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Honda Motor Co (NYSE: HMC) is increasing its capacity by 15% in North America to keep up with the growing demand for its fuel-efficient cars. According to the Associated Press, President Takeo Fukui told reporters that annual production will hit 1.62 million vehicles by 2008, up from 1.4 million. A new auto plant will be built in Indiana, Honda's seventh in North America, and is slated to begin production in late 2008, Fukui said.Overall, demand has been healthy for Honda's cars in America. Honda has a reputation for good mileage at a time when gas prices are reaching record levels. In comparison, American carmakers are fighting a losing battle against Honda and other foreign carmakers to regain its once-superior positioning. As a group, the market share of Detroit's Big Three slid in June to 50.2% from 56.1% a year earlier.
The Big Three are suffering from a problem they chose nearly a decade ago: focus on inefficient sport-utility vehicles and pickup trucks, instead of fuel-efficient cars.
The struggle to compete against the fuel-efficient cars has pressured Ford Motors (NYSE: F) to consider divesting some of its pricier foreign divisions, including Volvo, Jaguar and Land Rover. The London Sunday Times reported this weekend that Ford had decided to sell its Volvo unit. Despite Ford denying the allegation, some industry analysts believe Ford could benefit from a sale of Volvo, according to Tom Incantalupo of New York Newsday.
That's not quite a denial, notes Gerry Meyers, the former chairman of American Motors Corp told Newsday. "It's a weak response, which means, of course, that they more than likely are [considering selling]."
The Daily Telegraph today reported that Indian carmaker Tata Motors (NYSE: TTM) is in the early states of "evaluating a bid" for Ford's Jaguar and Land Rover units. Tata Sons, the parent group of Tata Motors, is a Indian conglomerate that recently acquired the British steel company Corus for 6.7 billion pounds. The company owns various businesses from retail and chemicals to IT outsourcing and tea.
The deal, if accepted, would create one of India's largest overseas takeover deals. One person familiar with the situation said that Tata Motors had recently signed a confidentiality agreement with Ford in the recent days. Analysts believe a sale of both units could fetch around $1.5 billion. Tata Motors dismissed the allegations, saying the group did "not comment on speculation about mergers and acquisitions."
Regardless of who buys Ford's units, the company needs to find some cash, and soon. With gas prices on the rise and sales falling 8.2% alone in the month of June, it looks like Ford might have to just give away their big-box vehicles before the year is over.
That's not quite a denial, notes Gerry Meyers, the former chairman of American Motors Corp told Newsday. "It's a weak response, which means, of course, that they more than likely are [considering selling]."
The Daily Telegraph today reported that Indian carmaker Tata Motors (NYSE: TTM) is in the early states of "evaluating a bid" for Ford's Jaguar and Land Rover units. Tata Sons, the parent group of Tata Motors, is a Indian conglomerate that recently acquired the British steel company Corus for 6.7 billion pounds. The company owns various businesses from retail and chemicals to IT outsourcing and tea.
The deal, if accepted, would create one of India's largest overseas takeover deals. One person familiar with the situation said that Tata Motors had recently signed a confidentiality agreement with Ford in the recent days. Analysts believe a sale of both units could fetch around $1.5 billion. Tata Motors dismissed the allegations, saying the group did "not comment on speculation about mergers and acquisitions."
Regardless of who buys Ford's units, the company needs to find some cash, and soon. With gas prices on the rise and sales falling 8.2% alone in the month of June, it looks like Ford might have to just give away their big-box vehicles before the year is over.
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Reader Comments (Page 1 of 1)
7-18-2007 @ 7:07PM
William Martin said...
I really don't understand the Big 3 auto makers. I hate what has happened over the years but they have brought it all on themselves and we all know it if we admit it. I remember if you were an auto worker in the 50's and 60's and worked 20 years you could retire with full benefits paid and over $600 a month for life with cost of living adjustments added each year. If each car made by Ford costs $1500 for worker benefits added to the price then I can see how they have "shot" themselves in the foot so to speak along with not improving the gas mileage of their cars to an acceptable level. No wonder the foreign cars do well.
7-18-2007 @ 11:08PM
Barry W. Sellmeyer said...
Henry Ford had the right that still applies to today's Market. Remember what the Common Man /Woman needs are in a Automobile. The new Focus and Taurus and escape and the Hybred version proves Detroit is trying to change course but it takes time. The new boss at Ford gets it Mike Rowe is the perfect pitch man for the new Ford. American made is not junk as the Japanese have most americans to believe. I have own one foriegn car a 544 Volvo and it was good car. I drove service Vans for over 35 years to perform my trade and had good luck with all 3 American auto makers products. I must say Ford was the most reliable With Chev and Dodge a very close second. Most had over 150,000 hard miles on them. I will alway try and buy American but what the Hell I was raised by a WWII Veteran who Loved his country more than Wallet. B.W. Sellmeyer
7-19-2007 @ 1:13PM
Gloria said...
How strange that everytime the industry seems to be failing they somehow find the money to build mfg plants abroad. Could it be that the wonderful tax incentives allowed by our govt makes it feasible to close down in the USA and mfg elsewhere? So, too, I remember reading many years ago that Volvo was producing a vehicle that gave 60 to 80 mph; but, was not permitted to sell it in the USA. Great lobbying by the oil companies presumable. Yes, Ford makes a great product. I was getting ready to buy a new car from Ford in 2008 only to find that the model I drive is being discontinued....and this after its being one of the most popular cars and best in its class. Oh, well.
7-20-2007 @ 11:05PM
Sandra Gilbert said...
America is giving up on America!
What a dismal shame it is to read the newspapers, listen to the newscasters, and get on line and read the blogging sections. In all cases, I see why the "second language" in America is spanish, while all the other countries in the world have their OWN language. One does not have to dial up on the phone anywhere else and be told whether you wish to speak another language other than the country you are in. Now we have foreign cars all over the place and we purchase them without a moment's thought, knocking our own "WORKERS" out the door - Ford, GM, and Chrysler are all on the back-burner while the foreign car makers are building larger and larger cars -and no one gives a moment's thought about this! What are we doing to ourselves America? We are going down the tubes FAST! When we wake up, there will not be an America - just foreigners and poor people!
7-26-2007 @ 5:17PM
Phil Lomax said...
Ford has a boycott going against them which they seem to ignore. Why?