Hottest Car Company on the Globe Right Now

With a string of hits, the installation of a younger internal cadre of managers to replace "senior" management, and setting out to match their best performing competitors-- it is Fiat.

New models, faster development, and a pumped up attitude has transformed Fiat from the laughing stock of global car makers into a very profitable, innovative, and creative company that produced Europe Car of the Year 2008, the Fiat 500.

Now there is talk of a spinoff of the car company or a merger. Maybe Case New Holland based in Wisconsin will go. All this seems to come from the kick ass leadership of Sergio Marchionne with straight talking, tuttle neck business wear, and a team that know that the competition is Toyota, Scania, and John Deere.

Tata's Driving Jaguar & Range Rover Wrecklessly?

Investors are really nervous about how Tata is going "drive" the Jaguar brand and its sister in the JLR brands, Land Rover. They cite the 3 things for concern-- Jaguar is a loser, costing Ford $10B; The U.S. Car Market is in downturn; and more so-- Jaguar does not find the into Tata line, particularly vehicles like the Nano. More unsettling are things like "No synergies", new carbon emission laws, no hybrid technology, and keeping the 3 plants in the UK.

Did Tata get a bargain or a basket of trouble? Tata has got to sell assets including it steel company to pay Ford. The JLR management team has sold Tata on their ability to deliver on a 5 year business plan of which no one on the outside has seen.

At the moment, it looks like what the U.S. Global market needs is not more luxury cars powered by 400 plus HP engines but a smaller, more effecient, green, and functional vehicles-- a mix of what Tata has been touting globally and what Toyota and Honda are doing, and what Ford and GM keep trying to convince us they are making or going to be making.

If you want to gain a better understanding of the Tata Turmoil, see the March 29th issue of the Economist or go to www.ft.com and find the great reporting that the Financial Times has been doing and will keep doing. Also monitor www.automotivedigest.com to keep abreast of the impact of this sale on the Ford and the U.S. market.

Would You Like to Buy a Bridge?

Want an investment tip that will really impact the traffic in your town, make you some money, and fix our roads, & bridges-- all at the same time? Kiplingers and others are saying that developing and rich countries (we are still one of those) will spend $ 30 Trillion, with a "T", on upgrading the physical infrastructures over the next 20 years.

Putting money into companies that build and fund bridges, roads, and other public infrastrucures will render steady dividends and returns.---like over 20% on a five year annualized return computation. Right now these "bridge-loan investments" are going on overseas, but soon will come to the U.S. as we realize that the cost of Iraq, health care, and investment bank bailouts is create a need to bring private investment to the streets, literally-- and probably from Wall Street.

Key to Dealer Survival is Selling Used Cars

The March 31st issue of Fortune has an timely article on page 24 about the success of John Zapp, a multi-franchise dealer in Oklahoma City, who shifted the focus of his GM & Chrysler stores from trying to sell more new cars to selling used cars. He outsold the Toyota dealer down the street, uped the net profit per sale, and motiviated his sales team with immediate cash payments. This retailing strategy is working great as Zapp is selling trade-ins off his lot for increased used car profit.

Opportunity for Dealers & Wholesalers: A lot of automobile dealers figured this out back in the 4th quarter of last year. However, wholesale used vehicle prices showed continued softness in February and auction inventories are still high. Any improvement in retail used vehicle market continues to favor franchised dealers. Retail used vehicle sales up by 40K+ units in February and 1.7%, YTD. This shows recession-resistance in the auto channel and a great used car market ahead in 2008 for dealers, auctions, and remarketers-- OEMs, too.--as the economic slowdown continues.

Renault Rushing to Car Wreck in Russia

Carlos Ghosn personally flew to Moscow last week to invest $1B for 25% of the mafia-infested automaker, Avtovaz. As Putin is re-nationalizing the major industries in Russia, he is fixing them up using some of the same tactics that U.S. private equity firms employ-- and then selling a minority stake to foriegn investors for a tidy profit.

The issue is: Avtovaz is bloated with over 100,000 employees making 736,000 cars last year vs. the effecient Renault with 130,000 employess making 2.43 M vehicles last year. Handing the keys to Russia's lead car maker to Ghosn maybe comparable to the Nissan take over of years back, but this time Mr. Ghosn may not have the backing of Putin, Acvtovaz management, the Russian Mafia, and desparate stockholders as he did when it went to Japan to tell Nissan that it was Renault's way or the "Road"--Plus the sales of 5 "foreign" brands including Chevrolet were up by over 50% in 2007 for a total of nearly 70% market share. Ghosn is going to groan over this deal before the vodka toasts begin.

The Emotional Economics of Ethanol

The stocks of major ethanol producers like VeraSun Energy reported major profit declines this past week (81% down). Stocks of other ethanol companies are trading below book value. The price of corn has gone from $1.90 to $5.64 per bushel while enthanol has gone from $4.50/gallon to $ 2.60/ gal so ethanol is now just another commodity. Ethanol companies and investors are claiming that high corn prices, overcapacity, and uncertainies over future government mandates for the use of ethanol are making the market "emotional".

Whatever, it appears that the "Ethanol Blitz" to replace the MBTE additive which was claimed to have carcinogenic groundwater pollutants may have it own kind of "cancer" on the investors and growers who have "bet the farm" as they seek to create a new source of fuel and a new world of energy prices. [See Herb Greenberg's column in the Saturday's issue of WSJ (March 15th) for more insight and erudition on what is really going on]

Don't Buy Gas from Exxon and Mobil

"The price of gas is killing me" -- that is the message in emails that are coming in from a dozens of intelligent, upscale professionals from New Jersey to LA, encouraging a chain of email recipients (people they know or do biz with) to not just stop buying gas from Exxon and Mobil for the month of April and May but permenantly.

The rationale is that this will somehow create a price war and drive the cost of gas back down to $1.30 per gallon. They hope to send this message to an ever increasing number of people until the purchase boycott becomes a national campaign, thus impacting the sales of gas , causing brands E and M to knuckle under and drop the price.

This is probably just an expression of frustration and futility. The price of gas, ironically enough, has little to do with the retailers at the pump or even OPEC, but with the Mercantile Exchange in New York and Dubai where union and retirement funds, investment banks on Wall Street, foreign investors, insurance companies, and speculaters are all "playing the futures market" -- all betting their entrusted funds on the future price of crude. Most of our crude oil comes from Canada, Mexico, and Venzuela so one has to wonder if OPEC is really the culprit or even Big Oil--maybe it our leaders in Washington who cannot seem to decide on anything including how to deal with why the people who have most of the oil hate us.

Books of Significance to Automotive Management

http://www.automotivedigest.com

There seems to be a need for and a lot of interest in someone in trade publishing who would monitor recently published automotive industry and business books that might be of significance to automotive management including dealers, remarketers, OEM executives, fleet, aftermarket---everyone in the channel.

So I plan to select books of significance from time to time and post a summary of their content and most importantly, how they might be useful to automotive managment. These "significantly informed opinions" about books may end up being posted on the industry's leading online automotive trade magazine, www.automotivedigest.com also.