+++ ASTON MARTIN is apparently considering a Mercedes-Benz-sourced 6-cylinder engine for the DBX. The company’s first crossover is believed to be compatible with Mercedes-Benz’s new M256 turbocharged 3.0-liter straight-6, which delivers up to 435 horsepower and 500 Nm. The mill employs a 48-volt mild hybrid system to spool up an auxiliary compressor, reducing turbo lag. “That would be a pretty good engine and combination, potentially”, Aston Martin chief creative officer Marek Reichmann recently told. The executive laughed off the possibility of adding a diesel powertrain, saying “Never! No diesels”. He also cautioned that the production SUV will not follow the 2-door coupe format of the 2015 concept. “It is and will be a true 5-door car, as a competitor to Cayenne, Bentayga, Urus and Cullinan effectively. But our take on that kind of car, and given our 7 cars in 7 years, the understanding of what that customer wants within that segment of car”, he added. The DBX is expected to begin rolling off the assembly line late next year. +++
+++ Automakers from CHINA face several hurdles as they set their sights on the American market. They must build cars that comply with local regulations and satisfy the expectations for quality, reliability, and safety. They also need to overcome the “made in China” label’s stigma and establish a reputation in the United States. A recent survey suggests they still have a long way to go. Autolist polled 1.565 American motorists to get insight on the perception of Chinese cars in the United States. 35 % of respondents said they wouldn’t consider buying a Chinese car regardless of how much it costs, what it looks like, or what it can do. 38 % said they weren’t sure, and 27 % replied they’d consider buying one under certain conditions. 34 % of motorists who currently own a Japanese or a South Korean car are open to the idea of buying a Chinese car. And, unsurprisingly, 42 % of those who drive an American car were against the idea of buying from China. 37 % of European car owners said no. The study revealed buyers remain concerned about safety and reliability. 23 % of the participants who said they wouldn’t buy a Chinese car chalked up their decision to perceived reliability issues. 21 % cited safety concerns, and 15 % noted the lack of an established, coast-to-coast dealer network. 40 % of participants told Autolist they’d buy a Chinese car if it’s priced right, meaning cheaper than a comparable model from a Japanese, American, or German brand. And, finally, 77 % said they had never heard of major Chinese automakers like GAC, Geely, BYD, Chery, and SAIC. This suggests most motorists wouldn’t know a Chinese car if they saw one. There are already a handful of Chinese-made cars sold in the United States. Buick makes the Envision in China, Cadillac sources the plug-in hybrid variant of the CT6 from the Shanghai area, and Volvo’s S90 comes from across the Pacific. The XC60 did, too, until Volvo began sourcing America-bound models from Sweden in response to tariffs imposed by the United States government. That list will grow in the coming years. Volvo and BMW both announced plans to source electric cars from China around the turn of the decade. The 2019 Focus Active which Ford will sell next year will come from China. Polestar will make the 1 on the outskirts of Shanghai, and state-owned GAC wants to establish an American dealer network before the end of the decade. The brand regularly attends the Detroit auto show and advertises at the Detroit airport. +++
+++ The carmarket in EUROPE has experienced its highest number of first-half registrations this century, with registrations up 2.4 % on 2017 to a total of 8.66 million cars. These figures are despite a trough in diesel registrations. Diesels are down by 17 % over the first half of 2017 to now make up just 37 % of the car market in Europe; the smallest share since 2001. The backlash against diesel has been highest in the UK and Norway, with 30 % and 32 % drops respectively. Slovenia’s diesel car market declined 28 % and those of Finland and Belgium fell by a fifth. As Europe turns to SUVs, registrations of all other segments of car collectively fell by 4 % to 4.865 million, while SUV registrations grew to 2.92 million; a leap of 24 %, taking the models to their highest market proportion in history. The Volkswagen Group was the most prolific SUV manufacturer across the first half of the year, experiencing a 42 % rise in its SUV registrations. It was bolstered by the new Volkswagen T-Roc, which has become the 32nd best-selling car in Europe, as well as one of the best-selling SUVs, despite having only recently been launched. The Nissan Qashqai remains atop the SUV pack, however, climbing to fifth overall from sixth previously. The Volkswagen Golf remains Europe’s best-selling car, with more than a quarter of a million examples registered so far this year. Europe’s top10 bestselling cars in 2018 so far are: 1. Volkswagen Golf (257,550 registrations), 2. Renault Clio (185,234), 3. Volkswagen Polo (163,9244), 4. Ford Fiesta (157,2865), 5. Nissan Qashqai (134,547), 6. Peugeot 208 (132,764), 7. Volkswagen Tiguan (129,237), 8. Skoda Octavia (123,710), 9. Renault Captur (121,235), 10. Opel/Vauxhall Corsa (117,981). The well-publicised decline of MPVs continued into 2018, with a 23 % drop in sales compared with the first half of 2017. A total of 532,600 were registered in Europe, making 2018 one of the worst years for MPVs in a decade. The United Kingdom was one of Europe’s weakest nations for overall registrations. Despite being one of the largest markets, a 6.3 % drop over 2017 was posted. Romania, one of the smaller markets, had the largest growth, with a 33.4 % year-on-year growth. Larger markets including Sweden, the Netherlands, Poland and Sweden also posted growth, while Ireland, Denmark, Norway, Italy, Switzerland and the Czech Republic were the other markets to post declines. Europe’s top10 bestselling brands in 2018 so far are: 1. Volkswagen (988,507 registrations), 2. Renault (624,443), 3. Ford (573,250), 4. Peugeot (542,433), 5. Opel/Vauxhall (493,802), 6. Mercedes-Benz (460,055), 7. Audi (432,191), 8. BMW (428,185). 9. Fiat (405,511), 10. Skoda (398,650). Jato global analyst Felipe Munoz said: “Car makers continue to update and modernise their traditional models, while the range of SUVs on offer continues to grow and appeal to all kinds of budgets and needs. The diesel crisis certainly affected the speed of growth in the market, but consumers are overcoming this by turning to more attractive petrol and AFV [alternatively fuelled vehicles]solutions”. Registrations of Alternatively Fueled Vehicles rose to 5.4 % of the European total, making up 450,000 cars in total; a 31 % increase over the same period in 2017. +++
+++ FORD ’s design team went to great lengths to give the new Focus a fighting chance on the Chinese market. Every generation of the Focus since the original model made its debut in 1998 has received a third side window integrated into the C-pillar. The new model lost its third window because Ford needed to give it wider doors that open at a greater angle. That’s key to the car’s success in China. “At the start we had a 6-light proposal, and it went back and forth. With China being such a focus on Focus we went with the extra-wide door instead. We had to use common doors between sedan and hatchback models”, explained Jordan Demkiw, Ford of Europe’s exterior design manager, in an interview. Ensuring the Focus appeals to Chinese motorists is somewhat puzzling. Historically, China has been a market where an overwhelming majority of buyers prefer traditional sedans over hatchbacks. Car companies, including Citroën and Peugeot, have gone through the trouble of turning hatchbacks into sedans specifically for the Chinese market. Michael Blischeke, the C2 platform’s chief engineer, added his team took an inside-out approach to developing the new Focus to ensure it’s at least as spacious at its main rivals. “We basically positioned mannequins in the rear seat to ascertain the maximum legroom and knee room we needed to be best-in-class, and then we put the components, the seats and wrapped around the sheet metal”, he explained. +++
+++ HYUNDAI and affiliate KIA said on Friday that they would achieve their sales target for the year by launching new SUVs in 2 major auto markets, the United States and Europe, in the second half. In separate biannual meetings with overseas sales executives, Hyundai and Kia discussed measures to achieve their sales target of a combined 7.55 million vehicles, up 4.1 % from the 7.25 million they sold last year, Hyundai Motor Group said in a statement. In terms of major challenges in the second half, the company named interest rate increases in the United States, rising oil prices and an unfriendly business environment due to U.S. tariffs on imported vehicles. To boost sales in the second half, Hyundai plans to launch a new Santa Fe and upgraded Tucson in the U.S. market in July and November. Kia will launch a Sorento facelift in June. The new Santa Fe is the most essential model in determining Hyundai’s annual earnings results this year. If it is well accepted in the United States, Hyundai will come up with strong financial figures at the end of the year, the company said. In Europe, Hyundai will gradually renew the Santa Fe, Tucson and Kona, and Kia will roll out the facelifted Sportage. The company has recently set up a task force to attract female customers in Saudi Arabia after the country permitted women to drive cars. +++
+++ The best, most inspirational moment of the recent Goodwood Festival of Speed? Watching a Formula3 car being piloted by one of the quickest drivers of the weekend, Billy Monger, who relies on a hand throttle to accelerate, and one of his prosthetic legs to brake. Lewis Hamilton retires soon, so could Brave Billy, 19, be the heir apparent? At the other end of the scale, the worst, most depressing moment was the appearance of the slow, uninspiring Roborace ‘car’ that drives itself. There’s nothing wrong with autonomous vehicles for those who can’t or don’t want to drive. But if driverless tech is the way motor racing is headed, it’s dead. While these were the highs and lows at Goodwood, MCLAREN was confident, single-minded and mischievously irreverent like never before. This is a company that so relishes working in leafy Woking that it proudly stamps ‘Made in Surrey, England’ on its cars. It insists it’ll never build an SUV because its customers are happy with their Range Rovers. So why not go half way and, in conjunction with JLR, do a McRange? That’d work. “Maybe it could”, a McLaren director told me over dinner at Goodwood. “However, we have no space, financial need or desire to build an SUV. But most importantly, our customers aren’t asking us for one. They want us to focus on mid-engined sports cars and supercars”. Fair enough. But such McLarens are circa 211,700 euro in The Netherlands and more. A baby McLaren for Porsche Boxster money would be nice? “A McLaren for less than 200.000 euro wouldn’t be a true McLaren, as the technology, craftsmanship and capability inherent to our cars couldn’t be incorporated for any less than our current entry point. And before you ask, there are no plans for a van, either”, my man said with a grimace. Does McLaren’s bad run in Formula One put buyers off its road cars? My insider added: “Seemingly not as we haven’t won an F1 championship since we began building road cars. And apparently we’ve been quite successful at that”. Pure-electric vehicles; this is something that doesn’t excite the Woking outfit at the moment. “Right now battery technology can’t give us what we need to make the McLaren of EVs”, he told me. “For an EV to be a McLaren, it needs to be able to do 10 laps of the Nardo test track on a single charge and not weigh 2 tonnes. We’ve begun research into a fast-charging, lightweight battery that may mean you see the McLaren of EVs towards the end of our Track25 business plan”. So that’s 2025, latest. But McLaren is a company that very deliberately pegs its production numbers to remain exclusive. Petrol-electric cars it can’t do without, but pure electrics it can. At least for the next 5 to 7 years. +++
+++ NISSAN reported a 29 % decline in operating profit in the most recent quarter as foreign exchange rate losses and rising commodity costs combined with falling sales in the United States and Europe to dent global performance. Operating profit fell to 109.1 billion yen ($985.8 million) in the fiscal first quarter ended June 30, the company announced. Net income declined 14 % to 115.8 billion yen ($1.05 billion) in the April-June period. Revenue dipped 1.6 % to 2.72 trillion yen ($25.58 billion), as worldwide retail sales declined 3 % to 1.31 million vehicles in the 3-month period. Nissan’s results were hit by the Japanese yen’s appreciation against the U.S. dollar and other currencies. Exchange rates lopped 19.3 billion yen ($174.4 million) off the quarterly operating profit, while rising raw material costs dented results by 27 billion yen ($244 million). Deteriorating wholesale volume and mix took a 68.1 billion yen ($615.3 million) bite out of the quarter amid sliding sales in Europe and the U.S., the Japanese carmaker’s biggest market. “In summary, our results for the quarter were unfavorable as we faced a number of challenges”, Corporate Vice President Joji Tagawa said while announcing the numbers. “Nissan remains focused on enhancing the quality of sales, particularly in the United States”. Still, Nissan was able to make some progress on reining in marketing and selling expenses, a top priority for CEO Hiroto Saikawa. He is pivoting the company away from profit-draining fleet sales and incentives in the U.S. in an attempt to shore up brand value and margins. Saikawa has said Nissan is prepared to sacrifice some volume to bolster margins. This spring, the company began pulling back fleet deliveries, culling bloated inventories and easing pressure on dealer sales incentive programs, even as the U.S. light vehicle market softens. Nissan said it slashed U.S. inventories by 68,000 vehicles in the fiscal first quarter, from a year earlier, contributing to a 30,000-unit reduction worldwide. The worldwide lot of dealer and factory inventory stood at 910,000 vehicles in June, down from 940,000 a year earlier. “In this aspect we are in good shape”, Tagawa said. But volume also fell, as Nissan dealers awaited the arrival of next-generation products to fill their showrooms. Sales in North America, Nissan’s biggest market, slid 9.5 % to 482,000 vehicles in the quarter, while regional operating profit dipped 2.6 % to 49.5 billion yen ($447.3 million). Operating losses in Nissan’s European unit widened to 4.7 billion yen ($42.5 million) in the fiscal first quarter, from an operating loss of 2.7 billion yen ($24.4 million) the year before. European sales declined 13 % to 162,000 vehicles in the 3 months. Tagawa said U.S. sales and profitability should perk up in the second half of the year. Nissan kept its outlook unchanged for the current fiscal year ending March 31, 2019. It predicts operating profit will decline 6 %, undermined by deteriorating foreign exchange rates. Net income is seen falling 33 %. Global sales are forecast to increase 2.7 % to 5.93 million vehicles. In recent months, the yen has turned on Nissan. Now the company is fighting unfavorable exchange rates in tandem with plateauing demand in the U.S. +++
+++ RENAULT achieved record profitability in the first half as emerging-market sales surged, enabling it to shrug off challenges caused by adverse foreign exchange rates. Operating profit rose 5.2 % to 1.914 billion euros for an all-time high profit margin of 6.4 %, up from 6.2 %, Renault said in a statement. Revenue increased 1.4 % to 29.99 billion euros. Higher raw material costs weighed on net income, which fell 16.3 % to 2.04 billion euros, also burdened by a restructuring charge of about 150 million euros, as well as a weaker U.S. dollar, Argentinian peso and Brazilian real currencies. The negative currency effects led to a 0.5 % decline in automotive revenues, which dipped to 26.87 billion euros despite pricing improvements. Renault said earlier this month that first-half vehicle sales had risen 9.8 % to an all-time high of 2.07 million, helped by rebounding markets in Russia and South America. CEO Carlos Ghosn said the margin high was a result of Renault’s “strategy of regional diversification”. Renault reiterated its outlook for the year of raising group revenue and maintaining a return on sales above 6 %. For the rest of the year, possible headwinds include new EU emissions testing standards, finance chief Clotilde Delbos told analysts and reporters on an earnings call. The new test standards continued to add “uncertainty” to the second-half outlook, Delbos said. The company declined to quantify the effect of any disruption. Chief Operating Officer Thierry Bollore said there is “still some work to do” for Renault to meet vehicle certification deadlines but the company did not expect the issue to have any significant negative impact on its business. He said all certifications would be completed by mid-August. Renault’s financial position in Iran (the company’s eighth-largest market, with more than 160,000 sales in 2017) has been hit by new U.S. sanctions against the country. Delbos said Renault expected “almost zero” sales in Iran and shipments of knockdown kits in the second half as the new sanctions began to bite. Renault has no recent Iran investments to write down, she said. CEO Carlos Ghosn had targeted a 15 % market share and sales of more than 250,000 units in Iran by 2022, but those plans are now in jeopardy. Renault said in August 2017 that it would set up a joint venture with Iranian partners to produce an additional 150,000 vehicles a year. Iran state media valued the deal was valued at 660 million euros. “We don’t want to abandon Iran”, Ghosn said in June, adding that Renault had been in contact with U.S. officials. “We can’t put Renault in peril, however”. Bollore indicated that Renault was following the lead of PSA Group and other companies that are halting activities in Iran. “As we comply fully with U.S. sanctions, it’s likely that our development will be put on hold”, he said. Renault saw a slowing in growth of sales to partners (including diesel engines to Mercedes maker Daimler) and a lower share of profit from Nissan, which is losing ground in the U.S. market. The Japanese carmaker’s contribution dropped 38 % to 805 million euros. +++
+++ TESLA is moving forward with its plans for a European Gigafactory and has entered talks with Dutch and German officials regarding the production plant. Initial discussions have begun with authorities in the 2 countries, although no agreement is guaranteed in either, according to officials. The Netherlands is home to Tesla’s European headquarters, although Tesla CEO Elon Musk hinted previously that the firm’s next Gigafactory production facility will be on the French-German border. Musk confirmed the plans for a European Gigafactory at a press conference in Germany in late 2016, after he announced Tesla’s acquisition of Grohmann Engineering. The next Gigafactory, however, is almost certain to be in Shanghai, pending talks with the local government. A European facility will arrive after this. The location of the proposed European site will put it near to Benelux countries. At the moment, however, Germany is “a leading choice” rather than a confirmed decision. +++
+++ Herbert Diess’ initial efforts to slim down VOLKSWAGEN Group’s sprawling empire have earned him praise as he surpasses his first 100 days as CEO this week, even as the automaker’s core strategic direction remains unchanged. On April 13, the 59-year-old Austrian assumed responsibility for the group in a surprise boardroom reshuffle that ended former CEO Matthias Mueller’s reign with roughly 2 years left on his contract. Diess, who joined VW in 2015 as VW brand chief, a job he still holds, promised VW Group investors he would to transform the company from a “cumbersome supertanker into a powerful fleet of speedboats”. By breaking down silos between the individual brands, VW as a whole could reduce a bloated and wasteful bureaucracy, he said. “Right now, processes in the Group are too complex and decision-making is too slow. In many cases, we are duplicating work”, he told shareholders in Berlin just 2 weeks after taking over as CEO. He has placed smaller peripheral businesses including motorcycle brand Ducati, industrial transmission maker Renk and ship engine builder MAN Diesel & Turbo on strategic review for possible spinoffs or disposals. In addition, VW Group’s Scania, MAN and Brazilian VW truck units are set for a partial stock market listing under the name Traton in a deal that VW’s board estimates could reap proceeds of 6 billion euros. “What you notice is his aim to make Volkswagen more manageable by selling off non-core activities. He’s started putting the group on a cleanse and diet”, said NordLB analyst Frank Schwope. “Nevertheless these aren’t necessarily his own ideas; some were decisions taken long before for which he will reap the rewards”. Indeed, Diess has elected to retain the strategy set out in his predecessor’s “Together 2025” midterm plan announced 2 years ago. “By and large, Diess is sticking to the direction set out by Müller, which is good. And he brings speed, importantly”, said Ferdinand Dudenhöffer, director of the Center for Automotive Research at the University of Duisburg-Essen in Germany. Beyond the portfolio review initiated by Müller, this includes a realignment of VW’s in-house components operations, a push into mobility services with its Sedric autonomous vehicle and an ambitious goal of electrifying all 300 group models worldwide by the end of the next decade. “We can build on a solid foundation”, Diess told reporters on his first day on the job. “This is an evolution, not a revolution”. Despite record sales volume, revenue and operating profit in his final full year as CEO, Müller was often considered an interim solution. Many had argued that Diess would have been the better choice when Müller was chosen in 2015 to replace Martin Winterkorn who stepped down at the height of VW Group’s emissions-cheating scandal. Diess, however, had only been at VW Group for a few months after arriving from BMW. When VW triggered speculation this year that Diess would replace Müller, shares closed nearly 5 % higher. Analysts and investors pinned their hopes on the veteran cost-cutter, believing only a true outsider such as Diess would be able to introduce professional standards of corporate governance to a company long known for its strong political and union influence. So far that hasn’t been the case as the same supervisory board that appointed Diess immediately saddled him with a trade unionist as his new head of personnel. Gunnar Kilian served for years as the trusted lieutenant to VW’s top labor leader, Bernd Osterloh. Kilian must now negotiate wage deals on behalf of Diess with his former boss. Since Diess has not been one to avoid conflict with VW’s organized labor, he can count on the support of Ingo Speich. The fund manager and corporate governance expert at Germany’s Union Investment expects the CEO will take a more forceful stance when it comes to pushing through unpopular, but necessary measures to safeguard the company’s future. “One thing you definitely notice is the difference in communication between Diess and Müller, both externally and internally. In particular toward the unions we welcome the greater stringency”, Speich said. “The feeling in the past was that labor played a dominant role when it came to strategic decisions, sometimes too dominant”. In particular he hopes Diess can convince unions of the need for changes to its production base as the company shifts the business from combustion engine-based cars to electric ones. Diess also won praise for enticing Stefan Sommer, the former transformative CEO of supplier ZF Group, to lead a combined portfolio including Group Components and Purchasing. “There is probably no one better in the entire supplier industry than Sommer. No one knows the business like he does and I am certain he will succeed”, Dudenhöffer said. “The only question that remains is who will run the VW brand? Although Diess certainly can do both, a natural distance between the group and the brand is important”. Here Diess has fallen short on one key promise made by the board, however. To ensure VW wouldn’t concentrate too much power in the hands of one manager, Chairman Hans Dieter Pötsch promised the VW brand would gain for the first time a chief operating officer to assist Diess. More than 100 days later nothing has happened. One German auto industry expert, who declined to be named in order to maintain good ties to the company, said many decisions thus far felt too cosmetic given the expectations placed in Diess. Pointing to the many similarities with Müller’s strategy, he said: “I’m not sure what it is he was hired for”. Time will eventually tell if Diess may need to overhaul the group more thoroughly or he simply needs to increase the tempo on issues already tabled by Müller’s Together 2025 strategy. “It’s too early right now to say whether the company bears his signature. There are some positive aspects and he’s found the right words, but he still has some posts to fill”, said Stefan Bratzel, head of the Center of Automotive Management at Germany’s University of Applied Sciences in Bergisch Gladbach. “It’s not as if Volkswagen’s back is to the wall though. It still earns good money”. +++