People asked that about GM.
Gone are those concerns.
Of course, VAG will demand a bailout from the German government. Thing is, in the 90s, then CEO Ferdinand Piëch went into empire building mode, buying up several other automakers in Europe. The German taxpayers may chafe at being handed the bill to bail out Czechs and Spaniards, or they will figure out that the bailout is all about the care and feeding of the Porsche and Piëch family heirs, who are already rich.
Steve
If the problem is that they borrowed too much money to finance things, govt should find a bailout easy. But if it is high manufacturing costs due to high wages, standard of living, and high energy costs, it will be more difficult. Their fundamental costs have to make them competitive in their markets. If not, how do you survive? Closing plants and dropping unprofitable products makes a lot of sense. Of course unions and politicians will object. Can they make the numbers work?
Jump into your WaBac machine, to 8 years ago. I lost count of how many Billions, maybe tens of Billions, VAG paid out for the diesel scandal. They could have cleared out redundant and vanity operations then to cut costs. The head of the German union himself, suggested clearing out a lot of redundant models that the company kept spending money on. Then there are Skoda and SEAT divisions, which compete against VW, by building cars out of the VW parts bin. Corporate was paying for three sets of divisional bureaucracy and overhead, instead of just having the VW brand in the mass market space. Did VAG clean house? No.
VAG did what it usually does: call in McKinsey. McKinsey’s default recommendation was headcount reduction in production, even with all the other waste in the company. The union would not have it, and forced VW to cancel the contract with McKinsey.
So, apparently, VAG burned through it’s capital to pay all the diesel fines and settlements.
So now, with it’s capital depleted, the company is in another crisis. Again, their first impulse is to take the money out of the workers on the line, instead of addressing the redundancies that fill the company.
Steve
Maybe using 21st Century production technology to replace Henry Ford assembly lines would help. Maybe outsourcing went too far. Maybe it’s the end of the ICE Age. It’s a call for a new Industrial Revolution.
The Captain
Closely related is the discussion of merging Honda and Nissan. If one is sold out of some models and the other has unused capacity, making Hondas in Nissan plants might not be difficult. And profitable for all–once the necessary investment is made to adapt. Cheaper than building new plants.
If the TFG tariffs are enacted, Honda would not have much stranded capacity: one plant in Ontario, and one in Mexico. The models built in Ontario are also built in Indiana or Ohio. The models built in Mexico are the cheapest, so the least hit to ATP and GP.
Steve
Honda might buy Nissan.
My thinking the main reason is to get the assembly lines.
A new assembly line costs $2 billion. To update an assembly line costs around $300 million.
Nissan otherwise is worthless.
Isn’t Nissan the one that was working with Sellantis. Wasn’t it Goshen who was CEO of both. That ended badly. Now both are struggling to survive.
Chaos in the auto industry as old line companies transition to an era of EVs and hybrids. And with tariffs as a tool to protect domestic production and limit imports.
Ghosn was top dog at Renault, the other French company, who formed an alliance with Nissan. Stellantis is the mashup of Peugeot, with GM’s former EU operations, plus Fiat-Chrysler.
Steve
With Porsche’s market cap at only 11.5B we are about to witness some very interesting times.
With Porsche’s market cap at only 11.5B we are about to witness some very interesting times.
Are you talking about Porsche AG, the car company, or Porsche SE, the family trust?
Steve
Porsche Automobil Holding SE (POAHY)
Thanks for the clarification. You saw the item on the wire a few days ago, that SE is considering writing down it’s VAG holdings, about 31% of VAG stock, by 7B to 20B Euros?
Steve
I never understood why they abandoned the Datsun brand. Irrelevant to the conversation, I know, just always wondered.
Their upscale line is Infiniti, of which cars I have owned several (5, to be exact, between Mrs. Goofy & I). We were always pleased with them, and especially with the dealer experience, which was a big part of the “upscale Japanese mantra”, also exhibited by Lexus and Acura.
In recent years, however, they abandoned the “small” in favor of Texas size SUVs and huge sedans, presumably because the margins were better. I remember reading the story when the Japanese were making Japanese size pickup trucks and the Texas Dealers Association brought some of the honchos over from Japan to walk them around the parking lots at a Cowboys game, saying “this is what Americans want.” Giant size Fords & Chargers & RAMs & GMCs, and the nice little - inexpensive - and entirely useful Japanese pickups went away in favor of new monster trucks.
And now, um, trouble in Happyland, Who could have predicted?
The last line is the kicker.
Nissan stopped using the Datsun brand name to strengthen the Nissan brand and streamline marketing efforts. The decision was announced in 1981 and the transition took several years to complete.
The rebranding process included:
- Marketing: New marketing campaigns and changing the slogan from “Datsun, We Are Driven!” to “The Name is Nissan”
- Dealerships: Rebranding 1,100 Datsun dealerships, which cost $30 million
- Car badges: Gradually changing the car badges from “Datsun” to “Nissan”
The rebranding was expensive, costing Nissan an estimated $500 million.
The name “Datsun” comes from the first car produced by Kwaishinsha Motor Car Works in 1914, the DAT, which was an acronym of the three investors’ surnames. “SON” stands for “son of DAT”, but was changed because it evoked a negative image of “loss” in Japanese
Some Infiniti dealers are in such dire straits they are moving in with Nissan stores.
https://www.caranddriver.com/news/a63162866/infiniti-dealers-merging-nissan-stores-save-money/
That has been the trend across the industry in the US. It’s all about pushing ATP and GP higher and higher. The easy way to do that is to stop producing smaller vehicles. Nissan still offers the Sentra, as Toyota and Honda still offer the Corolla and Civic, as well as larger sedans. Comparable models are long gone from the USian “big three”. Farley, at Ford, has gone as far as proposing Ford drop two row SUVs. There is :“too much competition in that segment” he whines, probably because the competition does not allow him to raise prices even farther. If Farley had his way, the smallest Ford would be the three row Explorer.
Steve
And they would be ONE seat wide–down the middle of the vehicle. So, to seat seven people, you would need five rows behind the two front seats.