Newsflash

+++ The boss of carmaker BENTLEY said failure to reach a Brexit deal would be “quite damaging” to annual profit in the worst case scenario, limit the company’s ability to invest and could lead to its plant closing for an additional few days. Chief Executive Adrian Hallmark told the firm was already preparing by building up some stocks and switching from the port of Dover to Immingham to bring in certain parts with more contingencies to be enacted from December if needed. Like the rest of the sector, the Volkswagen owned brand, which builds roughly 11,000 vehicles at a northern English plant in Crewe, is worried about duties and 10 % tariffs under World Trade Organization terms. “Best case, it’s an annoying impact on our annual profitability”, Hallmark told. “Worst case, it’s quite damaging on our annual profitability so a full no deal Brexit would hurt us as a company, it would limit ability to invest”. London and Brussels hope to strike a Brexit agreement next month but Hallmark said if there was no deal by the end of the year, the automaker would have to consider stockpiling more and closing its plant for a few extra days to handle any disruption. “We may work for 4 days, or we may have a longer Christmas break and a longer Easter break if there is no deal so that we can smooth the period between now and the middle of next year”, he said. Britain’s overwhelmingly foreign-owned automotive industry employs more than 850,000 people and has been vocal about the benefits of keeping free and unfettered trade as thousands of cars, engines and parts move to and from the continent daily. The country’s largest carmaker Jaguar Land Rover has warned that the wrong Brexit deal could cost it €1.35 billion per year whilst Mini has moved its annual shutdown to April, just after Britain leaves the bloc. Aston Martin is even considering flying in car components if there are snarl-ups on motorways to and from Dover, prompting many, including Bentley, to consider other ports to help avoid delays. Prime Minister Theresa May has repeatedly said she will get a good deal for the industry with her Chequers plan, which has faced stiff opposition from many in her party, promising a common rulebook for goods with the EU to avoid disruption. Whilst having to adapt to the uncertainties around Brexit, car firms are also preparing to provide electric and hybrid models as stricter air quality rules come into place and governments increasingly penalize the use of combustion engines. Hallmark, who took over as chief executive in February, is trying to make the brand’s range more environmentally-friendly and presented his plan to the board earlier this year. “It was taking stock of all the models, all the powertrains, all the future technologies that we needed to invest in and re-cut the plan to be more electrified than we were”, he said. Bentley expects to near a record 11,089 sales this year despite having faced delays to the arrival of its Continental GT model and the challenge of re-certifying some vehicles due to stricter emissions rules. It posted an €80 million loss in the first 6 months of the year and will remain in the red for its full-year performance, Hallmark said. It also faces a decision within about a year over developing its first pure-electric vehicle which it hopes could be available by mid way through the next decade. “When is the first full-electric Bentley? That is currently in the decision process but our target is definitely before 2025”. +++ 

+++ The next-generation BMW M3 will be offered as both a sedan and a wagon. Sources have told the Bavarian automaker is seriously considering launching an M3 Touring model as part of the next-generation range. As with the upcoming M3 sedan, which was spied earlier this month, the M3 wagon should feature pumped up front and rear wheel arches, lowered suspension, retuned handling, sportier styling and, of course, more power if it gets approved. Although nothing has been confirmed at this stage, it is widely expected the new M3 will once again be powered by a twin-turbo 3.0-litre straight-6 engine. The current M3 has a maximum of 460 hp / 600 Nm at its disposal in the range-topping CS trim. By way of comparison, the C 63 S has a 510 hp / 700 Nm bi-turbo V8, while the twin-turbo V6 in the Audi RS4 makes 450 hp / 600 Nm. Both of these competitors, it should be noted, have long been available as wagons. Reports indicate the new M3 will be available with both automatic and manual transmissions, at least in some markets. Adding a Touring to the next-generation M3 line should be relatively inexpensive to develop, and will be targeted at the European market. BMW is hard at work fleshing it out its 3 Series range, with the regular wagon variant likely breaking cover early in 2019. This will be followed by a 4 Series coupe, convertible and Gran Coupe 5-door hatch. The company is said to be dropping the oddball high-riding 3 Series GT hatch from the next-generation range. +++ 

+++ When BUGATTI took the veil off the Chiron in 2016, it was well expected that the French carmaker would create versions of the sports car. Then, the carmaker unveiled the track-focused Chiron Sport at the Geneva Motor Show in March 2018. But it seems Bugatti isn’t finished yet, as it is reported to be planning to reveal an extreme version of the Chiron at the 2019 Geneva Motor Show. According to my sources, Bugatti has plans to build an extreme version of the Chiron that even surpasses the Divo. It seems that a number of VIP customers were given the privilege of getting a good glimpse of the new upcoming version of the Chiron through sketches shown at the unveiling of the Divo at Château Saint-Jean. As report, Bugatti described this new extreme version as “a beauty of speed” as well as a “ground-to-ground Missile”. Chiron’s predecessor, the Veyron was gifted with an extreme version that held the record for being the fastest street-legal car for more than 7 years: the 16.4 Super Sport. This version features an engine that can deliver 1.200 hp and 1.500 Nm. It managed to achieve a top speed of 431.072 km/h to set a new record, only to be broken 7 years later. Sources told us that the hardcore version of the Chiron would still be served by the same 8.0-liter, quad-turbo W16 engine that powers the standard version. In the Chiron, this engine delivers 1.500 hp and 1.600 Nm of peak torque; much more than what Bugatti Veyron 16.4 Super Sport can offer. The Chiron Sport offers the same output and torque, but this version is around 18 kg lighter and has stiffer suspension. For the rumored Chiron Super Sport, its output and torque are expected to exceed that of the standard model. According to my sources, the Chiron Super Sport would have a very limited production run of around 40 examples, just like the number of copies expected to be built for the Bugatti Divo. The Veyron 16.4 Super Sport had a production run of 30 units. Fans and enthusiasts of the Chiron would have to wait until the next Geneva Motor Show, slated in March 2019, to see if this rumor is true. +++

+++ It was just several months ago when European commissioner Elzbieta Bienkowska called DIESEL powered cars as the technology of the past, even giving a prediction that these vehicles will completely disappear in the near future. While it is still too early to say whether her statement will come a true or not, but carmakers are facing a harsh reality for now: public demand for diesel cars are dropping in a fast pace in Europe. Public sentiment towards diesel cars in Europe has been dropping for the past years, with more and more consumers in the region looking to purchase cleaner, more environment-friendly vehicles. While Europe has been considered as the largest market for diesel cars since the 1980s, but the hunger for such vehicles has been waning lately. It was really evident from how carmakers across Europe has been shying away from diesel cars and pursuing electrification. Nonetheless, the latest available figures on sales of diesel cars are a better proof. According to a report by the International Energy Agency (IEA), there is really a huge decline in the demand for diesel cars. Since its statement is backed by numbers, it is really quite hard to deny the fact. As per IEA, diesel cars hold a large chunk of the automotive market in Europe, accounting for 42.5 % of all sales as of start of 2017. But a year after at the start of 2018, the market share of diesel cars in Europe had shrunk to 36.5 %. Overall during the period, carmakers manage to just move 3.12 million diesel cars to customers in Europe, for a huge decline of 16 %, according to IEA. The sales situation for diesel cars is worse in some countries in Europe. For instance, the auto industry saw sales of diesel cars in the United Kingdom significantly dropped by 30 % in the year to start of 2018. Germany is no better off, even though it is home to some of the largest diesel car producers in the world such as the Volkswagen Group and the BMW Group. At the start of 2017, diesel cars accounted for 41.3 % of sales in Germany. A year later, the demand for such cars plummeted by 31.1 %. Since sales of diesel cars have been in decline, there is also corresponding drop in the sales of diesel fuel. In fact, diesel fuel sales plunged by 115,000 barrels a day in August compared to a month prior, causing prices at the fuel stations to surge. Diesel cars have started falling out of favor from consumers in 2015, as traced back to the so-called Dieselgate scandal, which is essentially the emissions cheating scandal committed by the Volkswagen Group. From there, the European and national governments as well as local governments have been reassessing the impact of diesel cars. With a growing number of politicians discouraging their constituents to shy away from diesel cars, the future is also becoming bleak for these vehicles. +++

+++ The car market in EUROPE suffered the biggest monthly decline of the decade so far in September, with the impact of the new WLTP emissions testing regime contributing to a 23.4 % decline in year-on-year sales. Across Europe, 1.12 million vehicles were registered last month, according to data from industry analysts JATO, a 343,000 fall from September 2017. The sharp fall had been expected due to the ongoing problems of readying cars to meet the new and tougher WLTP tests, with JATO noting that only 57 % of versions previously sold currently meet the new test conditions. With registrations spiking in August as manufacturers cleared stock ahead of WLTP coming into force on September 1, overall European sales are still up 2.3 % year-on-year. JATO analyst Felipe Munoz said research showed a direct link between the availability of WLTP-homologated models and registration figures. “We will continue to see registrations decline so long as a large portion of the market’s versions remain unavailable under the new test conditions”, he said. “The big question now is how long the drop will last, which will depend on how long it takes car makers to homologate the models they want to keep on the market”. The Volkswagen Group has particularly struggled with readying cars for WLTP, which contributed to the PSA Group (Peugeot, Citroën, DS and Opel / Vauxhall) becoming the best-selling car maker in Europe. That makes September the first month in nearly 8 years that the VW Group has not topped European sales charts. Opel / Vauxhall had a particularly strong month: while it’s September year-on-year sales were down 12 %, its 80,920 registrations were enough to make it the best-selling brand in Europe, narrowly ahead of Ford (80,813). By contrast, Volkswagen’s sales fell by 53 % to 74,469, with a particularly sharp decline in Germany. Audi also struggled, with its sales falling by 60 %. The Volkswagen Golf, which has been Europe’s best-selling car every month since March 2017, particularly struggled, with registrations falling by 71 % to 14,968. The Opel / Vauxhall Corsa became the new market leader, with 24,752 examples of the supermini registered; a rise of 5 %. The Ford Fiesta also performed strongly, with registrations rising by 20 % to 22,478, putting it second in the European sales charts. +++ 

+++ FORD and Volkswagen may join forces to develop passenger cars together as part of wide-ranging partnership talks between the 2 automakers. In an interview Bob Shanks, Ford’s chief financial officer, noted the companies are “having a very broad set of discussions about how we can help each other around the world”. In June this year, Ford and Volkswagen announced it had signed a memorandum of understanding, and would investigate joint development of commercial vehicle platforms and models. Now, though, Shanks says “collaboration isn’t being limited in any way whatsoever, whether it’s different types of technology, product segments or geography”. While the Detroit automaker surprised many last week when it announced a $1.7 billion third quarter profit before tax last week, it was primarily driven by high-margin pickup trucks and SUVs in the North American market, where the company booked a profit of almost $2 billion. This was offset by losses of $152 million in South America, $245 million in Europe, and $208 million in Asia Pacific, where Ford’s poor showing China really hurt. Although Ford hasn’t said anything officially yet, the most obvious places for the two to collaborate would be for low-cost vehicles aimed at the South American market, as well as pick-ups and vans sold in Europe. It’s possible Ford could work with Volkswagen in producing replacements for the Mondeo family car range, along with the Galaxy and S-Max people movers, should it decide it still wants to compete in those shrinking market segments. Ford shocked the industry earlier this year when it announced it would discontinue all passenger vehicle lines, except the Mustang, for the North American market, shifting its entire range to pickups, SUVs and crossovers. It has since started partnership talks with Indian automaker Mahindra. Ford has also begun restructuring its Chinese operations with a view to making more use of its joint venture partners. +++

+++ The HYUNDAI Nexo has become the first hydrogen fuel cell electric vehicle (FCEV) to score a maximum 5-star Euro NCAP safety rating. The large SUV achieved the result in the latest round of testing conducted by Euro NCAP, with a 94 % rating for adult occupant safety. As well as the Hyundai, the Lexus ES hybrid, Mazda 6 and Mercedes-Benz A-Class also achieved maximum 5-star scores. The Nexo was the first FCEV tested by Euro NCAP. Matthew Avery from Thatcham Research, the only British firm that conducts Euro NCAP testing, said the Nexo’s 5-star rating should “dispel concerns around how hydrogen fuel cell-powered cars perform in a crash”. Avery praised the automatic emergency braking systems on the Nexo and A-Class, which can detect pedestrians and cyclists. “It’s pleasing to see that car makers across all categories are stepping up and working with Euro NCAP to do more to protect our more vulnerable road users”, he added. The Mazda 6 was singled out for it high adult occupant protection score of 95 %, the second-highest score in that category by a car in 2018 behind the Volxo XC40 (97 %). The mechanically identical Peugeot Rifter, Citroën Berlingo and Vauxhall Combo MPVs all received 4-star ratings. The report noted that they scored well in terms of occupant protection but achieved lower scores for vulnerable road user protection. +++ 

+++ LAMBORGHINI has so far refrained from entering the hypercar space but that could change in the near future. In an interview, Lamborghini boss Stefano Domenicali confirmed the marque is looking at launching a model featuring what he referred to as “extreme aero”, i.e. something along the lines of the McLaren Senna and potentially even the Aston Martin Valkyrie. He added that the car, if given the green light, would be a limited-production model in the same vein of the earlier Veneno and Centenario models, which Lamborghini calls one-offs even though multiple examples were built. Lamborghini is known to be working on its next one-off, a model code-named the LB48H and expected to feature hybrid technology. It isn’t clear if this is the model Domenicali was referring to. What also isn’t clear is whether Lamborghini is looking at a standalone model or going the same route as past one-offs by utilizing an existing model as the basis. Both the Veneno and Centenario, for example, were based on Lamborghini’s Aventador and featured the same 6.5-liter V-12 with only a slight increase in power. Domenicali said in his interview that Nürburgring lap times will continue to be an important yardstick for Lamborghini’s cars, though he stressed that it is important for the brand that the cars can offer a high level of performance lap after lap, as opposed to having to pull over to cool down or charge batteries for example. The recently revealed Aventador SVJ is currently the fastest production car around the ‘Ring, having set a 6:44.97 time earlier in the year. +++ 

+++ The PSA Group wants to gain a foothold here in the States. PSA executed the first part of this plan by launching its car sharing service, Free2Move, in Washington, D.C. Free2Move launched in D.C. with a fleet of 600 Chevrolet Cruise sedans and Equinox crossover SUVs parked in all 8 of the city’s districts. Users pay a one-time $10 membership fee and have 24/7 access to available units. All rentals are run through an app, which gives users codes to unlock the vehicles. Parking, gas, and insurance are included in the cost of each vehicle rental. Rental rates are based on how long a customer has a vehicle, on a per minute, per hour, or per day basis. The rate is the same from 0 to 800 kilometres, but after that customers are charged $.45 per kilometre instead of based on the length of time they have their vehicles. When done, users return the vehicles to any public parking spot. Through the app, Free2Move customers also have access to mobility options from the likes of Bird, Capital Bikeshare, car2go, Jump, Lime, Skip, and Uber. Free2Move is an established service that operates in 12 countries with more than 65,000 vehicles utilized by 1.5 million customers. This move is a toe-in-the-water strategy for the PSA Group. Eventually, the company wants to bring its vehicles here once again. “The launch of Free2Move Carsharing in Washington DC is our first step in the deployment of our 10 year plan for a North America entry, as part of our Push to Pass strategic plan”, President and CEO of Group PSA North America, Larry Dominique said. “Our unique ‘service first’ launch strategy allows us to pragmatically re-enter this market thoughtfully and with a greater understanding of the retail marketplace and its consumers’ needs”. The PSA Group owns Peugeot, Citroën, DS, Opel, and Vauxhall. At least one of those brands is destined to wind up on our streets in the not-too-distant future. Exactly which of those brands is coming is still up in the air, as the strategic questions for each brand and how it relates to the U.S. market are all being answered internally. Opel appears to be a strong candidate, as more U.S. customers will be familiar with the products. PSA bought Opel from General Motors in 2017. At the time, many Opels were rebadged as Buicks in the U.S. That means some customers would instantly feel at home inside Opel vehicles. +++

+++ TESLA boss Elon Musk says that the firm is aiming to take on Uber with its own ride-sharing service, and that the prototype of the forthcoming Model Y crossover is ready to go into production ahead of its launch next year. Musk made the announcements after the electric car maker reported a quarterly profit for the first time in more than 2 years. Tesla recorded a profit of $312 million for the third quarter of 2018, helped by deliveries of the Model 3 rising to 56,000. It is the first time Tesla has posted a quarterly profit since 2016; and just the third time it has done so in its 15-year history. Musk called the results “historic”, and praised the ingenuity and hard work of the company. He added that the firm had made more than 80,000 vehicles during the three months, of which more than half were Model 3s. Musk also told investors that Tesla has plans to expand into mobility services, saying that it “will operate its own ride-hailing services and compete directly with Uber and Lyfy, obviously”. Musk hinted that Tesla’s business model would be more like accommodation service Airbnb, with customers able to “offer their car, add or subtract to the fleet at will”. It is likely Tesla’s service could rely on autonomous technology when it is available, with reports that it would run a company-owned fleet of self-driving vehicles to pick up passengers whenever there are not enough customer cars available. Talking about Tesla’s future plans (which include the Model Y, a new Roadster, a lorry and a pick-up) Musk said the firm has “the most exciting product roadmap of any company on Earth”. Speaking about the Model Y, which Musk had previously said would launch in 2019 before going on sale the following year, he added: “I recently approved the prototype to go into production”. Even if the Model Y launches in March next year, it will be held back until 2020, in part because Tesla will need to find extra production capacity to build it. Tesla has already been forced to build a production line in a tent at its California factory to expand Model 3 production. Tesla is currently building a factory in China, which will feature production lines for 2 models (likely the Model 3 and Model Y) to be sold in that country. Speaking about the pick-up, Musk promised that it would be “next-level stuff”. The financial report was Musk’s final one as Tesla chairman, before he is required to step down due to a settlement with the US government for his tweets about taking the firm private. He will stay on as chief executive, and declined to comment on the search for his replacement. +++ 

+++ TOYOTA is considering following up the introduction of the new Supra with a revival of the MR2, possibly as an electric model. Speaking at this month’s Paris Motor Show, European vice president of sales and marketing Matt Harrison said the company is at the “discussion stage” with the model, but confirmed it is a favoured potential addition to the product plan. Harrison also alluded to the brand’s so-called ‘Three Brothers’ of the Supra, Celica coupé and MR2, using boss Akio Toyoda’s favoured term for the trio of sports models he would like to see returning to showrooms. The Supra is shortly to be launched and the GT86 is today’s Celica, leaving only the MR2 to come Toyota has already hinted at a smaller sports car with the 2015 S-FR concept, which was inspired by the front-engined S800 sports coupé of 1965. Other options could include a platform-sharing joint venture with another manufacturer wanting to introduce a relatively cheap mid-engined car, engineering its own petrol or petrol-hybrid mid-engined model or, perhaps the most cost-effective option, creating a pure electric sports car. An EV could have several advantages. The greater packaging flexibility of the battery-electric running gear means that the highly adaptable Toyota New Global Architecture, designed to accommodate EV powertrains, could form the basis of an electric MR2. The compactness of the electric motor would enable it to be located behind the car’s 2 seats, in the spirit of the original. The battery could be sited below the floor, bringing a desirably low centre of gravity, and the car’s relative simplicity should lower overall development costs. Range is likely to be less of an issue in a compact sports car, and a low-cost, low-weight EV sports car could be marketed as a fun, environmentally friendly, short-distance commuter car. Were it to get the go-ahead, a new MR2 would be unlikely to appear before the early to mid-2020s, by which time the energy density of batteries and EV technology in general will have improved. Toyota would also have a number of pure EV models either on sale or well under development by then. Toyoda is keen that Toyota should continue to offer “affordable, simple and fun- to-drive” cars among its zero-emission products. He cited the original Mini, which he owned when working in the UK in the 1980s, as “the kind of car we should all dream of making”. +++ 

+++ VOLKSWAGEN reported a smaller than expected 18.6 % drop in third-quarter adjusted operating profit, boosting its shares despite weaker vehicle sales tied to the introduction of more stringent anti-pollution rules. The carmaker’s adjusted operating profit came to €3.51 billion in the 3 months through September, better than the €3.21 billion predicted in a poll of banks and brokerages. It affirmed its target for 2018 operating return on sales before special items at both the group and its passenger cars business area of 6.5 to 7.5 %. Including special items, such as an €800 million fine against premium brand Audi, the adjusted operating margin will fall moderately short of the expected range, it said. “The fact that VW does not have to change its forecast makes it look more robust than most of its competitors, namely Daimler and BMW, it demonstrates VW’s talents in both the product and the cost side”, Metzler analyst Jürgen Pieper said. Volkswagen has struggled to adapt its fleet to the worldwide harmonized light vehicle test procedure, known as WLTP which took effect last month, resulting in a 3.6 % decline in deliveries during the quarter as some car models remained unavailable for sale. Volkswagen is also still feeling the impact of its 2015 diesel emissions scandal that has rewritten the rules for the car industry in many major markets. Analysts at NordLB said the carmaker could still face penalties and fines of up to €20 billion tied to its diesel cheating scandal. NordLB and Metzler reiterated their “buy” ratings on Volkswagen’s stock. Despite the new WLTP rules, VW said it expects new vehicle sales to rise moderately this year, after delivering 10.74 million vehicles to customers in 2017. +++