Bajaj Auto, which focuses only on motorcycles, preferred to shrug off Honda’s steady gain the Indian two-wheeler market.”As the most profitable motorcycle manufacturer, we are indifferent to someone else’s scooter sales,” Bajaj Auto President, Motorcycle Business, K Srinivas said.Bajaj gets around 35% of its volumes come from high-margin export markets, helping it to post consistent operating profit margins of roughly 18%.While Bajaj continues a large lead on the annual sales over Honda, analysts expect the Japanese to intensify the battle in coming days, particularly with its entry into entry-level segment.”The bulging market size of the India two wheeler market is throwing opportunity for global players. It has intensified competition and companies offering better products and technology would have a higher stake in the future,” Raamdeo Agrawal, joint managing director at Motilal Oswal Financial Services, said.

Honda has made public its aim to become the market leader by 2020 by cornering a third of the Indian two-wheeler market. The company expects around 30% of its global sales to come from India, up from 13% now.
And it’s steadily gaining ground. In 2011-12, it beat TVS Motors as the third largest two-wheeler maker. And it is maintaining its stronghold in the scooter segment, which is the fastest growing vehicle segment in India after the light commercial vehicles. Aggregating 25% growth in the fiscal, compared to 13% for bikes, scooter sales crossed 25-lakh mark in 2011-12.

Honda Motorcycle & Scooters is expanding production capacities to around 4 million vehicles by 2014 and plans to increase it further to 10 million.”We have posted consistent growth in line with out strategic growth in India,” a senior company official said.”We are concentrating on the upcoming launch of our new mass-volume entry-level 110 cc bike that is expected to be a game-changer for Honda,” said the person, requesting anonymity for not being authorised to speak to media.

With Honda preparing to launch its first high volume 110 cc bike the Yuga in May and Suzuki bringing its same segment 110 cc Hayate, the largely indigenous TVS Motors may find difficult to handle the new global competition.Sales of TVS Motors, which has for the first time trailed to the fourth spot, are now largely confined to smaller engine mopeds and scooterettes, while its share is shrinking in the high margin motorbikes market.Market leader Hero MotoCorp, meanwhile, maintains its huge lead and, unlike TVS Motors, has braced both Indian and Japanese competition strongly.

It has demonstrated a robust growth of 16% in the 2012 fiscal year on a high base of 5-million units-a-year and accounted for 56% of all bikes sold in the last fiscal year. It also has forayed into the scooter segment and aims to have a sizeable chunk with its twin offering of Pleasure and Maestro scooters.”Scooters form a major part of the portfolio and we are looking at increasing the production of at least 50,000 units to cater to the demand,” Hero Honda Senior VP (Marketing & Sales) Anil Dua said.

In comparison, Bajaj Auto completely exited the market two years ago. Kotak Institutional Finance analyst Hitesh Goel, in his monthly update on the twowheeler industry, said he expected motorcycle ales to grow slower than car sales. “The slowing market is more prominent in the premium segment as urban demand is slowing more sharply than rural demand that would intensify the competition,” Goel said.

———————————
Source:ET 4/4/12

Mumbai will be home to the first exclusive MINI showroom in the country. The company said that India is the 100{+t}{+h} market for the MINI.The company plans to add four to five more outlets in the country, with the Delhi (National Capital Region) seeing the launch of two more showrooms this fiscal.In Mumbai, Infinity Cars will be the exclusive dealer for the MINI fleet of cars.It is said that the MINI has seen bookings of over 100 so far, and deliveries are expected to begin from May.

———————————-
Source: BL 6/4/12

BMW India Strategy: BMW is aggressive and fast, and its Indian journey proves that. Within four years of its launch, the company unseated Mercedes to become the top-selling luxury car in India, its market share has moved up from 9% in 2006 to 42% in 2011.

Appealing to the younger buyers (average age of a BMW buyer is 40 years), it has introduced a varying product range at different price levels, starting with its cheapest model X1 available at Rs 23.7 lakh. It will further strengthen its portfolio by bringing in its MINI range, a new 3 Series and the new M5 sometime soon. On the back of all this, the country head Andreas Schaff is hoping to make India among the top 10 countries for BMW globally in the next 10 years.

At its Chennai plant, BMW assembles 3, 5 series and X1 while others like X3, X5 are imported as a fully built unit. But with growing sales, it may set up its second plant by 2015. It might also scale up its manufacturing facility from just complete knock-down (CKD) kits. Their local component sourcing, currently low, will rise. Already, they have a global sourcing team here to cater to their global needs and have identified 20 vendors so far. This number should go up in future.

Its marketing strategy has largely been to create touch points like professional golf tournaments, wine tasting sessions and events with fashion designers. Last year they organised an Xperience Drive in Gurgaon which brought in international trainers with a live performance by the Australian Raw BANG. A test course, with 10 obstacles, was especially designed to bring out X range’s special features.

BMW is growing its dealer network and hopes to touch the 60 mark by 2015. With 80% of its cars being financed by its own financial services arm, BMW financing is a brisk business. Its recently launched used-car business BMW Premium Selection will soon be available across all its dealerships.

Mercedes Brand positioning: A symbol of power. The ultimate car for those who have arrived and is almost always chauffeur driven. The brand symbolises social status with the tagline “The best or nothing”, says Pradeep Saxena, executive director, TNS Automotive.

Mercedes India Strategy: This is the oldest and the best luxury car India has known. It set up India operations in 1994 and has the best infrastructure among the three in terms of dealer reach and domestic component sourcing which stands at around 34%. But the leader has been on the backfoot ever since younger and peppier BMW unseated it in 2009.

Mercedes is now reorienting its India strategy to target the youth. The company is working on its model line-ups, marketing and brand positioning to keep them aligned. For example, the luxury brand is now increasingly emphasising on performance and sportiness of its brand in India. It is now closely associated with F1 in India. Further, the company has brought in performance cars from its AMG stable to appeal to young Indian buyers.

It is planning to invest Rs 350 crore as part of its strategy to introduce new small and compact cars in India by 2015. The company is expected to bring in its B-class, front-wheel-drive small family car sometime around the festival season (October-November) this year. Currently Mercedes’ cheapest car is the C-Class.

With B-Class hatchbacks, it will lower the entry threshold. The B-Class hatch, owing to its styling and agile contours will be positioned as sports tourer. During the next few years, Mercedes-Benz has planned the introduction of most of its 10 new global cars in India, and for this it is considering assembly of its SUVs ML, GL and GLC-Class here.

The company has recognised the need for more compact cars in countries like India and China and assembling them in local markets is considered beneficial. With better localisation of content, they will have a pricing edge over others. On the back of all this, as Indian luxury car market expands, the company is hoping to sell around 55,000-60,000 cars (from current 7,430) by 2020. This is part of the bigger plan for Mercedes to regain its top slot in India.

Audi Brand positioning: Like BMW, it targets young buyers who love to drive. The car emphasises design and style rather than speed (BMW’s thrust). Positioned as a well-engineered stylish car, its tagline is ‘Vorsprung durch Technik’ in German, meaning ‘Lead by Technology’.

Audi India Strategy: The second largest luxury car seller in the world and the third largest in India is nurturing some serious India ambitions. By 2015, Audi says it will be the largest luxury car seller in India as well as the world. Currently they have a marketshare of around 20% but they are the fastest growing luxury car company among the three.

In 2012, Audi is widely expected to beat Mercedes and wrest away the No. 2 slot on the back of volume driver Q3′s launch this summer, which will lower Audi’s entry threshold. The Q3 will compete with BMW’s X1, a model which has given BMW a significant jump in volumes.

—————————-
Source: ET 25/3/12

This opportunity is being extended to all Volkswagen owners via the official VW India Facebook page. Facebook users are to upload a photograph of their Volkswagen car and say why their car deserves to be a superstar. The winning car will be judged by Saif Ali Khan, Vir Das and Kunal Khemu well as the film’s director. Actor Vir Das said “Extremely excited to be associated with the first car audition of the world – The Volkswagen audition for Go Goa Gone. Waiting to see which car wins.”

The lucky winner will get a chance to see their VW vehicle star in the movie, Go Goa Gone and will also appear in a song sequence. It is an exciting contest and sure to attract the attention of a number of Volkswagen owners. ‘My Car Superstar’ as the contest is appropriately named ends VW passenger car auditions on March 31, 2012.

Volkswagen Passenger Cars, Head of Marketing & PR, Lutz Kothe had this to say. “It is an exciting contest and a unique way to engage all our customers who own a Volkswagen. We are sure the owner of the winning car will enjoy this experience.”

———————————
Source:www.rushlane.com  28/3/12

The model that famously put Datsun on the map was the 510, “a car that had a lot of the dynamics and specs of a BMW, but for a hell of a lot less money,” says Jim Hall, principal of automotive consulting firm 2953 Analytics in Birmingham, Mich. When the fuel crisis hit, Datsun’s zippy and efficient B210s also took off, cementing the company’s reputation. To top it off, Nissan was the first company to market small pickup trucks in America and also introduced Z-cars—a series of sleek, well-made Datsun sports cars that cost significantly less than, say, Porsches.

So, what happened?

It all goes back to the Datsun name. Nissan Motor, established in 1933, was a reorganized version of a company called DAT Automobile. The earlier company’s name was based on the first letters of the surnames of three investors: Den, Aoyama, and Takeuchi. DAT in 1931 released a two-seater called the “Son of DAT,” or Datson. The suffix was soon changed to “sun,” because “the rise of imperialism in Japan brought a lot of focus on the sun—land of the rising sun, the naval ensign was the sun,” says Hall. An alternate theory, which has been disputed, is that the word “son” in Japanese implies losing money.

For decades, Nissan continued using the Datsun brand everywhere but in Japan. Then, in 1981, the company resolved to rebrand all Datsuns as Nissans, as part of a global strategy to strengthen the company name. It proved to be a disaster. “Datsun signs came down, Nissan signs went up, and all the cars became Nissans. Overseas sales plummeted,” recalls Jackson Sellers in an e-mail exchange. Sellers is a retired Los Angeles Times writer who became friends with Yutaka Katayama, or “Mr. K” as he was known while Nissan USA president during the ’60s and ’70s. “Nissan? What’s that? It took several years for Nissan to recover.”

Hall estimates that the change cost Nissan hundreds of millions of dollars in terms of signage changes, marketing costs, and lost capital. “It was arguably a stupid thing when they did it because [Datsun had] great name recognition in the U.S.” And despite an aggressive name-change campaign, brand recognition long remained higher for Datsun than for Nissan. Today, Nissan has slipped to the No. 3 Japanese brand in the U.S., behind Honda (HMC), and, according to Hall, Nissan’s name change is one factor that worked to Honda’s advantage.

Now back to the revival of the Datsun brand. Hall suspects the move is part of Nissan’s strategy to sell lower-cost cars without devaluing the company’s luxury Infiniti brand. “Rather than pull Nissan down, they’re adding an entry-level brand,” says Hall. “And it’s a heritage brand.”Sellers, 80, can attest to that. “In my garage sits a pristine 1972 Datsun 510 wagon with 350,000 miles on it,” he writes. “The darling still runs nicely when I take her out.”

—————————————————–
Source: www.businessweek.com 21/3/12

The lesson was obviously well-learnt. For, the 45-year-old managing director and CEO of Bajaj Auto subsequently made a remarkable turnaround that saw his company back from the brink onto the recovery path. Bajaj Auto is now India’s most profitable two-wheeler manufacturer. Operating margins have been in the 20 per cent region for five quarters now, compared to market leader Hero MotoCorp’s less than 15 per cent.
Though it’s still way behind Hero in terms of sales volumes, Bajaj Auto is progressing fast. It posted 35 per cent sales growth in the last fiscal year — 11 percentage points higher than the industry’s growth.
What Reese and Trout taught him was that Bajaj Auto can’t afford to work with a buffet of brands as in the past, as the key was specialisation and clear positioning. For India, that positioning was a leadership role in the mid-space motorcycle market.

That’s precisely why Bajaj phased out other brands and is banking on just two — Pulsar (launched in 2001) and Discover (four years later) — to deliver the goods. The dual bike strategy has worked: at four million mobikes a year, it has roughly 10 per cent of the global market share by volumes, and the target is to take it to 20 per cent, which in itself will double the size of Bajaj Auto. Exports have grown over the past decade from zero to 35 per cent of sales.

ICICI Bank and Infosys Chairman K V Kamath, who was the head of the Jury to select the BS award winners, is among those who are quite impressed with this level of performance. “The scale he is delivering is serious stuff. What makes it all the more credible is his ability to deliver profitability on a sustained basis. The track record is impressive,” Kamath says.Ernst & Young Country Managing Partner Rajiv Memani believes that his decision to phase out scooters showed Bajaj’s capability of taking calculated risks. He proved his mettle by sticking to the brand play in premium motorbikes to protect margins.

Bajaj’s game plan is simple: While Pulsar focuses on the market for sports motorcycles, Discover is positioned for the market for sporty commuters. Then there is a market for utility bikes, especially in the African markets, for which the company has launched Boxer. For the niche markets, Bajaj Auto acquired a 39.8 per cent stake in KTM. Today, the KTM Duke 125, which has 99 per cent localisation, is a class leader across Europe.

The most challenging task of course was changing the mindset of people in the company when the young engineering graduate from Warwick decided to take the bull by the horns and get away from scooters (even his father Rahul Bajaj was initially uncomfortable with the idea). Everybody in the company and its dealers were used to a 10-year waiting period for scooters and the idiom of “now you have to chase customers” was Greek to them. Apart from the people factor, Bajaj had to change everything — research and development specifications, engineering processes, manufacturing standards and even many in the top management.

Many term Bajaj’s decision to move away from scooters as hasty, as the market for gearless scooters is growing at a fair clip (scooters now account for almost a fifth of all two-wheeler sales) and rivals like Honda, Hero MotorCorp, TVS and Suzuki are dead serious about it, but Bajaj has no intention of rolling back his decision to vacate the space. The profit margins in scooters are simply too thin to interest him.

Bajaj’s latest gamble is the RE 60, through which he is trying to upgrade the three-wheeler market to four-wheelers. This again shows why Bajaj is so successful. Three-wheelers are actually the most profitable automobile products in the world and Bajaj could have opted for the status quo. But the shrewd Bajaj realised a couple of years ago that there is no real barrier to entry in this market and hence the bar somehow needed to be raised. So, the idea behind developing a light four-wheeler is to actually move the three-wheeler market into that space. Reese and Trout would indeed be happy with their Indian disciple.

——————————————————
Source: BS 20/3/12

The British luxury car manufacturer has ambitious plans to promote its brand with a new identity. With a fresh corporate image, marketing strategies, and advertising campaigns, Jaguar Land Rover aims to regain lost ground. With demand for JLR cars astonishingly high in China, Tata Motors has entered into a joint venture with a Chinese automobile maker to set up a manufacturing plant for its JLR brand.

The new JLR campaign will create global awareness with heavy advertising and marketing. Jaguar has unveiled a brand new Jaguar Logo along with a corporate identity to create an impact globally. The Jaguar Alive campaign that includes new vehicles will be showcased through television, print, digital advertizing and outdoor advertizing in India by March 2012.

Mr Adrian Hallmark, Global Brand Director, Jaguar Cars, said: “Our fresh corporate image and the new global marketing campaign both underline the confidence we have in our existing products, and set the tone for our future expansion.”

Press Release

(February 27, 2012) – Jaguar is launching today a new global brand direction and marketing campaign, themed “ALIVE,” which introduces the famed British brand to luxury consumers in a new modern context. The brand direction is driven by the belief that Jaguar makes the world’s most instinctively rewarding performance cars. The campaign aims to increase awareness of the brand amongst a new audience in line with the brand’s ambitious future plans.

“Our refreshed corporate image and the new global marketing campaign both underline the confidence we have in our existing products, and the vision we have for the future of the brand,” said Adrian Hallmark, Jaguar Global Brand Director.

The basis for the new strategy is the brand’s award-winning lineup. There are three Jaguar models ranging in U.S. MSRP from $53,000 to $138,000: the XF sports sedan, the XJ full size luxury sedan and the XK coupe and convertible grand tourer. Each combines a stunning exterior form with luxurious, contemporary interior design that’s the result of the talented team led by Design Director Ian Callum. These aesthetic qualities, complemented by technologically advanced engineering under the skin, including all-aluminium construction for the XK and XJ, has made each of these Jaguars multi-award winners in their segments.

“In a world of mass market luxury, Jaguar cars stand out for the seductive effect of their design, their rich and warm luxury interiors and their arresting performance,” said Hallmark. “Jaguar is a brand for luxury consumers who are contemporary and open-minded, sophisticated and daring, with a desire for authentic, high technology, aesthetic, independent brands. Our product lineup combined with the ALIVE brand direction will define Jaguar in the modern era.”

The campaign, created with Spark 44, the international communications agency that’s part-owned by Jaguar Land Rover, will feature print, TV, digital advertising and a new look that contemporizes the aesthetics of the brand at every customer touch point. The Jaguar brand will have new corporate identification and a new font, created exclusively for the brand. The dramatic alteration, including significant changes to the brand symbols of the “leaper” and “growler,” is the most extensive change Jaguar has made to its visual identification in 40 years.

“Jaguar is a brand at the beginning of a rebirth and a relaunch – it’s a critical moment in the history of this storied British brand,” said Hallmark. “As part of a multi-year strategy to re-invigorate Jaguar cars globally, starting with a spectacular new line-up now in place, we have developed an all new brand positioning, effectively a brand reset. For too many luxury consumers, there is awareness of the Jaguar brand, but not consideration and modern relevance. Our ALIVE campaign is meant to differentiate Jaguar cars by underscoring its unique emotional character.”

The campaign’s primary message is this: Jaguar is ALIVE; it is a car not so much manufactured as created, and it is as alive as you are. Deliberately provocative, the campaign is designed to capitalize on the existing emotional pull of Jaguar’s vehicles. It frames Jaguar as truly different from its competitors by positioning the brand as animate — seductive, emotional, unique, energetic and high-performance — while asking consumers, “How alive are you?” The campaign targets luxury consumers who are contemporary, sophisticated and daring, with a desire for authentic, independent brands. It also appeals to a more youthful audience, while not alienating its current demographic.

The dramatically different Jaguar print and television advertisements are meant to spark curiosity and stir conversation. The TV spot, called “Machines,” invokes an emotional connection to the viewer by positioning the Jaguar cars as alive as you are. The commercials open with a visual collage of machinery of the past – including an assembly line and a robot — that were invented to replicate and replace people. It then cuts to visuals of a Jaguar XJ with a voiceover that informs viewers that the car is as alive as humans: “…there is one seductive, instinctive machine that’s as alive as we are…Jaguar.” The spot concludes with the tag Jaguar: How Alive Are You?

The campaign’s print ads are designed to intrigue and inform consumers: one features an image of a sonogram, with the baby being the Jaguar logo, accompanied by the headline, “Looks Like Somebody’s Getting a New Jaguar.” Others include the headlines: “Do One Thing That Scares You. Every Day” and “Every Jaguar Can Do Things Machines Can’t.’”

Reflecting an effort to target a younger audience, the campaign breaks February 27 with the debut of the TV spot on Jaguar’s YouTube and Facebook channels. The commercial then airs on national network and cable networks, including NBC, ESPN, Food Network and CNN, on March 15. Print ads break in April in top national lifestyle and business publications. Viral videos will be seeded in Mid-April. The spots can be viewed here: http://interactivejaguar.com/home/index.php.

In support of the campaign objectives in the U.S., Jaguar is also launching a high-profile experiential component in the U.S.: the “Jaguar Drive Experience,” a road show that will travel to 18 cities throughout the U.S. in an effort to expose the brand and the 2012 and 2013 model year line-up to new consumers. Beginning in April, key cities will host a multi-day event that invites consumers to test drive the brand’s full model line up, including the XF, XJ and XK, in a performance setting. With a professional driver beside them, consumers are invited to test the superior performance and technology of the cars in various simulated settings that highlight power, agility, safety and more. They are encouraged to push the car to its limits in a safe, closed course. The driving experience is accompanied by a display of heritage vehicles, a history of Jaguar technological innovation and a design retrospective in an effort to provide consumers with a full brand immersion.

Jaguar Land Rover is investing £1.5 B annually to deliver 40 product initiatives for the two brands over the next five years. In recent years, Jaguar has captured the public’s imagination with two spectacular design and technology concept vehicles, the hybrid electric C-X75 supercar and the hybrid electric C-X16 production concept sports car.

———————
Source: www.rushlane.com

According to the national auto fuel policy, in 2010, the BS IV norms were implemented in 13 cities—the national capital region, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Agra, Solapur and Lucknow, while BS III norms were made effective across the country. The 17 cities where BS IV emission norms have been implemented constitute at least 40% of the domestic car market.
“In the first phase of converting to BS III and IV, the entire industry had invested around Rs. 32,000 crore for the refinery upgradation. We are quite sure that we will be covering 50 cities by 2015,” said the chief executive of an oil marketing company requesting anonymity.

According to India’s petroleum ministry, the additional cities to be covered under BS IV will be considered on the basis of “pollution levels and the vehicle population…inclusion of all state capitals and cities with population of more than one crore will be emphasized while selecting the additional cities for extension of BS IV auto fuels”.“We are ready to extend this to 50 cities by 2015. We are prepared. The investment has already been done by the refineries. Now it is only a matter of logistics,” said a senior executive at state-controlled Hindustan Petroleum Corp. Ltd requesting anonymity.

The extension of the BS IV emission norms in 50 big cities across the country will also spell the end of Maruti Suzuki India Ltd’s first small car—the Maruti 800. The car’s engine has not been upgraded to the BS IV norms. However, the company is in the process of developing a replacement for the car.The Indian automobile industry welcomed the move but urged the government to make it a countrywide phenomenon.

“It is good for the environment and for the industry, but the government needs to ensure that it should get implemented across the country at the earliest. Providing BS IV fuel to only 50 cities gives an impression that India is a poor country and cannot afford this fuel for across the country at a time when we aim to become a developed nation by 2020,” said Vishnu Mathur, director-general, Society of Indian Automobile Manufacturers, a lobby group.India plans to draw the road map to reduce its future emissions.

“The government proposes to formulate a long-term policy and strategy to increase mobility but reduce emissions from transport by the year 2050, following European pattern of non-conventionally fuelled cars in cities, reduction in emissions from shipping, and use of low-carbon fuels in aviation and shift the inter city transport from road to rail,” according to the environment ministry.

———————————————
Source: www.livemint.com  26/2/2012

Nissan India is planning to go more aggressive on the digital platform. Though a very small share of the total marketing budget goes to the medium, the year could see some promising investment in digital. Explaining the digital strategy of the brand, Dinesh Jain, CEO, Hover India Automotive Pvt Ltd, the sales and marketing partner of Nissan in India, said, “Though we are a new entrant in the Indian market, we are already the leader in the digital media space among automobile companies in India. Nissan India’s Facebook page reached the 500,000 community fan milestone on February 29, 2012.”Recently, the brand also initiated a rather unusual campaign to attract youth to participate in the brand’s online activities. The company launched the ‘New Star of India’ (NSOI) online talent hunt, its first digital media initiative in India.

The Facebook page of Nissan India received over 2,300 short clips and many likes, mostly by young users. Though digital has the smallest share in the brand’s advertising activities, Jain believed that it was the fastest growing medium for the brand. The company could consider investing more into the medium to improve visibility. Jain added, “We keep reviewing the budget in accordance with the overall growth plan. Digital is a small contributor in overall terms, but fastest growing in our allocation over the last couple of years.”

Among Nissan’s competitors, well-established automobile brands like Maruti and Mahindra have been the most active on the digital, social and mobile media platforms. Recently, Mahindra was one of the first automobile brands in India to foray into augmented reality in association with Hungama Digital Media at the Delhi Auto Expo, which generated much interest.

Though not spending high on such initiatives, Nissan, too is optimistic about the higher returns of the medium. “The interactive platforms offered by social media makes it an ideal platform for automobile brands to interact directly with the young and mobile population,” concluded Jain.

—————————–
Source:  www.exchange4media.com  5/3/12

Indeed, Peugeot is already involved in several alliances of this kind with Ford, Toyota, BMW and Fiat.Deeper alliances, which might be backed by small cross share ownership deals, are also beginning to emerge.
The oldest and most firmly-established alliance of this kind is that between Nissan and Renault – the two companies share one chief executive, own stakes in each other and co-operate in many areas including research and development.

It is not known whether Peugeot and GM are currently considering a deal similar to this, or whether they are merely talking about sharing components and technologies.Indeed, at this stage, neither company is prepared to comment on whether or not they are actually talking to each other.But either form of alliance could make sense, not least given that the second trend is driven by technologies that have made sharing platforms and parts much more flexible.In the past, rival carmakers would at times share the same chassis, resulting in rather similar cars competing against each other.

These days, platforms have become modular, so they can be modified to fit a wide range of engine solutions or car bodies.The same goes for engines. Different models sharing the same engine can still be distinct from each other, as a result of the engines being tuned differently or by the addition of different types of turbo chargers.The two trends support each other, in that flexible business deals and adaptable vehicle architecture are drawn up in order to cut costs and thus boost profits.But for this to work, the chemistry between charismatic and powerful top executives must work, and the invisible, under-the-bonnet solutions most be stitched together without compromising the integrity of either of the brands involved in any alliance.Consequently, alliances require both a great deal of diplomatic as well as technical skills – though more than anything, alliances require a great deal of desire to make them work.

There should be plenty within both Peugeot and GM.Peugeot has had to cut back its research and development activities, reduce its marketing budgets and scale back its international ambitions after enduring a 500m euros ($661m; £422m) loss during the second half of 2011.Europe’s second largest carmaker, which already relies on European markets for more than half its sales, has in effect had its wings clipped.
Without cash to spend on growth strategies, the carmaker will quite simply find it almost impossible to halt the decline.GM’s problems are different.The carmaker has returned as the world’s largest by volume – less than three years after it was rescued from bankruptcy by a US government cash injection – on the back of strong performance in both North and South America, as well as in Asia, including the buoyant Chinese market.
But its European division Opel, which includes Vauxhall, has been losing money for years – last year’s losses came in at $700m (£446m) and a return to profitability remains illusive in spite of massive efforts to make it happen.

In other words, GM is strong all around the world, but not in Europe. Peugeot, in contrast, is weak all around the world, though in Europe it has done much to cut costs, improve manufacturing processes and diversify with new products.Besides, its brands Peugeot and Citroen remain reasonably popular with European customers, while GM’s Opel and Vauxhall brands have been losing their lustre in recent years.Combining the two companies in whichever form could at best help the two automotive giants gain access to each other’s markets or, under a more limited alliance, at least to each other’s technologies.Bringing together production in Europe could also enable both firms to cut costs by reducing the number of factories they operate, though both companies know full well that closing down plants invariably proves hugely controversial.

—————————————
Source:www.bbc.co.uk  22/2/2012