WCA September 2014

From the Americas

Jeep Grand Cherokee and Wrangler will be the first FCA products offered in India. The company is looking for 15 to 20 dealers in India’s major cities as it puts together a dealer network. Eventually, FCA wants to produce Jeeps in India. The company is in a joint venture with Tata Motors near Pune, and Mr Manley said there is enough excess production capacity at the factory there to begin building some Jeeps. “If you are going to be successful with Jeep you are going to have to localise vehicle production in India,” he told Mr Snavely.  Jeep sold 731,565 SUVs globally in 2013, and Mr Manley said it is on track to sell more than a million this year. But the Jeep chief, while confident, is also realistic about India’s intensely competitive marketplace. “In recent years a huge number of global original equipment manufacturers have increased their production,” Mr Manley told the Free Press . “We see pricing as being very difficult.”  Doing well by doing good? Tesla invites rival electric car makers to make free of its technology. Tesla Motors (Palo Alto, California) said on 12 th June that it was lifting the lid on its trade secrets in an attempt by CEO Elon Musk to bring down costs in the electric car industry and open business opportunities. Tesla, which has enjoyed considerable success with its luxury electric vehicles, pledged itself not to initiate any patent lawsuits against competitors. Mr Musk has repeatedly asserted that his primary goal of more widespread electric car usage is more important to him than Tesla’s ultimate success. But the creation of a larger market for electric cars would also probably have the incidental effect of dropping the cost of his company’s charging-station infrastructure. Industry experts have tied Tesla’s long-term future to the manufacture of a low-priced, mass-market model, and Mr Musk has promised an electric car costing less than $35,000 within the next three years. Because meeting that target would require a sharp reduction in battery costs, Tesla will build a larger-scale battery operation. Initial capacity of the plant is to be 500,000 batteries a year – far in excess of Tesla’s current needs. Presumably other electric car makers, using technology from Tesla, might choose to supply their battery needs from that source. Tesla has worked with other car makers in the past, helping them develop electric cars, and has supplied batteries to Japan’s Toyota and Daimler, the German owner of Mercedes-Benz. Both are shareholders in Mr Musk’s company. Elsewhere in automotive . . .  Daimler and Renault-Nissan on 27 th June announced a joint venture to produce a new generation of compact

Mercedes and Infiniti cars in Mexico. The car makers said they would invest about $1.4 billion to build a plant in Aguascalientes, about 300 miles north of Mexico City, where Nissan already has a major production operation. The vehicles produced by the 50-50 partnership are to carry different brand names but share many components. The project reflects a trend for car companies to share the costs of developing and producing new models while maintaining separate brand identities. Mercedes and Renault-Nissan, the French-Japanese alliance, already make four-cylinder engines together at a factory in Decherd, Tennessee. But the chief executives of the two companies made it plain that there are no plans for a merger. In Stuttgart, the home of Daimler, memories endure of the company’s disastrous acquisition in 1998 of the US car maker Chrysler and the decade of disintegration that ensued. China is giving way to Mexico as American companies in greater numbers relocate their labour-intensive factory operations “When you have the wages in China doubling every few years, it changes the whole calculus.” Christopher Wilson, an economics scholar at the Mexico Institute of the Woodrow Wilson International Center for Scholars in Washington, had cited the main reason why Mexico has become the most competitive place to manufacture goods for the North American market. It has also, in his view, become the most cost-competitive place anywhere in the world for some types of manufacturing. In an interview last spring with Damien Cave, a Mexico City-based correspondent for the New York Times , Mr Wilson took note of a reversal that until recently was scarcely conceivable. With labour costs rising rapidly in China, American manufacturers of all sizes are looking south to Mexico with what economists see as an eagerness reminiscent of the early years of the North American Free Trade Agreement in the 1990s. (“As Ties With China Unravel, US Companies Head to Mexico,” 31 st May) Wrote Mr Cave: “From border cities like Tijuana to the central plains where new factories are filling farmland, Mexican workers are increasingly in demand.” According to the International Monetary Fund, Foreign direct investment in Mexico hit a record $35 billion in 2013. American trade with Mexico grew by nearly 30 per cent since 2010, to $507 billion annually. Over the past few years, manufactured goods from Mexico have claimed a larger share of the American import market Manufacturing

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Wire & Cable ASIA – September/October 2014