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from Global Investing:
Hyundai hits a roadbump
The issue of the falling yen is focusing many minds these days, nowhere more than in South Korea where exporters of goods such as cars and electronics often compete closely with their Japanese counterparts. These companies got a powerful reminder today of the danger in which they stand -- quarterly profits from Hyundai fell sharply in the last quarter of 2012. (See here to read what we wrote about this topic last week)
Korea's won currency has been strong against the dollar too, gaining 8 percent to the greenback last year. In the meantime the yen fell 16 percent against the dollar in 2012 and is expected to weaken further. Analysts at Morgan Stanley pointed out in a recent note that since June 2012, Korean stocks have underperformed Japan, corresponding to the yen's 22 percent depreciation in this period. Their graphic below shows that the biggest underperformers were consumer discretionary stocks (a category which includes auto and electronics manufacturers). Incidentally, Hyundai along with Samsung, makes up a fifth of the Seoul market's capitalisation.
Shares in Hyundai and its Korean peer Kia have fared worst among major global automakers for the past three months - down 5 percent and 18 percent, respectively. Both companies expect sales this year to be the slowest in a decade. Toyota on the other hand has risen 30 percent and expects to reach the top spot in terms of world sales for the first time since 2010.
Lim Hyung-geun, a fund manager at GS Asset Management, is one of the many investors who have offloaded Hyundai stock, helping to push its shares down 5 percent on Thursday. The strong won is one reason, he tells Reuters:
from David Cay Johnston:
The troubled trade deal with South Korea
SEOUL -- In March, the United States and South Korea implemented a Free Trade Agreement that President Barack Obama touts as more significant than the last nine such agreements combined. He also said it was central to his goal of doubling American exports within five years.
I think the president suffers from irrational trade exuberance, a view reinforced by my reporting in this city of 10 million people.
from Russell Boyce:
Asia – A Week in Pictures 31 October 2010
In terms of the Ring of Fire, Indonesia had just been too quiet. Warnings that Mount Merapi, which towers above the outskirts of Yogyakarta city on Java island, was about to erupt, were heeded by some and ignored by many. On Monday, a 7.5 magnitude quake triggered a tsunami that hit the remote western Mentawai islands killing at least 343. A day later, Mount Merapi erupted, killing at least 34. It took almost three days for Jakarta based photographer Crack Palinggi to reach the scene of the devastation caused by the tsunami. Beawiharta was quicker to scene of the volcano; needless to say it's always worth standing well back when people are evacuating from an erupting volcano. Bea's picture screams panic, heat and noise of those fleeing as hot ash falls to earth, the drama amplified by the flash blur technique used. It is in complete contrast to the picture taken a day later of sombre near silence as rescue workers crunch through the muffled ashen landscape like newly fallen snow.
A woman covers her baby as she runs from ash falling from an erupting volcano at Kaliurang village in Sleman, near Indonesia's ancient city of Yogyakarta, October 26, 2010. Mount Merapi erupted on Tuesday, prompting terrified villagers to flee and join the thousands already evacuated from its slopes, witnesses said. REUTERS/Beawiharta
from Shop Talk:
Auto show-Super Bowl TV ads don’t score for Mazda
Advertising during the Super Bowl doesn't score for Mazda.
While the Japanese automaker plans to boost its marketing budget this year as it launches the Mazda 2 small car, running TV ads during the National Football League's championship game in February won't happen.
"You're never going to see us on Super Bowl," Mazda North American chief Jim O'Sullivan said at the Detroit auto show. "We're not going to spend that kind of money on that kind of property because, yeah, you get a lot of impressions and stuff out there, but the fact of the matter is, do you really get to the target you really wanted? That's more of a feel-good ad for a lot of people."
from Shop Talk:
Auto show-Consumer Reports analyst talks Toyota, other issues
Consumer Reports magazine's senior director for automotive testing, Dave Champion, sat down with correspondents Bernie Woodall and Ben Klayman at the Detroit auto show to discuss the U.S. auto industry, including Toyota's future, the changing nature of the show, small cars and Chrysler.
About Toyota:
"Toyota's grown incredibly quickly; not only in the number of vehicles that they sell but also in the number of vehicles that they produce. They have a range of vehicles now that's extremely wide. What Toyota used to have was a great attention to detail on every single part that went into the car and a real focus, very tightly, on the product. Now, with so many different variants and iterations and models, it was very difficult to keep that same focus and that same attention to detail on all the products."
from Shop Talk:
Auto show-J.D. Power analyst opines on U.S. market
J.D. Power and Associates analyst Jeff Schuster met with Reuters TV and text reporters at the Detroit auto show to discuss the U.S. auto market, including the changing nature of the show and 2010 demand.
About the subdued nature of this year's show:
"If you look around this show, the message here really is an industry getting back to business. They're obviously here to sell cars."
from DealZone:
DealZone Daily
Sigh of relief for Cadbury? Hershey and Ferrero may join forces to launch a rival bid for Kraft's offer for the British confectioner, a source tells us. On a rather much smaller scale, Cosmo Pharmaceuticals plans to buy rival BioXell for around $40 million, it says. For these and all other Reuters stories on deals, click here.
Plus a look at other media (some links may require subscription):
Hyundai Motor Co is planning to sell off its stake in affiliate Hyundai Mobis Co in a block trade to comply with antitrust rules, according to online media provider eDaily.
from Raw Japan:
Car Wars: Hyundai climbs with Toyota’s model
As a child in the early '80s, I remember spending a summer in Seoul and taking a trip with relatives to the countryside in a Hyundai Pony, South Korea's first homegrown car. I spoke no Korean, but learned one word quickly enough: "lemon".
Hyundai Motor has certainly come a long way since then.
Thirty-four years after introducing the Pony hatchback at the Turin Motor Show, Hyundai is the world's fourth-largest carmaker, surpassing Ford Motor in the first half of this year. With the rest of the industry reeling from slumping sales, Hyundai's charge has been especially conspicuous this year as it grabbed market share across the world and even made record profits in the latest quarter.
from DealZone:
My other car is in limbo
Be careful what you wish for.
Just a week after launching the cash-for-clunkers rebate program, policymakers and auto executives are left sorting through the chaos caused by the program's runaway success.
As of Friday, there was no knowing how much longer funding for the program will last. The Obama administration has reassured car shoppers and dealers that any trade-ins over the weekend will be honored at rebates for up to $4,500. Meanwhile, the U.S. House rushed to triple funding for the program, adding another $2 billion in a bill that heads to the Senate where it could face tougher scrutiny.U.S. car sales for July, set to be released on Monday, are expected to show a turbocharged boost from the government program, a sleeper success in a string of policy steps aimed at stabilizing the U.S. auto industry that has included government-sponsored bankruptcies at GM and Chrysler.Before the rush of clunker trade-ins, analysts had been looking for industry-wide July auto sales to top 10 million units, the highest rate of 2009 and an encouraging sign the market has turned the corner. Investors have discounted some of that recovery. Shares in AutoNation, the No. 1 dealership group, have gained 48 percent since the start of the second quarter. Shares in the No. 2 dealership group, Penske Automotive Group, have more than doubled.With inventories tight, automakers also stand to gain as production -- and revenues -- increase in the second half. July sales data will help sort the winners from the losers, but the early anecdotal evidence suggests that the some of the biggest gains have gone to the automakers that were already outperforming. Hyundai says about 18 percent of its sales in the month of July included a cash-for-clunker backed trade-in. Ford, which is seeking to distance itself from the rest of Detroit, reports that cash-for-clunker trade-ins were boosting sales of smaller, more fuel-efficient cars as opposed to crossovers and trucks. That is also the area where Ford's product line-up is seen as giving it an edge against GM and Chrysler.
from India Insight:
It’s raining compact cars in India
Honda's premium hatchback Jazz has just added to the flurry of four-wheelers crowding the ramp in the compact car segment.
Indian market leader Maruti has been in the forefront here, following up its launch of the A-Star in 2008 with the Ritz (see photo) this year.This week, Fiat launched the Grande Punto, another compact car.This segment already has cars such as the hugely popular Swift, Swift D'Zire (all from the Maruti stable), the i10, i20 and Getz from Hyundai, Chevrolet's Spark, etc.There are more in the pipeline with Skoda Auto's new Fabia expected later this year and Volkswagen's Polo in early 2010.And there is room for more.Auto expert Hormazd Sorabjee thinks this segment is fairly elastic and has the scope to absorb the supply."Of course there will be a lot of competition…they will eat into each other's share, but it will help to expand the market. And the competition is good."Around 75-80 percent of the cars sold in India are in the compact segment - where the price varies from about 350,000 rupees to about 700,000 rupees (the super-premium compact).Within this elastic price range, the category has the cars to suit all budgets.Maruti dominates the segment because of the number of brands it has.It would be difficult for other players to dethrone it mainly because the company has got a clear head start over the others and it has identified itself as more of an "Indian" company compared to them.Few people think about its Japanese parentage. It also has the advantage of having a wider service network than the other relatively recent entrants.What do you think? Which car can end Maruti's domination over the compact car segment in India?
