+++ With 8 brands already in the family, the Volkswagen Group has as many marques as it needs. Actually, I’d go further and argue it has too many. The German giant might do well to allow a couple to fly the nest. Why? Because they’re often, not always, competing directly with each other. And it’s you, the retail customer, who ultimately picks up the tab for these costly VW Group rivalries. This is perfectly illustrated in the mid-size hatch sector, where the Audi A3 goes head to head with the equally fine VW Golf, the brilliant Seat Leon and the clever Skoda Octavia. As someone who’s driven all 4 cars over many thousands of kilometres, I can attest that there’s little between them in real-world conditions. A right-minded person who’s not a badge snob could happily live with any of the above. It’s the same overlapping story in the supermini class, with the A1, Polo, Ibiza and Fabia at each others’ throats. What’s the point? They’re pretty much the same cars with different bodies and badges. Economies of scale on production lines are outweighed by each brand having its own costly HQ and dealer network. That’s why none of the above cars (not even the Skoda) is inexpensive. These attempts to steal sales from each other (paid for by you, remember) don’t come cheap. So I hoped and assumed incoming VW Group boss Herbert Diess would water down or even begin to break up the group, which is both monumental, with almost 700,000 employees, and also poorer than it used to be, thanks to the tens of billions blown in Dieselgate fines and costs. Instead, Diess stated, on 15 January, that “Volkswagen and Ford launch a global ALLIANCE ”. And to underline the fact he’s referring to a formal alliance, not a mere occasional tie-up, he deliberately mentioned that symbolic word ‘alliance’ 3 times in his first 3 sentences. This is not, at this stage at least, a Renault-Nissan-type alliance. Instead, ‘VolksFord’ insists it will initially deliver only pick-ups and vans from 2022, and explore potential collaboration on electric vehicles, with or without drivers. But here’s the kicker: “Volkswagen and Ford also said they were open to considering additional vehicle programmes in the future”, according to VW. This leaves the door open for the VW Group to potentially have a say in the design, and a hand in the build, of the Ford Focus Electric, which will be a direct competitor to expected Volkswagen ID Neo and siblings from Audi, Seat and Skoda. Similarly, there will surely be a plug-in hybrid Fiesta, up against the identical A1, Polo, Ibiza and Fabia. All this could result in Diess and his VW Group having responsibility, in full or part, for a massive proportion of the biggest-selling family hatches and superminis in showrooms. Volkswagen is the number-one group in Europe for new car sales, with a market share of almost 24 %. Ford adds around 6,5 %. ‘VolksFord’ would therefore be selling to almost one third of new-car buyers. With rival automotive groups and individual firms left unhappy, maybe it would be time for another alliance. Between Jaguar Land Rover and Hyundai-Kia, perhaps? That would get my vote. +++

+++ Sales of diesel engined cars dropped by nearly a 5th in EUROPE last year, but this was offset by a rise in demand for petrol and electrified vehicles. In total, 15.6 million vehicles were registered in Europe last year, according to data from industry analyst Jato. That was an increase of 346 cars over 2017, despite a sharp decline in the final quarter of the year due to multiple models being temporarily unavailable as a result of the introduction of the new WLTP emissions test. Demand for diesel fell in 20 of the 27 European countries, headed by a 30 % decline in the United Kingdom, with 5.59 million registrations in 2018. That’s a decline of 18 % on 2017, when 6.76 million were registered. Diesel cars accounted for 35 % of the total European car market, the lowest level since 2001. The fall in diesel sales was offset by a rise in registrations of petrol engined cars, which accounted for 57 % of total sales. Around a million more petrol-engined cars were sold in 2018 than the previous year. There was also a continued rise in demand for alternatively fuelled vehicles (AFVs), with 944,800 registrations in 2018. That represents 6.8 % of the car market, up from 737,400 in 2017. Notably, the biggest rise in AFV demand was for fully electric vehicles, with registrations up by 47 % from 132,800 in 2017 to 195,300 in 2018. As a result, registrations of electric vehicles outstripped those of plug-in hybrids (180,000) last year. Meanwhile, there were 555,000 hybrid vehicles registered, an increase of 24 % year-on-year. Germany remained Europe’s biggest car market in 2018, with 3,435,789 registrations; a year-on-year drop of 0.2 %. The United Kingdom remained second, with 2,367,147 registrations, despite a 6.8 % fall year-on-year. That ties with Sweden for the biggest decline in Europe. Lithuania was the biggest-growing market, with 32,382 registrations, representing 25.4 % growth on 2017. The Romanian market grew by 21.4 %, with 158,268 registrations. Volkswagen was the top performing brand across the 27 markets, with 1,746,411 registrations, compared to 1,099,289 for Renault and 1,014,190 for Ford. The German firm also had 2 of the 3 top models, with the Golf remaining Europe’s best-seller despite an 8 % year-on-year decline in registrations to 445,754; largely due to a 30 % drop in diesel model sales. Polo registrations rose by 10 % to 299,920, moving the supermini to third in the European best-seller list behind the Renault Clio (336,268). +++ 

+++ FORD ’s all-new, all-electric SUV, known as the Mach 1, will be revealed later this year and arrive in showrooms by 2020, the firm’s financial review for 2018 has confirmed. The company had previously confirmed the Mach 1 will be built on a dedicated EV platform and will have a range of 480 kilometres. The model has mostly been finalised and prototypes are expected to hit the road this year for development testing. Ford originally planned to launch a practical all-electric SUV but, to stand out from the market, the brand changed tack and decided to launch it as a performance model instead. Ford’s aim is to “infuse” the SUV with the image, performance and style of the Mustang. Performance details on the Mach 1 SUV are yet to be announced. However, I do know it will use lithium/ion battery technology, with Ford bosses confirming that production will take place at one of Ford’s facilities in Mexico. The decision to produce a performance SUV first was partly down to a new division within Ford called Team Edison; a group of around 200 people established mid-way through 2018, tasked with creating and developing Ford’s autonomous and electric vehicles. Ford recently doubled its investment in electric vehicles to $11 billion. Darren Palmer, Team Edison’s global product development director, expects this outlay to bring 16 fully electric vehicles into a global portfolio of 40 electrified vehicles by 2022. +++ 

+++ GENERAL MOTORS has taken the lead in Mexico as the country’s largest automaker in terms of vehicle output. he company manufactured more than 830,000 vehicles in Mexico last year, an increase of nearly four percent that displaced Nissan from the top spot as the Japanese automaker’s output slid by 10 % in 2018. exico is said to represent more than a quarter of GM’s total North American production volume. s automakers continue to take advantage of low wages south of the US border, Mexico has consistently grown its overall share of North American production across all automakers building vehicles on the continent. US output slid by nearly 3 % last year, while Canada was the hardest hit with an 8.8 % decline. GM responded to the report by pointing out that the company has not increased output capacity in Mexico for a decade and has no plans to follow such a strategy. The shift in proportional volume between the countries has been blamed on natural market forces as buyers eschew GM’s made-in-America cars in favor of pick-ups and SUVs that the company builds in Mexico. Automakers from both the US and abroad have faced increasing pressure from the Trump Administration to stop shuffling production to Mexico. +++ 

+++ Hyundai created its GENESIS division to take on big names in the luxury car segment like Audi, BMW, and Mercedes-Benz. The relatively young South Korean firm won’t follow its rivals into sub-brand territory; at least not yet. “We’re trying to set our base. We have to get the basics”, replied Manfred Fitzgerald, the global head of Genesis, when asked about the possibility of a performance-oriented sub-brand. His strategy makes sense. As of writing, Genesis sells 3 rearwheel drive sedans named G70, G80, and G90, respectively. The G70 is its answer to the BMW 3 Series. Albert Biermann, an engineer who spent decades developing BMWs, now leads Hyundai’s research and development department. It must be difficult to resist asking Biermann to turn the G70 into an M3-fighting super-sedan, but Genesis wants to focus on expanding its line-up with volume-oriented models before it starts chasing ‘Ring times. Its model offensive will include crossovers and SUVs; an earlier report claims the first one will make its debut before 2019. Tentatively called GV80, it will borrow a handful of styling cues from the eponymous concept car introduced at the 2017 New York auto show. It will compete in the same segment as the Mercedes-Benz GLE and the BMW X5. Once it has a full line-up of cars, and once its sales and image both take off, the brand could re-consider its decision not to form a sub-brand dedicated to horsepower. Hyundai showed it’s not intimidated by performance when it formed its N sub-brand. +++ 

+++ French President Emmanuel Macron said he has expressed concern to Japanese Prime Minister Shinzo Abe over the prison conditions faced by former Renault boss Carlos GHOSN . “I have considered that the detention was very long and the conditions of the detention harsh, I have said so to Prime Minister Abe on several occasions”, Macron told. The crisis surrounding Ghosn, however, did not threaten the balance of the carmaking alliance between Renault and Nissan, he said. Ghosn resigned as Renault head last week. He remains in detention following his arrest in Japan in November and indictment for financial misconduct. +++ 

+++ INFINITI says it will remain in Europe despite slumping sales and a model lineup that has been cut to just 2 cars. The Nissan-owned premium brand’s volume dropped by half to 6,246 last year from 12,408 in 2017. Infiniti sells only the Q30 and higher riding QX30 in Europe. Demand for the Q30, its top-seller in the region, fell by 59 % to 3,111. Both cars are based on Daimler’s compact-car platform that underpins Mercedes-Benz models such as the A class. They are built in Nissan’s factory, in Sunderland, England. Sales of the Q30 were hit after Infiniti dropped the 1.5-liter diesel engine version ahead of the new WLTP emissions regulations that came into force in September, an Infiniti spokesman said. Infiniti dropped the Q50 and Q70 sedans, Q60 coupe and QX70 SUV, from its European lineup last year. The new testing regime was also the reason behind Infiniti’s decision to stop selling the Q50 midsize sedan, although the model will return in March with a V6 hybrid drivetrain badged Q50h. The Infiniti spokesman said: “We firmly intend to remain in Europe”. The brand plans to reposition itself as an electric brand offering full-electric and hybrid cars using a version of Nissan’s e-Power system currently popular in Japan, starting in 2021. “We are confident that we will set a compelling new benchmark for premium electric vehicles”, Infiniti said in a statement. The brand unveiled an electric SUV concept called the QX Inspiration at the Detroit auto show on January 14. A spokesman said the concept “gives an idea of what to expect from the brand”. Infiniti will also start selling the QX50 SUV in Europe starting in December. The QX50 is powered by a 2.0-liter gasoline turbocharged engine with a variable compression ratio, that Infiniti says combines the economy of a 4-cylinder with the power of a V6. Infiniti said its move away from internal combustion engines would “result in reduced coverage” of western Europe in places “where combustion engines are still dominant”. Nissan executive Christian Meunier this month appointed Infiniti’s new global president. The French executive replaces Roland Krüger, who is taking the top job at household appliance manufacturer Dyson’s automotive unit, which plans to put an electric vehicle on the road by 2021. +++ 

+++ The JAGUAR XF has been updated for 2019 with a range of RDE2 compliant diesel engines, becoming the first executive saloon to meet upcoming emissions regulation changes. Although RDE2 compliance won’t become mandatory for manufacturers until January 2021, meeting emissions targets will make the XF more appealing to fleet buyers and company car drivers. Currently, the only other RDE2 compliant cars are from Mercedes-Benz, but they do not include any of its executive models. “These new diesel engines meet the demanding target, set by the latest European standards, well ahead of schedule”, Jaguar Land Rover UK managing director Rawdon Glover said. “The test results reflect their performance in real-world driving conditions, and Jaguar’s commitment to offering customers outstanding driving dynamics with the lowest cost and impact on the environment”. The updated XF now has ultra-low rolling resistance tyres. On diesel variants, this reduces CO2 emissions by up to 8 gram/km. +++ 

+++ This year’s unveiling of the next-generation LAND ROVER Defender will crown the most crucial 12 months in Jaguar Land Rover’s (JLR) history. The Defender’s reveal is scheduled for the autumn. A whole family of vehicles is set to be shown in order to demonstrate that the company is reinventing the model for the 21st century. As recent spy pictures have shown, the intention is to create a broader appeal than ever while including many nods to the model’s utilitarian 4×4 roots. The public unveiling of the Defender, and dealing with the inevitable backlash from purists no matter what the final production car looks like, is just one of several blockbuster events and launches JLR has in store over the next 12 months. Land Rover’s Range Rover Evoque, the second-generation follow-up to the smash-hit original, will arrive this spring, to be followed later in the year by a heavily revised version of Land Rover’s best-selling model, the Discovery Sport. Finally the Defender will be revealed in what is turning out to be one of the most eagerly anticipated events the industry has yet seen. Jaguar will once again try to assert its influence on the junior executive saloon market with a heavily revised XE. Changes include a significantly updated interior, in order to give the car the kind of all-round appeal it needs to compete in the segment over and above the way it drives. Those changes will make it to the XF later in the year, while the company will also enjoy the crowning of its best-selling F-Pace range with a new SVR model. The company will also mark the first full year of sales of its first electric car, the I-Pace. In the background, development will continue of the next-generation and all-electric XJ, ahead of its likely reveal next year as a radical reinvention of Jaguar’s flagship as the firm continues its move towards being a more electric-focused brand. This glut of important new launches arrives at a time of considerable belt-tightening at JLR. Since Tata bought JLR in 2008, its trajectory has been almost entirely upwards. However in recent months its sales and profits have been hit by a combination of a falling demand for diesel-engined models, the thawing of car sales in China brought on by the US-China trade war and the uncertainty around Brexit; an issue to which JLR is more exposed than perhaps any other manufacturer. Last October the company announced a turnaround plan designed to save €2.8 billion and improve cash flow over the next 18 months, including trimming the R&D budget by €1.1 billion. The ‘Project Charge’ plan followed 2 straight loss-making quarters coupled with falling sales. The wide-ranging cost savings are being felt across the company. There have already been production shut-downs at the Castle Bromwich and Solihull plants, and the decision has been made to skip the upcoming Geneva show; an event that would cost a vast amount of money to support and attend at a time when JLR has no headline-grabbing new products to reveal. The best way for a car maker to extricate itself from a perceived crisis is to create innovative new products that resonate with buyers, a strategy that represents the crux of JLR’s plans for this year following a quieter 2018. +++ 

+++ LEXUS plans to expand the Track Edition philosophy to other models. Recently debuted at the Detroit Auto Show, the Lexus RC F boasts more horsepower and a light weight than the existing high-performance version of the RC coupe. Though production of that car will be very limited (just 60 will be built) Lexus’s vice president for product planning Cooper Ericksen told that there will be more Track Editions in upcoming model years. It would seem that the Track Edition appellation would only be relevant to cars that already have an F model. That means just the RC F and GS F would apply, but Ericksen also mentioned that the F brand might be expanded to other models, including SUVs. It seems that Lexus’s entire performance lineup is under reevaluation right now, and what the future holds will is still very much up in the air. +++ 

+++ MERCEDES-BENZ is apparently preparing to demonstrate several next-generation safety technologies. R&D chief Ola Kalennius confirmed that the company has developed a new Experimental Safety Vehicle. Specific details weren’t mentioned, though the technology presumably includes advanced semi-autonomous safety features and occupant protection systems. “Having been in engineering for a couple of years, I’m absolutely amazed at the ingenuity and creativity of the engineers. It never stops”, he said. “We will do something in the middle of this year, to demonstrate what the future of safety is going to look like”. The executive promised that many of the innovations that will be highlighted in the ESV are “very close to series deployment”. Mercedes-Benz has apparently joined Volvo in setting a goal to virtually eliminate traffic accidents, acknowledging that most crashes are tied to human error that can be mitigated via the latest safety tech. +++ 

+++ NIO , one of the main rivals to Tesla in China, raised $650 million in a 5-year convertible bond, aiming to use the proceeds to fund expansion. The Shanghai-based carmaker’s move to raise capital via an equity-linked bond; only 4 months after it listed in New York. It mirrors that of China’s Netflix-like video platform iQiyi, which sold a $750 million convertible bond in November after going public last year, highlighting the growing appeal of convertibles for high-growth companies in need of cash. Convertible bonds are a cheaper funding avenue due to their lower coupons in exchange for giving the bondholder the option of converting the debt into company shares at a set price in future. The equity link gives investors fixed returns and the prospect of profiting from a rise in the issuer’s share price. NIO sold a 5-year convertible bond with a conversion premium of 27.5 % and a coupon of 4.5 %, according to a press release from the company. The startup could raise as much as $750 million if a greenshoe, or over-allotment option, is exercised within 30 days. Louis Hsieh, NIO’s chief financial officer, told investors that part of the reason for selling a convertible bond was to make up the difference between what the company raised in its IPO and what it had originally sought to raise. NIO raised $1 billion in its U.S. IPO but it had earlier aimed for $1.8-$2 billion, Hsieh said. Asked about the timing, Hsieh said the convertible bond market was receptive to a deal and he did not want to wait until March or April and risk a possible worsening in U.S.-China trade tensions. Convertible bonds are booming in Asia, hitting their highest volumes last year since the financial crisis, with $35.5 billion raised. Their appeal is growing at a time when interest rates are rising, driving up borrowing costs when companies in Asia face almost $500 billion in maturing dollar-denominated bonds over the next 2 years. For tech companies or startups, which can have more volatile stock prices and are often unrated, convertible bonds also represent a cheaper funding alternative than straight debt. China is the world’s largest and fastest-growing market for new-energy vehicles (NEVs), a category comprising electric battery cars and plug-in electric hybrids, but competition is fierce as Beijing looks to rein in subsidies that led to a huge array of EV contenders entering the market. NIO’s revenue and deliveries of its electric SUV soared in the third quarter of last year. It plans to use the proceeds of the convertible bond for research and development, development of manufacturing facilities and sales and marketing. Chinese internet giant Tencent Holdings and Hillhouse Capital Management, NIO’s existing backers, will buy $30 million and $5 million of the convertible bond, respectively, according to the press release. Bank of America Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley and UBS are joint bookrunning managers for the deal. +++ 

+++ NISSAN travelled to the 2019 Consumer Electronics Show (CES) to introduce the long-promised long-range Leaf. Named e+, it boasts up to 370 kilometres of range in its most basic configuration. That’s much better than the standard Leaf, but it’s still behind the Hyundai Kona Electric, Kia e-Niro and Opel Ampera-e, and the firm has revealed moving up in the trim hierarchy lowers that figure. Only the entry-level Leaf e+ qualifies for the 370 kilometres. More expensive versions with additional kit (and weight) are rated at 350 kilometres. Nissan told the additional standard features add weight which saps range. To be clear, losing range while gaining features isn’t a Leaf-specific problem. +++ 

+++ Volkswagen’s business in SLOVAKIA , the country’s biggest car plant and largest private sector employer, plans to reduce staff this year for the first time since the 2009 global downturn as part of an efficiency drive. The business will return some 500 workers it had borrowed from the Hungarian unit of premium brand Audi in 2016, reduce the number of contractors and will not extend expiring fixed-term contracts, it said in a statement. Volkswagen employs around 14,000 people in Slovakia and the German automaker did not say what that figure would fall to. The Slovak business will also reduce the number of production shifts that make higher-end SUVs as well as cheaper small family cars including the Volkswagen e-Up, the only electric car currently made in Slovakia. There are no plans to place production of new electric vehicles at the Bratislava factory at the moment, it added. There are no cuts in overall output projections, as reduced hours will be offset by an increase in the technical capacity of production lines, it said. Volkswagen said the move was part of a drive to increase efficiencies by 30 % by 2025, as it strives to fund a costly shift to electric and self-driving vehicles following a 2015 scandal over rigged emissions tests of diesel engines. In 2017, Volkswagen Slovakia saw its first-ever strike that ended after 6 days with a wage deal that gave workers the biggest pay rise among Slovakia’s carmakers, although they still earn less than Volkswagen’s employees in Germany. Overall production at Slovakia’s 4 car factories (the bedrock of the export-dependent euro zone member country’s economy) rose to 1.08 million vehicles in 2018 and is expected to reach a 1.15 million this year, cementing its position as the world’s biggest per-capita car producer, the country’s car association said this month. But a focus on traditional petrol and diesel cars and a low share of research and development activities could threaten Slovakia’s business model in coming years, as the EU aims to reduce carbon emissions from vehicles. Slovakia’s smallest carmaker, a unit of Kia, will also reduce staff this year, the first time since launching in the country in 2006. It will cut 27 staff as of February due to a 35 % slump in demand for diesel engines made at its factory outside Zilina, northern Slovakia, versus 2017. Its car production this year is expected to match last year’s 333,000 vehicles. The auto industry accounts for 13 % of Slovakia’s gross domestic product, which is expected to grow 4.3 % this year before slowing, and for 35 % of its exports. PSA Group and Jaguar Land Rover see their output rising this year in Slovakia. +++ 

+++ TESLA ’s chief financial officer will leave the company as the automaker promised cheaper Model 3 sedans, the launch of Chinese production this year and profits in every quarter in 2019. The departure of Deepak Ahuja as well as missing Wall Street profit targets for the end of 2018, sent Tesla shares down nearly 6 %. Zach Kirkhorn, Tesla’s vice president of finance, will replace Ahuja, who is about 56 years old. Chief Executive Elon Musk touted strong demand for the Model 3, as the company begins to ship the car to Europe and Asia from its Fremont, California factory. But he acknowledged it was paramount to cut costs to lower the price of the vehicle for a wider customer base. “We have to be relentless about costs in order to make affordable cars and not go bankrupt”, said Musk on a conference call with analysts. While the company expressed optimism that it could post a profit in the first quarter despite fewer deliveries of its flagship S and X vehicles, Tesla warned of challenges such as logistics and global deliveries of its new Model 3. Tesla said plans to lower the price of the Model 3 were contingent on quickly building its factory in China. It hopes to produce 500,000 vehicles a year there by the last quarter of 2019 and the second quarter of 2020, a goal it originally expected to meet in 2018. To start, the Shanghai factory will build 3,000 Model 3s per week, while production at Tesla’s Fremont plant will rise to 7,000 Model 3s per week by year’s end, the company estimated. “Bottom line is we need the Shanghai factory to achieve that 10,000 rate and have the cars be affordable”, Musk told analysts. “The demand for Model 3 is insanely high. The inhibitor is affordability”. Musk announced a 7 % workforce reduction earlier this month, saying it was crucial to cut costs to roll out a lower-priced, yet still profitable, Model 3. The cheapest today is priced at $44,000. Musk gave a “rough guess” that Tesla would begin building its originally promised $35,000 version around the middle of this year. Roth Capital Partners analyst Craig Irwin called Tesla’s results “somewhat weak, but largely as expected. We think people have been too bullish about Tesla showing earnings power, and sustained positive cash from operations”, he said.  Investors have wondered whether Tesla, which has never posted an annual profit, will seek more capital to fund a planned Model Y SUV, the building of factories in China and Europe, and the expansion of Tesla’s existing Nevada battery plant, the Gigafactory. Tesla said it ended the quarter with $4.3 billion in cash and said it could pay a $920 million convertible bond maturing in March. “Tesla has a fantastic brand, and by all accounts a fantastic product, but we’re worried it’s also fantastically expensive”, said Nicholas Hyett, Equity Analyst at Hargreaves Lansdown. “2019 could prove a make-or-break year”.  The winding down of a U.S. tax subsidy this year will make all Tesla cars more expensive and could hurt sales. Tesla said it expected lower S and X deliveries in the first quarter, given a “pull-forward in demand” in 2018 for those vehicles when the full subsidy was still available. Tesla recognizes revenue once a vehicle is delivered. In the 4th quarter, customer deposits decreased by $113 million from the prior quarter to $793 million. Tesla said it was working through its Model 3 backlog without clarifying further. Asked about Model 3 reservations, Ahuja said that number was “not relevant”. Tesla last disclosed in May that net Model 3 reservations, accounting for new orders and cancellations, exceeded 450,000. The company made a net profit of $139.5 million in the 3 months ended Dec. 31, compared with a $311.5 million in the third quarter, when it benefited from regulatory credits. Tesla’s total revenue rose 5.9 percent to $7.23 billion, beating the analyst average estimate of $7.08 billion. Tesla has reintroduced cheaper entry-level Model S and Model X configurations after dropping the 75 kWh variants from the lineup. The sedan now starts at $85,000 with 500 kilometres of range and a 4,3 seconds 0-to100 time, while the crossover is priced at $88,000 with 435 kilometres of range and a 4.9 seconds sprint. The new base models are simply called the Model S and Model X, dropping any reference to battery capacity from the name. All configurations now integrate a 100 kWh battery, reducing range via software restriction. The S and X with full unlocked capacity are now labeled Extended Range. The new options allow Tesla to potentially boost sales while streamlining manufacturing by placing a 100 kWh battery into every Model S and X. The entry prices are still higher than the previous cheapest base packages, maintaining a gap between the flagship vehicles and the Model 3 lineup. +++ 

+++ TOYOTA chief Akio Toyoda has reaffirmed the company’s intention to bring more sports cars to market. Speaking at the Supra launch, Toyoda acknowledged that SUVs are popular but opined “is there anything better than a tight rear-wheel-drive sports car? I hope this won’t be the last Toyota sports car you see from us in the future”. The statement echoes comments from the Supra’s assistant chief engineer, Masayuki Kai, who last year said “we want to have Celica back, we want to have the MR2 back”. A new Celica would likely be positioned as an all-wheel-drive alternative to the current GT86. A spiritual successor to the MR2 might take a different path, perhaps following in line with the S-FR concept. Separate rumors suggest Toyota may be patiently waiting for a partnership with another automaker to help share development costs in the low-volume segment, consistent with the Toyota- BMW collaboration that led to the new Z4 and Supra. +++

+++ In the UNITED KINGDOM , car production fell 9.1 % year on year in 2018, while automotive investment almost halved. UK car plants produced 1.52 million cars in 2018, the lowest figure in 5 years. Cars made and sold in the UK fell 16.3 % while exports dropped 7.3 %. Of the cars made in the UK, 80 % were exported. The decline is being blamed on regulatory changes and diesel policy uncertainty, plus slumps in demand in both China and Europe. Declining consumer and business confidence as a result of Brexit is another major factor that was cited. “The bottom line is that it’s a deeply depressing figure”, said SMMT chief executive Mike Hawes. “Product cycles always have an effect. WLTP affected production. Diesel uncertainty, not just in the UK but also in Europe, but particularly Germany and France, was a factor. Furthermore, there is falling business and consumer confidence here and elsewhere, and UK manufacturers are exposed to the global market”. Meanwhile, investment in the UK automotive industry plummeted by 46.5 % to €630 million. It is the first time since 2012 that investment has been less than €1 billion. Firms announcing investments in 2018 included Aston Martin and car seating and electrical company Lear. Hawes said: “The most alarming figure here is around automotive investment. It has effectively stalled. The manufacturers need to make underlying investments but a lot of that is on hold until we see what the future is. They are saying: ‘Do we have the confidence to invest in that plant when there is this Brexit uncertainty?’ ”. Coventry-based Jaguar Land Rover, which announced 4,500 job losses as well as factory shutdowns earlier this month, remains the biggest car maker in the UK. Its output fell 15.6 % in 2018 to 449,304 units across its 3 factories in Castle Bromwich, Halewood and Solihull. The hardest hit was Vauxhall, with its production falling 15.9 % to 77,481. The PSA-owned firm only produces 1 car in the UK at its Ellesmere Port plant, the Astra. Meanwhile, Nissan output fell 10.7 %, Toyota’s dropped 10.4 % and Honda’s decreased by a modest 2.1 %. Mini bucked the trend, with a 7 % rise. It produced 234,183 cars at its Oxford facility in 2018. The top British best-sellers worldwide were: 1. Nissan Qashqai, 2. Mini, 3. Honda Civic, 4. Toyota Auris, 5. Vauxhall Astra, 6. Range Rover Sport, 7. Nissan Juke, 8. Range Rover, 9. Range Rover Velar and 10. Jaguar F-Pace. The number of diesel cars made in the UK fell 22 % to 561,384 units, while petrol production dropped 3.5 %. Alternatively fuelled vehicle production rose 41.5% to 142,732 units. The electric Nissan Leaf is built in Sunderland and the plug-in hybrid Range Rover and Range Rover Sport are also made in the UK. Hawes described output to Europe, which has fallen 7.3 %, as “pretty flat” and noted it was “still overwhelmingly the biggest market”. UK car exports to China suffered the biggest hit in 2018, falling 24.5 %. Growing markets included the US (+5.3 %), making it the UK’s second biggest customer after the EU, Japan (+26 %) and South Korea (+23.5 %). According to the SMMT, twothirds of the UK’s car exports are to Europe or markets with preferential EU trade agreements. A spokesman said: “Time has almost run out to guarantee continuity of any of these arrangements before Brexit, and ‘no deal’ could therefore put more than two-thirds of UK automotive’s global trade under threat”. Hawes said he hoped that the industry “has not reached the point of no return” in relation to the damage already done since the Brexit referendum. He said the supply chain is particularly vulnerable, as it quickly feels the effect of falls in manufacturer volume. Talking about the mood within the industry, he said: “We’re not at the financial crisis levels of 2008. But the lack of clarity means the mood is incredibly nervous and everybody is increasingly exasperated”. If there is a Brexit transition, Hawes predicts production will fall by a further 20,000 units in 2019. He said it was “impossible to put a number on production under a no-deal scenario. Long term, no deal would be a catastrophe for the industry. It would be hard to see the levels of production volumes that we currently have. 3 or 4 years ago, I was bullish about the state of UK car manufacturing. I’m anything but now”. He concluded: “With fewer than 60 days before we leave the EU and the risk of crashing out without a deal looking increasingly real, UK automotive is on red alert. Brexit uncertainty has already done enormous damage to output, investment and jobs. Yet this is nothing compared with the permanent devastation caused by severing our frictionless trade links overnight, not just with the EU but with the many other global markets with which we currently trade freely. “Given the global headwinds, the challenges to the sector are immense. Brexit is the clear and present danger and, with thousands of jobs on the line, we urge all parties to do whatever it takes to save us from no deal”. +++ 

+++ The VOLKSWAGEN Group has held on to its position as the world’s top-selling automaker for the 5th year in a row, although the German group was edged out again by the Renault-Nissan-Mitsubishi alliance in the passengercars and light-duty vehicles segment. Renault, Nissan and Mitsubishi together sold 10.76 million passenger cars and light commercial vehicles in 2018. The group doesn’t sell heavy trucks. Nissan said it sold 5.65 million vehicles last year, down 2.8 % on the year. Mitsubishi reported an 18 % rise in sales to 1.22 million units while Renault sold 3.88 million units, up 3.2 % on the year. Volkswagen’s deliveries rose 0.9 % to a record 10.83 million last year, including its MAN and Scania heavy trucks, the German company said earlier this month. Excluding heavy trucks, it sold 10.6 million units. Toyota retained its third spot, announcing that it had sold 10.59 million vehicles last year including its Toyota and Lexus brands, along with minicars made by subsidiary Daihatsu and light and heavy trucks produced by its truck division Hino. Excluding Hino trucks, Toyota sold 10.39 million units last year. The automaker has said it expects to sell a total of 10.76 million vehicles in 2019. Many automakers are trying to boost sales volumes to achieve economies of scale and reduce costs amid soaring investments needed to develop next-generation technologies, including self-driving cars and electric vehicles. This has been a focus of the Renault-Nissan-Mitsubishi Motors group, which is looking to share more vehicle parts and consolidate production platforms to trim R&D and manufacturing costs, while raising profitability. The alliance, which brought Mitsubishi Motors into its fold in 2016, is currently in crisis with its former Chairman Carlos Ghosn arrested and indicted on charges of misconduct. Nissan has also been indicted, and Renault appointed new top management last week. +++

+++ Chinese automaker ZOTYE has started building a dealer network in the United States. It aims to start selling its cars in America before the end of 2020. As of January 2019, the company has 19 stores ready to sell its cars. The future dealerships are scattered across the country; some are in the San Diego area, some are on the east coast, while others are in more rural parts of the country like Wichita, Kansas, and Oklahoma City. All of them will be opened by companies who already operate at least one car dealership. That’s just the beginning. Zotye hopes to start distributing cars through anywhere between 300 and 325 dealers located in the top 80 markets across the United States. The company hasn’t revealed which model(s) it will sell here yet, but rumors claim the first Zotye-built car to disembark in America will be the T600, a crossover that made its debut on the Chinese market 2013. It could get a new name and design tweaks before arriving in U.S. showrooms. “The company’s first U.S. product will be an SUV with engineering, development, and homologation work currently underway”, HAAH Automotive Holdings, Zotye’s unfortunately-named parent company, wrote on its website. Duke Hale, the CEO of Zotye’s American division, promised to price the company’s cars 20 % under the competition. He also announced customers will be able to buy cars online, and that dealership will follow a strict, Saturn-like no-haggle policy. “We’ve got the team; we’ve got the lineup; we’ve got the price; we’ve got the value. And we’re going to have the experience. It’s going to be hard to duplicate. A lot of competitors are going to nearly hate us”, Hale told. Zotye may be the first Chinese company to sell cars in the United States under its own name, but it won’t have a monopoly on the bottom end of the market for long. GAC, another China-based firm, has exhibited its cars at the Detroit auto show for years, and it even purchased advertising space at the Detroit airport to announce its American offensive. It also plans to gain a foothold in the United States in 2020. +++

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