+++ ASTON MARTIN remained in the black in the first quarter of 2018, although pretax profit fell due to a weaker dollar and investment on a series of model launches. After 6 years of losses, James Bond’s favorite carmaker swung to a pretax profit in 2017, fuelling speculation of a potential stock market listing. Finance chief Mark Wilson reiterated the decision would be a matter for its shareholders, mainly Italian private equity fund Investindustrial and a group of Kuwaiti investors. “We continue to look at our options and we are continuing to execute on the plan and that gives our shareholders the most options available to them”, he told, when asked about a flotation that one source familiar with the matter has said could value the firm at 4 billion pounds. Pretax profit fell by just over half to 2.8 million pounds in the first 3 months of the year due to the weaker dollar, as around a third of its demand comes from customers buying in dollars or a currency pegged to it. At constant currencies, profit rose to 7.4 million pounds. Aston Martin also boosted investment by nearly a half to 68 million pounds ahead of the launch of a series of new models as it underwent a changeover plan that saw sales fall by 20 % to 963 vehicles in the quarter. Like the rest of the automotive sector, the company is pushing ahead with plans for hybrid and electric models to meet more stringent emissions rules and an eventual ban on the sale of new petrol and diesel cars from 2040 in Britain. The government has yet to clarify whether that will include hybrid vehicles, which comprise both a conventional combustion engine and electric propulsion, prompting Aston’s boss to criticize ministers on Twitter earlier this month. Asked whether the inclusion of hybrids in the ban would be a blow and change the firm’s future thinking, Wilson said: “It wouldn’t significantly. We have always said that we go from gasoline to BEV (battery electric vehicle) with only step along the way into hybrid so hybrid has always been a transitional technology”. +++

+++ BMW remains on track to introduce a flagship SUV named X8, according to a recent report. Insiders don’t deny the possibility of a model positioned above the upcoming X7 but they stress a decision hasn’t been made yet. “There is room for X8, especially in markets like China, but there are no decisions yet. Each car must have a distinct character, and these are the sort of areas that take time to evaluate,” BMW development boss Klaus Fröhlich told. That’s only part of the story. BMW has already started working on the model, though it’s still at the embryonic stage of the project. Officials are still unsure whether the X8 should take the form of a swoopier X7 with a fastback-like roof line like the X6 or become a long-wheelbase SUV. Either way, it will offer only 2 rows of seats instead of 3 in the more family-oriented X7 it will share at least part of its platform with. Power will come from either the 6.6-liter, 600-horsepower V12 engine found in the 7 Series or from a gasoline-electric plug-in hybrid powertrain. BMW’s xDrive all-wheel drive system will come standard regardless of what’s under the hood. Fully loaded, the X8 will compete in the same segment as the Lamborghini Urus, and the Bentley Bentayga. Entry-level variants will carry a more down-to-earth base price tag, though they still won’t be cheap. We’ll learn more about the model (and its chances for production) when BMW introduces the X7 later this year. If approved for production, the X8 likely won’t arrive before 2020. +++

+++ CHINA will steeply cut import tariffs for automobiles and car parts, opening up greater access to the world’s largest auto market amid an easing of trade tensions with the United States. Import tariffs will be cut to 15 % from 25 % for most vehicles from July 1, the Ministry of Finance said, adding that this was part of efforts to open up China’s markets and spur development of the local auto sector. A small number of imported trucks are taxed at 20 % currently. Import tariffs for auto parts would be cut to 6 percent from mostly around 10 %, the ministry said in a statement. The move will be a major boost to overseas carmakers, especially helping premium brands such as BMW, Tesla and Mercedes-Benz close a price gap on local rivals. “Benefits are huge for our business, especially Infiniti”, said a Yokohama-based executive at Nissan referring to the Japanese firm’s premium car brand. Another executive at the firm’s Chinese joint venture said it was “great news” but that the biggest beneficiaries would likely be German luxury carmakers, which also include Porsche and Audi. “That’s just because of the volume of imported cars they sell”, the person said, asking not to be named. Toyota said it would adjust retail prices for imported cars that benefited from the lower tariffs to provide Chinese consumers with “competitive” products. BMW said it would look at its prices and said the move was a “strong signal that China will continue to open up”, while Audi said it welcomed the “further liberalization and opening” of the Chinese market. A Shanghai-based spokesman for Ford said the U.S. carmaker welcomed the new tariff policies, but declined to comment further. China’s high tariff on vehicles (versus a 2.5 % U.S. levy) has been a key focus of U.S. President Donald Trump’s administration amid a simmering trade standoff between Washington and Beijing. Trump has said the 25 % tariff amounted to “stupid trade”, while auto industry leaders such as Tesla’s Elon Musk have said that Chinese restrictions on foreign auto makers created a skewed playing field. China and the United States, however, made a breakthrough in trade talks after negotiations in Washington last week, stepping back from the brink of a global trade war and agreeing to hold further talks to boost U.S. exports to China. +++

+++ German markets regulator BaFin is reviewing whether to impose fines after it found that transactions to buy a 9.69 % stake in DAIMLER on behalf of Li Shufu, chairman of Chinese carmaker Geely, should have been disclosed earlier. Li disclosed on February 23 that he had amassed a $9 billion investment in the German carmaker using banks, shell companies and derivatives, prompting questions in Berlin political circles about the adequacy of German disclosure rules. Li, who controls carmaker Volvo, revealed he had control over almost 10 % in rival Daimler, parent company of luxury brand Mercedes-Benz, even though German rules require investors to reveal if their stake exceeds the 3 %, 5 % and 10 % thresholds. “Voting rights disclosures by Shufu to Daimler should have been reported on February 22”, BaFin said in a statement. The regulatory disclosures have since been amended to reflect the earlier date of February 22 rather than February 23, BaFin said. “Whether this could also be relevant in regard to fines, is something we are looking at”, BaFin said, adding that the maximum fine to be paid by private individuals who violate disclosure rules could be 2 million euros, and for companies 10 million euros, or 5 % of annual revenue. As part of the Geely deal, German regulator BaFin asked Morgan Stanley to correct a disclosure filing, according to letter from Germany’s finance ministry, which was seen by Reuters. Germany’s finance ministry, which oversees BaFin, declined to comment on this specific case. Investment bank Morgan Stanley, which held Daimler voting rights that would later pass on to Li, has amended its disclosure filing to reflect the new date, the letter said. A spokeswoman for Morgan Stanley eclined to comment. Frankfurter Allgemeine Zeitung was first to report the existence of the letter. Morgan Stanley was part of a group of banks which helped Geely’s chairman buy a stake in German carmaker Daimler in a way which helped avoid early disclosure. BaFin is now investigating whether Li broke disclosure rules. Geely said it had informed markets in a timely fashion: “The capital market was at all times informed about the correct number of voting rights”. “However, BaFin has asked Geely to make an additional disclosure for 22 February 2018 based on a new interpretation of the legal provisions by BaFin which was published for the first time on 9 May 2018”, Geely said. Reuters reported on February 6 that Geely had bought Daimler shares and was intent on building a stake after being rebuffed by Daimler in late 2017. BaFin at the time said the stake would have to be disclosed if it was bigger than 3 %. Reuters later revealed that Geely had been building the stake over a period of months. +++ 

+++ HONDA will begin its assault on the global electric car market with a new Jazz-based vehicle due to launch in 2020. The EV will get a range of around 300 kilometres and will go on sale in China and other markets during the first half of 2020. Unlike Honda’s current fleet of hybrid vehicles, which use Panasonic and GS Yuasa batteries, the new EV will use battery technology from Contemporary Amperex Technology, a Chinese firm. This should help its prospects in the Chinese market, where the government provides incentives to vehicles equipped with locally-made batteries. It’s not known if this electric car will have a completely unique design, or whether its Jazz-based roots will be immediately obvious. In its homeland, the Jazz-based EV will be priced from around 2 million yen ($24,000). When production hits full speed, the company hopes to sell around 100,000 of these electric cars per year. Last year Honda confirmed it was developing 2 new electric vehicles, one aimed specifically at the Chinese domestic market, and one destined for sale across the globe. The former model is slated to become available this year. This HR-V-based vehicle will be sold under its Everus joint venture marque in China. At present, the company’s only EV is a version of its second-generation US-only Clarity. Designed specifically to fulfil its obligations under Californian law, the 120 kW / 300Nm Clarity Electric has a paltry range of just 129 kilometres from its 25.5 kWh battery pack. +++ 

+++ JAGUAR is reportedly moving forward with development of the XK’s successor. The 2+2 was put to rest in 2014, but its platform was extensively reworked and shortened to build the current F-Type 2-seater. The company reportedly penned next-generation XK before it was retired, but the plan was scrapped. Now, the company has revived the project and started from scratch with a new concept based on the next-generation F-Type that will likely arrive in 2019. “The F-Type has been a huge success”, Jaguar Land Rover (JLR) product planning boss Hanno Kirner told. “We love sports cars, and I use the plural quite deliberately. Whether that is delivered by a body variant or something else remains to be seen, but for now let’s just say that the body type is very important for us”. The executive shed light on potential powertrains, arguing that sports car buyers are still in love with the sound of an engine (a “defining part of a sports car”) and unlikely to immediately embrace an all-electric Jaguar performance car. “I absolutely believe that there will be electric sports cars one day, but I also believe there may be a different step of combining the battery and an engine”, he added. “At Jaguar, all I can say for now is that we will continue to invest in sports cars”. The XK’s successor is not expected to arrive until 2021 or later. +++ 

+++ Right now, if you check the MERCEDES G-Class configurator online, you will be given 2 options, namely the G 500 and the G 63. The G 500 first came out in January in Detroit and the G 63 made its first appearance in Geneva a few weeks after the first one. For those of you who are looking for a more low end torque, then you will need to wait until the end of the year to place an order for a diesel powered G in Europe. The diesel G-Class takes the shape of the G 350d 4Matic model will be available in Germany by December. At the same time, production will begin during this time but deliveries will not begin until March 2019 at the earliest. The report then says that dealers will get the first diesel models for potential clients to try out sometime in spring of next year. You might be wondering what the original identity of the diesel engine is. Well, it is actually the OM 656 that we saw last year together with the S-Class facelift. This was eventually launched in other models like the CLS. In the S 350d sedan, it pumps out 286 hp and 600 Nm. Moving on to the S 400d, it has a little more output, at 340 hp and 700 Nm. Apparently, Mercedes will be using the G 350d moniker for their boxy SUV, and it is safe to assume that this will be offered in the lesser specification. In fact, a beefier G 400d configuration is not part of the bigger picture. +++ 

+++ TOYOTA is taking an unprecedented route to meet China’s stringent green car quotas: its showrooms will sell an electric vehicle without the Japanese company’s distinctive triple-oval logo. Instead, it will feature the label of GAC Motor, Toyota’s Chinese partner, and will be built around GAC’s lower-cost technology. The move (a first for Toyota) will give GAC access to the Japanese carmaker’s stringent quality control, prestige and sales channel. For Toyota, it presents a quick way to meet Beijing’s requirements that such vehicles represent 10 % of an auto manufacturer’s production by 2019. According to 2 company executives familiar with the matter, Toyota plans to start selling the GAC Toyota ix4 by the end of the year. The car is a battery-powered compact SUV based on GAC’s Trumpchi GS4, and has been in development for 2 years. Selling a car derived from a Chinese partner’s vehicle would have been unthinkable just a few years ago. But the idea gained momentum at Toyota because of the Chinese government’s push to get more electric vehicles on the road, the executives said. The government mandates have spurred other new alliances, such as Ford’s agreement to develop electric vehicles with Zotye. Ford is waiting for regulatory approval for its partnership, which calls for designing and manufacturing several jointly developed no-frills EVs and selling them through a new China-only brand. It wasn’t immediately clear which parts of the ix4 Toyota would provide, or which company’s design standards were used. Quality experts say GAC cars rate relatively high. According to Jeff Cai, a Beijing-based senior director at JD Power & Associates, some of GAC’s cars, such as the Trumpchi GS8 crossover SUV, already stack up well head-to-head with vehicles marketed by global automakers. “The GS4 is a good car with acceptable quality”, Cai said. He added that the GS4 ranked No. 1 among Chinese brands and No. 3 among all brands for initial quality in the compact SUV category. One question, however, is GAC cars’ longer-term reliability and dependability, Cai said. Under the new Chinese regulations taking effect next year, carmakers must amass credits for so-called new-energy vehicles equivalent to 10 % of annual sales by 2019. That level rises to 12 % for 2020. New-energy vehicles are defined as all-electric battery and plug-in electric hybrid cars. Although the ix4 gives Toyota a cheaper and quicker way to meet the quota, it also shows the company’s anxiety about getting a toehold in the Chinese EV market before its own all-battery vehicle is available in 2020, industry officials and experts said. “It’s a creative solution to a critical issue all automakers face in China: how to meet the strict production quotas for electric cars”, said James Chao, Shanghai-based Asia-Pacific head of consultancy IHS Markit. Until recently, Toyota was one of the industry’s major hold-outs against full electrification. The company had planned to more or less skip battery-powered cars and turn instead to hydrogen fuel-cell technology as a mainstream alternative to gasoline-fueled cars. But China’s seemingly inexorable drive toward electric cars changed that attitude. At the Beijing auto show last month, Toyota unveiled plug-in electric hybrid versions of its Corolla and Levin, due to go on sale in 2019. The company is also developing an all-electric battery car of its own, which the company has said should hit the market in 2020. “All this means our partnership has entered a new phase”, the second Toyota executive said. The GAC-Toyota joint venture, established in 2004, has always produced and sold Toyota vehicles modified to sell in China or China-only Toyota cars. To be sure, industry officials and analysts believe GAC Motor cars such as the Trumpchi GS4 have been developed through studying global brands’ cars, including those from its partners Toyota and Honda. Toyota is negotiating to execute a similar EV deal with its second partner, the FAW Group, but nothing has been finalised, according to the first Toyota executive. Both executives declined to provide other details, including a target sales volume for the all-electric car or a pricing strategy for it. Toyota will assemble the vehicle at a factory in Guangzhou. The second executive said, however, that Toyota and GAC Motor would have to sell a “fairly sizable number” of ix4s to help the Toyota-GAC joint venture meet Beijing’s quotas. +++ 

+++ The Trump administration has launched a national security investigation into car and truck imports that could lead to new UNITED STATES tariffs similar to those imposed on imported steel and aluminum in March. The national security probe under Section 232 of the Trade Expansion Act of 1962 would investigate whether vehicle and parts imports were threatening the industry’s health and ability to research and develop new, advanced technologies, the Commerce Department said. “There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry”, Commerce Secretary Wilbur Ross said in a statement, promising a “thorough, fair and transparent investigation”. Higher tariffs could be particularly painful for Asian automakers including Toyota, Nissan, Honda and Hyundai, which count the United States as a key market, and the announcement sparked a broad sell-off in automakers’ shares across the region. The governments of Japan, China and South Korea said they would monitor the situation, while Beijing, which is increasingly eyeing the United States as a potential market for its cars, added that it would defend its interests. “China opposes the abuse of national security clauses, which will seriously damage multilateral trade systems and disrupt normal international trade order”, Gao Feng, spokesman at the Ministry of Commerce, said at a regular news briefing which focused largely on whether Beijing and Washington are making any progress in their growing trade dispute. “We will closely monitor the situation under the U.S. probe and fully evaluate the possible impact and resolutely defend our own legitimate interests”. The probe comes as Trump courts voters in the U.S. industrial heartland ahead of mid-term elections later this year, and opens a new front in his “America First” trade agenda aimed at clawing back manufacturing jobs lost to overseas competitors. It could raise the costs for overseas automakers to export vehicles and parts to the world’s second-largest auto market. Growing trade tensions over cars and car parts, particularly with China, could raise risks for U.S. companies expanding their presence in the country, signs of which are already emerging. Earlier this month, Reuters reported that Ford imported vehicles were being held up at Chinese ports, adding to a growing list of U.S. products facing issues at China’s borders. The majority of vehicles sold in the United States by Japanese and South Korean automakers are produced there, but most firms also export to the U.S. from plants in Asia, Mexico, Canada and other countries. Roughly one-third of all U.S. vehicle imports last year were from Asia. In addition to recently imposed 25 % tariffs on steel and 10 % tariffs on aluminum imports, the administration has threatened tariffs on $50 billion worth of Chinese goods over intellectual property complaints, and Beijing has vowed to respond. The administration is also trying to renegotiate the North American Free Trade Agreement to return more auto production to the United States. Commerce said the new probe would determine whether lost domestic production had weakened the U.S. “internal economy” and its ability to develop connected vehicle systems, autonomous vehicles, fuel cells, electric motors and batteries, and advanced manufacturing processes. In a separate statement, President Donald Trump said: “Core industries such as automobiles and automotive parts are critical to our strength as a Nation”. A Trump administration official said before the announcement that the expected move was aimed partly at pressuring Canada and Mexico to make concessions in talks to update the NAFTA that have languished in part over auto provisions, as well as pressuring Japan and the European Union, which also export large numbers of vehicles to the United States. An ad hoc industry group representing the largest Japanese, German and other foreign automakers called “Here for America”, criticized the effort. “To our knowledge, no one is asking for this protection. This path leads inevitably to fewer choices and higher prices for cars and trucks in America”, said John Bozzella, chief executive of Global Automakers, a trade group representing Toyota, Nissan, Hyundai and others. A Toyota spokeswoman said that the company was monitoring the situation. Chinese automaker Geely Holding Group urged free trade practices for the auto industry, which is built on a complex supply chain under which vehicle components for any given car often originates from numerous countries. “As a global manufacturer, Geely Holding Group is in favor of free trade and open markets. Free trade creates jobs, wealth and economic growth”, a spokesman said, adding that its plant in South Carolina to produce its Volvo brand cars showed its commitment to the country. Shares in Toyota, Honda and Hyundai each fell roughly 3 % in local trade following the announcement, while Mazda, which does not have any U.S. production capacity at the moment, tumbled more than 5 %. Late last week, Japan’s automakers’ association urged its export partners to keep tariffs on vehicles and components low and maintain free trade relationships. Roughly 12 million cars and trucks were produced in the United States last year, while the country imported 8.3 million vehicles worth $192 billion. This included 2.4 million from Mexico, 1.8 million from Canada, 1.7 million from Japan, 930,000 from South Korea and 500,000 from Germany, according to U.S. government statistics. At the same time, the United States exported nearly 2 million vehicles worldwide worth $57 billion. German automakers Volkswagen, Daimler and BMW all have large U.S. assembly plants. The United States is the second-biggest export destination for German auto manufacturers after China, while vehicles and car parts are Germany’s biggest source of export income. Asked if the measures would hit Mexico and Canada, a Mexican source close to the NAFTA talks said: “That probably is going to be the next battle”. +++ 

+++ VOLVO has received almost 80,000 orders for the new award-winning XC40 and is expanding production in Europe and China in order to meet demand. Production will be expanded at its Ghent manufacturing plant and Volvo will add XC40 production capacity at its Luqiao plant in China in the first half of next year, underlining the popularity of this year’s European Car of the Year. In addition, the company has also announced today that it will capitalise on the popularity of its new smaller models with the introduction of new models on its Compact Modular Architecture (CMA), replacing the current V40. “The XC40’s success has surpassed even our highest expectations”, said Håkan Samuelsson, president and CEO of Volvo. “The small SUV segment is the fastest-growing segment in the industry now, and with these additional CMA-based models we expect to benefit further from that growth”. The coming new models based on CMA will include fully electric vehicles and will be sold globally in all major regions. More product details will be disclosed at a later stage. The XC40 was launched in late 2017 to global acclaim and was the first ever Volvo to win European Car of the Year in March of this year. The new XC40 is the first model on Volvo’s new CMA vehicle architecture. Co-developed with Geely Holding, CMA provides Volvo with the necessary economies of scale for this segment. In March, Volvo announced it will produce cars for its new sister brand Lynk & Co at the Ghent plant. Like the XC40, the first Lynk & Co model is based on CMA. +++

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