+++ BMW and Mini sales in China have jumped 39% last month to reach 48,869 units, helping the Bavarian automaker outsell Mercedes-Benz and Audi. In the meantime, Mercedes sales went up 35% year on year to 47,627 vehicles, whereas Audi sales went down by 6.9% to reach 46,166 units. As China’s longtime luxury sales leader, Audi has yet to conclude a dispute with dealers over its plans to launch a new distribution network. The dealers have thus refused to order new cars. This is of course working in BMW’s favor, whose sales in the first four months of 2017 increased by 18% compared to last year, reaching a total of 191,697 units. In order to stay on top, BMW plans to double production capacity in China to 600,000 cars over the next 5 years, while also upgrading its assembly plants so that they can make electric vehicles. In the Chinese market, BMW’s has a 50-50 production joint venture with Brilliance China Automotive Holdings. +++

+++ Shortly after I reported that the EU intends on launching legal action against Italy for its handling of FIAT CHRYSLER Automobiles (FCA)’s alleged diesel emissions cheating, it has emerged that the U.S. Justice Department is preparing to sue the automaker directly. People close to the issue have revealed that a lawsuit could be filed as early as this week due to FCA’s alleged violations of U.S. clean-air rules. It is reported that negotiations are ongoing and that an agreement could be reached before legal action is taken as a last resort. The lawsuit alleges that the automaker installed a number of it diesel models in the U.S. with illegal defeat devices designed to disable pollution controls to improve performance. FCA hasn’t denied the use of emissions-control devices but according to investigators, hasn’t fully explained the purpose of its devices. Responding to news of a potential lawsuit, FCA said that it will defend itself against any allegations from the U.S. Justice Department. “In the case of any litigation, FCA US will defend itself vigorously, particularly against any claims that the company deliberately installed defeat devices to cheat U.S. emissions tests. The company believes that any litigation would be counterproductive to ongoing discussions with the U.S. Environmental Protection Agency and the California Air Resources Board”, the company said. In March, FCA told investors that it could face billions of dollars in fines if it is found to have violated any provisions of the Clean Air Act. The EPA says that approximately 104,000 Ram 1500 pickups and Jeep Grand Cherokees are fitted with defeat devices. +++

+++ FORD said it’s making an “accelerated attack on costs” by offering voluntary buyout packages to salaried workers in North America and Asia, as Chief Executive Officer Mark Fields faces pressure to improve profit and boost the carmaker’s stock price. The automaker expects 1,400 salaried employees to leave by the end of September, according to an emailed statement. The early retirement offers won’t be extended to key employees engineering new models and developing technology such as self-driving cars. The staff cuts are part of a plan to lop $3 billion off the company’s costs this year. Fields was grilled by his board last week and impugned by investors eager for a turnaround in Ford’s declining earnings and shares. Ford is pouring billions into developing driverless cars, while sales of its conventional models are struggling to keep pace with rivals including General Motors amid a slowing U.S. auto market. Salaried personnel will shrink by 10 percent in Ford’s North American and Asia Pacific operations, the Dearborn, Michigan-based company told employees. Buyout offers won’t be extended to workers in product development, plant manufacturing, information technology, global data and analytics and the Ford Credit financial-services unit. The early retirement offers also won’t apply to Ford’s operations in Europe and South America, which already have retrenchment plans underway. In North America and Asia, targeted salaried employees will begin receiving buyout offers in early June, according to the company. +++

+++ GENERAL MOTORS plans to quit selling vehicles in India by the end of this year and will sell operations in South Africa, the latest steps in a strategy of focusing cash and engineering effort on fewer, more profitable markets. The Detroit automaker said it will take a $500 million charge in the second quarter to restructure operations in India, Africa and Singapore. It will cancel most of a planned $1 billion investment to build a new line of low-cost vehicles in India. About $200 million of the charge will be a cash expense, GM said. The moves are expected to save $100 million a year in a sector of GM’s global business that last year lost about $800 million, the company said. GM President Dan Ammann told in an interview that the latest restructuring moves (and a series of earlier decisions to quit unprofitable markets) allow GM to focus more money, engineering effort and senior management time on expanding where the company is strong, including China and the North American pickup and SUV business, where GM has a “product onslaught coming”. GM also has said it is investing about $600 million a year in efforts to develop autonomous vehicles and transportation services. “What are we spending our time doing?” Ammann said. “Are we spending time pursuing opportunities, or all of our time fixing problems?” GM, like its Detroit rival Ford, has found it increasingly expensive to compete in emerging markets outside of China. GM sold just 49,000 vehicles in India and South Africa combined last year. Chief Executive Mary Barra traveled to New Delhi in 2015 to announce a plan to invest $1 billion there to build a new line of Chevrolet models developed as part of a Global Emerging Market vehicle program; GEM for short. Since then, auto sales overall in India have slumped, and GM has failed to gain traction against incumbents such as Maruti Suzuki. Now, GM plans to stop selling Chevrolet brand vehicles by the end of the year and will produce vehicles only for export at its remaining factory in Talegaon. The company currently employs about 2,500 workers there. GM said it would continue work at its design and engineering center near Bangalore. The $5 billion GEM program, which GM is developing with its Chinese partner SAIC, remains on track to account for about 2 million vehicles a year in global sales volume, mainly in Latin America, Mexico and China, Ammann said. “The market opportunity for GEM has continued to grow”, he said. In a separate move, GM plans to stop building Chevrolet vehicles in South Africa and sell its South African factory to Isuzu, along with the 30 percent stake the U.S. automaker owns in a truck venture with Isuzu. Isuzu agreed in February to buy out GM’s 57.7 percent stake in a joint venture in Kenya. GM also will cut an undisclosed number of staff at its GM International Operations headquarters in Singapore. About 200 people work in that operation, the company said. Since Barra took over GM in 2014, the one-time largest automaker in the world has taken aggressive steps to narrow its focus to China, the highly-profitable North American pick-up and SUV market, Latin America, vehicle financing and transportation services that ultimately could use autonomous vehicles. Despite the restructuring moves, including Barra’s decision in March to sell loss-making European operations to French rival PSA, GM’s share price has been stuck in a range close around $33 where it went public in 2010 following a government-funded bankruptcy. Barra and GM’s directors are under pressure from David Einhorn’s Greenlight Capital, which wants GM to split its common stock into 2 classes, one that pays dividends and a second that would be valued to reflect the company’s potential growth. Greenlight also has put forward a slate of 3 new directors. GM’s management and incumbent board have rejected Greenlight’s proposals. The hedge fund holds 54.8 million GM shares, or about 3.5 percent of the total. +++

+++ MCLAREN is continuing to evaluate all-electric powertrains and their implementation in future models, because of their relative simplicity and lower centre of gravity than combustion engines. The Woking brand has long hinted that its P1 replacement, due in 2023, could swap petrol for electric power, and its involvement in Formula E (where it supplies the drivetrain tech) emphasises its expertise in the area. Last year, McLaren launched its Track 22 strategy, where it aims for half of its range to be hybrid by 2022. The brand also stated that the strategy would prepare it for an all-electric future. More recently, Mark Vinnels, the company’s executive director for programme development, has emphasised how electric could benefit a supercar, saying “in engineering terms, electric cars are beautiful”. However, Vinnels also explained that range issues and the less viscerally engaging character of electric are still drawbacks. “Suppliers in the battery industry are working flat out to improve the energy density of their batteries, while what we want are batteries with better power density”, he said. “One promotes range, the other performance, and the more power density you have, the bigger the issues with cooling the battery pack”. However, McLaren Applied Technologies is supplying Formula E with a new generation of battery that offers significantly more range, which will negate the need for a car change mid race and therefore offers about double the range. McLaren is not alone among supercar manufacturers in acknowledging the need for hybridisation and electrification. Ferrari’s next generation of V12 supercars will be hybrid assisted and Porsche has already announced its 680 hp Panamera S E-hybrid, the most powerful such car to go into mainstream production. Porsche’s all-electric Mission E is due to go into production with over 600 hp by the end of the decade. +++

+++ BMW boss Harald Krüger has amplified the threat of the group moving production of the MINI abroad in the case of a hard Brexit. The comments were made at the group’s annual meeting in Munich, where Krüger said: “We hope for pragmatism from all parties in the Brexit negotiations; that means no new barriers to trade, free movement for skilled workers. We are planning in terms of scenarios. You know that we make Mini models at VDL Nedcar in the Netherlands. We’re flexible”. BMW Group has already expressed its consideration to building its 2019 electric model in Germany due to concerns relating to Brexit. Using inside sources, the paper said BMW’s British brand could opt to use plants in Regensburg or Leipzig in Germany, or Dutch contract manufacturer Nedcar to produce the model, rather than expanding production at Oxford. The shift would take place if the UK fails to secure a ‘single market’ trade agreement with the European Union, something the Society of Motor Manufacturers & Traders (SMMT) has described as crucial to ensure the sustainability of Britain’s automotive sector. Mini said no decision had been made regarding its EV production at this stage. It told in an official response: “Mini has announced that it will launch an electric vehicle in 2019. The production arrangements for this model have not yet been decided and will be in due course”. German sources said BMW would open conversation with the British government at the start of March with the UK’s decision to leave the EU likely to be a key topic. Mini’s first electric vehicle is due to make production in 2019 as the fifth model in the brand’s growing line-up. It follows a plug-in hybrid (PHEV) version of the Countryman. +++

+++ There’s been a lot of talk of TESLA ’s stock in the past few months, most of it positive. There was that period of a few days where it may or may not have been worth more than General Motors, for example. The announcement of an electric semi truck bumped things up even more. That positive movement may be coming to an end, as a key analyst from Morgan Stanley increased his estimate for Tesla’s cash burning. Although shares may be worth more than $300 (up 52 percent in 2017 alone) the company is spending a lot of cash. Adam Jonas, the top auto analyst for Morgan Stanley, believes Tesla will spend more than $3.1 billion this year. The real concern is the Tesla Model 3 launch later this year. While the volume model is sure to help the company in the long run, a Bloomberg Intelligence analyst said Tesla may need to “raise more capital to pull off a 2017 launch of the mass-market Model 3 and to fund battery, solar and other investments”. Additionally, Jonas believes competitors from more established companies like Alphabet (Google) and Apple will start bringing out competing products and services that encroach on Tesla’s current and future plans. +++

+++ A British test has revealed that the fix VOLKSWAGEN is applying to diesel-powered cars fitted with its emission-cheating software can have an adverse impact on fuel economy in the real world. Volkswagen fitted more than 1.2 million cars sold in the United Kingdom with software that allowed the car to know when it was undergoing emissions tests in order for its NOx emissions to reach legal levels. It is now having to apply a technical fix to all affected cars and has done so to more than 600,000 at present. The test was conducted at Millbrook Proving Ground to the standard set by the True MPG real-world test cycle. The test used the latest international standard equipment for testing vehicles in a scientific and repeatable manner to industry standards. It revealed that while NOx emissions were almost halved from 0.639g/km pre-fix to 0.351g/km post-fix; the test car’s combined fuel economy had fallen from 50.72mpg to 47.61mpg. This means that its CO2 emissions increased from 147.3 gram/km to 156.9 gram/km, a change of 6.5%. The economy drop is at odds with Volkswagen’s insistence that its technical fix has no impact on a car’s performance or economy. Volkswagen’s claim is based on back-to-back NEDC tests (the lab-based test cycle by which VW is being measured by the authorities) and has been verified by the KBA, Germany’s motor vehicle regulatory body. Looking at the pre and post-fix test data for fuel economy, it’s concerning that the data doesn’t back that claim up. The testcar has become less fuel-efficient than it was before the required technical measure was carried out. Volkswagen disputes the findings. It says there are more than 20 variables that can impact a test result. It would not, however, provide further details of those variables when asked to do so. In total, three engines are being fixed in the United Kingdom by Volkswagen: 1.2, 1.6 and 2.0 versions of the EA189 engine. The number of different combinations of car, transmission, engine and so on comes to 750, meaning VW needed to come up with 750 different fixes. It is understood that the fix to the 2.0-litre diesel models is the most complex. The test focused on the impact on real-world economy of the fix that Volkswagen has applied to the engines, but the 2.0-litre engine type is also subject to a growing number of case studies and reports that the fix is causing breakdowns in cars that have had it done. A report by the Volkswagen Diesel Customer Forum (VDCF) last month said owners of postfix VWs with the 2.0-litre diesel had experienced breakdowns, increased fuel consumption, reduced performance, increased exhaust smoke, excessive regeneration of diesel particulate filters (DPFs) and DPF failure. Exhaust gas regeneration (EGR) valves, turbochargers and fuel injectors are also said to have failed and others report their cars having entered limphome mode or their engines having become noisier. VW claims many of these faults could be down to poor maintenance, with some of the cars even missing their DPFs. None of the issues is related to the fix, Volkswagen asserts. VW hopes to have the fixes completed to all 1.2 million by the autumn. The German manufacturer says less than 1% of owners have so far reported problems after the fix, which translates to around 6,000 customers. +++

+++ VOLVO announced that it will start building models in a new assembly facility in India, starting from this year. The new assembly operations will be located near Bangalore in southern India and will build cars based on the company’s SPA modular platform, starting with the XC90. The decision to start assembling models in India comes after an initiative of the Indian government which wants to promote the local manufacturing expertise, with Volvo to market its models as ‘Made In India’. “I am pleased that as of this year we will be able to start selling Volvos that are Made in India”, said Håkan Samuelsson, president and chief executive of Volvo. “Starting vehicle assembly in India is an important step for Volvo as we aim to grow our sales in this fast-growing market and double our market share in the premium segment in coming years”. The Indian premium market is expected to grow rapidly in the coming years and Volvo already has a share of nearly 5 percent there, aiming to double it by 2020. Volvo sold over 1,400 cars in India in 2016, an increase of 24 percent compared to 2015. Year-on-year sales growth in the first four months of 2017 amounted to more than 35 percent. +++

+++ An exciting piece of technological history is on-show in the Audi museum mobile in Ingolstadt as part of the new special exhibit entitled “Revolution: 60 years of the NSU / WANKEL engine”. The special occasion is the 60th anniversary of this once revolutionary rotary engine concept. Audi’s predecessor brand NSU took on the new technology at an early stage in vehicles like the “Prinz 3” prototype. The exhibition runs from May 20 to November 5, 2017 and shows this and further models featuring the Wankel engine. What’s more, boat, airplane and motorcycle engines, as well as those used in lawnmowers and power saws of various manufacturers also demonstrate the eventful history of this progressive technology. “Rotating instead of punching”: this idea for an internal combustion engine with rotating pistons fascinated Felix Wankel from the late 1920s. The development of the concept to readiness for series production took more than 30 years. As part of his research work, self-taught Wankel became an expert in seals, but kept his aim of creating a machine with rotating pistons firmly in sight. At the end of 1953, the methodical analysis of possible rotors and housing combinations led Wankel to look more closely at the idea of a rotating oval-shaped piston in an almost circular housing which also rotated. The principle awakened the interest of NSU’s management. In March 1954, Wankel drafted the basic form of the engine which was to be named after him at a later stage. 3 years later, on February 1, 1957, the engine ran for the first time under its own power on a test rig at the NSU plant. In Neckarsulm, Walter Fröde, Head of NSU’s Development department, and his team simplified the technologically complex structure which initially used 2 components which rotated one inside the other. The first time the KKM (Kreiskolbenmotor) version of the engine with inverted kinematics was used was in 1962, when it was fitted in the so-called “Ski-Craft”. This towing device for water skis is on show in the Audi museum mobile. Just one year later, in September 1963, the NSU/Wankel Spider celebrated its premiere at the IAA in Frankfurt. As the world’s first series-produced vehicle featuring the NSU/Wankel engine, it spurred on the euphoria surrounding the Wankel engine. In the following years, virtually all of the notable manufacturers of automobiles, motorcycles or engines became part of the large group of NSU/Wankel licensees. Visitors to the “Revolution: 60 years of the NSU/Wankel engine” exhibition can expect to see not just the NSU/Wankel Spider but also further exhibits like the first NSU Prinz 3 Wankel prototype from 1959 and the NSU Ro 80. In 1967 this model with its innovative technology and timeless design was awarded the title of Car of the Year. Two Audi models are also exhibited: the Audi 200 KKM prototype from 1979 and an Audi A1 e-tron from 2012. A true looker, the Italdesign Namir sports car from 2009 will also be present. Further highlights include the Mazda Cosmo 110S, a Citroën M35 as well as the Malibu Virage racing car. The Wankel engine wasn’t just used in cars, it was also used in snowmobiles, fire engines, power saws, motorboats and motorcycles. The exhibition shows a whole host of these products, as well as free-standing engines and cutaway models. The Audi museum mobile is open daily from 9 a.m. to 6 p.m. The opening times will change from June 1: Monday to Friday from 9 a.m. to 6 p.m. Saturdays, Sundays and public holidays from 10 a.m. to 4 p.m. +++

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