Strikes cost Hyundai 2,000 vehicles

Strikes last week cost Hyundai Motor Co. an estimated 30 billion won ($28 million at recent exchange rates) and 2,000 vehicles.

Affiliate Kia Motors Corp. lost an estimated $11 million and 900 units.

Separate unions at the automakers took part in strikes against the South Korean government's deal to resume imports of American beef.

More strikes appear to be planned. Union workers at Hyundai plan to stop work for another four hours on both the day and night shifts on Thursday over a wage deal, the union said on Monday.

The strikes have been organized by a larger group called the Korean Confederation of Trade Unions. Hyundai and Kia unions are members.

The union at Hyundai struck for two shifts Wednesday, July 2, and Thursday, July 3, for a total of six hours, including overtime. The union at Kia struck for a total of four hours.

Unions at GM Daewoo Auto & Technology Co. and Ssangyong Motor Co. did not strike, and no more beef-related strikes have been announced.

But larger strikes could be on the way as all four companies have ongoing contract negotiations with unions. The talks are expected to continue well into July and perhaps into August.

Korean unions, especially the one at Hyundai, typically strike every year during contract negotiations. Last year, the union at Hyundai finished negotiations without striking. But the union joined the more aggressive Korean Federation after last year's talks. While there have been signs rank-and-file members want a more moderate stance from their union, the influence of the powerful Korean Federation could prove to be stronger on union leaders

Fiat, BMW plan small-car alliance

Fiat and BMW will cooperate to develop a new platform for small cars, supplier sources said.

The platform will underpin the next Fiat Grande Punto and BMW's third-generation Mini. Both cars are due early in the next decade.

The two companies are also considering developing a new family of gasoline and diesel engines, sources told Automotive News Europe.

Fiat Group CEO Sergio Marchionne said today that the carmaker will announce a cooperation agreement with another automaker tomorrow.

"Most likely it will be in the car business," Marchionne said on the sidelines of the press introduction of the 500 Abarth model here.

Marchionne did not give any more details on the cooperation.

But supplier sources familiar with the matter told ANE that Fiat and BMW will cooperate on a new small-car platform.

Fiat already has industrial alliances with other carmakers including PSA/Peugeot-Citroen, Suzuki and Tata.

BMW cooperates in Europe with PSA on engine production and the company has a joint venture in China with Brilliance.

Automakers increasingly are cooperating with competitors to reduce investments costs for new models.

China's Chery could bid for Volvo

China's Chery auto group is considering a bid to buy Swedish-based Volvo from Ford Motor, state media said today.

The Caijing business magazine quoted sources as saying that Chery has not yet reached any agreement or applied for permission from the government of Anhui, the company's home province.

It said Jin Yibo, an assistant to Chery's chief executive, had ruled out the possibility of buying Volvo, but other sources told the magazine that Chery had already contacted banks and private equity firms about financial backing for a possible acquisition.

Industry insiders estimated that Volvo could cost Chery more than 30 billion yuan (4.4 billion dollars), it said.

Chery produces several lines of passenger cars, mostly cheap compact models, and plans a share offer in Shanghai next year, Caijing said.

Earlier rumors reported in state media had linked the Shanghai Automotive Industry Corporation to a possible takeover of Volvo.

GM mulls job cuts, sale of brands

General Motors could shed thousands of white-collar jobs and sell or cease producing certain brands as part of a strategy reevaluation, said the Wall Street Journal, citing people familiar with the matter.

The job cuts are expected to be approved at a meeting of the GM board in early August. The management may also suggest options for raising additional cash to help GM make it through the downturn, and may discuss cutting certain brands, the sources said.

A company spokesman declined to comment on either the job or brand cuts, said the report.

GM sells under eight different brands, but most, including Buick, Saturn and Saab, struggle to attract buyers. The company has already decided to put its Hummer division up for sale.

On the job cuts, GM employs 76,000 white-collar workers globally, with the bulk of the force based in North America, said the report.

McLaren SLR Speedster

It looks like Mercedes-McLaren have big plans for its SLR farewell party! With the Mercedes supercar coming to the end of its production life, the German manufacturer has no plans to send the thoroughbred off quietly. Speculation has been growing about a final special edition speedster version of the SLR 722 - and it looks like the rumours were true. Despite the confusing disguise these exclusive spy shots, taken somewhere in the heart of Germany reveal Mercedes and McLaren have one last trick up its sleeve and it appears to be quite a special one.

We can also reveal that 75 examples of the final SLR will be produced and can confirm it will be light-weight speedster versions of the purebred supercar. The limited edition car will pay homage to the silver 300 SLR driven by Stirling Moss in the mid fifties and will have no roof and only a small wind screen in place of the car’s windshield.

Further deletion of the air conditioning system and power windows plus the use of composite materials in the body panels will shave about 440 pounds off the SLR’s kerb weight. The end result will be a car that can accelerate from 0-186 mph in just 26 seconds, on its way to a blistering top speed of about 217 mph, 8 mph faster than any previous SLR.

Sources can also reveal the limited edition SLR is expected to retail from about 450,000 euros if you can manage to get one.

Mercedes-Benz will end McLaren collaboration

Mercedes-Benz will end its partnership with British sports car manufacturer McLaren when its current agreement expires next year.

The German automaker and the British sports car manufacturer built the SLR premium roadster together.

"The partnership ends in 2009 and it will not be renewed," a Mercedes spokesman said.

Media reports say a new flagship premium roadster called the SLC will replace the SLR in 2010. It will be built by Mercedes' in-house performance unit AMG at the automaker's Sindelfingen plant, near Stuttgart, Germany.

Colin Couchman, a London-based auto analyst for Global Insight said that the German automaker needs this "halo" model to emphasize its reputation for engineering excellence.

"The Mercedes ethos has always been to be at the forefront of technology. In the past few years, the company has been distracted by other areas of its business while neglecting the top end of its lineup. They want to make up for lost time," Couchman said.

Couchman said the SLR's high price limited sales. The car starts at 452,200 euros in Germany. Mercedes has sold 1,577 SLRs worldwide since the car's launch in 2003, according to Global Insight.

The car has also suffered from technical problems. The SLR was one of the models affected in a recall of 680,000 Mercedes cars in 2004, after the electronic braking system failed on some vehicles.

In 2006, Mercedes-Benz USA recalled 433 SLRs that had developed overheating problems.

Merrill Lynch downgrades GM

General Motors will need to raise about $15 billion in cash to shore up liquidity and bankruptcy is "not impossible" if the U.S. auto market continues to slump, Merrill Lynch said on Wednesday.

Merrill Lynch analyst John Murphy said in a research note he cut GM to "underperform" from "buy" and lowered his price target for the largest U.S. automaker to $7.

GM shares fell Wednesday to as low as 10.80 on the report. As of 10:50 a.m. EDT, shares of GM were trading at 11.04, down 71 cents, or 6.0 percent.

The downgrade comes one day after GM said that June sales fell 18.5 percent from the same month a year ago. Despite the decline, GM shares closed up on Tuesday. Investors and analysts expected worse, with some predicting Toyota would pass GM in sales for the month.

For the first half of 2008, GM's U.S. sales totaled 1,604,942, down 16.5 percent from last year's 1,922,762.

Murphy also lowered his forecast for 2008 U.S. industry-wide light vehicle sales for the third time this year and said the recent drastic decline in sales would likely to continue through 2009.

He expects 14.3 million U.S. auto sales this year and 14 million units for next year. That compares with 16.15 million units in 2007.

Although analysts have said GM will need to raise capital to cover continued losses before 2010, $15 billion is a higher estimate than any other analysts have suggested.

"The recent extreme deterioration in volume and mix is driving much higher cash burn and eroding GM's cash position," Murphy said. "We believe $15 billion is necessary because there is downside risk to our current estimates and a greater cushion is essential."

Murphy said a decline of 1 million vehicles in annual U.S. auto sales equates to about $3 billion in cash burn.

Any capital GM raises has the potential to dilute equity if it's done through convertible offering, one of the possibilities for the automaker.

Volkswagen Polo

VW supermini set to get a lot more stylish thanks to Scirocco inspired design.

The Polo is getting a ‘fresher’ flavour! VW’s fifth-generation supermini will go on sale next year with a more upmarket look – and a front end which has been given ‘the Scirocco treatment’.

The car’s nose reflects the styling of VW’s sleek coupé – and inside, there is a classier cabin. A range of new engines includes hi-tech, low-emission diesels and super-turbo petrol powerplants.

As you can see from our pictures, produced using insider information, the Polo draws on the next Golf and Scirocco, dropping the large chrome grille seen on recent VWs for a simpler design with twin horizontal air intakes and angled headlights. It’s a cleaner look all-round, with uncluttered flanks, neat tail-lamps and a purposeful stance.

Under the skin, the Polo gets the new PQ25 small car platform – first used by the latest SEAT Ibiza. This means a bigger cabin, even though the dimensions are similar to the current model’s.

Quality will improve, as VW bids to address criticism over falling standards. It promises the Polo will be the best-built car in its class, with a Scirocco-style dash and soft-touch materials.

The generous kit tally will include an MP3 player input and Bluetooth connectivity on most models. Plus, the Polo could get the same sat-nav docking port as the Ibiza – this allows portable, hand-held units to be plugged into the dash.

While the car is unlikely to match the likes of Ford’s next Fiesta for driver fun, the steering will be improved and the ride made more compliant. Engine highlights will include 1.4 and 1.6-litre FSI direct-injection petrol units, plus new TDI turbodiesels.

The Polo will also make use of VW’s 1.4-litre supercharged and turbocharged TSI motor, available in a 138bhp ‘warm hatch’ and a 168bhp GTI variant. There will be a new Bluemotion model, too – this promises to emit less than 100g/km of CO2 and return 75mpg economy.

The firm’s seven-speed DSG twin-clutch box should appear as an option throughout the range. As well as three and five-doors, there will be a coupé-cabrio, inspired by the Karmann-built drop-top seen at 2007’s Frankfurt Motor Show.

In addition, buyers get the option of a four-wheel-drive SUV variant to replace the Dune – as we revealed in Issue 1,018 – and a compact MPV. These models won’t appear until at least 2010, while the hatch arrives next year, starting from around £9,000.

In a related story, VW has revealed more about its future by unveiling its first-ever plug-in hybrid. The Golf-based Twin Drive can run for up to 30 miles solely on battery power thanks to an 82bhp electric motor. When it runs out of energy, a 122bhp 2.0-litre turbodiesel takes over.

It gets stop-start technology, regenerative braking and hits a top speed of about 75mph. Energy comes from lithium-ion batteries that can be plugged into a household socket.

While there are currently no plans to put the Twin Drive into production, some of its features are set to debut on VW models within the next two years.

Ford's talks with Renault to sell Volvo

Ford Motor has had exploratory talks with French automaker Renault to sell Volvo, but the initial talks broke down due to price differences, sources familiar with the matter told Reuters.

The two parties have spoken again after their initial discussions, which were held last fall, the sources said.

Ford has also had talks with China's third-largest automaker, Dongfeng Motor Group, as a potential partner for Volvo, one of the sources said.

Ford spokesman Mark Truby declined to comment directly on the report, but said: "We announced earlier this year that Volvo is not for sale and that we are focused on improving Volvo's business results."

Automotive shares down as raw-material prices surge

Shares were lower in mid-afternoon trade as surging raw materials prices put pressure on automotive and other transport-related stocks.

Automotive stocks were particularly hit by news that oil prices reached a record high last Friday and a prerelease of auto motor und sport magazine which quoted ArcelorMittal's vice president for Automotives Jean-Luc Maurange as saying the company plans to charge higher prices to carmakers due to surging raw materials costs.

Daimler was off 0.99, or 2.48 percent, at 38.89 while BMW was down 0.15, or 0.50 percent, at 30.04.

Another factor contributing to weaker car stocks was Lehman Brothers' removal of Peugeot and Daimler from its Recommended Portfolio List, according to traders.

The only car stock on positive terrain so far was Volkswagen, up 0.86, or 0.48 percent, at 179.92. VW's management board is set to decide July 8 on the site of its new 500 million euro production site in the United States, auto motor und sport reported, citing management sources.