Honda’s Swindon plant
The car business is going through its most turbulent times ever. It makes for terrific breakfast reading, although sometimes that spills into lunch and dinner too. Here’s a couple of articles I found interesting in the past day or so.
The big news this morning is that Honda is ending all of its European production by 2020, which most of all affects its Swindon plant in Great Britain. And although Brexit is an extenuating factor, it’s not the primary one. Because the EU now has a very favorable trade deal with Japan, Honda will importing all of its EU bound cars from Japan. Nissan is also cutting back local production in Europe for the same reason. Swindon, which opened in 1985, will lose some 3,500 jobs. As it turns out, about 55% of Swindon’s output of Civics is exported to North America. And a plant in Turkey will also close.
Here’s what’s really going on:
As part of the realignment, Honda said it will commonize the European lineup with the brand’s offerings in China, where environmental standards put similar demands on emissions. Future product for Europe will be exported from Honda plans in Japan and China, Hachigo said.
Basically, the NA market can support (and build) its own specific cars, but Honda’s EU products will be harmonized with China. In both areas, EVs are going to be required to meet tightening CO2 emission requirements.
More at autonews. com
If you (and Bill Ford) are wondering why American car company stocks are languishing, here’s a good primer on the subject: Can Car Companies Ever Win on Wall Street?
In a nutshell, Wall Street is bearish on car companies because a slowdown in the car market is inevitable, and the demands on them in terms of the evolving marketplace with electrification, autonomy and mobility suggests that 2018 may have been a high water market for private car sales. And it’s not just the Big 3; Tesla’s stock hasn’t done much since 2014 either.
In fact the best performing stock of the bunch has been FCA, which is widely perceived to be the most intelligently managed of the Big 3, in any case. FCA simply has squeezed more out of its capital, in part by continuing to build older cars (Dodge Caravan, Ram Classic, etc.) longer and delaying investment in expensive new platforms, and ditching loss-leader sedans.
here’s a fascinating video that I found at the New York Times this morning. “Inside Japan’s Chicano Subculture”. I’ve always been amazed at how Japan appropriates so may different cultural themes over the decades. But this one surprised even me.
And finally:
Daimler’s new tech center “the jungle”
German car makers are desperate to find more tech workers. Here’s why:
Roughly 90 percent of all future innovation in vehicles will take place in the electric/electronic area. The bulk of that will be in software, according to VW Group. This field will increasingly be a competitive differentiator as the number of lines of code in vehicles could grow to 300 million from the 50 million to 100 million they have today. This doesn’t even include all the IT systems needed to provide connected services outside the car.
The problem in Wolfsburg is that VW Group has 10,000 engineers but only a few hundred programmers.
The automobile is transitioning from a largely mechanical device into a high tech one. Here’s the full story at autonews. The big question is whether the car manufacturers can win “the battle of the dashboard (center screen)” against the tech giants, which are all spending vast sums to implant themselves at the real heart of modern and future cars.
“Those auto manufacturers that prefer to sit in their own walled garden thinking they can bring these guys in, control them and then throw them out in two years, they are the ones most at risk,” said Bearing Point analyst Angus Ward.
Contrast this with companies such as Google that join with rivals to co-innovate, which slashes capital requirements and time to market. “They [carmakers] have to beat the tech giants at the tech giants’ own game,” Ward said.
That’s going to be a tough battle. The tech giants see future cars as just a vehicle (literally and metaphorically) for their tech wares, especially as autonomy becomes a factor, which it will at some point. The battle between the OEMs and Silicon Valley is going to be epic. FWIW, Tesla is already there, but squeezed somewhat precariously between the two. Their cars are the template for the future, but big guys have the capital, production expertise and quality experience, and the high tech firms have the scale for the software.
In a previous tech “revolution” Google joined forces with Motorola, once America’s leading cell phone developer, and before that, arguably the owner of the center of the dashboard.
“In fact the best performing stock of the bunch has been FCA, which is widely perceived to be the most intelligently managed of the Big 3, in any case. FCA simply has squeezed more out of its capital, in part by continuing to build older cars (Dodge Caravan, Ram Classic, etc.) longer and delaying investment in expensive new platforms, and ditching loss-leader sedans”
In other words, cheap crappy cars that don’t hold up because they don’t invest money in improving them. But they’re a GREAT stock until they go bankrupt.
Your Jeep Renegade is a FIAT now, I wonder how long they’ll run?
https://en.wikipedia.org/wiki/Fiat_500X
This why I shouldn’t bother to run posts like this…it’s not really the right crowd.
No, I find it (your post) interesting and it reduces the need for me to go off and find this stuff elsewhere. Usually the discussion ends up very well reasoned, thoughtful, and adding more insights, i.e. the complete opposite of the above comment that’s purely myopic and doesn’t even include the customary personal anecdote.
As much as everyone loves to hate on FCA, they really have performed beyond all expectations lately (in the larger sense at least, Fiat and Alfa aren’t performing nearly as well as hoped for, but I think Maserati is doing much better than expected.). Usually we here at CC are exactly the ones to celebrate a vehicle that gets produced for eons without updates as it usually makes them longer lasting, less expensive to run etc. But then again the other US makers have total dog nameplates in their stables as well. The fact that FCA has pretty much just said screw it to CAFE I find interesting, I don’t think I can really applaud it, but they clearly made compliance (or non-compliance) a business decision and realized it was worth it for them to budget for and pay the fine rather than just try to game the system or pay to develop and attempt to sell stuff that their buyers don’t seem to want.
I love my Fiat 500e, and they gave me one heck of a lease price two years ago, just $99/month, because it was the end of the month and they needed to get these electrics out on the road. For CARB compliance.
As I understand it, Chrysler in Michigan partnered with Bosch in Germany and Fiat in Italy, and together they banged out an excellent EV in the 500e. Chrysler led the project as the electric 500 is US-only. I hope those folks are still on the FCA team, they need them for the future EV plans they rolled out last year.
Hello Paul,
I am really enjoy your reporting and analysis regarding the current state of the automotive industry. It is more insightful than TTAC, Jalopnik Morning Shift, etc…
Maybe throw a beginning lead title on current events like “Automotive Industry Curbside today” followed by your headlines.
Or maybe use “Curbside TODAY -” followed by the article title to signify recent events versus Curbside Classics.
I really appreciate your writing Paul and the insights your posts provide! Please continue!
I enjoy reading these articles Paul so please keep them coming
Keep them coming, Paul. I follow industry news, albeit generally more at a product rather than strategic level. Your insights help give me a better understanding of the financial and strategic factors of the car business
Besides, yes we have some vocal commenters but we have legion lurkers as you know and I’m sure they enjoy reading these pieces!
Paul, your articles are interesting and thought-provoking.
You have a passionate following here!
Some car lovers may not share your perspective on industry trends, and some who share that perspective may not agree with your take on cars.
As long as people are not insulting, and factually correct (no blatant lies, but selective truths are OK), I think it’s all good!
I don’t like the increased role of electronics, because I believe it portends the beginning of the end of our ‘freedom’ of mobility, which has plateaued.
And maybe that’s how it goes…I will never again fun 1.5 miles in under 9:30 because I’m older. Our society is older and more crowded, so it’s naïve to expect to be able to have unfettered mobility forever.
However, I have a question of much more import at the moment.
Given the choice between a BMW 1602/2002, a (US Spec) Mk I Rabbit GTI, and a Mk II Golf GTI, all in good shape, my question is not “which should I pick?”
My thinking is this: the 1602/2002 was a shortened BMW 1600/1800 sedan that debuted in 1963-64, from a clever company with limited resource. So the body structure represented 1960 state of the art.
The 1974 Golf probably benefited from some Computer-Aided Design, so it’s body structure is early 70s state of the art. The body should be more stout, IMO. Anecdotally, I think the doors closed more solidly in the Rabbit.
The 1984 Golf (Mk II) most likely benefited from even more advanced CAD/CAM, and extra mass. Anecdotally, a Mk II feels a lot more solid than a Mark I.
So, would you agree what the BMW 2002 is the flimsiest car? What it offers is rear drive, but the VWs are more robust, IMO. So for a summer toy car, if condition is equal (price won’t be, but let’s NOT consider price), the VWs should be more robust.
Can you use your vast knowledge to tell me if my logic is off base, or on track please?
Thank you!
I would not judge these cars based on when their bodies were first conceived. There were plenty of unibodies before the CAD/CAM era that were built like tanks: 1958-1961 Lincoln, Chrysler C Bodies, etc..
I’ve never head of the BMW 02 being critiqued for a flimsy body. It always felt pretty solid to me. I would certainly not stay away from it for tat reason.
The Golf MkII is simply a somewhat bigger and maybe slightly more solid car than the MkI, but in principle very similar. The early Mk1s felt a bit “light”, but the later ones felt pretty solid. My FIL’s Mk1 Jetta seemed very solid to me. There’s nothing intrinsically flimsy about the Mk1, except that the early ones had less sound deadening and such, and assembly quality improved over the years, as it invariably does.
I would suggest to make your decision about other factors, but not about the body structures, as long as they’re not rusted, of course. All of these provide a solid basis for a fun project car.
The VWs will of course be cheaper; to buy and the parts availability and interchangeability. You can do all sorts of easy upgrades to these cars. The BMW is going to more likely want to be kept stock, or closer to it, given their values for good ones.
Good luck with whatever you decide.
Thank you Paul.
I didn’t realize some of the older unibodies were so solid.
I have a lot of personal MkII experience; next in order, I have BMW E30 experience, some MkI, and no 2002 experience.
Also, I’ve looked at the Mk1 and 2002 during the past decade, not new (the Mk2 was new and E30 was 3 yrs old), so we are talking 35-50 year old (isn’t that amazing? !!!) cars, so their condition and use may overshadow how they were new. In the 90s, I remember shopping for a ‘newer’ Mk2, as mine had 100k miles on it, and every one I checked out did not ‘feel’ as tight as mine, even though they had 45-70k miles. So I kept mine until 1999.
I checked out two 2002s last year, and they seemed on par with my 84 Rabbit as I remember it 8 years ago, and both seem less solid than my 86 Golf as it currently is.
I owned a 86 Golf and a 91 BMW 318i in the mid-90s. THAT BMW felt SOLID. Noticeably more solid than the Golf. I thought it was the world’s best-build small car. But that was an late 70s design, and weighed a good 500-600 lbs more than a 2002. And by the time the E30 came out, BMW had become successful and had money.
There are more, and nicer, BMW 2002s for sale than Mk1/Mk2 GTIs, but they obviously command a lot more money. And as much as I like the Mk1/2 Golf/Jetta/Sciroccos, they don’t have the appeal of the 1602/2002, IMO.
I also have the impression (and please correct me if I’m wrong) that the carbureted 2002s are simpler than electronic FI Golfs to keep running. I worry about finding some of the US-spec electronic components for my Golf….
I think I would enjoy a rear-drive car again (I’ve only owned two…a Fairmont and forementioned 318i). A rear-drive car with manual steering that was highly regarded
Anyway, thank for taking the time to answer, I appreciate it–and next time, I’ll communicate with you, rather than take the post off-track.
Paul, I really enjoyed this article. I don’t have the knowledge you have and sharing it is always a good thing for me.
Please ignore idiots or ban them.
As for the comment. The 300 and Caravan are selling well and make loads of profits.
I actually disagree with MarcKyle64’s post, but this outpouring seems like a quite bizarre overreaction.
I must apologize for my admittedly angry post and off the cuff remarks.
They stemmed from watching a girlfriend pay out the nose for a third Ultradrive 42RLE transmission for her 2010 Chrysler 300. I remember the reputation MOPAR used to have for their tough Torqueflite and it seems that they’ve lost their way. FCA could have invested minimal effort and resources into making their cars hold up better, and yet they’re lauded for the performance of their stock.
That reminds me of this quote: “General Motors is not in the business of making cars. It is in the business of making money.” We all know what happened there.
“General Motors is not in the business of making cars. It is in the business of making money.”
I got bad news for you: every company is in the business of making money. Or hoping to do so. If anyone tells you otherwise, run.
GM was just telling the truth. Which is why they sold Opel (it wasn’t making money), and are not going to be making many (passenger) cars in the future.
“GM is in the business of making money by selling trucks with gigantic profit margins”. As long as folks keep buying them, that is.
Keep in mind that quote came from a time when GM also made appliances, locomotives, diesel engines, turbines, big trucks, off-highway equipment, etc…
And keep in mind that selling loans to customers was always one of GM’s most profitable business lines (GMAC). How about “GM is in the business of making cars so we can sell loans”?
Back in 1954 (no kidding) I read an interview of an auto dealer in a car magazine. And he said: “My business is not selling cars, I want to sell loans”.
MarcKyle64, A company’s value, as Wall Street sees it, is based on its financials. Simply stated, Wall Street only cares about a business’ balance sheet, income statement, cash flow, and just a little bit on projected future earnings.
That said, FCA is managing their expenses (delaying investment in new platforms), building profitable products (Caravan, Ram Classic, Charger, and Challengers are cash cows) and utilizing their capital (less plant and equipment sitting idle) far better than the others.
Wall Street doesn’t care about what they are selling, as long as they are competitive and consumers are buying them at a price that allows a suitable net profit margin.
“Wall Street doesn’t care about what they are selling…” That’s the problem with Wall Street as it works today.
The system was not always so obsessed with short-term profits at the expense of building real wealth, quality products, loyal customers. Systems can be changed. [End of rant]
Actually, I rather disagree with both you and Kevin. Wall Street is interested in one thing: future growth. The stock market is a bet on the future, and often pretty far off into the future.
The Big Three have had mostly excellent profits for years now, but investors don’t see how these companies have a rosy long-term future, given the big changes that are predicted ahead.
This is why it’s so frustrating for Bill Ford: his company has been churning out great profits for years, and the stock keeps getting lower. Investors don’t believe it’s sustainable.
Meanwhile, everyone understands that Tesla’s high stock price is a gamble on their continued rapid growth. If they can’t maintain that, the stock will take a beating.
It’s the same reason companies like Uber have a $70 B valuation, even though they have huge losses every quarter: investors are betting on them being able to continue their rapid growth. same with so mnay thech companies.
Growth is what it’s all about. Which is why investors love tech companies: they have the potential to scale up quickly. An old school industrial company can’t, and realistically won’t.
Growth of real wealth? Or betting?
To quickly clarify (it’s dinner time) Wall St. has become a casino, focused on speculation aka betting, at the expense of growing real wealth.
The market has always been a casino. Capitalism started with investors buying shares in sailing ships heading off to India and such. The risks were very high, but if a ship came back with a good load, and the prices for its goods were high, then the investors made a very big return. Lots of ifs there.
Remember the tulip mania in Holland?
It’s been essentially the same eve since. Until the mid 1950s or so, most Americans wouldn’t touch the stock market because it was known to be “a casino”. Because during America’s exceptional period (1945-1972) American companies grew relentlessly, investing in stocks came to be seen as a relatively safe investment.
It’s not a place for the risk-averse.
The market is a bet on future growth and/or profits. Investors have learned there’s much more money to be made on doing that than investing in companies that just churn out a fairly consistent profit but don’t grow rapidly.
Investors are (mostly) in the stock market to maximize their returns. Judging the market or investor’s actions is mostly irrelevant. It is what it is.
There are conservative investors too, and they like companies that are stable and generate regular dividends. It’s not just all growth.
The elements have always been there, it’s gotten way out of balance in favor of short-term and ultra short-term betting.
High frequency trading has gotten so extreme that they’re spending $850 million to lay a cable across the Arctic because it will be 24 milliseconds faster between London and Tokyo. This is not investment, it’s horse racing.
Long-term investment in actual wealth, which is productive capacity and skilled jobs that generate real profits for investors and workers, not paper fortunes, is suffering in return.
Long-term investment in actual wealth, which is productive capacity and skilled jobs that generate real profits for investors and workers, not paper fortunes, is suffering in return.
Keep in mind that the only time a company actually receives an “investment” from a stock owner is from an IPO. After that, it’s just folks buying and selling from each other. One could argue that it’s meaningless to the companies, which essentially it is. But it’s not meaningless to the Ford family as well as all the executives at companies that get stock options.
The truth is most companies nowadays go public for one reason only: to create a currency that execs and owners can sell, as well as a way for the early private investors to sell out and make a profit. If a company is growing quickly, there’s plenty of private capital. No need to go public to actually raise money in very many cases.
That’s why the employees at SpaceX are chafing some, because it’s not easy for them to sell their vested shares.
As to ever fasting trading, it’s completely irrelevant to the companies themselves, or to those investors holding stocks for the long haul. faster trading just takes advantage of certain inefficiencies of the market itself. Who cares about that? It makes no impact on the companies or me.
As to 2008, it had little or nothing to do with the stock market. It was derivates, as well as drastic lowering of lending standards by the banks. And folks thinking that real estate was going to go up forever, and taking out absurd loans to support that supposition.
Yes, financial industry/lending/banking regulations need to be strong enough to prevent these abuses. But these have very little if anything to do with the actual stock market, which is now mostly/totally electronic.
A final word, I meant to say there’s a whole lot more to Wall St. than stocks, as we learned the hard way in 2008.
When the rules favored long-term investment, CEO salaries were much lower and we didn’t have hedge fund managers making billions for nothing of any real value to the economy.
I can recall numerous Wall Street analysts praising GM as an investment on the basis of financial metrics or the dazzling glad-handing of Rick Wagoner and his mismanagement team as it deteriorated toward bankruptcy in the mid-00s. What was missing was any understanding of the quality or competitiveness of the cars, or lack thereof.
Oh boy, here we go…
Good post, Paul. Change and uncertainty are uncomfortable to most people. Nowhere is that more evident than when discussing impending technological – and tectonic – shifts in the automotive industry among car guys (and gals). And you know the old saying about opinions being like a-holes…
However we may love to reminisce about the “good old days” here, automotive times are a-changin’ at an accelerating clip. Not all of us CC-ers are Luddites. Please do continue to run post like this one if for no other reason than to spark spirited (and respectful) debate and discussion on these topics. We don’t all have to agree always and that’s okay. Good stuff, and carry on!
I love old cars and take care of a couple of them.
But for every day, I will take a new car, thanks.
” Can Car Companies Ever Win on Wall Street?”
I’m tempted to said screw it Wall Street.
As for Honda, it’s a big page of history turning with the closing of the Swindon plant. To think things was more rosy in a not too distant past. https://www.aronline.co.uk/news/news-honda-takes-on-500-new-staff-at-swindon/
What if Honda had taken a larger participation in the Rover group instead of being kicked out by BMW? I think it might had been one of the rares missteps Honda did.
What do you suggest? That we nationalize our car industry? That’s worked out so well for other countries.
Honda should had taken a bigger share of Rover and BMW would have to find another partner to dance with it.
It’s tempting to imagine an alternate universe in which Honda used Rover as a springboard to bigger European market share. (And BMW didn’t get its hands on Mini and briefly Land Rover)
However, you’d have to pity the poor executive sent in to Honda-ize the remnants of BL – talk about a hiding to nothing.
After what they did to us in 2008, I too say “screw it Wall Street”. That doesn’t mean I’m not a capitalist. Nationalized car companies would have us all driving Trabants.
Regulated capitalism is the formula with the greatest success at real wealth creation, meaning healthy factories and good jobs. The rules can be shifted a bit to prevent the gambling and promote genuine investment.
Just so. The uncontrolled gambling can’t be spoken of as if it has no real-world effects. It does.
The Big Three used to “Win” on Wall street, but that was long ago, before the European and Asians turned into worldwide competitors. The American buying public was fed cheap gasoline and big cars for decades after WWII. Once the 1970’s came upon us, and oil became a scarce resource here in the states (somewhat manufactured by the Arabs), things changed on a grand scale.
And today it (the auto industry) has many players building a wide variety of products and serving multiple markets. No wonder it’s complicated and a “dog east dog” business.
Personally, I don’t think any single player will dominate the heap of auto manufacturers for any length of time. I see it as a race to survival until the next crisis.
With Honda shutting down Swindon, it’s actually the end of an era that perhaps not even a lot of car buffs were aware of – the end of volume exports from a UK car factory to the US (I don’t know the numbers off the top of my head, but I assume Swindon Civics have been greatly outselling Minis). I toyed with the idea of buying one of the 2001-05 EP3 Si coupes, and one of the appealing factors was its UK heritage. And thanks Paul, I certainly enjoy your industry insights even if I don’t always agree.
Added to the problem of Swindon (I moved on from there 30 years ago) the factory is running at half capacity because the current Civic is just a ‘meh’ car in Britain and has pretty well bombed in Europe. There are no SUVs in production. I’m surprised they are keeping it open for as long as they are.
But you hit the nail on the head: the EU Japan free trade agreement. No need for expensive EU production any more. Free trade agreements did for the Australian car industry and Britain will go the same way – unless it until post EU Britain puts some decent tariffs on (German) imports.
The only logical conclusion is the only one who has worked this out is dear Donald Trump…
The larger story here may be how Honda has failed overall, in Europe. Compared to their 8+% share in the US, Honda only holds a 0.9% share in Europe, ranking 25th with only 136.191 cars sold in 2018.
By some reports, the decision to offer a Civic hatchback in the US, for the first time in years, was motivated as much by efforts to improve the run rate at Swindown, as anything else.
Also, Honda is again building Civics in Japan, after a hiatus of several years. At the Detroit auto show a couple weeks ago, I looked at 3 Civics: one built in England, one built in Canada, and one built in Japan. One reason I have seen for the shift to sourcing some US market Civics from Japan is to free up more US production capacity for SUVs.
Yet they’re still profitable in Europe. Unlike the much bigger Ford and previously Opel. Size is not everything.
The Japanese all had a much harder time in Europe for very obvious reasons: they weren’t competing against giant cars or the Vega. The Europeans had very competitive small cars before the Japanese ever showed up. And Europeans are intrinsically more chauvinistic about their cars and their car industry, especially so the Germans. It’s their national pride and joy. And the French too.
When I was in England and France in 2011, I saw very few Japanese cars compared to European marques. Especially in France, where I’d say 3/4 of the cars on the road were Citroens, Peugeots and Renaults. I think I saw one Opel. In England, there were a good number of Fords, but few Vauxhauls.
SEAT has a bigger market share in Spain, ditto Fiat in Italy, Jaguar in the UK, Skoda in the Czech Republic, Proton in Malaysia, Tata in India, and so on.
Chauvinism might play a part for some folks, but buying locally-made cars is also a pretty rational decision. Cheaper parts, lower price, easier to service, plus somewhat more (eco)logical than shipping in cars from half a world away.
buying locally-made cars is also a pretty rational decision. Cheaper parts, lower price, easier to service, plus somewhat more (eco)logical than shipping in cars from half a world away.
But that’s hardly the full story. The Japanese built lots of plants in Europe; that’s why Swindon exists. Nissan’s plant in Sunderland is one of the biggest car factories in all of Europe, building close to 600k cars per year. Toyota has no less than six factories in Europe.
Lots of European brand cars aren’t even made in their home countries. Fiat has a huge operation in Poland. Others are spread out too, to various degrees.
I really don’t see folks making their decisions based on shipping distances. Part prices for any given car are pretty much the same anywhere. The market has become hugely global.
Buying a car built in the same country has a logical aspect in terms of supporting local jobs, but other than that, I’d say it’s mostly emotional. Nothing wrong with that; it’s human nature.
There’s no doubt in my mind that in relative terms, Americans were much more comfortable with buying Japanese cars than Europeans were with buying Japanese cars. The statistics bear that out of course, but I think it’s also a matter of inclination.
I get back to Austria from time to time, and it’s pretty easy to pick up on that vibe. When my older son went to high school for a year there in 2000, he was pretty shocked by the blatant racism against Muslim immigrants.
I hate to get political, but we can see the parallels with immigration, excluding the very current environment, of course. America is a land of immigrants, and historically was mostly open to that reality. Europe…not so much so.
Well aware of Japanese factories in Europe and the global nature of the car market. But then I’m a bit of a car nut and I read CC. Do you think everyone who buys a car knows or cares where it was built? All most people know is: this brand is familiar to me and my mechanic, so I’ll go for that.
To wit, the explosion of Dacia. Even though very few people had heard of the marque before the 2000s, Western Europeans started buying them in droves. Why? Because Renault made sure everybody knew they were cheaper, no frills Renaults. As long as it’s cheap to run and easy to fix, a car’s actual provenance is pretty moot, for most people, whatever the side of the Pond.
As to the people who care, there are more and more folks, especially millennials, who do take notions like ecological costs and sustainability into account when buying something, be it a car or a can of soup. They’re not a majority, but a growing number.
America is a land of immigrants, and historically was mostly open to that reality. Europe…not so much so.
Yeah, right. The Irish, Chinese, Russian Jews, Japanese, Italians and Latinos found they were all welcomed with open arms by the WASP back in the day. Easy with the rose-tinting, there.
The Austrian comparison might also skews things a bit. I don’t know the country that well, certainly not like you do, but it doesn’t have a very progressive / inclusive reputation. I know neighbouring Switzerland pretty well. It’s not the most tolerant place to be an immigrant, that’s for sure, certainly compared to other European countries I’m familiar with (France, Britain, Spain, Sweden).
Claiming Europeans are more chauvinist or racist because they don’t buy as many Japanese cars as Americans do isn’t just offensive, it also makes you sound like a bit of a chauvinist yourself. Not that I’d ever call you that… 😉
Asian automakers do well in Greece. Greece has never had a domestic auto industry.
Before Korean cars were credible:
I was in Iceland in 1989. There were tons of Toyotas and…Mitsubishis, and other Japanese products. No local auto industry.
In Saudi Arabia in the early 90s, Japanese makes were the most prevalent. And, there was a relatively large number of American cars. Of course, in the early 90s, the boxy GM full-size cars were only a few years old (LOTs).
My point is, that for countries that IMPORTED motor vehicles and had trade deficit concerns, like Greece and Iceland, the better value offered by Japanese (and now Korean also) brands means Asians do much better.
Same reason, the Asians continue to devour the US market.
Up until 90s, three of Europes top five markets had barriers to Japanese cars (France, Italy, Spain). These countries are also home to what used to be the volume European inexpensive makes: Fiat/Seat, Renault.
And when I was a kid in Greece in the 70s, the only other country I visited was Italy, and it was full of Fiats! In that era there was a certain amount of ‘patriotism’, and which helped manufacturers in their home countries.
This could go on forever, but let me clarify one key point, about my accusations of chauvinism: I’m aiming it particularly at the automotive press and other media that covered cars back then, and were very influential. I had a subscription to auto,motor, und sport, which utterly dominated the German/Austrian market. They were very powerful in influential. And their concerted effort to endlessly give Japanese cars poor ratings in reviews and comparisons was quite something to see.
I knew the cars (both German and Japanese) well enough to understand what they were doing and why. The German (and all European manufacturers) were scared shitless about a Japanese invasion in the 80s and early 90s of the likes that had taken place in the US in the 70s and early 80s. And they attacked any weakness of the Japanese cars relentlessly.
The point is this: their standards for reviews and comparisons invariably favored those qualities that the Germans were better at. And they took that to an extreme.
When the first Lexus LS400 came out, which was designed to be a very comfortable riding luxury sedan, they attacked its handling as too soft, and its brakes as too weak. The brakes had never been an issue in any review in the US, including extensive brake measurements. But they subjected the Lexus to brake tests against a BMW and Mercedes sedan on the Grossglockner mountain road, and repeatedly accelerated downhill and slammed on the brakes. Over and over at very high speed. Yes, the Mercedes and BMW did better at that. But who drives like that? Absolutely nobody.
But the whole German media picked up on it, making a big deal about how the Lexus had inferior brakes. Bullshit. Its brakes were more than adequate for anything that any driver would throw at it. It was a hatchet job.
But Toyota had no choice but to quickly beef up the brakes, which then met the same standards of the BMW and Mercedes and Audi. But did the media cover that? Nein.
This is just one little example of what I read almost every month. Of course they couldn’t disguise the fact that Japanese cars were consistently doing much better in their famous 100,000km long term tests. Much better than the competition, especially some of the French cars like Renaults that often did abysmally in them, including full engine replacements, blown transmissions, and gobs of other parts broken. The difference was incredibly stark. And no, I am not biased against Renaults. But their reliability in the 70s and early 80s really truly was bad, in relative terms.
The simple reality is that Japanese cars were dramatically more reliable than most European cars in the 70s and 80s. Which explains why Japanese cars actually had a pretty good start in the mid 80s, including in Germany. But the Europeans fought back in two ways: they improved their quality/reliability. Not as good generally as the Japanese, but good enough so the difference wasn’t glaring. And they constantly rubbed the Japanese cars for perceived slights in handling, braking and certain other criteria which might be relevant to 10-20% of the drivers, but certainly not to a great majority of everyday drivers.
This is classic chauvinism: to pick on the slights of the competition, real or imagined, and play them up in the media, which has its own interests in keeping the domestic car industry as successful as possible, due to advertising as well as possible cross-ownership of shares. Keep in mind that in Germany, the large banks were allowed to own shares in their clients. The biggest banks owned shares in key automakers and media, and had a very strong vested interest in keeping out competition from Japan or elsewhere.
I watched all this unfold in real time. I read the endless letters to the editors bitching about their unreliable cars. As well as from Toyota and Mazda owners proclaiming how reliable theirs were.
I’m also watching it play out now with Tesla. There are companies who are paying “journalists” to bad-mouth Tesla. They have plenty of issues as it is, but manufacturing ones that don’t really exist is another thing.
Eventually the Europeans figured it out. And now the European market has evolved to the point that it’s very difficult for the Japanese or Koreans to compete their unless they design vehicles specifically for that market. Toyota is the only one big enough to be able to do that. Honda tried, but no more. The others are mostly gone.
And I haven’t even touched on France! Of course, there was none of that going on in France at the time. Government-owned Renault was thrilled to have the Japanese competition. Welcome! No trade barriers or import restrictions here! We think competition is great! Our cars are every bit as reliable and well built as you Japanese! We have nothing to worry about!
Now the Brits are another case altogether. Having watched the utter implosion of their industry due to crappy cars, they really did welcome the Japanese. It was a big improvement.
As to the the reception of immigrants in America, it’s of course true that they weren’t exactly greeted with open arms. But every immigrant group overcame that within a generation or two. That was the rite of passage (not that I’m condoning it) and immigrants coming to the US mostly knew that reality. It didn’t stop their relatives from coming!
There’s no doubt in my mind that assimilation in the US is relatively much easier and quicker than it is in Europe. Which is why the US continues to be preferred as a destination for immigration.
SEAT has a bigger market share in Spain, ditto Fiat in Italy, Jaguar in the UK, Skoda in the Czech Republic, Proton in Malaysia, Tata in India, and so on.
Honda is doing poorly in Europe, even compared to other Asian brands. In the US, Honda is duking it out with Nissan for the #2 slot among Asians. In Europe, Honda isn’t even close. Compared to Honda’s 0.9% market share, Toyota has a 4.5% share, Hyundai 3.5%, Kia 3.2%, Nissan 3.2%, Suzuki 1.6% and Mazda 1.5%.
I haven’t been for a few years but I’d spend three weeks or a month every year in Europe, both eastern and western but sans the UK. Toyotas were common. Nissans were almost as plentiful. Rarely if ever saw a Honda. Very different than the US.
I appreciate posts like this t get automotive news and Paul’s insights. I see Honda pulling out of the EU as a significant development, I wasn’t aware that Swindon exported to the US, since that indicates excess capacity relative to local demand. I wonder if Honda will expand US capacity to compensate.
The Japanese pachucos were a great find.
Finally, I have learned to be wary of Wall Street since their idea of long term planning is two quarters ahead and cars have way too much lead time.
I thought that I was one of the very few folks that read car news over breakfast. I find that I get too easily sidetracked with other tasks during the day so that I have to read the auto news over breakfast.
I will pick up my favorite magazine, Britain’s Modern Classics the 1st wednesday of the month, and over the next 3 weeks of breakfast read the magazine cover to cover.
BTW, Swindon produced CR-Vs for the US, and the Civic Si for the US sold here in 2001-2004. They also send some of the current generation Civics….well, at least the Type R, and I think the Si. Does this mean that those models will not be sold here after 2020?
The Si comes from the same Alliston, Ontario plant as mainstream Civic sedans and coupes, the Type R and the regular hatchbacks come from Swindon.
My prediction is that the current coupe will be the last, the hatchback will take its’ place on the Alliston line when Swindon closes at the next Civic model changeover.
Loved the NYT piece on Japanese Chicano style. Was that a Tucker on the lift?
Looked like a ’49-52 Chevy fastback four door to me. Good material for an old-school lowrider.
A Tucker lowrider; now that would really be something!
Thanks for that. Not that it’s anything, but the magazine they were flipping through stopped at a feature on the first Saab.
I caught that too. Now that would make a good lowrider.
hehehe
Anyone who visits Japan has to see Akihabara. The coolest and most way-out fashion I have ever seen is proudly displayed. Japan is always full of surprises. It is a country in which I could easily live.
The line that’s left clanging in my head is this one (paraphrased): “this isn’t North Korea, it’s a VW factory”. Said without specifying which is the lesser, but going on to describe work conditions for programmers that, well, won’t have them flying off their beanbags at Google to be indentured in Spain. It doesn’t inspire warm thoughts of the future.
We are living through revolutionary times as dramatic as any in history. The pace of change is a marvel in everyday life (the wonders of the mobile internet) but as it accelerates into areas that are fixed in one’s mental landscape, it starts to become bewildering. The huge motor industry is convulsing, thrashing about. It’s impossible to know how Tesla will do, for example, because it has not happened this way before. The entire way of thinking about mobility is disintegrating, and even the big players have been caught short. Jaguar Landrover, in another case, suddenly writes down heaps of value partly because it spent big in diesel tech now all-but useless to it’s future. If a big company didn’t know, I surely can’t predict anything.
But one future thing I can see clearly as jobs evaporate, plants close, and communities suffer is something seeable because it relates to power relations of immoveable antiquity. A lot of the “freedom” and “flexibility” of the new IT jobs elsewhere replacing the old in industry will turn sour as the employed realise that short-term contracts, no benefits, no permanence turns quickly into a servitude of insecurity, an exploitation depressingly known from many other phases of history. In that regard, the promises of the brave new world are puffery, and for most it will be the old world in a very unfamiliar packaging, and likely less fair yet. If you’re looking for the con-job in all of this change, it’s not FCA or Tesla or somesuch, but this.
Still, whoever gets autonomous driving out first will be my pick as the Phoenix from the old players. Modern driving being so dull and cramped, it is too marvellous a proposition to ignore. Even if I’ll likely just be expected to spend the time in transit slaving further.
Probably for less.
FCA has certainly surprised me.
This is a most interesting article, Paul. I thank you for that. I have long made CC my place for car related reading; the notes on newer cars (rentals, for example) as well as this article of today have all something in common. They might be biased because of the personal thinking of the author, which is human and unavoidable…and probably good in my mind. But there are no commercial or hidden interests, so the articles are objective and the writers only want to share their experiences. No agendas, no other motives. Just sharing for its own sake.
And then, there are what you called the outpour. In my outlook, that’s valuable too as long as it’s kept in line with courtesy. I haven’t seen any other place where commentators are as kind to each other as this one. I don’t know, of course, how many comments might have to be moderated or otherwise corrected, but to my eyes, this is the most friendly site I’ve ever found. And it’s clear it’s intended to stay that way.
Please, go on writing. On anything you may choose. There are lots of people appreciating it.
Alright, today I am taking the preemptive strike of typing this elsewhere so “you are posting too fast” doesn’t eat my message again.
Yes indeed this is interesting. Read about the Honda closure in the paper as well, I feel 2% detached interest and 98% relief that I am no longer involved in the auto industry. Whew! I am glad that FCA is doing well, despite having put a remanufactured transmission in my Grand Caravan under warranty 😊
And Japanese Hispanic Low Riders. I’d known about the chopper motorcycle culture in Japan, so I guess this should come as no surprise. People always find their thing, and some people just want to be really different than everyone around them.
Please keep writing these posts, Paul. They are the only industry news I find worth reading. And I forward them to my non-car engineer-in-training offspring, to give him outstanding insights into where things are going, and how he should prepare.
“Roughly 90 percent of all future innovation in vehicles will take place in the electric/electronic area. The bulk of that will be in software”
As a professional engineer, I just threw up a little.