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+++ We’ve seen some bold claims from car manufacturers about their AUTONOMOUS programs. General Motors wants to deliver a car without pedals or a steering wheel in 2019, while BMW and Ford are targeting 2021 with their self-driving programs. But the push to automation hasn’t been smooth; far from it, in fact. Earlier this year, an Uber test vehicle struck and killed a pedestrian in Tempe, Arizona, garnering the attention of media around the world. Tesla has also had trouble with drivers crashing while Autopilot is engaged, most notably in an accident that killed an Apple software engineer. Adwait Kale, business development and project development manager for EasyMile Asia Pacific, suggested the reaction to the Uber self-driving death will make manufacturers more cautious than they otherwise would’ve been in rolling out self-driving vehicles. “Certain manufacturers are quite aggressive in terms of their strategy”, Kale explained. “Certain brands, like Lexus, are very safety-focused. I strongly believe that everyone, especially after the Volvo / Uber incident, everyone is going to be very, very careful in rolling these out”, he later argued. “They might offer a solution, but there will be a lot of caveats behind it. From my perspective, it would be very hard to believe they’d have a fully-autonomous self-driving car by 2022”, he said, referencing both BMW and Ford’s stated goals for automation. EasyMile is a company specialising in autonomous software for last-mile projects. It’s the supplier for the just-announced shuttle trial in rural South Australia, and is involved in similar projects around the world. As for the race to deliver a fully self-driving car? Kale said it’s more of a question of definitions than anything else, and argued true Level 5 automation could be 8 years away. “The key difference is, we are at level four automation”, he said, later adding, “a self-driving vehicle available for the consumer, which can just run by itself, I think it’s still 7 years in the making. 7 to 8 years. The reason being there are so many different aspects you need to take into consideration: lane-changes, traffic, environmental changes. To be able to cater for that, the technology, our AI, needs to evolve”. +++ 

+++ BMW is working on a more hardcore variant of the M5 worthy of wearing the coveted CS nameplate, according to a recent report. The first-ever M5 CS could arrive in showrooms before the end of 2019. A German website spotted what looks like a CS prototype testing on a race track in Germany. The super-sedan wears a bigger rear spoiler similar to the one fitted to the CS variants of the M3 and the M4; that’s the biggest indication that we’re not looking at a run-of-the-mill M5. The spoiler is made out of carbon fiber in order to keep weight in check. The rest of the car looks unchanged, though the production variant could receive other add-ons. BMW could shave 40 kilos from the M5 by adding more composite parts and sending most of the sound-deadening material back to the parts bin. Chassis and steering modifications will also be part of the transformation. The CS will keep the standard M5’s twin-turbocharged, 4.4-liter V8 engine but it will deliver more power. 640 horsepower is possible, a 23-horsepower bump compared to the Competition Package-equipped M5. The standard M5’s V8 makes 600 horsepower. BMW hasn’t commented on the report. If it’s accurate, we could see the M5 CS make its debut in the next few months and land in showrooms during the first half of 2019. +++

+++ FERRARI ’s sales mix leaned towards its “entry-level” Portofino supercar in the third quarter rather than its high-margin limited-edition models, weighing on the Italian company’s earnings. Adjusted earnings before interest, tax, depreciation and amortization for July-September period rose 4.7 % to €278 million. Sales were roughly flat at €838 million, the automaker said in a statement. The supercar maker, spun off from parent Fiat Chrysler Automobiles, has had a run of record earnings, helped by its higher-margin special edition models and a customizations program. Investors are looking for reassurance that new CEO Louis Camilleri can maintain Ferrari’s strong growth achieved under late boss Sergio Marchionne, who more than doubled the value of the group since he took it public in 2015.Third-quarter results showed strong demand for the Portofino (an 8-cylinder entry level model priced at €244,830 in The Netherlands) and 12-cylinder models such as the 812 Superfast. But the higher shipments (up 11 %) only partially offset lower volumes of the $2 million LaFerrari Aperta hybrid convertible that is finishing its limited series run. “The negative mix is driven to a great part by the success of the Portofino”, Camilleri said. On a conference call with analysts, Camilleri said the negative impact from the model sales mix would be short lived, as the entry-level Portofino helped to attract new customers who “tend to become loyal to the brand, go up the range and eventually buy the special series or limited edition models”. “Today’s results, while not spectacular, should be enough to keep bulls content as Ferrari continues to grow earnings despite higher investments and the benefits of the LaFerrari Aperta wearing off”, Evercore ISI analyst George Galliers said. He said the stock remained a “relative safe haven” given uncertainties related to raw material costs, tariffs, China and pricing faced by other automakers. The third quarter is the second set of results presented by Camilleri, who took over in July after Marchionne’s death. The sudden change at the top jolted shareholders who had expected Marchionne to remain at the helm until 2021. But investors welcomed a mid-term plan presented by Camilleri in September, under which he promised 15 new models, including hybrids, an SUV and special editions in a drive to almost double earnings to between €1.8 billion and €2 billion by 2022. Camilleri said 2 new models would be launched in the first half of next year, but declined to give more details. He said the company’s order book remained “significant” and had expanded across all regions. Ferrari also had “considerable flexibility” to adjust to any potential trade issues, he added. Asked about any potential U.S. tariffs, Camilleri said these would have no material impact. “We would pass that on to our customers and we don’t feel that would have a material impact”, he said. He said China was still a single-digit market as a percentage of overall sales for Ferrari so its exposure was not as heavy as for other luxury product manufacturers. Ferrari kept its 2018 core earnings unchanged, disappointing some investors. Analysts said the move once again showed the new management was taking a more conservative approach than it had under Marchionne. +++ 

+++ FORD made a profit in India for the first time in a decade in the last fiscal year, signaling that a strategy conceived 2 years ago by the U.S. car manufacturer for one of the world’s most competitive car markets is starting to show some success. Under an initiative called the Emerging Market Operating Model (EMOM), Ford cut manufacturing costs by 40 % and is developing more vehicles locally as it moves away from its “One Ford” plan, which restricted its ability to be cost-competitive and agile in a fast-growing market, Ford executives and industry sources told. “EMOM is the North Star for the turnaround at Ford in India”, Anurag Mehrotra, managing director of Ford’s India unit, said in an interview. It’s early days yet, and Ford still accounts for less than 3 % of total passenger vehicle sales in India, where analysts say it’s tough for auto manufacturers to make money. “They are still a long way away till they can call India a successful market”, said Kaushik Madhavan, vice president, mobility at consultant Frost & Sullivan. A key factor for Ford India will be how it leverages its partnership with local automaker Mahindra, he said. As part of EMOM, Ford is deepening ties with Mahindra to build passenger vehicles in India, which could also involve sales in other emerging markets. Over the past 2 decades, Ford has invested $2 billion in India, which has become a major growth area for car manufacturers. Car sales rose 8 % to 3.3 million last year and India is set to become the world’s third-largest market by 2020 with sales of over 5 million cars, according to consultant IHS Markit. But global car companies have mostly struggled to woo India’s cost-conscious buyers and are now under pressure from investors to focus on profitable markets and technologies like electric and autonomous vehicles. The success of India’s top carmaker Maruti Suzuki which sells 1 in every 2 cars in the country, has been built on having a wide range of products, low prices, a vast dealership network and an autonomous local team that can quickly react to market changes. Its nearest competitor is Hyundai with a 17 % market share, which has had better success than some of its American and European rivals like General Motors, Fiat Chrysler and Volkswagen. Ford is at a considerable distance from the leaders in the market, but sold more than 90,000 vehicles in the last fiscal year and exported twice the number. 2 years ago, Ford’s annual sales in India were less than 80,000 and it exported about 110,000 vehicles, industry data showed. Western carmakers have not come close to Suzuki and Hyundai because they have failed to tweak their global products and strategy to suit a frugal market like India, and their local teams often lack autonomy, industry sources say. Ford’s new strategy gives greater autonomy to the local management team, and will contribute to a global restructuring plan to save $11 billion over the next few years by cutting costs, forming partnerships and investing in new technologies. The strategy already seems to be giving Ford a cautious beginning to better sales in India. Ford India made a profit of 5.26 billion rupees ($72 million) in the fiscal year that ended on March 31 compared with a loss of 5.21 billion rupees a year ago, according to a regulatory filing. In contrast, General Motors decided to cut its losses and stopped selling cars in India last year while Volkswagen took a backseat, handing over strategy for the country to its sister-company Skoda. Ford’s top Asia and India executives came up with EMOM during a week-long strategy meeting in Shanghai in late 2016 and picked India as a testbed. The strategy has not formally been taken to other markets yet. “We realized we need to have a sustainable and profitable business in India”, said Mehrotra, adding that Ford looked at its brand, products, cost and scale to improve efficiency. For instance, in its Figo hatchback that sells for as little as 600,000 rupees ($8,200), Ford used imported floormats that cost more than locally sourced ones. During a review under EMOM it learned that buyers don’t really want imported mats, he said. It reduced logistics costs by 20 % by switching to rail freight instead of roads, and increased the use of locally sourced components in its cars to more than 85 % from about 60-70 %. Ford officials also said the company has developed a low-cost dealership format which is smaller in size and has fewer cars on display. It costs half of the 50-60 million rupees Ford usually spends on things like showroom inventory, spare parts and the sales force when setting up a dealership. In the last 18 months it has opened more than 100 such dealerships, especially in smaller towns and cities to further its reach, Mehrotra said. It would earlier cost Ford about 3 times the amount a domestic carmaker would spend on a product upgrade because Ford India needs to pay a fee, or royalty, to the parent, said a source aware of the changes. Under EMOM, Ford India will develop more products in-house, making it more responsive to market changes and reducing the royalty fee, which will boost profits, the source said. “One Ford doesn’t work anymore”, said the source, alluding to a global product strategy devised by former CEO Alan Mulally. “It will be there in spirit, but it will not be implemented the same way as it was 2 years ago”. Ford last year formed an alliance with SUV and truck-maker Mahindra to co-develop vehicles, including electric cars, share powertrains and work on new technologies. The carmaker made a similar strategy shift in China, giving up on its “One Ford” model and working with local, low-cost carmakers to come up with more competitive mainstream cars and boost sales. Ford and Mahindra are co-developing 2 platforms and the first car on it is likely be launched in 2020, 2 sources said, adding that Ford is using Mahindra as a benchmark to bring down supplier costs in the region. Mahindra is also the only commercial electric vehicle manufacturer in India, and Ford would benefit from getting access to its low-cost technology to build electric cars. Mahindra is already working on an electric prototype of Ford’s compact sedan Aspire, the sources said. “We’re certainly concentrating on India right now, but there’s all kinds of opportunity beyond India together should we both want to explore that”, Joe Hinrichs, Ford’s president of global operations, told Reuters in an interview in September. +++

+++ Future JAGUAR LAND ROVER (JLR) models will be able to tell if occupants are suffering from car sickness, and adjust their settings to combat this common complaint, said to be suffered by 1 in 5 people. JLR conducted research into motion sickness and claims it has identified techniques for reducing in-car nausea by at least 60 %. The company has created an algorithm that generates a “wellness score” for each passenger in the car, which can be used to automatically personalise the vehicle’s driving and cabin settings to prevent occupants from feeling unwell. When carrying out the research, JLR collected 24,000 kilometres of motion sickness data and tested the effects of performing a task, such as checking emails, while inside a moving car. This resulted in the creation of a baseline driving style for autonomous vehicles to work towards, minimising the need for steering corrections and thus reducing the risk of motion sickness. JLR wellness technology researcher Spencer Salter explained that in “an autonomous future where occupants will have more time to either work, read or relax on longer journeys, it’s important we develop vehicles that can adapt to reduce the effects of motion sickness”. Other JLR models already on the road, such as the E-Pace, are already fitted with more basic systems for preventing car sickness, including seating configurations for passengers to find a position that raises the infotainment screen relative to eye level and adaptive dynamics that remove low frequency motion from the road. Motion sickness is usually caused as a result of the eyes observing information inconsistent with that received by the inner ear, skin or other senses. +++ 

+++ The as-yet-unnamed KIA Ceed crossover has been spotted testing for the first time ahead of an expected debut at next year’s Geneva motor show. Although heavily disguised, the prototype reveals a number of stylistic similarities to its hatchback counterpart. The main differences come in the form of larger diameter wheels and tyres, raised suspension and what appears to be a bulkier tailgate design beneath the usual camouflage. Unique front and rear bumpers and prominent roof rails also feature. Kia’s Ford Focus Active rival will sit between the smaller Stonic and the full-size Sportage SUV, aiming to help capitalise on the growing SUV and crossover segments. Aside from the differences in design, the Ceed and its crossover offshoot will share the same fundamental underpinnings and powertrains. As such, engine options will include Kia’s turbocharged 120 hp 3-cylinder 1.0-litre petrol engine and the 115 hp 1.6-litre turbocharged diesel. The utilitarian design elements are unlikely to translate into a 4-wheeldrive system, however, as the larger, 4-wheeldrive Sportage’s drivetrains are not currently offered in the Ceed. Kia could offer a drive mode selector in the Ceed crossover, which would allow drivers to choose an appropriate drive set-up for adverse weather or challenging terrain. The unreleased SUV will be the latest model to join Kia’s expanded Ceed range, alongside the existing hatchback, Sportswagon and the upcoming Proceed shooting brake. +++

+++ MAZDA has reported a loss of ¥2.2 billion ($27 million) for the fiscal second quarter ended September 30. Net income dropped 86 % to ¥3.8 billion ($47 million) during the the same period, with revenue holding steady at ¥856 billion ($10 billion). Worldwide retail sales fell by 3.0 % to 392,000 units, with losses recorded in North America, China and Japan. Mazda attributes the drop in sales to a production suspension triggered by flooding near its headquarters in Hiroshima. The suspension meant Mazda lost production of 44,000 complete vehicles, and 23,000 kits destined for overseas production. Increased investment in its US retail network, a focus of new CEO Akira Marumoto, took a financial toll to the tune of ¥5 billion ($62 million). This investment is largely going towards an upgrade of Mazda’s American dealer network, along with preparation for a new plant in Alabama, to be shared with Toyota. Other contributors to the loss include the appreciation of the Yen against the US dollar, increased costs related to compliance with European environmental regulations and recall-related costs. +++

+++ SUBARU tumbled into the red in the latest quarter amid spiraling costs for a series of recalls in Japan and other issues stemming from an ongoing spate of faulty vehicle inspections. The automaker reported an operating loss of 2.5 billion yen ($22 million) in the fiscal second quarter ended Sept. 30, the company said in its quarterly earnings report. That erased an operating profit of 92.8 billion yen ($816.3 million) in the same quarter a year earlier. Subaru reported a net loss of 1.2 billion yen ($10.6 million) in the July-September period. The year before, Subaru posted net income of 2.7 billion yen ($23.8 million). Global revenue declined 2.1 % to 777.6 billion yen ($6.84 billion) in the 3 months on a 6 % slide in global wholesale volume to 244,000 vehicles. Subaru warned of the downturn. In late October, the automaker halved its operating profit forecast for the fiscal first half, citing higher quality-related costs related to inspection problems. Subaru’s quality woes stretch back to October 2017, when the company disclosed that uncertified workers had for decades carried out tests of new cars for the domestic market. The scandal deepened this year, when Subaru admitted final inspectors at the company’s Japanese plants had also faked fuel economy and emissions data in some cases. Those problems led to reprimands from the country’s transportation ministry and the recall of about 430,000 vehicles in Japan, including the Toyota GT86 manufactured by Subaru. Subaru President Tomomi Nakamura said the faulty inspections went on longer than originally determined. The problem actually extended to vehicles assembled as recently as last month. As a result, Subaru said it would recall an additional 100,000 vehicles for reinspection. That brings the total number of vehicles recalled for improper inspection to 530,000 units. The faulty inspections did not affect export models. But Subaru has said it needs to “reform its corporate culture from the ground up” to restore lost trust. Nakamura said this should mark the end of its inspection problems. Subaru will book a special charge of 6.5 billion yen ($57.2 million) in the current fiscal year for the inspection problems. And additional quality-related expenses are on the horizon. Just this month, Subaru initiated a separate global recall of 411,000 vehicles to fix a value spring problem that can cause engines to stall. That call back reportedly affects vehicles made between January 2012 and October 2013, including the Impreza, XV and BRZ. The recall also covers some Toyota GT86 vehicles. Subaru said the valve spring recalls would cost 55 billion yen ($483.8 million). Subaru said fixing the valve spring requires the engine to be removed from cars. The repair work can take up to 13 hours per vehicle, the Nikkan Jidosha newspaper reported. The most financial recent results were also hit by higher fixed costs, increased incentives and falling sales, Corporate Executive Vice President Toshiaki Okada said while announcing earnings. Unfavorable foreign exchange rates also undercut earnings. Subaru is also being pressured by intensifying competition in the company’s mainstay crossover segment as other brands rush into the red-hot arena with rival offerings. In North America, Subaru’s biggest and most important market, regional operating profit increased 4.4 % to 21.5 billion yen ($189.1 million) in the quarter ended Sept. 30. The increase came even as Subaru’s U.S. wholesale volume declined 4.3 % to 152,400 vehicles in the July-September period. Subaru has been dialing back wholesale shipments, which are the basis of parent company profits, partly as it ramps up production of new products. Subaru’s retail sales in the U.S. actually increased in the July-September period, and the brand is still forecasting its 10th straight year of record retail sales in the U.S. Wholesale volume in Canada increased 5.2 % to 16,100 units. European wholesale shipments slid 44 % to 5,300 vehicles in the quarter. In calendar year 2017, Subaru’s U.S. car sales marched ahead 8.5 %. But more profitable light trucks notched only a 4.2 % increase. Subaru has partly corrected course this year. Its light-truck volume expanded 11 % through October, but cars were down 12 %. Subaru is banking on margins to improve with this year’s U.S. introduction of the Ascent large-size crossover and the redesigned 5th generation Forester. Subaru cut its earnings outlook for the current fiscal year ending March 31, 2019. It now expects operating profit to plunge 42 % to 220 billion yen ($1.94 billion), a sharper drop that its earlier forecast. Net income is seen falling 24 percent to 167 billion yen ($1.47 billion), also a more severe downturn than predicted earlier. Subaru expects global wholesale volume to decline 2.4 % to 1.04 million vehicles. Nakamura, who took office in June, has begun a fresh 5-year business plan to boost U.S. market share, stoke a rapid increase in global sales, shore up flagging profitability and invest more in next-generation technologies. Under the new business blueprint, Nakamura aims to lift global sales 18 % to 1.3 million vehicles in the fiscal year ending March 31, 2026, from the 1.3 million units it expects had originally expected to sell in the current fiscal year. In North America, the all-wheel-drive niche player had targeted a 20 % sales increase to 920,000 vehicles. Subaru wants to lift its U.S. market share to 5 % through strengthening the retail network and increasing penetration in sunbelt states where it has traditionally been weaker. Through October, Subaru’s U.S. market share stood at 3.9 %. +++ 

+++ In the UNITED KINGDOM , new car sales declined 2.9 % in October compared to the same month last year, with model changes and testing backlogs as a result of WLTP (Worldwide Harmonised Light Vehicle Testing Procedure) causing supply shortages for manufacturers. A total of 153,599 new cars found homes in October, with drastic changes to the Government’s Plug-in Car Grant causing a rush to market, with a 30.7 % increase in the sale of AFVs (alternatively-fuelled vehicles) and an 86.9 %, equivalent to 584 units, in the number of new EVs (electric vehicles) registered. The figures from the SMMT (Society of Motor Manufacturers and Traders) also showed sales of petrol cars rose 7.1 %, but this was contrasted by a 21.3 % fall in the number of new diesels registered thanks to a lack of clarity over the Government’s policy on the fuel type. Meanwhile, private sales were down 1.0 %, while fleet sector registrations fell by 5.2 %. Some brands did better than others, with year-on-year sales increases for Jaguar (+81.94 %), Mini (+62.72 %) and Mazda (+42.96 %), while there were decreases for DS (-61.04 %), Audi (-52.65 %) and Alfa Romeo (-22.53 %). The Ford Fiesta remains the top seller in the UK, selling 84,890 units year-to-date and 5,564 in October. The Volkswagen Golf is the second-best-seller in October, followed by the Mercedes A-Class and Volkswagen Tiguan. +++ 

+++ Herbert Diess, CEO of the VOLKSWAGEN Group, has provided a few more details about the ongoing partnership talks between the German automaker and Ford. In an interview, Diess said Ford may supply Volkswagen with a successor to the Amarok. Should the 2 companies come to an arrangement regarding their global pick-ups, it’s not known when the Amarok will shift onto the Ranger platform. The Amarok went on sale around the world in 2010, while the current T6 Ranger started trundling down the production line in 2011. The Ranger had a facelift in 2015, and was recently re-engineered for the North American market, with sales slated to begin there in 2019. The Volkswagen CEO stated the main focus of discussions so far has been the “small commercial vehicles business in Europe”, where the two automakers believe there are “huge synergies” to be had. “In that segment we are both relatively small in size against our peers, so what we’re talking about is sharing a few platforms and manufacturing sites there”, Diess said. Diess went on to praise the long history of collaboration between Ford and Volkswagen, especially their previous joint ventures in Europe and South America. As has been previously reported, Diess said Volkswagen is open to licensing its upcoming fully electric MEB platform with other car makers, including Ford, to allow for increased economies of scale. Volkswagen and Ford signed a memorandum of understanding in June, enabling the automakers to investigate joint development of commercial vehicle platforms and models. Late last month Ford’s chief financial officer stated publicly “collaboration isn’t being limited in any way whatsoever, whether it’s different types of technology, product segments or geography”, thereby opening up the possibility the 2car makers could work together on passenger vehicles too. +++

+++ VOLVO has confirmed an agreement with Chinese internet services firm Baidu that will result in the 2 firms jointly developing electric and autonomous vehicles. The partnership is part of Volvo’s aspirations to become “the supplier of choice for mobility companies globally”. It follows a deal to supply ride-sharing firm Uber with 24,000 XC90s adapted to be fitted with Uber’s self-driving technology. The joint development of “customised autonomous driving cars” will allow Volvo and Baidu to cater to the ever-growing list of Chinese mobility firms looking to innovate in the world’s largest car market. The pair will pool their resources, with Baidu offering up its already heavily developed autonomous driving platform, dubbed Apollo, and Volvo proving access to its own expertise and technology, including its latest modular vehicle platforms and soon-to-be-launched electric powertrains. Existing partners of the Apollo platform include Daimler, Ford, Honda and Hyundai. Baidu claims Volvo’s well-publicised safety credentials were a major factor in choosing it as a partner. Volvo also sees Baidu’s influential position in the tech sector as crucial, because the Swedish company “seeks to capitalise on and lead the disruption currently under way in the industry”. Volvo cites a market research forecast that suggests up to 14.5 million autonomous cars will be sold in China by 2040. It’s not clear whether the deal means Volvo will reduce its focus on other markets. +++

+++ The Subaru WRX STI TC380, the latest in a long line of limited edition WRX models, has gone on sale in Japan. According to the Fuji Subaru car dealership, the TC380 was developed under the supervision of Toshihiro Arai, a former driver with the Subaru World Rally Team. The TC380 is based on the Japanese market WRX STI, so it presumably features a 2.0-litre turbocharged flat-four engine. Although it has yet to be confirmed, the car’s name suggests it will have around 380 hp. Key modifications include a number of HKS components, including the tuner’s GT III RS Sport turbine kit, Super Turbo muffler, and metal catalyser. Other changes include a new front suspension brace and RQA air filter made by Arai Motorsports, as well as specially designed Recaro seats and a carbon-fibre boot lip spoiler. The car is available to order in Japan. Prices start from ¥4,965,840 ($62,255), including taxes, with production limited to 50 units. Like other recent limited edition WRX models, such as the WRX STI Type RA-R, we expect the TC380 will be a Japan-exclusive model. +++

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