+++ We’ve known for quite some time that AUDI is taking the electrification of its range very seriously. However, we never knew it was planning this many all-electric vehicles. The German car manufacturer will launch e-Tron versions of virtually every single model in its family by the mid-2020s. 2 of the first e-Tron models to be launched by Audi will be the e-Tron Sportback and the production version of the e-Tron GT. In late 2020, these models will allegedly be joined by a Q3 e-Tron, based around the Volkswagen Group’s MEB architecture. The following year, Audi’s onslaught of new electric vehicles will continue. There will be an e-Tron GT shooting brake similar in philosophy to the Porsche Taycan Sport Turismo. In the same year, Audi will release a Q2 e-Tron and then follow it up with the Q4 e-Tron, recently previewed in concept guise at the Geneva Motor Show. In 2022, an Q5 e-Tron will allegedly hit dealership floors while in 2023, the production-spec version of the crazy PB18 hypercar concept from 2018 will arrive. Other models on track to launch in 2023 include a Q6 e-Tron, Q7 e-Tron, and Q9 e-Tron, the latter of which will be similar in size to the current Audi Q8. Audi won’t stop in 2023 because after all of these models launch, it will release an A4 e-tron, an A6 e-Tron, and an A8 e-Tron. The electric A4, A6, and A8 models will all be sold in sedan and Avant guises. +++ 

+++ FIAT CHRYSLER AUTOMOBILES (FCA) will be idling 2 plants located in Ontario, Canada, for 1 week each next month. The Brampton facility will be down between April 1 and 8, and the Windsor factory from April 8 to 15. FCA Canada spokesperson Lou Ann Gosselin said that the decision has been taken in order “to align production with demand”. In Windsor, a team of 6,000 people is responsible for making the Chrysler Pacifica and Dodge Grand Caravan. When running at full capacity, in 3 shifts daily for 6 days a week, the plant makes almost 1,500 minivans each day. The factory has already been shut down 3 times this year to adjust for inventories and due to parts shortage. Through February, sales of the Pacifica dropped by 24 % to 14,817, in the United States, whereas the Grand Caravan dipped by 27 % to 19,634. In the first 2 months of the year, the Pacifica was down 54 % to 512 units, while the Grand Caravan saw a 20 % decrease to 4,836 in Canada. At Brampton, about 3,500 FCA employees are putting together the Chrysler 300, Dodge Challenger and Charger. The facility was down the first 2 weeks of January, too, said Gosselin. At 4,586 units, sales of the 300 were down 32 % in January and February this year in the U.S. The Challenger and Charger saw a 28 % and 8 % decrease respectively to 6,869 and 11,757 units. North of the U.S. border, Chrysler sold just 390 units of the 300 in the first 2 months of the year, marking a 30 % drop. The Challenger and Charger were up, however, by 93 and 38 % respectively to 453 and 920 units. +++ 

+++ GENERAL MOTORS (GM) has sold one its factories in South Korea to Myongshin, a supplier to Tesla and Hyundai, who plans to turn it into an EV manufacturing facility. The news was confirmed by Myongshin, telling that it will pay GM $99.5 million for the land and buildings of the Gunsan facility on June 28. GM Korea confirmed the deal by saying “We aim to close this deal as soon as possible to ensure that there will be ongoing economic activity”, in a statement. Myongshin is part of a larger group of companies that plan to initially spend $176 million on the ex-GM factory to produce 50,000 electric vehicles in 2021 and 150,000 electric vehicles from 2025 onwards. The Korean company was negotiating with an unidentified global car maker in order to manufacture EVs for them at the Gunsan factory, according to a source with direct knowledge of the matter. The source added that the car maker in question was not Tesla. The revamped factory poses as an attractive solution for EV manufacturing, thanks to South Korea’s free trade deal with the United States and Europe. Myongshin will create 900 new jobs and another 2,000 for its suppliers. GM’s loss-making operations in South Korea used to play a key role in Asia, but they have been hit hard by the company’s decision to withdraw from Europe, one of their biggest export markets. +++ 

+++ S&P said it had downgraded its credit rating on JAGUAR LAND ROVER (JLR) and its owner, even deeper into junk and put it on review for a possible further downgrade due to the growing risks of a no-deal Brexit and U.S. import tariffs. S&P cut its rating on senior unsecured notes of Jaguar Land Rover and its owner India’s Tata Motors to ‘B+’ from ‘BB-‘ following JLR’s weaker than expected third-quarter results. It said it could lower the JLR rating further, most likely by one notch, if the UK-based automaker fails to meet the base-case expectations for full-year results, Britain leaves the EU without a deal or Washington slaps new import tariffs on cars. Fitch ratings agency also put Jaguar under review in early February. The moves, which usually increase a company’s funding costs, highlight growing concerns about disruption to industrial groups with complex supply chains spread across the EU and beyond from Britain’s potentially chaotic departure from the bloc. S&P said JLR’s woes are depressing profitability and causing a high cash burn rate for Tata. The agency said it expects Tata to suffer negative cash flow for at least the next 12-18 months before its Chinese operations stabilise and cost cuts restore its financial health. Tata Motors earlier this month denied a report that it is exploring options for Jaguar Land Rover that could include selling a stake in the automaker. JLR posted a loss of about $4 billion in the last quarter. +++ 

+++ A NISSAN committee set up to strengthen corporate governance after the arrest of former Chairman Carlos Ghosn said an investigation found he had wielded too much power and recommended the scandal-hit Japanese automaker add more independent outside directors to its board and better oversee compensation and auditing. In measures announced in Yokohama, where Nissan is headquartered, the governance committee said it concluded that the “root cause of the misconduct was the concentration of all authority in Mr Ghosn”. The committee’s findings, which were submitted to the company board, underline Nissan’s efforts to distance itself from Ghosn’s upcoming criminal trial. Ghosn, who led Nissan for 2 decades and rescued it from near-bankruptcy, says he is innocent. Arrested in November, he has been charged with falsifying financial reports in under-reporting his compensation, and with breach of trust in having Nissan shoulder investment losses and making payments to a Saudi businessman. Seiichiro Nishioka, a former judge and the co-chair of the governance committee, said the investigation found the problems were caused by what he called misconduct by an individual manager involving pursuit of personal gain, and were basically different from past wrongdoing at some other Japanese companies, such as accounting fraud. The post of chairman at Nissan, which had been held by Ghosn, will be abolished, according to the committee’s proposals. “The facts show there were governance problems at Nissan”, Nishioka told reporters, stressing that checks and balances needed to detect the wrongdoing were missing. A group to monitor compensation will be made up of all outside independent directors, while groups to oversee director appointments and auditing will consist mostly of outside independent directors. The governance committee has met several times, including to question Nissan executives to find out what led to Ghosn’s arrest. Nissan Chief Executive Hiroto Saikawa has denounced Ghosn as the “mastermind” of what he called professional financial misconduct, while declining comment on the criminal trial proceedings. Ghosn has said the compensation was never decided or paid, Nissan never suffered the investment losses and the payments were for legitimate services. The date of Ghosn’s trial has not been set, but it is not expected to start for several months, which is routine for Japanese trials. Ghosn was released on bail earlier this month. Governance experts say Nissan lagged behind other major Japanese companies, including rival Toyota Motor Corp, in governance measures, such as having outside board directors and instituting checks on compensation. Bruce Aronson, an affiliated scholar at the U.S.-Asia Law Institute, New York University School of Law, who has taught in Japan and serves as an outside director at a listed Japanese company, welcomed what Nissan was doing as “a good step forward, in line with other Japanese companies”. In a telephone interview, Aaronson said Ghosn’s case is providing valuable lessons for Japan amid rapid globalization. More than 90 % of major Japanese companies have 2 or more independent outside directors on their boards, a ratio that has grown rapidly since 2015, when a new governance code was passed. Nissan’s evolving relationship with French alliance partner Renault complicates the issues. When Ghosn was sent in by Renault, Nissan sorely needed his help to cut costs and steer its way back to growth. These days, Nissan is more profitable than Renault, but many perceive Renault as wielding more managerial power. Renault owns 43 % of Nissan while Nissan owns 15 % of Renault. The French government is the top stakeholder in Renault. +++ 

+++ SKODA has bolstered the engine range for its Karoq and Kodiaq, adding a new 190 hp 2.0-litre turbocharged 4-cylinder petrol. Skoda’s VW Group sourced 2.0-litre TSI unit produces 320 Nm and comes mated to a 7-speed DSG gearbox and an allwheeldrive system as standard. In the Karoq it means a 0–100 km/h sprint of 7 seconds and a top speed of 210 km/h, making it the fastest model in the range. The Kodiaq gets the same gearbox and allwheeldrive system but, due to its added weight, the 0–100 km/h time increases to 7.7 seconds, while its top speed is slightly lowered at 208 km/h. In the Karoq, the new engine is only available in Sportline trim. However, Kodiaq buyers can spec the new 2.0-litre TSI powertrain with Style, Scout, Sportline and L&K variants. +++ 

+++ Since its introduction 2 decades ago the diminutive SMART has sat awkwardly alongside the imposing, autobahn-eating cars that have made Daimler the king of the road. New Smart models with quirky designs came and went, as did managers trying their luck at yet another turnaround; strategies changed as often as the funky color palette. One constant through the years: the losses kept piling up. Now Daimler is changing tack, again. The German company is teaming up with Zhejiang Geely Holding Group, its largest shareholder, forming a joint venture to transform Smart into an all-electric brand based in China, the world’s largest auto market. Daimler will build a factory in the country and start worldwide sales in 2022, switching from importing the car now made at a factory on the Franco-German border. “This is arguably their last real chance to sort out Smart”, says Jürgen Pieper, an analyst at Bankhaus Metzler in Frankfurt. “It’s understandable that Daimler didn’t just want to let the brand go after investing a lot of money over the years”. From its inception, the Smart was a bold bet for Daimler that pushed the carmaker out of its comfort zone of big, reliable sedans with no-nonsense styling. Originally conceived in partnership with Swiss watch company Swatch Group, the bulbous 2-seater was aimed at young city dwellers seeking an alternative to 2 tons of hulking metal to get around town. But the car never caught on to the extent that Daimler had envisioned, particularly outside Europe in markets like the U.S., where gas-guzzling pick-ups and SUVs have maintained their insurmountable allure. Daimler introduced Smart in Germany in 1998 and brought it to the U.S. 10 years later, but the brand never met an original global target of 200,000 deliveries a year. Part of the problem: Smart struggled to define and occupy a distinct niche. For a utilitarian urban commuter car, it was too expensive; for a family vehicle, it was too small. Given the relatively low output, production in Europe was too costly. And there were alternatives like the Fiat 500, the Toyota Aygo or BMW’s Mini, which (while more expensive) offered a more compelling package in retro wrapping. Despite mounting losses, Daimler pushed on. The Smart became something of a modular experiment kit for a company known for its exacting approach to car manufacturting. Daimler introduced a 5-door version that was based on a Mitsubishi Colt platform and a roadster that was as daring in design as it was short-lived in the market. An SUV never came to fruition and the original concept of making the brand electric took years to put into action. Overall, the Smart brand didn’t prove elastic enough to accommodate the stable of urban commuter vehicles the company had originally envisioned. When Daimler came out with the third generation of Smart cars about 5 years ago (this time with Renault and its Twingo model as a partner) some analysts even then called it the last chance to get the brand right. Daimler aggressively pushed the cars into its Car2Go car-sharing service, and the vehicles remain popular with urban professionals like delivery services or doctors visiting homes in congestion-plagued cities like Rome or Berlin. Even so, Smart car sales have dropped in each of the last 4 months to about 7,854 cars in February. That’s a fraction of the 160,500 Mercedes-Benz cars sold in the same period. All told, Smart has racked up about €4 billion in losses, Bankhaus Metzler estimates. Smart’s global sales fell 4.6 % to 128,802 units last year. In the U.S., Smart sales last year plunged 58 % to a mere 1,276 cars. Daimler CEO Dieter Zetsche maintains that given the 2.2 million Smarts in the street around the world, the brand “represents a pioneer in urban mobility”. Smart’s main contribution to Daimler has been to help offset the emissions of high-margin gas guzzlers like the S-class sedan and AMG GT sports car. The boxy G-class offroader produces nearly three times the carbon dioxide as the ForTwo, meaning sales of the petite model provide an important contribution to meeting rules on fleet-wide emissions. In its latest reboot less than a year ago, Daimler switched top management at Smart and outright abandoned combustion engines for electric models starting in 2020. Now Smart is trying its luck once more with a new push, this time in China, where it says it will also bring out models for bigger car segments. Daimler can count on Geely’s help to establish a stronger foothold in Asia. Geely Chairman Li Shu Fu bought a $9 billion stake in Daimler last year and the companies have already joined forces to start ride-hailing and car-sharing services in China to take on market leader Didi Chuxing. Geely has established a something of surprise track record of turning around brands. Volvo, which the Chinese company acquired from Ford, has enjoyed a revival under its new owner. Pieper, the Bankhaus Metzler analyst, said Smart stands a good chance to benefit in the same way because Geely understands the local needs of the market. “We fully respect the value of Smart”, Li said in a release announcing the partnership. “This brand has a unique appeal and strong commercial value”. +++ 

+++ SUBARU ’s more than 7 year-long string of monthly U.S. sales gains may end if the Trump administration increases tariffs on cars and auto parts on national security grounds. “There’s no question” that the streak is at risk, Tom Doll, president and chief executive officer of Subaru of America, said. “Ultimately what could happen is the prices of the cars go up, and therefore, how do you put people into payments? Most people today are buying either on a lease or a loan. They’re not paying cash for the vehicle, so the monthly payment becomes critical”. Subaru is the only carmaker to boost U.S. sales every year in the last decade and extended its growth streak to 87 consecutive months through February. The Commerce Department delivered a report last month to U.S. President Donald Trump on whether imports of cars and parts threaten national security. +++ 

+++ The TESLA Model 3 hasn’t just been a hit in the United States since deliveries kicked off but it is also proving to be particularly popular across Europe too, as recent numbers show. But the country that’s definitely in love with Tesla’s baby EV is none other than Norway. Sales details reveal 4,609 units of the Model 3 have been delivered so far across the country just this month, with 792 being sold in February. Norway has been lapping up electric vehicles so much so that in 2018, one-third of new cars sold across the country were EVs. The Nissan Leaf was the best-selling car in the North European last year, shifting 12,303 units, but it seems likely that the Tesla Model 3 will breeze past that figure this year and, if demand continues at that rate, it could prove to be 2019’s overall best-seller. The Model 3 isn’t Tesla’s only popular model currently on sale in Norway as in March, approximately 400 units of the Model S and Model X were delivered. These impressive delivery figures will play a significant role in helping the electric car manufacturer achieve its delivery goals for Q1 2019. Earlier this month, Elon Musk emailed all Tesla employees asking them to prioritize vehicle deliveries. The automaker revealed it wanted to deliver 30,000 vehicles globally in the final 15 days of the month. +++ 

+++ After a security incident in February at its Australian subsidiary, TOYOTA has suffered its second security breach in the last 5 weeks, with today’s breach announced by the company’s main offices in Japan. “It was announced in Japan that Toyota Motor Corporation (TMC) learned it had possibly been the victim of a cyberattack targeting Toyota Tokyo Sales Holdings, a TMC sales subsidiary, and its affiliated enterprises. Additionally, 3 other independent dealers in Japan are possibly involved. Toyota Motor North America (TMNA) is monitoring the situation closely and is currently unaware of any compromise of TMNA systems associated with this incident or evidence that Toyota or Lexus dealers in the United States have been targeted”, Toyota Motor North America said in a statement. The company reportedly said hackers breached its systems, gaining unauthorized access to data belonging to several sales subsidiaries, all based in Tokyo. Toyota said the servers that hackers accessed stored sales information on up to 3.1 million customers that included names and dates of birth but no credit card information, though the investigation remains ongoing. In addition, Toyota Vietnam said that it is possible the company was also hacked, according to Tinmoi. “Toyota Vietnam Motor Company (TMV) has discovered that the company is likely to have been attacked by the network and some customer data may have been accessed. So far we do not have any concrete evidence and details about the lost data, and are currently in the process of investigation. We will share as soon as information is available”, TMV said according to a translation of a statement shared with Tinmoi. “In light of the Toyota security breach, it’s clear that automotive manufacturers need to be aware that as their technology continues to evolve there are more responsibilities involved to protect the consumer”, said Amir Einav, vice president of marketing at Karamba Security. “As car manufacturers are set to collect more data than ever before on drivers and vehicle behavior there is more personal information at stake. Following Toyota’s second breach in the last 5 weeks, there is a greater sense of urgency in the automotive industry around the need to take preventive cybersecurity measures, from the cloud to the in-vehicle technology”. +++

+++ In the UNITED KINGDOM , the number of cars produced in factories fell by 15.3 % in February compared to the same month last year, with 123,203 new models leaving car plants last month, compared to 145,518 in February 2018. The fall represents the 9th consecutive month of contracting UK car production. The dropping data, compiled by the Society of Motor Manufacturers and Traders (SMMT), is driven by declining demand both for cars produced for the domestic market (down 11 %) and cars built for export (down 16.4 %) last month. Year-on-year production is down 16.8 % overall, with an 8 % drop in domestic demand, and an 18.9 % fall in UK-built cars destined for export. Car production reached a peak in February 2017, when almost 1.8 million new models rolled out of UK factory gates. This latest drop comes against a gloomy backdrop that includes Nissan deciding it will not produce the X-Trail in Sunderland as originally planned, Honda announcing it will close its Swindon plant in 2021, and the temporary closure of Jaguar Land Rover’s Solihull plant towards the end of last year. Mike Hawes, SMMT chief executive, said the consecutive months of falling production should “be a wakeup call for anyone who thinks this industry, already challenged by international trade hostilities, declining markets and technological disruption, could survive a ‘no deal’ Brexit without serious damage”. Calling a managed no-deal scenario “a fantasy”, Hawes warned “business anxiety has now reached fever pitch and we desperately need parliament to come together to restore stability”. January’s figures follow a “deeply depressing” decline of 9.1 % in 2018, the same year investment in the UK automotive industry fell by a “disturbing” 46.5 %. Some 1.52 million cars were built in the UK in 2018, a 9.1 % decline on the previous year, when 1.67 million left factories. While production at Mini plants rose by 7 %, Vauxhall saw a 15.9 % fall in the number of cars it produced in the UK, with Nissan down 10.7 %, Toyota down 10.4 % and Jaguar Land Rover witnessing a 15.6 % production reduction. Brexit-related uncertainty, diesel downturn, regulatory changes, model cycles, market stagnation in Europe, and slowdown in China have been cited amongst the reasons for the manufacturing slump. The biggest concern for UK automotive, however, which employs around 856,000 people across the wider industry, is the fall in investment witnessed last year. The chief executive of the Society of Motor Manufacturers and Traders (SMMT), Mike Hawes, said: “The most disturbing feature of the figures is about automotive investment. Last year, total automotive investment was £588.6 million for the year. The previous year was about £1.1 billion. The year before that it was about £1.6 billion. If you look at a running average over the last three or four years, it’s about £2.5 billion. We had some good years coming out of the recession where it reached £5 billion, so to be down at £588.6 million shows investment is effectively stalled”. Hawes placed blame for the stalled investment firmly at the feet of Brexit: “We know uncertainty is the big enemy of business. We need a deal”. He added the industry was on “red alert” for the threat of no deal, adding: “Brexit uncertainty has already done enormous damage to output, investment and jobs”. Declining investment is “also about sentiment”, Hawes added. “You can be very competitive and have all the right positions, but do you feel confident about investing in the UK for the longer term? You might be competitive now, but do you feel welcome as an investor, and do you feel confident about the positions?” In an attack on those who considered a no-deal Brexit feasible or desirable, Hawes said: “There are new proposals coming out politically every day. Issues around ‘no deal can be managed’ for us, that is a fantasy”. Asked about ‘project fear’, Hawes simply explained that “the numbers give a lie to that: investment figures, production figures; if it’s project fear, we’re doing a good impression of it being a reality”. Addressing the idea that German car companies would put pressure on their government for fear of losing UK sales, Hawes said “Utter, utter nonsense. They’ve been there”. Asked if there were a sense that confidence and investment had caused irreparable damage to the UK car industry, Hawes said while we were not at the point, he suspected we were “very close, there’s exasperation, there’s an on-going uncertainty. We haven’t reached the point of no return but, at some point, you will reach it”. Turning to another common refrain among those who see Brexit as opening up new trade deals, Hawes said: “When we leave, we still have to operate with our biggest market by far under the rules Europe sets. At the moment, we have a seat at the table, we can influence those rules. The other major regulatory hub is obviously Washington. Should we do a free trade deal with America? I can’t ever see us having a seat at the table. They set their rules. +++ 

+++ VOLVO has long been known as a brand focused on road safety. But 60 years after the company invented the 3-point safety belt (and then opened up the patent to help every car occupant) the Swedes are embarking on an even more ambitious push as they strive towards their goal of 0 fatalities in Volvo cars by 2020. It is hard to imagine how any other brand could have made the sort of announcements that Volvo boss Håkan Samuelsson spelt out at the company’s press conference last week. Could you envisage Mercedes, Audi or BMW slapping a 180 km/h speed limit on every car they produce, for example? Or using geofencing technology to cut that maximum further around areas with more vulnerable pedestrians, such as schools? Volvo’s move is as clever as it is well-intentioned. The company is forging a position as the ‘thinking’ alternative to the established German brands, and a curveball on safety (not least, the opening up of 60 years’ worth of research on the subject) is every bit as useful in that respect as the bold jump towards electrification. In wider terms, though, the ideas do look bold enough to kick-start a general conversation, within the car industry, on how much responsibility lies with the driver/owner and how much with the firm that supplied the vehicle. How many of us, as car buyers, have had any training on how to cope with a vehicle at 180 km/h, let alone 30 km/h beyond that point? Much of the noise about safety during the past couple of years has been focused on autonomous cars that do all of the driving for us. But Volvo’s initiative may end up showing the rest of the industry (and the customers who support it) that there are more attainable, affordable and practical ways of making everyone’s journeys just that little bit safer. +++ 

+++ German auto parts maker ZF FRIEDRICHSHAFEN has agreed to buy U.S. rival Wabco for over $7 billion, an acquisition it has long targeted to bolster its expertise in autonomous-driving technologies. The American company said it had been approached by ZF. ZF, which helps carmakers develop gearboxes and hybrid drivetrains, has been on the lookout for a strategic partner as it foresees semi-autonomous driving functions and vehicle connectivity developing into important new business areas. “The combination of both businesses is expected to further accelerate the development of new technologies to enable autonomous commercial vehicle functions, making ZF less dependent on the economic cycle of the passenger car industry”, ZF said in a statement. The deal, which is expected to close in early 2020, had been unanimously approved by Wabco’s board of directors. The deal is contingent on ZF clinching more than 50 % of Wabco’s shares. ZF, which is unlisted, previously attempted to buy Wabco in 2017 but faltered amid opposition from ZF’s controlling shareholder, the Zeppelinstiftung. At the time, the foundation was concerned about ZF taking on too much debt by attempting to buy Wabco soon after its acquisition of TRW for $13.5 billion in 2015. ZF said it has received firm financing commitments for the acquisition from J.P.Morgan. It intends to partially refinance the facility via debt capital markets. “The intended strategic acquisition of Wabco comes at a good time for ZF”, ZF’s Chief Financial Officer Konstantin Sauer said in a statement. “Following the successful integration of TRW, ZF has significantly reduced its debt levels”. Wabco specializes in advanced driver assistance systems for trucks and trailers, key building blocks for developing autonomous driving technologies, a major growth area for ZF. The acquisition will cut ZF’s dependence on the passenger car market to around 70 % of its business from 80 % currently, Chief Executive Wolf-Henning Scheider said. The market for advanced driver assistance systems and autonomous vehicles is expected to grow to $96 billion in 2025 and $290 billion in 2035, from about $3 billion in 2015, according to Goldman Sachs. ZF and Wabco already jointly developed a so-called Evasive Manoeuvre Assist system, which combines Wabco’s braking, stability and vehicle dynamics control systems for trucks with ZF’s active steering technology. Wabco has its headquarters in Europe but its executive offices are in Auburn Hills, Michigan. Wabco’s Chief Executive Jacques Esculier said ZF provided the most suitable strategic fit for Wabco’s portfolio of technologies in a sector that is rapidly consolidating. Goldman Sachs advised Wabco on the deal, he said. “The competitive environment will become a lot more complicated and busy”, Esculier said, adding that he wanted Wabco to make a move before the good consolidation options ran out. “You don’t want to be the last person to pick your partner”, Esculier said. +++

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