MOTORSNEWS THE SUB-AUTOMOTIVE INDUSTRY:The global sales slump has spelt trouble for independent car building firms like Karmann. SHANE O'DONOGHUEconsiders the future of the contractors
ON APRIL 8th, Karmann filed for bankruptcy protection, citing a sharp decline in demand for its lack of orders and inability to continue. Although the news sent a ripple of dread through the industry, the average consumer could be forgiven for sighing and moving onto the next piece of bad news.
The announcement should remind some of the VW Karmann Ghia, produced from 1955 to 1974. A staggering 527,680 were manufactured – most for the US – so it’s no wonder the name is associated with this car. However, Karmann has produced upwards of three million cars, including such notables as BMW’s 635, the Ford Escort RS Cosworth, several Porsches and versions of the Golf, Scirocco and Beetle for VW.
In recent years, Karmann focused its efforts on the design and manufacture of roof mechanisms, including the folding hard tops of the Renault Mégane CC and Nissan Micra C+C. Karmann is also responsible for the engineering and construction of the Mercedes-Benz CLK cabriolet. Nonetheless, the production line for this model is due to grind to a halt in May, and with it a company that survived more than 100 years.
Karmann is not the only business of its type in Europe, nor is it the only one suffering – Edscha AG, Karmann’s direct German rival in the convertible roof market, went bankrupt in February, despite a seemingly full order book that included the roof for new Audi A3 cabriolet.
In France, the equivalent company is Heuliez. In business since 1920, Heuliez specialised in low-volume production runs, mainly for Peugeot and Citroën, with several estate versions of regular cars under its belt. In recent years, Heuliez also concentrated on engineering and producing folding hardtops, churning out about 350,000 examples of the Peugeot 206 CC.
The Opel Tigra is also produced by Heuliez, although demand is dwindling and the likelihood of a replacement non-existent. Heuliez’s dependence on this contract was illustrated by its request for protection from creditors in October 2007. Since then, Indian firm Argentum Motors has had to pull out of a deal in which it was to take a 60 per cent stake in Heuliez, leaving the company in financial limbo, with only the outside possibility of producing electric cars on the horizon.
It’s acknowledged that the establishment is in trouble. Some of the biggest car companies in the world are on the brink of collapse, yet there’s a need for innovative new products.
With such a dramatic shakeup permeating the industry comes an opportunity for new companies to become fast-rising stars with high-quality products. Tesla and Fisker are two examples of start-ups that have ambitious plans for electric and hybrid models. This could potentially be the saviour of such companies as Heuliez.
In Finland, Valmet has produced cars since 1968, mostly for Saab, yet it is currently reliant on a contract with Porsche to produce all versions of the Boxster and Cayman. Over 200,000 Porsche units have been built since 1997, although the contract will end in 2012. Valmet has signed an agreement with Fisker to produce its advanced hybrid model, the Karma, from 2010, although there are doubts that the technology will be fully developed by then.
Magna Steyr, a relative newcomer to the business in Austria, will take over Boxster and Cayman construction. Since 2001, Magna has carved out a lucrative niche – a clever production line with the flexibility to make several different cars at once.
Currently, the Austrian company produces all versions of BMW’s X3, along with the Jeep Commander and Grand Cherokee and Chrysler’s 300C saloon. However, the order book is healthier than most, with the new BMW X1 and Mini Crossover twins due to be produced by Magna, alongside Peugeot’s 308 RC Z coupé, the Aston Martin Rapide and the aforementioned Porsche twins.
Despite such a promising future, Magna is not resting on its laurels. It is developing electric and hybrid capabilities, tying up with Ford on its 2011 Focus-based electric car and revealing its own electric vehicle concept at this year’s Geneva Motor Show. The Magna Steyr Mila EV exhibited the company’s ability to provide car makers with a turn-key electric vehicle platform, while it’s also known that Magna is getting involved with battery technology.
Diversification is the key; companies all need to adapt to survive. In Italy, for instance, Pininfarina is no longer just a design house and coachbuilder. From the heady days of designing everything from most of Ferrari’s road cars to Austins, Peugeots and even Daewoos, Pininfarina is now struggling to make ends meet. It is still responsible for some truly inspiring designs (see panel), but it also produces cars for the manufacturers – notably the Alfa Romeo Brera and Spider, Volvo’s C70, the Ford Focus coupé-cabriolet and Mitsubishi’s Colt CZC folding hard-top.
Pininfarina’s compatriot, Bertone, has just as illustrious a design past, prolifically penning cars for the big car producers since the early 1950s, yet there has been a distinct slowdown in the number of vehicles designed by either of these companies and both have publicly declared their financial woes.
There were hopes for gaining new business from the emerging automotive industry in China, but the Chinese soon worked out that it’s cheaper to hire designers than to farm out projects to another company.
That same logic is being applied to vehicle engineering and production. As the market contracts, car makers are lumbered with the potential for oversupply in their own production facilities. So it’s understandable that they’ll require the services of external production facilities less and less. Karmann didn’t react quickly enough to this change in the marketplace, but the remaining companies still have the opportunity to adapt. Do or die, as they say.