Weak dollar may put more U.S. cars in other markets

[Ming]

Weak dollar may put more U.S. cars in other markets
By Dave Zoia
Ward's Automotive Reports

Thanks to its depreciation against the euro, yen and other foreign currencies, the dollar may not go as far these days, but the cars and trucks being built with it may begin to go even farther.

Auto makers are looking to step up production here and ship more U.S.-built vehicles to non-North American markets, in part due to recent currency swings.

Currently, U.S. exports remain minimal. In a good year, about 400,000 cars are shipped to non-North American markets.

But there are now several programs afoot that could boost that total, a healthy sign for a U.S. auto industry that has been struggling for decades to strike a better balance between imports and exports, worldwide capacity utilization and what it earns here and abroad.

Among programs being kicked about:

General Motors, which has aggressive plans to sell more U.S.-made Cadillacs around the world, also will build a version of its Pontiac Solstice/Saturn Sky 2-seat roadster for export to Europe under the Opel/Vauxhall brands. Both the Solstice (bowing this year) and Sky (due in 2006) will be assembled at GM's Wilmington, DE, plant, where the Opel version likely will enter the mix by 2007.

GM also is considering producing cars here for its Holden subsidiary in Australia. Holden is running its main assembly plant around the clock and still can't meet demand in a market that has been on fire of late.

A new U.S.-Australia free-trade agreement - and the U.S. dollar's continued decline against the Australian dollar - reportedly could pave the way for exports as early as 2007. An all-new rear- and all-wheel-drive platform, dubbed Zeta, is under development and will serve as the basis for future Holden models, as well as the next Pontiac GTO, Chevrolet Monte Carlo and several U.S. fullsize cars. Building some of the Australian vehicles here would allow GM to maximize North American capacity, better meet demand in Oz and possibly even save a few bucks.

Full Article Here: http://www.macombdaily.com/stories/0...wards001.shtml

[mgescuro]

Good. US cars outside the US market. That's good. And it's about high time it happened too. COnsidering now that the big 2.5 have credible products that can be sold elsewhere.

[Kar Krazie]

This should bring in so much money for american car companies. Considerening companies like Toyota and BMW have been here for so long, america is making a smart move in my opinion.

[tgagneguam]

Lest we forget, a significant proportion of vehicles made in America don Honda and Toyota badges. And as the article implies, other makers like BMW may soon take advantage of the same currency situation.

Daarn it, is there anything that will solely benefit the Big Three?

[GM_Fanatic]

"...Chevrolet Monte Carlo and several U.S. fullsize cars. "

I wonder how official that is...?

[GM_Guy81]

hey, way to find the sunshine in the storm. nice.

[Earl_Buick_Y]

Originally Posted by tgagneguam

Lest we forget, a significant proportion of vehicles made in America don Honda and Toyota badges. And as the article implies, other makers like BMW may soon take advantage of the same currency situation.

Daarn it, is there anything that will solely benefit the Big Three?

I am a bit sceptical about this currency situation. Most of these exports will not start before 2006-2007. 2 years is a very long time in finance to predict FOREX rates. GM needs to be a very competent currency hedger to guarantee returns. This will require them to figure out cash flows from these operations well in advance and lock-in the exchange rate. But this is risky as god knows how Europeans will react to Caddies and also costly. We should remember the currency damage VW and BMW suffered some time ago when the dollar started to depreciate. A possible dollar appreciation will be equally nasty for this project.

[mgescuro]

Originally Posted by tgagneguam

Daarn it, is there anything that will solely benefit the Big Three?

Well... The Big 3 can make competent cars that people want at a reasonable price that are as good or a better value than the foreign counterparts.

And they need to start playing the PR game (especially GM).

[DmitryKo]

Originally Posted by Ming

General Motors, which has aggressive plans to sell more U.S.-made Cadillacs around the world, also will build a version of its Pontiac Solstice/Saturn Sky 2-seat roadster for export to Europe under the Opel/Vauxhall brands. Both the Solstice (bowing this year) and Sky (due in 2006) will be assembled at GM's Wilmington, DE, plant, where the Opel version likely will enter the mix by 2007.

I don't see current Cadillac line-up selling good in the Europe, they are just looking inferior in comparison to other middle and premium segment cars from Mercedes/Maybach, BMW and VolksWagen, not to mention Toyota/Lexus. Opel version of Sky/Solstice sportster would also have a very niche market, I wouldn't expect lot of sales.

On the other hand, GM has made a bold decision to respawn GM Daewoo sales network as Chevrolet Europe and so rebrand the Daewoo cars, because they have a lot more potential for European sales than other GM branded cars. The recent models made for that market right from the start, ItalDesign styling is an evidence; build-quality problems of the past are long gone, thanks to GM efforts, and they are cheaper tnan most competition, too! So it's no wonder GM Daewoo makes profit as of now, while Opel is still making huge losses, closing some 12000 jobs.

[mrfunji]

Originally Posted by tgagneguam

Lest we forget, a significant proportion of vehicles made in America don Honda and Toyota badges.

Yea, but all those vehicles still use many parts sourced from suppliers in the homeland...

[1BadPig]

Another thing to consider is that Opel is beefing up its product line. With the exchange rate, the Euros it brings back to Detroit must make a huge impact.

[Mrbowtie]

Why do you think the Japanese continue to gain market share in the U.S.? Is it simply product-related or does it go beyond that?
Part of it is, of course, exchange rates. Adjusted for costs in the respective countries, the yen is just too weak. And considering the cost of doing business in the United States in U.S. dollars, the Japanese still have a cost advantage of three to four thousand dollars per vehicle, which they can either use to pricing advantage or margin advantage or putting more equipment into a car at a given price. And it doesn't matter whether they produce the cars in the U.S. or not, because a lot of the content is still imported. People say, "Well, Toyotas are built in the United States now." Yes, many are assembled in the United States, many are not assembled in the United States, and even the ones that are assembled in the U.S. contain a high percentage of Japanese or other offshore parts. The exchange rate issue is real.

I got the following exerpt from an article dated 10/21/03 We talk with the General's Car Czar
By Karl Brauer


This is why many imports were and in some cases still better, they had a serious cost advantage.
I think the current currency situation will help to level the playing field. The japanese are already looking for new ways to cut costs, for example, they are looking to end their great supplier relations and look for new suppliers in places like China because they are less expensive.

There is much hope for GM and Ford because they both have learned how to deal with huge costs and an extreme competitive environment. Health care, unions, quality, suppliers and foreign exchange. The Japanese do have their own problems but not like our domestic brands. Also in the future it is unclear whether the Japanese can handled an unfavorable exchange rate and lower quality suppliers.

[Butz]

I really wish Chevy brings some of its american cars here..

[powervette]

Originally Posted by Butz

I really wish Chevy brings some of its american cars here..

Where are You from?

[1BadPig]

The Japanese are already at the next cheap labor frontier... Vietnam!