Saturn seeks another carmaker

http://www.businessweek.com/ap/financialnews/D96FIDV80.htm

February 20, 2009
Saturn seeks another carmaker as GM casts it aside
By TOM KRISHER

The last hope to stop General Motors Corp.'s wounded Saturn brand from falling out of the solar system appears to rest with some unknown automaker building cars for the dealers to sell.

GM said in its restructuring plan presented to the U.S. government Tuesday that it will only keep Saturn running through 2011, but it's open to the possibility of spinning off the money-losing brand to retailers or investors. It's one of many tough steps the Detroit automaker says are necessary as it seeks a total of $30 billion to ride out the worst sales slump in 26 years.

Chinese and Indian automakers, which have made noise about entering the U.S. market, would be the most likely suppliers, but GM says it hasn't had any discussions with them, and Indian automakers either expressed no interest or wouldn't comment.

Saturn's dealers, with laid-back salesmen and no-haggle pricing, often match luxury brands' scores in independent customer satisfaction surveys. Their locations could be a ready retail network for a foreign automaker to come to the U.S.

"The goal -- from a product perspective -- would be to find future vehicles that match the Saturn Brand: fuel-efficient, safe, reliable and affordable," Saturn General Manager Jill Lajdziak wrote in a message to customers this week. "From a retailing perspective, we would build on our core strength of unmatched customer service. The same hassle-free experience that is a hallmark of the brand could be taken to even higher levels."

Carl F. Galeana, who owns two Saturn dealerships in Michigan, said he would welcome a buyer from China or India, as it would keep the company going and bring innovation to the product line.

"It's very possible," he said. "It gives a footprint for an automaker to come into this country on the cheap and have a good distribution network."

But other dealers are angry at GM for what they say is a lack of support for Saturn.

When GM executives cast doubt on the brand in December by announced publicly that it was under review, Mike Edwards, principal investor in seven Texas Saturn dealerships, said showroom traffic dropped and he decided to close three of his locations.

Edwards said GM's announcement raised doubts from lenders and customers about whether Saturn would even exist, yet the brand had nothing to do with GM getting government aid.

"It wasn't very well thought out," Edwards, who locked up Saturn dealerships in Amarillo, Midland-Odessa and Abilene. "Showroom traffic dropped considerably."

Mahindra & Mahindra Ltd. and Tata Motors have had the greatest appetite for foreign acquisitions among India's automakers and would be the most likely buyers, said Vaishali Jajoo, an auto analyst at Mumbai's Angel Broking. But Tata has cash flow problems and Mahindra might not be a good fit, she said.

Tata Motors spokesman Debasis Ray said the company wouldn't be interested in the Saturn brand or its distribution network.

"We are happy as we are," he said.

Mahindra declined to comment.

Calls were not returned by BYD, a Shenzhen, China, company that has touted goals to bring its electric and hybrid cars to the U.S.

GM started Saturn in 1990 as a small-car answer to Japanese automakers and billed it as a "different kind of car company." Its new factory in Spring Hill, Tenn., had more flexible work rules than traditional GM plants and more autonomy for those who built the cars, known for their plastic body panels.

Despite a cult-like following that drew thousands to annual reunions in Spring Hill, the brand never made money for GM.

As GM focused more on high-profit pickup trucks and sport utility vehicles, Saturn began to languish in the late 1990s. But in 2006, it started getting the best of GM's new models, and executives viewed it as a precursor for GM's restructuring effort.

After a good year in 2007, sales dropped 22 percent last year as the U.S. market withered.

Edwards blamed the sales drop on a lack of marketing support. Analysts often criticize GM for having so many brands that it can't advertise them adequately.

"There's nothing wrong with this product lineup," he said. "But it has to be supported by the manufacturer. They were pretty plain that they weren't going to support that."

GM also has said it is reviewing the fate of its Saab and Hummer brands. Swedish-based Saab went into court protection from creditors Friday so the unit can be spun off or sold by its struggling U.S. parent.
------
AP Auto Writer Kimberly S. Johnson in Detroit and Business Writer Erika Kinetz in Mumbai contributed to this report.

CEO murdered by mob of sacked Indian workers

The Robalini Plan to Jumpstart the Economy...

http://www.timesonline.co.uk/tol/news/world/asia/article4810644.ece

September 23, 2008
CEO murdered by mob of sacked Indian workers
Work protests coud threaten India's economy
Rhys Blakely in Bombay

Corporate India is in shock after a mob of workers bludgeoned to death the chief executive who sacked them from a factory in a suburb of Delhi.

Lalit Kishore Choudhary, 47, the head of the Indian operations of Graziano Transmissioni, a manufacturer of car parts that has its headquarters in Italy, died of severe head wounds on Monday after being attacked by scores of laid-off employees, police said. The incident, in Greater Noida, followed a long-running dispute between the factory’s management and workers demanding better pay and permanent contracts.

It is understood that Mr Choudhary, who was married with one son, had called a meeting with more than a hundred former employees who had been dismissed after an earlier outbreak of violence at the plant. He wanted to discuss a possible reinstatement deal.

A police spokesman said: “Only a few people were called inside. About 150 people were waiting outside when they heard someone from inside shout for help. They rushed in and the two sides clashed. The company staff were heavily outnumbered.”

Other executives said that they were lucky to escape with their lives. “I locked my door from inside and prayed they would not break in. See, my hands are trembling even three hours later,” one Italian consultant told reporters.

More than 60 people were arrested and more than 20 were in hospital yesterday.

A spokesman for the Federation of Indian Chambers of Commerce and Industry said: “Such a heinous act is bound to sully India’s image among overseas investors.”

The murder has stoked fears that outbreaks of mob rule risk jeopardising the sub-continent’s economic rise. Thousands of violent protesters recently forced Tata, the Indian conglomerate that owns Land Rover and Jaguar, to halt work on a plant being built to produce the world’s cheapest car, the £1,250 Nano. The move could result in £200 million in investment costs being written off.

Tata stopped work three weeks ago, saying that it could not guarantee its workers’ safety at the factory in the state of West Bengal. The billionaire industrialist Mukesh Ambani said that the Nano crisis showed how protesters were creating “a fear psychosis to slow down certain projects of national importance”. Other companies, including Vedanta, the London-listed mining company, have encountered similar problems in India.

In a statement issued from Rivoli, Italy, Graziano said that some of Mr Choudhary’s attackers had no connection with the company.

Sources: Asian Week, Times archives

Tata Motors buys Jaguar, Land Rover from Ford

http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-24037137.htm

Tata Motors buys Jaguar, Land Rover from Ford for 2.3 bln usd
March 26, 2008

MUMBAI, Mar. 26, 2008 (Thomson Financial delivered by Newstex) -- Indian automaker Tata Motors Ltd said it has agreed to buy the Jaguar and Land Rover brands from Ford Motor Co (NYSE:F PRS) (NYSE:F PRA) (NYSE:F) for 2.3 bln usd cash.

Tata Motors, which has been negotiating the deal since January, said it would support the growth of the two brands, which employ about 16,000 people at plants in the West Midlands and Merseyside in the UK.

It added the deal will be funded through a bridge finance facility along with the company's existing cash resources.

The company will raise 3 bln usd for a period of 15 months as bridge finance from a small syndicate of banks, which will be refinanced through long-term debt or equity or unlocking value from some of its investments in various units, a company spokesman said.

In a conference call, Tata Motors said Jaguar-Land Rover will operate as subsidiaries under holding company Tata Motors (UK) Holdings Ltd.

'We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact,' Tata Motors chairman Ratan Tata said in a statement.

Under the deal, which is expected to close by the end of next quarter, Ford will continue to supply Jaguar and Land Rover with vehicle components and environmental and platform technologies and will also provide financing for dealers and customers through Ford Motor Credit Co.

The US-based company has also committed to provide engineering support, including research and development, as well as information technology, Tata Motors said.

Ford will also contribute about 600 mln usd to the Jaguar Land Rover pension plans.

Ford said the sale, which was first mooted last August, would allow it to focus on turning around its core Ford brand.

'Jaguar and Land Rover are terrific brands,' said Ford president and CEO Alan Mulally. 'We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata's stewardship.'
Ford bought Jaguar for 2.5 bln usd in 1989 and Land Rover for 2.7 bln usd in 2000, and joined them with Aston Martin and Volvo to form its Premier Automotive Group.

But after posting losses of 12.6 bln usd in 2006 and 2.7 bln in 2007, it sold Aston Martin for 479 mln stg last March and put Jaguar and Land Rover on the block in the summer.

Jaguar is thought to have never made a profit for the company -- Ford does not separate results for its brands -- despite investment of about 10 bln usd since it was acquired.

Land Rover, which makes the top-end Range Rover as well as the Discovery and Freelander 4x4 ranges, however, is believed to have made profits of about 1.5 bln usd last year, and the two companies combined are thought to be profitable.

Industry analysts said the price paid was at the top end of expectations, although they said it is difficult to quantify the value of supply and engineering support agreements.

Eric Wallbank, automotive industry leader for Ernst & Young in the UK, said the deal would give Tata access to useful technologies, while Ford would get money to revive its North American operation.

'The deal also removes the uncertainty that has distracted the management, employees and customers of both companies,' he said. 'The companies can move forward with a high degree of certainty.'
Unions in the UK said selling to Tata was the best option for the brands.

'Today's deal is really good news for the UK automotive industry and the thousands of people who work for Land Rover Jaguar and its supply chain,' said Roger Maddison, Unite National Officer for the automotive industry.

'Unite has secured written guarantees for all five UK plants on staffing levels, employee terms and conditions, including pensions, and sourcing agreements,' he added. 'The sale ensures our members' futures and we look forward to working with Tata.'

Piyush Parag, an analyst with Religare Research, said the acquisition is positive for Tata Motors because the company will be able to enter into the luxury automobile segment with these brands.

Prior to this announcement, but amid media reports of the deal being inked today, Tata Motors closed down 0.08 pct at 679.40 rupees on the Bombay (OOTC:BBAO) Stock Exchange while the benchmark index ended 0.81 pct lower at 16,086.83.

Tata Motors is part of the salt-to-software Tata Group.

Cheap cars in Asia, expensive gas everywhere

http://money.cnn.com/2008/01/30/news/international/mini_cars_gas

Cheap cars in Asia, expensive gas everywhere
The debut of the $2,500 car is just another reason Americans will pay more at the pump, and highlights a need for some creative urban planning in the developing world.
By Steve Hargreaves, CNNMoney.com staff writer
February 2 2008

NEW YORK (CNNMoney.com) -- The debut of the $2,500 car may be billed as a mobility breakthrough for billions of people in the developing world, but for U.S. motorists it could mean one thing: higher gas prices.

Rising demand from the developing world has long been cited as a main driver behind the runup in oil prices. That demand will only get more intense with staggering growth in car sales - and by extension, gasoline use - in places like India and China.

"We'll get into a situation where we'll have to compete with them for gasoline, $4, $5 a gallon, who knows how high we could go." said Peter Beutel, an oil analyst at the consultancy Cameron Hanover.

He says that time could come much sooner than 2015, when light vehicle sales in India are expected to total over 3 million - doubling 2006 sales - according to J.D. Power & Associates. In China they're expected to nearly triple - to over 17 million - roughly on par with projected sales in the United States.

That huge growth doesn't even begin to scratch the surface of potential car buyers in those countries though. The 2 billion-plus combined populations of India and China could one day dwarf the 300 million potential car buyers in the U.S.

China is expected to nearly quadruple its fuel consumption for motor vehicles by 2030, according to the Energy information Agency. In India it's expected to rise nearly three-fold.

By comparison, growth in the U.S. is only expected to be about 40 percent, although fuel use in the U.S. will still be more than twice that of China thanks largely to the bigger vehicles we drive.

Sales of all types of cars and trucks are growing in India and China - as they are in other developing economies like Mexico, Brazil and throughout the Middle East.

But small, super-cheap cars are important because they are marketed to people who don't have cars. Earlier this year India's Tata motors introduced the Nano, a two-cylinder, four-person sedan that gets 50 miles per gallon and is priced at $2,500. China's Chery car company has the slightly more expensive QQ, and Nissan and Renault are reportedly considering similar tiny models.

While the vehicles are efficient - certainly more efficient than gas-guzzling SUV so popular in the U.S. - experts say their effect on gas consumption will nonetheless be significant for two reasons.

First, the people that buy them will mostly be trading in motor scooters, which get much better gas mileage especially due to their ability to whiz through Asia's traffic-clogged streets, said Lee Schipper, a fellow at EMBARQ, the World Resources Institute's Center for Sustainable Transport.

Second, these cars are seen as gateway vehicles. The ultimate goal of the car companies is to move the consumer up the supply chain into bigger - and less efficient - rides.

Environmentalist are uneasy criticizing countries that are basically following the development model of the West. But in addition to raising gas prices for everyone, they say the rate of growth will put the countries' roads under serious stress, make cities less livable, and add to pollution.

We've become utterly auto dependent and now we're trapped in our car," said John DeCicco, an automotive strategies fellow at Environmental Defense. He sees cheap cars creating a vast new constituency for cars and road expansion.

India's Tata, which builds the Nano, did not respond to an email seeking comment. China's Chery could not be reached.

But Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, said cars in developing counties are far more efficient than cars in the U.S. were just 20 years ago. She also defended the automobiles role in society.

"Modern life couldn't exist without the mobility automobiles provide," said Bergquist. "Access to jobs, healthcare...they really form the basis of our quality of life."

The mobility cars afford is not just relegated to developed nations as evidenced by the skyrocketing sales projections. The Chinese, Indians, Brazilians and others want these things too.

But if they're going to follow the West's development model, some argue that maybe it's better they use cars that get 50 miles a gallon.

"It was going to happen anyway, and I'd rather see them in these than in vehicles that get 20 miles a gallon," said Michael Robinet, vice president of global vehicle forecasts the research firm CSM Worldwide.

Robinet also wasn't convinced these cars will compete directly with U.S. drivers for gasoline, as refining blends often vary country to country and refining bottlenecks in the U.S. are a big reason gas prices are so high.

But the the speed at which customers in developing nations are snapping up these cars, and the sheer size of the market, come with an urban planning challenge commensurate in scope.

"If they go to fast down the road of cars, it will take decades before they are finally able to calm the traffic," said the Schipper.

The one-lakh car

http://www.economist.com/business/displaystory.cfm?story_id=10498699

The one-lakh car
A “people's car” from India
Jan 10th 2008 DELHI
From Economist.com

Tata Motors reveals a dirt-cheap model

RATAN TATA, chairman of the Tata group of companies, has a cerebral and cordial manner. But the so-called “one-lakh car”, which Tata Motors unveiled in Delhi to a rapt public on Thursday January 10th, is a product of impatience and chutzpah. Instead of waiting for the great swell of prosperity in India and elsewhere to create millions of customers for his company’s products, Mr Tata has decided to wade out—further than any one has gone before—to bring a car to them.

In India one lakh means 100,000, and Tata will sell the most basic version of its new car at 100,000 rupees, or $2,500 (not including taxes and the cost of transporting it to the showrooms). This is roughly half the price of its nearest rival, and little more than the cost of a three-wheeled auto-rickshaw. But the “nano”, as the car is called, is no rickshaw. Apart from the fourth wheel and the doors, it has a 623cc engine that will muster 33 brake horsepower. The car should eke out 50 miles to the gallon, Mr Tata says. It complies with the “Euro III” pollution standards that prevail in India and should meet the tougher Euro IV standards with a bit of tweaking. The firm claims that the car produces less pollution than some two-wheelers produced in India today.

Tata Motors is best known for its trucks, lovingly decorated and recklessly driven, that clatter along India’s highways. It started making small passenger cars only a decade ago. Its low-cost car project has set a trend. Mr Tata says he is “quite gratified” that other firms are following suit. Bajaj Auto, which is known for its two- and three-wheelers, said on January 8th that it hoped to team up with Renault and Nissan to produce its own low-cost car. Fiat, Ford, Honda and Toyota also have cheap models in the works. Tata may discover a market, only for others to crowd into it. “It’s not our God-given domain,” says Mr Tata.

Cheap cars can be expensive to invent. Tata experimented with a smaller engine, but was dissatisfied with its performance. It hoped to use continuous-variable transmission, but had to make do, for now, with manual. Tata’s rivals may be able to free-ride on its efforts, copying the cost-cutting tricks it had to discover through painstaking trial and error. “It will be an easier task for them than it was for us,” Mr Tata admits.

Competitors will, for example, notice how Tata shrank the car into what its chairman calls a “concise package”, with the powertrain at the back and the wheels at the “extremities”. The result is 21% bigger inside than the Maruti 800, says Ravi Kant, the managing director of Tata Motors, but is only 80% as long. That will, at least, shorten the traffic jams to which the nano will contribute. Congestion could be a big problem, if millions more cars are to take to the roads. The country's poor-quality road network is slowly improving, but it is heavily over-used. With India's transport arteries already so badly clogged, a boom in sales of low-cost cars could bring about a seizure.

Commuting in India’s cities can be both cosy and deadly. Children squeeze snugly between father at the handlebars of a motorcycle, and mother riding side-saddle at the back. This precarious balancing act, says Mr Tata was the “visual target” he had in mind when he first conceived of the need “to create another form of transport”. About 1,800 people die on Delhi’s roads each year, perhaps one-third of them on two-wheelers. Only 5% die in cars. Tata’s project may pose risks for investors, but it promises unaccustomed safety for customers.