+++ The 2017 CHEVROLET Corvette ZR1 will be the fastest ‘Vette to ever make production. It will get around 700 hp and have a massive, fixed rear wing and bulging bonnet. The rival for the Porsche 911 GT3 will also have a new set of star-shaped alloys, which will be lighter than those fitted to the current fastest ‘Vette, the Z06. The ZR1 will also have the Ford Shelby GT500 Mustang and Dodge Challenger Hellcat in its sights, so expect its supercharged 6.2-litre V8 to be ramped up to produce more than 700 hp. The car’s chassis will be adjusted to suit the demands of track driving, while the suspension will have harder settings for its magnetic ride control system, as well as stiffer anti-roll bars and springs. A set of Michelin Pilot Sport Cup 2 tyres will provide the mechanical bite required to get the car’s bespoke downforce package working. Along with the Corvette’s GT3 racer-sized rear wing, the aero package will include a larger front splitter and bigger cooling ducts. Performance for the ZR1 will trump that of the Z06, so expect a 0-100 km/h time of around 2.9 seconds and a top speed of more than 300 km/h. The new ZR1 is expected to be revealed next January at the 2017 Detroit motor show. As the final model of the C7-generation car, the ZR1 will be the last front-engined Corvette to make production. The C7’s successor, the 2018 C8, will adopt a mid-engined layout. A prototype for that car was spotted testing earlier this year. +++
+++ FIAT CHRYSLER Automobiles (FCA) has nudged up its full-year profit forecast for the second time this year after strong demand for Jeep SUVs boosted quarterly earnings and margins improved in North America. Reporting third-quarter results, Chief Executive Sergio Marchionne said he was also optimistic about reducing net debt to below 5 billion euros by the end of this year, due to operational improvements alone as the company was unlikely to make any asset sales this year. “There is nearly 100 percent certainty that no (sales) deal will happen in the fourth quarter of this year”, Marchionne told analysts on a post-results conference call. FCA’s components businesses Magneti Marelli and Comau have attracted interest from the likes of Samsung Electronics and Shanghai Electric, sources familiar with the matter have said. A deal could help FCA cut what is one of the highest debt piles in the industry, but Marchionne said that while there had been several approaches and talks continued from time to time, he had “never indicated that any of the assets were for sale”. The world’s seventh-largest carmaker said adjusted earnings before interest and tax rose 29 percent in the third quarter to 1.5 billion euros ($1.63 billion), above the average forecast of 1.4 billion given in a Reuters poll of 13 analysts. Sales were flat at 26.8 billion euros, slightly below expectations. FCA is investing billions of dollars to capture a bigger share of the lucrative SUV and pick-up truck markets in North America and is discontinuing production of low margin cars such as the Chrysler 200 and the Dodge Dart. North America accounted for 85 percent of quarterly profit, but analysts remain concerned about market demand peaking as pricing in the region is increasingly under pressure. “We believe negative SUV and pick-up pricing will be one of the negative surprises in the industry in 2017”, Stuart Pearson, an analyst at Exane BNP Paribas, said in a note. U.S. car sales in 2016 are expected to near last year’s record high but some forecasters are predicting a decline in U.S. and North American sales over the next few years. FCA’s profit margins in North America rose to 7.6 percent in the third quarter from 6.7 percent last year, despite lower shipments, but they were below the 11.2 percent reported by U.S. rival General Motors. General Motors said it expected to maintain double-digit margins in the region for several years. Marchionne said FCA’s failure to keep up with General Motors and Ford on profitability in North America remained “the single largest shortcoming that this group has against a competitor class”, but vowed to change that by 2018. FCA reported strong earnings growth in Europe in the third quarter, and profits also jumped at luxury brand Maserati, helped by the launch of the Levante, its first SUV. Group earnings remained under pressure in Brazil, although some signs of recovery are expected in the current quarter. +++
+++ GENERAL MOTORS is being critized by investors despite record third-quarter results, highlighting the disconnect between Detroit and Wall Street as the long U.S. vehicle sales boom cools off. General Motors’ quarterly results zoomed past analysts’ forecasts. But investors fear the U.S. automaker will not avoid a cyclical profit slump. Top executives of the largest U.S. automaker tried to reassure investors. General Motors Chief Executive Mary Barra told analysts “we are working hard to make sure the core business is operating in a very disciplined fashion” while the company invests in future technology such as self-driving cars. Chief Financial Officer Chuck Stevens said General Motors expects North American profit margins to stay at or above 10 percent because General Motors will rein in discounts needed to close deals, cut $5.5 billion from costs and refresh its compact cars and SUVs at a time when demand for such vehicles is hot. However, Stevens also said the overall U.S. car and light truck market is a “plateaued environment,” and forecast the slumping British pound could slash $400 million from General Motors’ European results for the year. General Motors said revenue for the third quarter rose 10 percent to a record $42.8 billion, boosted by production of vehicles that went onto lots at General Motors’ U.S. dealers. Compared to a year ago, General Motors said it had 110,000 more vehicles in stock at U.S. dealers as of Sept. 30. ” General Motors will say our inventories are fine and our incentives are great”, said Matthew T. Stover, automotive analyst with Susquehanna Financial in Boston. “The truth is their inventories are among the highest in the industry”. General Motors and rival Ford, due to release third-quarter results on Thursday, have staked out competing views of the U.S. auto market. Ford warned in July that a slowing U.S. auto market would put its full-year profit forecast at risk. General Motors has stuck with a more positive view, in part because it is reaping substantial profits from pickup trucks and large SUVs such as the Cadillac Escalade. Ford bet during the past decade that gas prices would be high, and cut back on its large SUV production, allowing General Motors to capture more than 70 per cent of the lucrative segment in the United States. General Motors’ results and its outlook depend primarily on continued strength in the U.S. and Chinese economies. The company said it lost money in Europe, and Stevens said achieving break-even results for Europe this year will be “very, very challenging”. Overall, GM said third-quarter net income more than doubled to $2.8 billion from a year earlier. Excluding a $110 million gain from litigation, earnings of $1.72 a share beat the analysts’ average estimate of $1.45, according to Thomson Reuters I/B/E/S. +++
+++ MERCEDES said it will launch a pickup truck in late 2017, becoming the first German premium auto maker to enter one of the most lucrative segments in the car industry. Mercedes said the new “X-Class” will hit showrooms in Australia, Brazil, Argentina, South Africa and Europe late next year. Daimler Chief Executive Dieter Zetsche, said: “With the Mercedes-Benz pickup, we will close one of the last gaps in our portfolio”. Currently no launch date for the United States, the biggest market for pickups, has been announced. Pickup trucks have gained popularity mainly in the United States, with sales of such models accounting for 90 percent of global pretax margins at General Motors and Ford, according to analysts. General Motors and Fiat Chrysler both reported better than expected earnings mainly thanks to demand for pickup trucks and SUVs in North America. The segment has been moving upmarket with Ford’s F-150 model fetching prices of up to $50,000. Daimler said the new pickup truck would be built by its Vans division. Germany’s top car companies have been vying for the global title of best-selling premium automaker, expanding into new vehicle categories as a way to boost sales. Deliveries of BMW’s core brand reached a record 1.81 million last year. By comparison, Audi sold 1.74 million cars and Mercedes-Benz sold 1.65 million of its own-branded passenger cars. Production of the Mercedes pickup will take place at Renault and Nissan plants, Daimler said. Mercedes, Nissan and Renault have shared engines, plants and vehicle underpinnings since they forged a cooperation alliance in 2010. For the European, Australian and South African markets, Mercedes will start manufacturing the truck at the Nissan plant in Barcelona, Spain, in 2017. The X-Class for the Latin American market will roll off the assembly lines at the Renault plant in Cordoba, Argentina, starting in 2018, Daimler said. +++
+++ The surprise removal of TATA Sons’ chairman Cyrus Mistry and his advisory team, and the temporary return of family patriarch Ratan Tata, may distract the salt-to-software conglomerate from its efforts to trim debt and reshape some of its businesses. “When Mistry was there some actions were being taken at a group level which would have helped reduce the company’s cash drain activities”, said Daljeet Singh Kohli, research head at broker IndiaNivesh. “There was hope that rational, rather than more emotional decisions would prevail”. Uncertainty at Tata may stall some ongoing initiatives, such as the search for a partner for Tata Steel’s struggling UK assets, some analysts say. Under Mistry, Tata “have taken significant steps towards deleveraging and better utilization of capital”, Citigroup said in a client note, adding his absence may impact the group’s future strategy and delay the “process of deleveraging”. Media reports following Mistry’s ouster suggest the influential Tata family, which owns a majority stake in Tata Sons through a series of trusts, was unhappy with some of his decisions as chairman. Both Ratan Tata and the Tata Trust were kept in the dark on a number of sensitive issues, said a person with knowledge of the matter, and attempts to sell Tata Steel’s UK business and an aggressive stand against Japan’s NTT DoCoMo in a teleservices dispute proved “the last straw”. “The way Mistry was displaced was quite out of character for the Tatas”, the person said. Indeed, the ouster risks escalating into a public spat, with local media reporting on court filings. Any legal dispute could pit Mistry’s Pallonji family, one of the largest shareholders in Tata Sons, against the Tatas – and prove a distraction for a successor. Potential full-time replacements touted in media reports include PepsiCo CEO Indra Nooyi; N Chandrasekaran, CEO of Tata Consultancy Services; former Vodafone boss Arun Sarin; family scion Noel Tata; and Ishaat Hussain and B Muthuraman from Tata Group. Tata Sons said in a statement that it added TCS’ Chandrasekaran and Jaguar Land Rover CEO Ralf Speth to its board. Ratan Tata urged the heads of Tata Group companies to focus on their businesses and shareholder returns, and not be distracted by the board changes. Those group companies own a range of well-known brands, including Jaguar Land Rover, Tetley tea, Titan and the Taj Group of hotels. “The companies must focus on their market position vis-à-vis competition, and not compare themselves to their own past”, Tata said, according to a company statement. “At a business level, life doesn’t change for us due to this management re-jig”, said a senior banker and frequent investor in Tata Group’s bonds. “What we need to see is what kind of strategy they will adopt now to revive their weak companies”. Mistry’s dismissal as chairman – he remains a board member – stunned even Tata insiders and senior executives, people in the company said. “It came as a surprise to us; nobody seemed to know anything about it”, said one senior Tata Group official, adding they were informed through a memo and told the move was “unlikely to have much impact on individual companies”. Tata has disbanded the group executive council – a core advisory team – set up by Mistry, who was trying to shake up the $100 billion company through changes to its management structure and the introduction of new faces at senior levels. In a sign of the near-150-year-old conglomerate’s heft, Prime Minister Narendra Modi was told about the leadership change in a personal letter, according to government sources. +++
+++ Two TOYOTA Motor Corporation brands again led the annual reliability survey from Consumer Reports magazine, and General Motors’ Buick was the first American brand in at least 35 years to crack the top three, the consumer magazine said. It was the fourth straight year that Lexus and Toyota finished in the two top spots, and they have had an outstanding performance since Consumer Reports began tracking brand reliability in the early 1980s. Buick, a “near-luxury” brand, does well in the survey because it has few models and none of the pickup trucks or truck-based SUVs that hurt the ratings of General Motors stablemates Chevrolet and Cadillac, said Jake Fisher, director of automotive testing for Consumer Reports. Asian carmakers still dominate for reliability, with seven of eight brands deemed “more reliable” based in Japan or South Korea. Volkswagen’s luxury Audi brand was the only German manufacturer among the eight “more reliable” brands. In the past decade, all brands in Consumer Reports and other third-party surveys have had improvements in reliability, especially the major U.S. automakers General Motors, Ford and Chrysler, now Fiat Chrysler Automobiles . Fiat Chrysler still lags far behind. Its brands took the bottom four spots in the 29-brand survey. Its most successful brand in terms of sales and reliability is its Jeep SUV lineup, which gained four slots to No. 23. Nissan’s luxury brand Infiniti was most improved from last year, gaining 16 places in the survey. Favorable results do not always mean better sales. Still, many U.S. consumers use the ratings as a key factor in purchasing decisions. The top-selling models from each for the three major U.S. brands are pickup trucks, which fare poorly in reliability studies. Fisher said large pickup trucks’ drive systems are more complex and raise consumer concerns, and “these trucks are now sold with much more power equipment and in-car electronics, so there are many more things to go wrong”. Toyota’s Tundra was rated the top full-size pickup truck by a large margin. The fourth U.S. automaker, Tesla, the electric car maker, finished at No. 25. Consumer Reports recommended the Tesla Model S but the “Model X SUV has been plagued with malfunctions, including its complex Falcon-wing doors”. Among the hot-selling SUV market, the consumer advocacy magazine named best in category, small to large, as the Chevrolet Trax, Toyota RAV4, Toyota 4Runner and Ford Expedition. +++
+++ The Piech and Porsche families that control more than 52 percent of VOLKSWAGEN have vowed to back senior management, setting aside past disputes as the carmaker struggles to overcome an emissions scandal, Der Spiegel reported on Saturday. In a rare interview, Hans Michel Piech and Wolfgang Porsche pledged support for VW chairman Hans Dieter Poetsch and chief executive Matthias Müller, and said they would stay out of daily operational affairs at Germany’s biggest carmaker. The two families had clashed when Ferdinand Piech was his family’s representative on Volkswagen’s supervisory board, a post he resigned from last year, clearing the way for his brother, Hans Michel. Some investors feared bickering between the two families would hamper decision-making as the company works to cut costs and adapt to new industry trends such as electronic and autonomous driving. “We are different and we see our task as representatives of the families different”, Hans Michel Piech was quoted as saying, but he and Wolfgang Porsche both emphasized their ability to find consensus. Porsche said that would remain the case despite a recent decision to increase the number of family members with voting power to 34. “Not all 34 will become supervisory board members, or have a say in discussions, and not all of them want to. What is important is that the next generation of suitable family members have an interest in the matter and do not simply wait for the dividend to arrive”, he said. Volkswagen has suffered its worst-ever crisis since admitting in September 2015 it used sophisticated secret software in its cars to cheat exhaust emissions tests, with millions of vehicles worldwide affected. The company has set aside 17.8 billion euros to pay for costs related to the scandal. +++
