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Major Auto Makers - 4 year plans

Discussion in 'Non FIAT Cars and two wheelers' started by Raj_pol, Feb 23, 2016.

  1. Raj_pol

    Raj_pol Superiore

    Punto Evo 1.3
    nkrishnap, gpunto75 and Murphy_Fiat like this.
  2. prabhjot

    prabhjot Esperto

    delhi ncr

    The car business is one of the most cyclical possible, the least 'flexible' (though some things are better now) and within it individual firms' trajectories are deeply cyclical too.

    Hyundai-Kia first (copying the previous decades' approach of Toyota, Honda, Nissan etc: the Japanese firms) targetted the 'paisa vasool' 'third world or emerging markets'.

    Then they took advantage of their priveleges thanks to being a client-state of the usa to attack the usa and the eu markets, on a largely large-discount-pricing basis (thanks to lower tariffs Korean imports enjoy and of course the hugely depreciated currency.)

    Then they made a 'design centric' push at a phase when the japanese firms dropped the technology and design ball (late 2000's and 2010's) EVEN as, barring say India, they continue to have a slight 'discount vfm brand' tag in the usa, the eu but also, notably (and much to their cost): China, the world's by far largest and fastest consistent-growth car market.

    NOW: their 'cycle' is turning very adversely. Labour costs in Korea are soaring. Their copycat-the-Europeans, add gizmos and bling and styling extroversion approach has been mimicked by their main competitors, the Japanese firms (albeit with more 'original' design rather than pirate style copying) while the European and American firms have restructured their cost-base and now have as much access to ultra-low-cost capital that has been the ONLY advantage of Hyundai-kia, structurally speaking): being part of a quasi-soveriegn giant chaebol/integrated-conglomerate that is in many export-centric (Korea is by itself a tiny market) lines of business beyond passenger cars.

    Hyundai-Kia's problem now is that, no matter the massive improvement in their 'quality of design, engineering and manufacturing as well as servicing' they're now at the stage where their 'discount brand status' has still not gone (in china, europe, usa and japan), their cost structure is rising, they have no 'special' (authenticity/heritage/racing/national-origins etc) brand-equity/allure let alone any premium/luxury/sportscars high-margin sub-brands or nameplates.

    In that sense Hyundai-Kia are the polar opposite of FCA. FCA has, before and after the 2008 acquisition of Chrysler Corp, laboured under the opposite burdens: a too-high currency (the new euro), high and rigid labour costs in italy and the usa, very high cost-of-capital, and finally too-concentrated geographically (Europe+LatAm and the usa for C corp.)

    NOW: thanks to the genius of Marchionne, the acquisition of Jeep, Dodge, Ram and Chrysler for 'free', the heavy rationalisation of labour costs in both Italy and the usa, the vastly lowered cost-of-capital/debt (thanks partly to the money printing the us fed and the eurpean central bank have been doing), the vastly competitive currency situation and the potent presence in suv-s (via Jeep, globally), in the lucrative 'lifestyle/luxury' pickup market in the usa (via Ram), in utility vehicles (via Fiat professional and Ram) as well as increasingly in high-margin, historic-heritage luxury/sports/gt-car brands (maserati, ferrari and now again Alfa Romeo) as well as very very high levels of capital investment efficiency under Marchionne (little redundant capacity, high capacity utilization at cutting edge new plants, no over-investment in China)

    has meant that FCA is in a massive and major up-cycle, seeing expanding in net margins, profitability, brand-equities, and model-range, as well as global geographic and segment/price-point coverage.

    Of course FCA still has large net debt, but unlike firms like VW group, Ford, Hyundai-Kia, BMW, Peugeot-Citroen, Mazda and maybe Honda as well: it is structurally in a BULL market-cycle, having more and more 'bases covered' for long-term health/expansion, despite already being the world's 7th largest auto firm (much bigger if one includes Case new Holland+Iveco+ferrari.)

    FCA is set fair to, almost uniquely among any auto firm, be profitable in ALL world-market regions as well as ALL segments/price-points (inlcuding Fiat in europe and latam) and in components (Magneti Marelli+COMAU robots+Teksid) with very large 'white space' or 'pent up' growth/demand baked-in, too, given its young presence in China, and its re-entry-after-decades into JEEP-globalization plus higher-volume luxury car/suv sales via Maserati, Alfa Romeo and Jeep.

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