Newsflash II

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+++ AUDI will build a full-electric compact crossover based on the Q4 e-tron concept at Volkswagen Group’s joint venture with SAIC Motor in China. The car will be built at SAIC-VW’s newly constructed EV plant in Shanghai’s suburban Anting district. The Q4 e-tron will be the first Audi assembled at the plant, which is expected to begin output in November. The factory will produce vehicles based on VW’s MEB platform for EVs. It can produce up to 300,000 vehicles annually at full capacity for the Volkswagen, Audi and Skoda brands. Audi introduced the Q4 e-tron at the Geneva auto show in March. In Europe, the car will be built at VW Group’s factory in Zwickau, Germany, where VW is investing €1.2 billion to produce as many as 330,000 EVs a year for the VW, Audi and Seat brands. Audi last year bought a 1 % stake in SAIC-VW, turning the joint venture into a 50-48-1-1 partnership among SAIC, VW, Skoda and Audi. The deal paved the way for the joint venture to build and market Audi vehicles. FAW-VW (a 60-30-10 partnership among China FAW Group Corp., VW Group and Audi) has been the only China source for the assembly and distribution of Audi models. The new production site and a second distribution network will help Audi fend off intensifying competition from German luxury rivals Mercedes-Benz and BMW in China. Audi remained the top luxury automotive brand in China by annual sales in 2018. But it risks losing that crown. In the first 4 months of the year, Audi’s China sales slid 0.5 % to 205,698 behind BMW brand, which sold 218,330 vehicles, a gain of 13 %. Mercedes-Benz was the best-selling premium brand with a  2.2 % rise to 232,050. +++ 

+++ BUGATTI appears open to creating more one-offs in the vein of the La Voiture Noire, the world’s most expensive new car. The French car manufacturer recently brought its La Voiture Noire display car to the annual Concours d’Elegance Villa d’Este in Italy and Bugatti head of exterior design Frank Heyl suggested there is demand for more coachbuilt models from the marque. “The market for this is really growing, and the brand is so strong that we have come to see now that the sky is the limit”, he said. However, according to Heyl, Bugatti doesn’t take requests from customers looking for one-offs and instead, the company itself is the one which has the ideas for such vehicles and presents them to potential customers. “When it is the other way around (I have also been involved in similar one-off projects, not for Bugatti) it gets very, very difficult”, Heyl said. “You have to be very, very disciplined in your process. Otherwise your process will explode, and your time will run out. If you are not very disciplined in that process, it will not make a business as well. After all, in the end, we have to make it work financially”. Asked point blank if Bugatti is doing anymore one-offs, Heyl said “Stay tuned”. The La Voiture Noire was built as a spiritual successor to the Type 57 SC Atlantic once owned by Jean Bugatti, which went missing during World War II. The vehicle was sold for approximately $19 million including taxes and won’t be delivered for another 2,5 years. +++

+++ Tesla has apparently sold regulatory EMISSION CREDITS to both General Motors and Fiat Chrysler Automobiles. First spotted by Bloomberg, filings in the state of Delaware confirm 2 of Detroit’s Big 3 automakers have agreed to buy greenhouse gas credits from the California-based EV maker. GM spokesman Pat Morrissey has said the move will help the company protect itself against “future regulatory uncertainties”. The statement was echoed by FCA spokesman Eric Mayne who argued that the pace of tightening regulations “far exceeds” increases in consumer demand for electric vehicles. “Until demand catches up with regulatory requirements, and there is regulatory relief, we will use credits as appropriate”, Mayne added. Tesla is said to have generated $2 billion in revenue from selling its emissions tax credits. +++

+++ FIAT CHRYSLER AUTOMOBILES (FCA) has resolved key differences with France over its proposed merger with Renault, 3 sources told, as the French carmaker’s board met to review the $35 billion tie-up plan. The compromise on French government influence over a combined FCA-Renault may clear the way for Renault directors to approve a framework agreement and begin the long process of a full merger, unless new issues surface at their meeting. France, Renault’s biggest shareholder with a 15 % stake, had been pressing for its own guaranteed seat on the new board and an effective veto on future CEO appointments. But after late-night talks with John Elkann, the Italian-American carmaker’s chairman, officials approved a compromise giving the French government 1 of 4 board seats allocated to Renault, balanced by 4 FCA appointees, the sources said. Renault would also cede 1 of its 2 seats on a 4-member CEO appointment committee to the French state, they said. With Renault chairman Jean-Dominique Senard, 66, set to become FCA-Renault’s first operational chief under Elkann’s chairmanship, the move gives France a formal say on the appointment of his successor. Renault, FCA and the French government, which have been locked in talks over the offer pitched by FCA to create the world’s third-biggest carmaker, declined comment. The proposal would see both carmakers acquired by a listed Dutch holding company owned 50-50 by current FCA and Renault shareholders, after payment of a €2.5 billion special dividend to FCA shareholders. Responding to criticism from some analysts and French industry leaders that the deal undervalued Renault and its 43.4 % stake in Nissan, Paris pushed for better terms. This bore fruit over the weekend, as FCA discussed concessions including a dividend to Renault shareholders, stronger French job guarantees and a Paris-based regional headquarters for the combined group. “The market has been worried that too much could be given away, and there’s a price to be paid for execution risk”, a source close to the negotiations said. “The more our hands are tied the harder it is to achieve meaningful synergies”. The possible dividend was still being discussed shortly before the Renault board convened, people close to the talks said. Firm undertakings on French jobs and sites as well as the Europe, Middle East and Africa headquarters site are likely to be worked out later in the process, they added. The FCA-Renault talks are playing out amid a French public outcry over 1,044 layoffs at a General Electric site in Belfort, eastern France where the U.S. group had promised to safeguard jobs on acquiring Alstom in 2015. “After the mess with GE, the government was determined to get binding agreements on jobs”, a source close to Renault said. “And they will. The state has made itself heard”. Finance Minister Bruno Le Maire has also stressed that the FCA-Renault deal must preserve Renault’s existing alliance with Nissan; already strained by the arrest and ouster of former chairman Carlos Ghosn, who is awaiting trial in Japan on financial misconduct charges he denies. Nissan’s 2 Renault board representatives are expected to abstain in any vote, sources at both companies said, a day after the Japanese carmaker’s CEO Hiroto Saikawa warned that the proposed merger would trigger a “fundamental review” of its relationship with Renault. Achieving €5 billion in FCA-Renault synergies would depend partly on access to technology jointly owned by Nissan, executives acknowledge. A Renault board decision to approve the merger proposal, subject to regulatory approvals and other conditions, would begin a process expected to last well into 2020. FCA and Renault would aim to put the tie-up to shareholder votes in the first quarter, one source close to the talks said. +++ 

+++ FORD has stopped taking orders for the Edge in the UK after less than 1.700 examples were registered last year. The Skoda Kodiaq rival will be available to buy from dealer stock until the end of the year, according to the firm. The news comes less than 6 months after the facelifted version arrived in British showrooms. Ford issued the following statement: “The Edge will continue to be sold in seven key European markets, with vehicle availability for customers in all other European markets as long as stocks last. The decision to limit Edge availability to 7 key markets is in line with our strategy aimed at strengthening the Ford brand and creating a sustainably profitable business in Europe, including by taking action to improve or exit less profitable vehicle lines. We are introducing other exciting vehicles soon that will better match customer demand and build on our success in the growing SUV segment in Europe. Edge availability will be limited only in Europe and will not impact any other region”. The Edge has been on sale here since 2016. Even in its first full year in Europe it struggled to replicate to popularity of the smaller Kuga, with 16,000 examples sold compared to 119,000 Kugas. In 2018 the Edge’s sales volume fell below 10,000 Europe-wide. The larger, US-market Explorer will also be sold in some European markets later this year. With the new Puma joining the brand’s lineup in 2020, there will still be 4 Ford SUVs on sale. Ford is seeing significant volume from more compact SUVs, and as part of its European restructure it will prioritise these money-making segments. +++ 

+++ HONDA has confirmed that its new electric city car, the E, will make its first appearance at this year’s Goodwood Festival of Speed. The new machine, which is now available to order before deliveries commence in 2020, will take to the event’s hillclimb course, with another on display on the Honda stand. Honda says the E that will appear at Goodwood will be “95 % true” to the production version. The latest version of the NSX hybrid supercar will also appear on the Japanese firm’s Goodwood stand. The E is the production version of the Urban EV concept, which was revealed at the 2017 Frankfurt motor show, and Honda has confirmed that many of that car’s features will reach the final model as standard. These will include the camera wing mirror system, which Honda claims reduces aerodynamic drag by around 90 %. That is said to improve the efficicency of the entire vehicle by 3.8 %, playing a significant role in maximising range. Honda recently began taking orders for the E, ahead of first deliveries beginning in spring 2020. Mirroring the process of rivals such as Tesla and Peugeot with the e-208, potential customers are invited to cough up a reservation fee to get “priority status” on the order books. Those customers will be invited to place a full order later this year. The E’s pricing is still yet to be announced, but as with most reservations, the fee is refundable if buyers change their mind. +++

+++ Despite understanding the potential benefits brought on by the proposed merger between Renault and Fiat Chrysler Automobiles (FCA), NISSAN chooses to remain noncommittal until it can make sure that its interests are protected. That was the message communicated by the company’s CEO Hiroto Saikawa in his first official statement regarding the merger. He also knows that working with FCA could “expand the playing field for collaboration and create new opportunities for further synergies”. Yet, he also feels that Nissan needs to look out for itself before fully supporting the tie up between the 2 European automakers. “From the standpoint of protecting Nissan’s interests, we will analyze and consider its existing contractual relationships and how we should operate business in the future”, stated the brand’s CEO, who also cautioned that a full Renault-FCA merger would “significantly alter” the structure of its 20-year alliance with the former. So to go ahead with merger talks would also require a “fundamental review” of the ties between Renault and Nissan. FCA’s initial proposal was for a 50-50 split between themselves and Renault, without directly addressing the French automaker’s existing alliance with Nissan and Mitsubishi, although the Japanese brands weren’t excluded from the plan. +++ 

+++ The new OPEL Corsa is the first of a raft of Opels aimed at rejuvenating the brand with new levels of design integrity and engineering. Opel vice president of design Mark Adams told at the Corsa’s unveiling that the new model (built on a PSA Group platform that will give it petrol, diesel and electric variants) was engineered to the most robust standards in the company’s history, despite a massively shortened development programme after PSA bought GM’s European arm in 2017 and started afresh. A GM-based Corsa was all but finished by that point and it could have been launched, but the ‘toolbox’ of newly available PSA technology, including access to BEV hardware, plus licensing costs that would have been payable to GM, meant starting again was “a no brainer”, according to Adams. “We hand-picked our most experienced designers and engineers”, said Adams. “This is not a committee car”. He added that Opel’s design and engineering team had learnt new methods on the way but that the company couldn’t work within such a time-frame with every new model. “You’d kill people with the intensity of the work”, he said. PSA sees Opel as a good fit with its French brands, noting that its German heritage means they’ll achieve sales volumes in their home markets that Peugeot, Citroën and DS won’t be able to match. PSA boss Carlos Tavares has overseen a surprising turnaround of fortunes in an extremely short space of time. Opel returned a €900 million profit last year, its first in 2 decades. That has come from a mix of cost reduction, extra buying power and a reduction in discounting rather than a notable sales increase. Adams says Opel has much more autonomy within the PSA Group than under GM, where it made products that sold not only in Europe but also, with Chevrolet, Holden or Buick badging, in other regions. “You can’t micromanage success”, says Adams, who added he was pleased to find that PSA boss Carlos Tavares was “extremely focused on brand values”. That approach has allowed Opel to deviate from other PSA brands and inject its own DNA into the Corsa’s design. Deliveries of the new Corsa start at the end of this year in internal combustion form, with the Corsa-e electric variant arriving a few weeks later. The new Corsa-e can be ordered from this week. +++ 

+++ RENAULT board has adjourned a meeting to examine the merger proposal pitched last week by Fiat Chrysler Automobiles (FCA) until Wednesday afternoon. “The board of directors has decided to continue to study with interest the opportunity of such a combination and to extend the discussions on this subject”, Renault’s board said in a statement at the end of a 3 hour meeting. The next meeting is scheduled for the end of Wednesday. FCA’s proposal last week for a 50-50 combination is designed to help the companies add scale, share costs and boost resources for tackling an expensive shift to electrification and autonomous driving. Longtime Renault partner Nissan has put up some resistance, while Renault’s most powerful shareholder (the French government) has outlined a list of demands on jobs and a board seat. +++ 

+++ Volvo, Mercedes, BMW and Ford have joined forces for a European SAFETY project that will see cars from the 4 companies share anonymised road safety data with each other. The initiative will see cars send alerts to a cloud database that is accessible to all members of the scheme, enabling safety data collected by a BMW, for example, to be accessed by a following Mercedes. In practice, this means that when a driver activates their hazard warning lights, or makes an emergency call via eCall, this information will be sent anonymously to a cloud server before being relayed to the infotainment systems of other vehicles in the vicinity. BMW will be the first company to make its safety data freely accessible, confirming that customer’s cars will ask them if they want to share anonymous data from 1 July, though BMW and Mini owners will be able to opt out of the scheme at any time. The firm says its cars will be able to send out warnings for broken-down vehicles, poor visibility and wet or icy roads and that “going forward, every BMW and Mini driver who provides anonymised data will be helping improve overall road safety”. Mercedes will also be taking part in the project, though its parent company, Daimler, says “will only use the test fleet for the project; no customer data will be collected”. Volvo’s Hazard Light Alert system, meanwhile, will send out alerts when a driver activates their hazard warning lights, while the firm’s Slippery Road Alert system will generate warnings when low-grip conditions are detected. Earlier in the year, Volvo announced all its cars would share safety information with each other from 2020, with the firm stressing at the time that it was keen for other carmakers to follow suit. As well as 4 key carmakers, the scheme will see navigation firms Here and TomTom help gather, anonymise and transmit the data to other road users. The project begin in the Netherlands before branching out to Germany, Spain, Finland, Sweden and Luxembourg. Christoph Grote, senior vice-president of electronics at BMW, said “we are proud to blaze this trail with our partners. When it comes to road safety, there are no competitors, only partners”. Volvo CEO Håkan Samuelsson echoed those sentiments, saying: “We think this type of anonymised data sharing should be done for free, for the greater good and to the wider benefit of society. It saves lives, time and taxpayer money”. +++ 

+++ TESLA boss Elon Musk says the automaker could build as many as 10,000 examples of the all-new Roadster each year. Musk spoke about the upcoming electric supercar, revealing it will offer performance that will better rivals from well-established manufacturers. The outspoken, and controversial, exec commented that “it will outperform Ferraris, Lamborghinis and McLarens” and promised that “we’re going to do things with the new Roadster that are kind of unfair to other cars. It’s crushingly good relative to the next best gasoline sports car”. We’ve known since the new Roadster was revealed as a prototype 18 months ago that it would be extraordinarily fast, with a 0-100 km/h acceleration in under 2 seconds and a top speed exceeding 402 km/h. The Roadster will go on sale from approximately $200,000; in the age of multi-million-dollar petrol and electric hypercars this is, comparatively, very cheap for that kind of performance. However, $200,000 is still a lot of money and there’s only a finite number of people willing to spend that much on a car. Porsche sold roughly 35,000 units of its 911 worldwide last year, but prices for it start at a touch over $100,000. The German brand also has a much more established presence in a larger number of countries than Tesla. Apparently, Musk is quite confident the performance offered by the Roadster will win customers over. And if Tesla delivers on its promises, there’s a good chance his faith is anything but misplaced. +++ 

+++ In the UNITED STATES , some automakers have reason to celebrate. FCA, Nissan, Toyota and Hyundai (plus the ever-plucky Subaru) are riding especially high as May numbers roll in, and I expect a few more high notes (Ford and GM report sales on a quarterly basis and are no longer included in monthly updates. As of the third quarter, FCA will follow suit). Nissan’s numbers are perhaps the most encouraging of the bunch, as the company has been struggling so far this year to find new footing. With news of the FCA-Renault merger talks, Nissan’s U.S. volumes are likely facing ever-stricter scrutiny. The good news didn’t extend to Infiniti, which is still struggling mightily to find a new equilibrium. Toyota’s situation is a bit less dire than Nissan’s. The company’s core brand is down more than 3.5 % compared to 2018, but its premium Lexus division is holding steady. Honda, which had managed to remain relatively flat through April, slipped slightly in May. Acura, however, remains strong. On the FCA front, the news isn’t as good as it looks on spec. The company’s gains came exclusively on the back of Ram, which is selling pickups so quickly GM is re-tooling its manufacturing in order to try to regain lost ground for Silverado. Every other brand in the portfolio is down compared to where it was a year ago. Subaru continues its run, thanks to the strong Ascent, and is managing to keep an also-steady Hyundai in its rear-view for the time being. Mazda, on the other hand, seems to have taken its foot off of the accelerator entirely. The British ex-pats are equally head-scratching, with Jaguar having another off month despite a strong year. Land Rover got a slight bump (which it has maintained through 2019). Oddly, JLR’s biggest growth brand, Jaguar, is the one that is about to kill off its full-size sedan. In the luxury segment, BMW sneaks into the lead with just over 124,000 units sold while Mercedes-Benz is just behind at a little over 121,000. Lexus sits in third with just under 113,000 sold. With 7 months still to go, this is anybody’s game. Speaking of the luxury segment, Audi seems to have stopped the bleeding after several consecutive months of backslides. While the 2.2 % drop isn’t exactly a stellar performance, it’s far better than the double-digit slumps of previous months. Audi remains down just over seven percent compared to 2018. Fortunately, Volkswagen’s core brand continues to thrive thanks to its better-late-than-never lineup of crossovers. Fans of the Golf family have little to celebrate, however, as the top 3 volume models for the people’s car maker were Tiguan, Jetta and Atlas, in that order. The Atlas alone more than doubled the total Golf family’s sales volume in May. If there’s any good news, it’s that GTI sales are doubling base Golf sales so far for the year, which means VW still has reason to bring the enthusiast model stateside. +++ 

+++ VOLKSWAGEN is likely to launch the sale of transmissions maker Renk in the autumn as the German carmaker streamlines operations to free up funds for investment in electric vehicles, people close to the matter said. The world’s largest carmaker last month announced a corporate restructuring. It has 12 brands spanning trucks, buses, motorbikes, cars and electric bicycles. Volkswagen said last month it would explore a full or partial sale, joint ventures or partnership for Renk, which has a market capitalization of €700 million. That comes 2 years after Volkswagen’s powerful works council thwarted an auction of Renk, which makes transmissions and bearings used in ships and wind turbines. Renk is 76 % owned by Volkswagen’s family ownership holding Porsche SE, with the rest of the shares widely held. U.S. investment bank Citi, which also led the 2017 sales process before it was pulled, has been retained as sellside advisor of a company that could be valued at up to €800 million, including debt, the people said. They added that the auction was expected to kick off after the summer break. “We are taking our time and are engaging in meaningful discussions”, a person close to Volkswagen said, adding that there would be no firesale of Renk and MAN Energy Solutions. Volkswagen is expected to market Renk to private equity firms such as PAI, EQT, KKR, CVC, Bain and Advent as well as some peers. Renk competes with Sumitomo Heavy, Mitsubishi, Rexnord, Timken and Allison Transmissions. The company’s large exposure to the defense industry (which it supplies with transmissions for tanks and gear units for navy ships) will make it hard for buyers headquartered outside NATO countries to acquire Renk, the sources said. In 2018, Renk posted flat earnings before taxes of €62 million on slightly higher sales of €502 million, while orders surged 22 % to €529 million. Its main peers trade at 6.5-8 times their expected earnings before interest, tax, depreciation and amortization. The Renk divestiture is expected to be followed by a sales process for MAN Energy Solutions, which makes diesel engines for use in ships and power stations, and whose separation Volkswagen also announced last month. Preparations for that process are at an earlier stage and no sellside advisor for the group worth roughly €3 billion has been appointed so far but Rothschild is seen in the pole position to bag it, people close to the matter said. Peers such as Cummins, Wartsila, Mitsubishi, Hyundai, Mitsui or Jenbacher are expected to be targeted in the auction, alongside private equity firms. Eventually, the sale of motorcycle brand Ducati (also scrapped in 2017) may also be revived, they said, adding that Volkswagen has also considered other options in the past, such as placing Ducati and the Lamborghini, Bentley and Bugatti brands into a separate entity with a view to listing that company on the stock exchange. +++

 

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