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+++ Talk of ASTON MARTIN returning to inline-6 engines dates back all the way to 2011, and despite official denials the rumors persist. It will potentially feature hybrid technology and eventually replace the current V8 engine the company sources from Mercedes-AMG. Aston Martin CEO Andy Palmer in September revealed that the company planned a turbocharged V6 with hybrid technology for the code-named 003 hypercar due in 2021. He said the engine would be related to the current 5.2-liter twin-turbocharged V12 Aston Martin offers. It’s unlikely two 6-cylinder engines, an inline-6 and a V-6, are being developed at Aston Martin, so perhaps something’s been lost in the rumors. Downsizing to a smaller engine is said to be seen as necessary for Aston Martin in order to meet stricter emissions regulations that will come into play should the automaker cross the 10,000-unit annual sales threshold. It’s a problem that also afflicts Ferrari which is expected to cross the threshold with the arrival of the Purosangue SUV early next decade, which is why the Italian firm also plans a V6. Aston Martin has offered cars with 6-cylinder engines in the past. The last was the DB7 which offered a 3.2-liter inline-6. Aston Martin dropped the option in 1998. +++

+++ AUDI must brace for big challenges in 2019 after turmoil in 2018 surrounding the diesel-emissions scandal culminated in the arrest of long-time CEO Rupert Stadler. Audi needs readjustments including polishing the brand’s image, enforcing a culture change and strengthening its largest market, China, the new CEO Bram Schot told workers at a staff meeting in Neckarsulm, Germany. “We must change things together – now”, Schot said. He regards the next year as decisive and told employees that “we need all of you to exploit our potential and make sure the transformation works out”. Sustaining Audi’s financial muscle is critical for the parent company’s ability to stem some €44 billion in investments to develop electric vehicles and boost digital offerings like ride hailing. Stadler, who led Audi for a decade, was released on bail in late-October. Investigations by German prosecutors into the use of diesel engine software to bypass emission tests are ongoing. Schot had been named Audi sales chief last year as part of a management reshuffle, which had spared Stadler. The company replaced more than half of its 7 management board members at the time. Schot joined from VW’s light commercial vehicle division and previously worked at Daimler. Audi’s global deliveries slumped 17 % last month as the brand lost further ground to the world’s 2 bestselling premium automakers, Mercedes-Benz and BMW. A fine imposed by German prosecutors and other diesel-related costs pushed Audi’s operating profit margin in the first 9 months to 6.5 % of revenue, well below the company’s target range of between 8 % and 10 %. Still, net cash flow grew 22 % to €3.12 billion euros. +++ 

+++ Diesel models from BMW were awarded top marks for their nitrogen oxide readings in the real-world road test conducted in Germany. The following models scored maximum points and were graded as outstanding: the 520d Touring, the 218d Active Tourer Steptronic and the X1 sDrive 18d Steptronic. The EcoTest organised by a German automobile association is a rigorous testing procedure that subjects vehicles to a thorough examination, including measuring their pollutant emissions in real-world road driving. BMW models have performed comparatively well in nitrogen oxide emission tests in the past, too. This was the case, for example, in the real-world road test conducted by a German motoring magazine auto and the many follow-up tests carried out by authorities in countries including France, Korea and Japan. Here, the respective BMW models obtained some of the best results. The test results are further proof that today’s BMW diesel models with state-of-the-art technology produce remarkably low emissions. +++ 

+++ BMW and and Porsche unveiled a CHARGING station that can jolt electric vehicles with enough power to drive 100 kilometers in less than 3 minutes, pushing ahead of Tesla in the race to make battery-powered cars more convenient. The ultra-fast prototype charger has capacity of 450 kW, more than triple Tesla’s Superchargers. Test vehicles developed to take that much power were recharged to 80 % capacity in 15 minutes. Tesla’s stations need about 30 minutes for a similar charge. Carmakers, developing a wave of electric models to keep up with tightening carbon emissions regulation, are under pressure to overcome consumer turnoffs like slow charging times and patchy infrastructure. With demand remaining tepid, BMW, Daimler and Porsche parent Volkswagen are also building a fast-charging network along major highways in Europe. The super-powered charging point was developed by a consortium comprising the 2 German car brands, engineering giant Siemens and charging specialists Allego and Phoenix Contact E-Mobility. The station in Bavaria is free to use for existing models, BMW said. One drawback: the charger offers more power than current models can take on. The BMW i3 limits its power intake to 50 kilowatts, while the battery-powered iX3 will triple that to 150 kilowatts when it rolls out in 2020. For the test vehicles to withstand the full electricity surge, Porsche used a cooling system that keeps battery cells at a steady temperature, while the charging cables were cooled too. Siemens provided a higher electric voltage energy supply to test the limits of the power jolt. +++ 

+++ CHINA will temporarily suspend additional 25 % tariffs on U.S.-made vehicles and auto parts starting Jan. 1, 2019, the finance ministry said, following a truce in a trade war between the world’s 2 largest economies. The Ministry of Finance, in a statement on its website, also said it hopes China and the United States can speed up negotiations to remove all additional tariffs on each other’s goods as it reduces tariffs from 40 % to the 15 % level that was levied before the current trade fight began. The suspension will last for 3 months. “China just announced that their economy is growing much slower than anticipated because of our Trade War with them. They have just suspended U.S. Tariff Hikes”, Trump said in a tweet. “U.S. is doing very well. China wants to make a big and very comprehensive deal. It could happen, and rather soon!” Shortly after the Chinese announcement, Tesla said it had cut prices on its Model S and Model X vehicles in China. “This is a good signal that China and the United States are on track to solve the trade war”, said Wang Cun, director of the China Automobile Dealers Association’s import committee. “Car makers might be ordering a large number of imported cars now”. Joe Hinrichs, president of Ford’s global operations, also welcomed Beijing’s announcement, noting that the U.S. automaker exported nearly 50,000 U.S.-built vehicles to China in 2017. “We applaud both governments for working together constructively to reduce trade barriers and open markets”, Hinrichs said. In July, China hiked its tariffs on U.S. autos and parts after the United States raised its tariffs on Chinese vehicles and parts to 27.5 %. Automakers do not expect the United States to immediately cut its higher tariffs on Chinese imports in response to China’s move. Auto exports between the 2 countries are relatively small. China exported 53,300 vehicles to the U.S. market last year and imported 280,208 U.S. manufactured vehicles, according to data from the China Automotive Technology and Research Center (CATARC), a government-affiliated think-tank. In contrast, in the first 11 months of this year, China produced 25.3 million cars, down 2.6 % from the same period last year, industry figures showed. Wang said car makers in China that imported cars from the United States had seen a 30 % decline in volume in the first 10 months of 2018, but the tariff cut would bring imports back to previous levels. BMW said it welcomes the temporary reduction of tariffs on vehicles imported to China from the United States, adding it is in talks with partners in China how to respond. The financial impact by fees in China for cars imported from the United States is expected to amount to almost €300 million for the BMW Group in 2018, the company has said. The latest announcement on the planned tariff suspension followed China’s first major purchase of U.S. soybeans since Trump and his Chinese counterpart Xi Jinping’s landmark talks on trade in Argentina on Dec. 1. The tariff suspension and soybean purchase are early signs that the bitter trade war between China and the United States may be starting to thaw. In Argentina, Trump and Xi agreed to a truce that delayed the planned Jan. 1 U.S. increase of tariffs on $200 billion worth of Chinese goods while they negotiate a trade deal. China’s tariff cut was communicated earlier this week during a phone call between Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin, a Trump administration official said. China will now suspend 25 % tariffs on 144 U.S. vehicle and auto part items and 5 % tariffs on 67 auto items between Jan. 1 and March 31, the Chinese finance ministry said. +++ 

+++ Audi’s first electric crossover, the E-TRON , has just been launched, but the company’s performance arm, Audi Sport, is hard at work on a faster, performance-oriented model that could arrive as soon as late next year. The original E-tron Quattro concept showed off a 3-motor electric powertrain back in 2015, and it’s likely Audi Sport engineers, the folks who bring us the RS and R8 models, are the ones adapting the layout to a rear-wheel-biased all-wheel-drive system for a hotter e-Tron in about year. Audi could call the model an e-Tron S, which would fall in line with its performance nomenclature used across its lineup. In the concept vehicle, the e-Tron’s 3-motor system featured 1 motor up front and 2 for the rear axle. Total output was 500 horsepower and a whopping 800 Nm of torque. In comparison, the 2019 e-tron makes 360 hp combined, but a boost function will increase power to 408 hp for 8 seconds at a time. Audi claimed performance estimates of 0-100 km/h in 4.6 seconds and a governed top speed of 210 km/h for its concept. The regular production e-Tron will scoot to 100 km/h in 5.7 seconds, which is quick but much slower than the Tesla Model X. The 3-motor setup should provide incredibly versatile torque vectoring, too. Audi Sport is also developing its electric car performance muscles with the upcoming e-tron GT sedan, which is due in 2021 but should like much like what we recently saw at the LA Auto Show. Audi will present its plans for the future of in-car entertainment at the 2019 Consumer Electronics Show (CES), showcasing its latest infotainment system alongside a new “mobile movie theatre”. Both systems will be displayed in the new e-Tron. The German car maker states that in the future, due to the rise of autonomous vehicles, drivers will have more “free” time behind the wheel. So, to prevent boredom, Audi has developed a movie theatre style system that allows drivers and occupants to enjoy films and television programmes provided by mobile streaming services. For now, the the technology is only functional when the vehicle is stationary. However, Audi will also unveil its next generation infotainment system format, which will be available for use when the car is in motion. Details on exactly how the system will look and operate are scarce, but we expect the latest gesture, voice and touch commands, combined with updated display screen graphics and a new stereo to feature. +++ 

+++ President Donald Trump said GENERAL MOTORS ’ decision to shift much of its focus to electric vehicles will not succeed, and he asserted a new trade deal will make it harder for the company to move work to other countries. GM last year said it planned to launch 20 new electric vehicles by 2023 as it faces rising regulatory requirements for zero-emission vehicles in China and elsewhere. The largest U.S. automaker has come under enormous criticism in Washington after it announced on Nov. 26 plans to close four plants in the United States and cut up to 15,000 jobs in North America. Trump questioned GM CEO Mary Barra’s business strategy in an interview with Fox News. “They’ve changed the whole model of General Motors. They’ve gone to all-electric. All-electric is not going to work. It’s wonderful to have it as a percentage of your cars, but going into this model that she’s doing I think is a mistake”, Trump said. Barra was on Capitol Hill for 2 days of meetings last week to discuss the company’s decision with angry lawmakers from states where plants are closing. “To tell me a couple weeks before Christmas that’s she going to close in Ohio and Michigan is not acceptable to me”, Trump said. Trump has repeatedly said GM should reverse a decision to close an assembly plant in northeast Ohio, an area potentially crucial in the 2020 presidential election. “Ohio is going to replace those jobs in like 2 minutes”, Trump said. “She’s either going to open fast or somebody else is going to go in”. Asked to respond, GM said it timed its job cut announcement so employees could accept open jobs at other plants. “We continue to produce great vehicles today for our customers while taking steps toward our vision of a world with zero crashes, zero emissions and zero congestion”, GM said. Trump suggested that a new free trade deal with Mexico and Canada makes it “very uncomfortable” for GM to build cars outside the United States. “I don’t like that General Motors does that. General Motors is not going to be treated well”, he said without elaborating. Trump signed a new trade deal with Mexico and Canada on Nov. 30 to replace the North American Free Trade Agreement, but that deal has not been approved by the U.S. Congress. The deal boosts the North American content requirements for vehicles to be traded tariff free and requires a significant percentage of vehicles to be made by workers earning at least $16 an hour. Some Democrats argue the trade deal may need changes to deter GM and other automakers from continuing significant production in Mexico. GM is not backing off its plans to build the new Chevrolet Blazer SUV in Mexico. +++ 

+++ HYUNDAI has shaken up its executive ranks and appointed its first foreign head of research and development, raising expectations of a smooth transition of power at the family-run business empire. The reshuffle is part of preparations for generational change in the executive ranks at South Korea’s second-largest family-owned business empire. Group President Albert Biermann, a German former BMW executive, was named head of research and development, replacing longtime executives Yang Woong-chul and Kwon Moon-sik. The move was seen as a significant step to bring in fresh ideas at the Korean-dominated group. In all, 17 top executives were reassigned across the group, including at Hyundai and Kia, which together form the 5th-biggest automaker in the world. The move follows the promotion of Euisun Chung in September to Hyundai’s executive vice chairman, moving him closer to succeeding his 80-year-old father, Mong-Koo Chung, as group chairman. It comes as Hyundai battles to reverse falling profits as a result of U.S. recall costs and weak sales in the U.S. and Chinese markets. While the announcement by Hyundai of a major investment in fuel cell production also lifted sentiment, analysts said most of it could be attributed to the leadership changes. In particular, it signaled that the junior Chung was making progress with his plans to restructure the sprawling group after a previous plan was scrapped due to opposition from U.S. hedge fund Elliott. “The reshuffle signals that the junior Chung is tightening his grip on the conglomerate, a move which raises investors’ hopes for change”, said Kim Joon-sung, an analyst at Meritz Securities. In a sign that Chairman Chung’s grip may be weakening, one of his closest lieutenants, Hyundai vice chairman Kim Yong-hwan, was reassigned away from the core automaker and named vice chairman of steelmaking affiliate Hyundai Steel. A person familiar with the matter told that the reshuffle was “part of a generational change the junior Chung is pushing for”. Hyundai chief innovation officer Youngcho Chi was promoted to president, as the automaker tries to catch up with its rivals in future technologies such as car-sharing. Biermann, a former BMW performance vehicle development official, is one of several foreign executives that heir apparent Chung, 48, has brought into the traditionally Korean-dominated group. In October, Thomas Schemera, also a former BMW executive, was appointed to lead product planning for autonomous cars, connected and electrified vehicles, while Luc Donckerwolke, a former Bentley design chief, was appointed to oversee design at Hyundai and Kia. The group has previously appointed new senior executives at its overseas operations, including China and the United States. +++ 

+++ Global sales of INFINITI rose 6 % in November from a year earlier, as the premium brand weathered a deepening market slowdown in China to post strong growth. Infiniti said total volume set a November record of 22,126 vehicles. Of that, it sold 14,086 cars in the United States, up 8 % on year, and 5,009 cars in China, a rise of 9 %. That took its year-to-date volume to 207,188 vehicles, down 6 % from the same period a year earlier. The brand attributed that decline to the slow pace of a production increase of its redesigned QX50. “Now that 2 factories producing the new QX50 are up and running, we have a record November”, a Hong Kong-based spokesman told, referring to locations in the U.S. and China. The monthly figure beat Infiniti’s previous November record set last year by 6.4 %. +++ 

+++ KIA plans to expand the Ceed family to include 5 models, with a new XCeed crossover on the cards. It will take on the Ford Focus Active, Volkswagen T-Roc and Mini Countryman in the ever-expanding compact crossover market, and will sit underneath the Sportage in the firm’s line-up. I expect the new XCeed will be released at the 2019 Geneva Motor Show. It should be the final member of the Ceed family, following the release of a more practical Ceed sportswagon and a stylish shooting brake Proceed. When quizzed about the idea of a Ceed crossover earlier this year at the reveal of the firm’s hatchback, Artur Martins, Kia’s vice president of marketing, told: “This is something we are putting on the table”. Martins identified the Ceed’s market (the C-segment) as an area for potential growth for Kia. He said: “We over perform in D-segment and SUVs; we have around 7 % marketshare. We have a chance to increase volume but we have to change the recipe, we have to come with a different proposition, something more relevant”. +++ 

+++ LOS ANGELES 2018 was the auto show that shocked, for good and bad reasons. Inside and outside the exhibition venue in downtown LA, the unexpected happened. And kept on happening. Let’s start with the shockingly bad. The decision by General Motors, the US’s troubled, old-school vehicle maker, to announce 14,000 job losses plus at least 5 plant closures during the week of the show was appallingly timed. On the one side, the LA show was proudly trying to do its bit to showcase America, Americans and the American auto business. On the other, GM was ripping much of the heart, soul and hope out of the country, its people and its industry. Caught in the middle were blameless victims, those 14,000 tearful and fearful, cruelly dumped employees who’ve just had to tell their families that Christmas and pretty much everything else is cancelled. “Unallocated” is the haunting word being used to describe these unfortunate souls, their gone-forever positions, plus the now-redundant factories that were, until a few days ago, their second homes. Meanwhile, recent and eeringly hollow broadcasts from President Trump declaring that American motor industry jobs are “all coming back” to America and Americans can, and should, be categorised as fake news. But his threat to cut “all” subsidies to GM are for real, as are the chances that The General will flirt with bankruptcy again, because its brand and products are simply too weak globally. Ironically, the still-young Korean car industry that was, in effect, largely owned by GM not so long ago was rampant in LA, unveiling all-new and intriguing little cars like the Kia Soul, while picking up major awards for the Genesis G70, which is a serious alternative to BMW because it was engineered by former BMW folk. Not so straightforward is whether the important, next-generation Mazda 3 looks as good as the version it’s about to replace. On stage in LA I feared it didn’t, but it must be seen on the road before its presence and beauty (or maybe not) can be properly assessed. The star of the LA show was the new Porsche 911. A shame, then, that the company chose to reveal it in such a small room that security guards were forced to close the doors in the faces of many who’d rocked up to witness the historic occasion. Conversely, Volvo’s car-free LA stand attracted hardly anyone. Which was no surprise. A vehicle manufacturer with a stand at a motor show that contains no vehicles makes about as much sense as a restaurant without food. In LA, some established auto industry firms were obsessed with being cool, promoting untried/untested tech, turning their backs on conventional cars and drivers. A big mistake. Customers buying, leasing, owning and driving petrol and diesel personal mobility machines are here to stay, for decades yet. These are the very consumers who’ve allowed most mainstream makers, GM included, to make billions in annual profits. Such loyal, high-spending motorists deserve more recognition, thanks, respect and reassurance. +++ 

+++ Gasoline engines still have a place in our future according to a company called MICRO WAVE IGNITION (MWI). This German startup gets its name directly from the technology it’s attempting to pioneer. Instead of igniting fuel using traditional spark plugs, these guys want to use pulsed microwaves for ignition. This process burns fuel at a lower temperature, which MWI says can cut consumption of gasoline by up to 30 %, and emissions by as much as 80 %. It’s natural to be skeptical of new-fangled ideas like this, but the company has one backer in particular we can take seriously: ex-Porsche CEO Wendelin Wiedeking. He led Porsche from 1993 all the way to 2009, bringing it into the world of SUVs on his watch. For that, he’s received some of the credit for making the company as profitable as it is today. Wiedeking said this about the technology, “I am convinced that MWI is a disruptive innovation with a huge market potential”. Wiedeking, along with a few other investors, own approximately 20 % of MWI. The kind of numbers MWI is promising from its technology are certainly enough to raise eyebrows. Cutting emissions by 80 % would breathe new life into the traditional combustion engine, possibly even slowing down the push toward electrification. MWI also claims the tech can be integrated into existing engine architecture, rather than requiring clean-sheet redesigns. On the surface, it seems like an interesting possibility for the future of gas and diesel engines. Mazda still seems engrossed in developing gasoline engines further with its compression ignition Skyactiv-X engine debuting in the new Mazda 3. Nearly everybody still has a foot firmly planted in the arena of combustion engines. It’ll just be a waiting game to see if anybody decides MWI’s tech is ready for a production car, or if a manufacturer copies it with their own version. +++ 

+++ NISSAN investigators are examining former Chairman Carlos Ghosn’s use of an internal ‘CEO Reserve’ fund and the role of subsidiaries in the Netherlands and other countries as part of a probe into alleged financial misconduct, 2 people with knowledge of the inquiry told. Ghosn and close associates spent money from a fund that some insiders dubbed ‘the CEO Reserve’ to help pay for residences used by the Ghosn family as well as for other personal expenses, the people said. Investigators are separately checking whether capital from some subsidiaries was also used to pay for Ghosn family residences and whether such payments were split into small chunks to escape checks by internal financial staff and auditors, they added. The 2 sources with knowledge of the inquiry declined to be identified as Nissan has not publicly disclosed details of the probe. Nissan spokesman Nick Maxfield said the Japanese automaker was still looking into the nature and extent of what it calls the misconduct by Ghosn. “We are unable to comment on the specifics of the ongoing investigation at this time”, he said. Ghosn has denied wrongdoing, according to media reports. Nissan fired Ghosn as chairman on Nov. 26, a week after he was arrested by Japanese prosecutors, accused of conspiring to understate his compensation by about half of the $88 million awarded over 5 years from 2010. He was indicted this week and remains in detention. Until recently one of the auto industry’s most celebrated executives, Ghosn was seen as the anchor of Nissan’s alliance with Renault and Mitsubishi. He has since been fired as chairman of Mitsubishi although Renault has stopped short of dismissing him from its helm. One focus of the probe is whether payments for the multi-million dollar residences were split by associates close to Ghosn into one million dollar chunks and then processed through a Nissan unit in the Netherlands called Zi-A Capital BV and its subsidiaries, which had been set up to invest in tech startups, one of the people said. Done that way, the transactions may have escaped the attention of finance people within Nissan, Nissan’s auditors and employees affiliated with the Nissan-Renault alliance, the people said. “Why would internal financial staff go in and check 1-million-dollar transactions in a subsidiary 5 or 6 levels or layers down and away from the global headquarters? They wouldn’t do that”, one individual familiar with the inquiry said. “Especially when amounts are less than 1 million dollars”, the individual said. Ghosn’s legal defense partly rests on the assertion that his compensation arrangements were vetted internally and by outside consultants, people familiar with the matter said. They did not identify the Nissan staff and external consultants who were in charge of the vetting. The former Nissan chairman is prepared to argue that properties spanning cities across the globe were purchased by Nissan as corporate housing, these people said. His co-defendant, former representative director Greg Kelly, who has been accused by prosecutors of conspiring with Ghosn about his compensation, has denied the allegations. Kelly’s lawyer, Yoichi Kitamura, said he was unaware of the content of Nissan’s internal probe and was confident his client will be cleared of the charges brought against him. Zi-A Capital BV was registered in the Netherlands as a company by Nissan on Dec. 10 2010 with Kelly and Ghosn named as 2 of 4 directors at the time. Ghosn, who was also CEO, left as a director on Nov. 2, 2011, according to a company profile available with the Dutch Chamber of Commerce. The role of 2 of Zi-A Capital BV’s subsidiaries, Zi-A Capital Ltd in Dubai and Hamsa Holdings Ltd in the British Virgin Islands, are also being checked by investigators, one of the people with knowledge of the probe said. Zi-A Capital BV is currently wholly owned by Nissan Motor Parts Center BV in the Netherlands, which is a unit of Nissan Automotive Europe SAS in France, which in turn is a wholly owned unit of Yokohama-based Nissan. Since investments in technology startups are generally considered confidential, the subsidiaries did not attract much attention from internal financial staff, the sources with knowledge of the probe said. Nissan’s auditor, Ernst & Young ShinNihon, questioned the automaker’s management several times, chiefly around 2013, about purchases of overseas luxury homes for Ghosn’s personal use and of stock-appreciation rights that were conferred on him, a person with direct knowledge of the matter has said. But the Japanese automaker said the transactions and financial reporting were appropriate. The CEO Reserve was set up to pay for unplanned business needs and could at times contain ‘a few hundred million dollars’, one of the people with knowledge of the inquiry said. “For example, if you have an autonomous drive company you’d want to buy right now, you’d use that budget”, the second person with knowledge of the matter said. According to one of the people, the team is reviewing “a mountain” of receipts and other financial records to see if purchases of residences in Rio de Janeiro, Beirut and Paris as well as expenses such as a yacht club membership and a donation to a college had been approved and paid for properly. One of the apartments in Rio de Janeiro has been the subject of a heated legal dispute between Nissan and Ghosn, with Nissan losing a battle to block Ghosn and his family from accessing the apartment. Nissan had argued that access could result in the destruction of evidence of crimes. Ghosn used the CEO Reserve to also pay for family vacation trips, utilities and even potato chips, one of the people with knowledge of the probe said. +++ 

+++ The future of PLUG-IN HYBRIDS in Europe is in doubt after the double blow of a harsh emissions reclassification and the removal of purchase subsidies in the UK, the region’s biggest market for such cars. Plug-in hybrids have always been a gamble for automakers because of the cost of fitting into a vehicle both a conventional engine and a battery pack big enough to provide satisfactory electric-only mileage. However, subsidies in many countries had bridged the cost gap separating plug-in hybrids and conventional models, and demand had been growing. European sales of plug-in hybrids, led by the Mitsubishi Outlander, soared 46 % to 94,999 in the first half of the year, according to figures from industry association ACEA. But then came the back-to-back blows. In September, automakers had to have retested all their cars to conform to new emissions regulations known as the Worldwide harmonized Light vehicle Test Procedure. WLTP is much tougher on plug-in hybrids than the previous emissions protocol. As a consequence, many plug-in hybrids are now rated as emitting more carbon dioxide than under the old standard, known as the New European Driving Cycle or NEDC. This was devastating because suddenly it pushed many plug-in hybrids above 50 grams of CO2 per kilometer, which is the threshold needed to qualify for a raft of tax incentives. In Germany, for example, buyers would have lost access to a purchase grant of €3,000. In the UK, plug-in hybrids still could qualify for the government’s €2,800purchase grant because the UK’s CO2 limit was set higher at 75 g/km. But then in October, the government announced the cancellation of the plug-in hybrid grant altogether, declaring that the market for the vehicles was now “established” and that it instead would concentrate on supporting full-electric vehicles. The UK automakers’ association, the SMMT, was furious, calling the decision premature and “totally at odds with the government’s ambition to be the world leader in the takeup of ultralow-emissions vehicles”. The automakers are right to be worried, said Felipe Munoz, a global analyst for market researcher JATO Dynamics. It’s too soon to gauge the fallout from the change to WLTP and the UK’s withdrawal of incentives, but Munoz expects sales to plummet. “These cars are still strongly dependent on incentives, so any change in the support has a big impact”, he said. Analyst firm LMC Automotive believes European sales will be down by 50,000 from September this year and into 2019. History has shown that removing incentives hits sales. The Netherlands was Europe’s sales leader for plug-in hybrids in 2015, thanks to government tax cuts for company-car drivers. But a year later, those tax cuts were scaled back significantly, and 2016 sales were halved to below 20,000. Half-year sales for 2018 were down to just 1,106 plug-in hybrids, according to ACEA. The Dutch government discovered a big problem with incentives for plug-in hybrids: Make their cost too attractive, and drivers just won’t bother plugging in the cars, and CO2 actually increases. The Dutch discovered this by analyzing data from the fuel cards that many drivers of company cars use when filling up. The Dutch experience turned UK authorities against the technology, says one senior industry figure involved in discussions between automakers and the government. “We have known for some time that some ministers were heavily influenced by the Netherlands report on plug-in hybrids”, the source told on the condition of anonymity. The decision to cancel grants will have “huge consequences” for sales in Europe’s biggest plug-in hybrid market. “Manufacturers tend to focus on markets where incentives mean there’s a good volume opportunity”, the source said. “Unfortunately, that’s not the United Kingdom anymore”. Automakers keep a close eye on incentives. Right now Toyota is unwilling to expand its plug-in hybrid range beyond its Prius variant with the powertrain while the incentive landscape is so volatile. “One minute, plug-ins are very hot because of the incentives on offer. The next minute, they are not at all hot”, Toyota Europe sales chief Matt Harrison said. “Without incentives in place today, the walk upward in terms of price premium for plug-in vs. the full-hybrid system is a barrier for some customers”. Even if consumers decided that the remaining incentives make plug-in hybrids worth spending extra, they can’t actually buy many of the popular models. Rather than make their cars WLTP compliant and accept the higher CO2 levels, many manufacturers decided to pull the cars from the market. Volkswagen, for example, dropped the Golf GTE and Passat GTE and will not replace them until July next year. BMW, Mercedes-Benz and Porsche also froze sales or canceled models. Despite the challenges, automakers are persisting with plug-in hybrids. For many, they have no choice: they need them to reach Europe’s fleet CO2 target of 95 g/km by 2021. Plug-in hybrids and full-electric cars not only help them reduce average emissions but thanks to the supercredit system the sale of any car emitting less than 50 g/km of CO2 will count as 2 vehicles in 2020, 1.67 vehicles in 2021, 1.33 in 2022 and 1 by 2023. To cut CO2 emissions to less than 50 g/km automakers have to extend the electric-only range by increasing the size of the battery in their plug-in hybrids. The first automaker to do this was Mitsubishi, which had its Outlander rated below the critical threshold under WLTP rules after enlarging the car’s battery to 13.8 kilowatt hours from 12 kWh. In response to the move to WLTP, many automakers are overhauling their ranges or planning new models. Skoda, for example, will launch its first plug-in hybrid next year with a version of the Superb. “Without electrification, we would never be able to meet targets set by legislation”, said Bjorn Kroll, head of product marketing and Skoda’s commercial leader on electric cars. Like many other carmakers, Skoda is angling the technology at the upper end of its range. “It’s an expensive drivetrain, so you would not put it on an entry car”, Kroll said. But the battery technology is becoming cheaper. “It is clear that costs have gone down dramatically”, Kroll said. “Now we can have a big battery and offer that at a good price. That’s also why we waited a little bit longer. When Volkswagen started offering plug-in hybrids in 2015, it was simply too expensive for Skoda”. Next year, PSA Group will begin its electrification campaign, which calls for 8 plug-in hybrids and 7 full-electric models by 2021. Starting next year that will include plug-in hybrid versions of the DS 7 Crossback, Citroen C5 Aircross and Opel Grandland X SUVs. PSA’s strategy is to restrict pure EVs to smaller models and build plug-in hybrid versions of larger cars, which are often used to drive longer distances and can’t be replaced easily by full-electric cars without fitting them with large, expensive batteries to overcome range shortcomings. “A fundamental selling point of a plug-in hybrid is liberty”, said Olivier Salvat, PSA’s plug-in hybrid program director. Tougher emissions legislation beyond 2021 will force manufacturers to expand their range of plug-in hybrids, but they believe the market will respond. PSA estimates the European demand for the technology will grow to 1.9 million cars by 2025. LMC Automotive, however, has reduced its forecast based on the latest information, predicting plug-in hybrids will account for 1.2 million sales in Europe in 2025, down 200,000 on its forecast from earlier this year. That would equate to 5.8 % of the market, compared with 11 % for EVs at a predicted 2.3 million. Ultimately the success of plug-in hybrids will remain dependent on governments. The bigger battery pack will make them more expensive, while full-electric cars become ever cheaper and usable. “The window of opportunity for PHEVs may be smaller than originally thought”, LMC wrote. +++ 

+++ TOYOTA has struck a deal with PSA to take sole financial ownership of the plant in Kolin by 2021, productionsite of the Toyota Aygo, Citroen C1 and Peugeot 108. The Japanese company states that it fully intends to continue employment and construction of the city cars at the plant, which produced a total of 199,000 vehicles in 2017. However, the move means joint production of A-segment cars between Toyota and PSA will end early next decade, and while Toyota has committed to producing PSA’s current generation city cars for the time being, there is no word as to whether the companies will continue to co-develop and build A-segment vehicles beyond 2021. The Kolin joint venture opened in 2002, with the first-generation Aygo, C1 and the Peugeot 107 launching in 2005. Second-generation versions of the vehicles were launched in 2014. The Executive Vice President of Toyota, Didier Leroy, marked the agreement stating: “Our agreement allows each company to play to its strength, while sharing technology and development costs. Our commitment to the Kolin plant demonstrates Toyota’s philosophy of producing cars where we sell them and our long-term manufacturing presence in Europe”. +++ 

+++ VOLVO , owned by China’s Geely, has no current plans to go for a stockmarket listing, its chief executive said, more than 2 months after the Swedish carmaker postponed its flotation blaming trade tensions and an automotive stocks downturn. Volvo and its parent had been working on an initial public offering, potentially valuing the carmaker at $16 billion to $30 billion. In September, the company dropped the IPO plans but said that a listing was still possible in the future. “There are no plans or time schedule for entering into the equity market”, Chief Executive Håkan Samuelsson told on the sidelines of the Los Angeles Auto Show. When asked if the company might instead consider raising funds via convertible bonds, he said: “It’s not the right timing and also it’s a turbulent market”. An IPO would have helped bolster Volvo’s coffers at a time when carmakers need cash to back their plans to develop electric and driverless cars. Samuelsson reiterated that Volvo, which is developing Polestar as an electrified performance brand and owns a stake in Geely stablemate Lynk & Co, would finance its development using existing cash flows. He had said in September when the IPO was dropped that the company had “other alternatives” to raise finance. Conditions in the automotive industry remain tough with the trade conflict between China and U.S. creating headwinds, China car sales falling and new emissions test standards hitting the European market. China is Volvo’s largest market. Profits at Volvo have been squeezed by rising costs due to product launches plus the impact of higher tariffs from a trade spat between Washington and Beijing has escalated. The U.S./China trade war could also hurt the pace of expansion at Volvo’s new U.S. factory in South Carolina, where it has plans to invest $1.1 billion and hire about 4,000 people, a spokesman said, confirming comments in U.S. media. “The plans for Charleston remains, however trade issues may impact the pace of the expansion, although we cannot quantify the effects”, he said. The company said last week that it had decided to split production of its S60 between the United States and China, changing an original plan to manufacture the vehicle only at its U.S. factory and export it to China. The spokesman said the S60 would be manufactured at the group’s plant in Daqing, China from next year to cover domestic sales and exports to some Asia-Pacific markets. +++

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