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+++ Brazilian automaker CAOA has signed a confidentiality agreement to negotiate a potential purchase of Ford’s plant in the industrial city of Sao Bernardo do Campo. Ford in February announced it would shut down the plant, its oldest one in the country, amid a global restructuring plan, costing 3,000 jobs. The announcement triggered a campaign led by Sao Paulo governor Joao Doria to find a buyer for the space. Reuters reported CAOA’s interest in the factory last month, but at the time there were up to three different companies interested in buying it up. Ford declined to comment on the confidentiality agreement or whether CAOA had been the one to sign it. Negotiations are not final, but it is a sign that the 2 companies are closer to reaching a deal. Brazil has long been South America’s automaking hub and has led many brand name global carmakers to set up shop here. But CAOA is the rare company that is actually domestically owned. It currently produces cars for Hyundai and owns a 50 % stake in China’s Chery operation in Brazil, which led to the rebranding of the cars as CAOA Chery. It also has a close relationship with Ford as its single largest distributor in Brazil. +++ 

+++ Now that Beijing has promised to relax limits on foreign stakes in vehicle manufacturing and marketing joint ventures, it’s time for global automakers seeking to gain control of joint ventures in CHINA to launch formal talks with local partners. Delaying such talks could only create bad blood between partners, add complexity to future talks and undermine operating flexibility at a time of rapid change in China’s auto industry. The world’s biggest light-vehicle market is becoming a major development and production hub for plug-in hybrid and electric vehicles. And by taking more control of Chinese joint ventures, global automakers will reap more cash and profits to deploy for critical investments in autonomous driving, EVs and other emerging technology. Consider what has happened with Volkswagen Group and SAIC Motor this month and other major partnerships in recent months. The Chinese government, under pressure to adopt broad 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. In October, BMW Group became the first global automaker to establish control over a partnership, with Brilliance China Automotive, by raising its interest in Brilliance BMW to 75 % from 50 % by 2022.  BMW is not the only foreign automaker eager to take control of joint ventures in China. Had it not been for restrictive Chinese rules enacted in the early 1980s, no global car company would have chosen to build light vehicles at joint ventures formed with local peers without a final say on how products are built and distributed. It’s no surprise that VW Group CEO Herbert Diess disclosed at a news briefing in Germany earlier this month that VW is evaluating the possibility of raising its stake in China-based joint ventures. Diess said he hopes VW and its Chinese partners can hold more talks on how to adjust stakes in their partnerships in the second half of 2019 or early 2020, according to Chinese media at the briefing. Diess’ remarks drew a quick rebuke from SAIC, which said in a statement this week it is “regrettable” that VW commented on important matters regarding shares in its joint ventures in China without consulting local partners. SAIC is VW’s first Chinese partner. Their joint venture, SAIC Volkswagen, was established in 1985 in Shanghai. It is equally owned by SAIC and VW and delivered 2.07 million cars under the VW and Skoda brands in 2018, accounting for 49 % of VW Group’s sales in China in the year. Given “the outstanding contributions it has made to the joint venture’s development along with Volkswagen Group”, it is “entitled to the same level of decision power on important matters of the joint venture” as Volkswagen Group, SAIC said in the statement. “SAIC hasn’t negotiated with Volkswagen Group on adjusting the shares” in their joint venture, the state-owned Chinese automaker said. “Neither has Volkswagen Group proposed plans to SAIC on talking about the shares”. Beginning in 1984, when Beijing opened its domestic auto industry to foreign investment, until 2013, when Renault struck a partnership with Dongfeng Motor Group, one after another global automaker had started output in China through a joint venture in which its interest was capped at 50 %.  The restriction was intended to enable China to foster a domestic auto industry with locally grown automakers. But as the deal between BMW and Brilliance China has demonstrated, it is not easy for a foreign automaker to persuade a local China partner to transfer shares and give up control. Brilliance China did not agree to the deal until BMW offered to pay €3.6 billion and spend another €3 billion to expand output. New-vehicle sales in China last year declined for the first time since the 1990s. While the market contraction has continued his year, electrified vehicle demand is surging. Gaining control of joint ventures would enable global brands to move quicker to adapt local operations to the fast-changing conditions in the market. To smooth the process, global automakers looking to obtain controlling stakes in China-based joint ventures should not waste time and start negotiations sooner rather than later. +++ 

+++ DAIMLER has complained to EU antitrust regulators about Nokia patents essential to car communications, a move underlining the tensions between tech companies and the car industry on the use of key technologies. Tech companies and mobile telecoms providers are playing an increasingly important role in the auto industry, with their technologies used in navigation systems, vehicle-to-vehicle communication and self-driving cars. Daimler confirmed that it had lodged a complaint with the European Commission against Nokia. “We want clarification on how essential patents for telecommunications standards are to be licensed in the automotive industry”, the car maker said. “Fair and non-discriminatory access to these standards for all users of the essential patents for telecommunications standards is a key prerequisite for the development of new products and services for connected driving”. The European Commission confirmed receipt of Daimler’s complaint. Nokia said Daimler was seeking to side-step taking out licenses. “Though we offer a wide range of options for automakers, including through their tier 1 suppliers, Daimler has resisted taking a license to the Nokia inventions it is already using”, Nokia spokesman Mark Durrant said. “Daimler’s allegations in its complaint to the EU are simply the latest in a long series of actions to avoid taking a license”, he said. Nokia has a highly profitable patent business, a legacy of its history as the market-leading mobile phone maker. Patent disputes between Apple, Samsung, Qualcomm and others have triggered mutual lawsuits worldwide in the last decade, with analysts saying the patent war could next move to the auto industry. +++ 

+++ FIAT CHRYSLER AUTOMOBILES and the PSA Group are exploring a partnership to share investments to build cars in Europe, according to people familiar with the talks. The French carmaker and its Italian-American peer have been holding preliminary discussions to collaborate on a “super platform” (the basic underpinning of a car model) to reduce their investment costs in the highly competitive region, said the people who asked not to be named as the matter is private. Preliminary talks could be announced by the end of the first half, one of the people said. The partnership could eventually develop into a wider combination in the future, though the current focus is on the limited cooperation, 2 of the people said. PSA boss Carlos Tavares said earlier this month that his company is ready to seize opportunities for growth, less than a year after integrating the Opel and Vauxhall brands that it purchased from General Motors. Fiat Chrysler CEO Mike Manley said at the same time that he would “clearly look into” a deal that would make the Italian-American carmaker stronger, including an alliance or a merger. A spokesman for PSA declined to comment, and referred to comments Tavares made earlier, when he said the company was not targeting a “specific” partner and isn’t engaged in “deep” negotiations to find a tie-up. “We have continuous discussions with our partners”, Tavares told in response to a question about potential talks with FCA. “There is no specific target, no specific deep ongoing negotiation”. FCA and PSA extended their cooperation on light-duty vans to include vehicles under the French manufacturer’s Opel and Vauxhall brands in February. Automakers are increasingly joining forces to share investments as the auto industry is facing a technological disruption driven by electric and self-driving cars. Stricter emission rules imposed by European regulators are also forcing the industry to shift away from traditional combustion engines. Automakers are getting squeezed with valuations hovering at recession-like levels, while cash-rich Silicon Valley giants such as Alphabet plot inroads into the industry to access data in future cars. With more signs that sales volume has peaked, Ford and Volkswagen are working toward a broad partnership that would include commercial vehicles and autonomous driving, while BMW and Daimler are collaborating on a range of shared- and self-driving efforts. Fiat Chrysler Chairman John Elkann shares former CEO Sergio Marchionne’s view that auto industry needs to consolidate to end duplication of investments. Marchionne said in his “capital junky confession” speech in 2015 that the auto industry was wasting €2 billion every week in product development and tooling costs which could be shared. +++ 

+++ FORD has confirmed that it will end production of the C-Max and Grand C-Max as part of its wide-reaching strategy to return to profitability in Europe. The 2 MPV models, long rumoured for the chop after years of slow sales across the continent, will be built until the end of June at Ford’s factory in Saarlouis, Germany. There will be a switch to a 2-shift operating pattern, with night shift production ended. Ford claims the measures have been approved “to create a sustainably profitable business in Germany and Europe”. The Saarlouis plant will continue to produce the Focus, with “higher-margin variants” such as the Active and ST to be prioritised in order to improve margins. Earlier this month, Ford announced that it would cut more 5.000 jobs in Germany and an as-yet-undetailed number in the United Kingdom while it attempts to restructure its European business and return to financial health. Further job cuts, possible plant closures and model line trimmings are expected to follow. The American manufacturer employs 53,000 people across Europe, including 12,000 in the UK. Sales of the C-Max and 7-seat Grand C-Max have been slowing as customers switch to SUVs such as the Kuga, with just 53,000 sold in Europe last year; a 21 % drop on 2017. +++ 

+++ Hyundai’s GENESIS premium brand has confirmed plans to debut a new all-electric concept in New York. The company revealed the futuristic Essentia concept last year at the New York International Auto Show, showcasing a bold new design language in a sporty GT package. The Essentia is among many recent EV concepts that are unlikely to see production, however. Hyundai Group design chief Luc Donckerwolke promised to show yet another Genesis “electric show car” at the 2019 edition of the show. The wording suggests the concept will be another design study. It will likely represent a different segment, such as crossovers, or perhaps bridge the gap between the wild Essentia and an actual production-bound nameplate. +++ 

+++ The next-generation HONDA Jazz, which has been spied testing for the first time, will be offered only in hybrid form from its launch next year. Set for an unveiling at the Tokyo motor show in October, the top-selling Honda model in the UK is expected to be the first in the brand’s line-up to only offer a hybrid powertrain. This follows Honda’s announcement that all of its models in Europe will become hybrids by 2025. Currently, the only model it offers as a hybrid is the CR-V, which indirectly replaced a diesel variant of the SUV. Petrol variants are also sold. Honda as seen great success with the CR-V Hybrid, which accounts for 60 % of the model’s sales. Following the launch of the hybrid Jazz in 2020, the next electrified model will be the Civic in 2021. The Jazz is likely to use a powertrain similar in conception to the CR-V Hybrid, which pairs 2 electric motors with a 2.0-litre petrol engine and a CVT transmission. However, given its smaller dimensions, the supermini will have a smaller combustion engine and less power. The new Jazz must remain familiar enough to appeal to its loyal owners, of which there are many, typically older buyers, while also bringing in new people to Honda’s entry-level model. Designwise, there will be a minor evolution for the 4th-generation Jazz. The space-maximising upright profile and tall glasshouse remains, but with more curved lines and redesigned lights, bumpers and bonnet. +++ 

+++ HYUNDAI and KIA (and Genesis) are set to benefit from a new electric car platform, similar to the Volkswagen Group’s MEB technology, while more radical designs for the brands’ dedicated EVs are promised, too. “A new platform dedicated to electric vehicles is about 2 years away”, a company insider revealed. “It will probably focus on B- and C- segment cars”. Hyundai and Kia have already said they will have 38 green cars in their line-up by 2025, including 14 EVs. Premium brand Genesis is also expected to launch an all-electric car by 2021. Meanwhile the Group will push on with the development of fuel cell vehicles in addition to today’s Hyundai Nexo model. Currently all of Hyundai group’s electrified cars are versions of existing models on current platforms, but design boss Luc Donckerwolke has hinted that he plans to push his design teams to come up with more radical proposals when it comes to the new range of EVs. “When it comes to electric vehicles you have to ask whether you want science fiction or whether you want to conform”, he told. “We can create something that doesn’t appeal to someone in the traditional sense. We need to appeal to millennials and next generation car buyers. They’re not car people: they want to buy something else”. Donckerwolke also revealed how 3D printing was going to have an effect on future car design and materials used. “3D printing is a game-changer”, he said. “With 3D printing we have to ask things like whether we could print a seat fabric that’s thick enough that you don’t need foam”. Currently, 3 EVs are available from the group. Hyundai has the Kona Electric and the electric version of the Ionic, which is due to get a larger battery later this year, while Kia has the e-Niro. An all-electric version of the new Kia Soul, that Autointernationaal.nl has already tested, will arrive at the end of the year. However, such has been the demand for electric models that both the Kona Electric and e-Niro are sold out. Increased supply should arrive next year, though, with a spokesperson telling me: “Customer demand has been higher than expected. It’s going to take 6 months to adjust to that level of demand”. +++ 

+++ The Carlos Ghosn debacle has continued to escalate as NISSAN releases a lengthy report blaming the executive for the compensation scandal and a separate report details an alleged coup plot sparked by his plan to push a merger with Renault. The automaker’s internal investigation appears to be focused on explaining how Ghosn was able to receive allegedly improper compensation without the issues being spotted by internal committees and audits. “Mr Ghosn was in a way deified within Nissan as a savior who had redeemed Nissan from collapse”, the report says. “Mr Ghosn (and alleged co-conspirator Greg Kelly) would transfer or drive into resignations directors, officers and employees who would object, raise questions or not follow directions”. The inquiry suggests Ghosn held such control over corporate affairs that board meetings were cut short and groups that should have helped spot improper compensation were left ‘opaque.’ The company does admit, however, that there are “issues requiring improvement” regarding Nissan’s governance “as it could not prevent the misconduct”. A Wall Street Journal report, meanwhile, claims Nissan executives only began digging for dirt in an attempt to derail Ghosn’s plan to merge with Renault. The Japanese automaker has reportedly been long bitter about Renault’s disproportionate control over its affairs since the French automaker bailed out the near-bankrupt rival 2 decades ago. A company spokesman told that the motives of the executives are not relevant as the internal investigations found substantial evidence of “blatantly unethical” conduct. “The sole cause of this chain of events is the misconduct led by Ghosn”, the statement added. +++ 

+++ RENAULT is gearing up to add 2 new electric vehicles to its range, sandwiching its Zoé between a smaller city car and a larger family-sized model to take on the Nissan Leaf. The EV expansion will help the Renault-Nissan-Mitsubishi Alliance sell 2 million electric cars per year by 2025. Renault has previously announced plans to launch 8 new EVs by 2022; currently it has 4 in its line-up. The firm’s global electric vehicle programme director, Eric Feunteun, said: “We will continue in the B-segment; that is our strongest segment and it is the heart of the European market. Then we clearly go down and then we will go up into the C-segment, so we will increase our coverage. The idea is to bring the car with the right timing”. Feunteun is conscious that launching an electric family-sized hatchback as it stands would make the model too expensive for a brand like Renault. He added: “If I do it with the cost of the battery today, then I will be at the price of my luxury competitors. If you want to go to the C, D, and E segment (we can see what Tesla is doing, and Jaguar) you need to go with very big batteries. That means very expensive cars. I’m a strong believer that the DNA of Renault is to bring affordable technology; the Zoé is the most affordable electric car on the market and price is the number one deciding factor. “My answer is very clear”, he added. “Yes, we will go to the C-segment, and yes, we will go with a bigger battery, that is for sure. But we need to find the right timing to be sure we have a competitive offer”. As a result, Renault’s Leaf rival isn’t expected to land until around 2022, when the cost of battery technology should be more in line with the level of pricing the firm is aiming to achieve with the EV. The model is likely to be based around the Symbioz concept, which announced the French manufacturer’s vision of electric and autonomous vehicle technology. While the as-yet-unnamed family car is likely to feature a more modest design over the concept, it is expected to inherit some of the show model’s more striking touches, such as the exaggerated daytime running lights at the front and rear. The production car will sit on an all-new dedicated EV platform, which will also be available to the Alliance partners, designed to give the sort of passenger space from the segment above. The larger battery size means it’s likely the forthcoming electric family car will feature a slightly raised ride height, a theme that will become common with electric vehicles. It should offer a real-world range of more than 400 kilometres. This idea of improved cabin space was touched upon with the Symbioz, and is something that will become a staple feature in future electric models; the EV platform’s packaging should allow it to offer more room inside for a car with relatively compact external dimensions. Speaking about the Alliance’s new electric architecture, Feunteun said: “If you look at a dedicated EV platform, it will bring a lot of value that hybrid platforms can’t. On the EV platforms, you will be able to have one segment difference from the inside to the outside of the car. That’s fantastic value”. +++ 

+++ Renault and Peugeot hope to give Europe’s SMALL CAR SEGMENT a needed lift with the introduction of the latest versions of the Clio and 208, the companies’ top-selling models. Renault has given the fifth generation Clio a more upscale feel, drawing on technology from higher-end models such as the Espace and Mégane with chrome and gloss black exterior trim, LED lighting, and a redesigned interior with an optional 9.3 inch infotainment touchscreen and digital instrument panel. Peugeot adds features from the brand’s more-expensive vehicles in its new 208, including the i-Cockpit layout, with a smaller steering wheel positioned below the instrument panel, a larger touchscreen and advanced driver-assist systems. The 208, which is the first Peugeot model on PSA Group’s new CMP architecture, will be available with an electric drivetrain as an option. Although the small-car segment is under pressure from small SUVs and crossovers (often built on the same platform) it remains the most popular in Europe, with an 18 % market share. That is down from 25 % a decade ago. Last year there were 2.8 million small hatchbacks registered in Europe, according to JATO Dynamics; a 1.2 % decrease from 2017. “The small hatchback is still a key segment in terms of volume”, said Felipe Munoz, global automotive analyst at JATO. “These cars are very important to keep some of the largest factories in Europe running, and they are also one of the most popular choices for rental car companies”. The Clio has outsold the 208 in recent years, although that could change in 2020. IHS Markit forecasts that each model’s production will peak next year at 350,000 units. That figure comes with a few qualifications, however. Peugeot expects 208 volumes will increase with the introduction of a full-electric version, while Renault is doubling production (to about 80,000 units a year) of the electric Zoe, which has very similar dimensions to the Clio and will fill the same niche for Renault as the electric 208 will for Peugeot. Peugeot expects that 10 % of 208 sales will be electric, with 20 % diesel and the rest gasoline. The Clio was first introduced in 1990 as a successor to the Renault 5 series. Sales of the current generation have increased every year since its debut in 2012, Renault says. “The fifth generation Clio is very important for us, as it is the best-seller in its segment and the second best-selling car in Europe”, Laurens van den Acker, Renault’s senior vice president, corporate design, said. Underlying that assessment, Renault says the new Clio is “the spearhead” of Renault’s 2022 strategic plan, Drive the Future. Under the plan, Renault will have 12 electrified models by that year, including a mild-hybrid version of the new Clio. Rivals in the segment include the Volkswagen Polo, Ford Fiesta, Toyota Yaris and Opel/Vauxhall Corsa. A new version of the Corsa (also built on PSA’s CMP architecture) is due late this year. Renault’s design brief for the new Clio was clear: Don’t mess with a good thing. The exterior will be familiar to fans of the current version, with similar proportions and sculptured side panels, though the new model is 14 mm shorter and up to 30 mm lower to the ground. The interior, however, has been revamped to include more technology, including a 7 or 10 inch digital instrument panel with a navigation display, vertically oriented infotainment, wireless phone charging and a newly developed connectivity system called Easy Link. Peugeot designers focused on giving the 208 a more dynamic and athletic look, drawing inspiration from the 205 GTi hot hatchback from the 1980s. The rear now has more pronounced ‘shoulders’ and the side profile is more sculptured, with deeper stampings. The use of the new CMP architecture gives rear-seat passengers more knee room. The 208’s dashboard includes a digital 3-D display that brings important information such as warnings and alerts to the front. +++ 

+++ VOLKSWAGEN has selected Siemens as its integration partner to help connect its 122 plants to Amazon’s cloud in an effort to raise efficiency in production, the 2 German companies announced. “Siemens will play a key role in ensuring that machinery and equipment of different manufacturers at the 122 Volkswagen plants are networked efficiently in the cloud”, they said in a joint statement, without giving financial terms. Volkswagen earlier said it has teamed up with Amazon Web Services to link up and integrate data from plants, machines and systems, as a way to improve and standardize its production systems and processes. For Siemens, Volkswagen is an important, high-profile customer for its MindSphere internet of things platform, the core of its Digital Factory division. +++

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