+++ J.D. Power isn’t the be-all and end-all of automotive evaluation, but the influential research firm and its various studies are a solid and fairly comprehensive resource to consult when searching for a new car, as the results are based on the responses of real owners. One of the most popular with automakers and customers alike is the Automotive Performance, Execution and Layout study, or APEAL for short, which looks at the gratification a car owner experiences with each new vehicle on the market. Porsche has managed to top the results of the Apeal study in 2017, making this the 13th year in a row the German marque has come out on top. More than 69,000 new car owners took part in the study, assessing 243 models from 33 manufacturers in 10 categories. Ranking at the bottom this year is Mitsubishi. Note, only volume brands are included to avoid skewing the results. The study surveys buyers of new cars, 90 days after the buyers have taken delivery. In total, 77 characteristics are examined. The list includes driving dynamics and design as well as aspects such as day-to-day usability and comfort. Finally, a score is given based on a 1,000-point scale. According to the researchers, cars are more appealing than ever, as evidenced by a significant 9-point increase in the industry average from last year. In addition to a brand category, the study also provides awards for popular segments. In the case of Porsche, the 911, Cayenne and Macan models also took the top positions in the Mid-Size Premium Sporty Car, Mid-Size Premium SUV and Compact Premium SUV categories, respectively. Also worth a mention is the strong performance of Genesis which despite being a new brand was second in the rankings. +++
+++ Germany ordered Porsche to recall and stop selling 22,000 DIESEL vehicles that the government says have illegal defeat devices. Transport Minister Alexander Dobrindt said a probe by the German Federal Motor Transport Authority found the defeat devices, software that allows vehicles to dupe tests measuring emissions, in Porsche Cayenne TDI models in Europe, with 7,500 of those in Germany. The total recall, which includes vehicles already sold and some that haven’t yet been delivered to customers, is equivalent to about 9% of the more than 235,000 vehicles Porsche sold world-wide last year. Dobrindt said the same defeat device was probably also used on the Volkswagen Touareg, though that hasn’t yet been confirmed. Matthias Müller, chief executive of Volkswagen, which owns Porsche parent Audi, agreed to fully cooperate with the authorities, the minister said. The new recall is yet another blow to Volkswagen, which has been unable to put the diesel scandal in the rearview mirror despite multiple settlements and internal investigations since 2015 when it first admitted to using defeat devices. It also follows on the heels of a recently revealed investigation into whether Volkswagen colluded with other German manufacturers including BMW to manipulated diesel engines. Volkswagen Chief Financial Officer Frank Witter declined to comment on the Porsche recall. Porsche said in a statement that an internal probe found irregularities in the software that controls the engine and alerted the transport authority. Porsche agreed with authorities that it would remedy the issue through a vehicle recall and software update. Porsche continues its internal probes and is cooperating with the authorities, it said in the statement. A Porsche spokesman later said the company isn’t responsible for engine irregularities as it gets its motors from Audi. The Porsche recall isn’t connected to the larger recall of Volkswagen Group vehicles in the U.S., said Audi spokesman Udo Rugheimer. +++
+++ FIAT CHRYSLER Automobiles (FCA) said profit jumped 15% in the second quarter after a strong showing from the company’s sports car division helped offset a general slowdown in North American earnings. Adjusted operating profit, which strips out one-time items, for the 3 months to the end of June rose to 1.87 billion euros from 1.63 billion. Revenue was little changed at 27.93 billion euro. Maserati’s adjusted operating profit more than quadrupled to 152 million euro as the sports car division almost doubled volume following the introduction of several new models. Fiat Chrysler’s profit fell in North American, but the company improved its closely watched operating profit margin half a percentage point to 8.4%. The company confirmed its full-year financial targets, which call for revenue of between 115 billion and 120 billion euro. Adjusted operating profit is seen at more than 7 billion euro and net debt at less than 2.5 billion euro. +++
+++ PORSCHE has given its strongest hint yet that its iconic sports cars, including the 911, will soon go hybrid, and that the top-end versions of those cars will use batteries and electric motors for performance rather than efficiency, just like the 918 Spider. At the launch of the new, range-topping Panamera Turbo S E-Hybrid, which sits above the internal-combustion engine Turbo S and is faster in every way, Porsche described hybridisation as “the drive system of the future” and “the ultimate performance kit”. It is the first time Porsche has introduced a hybrid as its top-line variant, and sends a serious message of intent. Hermann-Josef Stappen, Porsche’s manager of technical communications, suggested that a hybrid 911 would be accepted by buyers “as long as it is performing the way the customers expect”, but he also provided some hope for traditionalists by saying his company has no plans to do away with traditional big ICE power plants, just yet. “I’m sure, if we will bring a hybrid 911 it will also be again the best 911 ever”, Stappen told. “As the 911 model-line manager August Achleitner has said ‘even from the first 991 generation of that car, in 2011, there was already space in the platform for the electric motor. We can do it, technologically, I think it’s easy, because we already have a high-performance hybrid sports car in the 918 Spider’ So they’re looking constantly at it, but it’s not decided yet because there are questions to be answered. There’s the weight (the hybrid tech adds almost 300 kg to the Panamera), which is more important for a sports car, but it’s also the package. The 911 owner wants his 4 seats, but where can we put the batteries, other than in the rear?” In the case of the mid-engined Boxster and Cayman, the move to electrification is technically much easier, according to Stappen, so it seems likely they’ll be the first sports cars to offer hybrid options, while the 911 might hold off, but not for long. Stappen says the decision on that legendary car isn’t made yet, but it’s very much being discussed. “It’s about how many cars can we sell if we do it, will our 911 customers accept it?” he said. “I’m sure it will be a great car, but will the customer still have their 4-seat capacity? There are many questions”. What has been decided is that, for the immediate future at least, old-school, big-engined performance Porsches will still be made, Stappen says. “There is still a very small segment where customers want those engines, so they would still be around even without hybrid systems”, he explained. “It’s a very small percentage of the market, but the enthusiasts will stick with the V8, which is why we’ll still have them going forward. For what’s coming in the near future, you’ll still see V8 engines”. +++
+++ RENAULT reported a 59% jump in first-half profit as the French carmaker increased volume and got a larger payout from its holding in Nissan. Net income increased to 2.38 billion euros in the 6 months to the end of June from 1.5 billion euro in the same period last year. Revenue advanced 17% to 29.54 billion euro from 25.19 billion. Renault’s worldwide vehicle sales rose 10% in the first half, far outpacing the 2.6% increase of the wider market. The profit contribution from Renault’s holdings in partner companies almost doubled to 1.3 billion, with most of that coming from the 43% stake in Japan’s Nissan, which benefited from asset sales earlier this year. Carlos Ghosn, Chairman and CEO of Renault, declared: “The Group posted new record results for a first half-year. These results are due to our product range renewal plan, our geographic expansion and the commitment of all our employees. This achievement puts us on a solid ground for the implementation of our next strategic plan and allows us to confirm our guidance for the year. The performance reflects the strong momentum in our CKD activity in Iran and China and in the sales of vehicles assembled in Europe (notably with the start of Nissan Micra production)”. The contribution of associated companies, mainly Nissan, came to 1,317 million euro, compared with 678 million euro in the first half of 2016. Nissan’s contribution in the first quarter included a one-off gain related to the sale of its interest in the equipment manufacturer Calsonic Kansei. +++
+++ TESLA is scheduled to report second-quarter results after the market close on Aug. 2. Wall Street expects another loss for Silicon Valley company, but that is unlikely to matter much. The real burning questions are the ones about the Model 3. That’s the mass-market sedan at the center of Tesla’s expansion plans, a 35,000 dollar all-electric car the company hopes will smooth its path to becoming a larger car maker. Tesla has said it would deliver the first handful of Model 3 sedans in July, and Chief Executive Elon Musk confirmed that timeline earlier this month. With a few days remaining in the month, and a stock that has wobbled in recent weeks, all eyes will be on the Model 3. The same analysts forecast sales of 2.54 billion dollar in the quarter, which would compare with 2.56 billion dollar in the year-ago period and would be a slight dip from 2.7 billion dollar in the first quarter. Estimize analysts predict sales of 2.63 billion dollar. However, earlier this month, after Tesla reported it sold fewer vehicles in the second quarter than Wall Street expected, the stock started to retreat. It flirted with bear-market territory earlier in July. Shares are currently about 11% down from their June 23 high-water mark. The retreat has dented Tesla’s 2017 gains, but the ride is still impressive. Tesla shares are up 60% so far this year, which compares with gains around 11% for the S&P 500 index. That outperformance holds in a three-month period, with Tesla stock up more than 10% to the benchmark’s 3.9% rise. Other issues: Expect analysts to ask questions about the Model 3 production ramp and about how close Tesla is to fulfilling its promise to run its factory at a production rate of 500,000 vehicles annually by the end of 2018. Musk has teased new vehicles and products joining Tesla’s current lineup, including an all-electric semi truck and a compact SUV, so expect some questions about the timeline for new vehicles and products. Another perennial question (whether demand for Tesla’s pricier, luxury vehicles is waning) is sure to be featured. Analysts at UBS said in a recent note they believe demand for the Model S and the Model X is slowing, given overall flat production since the fourth quarter of last year. Analysts at Goldman Sachs also believe Model S and Model X demand is plateauing, but give Tesla some credit for bringing the Model 3’s soft launch date to July rather than September as they had expected. They remain firmly in the bear camp for Tesla, however, seeing “potential for downside as the Model 3 launch curve undershoots the company’s production targets and as second quarter margins likely disappoint”, they said in a note. Furthermore, Tesla’s cash burn should intensify as the year progresses, and the analysts predicted Tesla will likely tap the capital markets in the first half of 2018. Among the more optimistic on Tesla, Guggenheim analysts said they expect the Model 3 rollout to drive “at least” 8 quarters of positive momentum for the company. They recalled that about 400,000 reservations on the car (Tesla has not updated the initial reservations number), sight unseen, might be a far out undercount. Preorders placed today “will soak up Tesla’s Model 3 production right through to the second quarter of 2019”, they said. +++
+++ VOLKSWAGEN ’s net profit rose in the second quarter, fueled by increased sales and further distancing the German car maker from losses related to an emissions-cheating scandal that erupted in 2015. Second-quarter net profit was 3.19 billion euros compared with 1.21 billion a year earlier, the auto maker said. Sales were up 4.7% at 58.67 billion euro. Net cash outflows in the automotive division were 3.4 billion euro, largely due to payouts related to the diesel emissions scandal. The scandal has cost the company around 25 billion dollar in fines, penalties and compensation so far. Volkswagen tweaked its guidance for full-year sales, saying it expects them to rise by more than 4% compared with the “up to” 4% forecast previously. Some analysts were disappointed that Volkswagen didn’t raise its full-year forecast for operating margins of between 6% and 7%. Evercore ISI analyst Arndt Ellinghorst said the company is likely to raise its forecast alongside third-quarter figures, after achieving 7.6% mid-year. Profit during the first half of the year more than doubled to 1.78 billion euro from 881 million a year earlier. Volkswagen didn’t comment on fresh allegations of collusion with other car makers on prices, technology and suppliers. In September 2015 Volkswagen admitted to rigging millions of diesel cars with software to cheat emissions tests, sparking the worst crisis in the firm’s 80-year history. The scandal has cost the firm around 25 billion dollar in fines, penalties and compensation to dealers and customers. Sales took a nose dive at the end of 2015 and the company reported its worst ever loss. Full-year sales in the U.S. fell almost 8% in 2016, but have grown again this year. In May, the company said it expected to break even in the U.S. market by 2020, the first time in years. Volkswagen booked the expected charges in 2015 and 2016, meaning the cost shows up in its cash balance rather than its profit. Frank Witter, the company’s finance chief, has forecast cash outflows in “the double-digit billion euro range” this year. Volkswagen said late last year it would cut 30,000 jobs in coming years as part of a push to narrow the gap with more profitable rivals, Toyota and General Motors. Deep cuts are also needed to boost profit so that Volkswagen can invest in electric cars, digitization and self-driving car technology, the company said. +++