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Honda vehicles win Car, Truck of the Year

BEIJING-- Honda's new Civic and Ridgeline truck were awarded the North American Car and Truck of the Year honors at the International Auto Show in Detroit Sunday.

The Ford Fusion and the Pontiac Solstice were the other finalists for the North American Car of the Year award. Among trucks, the finalists were the Ridgeline, the Ford Explorer SUV and the Nissan Xterra SUV.

The awards are to recognize vehicles for their innovation, design, safety, handling, driver satisfaction and value for the dollar.

"I don't know how you can top this. We certainly hoped for one, didn't expect two (awards)," said John Mandel, senior vice president at American Honda. "Words can't express the excitement. It's the first time it's ever been done, I believe."

The annual awards are voted on by a committee of 49 automotive journalists from the United States and Canada. The
2006 Honda Ridgeline (Courtesy: Honda)
journalists involved write for a variety of publications, including Fortune Magazine, while some are freelance writers.

Despite the recognition of the automotive press making up the NACOTY/NATOTY jury, both Hondas have yet to make a big impression in the marketplace. Civic sales were down fractionally in 2005, while sales of the Ridgeline are running well below Honda's original projections.

The result marked another setback for Ford Motor Co. and General Motors Corp., which have been losing market share to Japanese competitors in their home market and have pledged to mount a comeback in the passenger car market.

GM may overtake VW as top foreign car seller in China

BEIJING-- General Motors (GM) may have unseated Volkswagen (VW) as the top foreign seller in China in 2005, outpacing its European rival as well as overall sales growth in the world's third-largest vehicle market.

The U.S. automaker posted a 35 percent rise in China sales to 665,390 vehicles in 2005, exceeding the combined 564,300 units sold by Volkswagen's two Chinese joint ventures.

However, an exact comparison was difficult because of differences in the way the companies report sales. GM figures include sales from a commercial vehicle joint venture that markets a local brand while VW figures do not include imports.

Analysts said a more diversified slate of vehicles had helped GM, which has been gaining on Volkswagen in China for years. The improved sales growth provides much-needed momentum for the beleaguered U.S. automaker, which has been losing market share in its home market.

“GM has a more diversified product portfolio in China,” said Jia Xinguang, chief analyst with China National Automotive Industry Consulting. “That helped to pump up sales even when market growth was slowing.”

By comparison, European carmakers have opted for more streamlined portfolios, analysts said.

They said VW’s commitment to two separate car ventures have also pushed up operational costs and made it less responsive to market needs.

Sales at its flagship joint venture with top Chinese carmaker Shanghai Automotive Industry alone fell 19 percent to 287,000 units last year, an executive at the venture said.

“VW in China is pretty much like a husband with two wives,” said analyst Zhang Xin with Guotai Junan Securities, describing the awkward situation with the two joint ventures.

Still, car sales throughout the nation have been slowing. Analysts said total sales last year were expected to have grown just 10 to 15 percent, matching the growth of 2004 but well off the doubling seen in 2003, due in part to the government’s crackdown on easy auto credit to help cool an overheating Chinese economy.

Car sales grow by 35.2%: GM report

BEIJING-- General Motors (GM) yesterday revealed its sales and market share in China for last year, showing it has overtaken Volkswagen as the top foreign auto maker in China.

The US auto maker's 2005 sales in China, the world's No 3 vehicle market, surged by 35.2 per cent to 665,390 vehicles compared to 2004, GM said in a statement.

Its market share in China reached 11.2 per cent last year, up 1.8 percentage points from 2004. GM started to produce cars in China in 1998.

Volkswagen sold more than 564,000 cars in China last year, down from 648,500 units in 2004, sources from the German car maker's China operations said yesterday.

Volkswagen, which runs two car ventures in China, was the market leader from 1985 to 2004.

However, if GM's sales exclude the local Wuling brand mini buses made by one of the US auto maker's joint ventures, Volkswagen would still be No 1 in the passenger car sector, said Yale Zhang, a Shanghai-based analyst for US auto industry consultancy CSM Worldwide Corp.

Sales from GM's three-way joint venture with Shanghai Automotive Industry Corp (SAIC) and Wuling Motor, in the Guangxi Zhuang Autonomous Region, climbed by 37.9 per cent to 337,188 units last year. This includes 310,288 Wuling-branded mini buses, the US auto maker said.

The Wuling venture, 34-per cent owned by GM, also makes the Chevrolet Spark mini-cars.

GM's other venture with SAIC, Shanghai GM, dwarfed Volkswagen's venture with SAIC as the biggest Sino-foreign venture in China last year with sales jumping by 28.7 per cent to 325,429 units.

Shanghai GM produces vehicles under the Chevrolet, Buick and Cadillac brands, and also markets imported Cadillac and Saab vehicles.

Sales of Buick and Chevrolet vehicles in China exceeded 240,000 units and 100,000 units last year respectively, GM said.

Backed by robust sales, GM's operations in China remained profitable in 2005 for the fifth consecutive year, the company said, without providing details. China contributed an estimated 25 per cent of GM's global profits in 2004.

Volkswagen said last year that its 2005 businesses in China would break even or be in the red due to sluggish sales and high costs.

"GM benefited from an unprecedented number of new and upgraded product introductions as well as a growing portfolio of brands," said Kevin Wale, president of GM China Group, in the firm's statement.

CSM's Zhang attributed GM's 2005 success in China largely to suitable products, a well-managed dealer network and marketing skills.

Benjamin Asher, from Automotive Resources Asia Ltd, a consultancy with offices in Bangkok, Shanghai and Beijing, said last year that GM was in a good position in China because it was able to source lots of cheap quality spare parts from South Korea.

Many of GM's products made in China, such as the Buick Excelle and Chevrolet Spark, Epica and Aveo, are redesigned models from its South Korean affiliate Daewoo.

"With strong performance in China, this market appears to be especially important for GM as it is losing ground to Asian rivals, led by Toyota, in its home market," said Jia Xinguang, from China Automotive Industry Consulting and Development Corp.

GM's vehicle sales tumbled by 4.3 per cent to 4.52 million units in the United States last year, which brought its share of the world's biggest vehicle market to 26 per cent from 27.3 per cent in 2004.

Wale said GM expected China's vehicle market to grow by 10 to 15 per cent in 2006 with robust demand in the small to medium-sized car segments.

"We have built the broadest selection of products and collection of brands of any auto maker in China. We have no intention of letting up on the accelerator," Wale said.

GM said it planned to roll out extra Buick, Chevrolet and Cadillac products and continue to expand its existing ventures and distribution networks in China this year.

China to regulate motorbike export

BEIJING-- China, the world's biggest motorbike exporter for five years, is set to bring motorbike export in order as the "vicious competition" of some exporting companies has resulted in a shrink of the country's foreign market.

These companies competed with each other for their market share mainly by cutting the price of their products, which has forced the Chinese motorcycle industry to withdraw from some major markets abroad, Zhang Ji, a senior official of the Ministry of Commerce, said Friday.

The "vicious competition" is detrimental to not only the interests of consumers, but the exporters themselves and the whole motorcycle industry, said Zhang, deputy director of the ministry's machinery and electronics department.

It has also marred the image of Made-in-China products, he added.

To regulate the motorbike export order, the ministry and other four central government departments have jointly issued a circular, which sets a higher threshold for companies engaged in motorbike export.

According to the document, motorbike manufacturers will have topass the state compulsory accreditation and reach the state-set scale of export or domestic sales.

The document was issued in the wake of the sharp decline in the price of Chinese motorbikes in the international market.

Statistics show the average per-unit price of Chinese motorbikes with a cylinder capacity smaller than 50 ml dropped from 375 U.S. dollars in 1999 to 199 U.S. dollars in 2005.

Meanwhile, the number of Chinese companies engaged in motorcycle export increased from 257 to 815. In the first half of 2005 alone, the number of companies that export less than 1,000 units increased from 115 to 334.

"To vie for a market share, these companies have to try very means to cut the price of their products, which brought about the vicious competition among them," said Zhang.

Experts who have urged a change in the disordered competition say the latest government document would help domestic motorcycle producers develop core technologies and build up their own brands, so as to increase export and improve product quality and benefits.

China has been the world's biggest motorcycle exporter for five years in a row. In 2005, Chinese companies exported more than 7 million motorcycles to 185 countries and regions, with the total value exceeding 2.4 billion U.S. dollars.

GM auto sales down by 4 pct in 2005

WASHINGTON-- General Motors Corp. said on Wednesday that its US sales declined by 4 percent in 2005 led by a7 percent drop in car sales and a 2 percent decline in sales of trucks and sport utility vehicles.

The report also said that the sales of GM, the biggest automaker in the United States, was also down by 10.3 percent in December. The struggling automaker sold 392,041 vehicles in December, bringing its total sale to 4,517,730.

Passenger car sales fell by 19.4 percent during the last month to 131,687 units and fell 7.1 percent for the year to 1,751,921 vehicles. Sales of truck and sport utility were down by 4.9 percent in December to 260,354 units and off 2.4 percent for the year, ending at 2,765,809 units.

"While December was a difficult comparison for us and other manufacturers, by any measure it still was a solid sales month," Mark LaNeve, vice president of GM North America sales, service and marketing, said in a statement in Detroit.

"We're particularly pleased with the recovery in our sport utility and full-size pickup business. It gives us renewed confidence as we prepare to launch new vehicles into these key segments in 2006," he said.

Motorcycle sector gears up for change

BEIJING-- China is poised to restrict the export of motorcycles in order to rationalize an industry that currently has too many firms producing machines that are not always of good quality.

Government institutions, including the Ministry of Commerce and the General Administration of Customs, will launch a new management regime covering motorcycle exports from March 1.

In order to conduct exports under the new system, motorcycle makers will have to pass certain quality standards.

They also must have achieved a minimum export value of US$500,000 in 2004, or must have sold over 30,000 motorcycles in the domestic market during that same year.

Trading companies will be allowed to export only when they have been authorized by qualified manufacturers.

"The move aims to rebuild good market order," said Zhang Ji, deputy director with the department of mechanic and electrical products for export and import at the Ministry of Commerce.

Competition has increased in China's motorcycle export business over the past five years. Exporters increased in number to 815 last year from 257 in 1999.

The low-price policy of some companies has led to "disordered competition" in this sector and also aroused the concern of certain target countries.

Using the new management mechanism, the number of manufacturers is expected to be reduced.

"This method will also help to protect the intellectual property rights of domestic companies," Zhang said.

He explained that some companies have been forced to participate in the price-cutting competition because of "poor practices" by competitors.

"They were not able to conduct research and development with the low profits that they have earned in the overseas market," he said, adding that a rebuilt market would encourage them to develop new products and build their own brands.

Zhang predicted the new management system would not result in a big decline in China's motorcycle exports this year.

According to the ministry's calculations, qualified motorcycle manufacturers accounted for over 90 per cent of exports, both in volume and value last year.

"Therefore, the reduction of players will not result in big changes in exports," Zhang said.

"On the contrary, there is expected to be steady growth and improvements in the quality of motorcycles," he said.

China is expected to have exported over seven million motorcycles in 2005 with a value of over US$2.4 billion.

Car sales expected to accelerate
(The Nation,4/1/2006)

Experts say the Thai automobile market will still be able to register growth in 2006 despite intensifying competition as major producers raise production and try to increase domestic market share. It is expected that total auto sales in 2006 will reach 740,000-760,000 units, up about 10 per cent compared to 2005.

This year could be one in which passenger cars make a strong comeback. In December Honda launched the new Civic while Ford had previously launched the Focus. Both cars are expected to reach their peak sales performance this year, although there will be many new rivals in the market.

Nissan is due to launch the Tida later this year to replace the nearly prehistoric Sunny, while Chevrolet, a rather new player in the market but with strong backing from General Motors, plans to introduce the Aveo.

However, the car that will make the biggest impact is the Toyota Yaris, a five-door subcompact, called Vitz in Japan, that will compete head on against the popular Honda Jazz. The Camry mid-sized sedan will also make a comeback to the market with a model change this year. The car will be unveiled at the Detroit Auto Show this month and will make its way to Thailand later in the year.

The one-tonne pickup market is set to be even more competitive, with Ford, Mazda and Nissan scheduled to launch new products this year, each coming with up-to-date common-rail diesel engines to match Toyota, Isuzu and Mitsubishi.

Ford and Mazda share the same platform for their Ranger and Fighter trucks. Despite being the first to introduce double-cab and open-cab body styles in the market, they were unable to challenge the market leaders due to the lack of common-rail engines. The new trucks from Ford and Mazda are expected to be unveiled at the Bangkok International Motor Show in March.

Ford will offer both 2.5- and three-litre engines, both with common-rail systems and more power than the competition.

Toyota is also expected to offer a minor-change version of the Vigo to keep the momentum going.

Meanwhile competition will also be directed towards fuel conservation, because of the continued high prices, which have certainly made consumers more aware of fuel economy.

More hybrid vehicles could make their way onto the market as well. Most will be imported, but there is also a possibility that a major Japanese auto-producer could start production in Thailand in the near future.

2005 round-up

nThe year 2005 saw the Thai automobile industry running onto a bumpy road, with a large number of negative factors.

Rising fuel prices, which came after the government lifted the oil subsidy, along with the tsunami as well as violence in the southern provinces of Thailand, were not good signs for the industry.

A large number of potential auto-buyers held back purchases, primarily due to the uncertainty of oil prices, both petrol and diesel. By mid-year the prediction that total auto sales would grow by 10 per cent and exceed 700,000 units was scaled back.

But thanks to the growth in the one-tonne pickup market, the Thai auto market was able to make a rebound in the fourth quarter, and the original 700,000-unit target may well be realised.

According to January-to-November 2005 figures, total sales reached 625,556 units, up 13.2 per cent compared to the corresponding period in 2004, with passenger-car sales dropping by 11.9 per cent to 162,187 units while one-tonne pickup-truck sales, the largest segment in the market, grew by 25.7 per cent to 463,369 units.

The year 2005 also saw Toyota poised to claim the triple crown for the first time. Although official sales figures for December have not been released, it is pretty clear that Toyota has finally achieved its target in 2005. Thanks to the attractive Hilux Vigo one-tonne truck and the highly popular Fortuner PPV (pickup passenger vehicle), along with a huge marketing budget, Toyota will almost certainly emerge the best-selling brand in the total, passenger-car and commercial-vehicle markets in 2005.

Disgruntled customers speak out

In January 2005 the Thai automobile industry, aiming to become the Detroit of Asia, lost much face when CNN aired pictures of Duanphen Silaket bashing her new Honda CR-V in protest.

The incident rocked the automobile industry hard. How can Thailand maintain its image of a high-quality auto-producer when local customers are not happy with the quality of their new vehicles?

It not only affected Honda, as owners of other brands also came forward to lodge their complaints in front of the press, whether by peaceful or aggressive means.

With press coverage and support from consumer groups, the car-smashing incident attracted much attention and forced auto companies to the negotiating table.

In order to restore consumers’ confidence and guarantee the standards of cars produced in Thailand, then industry minister Pongsak Raktapongpaisal appointed a panel to probe the quality of cars when there were complaints involving mechanical aspects.

The panel is headed by the secretary-general of the Thai Industrial Standards Institute, with the Thailand Automotive Institute director as vice chairman.

The incidents also led to the establishment of a call centre to take complaints about car defects in a bid to cool off car-owners and prevent them from reaching boiling point as Duanphen did.

Events of this sort seemed to fade away, until the Bangkok International Motor Show, at which a group of dissatisfied car-owners staged a protest that caused quite a stir.

Then towards the end of the year Toyota got hit. A customer unhappy with the braking performance of his customised Fortuner lashed out to the press and decided to torch the brake pads from his truck in a gesture of dissatisfaction.

Toyota, which acted much more quickly than Honda, turned down the heat by offering to stage braking tests for the customer’s vehicle in comparison with brand-new ones from the factory.

There are seven pickup-producers in Thailand, Isuzu, Toyota, Ford, Mazda, Mitsubishi, Nissan and Chevrolet, but the two key players are Isuzu, which has been the top-selling brand for two decades, and Toyota.

Featuring a modern common-rail diesel engine and monstrous dimensions, the Hilux Vigo became a huge success for Toyota, while the Fortuner PPV, based on the same IMV (Innovative Multi-purpose Vehicle) platform as the Vigo and classified within the one-tonne pickup-truck segment, chipped in the deciding sales figure to help Toyota overtake Isuzu for the first time.

Mitsubishi, the largest pickup-exporter from Thailand, also launched a new product, called the Triton, to replace its ageing Strada.

The Triton features a 165-horsepower common-rail engine that is the most powerful in the market as well as futuristic design, but it seems that only loyal Mitsubishi fans were impressed, and Triton sales have not caught on as expected.

Meanwhile passenger-car sales plunged this year due to the historic high fuel prices and the fact that major auto companies did not introduce any new models, with most new cars being launched towards the end of the year. And with fuel prices reaching historic levels, Thai consumers are now going for smaller cars with fuel-efficient engines. Subcompact cars like the Honda Jazz and the Honda City as well as the Toyota Soluna Vios enjoyed brisk sales in 2005, while the government supported the trend further by promoting the use of gasohol, which is a mixture of regular petrol and ethanol.

Ford almost became the first automaker in Thailand to enjoy a tax break (20-per-cent excise instead of 35 per cent) by being able to run on E20 gasohol, which contains 20 per cent ethanol.

But after announcing retail prices, the Thai government decided that it would not grant Ford the special tax cut, since E20 gasohol is still not available in the country, and Ford will have to wait until 2009 (or at least until someone starts selling E20 gasohol) before it enjoys that benefit.

In December Honda also introduced one of its core models, the Civic, which is expected to make life even harder for the Focus, currently considered the best product from Ford.

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