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+++ BMW’s new 1 Series is on the horizon for late 2018, but AUDI will also have a fresh challenger ready to take it on in the form of the latest A3. The popular hatch will debut in hatchback, saloon and, eventually, coupe form. The A3 is one of the best-selling premium models thanks to its range of bodystyles, trim levels and powertrains covering all the bases. So don’t expect the formula to radically change for the fourth-generation car, with evolutionary styling to bring it into line with the latest A4. Like the forthcoming Volkswagen Golf Mk8, the next A3 will use the VW Group’s updated MQB platform, but it’s also set to grow slightly to allow for increased space inside. Don’t expect the same weight-saving from generation-to-generation as the A4 as a result, but there could still be a few kilos shaved off as Audi’s engineers work their magic. We can expect much of the same interior technology drafted in from the A4, though. The clever virtual cockpit digital dials should be available across most of the range, while further features like wireless smartphone charging and a WiFi hotspot are likely. Whether or not we’ll see some of the clever autonomous tech that’s set to debut in the next Audi A8 is yet to be seen. The dash design itself is unlikely to be too different from the A4, however. Using the MQB platform means there’s scope for a huge variety of engines to be offered. Many will be updated from the existing (and not yet out of date) units, with both three and four-cylinder turbo petrols and diesel on the cards. A super-frugal plug-in hybrid e-tron model will push the claimed fuel economy figures event further, while it’s expected that the brand’s 48-volt electric system could be used to create a number of ‘mild hybrid’ models. Of course, there will also be the cooking S3 and super-hot RS3 variants for 2020 and beyond. I’m expecting the new A3 to be previewed late next year ahead of it arriving in showrooms in the first half of 2019. Prices will likely increase slightly over the current. +++

+++ BMW is plotting a new generation 1 Series. The next premium hatchback from BMW is set for a reveal late in 2018, before hitting showrooms in early 2019. Though a launch is still just under 2 years away, photographers have caught an early glimpse of the car undergoing assessment by BMW engineers. Don’t expect BMW to push the next 1 Series too far away from the current car in terms of design. It’ll get a modernized look strictly in rank and file with the rest of the range, while the big changes will be saved for under the skin. The BMW 1 Series has been a huge success since it launched in 2004, but BMW is planning a complete rethink for the third generation of its premium hatchback. A radical revamp under the skin will see rear-wheel drive ditched in favour of drive to the front axle. The new 1 Series will use the UKL platform that features on the BMW X1 and Mini range. While that will affect the way the 1 Series drives, BMW is confident that more people will benefit from the practicality and efficiency the new platform can offer. A longer wheelbase and absence of a propshaft will free up more space for passengers in the back, and also increase boot capacity. The new 1 Series should also be marginally taller and wider. While big changes are going on beneath the skin, the redesign of the 1 Series won’t be as revolutionary. The third-generation hatchback should appear sleeker than the current model; softer body panels and slimmer LED headlights that integrate with the kidney grille, like those seen on the new 5 Series, will be the standout changes. The new platform will bring advantages when it comes to weight reduction and practicality, but fans of the faster M models are going to be left disappointed. As the UKL platform is only compatible with four-cylinder engines, that means the next flagship M140i will have to ditch its sonorous straight-six engine in favour of a turbocharged four-cylinder. Not only that, but it will also switch from rear-wheel drive to xDrive four-wheel drive. That means it will be a direct competitor with models such as the Volkswagen Golf R, Mercedes-AMG A45 and Ford Focus RS. Engines for the rest of the 1 Series range will be adopted from the Mini and X1 line-ups. Entry-level cars, likely to be badged 116d, should come powered by an updated version of BMW’s 1.5-litre three-cylinder diesel, while a turbocharged three-cylinder petrol unit should appear in the 118i. Larger and more powerful 2.0-litre four-cylinder petrol and diesel engines will be found in the 120i and 120d respectively. BMW will also use the next 1 Series to launch a wider roll-out of its iPerformance line-up. Joining BMW’s five other plug-in hybrid models will be an electrified 1 Series using a tuned version of the powertrain found in the Mini Countryman Cooper E. Comprising a 1.5-litre turbo and small electric motor and CO2 emissions below 50 g/km are likely. We can expect new versions of the 2 Series Coupé and Convertible to follow the 1 Series at the end of 2019, and these will also adopt a front-wheel-drive layout. The industry’s focus may be on developing an army of SUVs, but hatchbacks such as the 1 Series are often the best sellers in a premium brand’s line-up. These are the incoming models that the BMW will face, and the cars that the manufacturers can’t afford to get wrong. +++

+++ The new BMW 5 Series saloon, which we named as our Car of the Year in January, has been awarded with a full five-star safety rating from EURO NCAP. Explaining the results, Euro NCAP said the 5 Series performed well in all of its crash protection and avoidance tests, while the effectiveness of its automatic emergency braking (AEB) system was also praised. Particularly impressive, says Euro NCAP, is the 5 Series’ pedestrian safety system, which combines a ‘person warning’ alarm with an active bonnet – which raises up in the event of a collision to better protect pedestrians. At the other end of the scale, Fiat’s latest Doblo, which is based on the van of the same name, has also been tested and was awarded with three stars. This generation of Doblo was introduced in 2010, and Euro NCAP says that its relatively poor performance shows the true age of the car. Euro NCAP’s Secretary General, Michiel van Ratingen, said, “Fiat’s line-up now features several cars that have been on the market for a long time and their safety is well behind the class leaders”. He also said that BMW “has led the way with a new 5 Series that features lots of driver assistance systems which Euro NCAP believes will transform safety in the years to come”. +++

+++ The U.S automotive industry is weakening, and this may be the beginning of a cyclical decline. Not only are car sales and used car prices declining, but defaults on auto loans have begun to increase. FORD faces a two-pronged challenge that suggests further downside in the stock. However, much of the bad news may be priced in by now. A recent string of bad news pummeled the company: sales slumps and there are several recalls on key products. The bear case for Ford is predicted to sub-prime lending and cyclical industry decline. In light of these challenges, Ford’s stock should be avoided. But investors who go short now are late to the party and may be trading on priced-in information. Ford’s is an automaker and a financier through its ‘bank’ Ford Credit. Ford Credit helps customers finance their vehicle purchases through in-house lending. General Motors is heavily involved in this type of lending as well. Analysts have been calling a “subprime auto lending bubble” since the beginning of the year. But the problem is becoming too big to ignore. Not only is the total of U.S automobile debt growing, but its quality is decreasing. The loans are being increasingly made up of sub-prime borrowers. And the delinquency rate on these loans has upticked sharply. Further evidence that automotives are entering a cyclical downturn can be found in the used car market. Prices have been declining significantly. And the pain has even been felt in the rental car space. Investors are demanding higher premiums for bonds issued by Hertz and Avis. The market seems to be bracing for a severe decline that will leave no one untouched. Conclusion: Ford faces headwinds in the U.S auto industry. The full extent of this trouble remains to be seen, but the market appears to be bracing for a cyclical downturn in the automotive industry. Ford is uniquely impacted because of its usage of subprime lending through Ford Credit. If subprime delinquencies continue to rise while auto sales continue to fall, Ford will be crushed on both sides of its business. Are we witnessing the bursting of the “subprime auto bubble”? How much downside is left in the stock? I previously made the call to short Ford, but while I still see significant headwinds for the company, the news is late. And reactionary investment advice is usually useless because it’s impossible to know how much of Ford’s bad news is already priced into the stock price. +++

+++ Chinese automaker GREAT WALL is considering building an auto plant in two Mexican states hit by U.S. President Donald Trump’s drive to make American companies invest at home, sources said. Great Wall, which describes itself as China’s largest SUV and pickup manufacturer, is interested in building a plant in Nuevo Leon in northern Mexico or the central state of San Luis Potosi, three people familiar with the matter said. Under pressure from Trump to keep jobs in the United States, Ford in January canceled a $1.6 billion plant in San Luis Potosi, while heating and air conditioning firm Carrier in December scaled back plans to move production to Nuevo Leon. Great Wall officials met with Mexico’s top railroad firms, Ferrocarril Mexicano (Ferromex), part of Grupo Mexico, as well as Kansas City Southern de Mexico, to evaluate the states’ connectivity, according to a source. He said the company was in direct talks with Nuevo Leon’s government. Another source said the automaker was also eyeing a U.S.-based plant but gave no further detail on locations. A senior Great Wall executive, speaking on condition of anonymity, said the choice between U.S. and Mexican locations would depend on trade issues involving the United States, Mexico and China. Great Wall and Ferromex did not immediately respond to requests for comment. A spokesman for Kansas City Southern de Mexico confirmed Great Wall officials met the company, but declined to provide further details. A pledge by the Chinese firm could bolster Mexico’s efforts to reduce dependence on U.S. trade and investment as Trump threatens to rip up the North American Free Trade Agreement (NAFTA) and rails against U.S. firms moving jobs south. China, a low-cost manufacturing rival to Mexico, has traditionally invested little in Latin America’s second largest economy. But there are signs that could be changing. In February, China’s Anhui Jianghuai Automobile (JAC) and distributor Chori Company unveiled plans with a firm part-owned by Mexican tycoon Carlos Slim to invest over $200 million in a car plant in the central state of Hidalgo. According to one of the sources, construction on the Great Wall plant could get underway next year and cost about $500 million. It would produce some 250,000 autos a year for the American and Mexican markets and seek to use Chinese inputs, the person added. +++

+++ The revised MERCEDES S-Class will be the most advanced autonomous model on sale when it arrives in autumn this year. Due to make its appearance at the Shanghai motor show, I was given a sneak peek of the car which confirms that aesthetic changes are only minor and include new front and rear bumpers and headlights. There is also a new grille design, integrated exhausts and ultra-range LEDS. Inside, the car features fully bonded optic glass across two 12.3-inch display screens. According to Kirk Petzer, S-Class product boss, the subtle design changes were done “wisely and sensitively” following customer feedback on the existing model. The most notable developments to the S-Class surround its driver assistance systems, particularly those which facilitate advanced autonomous capabilities. The systems include a newly developed Active Distance function that provides fully autonomous acceleration and braking over any given journey programmed into its sat-nav, in conjunction with an updated Active Speed Limit Assist system. A revised Distronic cruise control system, which Mercedes says will eventually filter down into all of its future models, offers a new autonomous driving function that promises improved safety as well as a set-and-forget speed limit function which strictly adheres to both posted and temporary speed limits, whether in town, country roads or on the motorway. Crucially, it is able to autonomously adjust the speed according to the route, braking for corners, decelerating when approaching motorway exits and stopping when the driver indicates to turn across the path of oncoming traffic. Supporting the Distronic system is a new series of graphics, both within the instrument cluster and within the optional head up display unit. The new optional driver assistance system, which is accessed via buttons on a newly designed multi-function steering wheel rather than Mercedes-Benz’s traditional cruise control stalk, relies on an upgraded stereo camera mounted within the windscreen, with the two lenses moved further apart for improved definition, to scan road signs. It also uses an improved long-range radar system capable of operating at up to 250 metres in front of the car to support the driver and autonomously stop the S-Class if it detects an obstacle. It’s also able to provide anticipatory adjustments in speed on the basis of digital mapping data in the upgraded Comand Online 5.5 sat-nav and infotainment system. The mapping data, provided by the Here joint venture, which is owned by Audi, BMW and Mercedes-Benz, is described by Michael Hafner, the head of automated driving and active safety at Mercedes-Benz, as being “significantly more intelligent” than that of previous systems. It is this data which allows the Active Distance function to reduce speeds at bends, roundabout and tollbooths, for example. The character of the autonomous functions can be altered in three modes via the S-Class’s Dynamic Select system:  Eco provides a conservative driving style for maximum fuel savings, Comfort aims for more serene progress and Sport is programmed to maximum accelerative potential while providing later and more severe braking. Cornering speeds are also varied between the three modes. Mercedes-Benz’s latest autonomous cruise control function also controls the following distance to other vehicles within a speed range between 0 and 210 km/u. To maximise fuel economy in Eco mode, it also engages the coasting function during periods of trailing throttle, taking into account the speed limit and autonomously braking to ensure you remain within it. Coupled with a revised Active Steering Assist function, the Active Distance function offered on the facelifted S-Class also provides autonomous steering for periods of up to 30 seconds. Hafner says the software controlling the autonomous steering function has been extensively reworked, providing it with greater accuracy and improved fluidity. Further driver assistant systems set to be adopted by the facelifted S-Class include the Active Lane Change Assist, Active Emergency Stop Assist, Active Brake Assist and remote Parking Assist functions already offered on the E-class. While Mercedes won’t confirm details of the car’s engine line-up until next week, the units are likely to be carried over in their entirety but with minor improvements to fuel economy and CO2 emissions figures. I do know that the car maker’s straight-line 3.0-litre six-cylinder petrol unit will replace the V6, while a plug-in hybrid is also under development which will offer an all-electric range of “more than 50km”, according to Fetzer. He also confirmed the introduction of the 48-volt mild-hybrid system, as reported by Autointernationaal.nl last year, describing it as one of “the biggest refreshments” for the car. While he said it would not be used across all engines in the S-Class’ line-up, it will be used in the new straight-six unit. It uses an electrical motor attached directly to the crankshaft. This can act as both an alternator and a starter (allowing the engine to fire up in just a fraction of a second) but it will also be able to add assistance and harvest electricity through regenerative braking. Ketzer confirmed that both AMG 63 and AMG 65 models would remain in the range, but said a warm AMG 43 variant (which are proving popular in other AMG models) is not currently under consideration for the S-Class. “We don’t currently foresee the 43 for the S-Class”, he said, adding that the AMG 63 and AMG 65 do “extremely well for us in the S-Class”. The AMG 63 model’s current power is expected to increase from 585 hp. With S-Class customers keen for performance and luxury, the Maybach variant will also continue in the revised line-up, confirmed Ketzer, while regular and long-wheel base varieties will stay too. Pricing has not yet been announced, but expect a small increase over the current model. As I set off in the facelifted S-Class with all its various driving assistant systems switched on for the first time, the overriding impression is just how far Mercedes has come to delivering on the promise of equipping its future models with fully autonomous driving capability. While Mercedes is yet to provide its upper luxury saloon with a full-time autonomous steering function due to such a system’s illegality on European roads, the combination of its new Active Distance Assist and Active Speed Limit Assist functions nevertheless represent a significant step toward endowing the S-Class with the driverless mobile lounge-like qualities touted by recent future-focused concepts such as the F015 Luxury In Motion. With a route programmed into its updated Command Online navigation system, the updated S-Class gets under way with a nudge of the throttle from the driver. From there, it autonomously accelerates and brakes its way out of Mercedes’ technical centre on the outskirts of Stuttgart. Using information gathered by its newly engineered stereo camera, long-distance radar and digital mapping data from the navigation system, I spend almost an hour heading along a section of a six-lane autobahn, winding country roads and urban streets. Impressively, the only action required by the driver is an occasional tweak on the new multi-function steering wheel. With the new Mercedes able to accelerate and brake on its own, stress on its driver is clearly reduced. As a further advantage, the car’s speed never rises above the legal limit. What really impresses is the predictive element Mercedes has engineered into its latest Distronic system. As I exit an autobahn, the S-Class autonomously applies braking force within the exit lane, recognising the corner ahead and adjusting our speed accordingly. When I reach the corner, sufficient speed has been wiped off to enable the driver to confidently turn in before the car accelerates itself back up to the 70 km/h limit without the driver’s foot coming anywhere near the throttle. In another example of the predictive capability, the new Distronic system applies braking force while on the entry to towns, ensuring the speed of the car is perfectly matched to the limit right at the appearance of the town sign. What it also does well is easily identify temporary speed limits in construction zones, even on signs that are partly obscured. But while representing a big advance on the former Distronic system, the Active Distance Assist and Active Speed limit Assist systems are not quite perfect. The sign scanning software cannot yet differentiate between varying speed limits where the sign denotes a certain time of day for one limit and then a second time of day for another limit. “We’re working on it”, says Hafner. “But the complexities are enormous and these things simply take time”. I also noticed that the car failed to come off the throttle and adjust speed when we passed a temporary sign warning of an oil spillage. +++

+++The SUBARU Ascent name has been confirmed for the brand’s upcoming 7-seat SUV, destined for the North American market next year. On show in concept form at the New York motor show, the Ascent evolves the design of the Viziv-7 concept that was first shown in LA in November. It will become the largest model the Japanese brand has ever produced. No numbers have been revealed for the Ascent, but the Viziv-7 was 1 mm longer and 20 mm taller than a long-wheelbase Range Rover, although it was a fair bit narrower. This would make the car considerably larger than the Skoda Kodiaq and Toyota Land Cruiser, with a wheelbase not far off that of a Bentley Flying Spur. The production version, which is due in 2018, will be based on Subaru’s new Global Platform, shared with models like the next XV. It will be powered by a turbocharged flat-four boxer engine and drive all four wheels. The Ascent concept’s cabin features a digital instrument cluster and central touchscreen. There are also touchscreens for the window controls. Some of these features will likely make it to the final car. Takeshi Tachimori, Subaru’s corporate executive vice president, said of the model last year: “We know customers in this segment want a full-sized vehicle and the next three-row from Subaru will be the biggest Subaru vehicle ever”. Tachimori described the brand’s 7-seater as ‘forward-looking’, ‘dependable, safe and capable’, hinting at the car’s off-road ability. +++

+++ In the UNITED KINGDOM, Motorists are racing to beat new green taxes pushed cars sales to an all-time record last month. Data on new car registrations – a proxy for sales – showed that in March 562,337 vehicles were registered, an increase of 8.4 percent on the same month a year ago. Changes to vehicle excise duty rates (VED) meant that from April 1 all new cars except zero-emission ones such as those with electric power systems are hit with higher tax charges that previously only affected those with large engines and higher emissions. Instead of paying as little as £10 a year in VED for ultra-low emission petrol and diesel engines, after the first year all cars except for zero-emission models will be taxed at £140 a year. Sales in March already received a boost as it is one of the 2 months each year (along with September) when registration plates update, denoting a new car, traditionally a status symbol that drives demand. This boost, along with the scramble to beat the VED change, meant that during March more cars were registered than in the first 2 months of the year combined. With 820,016 new vehicles registered in the first quarter, this was another new record for Britain’s car industry. “These record figures are undoubtedly boosted by consumers reacting to new VED changes, pulling forward purchases into March, especially those ultra-low emission vehicles that will no longer benefit from a zero-rate fee”, said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, which collated the data. He forecast that the surge would probably mean sales in April will be lower than normal and added that the industry expects the market to cool from 2016’s all-time record of 2.7 million cars sold. Economic uncertainty related to Brexit could also put the brakes on sales, though previous forecasts of a slowdown have been defied by buyers. Closer examination of the headline figures reveals that alternatively fuelled vehicles (AFVs) with environmentally friendly zero-emission power systems surged 31 percent during March, but at 22,818 represent only a fraction of the total market. Diesel car sales rose 1.6 percent during the month to 244,263, giving the fuel 52.5 percent of the market. This surprised some in light of the VW “dieselgate” scandal and recent news that many major cities are discussing levies of as much as £10 a day on diesel vehicles, reflecting concerns about the pollution they emit. Private buyers made up 48.7 percent of the market, a rise of 4.4 percent, indicating those buying cars out of their own pocket were highly aware of the impact of the new VED regime. March’s sales surge was “impressive” but possibly a “last hurrah” for the sector according to Howard Archer, chief UK economist at IHS Markit. “There was clearly a considerable lift to sales coming from both consumers and businesses bringing forward car purchases before VED changes,” he said. “It looks odds-on that the squeeze on consumers’ purchasing power will deepen appreciably further while businesses will face increasingly challenging and uncertain conditions which may well cause them to be more circumspect in replacing their car fleets”. Manufacturer Jaguar Land Rover (Britain’s biggest car producer, responsible for more than 500,000 of the 1.7 million cars rolling off UK production lines every year) said the sales increase meant that during March every 30 seconds one of its vehicles was registered in the UK. +++

+++ VOLKSWAGEN plans to build another new SUV at its Chattanooga, Tennessee, plant as demand surges for larger vehicles, the German company’s top U.S. executive said. VW Group of America Chief Executive Officer Hinrich Wöbcken told reporters that the automaker planned to build a five-seat SUV in Tennessee, but he declined to say when production would begin. The news follows VW’s 2014 announcement that the company would spent $900 million to build a new SUV in Tennessee. Volkswagen, the largest automaker worldwide by sales, will start selling its new seven-seat VW Atlas SUV next month. Wöbcken said VW was shifting focus in the United States from a mainly car brand to a “family friendly” automaker offering larger, U.S.-built SUVs. At the show, major automakers said they expected the popularity of SUVs to increase in the United States. SUVs’ share of U.S. vehicle sales rose to nearly 40 percent in 2016 from 32.6 percent in 2014. Wöbcken would not say whether VW would add additional workers in Tennessee to build the new SUV. VW will sell four separate SUVs in the United States later this year, a figure that does not include the new one. The company said on Tuesday that it would continue selling the current Tiguan as the “Tiguan Limited” for several years even as it plans to offer a completely new, larger version later this year. The company also announced it was offering an industry-leading six-year, 72,000 mile warranty on its new SUVs. As part of its diesel emissions settlement, Volkswagen has agreed to add at least three additional electric vehicles, including an SUV, in California by 2020 and must sell an average of 5,000 electric vehicles annually there through 2025. Wöbcken said he hopes that decision will help boost the company’s image in the United States. VW has agreed to spend up to $25 billion to buy back vehicles and resolve claims from U.S. regulators, dealers, owners and states. +++

+++ The 2017 WORLD CAR Awards winners have been announced, and in a decision that reflects the increasing dominance and popularity of the SUV market sector, the Jaguar F-Pace has been named World Car of the Year for 2017 at the New York Motor Show; the first time a British car has taken the overall crown since the inaugural awards in 2003. I’ve also got winners for the five other categories: World Urban Car of the Year, World Luxury Car of the Year, World Performance Car of the Year, World Green Car of the Year and World Car Design of the Year. More British representation is found in the Performance Car and Car Design categories, with the McLaren 570S and Jaguar F-Pace again. Votes from 75 international jurors determined the shortlist for the six categories and with the New York show underway, we’ve got the full list of winners. World Car of the Year: Jaguar F-Pace (Jaguar’s first SUV effort has instantly taken the fight to established premium carmakers with more experience in the SUV market sector, and has been awarded with the coveted World Car of the Year crown. With its eyecatching looks, sweetly interpreting Jaguar’s design language into a rakish SUV design, it’s picked up the World Car Design of the Year gong too). World Urban Car of the Year: BMW i3 (Three years on from its introduction, the i3 is still one of the most desirable urban cars on the market thanks to its cool interior, electric powertrain and space age exterior design. A round of revisions in 2016 has kept the car fresh, with a denser 94 Ah battery pack for greater range – on a single charge it now comes with a claimed 195 mile range). World Luxury Car of the Year: Mercedes E-Class (The Mercedes E-Class placed as a runner up for the overall title in 2010, but the latest model – introduced last year – takes home the World Luxury Car title for 2017). World Performance Car of the Year: Porsche 718 Boxster/Cayman (Porsche’s switch to four-cylinders has done little to dent the reputation of the latest 718 Boxster and Cayman models. It’s the fifth time Porsche has won the Performance Car category). World Green Car of the Year: Toyota Prius Plug-in (The Toyota Prius Plug-in takes home World Green Car of the Year for 2017, marking back to back wins in the category for the Japanese giant – the Mirai took class honours last year). World Car Design of the Year: Jaguar F-Pace (It’s a double for Jaguar – the F-Pace’s look set the benchmark for 2017 according to World Car Awards judges. It’s the second time Jaguar has won the award, after the F-Type won in 2013). +++

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