Vol. IV No. 7 - Saturday February 12 - February 18. 2005
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Automania

Hybrids not the way to go says Nissan CEO Ghosn

Despite the fact that Toyota and Honda are leading the world in consumer hybrid gasoline-electric technology, Nissan is not going to leap wholeheartedly on the band-wagon, said their CEO Carlos Ghosn, at a meeting in New Orleans at the end of January.

Carlos Ghosn

Ghosn (despite an impossible to pronounce name) is a very smart cookie, taking Nissan from a company which was on the brink of collapse in 1999 to one that has seen its sales increase by 24 percent in the US. He said that the company has learned its lessons about investing in technology, for the sake of technology, and would be looking at the financial bottom line before going further into technological territory.

“Nissan is a profit-driven company,” he said. “If volume growth is antagonistic to profit, we don’t want to go there. We don’t want to build or sell cars that don’t make a profit.”

Now while that seems that it should be as obvious as the nose on your face, many automakers use the “loss leader” supermarket approach to their vehicle line-up. Speaking to 4,200 car dealers and other industry professionals, Ghosn stated that of the 16.9 million vehicles sold in the United States in 2004, only 88,000 were hybrids. A very small percentage of total sales.

Nissan Altima

Even though demand has grown worldwide because of concerns about the dangers of global warming, decreasing natural fuel supplies and the rising cost of those fuels, Ghosn remains unimpressed. “They make a nice story, but they’re not a good business story yet because the value is lower than their cost,” said Ghosn. “The same is true for fuel cells. The cost to build one fuel cell car is about USD 800,000. Do the math and you figure out we’ll have to reduce the cost of that car by 95 percent to gain widespread marketplace acceptance.” Ghosn does not mince his words! Of course, many manufacturers share his thoughts on this. The fuelling infrastructure to support hydrogen fuel cars is not in place at all, and the introduction is probably much more than 15 years away, say the experts.

However, Nissan will release a gasoline-electric hybrid in the US joining Toyota, Honda and Ford who already sell advanced hybrid vehicles in the United States. This will be called an Altima, scheduled for introduction next year, and this will use some hybrid technology licensed from Toyota. Ghosn explained the seeming turn-around by saying they were building the hybrid Altima to meet the much stricter vehicle emissions standards in California and other states.

(California regulators in September adopted what would be the world’s toughest emissions standards to cut greenhouse gases, although some automakers are challenging the regulations in the courts.)

Ghosn, who is credited with the dramatic change in fortunes at Nissan, is going to take over as chief executive at Renault in May this year. (44 percent of Nissan is currently owned by French automaker Renault, but Ghosn will continue to oversee Nissan as well as taking on Renault.)


Heidfeld gets the nod at BMW Williams

Who would partner Aussie F1 star Mark Webber at BMW Williams has been a matter of conjecture over the past three months. Finally it came down to Antonio Pizzonia (AKA Jungle Boy) who was previously dropped by Jaguar mid-season or German Nick Heidfeld, who has been skulking around the back in Sauber and Jordan, without making any real impression, in my book.

Finally, as they revealed their race vehicle to challenge for 2005, Sir Frank Williams also revealed that the number 2 would be Heidfeld. “We have decided, at the last minute, that Nick Heidfeld would be the team’s regular driver,” said Sir Frank Williams, continuing on, “There was little to choose between the two of them, and we were in the fortunate position to be able to choose between two drivers who would be a credit to any Formula One team.”

“Ultimately, however, it is Nick who has got our vote, but I am delighted that we have strength in depth with Antonio taking up the position of official test and reserve driver.”

Heidfeld, who drove for Jordan in 2004, was delighted to hear that he had got the nod to partner Mark Webber. “I really wanted this job. Driving for Williams is the greatest opportunity of my career,” said the man who has been previously called ‘Quick Nick’.

Heidfeld does have a good history in the lower formulae and was the F3000 champion before graduating to Eff Wun, however, I have serious misgivings. When I interviewed Heidfeld in Pattaya, when he was still with Sauber at the end of 2003, I asked him who was the best driver in F1. Race drivers need a healthy ego to keep going, and I expected the response to be that he was the best, and fellow German Michael Schumacher wasn’t bad either. However, I got the very weak reply that it was difficult to say and judge, and he did not want to be pinned down on that issue! If you are going to be world champ, you have to borrow from Cassius Clay, who said “I am the greatest,” and he certainly proved that later on.

I am prepared to be wrong, but I think Nick is like Rooby Baby Barichello, a good number two. I also wonder how much influence the German BMW engine suppliers had in influencing Sir Frank to choose the German driver?

FoMoCo move again into China, bringing Mazda as well

Thailand may call itself the Detroit of Asia, but it will not hold that title long. The coming country is China, and with the deregulation or easing of restrictions on doing business with China being evident, all the majors are moving into China.

The new manufacturing plant is in Nanjing, to make it the third plant in China for Ford, but the first for Mazda. The local venture partner is Changan Automotive group, about whom I have to say I know very little, other than the fact that they are already a joint venture partner with Ford at another plant in China.

Bill Ford

Mark Schulz, Ford Motor Company executive vice president said, “China is easily the third largest automotive market in the world. With this new plant, we will be introducing more Ford and Mazda products to the Chinese consumer. But just as important, we will be introducing an entire company to them and the way we do business and how we care for the communities where we live and work.”

This is the same philosophy as they used at the AutoAlliance plant here in the Eastern Seaboard Industrial Estate. The difference is that the Nanjing plant can supply a much larger local market. Forget about the idea that the Chinese are sitting on street corners begging for rice. Those days are long gone. You are looking at a newly industrialized country, whose inhabitants have money to spend. If they haven’t got the money right now, then Ford Credit will make sure they have enough to buy a Ford car. That’s the way it works. Ford makes more money out of selling money, than they do out of selling cars!

The all-new vehicle manufacturing facility will be the first in China for all three companies (Ford/Mazda/Changan) working together. The 190,000 square meter facility will have an initial manufacturing capacity of 160,000 units a year and could be expanded to as many as 200,000 units annually.

Bill Ford and Hisakazu Imaki

Highly flexible and capable of producing a number of different Ford and Mazda vehicles, the new plant will be fully integrated to support stamping, body assembly, paint, trim and final assembly. Using the Mazda manufacturing process as a blueprint, the jointly developed manufacturing facility will feature the latest safety and environmental standards to ensure the plant is friendly to both people and the surrounding ecosystem.

The new plant is part of the USD 1 billion investment that Ford Motor Chairman and Chief Executive Officer Bill Ford announced during his visit to China in October 2003.

“This is an important next step in expanding in China,” said Mark Schulz, Ford Motor Company executive vice president. “The progress we have been able to make, thanks to the support of central and provincial authorities in China, is gratifying.” (And there’s a man who gets 10 out of 10 for diplomacy!)

“With Mazda joining us in this new project, we expand our ongoing cooperation that has us building vehicles together on four continents,” Schulz said. “By using a combination of Mazda’s manufacturing expertise and Changan’s deep knowledge of China, all of us will benefit.”

Mazda’s Hisakazu Imaki, president and chief executive officer, added, “The plant in Nanjing is a key part of Mazda’s overall business strategy in China. Working with Changan Group and Ford, and putting to use Mazda’s noted strengths in manufacturing capabilities, we will build a plant able to deliver world-class quality and efficiency. We are confident that the new plant will produce vehicles both high in quality and performance; vehicles that are exciting to drive and able to deliver the level of quality Chinese customers certainly deserve.”

Despite all that coming from an official press release, the important words were at the end - “the level of quality Chinese customers certainly deserve”. This plant is not trying to export, it is there to fill local demand. Considering the total output of all auto manufacturing in Thailand is around 600,000, this Nanjing plant has the capacity to turn out one third of Thailand’s production, on its own! Do we still think we are the Detroit of Asia? I think we should change that to the “Detroit of SE Asia” before it’s too late!

The press release continued to spell further doom for the Thailand manufacturing claims. “Nanjing is an ideal location,” said Yin Jiaxu, president of Changan Automotive Group. “Our operations with Ford in Chongqing are being expanded and production is going well. This new location and Mazda’s participation will enable us to grow even faster and to serve the populous eastern provinces of China even better.”

Ying Zhanwang, former Vice President Technology of Changan Ford, is appointed General Manager of the new plant, putting to work his experience in Chongqing. Masahiro Araki, former Production Engineering Division Manager of Mazda Motor Corporation, is appointed Vice President of Operations. Albert Li, former CFO of Ford Motor (China), is appointed Vice President of Business Operations.


Autotrivia Quiz

Last week, I mentioned that a designer produced a car in 1937 that featured front wheel drive and rear wheel steering. I asked what was his name? It was a gentleman from Belgium called A. Demati, if your Google failed you?

So to this week. Folklore would have it that the first cars to be built in Australia were the Holdens in 1948, with the FJ now being an Australian icon. However it was not the first car to be built Down-under. The first was built in 1898. What was it called?

For the Automania FREE beer this week, be the first correct answer to email automania @chiangmai-mail.com

Good luck!


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