911: Porsche launches new model

As the global auto industry faces some of the harshest conditions it has in decades, one question has surfaced again and again: Can developing markets fill the void left by the collapse of spending on cars in the United States and Western Europe?

In Egypt, many analysts are predicting an end to the car market’s recent boom years — it has grown by about 20 percent per year since customs were lowered in 2004. But even a market with no growth is more appealing than one in which sales are declining, and so many companies have stepped up their campaigns in countries such as India and China.

Porsche, for one, is betting that Egypt will help them pick up at least some of the slack. Last week, the German luxury brand introduced the 911 Carrera 4, a flashy new model with an even flashier price tag, in Cairo.

The company presented the car at a press conference complete with instructional videos, dramatic musical buildups and a ceremonial unveiling.

The new Carrera has been applauded by many car critics recently, partially for better fuel efficiency, more power, and new features including a flat-six engine, direct fuel injection and its Doppelkupplunsgetriebe – “double-clutch gearbox.”

According to Auto Arabia, a regional car reviewer, the new Carrera has up to 8.5 percent more power — now 345 bhp (254 kW) — and is 12.9 percent more fuel-efficient than the previous model. With the double-clutch gearbox, the new model uses 10.1 liters of gas per 100 kilometers (about 28 miles per gallon).

At LE 1.5 million, the Carrera’s price places it well out of reach for average, and even most above-average, Egyptians. But the Cayenne model has already seen some success here. Whether the financial crisis will affect the Carrera’s appeal will be seen over the next few months.

Despite the state’s lowering of some customs earlier this decade, taxes still necessarily affect Porsche’s business model here. The company pays as much as LE 1 million to the Egyptian government when importing some of their models here, company officials said at the press conference.

It is expected that the state will continue to lower tariffs, which should allow the introduction of more luxury models at a later time.

For now, though, most local media has greeted the new Porsche with enthusiasm – and a bit of humor. “What a name. I mean, 911 – no one will forget it,” quipped one reporter at the conference.

Renault Itching for a Return to the U.S.

French car maker Renault SA is still itching for a move into the U.S. automobile market -- the world's biggest, from which it has been absent for more than 20 years -- and might be interested in Chrysler LLC if its owners were to put it up for sale, a senior Renault official said Thursday.

Jacques Verdonck, Renault's vice-president for corporate and strategic planning, told Dow Jones Newswires that one option for the company is to try to establish a presence in the U.S. by itself, although this would be both "risky and costly."

That is because it would involve developing at least three new products specifically designed for the U.S. market, while creating a dealer network, either by forming an alliance with an existing dealership network or creating Renault's own network from scratch.

The other easier and less onerous way would be to link up with one of the large U.S. automotive companies, though this would imply that the partner is in good financial health and is sufficiently robust to carry the deal through, he said.

In 2007, talks between Renault and General Motors Corp. about a possible alliance collapsed after management of the two companies failed to see eye-to-eye on the potential synergies that could be derived from an alliance.

"We had discussions in past with GM that didn't work out even though there were considerable potential synergies," Mr. Verdonck said. "If the opportunity presents itself again, we will seize it. But if it doesn't, I don't believe we can launch an aggressive takeover operation against an American company."

In 1982, Renault took over American Motors Corp. to make the Alliance, a variant of Renault's subcompact Renault 9 car, but the project never made money and Renault backed out and sold off its interest to Chrysler Corp. five years later.

While a straight takeover is only one of several scenarios, he acknowledged that Chrysler "would make a good partner" in the U.S.

Potential synergies are different when you consider Chrysler, GM or Ford Motor Co., he said. Chrysler is more focused on its U.S. operations, while GM and Ford are more global players, he noted.

"What's important in a partnership is to ensure that management really wants to be in the partnership; if you do it against the will of the partner, you'll face huge difficulties," Mr. Verdonck said.

Renault Chief Executive Officer Carlos Ghosn said earlier this year that now is not the time for Renault to make a bold move into a new market such as the U.S., arguing that the company must first ensure the success of its industrial expansion in Morocco, in Latin America, India and Russia.

GM’s future now depends on small cars

GENERAL Motors Corp. is known for making top- notch trucks and sport utility vehicles. The company’s survival now hinges on the difficult task of convincing buyers that its upgraded cars are just as good as its trucks and worth some extra cash. That’s essentially the business plan for the reconstituted GM, the one that is trying to make it in a US market where people no longer want $ 42,000 Chevrolet Tahoes that get only 14 miles per gallon ( 5.95 kilometers per litre) in the city. Instead, the revenue to sustain the nearly century- old industrial giant will have to come from cars, which have typically made only hundreds of dollars in profits.

Better cars, and lots of them. The change has come quickly. Faced with high gas prices and a weak economy, GM's sales fell 16 per cent for the first half of the year, with trucks off 21 percent and cars down nearly 9 per cent. GM has lost billions of dollars during the last three years. The company on Tuesday announced a combination of cuts, borrowing and asset sales that would raise $ 15 billion to weather the recent slump in US auto sales and the rapid shift from trucks to cars. Henderson, who concedes that GM has some repair work to do on its car brand image, says the change will have to come one or two models at a time.

It will follow the path of the new Chevrolet Malibu, which saw sales jump 46 percent in the first half of the year and average sale prices rise $ 4,000 over previous Malibu models due to improved quality. “ One product launch does not a success make,” Henderson said. “ It’s how do you build on that? But I think it gave us some confidence that if we get the car right and we get the promotion right, we can make progress and we can actually bring people back to the car.” GM has big plans for cars and car- based crossover vehicles. Nearly every brand, including Cadillac, will be getting a small car soon. Eighteen of the 19 vehicles GM is launching between now and 2010 are cars or crossovers.

One model, the sleek new Chevrolet Cruze due out in 2010, is the replacement for the clunky Chevrolet Cobalt small car. GM plans to power the Cruze with a 1.4- liter turbocharged four- cylinder engine, allowing it to get around 45 miles per gallon ( 19.13 kilometers per liter). Clark said in a statement, “ GM will likely face a sizable cash burn until it gets this part of the equation right.” GM Vice Chairman Bob Lutz said car prices also will rise because of demand, while truck and SUV prices will likely fall.