+++ Stephan Winkelmann will leave his post as CEO of AUDI Sport to head Bugatti. He will replace current Bugatti boss Wolfgang Dürheimer, who is expected to remain chairman of Bentley. Winkelmann will leave Audi Sport later this year, capping off a short tenure. He joined Audi’s high-performance division in March 2016, and during that time, he oversaw a company name change and the rollout of the R8 Spyder and RS 5 Coupe. Before this gig, he spent more than 11 years leading Lamborghini and helped the brand triple its number of dealerships. As the new president of Bugatti, Winkelmann will likely lead the introduction of new Chiron variants, including the possible Chiron Grand Sport and Chiron Super Sport. Meanwhile, Michael-Julius Renz will step up to take the reins at Audi Sport. Since 2015, he has led Audi’s sales division in China and previously served as head of sales in Germany. Looking toward the future, Audi Sport is likely to receive its own hypercar at some point. Or at least that was Winkelmann’s vision for the brand. In a recent interview, Winkelmann said he envisions a low-volume exotic sports car that slots above the R8. “I’m very keen on working on this in the future”, he said. “I think not only the brand deserves it, but there is a demand outside, and the customers are looking into it”. It’s likely that Winkelmann will eventually replace Dürheimer in his role as chairman of Bentley as well. Although it’s unclear when he will depart, Dürheimer’s contract is reportedly set to end in mid-2019. +++
+++ I haven’t driven many electric cars, but the ones I have driven, the Opel Ampera-e and the BMW i3, have left me with smiles. I have no doubt that a Tesla Model S or X would as well, but even these more modestly powered (and priced) machines are surprisingly fun. They both handle impressively well, and their electric motors are responsive and linear, making it easy to fine tune throttle inputs. The Ampera-e is even pretty potent with 204 horsepower and 360 Nm of torque, while the BMW’s rear-drive layout and excellent steering make it distinctive. Considering how much fun can be had with the standard models, it’s great to see BMW introducing the higher-performance i3s. It ticks all the right boxes for a mild hot hatch. It gets updated styling with more aggressive air inlets, fender flares, and wider wheels. BMW also bestowed it with an extra 14 horsepower and 20 Nm of torque for totals of 184 and 270, respectively. It allows the little EV to hit 100 km/h more quickly (in 6.9 seconds) and it reaches a top speed of 160 km/h. It also has wider tires and upgraded suspension. It sounds like a strong contender for starting an electric hot hatch revolution. Except, I’m not sure the average buyer will ever really notice given the i3’s inherent “on paper” faults. Although figures for 2018 haven’t been announced, the 2017 i3 has a maximum range of 190 kilometers with its 94 amp-hour battery (there is also a 60 amp-hour version available for less money), while the i3 REX and its gasoline-fueled motor ge nerator increases that to 270 kilometers. That isn’t terrible at the moment, but it has been eclipsed by the Ampera-e on pure electricity, as well as the upcoming Tesla Model 3. Unsurprisingly, sales of an underperforming, arguably overpriced car like the standard i3 haven’t been roaring. And since the i3s is certain to cost even more, it seems unlikely to be a sales success either. Hopefully that won’t dissuade other car companies from giving the performance-oriented EV concept a try, as there’s so much potential in them. The Ampera-e has the best chance of performance success, and actually would be a better first step into the new, affordable(ish) hot EV world than the i3s. Its motor already has the output to challenge a Volkswagen GTI, and a bit more power would make it that much more fun. Plus, it’s more affordable and has a genuinely impressive range right out of the gate. Add in a more aggressive look and better handling, and you’d have a fun performance machine all-around, not just in comparison to other EVs. The Opel Ampera GS-e has a nice ring to it. What about other carmakers? It would be great to see another manufacturer take the leap. How about a Nissan Leaf Nismo, for instance? So consider this an open call to EV builders: please don’t be discouraged by the i3s, bring us more hot electrics! +++
+++ The rumors claiming a large Chinese automaker was weeks away from buying FIAT CHRYSLER Automobiles (FCA) were overblown, according to company CEO Sergio Marchionne. He said he’s not working on a “big deal” to sell FCA right now. He hasn’t even been approached by a potential buyer, which signals China’s Great Wall still hasn’t managed to make contact with FCA’s top executives. Marchionne stressed he’s working on a plan to spin off parts of FCA’s business. The first divisions to get axed will be the ones which manufacture components. “There are activities within the group that do not belong to a car manufacturer, for example the components businesses. The group needs to be cleared of those things”, he explained. The divisions (which likely include Magneti Marelli) will be divested by the end of next year. He didn’t deny the rumors claiming Maserati and Alfa Romeo will be sold to generate cash and “purify” FCA, but he explained the timing isn’t right. The brands need to “have the muscle to stand on their feet, make sufficient cash” before he would consider a sale. He didn’t provide a more specific time frame. “The way we see it now, it’s almost impossible, if not impossible, to see a spin-off of Alfa Romeo/Maserati. These are 2 entities that are immature and in a development phase. It’s the wrong moment, we are not in a condition to do it”, he added. +++
+++ German carmaker OPEL , which has been bought by France’s PSA Group from General Motors, widened its losses in the second quarter to around $250 million. Opel was losing around 4 million euros ($4.74 million) every working day. Opel made a loss of $210 million in the first quarter. General Motors is selling off its loss-making European operations to the owner of the Peugeot, DS and Citroen brands, which has a better track record of profitability in the business of manufacturing small cars in Europe. PSA Chief Executive Carlos Tavares said in May he expects Opel to lose more money in 2017. Opel was lossmaking for the past 16 years in part because the carmaker was forced to spend roughly $1 billion a year on research and development to help keep small and compact vehicles compliant with new European anti-pollution rules, which differ substantially from those in the United States or China. A PSA manager said that integration teams of high ranking representatives from PSA, Opel and General Motors met in Paris last week to discuss future strategy. PSA agreed that Opel will set its own direction in many areas, although many Opel engines are likely to be replaced with PSA ones, with worker representative fearing that only 800 out of 7,700 employees in development will still be needed. Tavares has said that Peugeot would move swiftly to introduce its platforms to Opel vehicles, a step that would increase economies of scale and efficiencies for both companies. PSA wants Opel to return to lasting profit no later than by 2020 with operating margin goals of 2 percent that year and even around 6 percent by 2026. +++
+++ SAMSUNG has reportedly received approval to begin testing autonomous prototype vehicles on public roads in California. The Korean electronics giant is the latest addition to the California DMV’s list of permit holders for its Autonomous Vehicle Tester Program, which has grown to more than three dozen companies ranging from established automakers to obscure startups. Samsung last year acquired Harman, a supplier of audio and infotainment electronics, to expand its presence in the automotive industry. The company said the buyout would give it a significant launch into a segment that it expects to grow in value to $100 billion in the coming years. The autonomous testing permit apparently corroborates speculation that Samsung has been working on autonomous vehicle technology, following in the path of archrival Apple and familiar competitors Nvidia and Google. More details could surface as Samsung begins to submit mandatory reports related to its testing operations in California. +++
+++ TESLA has dropped prices for its most expensive Model S and Model X variants equipped with 100 kilowatt-hour battery packs. The company has slashed the price of the Model S and X 100D by $3,500, dropping the respective starting points to $94,000 and $96,000. Flagship P100D performance packages have been reduced by $5,000 to $135,000 for the Model S and $140,000 for the Model X. Tesla suggests the price adjustments reflect higher profit margins as battery modules experience cost reductions, presumably via production scaling and a general drop in lithium-ion battery cell prices. “Tesla is passing cost efficiency improvements of approximately 3% in 100 kWH pack production through to customers”, the company said in a statement. +++
+++ The latest VOLKSWAGEN Polo (with its high-tech digital instrument display) couldn’t come at a better moment for one Volkswagen salesman. “It’s high time,” the dealer said with exasperation after surveying several older, low-tech models sitting on his lot near Mannheim, Germany. It has been especially challenging to find buyers for the 8-year-old current Polo. Things should change for the salesman with this month’s arrival of the 6th-generation Polo, which has a high-tech interior and modern look. The refined finish of the subcompact’s glass-encased central display even tops the dashboard in the brand’s new top-of-the-line Arteon, which was launched in June with a price tag 3 times higher than the Polo’s. VW is not the only automaker that is packing its small cars with cutting-edge infotainment, safety and comfort features. Ford, Nissan and Kia have already done the same with their subcompacts in Europe. It’s a big shift because important innovations used to be introduced in pricey luxury sedans before trickling down into lower segments over time. These days, however, the pace at which this so-called “democratization” process takes place is accelerating, driven in part by trends in consumer electronics as well as safety regulations. “More and more often we see that new features (especially in the area of connectivity and driving assistance systems) are no longer top-down. The speed at which the innovation cycle develops is so dynamic, carmakers don’t want to force their customers to wait years until the product cadence ensures higher segment cars are first equipped with them,” said Stefan Bratzel, head of the Center of Automotive Management in Germany. Dirk Hoheisel, a management board member at supplier Robert Bosch, took it a step further. “In some cases, this is even flip-flopping”, said the executive, who runs Bosch’s car multimedia and automotive electronics businesses. A key reason for the intensifying investment in small cars is that the subcompact segment is one of the last strongholds still dominated by traditional European volume brands. The sector, where most models are about 4 meters long, has proved unappealing for premium car manufacturers to attack. The volume subcompact segment is also still growing, expanding by 2.4 percent last year to 2.82 million vehicles, according to market researcher JATO Dynamics. This was a faster growth rate than the volume compact segment, and was exceeded only by the sharp increase in demand for volume SUVs and crossovers. While the Polo is VW’s No. 2-selling model in Europe after the Golf family, the Fiesta is and will remain Ford’s more important model in the region. To better tap into growing demand for small cars, Ford of Europe recently reorganized its portfolio in the segment. By inflating the previously diminutive Ka into a plus-size minicar aimed at rational, value-focused customers, Ford marketers could begin repositioning the Fiesta as a purely emotional choice for those looking for a fun-to-drive hatchback at a relatively affordable price. JATO Dynamics senior analyst Felipe Munoz said data backs up Ford’s strategy since registrations of small cars priced between 13,000 to 20,000 euros are increasing more slowly than those priced above that threshold. “Consumers are looking for more refined subcompacts, and the new Fiesta is just that”, he said. “Ford’s intentions of going upscale with the new Fiesta will prove it was worth it to follow the trend we’ve seen in this segment”. Ford of Europe President Steven Armstrong told that the new-generation Fiesta will be a moneymaker despite tight margins for subcompacts because Ford will offer 5 different variants, including a Vignale high-spec version and a crossover-inspired Active model. “It will mean people will spend more to buy a Fiesta that suits them. It will be a profitable vehicle for us”, Armstrong said. Amid weaker second-quarter earnings in Europe due in part to Fiesta launch costs, Armstrong’s boss, Ford Motor CEO, Jim Hackett, gushed about the new Fiesta during a call with analysts this summer: “All the early reviews have been great”. Volkswagen’s bosses are also showering the new Polo with praise. VW brand CEO Herbert Diess described his entry as no less than the most advanced small car ever developed. “It provides safety, comfort, performance, everyday fuel efficiency and it offers great value for money, maintaining high residual values”, Diess said. “Now the Polo plays in a higher league”. Demographics play a big role as small hatchbacks are predominantly purchased or driven by younger customers who have grown up with smartphones. They shun cars that lack the ability to quickly and seamlessly link to their handheld devices via Android Auto or Apple CarPlay. Certain features are simply more relevant for this target group. “A key purchasing reason for consumers is no longer the horsepower under the hood but rather the ability of the vehicle to connect itself to the infrastructure and its surroundings”, said Bosch’s Hoheisel. “Nowadays those are the kind of features that have to be state of the art”. VW’s Polo is the first model in the brand’s product range that comes equipped with the latest generation of the brand’s Active Info Display virtual cockpit, replacing its old analog instrument dials. Only a couple of years ago, customers had to buy a premium car such as the Audi TT to get access to that level of dashboard technology. At the unveiling of the 6th-generation Polo in Berlin in June, Frank Welsch praised the new upscale features VW can afford to offer now that the model finally uses the same flexible, high-volume MQB modular architecture that underpins the larger VW Golf. “It has more interior space than any competitor. It has our newest infotainment system and is packed with driver assist systems”, the brand’s head of technical development told. “The new Polo will be a cornerstone of the brand’s financial and reputational recovery strategy”, wrote IHS Automotive analyst Tim Urquhart. “It features far sharper, and more contemporary styling and a host of connectivity and infotainment features to make it appeal to the young buying demographic VW is chasing with the car”. Small hatchbacks are also emphasizing high-end listening experiences. Ford, for example, struck a deal with Harman International Industries to bring the B&O PLAY sound system from its premium brand Bang & Olufsen into the Fiesta. Citing an Ipsos 2016 automotive study, Ford said audio brands had a “significant impact” on the purchasing decision for roughly one-third of new car buyers. Not to be outdone, VW teamed up with Beats, the Apple audio subsidiary founded by rapper Dr. Dre, to offer a special edition Polo priced 5,000 euros above the conventional version. The car comes with an exterior vinyl wrapping, unique color tones for the passenger cabin, and a 300-watt sound system as its centerpiece. Just to make sure no one mistakes the owner for having grown up with compact discs, “Beats” logos are plastered on, around and inside the car. Minicars such as the Mini and Fiat 500, and even the Opel Adam, helped prove there was a market for fully-loaded, higher-priced small cars. Ford Chief Financial Officer Bob Shanks gave credit to former Ford of Europe boss Stephen Odell, who introduced the Vignale luxury subbrand to Europe, for driving this approach at the U.S. carmaker. “There is gold to be mined in the hills”, Shanks said. With 2 out of 3 Fords sold in Europe this year either featuring high-end equipment such as its Titanium trim line or sportier powertrains such as the ST and RS versions, the brand decided the time was right for the Fiesta to receive its own unique Vignale line with the new generation. Nissan, meanwhile, learned from its Juke that customers liked enhancing their vehicle with added interior or exterior parts. It applied this knowledge when replacing its previous-generation Micra, which was a slow seller because there was “little to no personalization” in the old version of the subcompact hatchback, Nissan Europe’s head of product planning, Ponz Pandikuthira, told. Now that the new Micra, which debuted this year, has 125 variations to choose from, Nissan claims 25 percent of the car’s customers are spending an average of 400 euros just to get a personalized design. Another growing customer group for subcompact is more mature drivers who after years of graduating to larger vehicles are looking to downsize because the kids are out of the house, urban congestion is getting worse and parking spaces harder to come by. Pandikuthira said these customers want the latest in safety features and creature comforts. “We’re seeing a trend of people moving from C-segment hatchbacks to a B-segment hatchback, and the technology is a big part of the story,” he said. “If you don’t have the technology, people won’t shop your vehicle”. Tougher regulations are also playing a role in the push by automakers to pack their small cars with technology. To qualify for EuroNCAP’s coveted five-star safety rating, a new-generation model should have autonomous emergency brakes with pedestrian recognition. Ford went a step further with its Fiesta and offers nighttime recognition of pedestrians, a first in any subcompact in Europe, which should help Ford’s top-seller earn the top score of 5 stars (the new car hasn’t been tested yet). Meanwhile, the budget Ka+ was given only a rudimentary safety system that earned the car just 3 stars. All this extra content and equipment however comes at a cost, and VW brand executives admitted they are having to swallow a chunk of it. Although the Polo’s margin should improve over that of the previous generation, finance chief Arno Antlitz said not all cost cuts from purchasing its MQB modular components in bulk flows through to the bottom line as a chunk of it is gobbled up by adding content. “Over time MQB really fulfilled its promise in terms of material costs, however we reinvested a lot of these advantages into product substance for the new Polo, so you couldn’t really see all the 20 percent savings in the car”, he told investors in July. If a car cannot live up to expectations, it can quickly fall by the wayside. The segment for small hatchbacks is one of the most egalitarian of playing fields with every top10 model easily surpassing the 100,000-unit mark; no other segment can claim such an even distribution of strength across competing models. “We lost our way with the car and the market punished us for it”, said Nissan Europe’s Pandikuthira of the current Micra’s predecessor. Amid this fierce competition, it’s been difficult for import brands such as Nissan to gain a strong foothold in the segment. Although carmakers such as Hyundai and Kia can make the top10 in the minicar or compact class with the i10 or Rio, respectively, only Toyota can claim this distinction in the subcompact segment with its French-built Yaris. But that doesn’t mean they are giving up on the segment. Kia is giving its Rio all-new driver assistant systems while Nissan retailers completed one of the most ambitious training programs ever undertaken by the brand in Europe ahead of the new Micra’s launch. About 4,300 Nissan sales executives from more than 2 dozen countries were involved in the 24-hour residential event to learn about the Micra’s features, including the option of adding twin Bose speakers built into the driver’s head rest for an immersive 360-degree listening experience. For premium brands, the small car market is far less attractive than the compact and midsize sectors. Amounting to only about 313,000 units annually and dominated by the Mini Hatch, Europe’s entry-premium sector is just a third of the size of the premium compact segment. Asked whether Daimler had any plans to venture into the small car segment, CEO Dieter Zetsche showed little interest. “If such considerations were to exist and lead to a positive result then we would inform you about them and that is not the case”, he said. Just as Mercedes-Benz prefers to focus on big plans for its compact lineup, expanding its range to 8 models, BMW would rather leave this part of the European market to its sibling Mini brand. Audi is the rare exception: able to rely on an old PQ25 platform used by VW to build the Polo, it decided to move down-market and occupy the entry-premium space with the A1. It’s easy to understand why premium brands have little desire to get into the small car market. Margins are extremely thin. “Polo customers often are going over their budget to buy a new car, so they can be particularly time-consuming”, explained the VW dealer near Mannheim. “Whereas, Polo buyers try to negotiate the best possible deal, a customer spending tens of thousands more on a much larger Passat typically requires a lot less effort”. With the new Polo, VW hopes to put those days of haggling to the last euro behind it. +++