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+++ AUDI has given the strongest indication yet that the hot version of its new Q2 compact SUV is on the way and will take-on the Audi SQ2 name. The brand has applied to registed ‘SQ2’ as a trademark with the global trademark office, suggesting that the car my spy photographers have already seen testing is on its way to showrooms. Back in the summer of 2016, I revealed exclusive news of a hot new Audi Q2 model, shortly before the turbocharged SQ2 was seen testing on and around the famous Nürburgring race track. The pictures clearly show a tuned version of Audi’s latest crossover with the giveaway quad exhausts, wider body kit, flared arches and big alloy wheels. The gloss black detailing to the grille, vents and C-pillar are hints toward a faster model, too. Given the fact that Audi is testing the car both on and off track, we expect bosses are keen to make this one of the best handling cars in the crossover class. It’ll rival models like the Mercedes-AMG GLA 45 – sitting below its bigger brother, the RS Q3. An SQ2 model is likely to use the four-cylinder 2.0-litre turbo from the Audi S3, with 310 hp and Quattro four-wheel drive. It would slot into the maker’s growing SQ range of hot SUVs alongside the SQ5 and new SQ7. “It is something we’re looking at”, admitted Stephan Knirsch, Audi’s Board member for Technical Development. “It would be relatively easy to do with MQB. The Q2 shares a lot with the A3, but we have to see what appetite there is for the more expensive Q2 models first”. The new Q2 already features the same Progressive Steering system as the S3, so adding that car’s drivetrain is a logical next step. It’s likely to be some time in 2018 before we see the SQ2 in showrooms. +++

+++ Sergio Marchionne, FIAT CHRYSLER ‘s CEO, is still looking for another automaker to partner with, especially in light of the cancelling its front-wheel-drive compacts. The need is made especially clear now that the Dodge Dart compact has been discontinued, and with the Chrysler 200 soon to follow. In January FCA announced that it would kill off the two front-drive sedans to focus more on producing Jeep-branded SUVs and Ram trucks. As reported by Automotive News, Marchionne said on a conference call last month that FCA has yet to “finalize” a replacement to fill the gap in the company’s lineup left by those compacts, even though he had promised so in January. Marchionne also said that in the big picture, compact cars in the US represent a “rounding error” in FCA’s global sales goals. He also wants to preserve the character of the company’s rear-wheel-drive offerings, implying that an automotive partner would primarily be responsible for building front-drive compacts for rebadging. Marchionne also restated his belief about the marketplace permanently veering away from passenger cars. In other words, his message is, “Partner with FCA, then make the things we don’t care about for us”. +++

+++ The LAND ROVER Range Rover Sport Coupé has been spotted testing again, ahead of its expected launch next year. The next Range Rover model will break fresh ground by moving the brand into sportier and more road-biased territory with a luxury model pitched at the BMW X6. It could also be the model that introduces Jaguar Land Rover’s upcoming electric drivetrain to the road. 3 years ago, when Land Rover revealed its ‘three-pillar’ brand strategy (Defender, Discovery and Range Rover) the Sport Coupé was referred to as ‘Evoque XL’ and positioned between the Evoque and Range Rover Sport. The Sport Coupé will sit on the same aluminium architecture as the Jaguar F-Pace. Powertrains for the Sport Coupé will be taken from the extensive Jaguar Land Rover range of six and eight-cylinder diesel and petrol engines, but it is not yet clear if the new Range Rover will feature the four-cylinder engines that are available in the Jaguar F-Pace. It could also feature the all-electric powertrain that Jaguar Land Rover is developing for its I-Pace EV, which should be seen next year and will help Jaguar Land Rover hit a new Californian target of 15% fleet mix of battery electric vehicles between 2018 and 2025. However, because many buyers will live in mega-cities in Europe, the United States and Asia, Range Rover is expected to offer a hybrid powertrain, possibly based on the 340 hp 3.0 SDV6 HEV in the Range Rover Sport. If Range Rover chooses to fit its most powerful 550 hp 5.0-litre V8 supercharged engine, the new model will offer outstanding performance, partly because its lightweight alloy body could weigh as little as 1.800 kg; a 4.00kg advantage over the X6 and GLE Coupé. That engine is thought to be earmarked for an F-Pace SVR model and for the range-topping model of the Sport Coupé range. Another crucial decision to be made is the name of the new car. In many ways, the new Range Rover would be more deserving of the ‘Sport’ name than the current 7-seater model that wears the badge. Range Rover won’t discuss this key detail, except to confirm that the existing Sport will keep its name. Many details of the new Sport Coupé remain secret in the build-up to its launch, which is expected next year. The Sport Coupé is said to set new standards for a Range Rover’s styling, interior and road-focused handling. This handling will come from the F-Pace’s suspension and lightweight aluminium body. Land Rover design chief Gerry McGovern and Range Rover design boss Phil Simmons were understood to be developing a new look for the Sport Coupé by exploiting the sporty, long-bonnet proportions of the F-Pace. At around 4.7 meter long, the new Range Rover will be a little smaller than the 4.9 meter long X6 and the Mercedes-Benz GLE Coupé. The interior is expected to be more intimate than those of current Range Rovers and, in an echo of the layout of the X6 and GLE, is being designed around a luxurious four-seat layout. A 2+1 rear seat with fifth seatbelt will be on the options list. Insiders have told that the F-Pace’s alloy architecture is not capable of stretching to a three-row, 5+2 seating arrangement; the configuration previously attributed to the ‘Evoque XL’. The cabin will be more like a ‘cockpit’ than any previous Range Rover and feature a dramatic sloping roofline with a tight rear overhang. The rear doors will be reduced to minimal openings in the search for the most elegant styling possible, while the luxury-quality interior is understood to introduce new materials and finishes. The target market will include an ‘urban cool’ group of buyers, and the colour palette will therefore be chosen with them in mind. +++

+++ Dieter Zetsche’s marketplace revival of MERCEDES was about to begin. But, outside the Airbus factory in Hamburg, Germany, the rain began to fall in sheets, hammering the roof so hard that the noise threatened to drown out a live performance by Grammy-winning singer Alicia Keys. Inside, Daimler officials were growing nervous. According to the plan for that May evening in 2013, the hangar door would open and the next-generation Mercedes-Benz S class would be driven inside amid music, lights and artificial fog. Airbus personnel wanted to nix this for safety reasons even though hundreds of guests were waiting. The emcee was told to stall as Daimler staff could only hope the bad weather wouldn’t turn the evening into a fiasco for CEO Zetsche. “There was only one storm cloud over Hamburg at that time, and it was hanging directly over the Airbus plant”, remembered a veteran Daimler manager who was there that night. “I downed 3 glasses of chardonnay when the rain started, knowing there was simply nothing we could do”. Once the world’s undisputed champion among premium carmakers, Mercedes had already been outsold by BMW in 2005 and then, under Zetsche, by Audi 6 years later. Had the S class, the model that most symbolized Mercedes’ claim to deliver “The best or nothing,” failed to defend its leadership, the pressure on Zetsche (well-known in the U.S. from his role as head of Chrysler Group from 2000 to 2006) would have been enormous. Analysts disappointed with the stock’s performance had already called on him to relinquish his dual role as Daimler CEO and head of the group’s core passenger-car division. In addition, Zetsche emerged weakened rather than empowered after a contract extension only months earlier. Yet just when it looked as though even the heavens were against Daimler, the storm clouds over the Airbus factory passed; just as they have for Zetsche. Since then, sales and profits at the group’s car business, which includes Smart, have steadily been on the rise. Asked when management knew the company’s growth plan would work, a former Mercedes board member said it all started with the S-class launch: “That was the turning point for Mercedes”. Today, Zetsche has Mercedes poised to overtake BMW and reclaim the title of world’s top-selling premium brand, achieving his target four years ahead of schedule and spoiling the centennial celebration of its archrival in Munich in the process. In September, Mercedes reported global sales of more than 200,000 vehicles, setting a new all-time high for the month while also breaking its own sales records for a quarter and for the first nine months of a year. Thanks to strong demand for new models such as the E class, third-quarter operating earnings at Daimler’s car business surged 26 percent to a record 2.7 billion euros. Mercedes has stormed back because of an aggressive product offensive that includes lucrative models such as the S-class Cabriolet, the flagship’s first convertible in over 40 years. By expanding into new niches and segments with other hot sellers such as the GLA compact crossover and saving 2.22 billion dollar from cost cuts, Mercedes is on track to meet its 10 percent return on sales target. When asked to name key factors in Mercedes’ turnaround, Zetsche said: “Probably the three most important elements, I think, are design, product portfolio and gaining a better understanding of China”. Although Mercedes still enjoyed a thriving business in Europe and the U.S., its costly missteps in China meant that it became a distant third in global premium car sales to BMW and Audi. In late 2012, Zetsche took action. First, he installed Hubertus Troska, a senior Daimler Trucks executive, as a new management board member responsible for China to create a reporting line that cut across all operations. He replaced the local sales chief and added hundreds of new sales points to close the gap with BMW and Audi. Then Mercedes acquired majority control of its import distributor from Chinese partner Lei Shing Hong and merged it with a second, separate sales channel for locally built cars. “By bundling the two, we have one voice to our sales network and one strategy for the whole portfolio”, said a senior Mercedes sales executive at the time. As the sales network upgrade was taking place, Mercedes development chief Thomas Weber was following through on a massive product offensive. In 2010, Mercedes sold 24 models; come 2020, that number is expected to reach 40. “If you looked at the product range, they basically didn’t have any derivatives of anything, and now they have a precise sequence of new models that address a wide range of customer tastes”, said a former non-executive director at the company. “The volume of products over the past 2 or 3 years has really been the key”. Major gaps in its portfolio were addressed. In 2014, the C class finally received a long-wheelbase version for chauffeur-driven customers in China. Dealers in the United Kingdom, Europe’s second-largest market after Germany, were finally able to offer a compact crossover to customers in the GLC, whose predecessor had not been engineered for right-hand drive. And while Zetsche scrapped poorly performing Maybach as a stand-alone brand in 2012, he resurrected it as the name for a line of ultraluxury S-class cars that have been immensely successful alongside two entirely new derivatives, including the cabrio version of Mercedes’ most exclusive model line. At the opposite end of the spectrum, Zetsche revamped the automaker’s compact line, adding the GLA crossover to challenge the BMW X1 and Audi Q3 in a segment that has experienced constant global growth for years. The improved and expanded vehicle portfolio has earned praise from analysts such as Barclays Capital’s Kristina Church: “It’s being helped by some awesome product right now. It’s the best in the market and makes some of BMW’s models look a little old”. A key player in the brand’s transformation has been design chief Gorden Wagener, who made Mercedes cars desirable again. Since he was appointed in 2008 as head of design at the age of just 39, Wagener abandoned the engineering-inspired styling of individual models under predecessor Peter Pfeiffer in favor of a unifying philosophy for the whole brand and a fresher look that appealed to younger customers. Most striking was the transformation of its core compact model, the A class, which lost its drab, functional minivan looks in favor of a sleek and sporty hatchback shape that embodies Wagener’s so-called Sensual Purity design language that is meant to reconcile emotion with intelligence. “I spend a lot of time in our design dome”, Zetsche tells. “I’m convinced that with Gorden Wagener, we have probably the most talented and capable head of design”. The big question is whether Mercedes can remain on top or, if it slips, whether it will still reach Zetsche’s original target of being the biggest premium carmaker in 2020. The brand is at a product-cycle peak, having launched the S class, C class and most recently the E-class sedan this year in short succession. The next high-volume models won’t come until its family of compacts is renewed starting in 2018. Meanwhile, the competition has awoken. Audi late last year introduced its new A4, providing competition in this volume-heavy segment. Meanwhile, BMW is gearing up to launch the new 5 series, which has historically been a more serious competitor for the E class than the larger 7 series has ever been to the S class. BMW also hopes to copy the success of the S-class Maybach by launching its own version of a 180,000 euro-plus car. “What happens to Mercedes’ margins when the product cycle has peaked and may not be quite so supportive? We will certainly get more of an indication after the arrival of the new 5 series, a hugely important car and key profit driver for BMW, than we had from the 7 series”, said Church, who added that she remains skeptical about the sustainability of Mercedes’ turnaround. “The jury is still out. I’m still slightly wary”. Moreover, Daimler still struggles with a sizable staff. The Mercedes-Benz Cars division, which includes Smart, had 137,000 workers at the end of last year. The entire BMW Group, which includes 3 car brands, a motorcycle business and a financial services division, employed 122,000 people. A big difference between the companies is Mercedes’ higher level of manufacturing depth. BMW, for example, sources all of its transmissions from suppliers such as ZF Friedrichshafen while Mercedes builds them in-house. Zetsche told analysts during the second-quarter results conference call in July that he saw the prospect of electric vehicles, where Mercedes will be last to market with its EQ subbrand, as “an opportunity to further reduce vertical integration”. Due to its large number of German employees, Daimler has been forced to inject $5.83 billion to top up its domestic pension fund since December 2014. Even after effectively pawning its 3.1 percent stakes in Renault and Nissan to the plan’s asset pool to save cash, Daimler is still nearly $12.1 billion short. Lastly, Zetsche has realized the group’s bloated organizational structure is not nimble enough to compete with tech startups and has asked nearly 150 Daimler managers to come up with proposals to address this weakness. The team involved in Daimler’s Leadership 2020 initiative is already putting some of the proposals into place. Here, Zetsche can rely on the full support of his once-combative German trade unions. “We believe it will help minimize the hierarchical management culture”, a Daimler labor official said. “Case in point: In the past, something like this would be decided by the senior executives and then cascaded down without ever asking for any input from the work force”. Zetsche has also proved more flexible and pragmatic than BMW in terms of partnerships. He teamed up with Nissan to develop a joint front-wheel-drive platform for compact cars together with the Japanese carmaker’s Infiniti premium brand. BMW has largely continued with its stand-alone strategy. Daimler is also being rewarded for its openness to a new business idea long before competitors. First launched in 2009 in the provincial German city of Ulm, the company’s Car2Go car-sharing scheme has expanded across the globe. In October, Car2Go announced it had crossed the 2-million-customer mark; almost 4 times as many as BMW’s car-sharing joint venture, DriveNow. All of this success can be traced to that stormy evening in 2013. The S class, the first car with the ability to steer and accelerate itself through a traffic jam, was the game-changing vehicle that Mercedes, and especially Zetsche, needed. +++

+++ MINI is considering adding a coupe version of the all-new Countryman to its range as an indirect replacement for the old Paceman. BMW Group design chief Adrian van Hooydonk told that the company was weighing up a different take on the Paceman formula. The new five-door coupe would likely launch in 2018, giving the all-new Countryman some breathing space when it lands early next year. “Part of the issue was the three doors”, van Hooydonk told. “We have looked into a lot of things, but all of our (BMW) SUV coupes are five-door vehicles. As much as people probably drive the cars with only one or two people, they like the comfort of an extra set of doors. They want to carry extra stuff – throw a bag in the rear or take someone”. The coupe will sit on the same UKL1 platform as the new Countryman, but it will sit lower to the ground and feature a more aggressively raked roofline. It will be a direct rival to cars like the Range Rover Evoque, and offer a similarly compromised rear cabin and boot. Due to its shared platform, the new Paceman is likely to lift the Countryman’s range of three and four-cylinder engines unchanged. That means the same entry-level 1.5-litre Cooper, more economical Cooper D and racy Cooper S. A flagship John Cooper Works hot SUV is also an option. “At the moment we are laying the foundations for the next-generation Mini’s”, van Hooydonk told. “There are a lot of things that we are discussing. What type of technology, what type of design, and what type of vehicle line-up. I am involved in this on a daily basis. We have turned Mini from one car into a brand. We have managed to attract people to the brand who knew the old car – but you can’t ask people to compromise any more”. Elsewhere in the BMW Group, the X4 and X6 coupe-SUVs have enjoyed huge success, with a third model, the X2, due in dealers by 2018. A new Mini Countryman Coupe would undercut the X2 despite sitting on the same platform. +++

+++ The next-generation ROLLS-ROYCE Phantom has been spotted testing, ahead of its confirmed launch in 2018. BMW Group’s luxury car maker recently revealed that the car’s all-new aluminium architecture has now moved into an advanced stage of development. No official technical details have been revealed, but insiders expect the new car to feature one of two possible engines: a more powerful version of the current Phantom’s 6.75-litre V12 unit, or a boosted version of the 6.6-litre V12 unit featured in the new Dawn. Rolls-Royce says that demand for the current Phantom is so high that orders have pushed into 2017. The car maker also says that all 50 of the final Phantom Coupé and Drophead Coupé Zenith Collection cars have been sold. +++

+++ The SEAT Arona small SUV will get the same rugged, off-road variant, called X-Perience, as its Ateca sibling following its launch late next year. The Ateca X-Perience, which was revealed at the Paris motor show earlier this year, gained 18-inch wheels with high-profile tyres, scratch resistant matte green paint and black body cladding, as well as orange highlights across the exterior and interior. It will also have a four-wheel drive system already found on high-end Ateca versions. The Arona X-Perience is expected to gain the same features, grafted onto the model’s smaller package. I expect the Ateca X-Perience to be priced at around 1.500 euro above the top-spec Ateca Xcellence trim, so the same premium is likely for the Arona X-Perience, which is also expected to feature the range-topping Xcellence trim, given Seat’s extension of the Xcellence badge to the Leon. Talking about the Ateca X-Perience, Seat’s research and development vice president, Matthias Rabe, said: “The X-Perience is an exercise to show the Ateca family’s possibilities and potential in the future. With the Ateca X-Perience we can go beyond that which we already have in the series. It’s for the customer who wants to go further, taking it to the extreme, for weekend adventures and, of course, off-road”. A number of Seat executives declined to comment on an Arona X-Perience, hinting at the plans. Meanwhile, a Seat spokesman could not confirm anything more than the Arona’s arrival in the second half of next year, and its shared platform with the next Seat Ibiza and Audi Q2. However, with Seat considering the Arona as one of its four key models in the future, it is highly likely an X-Perience model will reach production. +++

+++ Fleet sales continue to drive the car industry in the UNITED KINGDOM forward, as new October figures show 1.4 percent growth amid falling private sales. The month of October saw 180,186 cars registered, bringing the yearly total to 2,330,663 cars and up by 2.5 percent, according to the latest figures released by the Society of Motor Manufacturers and Traders. Fleet registrations continue to be the driving factor behind new vehicle sales on UK forecourts, with demand up by 4.2 percent compared to this time last year. According to the SMMT, the private sales market is stabilising after record high growths, and is down 1.1 per cent compared to last year. Alternatively fuelled vehicles continue to show the biggest promise in the industry, with registrations up 12.4 percent in October and 23.3 percent for the entire year. There have been 75,987 alternatively fuelled vehicles registered so far in 2016; the highest level ever achieved in the first 10 months of the year. Rising fleet demand and has surely helped Mercedes to increase sales by nearly 20 percent this year. It’s rivals, Audi and BMW also show rising sales. Equally impressive was Jaguar Land Rover, which saw year-to-date registrations go up by nearly 50 percent for Jaguar and 26 percent for Land Rover. Volkswagen, which has been troubled by an ongoing emissions scandal for over a year now, has seen sales fall by over 10 percent. British top10 sellers were: 1) Ford Fiesta (103,945 registrations), 2) Vauxhall Corsa (68,831), 3) Ford Focus (61,233), 4) Volkswagen Golf (59,474), 5) Nissan Qashqai (55,238), 6) Vauxhall Astra (49,756), 7) Volkswagen Polo (47,161), 8) Mini Hatch (39,913), 9) Mercedes C-Class (37,918) and 10) Audi A3 (37,521). +++

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