Japan’s major vehicle manufacturers have been forced to stop production in Thailand as floods continue to wreak havoc on the region.

Japan Automobile Manufacturer’s Association chairman Toshiyuki Shiga confirmed all nine Japanese carmakers with plants in Thailand had been forced to stop production this past week. Mr Shiga said Honda, Mazda, Mitsubishi, Nissan and Toyota were among the worst affected by the floods. “As a whole, production of 6000 units has been affected on a daily basis,” he said. “Of the nine companies which have halted plants, eight have done so because they could not procure parts sufficiently.”

Honda suspended production at its HATC Ayutthaya plant between October 4 and 8 because of parts supply disruptions, and reclosed the factory on October 10 as the floodwaters reached the plant property. At this stage, it remains unclear how long each carmaker’s production facilities will remain out of action. Mr Shiga, also the CEO of Nissan, said a number of manufacturers were weighing up shifting production and sourcing parts from factories in Japan or other countries while the floods continued.

Thailand acts as a second manufacturing home for a number of Japanese carmakers. In 2010, 1.6 million Japanese-brand vehicles were produced in the southeast Asian country.

The fragile recovery of the local vehicle sector is under threat and the industry may be due for another slowdown, said the National Association of Automotive Manufacturers SA (Naamsa), which released a report on the industry for the second quarter on Monday.

The industry has amazed market participants with average sales growth levels of about 20% month-on-month in the first half of the year.

“Statistically, the industry appears to be doing well,” said Naamsa director Nico Vermeulen. “However, the numbers we saw in the first half were compared to the extremely depressed conditions we had last year and pent-up demand in the market.”

He added that compared to the second half of 2009, the second quarter of 2010 has seen undeniable improvement. However, there has been a significant slowdown since the first three months of the year, raising the possibility of a small double dip in the sector’s growth.

Vermeulen listed a number of risks to the automotive sector. These include the introduction of carbon emmission tax on light commercial vehicles and small bakkies.

Details of the tax have not been finalised, but industry experts have estimated that the retail price of these vehicles will increase by about 2%.

Another risk is collective wage bargaining currently taking place between the National Union of Metalworkers of South Africa (Numsa) and the Automobile Employer Organisation. Numsa is asking for a 20% wage increase.

Vermeulen said that unless a resolution is reached soon, strikes will take place and these could result in product shortages.

Uncertainty about the global economic recovery is also adding pressure to the industry, in particular export security. Naamsa has forecast a 30% export hike for this year compared to 2009, provided there is no deterioration of economic conditions.

The biggest positive emerging for the automotive industry at the half-year mark is the encouraging creation of jobs.

Vehicle manufacturers, including truck and bus makers, created 427 jobs in the sector during April, May and June which brings the number of jobs in the sector to 31 784 – an improvement of 5.4% from the end of 2009.

This compares to the worsening job situation in the South African economy as a whole during the second quarter of this year.

“We are one of the few sectors currently creating employment in South Africa,” said Vermeulen. He added he was cautiously optimistic that this level of job creation could be maintained or even improved going forward.

This is partly because the industry is expected to almost double its capital expenditure projects next year to R4.6bn – the majority of which will be spent on increasing local production facilities.

The reason why automotive manufacturers are embarking on a capex drive is due to investment incentives in the Automotive Investment Scheme, which is part of the impending industrial policy for the sector, the Automotive Production and Development Programme.

via FIN24

General Motors Co. has inked a deal to sell its premium off-road brand, Hummer, to a Chinese industrial company.

GM said last Friday that it has a definitive agreement with Sichuan Tengzhong Heavy Industrial Machinery Co. for 80 percent of Hummer. A private investor would buy the remaining stake.

Under the terms of the deal, GM would continue to build the H3 and the H3T until June 2011 on a contract basis. GM would assemble the H2 for the Chinese owners for that time period as well. The deals have an option to be extended until June 2012.

Financial terms were not disclosed, but GM would reportedly get US$150 million. It’s still subject to closing conditions and regulatory approvals.

James Taylor, the CEO of Hummer, will stay on and lead the company under its new ownership. He previously was the Cadillac general manager and oversaw that brand’s revival.

“Hummer is a strong global niche brand, and this agreement signifies another important milestone in writing the next chapter for both GM and Hummer,” GM CEO Fritz Henderson said in a statement. “For Hummer, the combination of its knowledgeable leadership team, vehicle-design expertise and the capital financing of Tengzhong portend a successful future.”

The deal could secure about 3 000 jobs in the United States, and Tengzhong would get access to the Hummer dealer network.

Hummer said it plans to add FlexFuel capability to the 2010 H3 and H3T and will sell a diesel H3 outside of North America. The brand also is looking at more options for fuel efficiency, including alternative powertrains and six-speed transmissions.

The agreement is another milestone for GM as it restructures in the wake of its historic bankruptcy. The automaker is shuttering Pontiac and Saturn and trying to sell Opel and Saab. That leaves GM with four core U.S. brands: Chevrolet, Cadillac, Buick and GMC.

Via AutoWeek