+++ According to a recent study performed on a global scale by data analysis company Inrix, consumers have trust issues with ride-hailing companies such as Uber when discussing AUTONOMOUS technology. Unsurprisingly, traditional automakers and technology giants such as Google’s Waymo are more likely to be viewed as reliable autonomous-vehicle technology producers, and this discrepancy is showing why Lyt and Waymo partnered; such new alliances will fill the void in autonomous-vehicle development. The survey covered 5,045 drivers from five countries, and around 30 percent put their trust in traditional makers when discussing the future self-driving cars, while more than 20 percent said they would place their trust in technology giants such as google or Apple. As opposed to this view, a mere 4 percent said they trust ride-hailing companies. “Consumers and drivers have trust in these long-running corporations”, explains Bob Pishue, senior economist at Inrix and co-author of the report. “Rideshare companies are newer, and although they’re popular, people tend to trust those they’re most familiar with”. Autonomous car development is a hugely costing affair: the Boston Consulting Group views this up and coming segment worth 77 billion dollar by 2035. Partnerships seem to be the right solution to alleviate consumer concerns, with 71 percent of respondents saying they believe autonomous cars to become as safe or safer than regular cars, but only a quarter admitting they would buy one. +++

+++ With more and more manufacturers and startups bringing to market new electrified vehicles, and demand on the rise, it seems entering the business of producing lithium-ion BATTERIES is a good way to ensure success on the long run. Tesla, the company that not only produces electric cars, but also batteries and battery packs as well as solar cells, threw itself head on in the game, partnering with Japan’s Panasonic to start construction on the Gigafactory; a Li-Ion battery plant set to become the largest in the world when full construction is completed. Others have joined the party since: Mercedes-Benz recently announced a battery factory in Germany through Daimler’s fully-owned subsidiary Accumotive and LG Chem and Samsung SDI are other, established, battery providers. And companies such as Energy Absolute, a Thailand-based solar specialist, believe demand will far greatly exceed current production, which is why they recently announced the start of their own battery production project. It will cost $2.9 billion, with work on the battery plant construction set to commence in 2018 for a full capacity of 50 GWh when completed. “We will choose just one location for the manufacturing plant”, commented CEO Amorn Sapthaweekul. “We would prefer to have the plant in Thailand, which will be beneficial for the country’s development”. +++

+++ People are buying cars they can’t afford and government regulators are sick of it. The Australian Securities and Investment Commission has gone after CREDIT providers ranging from dodgy outback car dealerships to global automotive powerhouses, small-time loan centres and one of the big four banks to protect consumers from exploitative practices… and themselves. This week, Motor Finance Wizard agreed to cop more than $11 million in refunds and write-offs to more than 1.500 customers who signed up for a vehicle lease or loan between July 2010 and July 2014. The promise was that anyone could get a car loan from Motor Finance Wizard, even if banks, dealerships, credit unions and your wealthy old uncle said no. Check out the sober blurb presented to consumers who pop over to the Wizard’s website and apply for a loan: “We consider everyone! Apply now, even if you are an ex-bankrupt, have bad or no credit history, are unemployed, self-employed, a pensioner or sole parent”. The company used its own formula to assess the finances of potential customers before doling out loans for used cars. Australian consumer authorities have questioned the Wizard’s in-house blend of fiscal sorcery, and ASIC deputy chair Peter Kell says Motor Finance Wizard failed to meet responsible lending obligations by neglecting to ask customers about their financial circumstances, or to verify their reported expenses. This is not an isolated case. On a much smaller scale, in 2016 ASIC pursued Queensland car dealer Colin William Hulbert, who was found to have breached consumer protection laws by exploiting people in the isolated Aboriginal community of Yarrabah. Hubert’s second-hand car yard, Super Cheap Car Sales, charged customers $550 to $990 in fees to access his own financial brokering service, Cash Brokers, which then sourced car loans from Cairns-based lending outfit, Channic, which he also owned and operated. ASIC says Channic charged 48 per cent interest on vehicle loans to vulnerable customers who were not properly vetted. At the other end of the spectrum, BMW Australia Finance agreed to pay $77 million in December 2016 as part of Australia’s largest consumer credit remediation program, committing to $14.6 million in cash-back remediation payments as well as $7.6 million in interest rate reductions and $50 million in loan write-offs to more than 15,000 customers. The luxury brand also has to contribute $5 million to community financial literacy programs. BMW had already been stung twice, in 2015 and 2016, for breaching consumer provisions surrounding the repossession of vehicles, and it has had strict conditions placed on its financial license. The car maker has to buy back debt it sold to third-party collectors, and submit to oversight from an independent advisor who ensures the company isn’t selling car loans to people who can’t afford to pay their bills. ASIC slammed BMW for having “a sales-driven culture that failed to comply with the requirements of the credit laws and resulted in poor outcomes for many consumers”. The government authority has hinted BMW isn’t the only car company that may have failed to comply with local laws. It has also taken on Westpac’s Capital Finance car financier for breaching automotive repossession requirements. Overseas, the US state of Massachusetts reached a $US22 million settlement with Santander bank in March, as the bank failed to do its homework when guaranteeing car loans. Santander reportedly verified income on just 8 per cent of car loans, failing to do due diligence on many of its automotive deals. Why the big deal? That was triggered in part by sub-prime mortgages, or home loans issued to people with less-than-ideal financial circumstances (classified in a ‘sub-prime’ credit bracket) who could not afford to make repayments. Wizards of the American home loan world issued ambitious mortgages to NINJAs – people with no income, jobs or assets – leaving people deep in debt on properties that soon became worth less than what they owed. So people defaulted on their mortgage, declared bankruptcy or simply walked away, causing banks to either collapse or be bailed out at immense cost to taxpayers. The same thing is starting to happening in the automotive world, particularly in the US, only this time people are buying cars they can’t afford. Citing Morgan Stanley data, respected car industry publisher Wards Auto reports that risky “deep sub-prime” car loans have “risen from 5.1 per cent in 2010 to 32.5 per cent today”. According to Wards Auto, US consumer spending on cars grew by 36 per cent between 2009 and 2016, while wages grew by 15 per cent. Further data suggests the average amount of debt held attached to vehicles in the US increased by 44 per cent in the same period. Santander has been busted for failing to examine whether people are eligible for car loans, while a UBS banking survey found that one-in-five people seeking car loans submitted applications that “contained inaccuracies”. Bloomberg reports that around 1 per cent of new car loan applicants in the US flat-out lie about their financial circumstances, matching the rate of mortgage fraud surrounding sub-prime mortgages in 2009. US motorists owed $US1.1 to $1.2 trillion in outstanding car loan payments at the end of 2016, and financial vetting firm Point Predictive estimates that losses from car loan fraud will double from $US2-4 billion in 2015 to $US4-6 billion by the end of this year. The American culture surrounding car loans shifted after the global financial crisis, our Great Recession, as manufacturers and dealers tried to stimulate a flagging industry by relaxing requirements on new vehicle loans. Cars are loaned or leased for longer terms than before: US research firm Moody’s reports almost one third of loans last longer than 6 years; in many cases longer than people choose to keep a new car. Long repayment periods with small deposits and modest repayment requirements mean that people looking for a new car often owe money on their trade-in, so they roll negative equity into their next car loan. The LA Times reports that one third of US buyers who trade in a car for a new vehicle owe money on the old one, sitting “underwater” or “upside down” at an average of $5000. Economists are getting itchy about the automotive sub-prime situation in the US. To be clear, it’s not nearly as serious as the mortgage crisis, as the sums involved are much smaller and banks are far less exposed than they were in 2009. But the car industry isn’t as healthy as it could be. The US market is contracting after years of growth and the same is true in Australia, where the market is down nearly 3 percent on 2016’s record high. The car industry needs to care about this issue, as governments clearly do. Consumers also need to take responsibility for their spending, and buy a car they can afford rather than the most impressive vehicle a dealership will let them take out of the showroom. Australian automotive research group ACA Research says many customers appear to put little thought into exactly how they will pay for new cars. A 2016 report by ACA states that “more than one third of consumers are not considering finance until the last week, with more than half making the final choice of lender at this time”. It says 34 percent of motorists source finance through car dealerships, which can have its pitfalls. These days, Motor Finance Wizard says no: “Unfortunately our lending criteria has changed and we no longer provide finance options to unemployed applicants”. ASIC deputy chair Peter Kell on BMW: “This is an example of the staggering cost of poor business practices and should act as a warning to other car financiers to get their houses in order”. Massachusetts Attorney General Maura Healey: “These predatory practices are almost identical to what we saw in the mortgage industry a few years ago”. Euromonitor International analyst Eric Totaro on a change to car loans: “Intelligent automakers and lenders must increase their conservatism now to protect themselves against a future car-credit bubble. They should promote cheaper vehicles that consumers can afford by marketing less feature-laden models”. Keen to stamp out the sort of irresponsible lending behaviour that triggered the 2009 crisis, legislators are tightening their hold on the car industry at home and abroad. When Federal Government agencies aren’t ripping in to dealerships over lending practices, they are chasing Volkswagen over the diesel emissions scandal, examining service and warranty arrangements, weighing up the option of letting people cut out dealers to import new cars directly from overseas sources, sizing up new emissions laws and more. ASIC announced in March that it will prohibit “flex commissions” in car finance, preventing car dealers from arranging loans at higher interest than the lowest available finance rates; a setup that generated extra revenue for banks and sales staff at the expense of customers, who unwittingly paid more than they needed to. Arrangements established between finance companies and car dealers paid cash incentives to sales staff who were able to convince customers to commit to high interest rates. One example stated by ASIC shows that a dealership that sold a car for the minimum applicable 6.24 percent interest rate would receive a flexible commission of $346, whereas a sale that locked the customer into paying a 13.04 percent rate earned the sales outlet a $3173 bonus. In March Kell said that “most consumers would be surprised to learn that when you are buying a car on finance, the car dealer can, for example, decide whether you will be charged an interest rate of 7 percent or one of 14 percent, regardless of your credit history”, criticising the car industry for failing to operate in a “fair and transparent” way. Kell says average interest rates on car loans will fall as a result of “more efficient pricing models and lower losses through defaults”, and car sales staff are likely to be more diligent in making sure their deals comply with consumer credit laws. The tricky part here is that car companies need to sell cars to stay alive. Euromonitor International analyst Eric Totaro says manufacturers “should promote cheaper vehicles that consumers can afford by marketing less feature-laden models”. But that doesn’t fit with the booming global trend toward SUVs and luxury models, one that seems to have no end in sight. It may be that the only way to solve the automotive lending problem is for motorists to buy what they need as opposed to what they want, and drive within their means. +++

+++ Circling back for a closer look at some breaking news out of FORD , I notice that the shuffled organisation chart under new CEO Jim Hackett moves Ford’s head of product out of that key job and into a bigger one, and installs a new product guy in his place. In the world of car manufacturing, the head of product is a rockstar, or rather a conductor who leads a years-long symphony of design, engineering, and production to bring a new vehicle to market. It turns out, Ford’s new product guy has a lot of interesting products on his résumé. Raj Nair, until now the executive vice president of product development and Ford’s chief technical officer, is taking on a new role as president of Ford’s North American operations. According to Ford, Nair, in the role he held since 2012, “had global responsibility for all aspects of the company’s design, engineering, research and product development, and played a key role in the company’s expansion into emerging mobility opportunities”. There’s that word “mobility” again. Note that new CEO Hackett had been running the Smart Mobility division, and on Monday, Bill Ford Jr. said, “Jim Hackett is the right CEO to lead Ford during this transformative period for the auto industry and the broader mobility space”. Nair has led projects such as Ford’s hybrid offerings, autonomous cars, and the most mobile thing we can think of, the Ford GT. Before he was executive VP of product, Nair was vice president of engineering for product development, meaning he oversaw all engineering for Ford and Lincoln vehicles. Most notably, he was part of a drive (the One Ford Plan begun under CEO Alan Mulally) to leverage Ford’s global reach by sharing and reusing vehicle platforms and components from one country to the next; a move away from every market around the planet just kind of doing its own thing. And before that, every job he’s had was focused on engineering and products, going back to his mechanical engineering degree from Kettering University in Michigan (where he’s now on the board of trustees). In other words, someone who may well own a pocket protector is now calling the shots for everything Ford does in the United States, Mexico, and Canada. And that’s a great development if you believe a company that builds things should be run by people who have actually built things, not just balanced a spreadsheet. Let’s start with the good stuff. Hau Thai-Tang is a true car enthusiast. To wit: He was the chief engineer for 2005 Mustang, the clean-sheet redesign that reinvigorated the pony car and returned it to its design roots. He worked with Ford’s legendary chief designer J. Mays on the design, development, and launch of the car, even taking control of the budget. He also worked on the Thunderbird reboot and Lincoln LS. He was in charge of 3 familiar letters: SVT, the Special Vehicle Team that brings us Ford’s performance vehicles. Thai-Tang also was executive director of Global Product Programs, and director of Advanced Product Creation. Just out of college and new to Ford in 1993, he was a race engineer for Nigel Mansell and Mario Andretti on the Newman-Haas CART and IndyCar teams. Says Ford, he “contributed to six victories, 11 podium finishes, and the overall driver’s and manufacturer’s championships.” So, this is a guy who hung out with Paul Newman and Carl Haas, which is more than most of us can say. Back when the 2005 Mustang launched, Thai-Tang was in the news a lot. He told the Los Angeles Times and NPR that he saw his first Mustang, a white Mach 1, in 1972 in his native Saigon, where it was on display as a morale booster to US troops during the Vietnam War. He was 5 years old. “It really left a lasting impression on me, with a long wheelbase, a long hood line, very muscular”, Thai-Tang says. “It reinforced all those positive images of America. It was big, it was powerful, and it really stood for freedom”. In 1975, Thai-Tang’s family escaped Saigon and moved to New York City. He earned engineering degrees from Carnegie-Mellon University and the University of Michigan. After college, he got a job as an engineer with Ford and bought his first car. A Mustang. Thai-Tang has more than 25 years of experience in product development and has held another one of Nair’s old titles, VP of engineering for global product development. And he, too, was a key player in Mulally’s One Ford Plan, telling Fortune, “Alan Mulally, with his outsider’s perspective, was able to say, ‘You guys are a global company but you’re not acting like it’ “. In 8 years, from 2007 through 2015 when Thai-Tang spoke with Fortune, Ford had shrunk its global vehicles platforms from 27 to just 9, and was on its way to 8. In 2001, the Automotive Hall of Fame awarded Thai-Tang the Young Leadership and Excellence Award. His job since 2013 has been group VP of global purchasing, and if you think that sounds, um, boring, Ford points out he has been responsible for how the company spends $100 billion a year. He was named Purchasing Executive of the Year by Automotive Supply Chain Magazine, and Ford credits him with “numerous supplier-partner led innovations and delivered significant material cost savings”. Now on top of that role as global quartermaster, Thai-Tang is Nair’s replacement as product guy, the formal title “executive vice president, product development and purchasing”. In that role, Ford says, “he is globally responsible for overseeing all aspects of the company’s design, engineering, research and product development, as well as purchasing operations”. Sounds like a big job. Sounds like 2 big jobs. +++

+++ LAMBORGHINI says its core DNA of futuristic designs, emotional evocation from its naturally aspirated engines, and fun-to-drive sensation have led to its brand becoming far more popular amongst the younger generation than its rivals. The Italian brand, which has the youngest owner demographic of any supercar manufacturer in the world, is led by Stefano Domenicali, who strongly believes that while his competitors have gone down the turbo or electrification path, it’s Lamborghini’s insistence on staying with its noisy and evocative naturally-aspirated engines, as well as its design, that have helped foster a new generation of fans. “From one side in the normal auto industry, there is this push for electrification, autonomous drive and digitisation. On the other hand, you will see the ones that are following us more are the youngsters, and that, in my view, has something to say to us”, Domenicali told at the launch of the Huracan Performante in Italy. “So you would believe that from one side, because a normal car for youngsters and teenagers is not relevant, it’s just a commodity to move from A-to-B. In the meantime, when they see us, we are aspirational and different to other brands, and they are in love with our brand. That’s why we are more convinced if we can be current with these kinds of things (such as naturally-aspirated engines) and can show on the technical side we can improve these performance and respecting the general architecture of our care, and on the other side we can still work very hard on the brand value and design of the car and these feelings – if you match these two things, we do believe that we have the right space for our dimension because no one wants for us to be out of our niche”. +++

+++ It’s curtains for the LEXUS CT 200h. 2017 will be the compact hybrid’s last year with no direct replacement on the horizon. Lexus is ending production of the CT200h. 2017 will be the luxury hybrid’s final year of sales. In the United States, Lexus sold just 8,093 in 2016 while other entry-level luxury hatchbacks like the Mercedes CLA and Audi A3 saw 25,792 and 31,538 units in sales, respectively. The CT 200h had shared a hybrid-electric powertrain with the previous-generation Prius and is now showing its age. Additionally, a recent plunge in fuel prices and a general shift towards crossovers contributed to the CT 200h’s sales decline. The CT 200h was introduced in 2010 and saw a minor design update in 2013 but was otherwise largely unchanged throughout its lifespan. Though a luxury compact hatchback didn’t exactly fit with Lexus’s upscale image, it was a decent value in its own right. The CT-class will have no replacement for the time being, though it will still be sold in other countries. A sub-NX compact crossover is under development however. +++

+++ A report by a California nonprofit organisation shows TESLA factory workers have been injured at a higher rate than the industry average in the past 2 years, and spend nearly twice as many days away from duty than the norm. The Worksafe report notes that Tesla workers at its Fremont auto-manufacturing facility suffered 8.8 nonfatal injuries per 100 workers in 2015, while the average rate in the industry was 6.7, a difference of 31.3%. Tesla posted a rate of 8.1 in 2016; while industrywide figures from the Bureau of Labor Statistics are not yet available for last year, the average rate for the automobile industry has ranged from 6.7 to 7.7 since 2008, Worksafe pointed out. The median rate in that time is 7.2. The seriousness of injuries suffered at such plants is typically measured by how many days workers spend away from duty due to injuries, known as a DART (Days Away, Restricted or Transfer) rate. Tesla had a DART rate of 7.9 in 2015, more than double the industry average of 3.9, and posted a 7.3 rate in 2016, Worksafe reported. The report arrives amid what Tesla described this month as a coordinated campaign from the United Automobile Workers union that “involves a concerted and professional media push intended to raise questions about safety at Tesla”. Auto workers in the Fremont factory have reached out to the UAW for support in unionizing the workforce, and a Guardian report that was published the same day as Tesla’s blog post included complaints from more than a dozen Tesla factory workers. Worksafe Executive Director Doug Parker said in a telephone interview that UAW did contact his organization to originally make them aware of potential safety issues, and helped facilitate receipt of the injury numbers, which workers had to request from Tesla. Parker said UAW did not compensate the nonprofit in any way for the report. Parker called the injury totals “alarming”, and said, “Tesla simply needs to be more proactive in addressing the health and safety concerns”. In its blog post, Tesla says its injury rate for the first quarter of 2017 was 4.6 nonfatal injuries per 100 workers, much lower than industry averages and its own previous rates. Worksafe could not confirm this claim because it did not yet have access to the total number of hours worked, and said “sufficiently reliable data are not available to make this evaluation”. Worksafe points out that Tesla has made a habit of revising its injury numbers in mandated reports. For example, it says Tesla reported on Feb. 1, 2017, that factory workers suffered 705 reportable injuries in 2016, but a May 3 report increased that number to 840 while days spent away from work more than tripled between the 2 reports. For the first-quarter results on which Tesla relies in its blog post, Worksafe notes that an April report claimed 100 reportable injuries in the period, but one published weeks later increased that total to 146. After the first quarter of 2016, Tesla reported 145 injuries for the period, but 30 more injuries were added to that total by the time Tesla reported the figures on an annual basis, Parker pointed out. “Relying on 2017 injury data to reach any conclusions about safety trends at the plant is premature and could have misleading results”, the report states. Tesla said that the data it shared on first-quarter injuries used the latest revised numbers. The company believes that the addition of a third shift on the assembly line in fall of 2016 has helped reduce its injury rate, which it said was 6.84 in the fourth quarter of last year before the decline to 4.6 in the first quarter. “We may have had some challenges in the past as we were learning how to become a car company, but what matters is the future and with the changes we’ve made, we now have the lowest injury rate in the industry by far,” a Tesla spokeswoman said in an official statement. “Our goal is to have as close to zero injuries as humanly possible and to become the safest factory in the auto industry”. +++

+++ Lotus has a long history in engineering and building precise, sharp-handling cars. Now, as Lotus and parent company Proton, are in the process of being acquired by Chinese firm Geely, a bit of that spritely British engineering could find its way to VOLVO . How might Swedish engineering and British finesse combine? Volvo is also owned by Geely, which means Lotus and Volvo will have the opportunity to share expertise. Volvo is pretty open to the idea as well. “Why not”, Roger Wallgren, principal engineer of vehicle dynamics for the XC60, said. “I don’t see any problem using their knowledge. I think it is pretty applicable all over the board. You need to have a dialogue, you can exchange knowledge back and forth”. Volvo isn’t jumping the gun, though. Wallgren added there are no specific plans to tap Lotus currently. However, it sounds more than probable. “Lotus engineering is pretty big”, he said. “The whole UK auto industry has a lot of competence there”. Volvo’s Polestar performance brand could benefit greatly from Lotus’ expertise and Wallgren shared Geely’s ambitions to further invest in performance cars. “Polestar is a brand that’s going to be used, we are not going to let it sit there and do nothing”. Volvo has already hinted Polestar’s future will undoubtedly involve electrification. The performance house looks to drive innovation by taking the lead on the technology inside Volvo, according to Henrik Fries, vice president of product strategy and R&D for Volvo’s Polestar division. Geely will gain a 51-percent stake in Lotus with its purchase of Proton from DRB-Hicom. Geely has been successful in implementing Volvo’s turnaround globally with a hands-off approach. Lotus has plans for an SUV and U.S.-legal Elise and Exige replacements, and Geely appears ready to back Lotus with development dollars. “We also aim to unleash the full potential of Lotus Cars and bring it into a new phase of development, thanks to our experience accumulated through Volvo Cars’ revitalization”, Geely CFO Daniel Donghui Li said in a statement after the purchase was announced. +++

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