+++ A key committee of EU lawmakers rejected a European Commission push for a wifi-based technology for cars, backing critics who support the alternative 5G standard. The EU executive is seeking to set benchmarks for internet connected cars, a market for carmakers, telecoms operators and equipment makers expected to be worth billions of euros a year. The Commission’s preference for the wifi-based ITS-G5 would give Volkswagen and Renault an edge over Daimler, Ford and PSA Group which endorse the rival 5G standard C-V2X. A clause requiring new technologies to be modified in order to be compatible with older technology has triggered alarm in the telecoms industry which is rooting for the 5G standard, and other involved parties. The European Parliament’s transport committee said the clause would put a brake on innovation. Commission digital chief Andrus Ansip, Finland and Spain have also voiced criticism of this requirement. The EU executive declined to comment on the parliamentary committee vote. Parliament will vote on the Commission’s proposal on April 17, which can only be blocked by a majority. The European Council also has a say in the issue and would also need a majority of EU countries to derail the proposal. Lobbying group and C-V2X supporter 5GAA has said the wifi push goes against the Commission’s campaign to promote 5G-based activities and boost economic growth. +++
+++ Fiat Chrysler Automobiles (FCA) has settled a lawsuit that accused the company of pressuring dealers to FALSIFY SALES NUMBERS . Lawyers representing the automaker initially succeeded in narrowing the charges in the 2016 lawsuit, dismissing the racketeering allegations but allowing plaintiffs to push forward with antitrust and breach-of-contract arguments. The lawsuit claimed FCA had provided cash compensation to dealers that improperly counted in-stock unsold vehicles as sold near the end of the month, artificially inflating FCA’s apparent sales totals. Dealers then “backed out” the sales on the following business day entering the next month. One dealer claimed a manager was offered $20,0000 to misrepresent sales of 40 new vehicles in a single month, concealing the payment as co-op advertising payments. “FCA is pleased we could reach an amicable resolution to this matter”, the company said in a statement, though terms of the deal were not made public. The automaker settled 2 related investor lawsuits for $14.75 million. Federal investigations into the allegations are ongoing. +++
+++ FIAT CHRYSLER AUTOMOBILES (FCA) is to pay Tesla “hundreds of millions” of euros to enable Tesla’s electric cars to count as part of FCA’s “pool” of vehicles for the purpose of CO2 emission measurement, thereby allowing FCA to meet stringent EU emission targets. Under the deal, the Tesla Model 3, S and X will become part of FCA’s vehicle fleet for the purposes of counting carbon dioxide emissions, enabling FCA to more easily meet EU targets. Another pool includes Toyota and Mazda. European Union rules will require carmakers to post average CO2 emissions of 95 g/km across all the cars they sell by 2020 and 2021. Cars from FCA, which owns Fiat and Alfa Romeo, as well as Ferrari, Maserati and Jeep, emitted 123 g/km of CO2 on average last year, meaning the 95g/km target is likely to be hard to hit within a year or 2. Carmakers who do not meet the fleet average targets will have to pay fines of €95 for every g/km of CO2 over the 95 g/km target each car they sell emits. Analysts claim FCA could face fines of more than €2 billion by 2021 if the company’s fleet CO2 emissions aren’t reduced. EU rules permit companies to “pool” their emissions with internal brands, meaning Volkswagen can share fleet-average emissions with Seat, Skoda and Audi, and PSA brands (Peugeot, Citroen, DS and Opel / Vauxhall) can do similarly. But external pools (where one company teams up with another) are also permitted, and the FCA-Tesla deal is believed to be the first of its kind. A statement from FCA said the company is “committed to reducing the emissions of all our products” and that it intends to “optimize the options for compliance that the regulations offer”. FCA stressed that “the whole point of a CO2 credit market is to leverage the most cost-effective ways to reduce overall GHG (greenhouse gas) emissions in the market” and that a CO2 “purchase pool provides flexibility to deliver products our customers are willing to buy while managing compliance with the lowest-cost approach”. +++
+++ Automakers could be hit with billions of euros in FINES for missing the European Union’s fleet CO2 emissions target that starts to take effect next year. That is the conclusion of analysts after CO2 rose to its highest level since 2014. The estimated total penalty payment is €34 billion, according to a report this month from Jato Dynamics, which based its figure on CO2 data from last year. Volkswagen Group and PSA Group, the 2 largest automakers by volume in Europe, could face the loss of up to half of their combined net profits, JATO said. The fine is 95 euros per gram of CO2 over the limit, multiplied by the number of cars sold in 2020 and 2021, although 5 % of the highest-emissions vehicles will not be counted in 2020. The fleet CO2 target is 95 grams per kilometer. JATO said in March that overall CO2 emissions in the 23 European markets it analyzed in 2018 were 120.5 g/km, compared with 118.1 g/km in 2017 (the European Environmental Agency’s final 2017 figure is 118.5g/km). Analysts attribute that increase to multiple factors. They include the growing popularity of SUVs, which tend to be heavier and less aerodynamic (and thus less fuel efficient) than their sedan equivalents; bans on older diesels in some European cities; and the continuing fallout from the Volkswagen Group’s emissions-cheating scandal. The bans and the VW scandal have weakened confidence in diesels, causing consumers to switch to gasoline engines, which are less efficient. “Companies are going to have to speed up to meet the targets”, said Michael Schweikl, an automotive expert at PA Consulting in Germany and an author of the company’s annual report on automakers’ progress toward emissions targets. “I think they underestimated the effort of changing from internal combustion engines to other alternatives”, he added. “The market is pulling in one direction and they underestimated how long it will take to steer it in a new direction” toward zero- and low-emissions vehicles. Although the EU has mandated a 2021 fleet average of 95 g/km of CO2, each automaker has a different target based on the average mass of its vehicles. Fiat Chrysler’s 2021 target is 91.8 g/km, for example, the lowest of all automakers, because it sells a high percentage of small cars, while Daimler’s target is 102.8 g/km. The investment bank UBS suggested in a report this month that this “limit value” has made it less likely automakers will use “lightweighting” technology to lower emissions. Fleet weight may be a factor in whether Ford achieves its 2021 target, Schweikl said. The automaker has recently announced a strategy to reduce the number of cars in its lineup in favor of SUVs. That could make it even harder for Ford to lower emissions, but at the same time, a heavier average fleet weight would raise their target emissions figure, Schweikl said. He added that Ford’s decision to change it strategy one and half years before the deadline means “it will be a really big job to do it successfully”. UBS said this month that while it expects all automakers except Fiat Chrysler to meet their targets, the cost of compliance (through new technologies such as plug-in hybrids) will dent combined profits by up to €7.4 billion. That could mean a 25 % hit on earnings per share at PSA and 20 % at Fiat Chrysler, UBS said. About 75 % of those costs will be borne by automakers, UBS said, with buyers asked to shoulder the rest through higher prices. “Under normal circumstances, companies and consumers would share the burden”, Schweikl said, “but in the last 2 or 3 years, automakers have lost the trust of consumers” because of the VW cheating scandal and other factors, and it will be more difficult to pass along price increases, he added. Dave Leggett, who is automotive editor at analytics company GlobalData, said in a note: “As the time horizon to 95 g/km shortens, other companies are sure to consider pooling like FCA and Tesla as a strategy for avoiding large fines. The sum FCA may be paying Tesla for the pooling privilege has not been disclosed. It is not surprising that zero-emissions Tesla is alert to the revenue raising pooling opportunity emerging in Europe. It has also made money trading zero-emission credits in the US in the past”. In 2018, Fiat brand’s CO2 emissions were 119.2 g/km, according to JATO, therefore analyst firm Evercore ISI calculates that the brand would need to reduce emissions to less than 89 g/km to comply with the targets. Assuming the 30 g/km gap and applying the €95 fine for noncompliance, the potential fine at current levels would be roughly €3 billion, Evercore ISI estimates. Many automakers have also elected to create closed pools of their own brands. PA Consulting is less optimistic than UBS that the 2021 targets will be reached. Under the most optimistic forecast, Ford and FCA will miss targets, while VW Group and PSA will be right at the limit, PA Consulting said. Under a more conservative scenario, the only carmakers that will be under their targets are hybrid-heavy Toyota, Volvo and the Renault-Nissan-Mitsubishi alliance. VW Group is in danger of having to pay emissions fines despite having just announced it would invest €19 billion in electric vehicles from 2019 to 2023, Schweikl said. “They waited 1 or 2 years too long to develop their products”, he said. “Can they absorb a fine of, say, €1.5 billion? Yes, they can, but the problem is not the money, it’s more their reputation if they miss a known target”. Analysts said that although the emissions situation may look grim for many automakers based on 2017 sales and provisional 2018 figures, the market will start to look very different toward the end of this year as more electric vehicles and plug-in hybrids become available. Big players such as VW Group, PSA and Daimler have not yet started selling mass-market electric vehicles. “Key CO2-saving models need to be on the market already from the beginning of 2020”, UBS said, noting that, on average, automakers still need to reduce emissions by 19 %, or 23 g/km. Top executives say they are confident that they can reach their emissions goals, even if the figures show that many automakers have taken a step backward. “Paying any sanction or any fees is just not an option”, Renault CEO Thierry Bollore said at the Geneva auto show last month. “And we have designed our strategy as such”. +++
+++ Former Nissan and Renault boss Carlos GHOSN has been sacked from the Nissan board by shareholders following an extraordinary general meeting. The 65-year-old was dismissed from his role as Nissan’s chairman after he was arrested last November and charged with a number of financial misconduct offences relating to his time at Nissan. But he officially remained on the firm’s board, until a vote was taken at a meeting in Tokyo. Greg Kelly, the former Nissan special director who was arrested at the same time as Ghosn, was also sacked. Renault chairman Jean-Dominique Senard has been added to the board, as part of an effort to stabilise the Renault-Nissan-Mitsubishi alliance following Ghosn’s arrest. The decision comes a week after Ghosn, who had previously been released on bail, was detained for a 4th time by Japanese prosecutors over fresh charges that he used Nissan funds for personal benefits. In a statement released through his lawyer, Ghosn strongly denied the latest charges, calling his arrest “outrageous and arbitrary”. He added: “It is part of another attempt by some individuals at Nissan to silence me by misleading the prosecutors. Why arrest me except to try to break me? I will not be broken”. Ghosn’s arrest came the day after he joined Twitter and posted that he would “tell the truth” about what happened in a press conference on Thursday 11 April. The tweet came from a newly established @carlosghosn account, which has been verified by the social media service. In a further development, Renault’s Ethics and Compliance Department has completed its report into Ghosn’s behaviour while heading the French firm. Renault has previously reported a number of ‘issues’ to French judicial authorities, and its board of directors says it has now reported a number of “potential issues concerning payments made to one of Renault’s distributors in the Middle East”. The board has also recommended that Ghosn stops receiving his company pension. +++
+++ HONDA has decided to end car production in Turkey following completion of the production of its current Civic Sedan model in 2021, the company said in a statement. It said it made the decision due to electrification developments in the industry globally and the need to ensure adequate production capacity. Operations in the automobile area that include vehicle imports and distribution would continue, Honda said. +++
+++ JAGUAR LAND ROVER (JLR) shut its UK plants for 5 days over Brexit, adding to other shutdowns to leave at least half the country’s car production off-line in what could be a pivotal week for Britain’s divorce from the EU. The move was intended to prepare for any Brexit related disruption at Britain’s biggest carmaker, which also reported a fall in global sales. The decision was taken a few months ago at a time when the departure date (since extended to April 12) was March 29. Automotive firms face several possible risks under a disorderly Brexit, including delays to the supply of parts and finished models, new customs bureaucracy, the need to recertify cars and an up to 10 % tariff on finished vehicles. Prime Minister Theresa May’s efforts to obtain a longer extension have also ruined contingency plans for some of them. Shutdowns are generally organized far in advance so staff holidays can be scheduled and suppliers adjust volumes, making them hard to move. With Britain’s political leaders still deadlocked over Brexit and some EU states questioning a further departure delay, culture minister Jeremy Wright said May would continue talks with the opposition Labour Party to try to find a compromise solution. BMW’s UK Mini and Rolls-Royce plants are also shuttered this week, as is PSA’s Opel / Vauxhall car factory, which brought forward summer shutdowns to April. Together JLR, Mini, Rolls-Royce and Opel / Vauxhall built over 750,000 of Britain’s 1.52 million cars last year. Honda has also scheduled 6 “non-production days” in April but has declined to say exactly when. Britain’s car sector has posted sharp falls in sales, output and investment since 2017. JLR had to cut output last year and in the year to March 2019 its global sales fell nearly 6 % to 578,915 vehicles, hit by a sharp decline in China. UK sales rose 8.4 %, however. Overwhelmingly foreign-owned, the Britain-based car industry has become increasingly frustrated as a stable investment environment becomes mired in a political crisis that could lead to trade restrictions. At least 25 % of Britain’s automotive engine capacity is also closed as Mini’s central English Hams Hall factory continues a 4-week shutdown while JLR’s Wolverhampton site stops production this week as part of Brexit preparations. +++
+++ “Very serious” delays in exporting goods over the U.S. – MEXICO border are impacting the auto industry, Eduardo Solis, the president of the Mexican Auto Industry Association (AMIA), said. Washington’s decision to move some 750 border agents from commercial to immigration duties to handle a surge in families seeking asylum between border crossings has triggered long delays for cross-border traffic at Ciudad Juarez, Nuevo Laredo and Otay Mesa, some of the busiest ports on the border. Solis said the delay in exporting car parts destined to U.S. auto plants was putting operations there at risk and called on officials to find a diplomatic solution. +++
+++ Europe’s MPV market is in free fall as more automakers shift their focus to SUVs, but the struggling segment is being handed a lifeline as companies offer an alternative in the form of more sophisticated passenger versions of Vans such as the Volkswagen Transporter and Opel Vivaro. Having peaked at 2.4 million units in 2005, last year the combined MPV segment dropped below 1 million, figures from LMC Automotive show. At the height of its popularity, the class-leading Renault Scenic accounted for more than 300,000 sales annually, but last year no MPV managed to top 100,000. The slide will worsen in the coming years as more automakers abandon the segment, according to LMC Automotive, which sees the MPV sector dropping below 800,000 this year and falling to fewer than 600,000 by 2022. “With SUVs being the primary focus of investment, other body styles have to fight for survival, none more so than the MPV”, Sammy Chan, an analyst with LMC, wrote in a paper earlier this year. Once-key models are now being dropped. Ford is discontinuing the C-Max, once a top 3-seller in the segment, and the company is unlikely to replace the S-Max or Galaxy as it looks to save money in the region. Toyota has cut its Verso, which was the last MPV in its lineup, while Opel is phasing out the Zafira, another big-seller in its day. Automakers such as Nissan and Honda got out of the segment a long time ago. Peugeot, Mazda and Seat followed more recently. The small MPV segment suffered most last year from the rapid shift by car buyers to SUVs. The sector halved to a little more than 100,000 sales, according to figures from JATO Dynamics. Only the Fiat 500L topped 50,000 last year, while both Ford and Opel left the segment after axing the B-Max and Meriva, respectively. The Hyundai ix20 and Kia Venga remain on sale but both models are expected to be dropped by 2020, LMC predicts. The compact MPV segment fell below half a million last year to 410,966, a drop of 21 %, according to JATO. The segment is buoyed mainly by its key market of Germany, where 186,063 compact MPVs were sold last year. France is the birthplace of the European MPV with Renault launching the Espace first then the smaller Scenic, but sales of the models there fell 25 % last year. Espace sales were particularly bad, falling 35 % to just 12,029 in Europe. Germany is now by far the biggest market for large MPVs, helped by the success of the class-leading Mercedes-Benz V class. The V class, which is also sold as a passenger van, is becoming a case study for other manufacturers hoping to keep a foot in the segment. They do so by making their vans sophisticated enough to appeal to MPV customers by adding more seats and windows to differentiate them from the commercial versions typically sold to tradespeople or delivery companies. The market is more stable than it is for MPVs: “Van-derived MPVs seem to resist the shift to SUVs”, Felipe Munoz, global analyst for JATO, said. The European market last year stood at 485,000 and will grow slightly this year to reach almost half a million, LMC predicts. The market will then slowly decline to 419,000 by 2022, it forecasts. Manufacturers are hoping to prove LMC’s predictions wrong and grow the market by blurring the line between Van and car. For example, Opel/Vauxhall has named the passenger version of its new Vivaro midsize van the Zafira Life as a way of linking it to its MPV. Opel will offer the Zafira Life in 3 lengths, the smallest of which at 4.600 mm is similar to that of the Zafira Tourer, which is being discontinued. Opel/Vauxhall also has big plans for its Combo compact Van. “We see a lot of growth for the passenger version”, Tobias Stoever, Opel’s senior manager for light commercial vehicles, told last year. He cited the fact that Peugeot and Citroen routinely sell about 40 % of their compact van volume as passenger versions, compared with 10 % for the previous Opel Combo. The European leader in the passenger van segment is the VW Transporter midsize model with sales of 64,254 last year. The VW Caddy compact Van was No. 2. The Dacia Dokker ranked third followed by the Fiat Ducato. The latest passenger version of the Transporter, dubbed the Multivan 6.1 by VW, was released last month at the Geneva auto show. The Van featured technology from VW’s car range such as a 10 inch infotainment screen behind the steering wheel, adaptive cruise control and lane departure warning. While Ford is expected to leave Europe’s MPV segment, its broad range of Transit-badged vans offers a way back for a lot less money in terms of development spend. “From an automaker’s point of view, van-derived/van-platform sharing models certainly offers a solution to reduce costs while still retaining a footprint in the MPV segment”, LMC’s Chan told. Last year, Ford sold 38,028 passenger Vans, the majority of which were built in Turkey to take advantage of the country’s low-cost manufacturing base. An agreement between Ford and VW to share Vans is expected to reduce costs further at each company. The key to van success in Europe is Germany, where customers purchased 208,376 passenger Vans last year, almost quadruple that of the second-biggest market of France. The fact that Vans can be registered as cars and be used either for work or leisure boosts their popularity in Germany. In addition, Germany’s Van market is more of an open playing field as the Fiat Ducato was the No. 2-seller there last year after the VW Transporter. In the future, passenger Vans may have a much bigger role to play as the line between private and public transport is blurred in a world of shared mobility, while further in the future the makers of autonomous vehicles will likely highly value Vans for interior space. The MPV in its current form is fading fast, but the concept might merely be evolving rather than going extinct. +++
+++ PSA Group boss Carlos Tavares says that he would consider a merger or acquisition with Jaguar Land Rover, as long as it wouldn’t distract the French firm. Tavares has been open about looking to expand PSA (which currently comprises Citroën, DS, Peugeot and Opel / Vauxhall) through acquisitions or partnerships with other car firms. Tavares led PSA’s purchase of Opel / Vauxhall from General Motors in 2017. In an interview, Tavares was asked about rumours of interest in Jaguar Land Rover, which is owned by Indian firm Tata Motors. He said that it would be good for PSA to have a luxury brand and that the company was “considering all opportunities”, adding he would be interested “as long as it’s not a distraction”. Tavares said that there had been no discussions with Tata Motors about Jaguar Land Rover yet. He also said that “we don’t have a specific target but if there are opportunities, of course, we will consider it”. Asked further about adding a luxury brand that would sit about DS, Tavares said: “Why not? Why shouldn’t we discuss it? It depends on what kind of value creation we could generate”. Jaguar Land Rover has struggled in recent months, hit by falling demand for diesels and the decline of the Chinese market. Recent heavy losses, including an asset writedown, also caused the Tata Group to post a quarterly loss. Tavares cited PSA’s success in turning around Opel / Vauxhall, which posted its first profit in 20 years recently, suggesting it could have a similar impact on the strugging British firm: “With Opel, we have demonstrated that we can turn around a company that was in the red for 20 years, in 12 months. So this is something we know how to do”. Tavares said the group’s current focus was on its ‘Push to Pass’ strategic growth strategy to expand the company’s global presence, including expansion into the US, Russian and Indian markets. In a statement, Tata Motors said that Jaguar Land Rover was not for sale. A spokesperson said: “There is no truth to the rumours that Tata Motors is looking to divest its stake in JLR”. Following Jaguar Land Rover’s 2018 losses, Tata’s boss had previously affirmed its commitment to the company. The Peugeot family, which owns the largest stake in the PSA Group, recently said it would back future mergers or acquisitions, including with the FCA Group. +++
+++ TESLA boss Elon Musk has hinted at a few upcoming features that will be added to the company’s fleet via over-the-air software upgrades. Responding to Twitter users who complained that they have to disable Autopilot to maneuver around potholes, Musk promised Tesla is making progress with a pothole-avoidance system. The executive also said vehicles will eventually support in-car video playback when parked and connected to Wi-Fi. To help support the feature, free Wi-Fi will be offered at all Supercharger stations over time. Tesla has not announced firm details of a potential timeframe for launching any of the new features. +++
