Feature Story

AUTO BUSINESS ITEMS FROM AROUND THE WORLD

by Bob Hagin

October 23, 1998

Sometimes we Americans get the feeling that the entire automotive world revolves around us and that the international auto industries exist just to produce cars and trucks for our pleasure. Not so, of course, and periodically we like to bring to the attention of our readers happenings from around the globe. These are the international automotive goings-on that attracted our attention recently:

RANK HAS ITS PRIVILEGES - North Korea is a country I had a bad personal experience with several decades ago. Its name periodically pops up in the news but it has never done so in my own area of expertise - until now. News from Mercedes-Benz is that the North Korean government (the only entity that can legally engage in any form of enterprise there) has ordered a couple of hundred new model '99 M-B S500 sedans for their governmental elite and it will pay a premium to get them right away. Although it's not the top-of-the-line in the M-B product mix (the big V12 S600 sedan is a notch up), it's still a six-figure item and very luxurious. This order is being made in spite of the fact that the North Korean government is financially bankrupt, it's people are literally starving and it's economy seems to be based on selling arms to the world's belligerents. I imagine that the salespeople at Mercedes-Benz have enough moxie to ask for payment up front and that the payment be made in hard currency - small bills, unmarked.

FORDS IN RUSSIA? - You won't have to worry about having the owner's manual that comes with the '99 Ford Escort that you buy here printed in Russian, but if the company you work for transfers you to McDonalds in Moscow, you may have to brush up on the language. Ford recently announced that it's going into a 50/50 joint venture with Russky Dizel in St. Petersburg. While the economic situation in Moscow itself borders on chaos, the situation in the outlying areas isn't quite so hectic. It's stable enough, in fact, that Ford expects to be able to market 25,000 Escorts and Transits (a European Ford product) the first year from parts brought in as "kits." Eventually the Russian Fords will have to be made of at least half Russian-made parts as part of a deal offered by the Russian government. To qualify, Ford had to guarantee an investment of at least $250 million. Ford is proceeding with caution.

VOLVO LEAVES NOVA SCOTIA - In the winter, Nova Scotia gets cold enough to be part of Scandinavia and that may be one of the reasons that Volvo picked Halifax as the location for one of its assembly plants 35 years ago. But that was then and this is now and Volvo has decided that with a production capacity of only 8000 cars a year, the aging plant has to go. Currently the plant assembles the updated but still-boxy S70 and V70 sedans and stations wagons from parts and assemblies brought in from European plants. Being small by comparison to other more modern facilities around North America, the Halifax plant can build only enough of these cars and wagons to supply Canada and some of our Northeastern states. Among the reasons give is that world-wide, Volvo has more car and truck building capacity than it's currently using. And while only 250 workers will be affected, the Canadian Auto Workers union (a very strong organization in Canadian politics via its workers in American car plants in Ontario) is calling upon its government to ban Volvo from selling in Canada if the Nova Scotia plant folds.

FORD SNUBBED IN KIA AUCTION - Hyundai Motors, itself in deep financial trouble in its native South Korea, beat out Ford in bidding for the assets of the bankrupt Kia Motors. This was the third round of bidding on Kia and only the day before, Ford was generally considered the odds-on favorite according to international financial observers. But the South Korean government has always been vociferously resistant to letting foreign investors get a foothold in the country's financial structure. This is especially prevalent where it sees competition to home-grown products - like the Hyundai. But the government disqualified Ford from the bidding war for making a bid that was too low and the two other bidders, Samsung and Daewoo (both South Korean auto makers) were eliminated through a government "screening" process. Also a bone of contention was the huge debt that Kia has encumbered and how much of it Korea Development Bank, Kia's major creditor, is willing to write off. The sale is subject to acceptance of Kia stockholders and creditors but the government says it will shut down Kia if the offer isn't accepted. It pays to be in the driver's seat - especially in South Korea.

NISSAN GOES GREEN IN EUROPE - It seems to be all but over for alternative fueled cars and trucks in this country but Nissan thinks that they have a place in Europe. That company recently announced that within a few years it will introduce a fuel cell-powered mini-car through its European outlets that will use methanol (a renewable alcohol) as the energy source. In addition it's has a car in the works that will achieve that magical "3.0-Liter" goal of producing a car that will travel 100 kilometers (62.5 miles) on three liters of fuel which works out to about 78 miles per gallon.

All this goes to show that the auto world isn't strictly an all-American bailiwick and that the rest of the world is just as addicted to "wheels" as we are.

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