pm
I had the same thought,pedro. Sorry about spelling errors today. I’m busy sharpening chain saw blades and watering garden.
July 16th, 2012 at 7:37 pm
Those Audi grilles are designed for a home market where all cars have front number plates. The grills seem to work well compared to many other cars with the front plates, to me at least.