+++ CHINA ’s auto industry is charging ahead with aggressive plans to electrify cars even as policymakers scale back subsidies aimed at building sales from relatively low levels and consider tapping the brakes on sales quotas for plug-in cars. Industry executives will use the Shanghai Motor Show to show off numerous battery electric and plug-in hybrid models. But behind the scenes, many are worried that batteries capable of delivering the same driving range as gasoline cars are still too expensive. While green energy car sales have risen dramatically on the back of government policies, making China the world’s leading market in this segment, electric cars have otherwise generated little consumer interest. They make up less than 2 percent of China’s overall auto market of 28 million vehicles sold last year. The dominant players in China’s electric vehicle market are local, including state-owned Beijing Automotive Group, and Warren Buffett-backed BYD. Most cars are relatively cheap with limited range. Beijing’s central government has floated proposals to require automakers to substantially boost sales of so-called “new energy vehicles” (NEVs), or risk being penalized. But at the same time, it is cutting subsidies on green cars by a fifth this year, a move that could deepen manufacturers’ losses on such models and discourage consumers from buying them. Policymakers say reducing subsidies gradually to 2020 will wean automakers off government support and create a self-sustained market for electric vehicles. Industry officials and experts reckon tightening fuel efficiency regulations through 2020 will compel car makers to rely more on electrification to boost average fuel efficiency despite the drop-off in subsidies. Industry executives say long term, they expect China will insist on more electric vehicles, and to be ready, they must invest in developing those vehicles now. “We’re not holding back anything. The requirements whether they get changed or adjusted or whatever, the bottom line is clear that electrification is going to play a bigger and bigger role … in China and other markets as well”, Ford CEO Mark Fields told reporters at a pre-show event this month. Industry executives expect Beijing to ask automakers operating in China ultimately to generate green car credits equivalent to 12 percent of annual sales volume with NEVs by around 2020, with each green vehicle getting a different number of credits depending on the level of electrification and driving range. Automakers and government officials have been bargaining over China’s electric vehicle policy for years. In the latest draft policy released in September, Beijing proposed a requirement that they generate credits equivalent to 8 percent of automakers’ sales next year by selling battery electric or plug-in hybrid vehicles, rising to 10 percent in 2019 and 12 percent in 2020. More recently, the government has indicated that timetable could slip. Whatever target the government sets, automakers would have little choice but to comply. China is the world’s biggest auto market by far, and growth is set to continue this year, albeit at a slower 5 percent, according to the China Association of Automobile Manufacturers. That is why even as automakers fight electric vehicle mandates in the United States, they are scrambling to develop more plug-in electric hybrids and electric battery cars for China. Ford, for example, says that by 2018 it will launch in China a plug-in hybrid sedan called the Mondeo Energi, a version of the low-volume Ford Fusion Energi offered in the United States. It also plans to bring an all-electric sport-utility vehicle to China over the next 5 years. General Motors, one of the largest automakers in the Chinese market, plans to launch at least 10 NEVs by 2020. To support the growth of its NEV line-up, GM has built a battery assembly plant in Shanghai which should be ready to deliver battery packs next year. Volkswagen plans to have 13 additional NEVs by 2020 based on its current generation of technology, following on plug-in hybrid versions of the Phideon sedan, due to be unveiled later on Tuesday, and the Audi A6L sedan. The VW brand aims to further launch 10 electric vehicles between 2020 and 2025. The German manufacturer also hopes to form a joint venture just for NEVs with Anhui Jianghuai Automobile Group (JAC), and any models from that partnership would be on top of those plans, a spokesman told. VW said in January the first VW-JAC car could be produced next year. China’s drive for electric vehicles, driven in part to combat often suffocating urban smog, has put pressure on Toyota to re-think its earlier scepticism about battery-electric technology. Toyota has said it will locally build plug-in hybrids and sell them in China, starting in 2018, although it has not said when all-electric car models would hit Chinese showrooms. To be sure, even as automakers renew commitments to produce more NEVs, it’s not clear how aggressively they would push those cars in the marketplace. “All automakers in China are still trying to understand the implications of the more stringent fuel efficiency regulations and whether to increase production of qualifying NEVs or purchase NEV credits from other automakers, including their partners”, said James Chao, Shanghai-based Asia-Pacific chief of consulting firm IHS Markit Automotive. +++
+++ Fiat Chrysler Automobile’s premium MASERATI brand expects to see sales in China rise as much as 47 percent this year, the firm’s chief executive said. Reid Bigland said China sales of the luxury Italian brand would be 17,000 to 18,000 vehicles, from 12,250 last year. Bigland said the firm’s growth prospects in China were not tied to the overall Chinese car market, which many in the industry expect to slow this year as tax incentives on small-engine cars are reduced. “Whether the market is going to be up or down 7 or 8 percent, we’re not playing in that arena”, he said, adding growing demand from younger consumers for luxury experiences, comfort and performance was behind the forecast. He added Maserati was forecasting global sales of 55,000 vehicles this year, versus 42,000 in 2016. In October Fiat Chrysler nudged up its full-year forecast, partly on the back of strong profit at Maserati, helped by the launch of its first sport utility vehicle, the Levante. +++
+++ The MERCEDES Concept A Saloon, revealed at the Shanghai motor show, previews the striking design of a new entry-level saloon. A production version is set to reach showrooms by the end of next year and will be part of the German firm’s 8-model compact car line-up. The new four-door has been conceived to challenge the likes of the Audi A3 saloon and upcoming BMW 1 Series saloon. The latter is currently produced and sold exclusively in China, but BMW officials say it is likely to be offered globally when the third-generation 1 Series is launched in 2019. As with the models offered by its premium brand rivals, the new Mercedes saloon is set to give buyers the choice of a range of four-cylinder petrol and diesel engines, including a 400 hp-plus turbocharged 2.0-litre petrol unit in a range-topping A45 4Matic variant. Insiders suggest this car will be added to the Mercedes-AMG line-up in 2019 as a direct competitor to the recently introduced Audi RS3 saloon. Also planned is a petrol-electric plug-in hybrid version that will offer a pure-electric driving range of up to 50 kilometers. Alongside standard front-wheel drive, the A-Class saloon is also being engineered to support Mercedes’ multi-plate clutch 4Matic four-wheel drive system in combination with most engines. Again, this mirrors the strategy adopted with Audi and BMW for the A3 saloon and 1 Series saloon. The new A-Class saloon will take a place in Mercedes-Benz’s compact car line-up alongside successor models to the A-Class, B-Class, CLA, CLA Shooting Brake and GLA, as well as a new SUV, likely to be called GLB, that will rival the BMW X1. The identity of the 8th model in the new line-up remains under wraps, although insiders at Mercedes’ headquarters in Stuttgart suggest it may be a 2-door cabriolet version of the new SUV to counter the Range Rover Evoque Cabriolet. The planned introduction of the A-Class saloon comes in response to customers’ calls for a more practical alternative to the German car maker’s existing price-leading 4-door model, the CLA. Key design elements include what Mercedes describes as the ‘predator face’: an aggressive-looking front section dominated by a low-set oval-shaped grille, large trapezoidal shaped headlights and a contoured bonnet. The striking new look will be shared across the new A-Class line-up and will also feature on other new Mercedes models, including the third-generation CLS, due out later this year. The styling reveals a conscious shift away from the heavily sculptured treatment of existing Mercedes-Benz models towards a smoother appearance with fewer crease lines. The Concept A Saloon has a traditional three-box silhouette with short overhangs, a shape that aims to match the practicality offered by the four-door A3 and 1 Series models. The new look, described by Mercedes design boss Gorden Wagener as a development of the current ‘Sensual Purity’ styling lineage first adopted by the C-Class back in 2014, aims to provide future Mercedes models with ‘timeless’ aesthetic appeal. “The Concept A Saloon shows that the time of creases is over”, Wagener said. “Form and body are what remain when creases and lines are reduced to the extreme. The car has the potential to introduce a new design era”. As well as closely hinting at the design of the new A-Class saloon, the Concept A Saloon also reveals the so-called Panamericana grille treatment, with its vertical slats, as well as the aggressively styled front bumper to be adopted by AMG performance versions of the new Mercedes model. At 4570mm in length, 1870mm in width and 1462mm in height, the Concept A is claimed to mirror the dimensions of the production A-Class saloon that is planned to be assembled alongside the A-Class hatchback, CLA, CLA Shooting Brake and GLA at Mercedes-Benz’s Kecskemét plant in Hungary. The dimensions make it 112mm longer, 74mm wider and 46mm higher than the Audi A3 saloon. It is also 116mm shorter, 60mm wider and 20mm higher than the Mercedes C-Class, which until now has been the German car maker’s most affordable dedicated saloon model. +++
+++ MITSUBISHI will persist with the Space Star into the next generation, despite softening interest. A spokesman said: “From the global perspective, there’s no indication that we’re going to do anything other than keep it going into the new generation”. However, there is no indication of when the Space Star is likely to be replaced; future product planning is under the spotlight across the company after the merger with the Renault-Nissan Alliance late in 2016. +++
+++ A hot version of the OPEL Insignia Grand Sport could reach showrooms with as much as 500 hp from a boosted petrol V6, thanks to Australian maker Holden’s in-house HSV tuning arm. That would be a huge uplift in power from the old Opel Insignia OPC. Sources inside GM suggest Holden Special Vehicles has been playing around with the new Insignia, extracting more than 500 hp from a fettled V6; possibly with the addition of a supercharger. However, as is the existing trend for forced induction and reduced fuel consumption, turbocharging might make more sense for the production vehicle. While the new Insignia Grand Sport is currently only available with turbocharged four-cylinder engines, the range-topper will allegedly use a six-cylinder motor. The Australian market has a penchant for high-capacity petrol engines. With the outgoing Opel Insignia OPC boasting 325 hp from a turbo V6, brand bosses see space above that car, aiming the yet-to-be-named hot saloon squarely at the BMW M3 and Mercedes-AMG C 63 S. Unlike its rivals, however, Opel’s flagship will use an uprated version of the standard Grand Sport’s Twinster all-wheel-drive setup. This allows for the implementation of an innovative torque vectoring system that uses the throttle rather than the brakes for sharper turn-in and less understeer. It’s likely that any fast Insignia will be mated the same eight-speed automatic gearbox as the current flagship 260 hp 2.0-litre Turbo 4×4. Elsewhere, due to PSA Peugeot Citroen’s recent buyout of the Opel brand, plans for a high-power Astra hot hatch have been put on hold. Despite seeing success from the now defunct previous-generation Astra OPC, management has decided to focus on mainstream engine and trim combinations before switching to a PSA-produced platform by 2025. The prospect of future tuned Astras hasn’t been written off completely, however. +++
+++ The sale of PROTON to a successful bidder will be confirmed imminently, according to PSA Group boss Carlos Tavares. PSA Group has long been in the running to purchase the ailing Malaysian car maker alongside emerging Chinese brand Geely. However the latter announced it was pulling out of the bidding process for Proton last month, accusing executives of the brand of indecisiveness in their plans. Tavares confirmed that PSA, which owns Peugeot, Citroen and DS, remains in discussions with Proton to purchase it, but added that it was not the only interested party remaining. He said that the Malaysian authorities say a decision will be made in the second quarter of 2017, meaning an announcement by the end of June at the latest. If the French car maker, which confirmed its purchase of Opel/Vauxhall earlier this month, bought the firm, it could also inherit Lotus, adding a sports car line-up to its portfolio. Before Geely backed out, it had been in a bidding war with PSA for financially-embattled Proton, which is reported to have sold just 75,000 cars last year. “They keep changing, today it’s this, tomorrow it’s that”, said Geely chairman Li Shufu. “They haven’t decided what they want”. Proton is required to attract a foreign partner due to loan conditions from a financial rescue package settled in 2016. Proton, which is controlled by Malaysian entrepreneur Syed Mokhtar Al-Bukhary and his company DRB-Hicom, was established in 1983 by former Malaysian prime minister Mahathir Mohamad as part of the country’s extensive industrialisation program. Geely, which is the parent company of Volvo, the recently announced Lynk&Co brand and the London Taxi Company (LTC), had been eying up Proton as part of a global expansion programme that insiders suggest also included the purchase of Proton-owned Lotus. A high-level Geely executive who asked not to be identified suggested preliminary plans had been drawn up to use Proton’s underutilised Tanjung Malim manufacturing facilities to produce right-hand-drive versions of the recently unveiled Lyn&Co 01 SUV for export to various markets including the UK, Australia and South Africa.
Further plans included establishing Proton as an entry-level brand within the growing Geely portfolio. “Geely has established itself as a reputable middle-class brand in China thanks to its links with Volvo. The purchase of Proton would give it a new entry-level point, which is considered crucial to further growth”, the executive said. By using Proton as an entry-level brand, Geely would also have had key exposure to the potentially lucrative south-east Asian car market in markets such as Malaysia, Indonesia and the Philippines. More crucial to British jobs was Geely’s intention to bundle Lotus with its earlier planned purchase of Proton. “My chairman is desperate to buy a sports car maker. We’ve spoken to Aston Martin and others, but Lotus has always been the target”, he said. Among the attraction in Lotus is the Norfolk-based manufacturer’s lightweight platform technology and engineering consultancy business.
With Geely now out of the running, PSA is expected to finalise its bid for Proton. Officials from the French car maker, which confirmed its purchase of Opel/Vauxhall earlier this month, say they expect a final decision on plans for Proton by the start of summer. Geely and PSA are the latest in a long line of bidders for Proton, which is also said to have considered recent proposals from Skoda, Renault and Suzuki. Earlier talks had also linked the Malaysian car maker with Volkswagen, Honda and Toyota. +++
+++ The next RENAULT Mégane RS will look more mature than many of its hot hatch rivals despite having more than 300 hp. Brand design boss Stéphane Janin said he believed Renault Sport’s next model would be better off flaunting its performance with raw pace rather than lairy design. “Our brand is not about aggressivity”, he said. “We try to have a powerful product but rather simple with sensual shapes. That’s what we tried to make with the next RS, which is actually harder than going aggressive I think. To find the right balance is harder but I think we have done it”. The car will be the most potent Megane produced yet. It will get four-wheel steering and benefit from the larger platform of the latest Mégane, making it a contender to steal the Nürburgring front-wheel-drive lap record from current champion, the Volkswagen Golf GTI Clubsport S. Under the bonnet of the hottest fourth-generation Mégane will be a turbocharged 2.0-litre engine. The unit will produce more than 300 hp, making it at least 30 hp more potent than the most powerful version of the old car’s engine. It will drive the car’s front wheels through a 6-speed manual gearbox, but a 6-speed EDC dual-clutch automatic will almost certainly offered for the first time. While European markets are expected to prefer the manual, markets in Asia will likely have more demand for EDCs. Due to the lower and longer five-door only platform of the new Mégane, which sits 25mm lower and is 28mm longer than the old car, plus the use of wider tracks, the next Mégane RS is expected to have significantly more mechanical grip. The use of four-wheel steering will also help to make it more agile at speed while improving the car’s turning circle and enabling Renault Sport to make the steering more alert. The hottest version of the outgoing Mégane RS, the 275 Cup S, reaches 100 km/h from rest in 5.8 seconds. Expect the next Mégane to trim several tenths off that sprint time, making it quicker than the Honda Civic Type R, which takes 5.7 seconds, and close to the four-wheel-drive Audi S3, which needs 5.2 seconds. The car’s sporting design is expected to take influence from the details of the latest Clio RS. The test mule wears a cut-up version of the Mégane GT’s body, with only wheel arch add-ons and a centrally mounted twin-exit exhaust system giving away the true identity of what lies beneath. Renault has remained tight-lipped about its next hot Mégane, but the brand has at least hinted that the car’s arrival date will be some time in 2018. As with the facelifted Clio, expect a small increase in price over that of the current Mégane RS. It will significantly undercut the Honda Civic Type R, but ranks the Mégane RS above the less hardcore Ford Focus ST. I expect to first see it at the Frankfurt motor show. +++
+++ It’s not due to arrive in China until next year, but already Chinese-funded, smart, connected plug-in car start-ups are scrambling to launch cars to go head-to-head against TESLA ’s “mass market” Model 3 sedan. For leading Chinese electric vehicle (EV) start-ups such as Future Mobility, WM Motor and Singulato Motors, the key is that they will produce their cars locally, making them better able to match the Model 3’s price. Tesla, which has largely enjoyed a monopoly in the premium electric car market, is expected to price its Model 3 from $35,000 in the United States. Buyers in China would expect to add 25 percent to that in import tariffs. The founders and CEOs of Future Mobility, WM Motor and Singulato acknowledge the Model 3 is the car to beat. The first vehicles they aim to launch in the next couple of years will be priced around 300,000 yuan (roughly $43,500) or below, they told Reuters ahead of the Shanghai auto show. “Between 200,000 yuan and 300,000 yuan”, said Singulato’s co-founder and CEO Shen Haiyin. The Chinese-funded firms’ strategy is to beat the Model 3 in China by making their cars more premium and yet cheaper than Tesla’s mass-market all-electric battery car. The 3 start-ups see California-based Tesla’s weakness in its inability to produce cars in China, the world’s leading market for plug-in cars. Tesla has denied recent talk in China that it was considering manufacturing its cars locally. “Tesla is deeply committed to the Chinese market, however these rumors are not true”, the company said. To be sure, Tesla will be no pushover. It this month overtook Ford in market value as investors embrace CEO Elon Musk’s strategy of offering stylish, high performance cars that are continually upgraded with features that rival automakers are still only testing. Tesla has to date competed only in premium price classes at relatively low volumes. The Model 3 will need to appeal to more price-sensitive consumers to reach its projected annual sales of 500,000 vehicles. Daniel Kirchert, president and co-founder of Future Mobility, says his company plans to launch 3 models. The first, a premium midsize SUV, will arrive “before 2020”, followed within three years by a sedan and a 7-seater MPV. All will be based on the same vehicle underpinning architecture and share major components, “to achieve this very attractive entry price of about 300,000 yuan,” Kirchert told. “It’s a bit more than $40,000, a very competitive price positioning … because Tesla customers buying the Model 3 in China would have to shoulder the cost of a 25 percent import tariff on the car”, unless it’s produced in China, he said. “We will be competitive because we produce the car locally”, he added. As well as making its car in China, at a planned assembly plant in Nanjing, Kirchert said Future Mobility plans to make the SUV bigger than the Model 3 and more luxurious. “In the end, it’s really about how premium you are. That’s the real challenge”. Singulato Motors unveiled its first “mass-production” car, also a SUV, in Beijing last week, and says it will be priced below 300,000 yuan. It has started taking pre-orders for a limited period from customers willing to put down a deposit of 2,017 yuan. WM Motor plans to launch its first car, an electric plug-in SUV, in the second half of 2018, again priced to compete with the Model 3, co-founder Freeman Shen told. The car will be the first of three electric vehicles the Shanghai-based firm plans to launch by 2020, by which time Shen says WM Motor should be selling around 100,000 cars a year. WM Motor showed a concept car to reporters in Shanghai, which Shen said hinted at the mass market model. The company aims to get the car to showrooms by September 2018. +++