Reuters blog archive

from Breakingviews:

China’s car joint ventures aren’t built to last


By Ethan Bilby

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Chinese drivers are booming in number, and foreign auto companies have cruised away with most of the sales. But access to what is now the world’s largest auto market has come with a big financial concession: joint ventures with local partners. Those alliances haven’t fulfilled Beijing’s goal of developing competitive Chinese brands. That divided interest could lead to future break-ups.

When Beijing allowed foreign carmakers to set up shop in China in early 1980s, it wanted to make sure they didn’t kill off the nascent domestic industry. Foreign companies were required to enter into joint ventures with local manufacturers and to share technology with them. Each foreign carmaker is allowed to partner with up to two local groups in joint ventures.

Graphic: China's car joint ventures

Since then, China has surpassed the United States to become the world’s biggest car market. Sales of domestically-made passenger cars reached 16 million last year, according to Credit Suisse. Over two thirds of these were foreign models manufactured by Chinese joint ventures. Some of the top Chinese automotive companies are almost entirely dependent on selling overseas brands. For Shanghai’s SAIC, 89 percent of the passenger cars it sold last year were from joint ventures with General Motors and Volkswagen.

from Breakingviews:

China still means the world to car makers


By Ethan Bilby

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China loves to do things big, and that includes buying cars. The country accounted for 85 percent of the expansion in the global automobile market last year. China’s growth may down-shift to 10 percent this year, according to consultancy IHS, as top cities introduce caps on new car-buying. Even then, it remains the world’s most important car market.

from Breakingviews:

Tyremakers’ takeover spat faces high toll


By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Apollo Tyres’ spat with its U.S. target could face a high toll. The Indian firm wants to renegotiate its $2.5 billion takeover of Cooper Tire & Rubber following protracted disputes with workers in the United States and China. Cooper has gone to court to force its suitor to pay up. In this fight, a compromise looks like the least bad outcome.

from Breakingviews:

China price probes may be too much of a good thing


By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s trustbusters have found their mojo. Last month, the National Development and Reform Commission fined six milk companies including Danone and Fonterra for fixing prices. Petroleum groups, telecom operators, banks and auto makers may be next to feel the heat. China needs stronger watchdogs, as long as what motivates them is a hunger for good, not a taste for glory.

from Breakingviews:

Return to glory days may elude Japan’s automakers

By Antony Currie

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

The weakening yen is good news for Japan’s automakers. The more than 20 percent drop in the currency’s value against the dollar since early October will boost profit from overseas sales - and probably market share, too. A return to the glory days of 2006, though, is likely to prove elusive.

from Global Investing:

Amid yen weakness, some Asian winners

Asian equity markets tend to be casualties of weak yen. That has generally been the case this time too, especially for South Korea.

Data from our cousins at Lipper offers some evidence to ponder, with net outflows from Korean equity funds at close to $700 million in the first three months of the year. That's the equivalent of about 4 percent of the total assets held by those funds. The picture was more stark for Taiwan funds, for whom a similar net outflow equated to almost 10 percent of total AuM. Look more broadly though and the picture blurs; Asia ex-Japan equity funds have seen net inflows of more than $3 billion in the first three months of the year, according to Lipper data.

from Breakingviews:

BYD caught in two Chinese economic traps

By Wei Gu

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Warren Buffett doesn’t usually like companies in which the top managers are selling when the share price falls. By that standard, the Omaha investor must not be too happy with his Berkshire Hathaway’s 2008 purchase of 9.9 percent of Chinese electric automaker BYD.

from Money on the markets:

BSE Auto index falls 2 pct

Auto stocks struggled in trade on Friday, as stocks like Exide Industries, M&M and Maruti Suzuki fell, pushing the sectoral index down 2 percent.

Exide Industries ended down 4.6 percent as the top loser in the auto index, followed by M&M which dropped 3.3 percent.

from Reuters Money:

3 ways to save money on a new car loan


New trucks are displayed for sale at a Ford dealership in Encinitas, California November 11, 2008.    REUTERS/Mike Blake   Car dealers don't just make money on cars. They make money on extended warranties, undercoating, fancy floor mats, extra insurance and loans. They make a lot of money on loans, according to the consumerist Center for Responsible Lending, which reckons that dealers rack up hundreds of dollars in kickbacks for every loan they offer.

How much? According to a new calculator at the center's website, if you're financing a $26,000 car for five years and you have a decent credit score, the dealer is getting between $556 to $2,223 back from the lender. That's because the dealer is essentially acting as a loan broker, according to Chris Kukla, the center's senior counsel for government affairs. Dealers make the loans and then sell them to third party lenders. The sale price includes a markup that goes into the dealer's pocket... not yours.

from Reuters Investigates:

How visible is the hand of Treasury in steering GM?

By Kevin Krolicki

"What we are not doing -- what I have no interest in doing -- is running GM."  -- President Barack Obama, June 2009.

GM/GM has undergone massive changes in the nearly year and a half since the Obama administration stepped in to save and restructure the company in bankruptcy to spare it from liquidation and to save hundreds of thousands of American jobs.