I read it and I disagree.Quote:
Originally Posted by Dylan H
The suppliers will cut back and live live with the contracts from the Europeans and Japanese and maybe Ford.
Just because GM and Chryslers go belly up it doesn't mean that manufacturers that produce way more than them will not be able to support at least partially the suppliers.
My bad, sorry. :)Quote:
Originally Posted by Dylan H
On the above thread you stated that 80% of BMW ,s sold in UK or USA were on credit..I think what is true is that in the UK85% of ALL cars are on credit,lease or not paid for by the person driving them.I was also told by a dutch dealer that it is just the same in his country,.Ask any body who works in a bank and they will tell you that 85% of all bank accouts in the UK if not the rest of Europe ,are in the RED
The suppliers will lose a significant chunk, we're talking up to 50-60% of their custom from GM/Chrysler going bust. Thats on top of the already reduced custom due to everyone cutting production anyway.Quote:
Originally Posted by ioan
They won't simply cut back and live. The healthiest suppliers will survive but a large number won't. The suppliers that do go bust will affect all the companies they supply, not just GM and Chrysler.
Try cutting sales in any company by 50-60% and see how well they fare.
Anyway here's a link that explains things better.
http://www.reuters.com/article/compa...3?symbol=TRW.N
According to Autosport, the News Of The World (ok, so they've made up a few stories in the past) interviewed Bernie, and he confirmed that the rumours about him offering to buy out Honda were true, but they turned him down! Last week I thought that Honda's survival looked quite good, but the sounds from Branson aren't positive, and this only really leaves the management buyout option.
I just picked BMW as an example, its one of the worst affected by poor credit flows because much of its recent sales expansion has been credit fed. You're right of course that all makers are affected by this, and its interesting to see that in the first carmaker bailout in the US GM and Chrysler funnelled government cash partly directly into their credit wings to allow more credit funded purchases.Quote:
Originally Posted by driveace
My understanding is that the level of credit funded car purchases is lower on the Continent, though how much so I don't know.
I disagree with the 85% figure about bank accounts though, you may not believe it but the majority of people in the UK are actually net savers, the problem is that a significant minority live on credit and a small number of those have totally overborrowed. Still, you only need a small decline in the number of people with money to spend to cause a recession as long as the perception of impending doom exists in the rest of the population with money.
It may be difficult to believe, but it's true. The US has been BMW's largest market for years and last I saw, they sell more cars in the US than all other markets combined.Quote:
Originally Posted by ioan
I suspect maybe you don't quite realize just how many cars there actually are in the US and just how many people directly rely on the automobile industry for employment. Hell, I worked for two different major suppliers to GM and Chrysler while in college. I know absolutely no one that doesn't own a car, and I can honestly say, I don't know a family that doesn't own at least Two. The EU may have have a billion people, but the percentage of car ownership in the US is VASTLY higher than the EU. It may sound a uppity or bragging, but I own 7 cars, all operational. Granted 3 are old VW beetles and one is a minivan we keep for travelling to football and soccer games and races, but we have them none the less.
I've honestly never seen a Z8, but 3 and 5 series are a dime a dozen and the Z3's are everywhere. The SUV's are also pretty common. Without trouble, I can come up with at least 2-3 dozen people I know personally that have at least 1 BMW in the garage and I dont' exactly live in an overly affluent area.
Their US sales numbers are pretty well published. BMW's are VERY common, At least in my area. To be honest, They aren't really seen as anything really special unless you have a 6 or 7 or things like an M5. I EASILY see more 3 series BMW's than any Mercedes model, and you can't shake a stick without hitting a MERC.
1,276,793 BMW brand cars were sold in 2007, surpassing the previous year's level (1,185,088 units) by 7.7%.Quote:
Originally Posted by nigelred5
...............
The USA remained the largest single market for BMW and MINI cars in 2007. With a sales volume of 335,840 units (2006: 313,603 units /+7.1%), the BMW Group sold more vehicles there than ever before. On top of this, BMW was the most popular European premium brand among US customers in 2007. In total, 293,795 BMW brand cars (2006: 274,432 units, +7.1%) were sold in the United States, making it the most successful European car brand on the US market in 2007.
http://www.autospies.com/news/BMW-Se...-Record-26092/
So, they sell nearly 1/3 to the US. Still a major share of revenue!
My problem was with the 80%, but it turned out he was only talking about cars sold on credit.Quote:
Originally Posted by nigelred5
I don't doubt that the US (as a country) is the biggest market for BMW given that it is the most populated country where people could afford to buy a BMW (US approx 300.000.000, Japan approx 100.000.000+ and next is Germany with 90.000.000+ inhabitants, the rest are all even smaller).
I would say that China and India are the largest Markets for BMW, regardless of the number of cars they sell there.Quote:
Originally Posted by ioan
BACK ON TOPIC
The Virgin deal must be dead as it looks like it is a management buy out afterall...
Go look at Honda GP Ltd on Companies House Direct - the UK companies register
A whole load of forms 403a have been filed today, releasing the company's assets from various charges that the company's funders held.
This all suggests that the facilities have been paid off in full and means that the company would be free to sell those assets.
So In other words, something is definitely happening today and it looks like the rumour of the Management Buyout today could well be true.
http://wck2.companieshouse.gov.uk/3ae9f3d8...dorder?incexc=1
:laugh:Quote:
Originally Posted by Cooper_S
Good try :D
Something's happening for sure.Quote:
The Virgin deal must be dead as it looks like it is a management buy out afterall...
Go look at Honda GP Ltd on Companies House Direct - the UK companies register
A whole load of forms 403a have been filed today, releasing the company's assets from various charges that the company's funders held.
This all suggests that the facilities have been paid off in full and means that the company would be free to sell those assets.
So In other words, something is definitely happening today and it looks like the rumour of the Management Buyout today could well be true.
http://wck2.companieshouse.gov.uk/3ae9f3d8...dorder?incexc=1
My hunch when Honda said recently that it could wind it up is that it was an attempt to railroad negiotiations with a prospective buyer.
I am sure there is a deal on the table but it needs a push. The deadline is TODAY for the engines.
Expect more by close of play with Honda, Mercedes and A. N. Other saying they are very pleased with the deal.
The CEO stated today that they may have trouble finding a buyer, might this reorganisation be part of making the assets free to sell before winding up the company/team? It does look like management buyout is the only remaining option, and nobody seems very hopeful about this.
If nothing happens, then this will be a pathetic waste of a ready-to-go Formula 1 team. They have staff, drivers, a car, an option for engine supply and good facilities. Honda are satisfied they can't keep the team because of it's finances, so why won't they just get off their high horse and let the team go for an expected non-financial gain. They turned down Ecclestone's rescue and a supposed management buyout, and for what? It just seems like they are greedily trying to get somesort of huge amount of money for it all, when that is clearly not going to happen. So it seems like we'll just lose the whole thing altogether and be left with 700 people out of a job, Button with no drive, Brawn with no job, a developed car which which never see the track and 2 less cars on the grid. It just seems like a totally annoying and needless waste. It's not so much that they can't find a buyer, more that they didn't get the seemingly impossible offer they wanted.
So either the management buyout can take place or preparations are being made to liquidate the team...Quote:
Originally Posted by Cooper_S
Given all thats gone on there is nothing having precluded Virgin talking to the management buyout group to sponsor them. Bernie's being unhelpful as usual, I believe it was last week that he indicated that it would be illegal for him to take a stake in Honda F1, now he's suggesting they were mad not to take it up.
Someone will buy it at the last moment when the price will be the lowest possible and the conditions too.
I think the price is for consideration; i.e. £1Quote:
Originally Posted by ioan
The discussion will be centered around liability of debt and contracts.
Honda are NOT bankrupting their F1 team but are offloading the liability as I understand it.
maybe in 25 yearsQuote:
Originally Posted by Knock-on
popultaion numbers are not the key, purchasing power and discretionary income are the keys in this case.
That's why the US is 1, and Japan and Germany are close behind.
If it were simply a numbers game, you could throw in Inodnesia and Vietnam each with staggering populations as well. then Brazil, The Philippines and Nigeria to boot.
25? you're joking right.Quote:
Originally Posted by truefan72
5 Max! They are the fastest growing economies and set to explode.
As Markability says, follow the money. The US and Europe are leaking investment to the far East and Subcontinent.
How many people in America are buying New Beemers? About 0.1% of the population.
Then consider that Mercedes and BMW are seen as huge statements of wealth in China and you will understand that a very small shift in the wealth of the top 0.01% of the population there and you see why they are so important.
This and the cheap labour probably explains why they have stuck a few factories in China and India.
Sorry for going off topic again. Anything going on with Honda yet ;)
It takes a long time to sign 700 pink slips......
You can't buy new BMW's with monthly paychecks between 100 and 200 Euros.Quote:
Originally Posted by Knock-on
And I doubt that the salary will go up to almost 2000Euro in just 5 years!
ioan. I bow down to your superior knowledge.Quote:
Originally Posted by ioan
Just one thing. Can you provide a link to where it says that the top 0.01% of the population of China earn €1-200?
I wonder what the really poor people in China earn :?:
To get you started, I dug up this.
http://www.ibtimes.com/articles/2007...e-increase.htm
Average urban earnings $250 showing year on year growth of 19%
Therefore, average annual earnings if using this model will be $10,140 by 2014
NOW that is average annual earnings.
As I said, I was using the top 0.01% for China as opposed to the 0.1% of Americans who purchased a new BMW last year.
Link Please
:D
(Just joking)
What is the urban to rural ratio of Chinese population? I confess I don't know but I suppose the former ones are in the minority.Quote:
Originally Posted by Knock-on
Also they can't have 19% earnings growth every year, not when the yearly economical growth seams to be already under 10%.
I come from a land where there was 9% growth last year, and many wages went up with some 25% every year in the last 4 years, still among those that are not children, disabled, jobless or retired 80% are living with wages of max 400 Euros, another 19% get close to 1000 and 1% earn more than 1000 Euros.
Even with 1000 Euros/ month you can hardly dream about buying a car that costs some 30000.
The ones who buy one are those that earn in excess of 2000 and even they will need to take up a 5-10 years credit to do so.
IMO China and India are for now the greatest markets for psuh pedal bikes and small bikes, and maybe for the new Tata mobile (can't call that a car).
They will need at least another 10-20 years of sustained economic growth to be able to claim that they can buy more BMW's than in the US.
;) :)
You're right, China isn't the largest car market in the world, its the second, and only the third largest car maker in the world just ahead of Germany but behind Japan and the USA.Quote:
Originally Posted by ioan
Given the slump in car sales in America, it might already be the worlds largest:
http://www.ft.com/cms/s/0/fe07ae0c-f...nclick_check=1
What is exciting companies like BMW about China is that 50% of all car sales are to private individuals, people who can be influenced strongly by brands.
Even if BMW has a tiny share of the market, the market itself is so large that it would make a big difference for them. They better get in quick though, the Japanese and VW have been there establishing market share for years.
China may be the second largest car market in the world. but the products being sold there are mostly chines made vehicles and knockoffs of the BMW's and Audi's so much so that the German chancellor had to get involved and express dismay at the blatant copying of German cars.Quote:
Originally Posted by Knock-on
It will be a long time before Chinese people will be buying BMW's at the rate that the US does. They are simply not at the point in their economy where purchasing a luxury car is seen as affordable to their "middle class"
Also their protectionism laws especially with regard to foreign cars makes it difficult to compete in that market. Only the really wealthy are able to afford a BMW, Mercedes, or Audi in that country.
China's economy has grown in a staggering amount, but the average consumer purchasing power has not matched that growth. The vast majority of their economic power is embedded in state industry, large conglomerates with heavy state influence and their ability to produce goods with a vast amount of "cheap labor". This in turn means the average Chinese is lagging far behind their economy in wealth growth as their mantra over there is sacrifice and hard work for the good of the nation.
A classic example would be the Olympic games. Where hundreds of thousands of people worked to produce incredible venues, clear up the air in Beijing, clean up the city, and build hotels, housing and infrastructure to accommodate the games. Most did not get paid, many were bused out of the capital once the job was done, there were sever penalties for not keeping on schedule resulting in many earning pennies for their work etc, etc,etc. The end result may strengthen the nation but not the individual.
The growth of an economy is not as closely correlated to the growth of individual purchasing power as you might think. The current Chinese regime will make it difficult for any foreign car manufacturer to do well in that nation.
India, while more democratic and capitalist, still levy's heavy protectionism on their car industry, with more and more Indian made cars hitting the market. It will be a long time there as well before BMW will see fit to call either of these countries a major market to which they would invest building a car plant there to satisfy the demands.
This simply isn't true. 50% of car sales are to private individuals in China, this is a greater proportion than in the UK for example where the majority of sales are to either companies or the state. The massive rise in consumption over the past few years in China has been most marked with domestic goods, TVs, fridges etc etc. Look at the cars that are selling, most of them are passenger cars aimed at domestic users, not targeted at state industry. Again that is due to the rise of the middle class. The state is of declining importance in terms of influencing consumption.Quote:
Originally Posted by truefan72
Of course the majority of Chinese are not in a state to afford these goods let alone a car, but for China to be an important car market it only requires a small middle class.
ioanQuote:
Originally Posted by ioan
I really wish you will re-read my posts and the link provided.
I was talking about the top 0.01% of the population of China (and India for the sake of arguement)
This represents a market of 250,000 very wealthy individuals that aren't going to go hungry if they buy a new Merc or BMW.
Now, 250,000 potential customers is a significant market but shift that percentage up by a factor of 10 to 2.5m potential customers and it is compulsive. It is a fact that China, in the example I gave, is experiencing nearly 20% earnings growth up to 2007 and although there is a global slowdown, will still experience the best worldwide growth over the next 5 years IMHO.
THAT is why BMW are/has been building factories in China and India to capitalise on this opportunity.
Anyway, lesson in economics over as this really has very little to do with F1 as has been pointed out. It doesn't matter if you accept it or not.
Exactly.Quote:
Originally Posted by truefan72
I would add that they have a very long way to go until they will have a "middles class", meaning that at least 30% of the people should be part of a social class that can live a normal life by today's standards.
I understand that, but what if those 250.000 people don't want a BMW but a Merc, a Porsche, a VW, and Audi, Peugeot, Citroen, Renault, Chrysler, Lexus or other high end model?!Quote:
Originally Posted by Knock-on
You see, they need at least a few millions people in a wealthier middle class in order to sell the 300000+ BMW that were sold last year in the US as they will not buy only BMWs.
I dont know about the current % of middle class Chinese, but I saw a hell of a lot of BMW's, Merc's and Audi's on my last trip to China last year.
I see plenty of them in Romania too, it doesn't mean too much though when you look to the actually sold BMW's numbers.Quote:
Originally Posted by 555-04Q2
And I see them in Spain, and we are supposed to be knee-deep into the worst crisis ever seen... And people keep buying them because if someone has enough money, there´s no crisis which can stop you. Or at least you won´t have serious trouble.
http://news.bbc.co.uk/1/hi/business/7915443.stm
Those cheeky Chinease are getting above their station again.
I wonder what proportion of 2008 global Land Rover sales this represents ;)
i see a ton of these cars in Nigeria and Cameroon too when I was there recently, along with Range Rovers, Hummers and the ever popular Pajero.Quote:
Originally Posted by 555-04Q2
This does not mean that either market is prime to thes companies. It means that the few at the top have the means to buy multiple cars. And while they represent a very visible number, I very much doubt that they represent a significant percentage in total Global sales.
As a side note, did you "really" look at those cars or assumed they were BMW's and Audi's because they looked like them. China has a huge knock off problem with their domestic auto industry. Many of these cars being sold at a fraction of their original counterparts
http://www.wordplop.com/2008/05/07/c...-walk-instead/
http://www.wordplop.com/wp-content/u.../chinacars.jpg
http://www.monsterauto.ca/chinese-cars.php
Shuanghuan CEO is a look a like to the BMW X5
http://www.monsterauto.ca/images/Picture-for-2.jpg
BYD f8 vs Mercedes Benz CLK
http://www.monsterauto.ca/images/Picture-for-5.jpg
of that 50% I would guess that 90% were purchases of chinese made cars averaging around $5,000 per car, which is what a good Mercedes knock off is being valued for. As I said purchasing powers and brand purchase tells a better story than raw statistics.Quote:
Originally Posted by Dylan H
Exactly. Got to capture the market and establish your brand while its growing, otherwise it'll go to someone else. Thats why people like BMW have to put the effort in now. No point entering when its a mature market and fight an uphill battle, just look at the effort Lexus and Infiniti are making to capture only a tiny market share in one of the maturest markets of all, Europe.Quote:
Originally Posted by ioan
I'm a bit surprised by the lack of knowledge about China and its middle class. As a proportion of the population they are not large, say 10-20%, equal to the total population of the UK and France combined. They are affluent, purchasing LCD TVs, mobile phones, private education for their kids. Their purchasing power on an international standard is currently not high and in most cases unable to stretch to a BMW or Merc, but they are currently buying Civics and Camrys instead. It really wouldn't take much time before they can stretch to buying BMWs in significant numbers though, probably not even a decade.Quote:
Originally Posted by ioan
I don't believe anyone is suggesting that China is currently a big BMW market, just that it is the biggest potential market and one that BMW is concentrating on very hard (along with other makers).
Think about it like this. What is the maximum feasible percentage increase in sales over the next two decades BMW can expect in the US or Europe? Now what is the probable increase in sales BMW can expect in China or India?
Anyway, looks like this thread is coming to a close now as Virgin doesn't look interested in Honda, Reynard is nowhere to be seen and it looks like Brawn is leading a management buyout.
Exactly. Got to capture the market and establish your brand while its growing, otherwise it'll go to someone else. Thats why people like BMW have to put the effort in now. No point entering when its a mature market and fight an uphill battle, just look at the effort Lexus and Infiniti are making to capture only a tiny market share in one of the maturest markets of all, Europe.Quote:
Originally Posted by ioan
I'm a bit surprised by the lack of knowledge about China and its middle class. As a proportion of the population they are not large, say 10-20%, equal to the total population of the UK and France combined. They are affluent, purchasing LCD TVs, mobile phones, private education for their kids. Their purchasing power on an international standard is currently not high and in most cases unable to stretch to a BMW or Merc, but they are currently buying Civics and Camrys instead. It really wouldn't take much time before they can stretch to buying BMWs in significant numbers though, probably not even a decade. Imagine a middle class as numerous as two large European countries as a virgin market for BMW?Quote:
Originally Posted by ioan
I don't believe anyone is suggesting that China is currently a big BMW market, just that it is the biggest potential market and one that BMW is concentrating on very hard (along with other makers).
Think about it like this. What is the maximum feasible percentage increase in sales over the next two decades BMW can expect in the US or Europe? Now what is the probable increase in sales BMW can expect in China or India?
Anyway, looks like this thread is coming to a close now as Virgin doesn't look interested in Honda, Reynard is nowhere to be seen and it looks like Brawn is leading a management buyout.
This just anwswers my point a while back to both yo and knock-on that China. and india as still 20-25 years away from becoming dominant luxury car markets. Just not today, and not in the next few yearsQuote:
Originally Posted by Dylan H