+++ Bowing to regulatory pressure, BMW will not offer the next-generation 7 Series with V8 and V12 engines. The firm will instead argue that electrification is the right replacement for displacement. I already knew the mighty, 6.6-liter V12 engine that powers the M760i wasn’t long for this world, but this is the first time I’ve heard about the V8’s demise. Every version of the next-generation 7 Series will incorporate some degree of electrification, including mild hybrid and plug-in hybrid technology. These technologies will allow BMW to offer nothing bigger than a straight-6 engine. While some motorists will miss the charm of an V8 engine, they won’t miss its power. The downsizing campaign won’t lead to a less powerful 7 Series. The plug-in hybrid powertrain will make 560 hp and 780 Nm in its most powerful configuration, figures that are higher than the ones posted by the 750i. How BMW will fill the void created by the 600-horsepower M760i’s demise remains to be seen, however. Weight is another significant factor. Electrification adds weight, but BMW is seemingly on a quest to make every new car it releases lighter than the model it replaces. It could at least partially offset the mass added by electric motors and the battery pack that feeds them. +++ 

+++ BMW AND DAIMLER unveiled a joint ride-hailing, parking and electric car charging business to compete with mobility services provided by Uber and other tech firms. The luxury car firms said they would invest more than €1 billion to expand the joint venture, shifting beyond manufacturing and car sales toward pay-per-minute or pay-per-kilometre systems. Consultancy PwC has said carmakers face marginalization by cash-rich technology firms unless they develop services based on vehicle usage. Established ride-hailing firms have been expanding. China’s Didi Chuxing aims to build its business in Latin America and Uber is gaining a stranglehold on its U.S. market. “Further cooperation with other providers, including stakes in startups and established players, are also a possible option”, Daimler’s chief executive Dieter Zetsche said. Daimler’s Car2Go car-sharing brand will be combined with BMW’s DriveNow, ParkNow and ChargeNow businesses, with both carmakers holding 50 % stake in the venture. The venture has 5 strands: Reach Now: a smartphone-based route management and booking service, Charge Now: for electric car charging, Free Now: for taxi ride-hailing, Park Now: for parking services and Share Now: for car-sharing. “These 5 services will merge ever more closely to form a single mobility service portfolio with an all-electric, self-driving fleet of vehicles that charge and park autonomously”, said BMW Chief Executive Harald Krüger. BMW and Daimler are working to develop autonomous cars, vehicles which could enable them to up-end the market for taxi and ride-hailing services. +++ 

+++ In 3 cavernous former Royal Air Force hangars at an old airbase in Wales, luxury carmaker Aston Martin is forging ahead with construction of a new vehicle assembly plant. The paint shop is in, robots are being unpacked, and production of the company’s critical new sport utility vehicle is on track to start this year; BREXIT deal or no deal. “I still have to believe that we’ll get to a proper and right decision because a no-deal Brexit is frankly madness”, Aston Martin CEO Andy Palmer told at the company’s Gaydon headquarters in England, where designers are working on a diverse lineup of vehicles for the 2020s and beyond. Headlines have focused on plant closures and job losses ahead of Britain’s divorce from the EU. Nissan has scrapped plans to build its new X-Trail in the country, while Honda will close its only UK car plant in 2021 with the loss of up to 3,500 jobs, though it said the decision was not related to Britain’s exit from the EU. However many auto companies (from luxury marques like Aston Martin to mass-market brands such as Vauxhall) are working on ways to survive after March 29. On the outskirts of London, workers at Vauxhall’s operation in Luton are preparing to produce a new line of commercial vans following fresh investment from the brand’s owner PSA which they are counting on to sustain over 1,000 jobs. While post-Brexit market conditions remain a big unknown, Vauxhall boss Stephen Norman told Britain’s exit from the European Union could present an opportunity to increase the brand’s market share. He is pursuing a marketing campaign to boost demand for the company’s modestly priced cars and SUVs. The continued investment by some carmakers and the potential sales upside seen by Vauxhall reflect the conflicting decisions and opportunities that brands face depending on their size, their customers and where they are in the production cycle. All automakers in Britain will anyway have to find ways make Brexit work, even if only in the short term. Nissan builds nearly 450,000 cars and multiple models, making it hard to pull out of the country any time soon. Toyota builds just one model in Britain, the Corolla, but has only just started making it; in an industry where vehicles tend to have a 7-year production life cycle. Aston Martin and Vauxhall are as different as 2 auto companies can be. Now Brexit has thrown Palmer and Norman into the same precarious boat as, like their rivals, they seek to minimize the potential harm of a disorderly British exit. The 2 companies have significant British manufacturing operations and together have thousands of employees in the country. Palmer and Norman both said in interviews that the impact of Brexit would be more complicated, more pervasive and take longer to play out than policymakers and the public appreciated. For Aston Martin, which sells sports cars at prices well above 100,000 pounds, new European tariffs on British-built cars are not a significant concern, Palmer said. Like other smaller players such as Bentley, Rolls-Royce and McLaren, Aston Martin has much larger margins on its cars and extra costs can be more easily passed onto wealthy customers. That’s not a luxury enjoyed by mass-market players. What concerns Palmer more is the disruption to his company’s network of suppliers and its meticulously scheduled production system. As he walks through Aston’s Gaydon factory, Palmer points to several rows of dashboards mounted on carriers and crowded into a corner of the plant. Aston Martin is building stockpiles of key parts in case an abrupt, no-deal Brexit results in trucks with components getting delayed by chaos at British ports. It is increasing the days of stock it holds from 3 days to 5 days and could fly in parts if ports become clogged up after March 29. Aston Martin receives many of its engines from a Mercedes-Benz factory in Germany, and new border checks and tariffs could delay those shipments. Reverting to a regime of cross-border tariffs and World Trade Organization rules, after decades of free trade, would force Aston Martin and its suppliers to trace and document where all the parts in a vehicle come from, Palmer told. “When you’ve got 10,000 parts on a car and then you’ve got all of the sub-parts and the sub-parts, you quickly get up to hundreds of thousands of parts. And do you honestly know where they’ve all come from? Often not”, he said. That’s one reason why Palmer said he hired a supply chain chief, an appointment announced last month. “His obsession right now is planning for Brexit”, he said. The Brexit vote in mid-2016 came as Aston Martin was pursuing a multi-year strategy, unveiled in 2015, to go from making about 3,500 sports cars a year to building up to 14,000 sports cars and SUVs annually. The St Athan plant will start building DBX cross-over, and then is expected to begin assembling a new line luxury electric vehicles under the Lagonda brand early in the 2020s. Scrapping that investment is not Aston’s plan. “People have asked me: what keeps you awake?” Palmer said. “It very much is the supply chain and the capability of that supply chain to absorb all the macroeconomics that are thrown at them”. Aston is not alone in this concern: Volkswagen, the biggest car seller in Britain, and Honda have both said they are stockpiling parts while Jaguar Land Rover has been talking to warehousing companies and Bentley has leased storage space. At Vauxhall, boss Norman said Brexit could be an opportunity for a brand that struggled under its former owner, U.S. automaker General Motors, and is charting a new strategy under French group PSA. Vauxhall believes a no-deal Brexit would lead to as much as a 20 % fall in British new vehicle demand but a bigger market share for Vauxhall. PSA has committed last year to fresh investment to launch new models at its Luton van factory. But it faces a decision next year on whether to keep Vauxhall’s Ellesmere Port plant open after the current run of Astra Sports Tourer ends. That decision is not a simple one, Norman said. “It would not be true to say that a hard Brexit automatically means the closure of plants in the United Kingdom, neither for us, nor for other manufacturers, but it would certainly mean they come under greater scrutiny”, he said. British workers would have to deliver productivity gains that offset tariffs and supply chain friction. Currently Vauxhall, which was bought by PSA in 2017, accounts for 7.5 % of British car sales. Added to the group’s Peugeot, Citroen and DS brands the total rises to 13 %, making PSA one of the biggest sellers in Europe’s No.2 auto market. If the market takes a hit, Vauxhall’s emphasis on functional, economically priced models could be an advantage, Norman said. “People will look very long and hard”, he said. “And they will say: do I need this enhanced brand strength which I’m actually paying for that has no material value or should I not look more seriously at the offer from Vauxhall and have just as good a vehicle and not have to pay through the nose for the privilege”. +++ 

+++ As their company was swirling around the financial drain in the early 2000s, General Motors executives came up with an idea to counter its gas-guzzling image and point the way to transportation of the future: an electric car with a gas-engine backup that could travel anywhere. At Detroit’s auto show in 2007, they unveiled the CHEVROLET Volt concept car, not knowing yet whether they had the technology to pull off a major breakthrough in battery-powered vehicles. It took nearly 4 more years, but the first Volt (a longer-range version of a plug-in hybrid) rolled off the assembly line late in 2010. GM had hopes that customers would be ready for a car that could go 60 kilometres on electricity before a small internal combustion generator kicked in. They weren’t. Earlier this month, the last Volt was built with little ceremony at a Detroit factory that’s now slated to close. Sales averaged less than 20,000 per year, not enough to sustain the costly undertaking. The Volt wasn’t the first electric car, but it was the first to conquer anxiety over range at a reasonable cost. GM’s limited-range EV1 came out in the 1990s, and Tesla put out its Roadster in 2008 for more than $100,000. The Volt was among the first plug-in hybrids, many of which can go only 35 or so kilometres on electricity and haven’t gained much popularity among consumers. Yet the Volt did serve a purpose. It led to advances in lithium/ion batteries similar to those that power smart phones and computers. But such advances ultimately led to the Volt’s demise as GM and other manufacturers developed fully electric vehicles that can go 300 more kilometres per charge. +++ 

+++ CHINA ‘s auto sales fell for an 8th month in January, extending a painful decline for the biggest global market as demand cooled amid a slowing economy and tariffs standoff with the U.S. Purchases of sedans, SUVs and MPVs fell 15 % from a year earlier to just over 2 million vehicles. Cooling growth and trade tensions with Washington are prompting jittery buyers to put off purchases. The slump is a setback for global automakers that are looking to China to drive revenue and are spending heavily to meet Chinese government targets to develop electric vehicles. 2018 passenger vehicle sales suffered their first decline in nearly 3 decades. Purchases fell 4.1 % from the previous year to 23.7 million. The downturn has prompted suggestions Beijing will cut sales taxes or offer other incentives. January’s total vehicle sales, including trucks and buses, declined 15.8 % to 2.4 million, according to CAAM. Sales by Chinese brands fell 22 % to 832,000. Their market share contracted by 2.4 percentage points to 41.2 %. Purchases of electric and hybrid vehicles, which Beijing is promoting with subsidies, rose 138 % over a year earlier to 96,000 units. Sales of SUVs, usually a bright spot for the industry, contracted 19 % to 878,900. Volkswagen said sales fell 2.9 % to 387,300. BMW said sales (including Mini) rose 15.5 % to 63,135. Nissan said sales were off 0.8 % at 133,934. +++ 

+++ FORD has launched an investigation into whether flaws in an internal mathematical model may have caused it to overstate gas mileage and understate pollution from a wide range of vehicles. The company says a group of employees reported possible problems with the model in September, prompting the company to hire an outside firm to run tests. Testing will start with the Ranger pickup, and if problems are found, the company will start looking at models dating back to 2017. Ford says it has no evidence yet that mileage or pollution numbers are wrong, but the investigation has just started. The company says it’s too early to tell how many and which models might be involved. “At Ford, we believe that trust in our brand is earned by acting with integrity and transparency”, Kim Pittel, the company’s vice president for environment and safety engineering, said. “We have a process for looking at how we perform and behave in our broad and complex company”. The U.S. Environmental Protection Agency and the California Air Resources Board, which monitor emissions and mileage, have been informed of the probe, the company said. Depending on what is found, Ford could be required to restate the mileage on EPA-approved window stickers as well as reimburse owners for the mileage difference. The company could also face penalties from the government agencies. The problems do not involve “defeat device” software that activates pollution controls for emissions tests and turns them off on the road, according to Ford. For years, Volkswagen used a defeat device to cheat on diesel emissions tests until they were caught by university researchers and a nonprofit organization. Ford said the investigation is focused on vehicles with gasoline engines. In an interview, Pittel said it’s too early to tell how widespread the problem is or if it goes beyond 2017 models. “We’re just going to go where the investigation takes us”, she said. “We will be very, very thorough”. +++ 

+++ Even though brand new cars might be the way to go if you’re mostly worried about what can go wrong when it comes to overall reliability, things don’t always play out that way. A number of new car buyers will always end up having to take the vehicle back to the dealer in order to fix certain issues (that’s what the factory guarantee is there for, after all) and this exclusive survey courtesy of Consumer Reports tells us exactly which models proved LEAST RELIABLE over the past 12 months. The list counts down to the absolute worst car here in terms of reliability in the U.S. market, so without further ado, let’s see them. 10) Volkswagen Atlas, 9) Cadillac CTS: Cadillac’s midsize premium sedan is assembled in Lansing, Michigan, and some say that it’s one of the sportiest models in its segment. However, negatives include the overly complex Cue infotainment system, rear seat room, trunk size and the refinement of the 4-cylinder turbo and 3.6-liter V6 power units; described as not the best in class. Main issues: Climate system, drive system, transmission. 8) Alfa Romeo Giulia: The Giulia remains a very attractive proposition in a segment that includes strong entries such as the BMW 3-Series, Mercedes C-Class, Audi A4, Jaguar XE, Volvo S60, Lexus IS and more. According to owners, however, despite its sporty handling, beautiful exterior and decent interior, the Giulia struggles to absorb bumps as well as some of its rivals. It also has unintuitive controls, it’s not as quiet as some would like, its seating comfort isn’t the best and the infotainment system can be distracting to use. And if you look at its problems, they somehow manage to fit the Italian car stereotype. Main issues: Power equipment, engine, in-car electronics. 7) Kia Cadenza, 6) Cadillac Escalade: If you ignore the Escalade’s popularity and projected image, you begin to see imperfections such as the stiff ride, loose handling characteristics, cramped third-row and so on. A well-trimmed Chevrolet Suburban or a GMC Yukon XL would make for smarter purchases right now. Buying something like the Escalade, though, is hardly based on logic. Main issues: Climate system, transmission (minor), in-car electronics. 5) Cadillac CT6: Technically, the CT6 suffers from pretty much the exact same faults as the Escalade. However, compared to the SUV, the CT6 is actually a lot more refined, more lively to drive and offers higher levels of overall comfort, despite lacking in cabin storage. Main issues: Climate system, transmission (minor), in-car electronics. 4) Chevrolet Silverado 2500HD, 3) Tesla Model X: The all-electric Tesla Model X may be innovative, quick and striking to look at, especially with its rear falcon wing doors, but unlike most SUVs its size, it’s not tremendously practical inside, while overall ride comfort and noise isolation aren’t as good as in the Model S, and those doors take forever to open and close. Main issues: Body hardware, paint and trim, in-car electronics, noises and leaks. 2) Buick Enclave, 1) Jaguar F-Pace: The “winner” and least reliable car this year. General grievances include the omnipresent engine droning from the supercharged 3.0-liter V6, stiff and choppy ride, subpar interior quality (at least compared to some top competitors), and the fact that the infotainment system isn’t as good as what you get with some of its rivals. Paying a premium price means you expect a high-end product, but Jaguar’s SUV clearly falls short of expectations. Main issues: In-car electronics, drive system, power equipment, noises and leaks. +++ 

+++ NISSAN took another hit as the automaker’s debt rating was cut on concerns the next 2 years will be marked by slowing sales and a preoccupation with cleaning up after the scandal involving Carlos Ghosn. The company’s rating was lowered for the first time in a decade by Standard & Poor’s Global Ratings to A- from A. The outlook on the long-term debt score is stable, the rating firm said. The company’s A2 grade at Moody’s Investors Service also was placed on review for a downgrade. Nissan reduced its full-year earnings forecast after third-quarter profit missed analysts’ estimates, adding to the headwinds for a carmaker struggling with the fallout from the arrest of former chairman Ghosn. Sales in the U.S. plunged 19 % in January amid an industrywide slump, intensifying the pressure on CEO Hiroto Saikawa as he tries to ease tensions with partner and shareholder Renault. Standard & Poor’s also cut its outlook on Renault to “negative” from “stable”, citing broader challenges within the automotive sector that could hit its profits. Nissan is cutting as many as 700 workers at a Mississippi factory because of slowing truck and van sales. “Given severe business circumstances in the automotive business, we believe the company will find it difficult to restore its weakened profitability over the next 1 to 2 years”, S&P said. “It will take time to stabilize its management”. Before the downgrade, Nissan already was getting the cold shoulder in the bond market, after Ghosn’s incarceration exposed new lapses in corporate governance, according to market participants. “It’s bad timing because automakers all need financing for investment in new technologies”, said Seiji Sugiura, an analyst at Tokai Tokyo Research Center. “It sends a negative message to shareholders because it increases the chance for them to cut their dividend”. The last time Nissan tapped the bond market was April 2016, when it raised 125 billion yen ($1.1 billion) in a sale of 5, 7- and 10-year notes. Nissan and its French partner have spent the last 3 months coping with a major reputational hit from Ghosn’s arrest, indictments by Tokyo prosecutors over alleged financial improprieties and an unflattering spotlight on both companies’ corporate governance controls. Then there’s the sluggish sales in China and the U.S., Britain’s potentially jarring exit from the European Union and huge investments in electric and autonomous vehicles hovering over the entire auto industry. Taken together, these negatives could leave the alliance partners falling behind competitors such as Volkswagen and Toyota in the race to adapt to the changing terrain. The risks may be greater for Nissan since the lion’s share of allegations against Ghosn reflect his tenure there, and its business challenges are tougher than Renault’s. Ghosn remains in a Tokyo jail, accused of aggravated breach of trust and filing false statements to regulators regarding $80 million in deferred income looms. He was arrested Nov. 19 and faces as many as 10 years in prison if convicted. He denies all charges. Nissan this month took a 9.2 billion yen ($83 million) charge over Ghosn’s deferred compensation for the 8 years ending in 2017. In doing so, the carmaker is trying to end any debate over whether Ghosn hid millions of dollars in income deferred until his retirement from his fellow executives and board members. A Nissan governance committee will likely propose that outside directors make up a majority of the board in a bid to ensure more transparency following the arrest of Ghosn. But the panel, which will draw up a report in late March, is not expected to delve into the responsibility of current Nissan executives, including President Hiroto Saikawa, for the governance problems that have led to Ghosn’s alleged financial misconduct, the sources said. Currently, Nissan’s 9-member board only includes 3 outside directors. By increasing the ratio of outside members, the panel is aiming to have them play a leading role in nominating executives and determining their remuneration, the sources said. Ghosn has been charged with understating his remuneration for a number of years in Nissan’s securities reports and transferring derivatives losses from his private asset management company to the Japanese automaker. Nissan, which brought the allegations to prosecutors following a whistleblower tip, has said it did not have enough checks on Ghosn’s power during his 2-decade reign. The committee is expected to make its proposals at Nissan’s board meeting in mid-April. It has also discussed Nissan’s cross-shareholdings with French partner Renault but will not make any proposal on the issue amid differing views among its members. Renault holds a stake of more than 40 % in Nissan while the Japanese group owns around 15 % in Renault, a structure that some Nissan executives have seen as unfair. +++ 

+++ PEUGEOT will add a full-electric version of its new-generation 208, while also making the small car more upscale by adding technology and materials more commonly found on the brand’s higher-end models such as the 508 and 3008. Peugeot released details of the 208 ahead of the car’s public unveiling at the Geneva auto show on March 5. With the exception of the name, almost everything on the new Peugeot 208 is different than the previous generation. It is built on a new platform, PSA Group’s CMP architecture. It has more aggressive styling and new color and trim options. The interior has a 3D instrument display, a first for Peugeot. PSA Group says it has optimized the CMP architecture to accept both internal combustion and full-electric drivetrains. The battery-powered 208 will have 340 km of range under Europe’s new WLTP homologation (equivalent to 450 km under the old NEDC testing). Peugeot says the 208 is ideal for full electrification rather than a hybrid powertrain because most trips will be short, and urban owners will have guaranteed access to city centers that could be restricted in the future to zero- or ultra-low-emissions vehicles. The 208 electric variant will compete directly in Europe against the similar-sized Renault Zoe. Indirect rivals because they are crossovers would be the Hyundai Kona Electric and the Kia e-Soul. The electric 208 will weigh about 250 kg more than internal combustion versions, Peugeot says, with a 50-kilowatt hour lithium-ion battery pack located under the rear seats, where the gasoline tanks for gasoline or diesel models will be. The 136 hp electric motor will be supplied by Continental, while PSA Group prepares its own motors in a joint venture with the Japanese supplier Nidec. The electric 208 is identified only by small ‘e’ badges and composite inserts on the wheels, and there will be a sports-oriented GT trim level with special seat stitching and fabrics. Yann Beurel, the design manager for the 208, said consumers in focus groups told Peugeot that they did not think an electric vehicle needed to be differentiated from an internal combustion version. They told me: “We are not at the beginning of the electric vehicle era anymore”. The current 208 was introduced in Europe in 2012 and has been a strong seller, if not a blockbuster, for Peugeot. According to figures from JATO Dynamics, the 208 ranked 4th in the European small hatchback segment in 2018, with sales down 6 % to 230,000, trailing the Ford Fiesta, Volkswagen Polo and its French rival, the Renault Clio. Renault will unveil a new generation Clio in Geneva, while VW and Ford updated their small cars in 2017. Worldwide sales of the 208 last year were about 295.000 units; down 9.8 %. Overall European registrations in the small-car segment fell by 1.5 % last year, to 2.97 million vehicles from 3.1 million in 2017, as buyers increasingly favor small SUVs and crossovers. PSA plans to produce as many as 350,000 208 models worldwide by 2020 at its plants in Trnava, Slovakia and Kenitra. A significant part of the expected sales increase will come from the electric version, which Peugeot expects will make up 10 % of the volume. Diesels, mostly aimed at fleet buyers, will be 20 % and gasoline versions will make up the rest. Peugeot has not yet announced pricing for the new 208. 5 trim levels will be available, including the dedicated e-GT line, which will be the most expensive option. In developing the latest 208 Beurel said designers kept the Peugeot 205 GTI hot hatchback from the mid-1980s in mind, although he said the new 208 was not meant to be a tribute or retro-inspired. The new 208 is meant to be more dynamic, with a 30 mm lower roofline, longer hood and deeper side stampings. Trim and embellishments have been minimized, he said, to emphasize the 208’s profile. “If you have the best ingredients, you don’t need to over-spice the food”, Beurel said. Similar to the 508, the 208 now wears its model number on the hood, and the daytime running lights are now in the brand’s “lion’s claw” shape. Even though the 208 has a slightly smaller envelope, interior space is largely unchanged and there is more rear-passenger knee room, thanks to the new CMP architecture, said Eric Dejou, manager of interior design for the 208. The most-noticeable interior change is Peugeot’s i-Cockpit, found on the 3008 and 5008 crossovers and 508. The steering wheel is smaller and set below the instrumentation, which Dejou said could improve reaction time by up to half a second compared with looking through the wheel. The digital readout is customizable and has a 3D layout that brings the most important information to the front of the display, such as alerts or vehicle speed. There is also a 7 or 10 inch horizontally oriented infotainment screen that incorporates gestures such as swipes to access various controls. Below the screen are “piano key” climate switches similar to those on the new 508. “We wanted to combine the digital and the tactile”, Dejou said, including more soft-touch materials in the cockpit. +++ 

+++ Nissan had asked the Japanese government for help in fending off a proposal to merge with RENAULT . The request by the automaker was made months before the arrest of former Nissan and Renault Chairman Carlos Ghosn in Japan in November. The unusual request for government help “indicated the level of pressure that Nissan executives sensed coming from the French side” to merge the 2 automakers. The French government is the biggest shareholder of Renault. In response to the request, the Economy, Trade and Industry Ministry drafted an agreement that would allow it to oversee talks between Nissan and Renault, a role Nissan considered invasive. Some senior Nissan officials discussed whether the draft accord promised the Japanese agreement too much involvement in Nissan’s internal affairs. +++ 

+++ RENAULT SAMSUNG Motors, the South Korean unit of Renault, is expected to face a lower utilization rate after it stops producing the Nissan Rogue later this year. The Rogue accounts for 48 % of production at Renault Samsung’s plant in Busan, but the Franco-Japanese auto alliance is unlikely to renew a contract on the vehicle’s production. A source at Renault Samsung said renewing the contract, which will expire in September, would be “impossible”, given the high costs at the Busan plant. Renault Samsung is getting ready to introduce a new SUV in 2020, but the plant’s utilization rate will inevitably be reduced until exports and domestic sales of the vehicle start, the Renault Samsung insider said. The carmaker reported a 37 % plunge in sales last month. Renault Samsung sold 13,693 vehicles in January, down from 21,847 units a year earlier. Domestic sales fell 19 % to 5,174 units last month from 6,402 units a year ago. Exports declined 45 % to 8,519 autos from 15,445 during the same period. +++ 

+++ SUBARU topped U.S. magazine Consumer Reports’ annual rankings for the first time. “Subaru’s strong predicted reliability and owner satisfaction marks drove it to the head of the pack”, the magazine said. It rose from 7th in last year’s rankings. Among other Japanese brands, Lexus came 5th, Mazda 6th and Toyota 9th. Honda was ranked 13th, while Nissan ranked 21st. Hyundai’s Genesis luxury brand fell to second place from last year’s top spot, while Porsche rose to third from 5th. Meanwhile Tesla’s Model 3 lost a coveted recommendation from Consumer Reports, dropping its brand from the top10 of the magazine’s closely watched annual ranking. The electric-carmaker’s shares dropped. The magazine said owners have complained about issues including loose-fitting exterior parts and defective glass, casting doubt on the Model 3’s reliability and costing the car its recommendation. The sedan’s fall from grace contributed to Tesla dropping to No. 19 in Consumer Reports’ brand rankings, down 11 spots from last year and its lowest-ever ranking. The dropped recommendation follows two Model 3 price cuts this year to partially offset lower federal tax incentives. The moves have raised concern among some investors about demand for the vehicles keeping pace after deliveries surged in the second half of last year. “All three Tesla models have below-average reliability, and we don’t recommend any of them”, said Jake Fisher, director of auto testing at the magazine published by the nonprofit group Consumers Union. Consumer Reports has built up the credibility of its ratings by refusing carmakers’ advertising dollars and restricting the companies from using its recommendations in marketing campaigns. +++ 

+++ The regime for assessing the safety of self-driving car systems is under scrutiny after consultants discovered errors in an analysis of TESLA crashes by a US government agency, which then delayed release of the data for 2 years in an apparent attempt to divert attention from the issue. Quality Control Systems Corp (QCSC) made a deep-dive into data that purported to back up an impressive claim by NHTSA, the powerful US road safety body, and Tesla that the Autosteer system in Autopilot had reduced serious accidents by 40 %; a game-changing improvement. Tesla boss Elon Musk tweeted the results as NHTSA’s findings were released in January 2017. But QCSC found that the NHTSA analysis failed to take into account all the mileage driven by the 43,781 vehicles studied. In fact NHTSA only used mileage data for 14,791 vehicles. As a result, the crash rate before Autosteer was inflated, leading to the wrong conclusion, says QCSC. “The importance of this research goes well beyond the specific issues addressed in our statistical analyses”, said QCSC. “The larger question is whether the field experience of autonomous vehicles and advanced driver-assistance systems will be fairly and transparently assessed by public officials”. When QCSC, which specialises in data analysis as a business tool, approached NHTSA for access to the publically-funded research, they were refused. The log-jam took 2 years to break, only after QCSC threatened court procedings to obtain the data via a freedom of information request. In response to a request for a comment, the Washington-based NHTSA released a limited statement: “The agency is reviewing the report released by Quality Control Systems Corp. with interest and will provide comment as appropriate”. QCSC’s report is titled “NHTSA’s Implausible Safety Claim For Tesla’s Autosteer Driver Assistance System” and looked at data for airbag deployments of MY2014 – 2016 Model S and MY2016 Model X models equipped with Tesla’s Autopilot. QCSC’s analysis of the data, contained in a 24-page report, found that airbag deployments actually increased from 0.76 million to 1.21 million, a 59 % rise, rather than decreased. “Before and after comparisons of the resulting crash rates are unbiased by missing data for exposure mileage because there are no missing data in this subset of the data”, said QCSC in its report. When NHTSA analysed airbag deployment and mileage travelled data supplied by Tesla, NHTSA came to the conclusion that there were 1.3 deployments per million miles before Autosteer and 0.8 million after; a 40 % reduction. NHTSA’s findings were widely reported in January 2017, partly because of the fatal accident in Florida 6 months earlier when a Model S operating with Autopilot ploughed into a truck, having failed to detect the vehicle making a turn across the car’s path. Autopilot is a Level 2 advanced cruise-control self-driving system that allows the driver to temporarily relax their grip on the steering wheel. Autosteer is the lane-keeping part of the Autopilot system, which also facilitates lane changes when the indicator is operated. Introduced in 2014, Autosteer was enhanced in 2016 with an upgrade. Significantly, it means a lane change can be executed with less oversight by the driver. Ultimately Tesla aims for automatic lane-changing manoeuvres in Level 3 or 4 autonomy. In response to the report, a Tesla statement read: “QCSC’ analysis dismissed the data from all but 5,714 vehicles of the total 43,781 vehicles in the data set we provided to NHTSA back in 2016. And given the dramatic increase in the number of Tesla vehicles on the road, their analysis today represents about 0.5 % of the total mileage that Tesla vehicles have traveled to date, and about 1 % of the total mileage that Tesla vehicles have traveled to date with Autopilot engaged. NHTSA’s original report not only indicated that ‘Tesla vehicles crash rate dropped by almost 40 percent after Autosteer installation’, the agency also concluded that it ‘did not identify any defects in the design or performance of the AEB or Autopilot systems’, nor did it find ‘any incidents in which the systems did not perform as designed’. They also found that “the potential for driver misuse was evaluated as part of Tesla’s design process and solutions were tested, validated, and incorporated into the wide release of the product”. “Our own vehicle safety data for Q3 and Q4, which includes data from roughly 2 billion miles driven in Tesla vehicles, shows that drivers using Autopilot were significantly less likely to be involved in an accident than those driving without using Autopilot”. +++ 

+++ TOYOTA president Akio Toyoda called on U.S. President Donald Trump to make a “careful and appropriate decision” on whether car imports to the United States are a national security threat, and potentially impose tariffs, to avoid potential ripple effects across the industry. Speaking in his capacity as chairman of the Japan Automobile Manufacturers Association, Toyoda said imported vehicles aren’t a threat and warned import restrictions would affect manufacturers, dealerships and customers. Negative effects on the U.S. economy and local jobs “should be avoided,” Toyoda said in a statement. Trump, threatening levies of 25 %, on Sunday received the findings of a probe into whether imported vehicles posed a national security threat, the basis for imposing sanctions. He now has 90 days to decide whether to act on the findings, which haven’t been published. Companies and governments from Europe to Asia have warned Trump that tariffs would hurt the U.S. economy and disrupt the global auto industry. Commerce Secretary Wilbur Ross started the investigation in May under Section 232 of the Trade Expansion Act, the same provision the administration used last year to slap tariffs on steel and aluminum. The car probe covers imports of vehicles including sport utility vehicles, vans and light trucks, as well as auto parts. +++ 

+++ VOLKSWAGEN warned of a tough year ahead as its preliminary annual results were weighed down by currency effects and supply bottlenecks caused by new emissions testing rules. The German carmaker suffered from an increase in inventories at its Audi and VW brands after a new emissions testing procedure, known as WLTP, took effect in September and delayed road certification for many of its vehicles. “The headwinds in key markets are expected to strengthen further in 2019”, chief executive Herbert Diess said. “Overall, however, we will have to redouble our efforts to meet our ambitious targets in the new fiscal year”. Volkswagen, which is still battling to recover from a 2015 scandal over emissions test cheating, reiterated it wanted to achieve an operating return on sales of between 6.5 and 7.5 % for the passenger cars division and the group this year, a step welcomed by analysts. “The results are pretty solid, and it’s positive that they stick to their margin forecast especially when contrasted with rivals like Daimler which was more cautious”, Nord LB analyst Frank Schwope, who has a buy rating on the stock, said. Vehicle deliveries are expected to rise slightly in 2019, and group revenues are seen up to 5 % higher. Volkswagen’s 2018 operating profit came in at €13.92 billion; only 0.7 % higher than the prior year and below 14.53 billion euros forecast in a poll. VW said it expected positive net cashflow for 2019 thanks to lower penalties and compensation payments related to the company’s diesel-cheating scandal even as it faces €80 billion in investments to mass produce electric cars. Analysts said Volkswagen’s free cashflow was negative for the full year and down €3.8 billion in the 4th quarter, suggesting there was no meaningful reduction in inventories. Germany’s highest civil court said a dispute between a VW customer and a dealer had been settled out of court. The customer had demanded compensation for owning a vehicle which contained software that masked illegal levels of pollution. VW had refused, leading to a court battle. Volkswagen said this out of court settlement was not a basis for forecasting the outcome of other potential claims. The carmaker is due to release more detailed full-year earnings on March 12. Separately, Volkswagen’s sportscar brand Porsche will offer a fully electric version of the next generation Macan, its best selling vehicle. +++

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