Archive for August, 2010

Auto parts turnaround seen in 2011

Cost-savings measures undertaken over the past 18 months and a gradual recovery in the U.S. economy will allow Canada’s automotive parts industry to return to profitability next year, according to a report yesterday from the Conference Board of Canada.

After losing $674 million in 2009, largely because of a worldwide recession and virtual collapse of the domestic auto industry, the board forecasts the parts sector will turn a profit of $378 million in 2011 with gradual increases over the next three years until profits hit $894 million by 2014.

The industry is expected to lose another $41 million this year before the recovery takes hold.

According to the report, U.S. vehicle demand is gradually recovering and cost-cutting measures implemented during the recession are improving the bottom line.

According to the report, the parts industry benefits from a high degree of collaboration with vehicle assemblers, as the just-in-time assembly process minimizes inventory carrying costs and assures financial stability through long-term contracts.

However, the large decline in auto sales during the recession exposed the downside of this relationship.

Employment is also expected to rebound, having fallen from an estimated 120,000 in 2006 to a current estimate of 89,000.

The board projects that employment will increase steadily over the next four years and reach 108,000 by 2014.

There are about 750 auto parts suppliers in Canada, with 33 of them employing more than 500 workers and about 240 medium-size companies with 20 to 500 employees, while the rest have fewer than 20 employees.

Thai Rung swings into black

Thai Rung Union Car (TRU) expects more than 50% revenue growth this year and 20% next year thanks to the global economic recovery and domestic eco-car programme.

Managing director Sompong Phaoenchoke said the firm would spend 600 million baht between now and the end of next year to expand operations.

Some 400 million baht will go to expanding TRU’s auto parts plant in Rayong province, which is now running at 70% capacity. Another 200 million baht will go towards a new car-paint facility.

TRU posted first-half revenue of 840 million baht, up by 31% year-on-year. Quarterly revenue also rose by 31% year-on-year to 430 million baht.

Net profit swung back into the black with 61 million baht recorded for the second quarter against a loss of 30.9 million the year before. First-half profit totalled 84.2 million baht against a loss of 80 million last year.

Mr Sompong told investors at a briefing yesterday that the launch of Thailand’s eco-car programme would help boost activity across the supply chain. Nissan has already announced its March eco-car, while Honda will spend 6.7 billion baht to build its own small concept car at its Ayutthaya plant this year.

Mitsubishi hopes to produce 107,000 eco-cars in Chon Buri province from 2012, while Toyota is projecting 100,000 units in annual sales from its 4.64-billion-baht investment in Chachoengsao. Suzuki is also investing 7.5 billion baht in its own programme.

Authorities hope eco-cars, a new classification of small-engine compact passenger cars, will become a new product champion for the Thai auto industry to complement the sector’s existing strengths in the light pickup category.

Thai auto production is on track to set a new record this year, with more than 1.57 million units projected, including exports of 894,000.

Nearly half of TRU’s revenue comes from original-equipment manufacturing (OEM) deals for parts and tooling sales for firms such as General Motors (GM), Aapico Hitech, Emerson, Triumph and Kawasaki.

Revenue from contract assembly accounts for another 29% of the total, including clients such as Isuzu, GM and Tata.

Mr Sompong said the company posted net losses over the past three years due to the global crisis and high market competition.

But he believes the company looks set to pay a dividend this year and that the consolidated net profit will remain relatively strong at 1.04 billion baht.

Mr Sompong said TRU would continue to focus on the OEM market for the next several years, eventually expanding into the turnkey auto market, with one contract already in place for a Chinese client and another in negotiation for an Indian customer.

Shares of TRU on the Stock Exchange of Thailand closed yesterday at 4.92 baht, down 4 satang, in trade worth 8.73 million baht.

Things to consider when buying your first car

Modern society believes that cars are not luxury items but means of transportation. But if you are a teenager in high school, or a college student do you really think so? Or maybe your parents believe that you are old enough to become a responsible driver and should buy the car without major assistance. More likely you have not got any credit history yet, so the process of buying a first car turns into a night mare with lots of unpredictable obstacles.

The toughest question for most young people is how to get finance for the purchase. Trustworthy experts advise not to buy a car if you are not able to pay it off in 2 year. Remember that during all this time your expenses on the car will be higher than just the loan payment. You will also have to pay for gas, new batteries, oil and filters changes, and many other things. And the more expensive the car the more extra expenses it will take. So, are you still sure that you can afford that cool new car you have been dreaming about? Maybe you would better think about a used car for now? If you get a used Toyota Camry or Honda Accord from a reliable dealer it would likely run long without major repairs. But do not forget to get a Vehicle History Report on the Vehicle Identification Number. Besides it would not hurt if the mechanic that you trust examines the car. Those simple actions will help you to avoid unpleasant surprises when the deal is closed.

Planning the budget, remember about insurance rates that are often higher for teens. As it is illegal to drive without car insurance, it will become a noticeable part of your payments. The insurance rates beside your age also depend on the area you live in, local traffic situation and your annual mileage. In some case even car parts may affect your insurance. You may be required to use only OEM car parts which are often way more expensive than aftermarket parts.

As soon as you know what car you can afford, you have to decide your main budget source. Be ready to find out that it is not so easy to get a car loan with lack of credit history. Lenders will want to see that young customers have a stable monthly income and capable to pay bills in time. Thus, sometimes it is useful to establish your credit scores some month before buying the car.

Sometimes parents may come to the aid and become co-signers. Then, if you fail in the monthly payment, your parents will be responsible. But if both of you fail, your credit history will be hit as well as the credit score of your parent.

Got budget planned? Find a reliable place to make the deal. You can choose from a local dealership or a private seller, check numerous Internet stores and actions.

So now you are a happy owner of a car. But it is not time to relax. Remember that more teens die in car accidents than because of any other reasons. You do not want to contribute to this sad statistics, don’t you? As soon as you are on the driver’s seat you must understand that every your mistake can be fatal for you or somebody on the road. Nobody is protected! It may happen to everybody! The only thing you must do is to be very careful. There some simple well-known rules that may save your life. Do not think that you are the only person in the world that can resist physical law and avoid hitting the windshield in a case of a collision. Always use signals to let other drivers and pedestrians know about your plans. And never overestimate your driving skills! Even a single phone call or your tiredness may cause an accident.
Remember our simple hints. Buy car accessories to make your car stylish and enjoy safe driving.

Doing the Math on Obama’s Detroit Bailout

President Obama served up red meat for his hard-core supporters in Detroit yesterday, proclaiming that the government’s bailout of General Motors and Chrysler to be a success. Had he not intervened and invested in the two companies, Obama said, they would have fallen into liquidation and 1.1 million jobs would have evaporated. In the past year, the auto industry has regained 55,000 of the 334,000 jobs lost, he went on