Car industry reaps rewards from restructuring drive

In a recent roundtable meeting in Dubai, Steve Odell, president of Ford Europe and the Middle East, said the company is turning the corner in Europe and is expected to break-even in 2015.
This turnaround would mean Ford leaving behind one of the deepest recessions it had encountered in Europe for a long time.
After several years of continuous decline, figures for November 2013 indicate a slight rise of 0.7 percent in new car sales in Europe.
It seems that the painful restructure undertaken by many manufacturers in Europe is finally paying dividends.
However, it is a different story in the US where car sales drive to a six-year high.
GM, Ford, Chrysler and Nissan all reported double-figure sales growth despite the shaky economic picture.
Car sales in the US increased nine percent year on year to 1.24 million units in November 2013.
Sales on a seasonally adjusted rate basis climbed 7.2 percent from November 2012 to 16.4 million vehicles. This is the highest rise since February 2007.
General Motors recorded 212,060 vehicle sales in November, rising 14 percent year on year due to strong demand for all four brands — Chevrolet, Cadillac, GMC and Buick. Retail sales increased 19 percent, although fleet sales declined by three percent.
Ford reported a seven percent hike in total sales, from a year ago, to 190,449 vehicles. The company has generated year on year growth in sales in every month since November 2012. Retail sales rose nine percent to 147,021 vehicles.
The impressive performance was mainly driven by strong demand for its F-Series pickup truck, Fusion and Fiesta.
Sales of Fusion surged 51 percent to 22,839 units.
Fiesta and Fusion saw their highest November sales. Sales of F-Series pickup truck grew 16 percent to 65,501 units.
As for Chrysler Group, owned by Italy’s Fiat, it recorded a 16 percent year on year rise in sales, bringing the figure to 142,275 vehicles, driven by strong demand for its Chrysler, Jeep, Dodge and Ram Truck brands.
Chrysler has witnessed increase in monthly sales for 44 consecutive months.
Ram truck’s sales gained 25 percent, while the Jeep brand’s sales jumped 30 percent.
Even the Chrysler and the Dodge brands’ sales improved 12 percent and four percent respectively.
The Chinese market, meanwhile, is still growing, albeit at a lower rate of seven percent this year to 15.5 million vehicles.
Most the European luxury brands now rely on the Chinese market for a large chunk of their annual growth.
Despite, the green shoots in Europe, its car markets are not out of the woods yet.
Moody’s estimate that there are 1.4 million surplus vehicles of excess production that need to be removed from the market at the expense of several thousand job losses.
Sales in Europe are still below the 2007 levels. European (EU, plus Norway and Switzerland) car sales are running at about 12.2m units this year, nearly 4m below their peak in 2007.
Companies complain that European strict emission controls are making Europe a high-cost base and making life difficult for manufacturers, especially in the popular small and medium size segments.
Discussions are still going on at the EU to approve plans on emission restrictions that are viable for the companies.
The only exception in Europe is the luxury car segment which is booming.
All luxury brands saw big increases in US, Europe, China and the Middle East.
Most luxury brands in the Middle East reported double-figure sales increases this year.
The change of focus in Europe forced GM to withdraw its Chevrolet brand from the continent and concentrate more on Opel and Vauxhall brands. The withdrawal will start in 2016.
But “iconic vehicles,” such as the Corvette, would continue to be sold and it would retain a presence in Russia.
In 2012, Chevrolet sold 195,000 cars and SUVs in western and central Europe, followed by a further 137,000 in the first 10 months of 2013.
But it has been losing money in Europe, where a mature and saturated car market, coupled with a fragile economy, has stifled growth.
Chevrolet is doing very well in the Middle East region with its Impala model and it displayed its halo model, the Corvette Stingray, in recent motor shows in the region.
The Cadillac brand unveiled the new Escalade and revamped CTS; both of which have raised the bar again in the luxury segment.
GM’s competitor, Ford, meanwhile, unveiled its latest Mustang sports car. Ford said Mustang now is a “world car” that would be made available in Europe, China and the Middle East. The Mustang is celebrating its 50th anniversary next year.
Regional markets
Nearly all companies operating in the Middle East have recorded significant rise in sales and profits during 2013 — with a majority achieving double-figure growth rates.
Although the regional market is small by international standards it is growing at a faster rate and has a bigger appetite for luxury cars.
Elite and sports cars do relatively better in the region than in other markets.
Saudi Arabia is the fifth largest market in the world for Rolls Royce cars, according to regional manager Jeff Briscoe. The company is hoping its new Wraith model would do well next year in the region.
As for Bentley, regional director Chris Buxton confirms a 70 percent sales hike in the Mulsanne flagship brand during the first six months of 2013.
Saudi Arabia and UAE are the largest Bentley markets in the region and the two markets have the largest Bentley distributors in the world.
Audi has ambition plans to double its sales in the region by 2020, according to managing director Trevor Hill.
The company is on track to achieve record sales this year of 10,000 vehicles. Audi is making in-roads with its Q7 model, which is its best-selling vehicle in Saudi Arabia and UAE.
At the same time, Ford Taurus led a 20 percent sales increase for Ford during the first eight months of this year by doubling its sales from last year. Regional sales manager Thiery Sabbagh said Edge and Explorer models recorded 40 and 20 percent rise in sales respectively.
The Lincoln luxury brand rose by 85 percent during the first eight months this year. The company revealed its MKZ model and MKC concept in recent motor shows in the region.
BMW launched its i8 hybrid model in Dubai recently and is appointing a new managing director, Johannes Seiberet, who takes over in February 2014.
He succeeds Dr. Joerg Breuer who has been in the region for several years and achieved record sales during his tenure. Dr. Breuer will return to the German market.
Another new regional director is Morris Williams of GM who succeeded John Stadwick. The company looks forward to launch 11 new and face-lifted models in 2014 in the region.
Tom Lee of Hyundai expects to do well with small models in the region with the company’s i-series. He focuses on quality especially in the Saudi market, which is the largest regional outpost for Hyundai.
While Jaguar/Land Rover achieved a 40 percent increase in sales during the second quarter of 2013 according to the company PR manager Salman Sultan, Porsche topped that figure with 50 percent rise during the first half of the year.
These figures are hard to achieve in other regions, even in China, and that is the relevance of the Middle East as a fast-growing market.