+++ FORD is aiming to cut up to 400 jobs from its engine plant at Bridgend in Wales, in one of the first moves of its cost-cutting ‘transformation’ of its European business. The car firm has informed trade union officials that it will launch a voluntary redundancy drive at the plant to cut between 370 and 400 jobs. The scheme is open to both hourly and salaried employees, with those who apply and are selected expected to leave their jobs in the second half of 2019. Ford has been planning to shrink production at the facility. The move is part of a major overhaul of its European business, and more widely of a €15 billion global cost-cutting programme. It includes cutting costs in areas such as purchasing, manufacturing and engineering, and reducing “surplus labour”, according to Ford president Steven Armstrong. Ford could cut more than 1,100 jobs at Bridgend in south Wales by 2021; a move the factory’s labour union Unite blames partly on Brexit. The plant recently started building the 3-cylinder 1.5-litre Ecoboost engine used in the Fiesta ST and new Focus, alongside a 4-cylinder unit. It also produces the Jaguar AJ-V8 engine for Jaguar Land Rover (JLR), although demand for that motor has been hit by falling sales of the various models it is used in. Last year, the factory churned out 670,000 engines. With JLR due to move engine manufacturing to its new plant in Wolverhampton after 2020, Ford will also look to scale back on production. In a statement, Ford said: “It goes without saying, that in order to attract new business, the Bridgend operation would need to ensure its competitiveness, and addressing some of the current concerns relating to the plant’s efficiency would be high on the agenda”. +++ 

+++ Chinese automotive giant GEELY is setting up a new design centre in the UK and has poached former Jaguar designer Wayne Burgess to head up the operation. Geely, which owns brands such as Volvo, Lotus, Lynk & Co and the London Electric Vehicle Company (LEVC), intends to set up the new facility in Coventry, employing around 100 designers and support staff within the next 5 years. Burgess, a Brit who has been at Jaguar Land Rover since 2001 and previously held the position of design director of Jaguar production and SVO vehicles, has cars such as the F-Pace, F-Type, XE and the latest-generation XJ in his design portfolio. He’ll be managed by fellow Brit Peter Horbury, Geely’s global head of design since 2011. The new facility will join Geely design studios in Shanghai, Barcelona, Gothenburg and California. It will “support in-house design functions” of brands such as Geely Auto, Lynk & Co, Proton, Lotus and LEVC. In a statement, Horbury said: “The addition of Geely Design UK showcases Geely’s commitment to the UK and also shows Britain’s leading position in the areas of creativity and design. Wayne brings with him a wealth of experience in premium car design which will help us develop our brands”. Geely is planning to launch Lynk & Co in Europe this year, after the newly established brand enjoyed strong initial success in its home market. Geely has also owned Volvo since 2010 and Lotus since 2017, the same year in which it ensured LEVC launched London’s first range-extending electric taxi. +++ 

+++ GENERAL MOTORS said it is negotiating “feasibility conditions” to invest 10 billion reais ($2.73 billion) in Brazil from 2020 to 2024, after having warned last month that new investments would depend on returning to profit. The automaker also said it is completing an investment plan of 13 billion reais between 2014 and 2019. “As market leaders, we are taking on the responsibility of facing the challenges of competitiveness that the industry is experiencing in order to make a sustainable future possible for our businesses and the proper return to shareholders”, said Carlos Zarlenga, chief executive of GM Mercosul, in a statement. “We continue to work with unions, dealers, suppliers and the government in order to enable this new and additional 10 billion reais investment in the factories of São Caetano do Sul and São José dos Campos”, he added. GM has in recent weeks warned its employees in Brazil that “sacrifices” would be necessary for the company to return to profit in the country, raising concerns about layoffs or shuttered assembly lines. Last month, the carmaker told public officials and unions it was in talks with Sao Paulo state about tax incentives. GM will invest in its product line until 2022, and then the following year, the company would start to enjoy tax rebates. GM’s losses in Brazil last year totaled 1 billion reais despite being the country’s market leader. +++ 

+++ Braced for a possible logistical nightmare when Britain leaves the European Union in March, HONDA said it was preparing to front-load some production at its plant in the country to ship overseas or build up inventories. The Japanese automaker, which produces the Civic at its factory in Swindon, southwest England, may face possible supply chain, production and distribution issues if Britain’s borders are disrupted from March 29, when the country is due to leave the EU. “To avoid any possible disruptions at the end of March, we’re making a number of preparations including front-loading some production to ship or step up inventories”, Honda Chief Operating Officer Seiji Kuraishi told. Carmakers in Britain have warned that their factories, which rely on the constant delivery of parts to enter production cycles, would be severely impaired if Britain leaves without a trade deal, forcing the need for customs checks at borders. Earlier this month, Honda said it would stop its British operations for six days in April to help counter any disruptions resulting from a potentially chaotic Brexit. Japan’s third-biggest automaker said increased discounting on its popular CR-V pushed operating profit down 40 % in October-December, while quality-related costs and currency volatility also stung its bottom line. Honda posted profit of 170.1 billion yen ($1.56 billion) for the quarter, tumbling from 284.5 billion yen a year ago. Kuraishi said the company had increased discounts on the old CR-V sold in North America, where inventories had built up towards the end of the year, to make room for the current year model. Such discounting helped boost sales in North America to 498,000 units during the period, up from 491,000 a year earlier. While it managed to buck the trend of slowing demand in the United States, higher incentives slashed profitability in the region. Honda’s global automobile sales came in at 1.41 million vehicles in October-December, versus 1.34 million a year earlier, boosted by rising sales at home and in Asia. In China, another key market where sales have also cooled after years of growth, Honda sold around 1.43 million vehicles in 2018, down slightly on the previous year. While sales in the past few months have held up against an overall market slowdown, Honda was stung earlier in the year by a quality issue with its Civic, the CR-V and other popular models. Kuraishi said that he hoped to keep increasing sales in China this year, even as automakers in the world’s largest auto market brace for a tough 2019. Demand in China has cooled following years of strong growth as the country’s growing middle class snapped up new cars. +++ 

+++ HYUNDAI is forging ahead with the development of an all-new i10 even though the A segment market is set to undergo a dramatic shake-up in the next few years. Brands are looking to increase the number of electric cars in their ranges and boost profits, which means the humble A segment car (the most affordable way into new model ownership) is under threat due to their relatively small profit margins and volumes they sell. Nevertheless, by the time the third generation i10 arrives in dealers next year, it will be the most hi-tech and advanced car in a market many rivals are looking to pull out of. Despite the extensive disguise worn by prototypes spotted testing, I’m expecting the new i10’s revisions to be minimal because of the car’s low build and retail costs. The new i10 will share its basic shape with the outgoing model, sporting the same funky headlamps, centre-mounted daytime running lights and bumper design. Expect little more than a mild tweak to the front and rear bumpers. Hyundai has said the i10’s coloured interiors are likely to be phased out, due to their poor sales. Inside, a mild update to the infotainment system could be possible for premium models, which are likely to borrow the 8,0 inch touch screen found in the larger i30. Under the bonnet, the i10 is expected to stick with Hyundai’s tried-and-tested 1.0-litre 3-cylinder and 1.2-litre 4-cylinder engines, but feature tweaks to boost power and efficiency. +++

+++ The facelifted version of the MERCEDES E-Class has been caught on camera again. This facelifted saloon is further evidence that Mercedes will refresh the entire E-Class line-up, with Estate, Coupe and Cabriolet variants expected to follow. The facelift will be similar in structure to the company’s C-Class revamp from last year. I expect exterior alterations to be limited to the bumpers, headlights, grille and tail lights. The headlights are likely to get the same distinctive eyebrow lighting signature as seen on recent Mercedes releases, such as the latest CLS and the A-Class. The front bumper will also likely adopt Mercedes’s latest intake-design. Interior changes to the E-Class will likely be minor, being limited to the car’s infotainment system. Mercedes’s latest MBUX unit will be introduced across the E-Class range, adding the “Hey Mercedes” voice activated assistant, along with a new infotainment user interface and a fresh steering wheel. The E-Class engine range is unlikely to alter too drastically, but more electrified options are inevitable in response to the more stringent WLTP emissions regulations. At the upper-end of the range, AMG-tuned variants (in either a 6-cylinder-powered AMG 43 or V8-propelled AMG 63 flavours) could arrive with more power. With prototypes hitting the road now, I expect a reveal of the facelifted E-Class within 12 months, before it goes on sale early in 2020. +++ 

+++ NISSAN has scrapped plans to build its new X-Trail in Britain and will produce it solely in Japan, warning 2 months before Brexit that uncertainty over Britain’s departure was making it harder to plan for the future. Falling demand for diesel cars in Europe has forced Nissan to invest in other technologies and save costs. It cut hundreds of jobs at its Sunderland factory in the north of England, Britain’s biggest car plant, last year as output slumped 11 %, hit by levies and crackdowns on diesel. “Nissan has increased its investments in new powertrains and technology for its future European vehicles”, the firm said. “Therefore the company has decided to optimize its investments in Europe by consolidating X-Trail production in Kyushu”. “While we have taken this decision for business reasons, the continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future”, said Nissan Europe Chairman Gianluca de Ficchy. Britain’s business minister Greg Clark said the announcement was a “blow to the sector and the region”. Britain is due to leave the European Union on March 29. Lawmakers rejected Prime Minister Theresa May’s Brexit deal, heightening fears of a disorderly no-deal Brexit and of new trade barriers. May said she would seek a “pragmatic solution”. In a letter to workers, de Ficchy said Nissan has a task force that reports to him and is “considering all of the possible scenarios and the potential impact on the business”. Nissan builds roughly 30 % of the country’s 1.52 million cars and exports the vast majority to the continent. It said 4 months after Britain voted to leave the EU in June 2016 that it would manufacture the new X-Trail in Britain; a major vote of confidence in the country and May, shortly after she took office. A source told at the time that Nissan received a letter from the government promising extra support in the event that Brexit hit the competitiveness of the Sunderland plant. Ministers are now considering whether to withdraw a $78.46 million package of support for the company. “This kind of support package to help in areas such as training and skills is typical across the industry. Clearly we will be reviewing it in the light of this decision”, a government source told. The new X-Trail could have created hundreds of jobs. The carmaker’s planned investment in the next-generation Juke and Qashqai models, which was also announced in 2016, was unaffected, Nissan said. The announcement came just after an EU-Japan free trade agreement kicked in, which includes the European Union’s commitment to removing tariffs of 10 % on imported Japanese cars. Many Japanese companies had long seen Britain as the gateway to Europe, after being encouraged to open factories in the country by former prime minister Margaret Thatcher. Brexit has thrown that into doubt, prompting consternation in Tokyo. Doubts about the future of the Sunderland plant, which currently produces the Juke, Qashqai, X-Trail and Leaf, along with the Infiniti Q30 and QX30, were raised after Britain voted to leave the European Union in 2016. Nissan eventually committed to the plant’s future after then-chairman Carlos Ghosn struck a deal with the UK Government after a meeting with Theresa May. Earlier this year, Nissan cut a number of jobs at the plant, in a move understood to be related to a fall in their sales of diesel-powered cars. The news is another blow to the car industry in the United Kingdom, after confirmation that car production in the country fell 9.1% year-on-year in 2018. +++ 

+++ PORSCHE could be given a substantial fine by the German government after admitting that fuel consumption and emission figures submitted for type approval of the outgoing 991-series 911 were incorrect. The fuel consumption and emission data submitted to the German Transport Ministry prior to the granting of type approval for unspecified 911 models in 2016 and 2017 included incorrect values due to miscalculations in their drag co-efficient. Porsche self-reported the error to German authorities and is also set to inform US authorities. Laboratory tests carried out on the old 911 failed to factor in the drag co-efficient, which led to figures that do not represent real world fuel consumption and emissions. Fuel consumption and emission values gained on a rolling road are much lower from those in the real world owing to a lack of wind resistance. The error means that the affected 911 models use more fuel and emit more emissions than noted in their type approval. Porsche chairman Oliver Blume says he has informed the German Transport Ministry of the false data and Porsche engineers are now reportedly working with German government authorities to determine the extent of the miscalculation. Under German law car makers can be fined if fuel consumption and emissions vary by more than 10 % from their claimed values, and customers could also claim compensation. It is not yet know how much variation there is between the figures Porsche recorded, or how many cars are affected. +++

+++ RENAULT – Nissan is examining fees paid to consultants and political advisers including a serving European lawmaker, following Chairman Carlos Ghosn’s arrest and ouster from the helm of the carmaking alliance, 2 sources told. Past business relationships with French advisers and lobbyists are in focus as the carmakers embark on an independent audit of their Dutch-registered Renault-Nissan BV (RNBV) holding that Nissan had long demanded and Renault initially resisted. The Japanese carmaker is concerned that use of shared RNBV funds lacked transparency and may not have served the company’s interests as much as those of Renault, or Ghosn himself, the sources said. Strategic PR adviser Claudine Pons and security consultant Alain Bauer have already confirmed reports they were paid via the holding for their services after a scandal at Renault in 2011 that almost forced Ghosn out. The company was hoaxed into firing 3 innocent executives over false spying accusations. The alliance also hired former justice minister Rachida Dati as a legal adviser soon after she left the government of then-president Nicolas Sarkozy in 2009 to stand for the European Parliament, according to the same 2 sources. RNBV’s dealings with Dati were unknown to Nissan, which co-funds the holding, spokesman Travis Parman said, when approached for comment. “Nissan is not aware of any such payments. We can’t comment on specifics related to the joint audit”, he said. There is no suggestion of any wrongdoing by Dati, who is the highest-profile recipient of an alliance contract to have come to light. She referred questions to her lawyer, Olivier Pardo. Pardo said Dati had been hired by RNBV in October 2009, 4 months after leaving Sarkozy’s government, and retained until February 2013. He declined to comment on her remuneration. “It was a retainer agreement that complied with the rules applying to lawyers”, Pardo said. “It was a very broad and wide-ranging assignment, and since she is bound by professional secrecy I can’t go into any more detail”. The decision to end her RNBV contract was taken in October 2012, according to Pardo, 5 months after Francois Hollande succeeded her former mentor as French president. Spending on advisers appeared in RNBV accounts as a single line for consultants’ fees, which exceeded €20 million in 2015 but included no further details, sources have said. Renault declined to comment on the RNBV audit. Ghosn, who was forced to resign as Renault chairman and CEO, has been charged with failing to disclose more than $80 million in additional Nissan compensation for 2010-18 that he had arranged to be paid later. Senior director Greg Kelly and the Japanese carmaker itself have also been indicted. Both men deny that the deferred pay deals were illegal or required disclosure. Ghosn has denied a separate breach of trust charge over personal investment losses he temporarily transferred to Nissan in 2008. The scandal has strained Nissan’s 20-year-old partnership with 43.4 % owner Renault. Repairing the relationship is the biggest challenge facing Jean-Dominique Senard, who took over as Renault chairman, as Ghosn’s deputy Thierry Bollore was promoted to chief executive. Nissan began pushing for an investigation into RNBV within hours of Ghosn’s arrest, and formally proposed a joint audit on Dec. 19. But its calls were rebuffed by Renault under Bollore’s leadership as interim CEO, several sources have told. Nissan stepped up pressure for a financial audit to be conducted independently of lawyers reporting to Mouna Sepehri, a senior executive close to Ghosn, following a report on Jan. 10 about her undisclosed pay, 2 people with knowledge of the matter said. Renault’s board agreed to the audit the following week. Further management changes are now likely at Renault “within a month or so”, a source close to Chairman Senard told Reuters. Mazars, the Paris-based audit firm selected last week to comb through RNBV’s finances stretching back to its creation in 2002, is expected to complete its work by the end of February. +++ 

+++ TESLA has boldly claimed the Model 3 was the most popular premium vehicle among American buyers last year, outselling all other models including popular SUVs. “With nearly 140,000 units sold, Model 3 was also the best-selling premium vehicle (including SUVs) in the US for 2018; the first time in decades an American carmaker has been able to secure the top spot”, the company wrote in its Q4 financial disclosures. To highlight the achievement, the Q4 report shows a chart with the Model 3’s sales towering above the Lexus RX, Audi Q5, Mercedes-Benz GLC, Acura RDX, Lexus NX, BMW X3, Cadillac XT5, Mercedes C-Class and Acura MDX. Tesla chief Elon Musk argues that demand is strong and sales are being limited only by production volume and the entry-level price tag. The cheapest Model 3 currently available is the midrange edition that starts at $44,000, still $9,000 above the target floor of $35,000. “The demand for Model 3 is insanely high. The inhibitor is affordability”, Musk said to analysts following the Q4 release. “It’s just people literally don’t have the money to buy the car. It’s got nothing to do with desire. They just don’t have enough money in their bank account. If the car can be made more affordable, the demand is extraordinary”. Tesla expects to sell up to 500,000 Model 3s this year, though hitting the half-million milestone will require the Shanghai factory to begin production on time. +++ 

+++ VOLKSWAGEN will launch a mass-market, affordable electric car that will cost under €25,000, according to the firm’s bosses. Said to be part of a modern-day ‘people’s car’ project, the compact crossover utility vehicle was today confirmed by product strategy head Michael Jost. It will arrive by 2023, or 2024 “at the latest”. The compact 5-seater will have a raised ride height and exterior dimensions similar to the existing combustion-engined T-Cross, forming part of Volkswagen’s upcoming line-up of I.D. battery-powered models that will kick off with the launch of the Neo hatchback in 2020. Previously, Volkswagen chairman Herbert Diess indicates could be as low as €20,000. Jost also confirmed that price point, while saying “we build cool electric cars that are fun to drive, beautifully designed and fully networked”. The keen pricing for what will be the 5th I.D. model after the Neo and production versions of the Crozz, Buzz, Lounge and Vizzion concepts is a crucial component in a broader plan at Volkswagen to create a contemporary, new electric-powered people’s car in a move aimed at mirroring the success of the original Beetle and its indirect successor, the Golf. Diess, the architect of Volkswagen’s electric car strategy, recently claimed engineers are working on a car conceived to be priced at half that of the Tesla Model 3 without naming the secret new electric-powered crossover, suggesting it would be on sale within 4 years. The idea behind the new I.D. model is to create a car with classless design appeal, outstanding interior space within a compact footprint and the sort of affordability to allow it to appeal to a wide number of car buyers in all of Volkswagen’s existing markets. As with Volkswagen’s other I.D. models, it is based around the company’s new MEB (Modularen Electrik Baukasten – modular electric architecture) platform with a front-mounted electric motor together with a battery of sufficient capacity to provide a range well over the claimed 300 kilometres of today’s e-Golf. To keep the price down, it will likely be offered exclusively in front-wheel drive guise, with a series of connectivity options set to be offered as optional equipment.
Together with the primary Volkswagen version, the new zero-emission crossover 5-door has been conceived to sire similar models from Audi, Seat and Skoda. Production will take place at Volkswagen’s Emden manufacturing plant in Germany, a site which currently produces the Passat and Arteon, with capacity set to top 300,000 units a year. Insiders at Volkswagen’s Wolfsburg headquarters suggest plans are to switch production of the next-generation Passat and Arteon to Skoda’s Kvasiny plant run in the Czech Republic, which currently produces the Superb, or possibly even a brand-new greenfield site in Bulgaria. The decision to use the Emden plant for the production of the junior I.D. models means Volkswagen will have installed capacity for well over 1 million electric vehicles by 2022, with its existing Zwickau and Hannover commercial vehicle plants in Germany, as well as joint venture factories operated with SAIC (Shanghai Automotive Industry Corporation) in Shanghai and FAW (First Automobile Works) in Foshan, China accounting for the production of China-only models. At this stage, there is no indication whether the new entry-level I.D. model will be produced in other factories, though rumours in China suggest it could form the basis of a new joint venture model to be produced between Volkswagen and JAC (Anhui Jianghuai Automobile) under the new SOL electric vehicle sub-brand. As well as eyeing private and business sales of the new price leading I.D. model, Volkswagen is believed to have drawn up plans to use it as the basis for a global mobility project under its newly formed Moia subsidiary, which is developing ride-sharing schemes and other mobility solutions. Volkswagen plans to launch a total of 27 MEB-based models across its 4 brands (Volkswagen, Audi, Seat and Skoda) by 2025. +++

+++ Automakers are bracing themselves for added costs and renewed market volatilities as the next stage of Europe’s new WLTP testing regime goes into effect later this year. WLTP’s introduction last September forced some automakers including Volkswagen Group, BMW and Renault to pull models from the market and halt output because of bottlenecks in getting vehicles certified for sale in time for the deadline. VW, Daimler and other automakers are looking with concern at the next WLTP stage, which includes changes to the mandatory evaporation test (EVAP). Volkswagen Group’s sales chief Christian Dahlheim said that to pass the latest tests nearly all engine-transmission variations will again have to go through “time consuming” WLTP certification processes. “Compared with 2018, we are confident that we can dampen the effects of the second stage considerably. Nevertheless, we cannot rule out temporary limitations to some of the models in our range in the second half of this year”, he said. Daimler said the industry has had little time to prepare for the second set of tests. The new regulations were only published in their final form at the end of November and, in the case of new vehicle types, required compliance already at the start of the year, the company said in a statement. “It remains challenging because the effort for everyone involved with the new processes has risen enormously”, Daimler’s sales chief Britta Seeger. She is confident that the challenges can be met. “In 2018, we learned a great deal. We can now plan better”, she said. WLTP (Worldwide harmonized Light Vehicle Test Procedure) replaces the outdated New European Driving Cycle (NEDC) as the homologation process for new passenger vehicles in EU markets. PSA Group’s Opel/Vauxhall unit said it was confident that its business will not be interrupted. “Opel took extensive precautions early on to ensure the timely certification of all models in keeping with the coming emissions limits. We expect we will be at all times capable of meeting demand, just as was the case in 2018 with the initial changeover to WLTP”, a spokesman said. PSA prepared well and suffered little disruption from WLTP’s introduction. PSA’s Europe chief, Maxime Picat, said earlier this month that the company’s ability to meet last September deadline gave it a sales advantage in the second half of 2018. BMW Group also said it does not expect any problems homologating its vehicles under EVAP. “BMW has set up a special project team with enough time in advance to cope with the considerable additional time expenditure required, such as making the necessary IT adjustments”, a spokesman said. “The changeover process for the new type approvals is proceeding according to plan”. VW expects less disruption from the second stage than it suffered last year when a shortage of engineers partly contributed to it failing to get vehicles ready for certification, causing delivery bottlenecks and a big sales hit in the last quarter. Last August, VW and many other automakers offered discounts on new cars that were homologated under the outgoing NEDC test to reduce stocks ahead of the Sept. 1 deadline. This led to €1 billion in costs through lost sales and higher incentives, VW said. “We believe we are considerably better prepared. It won’t be a walk in the park, but we do not expect any significant extraordinary financial effect in that magnitude”, Dahlheim said. VW Group’s Audi brand is still expected to suffer effects from the first stage lasting through the end of the first quarter, he said. This is in part due to a complex number of engine-transmission variations and a recent renewal of its product portfolio. In an internal video communication to employees in late 2018, VW CEO Herbert Diess warned: “The second phase of WLTP is coming. It will be the same drill as this year all over again, especially for Audi and VW”. WLTP’s introduction sent European new-car sales on a rollercoaster ride in the latter half of 2018. Sales surged 31 % in August as buyers rushed into dealerships to take advantage of heavy discounts, data from industry association ACEA showed, but declined though the rest of the year, falling 24 % in September, 7 % in October, 8 % in November and 8 % in December. +++

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