Aussie Motoring

The economic news for the car industry just goes on getting worse. Daimler, the luxury car manufacturer has admitted that things are so bad for them that they will suspend production for an entire month beginning on December 11.

For some time now it’s been fairly obvious that Ford would be looking to sell it’s 1/3rd share in Mazda. While that may have been a very tough decision for Ford to make because a lot of Ford’s research and development work is actually done by Mazda it was a decision that looked inevitable thanks to Ford’s difficult financial situation.

Late last week several respected news sources in Japan announced that the sale as definitely going to happen and now the hunt is on to find a buyer. While many think that a local Japanese company will pick up Ford’s share there are rumours that the Indian car maker Tata Motors is also interested in buying into Mazda.

Only time will tell but don’t be fooled into thinking that an Indian car maker who seems intent on producing the cheapest car in the world isn’t interested in a share of a Japanese car manufacturer. Tata has already bought Jaguar and Landrover from Ford.

The Nissan Motor Company is about to issue recall notices for 204,361 vehicles in the United States.

The recall is to check for a fault in the passenger side airbag that could occure in a range of models built between March 12, 2007 and May 27, 2008. Nissan suspects that the number of vehicles that are actually carrying the fault coul be as low as 2000.

The part causing the problem is manufactured by a 3rd party and the part is unique to Nissan.

Recalls are never popular with anyone. Owners are inconvenienced and left with a negative impression of the vehicle and the company. Dealers are left to handle unhappy customers and carry out the repairs or inspections that they’re not always fully reimbursed for and the company is left with a huge bill and a potential public relations disaster on its hands.

A recent study (April 2008) done by RDA Group has found that Ford is in a statistical dead heat with Toyota and Honda for inital quality. The quarterly study measured customer feedback from drivers of Ford vehicles as well as competitive makes and models.

Of course the study just happened to be commissioned by Ford.

Perhaps this is a case where a second opinion, from someone not commissioned by Ford, might be helpful.

Early yesterday the word was out that Ford was planning to cut around 500 jobs from their Victorian operations because demand for their big-car products was down. By late yesterday afternoon it was Holden’s turn to announce reductions that will impact on over 3,000 works in South Australia.

It appears that Holden may not be cutting any actual positions but their plans will reduce the amount of take-home pay for those affected workers for the plant will be closed for an entire week in November and an extra two weeks over Christmas.

If there is one thing that both Ford and Holden are lacking in Australia it’s a hybrid car to attract buyers who want to be environmentally friendly.

Sadly neither of the big two seem interested in filling that gap anytime soon. Holden may have unveiled the Chevy Volt at the Sydney Motor Show last week but it’s still not set to arrive here in Australia till 2012 despite the fact that it was on display in America as long ago as January 2007. 

How long can they go on building cars in Australia that fewer and fewer people want to buy?

It seems that Ford Australia is about to cut hundreds of jobs from its plants in Victoria. This latest round of cuts is in addition to the job cuts previously announced.

Ford’s Victorian operation produces larger vehicles that are out of favour with the marketplace so it’s possible that even more positions might go in the future.

Every cloud has a silver lining … at least for someone … and the current economic storm clouds certainly have some silver linings for any Australian new car buyer who has the cash or the credit to make a purchase right now. And things could get even better in the near future.

Right now Holden has their fuel offer, Ford has fleet price discounts for ordinary buyers, Mazda, Toyota and Hyundai have drive-away deals on some models, Mitsubishi has a cash-back offer on all its vehicles, Mercedes has an interest rate deal and Nissan is offering drive-away deals on all models plus fuel deals on some of the range.

And yes you did read that correctly … it might be hard to believe but even Toyota is struggling to move some vehicles.

But wait … things could get even better for new-car buyers. New.com is reporting that holding yards along the east coast are packed full of new vehicles that importers have brought into the country and now can’t shift. If that’s the case then those offers are just going to get a whole lot sweeter.

In America there used to be the big three auto makers - General Motors, Ford and Chrysler.  Now of course we have the very weak and wobbly three as sales plummet, credit evaporates and fuel becomes so expensive that even the Americans now want smaller, more fuel efficient cars.

Soon though there’s a very strong possibility that the three may be reduced to just two as rumours abound that General Motors and Chrysler are engaging in merger talks. Cerberus Capital Management - the company that owns Chrysler are denying that such talks are taking place but the rumours just won’t go away.

Reuters is also reporting that one of their sources is suggesting that Cerberus is also in talks with “other parties including Renault-Nissan”.

Here in Australia new car sales are down but then that’s only to be expected. Financial times are tough and people tend to put off major purchases at times like this. Even if they want to buy a new car credit is harder to come by and no one really knows where interest rates are going.

But will things get as tough as they are in the United States? Here in Australia new car sales are down 3.1% compared to this time last year. Over there one in five new car dealerships could close. One of the biggest dealerships in the country … a company with revenues last year that were measured in the billions has filed for bankruptcy protection. Companies are laying off staff as fast as they can.

Every major car maker in the US market posted a decline in sales in September as sales dropped by a whopping 26%. And finally Toyota … the leading seller of cars in America (and Australia) has finally had to offer zero interest on loans as an encouragement to get people to buy their cars.

While I doubt that we’ll ever see zero interest rates here in Australia you can be sure that things are going to get worse here in Australia and before long the sales of new cars will fall below last year’s figures. When that happens you can expect to see some nice incentives offered to encourage you to buy a new car.