+++ It’s been about four years since BMW started manufacturing the i3. And in that span of time, it’s produced 100,000 of them. The milestone was celebrated at the plant in Leipzig, Germany, where the Bavarian automaker assembles its dedicated range of electric vehicles. The plant churns out i3s at a rate of over 120 units each day, totaling 26,631 last year alone. It also handles production of the i8 at a rate of 8 to 10 per day, for a total of 2,783 in 2016. The next addition to the range will be the i8 Roadster, set for release next year. BMW also produces the 1 Series and 2 Series at the plant in Leipzig. Porsche also assembles the Panamera, Cayenne, and Macan at its own plant in the same city, the largest in the federal state of Saxony and the tenth largest city in Germany. “We are proud of the 100,000th i3 built by our plant in Leipzig. The i3 is the original, a true technological pioneer”, said BMW chairman Harald Krüger. “In the interests of sustainability, today we are also presenting a concept for the second use of i3 high-voltage batteries. With our Strategy ‘Number One Next’, we are looking far beyond the car itself and driving change in our industry with totally new approaches and business models”. The battery storage farm in Leipzig uses the decommissioned power packs from as many as 700 i3s to absorb surplus power from the local grid and supply it back when electricity production is low. +++
+++ Jim Hackett, FORD president and CEO this past 5 months, is leading a revolution. Ford has opened a new European Smart Mobility office, artfully located in the middle of a collection of technology start-ups and university satellites that have grown up in a collection of ex-Olympics buildings called Here East, near Stratford in distinctly non-leafy north-east London. Here, Ford’s brightest and best technical talents will co-operate with others in similar cells around the globe to build what Hackett likes to call “smart cars for smart cities”. Electrification and autonomy are most certainly on the agenda because change is Hackett’s preoccupation. “The future is not a fantasy”, he likes to say. “As my old football coach used to say, you get better or worse, but you don’t stay the same”. A homely, lived-in sort of bloke whose frame belies his years as a college football star, Hackett has already been extensively billed as “a deep thinker” and “a leader experienced in driving transformational change” by the company’s executive chairman, Bill Ford, who has assumed the role of recruiter-in-chief since 2006 when he gave up the big job himself and brought in Alan Mulally, fresh from a successful turnaround at Boeing. Mulally’s ‘One Ford’ mantra and his adroit but lucky avoidance of a 2008 government bail-out put Ford back on the rails far sooner than GM or Chrysler and greatly enhanced it in the eye of the US public. Thus Hackett has big shoes to fill: hardly anyone spares a thought for the footwear of recently departed CEO Mark Fields, whose management time delivered several years of record profits, but whose relationship with new technology always looked distinctly brittle. On Fields’ watch, Ford’s all-important stock price fell nearly 40 percent, to a point where profitless Tesla, making only a few thousand cars a year, had a greater market capitalisation than Ford. The headlines kept saying so and it couldn’t go on. Hackett’s past 5 months have brought a modest stock upturn but, as the pitiless denizens of Wall Street keep observing, no greater than the recent upswing of the indices themselves. America’s markets are unashamedly short-termist and Hackett knows he has a big job ahead convincing them (happy as they are to make an exception of Tesla) that future tech at Ford can be a money-spinner. For a guru of change, Hackett’s career at first glance looks curiously sedentary. After a few years with Procter & Gamble after college, he spent 35 years with an office furniture group, Steelcase, and taking directorships with banks and insurance companies. Should someone who always worked for the same company, and in the same place, be lecturing us on modern corporate development? Well, yes, as it happens. The filing cabinet business went through a eureka moment when Hackett (as its 39-year-old CEO) led a team that ‘discovered’ smart working, and promptly started a revolution in office design. That achievement cast deep-thinking Hackett into a change guru and put him in daily touch with other leading American design thinkers. It also brought him to Ford in 2015 as chief of a new smart mobility division, which is why he was ready when Fields faltered. Talking vehicle connectivity, Hackett is instantly impressive. “We need smart vehicles for a smart world”, he says, “but cities are not ready. Their streets were never wired when they were built and nobody’s about to start digging them up now. Connectivity will provide answers”. Progress must be continual, says Hackett, displaying his penchant for deep thinking on corporate behaviour by describing how market-leading companies have eventually failed by sticking too long to the source of their original advantage. “Take Pony Express”, he says. “I’ll bet their CEO would not have had a good board meeting the day he suggested they should ditch ponies. But it had to happen”. Vital question: does this mean Ford has initially to stop making cars as we know them? (I’m a little concerned, having articulated my love for the Mustang). “Good Lord, no,” says Hackett, aghast. “You go right ahead and get your Mustang. What we’re finding is that people’s enthusiasm for their cars doesn’t decline when the method of propulsion changes. That makes the whole thing maintainable”. Still, I persist, surely there’s a huge job ahead to make people want these new-theory cars. You’ve got to take the public with you. Hackett promptly agrees, with provisos. “The technology must adapt itself to the requirements of the market”, he says, “and early iterations didn’t do that well enough. But the basic principle is to build trust. To make it clear to people that they can commit to Ford. Back in 2008, we earned their trust in ways they probably didn’t expect”. +++
+++ Executive vice president for vehicle testing and high performance development. It’s not a bad job title, is it? At the HYUNDAI Motor Group, which incorporates both Hyundai and Kia, it’s a title now worn by Albert Biermann. Has been for a couple of years, in fact. Because, at 57, if somebody makes you an offer, and you’ve been at your old place for 32 years, what else are you going to do? Even if the old place was BMW, and eventually you were basically in charge of the revered M division. Biermann figured he had made his mark, achieved what he’d wanted to and figured, well… why the hell not? So here we are, a couple of years later, and the Korean conglomerate’s Kia Stinger and Hyundai i30 N are about to go on sale. Fruits of the labour, if you like. “Everything is finished,” he says of the Stinger GT. “I mean, we have no mass production cars out yet, but they’re more or less on the way from Korea to Europe”. Those who have driven this new grand tourer, a rear-wheel-drive executive hatchback- cum-coupé, have warmed to it. “People are surprised a Kia can drive like this”, says Biermann. “And at this moment, we have only put the 3.3-litre V6 out, and we’re not focusing on the 2.0-litre petrol or the diesel versions. But I’m also quite optimistic about those. Of course some power is missing, but the sporty character is there”. Which is all very well, Albert, if the Stinger is a flagship vehicle. But what of the cars beyond that? “We try”, Biermann says. “If you drive the Stonic now, you might find the drive not exactly what you expected from a little B-segment SUV. It’s also maybe a little bit more nimble, a bit more fun to drive than you would have expected 2 years ago. But it’s not like it’s the ultimate fun machine; it has to serve for city driving and so on”. He also says Kia has “put a lot of effort into the next Cee’d, so you can expect a good step up for driving fun, precision, agility and so on compared with the previous Cee’d; and that’s a car that gets a little more attention and focus in that area. But, as you know, we make tons of cars and we cannot give the full dynamic attention to all of them. “The philosophy for the Stinger was different, because we were challenging on a premium OEM level, and I think the effort we put into the car was also a little bit focused on that challenge, so we put more effort into that car than others”. Hyundai has had its Genesis saloons before (and will again), but the Stinger is the first time that Kia has attempted to mix it with the European big boys. Has public perception shifted at all? “I can’t tell yet, but I’m sure it will happen”, Biermann says. “The Stinger will change the expectation of Kia cars in general, because people will think we can perform at a higher level”. He knows, though, that it will be a long haul to get a Kia into the same conversation as an Audi, BMW or Mercedes-Benz. As you would expect from someone who spent so long at M division, it’s the dynamics that get Biermann’s attention. Not all companies do that, you know; pay attention to the little details like that, to get things fundamentally right. It’s new for Kia too. “We have some new experiences”, says Biermann. “But it’s very fruitful because, all of a sudden, our car is competing on a premium European car level. And they’re enjoying it, you know”. So are we, Albert, so are we. +++
+++ The car market in JAPAN has proven to be a really tough place for U.S. manufacturers, who have claimed that protectionist policies keep them out of the third largest car market in the world but the reality is more complicated than that. Japanese brands account for 90 percent of the domestic car market in Japan and a big role in this is due to the special relationship between the customer and the dealer. Japanese buyers are used to having a much closer relationship with the dealer compared to the Western standards. According to a report from the Atlantic, a dealer from a Japanese brand will build a relationship with their customers by bringing demo cars to the customer’s house, offer free car washes for life, handle their insurance policies and remain generally in contact with them, offering a service that’s considered kind of a custom in the country. This hospitality is what helps the Japanese automakers remain dominant in their home market and is also what baffles American dealers that aren’t used to provide this kind of service. In the U.S. market the domestic brands remain dominant but with a much smaller share of the pie, with the Big Three (GM, Ford, FCA) making up 45 percent of the market and the Japanese brands accounting for 39 percent. This dynamic contributes in part to the trade imbalance between the U.S. and Japan: last year it was $68.9 billion and a large share of it came from vehicles and from automotive parts ($52.6 billion). This has long been an issue for politicians, including Trump who said earlier this year that the Japanese “make it impossible to sell cars in Japan”. American carmakers also use the same line of argument, accusing Japan of protectionist policies saying that practices like requiring lengthy car inspections of foreign-made vehicles and prohibiting existing dealers from selling foreign cars have prevented non-domestic car companies from gaining a larger share of the market. However, protectionism is not the full explanation of why Japanese customers don’t buy foreign cars. For example, there are no import tariffs on cars, whereas the U.S. and EU impose 2.5 percent and 10 percent tariffs. Instead, the problem lies in large part in the hesitance of American car dealers to invest in the kind of network that Japanese consumers have come to expect. “The way Japanese consumers buy cars is very different”, Deborah Elms, the executive director of the Asian Trade Center said. “Yet the Americans have not invested in a dealer network to break into the market”, Indeed, Ford has pulled out of Japan, where it had sold just 5,000 units annually while GM has only 28 dealerships in the country, managing to sell just 1,000 cars in 2016. Japanese customers expect to receive services like free maintenance from their dealers and picking up their car for a check-up, performing it and then return it. This sort of dealer network is expensive to develop but also to maintain. Not all foreign companies though struggle with Japan; imports from EU grew five percent between 2013 and 2016, with 251,115 cars while imports from the U.S. shrank by 15 percent for the same period, to 19,933 cars. Brands like Mercedes and BMW saw their sales growing by 60 percent and 23 percent respectively between 2012 and 2016. BMW for example decided three years ago to redouble its efforts in the Japanese market, spending $675 million to refurbish its dealer network. “In Japan, everything is about hospitality”, Peter Kronschnabl, the CEO of BMW Group Japan and the chairperson of the European Business Council’s Automotive Committee and the Japan Automobile Importers Association, said. “If you are not into this, it will be very difficult to succeed in the Japanese market”. +++
+++ The MITSUBISHI Space Star replacement is set to use Renault Clio platform and engines. Mitsubishi is looking to use its new position as part of the Renault-Nissan Alliance to produce a Ford Fiesta-rivalling supermini. It would share its platform and mechanicals with the next-generation Renault Clio and Nissan Micra, and is expected to replace the smaller Space Star in Europe. Mitsubishi’s corporate vice-president and product planning head Vincent Cobee told: “Designing and building a bespoke platform is expensive, and the margins in the small car sector are smaller. So are we looking to use Renault and Nissan platforms in that segment? The answer is yes”. Cobee, who joined Mitsubishi from Nissan when it bought a 34 percent stake in the firm earlier this year, admitted that launching SUVs such as the next Outlander was the “immediate priority”, but that B-segment small cars made up “30 percent of global demand”. He also said it would be “extremely hard” to meet emissions regulations without a supermini. Renault’s next Clio is expected to arrive in 2018 using a new platform, and Mitsubishi will borrow that architecture, along with Renault’s three-cylinder turbo petrol engine. Mitsubishi confirmed last year that the Space Star replacement would feature a fully electric variant in the future, too. It’s not clear yet whether the new small car will take the current name. One potential option would be to revive the Colt badge from the brand’s previous-generation supermini, which was axed back in 2013. +++
+++ NISSAN ’s chief planning officer, Philipe Klein, has played a very straight bat when asked when, or if, a successor to the nine-year old 370Z halo sports car will be launched, meaning the next iteration seems years away in even the best-case scenario. Speaking to media at the Tokyo motor show, the man in charge of planning, developing and implementing the company’s global product strategy seemed to indicate that the Z program was well down the company’s priority list. “There is a lot of passion behind this vehicle… at the same time it’s a segment that is gradually declining, making the case more difficult”, he told, adding the GT-R perhaps had more potential as a brand leader. “We have no intention to quit excitement, but we’re going to make it happen in different ways”, he said. There’s a few lines to read between there … However, lovers of the iconic Z line that goes all the way back to the Datsun 240Z should be somewhat reassured that at least Nissan’s engineers and designers are chomping at the bit to continue the legacy. For instance, Nissan’s engineers are investigating the use of electrification in a performance context (headlined by its just-announced Formula E entry for the 2018/19 season) plus Control Logic motor torque vectoring. For one, there’s the brand’s e-Power hybrid system, already used on the Japanese-market Note and Serena, which uses a combustion engine to generate power for the electric motor/s that actually drive the wheels. Like a range-extender that doesn’t plug in externally. “GT-R and Z cars are our symbol, so we want to launch a new vehicle”, Hideyuki Sakamoto, Nissan’s executive vice president of product engineering, said in a separate meeting. “We are now studying utilisation of e-power to create more aggression. Timing is strictly prohibited though”, he said. The other option would be to use the technology premiered this week in the company’s IMx concept, an EV crossover with motors on the front and rear axle, with a combined system output of 435 hp / 700Nm. “For quite high power and torque, e-Power has a very very high level of possibility. EV is of course also available”, Sakamoto suggested. Nissan’s design chief Alfonso Albaisa also added to the mix his desire to create more iconic sports cars (particularly a next GT-R, I would add) citing his childhood discovery of the Jaguar E-Type as the catalyst for his career in car design. “Next question…?” he asked cheekily when the next Z question was lobbed. “I can say we don’t have a fixed thing yet… but how can we completely blind of the importance of that name to the company? Maybe you can feel that I love these cars, but I can’t say too much or I’ll be taking a train home instead of my company car!”, he added. As you may recall, there has long been conjecture that the next Z car may become a crossover, as previewed by the Nissan Gripz concept premiered in late 2015. +++
+++ Fresh research reveals average gap between quoted and REAL WORLD fuel consumption has risen from 9 per cent in 2001 to 42 per cent today. The average gap between a car’s official fuel economy figures and those obtained in real-world driving conditions has leapt to 42 percent, new research has found. The International Council on Clean Transportation (ICCT) analysed data from over 1 million vehicles in 8 European countries, to reach its findings. The latest 42 percent discrepancy follows 2013 data that found a 25 percent average gap between advertised and real-world economy in 2013; back in 2001, the discrepancy was just 9 percent. Privately-owned cars fared slightly better than company cars, with the former posting an average 39 percent discrepancy and the latter a 45 percent difference between official and achieved economy. The ICCT estimates consumers pay 400 euro extra a year for fuel as a result of these differences. These figures may well improve in the future, however, thanks to the introduction of a new WLTP testing procedure for economy and emissions. This new regime was introduced in September 2017 and will become mandatory for all new cars from September 2018. The WLTP procedure replaces the outgoing NEDC assessment programme, which saw cars tested for just 20 minutes in order to ascertain emissions and fuel economy. Despite the new testing regime, the ICCT says more may need to be done to address the cap between official and reported economy, as the new WLTP programme: “contains new loopholes that could permit the performance gap to increase again”. +++
+++ The French government, the largest shareholder in RENAULT , has reduced its stake in the company to 15 percent, from 19.73 percent previously. The shares were sold for 1,2 billion euro. Renault has announced that 10 percent of these shares will be offered to employees to give them a say in the way the company is run. The French government previously owned 15 percent of the company. In 2015, it bought the additional 4.73 percent stake when a legislative change regarding the voting rights of long-term shareholders prompted then economy minister Emmanuel Macron to increase the Renault holding, albeit temporarily, reports Bloomberg. France remains Renault’s largest shareholder, ahead of Nissan, by a small margin. Renault is currently valued at 25 billion euri. The brand aims to increase this with an ambitious plan to boost operating profit and strengthen sales in existing and new segments. It’s part of Renault’s Drive the Future initiative, which was recently detailed. +++