+++ Tougher European car emissions tests being introduced in the wake of the Volkswagen scandal are about to bring surprising consequences: BIGGER ENGINES. Carmakers that have spent a decade shrinking engine capacities to meet emissions goals are now being forced into a costly U-turn, industry sources said, as more realistic on-the-road testing exposes deep flaws in their smallest motors. Opel, Renault and Volkswagen are preparing to enlarge or scrap some of their best-selling small car engines over the next 3 years, the people said. Other manufacturers are expected to follow, with both diesels and gasolines affected. The reversal makes it even harder to meet carbon dioxide (CO2) targets and will challenge development budgets already stretched by a rush into electric cars and hybrids. “The techniques we’ve used to reduce engine capacities will no longer allow us to meet emissions standards”, said Alain Raposo, head of powertrain at the Renault-Nissan alliance. “We’re reaching the limits of downsizing”, he said at the Paris auto show, which ends on Saturday. Opel, Renault and Volkswagen all declined to comment on specific engine plans. For years, carmakers kept pace with European Union CO2 goals by shrinking engine capacities, while adding turbo chargers to make up lost power. Three-cylinder motors below 1,0 liter have become common in cars up to Volkswagen Golf-sized compacts; some Fiat models run on twin-cylinders. These mini-motors sailed through official lab tests conducted – until now – on rollers at unrealistically moderate temperatures and speeds. Carmakers, regulators and green groups knew that real-world CO2 and nitrogen oxide (NOx) emissions were much higher, but the discrepancy remained unresolved. All that is about to change. Starting next year, new models will be subjected to realistic on-the-road testing for NOx, with all cars required to comply by 2019. Fuel consumption and CO2 will follow 2 years later under a new global test standard. Independent testing in the wake of Volkswagen’s exposure last year as a U.S. diesel emissions cheat has shed more light on the scale of the problem facing automakers. Carmakers’ smallest European engines, when driven at higher loads than current tests allow, far exceed legal emissions levels. Heat from the souped-up turbos generates diesel NOx up to 15 times over the limit; gasoline equivalents lose fuel-efficiency and spew fine particles and carbon monoxide. “They might be doing OK in the current European test cycle, but in the real world they are not performing”, said Pavan Potluri, an analyst with influential forecaster IHS Automotive. “So there’s actually a bit of ‘upsizing’ going on, particularly in diesel”. Carmakers have kept understandably quiet about the scale of the problem or how they plan to address it. But industry sources shared details of a retreat already underway. General Motors will not replace its current 1.3-litre diesel when the engines are updated on a new architecture arriving in 2019, people with knowledge of the matter said. The smallest engine in the range will be 25-30 percent bigger. Volkswagen is replacing its 1.4 liter 3-cylinder diesel with a 4-cylinder 1.5 for cars like the Polo, they said, while Renault is planning a near-10 percent enlargement to its 1.6 liter R9M diesel, which had replaced a 1.9-litre model in 2011. In real-driving conditions, the French carmaker’s 0.9-litre gasoline H4Bt injects excess fuel to prevent overheating, resulting in high emissions of unburned hydrocarbons, fine particles and carbon monoxide. Cleaning that up with exhaust technology would be too expensive, sources say, so the three-cylinder will be dropped for a larger successor developing more torque at lower regimes to stay cool. The turnaround on size is a European phenomenon, coinciding with diesel’s sharp decline in smaller cars. Larger engines prevalent in North America, China and emerging markets still have room to improve real emissions by shrinking. Fiat, Renault and Opel have the worst real NOx emissions among the newest “Euro 6” diesels, according to test data from several countries. They now “face the biggest burden” of compliance costs, brokerage Evercore ISI warned last month. Such reckonings are the inevitable result of on-the-road testing, said Thomas Weber, head of research and development at Mercedes, which has nothing below 4 cylinders. “It becomes apparent that a small engine is not an advantage”, Weber told Reuters. “That’s why we didn’t jump on the three-cylinder engine trend”. The tougher tests may kill diesel engines smaller than 1.5 liters and gasolines below about 1.2, analysts predict. That in turn increases the challenge of meeting CO2 goals, adding urgency to the scramble for electric cars and hybrids. Volkswagen has been far more vocal about ambitious plans announced in June to sell 2-3 million electric cars annually by 2025; about a quarter of its current vehicle production. “You can’t downsize beyond a certain point, so the focus is shifting to a combination of solutions”, said Sudeep Kaippalli, a Frost & Sullivan analyst who predicts a hybrids surge. In future, he said, “downsizing will mean you take a smaller engine and add an electric motor to it”. +++

+++ GENERAL MOTORS ‘ car-sharing program Maven, the auto giant’s latest foray into alternative transportation services, has expanded into San Francisco, marking its 9th market since launching in January, the company announced Thursday. Maven’s entry into one of the nation’s leading technology hubs puts it squarely in competition a number of car-sharing programs such as Zipcar and Getaround that are already popular in the city. Maven’s markets now include Boston, Chicago, Los Angeles, New York and Washington D.C., among other cities. The quick growth signals General Motors’ aggressive push to cater to millennials and urban professionals who do not want the burden of car ownership. “Either General Motors spends money to convince someone who doesn’t want a car to buy a car, or spends it getting into another business”, said Dan Grossman, Maven’s chief operating officer. Maven buys cars from General Motors and pays for the maintenance, repair and gas. In addition to the revenue from the sale of cars to Maven, General Motors will reap the profits from Maven’s car-sharing business. The cost of renting a car starts at $8 per hour. The company touts its technological sophistication as an advantage over competitors such as Zipcar. Customers can reserve a car via an app and use their smartphone to unlock and start their vehicle. Grossman said more than 12,000 car reservations have been made to date. While General Motors aims to appeal to drivers who do not want to own cars, the company also hopes Maven will introduce new car models – such as the all-electric Bolt – to customers who could be convinced to make a purchase. General Motors earlier this year also launched a car loan program with ride-sharing service Lyft, allowing Lyft drivers to lease cars for a week at a time. General Motors invested $500 million in Lyft in January; it owns 9 percent of the startup. Maven acquired patents from Sidecar, a San Francisco ride-hailing service that shut down last year. +++

+++ NISSAN will decide by the end of the year whether to build its new Qashqai model at Britain’s biggest car plant, a source told Reuters, after CEO Carlos Ghosn met Prime Minister Theresa May to seek reassurance over the impact of Brexit. Just weeks after telling Britain that he could scrap new investment unless he got a guarantee of compensation for costs related to Brexit, Chief Executive Ghosn held talks with May in her Downing Street residence in central London. Businesses have been concerned that Britain is headed towards a “hard Brexit”, which would leave it outside the European single market and facing tariffs of up to 10 percent on car exports. Nissan, which made nearly one in three of Britain’s 1.6 million cars last year, already builds the Qashqai at its Sunderland plant in northern England. The time it takes to bring a new car into production means Nissan needs to decide on the location of its next generation model soon. “The decision-making process is in the next few weeks and months with a decision expected before the end of the year”, a company source told Reuters on Friday, adding that the location might not be announced until early next year. The source also said that a further meeting between May and Ghosn had not been scheduled but that senior Nissan and government officials would continue meeting in the coming weeks. After speaking to May, Ghosn did not disclose whether the issue of compensation had been raised. “I am confident the British government will continue to ensure the UK remains a competitive place to do business”, said Ghosn, nicknamed “le cost killer” for slashing expenditure at Renault which he also heads. Ghosn’s concerns over trade barriers led other carmakers to warn about the consequences of a “hard Brexit”, favored by some ruling Conservatives who wish to impose limits on immigration, a key concern of many voters who backed Brexit in June’s referendum. The chief executive of Britain’s biggest automaker Jaguar Land Rover told Reuters that any Brexit deal would have to guarantee a “level playing field”, opening up the possibility that others too would seek financial guarantees. The government has said it would do everything it could to encourage, develop and support strategic sectors of the economy such as car manufacturing. May said on Friday she would cooperate with the Japanese carmaker in the future. “We will continue to work with Nissan as we develop the environment for competitiveness of the automotive industry here in the UK to ensure its success”, she said after meeting Ghosn. Last month Japan published a list of requests to Britain and the EU over Brexit, including maintaining the current duty-free trade between Britain and the EU and preventing any additional customs clearance burden on trade. Nissan, Toyota and Honda together built almost half of all of Britain’s cars in 2015. The largely foreign-owned car industry was a strong supporter of continued membership of the European Union ahead of the June 23 vote, benefiting from unfettered access to the world’s biggest trading bloc and its standardized regulations. On Wednesday, a dispute between Britain’s biggest retailer Tesco and consumer goods company Unilever caused by a plunge in the pound since Britons voted to leave the EU highlighted business tensions following Brexit. Ghosn said that it was important that the Sunderland facility, which directly employs 7,000 people and many more through the supply chain, remains one of the firm’s most efficient plants. “We want to ensure that this high-performing, high-employment factory remains competitive globally and continues to deliver for our business and for Britain”. +++

+++ PEUGEOT is planning to add an all-electric powertrain to its next 208. The new model is set to launch in 2018 on an all-new platform, which will be engineered to support the new technology. Asked about the potential for electric power in the larger EMP2 platform, Peugeot 3008 Project Manager Marion David told: “that is something we are working on for the 208 platform. The range is not long enough for the larger cars yet”. That means the new CMP (Common Modular Platform) technology that will underpin the new 208, as well as future PSA cars, is being engineered to support batteries and motors for all-electric models. The platform is set to shed weight over the current PF1 architecture, which will go some way to offset the weight of battery packs in the small car. The electric 208 would be part of the PSA Group’s plan to launch 11 electric cars over the next 5 years. While CMP will get a range of all-electric models, plug-in hybrids are on the way for larger cars like the new 3008, which will get a PHEV version in 2019. The existing 208 was facelifted in 2015, but with the Citroen C3 already unveiled plus new versions of the Volkswagen Polo and Ford Fiesta also expected in 2017 the need for an all-new version is pressing. Peugeot’s stated goal is to become “the best high-end generalist brand” (more premium than Citroën but less luxury-focused than DS) so the 208’s styling will become more sophisticated. The 208 will replace its existing curves with crisper, straighter lines and Peugeot’s latest family face, with neatly incorporated LED daytime running lights. It will continue to be offered in 3 and 5-door form. The overall profile of the new generation will be close to that of its larger brother, the 308, although the 208’s overall length will stay at 4 metres. The front and rear overhangs should be shorter, though, thanks to a longer wheelbase, which should balance out to increase head and legroom inside. That extra length will come from the switch to the all-new chassis. Unlike the new Citroen C3, which stays on PSA’s existing PF1 supermini platform, the 208 will get a fresh set of components. Called CMP, the new platform is being developed jointly by the French company’s engineers and technicians from PSA’s Chinese manufacturing partner, Dongfeng. As with EMP2, which brought significant weight savings to the 308, and 3008, CMP should help the 208 to shed kilos and improve efficiency: it could be up to 100 kg lighter, although some of that gain is likely to be ploughed back into a plusher interior. As well as the all-electric version, the engine line-up will bring new generations of PSA’s BlueHDi diesel and PureTech petrol motors. The petrols are expected to be three-cylinder turbos, with power ranging from around 68 hp up to 150 hp for the 1.2-litre version. There will also be a new 1.6 THP petrol in the 208 GTi, offering around 220 hp. The diesel range will get an even bigger shake-up, as PSA follows the Volkswagen Group’s lead in downsizing its 1.6-litre engines to 1.5 litres. Expect power outputs to remain broadly the same, at between 75 hp and 120 hp, but CO2 emissions to fall to less than 75 gram/km on eco-focused editions. Inside, Peugeot will further refine its controversial i-Cockpit set-up, while the central infotainment system will be upgraded for quicker responses. Greater smartphone connectivity and other multimedia features will be offered. French sources suggest that the new 208 could make its public debut at the Geneva Motor Show in spring 2018. +++

+++ While the rest of TOYOTA’s product portfolio is undergoing a thorough development process, the future isn’t looking so bright for the humble Avensis. The future of the model is currently “under discussion”, according to the firm’s European boss, in the face of ever-declining sales in the market for family saloons. Several mainstream brands have abandoned the family saloon and estate market altogether in favour of SUVs, and Toyota Europe president & CEO Johan van Zyl has told Auto Express that the future of his firm’s rival to the Ford Mondeo and Opel Insignia, which is built at the Burnaston plant in Derbyshire, is now under consideration. “We’re looking at it at the moment”, he said. “We are looking at that segment of the market and asking ourselves some questions. We’re very satisfied with the performance of Avensis now: the product is doing fine for us. But we’re asking if the next step should be another D-segment saloon or something else”. The existing generation of the Avensis was introduced in 2009 and facelifted in 2015, so under typical development cycles, Toyota would normally be lining up a vehicle to replace it within the next 18 months. +++

+++ VOLKSWAGEN is planning to tighten spending sharply as it deals with fall-out from its diesel emissions cheating scandal. Chief executive Matthias Müller in an internal meeting demanded that material costs and overheads be cut by 10 percent as part of its annual budget round for 2017. A Volkswagen spokesman declined to comment. Müller was quoted as saying of the savings: “They will be heavy and it won’t be done without pain. The effects of this crisis in the coming years will go to the limits of what we can bear”. He also said this was happening at a time when ideally the company should spend its money on dealing with the structural change in the automotive industry. The diesel emissions scandal is costing the company billions of euros and has prompted ongoing talks between management and employees on a cost-cutting deal for the core Volkswagen brand. Volkswagen’s supervisory board is scheduled to meet on Nov. 18 to approve new spending targets on products, plant and equipment for the coming years, 2 company sources have said. Volkswagen, in another step to move past its costly diesel emissions cheating scandal, has agreed to pay $175 million to U.S. lawyers suing the German automaker on behalf of the owners of 475,000 polluting vehicles, 2 people briefed on the agreement said on Friday. In August, the lawyers in the class action litigation sought up to $332.5 million in fees and costs for their work in a $10 billion settlement that gives U.S. owners of 2.0 liter polluting cars the ability to sell back their vehicles to Volkswagen. The latest deal with the lawyers means Volkswagen now has agreed to spend up to $16.7 billion to compensate U.S. owners and address claims from states, federal regulators and dealers arising from the “Dieselgate” scandal. The amount to be paid out to lawyers was first reported by Reuters on Friday. The resolution of legal fees clears another hurdle as the world’s No. 2 automaker looks to resolve all of the outstanding aspects of a scandal that disrupted its global business, hurt its reputation and led to the ouster of its chief executive officer last year. Volkswagen in September 2015 admitted using sophisticated secret software in its cars to cheat exhaust emissions tests, with millions of vehicles worldwide affected. The cheating allowed Volkswagen’s U.S. vehicles sold since 2009 to emit up to 40 times legally allowable pollution levels. The $175 million includes attorneys’ fees and other costs, according to the sources, who spoke on condition of anonymity. Lawyers for the owners of polluting vehicles and a spokeswoman for Volkswagen declined to comment. Lead plaintiff lawyer Elizabeth Cabraser, who is part of a committee of 22 lawyers overseeing the owner suits, said in August the amount sought in attorneys fees was far less than the “judicially established benchmark” for class actions of approximately 25 percent of the settlement amount. U.S. District Judge Charles Breyer on Tuesday is set to hold a hearing in San Francisco on whether to grant final approval of the vehicle owners’ settlement announced in June, which would be the largest-ever automotive buy-back offer in the United States. Breyer must also decide whether to approve the legal fee agreement. Volkswagen has agreed to spend up to $10.033 billion to buy back the vehicles and compensate owners. It may also offer vehicle fixes if regulators approve. Under a timetable announced this summer, regulators could approve a fix for some 2015 modelyear Volkswagen diesel vehicles as early as next month. In addition, Volkswagen has agreed to pay up to $1.21 billion to compensate U.S. Volkswagen brand dealers, pay more than $600 million to 44 U.S. states, spend $2 billion on zero-emission vehicle promotion and infrastructure, and another $2.7 billion to offset diesel pollution. It still faces billions of dollars in potential fines from the U.S. Justice Department in its criminal probe into Volkswagen’s cheating scandal, and must resolve the fate of larger vehicles that were not part of the initial $10 billion settlement. Volkswagen and U.S. regulators are in continuing discussions over whether the automaker should agree to buy back 85,000 larger 3.0-liter Porsche, Audi and Volkswagen vehicles that also exceeded U.S. emission standards, and whether it should offer additional compensation to those owners. Volkswagen may have to pay additional owner attorneys’ fees as part of a separate potential 3.0-liter settlement, the sources said. +++

+++ The next VOLVO XC60 has been spied testing ahead of its expected reveal next year. Despite the model’s looming replacement (it’s been around since 2008, making it one of the oldest models on the road) the XC60 remains one of Volvo’s best-selling cars. The new XC60 will incorporate Volvo’s new design policy, and it will feature the ‘Thor’s hammer’ daytime running lights. A dominant front grille is also part of the new styling direction of the next XC60, which will spearhead Volvo’s refreshed 60 Series in the next stage of Volvo’s reinvention. A Volvo spokesman wouldn’t rule out the possibility of the model’s replacement before the new XC40 arrives at the end of 2017. It’s inevitable that the model will have Volvo’s 2.0-litre diesel and petrol engines at the upper end of the lineup, but Volvo’s aggressive stance on engine downsizing means that these will be the largest in the range. This means that the 2.4-litre D5 engine from the current XC60 will be discontinued. Volvo’s new T5 three-cylinder hybrid system, although not confirmed, is likely to feature in the XC60. It will make its first appearance in the XC40 at the end of next year, before likely being carried over to the XC60. Inside, the XC60 adopts many of the features of the 90 series, like the large, central infotainment system flanked by large air vents, and a digital dash display behind the steering wheel, rather than traditional dials. When the XC60 goes on sale (likely a while after an appearance at either the Geneva, Detroit, Beijing or Shanghai motor shows) it’ll face renewed competition from the new Audi Q5, as well as a new BMW X3, which is due around the same time, having been introduced in 2010. It’ll also be the first model to confirm or disprove whether Volvo will adopt a ‘Russian doll’ styling approach to its lineup. +++

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