Dr. Michael Kowalski Ph.D.

GLG News by Dr. Michael Kowalski Ph.D., Consultant

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The entry of Chinese automobiles into the North American Market

October 3, 2006

Analysis of:DaimlerChrysler, Chery close to car deal: sources | news.yahoo.com

Outsourcing the design, development, tooling, manufacturing and certification of automobiles has been used by Detroit Automakers as a way to compete in new market segments with a minimum capital expenditure. Japanese and Korean manufacturers have been the primary source for these re-badged vehicles. This may have made short term financial sense for Detroit automakers, but has had long term negative effects on them. Is this going to be repeated with Chinese suppliers?

Are Plug-in Hybrid Vehicles for real?

October 3, 2006

Analysis of:Hybrids With A Power Cord: Plug-in Vans Put to the Test | www.nytimes.com

Plug-in Hybrid vehicles are the next logical step in the development of these potentially higher efficiency and lower polluting vehicles. The process of developing these vehicles has begun at a number of major automotive manufactures, although serious technical hurdles remain. Major upgrades to our power-generating infrastructure will be necessary or we will be simply transferring the fuel consumption and pollution from mobile to stationary sources.

 

A GM-Ford Parnership Unlikely

September 22, 2006

Analysis of:GM, Ford Alliance Talks Mark Auto-Industry Shift | online.wsj.com

A partnership between General Motors and Ford is very unlikely because there would be few tangible benefits from such a hook up. Joint projects, such as the recent six-speed transmission, are likely to continue, as each manufacturer seeks to maximize the benefits of capital expenditures.

 

Ford should sell Aston Martin quickly.

September 19, 2006

Analysis of:Ford Says It May Sell Aston Martin Sports-Car Unit | www.bloomberg.com

Ford's premium vehicle division produces vehicles such as the Aston Martin that were costly to Ford to acquire and continue to be a capital drain. The "cache" of marketing these exotic vehicles does not rub off on the sales of traditional Ford products, as most of their customers are unaware of Ford's ownership of these products. Clearly these vehicle lines need to be quickly sold to raise capital and eliminate expenses.

OnStar is a growing business at GM

September 18, 2006

Analysis of:GM's OnStar to cut renewal cost of premium package | www.detnews.com

OnStar is a system that provides many useful safety, security, and convenience services for automotive customers. Over the past decade the number of subscribers to this service has substantially increased. This provides GM with a new revenue stream, but more importantly, a direct connection with its customers. The hope is that this will increase customer loyalty and repeat vehicle sales.

A First Serious Step at Ford Motor

September 11, 2006

Analysis of:Ford Motor Names Mulally Of Boeing as Chief Executive | online.wsj.com

The appointment of Mr. Mullany as Ford CEO could be positive in permitting a seasoned executive to make the decisions necessary for Ford return to profitability. He doesn't need automotive experience to accomplish this goal, but he does need independence. The real question is are the Ford family willing to give that independence to him.

How Can Detroit respond to long term high fuel prices?

September 5, 2006

Analysis of:Detroit Sees Cheap Gas as History | www.nytimes.com

Detroit automakers have not demonstrated a long-term product plan to address the fuel economy issue. In recent years much of their profits have come from large and high performance vehicles. They have used the E85 fuel capability as a way to improve their corporate average fuel economy numbers, without addressing the fundamental issue. What avenues are open to them? See below.

What is Wrong at Ford?

September 5, 2006

Analysis of:Analysts forecast bumpy road for Ford | www.washingtonpost.com

The problems facing Ford and very similar to those effecting General Motors. These are not new issues and they have existed for decades. Both have suffered long term market share declines as a result. General Motors has undertaken a number of important actions that are beginning to have a positive result. Ford on the other hand seems clueless and is floundering.

 

What is the Solution to the problems at Ford?

August 31, 2006

Analysis of:Ford's Private Thoughts | msnbc.msn.com

Ford is under strong pressure to take action to restore the company to profitability. Two possible approaches are possible. Either taking the company private or to form some sort of partnership with another automotive manufacturer. I believe going private is the more likely outcome. The solution at Ford will not and should not be a copy cat approach to what happening to restore General Motors.

Another "knee-jerk" Reponse from Ford

August 28, 2006

Analysis of:Ford Unveils Plan For Sweeping Cuts In '06 Production | online.wsj.com

The high cost of fuels and the increases in interest rate are having an impact on sales of large (and profitable) vehicles at Ford. The productions reductions announced are a quick, but expensive fix for this problem. More fundamental actions by Ford's leadership are going to necessary to provide a long-term solution.

What is Gentex business strategy?

August 24, 2006

Analysis of:Gentex Increases Quarterly Cash Dividend Rate and Board Authorizes Additional Share Repurchase | biz.yahoo.com

Gentex’s Board of Directors have increased it stocks dividend and expanded it stock repurchase program. Its primary product advantage could evaporate in a wink of the eye if some competitor were to introduce a better or cheaper product.

 

GM making a buck any way it can!

August 21, 2006

Analysis of:Troubled Automakers' Golden Goose: Licensing Other Products | adage.com

The major automobile manufacturers are licensing their brands in their markets. While the income from such operation is relatively small (?), the advertising potential is large. Further it may influence the purchasing decisions of future customers. General Motors has capitalized on this opportunity the most while the Japanese have until now been notably not involved.

An Accommodating UAW position at Ford!

August 21, 2006

Analysis of:Report: UAW open to helping Ford | money.cnn.com

UAW Union leadership is recognizing the reality of the difficult situation of lack of profitability at Ford Motor Company. Will they be able to convince the rank and file members of the need to cooperate with Ford? This is yet to be determined. However the statements of Mr. King are a refreshing development and hopefully will result in a more reasonable compromise in the upcoming contract negotiations next year. This is also good new for General Motors and Daimler Chrysler as well.

Satisfy the Customer with features they desire.

August 17, 2006

Analysis of:Apple's iPod Compatibility in More Cars | biz.yahoo.com

Contemporary entertainment systems in automobiles are an important feature that can generate sales and profits for the automakers.  They provide a challenge however in that the rapid product cycle times in the electronics industry contrasts strongly with the much longer production lead times and product cycles of the automotive industry.

Will Toyota become the largest Automaker?

August 15, 2006

Analysis of:Toyota's 1Q Profit Up 39 Percent | www.forbes.com

Toyota has succeeded very well primarily for its strong reputation for quality. To become the world's largest automaker, it must maintain that quality performance and reputation. It will be a huge challenge for its senior management to continue expansion of its operations in all parts of the world and to retain that quality image it now enjoys. I think Toyota will become the largest automotive manufacturer, but not so much because of its efforts, but more from the failures of it larger competitors

 

Japanese Automakers Continue to Grow Overseas

August 7, 2006

Analysis of:Japan builds most cars abroad | www.detnews.com

For a large number of reasons it has been proven to be a successful business model for the Japanese automakers to build manufacturing and assembly operations in the major overseas markets they participate in. In the case of the US market this success has resulted in a long history of increasing market share and growing acceptance of its products as "American" built. To support this there has been a corresponding increase in the number of Japanese manufacturing and assembly plants operating in the US. This will continue as long as market share grows and their products are desired.

Will the good news at GM continue?

August 4, 2006

Analysis of:GM shares increase for 10th straight day | www.detnews.com

The impressive increase in GM stock price thus far this year is due to many developments that indicate that a turn around is already well underway. But to return to a sustained profitability GM must introduce new and attractive vehicles that will attract buyers. The small car segment is one at which GM has been weak and an area where it has historically failed to make a profit. This must change is the turn around is to continue.

China's Threat to the Domestic Automobile Market

August 4, 2006

Analysis of:China's Rise as Auto-Parts Power Reflects New Manufacturing Edge | online.wsj.com

The domestic OEMs are using the increasingly capable automotive part manufacturing in China to coerce their traditional supplier base to reduce prices. The implied threat is that they will go to these new suppliers and this has resulted in an increasing shift to off shore parts manufacturing and increased consolidation of the supplier base. The expansion of American automotive assembly plants in China (to participate in the large and fast growing demand for vehicles in China) has been a further impetus to the growth of the Chinese supplier base. This is also resulting in the creation of a Chinese Automotive industry anxious and almost ready to compete in the global market.

Is the Way Forward at Ford enough?

August 3, 2006

Analysis of:Visibility Lacking But Way Forward Working, Ford’s Stevens Says | wardsauto.com

The Way Forward is Ford Motor Car Company plan to return it to profitability by 2008. The plan has been vague and its effects are not yet apparent from the outside. Ford's losses continue, the sales volumes of its vehicles are down, particularly the profitable large SUV and trucks. In this environment it should be expected that bold and forceful actions should already be underway. This does not seem to be the case with the slow announcements of modified plans and "me too" in response to GM's turnaround efforts.

Hybrid Vehicles and the proposed GM/Renault/Nissan Alliance

July 27, 2006

Analysis of:Hybrids: Are They on Hiatus or Already History? | www.resourceinvestor.com

This article makes two points.  First that the combining of the displacement on demand technology with hybrid drivetrains makes for impressive fuel economy numbers and still provide to impressive vehicle performance and towing capability for larger pick-up and SUVs.  This could be a major benefit for GM's survival and one of the reasons for Renault-Nissan interest in the automaker.

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