+++ AUDI said it expected sales in Europe to fluctuate in the coming months after a 55.5 % slump in September sales due to supply bottlenecks caused by stricter anti-pollution rules. Last month Volkswagen Group’s sales fell by half in Europe’s 5 biggest markets, according to analysts at Citi, after several top selling models failed to conform to new the Worldwide Harmonised Light Vehicle Test (WLTP) rules. Audi’s monthly sales were down by 69.4 % in Germany, while China deliveries increased 12.5 % and sales in North America rose 1.2 %, the carmaker said. “Following above-average sales results in Europe over the past 2 months due to the sell-off of models in stock, the increasingly empty stores and the restrictions in the sales portfolio had an adverse effect on deliveries in September”, Audi said. Some of the supply bottlenecks that have slowed sales of Volkswagen’s namesake brand, however, are now easing, VW said. “Currently we have WLTP certification for volume sellers for all of our 14 models”, it said in a statement. “Further vehicle variants will gain their product release shortly”, VW said, adding that by year-end it would be able to offer close to all models to customers. +++
+++ BMW rivals and ride-hailing companies are considering joining its consortium for developing self-driving cars as auto industry profits come under increasing pressure, board member Klaus Fröhlich said. Carmakers and ride-hailing companies have sought to build self-driving cars as a way to enter the business of smartphone-hailed robotaxis. However, they are entering a crowded field where the likes of Apple and Alphabet have been pouring billions of dollars into cars that can drive themselves. “Unfortunately, everybody thought they would be the winner and would have an enormous ride-sharing business”, Fröhlich told. BMW, however, wanted to spread the cost of investment and started a consortium that now includes Mobileye, Magna, Fiat Chrysler and auto suppliers Delphi Automotive and Continental AG. The technology is proving complex and the returns on investment are taking longer to materialize, causing investors to scrutinize whether go-it-alone strategies make sense. “I have had another German carmaker saying, ‘it sounds like we wasted a lot of money’. I also have had contact from tier one suppliers who say ‘lets do a common platform’ ”, Fröhlich said. “Some ride-hailing companies have also expressed interest in joining the consortium”. Fröhlich would not be drawn on who might join the consortium beyond saying “there may be some news on this next year”. +++
+++ BUGATTI could join rival ultraluxury brands Rolls-Royce and Bentley in producing an SUV to broaden its range, Bugatti President Stephan Winkelmann said in an interview. Up for discussion are a range of chassis and engine variants, as well as an SUV that fits with the nameplate’s billionaire target audience, Winkelmann said. VW Group’s ultraluxury brand currently makes different versions of the Chiron, and this week premiered the sold-out $5.9 million Divo supercar in Europe. “The brand is ready for more”, said Winkelmann, whose Divo has a a 1.500 hp engine. “The W16 engine is at the core of the brand today, but it won’t remain the heart forever”. Demand for exclusive cars has been largely decoupled from an auto industry battling tightening emission regulation and growing trade barriers. Vehicles such as the Divo, Ferrari’s Monza supercar and Aston Martin’s Valkyrie tend to compete more with purchases of luxury apartments or yachts than affordable means of transportation. With few financial constraints, buyers look for assets that might become valuable collectors’ items. In the Divo’s case, road-legal but built for the track with a top speed capped at 380 km/h, production is limited to 40 cars, enhancing the product’s appeal just like the €1.6 million Monza, whose 499 unit run is already allocated to Ferrari’s most loyal customers. An expansion at Bugatti, often mocked as a prime example of VW Group’s excessive engineering budgets during the manufacturer’s previous management, must be economically viable to go ahead, Winkelmann said. “We need to come up with a convincing pitch to our shareholders that justifies the related investment”, said the manager, who previously ran VW Group Italian subsidiary Lamborghini. A hybrid engine “could be part of the future, you have consider social acceptance in terms of emissions”. +++
+++ CADILLAC outscored Tesla in a new ranking of partially automated driving systems tested by Consumer Reports. The highly influential nonprofit organization, which tests and rates a variety of consumer products from mattresses and baby food to vehicles, said it compared Cadillac’s Super Cruise and Tesla’s Autopilot with similar systems from Nissan and Volvo. Nissan’s ProPilot Assist was ranked third and Volvo’s Pilot Assist fourth. GM, Tesla and Volvo did not respond immediately to a request for comment. Nissan in a statement said its ProPilot Assist system is available on several models, including the X-Trail, the Leaf and the Qashqai, “all of which are priced tens of thousands of dollars below the Cadillac and Tesla products mentioned in the Consumer Reports test”. Consumer Reports said it has been testing partially automated driving systems for several years but elected to conduct a formal study intended for publication, because “we are at a tipping point where they are now going mainstream”, according to Jake Fisher, director of auto testing. The organization said its tests, conducted on a private track and on public roads in Connecticut, were designed to measure the systems’ ability to automatically control steering and speed in certain situations, while helping drivers pay attention and regain manual control of the vehicle when required. The systems typically use cameras, radar and other sensors, as well as mapping data, to monitor location and traffic conditions and help keep a vehicle centered in the lane at a safe distance behind other cars. Each system has limitations. Cadillac’s Super Cruise, for instance, only functions on divided highways that have been mapped by GM. In contrast, Tesla’s Autopilot can be used even on small, curvy roads with poor lane markings, but “operates erratically in those situations”, Consumer Reports said. While they can help relieve driver stress and fatigue, Consumer Reports said, the partially automated systems are “not intended to be self-driving features”. The organization tested Super Cruise on the Cadillac CT6; Autopilot on the Tesla Model 3, Model X and Model S; ProPilot Assist on the Nissan Leaf and Infiniti QX50, and Pilot Assist on the Volvo XC40 and XC60. Consumer Reports said Cadillac’s Super Cruise did “the best job of balancing high-tech capabilities with ensuring the car is operated safely and the driver is paying attention”. Tesla’s Autopilot was cited for its capability and ease of use, while Nissan’s ProPilot Assist did a better job than Autopilot or Volvo’s Pilot Assist in keeping drivers engaged. Cadillac’s Super Cruise is not related to the GM Cruise self-driving vehicle being jointly developed by General Motors and Honda. +++
+++ The long-awaited Audi E-TRON has just been revealed, but the automaker claims to have already secured 10,000 pre-orders. Director of Audi France Lahouari Bennaoum revealed the impressive figure during an interview. Although the e-Tron was only revealed in full last week, Audi has been accepting $1000 refundable pre-orders for a number of months. Nevertheless, the numbers show that Audi customers are indeed interested in an all-electric model. Power for the crossover comes from a pair of asynchronous motors working alongside a generous 95 kWh battery pack. Horsepower and torque figures remain unspecified but Audi says the e-Tron will reach 96 km/h in a respectable 5.5 seconds and top out at 200 km/h. Perhaps the most intriguing aspect of the vehicle’s electric motors are the innovative energy recuperation features they include. Whenever the driver releases the accelerator and when the brake pedal is depressed, the electric motors can recover energy. This recuperation system alone is responsible for as much as 30 % of the e-Tron’s total range. Additionally, the e-Tron features an advanced electric all-wheel drive system that incorporates torque vectoring. Finally, in an industry first, the e-Tron’s battery pack supports DC fast charging of up to 150 kW at select high-speed public charging stations. This means the battery can be topped up to 80 % capacity in just 30 minutes. +++
+++ Toyota, Nissan and Mazda welcomed the revised North America trade deal that left automakers in JAPAN unscathed but they may face a bumpy ride when Washington and Tokyo hold new talks on over $40 billion of annual U.S. auto imports from Japan. The United States and Canada reached an agreement to update the 1994 North American Free Trade Agreement after Washington had forged a separate trade deal with Mexico in August. The updated deal effectively maintains the auto industry’s current footprint in North America, and spares Canada and Mexico from the prospect of U.S. national security tariffs on their vehicles. Mazda, which ships cars to the United States from Mexico and Japan, called the deal a “big step forward”. Nissan, which makes the cars it sells in the United States locally as well as in Mexico, Japan and other countries, said it was “encouraged” by the agreement. Toyota, Japan’s biggest automaker, said it was “pleased” that a basic deal was reached. Other automakers were not immediately available for comment. While the deal has removed the risk that the disintegration of the pact would have posed to automakers, bigger risks loom large for Japanese firms as a chunk of the roughly 7 million cars they sold in the U.S. last year were shipped from Japan, and a trade deal between Washington and Tokyo has yet to be agreed. The United States and Japan last week agreed to begin fresh trade talks, with U.S. President Donald Trump seeking to address Japan’s $69 billion trade surplus, of which nearly two-thirds comes from auto exports. Washington is also investigating the possibility of slapping 25 % tariffs on auto imports on national security grounds, although it has agreed with Japan to put any new tariffs on hold during the talks. Analysts say the United States may take a tougher stance on auto imports from Japan than from its neighbors. “If Japan requests an exemption from the 25 % tariffs under consideration, Washington could propose a more strict cap on imports than it agreed to with Mexico and Canada”, said Koji Endo, senior analyst at SBI Securities. “That would be a risk”. This could be a big blow to Japan, as the United States is a key source of revenue for Japanese automakers. The U.S. market accounts for a quarter or more of their annual global vehicle sales, and of their total U.S. sales, and depending on the automaker, as much as half of those was shipped from Japan last year. A side letter to the United States-Mexico-Canada Agreement (USMCA), as the new deal agreed on Sunday is called, states that Mexico and Canada would each get a tariff-free passenger vehicle quota of 2.6 million annual export units, well above their current export levels. “I don’t think that will happen in the case of Japan”, said Takeshi Miyao, managing director of consultancy Carnorama, adding that U.S. automakers, which sell very few cars in Japan, would stand to lose little from any trade barriers with Japan. +++
+++ Toyota, long opposed to producing its premium LEXUS cars in China because of concerns over quality and profitability, is now considering it to ignite growth and narrow sales gaps with its German rivals, 4 company insiders told. The company, which imports Lexus models made in Japan to sell in China, has spent the last 2 years researching how to produce them locally. Toyota also talked to its Chinese joint-venture partners (Guangzhou Automobile Group and FAW Group) last year about Lexus models. It wasn’t clear whether Toyota approached the Chinese companies about a partnership or vice versa. Local production would be a major shift for the world’s largest automaker, encouraged by improved China-Japan ties, as well as new Chinese investment rules that might allow foreign automakers to fully own or majority-control China operations. “We’re torn over this”, said one of the insiders. “But it makes little sense to let this opportunity slip by”, another told Reuters. All 4 insiders declined to be identified because they are not authorized to speak to the media. China’s planned scrapping of foreign ownership restrictions in the auto industry is in part a response to criticism that Chinese companies have been largely allowed to invest freely in outside markets while Beijing limits foreign firms’ access to the world’s second-largest economy. The rule changes (affecting electric carmakers this year and others by 2022) led Tesla to gain Beijing’s approval for a wholly-owned China manufacturing and sales company in Shanghai. That marked the first time a foreign carmaker established itself in China without a partner. Toyota already produces numerous Toyota-brand models, including the Camry, Highlander, Corolla, Levin and Crown, in China with partners. Last year it sold 1.29 million cars there, including imported Lexuses. Toyota had contemplated moving Lexus production to China before, as far back as 2011-12, according to 1 of the 4 insiders. But it had until now considered a potential erosion of quality too much of a risk, and didn’t want to sacrifice the brand’s relatively high margins by sharing profits with a local partner. 2 of the Toyota insiders said the automaker had identified specific scenarios for localizing Lexus. “All the preparation has been more or less completed”, one said. “All we’re waiting is a ‘go’ from management”. Toyota’s preferred option is to own all or most of a localized Lexus unit, which it could do immediately by building only electric cars (Lexus has plans for electric battery and plug-in electric hybrid versions of existing models). But China might not let another brand in when the market has slowed down significantly, with sales of some foreign vehicles, including PSA, Ford and Hyundai, all falling in the gutter in recent months. “You’d still need a good political follow-wind to execute this”, 1 of the sources said, pointing to help from Japanese Prime Minister Shinzo Abe, who has a state visit to China planned for this month. Even as other premium brands (such as Audi, BMW, Mercedes-Benz and Cadillac) have opened assembly plants in China to gain market share, Toyota has resisted. That reluctance reflects the company’s unwillingness to share with a Chinese partner a brand painstakingly built since 1989 into a top premium car in the United States. Opponents inside Toyota also point to China’s lowering tariffs on passenger cars to 15 % from 25 % in July as a reason to keep importing Lexuses. They also note that the nearest Lexus plant to China is at the northern tip of Japan’s southernmost main island of Kyushu; only 2 days from Shanghai by sea. A Toyota spokesman in Tokyo said “the most important task” for Lexus is to become a distinguished brand in China. “We always weigh the need for localizing production as part of the consideration for the Lexus brand’s future in China”, he said. “But at this point in time, we don’t have any specific plans for producing Lexus cars in China”. Nonetheless, support for localization is growing among Toyota leaders. China has typically been a difficult market for Japanese companies, but there is new optimism, especially after an official visit to Japan by Chinese Premier Li Keqiang in May. During his visit, Li toured Toyota facilities on the northern island of Hokkaido, escorted by the company’s family scion and chief executive, Akio Toyoda. Toyoda has since sought to boost his company’s presence in China, including an effort to significantly expand its manufacturing capacity and distribution networks, and share more technologies with Chinese companies. China has also proposed limiting new production capacity for automakers, adding an incentive for Toyota to move quickly if it wants to build Lexus models there. Nissan and Toyota have each recently revealed plans to boost capacity, much of which will be used to produce electric cars. Alan Kang, a Shanghai-based analyst for consultancy LMC Automotive, thinks localizing production is exactly what Lexus needs to start narrowing the big sales gap with German premium brands. Mercedes-Benz, for example, last year sold about 610,000 vehicles, compared to 130,000 for Lexus during the same year, according to LMC. “If Lexus doesn’t want to remain a niche, it needs to start investing more”, Kang said. +++
+++ The new-generation RENAULT Clio “will be shown early next year”, said the brand’s design chief, Laurens van den Acker. The Renault official told the supermini is “finished, it’s done, it’s duster”, adding that “it’s going to be great”, and “will be the best Clio we’ve ever done”. On the styling front, the new Clio should remind a smaller Mégane, with elements taken from the Symbioz Concept, too. Still, the French automaker will keep some of the elements of the current car in place, such as the rear door handles, which will be hidden in the frames. Inside, the new Clio will echo the looks of its larger sibling, too, with a portrait-style infotainment screen taking center stage in the middle of the dashboard. This should give the new model an advantage over its direct rivals, such as the Ford Fiesta and Volkswagen Polo, whose infotainment screens have a more traditional look. Drivers should expect other novelties in this department, where Renault “will try to make the difference”, Van den Acker said. It’s no surprise that the next Clio will be based upon the CMF-B platform, powered by small petrol and surprisingly, diesel engines, too. Among them, we might find the 1.0-liter and 1.3-liter units, with the latter developed by Renault-Nissan and Daimler, as well as the 1.5-liter dCi. The diesel will reportedly welcome a mild hybrid derivative, said to be called the Eco2, but will be launched later on. It could be followed by a plug-in hybrid powertrain, probably in 2020. Renault isn’t interested in offering a battery-electric-powered version of the Clio V, due to fears of cannibalizing the Zoe EV. As for the Clio RS, Renaultsport will unveil it in 2020, but not before sending off the current iteration with a new limited edition. It’s unknown what will power it, as some say it will make use of the current 1.6-liter mill, while others believe it might adopt the Megane RS’ 1.8-liter lump, albeit in a de-tuned state. Last, but definitely not least, the next-generation Clio will come with the brand’s latest and greatest driving assistance features, including a semi-autonomous driving system, probably of Level 2. +++
+++ Volkswagen Group announced the firing of Rupert STADLER . Stadler was suspended in June for his role in the dieselgate scandal. Stadler’s firing doesn’t come as a huge surprise as the executive has been jailed since June. Effective immediately, Stadler will be stripped of his title as CEO of Audi. VW is also removing Stadler from Volkswagen’s board of management. “Mr. Stadler is leaving the companies with immediate effect and will no longer work for the Volkswagen Group”, VW said in a statement. “Mr. Stadler is doing so because, due to his ongoing pretrial detention, he is unable to fulfill his duties as a member of the board of management and wishes to concentrate on his defense”. Stadler began working for Audi in 1990 and was named to the company’s board in 2003. In 2010, Sadler was also appointed to the board of management for VW AG. +++
+++ “Elon Musk tweeted something” really ought not to be how a piece about TESLA starts. But that’s what happened, and it matters. Grammatical mishap aside, this is what some might call a “sick burn”, one supposes. Just 4 minutes later, it would have gone out at the mystical time of 4:20 on the East Coast, and this column would probably have to be a thousand words longer, at least. As it is, and unlike the “funding secured” bombshell, the Tesla CEO did at least wait until the market was closed. The value of his company dropped about $1.1 billion after the close anyway. As well it might. Because, while this isn’t the first tweet of questionable wisdom issued by Musk (see “pedo guy”, for example), he really picked his target this time (assuming his account wasn’t hacked). While it’s obviously getting hard to keep up, you may recall Musk just settled with the Securities and Exchange Commission, which was suing him for misleading shareholders with that whole funding-secured thing. In its complaint, the SEC documented Musk’s extensive complaints about short sellers having it in for Tesla. Having first called the SEC’s action unjustified, Musk quickly settled for a $20 million fine and giving up the chairmanship for three years, while retaining the position of CEO (the stock had dropped 14 % in the intervening day or so). Tesla, meanwhile, was supposed to add new independent directors and implement controls overseeing Musk’s communications. I’ve no idea what the SEC’s sense of humour is like. But the regulators had been criticized already for letting Musk off relatively lightly. So openly mocking them seems a somewhat bold move. Especially as the settlement must yet be justified to a district judge in order for it be approved. Guessing whether another tweet could really blow up this settlement would just be that: guessing. Either way, Tesla’s shareholders just got another reminder of the vacuum of governance at this company. There was speculation about who would replace Musk as chairman, with existing director James Murdoch’s name being thrown around. Given everything that’s happened this year with Murdoch already on the board, though, it’s unclear why his elevation would make much difference. At a minimum, Tesla needs someone from outside, not least because they would conduct an audit of the company’s operations, governance and finances for themselves. Of course, with the CEO seemingly still willing to take big risks for the retweets, it’ll be a brave soul that even considers the job. +++
+++ TOYOTA and SoftBank Group are teaming up to develop self-driving car services, signaling deepening alliances between top automaker and tech firms as the global race to develop autonomous cars intensifies. Japan’s biggest automaker and its most influential tech firm will jointly develop a platform to operate self-driving vehicles which can be used as mobile shops, hospitals and other services as they envision a future in which fewer people drive their own vehicles. The tie-up shows that even big, well-funded firms want to share costs and expertise in pursuing promising but risky automotive technologies that have yet to gain widespread consumer acceptance. The joint venture will start small with initial capital of 2 billion yen ($17.5 million). SoftBank will own just over half of the business, which will initially focus on Japan and eventually go global. “SoftBank alone and automakers alone can’t do everything”, said Junichi Miyakawa, chief technology officer at SoftBank who will be CEO of the new company. “We want to work to help people with limited access to transportation”. The partnership will see Toyota and SoftBank work together to develop the automaker’s multi-purpose mobility service based on its “e-Palette” concept announced earlier this year, in which Toyota plans to produce the hardware and software for convoys of shuttle bus-sized, self-driving multi-purpose vehicles used, for instance, as pay-per-use mobile restaurants and hotels. The joint company will be called Monet, short for mobility network, and will roll out an autonomous driving service using e-Palette by the second half of the 2020s, the companies said. SoftBank will provide technology to collect and analyze transportation data to ensure cars are efficiently dispatched when and where they’re needed, they said. “Toyota is hoping to increase its revenues by combining its own data with the data and expertise which SoftBank has culled from its mobile phone operations”, said Koji Endo, senior analyst at SBI Securities. “The new company will enable SoftBank to widen its partner network, and it could be hoping to take a lead in developing platforms (for new transport services)”. A slew of automotive technology-related deals and discussions have already resulted in myriad pairings between global automakers, ride-hailing companies and major tech firms. Honda said it would invest $2.75 billion and take a 5.7 % stake in General Motors’ Cruise self-driving vehicle unit, in which SoftBank is also an investor. Daimler and Renault said they may expand their cooperation to batteries, self-driving vehicles and mobility services. The partnership between the 2 Japanese companies reflects SoftBank’s growing influence in the emerging fields of AI and autonomous driving, which has been accelerated by its investments via the almost $100 billion Vision Fund. It is also a vote of confidence from SoftBank CEO Masayoshi Son, who has been critical of Japan for lagging overseas rivals, in Toyota’s vision for the future of cars. “He has an image of the future”, Son told a media briefing, referring to Toyota President Akio Toyoda. “Automobiles are becoming a cluster of semiconductors, not screws, bolts and nuts”. While both firms have been independently developing technologies for self-driving vehicles and car sharing, and each have investments in ride-hailing firms Uber Technologies, Grab and Didi Chuxing, this is first time they have come together. Toyota Executive Vice-president Shigeki Tomoyama said the partnership came after SoftBank’s widespread presence in the ride-hailing industry became apparent: it holds major stakes in the ride-hailing firms it had invested in and played a consolidating role in that industry. Toyoda joked about rumors that the 2 companies did not get along, and recalled rejecting a business proposition from Son 20 years ago, when SoftBank had yet to make its name as one of the world’s largest technology investors. “We are trying to take traditional car making into new fields”, he told reporters. “We realized that SoftBank shares the same vision when it comes to the future of cars, so it’s time that we partner together”. +++