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Market News

 January 13, 2009
On the Road to Green

 Globe-Net - Today’s Globe and Mail reports that the ’Big Three’ U.S. automakers are going electric in a battle to survive the worst crisis the industry has faced since the Great Depression. Chrysler and General Motors, both of whom are still operating due to massive government bailouts from both sides of the border, are looking to electric powered vehicles as the way of the future.

Ford, which has not drawn down on any emergency cash infusions - at least for the moment - has announced a partnership with Aurora, Ontario -based Magna International to introduce a zero-emission lithium-ion battery electric vehicle (BEV) to be delivered to market in 2011.

Ford announced the vehicle at this year’s North American International Auto Show in Detroit as a key vehicle in its electrification strategy. It will be a small car with an expected range of up to 100 miles without using a drop of gasoline and without compromising customer performance expectations.

Company Chairman Bill Ford Jr. said is not a test program," during a news conference. "It is aimed at making Ford the leader in sustainable transportation."

He told several thousand journalists at the Auto Show in Detroit that his company plans to introduce a battery electric commercial van in 2010 and a new generation of hybrid models, including plug-in versions in 2012.  "Ford is heading in the direction America and our customers want us to go, which is green, high-tech," he said. "I think that is where society would like to see the entire industry go and Ford is going to lead that charge."

While the Big three Detroit-based carmakers dominated this years Auto Show, several foreign-based manufactures were present and drew considerable attention with their plans for future fuel-efficient models.

Volkswagen, in addition to conventional gasoline-powered vehicles, plans to build hybrid and diesel versions of a future successor to the Jetta sedan, an unnamed midsize sedan and two other vehicles under development, said Stefan Jacoby, president and chief executive of Volkswagen Group of America.

Toyota Motor Corp. is looking to keep the Prius in its spot as the top-selling hybrid in the U.S. The highly anticipated 2010 Prius unveiled Monday at the Auto Show gets an average of 50 miles to the gallon, a 4 mpg improvement over the current model, which already is the most fuel-efficient vehicle ranked by the Environmental Protection Agency.

Non- American carmakers claimed a 51.3% stake in the U.S. market according to the latest figures.

General Motors, Ford and Chrysler have collectively lost ground to their overseas rivals every year since 1996. But with less than half of dealership sales in their home market, analysts argue the industry has reached a tipping point in shifting consumer loyalties.

"My feeling is there’s been a change," said Richard Cooper, vice-president of J. D. Power and Associates’ Canadian operations. "Not so much ’Why should I go back to GM?’ for example. But I think a little bit more ’Why shouldn’t I consider Toyota, Honda, Mazda, and Volkswagen?’ In Canada, we’re a little bit further down that curve" than the United States, he added.

The Ford - Magna partnership is indicative of the type of relationships between auto makers and their key parts suppliers that will be crucial over the next decade as car companies rush to meet new more stringent fuel economy standards by 2020 at an estimated industry-wide cost of more than $100-billion (U.S.).

The implications for the people who design, build and sell automobiles will be profound. The need to design vehicles that achieve better fuel efficiency, lower emissions and which can accommodate varying fuel alternatives, as well as changes in consumer demand, legislative requirements and new technology breakthroughs will all impact on a sector that has been dominated by the internal combustion engine for over 100 years.

The industries that will be most affected will be automakers and their traditional suppliers, electronic and semiconductor companies, electric utilities, and gas and oil producers.

"The automotive industry is at a tipping point in terms of implementing super fuel-efficient and clean technologies," said Mary Ann Wright, Chief Executive Officer, Johnson Controls-Saft Advanced Power Solutions LLC., at the 2008 Auto FutureTech event in Vancouver, which was part of GLOBE 2008.

The Road to Green will not be an easy journey and there will be potholes and bumps along the way," said John Wiebe, President and CEO of the GLOBE Foundation of Canada. "But there is no other alternative for the key players in the auto sector. They must go green or get off the road altogether."

For More Information: Globe and Mail
Source 2: Magna International