Developing Trends Promise To Reshape Auto Industry

The just released Kia Forte sedan will soon be joined by the Forte Koup, a stylish two-door model arriving later this summer.

We’re right at the middle of the year which is a good time to take a look at the auto industry and what is coming down the pike over the coming 6 to 18 months. The first six months of the year were very active as both GM and Chrysler went bankrupt with Chrysler already emerging through its proceedings and is now part of Fiat. The rest of the industry is awaiting for the market to rebound, but the auto landscape will continue to change in the months ahead.

The following are some of the changes on the horizon:

Near term – This summer, Ford will release the all new Ford Taurus a nicely redesigned full sized sedan for the Blue Oval. Ford will also be introducing its highly anticipated EcoBoost technology and will roll out its Lincoln MKT crossover by late summer. GM has a pair of Cadillacs in the pipeline – the SRX crossover and the CTS wagon. Buick will get a new LaCrosse sedan while GMC inherits the Terrain which is based on the Chevy Equinox. Chrysler has nothing coming up while Acura will stick a V6 engine in the TSX. The Kia Forte KOUP should be in showrooms by late August.

This fall – The remaining 2010 models will be out, a model year that began right after the new year when the Mercedes GLK was introduced. A hatchback BMW 5-Series is on its way, while a small X1 crossover is being introduced.  A restyled Audi A8 hits the market while the S4 makes its return. Hyundai introduces a restyled Tucson while the Mitsubishi Lancer Evolution will be welcomed back. A hybrid version of the Porsche Cayenne will be introduced. Mahindra will be selling their first trucks this fall.

Next spring – 2010 will have several watershed moments including the introduction of the Ford Fiesta subcompact. Throughout the year beginning in the Spring, automaker will be rolling out several pure electric and plugin hybrid models. Mitsubishi and Nissan appear to be leading the way with Ford and Toyota following.

Summer 2010 and Beyond – The Chevy Volt will likely hit showrooms by November but there will be lots of new models from new manufacturers including Coda, Fisker, Th!nk, Smart, MINI and perhaps V-Vehicle if the latter doesn’t turn out to be a bad case of vaporware. By the end of the year the Fiat 500 should be ready for the US. Tata Motors could be bringing the Nano to the US by year end, but 2011 looks like a better bet.

There is really very little uniformity in the auto industry as consolidation means some brands will disappear or be companies merged while new ones will continue to pop up especially if government money plays in as it is doing now in the US. China and India with their vast consumer societies are forces to be reckoned with as their cars begin to appear on American highways.

Thus, the forecast I gave is just a generalized overview, with room for additional changes too.

See Also — Coda Automotive Introduces All Electric Sedan

Tata Nano Launches, But At What Cost?

The newest car to hit the market won’t be sold in the US, but it is getting a lot of global attention for one big reason: its extraordinarily low price. Arriving at dealers at a cost of $1945 (to dealers), the Tata Nano offers 1960s era pricing with similar era product build. No matter, compared to what most Indian consumers drive, which includes motorcycles and scooters, the Nano will give them at least a roof over their heads. Literally.

First conceived in 2003, the Nano was announced to the world in January 2008 with production expected to begin that Fall.  Political problems in one Indian state forced Tata Motors to change its plans, moving the factory to a much more receptive state clear across India. That delay along with the rapidly dropping economy has taken its toll on the automaker, but their plans to sell the Nano remain unchanged.

Tata Motors is also digesting its purchase of British automotive icons Jaguar and Land Rover, having borrowed two billion dollars last June to seal that deal. Tata must come up with the money by this June or seek refinancing of its debt. That latter option could be more difficult to arrange given the state of the world economy.

The automaker hasn’t said what sort of profit lines it will have with the Nano. Given that virtually all small cars are produced more for enhancing volume (and introducing consumers to the brand) than for making money, Tata will have to rely upon  higher contented versions of the Nano to turn a profit. Indeed, Tata is looking at producing a European spec version of the car, one that will sell for approximately three times the price as the Indian Nano but include all of the required safety features and consumer enhancements for that market.

Other automakers are looking at building Nano competing models, but those cars aren’t likely to match the Nano in price. For some manufacturers building a budget scraping car amounts to a fool’s errand, one that won’t produce the profits necessary to sustain the model or enhance brand imaging.

See Also: Nissan, Renault to Tackle Tata Nano

Jeep Only Pitch By Renault?

It is no secret that Chrysler LLC is for sale and the owner Cerberus Capital Management wants to be freed of its short-lived involvement as a manager of an automotive manufacturer.

Rumors of a pending sale have been heating up with some analysts suggesting the General Motors will get the company while others have said that Tata Motors, Fiat, or even a Chinese manufacturer could make a pitch for the company. Most recently, rumors have flown around that Renault is interested in the company, but only for Jeep.

Renault previously owned Jeep when it was part of the American Motors Corporation during the 1980s, but sold out to Chrysler in 1987. With that move Renault exited the US market, unable to compete against entrenched American manufacturers and rapidly expanding Japanese car companies.

Obtaining a portion of Chrysler LLC might be more palatable to Renault who is joined at the hip with Nissan. A Nissan-Renault-Jeep company would carry a lot less baggage with it while allowing Renault to gain instant access to the US market with its own line of vehicles. The remainder of Chrysler could be auctioned off, perhaps to General Motors who has its eye on Chrysler’s minivans as well as truck manufacturing facilities in Mexico.

Whether that would spell the end of the Chrysler and Dodge nameplates is anyone’s guess, but it could allow GM and Renault to get the portion of the Chrysler pie each one wants.

Cash poor General Motors could buy Chrysler’s assets by selling off its remaining interest in GMAC to Cerberus who already owns 51% of the financing company. GM has little need for any of Chrysler LLC’s other products which overlap what GM sells, but union and government opposition could in the face of massive layoffs and plant closures could make GM’s quest all the more difficult to carry out.  Allowing Renault to take control of Jeep might lessen that blow, but significant cutbacks will still take place.