New Volkswagen Plant in Russia

The way for a new Volkswagen AG production plant in Russia is clear. The Chairman of the Board of Management of Volkswagen AG, Dr. Bernd Pischetsrieder, and the Chairman of the Board of Directors of Skoda Auto, Detlef Wittig, signed the necessary contracts with the Russian Federation and the Kaluga Oblast in Moscow on Monday.

The new plant will be built in the city of Kaluga some 160 kilometers to the south west of Moscow. Representing the Russian partners, the contracts were signed by Minister German Gref on behalf of the Russian government and Governor Anatoly Artamonov on behalf of the city of Kaluga. “We will be significantly expanding our position in Russia over the coming years with this new plant. It represents an important strategic step for our Group, and also contributes to securing jobs in Germany,” commented Pischetsrieder.

"We are firmly resolved to tap the considerable growth opportunities offered by the Russian market,” said Pischetsrieder. He added that, due to high customs duties on imported automobiles, Volkswagen and Skoda models could only be offered at competitive prices if they were produced in Russia. “The new plant means lower customs duties and more attractive prices for our cars. That is how we can significantly increase our market volumes in Russia and thus raise capacity utilization at the Group’s component plants.” Pischetsrieder stated that the objective was to expand Group sales from some 30,000 vehicles at present to 150,000 units over the next four to five years.

During the run-in phase, semi knocked-down Volkswagen and Skoda brand models will be assembled in Kaluga from the second half of 2007. The Skoda Octavia will be the first model to leave the assembly line. Initially, some 20,000 units will thus be produced annually. At the same time, full production facilities comprising body shop, paint shop and assembly lines will be installed, with operation scheduled to commence in the first half of 2009.

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Gasoline prices delaying 'green' cars

Thirty-seven percent of consumers say high gasoline prices have them thinking about replacing their cars with more fuel-efficient vehicles. And half of those say they are considering a gasoline-electric hybrid, according to a new survey by Consumer Reports.

But when cost-conscious consumers actually look at hybrids, many of them will be turned off, predicts Douglas Love, a spokesman for Consumer Reports.

The first generation of hybrids, such as the Honda Insight and Toyota Prius, "were designed from the start to deliver great fuel economy," Love says. These cars use electric motors to supplement small gasoline engines for significant increases in mileage.

Although the tiny two-seater Insight is being discontinued, the Prius continues to fly off dealer lots, often at a premium over the sticker price. The Honda Civic Hybrid, another model designed mainly for mileage, is also selling well, but that's partly because of a redesign that has boosted sales of all Civics, including the non-hybrid version.

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Automotive corporate responsibility

Great news from TNS! Automotive companies are finally striking a chord with their social responsibility programmes in emerging markets. A great step towards building some strong local ties that can aid the production of cheap cars in the future.

The 2006 Global Corporate Social Responsibility (CSR) study, which was conducted in March and April across 16 countries, reveals that emerging markets such as Thailand, India, and China rate automotive companies higher in regards to corporate social responsibility than mature markets of the west. The study attributes this to the general public's high ratings of the automotive sector in emerging markets for generating jobs and improving quality of life.

Chris Bonsi, regional director TNS Automotive explains: 'Thailand, India, and China have recorded phenomenal industry growth in the automotive sector and consumers in these markets see automotive companies playing an integral role in the economic and social development of their country. Conversely, the governments of some emerging markets do not fully recognise the contribution of the automotive sector in generating jobs for their country - in some cases, levying high taxes on the automotive sector because the end-products are seen to be luxury items that only a few can afford, without considering the jobs the sector creates for everyday people manufacturing, distributing, and servicing these products.'

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Robotic cars driving inside city limits

Seven months after an unmanned Volkswagen successfully drove itself over the rugged Mojave Desert, the Pentagon is sponsoring another challenge for self-driving vehicles that can weave through congested city traffic without causing an accident.

The contest, to be held in November 2007, will test the vehicles' ability to independently carry out a simulated military supply mission in an urban setting in less than six hours.

The Pentagon's Defense Advanced Research Projects Agency, or DARPA, created the latest challenge to spur development of vehicles that could be used in the battlefield without any sort of remote control.

Participants will have to navigate a complex 60-mile test course in a yet-to-be-determined city filled with moving vehicles -- both manned and unmanned. The test course will be designed like a real city street where vehicles will have to make sharp turns, navigate intersections and avoid crashing into obstacles such as utility poles, trees and parked cars.

Equipped only with a computer brain and sensors, the participants will be graded on how well they can obey traffic laws, change lanes, merge with moving cars and pull into a parking lot.

The first vehicle that successfully completes the mission will win $2 million with second-place finishers claiming $500,000 while third place will receive $250,000.

Last October, the agency awarded $2 million to a driverless Volkswagen SUV, which beat out a field of 23 vehicles by traversing 132 miles of twisting desert and mountain terrain. While the vehicles had to drive on rough road and dodge man-made obstacles, they didn't have to drive in traffic.

''We believe the robotics community is ready to tackle vehicle operation inside city limits,'' DARPA Director Tony Tether said in a statement.

Stanford University computer scientist Sebastian Thrun, who won last year's race, said he was excited to see the agency take the challenge to the next level. Thrun said the artificial intelligence knowledge gained from the contest could also benefit society by pushing the development of ''smart cars'' that can self-navigate on highways and potentially reduce accidents.

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New York Auto Show

Anyone with a car has seen the upward drift of gas prices, which have jumped an average of 17 cents in the past two weeks. And the auto industry is watching that trend closely, rolling out a variety of more economic, fuel-efficient vehicles.

They're on display at the New York International Auto Show at the Jacob Javitz Center. Hybrids are getting a lot of attention this year, offering electric power assist for lower gas usage. And the other flavor of the moment is the crossover utility vehicle, or CUV. This is the fastest-growing sector in the United States, outpacing even the remarkable growth of SUVs in the 1990s. A cross between a station wagon and an SUV, their attraction lies in spacious and flexible interiors, all-wheel drive, and better fuel efficiency than larger vehicles.

Courtney Caldwell, editor in chief of Road and Travel magazine, highlighted some of the hottest newcomers for The Early Show Wednesday.

Saturn Vue Green Line Hybrid
The Vue Green Line is expected to be the lowest-cost hybrid-powered SUV on the market, and advertises a combination of fuel savings, value, and utility. The company says it will deliver an estimated 20 percent improvement in fuel economy, depending on driving conditions. It is expected to carry an EPA fuel economy rating of 27 mpg in the city and 32 mpg on the highway, which would make it the best highway fuel economy of any SUV currently on the market.

Electric Motor/Generator improves fuel efficiency by:

Fuel shuts off upon deceleration

Engine shuts off when vehicle is stopped

Promptly restarts engine when brakes are released

Other features:

OnStar, an in-vehicle navigation, safety and security system.

Price: $23, 000

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New York debut of Saturn PreVue

The PreVue seems like a glimpse of a possible future design direction for the Saturn brand as it tries to broaden its appeal to include sportier vehicles notes the Auto Blog. Sharp-eyed readers will recognize the PreVue as a rebadged Opel Antara GTC concept from last year's Frankfurt Motor Show, more evidence, if any were needed, of General Motors' shotgun wedding of the two brands. Not that this is a bad thing - Opel's Antara was one of our favorites in Frankfurt.
The concept car is powered by a transverse-mounted, twin-turbo Ecotec diesel, putting out 212 hp (156 kw) through a six-speed automatic.

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Saving private US auto industry

The accelerating woes of Ford and General Motors and the ongoing crisis in auto parts have produced vows from Detroit that business-as-usual won't continue. Yet unless U.S. trade policy changes, too, and Washington imposes sweeping emergency tariffs on imports of manufactured goods, the American-owned automotive industry will soon disappear, and along with it much of the rest of America's core manufacturing.

For a quarter-century, Washington has dodged the biggest trade problem plaguing domestic automotive producers: an import tidal wave of vehicles and parts from rivals enjoying a host of advantages unavailable to U.S. automakers. Though Japanese, German, and Korean automotive companies sell freely to the U.S. market, their home markets have been tightly protected. These governments also use numerous other tricks to promote their auto sectors such as currency manipulation and subsidies.

Since the import flood began in the 1970s, U.S. leaders have lacked the will and economic savvy to counteract these unfair competitive advantages. And unfortunately, Detroit has flunked the trade policy challenge, too.

In the 1980s, the United States imposed import quotas in part aimed at forcing foreign automotive companies to produce in America. But because no overall competitiveness strategy accompanied these barriers, they handed the Europeans and Asians not only new access to U.S. markets, but bargain-basement labor and health-cost structures with no retirement obligations.

During the 1990s, domestic automotive producers strongly backed NAFTA, believing that such a deal would strengthen American manufacturing by enabling labor-intensive operations to be sent to low-cost Mexico and by requiring Asian and European manufacturers to use high levels of North American content if they wanted to sell here. However, even though foreign-owned factories produce millions of vehicles in the United States, car and truck imports from these countries keep surging.

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Motorola in automotive electronics sale

Motorola Inc. said Monday it is selling its automotive electronics business to Continental AG.

The German tire company will pay about $1 billion for Motorola's auto electronics business, which generates about $1.6 billion in annual sales.

The unit will join Continental's automotive systems division, which has annual sales of about $6.5 billion.

The deal is expected to close in the first half of this year, pending customary closing and regulatory conditions.

Motorola's automotive unit currently is a component of its Networks & Enterprise business and has nearly 4,500 employees worldwide.

Continental is a supplier of brake systems, chassis components, vehicle electronics and tires. At present it has a worldwide workforce of approximately 80,000.

Schaumburg, Ill.-based Motorola (NYSE: MOT) manufactures a variety of communications devices and has operations here in the Valley.

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Chinese carmaker in Malaysia

China carmaker Geely Automobile Holdings Ltd’s plan to assemble its cars in Malaysia is now back on track, making it the first Chinese vehicle to be assembled here, after the government allowed a portion of its cars to be sold in the domestic market.

The assembly of its 1.3 litre Geely CK1 sedan will be carried out via Information Gateway Corporation Sdn Bhd (IGC), a local company that holds the exclusive franchise to assemble, manufacture and distribute the China carmakers’ right-hand drive cars.

Under the latest collaboration, IGC will sell 20% of the locally-assembled Geely vehicles in Malaysia with the rest exported. The Geely CK1 export price would be between US$5,000 and US$6,000 but the price for the domestic market has not been determined.

IGC group executive chairman Tan Sri Cam Soh Thiam Hong said IGC will assemble up to 10,000 Geely CK1 units by August 2007 (one year after roll-out) following the strategic collaboration between the two companies.

The company had in late last year suspended its planned production project in Malaysia due to a policy reversal by the government which required Geely to export all the cars it produced in the country.

When Geely signed the deal in May 2005, it had intended to sell at least 90,000 completely-knocked-down (CKD) units worth US$450 million in Malaysia.

On the 80:20 ratio for the export and domestic sales, Soh said: “This is in line with the National Automotive Policy and the government’s vision to develop the country into an automotive manufacturing and assembly hub.

“The Geely CK1 assembly will be done at Oriental Assemblers Sdn Bhd in Johor Bahru and we expect roll out by July this year. This model will only have 40% local content as we will purchase 60% from Geely."

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