Newsflash II

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+++ BMW significantly upgraded the M2 when it launched the Competition version earlier this year, with more power coming from a new engine, plus other work carried beneath the skin. Now, BMW is planning a CS version of the M2. Said to arrive next year, the M2 CS will apparently be manufactured in limited numbers. However, the carmaker is still undecided on the production run and, even more important, whether it will make any sense from a sales standpoint. This version will probably shed some weight and even offer a bit more power from the twin-turbo 3.0-liter six-cylinder that makes 410 hp and 550 Nm in the M2 Competition. The latter is capable of reaching 100 km/h in 4.4 seconds with the standard 6-speed manual gearbox, or 4.2 seconds with the optional 7-speed dual-clutch. Top speed is limited to 250 km/h in both versions, or 280 km/h with the M Driver’s Package. Development of the M2 won’t allegedly end with the rumored CS, as BMW is also expected to drop a CSL version, probably in 2020. Unlike the CS, the CSL will be offered worldwide and could remain on sale for exactly one year. It seems that this will be BMW’s approach for future M cars, with the regular models launched at first, followed by the CS and then the CSL derivatives. However, we’ll have to wait and see if BMW officials actually greenlight those projects or not. +++

+++ Does the BREXIT have any upsides for the car companies in the United Kingdom? A hard Brexit would put barriers up and force businesses to look inward, which could boost the UK parts industry. Currently an average car built in the UK uses 44% of UK parts in terms of value. Post-Brexit, car makers might want to increase that to hit ‘rules of origin’ requirements. The lack of tariffs and border hassle could make a UK part that much more competitive compared with an EU part. For example, Aston Martin and McLaren both use Italian-made Graziano gearboxes. In the event of a hard Brexit, McLaren Automotive CEO Mike Flewitt said he would try to persuade Graziano to build a UK plant. “If the duties were there and it was harming our competitive position, absolutely we would”, he said. McLaren currently sources 50 % of its parts from the EU (outside the UK), a figure that will go down to 40 % once it starts making its carbonfibre tubs in Yorkshire in 2020. That decision to shift production from Austria was made prior to Brexit, but we could see more of this. McLaren and Aston Martin have both said they’ve benefited from the fall in the pound’s value since the 2016 vote. What do UK auto makers want from Brexit? “We want free trade, zero tariffs, frictionless trade across borders”, Flewitt said. It’s a common refrain. Essentially, they want what we’ve got now: a customs union, free trade, common rules (and a say in how they’re made) and the freedom to hire staff from across Europe. “We need unrestricted access to the single market of Europe, our largest trading partner”, the SMMT said. Last year, 54 % of UK-built cars were shipped to customers in the EU. The SMMT reckons a no-deal shift to World Trade Organization (WTO) tariffs would add 2 billion euro to the cost of exports, forcing price increases. Meanwhile, an extra 3 billion euro would be paid collectively for new cars coming from the Continent. Ford puts the blame squarely on Brexit for its loss-making second quarter in Europe this year. “The biggest issue we face is the UK”, Jim Farley, president of global markets, told investors. “Brexit and the continued weak sterling has been a fundamental headwind for our European business”. So what will happen? The latest white paper from prime minister Theresa May proposes that we stay in a version of a customs union and single market while maintaining the EU’s rules on goods such as cars. So no tariffs, no border checks and no real change, apart from making it more difficult to hire people from outside the UK. The SMMT called it a “welcome step” that shows the Government is listening, but the hard Brexit wing of the Tory party hates it for proposing we take EU rules without having a say in how they’re made, and have forced amendments to the White Paper. There’s little evidence to suggest the EU would accept either version. “There’s a sense of relief among auto makers that there’s a desire to stay in the single market, but they don’t know what they’ll end up with”, said Professor Bailey. “That is deterring investment in a very big way”. Honda’s future in the UK was looking gloomy way before Brexit. It mothballed one half of its Swindon plant after sales failed to recover following the 2008 financial crisis, and then decided to produce just the Civic hatchback, dumping the Jazz and CR-V. But the new Civic is now also exported to the US for the first time, and production numbers rose 24 % last year. It still makes a diesel in the attached engine plant but has been able to swing production more towards petrol. Swindon’s future probably hinges more on whether US president Donald Trump’s threatened tariffs come to pass. That plus a hard Brexit could sink its UK manufacturing. “We struggle to see a bright future for Honda in Europe”, auto analyst Max Warburton wrote for Bernstein Research earlier this year. The UK’s single largest car factory, Nissan in Sunderland, is regarded as a bellwether for Brexit because of its size; nearly half a million vehicles were built there last year, of which 80 % are exported. In April, Reuters reported Sunderland would shed “hundreds” of jobs after demand slumped. Nissan’s UK sales were down 30 % in the first half of this year, but that’s mostly due to ageing product. Expect production numbers to climb again after the Juke and Qashqai are replaced and it gains the X-Trail. No start dates for those cars have been given. Luton and Ellesmere Port looked vulnerable to closure after Vauxhall’s sale to cost-cutting PSA Group coincided with Brexit uncertainty. However, PSA came to Luton’s rescue with news that the factory would make a new range of vans on PSA platforms. PSA boss Carlos Tavares said no decision would be made on Ellesmere Port until 2020, closer to the time when the current Astra is replaced. A third of its workforce was cut at the beginning of this year in an attempt to increase its cost-competitiveness. If that works and we have a deal on Brexit that mirrors current benefits, it could yet survive. The union Unite gave an indication of the paranoia among manufacturing workers in the UK over the upheaval surrounding diesel engines when it called for Ford’s 2 vast engine plants, the petrol-focused Bridgend and diesel-making Dagenham, to switch to making electric powertrains instead. Ford is too pragmatic for that, but its big problem is losing JLR as a client for the V6 petrol and V8 in Bridgend, and the V6 diesel in Dagenham by 2020. The V6 diesel has a new life in the F-150 pick-up in the US, but production at Bridgend will fall by some 150,000 engines. A new range of 1.5-litre engines in both plants will give them a boost, but most head to Ford’s assembly plants in Europe, so any Brexit-derived disruption will hurt. BMW is unlikely to leave Mini’s ancestral home in Cowley (it’s due to add the electric Mini from next year) but has other options in the case of a hard Brexit. The firm ramped up Mini production at its Dutch contract manufacturing plant to 170,000 units in 2017 and has increased the head count there, Reuters reported in June. The company has been vocal on the threats of Brexit, particularly in terms of customs hold-ups, but its engine plant at Hams Hall is well positioned to ride out the diesel slump: it doesn’t make any. “Let’s be clear, Toyota, Nissan and Honda came here to access the European single market, which is why they’ve got a particular problem with Brexit,” says Aston University’s Professor Bailey. Toyota’s 2.500 employees in Derbyshire breathed a sigh of relief when the firm announced the next Auris for the plant starting early next year. It should boost production after a lean couple of years, but the Avensis has now gone and won’t be replaced. Toyota’s engine plant in Deeside in North Wales, meanwhile, has thrived thanks to the interest in Toyota hybrids amid the diesel slump. Jaguar Land Rover Britain’s biggest auto maker made just over half a million cars in the UK last year, but 2018 has brought problems. First it said it was cutting production at Halewood, then in April it announced the loss of up 1.000 agency jobs at its biggest plant in Solihull. To make up the shortfall, JLR shifted over 362 full-time staff from Castle Bromwich, where it builds Jaguars suffering some of the biggest sales declines this year. JLR has blamed the diesel slump and model cycles, but its global strategy is also a cause. Production is growing in China and it’s just about to start production of the Discovery in Slovakia. After being saved from closure when Tata took over JLR in 2008, Castle Bromwich now looks vulnerable. The luxury brands Bentley, Rolls-Royce, Aston Martin and McLaren might grumble about Brexit, but they have no real choice but to ride it out; too much of their global brand allure is tied up in the ‘Made in Britain’ promise. To McLaren’s Mike Flewitt, it’s just another challenge to negotiate. “In one market, Singapore, I have a 180% tariff. We’re talking maybe WTO tariffs at 10%”, he said. “I’m not even convinced there will be tariffs”. Tariffs are fourth on the list of Brexit fears for Aston Martin CEO Andy Palmer. “That’s least of my concerns”, he says. Number one for him is border drag, two is rules of origin and three is hiring the right people. “We’re employing people from the likes of Ferrari, and I need to be able to say to them they’re going to be able to stay after Brexit”, he said. +++ 

+++ CHINA announced plans to slap an additional 25 percent tariff on vehicles imported from the United States and reports have suggested American-made SUVs are being held up by customs officials in the country. Daimler confirmed authorities are inspecting SUVs made at the company’s plant in Tuscaloosa, Alabama for potential problems. Little else was known about the incident, but an unverified document suggested officials were examining the GLE and GLS for rear brakes that were “insufficient”. Authorities are reportedly examining SUVs built between May and June. A Daimler spokesperson said they are “working with the relevant authorities to resolve the issue”. While the situation appeared to be an isolated incident, a new report says the American-made BMW X4 is also facing a similar issue. In that case, authorities are preventing the delivery of 400 SUVs built between April and June. While the timing seems suspicious, it’s unlikely the trade dispute between China and the United States is causing the problem. BMW told the X4s are part of a recall that impacted around 19,000 of their SUVs. The automaker said the recall was the result of a supplier that delivered rear brake calipers which could potentially be faulty. Given the focus on rear brakes in both cases, it’s possible that Chinese authorities are examining the Mercedes SUVs to ensure they didn’t use the same rear brake calipers as the BMW X4. Regardless of the reason, the issue appears to be safety related and not politically motivated. +++

+++ Automakers pushing to sell cars before new emissions rules come into effect helped to boost registrations in western EUROPE by 9.1 % in July, according to market analysts LMC Automotive. France and Spain saw the biggest growth in the region’s top5 markets, also helped by an extra selling day compared with July 2017. Both markets were up 19 %. Registrations in Germany, Europe’s biggest market, increased by 12 %, while in Italy sales were rose 4.4 %. The UK market grew by 1.2 %; a modest increase after sales fell throughout the year impacted by a decline in demand for diesel cars and uncertainty over the outcome of Brexit talks. In a news release, LMC said there is a “strong suspicion” that July’s increase in western European sales is related to the Sept. 1 deadline to register cars under the existing NEDC emissions regulations rather than the more stringent WLTP legislation. In Germany in particular, “the most likely explanation seems to be self registrations ahead of the WLTP deadline because there is no other apparent reason for the pace of sales to pick up so strongly”, LMC said. The analysts firm forecast “payback in the later months of the year, restraining growth for 2018 overall”. LMC expects the western European new-car market to grow by 1.6 % this year to 14.53 million, boosted by strong performances of Germany and France. +++ 

+++ FORD has confirmed that it’s working on “a yet-to-be named rugged small SUV”. The new small off-roader is referred to as the ‘baby Bronco’. Expected to arrive in 2019 or 2020, it will benefit from “off-road positioning and imagery”, in the words of Hau Thai-Tang, the company’s Executive VP for Product Development and Purchasing, who briefly talked about the model at an investor conference in New York. Using the word “off-roader” to describe it might be a long stretch as, unlike the real Bronco that will arrive in 2020 with a body-on-frame construction, the small SUV will be based on the same platform as the new Focus. The architecture is extremely versatile and supports different vehicles, and besides the Focus, the Kuga should lend some of its features, too. Some (if not all) of the engines will likely come from the next generation Kuga. Ford is also thought to be working on a pickup version based on the same platform. It’s said to be aimed at the North American market, at first, and could also go on sale in Europe eventually. +++

+++ In view of the latest results, new Fiat Chrysler Automobiles chief executive Mike Manley is confident that MASERATI ’s sales growth and profitability can be restored, particularly in China. Deliveries in the second quarter fell 41 % compared with the same period in 2017. The key reason for this decline was a huge 69 % fall in Chinese sales. Elsewhere, North American deliveries were down 22 % and those to Europe, the Middle East and Africa also dropped by 23 %. During a conference call discussing FCA’s second-quarter financial results on the day of Sergio Marchionne’s death last month, Manley said “70 % of the issue is all focused on China”. One reason for decreased deliveries in China was due to a government announcement that cut import tariffs on foreign-made automobiles from 25 % to 15 % as of July 1. To cash in on this, many dealerships held back orders until July 1 to benefit from the 10 % tariff reduction. In the first half of 2018, Maserati has sold 17,200 vehicles throughout the world. At the same stage last year, sales stood at a record 25,100. These lower shipment numbers triggered a fall in Maserati earnings before interest and taxes from 152 million euros in Q2 2017 to just 2 million euros in the same period this year. Due to the reduced demand, Maserati has excess inventories and this month, is closing its Mirafiori plant in Turin, where the Levante is built, for 3 whole weeks. +++

+++ SAUDI ARABIA ’s sovereign wealth fund is interested in investing into Tesla, now that Elon Musk attempts to take the Palo Alto-based EV maker private. The Saudi Kingdom’s Public Investment Fund (PIF) wants to be part of any investor pool that will be created to take Tesla private, Bloomberg reports citing people with knowledge of the matter. The fund has recently built a stake just shy of 5 % in Tesla. The potential transaction will cost a jaw-dropping $82 billion, with Musk hoping to avoid having one or 2 large stakeholders in a company. Instead, he would prefer to gather the funds from a larger group of inverstors, according to the same sources. At least 2 investors have sued Musk and Tesla alleging share-price manipulation. Musk owns 20 % of Tesla Motors. “The question is still around Tesla’s future sales. This is essentially a chicken-and-egg problem”, Nannan Kou, a senior associate at Bloomberg said. “At this stage, it is hard for Tesla to convince the general investors that delivery will ramp up quickly. So the potential investor must be patient and strategic-looking”. Musk said he still expects to own around 20 % of Tesla after any transaction and that he hopes all shareholders will remain owners of a private company. The Saudi fund approached Musk months ago to discuss buying a minority stake but he initially resisted the investment, according to the same report. As a result, PIF itself decided to buy around $2 billion in Tesla shares, reportedly with the help of an investment bank. The Saudi government is planning to turn the fund into a $2 trillion powerhouse to help diversify the oil-dependent nature of the kingdom’s economy. +++

+++ It’s no secret that SEAT ’s Cupra performance division plans on launching a plethora of potent vehicles in the coming years. The Cupra Arona will be one of the first. The Cupra Arona will be launched before the end of 2020 as a 2021 model, therefore putting its arrival roughly halfway into the life of the small crossover. As the Arona uses the same MQB A0 platform as the 2018 Polo GTI, Cupra will have a selection of powertrains to choose from. The most likely candidate is the VW Group’s 2.0-liter turbocharged four-cylinder, pumping out roughly 200 hp that are channeled to the front wheels. It seems probable that Cupra will also look to improve the braking performance of the Arona with a set of upgraded brakes. Further modifications will also be made to the chassis to provide the crossover with better handling. Like other vehicles affixed in the Cupra range, the Arona will easily stand out from lesser variants. More specifically, it is reported that the car will arrive with redesigned bumpers, bespoke wheels and four exhaust pipes. Elsewhere, Cupra will apply a number of decorative finishes to the crossover’s interior to give it a sporty vibe. Sports seats specific to the Cupra Arona are also a possibility. When the Cupra Arona arrives, it will go head-to-head with other small performance crossovers like the Nissan Juke Nismo. +++

+++ Just weeks after TESLA announced a new Gigafactory to be constructed in Shanghai, China, the electric automaker has started hiring. Job postings on Tesla’s website reveal that it is currently looking to fill at least 14 vacancies, including architectural designer and a senior finance manager. CNBC reports that most of the positions are senior in level and necessitate at least 6 years’ experience. While Tesla’s is looking to snap up local talent, it remains to be seen how soon future employees will actually be able to get to work as the Gigafactory hasn’t even broken ground. Tesla doesn’t need to form a joint venture for its Chinese factory. This month, Tesla chief executive Elon Musk said the factory will cost roughly $2 billion to construct and confirmed it will be funded with local loans. An agreement was signed with Shanghai authorities for the factory just days after U.S.-Chinese tariffs forced Tesla to dramatically increase the prices of its local models. The company’s current plan aims to commence production of the first vehicles at the site roughly two years after construction begins. By the time the Gigafactory is complete, it could roll out up to 500,000 vehicles annually. Elon Musk’s Gigafactory ambitions don’t end in Shanghai. Reports from the start of this month reveal that discussions are being held for Tesla’s fourth Gigafactory to be located in either Germany or the Netherlands. While a final decision has yet to be made, Musk is thought to be favoring Germany, most probably a location near its engineering division in Pruem. +++ 

+++ While TOYOTA is able to challenge other compact hatchbacks with its new generation Auris, the Japanese automaker still lacks the means to go after the likes of the Volkswagen Golf GTI. This could however change, and sooner rather than later. Also, a possible hot hatch version of the Auris would not necessarily follow a traditional route, by having a potent internal combustion engine powering the front wheels. Instead, according to the brand’s chief engineer, Yasushi Ueda, the car could adopt a hybrid powertrain. Ueda admitted that there are several options when it comes to a potential compact hot hatch model, but that his employer still has to decide whether a hybrid is the right way to do it. It “sounds very good to me”, said Ueda when asked about such a version of the car, adding that “I have to consider that, I have to investigate, research. We don’t have any detailed plan yet. Of course, in the future, the idea of a hot hybrid sounds very good”. The Toyota official went on to say that the Auris hot hatch could use a petrol internal combustion engine to power the front wheels, whereas the rear axle would be motivated by an electric motor; somewhat similar to the RAV4 Hybrid, which has a 2.5-liter engine and 2 electric motors, with a combined output of 194 horses. +++ 

+++ Could the next-generation Ford Ranger and VOLKSWAGEN Amarok pickups share a common platform? They very well might. During a recent interview, VW Groep Australia managing director Michael Bartsch hinted that the commercial vehicle joint venture between the 2 automakers could help lower the costs of the 2 mid-size pickups moving forward. “All options are being looked at. All avenues are being explored. I think it would be disingenuous of me to say there is nothing going on with Ford, otherwise Ford wouldn’t be making the comments that they are making, but I am not in a position at the moment to say what it may or may not be. What I think is very clear is, in order to be competitive, we have to get the cost base of the Amarok down. It’s being produced in Argentina and Germany and both of those are high-cost markets for a product that is in the most competitive environment that you can be in”, Bartsch said. According to the executive, high manufacturing costs in Germany and Argentina’s unstable currency make it hard for the Amarok to compete with cheaper alternatives built in Thailand and Japan. By sharing parts with Ford, the German manufacturer could rectify this issue. Mercedes-Benz and Nissan have the most prominent pickup collaboration at the moment due to the parts-sharing between the X-Class and Navara. If Ford and Volkswagen were to collaborate on their future pickups, Bartsch is confident they would do a better job than them. “If there is a joint venture done, we would do a better job at differentiating the products between the 2 participants. With all the respect I have for Mercedes, I personally think that brands with very definitive cultures and positions in the market be very careful about how they maintain that integrity”, he said. +++

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