+++ In AUSTRALIA , Holden and Ford have wound back the clock more than half a century, posting their lowest sales since 1961 and 1966 respectively. Holden sold 60,751 vehicles in 2018 compared to 58,710 in 1961, while Ford sold 69,081 vehicles last year versus 68,520 in 1966. The 2018 results are a stark contrast for what were Australia’s Top2 automotive brands for most of the past half century, and a sign of how vastly our car market has changed. In the 1960s, Australians bought an average of 400,000 cars a year and there were fewer than a dozen mainstream brands; today’s car market has grown to more than 60 brands competing for about 1.1 million sales. Both Ford and Holden are now outside the Top4, slipping to 5th and 6th place respectively, after Mitsubishi posted record sales to place 4th behind Toyota, Mazda and Hyundai. Holden struggled across the board, with slow take-up of the imported Commodore (Insignia) while the Astra and Equinox SUV are also yet to meet sales expectations. The Colorado pick-up and Trailblazer four-wheel-drive twins were even outsold by models produced by Holden’s former joint venture partner Isuzu, which has a much smaller dealer network. While the Toyota HiLux set an all-time record for a pick-up, and was the first vehicle to eclipse 50,000 sales in 10 years, the Isuzu D-Max (18,550) overtook the Holden Colorado for the first time ever (18,301) after Colorado sales fell 15 % and Isuzu had a strong finish to the year, posting its 10th year in a row of continuous growth. The Isuzu MU-X four-wheel-drive (9,090) coasted to an easy win in the pick-up derived off-roader class, ahead of Mitsubishi Pajero Sport (6,566), Ford Everest (5,482), Toyota Fortuner (3,592) and Holden Trailblazer (2,606). Ford’s sales surge after its 2016 factory shutdown (driven by the Ranger and Mustang) subsided in 2018 as demand for both models flattened, although the Ranger still managed to hang onto second place outright ahead of the Toyota Corolla, Mazda 3 and Hyundai i30, which rounded out the Top5. The sharp sales declines in 2018 for Holden (down 32.7 %) and Ford (down 11.6 %) occurred despite bold retail campaigns, including Holden’s $500 test drive challenge, and both brands boosting their warranty coverage to 5 years/unlimited kilometres. +++

+++ BMW said it achieved record sales of 2.49 million BMW, Mini and Rolls-Royce vehicles last year. “It means the BMW Group is the world’s leading premium automotive company for the 15th year running”, Chief Executive Harald Krüger said. Daimler has not yet released annual sales figures for Mercedes-Benz passenger cars, so it remains unclear whether BMW brand overtook Mercedes-Benz in terms of sales in 2018. Sales of BMW, Mini and Rolls-Royce cars were higher than Mercedes-Benz in 2017. +++ 

+++ To deliver an ELECTRIC vehicle (EV) that’s cheaper, safer and capable of traveling over 800 km on a single charge, the auto industry needs a breakthrough in battery technology. That’s easier said than done. Scientists in Japan, China and the United States are among those struggling to crack the code of how to significantly boost the amount of energy a battery cell can store and bring an EV’s driving range into line with a full tank of gas. That quest has zeroed in on solid-state technology, an overhaul of a battery’s internal architecture to use solid materials instead of flammable liquids to enable charging and discharging. The technology promises major improvements on existing lithium/ion packs, which automakers say are hitting the limits of their storage capabilities and may never hold enough power for long-distance models. If it can be mastered, solid-state technology could help speed the demise of the combustion-engine car and potentially slash EV charging times to about 10 minutes from as much as several hours. The supercharger network built by Tesla, now offering some of the fastest charge times, needs approximately 30 minutes to bring a depleted car to 80 %. “We don’t see another way to get there without solid-state technology”, said Ted Miller, Detroit-based senior manager of energy storage strategy and research at Ford, which has studied various technologies aimed at delivering a more powerful EV battery. “What I can’t predict right now is who is going to commercialize it”. Currently, the best prototype with solid-state batteries is only powerful enough to propel a one-person vehicle across a Toyota parking lot near Mount Fuji. Car companies such as Daimler and Fisker are working on the task, as are a Chinese lithium giant, the French oil company Total, and spinoffs from the Massachusetts Institute of Technology and Stanford University. Fisker may conduct vehicle tests as early as this year, while Toyota and Daimler timelines extend into the 2020s. The stakes are enormous. Adoption of electric vehicles is already expected to fuel an exponential increase in lithium-ion batteries, the reigning replacement for the internal combustion engine. The latest report from Bloomberg found that electric buses and passenger cars accounted for 44 gigawatt hours of lithium/ion battery demand in 2017, and by 2030 that demand is forecast to surge to over 1,500 gigawatt hours per year. Anyone with a viable solid-state battery that can outperform lithium/ion technology could gain the upper hand in a market for all EV batteries that will be worth about $84 billion by 2025, compared with about $23 billion now, according to UBS Group. Lithium/ion technology, the standard for decades in mobile phones and personal electronics before moving into EVs and utility-scale energy storage, uses a liquid electrolyte to shuttle ions between the anode and cathode to charge or discharge a battery. A solid-state battery, as the name suggests, replaces this liquid with a solid material such as ceramic, glass or a polymer. That should reduce the risks of batteries bursting into flames and allow for thinner cells and smaller packs that fit under a car seat. Researchers also want to pair the solid electrolyte with a lithium metal anode to improve energy density and enable EVs to travel longer distances without stopping. That could help stoke sales by erasing consumer worries about running out of juice halfway through the trip. To achieve all that, first of all there’s a list of puzzles to solve. Prototypes currently have battery life that is too short for a vehicle and suffer from poor conductivity, uncompetitive costs and a sometimes violent swelling and shrinking of materials when charged or discharged. When scientists solve one problem, that typically exacerbates another, said Yasuo Ishiguro, managing director of Japan’s Consortium for Lithium Ion Battery Technology and Evaluation Center, or LIBTEC. The group of more than 25 companies, including Toyota, Panasonic and Nissan, is backed by about ¥10 billion in government funding to speed up progress. “Among all the players out there, it seems like everyone has solved 1 or 2 or 3 of 5 of the most important things, but nobody has really solved everything”, said Henrik Fisker, chairman and chief executive officer of his namesake Los Angeles-based EV maker. China’s Qingtao New Energy Research Institute will experiment with cars within 2 years and considers a commercial product possible by 2025. Contemporary Amperex Technology, China’s biggest cell producer, includes solid-state in its advanced-battery research. South Korea’s Samsung SDI, SK Innovation and Hyundai said they are also studying the technology, as is Dyson, the U.K.-based home-appliance maker now targeting EVs. “For passenger cars, we should see prototypes in the early 2020s”, said Andreas Hintennach, head of battery research at Stuttgart, Germany-based Daimler. The automaker behind brands including Mercedes-Benz agreed last month on orders for $23 billion of current generation lithium-ion battery cells through 2030. Volkswagen plans to begin trial production with partner QuantumScape as soon as 2022. Those timelines may prove optimistic. “It’s a brutal battlefield actually making these batteries work, and nobody is anywhere close”, said Sam Jaffe, managing director at Boulder, Colorado-based Cairn Energy Research Advisors, an industry consultant. It will be the end of the 2020s before solid-state batteries with all the promised advantages are available, and even then, they still could be priced at a premium, said James Frith, a London-based analyst with BNEF. Tesla, which says it talks frequently to developers and reviews battery prototypes, doesn’t yet see a technology that is better than its existing lithium-ion packs. Its Model S can travel as far as 539 km on a single charge. “We’ve looked as hard as we possibly can”, Chief Technology Officer J.B. Straubel told an annual meeting in June. “We are all ears, we’d love to find it, but we haven’t found it yet”. Tesla supplier Panasonic said it continues researching solid-state technology, though there are “many hurdles left before commercialization is possible”. The biggest hope for a breakthrough rests on Toyota, according to rivals, academics and patent data. Asia’s largest automaker has at least 233 patents or applications concerning the technology; almost triple the number of its closest competitor. The company is investing ¥1.5 trillion in its battery business and plans to commercialize solid-state technology by the early 2020s, according to its annual report released in October. During the past decade, Toyota has deployed as many as 200 employees at a time to pursue the technology, primarily at its Higashi-Fuji research center close to Mount Fuji. The company has progressed in using solid-state batteries to power a digital clock, a 2-wheel scooter and a conveyor belt before testing the technology in an adapted version of the COMS, its single-seat, low-speed car. The vehicle serves more as an inspiration to researchers than a mode of transportation, said LIBTEC’s Ishiguro, a former Toyota manager. With many existing EV battery makers focused on lifting volumes and lowering costs, Toyota’s key challengers could be a cluster of U.S. startups, Ford’s Miller said. In a reflection of this possibility, Volkswagen last year paid $100 million to increase its stake in QuantumScape, founded by former Stanford researchers and based in San Jose, California. Ionic Materials Inc., based in Woburn, Massachusetts, counts Sun Microsystems co-founder Bill Joy and a venture-capital fund comprising automakers Renault, Nissan and Mitsubishi as backers. SolidEnergy Systems, an MIT spinoff also based in Woburn, expects to begin trials with EVs after 2021, CEO Qichao Hu said at an October forum in Osaka. Solid Power, a Louisville, Colorado-based battery company, has had a development partnership with BMW since December 2017. CEO Doug Campbell said he is confident solid-state technology will be commercially viable in cars. Just not for another 5 to 10 years. “I’m not going to say that there aren’t challenges in front of us”, Campbell said. “But I am confident that I don’t see challenges where it says: ‘Insert Miracle Here’ ”. +++

+++ FARADAY FUTURE has managed to stave off what seemed like imminent death by ending a dispute with key investor Evergrande Health Industry Group, the same company Faraday Future accused last October of trying to gain its intellectual property. The 2 firms said that they have agreed to terminate all previous investment contracts, withdraw and waive all current litigation and arbitration proceedings, and remove all roadblocks to Faraday Future raising further funds. Evergrande agreed last June to purchase a 45 % stake in Faraday Future by acquiring Season Smart, an existing shareholder of the electric car startup. As part of the deal, Evergrande was to pay approximately $2 billion to Faraday Future via a payment plan running until 2020, with $700 million of the $2 billion figure to be paid up front. However, Evergrande never ended up paying Faraday Future, which led to the firms clashing in a Hong Kong arbitration center. Evergrande argued that Faraday Future failed to meet certain milestones its funding depended on. Under the new agreement, Evergrande will own a 32 % stake, down from the previous 45 % figure, according to filings. Faraday Future also said that the new agreement would speed up its equity and debt financing efforts, adding that investors have expressed interest and several have already held talks. It also said it has completed development of its first model, the FF91 crossover, and that multiple pre-production examples had been built at its plant in Hanford, California. Faraday Future didn’t provide an updated timeline for the start of deliveries of the FF91. It said last August that the first customer deliveries are scheduled to commence in the first half of 2019, however since then the electric car startup lost a co-founder and announced significant layoffs. +++ 

+++ Executives at FIAT CHRYSLER Automobiles and Ford have reason to celebrate over their muscle cars, while Chevrolet is likely taking a hard look at its Camaro. The 2018 sales figures are in from all three American automakers, and the results put Ford on top in the muscle car wars. Despite a decrease in sales of 7.4 % compared to the previous year, Ford managed to sell 75,842 Mustangs in 2018. The figure is more than enough to claim the number1 spot after its first full year on sale after a mid-cycle refresh. The Mustang gained a revised front and rear clip and a host of other optional goodies. This year, the 2020 Shelby Mustang GT500 should create a welcome halo effect for dealers after the car debuts in Detroit later this month. Second place goes to the Dodge Challenger. Although it placed second of the three, Dodge should celebrate the fact that it is the only brand that saw sales of muscle cars rise. In 2018, Challenger sales rose 3 % year-over-year with a total of 66,716 cars sold. I have a feeling the Challenger SRT Demon had something to do with the uptick as more buyers jumped on the bandwagon by nameplate association. The Challenger is also archaic compared to the Mustang and Camaro, but buyers continue to flock to the car for affordable V8 power and retro good looks. A redesign of the Challenger and platform-sharing mate Charger isn’t due until sometime early next decade. FCA’s late chief, Sergio Marchionne, told last June that the redesigned cars may stick with the current-gen platform, albeit a heavily updated version. Finally, in last place is the Chevrolet Camaro. Despite its sharp chassis and 3 different engine choices, the Camaro continues to flounder in the segment. Last year, the Camaro found just 50,963 homes; a decrease of 25 % year-over-year. Since the 6th-generation car debuted, the Camaro battled to gain traction in the segment after banner years earlier this decade with the 5th generation car. Readers may recall it was often the Camaro in first place atop both the Mustang and Challenger. One saving grace could be that buyers held off earlier in 2018 as they awaited the refreshed 2019 Camaro to reach showrooms. Numbers this year could be higher, especially with rumors Chevrolet is possibly fast-tracking a new front clip to production. Chevrolet showed off a Camaro concept at the 2018 SEMA show that relocated the bowtie badge to the grille, which seems to help the awkward front-end proportions of the current production car. Given the sales numbers, it looks like the Camaro will need all the help it can muster. +++

+++ FORD is recalling more than 953,000 vehicles worldwide to replace Takata passenger air bag inflators that can explode and hurl shrapnel. The move includes over 782,000 vehicles in the U.S. and is part of the largest series of recalls in U.S. history. Included are the Edge, Ranger, Mondeo and Mustang. Takata used the chemical ammonium nitrate to create an explosion to inflate air bags. But it can deteriorate over time due to heat and humidity and explode with too much force, blowing apart a metal canister designed to contain the explosion. At least 23 people have been killed worldwide and hundreds injured by the inflators. Ford says it doesn’t know of any injuries in vehicles included in this recall. Dealers will replace the inflators. Ford will notify owners about the recall starting on Feb. 18, and the company has replacement parts available for dealers to order, said spokeswoman Monique Brentley. In previous Takata recalls, parts availability had been an issue. More than 3 years after the U.S. National Highway Traffic Safety Administration took over management of recalls involving Takata inflators, one third of the recalled inflators still have not been replaced, according to an annual report from the government and a court-appointed monitor. The report says 16.7 million faulty inflators out of 50 million under recall have yet to be replaced. And 10 million more inflators are scheduled to be recalled this month, including the Ford vehicles. Also, Honda recalled 1.4 million vehicles in September, months ahead of schedule. Safety advocates said the completion rate should be far higher given the danger associated with the inflators. The recalls forced Takata of Japan to seek bankruptcy protection and sell most of its assets to pay for the fixes. The inflators grow more dangerous as they get older because ammonium nitrate deteriorates due to high humidity and cycles from hot temperatures to cold. The most dangerous inflators are in areas of the South along the Gulf of Mexico that have high humidity. +++

+++ GENERAL MOTORS has filed yet again to trademark the “Zora” name, which has fueled rumors the mid-engine C8 Corvette will wear the nameplate. However, GM hasn’t yet secured the Zora name for use in the U.S. The reason? The automaker must provide a Statement of Use document to describe how GM plans to use the name. GM probably filed for an extension on the document back in 2014 before refiling the application in December. With the trademark resurfacing, it’s likely GM will soon present a Statement of Use document as it prepares to debut the C8 Corvette. Zora comes from the first name of long-time engineer, Zora Arkus-Duntov, who enthusiasts consider the father of the Corvette. Crucially, Duntov led the charge to grace the first-generation Corvette with a V8 engine, which helped catapult the sports car to success in the 1950s and beyond. Duntov also fought hard during his time as lead Corvette engineer to move the car to a mid-engine layout, a goal he never realized during his tenure or lifetime. He passed away in 1996. Today, Chevrolet is on the cusp of revealing the most revolutionary Corvette in decades with Duntov’s long-desired mid-engine layout. An upgraded LT1 V8 engine is rumored to serve as the base powertrain, while a couple of DOHC flat-plane crank V8 engines may show up afterward. Reports have also indicated an all-wheel-drive Corvette with a hybrid powertrain is in the cards. The mid-engine Corvette was rumored to debut at the upcoming Detroit auto show, but it is now expected this summer, perhaps as soon as May. Chevrolet has reportedly worked hard to ensure it remains an affordable sports car for the masses, with pricing just a bit higher than the current Corvette. +++ 

+++ It will be “very difficult” to win bail for former Nissan chief Carlos GHOSN before trial and it could take 6 months before his case reaches court, his lawyer said. Motonari Otsuru, speaking shortly after Ghosn made his first public appearance in a Tokyo courtroom since his shock November arrest, said he would nonetheless apply to end the businessman’s detention later today. Ghosn has been held in a Tokyo detention center since his November 19 arrest, and faces 3 sets of allegations of financial misconduct. In court, he protested his innocence and said all his actions at Nissan had been legal and approved by the appropriate executives. But Ghosn appears unlikely to win release anytime soon, as Japan’s justice system allows prosecutors to seek lengthy pre-trial detention as well as further detention periods to investigate allegations even before pressing charges. “We are uncertain in this case as to what will happen. However, in general in such cases in Japan it is indeed the case that bail is not approved before the first trial does take place”, Otsuru told. “It would be indeed a very difficult situation to expect bail before trial. I believe it could be considered that at least 6 months will be needed before being able to go to the first trial”, he added, citing the complexity of the case and the fact that the documents involved are in both Japanese and English. He said nonetheless that he would apply later to end Ghosn’s detention, though he gave little indication he expected the application to be successful. The auto tycoon has seen his detention repeatedly extended and his requests for release denied since his arrest on a first set of allegations of under-reporting his salary. He has now been charged with those accusations, and prosecutors have leveled other allegations involving further under-reporting of his pay and a complex scheme in which he allegedly tried to transfer losses to Nissan and used company funds to compensate a business contact who put up collateral. Otsuru also said Ghosn had been moved to a larger cell with a Western-style bed, but was not being permitted to receive visits from his family. Ghosn’s current detention period on the third set of allegations against him ends on Jan 11, and Otsuru said it was likely prosecutors would indict him. They could also rearrest Ghosn on additional allegations, or in theory allow him to seek bail. Otsuru denied reports that Ghosn had been pressured to sign a confession in Japanese, insisting all interrogations and documents were translated. “Not once has Mr Ghosn said to us he has any concerns about being asked to sign something in a language he doesn’t understand”. And he said the businessman used their regular meetings to focus on the case, making no mention of any discomfort he might be in. “He’s very calm and logical in his current situation”. +++ 

+++ Imagine having your global car production centered in the UK and Brexit uncertainty being only 4th or 5th on your list of headaches. That is the nightmare facing JAGUAR LAND ROVER (JLR) as it slumped to a loss in the first half of 2018 amid falling sales, high costs and production freezes. JLR has been an industry success story since Tata Motors purchased the struggling brands from Ford in 2008. Back then, JLR was “near bankruptcy,” says Ralph Speth, the former BMW executive who was hired to turn around the British company. Under Speth and his management team, also largely recruited from JLR’s German premium rivals, sales almost tripled to 604,000 in the automaker’s 2017 fiscal year from 241,000 in the 2011. JLR has capitalized on surging global sales of SUVs, posting record profit after record profit, peaking at €2.9 billion in the 2015 financial year. Fast forward to 2018 and the company lost €400 million in the first 6 month of its current financial year (which runs until March 31, 2019). This caused S&P Global Ratings to lower the credit rating of Tata Motors and JLR deeper into junk status last month, citing weaker-than-expected profitability at JLR. In response, JLR plans to slash costs by cutting jobs and reducing its R&D budget. Falling sales have already forced JLR to lower production and reduce the size of its contract staff. The closure of 1 of its 4 UK assembly plants is looking more likely and the fallout is expected to include a dramatic change of direction for the stuttering Jaguar brand. Just before Christmas, Tata Motors publicly backed its troubled UK subsidiary amid speculation about JLR’s future. “There is no truth to the rumors that Tata Motors is looking to divest our stake in JLR or discontinue the Jaguar brand. We have great belief in the potential of JLR’s distinctive premium products and brands as well as in JLR’s design and engineering capabilities”, Tata Motors and JLR chairman, Natarajan Chandrasekaran, said in an emailed statement on Dec. 24. JLR Chief Financial Officer Ken Gregor told analysts during the company’s second-quarter results call in November that China has driven the sharp deterioration in profits. “It’s the single biggest challenge”, he said. JLR’s sales slumped 44 % in China during the quarter, a collapse that Gregor blamed on falling consumer confidence and import tariff changes. In response, JLR dramatically cut production to reduce the resulting buildup of unsold cars, both in the UK and at its joint-venture plant in Changshu, near Shanghai. “Changshu has basically been closed for most of October”, Gregor said. China became JLR’s biggest market in 2017, accounting for 146,399 sales, according to company figures. The Range Rover Evoque was the first model produced at the Changshu plant when it opened in 2014. The Land Rover Discovery Sport along with the long-wheelbase versions of the Jaguar XE and XF followed. The Jaguar E-Pace is poised to be the next model made in China. JLR’s dealers in the world’s largest car market, however, don’t like the locally built cars. “They tell us that they lose money selling those vehicles”, Gregor said, adding that JLR plans to end the “vicious circle” of pushing ever-higher incentives to support an “unsustainable” level of volume in China. “If that means accepting lower volume to allow our own profitability to be rebuilt then that’s what we will look to support”, he said. China’s downgrade to JLR’s 4th-largest global market, based on its 10-month figures, marks the end of the country being JLR’s cash machine. At one point, JLR was making €70,000 of profit on each Range Rover it sold in China, Bernstein analyst Max Warburton estimated. “Company profitability was too narrowly dependent on China”, Warburton told. “It papered over a lot of cracks elsewhere”. One of those cracks is excess capacity in JLR’s expanding production network. The Chinese downturn is coinciding with the opening of JLR’s new factory in Slovakia, the expansion of its Chinese plant, the production start for Jaguar’s E-Pace and full-electric I-Pace, which are both being made by contract manufacturer Magna Steyr in Austria. Along with temporarily idling its Chinese plant, JLR has responded to falling demand by imposing a 3-day workweek at its plant in Castle Bromwich, while in November it cut 500 contract workers at its engine plant in Wolverhampton and another 500 at its Solihull factory. All 3 facilities are in central England. 3 industry specialists believe JLR will end up shutting its Castle Bromwich site for good. “It will be a shopping center within 5 years”, Warburton predicted. The site is small, making about 50,000 vehicles a year, and the cars it does build are Jaguar’s slow-selling sedans. “The bigger question is: How do you build in Slovakia, and keep both Halewood and Solihull”, Warburton said. Solihull, home of the flagship Range Rover, lost the Land Rover Discovery when it was moved to the new Slovakia plant late last year, while Halewood, a former Ford plant in northwest England, makes JLR’s best-selling (and newly replaced) Range Rover Evoque as well as the Land Rover Discovery Sport. Slovakia is scheduled to make the replacement for the Land Rover Defender starting this year, but its sheer size (150,000 vehicles a year with the potential to increase to 300,000) and its much lower cost base means it needs more work. It was due to build the Jaguar XE and XF when their replacements arrived around 2023, according to previous IHS Markit predictions. It seems unlikely, however, those cars will survive. A bold plan under review at JLR is to transform Jaguar into an electric brand, a source said. Jaguar has already successfully launched the battery-powered I-Pace SUV, beating rivals from Mercedes and Audi to market. Jaguar weighed on Land Rover’s success while Ford owned the 2 brands and Jaguar’s troubles look to have returned. Just as Ford failed to successfully expand Jaguar’s lineup with the X-Type midsize sedan, JLR has also failed to succeed with either the XE or the bigger XF, despite both using a bespoke, rear-wheel-drive aluminum platform that helped them at least match the dynamic abilities of their BMW equivalents. XE sales were down 22 % through October 2018 to 26,218 while demand for the XF slipped 20 % to 27,872, according to JLR figures. Despite that, Jaguar is shifting around 4 times the volume that it had when Tata first took over, mainly because of the F-Pace and the recently launched E-Pace. Ominously however, global sales of the brand’s best-selling F-Pace fell 25 % through October, suggesting the E-Pace is cannibalizing some of its sister model’s sales. The sedans have been hamstrung both by their anonymous looks and stiff competition from BMW, Audi and Mercedes-Benz, IHS Markit principal analyst Tim Urquhart said. “The XE and XF are competent but against the Germans they’re a bit of a waste of time”, he said, adding that they probably won’t survive, which means a bold plan is needed for the brand. “Standing still and keeping as it as it is, is not an option”, Urquhart said. The bold plan is to transform Jaguar into an electric brand. “It’s definitely an advanced plan and is only a matter of time before it’s signed off”, said a person with knowledge of the situation, who asked to remain anonymous. Jaguar has already successfully launched the battery-powered I-Pace, while the XJ sedan will be reinvented as an electric car. The problem is that it won’t help profitability, not initially. JLR chief financial officer Gregor admitted that the I-Pace’s margins are lower despite being priced 15 % above an equivalently equipped F-Pace. In fact, he said the I-Pace was more useful to help JLR reach tougher forthcoming CO2 targets in markets such as Europe and China. “Those electric vehicles are really important for balancing out the vehicles that have higher CO2 footprints”, he said. They also mean Jaguar eventually will not need smaller cars to achieve that compliance, giving them more reason to kill the XE. These are some of the other challenges JLR is trying to overcome. 1) Brexit: Britain’s exit from the EU trading bloc at the end of March could cause all sorts of problems for JLR in terms of border friction or even tariffs, depending on what sort of deal is negotiated. A poor deal could wipe €1.12 billion from JLR’s profits, the company says. One good manufacturing decision it made was locating a plant in Slovakia, giving JLR a presence in Europe after the UK leaves the EU. It’s already helping: In October Slovakia pushed to keep the CO2 derogations that means JLR has a much softer target for 2020-21. 2) U.S. tariffs: President Donald Trump has repeatedly threatened tariffs on cars from Europe. Barclays Research described JLR as being “significantly exposed” in a recent report while JLR sources estimate tariffs would cost the company around a €1.12 billion annually. North America was JLR’s biggest sales market through 10 months of last year, beating Europe and the UK. 3) Quality: JLR has worked to improve the traditionally poor reliability of its cars, but the Jaguar and Land Rover brands still finished second-to-last and last, respectively, on JD Power’s 2018 U.S. quality study. 4) Diesel: JLR believes sales have been hurt by the shift away from diesel in Europe, where 84 % of JLR’s vehicles are sold with the powertrain. JLR needs to make the tough decisions rival Volvo made a long time ago, a senior UK car industry executive told on condition of anonymity, “They need someone like Volvo CEO Håkan Samuelsson. He ditched the old production plans, kicked out 6-cylinder engines and diesels and said: ‘We don’t try to do everything because we can’t’ ”, he said. “I don’t see any signs JLR is thinking like that”. JLR admits that the days of achieving a 14 % profitmargin, which it did during its 2015 financial year, are long gone. The automaker is targeting a figure of between 7 % and 9 %, CFO Gregor said. During its previous financial year JLR’s EBIT margin slumped to 3.8 %. “That’s not a figure we like at all”, Gregor said. S&P said recently launched and upcoming products may help prop up growth, though competition in the luxury car market may hurt margins. JLR’s problems are not unique. Global uncertainties, the shift to electric and competing demands on tech investment are cutting automaker profit forecasts globally. JLR, however, is on the back-foot to a greater extent than any of its bigger premium rivals. To counter this, JLR has formulated a turnaround plan called Project Charge. The plan calls for savings of €2.8 billion in 18 months. Of that total, €1.12 billion will come from cutting €560 million each from its investment plans for the 2019 and 2020 financial years. S&P, however, considers the company’s cost cut target to be aggressive. It forecasts that “JLR will have significant negative free operating cash flows over the next 2 years, resulting in weak financial ratios for Tata Motors”. Despite that, JLR’s cash flow will suffer in the short term. Said JLR Treasurer Ben Birgbauer during the Q2 analyst call: “We expect negative cash flow this year and it may be negative next year and in the following year as well”. Job cuts are also likely at JLR, Gregor warned: “The sort of cost reductions that we are targeting are really not possible without also reducing employment costs and employment levels”. If they’re prepared to make tough decisions, the plan could work, Bernstein’s Warburton believes. “The issue with JLR is not one of revenues and margins, but costs and outgoings”, he said. “It’s just been running so fast it has gotten to a level of spending that’s eye-opening. In theory Land Rover is hugely profitable”. +++

+++ MAZDA said it will launch production of fully remodeled next-generation SUVs at a domestic plant. Mazda President Akira Marumoto unveiled the plan in his New Year greeting message. Details of the SUV model and the timing of its release will be announced at a later date. In 2019, Mazda plans to release a series of new-generation models that adopt its new ‘Kodo Soul of Motion’ design concept and innovative technologies such as a gasoline engine with fuel efficiency enhanced by 20-30 %. +++ 

+++ MINI will mimic Tesla’s strategy of playing up the performance aspect of electric powertrains when it launches its first volume EV next year in the form of an electric Hatch. That’s according to sources in Mini’s engineering department, who claim the car will be positioned as a hot hatch as opposed to an eco-friendly model. As a result, the car will reportedly arrive as a Mini Cooper S E Hatch. The same designation currently used for the plug-in hybrid version of the Countryman. There won’t be much to distinguish the electric version of the Hatch from its internal-combustion siblings. Subtle differences will include a sealed grille and additional accent lighting, and naturally there won’t be any exhaust pipes. Mini remains quiet on specs, which is smart considering the pace at which the technology is changing. The BMW i3s powertrain will be adopted, albeit with the electric motor positioned at the front axle in the Mini instead of at the rear like in the BMW. The i3s motor is good for 184 hp, which is close to the 192 hp generated by the current Mini Cooper S’s 2.0-liter turbocharged inline-4. Of course, the electric motor should provide plenty of low-end torque, too. Range meanwhile is expected to be 320 kilometres or more. The i3s with a 42.2 kWh battery is good for 240 kilometres. Look for the electric Hatch to reach showrooms around the end of the year as a 2020 model. +++ 

+++ NISSAN ‘s alliance with France’s Renault is not in danger “at all”, the Japanese automaker’s CEO told, despite tensions exposed by the arrest of the partnership’s chief Carlos Ghosn. In an interview, Hiroto Saikawa brushed aside suggestions that the alliance, which also includes Mitsubishi, had been damaged by the aftermath of Ghosn’s arrest for alleged financial misconduct. “I don’t think it’s in danger at all”, he said. He declined to comment directly on the case against Ghosn. “This is a process of the Japanese system, so I have nothing to say”, Saikawa said. “I just want to focus on stabilising the company”. Ghosn’s arrest rocked the auto industry and exposed rifts in the 3-firm alliance that he forged, particularly between Nissan and Renault. Nissan and Mitsubishi Motors swiftly removed Ghosn from his leadership positions after his arrest, with Saikawa even referring to the “dark side” of his former mentor’s tenure. But Renault has kept Ghosn on as CEO, and the French firm has repeatedly urged Nissan to call a shareholder meeting, reportedly seeking to bolster its representation on the company’s board. Officials at both companies have also complained about a breakdown in communication in the wake of the arrest. +++ 

+++ The future of Carlos Ghosn as head of RENAULT is increasingly in doubt. The French government, the carmaker’s biggest shareholder, is calling into question if Ghosn can remain at the helm of one of the country’s most important manufacturers, according to a senior government official. Ghosn would spend most of his time defending himself against accusations of financial improprieties rather than running a company, and his position at Renault is seen as unrecoverable, according to sources close to Renault’s leadership team who asked not to be identified discussing internal company matters. Ghosn held pivotal roles in Japan and France as chairman of Nissan and chief of Renault, as well as head of the alliance that binds together both carmakers. Nissan, where allegations of wrongdoing surfaced, moved swiftly to remove him from his post after his arrest Nov. 19, while Renault nominally kept him in place as it awaits more evidence of malfeasance. Ghosn has disputed the allegations through his lawyer, though prosecutors have doubled down, re-arresting him last month and bringing new accusations that range from hiding investment losses to misuse of company funds. Renault officials didn’t respond to requests for comment. How to proceed is a tough choice for Renault and the French government. The thinking goes that on the one hand, Ghosn deserves fair treatment and an opportunity to defend himself, particularly given his long service to Renault. But on the other hand, the government doesn’t want to be seen shielding an executive who enjoyed the trappings of large salaries at a time when France is being rocked by violent protests against rising costs of living and tax cuts for the wealthy. “There is a presumption of innocence. I have nothing in hand that lets me demand Ghosn’s departure”, French Finance Minister Bruno Le Maire said in an interview. “This principle of the presumption of innocence in a democracy is not negotiable”. Only if Ghosn is definitively prevented from returning would the government seek to replace him, Le Maire said. The government has sought more information on the allegations of improper payments, he said. “If and only if he were blocked lastingly would we draw conclusions. But we aren’t there today”, Le Maire said. Government spokesman Benjamin Griveaux declined to comment on topics that might interfere with a judicial inquiry and reiterated the importance of stability at Renault. He declined to say whether Ghosn should be stripped of his mandates at the end of the inquiry. Renault is “strongly managed at this stage, and is also benefiting from strategies that have been implemented for many years” by Ghosn, Griveaux told. Despite all demands to give Ghosn a fair shake, president Emmanuel Macron has been at odds with the executive and with Nissan since obtaining greater government control over Renault as economy minister a few years ago. Macron asked his administration last month to crack down on executives who avoid paying taxes in the country. At the same time, Renault, which benefits from the status quo that Ghosn enforced at the alliance, has been wary of making changes under pressure that could potentially increase the clout of Nissan, which has said that the structure of the alliance should be reviewed. As Ghosn’s position becomes increasingly untenable at Renault, France has started to shortlist potential successors as chairman, with Michelin CEO Jean-Dominique Senard as front-runner, a person familiar with the matter said last month. +++ 

+++ SSANGYONG is currently testing a facelifted version of its Tivoli. Once the updated crossover is unveiled, I expect changes to include a mildly revised front end with new headlights, a new grille and restyled bumpers, but also new taillight graphics at the rear and some fresh interior trim and tech. Further aesthetic changes will take place inside, where we could maybe see new trim pieces, improved materials and maybe even some upgraded tech. Right now, the Tivoli is available with multiple active safety systems such as Forward Collision Warning, Autonomous Emergency Braking, Lane Departure Warning, Lane Keeping Assist, High Beam Assistance and Traffic Sign Recognition. You can also get keyless start, a reversing camera, cruise control, a 7,0 inch touch screen, sat-nav and dual-zone air conditioning. As for its 128 hp 1.6-liter Euro6 petrol unit, rumor has it that it could be replaced by a smaller 1.2-liter turbocharged engine. +++ 

+++ TESLA made about 9,300 more vehicles than it delivered last year, raising concerns among industry analysts that inventory is growing as demand for the company’s electric cars may be starting to wane. If demand falls, they say, the company will enter a new phase of its business. Like other automakers, Tesla will have to either cut production or reduce prices to raise sales. A drop in demand could also curtail the company’s earnings and jeopardize CEO Elon Musk’s promise to post sustained quarterly profits. Tesla did cut prices, knocking $2,000 off each of its 3 models. The company said the cuts will help customers deal with the loss of a $7,500 federal tax credit, which was reduced to $3,750 this month for Tesla buyers and will gradually go to zero by the end of 2018. “They have for a long time had more demand than supply”, Gartner analyst Michael Ramsey said. “It’s becoming apparent that that dynamic is changing”. Tesla reported that it produced 254,530 cars last year and delivered 245,240. The company’s deliveries for the full year matched Wall Street estimates, but its figures for the 4th quarter didn’t reach expectations. Tesla said it delivered 90,700 vehicles from October through December. Analysts polled by data provider FactSet expected 92,000. Jeff Schuster, a senior vice president at the forecasting firm LMC Automotive, said demand for Tesla’s lower-priced Model 3 has been artificially high for the past 6 months as the company overcame production problems at its Fremont, California, factory. “You’ve had these inflated months because of delayed deliveries”, Schuster said. “We’re probably getting to that point where we’re getting to equilibrium and consumers aren’t necessarily waiting for vehicles”. Last year, Tesla reported that about 420,000 buyers had put down $1,000 deposits to join the Model 3 waiting list. LMC predicts that Tesla U.S. sales will rise in 2019 because it’s the first full year on the market for the Model 3. It anticipates sales to then fall by about 10,000 in 2020. Losing the tax credit will hit those who have been holding out for the $35,000 version of the Model 3, Schuster said. At present, Tesla is selling only versions that cost more than $45,000. Under federal law, buyers get the full tax credit until a manufacturer reaches 200,000 in sales since the start of 2010. Tesla hit 200,000 in July but the full credit continued for vehicles delivered by Dec. 31. It was cut in half on Jan. 1 and will go away by the end of the year. “You’ve had your early adopters, those early followers have already come in” to buy, Schuster said. “Now you’re trying to appeal to the mainstream market. I think that will have an impact on overall demand”. At the same time, inventory appears to be swelling. The company parked hundreds of cars at lots and Tesla stores all over the country at the end of last year, which could indicate excess stock. Tesla wouldn’t give inventory numbers but said it has lower stocks than its 2 biggest competitors, BMW and Mercedes. The Associated Press found one lot on the north side of Chicago where Tesla was storing dozens of vehicles in late December, and Mark Spiegel, a hedge fund manager who bets against Tesla stock, said other lots were full across the country. Tesla said it sometimes stores vehicles on lots as they’re being shipped to company dealerships across the nation. The lot in Chicago has fewer cars on it today, the company said. “Our inventory levels remain the smallest in the automotive industry”. Tesla also says Model 3 sales should grow worldwide as it expands distribution and begins to offer leases. Deliveries in Europe and China will start in February, and a right-hand-drive version is coming later in the year, the company said. In addition, inventory dropped in the 4th quarter as Tesla “delivered a few thousand vehicles more than produced”. Tesla said it had about 3,000 vehicles in transit to customers at year’s end. But even with that number, Schuster said production still exceeded deliveries, which doesn’t fit Tesla’s business model of building cars when they are ordered by customers. Still, even at 9,300, Tesla’s inventory is smaller than other automakers that have to stock dealerships, Schuster said. +++

+++ The VOLKSWAGEN Group said it will boost sales in China this year by adding new models that will help avoid the downward pull of a market that is expected to see its first annual decline in at least 2 decades. The automaker is “confident” of more growth in 2019, incoming China CEO Stephan Wollenstein said at a briefing. Sales at the group, which includes the Audi brand, climbed about 20,000 units last year compared with the 4.2 million units it delivered in 2017. Trade tensions between the U.S. and China as well as the car industry’s unprecedented transformation toward automation and electrification have contributed to damp car demand. Unit sales in China dropped for a 6th straight month in November and are headed for the first full-year decline since at least the 1990s, intensifying pressure on automakers that have been counting on the world’s biggest auto market to support growth. VW predicted China market sales to fall in the first half of 2019 from the same period a year earlier, said China head Jochem Heizmann, who will retire at the end of this year. The automaker makes vehicles in China through 3 joint ventures, with FAW, SAIC and Anhui Jianghuai Automobile. Other highlights from the briefing, which was also attended by VW Group CEO Herbert Diess: VW will not reduce its research and development capabilities in Germany even as it builds up R&D in China. In response to a question on whether China’s car policy is working, Diess said: “So far we have no reason to question it”. VW said it may be in a position to share more details on its commercial-vehicle plan in China in a couple of months. +++

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