China Could Add 120 Million Cars In The Next Seven Years

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1st Gear: The Bull's Case

Bloomberg is reporting that a study by LMC Automotive is out saying they expect China to continue to boom, adding 120 million cars to their fleet by 2021.

Bulls argue China's car fleet will expand by about 120 million vehicles by 2020 because of income growth and rising auto ownership. The number of passenger vehicles per 1,000 people may more than double to 150 from about 65 last year, according to LMC Automotive.

That still trails more than 400 in the U.S. and Japan, based on World Bank data. Auto sales will also be boosted by old cars being replaced.


China is selling about 20 million cars a year so, if you do the math, that makes sense. However, I think the increasing urbanization of China (projected to be close to 70% by 2021) as well as resistance from the central government makes that a harder number to hit than you'd think.

Still, not out of the realm of possibility. I should be discussing this at around 9:35 AM EST on Bloomberg with Olivia Sterns and Matt Miller.

2nd Gear: What Is Mercedes Planning?


As if it wasn't obvious enough that China IS VERY IMPORTANT BUSINESS for automakers, Mercedes announced that it's hoping to compete with BMW and Audi more effectively by opening up an R&D center in Beijing aimed at giving the Chinese just what they want.

Here's the fun part per Reuters:

Also as part of the China focus, Troska said Mercedes-Benz is considering a new super premium car built particularly with the Chinese consumer in mind.

"The (flagship) S-class is uniquely positioned and has a tradition also in China as being a top-of-the-line boss' car. Is there an opportunity to position even the S-class slightly higher? I think there is," Troska said.

"You will very soon hear about it," he added, declining to elaborate.


3rd Gear: Why Mexico Is Kicking Brazil's Ass


You'd think Brazil would be considered a sexier place to build cars than Mexico, though both countries are problematic. It's just that Brazil is exactly the kind of the problems that hamper growth despite the prospect of growing wealth in the country.

From Bloomberg again:

As the world’s fifth-largest car market, Brazil is too big to ignore as gains among the middle class in the past decade fuel a surge in sales. But high costs, poor infrastructure and few trade agreements mean its exports aren’t competitive, said Arturo Pineiro, chief executive officer of BMW Group do Brasil.

That leaves carmakers setting up small factories here to meet internal demand, while building the bigger plants in countries like Mexico, which has lower wages and trade agreements with 44 countries.



4th Gear: Meet The New Face Of Hyundai


If the way he purchases real estate is any sign, Hyundai Chairman Chung Mong-koo ain't exactly a rule-by-committee kind of guy. His son and heir-apparent Chung Eui-sun, it seems, not so much.

Here's a nice Reuters profile:

When he attended design preview meetings for the Genesis luxury sedan, Hyundai Motor heir-apparent Chung Eui-sun suggested features he'd seen on high-end European rivals, such as a pop-up navigation screen and a gearshift that rises and retracts.

But the ideas faced opposition from engineering chief Yang Woong-chul, who was worried about the technology, and Chung did not insist, said a person who sat in the monthly meetings. The features did not make it into the car, launched late last year.

The story neatly illustrates the challenge facing the design-loving, consensus-building "E.S.", the only son of group chairman Chung Mong-koo, in driving change at the company when he eventually succeeds his famously autocratic father.

"M.K. orders this and that. But that is not the way E.S. does business," said the person present at the meetings. "E.S. wants to take Hyundai's design to the next level. But he has faced a lot of hurdles."


There's a lot more in here and it's worth reading to understand what kind of future Hyundai has and what kind of future Hyundai is painting of itself (none of these profiles happen by accident). Also worth noting that he and his dad donated $1 billion to charity... after getting nabbed in a pretty massive bribery scheme.

5th Gear: At Fiat Chrysler, Quality Is Job... #6?


We've already reported that Chrysler's top quality guy is out following a punishing Consumer Reports survey, and Brent Snavely follows up with some more details:

All of Chrysler's brands fell in this year's rankings with Dodge, Ram, Jeep and Fiat as the four lowest-ranked brands. Among specific models, the Fiat 500L finished last.

"I am not taking issue with the survey itself, other than it is clear that we have focused on the wrong things in dealings with some parts of the customer base," Marchionne said. "We need to go back in and fix that perception because I know that from an engagement standpoint the whole house has been driven in a completely different direction that those surveys are indicating. So we have an absolutely mismatch of internal evaluation and commitment."


You're not getting to seven million cars a year with bad quality.

Reverse: How Did He Not Win The NYC Marathon?

Engineer Andrew Riker delivers the first four-cylinder, gas-powered Locomobile—a $4,000, 12-horsepower Model C—to a buyer in New York City on this day in 1902. The Locomobile Company had been known for building heavy, powerful steam cars, but by the turn of the century it was clear that the future of the automobile—and thus of the Locomobile—lay in the internal-combustion engine. Until it went out of business in 1929, the company built elegant, luxurious touring-cars and streamlined racers for wealthy patrons. A Locomobile, ads crowed, was the "Best Built Car in America."




Neutral: Bull Or Bear? Are those Chinese numbers high or low?

Photo Credit: Getty Images

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