Newsflash

+++ Last year, AUDI sold 597,866 vehicles in China, up 1.1 percent from 2016, while BMW Group, which sold 594,388 BMWs and Minis, rose 15 percent. Daimler remained third although sales of Mercedes and Smart vehicles soared 26 percent to 587,868. In December, Mercedes and Smart sales rose 12 percent year on year to 48,140 vehicles, while Audi sales jumped 34 percent to 69,160. For the month, BMW and Mini deliveries increased 19 percent to 52,026. Audi is recovering from a boycott by dealers who protested its plans to open a second distribution channel in China. Sales plunged until Audi killed its proposal in May. Audi said China was the No. 1 market for the Q5 last year. In spring, Audi will introduce a long-wheelbase version in China. Meanwhile, BMW noted that its China sales were strong in 2017 despite a model changeover for the 5-series sedan. And Mercedes noted that China, along with Germany, was its biggest market for compact cars. China was also Mercedes’ biggest and strongest growing market for the C class. And E-class sedan sales doubled in China, thanks to strong demand for the long-wheelbase version. +++

+++ AUTONOMOUS electric vehicles have fast become all the rage, and BMW’s planning to get in on the action with a new concept. Not only that, but it wants to put it into production. The show car, dubbed iNEXT, will be unveiled sometime next year in the form of an SUV. “It’s groundbreaking”, said Alexander Kotouc, product manager for the BMW i division. “The iNEXT will be more of the shape and size of an X5. It will have a completely different interior and be able to seat 5 people”. The as-yet unseen concept is earmarked to yield a production version to launch in 2021, based on a new common architecture that will underpin a dozen new electric vehicles to come from the Bavarian automaker; all of them to arrive by 2025. Among the first will be the i5 sedan previewed by the Vision Dynamics concept presented at the 2017 Frankfurt Motor Show. The platform is being designed to accommodate a wide range of electric powertrains, ranging from 136 horsepower to 450, with batteries from 60 kWh to 120, and driving ranges from 450 kilometres to 700. Placing electric motors at both axles could even lead up to 800 hp. “I can promise you that this year you will see something and touch something, you need to let people experience what is coming”, Kotouc told. “I saw last week the latest design ideas and I can say it’s really impressive. It’s looking bold; people will buy it even if they don’t want an electric car because of the design”. The iNEXT is expected to incorporate level-3 autonomous capabilities, allowing the vehicle to operate autonomously most of the time, and prompting the driver to take over when needed. Eventually it could lead to level 4 or even 5, requiring little if any driver intervention at all. The automaker is working on developing the technology necessary with the Here digital mapping operation it acquired (together with Daimler and Volkswagen) from Nokia, and with Mobileye (recently acquired by Intel). “We’re going to see what we believe to be the first full autonomous capability”, said BMW sales and marketing chief Ian Robertson. “There are a lot of people talking about autonomous driving at the moment, but first of all the technology isn’t robust enough. It’s not good enough to say it will be better for most of the time, it needs to be better all of the time”. +++

+++ BMW is investigating the possibility of launching a more powerful version of its i8 hybrid sports car on the back of customer demand for such a vehicle. The head of BMW i Product Management Alexander Kotouc, said that a possible i8s is currently under consideration. “I can tell you at this point we are still evaluating it; the i8 is the iconic sports car of the new era”, Kotouc commented. “Yes, there is customer demand for a more powerful version, but it needs to make sense for our brand. You could put a V12 in there and it would be incredibly powerful, but would it still be a BMW i car? We need to find the perfect balance”. In its most recent form, the BMW i8 delivers a combined 374 hp from its 1.5-liter 3-cylinder and electric motor. Kotouc revealed that the existing powertrain can be modified to deliver more grunt, but hinted that a completely different setup could be used. “There is a customer need and desire to have more power and we will try to fulfill it while also keeping our DNA authentic”, he said. If BMW does decide to make an i8s, it would follow in the footsteps of the i3s, recently launched as the sportier version in the i3 range. +++

+++ Inside GENERAL MOTORS ’ vehicle assembly plant in this southern China city, many workers wear the red-and-yellow uniforms of DHL, the logistics company. The DHL employees work side-by-side with GM workers handling the flow of parts within the plant, which builds about 400,000 Baojun brand vehicles a year and is owned jointly by GM, Chinese partner SAIC Motor and the Guangxi Automobile Group. DHL assembles thousands of kits of parts daily in a strategy to avoid assembly errors, and reduce costs. At some GM-run final assembly plants in China, seats are unloaded from delivery trucks, put on a conveyer system that runs underneath an assembly line, and are delivered to the assembly line operator untouched by human hands. Some parts are delivered by small self-guided robots that would be at home on the set of a “Star Wars” movie. GM is now deploying third-party logistics contractors inside all 17 of its joint-venture general assembly plants in China to transport materials, and manage parts warehousing outside the plant and delivery to the plant, a senior GM executive told. Outsourcing in-plant material handling jobs, traditionally done by GM workers, allows the automaker’s workforce to focus on the more critical work of improving quality and efficiency, GM China’s manufacturing chief Paul Buetow said. GM has not previously shared details of its strategy for using DHL and other contractors in its Chinese joint-venture factories. Early on in developing its Chinese manufacturing, GM used relatively simple manufacturing systems, relying more on cheap labor than advanced technology. Now, GM’s Chinese operations are deploying advanced manufacturing systems ahead of many factories in mature markets, and leading the way in many aspects of factory floor innovation. GM’s increasing use of contractors in China points toward a future where much more of the work involved in producing vehicles, or even all of it, could be handed over to third-party specialists, as Apple does by outsourcing production of its devices. Established automakers have used contract assemblers, such as Magna International, to build small numbers of niche models. But union agreements have limited the use of outside contractors within many plants run by global automakers in Europe and the United States. Some electric-car startups, including NIO, formally known as NextEV, are already experimenting with handing over the bulk of production work to third parties. NIO’s founder and chief executive William Li, who has his entrepreneurial roots in e-commerce, has been lobbying China’s industrial policymakers to allow existing automakers to subcontract for electric car ventures such as his, so that startups could channel limited resources into technology and product development. Under current policy, EV startups in China are required to have their own manufacturing capacity. Buetow said he has “thought about” the possibility of fully outsourcing production, but has concluded the automaker should still control manufacturing. “The building and assembling of vehicles is still a core competency for General Motors”, Buetow told in an interview in Liuzhou. “I am not sure we would ever contract that out”. It is critical, he said, to have the “technical control” necessary to build vehicle bodies with precision in order to assure crashworthiness. GM and SAIC, and Guangxi Automobile have roughly 6,000 employees at the Liuzhou manufacturing complex. To support them, DHL has deployed 1,500 of its own workers according to DHL. Cars have 20,000 to 30,000 parts, and modern auto factories often produce multiple models on the same assembly line. The parts kits, delivered in the proper order according to computerized schedules, help reduce errors. Assembly line workers, for example, do not have to decide what color sun visor to use in a car. That choice is made by the people assembling the kit. Parts kits put together by DHL are delivered by DHL workers just-in-time for a given vehicle coming down the assembly line. DHL uses a system for creating kits of parts that was pioneered by Toyota and later shared with GM. According to GM, most of these DHL workers are doing warehousing and parts delivery to the plants. DHL workers who handle parts-kitting and just-in-time delivery to the assembly line are much fewer in number than those working outside the assembly plants and they do not engage in vehicle assembly work, the company said. Similar outsourcing arrangements are being carried out on a small scale in GM’s North American manufacturing facilities and elsewhere, but “what we have done in China is more (evolved)”, Buetow told, without elaborating. GM declined to provide detailed information on the presence of third-party logistics service providers inside its Chinese plants, saying that is competitive information. GM China manufacturing facilities also have adopted technologies such as “zero-downtime” welding and other robots, as well as collaborative robots which work side-by-side with human operators on the assembly line, Buetow said. As a result, GM’s Chinese production facilities have enjoyed a big jump in efficiency, Buetow said. Buetow and GM declined to give specific data, but Buetow said the number of vehicles assembled with the wrong components has fallen to a quarter of the level seen a decade or 2 ago. “You rarely see any vehicles that are mis-built at the end of the line these days”, Buetow said. +++

+++ Ever since LEXUS pulled the plug on the LFA in 2012, there have been several reports regarding a possible successor. The brand’s VP and General Manager Jeff Bracken hints that the Japanese automaker might eventually make a new supercar. “We need more halo representation. We hear often from our dealers if we can have an LFA follow-up. So you never know”, said Bracken. “I think that when we hear so many emotional and high number of requests for a follow-up to LFA, we certainly won’t ignore that. It’s not a closed door”. Lexus’ global President Yoshihiro Sawa shares that idea as well, but that’s all for now, as we have no info whatsoever concerning such a model. Lexus’ parent company, Toyota, on the other hand, is testing the waters with the Gazoo Racing GR Super Sport hybrid hypercar. The study was shown during the Tokyo Auto Salon, and combines a Toyota Hybrid System with a 2.4-liter twin-turbo V6 for a total output of 1,000 hp. +++

+++ Autonomous driving technology is becoming a key differentiator in the premium luxury market and Audi took an early lead when it introduced the all-new A8 with a Level 3 semi-autonomous driving system. MERCEDES was one of the first automakers to introduce semi-autonomous driving technology as the company’s adaptive cruise control system has been around for over a decade. As a result, the company isn’t going to sit idly by while Audi enjoys the spotlight. As Mercedes research and development boss, Ola Källenius, told: “It is our goal in the next 3 years or so, to have the first application in the market for that Level 4 / Level 5 technology. Prior to that, in 2020, we’re pursuing our first Level 3 car where you can obviously have some parts of the driving experience autonomous”. The Level 3 system will debut on the S-Class and Källenius noted it will be a “sensible option” for buyers of the flagship sedan. There’s no word on how much the system will cost but Källenius hinted the technology will be priced similarly to other options on the S-Class. That’s a little vague but the Driver Assistance Package on the S560 sedan costs $2,250 and includes features such as Active Steering Assist, Active Lane Keeping Assist, and Active Brake Assist with a cross-traffic function. SAE International defines a Level 3 system as conditional automation and says the vehicle should be able to handle “all aspects of the dynamic driving task with the expectation that the human driver will respond appropriately to a request to intervene”. Mercedes is also working on Level 4 and Level 5 systems but Källenius has previously said they are primarily being developed for the taxi market as they are “phenomenally expensive” and will likely cost “tens of thousands of dollars once you get it into production”. +++

+++ To return to the U.S. market, PSA Group is asking some OPEL engineers to return to their roots. The French automaker is making its latest products compliant with U.S. regulations as part of a 10-year plan to sell vehicles in North America, PSA CEO Carlos Tavares told. The company is using Opel, a former General Motors brand based in Rüsselsheim, Germany, to take the first steps to enter the U.S. “Our engineering teams, using some of the Rüsselsheim engineers, are making our next generation of products U.S.-compliant”, Tavares said. “That work started a few months ago and has been boosted by the fact that we’re now using the Rüsselsheim engineers who have been working for GM for so many years”. PSA will sell vehicles in North America by 2026, Tavares said, and is researching the U.S. consumer market to decide which brand to lead its return. As it has done in Russia and Latin America, the automaker will start with low-volume sales to ensure short-term profitability. “Our success in Europe could lead to a very arrogant position that I want by all means to avoid”, Tavares said. “Entering the U.S. will only be an upside for the value and the profitability of my company. My only focus in the U.S. is to do the right things right”. To succeed in North America, PSA is starting at the engineering level, relying on engineers whose job had been to homologate U.S. vehicles for the European market. At the same meeting with reporters, Larry Dominique, CEO of PSA North America, said the company has hired Ben Winter, formerly of Ford and Fiat Chrysler Automobiles, as its chief technical officer. He will be responsible on the U.S. side for working with the engineers in Rüsselsheim. Other new hires include Lynn Blake, vice president of mobility. She is a former Nissan colleague of Dominique and Tavares. Vincent Noirbent has transferred from France as vice president of corporate and product planning. Dominique described him as PSA North America’s conduit into the parent company. Opel found itself under French ownership last year after GM struggled for decades to turn a profit. Tavares said he can revive the brand using the same tactics the former Renault-Nissan Alliance executive used in the turnaround of PSA in 2013, tightening up manufacturing operations and giving engineers “room to breathe”. However, that extra breathing room comes with additional responsibilities. By tasking Opel engineers with the reverse process of readying European vehicles for the North American market, PSA can advance its global aspirations while developing a potential source of additional profit. “For us, it’s a great opportunity to merge their skills and their expertise to prepare the cars for the U.S. market”, Tavares said. Along with U.S. regulatory compliance, PSA is preparing for globalization with its Free2Move mobility platform, which allows customers to use multiple mobility services on one app. The app launched in the U.S. in October and hosts outside companies such as Zipcar and Car2go. PSA will add its own mobility services, including a car rental service, to the platform this year. PSA has yet to announce a location for its North American headquarters. The company pulled its Peugeot brand out of the U.S. market in 1991. +++

+++ PSA Group CEO Carlos Tavares said he planned to meet next week with UK unions and government officials to discuss the future of the automaker’s’ Vauxhall plant in Ellesmere Port, where Tavares said production costs are twice those of its plants in France. PSA has already begun cutting jobs at the plant in moves that would reduce the workforce by a third, or 650 jobs. This has provoked protests from unions. Tavares told that a hard Brexit which results in tariffs on exports of UK-built vehicles would increase pressure to cut costs. He said the plant is at efficiency levels similar to where PSA stood 4 years ago, when Tavares began his turnaround effort at the French automaker. PSA took over the Ellesmere Port factory, which builds the Astra, last year when it acquired Opel and Vauxhall from General Motors. “What counts is to bring UK plants to the level of cost and quality that is the same as Continental Europe”, Tavares said. Separately, Tavares said he is “very open” to a potential alliance in Latin America. He was responding to a question about Ford’s signal 2 days ago that it was exploring options for its money-losing Latin American business. Tavares declined to say whether PSA planned to discuss a partnership with Ford. Asked if he had talked with Ford executives, Tavares said, “not so far”. +++

+++ The Corolla name looks set to return to Western Europe this year when TOYOTA  launches a new model to supersede its struggling Auris. A source told that the Corolla, which will return the moniker to the UK for the first time since 2007, would be tasked with turning around the declining sales of the Auris. Although the Corolla has been absent for 11 years, cars bearing its name have remained on sale in other global markets since it was first introduced in 1966. The new model will arrive as the current international Corolla, which has been on sale since 2013, is replaced with a family of models. Alongside a hatchback, an estate is also likely as a replacement for the Auris Touring Sports. The range will be built on Toyota’s New Global Architecture platform and is predicted to come with petrol and hybrid powertrains. My source said the 1.2-litre direct injection petrol and 1.8-litre hybrid powetrain currently featured in the Auris could be included in updated forms. No diesel option will be offered because Toyota removed both Auris diesel models from showrooms at the end of last year. Toyota is also considering removing the Avensis from its line-up when the current version goes off-sale later this year, due to dwindling sales in the Ford Mondeo-sized segment. +++