+++ GENERAL MOTORS said it would invest $2.7 billion in 2 Brazilian factories over the next 5 years, sparing them from a shakeup of the automaker’s operations, a decision hailed by the governor of Brazil’s largest state. Sao Paolo state Governor Joao Doria told during a joint news conference with GM executives that the plants in Sao Caetano do Sul and Sao Jose dos Campos had been slated for closure last December, and said he convinced GM to reverse the decision, saving jobs. Last November, GM said it would slash thousands of jobs around the world and would close two unspecified plants outside of North America by the end of 2019. The company declined to say whether its restructuring plans had referred to the 2 Brazilian factories, and declined to comment on whether the two plants had been slated for closure as Doria claimed. Sitting next to Doria at the news conference, GM’s CEO for South America, Carlos Zarlenga, also did not directly address Doria’s recounting of the negotiations with GM. Doria, a former businessman and reality TV show host, took office in January and became a vocal advocate for the state’s auto industry. Earlier this year, he said he would find a buyer for a Ford plant that is slated to close, after the U.S. automaker said it had tried and failed to find one. At the news conference, Doria said GM told him in a call days before his inauguration that it planned to close the plants. “I thought it was going to be good news”, Doria said. “But to my surprise I was told that the next day GM boss Mary Barra would announce the closing of 2 factories in Sao Paulo. I fell off my chair”. He said he dispatched his future state finance minister to fix the situation and landed a meeting in Miami with GM executives. He said 65,000 workers employed directly and indirectly by GM would have lost their jobs without his intervention. Earlier this month, Doria announced an incentive plan granting automakers a 25 % reduction in value added taxes if they created at least 400 jobs and invested at least 1 billion reais. At the news conference, GM announced it was creating 400 new jobs. Zarlenga said the future of its Sao Paulo factories had presented GM “a really serious problem,” but did not confirm that the automaker had considered closing them down. GM, the sales leader in Brazil, South America’s largest market, had warned local employees it was dealing with heavy losses and “sacrifices” would be necessary. As announced, the plan pales in comparison to GM’s most recent investment plan in Brazil in 2014, which totaled $4 billion. However, the announcement does not include potential future investments in the automaker’s plants elsewhere in the country. +++
+++ Russia’s Yandex and HYUNDAI agreed to jointly develop control systems for driverless vehicles. The 2 companies plan to present a driverless prototype vehicle based on a standard Hyundai or Kia production model cars before the end of the year, a Yandex spokesman said. In the future, the cooperation aims at building a new autonomous driving control system for car manufacturers, car sharing services and taxi fleets. Yandex added they may expand into other areas of cooperation such as developing joint products that would integrate Yandex’s speech, navigation, and mapping technologies. The Russian company began testing self-driving prototypes in 2017 and launched a fully autonomous taxi service last year in the university city of Innopolis and the Skolkovo innovations center. +++
+++ JAGUAR LAND ROVER has downplayed claims that a recall to correct false CO2 figures achieved in certification testing, that affects tens of thousands of mainly diesel models, will affect the drivability of the cars or actually increase other emissions. JLR has so far said the recall will affected 44,389 models in its home market. The recall will spread to Europe, the automaker said, but did not give a figure for the number of cars affected. The UK figure includes 34,736 diesel versions of the Range Rover Evoque, Jaguar XE and Jaguar XF sold between 2016-2018. The remaining 9,653 cars are 2.0-liter gasoline versions of the Land Rover Discovery, Discovery Sport, Range Rover Sport, Range Rover Velar, Range Rover Evoque, Jaguar E-Pace, F-Pace, XE, XF and F-type. The JLR cars were discovered to be emitting more CO2 in laboratory conditions using the older NEDC cycle tests than recorded by the automaker. JLR said it spotted the discrepancy itself, although this was disputed by the UK vehicle standards body, the DVSA, who said it was picked up by the UK’s Vehicle Certification Agency (VCA), which is tasked with overseeing the results. JLR said it did not use cheat software to achieve the results. It claims the cars are on average emitting around 2 % more CO2 than the officially recorded figure. JLR has made it clear to owners that the recall will not affect power outputs and has released information about what side-effects to expect. On gasoline cars, the stop-start function might operate at lower engine temperatures. Diesel cars could get noisier on cold-starts and could idle at lower revs at junctions. JLR also said owners of diesel cars could see higher consumption of the AdBlue urea additive that reduces exhaust NOx levels. JLR said that “all of the changes have been reviewed and agreed with the VCA”, meaning the certification agency is happy the cars will return to the agreed certification figures. The side-effects admitted by JLR are likely to mean the recall will impact the owner experience for those cars affected, Greg Archer, UK director for pressure group Transport & Environment, said. He said that T&E engineers concluded that stop-start operating at lower temperatures for gasoline cars could lead to a delay in the catalyst getting up to temperature after a cold start. “That could have a knock-on effect on NOx and emissions”, Archer said. Lowering the idle speed on diesels is likely to be a simple fix to drop the fuel consumption by a few grams, but that could affect drivability of the car. “Manufacturers don’t like their car to idle at excessive revs, because it raises CO2, but there is a limit to how far you can bring them down. Too low and the car starts to sound rough and it affects drivability”, Archer said. JLR disputed Archer’s claims lowering the idle speed will mean that the cars will be trickier to drive. “The reduction in idle speed is not going to introduce any drivability concerns,” the company said in a statement. “The engine management system ensures that all of the required anti-stall devices are employed to mitigate any drive take-up engine rev deficiency”. Archer said the rise in AdBlue consumption is likely to be related to the fact that JLR will reduce the amount of exhaust returning into the cylinder via the exhaust gas recirculation (EGR) valve, which helps limit NOx but also increases fuel consumption. The reduced effectiveness of the EGR to reduce NOx means the car’s SCR filter has to work harder and will consume more AdBlue. JLR declined to offer an explanation as to why the cars will use more AdBlue. JLR’s recall highlights the shortcomings of the outgoing NEDC tests, which organizations such as T&E have long criticized for being too easy to game. NEDC tests were replaced September by the WLTP standard that aims to make the tests more reflective of real-world use. A 2014 report from the International Council on Clean Transportation (ICCT) showed that the gap between NEDC laboratory figures and those achieved in independent real-world tests soared from 8 % to 31 % between 2001 and 2013. In 2015, a test carried about by Germany’s Ministry of Transport following the discovery of Volkswagen Group’s NOx cheating, also revealed many cars from a variety of automakers were emitting far more CO2 in lab conditions than they were officially rated as producing. Leaked results showed the lab tests conducted on cars without the knowledge of the automaker were producing up to 36 % more CO2. The exposure of JLR’s higher CO2 emissions and the subsequent recall orchestrated by the UK’s VCA test authority shows that countries are taking testing discrepancies much more seriously, Archer said. “Since dieselgate there have been more check tests by type approval authorities to check it’s in line with official results”, he told. JLR’s move to return the cars to their official recorded figures means the company is expected to avoid fines or lawsuits related to the fact that customers were sold cars that emitted more fuel than advertised, and that governments were missing out on higher tax income because the higher CO2 moved the cars into higher tax thresholds. “It would be much easier to change the CO2 value, but if they would admit the original CO2 figures were wrong then drivers could claim compensation for that”, Archer said. +++
+++ LYFT officially kicked off the road show for its initial public offering, saying it plans to put more than 30 million shares up for sale with an anticipated price of between $62 and $68 per share. That would raise more than $2 billion for the San Francisco ride-hailing company, pegging its market value at $20 billion to $25 billion, even though it hasn’t been able to turn a profit yet. It’s the first time that Lyft has revealed how much money it hopes to raise in the IPO, and how much it believes it’s worth. Those financial targets could still change as Lyft’s investment bankers gauge demand for the company’s stock leading up to the IPO pricing, which is expected to happen next week. Lyft and Uber have raced to be first with an IPO, and Lyft’s rival is expected to offer shares in the coming weeks. Uber is hoping its larger ride-hailing service will justify a market value as high as $120 billion after its IPO is completed later this spring. Lyft released financial details about the company for the first time this month, reporting $2.2 billion in revenue last year, more than double its $1.1 billion in revenue in 2017, but also $911 million in losses. Lyft has lost nearly $3 billion since 2012, but has brought in more than $5 billion in venture capital. The company’s executives warned that the company could struggle to turn a profit, despite a rapidly growing market share. The company’s share of the U.S. ride-hailing market was 39 % in December 2018, up from 22 % in December 2016, according to its filing. Bookings, which represent Lyft’s fares after subtracting taxes, tolls and tips, have been rising dramatically; a trend that the company intends to highlight to potential investors. Lyft’s bookings surpassed $8 billion last year; 76 % more than in 2017 and more than 4 times the number from 2016. +++
+++ The new MERCEDES-AMG GLS 63 is currently in the development phase and it should be more aggressive-looking than ever. The outgoing GLS 63 is fitted with a twin-turbo 5.5-liter V8 pumping out 585 hp. However, it seems likely that the new model will ditch this aunit in favor of AMG’s latest 4.0-liter twin-turbo V8. Despite the reduction in capacity, the new GLS 63 will at least match, but most likely exceed, the power of the current model and at the same time use slightly less fuel. The cabin of the 2020 GLS 63, as well as the rest of the latest-generation GLS range, will be updated with a host of new features. For starters, the automaker’s MBUX infotainment system is bound to come as standard and the SUV should also receive a number of semi-autonomous driving systems already featured in the E-Class and S-Class. I expect Mercedes-AMG to unveil the new GLS 63 this year. +++
+++ MEXICO ’s government said it had reached an agreement with Brazil on the free trade of light vehicles, subject to a 40 % regional content requirement, paving the way for more open commerce between Latin America’s 2 biggest economies. The agreement takes effect this month and the content requirement would be subject to current formulas for calculation, the economy ministry said in a statement. The statement did not provide details on the formula. Mexico has been seeking to diversify trading partners since U.S. President Donald Trump warned of the possible death of the North American Free Trade Agreement (NAFTA) that has underpinned Mexico’s foreign trade for a quarter-century. The economy ministry said Mexico racked up a trade surplus in the auto sector with Brazil worth $868 million last year; 3 times the total recorded in 2017. Brazil’s auto industry is protected by subsidies and import taxes. Antonio Megale, president of automotive sector trade group Anfavea, told he would have preferred to delay the free trade agreement by 3 years. Announcing new investments in Brazil, Carlos Zarlenga, General Motors’ top executive for South America, said the Brazilian industry was competitive and benefited from its scale, but noted that taxes were so high that 50 % of the automaker’s revenue in the country was spent on taxes. In addition to the Brazil agreement, Mexico has renewed auto trade quotas with Argentina for the next 3 years, after which there will be free trade, the ministry said. In the first year the auto trade quota between Mexico and Argentina would increase by 10 %, followed by a 5 % increase in the second year, then another 5 % in the third and final year. Since 2012, Mexico’s fast-growing auto sector has had to contend with curbs in trade with Brazil and Argentina, whose governments have sought to protect local manufacturing. +++
+++ The PEUGEOT family, one of the major shareholders in the PSA Group, is ‘ready’ to support an acquisition or merge with Fiat Chrysler Automobiles, pointing to the success of the purchase of Vauxhall-Opel. The PSA Group comprises Citroën, DS, Peugeot and Vauxhall-Opel, and boss Carlos Tavares has already said he is interested in acquiring more brands. The FCA Group, whose brands include Alfa Romeo, Fiat, Maserati and Jeep, has frequently been cited as a potential target. The Peugeot family is a major shareholder in the PSA Group through its FFP holding company. In an interview chairman Robert Peugeot was asked about a potential merger with FCA, and said: “With them, as with others, the planets could be aligned”. The PSA Group is also reportedly interested in Jaguar Land Rover, which is owned by the Indian Tata group but has struggled recently. While he said there were no deals currently in place, Peugeot said that the “exceptional success” of PSA’s 2016 purchase of Vauxhall-Opel from GM made the family willing to back a similar move. “We supported the Opel project from the start”, he added. “If another opportunity comes up, we will not be braking”. PSA has long had an interest in a deal with FCA, with Tavares ruling out such a move in 2015 to focus on completing the Vauxhall-Opel deal. The 2 companies have already collaborated in the development of commercial vehicles, and PSA’s interest in FCA is understood to be in part due to the latter’s strong presence in North America, primarily through Jeep and Ram. PSA is currently preparing to re-launch Peugeot in the USA, and a deal with FCA would give it access to infrastructure for servicing and dealerships. FCA boss Mike Manley told Italian reporters at the Geneva motor show that he was “very open” to increased cooperation with other car firms, “whether it’s partnerships, joint ventures or deeper levels of equity cooperation that makes sense for us and whoever that is”. +++
+++ SKODA will build a new Volkswagen Group factory to cope with demand for its growing SUV line-up and prepare for expansion into new markets. The Czech firm recently launched the Kamiq to sit beneath the Karoq and Kodiaq in its SUV range. It sold 150,000 Karoqs in 2018, the first full year the model was on sale, but company boss Bernhard Maier has admitted that figure was limited by a lack of supply. “We would have been able last year to sell nearly more than 100,000 vehicles more than we did because of a lack of production capacity”, he said. Skoda sold 1.2 million cars last year and has a goal of increasing that to 2 million by the middle of the next decade. Maier said the brand was moving “from being a straight volume manufacturer and expanding into a true global player”. He added: “With our new product line, if we fixed our production capacity, we’d be able to sell more than 2 million vehicles before the second half of the decade. We could sell more this year if we could build more. The problem is that product demand is bigger than our supply”. Skoda was short of body building and final assembly capacity at its two main plants in the Czech Republic, Mladá Boleslav and Kvasiny, where it assembles around 800,000 units a year. A third plant in neighbouring Slovakia makes the Citigo. Models affected include the Fabia, Scala, Octavia, Superb, Karoq and Kodiaq. The need to add capacity, which Maier notes is “a good problem to have”, has led to Skoda taking the lead in the construction of a new Volkswagen Group plant in Eastern Europe. The firm is currently considering 4 sites. “By the middle of this year, we have to decide whether to push the button”, said Maier. Which models the plant would build has yet to be decided, but Maier described it as “a completely different product line-up”. As with other manufacturers, Skoda also had to work around shortages of some petrol and diesel engines due to the difficulties of rehomologating for the new WLTP regulations, but Maier pins the bulk of the lost capacity on a shortage of body and final assembly. +++
+++ TOYOTA and Nvidia have announced a new partnership to develop, train and validate self-driving technology. The Japanese automaker will use Nvidia’s Drive AGX Xavier and AGX Pegasus AV computer platforms. The companies plan to scale the architecture across many vehicle models and types. Notably, the collaboration will employ Nvidia’s Drive Constellation simulation platform to virtually process the equivalent of billions of miles of real-world driving in challenging scenarios. “We believe large-scale simulation tools for software validation and testing are critical for automated driving systems”, says Toyota Research Institute (TRI-AD) chief James Kuffner. Simulation is credited with helping Waymo apparently establish a clear lead ahead of established automakers and other startups racing to bring self-driving technology to market. +++
+++ SAIC Motor expressed disappointment over comments which VOLKSWAGEN Group CEO Herbert Diess made last week on the possibility of increasing the German automaker’s shares in its China-based joint ventures. It is “regrettable” that VW unilaterally commented on important matters regarding shares in its joint ventures in China without consulting local partners, SAIC said in a statement. SAIC has a joint venture with VW in China, SAIC Volkswagen, that produces cars for the Volkswagen and Skoda brands. The 50-50 partnership was established in 1985. The Chinese government, under pressure to accelerate market reforms, pledged in June 2018 to phase out by 2022 the 50 % cap on foreign automakers’ interest in joint ventures formed with local companies. Last year, BMW became the first global automaker to embrace the policy change, gaining control of its partnership with Brilliance China Automotive by lifting its interest in Brilliance BMW to 75 % from 50 %. Diess, asked whether VW would also raise its interest in China-based joint ventures, said at a news briefing at VW’s headquarters in Wolfsburg, Germany, on March 12 that the company is evaluating the possibility, according to Chinese newspapers present at the briefing. Diess also told Chinese journalists that he hopes VW and its Chinese partners can finalize and disclose how to adjust stakes in their partnerships in the second half of 2019 or early 2020. Besides its venture with SAIC, VW also has joint ventures in China with FAW, a 60-40 cooperation that builds vehicles for the Volkswagen and Audi brands and JAC Volkswagen, a 50-50 electric-vehicle partnership formed in 2017 between Jianghuai Automobile and VW, that has yet to launch sales. In 2018, VW delivered 4.21 million vehicles under its various brands in China, edging up 0.5 % from a year earlier. +++
