+++ The biggest investor in ASTON MARTIN is considering buying another 3 % stake, offering to increase its holding after shares in the luxury carmaker crashed almost 50 % since its listing 9 months ago. Strategic European Investment Group, part of the Italian private equity group Investindustrial, owns 31 % of Aston Martin. It only wants to buy a maximum 3 % stake but has to make an offer to all shareholders due to its already large holding. It has secured agreements from existing shareholders such as a group of Kuwait-based investors to back the move. It is offering to pay $12.68 per share. It must make a decision by July 29. Aston Martin has struggled since it listed in October last year. Its shares fell on the opening day and are now down 47 %. The company’s recent results have been hit by a need to invest more in its manufacturing plants and expand its vehicle offering, leading to higher costs. +++

+++ The German transport ministry has identified up to 4 different emission defeat devices in software code used by AUDI ’s V6 diesel engine. The various defeat devices are claimed to have been developed by Audi to provide models fitted with its 3.0 TDI engine with lower emission readings during government mandated tests on rolling roads under controlled conditions than actual results on public roads. The various defeat devices are said to have been used in vehicles produced up to the beginning of 2018, more than 2 years after US authorities made public findings that Audi parent company, Volkswagen, had used similar illegal software functions in various diesel models. The German transport ministry issued Audi with a forced recall of various models fitted with the V6 diesel engine in January 2019, confirming up to 200,000 vehicles in Germany were suspected of using an illegal software function the German car maker labelled as a “Motoraufwärmfunktion” or engine warm-up function. This so-called Motoraufwärmfunktion is, in fact, a secret defeat device used to manipulate emission results, say representatives of the German transport ministry. Models from Volkswagen and Porsche were also affected. Information in an addendum to the German transport ministry report identifies a further 3 defeat devices. 3 additional defeat devices were not deemed illegal despite the report suggesting they facilitated functions leading to emission manipulation. In the report, the various defeat devices are listed as A, B, C and D. However, the German transport ministry states only one can be identified as being illegal, suggesting Audi was free to voluntarily remove the other 3 functions from its software code as part of the recall announced earlier this year. It is apparent that the German transport ministry did not undertake testing leading to the discovery of the defeat devices but relied upon information provided by Audi. +++

+++ The BENTLEY EXP 100 GT concept, to be revealed on 10 July, will showcase a zero-emission “future of grand touring”, according to the brand. The concept will celebrate to the day the centenary of the marque. As well as offering zero emissions, it will be capable of driving autonomously. Bentley describes the concept as a “showcase of sustainability and innovation”. It continued: “It will feature a fascinating array of materials seamlessly blended together by the designers at Bentley, who have taken handscraftmenship of materials to an as yet unseen level”. While Bentley hasn’t confirmed the powertrain of the EXP 100 GT, sources say it is powered by a hydrogen hybrid, making it the first time Bentley has demonstrated an interest in hydrogen power. Its first petrol-hybrid, a variant of the Bentayga, will launch in August this year. Meanwhile, a full electric model will arrive within 5 years. While not yet confirmed, the concept is set to show a transparent OLED display on door cards, first talked about by Bentley in early 2017. The OLED display could overlay wood veneers and only be visible when in use, to control features such as audio. A version of the technology was shown in Bentley’s EXP12 Speed 6 e concept. Design director Stefan Sielaff told earlier this year that the concept is “a manifesto for how we see Bentley in the future”. He said at the time: “It’s a view into the future. We don’t want to show a spaceship. It should be something that everyone knows is a Bentley and that the technology we show is credible. It’s not only a design statement but a statement for the company. It’s about sustainability, social responsibility, local sourcing, materials. It’s a big change in our thinking because society is changing”. +++ 

+++ It has been several months since BMW teased us with a shadowy image of the new 2 Series Gran Coupe, but now more details about the compact saloon have emerged. A recent interview with BMW’s chief engineer Klaus Fröhlich suggests that, contrary to previous suggestions, the new model might keep a rear-wheel drive layout. It was previously thought that the next 2 Series, due on sale in 2020, would use an extended version of BMW’s UKL front-wheel-drive architecture shared with the 1 Series hatch and the current Mini. However, Fröhlich suggested that it might use the brand’s CLAR underpinnings. When questioned about the structure of the upcoming i4, Fröhlich responded, “This is our Cluster Architecture. This is in our rear-wheel drive cars; from the 2 successor up to the X7”. With the CLAR structure, the only common component is the bulkhead: the rest can be moved around to allow for varying wheelbases, track widths and floors which can accommodate batteries for electrified drivetrains. This will open up the possibility of plug-in 2 Series Gran Coupe models, too. The 2 Series Gran Coupe will be an entirely new model for BMW, taking the place of the previous two-door model and forming part of its growing ‘Gran Coupe’ family. This will also include both the new 8 Series Gran Coupe and a 4 Series variant in 2020. This 2 Series version will act as a style-focused alternative to the recently-revealled 1 Series hatchback. +++ 

+++ The BMW M DIVISION will expand its line-up with more M Performance and full-blown M models that span the entire range; from the new M135i xDrive to a 625 hp version of the upcoming X8. M division also plans to top its line-up and showcase its engineering prowess with a bespoke mid-engined coupé based on the Vision M Next. That arresting new concept points to a high-tech hybrid future at BMW M. However, significant restructuring measures have already been put in place to ensure the long-term competitiveness of more volume-selling M models against a growing number of rivals from Audi Sport, Jaguar SVO, Mercedes-AMG and Porsche. BMW M’s wide-ranging engineering programme is ensuring a quick ramp-up of its model portfolio under a plan originally initiated by former M division CEO Frank van Meel and carried through under the watch of his successor, Markus Flasch. Recognition of this comes in the quartet of new M models already launched in 2019: the X3 M, X4 M, M8 Coupé and M8 Convertible. On top of this, BMW M has also introduced the new M135i xDrive and X2 M35i at the bottom end of its range. On top of this, BMW M also plans to expand its number of hardcore CS models, starting with the new M2 CS in 2020. A key driving force in BMW’s decision to build on its current number of M models is the company’s R&D boss, Klaus Fröhlich, who once led the engineering at Land Rover and has been a member of the BMW board since 2014. In an about-turn on the current M model strategy, plans have now been approved for a new 4-wheeldrive 4-cylinder 1 Series with up to 400 hp. The hot new model will go up against the strong-selling Audi RS3 and Mercedes-AMG A45, as well as the upcoming Volkswagen Golf R Plus. At the other end of the line-up, a new range-topping X8 M model has been conceived as a competitor to the likes of the Audi RS Q8, the Mercedes-AMG GLE 63 and the Porsche Cayenne Turbo. Upcoming M Performance models will continue to receive tuned versions of standard BMW engines in petrol, diesel and petrol-electric plug-in guises. However, future hardcore M models will run one of three key BMW M petrol engines from a modular driveline family similar to the one in place at Mercedes-AMG. According to sources with knowledge of the plan, all future dedicated BMW M engines will receive a common 500 cc cylinder capacity, with a 2.0-litre 4-cylinder, updated 3.0-litre in-line 6-cylinder and new 4.0-litre V8 set to underpin the range. The decision to base the new engines around a common architecture is claimed to speed up development and allow greater economies of scale in production. In the middle of its range, BMW M will introduce new M3 and M4 models in 2020. They will feature an updated version of the existing twin-turbo 3.0-litre in-line 6 with up to 510 hp. Manual, automatic, rear-wheel drive and four-wheel drive options will be offered. The firm is also planning to provide selected M Performance and M models with petrol-electric power. Although it is not yet official, engineering sources suggest plans are under way to establish a 2-tier line-up of hybrid drivetrains. The lower-powered hybrid drivetrains are set to be adopted by M Performance models, with the high-powered units planned for fully fledged M saloon and SUV models and set to be launched first. +++

+++ A no-deal BREXIT could cost the UK automotive industry at least £3 billion in CO2-related fines. The costs represent the fines that would be racked up by the 40-plus manufacturers operating in the UK and who would fall foul of the 95 g/km fleet average CO2 figure, which the government has pledged to implement unilaterally if the UK goes-it-alone in October. A spokesman for the Society of Motor Manufacturers and Traders (SMMT) said: “The European CO2 Directive allows manufacturers flexibility to balance their emissions performance across all relevant European markets. A no deal Brexit would, however, remove this flexibility, which may make reduction targets far harder for some manufacturers, given the UK model mix may differ from a European average. If this meant additional fines were to be levied on UK companies, the effects could be hugely damaging, reducing consumer choice, undermining competitiveness and restricting future R&D spend. This is yet more evidence of the severe consequences for the British automotive industry from a disorderly Brexit; a no deal must be ruled out immediately”. Although the concept of the UK adopting the 95 g/km CO2 average has been well-flagged (it was a key element in government No Deal Brexit planning documents) the impact on individual car-makers and the industry as a whole is only just starting to emerge. The significant issue is that the UK fleet average figure would be based purely on UK sales, making it less likely for sales of heavier cars with larger engines, especially the growing mix of SUVs models, to be balanced out by cheaper, lower polluting city cars and superminis. One mass-market manufacturer has carried out an internal audit of its annual new car sales and calculated its fleet mix of petrol, diesel, hybrid and electrified models would rack up around £100 million in fines. The fines could be reduced by altering the mix of powertrains in favour of more electrified models, but factory capacity for such a dramatic short-term change in output is limited, largely because CO2-planning is being organised on an EU-wide basis and production plans for 2020/2021 have already been committed. More diesels would help cut CO2 figures, but the government is actively shutting down that route by demonising diesel with threatened policy initiatives that have cut consumer demand. Across Europe, brands have been planning their CO2 fleet averages with sales of larger cars in northern Europe balanced out by smaller cars in southern Europe. The UK’s Brexit plan cuts the UK industry off from this product planning mix, exposing UK car companies to huge fines. The manufacturer has ‘gamed’ several potential scenarios, the most severe of which would require a 20 % cut in sales in 2021 and a significant drop in profitability. Although that would reduce fines to a more reasonable £5 to £10 million, the effect on its business would be dramatic. +++ 

+++ The new CADILLAC CT4-V might be a tad underwhelming, but work continues on a proper ATS-V successor. Recently spotted undergoing testing at the Milford Proving Grounds, a high-performance variant has been tentatively dubbed the CT4-V Plus. While the name’s not official, it will be more hardcore than the standard model. Compared to the CT4-V, the Plus variant has a revised front fascia with more aggressive air intakes. The model also has front fender vents and a larger rear spoiler. GM has been tight-lighted about performance specifications, but rumors have suggested the model could use the twin-turbo 3.0-liter V6 engine from the CT6. It produces 410 hp and 542 Nm. The engine would enable the CT4-V Plus to be significantly more powerful than the standard model which has a turbocharged 2.7-liter 4-cylinder that develops 324 hp and 500 Nm. However, it would be weaker than the ATS-V’s twin-turbo 3.6-liter V6 that cranked out 470 hp and 603 Nm. Regardless of what’s under the hood, the CT4-V Plus should have a sportier suspension that is more focused on high-performance driving. There’s no word on specifics, but executives have promised the hotter V-Series variants will have “ultimate, high-performance track capability” as the company would “never forget about our customers who do want to take their cars to the track”. It remains unclear when the CT4-V Plus will debut, but the standard CT4 should be introduced shortly. +++ 

+++ DACIA has announced a €100 million investment plan, with €25 million coming from the Romanian Government, to boost local car production by 50,000 units annually, to 400,000 cars, from September, 2020. Apart from its output increase, the automaker also intends to expand its, currently not-so-big, lineup. Dacia and Renault Group Romania general manager, Christophe Dridi, said it’s time for their ‘kid’, namely the Duster, to get some siblings, without though going into specifics. “We’re very proud of the Duster. We’re selling it in 44 countries, it’s the best-selling SUV in Europe. We believe the Duster is like an ambassador for Romania”, commented Dridi. “Our challenge is to continue the Dacia success, and our ‘kid’ should have some siblings”. Asked when they will launch the next model, the official said: “You know I cannot answer that”. One derivative based on the budget SUV that’s expected to launch later this year is a pickup. The European version of the Duster Oroch will be made in partnership with Romturingia, a coach-builder that already launched a limited-run of 500 units, based on the previous iteration, 5 years ago. An electric version remains a possibility at this point and have already spotted a mysterious prototype earlier this year with an elongated wheelbase and what appeared to be a zero-emission powertrain. The so-called Grand Duster, a larger variant of the Romanian SUV, was also rumored at some point. However, the cheaper alternative to the likes of the Hyundai Santa Fe and other mid-size SUVs has reportedly been scrapped, as it would’ve been too expensive for the brand’s clientele. Another candidate is the Renault Arkana, which could come to Europe rebranded as a Dacia. Moreover, the French automaker also has other high-riding vehicles in its portfolio that cannot be had in Western markets, such as China’s K-ZE and India’s Triber, that are prime candidates for budget-friendly SUVs and fall in line with Dacia’s strategy. +++ 

+++ The DODGE Challenger SRT Hellcat isn’t exactly a slouch as it features a supercharged 6.2-liter V8 engine that produces 727 hp and 888 Nm. However, it could become even more powerful thanks to the addition of a mild-hybrid system. Several sources have suggested the Hellcat engine could eventually be equipped with a mild-hybrid system that is similar to the one used on the Jeep Wrangler. The system would reportedly weigh less than 45 kg, but could potentially deliver more than 176 Nm. Little else is known about the rumored system, but the Wrangler’s turbocharged 2.0-liter 4-cylinder has eTorque technology. It adds several different features including an engine start/stop system, regenerative braking, extended fuel shut-off and an electric power assist function. The latter delivers an extra 96 Nm to boost off-the-line acceleration. There’s no word on when the hybrid Hellcat could arrive, but FCA’s powertrain boss said the company aims to be an electrification leader in the next 12 to 18 months. That would be a big change for the company as their most prominent electrified vehicles are the Chrysler Pacifica plug-in hybrid and Fiat 500e. Micky Bly wouldn’t go into specifics, but said the electrification push is the result of the need to meet “government compliance”. He also said “You can’t get much more efficiency out of a gasoline engine”. While Bly didn’t talk about specific models, the company has already announced plans for an assortment of new plug-in hybrids and electric vehicles. During last year’s Capital Markets Day presentation, Jeep said it will have four electric vehicles and ten plug-in hybrids by 2022. Alfa Romeo and Maserati are also working on a number of electrified models including the Alfieri, GTV and 6C. +++

+++ New rules coming into force on 1st of July dictate that all new fully ELECTRIC vehicles must be fitted with an audible warning device to aid safety. In response to concerns that EVs pose a risk to pedestrians at low speed, the new ‘Regulation on the Sound Level of Motor Vehicles’ calls for silent vehicles to emit a sound when travelling at speeds under 20 km/h or reversing. An acoustic vehicle alert system (AVAS) will generate a noise similar to that made by conventional combustion engines, and can be deactivated when judged necessary by the driver. The devices will be fitted to all new EVs with at least 4 wheels henceforth and hybrid vehicles from July 2021 onwards. A number of manufacturers, including Mitsubishi, Nissan and Toyota, already have some sort of AVAS fitted to their electric vehicles. Jaguar has equipped the I-Pace with a system specifically tuned for the visually impaired. +++ 

+++ The FORD Focus and Fiesta are fading away in the U.S., but the headaches caused by the small cars’ PowerShift dual-clutch transmissions live on. Ford never conquered the long-term reliability problems on the gearboxes that thousands of customers complained would shudder, jerk and hesitate. Although engineers helped solve some early glitches with software updates and redesigned parts, Ford issued more than 20 technical service bulletins related to the transmissions, which were code-named DPS6. In 2014, Ford extended the transmissions’ warranty by 2 years and 64,000 kilometres. Litigation over the transmissions remains unresolved. Ford reached a settlement in 2017 for a class-action lawsuit covering 1.9 million owners, but the settlement is being challenged in a federal court in California on the grounds that not enough owners would be compensated. A separate mass-tort case involving thousands of customers is pending in Michigan. Former Ford CEO Mark Fields has been ordered to testify by July 31 in a series of cases involving customers who opted out of the class-action suit. A Florida judge last month denied Fields’ motion to avoid testifying. Ford also has been forced to pay up around the world; last year it lost a class-action lawsuit in Thailand and separately was fined $10 million by a court in Australia. “They have a major PR and customer-satisfaction nightmare on their hands”, Gabe Shenhar, associate director of the auto test program at Consumer Reports, told. “It’s still not well sorted out”. Ford introduced the 6-speed PowerShift transmission in 2010, playing up the gearbox’s fuel-economy benefits. But customers soon began complaining about jerkiness and a lack of power, and the transmission (along with the troublesome MyFord Touch infotainment system) contributed to Ford’s plunge to No. 20 in Consumer Reports’ 2011 reliability survey from 10th the previous year. Many customers weren’t used to the dual-clutch gearbox, incorrectly assuming it would behave like a regular hydraulic automatic transmission. The PowerShift used 2 dry clutch packs in place of a normal automatic torque converter, which tended to make buyers think the car wasn’t properly accelerating. On the reliability front, the clutches would overheat and often showed signs of premature wear. Ford made some changes in 2012 that it believed would solve most of the problems, but complaints continued. The company also directed dealers to make fixes that often included replacing clutches and updating the transmission control module. “They made it marginally more palatable, but each update came with some loss of fuel efficiency and power”, Shenhar said. “Customers weren’t happy”. The warranty extension Ford eventually offered was a “pretty clear conclusion” it didn’t have a permanent fix, Shenhar said. Angry customers have turned to the courts, arguing that Ford knew about the defects but sold the vehicles anyway and then blamed owners for not driving them properly. Although Ford reached a settlement in 2017 that would give customers $2,325 if they opt in and meet certain qualifications, that settlement is being challenged by groups that argue the deal would let Ford off the financial hook. The automaker’s lawyers argued to keep the settlement in front of three appeals judges in April. An answer is expected by December. The automaker, in a statement, said it does not comment on pending litigation but is committed to providing top-quality vehicles for its customers. “We continue to deny the allegations in this lawsuit, but rather than continuing with the litigation, Ford entered into a settlement agreement with lawyers representing these plaintiffs”, the statement said. “That settlement is fair and appropriate and we look forward to final court approval”. A number of customers opted out of the class-action lawsuit, and their suits have been combined into a federal case in California. That’s where Fields comes in. The former CEO was Ford’s president of the Americas when the cars with the dual-clutch transmissions were launched. “The deposition is critical to investigating and confirming that Ford’s executives at the highest level knew of the problems with the transmissions and intentionally concealed that information and sold the Focus and Fiesta to the public anyway”, Russell Higgins, an associate attorney at Knight Law Group, which represents a number of individuals in the case, told. Fields, who was replaced by Jim Hackett in May 2017, is now a senior adviser at TPG Capital, a global asset management firm. “Mr. Fields is sort of where the buck stopped in terms of corporate knowledge”, Higgins said. “It’s important to have him be able to talk about his actions and what he knew”. +++ 

+++ The wife of ousted Nissan chairman Carlos GHOSN has again called on world leaders, who have gathered in Japan for a G20 summit, to help raise the issue of her husband’s treatment in the country where he is facing financial misconduct charges. Ghosn, who holds French, Lebanese and Brazilian citizenship, has denied the charges and says he is the victim of a boardroom coup at Nissan. While he has been released on bail, he remains restricted from contacting his wife. Carole called on leaders including U.S. president Donald Trump and French president Emmanuel Macron to hold Japanese prime minister Shinzo Abe accountable for what she has repeatedly called the country’s “hostage justice system”. “My husband’s basic human rights have been violated. And all of this came about because a few people at Nissan were working to prevent a merger between Nissan and Renault which resulted in a corporate coup”, she said in a statement. Her comments come a day after Ghosn abruptly canceled what would have been his first press conference since his arrest in Tokyo in November. His lawyers cited concern that it could invite retaliation by Japanese authorities. +++ 

+++ Drivers in the United Kingdom who leave their engines IDLING when parked could face stricter rules and increased fines if new Government proposals are enacted. Transport secretary Chris Grayling has announced his intention to hold a public consultation into the matter in an effort to improve air quality in areas with large numbers of waiting vehicles, such as outside schools, at taxi ranks and bus stations. Although local authorities already have the power to fine drivers who commit the offence, the Department for Transport (DfT) wants to toughen the rules in order to put a stop to “unnecessary” air pollution. Local authorities already have the power to give drivers who commit the offence a default fine of £20, which can increase to £80 if the driver is a repeat offender. The consultation, which is likely to launch in the summer, will look at how best to deal with repeat offenders and may also see the default fine rise to around £100. In May, Jesse Norman MP (who was a transport minister at the time) told that the DfT was “seriously considering” the issue of idling vehicles, while a spokesperson for Westminster City Council confirmed that representatives from both the DfT and the council were meeting to discuss the matter. The issue had been brought to public attention when Westminster City Council requested powers to issue instant fines without warning to drivers who are caught leaving their engines running unnecessarily. The council said such a policy would be enforced by its parking marshals, who would first talk to an offending driver and request that they turn their engine off, only issuing a fine as a “last resort” to those that refuse to comply. That said, if the policy is implemented on a local or national level following the DfT consultation, any resulting legislation might dictate that other enforcement methods are used, with councils either using their own employees or possibly working with the police. “We are determined to crack down on drivers who pollute our communities by leaving their engines running, particularly outside school gates where our children are breathing in this toxic air”, Grayling said. “Putting a stop to idling is an easy way to drive down dangerously high levels of pollution, reducing its impact on the environment and our health”. +++

+++ JAGUAR ’s facelifted 2021 F-Type sports car has entered its public testing phase, getting spotted recently by spy photographers while lapping the Nurburgring Nordschleife. The upcoming renewd F-Type will clearly feature a more streamlined design language, utilizing thin horizontal headlights (instead of the current car’s vertical, swept-back ones) and a large grille upfront, almost reminiscent of the Aston Martin Vantage. I could say that it’s a somewhat subtle look, but I won’t know that for a fact until the camouflage actually comes off and I can see the front fascia undisguised. The rest of the body is rather recognizable as an F-Type, especially if we consider the rear end, which looks almost the same as it does now, only a bit more modern. The taillight graphics point to this being a Jaguar from a mile away. As for what we can expect from the interior, Jaguar’s latest infotainment tech is a given, along with updated materials and improved active safety. The British sports car maker will launch the facelifted F-Type either in 2021 or sometime next year as a 2021 model. +++ 

+++ JAGUAR LAND ROVER (JLR) will reportedly announce this week its plans to build 3 new electric vehicles at the Castle Bromwich plant in the UK. The all-electric version of the next generation XJ sedan will be the first one. JLR will use a common platform for all 3 planned electric vehicles, with the electric XJ to be followed by an SUV, which will most likely be the next Range Rover. The British carmaker has already announced some details about its future products, including its electric models which will use a 90.2 kWh battery pack, giving them a driving range of up to 470 km. The Modular Longitudinal Architecture (MLA) will also spawn plug-in hybrid variants with an EV range of up to 50 km with a smaller 13.1 kWh battery. Choosing Castle Bromwich for the production of JLR’s upcoming battery-electric vehicles will require an investment in the “hundreds of millions of pounds”. This is certainly good news for the British automotive industry, which has been battling with Brexit issues and various factory closures and its future is quite uncertain right now. The 2,500 workers at the JLR’s Birmingham factory have recently agreed to work on a 4-day week basis, while Castle Bromwich will reportedly have to shut for 6 weeks in order to retool the production line for the new models. JLR has this month approached European investors via a bank for a potential new bond financing, according to people familiar with the matter. Assessing appetite for a high-yield offering marks a shift from earlier in the year when the automaker said that market conditions were not right for it to borrow from the bond market. Since then, JLR has delivered its first profit in 4 quarters and the yield on its 4.5 % euro notes due 2026 has narrowed to 6.8 % from a record high of 9.4 % in February. “We’ve always regularly monitored the capital market and issued bonds when market conditions were considered appropriate, and therefore continue to monitor the market on an ongoing basis”, a JLR spokeswoman said. JLR has $1.38 billion of maturing bonds over the next 2 years, including 2 bonds ($500 million) due in November 2019 and March 2020. Last week, Moody’s Investors Service cut its rating on the company to B1 from Ba3, citing elevated leverage and negative free cash flow. As of March, JLR had 3.8 billion pounds of cash on the balance sheet and access to a fully undrawn 1.9-billion-pound revolving credit facility due July 2022 with no financial covenants, according to Moody’s. Funding options this financial year include the utilization of a new $700 million receivable financing facility and potential new financing such as export credit agency funding, certain finance leases and new bond issues, JLR’s spokeswoman said. +++ 

+++ Since Fiat Chrysler Automobiles (FCA) submitted its proposal for a MERGER with Renault, the industry has been closely monitoring whether they will combine. After an initially positive reaction, doubts arose in France on some details of the deal and its effect on the alliance between Renault and Japanese partner Nissan. When the French government, Renault’s largest-single shareholder, asked for some extra time to conclude the merger, FCA chairman John Elkann abruptly ended negotiations. After a few days blaming each other, negotiations restarted in secret, with the companies refusing to confirm talks had resumed. Sources say the companies are still talking, but they are doing so outside the media spotlight. Despite the setback, top executives at FCA and Renault continued to speak positively about the deal. “The project remains, in my head, absolutely remarkable and exceptional”, Renault chairman Jean-Dominique Senard told shareholders on June 12. At Nissan’s shareholders meeting, Senard said the Japanese automaker missed a golden opportunity to cash in on a blockbuster tie-up. “This project, at the time, was incredibly beneficial to Nissan. That is the truth and reality”, he said. In the media release announcing that it had pulled the Renault offer, FCA said it remained “firmly convinced of the compelling, transformational rationale” of the deal. The remaining players at the table (the French government and Nissan) sounded more cautious but didn’t openly oppose the logic of the proposed merger. In its offer, FCA touted €5 billion in annual savings from synergies. Those would mainly come from Europe and Latin America, where FCA’s and Renault’s businesses overlap the most. In this light, the deal still makes sense, many analysts say. Philippe Houchois of Jefferies wrote that it is “hard to disagree with the logic and with net synergies of €5 billion versus implementation costs of €3 to €4 billion”. UBS pointed to the “strong potential of synergies in Europe, given the substantial product and platform overlap”. This would be a deal aimed at building a sustainable business in Europe and Brazil, wrote Max Warburton of Alliance Bernstein; one of the analysts most skeptical about the outcome. To envisage potential synergies is one thing. To turn them into actual savings is another story. Elkann’s mentor, the late FCA boss Sergio Marchionne, saw this quite clearly. In a 2008 interview, just a few months before embarking on the Chrysler Group takeover, Marchionne said: “Mergers in the car industry never work. On paper, they are the best solution. But it’s nearly impossible to merge different cultures, technologies, product architectures and sales networks”. Marchionne was more of a tactician than a strategist, which explains his sudden about-face on the matter. After successfully merging Fiat and Chrysler into FCA, he became a fervent supporter of the need to consolidate, with his famous 2015 speech titled “Confessions of a Capital Junkie”. The FCA merger is one of the few positive M&A in the car industry, although it profited from some favorable conditions: Chrysler was bankrupt, and the new management had a free hand in closing plants and cutting the workforce; dealerships could be dropped; and the unions had to approve costly concessions and came on board as the main shareholder. Those conditions are not available to FCA and Renault. The recent takeover of Opel / Vauxhall by the PSA Group, though, has shown that even in Europe, smart management can extract synergies and bring a chronic money-loser back to profit in a relatively short time, without resorting to heavy and politically unpalatable job cuts. Both the pros Marchionne listed in his 2015 presentation and the cons he described in his 2008 interview still stand. Some of the reasons he put forward in 2015 have actually become more relevant with time, as is the case of investments in new technologies. A study by consultancy AlixPartners estimated that 2017 total capital expenditures and R&D costs at the 13 largest global automakers totaled $200 billion; a 55 % increase from 2012. Working together, FCA and Renault could save billions on investments in electrification and autonomous-driving technologies. At the same time, the political complexity of integrating different cultures would only increase by adding FCA to an already fractious Renault-Nissan relationship. The complex FCA-Renault negotiations might completely break down by the time you read this. But even so, the need to share costs and the debate on the rationale behind mergers will not go away anytime soon. +++ 

+++ ONLINE disruptors have dramatically changed how we spend our money, whether on food delivery, taxis, TV shows or vacations. But while research into car buying has emphatically moved online, the actual car purchase has remained stubbornly linked to a physical dealership. The absence of an Uber or Deliveroo for car buying means automakers haven’t felt the pressure to substantially alter a model that is almost as old as the cars they sell. However, as technological change starts affecting not just the car but also what it means to ‘own’ a car, automakers in Europe are slowly building the capability to move the whole car buying process online. The shift to online sales, automakers say, is in response to customer demand. “We have to offer customers another way in. It’s all about not prescribing how you want your customers to behave”, Roelant de Waard, Ford of Europe general manager of passenger vehicles, told. The springboard for Ford’s rollout of an online ordering system will be next year’s launch of its first stand-alone electric vehicle, the so-called “Mustang-inspired” battery-powered SUV. It’s a significant milestone. With a new propulsion system comes a new mindset to purchase it. Also joining Ford is the Volkswagen brand, which is rolling out a new IT system to coincide with the launch of its new ID family of electric cars that incorporates online sales as part of a wider shakeup of its relationship with its dealers and customers. PSA Group CEO Carlos Tavares told investors in February that he wants online sales within the group to increase from 6,000 in 2018 to 100,000 by 2021. And across Europe automakers such as Hyundai, Volvo, Alpine, Jaguar Land Rover, Mitsubishi, BMW, Dacia, Mini are operating online sales programs or pilot schemes in selected markets. Geely subsidiary Lynk & Co, meanwhile, is promising to launch next year in Europe with a strategy that predominately relies on online sales. Dealers are gearing up for the change. In the UK, Europe’s second-largest market and the test country for many automakers’ online sales programs, 60 % of dealers say they will have the ability to offer online transactions within the next 2 years, according to a new study by Cox Automotive. “It will be the normal way of selling in 10 or 20 years, no question”, said Marion David, product director at PSA’s DS Automobiles brand. Car buyers are already online. Ford research in Europe shows that its customers visit a dealership just 1.2 times during the purchase process, with much of the decision-making informed by research done on the Internet. Automakers have long facilitated that by developing increasingly sophisticated online configurators, where customers can create a virtual version of their ideal car, while seeing how each change will affect the price. But that’s where it stops. Or in VW parlance, where the link is broken. “In the future, we will try to avoid these break points”, said Jörgen Stackmann, head of sales, marketing and aftersales for the Volkswagen brand. Right now a customer’s online journey is largely invisible to VW. Car buyers don’t emerge until they send a link containing the details of their configured car to their nearest dealer. The new system proposed by VW gives the customer an ID number to make themselves known to the entire VW dealer network and VW itself. Not only will that enable online purchasing, but it means any interaction the customer has, be it servicing reminders or an email complaint to the dealer, will be recorded onto that customer ID. “This way everyone who needs to know, knows who he is and what he needs. It has a total ecosystem advantage”, Stackmann said. It might be VW creating it, but it will be to the dealers’ advantage. “The dealers realize the future of customer connection is within our system, not within each dealer. They can’t create a journey for a customer on their own”, Stackmann said. The dealer, however, remains a key element. The move to embrace online sales is not the same as a move to direct sales, automakers were keen to point out. “They are the face of the brand to the customer. They help when things go wrong. We can’t pretend everything we do is perfect”, Stackmann said. The online sales model that automakers are largely adopting calls for the internet order to be fulfilled by the dealer chosen by the customer, most likely the store that is nearest. “You don’t want to just drop off a vehicle and say goodbye”, Ford’s De Waard said. Matthew Harrison, head of sales and marketing at Toyota Europe, agrees. “The purchase is just the first part of the journey. It’s important we look after them through the ownership of what are increasingly high-tech cars. Our retail partners are central to that relationship”. Toyota has a pilot online sales program in the UK and Norway ahead of opening online sales “across a number of markets” within the next few years. But right now they are still gathering information. “We have learned it’s not as straightforward as putting a payment form underneath your website”, Harrison said. In Norway Toyota’s online operation has focused on the Aygo specifically and has generated some interesting findings. The first was that Toyota gained a lot of conquest sales from other brands. Secondly, the automaker learned that offering finance in the form of leasing was the key to success. “There has been a very high mix of customers who want to take the full private leasing package. Finance, insurance and car in one. It’s almost like a contract for a mobile phone”, Harrison said. Private leasing in Norway has grown alongside its unique electric car market, perhaps in response to nervousness about residual values. “It’s possible there is some shift away from ownership because of that”, Harrison said. Having a younger customer base also helped. The willingness of customers in the UK to buy cars on finance is a big reason why automakers have chosen the country to trial online sales. In the 12 months to the end of March this year, 91 % of cars bought privately were done using finance, according to figures from the UK’s Finance and Leasing Association. “The ‘how much does it cost per month’ mentality reduces the barrier to an online purchase compared with a capital purchase of €20,000 or more”, said Steve Young, managing director of ICDP, an analyst firm specializing in automotive dealerships. Volvo launched its online sales platform in the UK in April, describing Volvo Online as more comprehensive than similar services in the UK run by Peugeot, Hyundai, BMW and Mitsubishi. A tick-sheet of online features Volvo offers includes the ability to have your current car valued prior to trade-in, 3 different types of finance (including personal leasing, hire purchase and, the UK’s current favorite, personal contract purchase, where a chunk of the car’s price is held back to the end of the contract to reduce the monthly payments) and an online credit verification process that is concluded by using an e-signature. Volvo Online requires buyers to pick a dealer first and then accept that dealer’s offer on finance packages. Unlike standard configurators, buyers can see how the additional options or engine upgrades will affect their monthly figure, not just the overall price. Volvo said the system doesn’t just embrace dealers, it benefits them. John O’Hanlon, CEO of Waylands Automotive, which runs a small network of Volvo dealerships in the UK, agreed. “We don’t care where that lead comes from”, he said. “If you had asked me how I felt about a manufacturer setting up an online channel 12 to 24 months ago, I would have been more concerned”, he said. But Volvo warned customers that its online sales site would not necessarily show the cheapest car available, partly because customers could not search the whole dealer network at once. “If you just want the best price you will go to an aggregator. If you want a brand experience involving bricks and mortar that our dealers have invested in, this is the way to do it. Not everyone wants to take the cheapest in the market”, said Volvo’s former UK managing director, Jon Wakefield, who is now head of Volvo in Sweden. He said Volvo’s aim is to offer a “premium” method of buying cars online. The aggregator sites he was referring to operate in a similar way to websites advertising cheap flights by collating the best deals, often financed by private leasing. The car is still delivered to a customer by a franchised dealer, but sites such as in the UK are the closest thing to a disruptor in new-car sales. In Sweden, leasing now accounts for about 40 % of the consumer car market, helping Anders Hedin Invest grow its website, which collates lease deals from across the IA Hedin Bil dealer group.’s share was 6.6 % of the consumer market last year and 20 % of its sales were done online, the company said. The aggregators run counter to the ethos of a premium manufacturer such as Volvo, said Waylands’ O’Hanlon. “Discount culture drives any value from the proposition and that’s where we should slow down the process and actually sell you the benefits of the car you have searched for”, he said. The suspicion that the price being offered is not the best in the market is preventing online sales from becoming popular, ICDP’s Steve Young believes. “Our consumer research shows that very few new car buyers are interested in completing the entire sales process online, although most want to do some part of the process online”, he said. “They recognize that there is a deal to be done when buying a car, and no automaker has yet introduced a site that allows deals to be done”. ICDP research suggests that pilot schemes around Europe are generating no more than a few hundred online sales each per annum. Ford, too, has experienced a slow uptake from its UK pilot. “It taught us that you get a lot of traffic but in the end the majority prefer to go to the dealer”, Ford’s De Waard said. The push to make online sales work could come from automakers’ need to persuade their customers to join a digital ecosystem that offers more opportunities to sell products and services, much in the same way retailers such as Amazon or Apple do. Tesla operates this way, and its direct sales model already requires customers to buy online, even when the actual transaction takes place in one of its stores. The California-based company went further earlier this year by announcing that it would be winding down its physical network of stores and moving all sales online, before reversing that statement and instead committing to keep half its stores. Next year Lynk & Co will launch in Europe with an online sales model that relies only on a handful of retailers. “There’s a mismatch between today’s consumer behavior and what the car industry is doing”, CEO Alain Visser said. The company wants to follow the subscription model already piloted by other automakers, including Volvo, that boils everything down to a single monthly payment. “We will be like Spotify or Netflix. We are selling mobility rather than cars”, Visser said. Buyers only need to commit for 1 month at a time rather than a minimum of 12 months and can make their car available to be shared by others via an app. Users will be prepared to pay for the flexibility, the company believes. “We never said we would be cheap, but we will be super-relevant”, Visser said. Whether customers embrace online sales or not, it’s clear the manufacturer-dealership relationship needs to change with the advent of electric cars, which threaten dealers’ lucrative aftersales revenue stream because EVs require less maintenance. Aftersales, for example, generated 33 % of the gross profit for UK dealer giant Pendragon last year, despite bringing in just 7.3 % of revenue. New-car sales generated the least profit, ranking No. 3 after used-car sales. VW’s new dealer agreement includes a revenue-sharing arrangement with the dealer when a customer goes online to choose, for example, software upgrades for the vehicle, whether the dealer had influence over that decision or not. There is clearly disruption ahead then, but the advantage that automakers and their dealer networks have is that if customers  had to buy online, they would still much rather buy a car from them than any online retail disruptors, according to consumer surveys carried out by ICDP. Said ICDP’s Young: “Traditional franchised channels are the most preferred, while pure online retailers, for example Amazon, are the least preferred option, by a significant margin”. +++ 

+++ Enthusiasm for BEVs (battery-electric cars) is growing, which is a good thing. That said, no amount of EV enthusiasts telling consumers they don’t actually need the range they think they do will convince them to pay more for something that does less. Manufacturers know this, which is why there’s so much talk surrounding the latest wonder-tech looming over the horizon: the SOLID STATE BATTERY . So what are these miraculous things that it’s claimed will banish any quibbling about range forever? The main components in any battery are electrodes (anode and a cathode) immersed in electrolyte. A conventional 12 Volt lead-acid car battery contains a solution of sulphuric acid as electrolyte, which is fine as long as it stays in the battery. A lithium ion car battery has an inflammable electrolyte composed of lithium salts in a solvent. Lithium ion batteries have a further important component, too; the separator that keeps the electrodes apart. If lithium ion batteries are not carefully controlled when in use, then heat build-up can cause ‘thermal runaway’ resulting in a nasty chemical fire that is impossible to put out. Because of that they need complex electronic battery management systems and equally fiddly cooling circuits to keep them safe, making manufacturing harder and piling on weight and cost. The upside is that lithium ion batteries are more powerful and store more energy than any other battery type. But they could be better still. Solid-state batteries should overcome all those problems by switching to a non-flammable solid electrolyte, hence the name. Heat in a solid-state battery is easier to control so cooling is simpler, cheaper and less bulky, there’s no need for separators and a heavy, protective outer casing is unnecessary because the technology is intrinsically safe. The real barrier to getting them to work in the past was the poor conductivity of the solid electrolyte such as a ceramic material, but the latest materials are said by battery developers to be highly conductive. The biggest bonus, though, is the energy density – the amount of energy a battery can store relative to its weight and volume. Claims for batteries capable of storing more than twice the energy of a conventional lithium ion battery are being made, along with reduced manufacturing costs. This simply means a solid-state battery will last longer and give an EV a greater range than a conventional battery of the same volume and weight. It’s that virtuous circle again. The lighter the battery, the lighter the car, the less energy it needs to achieve the same range, so the battery can be even smaller. Car makers are talking about the technology being in production by 2025 and some sooner than that. When and if it happens, it would radically change the automotive landscape. Radically increased range would reduce the need for charging on the move, easing the pressure on infrastructure, because one overnight charge (for those with such access) could make the need to charge during a longer journey less necessary than it is today. When the battery is connected to the device it is powering, like a motor, phone or whatever, ions are released from the negative anode to the positive cathode. When the battery is connected to the charger, the opposite happens and the battery is recharged. +++ 

+++ TESLA said a single battery module caused a car to catch fire in Shanghai and it had revised its vehicle settings to further protect its batteries following an investigation into the incident. The company said in a statement that the joint investigation team had conducted an investigation and analysis of the battery, software, manufacturing data and vehicle history. The investigation found no system defect, and the initial findings show the incident was caused by a single battery module located at the front of the vehicle, Tesla said. Japanese battery manufacturer Panasonic supplies Tesla with battery cells, but not modules, which are a group of cells joined together. The company has revised the charge and thermal management settings on Model S and Model X vehicles via an over-the-air (OTA) software update, to help further protect the battery and improve battery longevity, the statement said. A parked Tesla Model S caught fire in Shanghai on April 21. Tesla has said its EVs are about 10 times less likely to experience a fire than petrol-powered cars. Tesla’s local competitor Nio said that some battery modules in its cars might have safety issues as well, and that it would recall 4,803 units after 3 fire incidents in China. Safety of electric vehicles is a growing issue in China, the world’s largest new energy vehicle (NEV) market, where 1.3 million NEVs were sold last year. China’s industry ministry asked carmakers this month to carry out safety investigations on waterproof protection, high-voltage harnesses, in-vehicle charging devices, and battery boxes in their cars. +++

+++ While the TOYOTA Supra and the BMW Z4 are built on the same platform, and they share many components, they don’t overlap because one is a coupe and the other is a convertible. However, Toyota hasn’t ruled out making a drop-top variant of the born-again Supra before the end of the model’s production run. Tetsuya Tada, the Supra’s chief engineer, told that the Supra was engineered with a drop-top variant in mind from the get-go; technically, nothing is preventing the firm from turning it into a convertible. However, he believes the model is better suited to receiving a targa top, a configuration many previous generations of the Supra have offered. Making a Supra with a targa top would ensure the model doesn’t lose too much rigidity. It would also allow Toyota to stay off of BMW’s turf. Seeing a top-less Supra in showrooms is certainly possible, but it’s not currently under development, according to Tada. Toyota is likely waiting until it has a better idea of how popular the Supra is around the world before it approves additional variants. In Munich, BMW is singing a different tune. While turning the Z4 into a coupe is possible, and the heritage is there, executives have previously confirmed the model will only be available as a convertible during its production run. On a similar note, Tada told that the 2013 Toyota FT-86 Open concept (which was essentially an GT86 with a soft top) very nearly reached production. Executives even talked to Austria’s Magna-Steyr about building the convertible there, but they pulled the plug on the project at the last minute. Tada didn’t reveal why, though low demand for convertibles was likely a determining factor. +++

+++ VOLKSWAGEN is expected to reap €1.55 billion from an initial public offering (IPO) of its truck unit Traton, likely pricing it at the low end of a marketing range, one of the deal’s bookrunners said. The final price guidance given to investors was for €27 a share, the person said. That would give Traton an initial market capitalization of €13.5 billion. Pricing usually occurs at the level of the final guidance. Volkswagen said earlier this month that it aimed to raise €1.55 – €1.9 billion by selling 10 % – 11.5 % of Traton for €27 – €33 a share, having scaled back earlier ambitions to list a stake of up to 25 % of the shares to raise €5 – €6 billion euros. Although markets are still receptive to IPOs given low volatility, sentiment for new listings is shaky. Global Fashion Group drastically cut the offering price of its IPO in a last ditch bid to woo investors. Volkswagen plans to invest the proceeds in transforming its auto production as it readies the launch of dozens of electric vehicles over the coming years and deepens an alliance with Ford. In March, VW had postponed the Traton listing citing jittery markets. If Traton does not exercise an over-allotment option proceeds will stand at €1.35 billion. +++

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