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+++ BMW will reveal a concept version of its M8 performance car at the Geneva motor show in March, previewing the look and styling of its 600 hp range-topper. The car will be a Gran Coupé and offer a clear glimpse of the future production model’s design. It will wear M-designed body panels that express the added muscle housed beneath its lengthy bonnet. BMW’s Geneva reveal will foreshadow a summer launch for the production 8 Series, which is due on roads in November. The M version is due next year. The high-performance M8, which spawned a racing car that has already competed in this year’s Daytona 24 Hours, will sit above the regular 8 Series and use BMW’s twin-turbocharged 4.4-litre V8 engine. It will produce around 630 hp, placing it above the latest 600 hp M5 and giving it more firepower than the Mercedes-AMG S 63 S Coupé, which has 612 hp. M division president Frank van Meel said of the new line-up: “The conception and development of the standard BMW 8 Series and the M model run in parallel. The future M8 will build on the genes of the 8 Series and augment its DNA with added track ability and generous extra portions of dynamic sharpness, precision and agility. It all flows into a driving experience that bears the familiar BMW M hallmarks and satisfies our customers’ most exacting requirements”. He told: “We have been involved with the wider 8 Series project from the very beginning. Our challenge as engineers was actually to ensure that the standard car wasn’t too sporty for its customers, because we wanted the M8 to feel like a proper step up. Also, because not all 8 Series customers want an M car”. Insiders suggest the 8 Series and M8 will use the same platform as both the 7 Series and 5 Series, and that the M car will share much of the drivetrain of the four-wheel-drive M5. “For now, I can’t confirm that”, van Meel said of the speculation, “except to say that we have watched the luxury sports coupé market closely and we see lots of four-wheel-drive cars within it already. We have also already proven that our M xDrive four-wheel drive system doesn’t adversely affect the handling purity of the new M5. There’s nothing to fear from four-wheel drive. “We certainly want to make a statement with this car. It will sit at the very top of our model range and, for now, we have no confirmed plans for any series production model above it, so we understand it must have a specification suiting its position in our hierarchy”. The M8 will carry a heavy premium over the standard 8 Series, so a starting price on Mercedes-AMG S 63 S Coupé level seems logical. +++

+++ A committee has warned that Britain leaving the European Union ( BREXIT )without a trade deal would be “hugely damaging” to the British car industry, according to a report by MPs. The Business, Energy and Industrial Strategy Committee says that failure to reach a deal would lead to a 10% tariff being introduced on British-made cars exported to the EU that would, in turn, result in the shift of manufacturing to countries remaining in the EU. The report says that would put “hundreds of thousands” of jobs at risk. The UK exports just under 80% of the cars it produces (which amounts to 13% of all goods exported from the UK) with 56% of those going to the EU. The report notes that 86% of all vehicles sold in the UK are imported, with 70% of that total coming from the EU. The ‘impact of Brexit on the Automotive sector’ report, produced after the Committee heard from figures involved in both the UK and EU car industries, says that because UK car industry supply chains are “inextricably intertwined” with those of the EU, any tariffs or non-tariff barriers (such as border delays and added bureaucracy) resulting from Brexit would affect UK competitiveness. It adds that future trade deals would “need to accommodate the largely European content of cars built in the UK”, and calls for a deal to allow UK content in cars to be classed as EU under the rules of origin. When considering the post-Brexit regulatory framework, the report noted: “We have not identified any potential benefits from regulatory divergence from the EU, only costs. We recommend that the Government seeks in the negotiations to preserve existing arrangements for the certification of vehicles throughout the EU”. The report also looked at potential opportunities that might arise from Brexit, through Britain’s ability to negotiate independent trade deals with non-EU countries. It noted: “We found that it is unrealistic to expect an expansion of trade overseas to outweigh the loss of trade to Europe arising from a hard Brexit. Furthermore, any new bilateral trade deals secured by the Government are unlikely to lead directly to a significant increase in investment and jobs in the UK automotive sector. Retaining good access to the single market is more important than securing the freedom to secure new trade deals with third countries”. When considering freedom of movement within, the EU report also calls for the Government to prioritise ensuring key manufacturing sectors such as the car industry can “retain sufficient access to essential skills to ensure that gaps can be filled adequately with UK workers”. The report concludes: “There are no advantages to be gained from Brexit for the automotive industry for the foreseeable future. The negotiations are an exercise in damage limitation”. The 11-member Business, Energy and Industrial Strategy Committee is chaired by Labour’s Rachel Reeves MP. The committee features Labour, Conservative and Scottish National Party members. +++

+++ When DAIMLER announced that Li Shufu had acquired almost 10 percent of the automaker last Friday, it caught financial markets (and German regulators) by surprise. Although the move seemed sudden, the head of the Chinese carmaker Geely had, according to multiple sources and documents, spent months stealthily laying groundwork for the stake. Two sources in Geely and one source close to the company said a senior executive there, Li Yifan, had for more than a year led a small team tasked with acquiring shares in Daimler. By using Hong Kong shell companies, derivatives, bank financing and carefully structured share options, Li Shufu kept the plan under wraps until he could, at a stroke, become Daimler’s single largest shareholder. The result was a $9 billion investment that skirted disclosure rules requiring investors to notify German authorities if their share of voting rights in a company passed 3 percent, and then 5 percent. Because of the way the stake was built, there is no indication that Geely breached those rules. “The fact that Li would invest did not come as a surprise”, said a senior Daimler executive, who did not want to be named because he was not authorized to speak to the media.“But how he went about it certainly was”. The shell company used to amass the stake, Tenaciou3 Prospect Investment Ltd, was incorporated on Oct. 27 in Hong Kong. The company had just one ordinary share, worth HK$1 (12.8 U.S. cents), according to documents filed to the Hong Kong Companies Registry. It also has a single director: Li Yifan. Reuters reported in November that Daimler rejected a proposal by Geely to acquire a stake or reach a technology-sharing deal. The next month, Tenaciou3 signed agreements, subsequently filed with Hong Kong’s companies registry, with Morgan Stanley and Bank of America Merrill Lynch that would help the Chinese company build its stake in a less-direct way. Last week, Daimler named Tenaciou3 in a regulatory filing as the entity controlling Li Shufu’s 9.69 percent stake. A person with knowledge of the deal said Morgan Stanley had worked on the structure of the investments, helped Li build up his position in the secondary market and provided financing. The person asked not to be named because he was not authorized to speak to the media. Geely also hired two former Morgan Stanley executives, Dirk Notheis in Germany, and Bao Yi, who worked in China, to help the banks devise tactics that would avoid immediately triggering disclosure requirements in Germany, according to sources familiar with the matter. Tenaciou3 purchased some shares on its own, but not enough to require disclosure. The banks then acquired additional shares in two ways without Geely having an entitlement to the shares and therefore no requirement to disclose the holding, according to 2 people familiar with the matter. Some were purchased directly, and the risk was offset by an“equity collar” structure to protect the investment from losses. That involved selling options for the right to buy shares above the then-prevailing price while buying options to gain the right to sell the shares below the price. The banks also gained the right to acquire some shares by buying derivatives, the sources said. Only when the shares were sold to Tenaciou3 did the stake need to be disclosed. Li Yifan did not respond to requests for comment. Morgan Stanley and Bank of America declined to comment. Daimler also declined to comment. Li Shufu was not immediately available for comment. German Chancellor Angela Merkel said there were no obvious violations linked to the acquisition, although the country’s financial regulator, BaFin, is investigating whether disclosure rules were broken. In a report to Germany’s parliament, the country’s Economy Ministry said it would consider tightening disclosure regulations in light of the Chinese stake in Daimler. The structure of the deal makes it difficult to determine the source of the money behind it. On paper, Tenaciou3 is owned by another Hong Kong-registered company, Fujikiro Ltd, which lists a third company, Miroku Ltd, as a director. The other directors of both these companies are all senior partners at global law firm King & Wood Mallesons, according to official records. Li Shufu is not named in any of the documents, but he has openly said he is the owner of the stake held by Tenaciou3. The practice of using shell companies as investment vehicles and lawyers to act as directors on behalf of wealthy investors is fairly common. King & Wood Mallesons declined to comment. Geely officials familiar with the transaction said the shell company was set up in part to make the deal an“offshore” acquisition and avoid the heightened recent scrutiny from Beijing on deals in which funds are moved out of mainland China. The company has said that all the funds for the deal were raised outside China, although industry consultants said the use of the Hong Kong entity made that hard to verify. A separate shell company, Tenaciou3 Investment Holdings Ltd, directly controlled by Geely, borrowed 1.67 billion euros ($2.04 billion) from the Hong Kong branch of Chinese bank Industrial Bank, according to an agreement dated Dec. 5 and filed in Hong Kong. A Daimler filing shows Tenaciou3 Investment Holdings, whose director was listed as Li Yifan, as the controlling entity behind Tenaciou3 Prospect. Tenaciou3 Investment Holdings used its share capital in Tenaciou3 Prospect Investment as collateral for the loan. The agreement with Industrial Bank did not say what the funds would be used for. Industrial Bank, which is headquartered in China’s southeastern city of Fuzhou, did not immediately respond to a request seeking comment. Angela Stanzel, Berlin-based senior policy fellow focused on Asia at the European Council on Foreign Relations, said the main concern in Germany was the lack of transparency. “The issue is, where does the money come from and how did this bid actually happen?” she told. +++

+++ Almost 2,500 workers at GENERAL MOTORS ’ South Korean unit, equivalent to 15 percent of its staff, have applied for a redundancy package that the U.S. automaker is offering as part of a drastic restructuring, union officials said. The relatively strong number of applicants could make GM’s task of negotiating with the unions and the government somewhat easier, although the automaker still faces many obstacles after saying last month it would close one South Korean plant and was weighing the fate of its 3 remaining factories. “It looks the redundancy program has been well received by workers”, said Cho Seong-jae, a senior fellow at the Korea Labor Institute. “It seems that workers have given up any hope. They are fed up as the Gunsan factory has been underutilized for the past 2 to 3 years”, he added. The number of applicants contrasts with past militant action by unions in South Korea’s auto sector. In 2001, Daewoo Motors laid off 1,750 workers, triggering violent clashes with riot police. Daewoo Motors’ assets were sold to GM the next year. GM’s South Korean unit, which is geared primarily towards building cars for export and employs some 16,000 people, is expected to have made a fourth straight year of operating losses last year, battered by the automaker’s decision to pull the Chevrolet brand from Europe in 2013. A GM document seen by Reuters showed that over the longer-term, the U.S. automaker aims to cut 5,000 South Korean jobs but keep production steady if Seoul agrees to a $2.8 billion financial aid proposal for the loss-making operation. How amenable South Korea’s government will be towards GM’s proposal is unclear. The planned closure of the Gunsan plant is, however, a setback for President Moon Jae-in who has made job creation a key policy goal. Under the redundancy package, which had an application deadline of March 2, workers are being offered 3 times their annual base salary, money for their children’s college tuition and more than $9,000 towards a new car. Just ahead of the deadline, GM Korea last week urged workers to take the package, saying this may be the last time such an offer would be made. “Management scared us. Some workers were concerned that they might be laid off if they didn’t apply”, a union official told Reuters, adding that it was not a bad deal for some workers who were near retirement. At the Gunsan factory which is due to be shut down, 941 out of some 2,000 workers applied for the redundancy package, union officials said, declining to be identified as the information has not been publicly released. Cho at the Korea Labor Institute said it would not be easy to relocate the Gunsan workers who did not apply for the package to other factories. “Workers at other factories may refuse to take in the Gunsan workers, because they also face restructuring pressure”, he said. In addition to sharply reducing headcount, GM is also seeking concessions on wages and other benefits from the union. Management plans to hold another round of talks with the union where the 2 sides may discuss the fate of the workers at the Gunsan plant who did not apply for the package as well as the automaker’s proposals on wages. The union has come under much pressure to make concessions. South Korea’s auto association added its voice, arguing that workers’ wages at GM were high. The South Korean government is expected to start due diligence on GM Korea this week as it weighs whether to spend taxpayer money to rescue the unit. +++

+++ The third generation of the KIA Soul is beginning to take shape. Industry sources who anonymously spoke to a South Korean news outlet shed insight into what we can expect from the model. The sources told that Kia will make the next-generation Soul more rugged than the current model. It’s being designed inside and out with American buyers in mind. It will be bigger than its predecessor and it will look more like an SUV. The updated sheet metal will hide a platform also found under the recently-introduced Hyundai Kona. The 2 soft-roaders will also share numerous mechanical components, including the Hyundai’s turbocharged engines. Front-wheel drive will come standard, and all-wheel drive will most likely be offered at an extra cost. The all-electric variant of the Soul will return. And, unsurprisingly, it will benefit from the technology ushered in by the Kona Electric, a model scheduled to make its public debut next week at the Geneva Auto Show. The battery-powered Soul will offer over 300 kilometres of range. There’s no word yet on whether the Soul and the Kona will use the exact same battery pack, or if they’ll merely share battery technology. The third-generation Kia Soul will make its public debut before the end of the year. We expect it to arrive in showrooms in time for the 2019 model year, though the firm hasn’t released an official time frame yet. +++

+++ The MINI brand achieved global sales growth of 7.0%, with the delivery of 20,929 vehicles to customers in January. The strongest growth driver was the Countryman, which doubled its sales compared to January last year. A total of 6,022 customers took delivery of this model in the month, with one out of seven choosing the plug-in hybrid version of the car. +++

+++ PAGANI boss Horacio Pagani has confirmed that a team of 20 people are working on the hypercar manufacturer’s first EV, which is due by 2025. A new model with the option of a manual gearbox is also on the horizon. Pagani revealed that until customer demand for internal combustion engined cars drops off, his company will still offer them, but that the brand will bring out its first EV by 2025. In addition, Pagani is developing another model, a successor to the Huayra. This will continue to use Mercedes-AMG power, with a twin-turbo V12 that will remain petrol-only, rather than half-stepping to electrification with a hybrid. This second model will offer a choice between Pagani’s current manually operated automatic gearbox and a full manual ‘box, as a result of growing customer demand for the latter. Porsche has also bowed to customer pressure to offer a manual on its high-end models after years of offering only PDK-equipped cars. Pagani dismissed the idea of autonomous driving technologies in his cars, saying they’re ‘toys’ that owners drive only when they want to. Pagani has always produced one model at a time (first the Zonda and now the Huayra) but it’s expected that the electric car, which will fight competition from Rimac and hypercars from more mainstream manufacturers as the industry turns to electric power, will be produced alongside the new internal combustion-engined model. Pagani last year launched a restoration service for its cars and is following the model of Rolls-Royce, Porsche, McLaren and Aston Martin by offering more bespoke options for its cars, with increasing individuality for customers and demand-driven options implemented in response to requests. +++

+++ Mercedes-Benz took the luxury segment by surprise when it introduced a body-on-frame PICK-UP named X-Class last year. Rival BMW wants a piece of the action, especially in Australia where the pickup segment grew by 17 percent in 2017. “We cannot close our eyes and neglect the pickup segment, we cannot neglect market trends”, warned Marc Werner, the head of the company’s Australian division, in an interview. There’s no word on what BMW’s answer to the X-Class will look like if it’s approved for production. Engineers can conceivably take several paths to the segment. First, they can borrow the Hilux architecture from industrial partner Toyota and bring a rugged, body-on-frame off-roader to the market. That’s roughly what Mercedes did; the X-Class is a re-skinned Nissan Navara. BMW can also build its truck on the CLAR architecture and end up with a more lifestyle-focused unibody model; think of it as an upmarket Honda Ridgeline. There’s no word on when (or if) the model will receive the proverbial green light for production. Werner claims the project is under consideration in Munich, so it’s not merely a pipe dream. But while building a pickup is entirely feasible from an engineering standpoint, the chances of seeing one in showrooms depend on how well it fits into the brand’s image and values. “We have raised that with headquarters and certainly investigations are happening as we speak, but it’s too early to speak about the results of that analysis”, he said. +++

+++ PORSCHE has officially ended production of all current diesel vehicles in the face of changing consumer demand and upcoming stricter emissions tests. In a move that a Porsche spokesman said mirrors the “cultural shift” of the brand’s customers, the German manufacturer has discontinued its only 2 current diesel models, the Macan S Diesel and Panamera 4S Diesel, just 9 years after its first oil-burner hit the market. The original Cayenne was the first Porsche to offer diesel power back in 2009. Porsche was originally reported to be launching the new Cayenne with only petrol and petrol-electric hybrid powertrains, but has now announced that a diesel variant is on the way. In an official statement, Porsche said that the Macan S Diesel, the only such version of the brand’s Range Rover Velar rival, has been “taken out of the production programme” as buyer demand moves towards petrol and hybrid versions. The brand revealed that the diesel’s removal was also linked to “another software update” that has been subject to an “ongoing consultation with the authorities”. While not directly confirming it, this suggests that like with BMW and its F80 M3, Porsche has decided against re-engineering the Macan S Diesel to conform to the new Worldwide Harmonised Light Vehicles Test Procedure (WLTP) standards. Such a move highlights the shrinking demand for the model, which a Porsche spokesman said represented a small portion of the SUV’s 97,000 global sales from 2017. The Macan is also due to be facelifted in April. The same justification was given for the demise of the Panamera 4S Diesel, which was removed from Porsche’s ranks during the luxury car’s range update at the start of the year. Porsche said the change was linked to falling demand for the variant, which accounted for 15% of the Panamera’s 11,000 global sales in 2017. Petrol versions accounted for 35%, while the Panamera 4 E-Hybrid accounted for 50%. An inside source told that the current lack of diesel cars in its range doesn’t “mean Porsche has decided to stop all diesel models” forever. But Porsche boss Oliver Blume revealed last year that “diesel is not so important for Porsche”, adding that diesel sales made up just 15% of Porsche’s total worldwide sales, mostly in Europe. Porsche revealed the following statement on its diesel plans: “Traditionally, diesel engines have played a subordinate role at Porsche; the company does not develop or build diesel engines itself. Currently, the demand for diesel models is falling, whereas interest in hybrid and petrol models is increasing significantly. For example, the ratio for hybrid versions of the new Panamera in Europe is around 60 percent. In light of these facts Porsche has adapted its production planning. This decision means that Porsche currently does not offer any vehicles with diesel engines. However, it does not mean a diesel exit at Porsche. As announced, the new Cayenne is set to feature a diesel powertrain. The exact time of the market launch is not yet clear”. Unlike its petrol engines, Porsche never developed its own diesel powerplants, instead sourcing them from elsewhere within the Volkswagen Group. Porsche halted investment in diesel last year, shifting much of its R&D focus to electrification. The results of this electric focus will produce the Mission E next year, while a hybrid version of the 992-generation 911 is also due in 2019. +++

+++ Porsche has ramped up criticism of TESLA as the Mission E inches closer to market. Speaking to media at a recent event, Porsche electric vehicle vice-president Stefan Weckbach suggested Tesla’s claims of record acceleration are not repeatable after a few attempts. The executive said the top-trim Model S can launch from 0 to 1100 km/h in under 3 seconds, but “only twice” since the “system is throttled”. “The third attempt will fail”, he claimed. “Porsche drivers won’t need to worry about that”. Weckbach may be referring to Tesla’s earlier software that limited the number of full-power launches to reduce wear on the powertrain. The company claimed to have revised the software to remove the throttling, however, after the practice was uncovered by owners. The German performance marque has promised the Mission E will be capable of maintaining speed through an entire track session, with a battery system that can support “reproducible performance and a top speed which can be maintained for long periods”. The Mission E’s 800-volt battery system will also support extremely rapid recharging, enabling 400 kilometers of range to be added from a 20-minute plug-in session. Porsche expects to begin first deliveries next year. +++

+++ TOYOTA said it will build the next generation of its Auris car in England in a welcome boost to Prime Minister Theresa May as Britain leaves the European Union. The Japanese carmaker will make its new Auris at Burnaston, Derbyshire, replacing the current run of the model made there, the company said in a statement. Sources told last year that Toyota planned to build the model in Britain on the assumption that ministers will secure a transitional Brexit deal designed to maintain current trading conditions until at least the end of 2020. The automaker said free trade was important for the future. “With around 85 percent of our UK vehicle production exported to European markets, continued free and frictionless trade between the UK and Europe will be vital for future success”, said Toyota Europe President and CEO Johan van Zyl. Business minister Greg Clark hailed the announcement and said Britain’s automotive sector was one of the most productive in the world, adding “this government will continue work to create the best possible environment”. Carmakers are worried that without the right Brexit deal, their factories could be subject to tariffs and trade barriers, adding to costs and risking the long-term viability of sites. Toyota’s Burnaston plant churned out 144,000 models last year, down 20 percent from 2016 according to industry data, as its current line-up of models neared the end of their product life cycle. Nearly 1 in 5 of those cars were Avensis models, according to a source familiar with the situation. The firm did not comment on the future of the model in its statement. A Toyota spokesman declined to comment or speculate on the Avensis. +++

+++ The VOLVO XC40 has been named the 2018 winner of the prestigious European Car of the Year Award. The small SUV took a commanding victory in voting for the award, The result was announced on the eve of this year’s Geneva motor show. The XC40 received 325 votes, placing it well ahead of the runner-up Seat Ibiza (242 votes). The BMW 5 Series was third, with 226 votes. The XC40’s victory marks the first time a Volvo has won the prize. Company boss Håkan Samuelsson said: “This is the right car to win. I’m glad we got votes from each of the countries that took part in the judging: it shows this car really is a success. “This car represents the future of Volvo. With an all-new platform developed with parent firm Geely, it goes into new markets for us”. The Car of the Year award is run by 7 European automotive publications. The award is voted on by a jury comprising 60 journalists from 23 countries. The award was established in 1964, with the Rover 2000 claiming the inaugural victory. The other finalists for this year’s award were the Alfa Romeo Stelvio, Audi A8, Citroën C3 Aircross and Kia Stinger. +++

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