TIME China

Survey: Foreign Companies in China Feel ‘Targeted’

China Monopoly Crackdown Autos
A woman walks past Mercedes-Benz's showroom in Beijing on Aug. 18, 2014 Andy Wong—AP

"Many areas of regulation are overly focused on foreign multinationals"

(BEIJING) — Foreign companies in China feel increasingly targeted for unfair enforcement of anti-monopoly and other laws and might cut investment if conditions fail to improve, a U.S. business group said Tuesday.

The American Chamber of Commerce in China’s report adds to mounting complaints about a flurry of investigations of global automakers, technology suppliers and other companies. It is a reversal forcompanies that welcomed plans unveiled by the ruling Communist Party in late 2013 to open the state-dominated economy to more private competition and adds to pressures at a time of slowing growth and rising competition from local rivals.

Almost half of companies that responded to a survey last week believe they are targeted for “selective and subjective enforcement” of anti-monopoly, food safety and other rules, the chamber said in a report. It said China faces a growing risk it “will permanently lose its luster as a desirable investment destination.”

“Many areas of regulation are overly focused on foreign multinationals,” said the chamber’s chairman, Greg Gilligan.

Out of 164 people who responded to the survey, 60 percent said they felt “less welcome” in China, up sharply from a survey in late 2013 in which 41 percent of 365 respondents expressed the same sentiment.

The ruling party under President Xi Jinping has promised to make China’s economy more productive by opening more industries to private and foreign competition. But at the same time Beijing is trying to create “national champions” in fields from autos to telecoms to aerospace. Business groups say that has led regulators to use a 6-year-old anti-monopoly law and other regulations to shield domestic companies from competition.

The European Union Chamber of Commerce in China also expressed concern last month about the anti-monopoly investigations. It said it received reports companies were pressured by regulators to accept penalties without a full hearing and avoid involving their governments.

Trade officials from the United States, the European Union and Japan say they are watching the investigations but have yet to announce whether they consider them a violation of China’s free-trade commitments.

Industries targeted by regulators include pharmaceuticals, medical devices, high technology and autos, according to Les Ross, the American chamber’s vice chairman. He expressed concern regulators might be “taking down” foreign companies to narrow the gap with Chinese competitors.

Beijing has announced fines totaling $202 million against 12 Japanese auto components suppliers on charges of price-fixing as part of a sweeping investigation of the industry. Officials say Mercedes Benz, Audi and Chrysler also will face punishment. In separate probes, Microsoft and chip maker Qualcomm also are under scrutiny.

Foreign business groups welcomed the anti-monopoly law in 2008 as a step toward clarifying operating conditions. Since then, they have said it is enforced more actively against foreign companies than against local rivals.

Regulators deny they favor domestic companies. They point to actions such as fines last year against two Chinese liquor producers for price-fixing.

“We believe the fairness of the law enforcement will be better reflected as the number of cases increases,” said the director of the anti-monopoly bureau of the Cabinet’s planning agency, Xu Kunlin, in comments Tuesday in the China Daily, an English-language newspaper aimed at foreign readers.

Foreign companies used to have a “sense of cooperation” with regulators but believe that has changed over the past two years, said Kim Woodard, a former vice chairman of the American chamber.

“Now, what’s happening is you have aggressive enforcement actions against selected companies,” said Woodard. “That starts to look like another barrier to market access.”

That period coincides with the time since Xi became Communist Party leader in 2012. But Woodard, Gilligan and Ross said it was unclear how much of the change was driven by ruling party leaders and how much by other forces such as factions that might oppose reform plans.

Beijing also is reducing purchases of goods from foreign-owned companies, said Ross.

The government procurement agency announced in May it would not buy computer equipment that runs Microsoft’s Windows 8 operating system. It gave no explanation, but state media said Beijing wants to develop its own operating system to compete with Windows and with Google Inc.’s Android.

Uncertainty over regulatory conditions adds to challenges for foreign companies at a time when China’sgrowth is slowing and they face competition from ambitious local rivals. Growth of 7.5 percent in the three months ended in June was barely half of 2007’s rate of 14.2 percent.

China is one of the world’s top investment destinations. The government says it receives in excess of $100 billion a year, thought economists say a large share of that is money brought home by Chinesecompanies.

But fewer companies report substantial revenue growth and those reporting slight decreases are “more prevalent,” the chamber’s report said.

“Companies are increasingly cautious about future investments,” it said.

TIME Automakers

Chrysler Recalls Up to 800,000 Jeeps Over Ignition-Switch Problems

A 2005 Jeep Grand Cherokee rolls down the assembly line Wedn
A 2005 Jeep Grand Cherokee rolls down the assembly line Wednesday, Aug. 25, 2004, at Chrysler's Jefferson North Assembly Plant in Detroit, Michigan. John F. Martin—Bloomberg/Getty Images

Older Jeep Grand Cherokees and Jeep Commanders may have a faulty ignition switch

Around 800,000 older Chrysler Jeeps could be affected by a recall due to a problem with the ignition switch, the company said in a statement Tuesday.

The company said it is aware of one reported accident associated with the defect, but no injuries.

The recall will affect a still-undetermined number of model year 2006-2007 Jeep Commanders and 2005-2007 Jeep Grand Cherokees. In vehicles affected by the problem, contact with a driver’s knee or other outside force can move the ignition switch from on to off, causing the engine to stall and cutting power brakes and power steering.

The company said its investigation is ongoing but that around 792,000 vehicles could have faulty switches, including 659,900 in the U.S. and others in Mexico, Canada, and elsewhere. Newer models have been redesigned are unaffected, the company said.

Chrysler’s recalls come as rival automaker General Motors has recalled nearly 28 million automobiles worldwide for similar ignition switch issues. The GM problems have been linked to at least 13 deaths, and the company has faced federal investigation over its handling of the situation.

Chrysler also announced that 21,000 vehicles, including certain 2014 Ram pickups, 2015 Jeep Cherokees and 2015 Chrysler 200 sedans, will be recalled for inspection and, if necessary, have their shocks and struts replaced.

TIME Innovation

Ford President Says Aluminum F-150 Is All Engines Go

Ford

Ford says the truck will ship on time this year, despite analyst concerns that manufacturing plant retooling will impact availability.

Investment firm Morgan Stanley is publicly fretting the truck might be delayed, but Ford says its new lightweight aluminum Ford F-150 pickup is on track and we’ll see it later this year.

“Everything is on schedule and everything is going as planned,” Ford Americas President Joe Hinrichs told reporters, speaking at Ford’s headquarters in Dearborn, Michigan (via Automotive News), adding that he was “very confident in this vehicle.” Morgan Stanley’s analyst Ravi Shanker had said earlier that Ford’s planned factory retooling, which it has to perform in order to produce the new pickup, would result in “slow changeover, with tight supply.”

Ford has noted the planned retooling would temporarily deplete its production by over 90,000 F-Series pickups, reducing company sales and profits. Furthermore, margins are expected to be lower on the new aluminum-bodied F-150. But Ford views all of that as necessary back-stepping to be first to market with a truck that uses a combination of “military-grade aluminum and high-strength steel,” and that’ll weigh roughly 700 pounds less than the version it’s replacing.

Note that Shanker doesn’t say the launch itself is in danger of being delayed, only that supply is going to be very tight in 2014 given manufacturing constraints. If supply is at a trickle, that could mean higher demand-driven dealer pricing, of course, culminating in a scenario where the truck’s debut looks more like a paper launch, and buyers wind up having to wait to lay hands on one until supply catches up.

TIME Automakers

GM Recalls Another 2.7 Million Vehicles

The car giant is recalling about 2.7 million vehicles in the U.S. for issues like a hydraulic brake booster problem, hoping to raise flags early this time, amid a federal investigation into why it waited more than a decade to recall vehicles with a deadly ignition switch defect

General Motors said Thursday it’s recalling about 2.7 million additional vehicles in the U.S., including more than 140,000 cars suffering from brake problems.

Among GM’s newly-recalled vehicles is the 2014 Chevrolet Malibu, which has a hydraulic brake booster problem that can make stopping the vehicle more difficult. The company said it was aware of four crashes, but no injuries, that may have been related to the brake issue.

The fresh recalls come as GM is already grappling with the recent recall of 2.59 million cars over defective ignition switches. GM faces a federal recall over its decade-long delay to address the ignition switch problem, which has been linked to at least 13 deaths.

“These are examples of our focus to surface issues quickly and promptly take necessary actions in the best interest of our customers,” Jeff Boyer, vice president of GM Global Vehicle Safety, said in a statement regarding the new recalls.

The largest of the recalls announced Thursday involves break lamp wiring corrosion affecting 2.4 million previous generation cars. GM said the defect could result in brake lamp failures as well as disable cruise control, traction control, electronic stability control and panic braking assist operations where applicable.

GM said it was aware of two injuries and 13 crashes as a result of the brake lamp defect as well as several hundred complaints. The recall related to the brake lamps involves the 2004-2012 Chevrolet Malibu, 2004-2007 Chevrolet Malibu Maxx, 2005-2010 Pontiac G6 and 2007-2010 Saturn Aura. The automaker also said it issued a technical service bulletin about the problem in 2008.

In a third recall, GM said that 477 recently built full-size trucks may have defective tie-rods — part of the vehicles’ steering system — that could separate and cause a crash. The company said it has already fixed the problem on the assembly line and is now warning dealers and owners of vehicles that have already been sent to market.

GM said last month it took a $1.3 billion hit after it recalled 7 million vehicles worldwide, including cars with the defective ignition switch. GM said Thursday it expects the latest recalls to cost the company another $200 million.

TIME Companies

Ford Announces Mark Fields As New CEO, Will Replace Alan Mulally

Mulally is credited with turning Ford around after the recession.

Ford Motor Company announced Thursday that Mark Fields will run the company after current CEO Alan Mulally retires this summer.

Fields, who’s been Ford’s Chief Operating Officer since 2012, is a long-time company executive with substantial experience overseeing international markets.

Mulally, who joined Ford from Boeing in 2006, will retire July 1, the company said. Mulally, 68, has overseen 19 consecutive quarters of profits since the recession took its toll on Ford and other automakers.

“Alan deservedly will be long remembered for engineering one of the most successful business turnarounds in history,” Ford Executive Chariman Bill Ford said in a statement. “Under Alan’s leadership, Ford not only survived the global economic crisis, it emerged as one of the world’s strongest auto companies.”

Fields, 53, has been at the company for more than 25 years. He previously led Ford’s operations in the Americas as well as oversaw transformations in Ford’s European operations and of the Japanese-based Mazda Motor Corporation, which was previously partnered with Ford.

TIME Earnings

General Motors Profits Drop 86 Percent After Recalls

The troubled automaker took a $1.3 billion hit after it had to recall 7 million vehicles worldwide, 2.6 million of them because of problems with ignition switches that have been linked to 13 deaths so far

General Motors said Thursday its first quarter profits dropped approximately 86% from the same period last year after a series of massive recalls cost the automaker $1.3 billion.

The company’s profits in the first three months of the year fell to $125 million, compared to $865 million for the first quarter of 2013. This year’s first quarterly earnings report marks the company’s worst showing since it reported a loss after going through bankruptcy in 2009, the New York Times reports.

But the company’s first quarter profits still trounced analyst estimates. Excluding one-time items, GM’s profit was 29 cents a share, well above the Bloomberg estimate of 4 cents a share.

GM has recently recalled 7 million vehicles worldwide, 2.6 million of which because of faulty ignition switches that have been linked to at least 13 deaths. The company was also hit with $300 million in restructuring costs and $419 million because of a valuation change in Venezuelan currency.

TIME Autos

Car Dealers Are Even Happier Than You That Spring Weather Is Here

Car sales ended March on a hot streak, and an even bigger period for automakers and car dealers is upon us.

The year got off to an awful start for the auto industry, with two-plus months of frigid, snow weather resulting in subpar sales tallies that left car dealerships desperate for buyers. Eventually, the buyers didn’t disappoint.

Many of the car purchases that probably would have taken place earlier in the year had Mother Nature cooperated wound up as done deals in March, which started slow but ended up as a strong month for auto sales. According to The Detroit Bureau, Subaru sales in March rose 21% compared to the same month in 2013, while automakers such as Ford, Fiat Chrysler, Toyota, and Nissan posted significant (though smaller) sales gains as well.

Clearly, warmer weather helped the cause. “March sales turned noticeably higher mid-month and finished strong,” Ford executive John Felice said. In an end-of-March report, Jessica Caldwell, an Edmunds.com senior analyst, said, “Car buyers who chose not to brave the cold weather last month found plenty of opportunity this month.”

(MORE: Your City Could Pay for Car Damage Caused by Potholes. But It Probably Won’t)

Mercedes, Bloomberg News reported, sold more cars in March than any other month in the company’s history, thanks to an expanded line of vehicles of high- and lower-priced models.

Substantial incentives and discounts offered by car sellers eager to make up for the underwhelming start of the year certainly boosted sales totals as well. TrueCar noted that the average transaction price for a new car in March was up 1.2% over last year, while the average incentive was up 7.9% compared to March 2013, and up 2.6% compared to February 2014.

Overall, the number of light-vehicle sales in March was up 6% year over year. But according to experts cited by Automotive News, the increase is more impressive than it seems because a disproportionate percentage of the sales took place toward the end of the month, after a fairly sluggish start. The end-of-March sales spurt put the industry on pace to sell 16.4 million vehicles for the entire year. Richard Kwas, an analyst with Wells Fargo, thinks that the untold delayed purchases of early 2014 are likely to result in a flood of new-car buys this spring, perhaps bringing the pace up to 17 million or more cars sold by year’s end. A figure that high hasn’t been seen in the U.S. since before the Great Recession.

(MORE: Only 2 Mid-Size SUVs Get Top Rating in Crash Tests)

“The industry needs to see continued momentum,” Kwas said. “But March represents a good start to the spring selling season.”

TIME Ford

Ford Recalls Nearly 435,000 Cars to Fix Faulty Parts

The car company is making two recalls, covering five models, in order to repair faulty parts. The larger recall was of Ford Escapes, which can rust and lead to steering issues. No injuries were linked to either recall

Ford said Monday it was recalling nearly 435,000 cars and SUVs in total to fix two separate potentially faulty parts, the Associated Press reports.

The larger recall comprises 386,000 Ford Escapes from models years 2001 through 2004, which have frames that can rust and hamper steering control. That recall covers models sold or registered in 20 states and Washington, D.C. as well as six Canadian provinces, where salt used to clear snow and ice from area roads can exacerbate the problem.

The other recall, which applies to 49,000 Ford Fusion, Lincoln MKZ, Ford Escape and C-MAX vehicles from model years 2013 and 2014, will replace seat back frames that weren’t welded properly.

No injuries were linked to either recall, though Ford said it was aware of one crash related to the rusting frames.

Ford’s recall comes as rival automaker General Motors is in the hot seat over allegations it mishandled manufacturing problems that have been linked to at least 13 deaths.

[AP]

TIME

Nissan’s Ugly Little SUV: Now Uglier Than Ever

New Nissan JUKE: Designed to thrill
Nissan—Wieck

What does an automaker do when one of its cars is bashed as hideous? Well, Nissan decided to accentuate the features people hated to make the car stand out even more from the pack.

Introduced in the 2011 model year, the Nissan Juke has quickly ascended to the top of many automotive enthusiast lists. Not in terms of reliability or fuel economy or value—but for sheer ugliness.

Readers at Car Throttle voted the Juke into its “Top 10 Ugliest Cars Ever Made” lists, and a Motor Trend forum gave the Juke the Ugliest Car Award. While not at the very top of Edmunds “100 Ugliest Cars of All Time,” the Juke did get bashed by editors thusly: “It has at least six headlights and fenders that seem tacked on as an afterthought. It’s proudly peculiar and un-pretty.”

Nissan has good reason to embrace the Juke’s peculiarity, however, even if its most unique attributes are considered unattractive by the masses. For all the criticism, the vehicle has been a sales success. The automaker has sold 420,000 Jukes worldwide in less than 40 months, including 135,000 in 2013. Nissan will take those kinds of results over a “pretty” car that’s a sales dud any day.

(MORE: Selling Cars to Millennials: Quirky Models, Flashy Colors Aim to Get Gen Y Out of Neutral)

Now, Nissan is pushing the peculiar angle even further. This week at the Geneva Motor Show, the automaker announced that the Juke, a “design trend-setter” in its own words, will be redesigned in even more “dramatic” fashion. The new model, on sale in Europe this summer (and perhaps soon thereafter in North America, though plans haven’t been released), is even more angular than its “ugly” predecessor, and its rounded front end features odd pointy lights stretching around the hood.

Clearly, the original Juke was polarizing—hated by many, but purchased and described as “cute” by many others—and the new model will be more so. “Great design often is polarizing,” Nissan spokesman Travis Parman told USA TODAY. “Juke is a fun car that allows for more assertive expression—which is exactly what many buyers want.”

Nissan is hardly the only automaker that’s been toying with design described as ugly or, more generously, “polarizing.” The Kia Soul and Honda Element are among the small SUVs launched in the recent past with distinct—some would say homely—exteriors.

(MORE: Will Millennials Change How Cars Are Bought and Sold?)

More recently, Jeep has redesigned one its crossover SUVs and introduced another that have both been subject to unkind attention due to their appearances. Plenty of hate has accompanied the tweaked new grill on the Jeep Cherokee, described by CNN Money in a mostly glowing review as a “strange look, kind of like it got its nose stuck in a print roller.”

The initial reactions to Jeep’s “crazy” little new SUV, the subcompact Renegade, have been all over the map. Many say it got walloped with the ugly stick, while others love its boxy body, garishly bright exterior colors, and most of all that it’s not just another boring, vaguely CR-V-like crossover. “I think it looks pretty cool,” Karl Brauer of Kelley Blue Book said to MLive.com. “It’s going to be a massive success. That small SUV market … is going to be hot in the U.S. and globally. I think the timing on it is very good.”

TIME Autos

With Auto Sales Slumping, Car Dealerships Will Wheel and Deal

Getty Images

After weeks of bad winter weather have turned car sales cold, the forecast calls for automakers to hike rebates and incentives to get the new car market moving again.

Automakers are expecting 2014 to be an exceptionally big year for sales. The analysts at Edmunds.com have forecast that sales of light vehicles will hit 16.4 million this year, up nearly 6% over the 2013 total, which was itself considered a strong performance for the industry.

But 2014 hasn’t gotten off to a good start for automakers and car dealerships. One reason why this is so is that people don’t tend to visit car dealerships—or even leave the house unless it’s 100% necessary—when record-setting cold spells and generally miserable weather are hitting their communities, as was the case in much of January. Despite great expectations for auto sales in 2014 as a whole, it shouldn’t have come as a surprise that car sales fell 3% in the year’s first month, compared to January 2013.

Nonetheless, any sales decline — even one largely blamed on Mother Nature — can be enough to get automakers antsy; by some account, January 2014 was the first month since August 2010 that there was a month-over-month sales decrease. Therefore, it also shouldn’t come as a surprise that automakers and dealerships are going to aggressively try to rebound from the January slump with strong sales increases in the months that follow.

(MORE: The Auto Industry’s Hard Sell to Convince Your Kids They Need to Buy Cars)

They’ll do so, analysts say, by resorting to big incentives and discounts, which are likely to inspire their competitors to do the same. Incentive wars, with each automaker trying to one-up the others in order to snag sales, could be a reality very soon.

The Detroit Bureau quoted Eric Lyman, vice president of Editorial and Consulting for ALG, formerly known as the Automotive Leasing Guide, who said, “Rising inventory levels combined with several more waves of bad weather will result in a short-term spike in incentives.” With dealership lots growing crowded with unsold vehicles, Lyman said he expected cash-back rebates and other incentives to jump in the neighborhood of 15% to 20%.

Whether or not incentives are hiked significantly depends largely on how difficult it is for dealerships to get consumers to buy now. Karl Brauer, senior director of insights for Kelley Blue Book, told The Detroit Bureau that there is a “very real possibility of an incentives war if sales don’t pick up in the coming weeks.”

According to Benzinga.com, Brauer explained, “If one automaker starts an incentives war several more will almost certainly join in.”

(MORE: New Cars Perform a U-Turn on Reliability, Survey Says)

Bigger incentives are likely to pop up for a wide range of auto brands, but especially with automakers that struggled mightily in January—such as Toyota, which experienced a 27% sales dip in the month. Likewise, speaking via Reuters, Joseph Spak , an auto analyst for RBC Capital Markets, said, “Toyota may have to revise current (production) schedules and/or utilize still higher incentives.”

Your browser, Internet Explorer 8 or below, is out of date. It has known security flaws and may not display all features of this and other websites.

Learn how to update your browser