Recalling the Toyota recalls

During my stint with erstwhile Chrysler, I learnt one important thing about the average American car drivers - they are a quirky and very paranoid bunch of people when it comes to the quality and the safety of the vehicles. No wonder they have the safest and the most technologically advanced vehicles; but at the same time over-dependence on technology has diluted the driver's intuition in the average American.


The recent Toyota recall story is not new. It is a deja vu of the Audi 5000 recalls in the mid-1980's. Anyway, we all know the story of unintended acceleration of certain Toyota and Lexus models and the number of recalls made, etc. In my opinion, Toyota did a commendable job in managing the negative publicity, but just a couple of months after the hue and cry is over, everybody seems to forget to find out what really happened. Were the Prius' really faulty, as alleged? What about the outcome of the investigation?


I stumbled upon Drew Winter's commentary in Wards Auto and I think it is a must-read. Drew gives very nice details on what really happened as the initial Federal investigation results showed up and further investigations are made. To read Drew's article click here.


Addendum - The NHTSA slammed a fine of USD 16.4 mn on Toyota stating that Toyota was aware of the faulty electronic throttle, but chose to remain silent. Food for thought - Toyota being fined means the Big 3 sales increase, two of which are owned by the US government.

Is BYD, China, buying the Maybach marquee from Daimler?

The latest speculation in the automotive world is BYD approaching Daimler AG to buy the Maybach brand. BYD is one of the smaller Chinese automotive companies that focus in battery-operated electric vehicles. BYD already had teamed up with Daimler to develop electric vehicles for the Chinese market.

Interesting facts about BYD are that, Warrren Buffet has a 10% stake in the company and it was originally a Li-ion battery manufacturer for Nokia and Motorola.

Spokespeople from both the companies have clearly denied the rumors and have passed it off as market speculation.

The truth remains to be seen. But with a poor sale of around 200 Maybachs last year and Daimler working vehemently to lose its extra fat, such a rumor might not stay a rumor for long.

Geely buys Volvo

The announcement of Chinese car manufacturer Geely buying Volvo Cars from Ford Motor Company is a big news. A landmark event or not, remains to be seen. I make this comment because if we consider the popular school of thought, according to which, consolidations in the future would leave about 5 major global automotive companies owning over 30 brands, Geely's acquisition seems like a small ripple in the grander scheme of things; but nevertheless an important milestone, especially for the Chinese automotive industry.

Estimated at USD 1.8 bn, the Geely-Volvo deal marks China's biggest overseas auto purchase and a global shift in manufacturing from North America / Western Europe to China.

According to Geely, its present and near-future aim is not to tap the western market but bring volumes to the the Chinese market and boost manufacturing. This objective is not so simple as it sounds. Volvo Cars sold around 50,000 units in China in 2009, while the market leader in the premium segment in China, Audi, sold almost 130,000 cars in 2009. But the acquisition is a step forward in the right direction for Geely. Already, a big player within its compatriots, Geely now has the famed Volvo safety design and vehicle engineering technologies at its disposal. This will take Geely a few steps ahead of the other Chinese automakers.

The deal took almost 2 years in the making since Geely went to Ford Motor Company with a speculative bid to buy Volvo Cars. But the buy-over did not happen earlier mainly due to two reasons -

1) Fears of loss of Intellectual Property. The Chinese manufacturers do not have a very good reputation of protecting the interest of foreign JV partners. Remember Chery shamelessly copying the design of Daewoo Matiz? (I heard Chery did such a fine imitation that the QQ headlamps would fit like a glove in a Matiz!)

2) Geely is essentially a private firm without government stakes in the company. This does not bode too well for a foreign investor because according to the Government Procurement Law of the People's Republic of China, "...purchasing activities conducted with fiscal funds by government departments, institutions and public organizations at all levels, where the goods, construction and services concerned are in the centralized procurement catalogue complied in accordance with law or the value of the goods, construction or services exceeds the respective prescribed procurement thresholds", basically, fiscal funds can be used only when the government gives a go-ahead.

But what is interesting is that Geely only paid USD 800 mn of the total USD 1.8 bn amount to Ford. The rest of the money comes from "regional investments", which basically means local governments.

After the unsuccessful attempt by the little-known heavy machinery maker Sichuan Tengzhong Heavy Industrial Machinery to buy Hummer, the Geely-Volvo deal is a new chapter in Chinese automotive history. What remains to be seen whether this is a mere ripple in major consolidations in the automotive industry that are to happen in the future or a milestone event that could change the global automotive industry and start a new trend.

Portion of Hyundai i20 production to shift to Turkey

By June this year Hyundai will shift a part of its production of the i20 to Turkey. The main reasons for this shift are -

1) The production capacity (~600,000 units per annum) of the two plants in Chennai is almost saturated.

2) The recent spate of labor problems in the plant.

What this means for the Indian consumer is that the waiting period for the i20 will now be around 3 weeks.

This move also signifies the Indian economy losing out a portion of its revenue to an Eastern European country, which have become close competitors to India, China and other South-east Asian countries in terms of affordable labor and raw materials for automotive OEMs.

What seems curious is that, Hyundai after announcing India as its small car manufacturing hub, should have considered capacity expansion in India rather than moving to another country. But I guess this will be the trend going forward, as Turkey has the advantage of being closer to the European market besides offering the same USP as India.

The Dark Horse gets its strategy right – Ford hits India with the right product

I like American cars, especially Ford. When I saw the Ford Escort around 1998, I was, let’s say, not so enthused. The Ikon was much better and the Mondeo was true Ford DNA; but Ford never could make a mark in the Indian market. Ford was never mass-market here and the only feeble effort was the launch of the Fusion in 2004. But like I discussed in an older post (look at the post at the bottom), the Fusion could never compete with the hatchback leaders in India.

But things are going to change for Ford in India and the B+ segment market here is in for some fresh competition from the Ford Figo. Ford, for the first time, understands the importance of the Indian automotive market and actually has a strategy. It took more than a decade, but finally, I feel Ford will see its market size grow in India from a puny 1.6% (volume).

I will not talk about the specifications as they have been discussed in many places, especially the Team-bhp review, which is all comprehensive. You can read it all here. My personal opinion is that two engine variants, 1.2 L petrol and 1.4 L diesel churning out 70 bhp and 68 bhp respectively are very decent options for the Indian buyers, though other OEMs have set a higher standards for power.

What I feel will make the Figo a hot-seller in India is its neat looks (no overambitious design experimentation like the Ritz, A-Star or the Beat), ample space in the car and most importantly the price. INR 4.5 lakh for the high-end petrol version and INR 5.3 lakh for the diesel variant places the Figo bang in the middle of the hottest selling hatches in India (the Swift and the i10). The mileages are impressive too. At 15.6 kmpl (petrol) and 20.0 kmpl (diesel), the Figo numbers are among the best offered in the country.

The improvements visible in the Figo are a step in the right direction for Ford; but it only means that Ford is catching up with Maruti, Hyundai and the other hatchback makers in India. What I really feel gives Figo the edge over competition is the fact that Ford has managed to pack its essence in a B-segment car in the true sense, namely, handling and the sheer driving pleasure. A Ford has always been a driver’s car. GM needs to pull its socks up.