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The following article and those included in the country sections to the left are from past issues of the CENTRAL EUROPE AUTOMOTIVE REPORT™. If you would like to receive our most current information and all the articles included in our information packed monthly and weekly reports, subscribe today.
Article title: Regional Market Highlights
Central Europe Automotive Report™ Volume III, Issue 2, February 1998
Summary
New Cars Sales in Poland Up 26%
Skoda Gets ISO 9001 Certification
Suzuki Hungary Expands Production Capacity
Dacia and Hyundai Sign Licensing Agreement
New CEO at Daewoo Automobile Romania
Timken Buys Romanian Bearing Manufacturer
Poland
New Car Sales Grow By 26%
During the first 11 months of 1997, new car sales in Poland totaled 440,916 units, up over 26% compared to the same period a year earlier. The figures, released by SAMAR, show that local production accounted for 306,384 units, and imports totaled 134,532 units.
Fiat was the best selling brand, capturing a market share of 35.09%. Daewoo held strong at the number two position with a market share of 25.72%. GM-Opel was the third best selling brand with a market share of 9.33%.
J.T. Granatelli Lubricants Signs Distribution Agreement For Central & Eastern Europe
On December 18, 1997, J.T. Granatelli Lubricants, Inc. reported that it entered into a material exclusive licensing arrangement and purchase agreement with Union Construction Enterprise, Inc. The agreement has an estimated value of $28.8 million over a ten year period.
Pursuant to the agreement, Union is granted exclusive marketing and distribution rights for Lithuania, Poland, Belarus, and Kaliningrad. The agreement calls for certain "take-or-pay" provisions, including the posting of a performance bond by Union in the sum of the aggregate product to be purchased under the agreement.
"This agreement with Union is a culmination of eighteen months of test marketing throughout Poland, Belarus, Kaliningrad, and Lithuania," said Harry Hibler, President of J.T. Granatelli. "Union's preliminary marketing efforts have been extremely well received within those regions, and are further evidenced by Union's firm commitment to continue to develop and grow those emerging markets for [our] product line."
J.T. Granatelli Lubricants, Inc. manufactures, markets, sells, and distributes its proprietary line of motor oil, general household and motor vehicle lubricants, and contiguous products worldwide.
Czech Republic
Skoda Auto Receives ISO 9001 Certification; New Engineering Center Under Construction
On December 15, 1997, Skoda Auto a.s. received ISO 9001 certification. The German auditing company RW TUV Essen confirmed the quality of all processes at the company, from automobile engineering through purchasing, production, and sales. Skoda also supplies components to various plants of other VW Group subsidiaries. Skoda's Vrchlabi plant achieved the best quality in the entire VW Group in the third quarter of this year.
In December 1997, the foundation stone was laid for Skoda's new engineering center in Mlada Boleslav. The Czech Crown 200 million ($6 million) investment will provide new workplaces totaling 3,800 sq.m. for 160 engineers and designers. Skoda's engineering staff has increased to a total of 1000.
According to plans agreed to with the VW Group, Skoda will double production to 500,000 automobiles per year by the end of the century.
Daewoo Avia Increases Production & Sales
During the first 11 months of 1997, Daewoo Avia produced 4,826 units of Avia vehicles and 876 units of vehicles from Daewoo's Lublin plant in Poland. In 1996, Avia vehicle production totaled 4,448 units. For all of 1997, the company expects to sell 5,500 Avia vehicles, with 2,800 of those units destined for export markets.
Hungary
Suzuki Expanding Capacity
Magyar Suzuki plans to expand its yearly production capacity to 70,000 vehicles from the current capacity of 50,000 vehicles. Estimated production for 1997 is 60,000 vehicles, which was achieved through overtime production, Saturday operation, and other methods.
Suzuki currently produces the Swift model at its factory in Esztergom, Hungary. Car production at the plant began in October, 1992.
Romania
Dacia & Hyundai Enter Into Licensing Agreement
Troubled Romanian carmaker Dacia has entered into an agreement with Hyundai. Pursuant to the agreement, Dacia will assemble 50,000 Accent models, as well as 100,000 Hyundai engines per annum. According to company sources, Dacia should start assembling the Hyundai Accent in 1999. The standard model should sell in Romania for $8,000, jeopardizing Daewoo's domestic market share.
New CEO at Daewoo
In January, Daewoo Automobile Romania will have a new CEO. Former CEO Dong-Kyu Park returns to the corporate headquarters in Seoul, Korea, while Oh Joon Kwoon will take over in Craiova.
Mr. Kwoon is considered a high flier within the Korean chaebol, where he has worked since 1972. He previously held important positions in Daewoo's overseas operations, including chairman of Daewoo Heavy Industries branches in Japan and the US.
The Romanian media reported that the change was triggered by the low domestic market sales performance of the company -- some 4,700 units during the first ten months of 1997.
However, things look vastly different from Daewoo's perspective -- a company renowned for its stubbornness in pursuing long-term goals. Mr. Park -- a man with a military background -- may well have been the best person to lead the company through its initial development stages, which involved team building, capital investments, and meeting short deadlines.
With full speed production now underway, the focus has changed to soft management areas such as human resources, marketing, and sales. Given Mr. Kwoon's credentials as a marketing man, he may be the right person to boost company's sales. Mr. Kwoon is, however, cautious. "Our sales target for 1998 is 40,000 units -- equally shared
between the domestic and overseas markets," he said.
Timken Signs Quick Agreement to Buy Romanian Bearing Manufacturer
In December, the Timken Company signed a definitive agreement to acquire 70% of Romanian bearing manufacturer Rulmenti Grei S.A. Rulmenti Grei, located 60 km north of Bucharest in Ploesti, produces bearings used in a wide range of industrial applications, including steel and aluminum rolling mills, paper mills, marine systems, and oil and gas production. In addition to serving customers in Romania, Rulmenti Grei exports to customers in Eastern and Western Europe, Asia, and North America.
Timken is paying $37 million for the Romanian government's 70% share. However, Romania's privatization process returns 60% of the purchase price back into the development of the firm. Rulmenti Grei has been 70% owned by Romania's State Ownership Fund and 30% by private investment groups and individuals.
"As with other acquisitions, we will be working to strengthen Rulmenti Grei by introducing advanced technology and manufacturing processes," said Robert L. Leibensperger, executive vice president and president-bearings for The Timken Company.
"Over the next five years, we will match the Romanian privatization reinvestment in the enterprise to establish Ploesti as a major technical center for the design and manufacture of bearings for industrial applications. The output will be substantially above the current level."
Timken's deal with the Romanian State Ownership Fund happened quickly, with less than 5 months elapsing from the first plant visit to the signing of the definitive agreement.
Rulmenti Grei was built in 1979 and employs some 1,000 people. It manufactures over 1,200 types and sizes of bearings, including tapered, cylindrical, spherical, and ball bearings.
New Car Sales, Exports, & Production Up In Romania During First Nine Months
New car sales in Romania during the first nine months of 1997 totaled 66,358 units, up from 65,298 units sold during the same period last year. The top selling brand was Dacia with 58,427 units sold, up 21% compared to 1996. Daewoo was the second best selling brand, with 3,520 units sold, and Volkswagen captured the number three position, selling 1,187 units.
Passenger car exports from Romania during the first nine months totaled 14,545 units, up from 4,219 units a year earlier.
Passenger car production in Romania during the first nine months was 80,930 units, up from 65,364 units a year earlier. Light commercial vehicle production dropped from 15,559 units in 1996 to 12,485 units in 1997.
International
Visteon Appoints Vice President Of New Market Development
Visteon Automotive Systems has appointed James B. Smith III to the position of vice president of New Market Development. Smith, formerly vice president of Finance and Chief Financial Officer for Ford Credit, will be responsible for evaluating and pursuing new business opportunities for Visteon on a global basis.
Prior to his appointment with Ford Credit, Smith was executive vice president of Financial and Administrative Matters for Autolatina, the joint venture between Ford Motor Company and Volkswagen AG in Argentina and Brazil. Following dissolution of Autolatina, Smith was vice president of Financial and Administrative Matters for Ford's Argentina and Brazil operations. Smith joined Ford in 1970 and has held a variety of positions in North America, South America, and Europe.