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+++ As forecasted, 2019 is proving to be challenging for AUDI : in the first half of this year, deliveries, revenue and operating profit were lower than in the same period of 2018, partially reflecting effects from the deconsolidation of several multi-brand import companies. Operating performance was adversely affected in particular by the repercussions of the WLTP changeover, the implementation of the model initiative and the downturn in the global passenger car market. At the same time, Audi is making high advance expenditure in the mobility of the future. As a result, the operating return on sales of 8.0 % for the first half of the year was below the long-term target corridor of 9 to 11 %, but within the bandwidth of 7 to 8.5 % that had been forecasted for 2019. Despite strong headwinds, Audi also affirmed its earnings target for the full year. “As expected, 2019 is a real test. We are operating in a very difficult market environment with many adverse factors and are taking consistent action against this trend with our Audi Transformation Plan”, says Alexander Seitz, Member of the Board of Management for Finance, China and Legal Affairs. “At the same time, we (like our competitors) must renew the future viability of our business model and work hard on our long-term competitiveness. With the new ‘Consistently Audi’ strategy, we have defined the roadmap into the future. What counts now is consistent implementation. Together with the employee representatives, we want to agree on sound solutions to finance this change”. The strategic realignment presented by the Audi Board of Management at the Annual General Meeting in late May puts Group-wide decarbonization center stage including the substantially expanded electrification of the model range. Profitability and corporate value are to increase significantly in the long term with ‘Consistently Audi’. Audi’s planned advance expenditures will total approximately €40 billion solely until the end of 2023. In the first half of 2019, the company handed over to customers 906,180 automobiles of the Audi brand and thus fewer than in the previous year (2018: 949,233). The global car market contracted at a similar rate, so the Four Rings’ market share remained stable. Adverse factors for Audi also resulted from aftereffects of the transition to the WLTP test cycle and from the ramp-up of numerous model changes. The company expects the model initiative to deliver increasing growth stimulus during the second half of the year. The upgraded A4 and Q7 will be launched, as well as the Q3 Sportback; a new model without a predecessor. Especially in the full-size segment, Audi is expanding its portfolio of plug-in hybrids (in the A7 and A8 for example) and with especially sporty automobiles such as the SQ8 and the most dynamic member of the A8 family. In China, the all-electric e-Tron and the Q8 will become available for the first time, and in the United States, the new generation of the important Q3 will be launched. First-half revenue amounted to €28,761 million (2018: €31,183 million) and reflects the adjusted reporting structure of Audi. Due to the previous inclusion of several multi-brand import companies, Audi’s consolidated financial statements also included revenue from the sale of cars of other Volkswagen Group brands in previous years. This revenue has now been reported at Volkswagen Group level since the beginning of 2019. Adjusted for these effects, revenue in the first 6 months of the year was slightly higher than the prior-year level. Positive effects resulted from the model mix, primarily from the launch of the e-Tron and the Q8. At Lamborghini, revenue increased by 75.6 % along with the success of the Urus. For the first half of this year, the Audi Group posted operating profit of €2,300 million (2018: €2,761 million). The decrease is attributable among others things to higher depreciation of the production network expanded in the previous years and increased personnel costs. Higher advance expenditure for future technologies also had an adverse impact and led to an increase in the ratio of research and development expenditure to revenue to 7.7 % (2018: 6.5 %). On the contrary, lower distribution costs had a positive effect and the company made further progress with the Audi Transformation Plan. In the context of this program for earnings improvement, Audi took measures in the first half of the year that will have a positive impact on full-year 2019 operating profit in an amount of more than €1 billion. The operating return on sales decreased to 8.0 % in the first half of the year (2018: 8.9 %). The revenue-reducing effects from the deconsolidation of the multi-brand importers had a positive effect on the return ratio and dampened its decrease. Audi reports profit before tax of €2,580 million for the first half of this year (2018: €3,211 million). This includes the financial result, which decreased to €280 million (2018: €450 million), partially due to measurement effects. At €2,253 million (2018: €2,672 million), the net cash flow yet again reached a high level also in the difficult first half of this year, thus confirming the Audi Group’s first-class solvency. Compared with the prior-year figure, decreased profit before tax and one-time effects from the deconsolidation of the multi-brand importers had a negative impact. Positive factors were increased spending discipline and the sharpened strategic focus of investment activities, which led to a decrease in the ratio of capital expenditure to revenue to 3.0 % (2018: 3.4 %). “In the second half of the year, we will vigorously push ahead with our restructuring. We intend to further stabilize Audi’s performance in a turbulent environment”, says Alexander Seitz. “The upcoming introduction of the second stage of the WLTP test cycle will also challenge us again. We have prepared for this intensively in recent months and as the next step will focus on the reduction of the related inventories”. For the full year, Audi affirms its earnings forecast and anticipates an operating return on sales of between 7.0 und 8.5 %. Along with moderately rising deliveries of the Audi brand, revenue should slightly exceed the prior-year figure adjusted for the deconsolidated import companies. The company forecasts a net cash flow of €2.5 billion to €3.0 billion. Audi now assumes that its ratio of research and development expenditure will be moderately above the target corridor of 6.5 to 7.0 %; at the beginning of the year, the company had anticipated a ratio just slightly above the target corridor. On the other hand, the Audi Group now anticipates a lower capital-expenditure ratio which is to be slightly below instead of within its target corridor of 5.5 to 6.0 %. +++ 

+++ When BMW killed the 3-Series Gran Turismo, it didn’t cause much of a response other than “They still built that?” However, a new report says the company could axe a number of models which are near and dear to the hearts of enthusiasts. The company is planning to eliminate a number of convertibles including the 2-Series, 8-Series and recently launched Z4. They apparently won’t be killed overnight, but rather not redesigned when their current life cycle comes to an end. Those aren’t the only models headed to the automotive graveyard as the 8-Series Coupe is also expected to die. The 8-Series Gran Coupe, on the other hand, could live. The standard-wheelbase 7-Series is also said to be living on borrowed time and that doesn’t seem too surprising as most sales come from the long-wheelbase variant. In fact, BMW doesn’t even offer the standard-wheelbase model in the United States. If that wasn’t enough, the 6-Series Gran Turismo could get date with the undertaker in 2024. The X2 is also rumored to be flirting with disaster, despite being relatively popular in Europe where 36,484 units were sold last year. That number isn’t terrible, but it pales in comparison to the 111,496 X1s that were sold on the continent in 2018. While a lot of models could eventually be phased out, there a handful of new products in the pipeline. Key among them is an “emphatically sporty crossover” crossover called the X8. Unlike the X4 and X6, the model won’t be a coupe-ified version on the X7. Instead, it will reportedly be more unique and offered exclusively in M Performance and M guise. The model is also slated to offer an M Power plug-in hybrid system that features a 60 kWh battery and an electric motor with 170 hp / 250 Nm. The company is also working on a new of plug-in hybrid and electric models including the iX3, i4 and iNext; to name a few. +++ 

+++ New Prime Minister Boris Johnson has been urged to rule out a no-deal BREXIT by the head of car industry body the Society of Motor Manufacturers and Traders. SMMT boss Mike Hawes has long warned of the dangers posted by Britain leaving the European Union without a trade deal in place, and reiterated that in a letter to Johnson, who took over as the UK’s Prime Minister from Theresa May earlier this week. Johnson campaigned for Brexit during the 2016 referendum over Britain’s EU membership, and has repeatedly said that he will leave without a deal in place on 31 October (the current deadline) if the EU doesn’t compromise over issues such as the Northern Ireland ‘backdrop’. In his letter, Hawes congratulated Johnson on his appointment and highlighted the “dramatic and exciting change” the industry is undergoing with new technology and the shift to electrification. Noting that the automotive industry contributes £18.6 billion to the UK economy, Hawes wrote: “The UK sector remains strong, with high levels of productivity, a skilled and flexible workforce and first-rate research and engineering facilities, so we are well placed to take advantage of the opportunities that emerge”. However, Hawes added that the industry needs “the right policy, business and trading environment if we are to thrive”. He called for Johnson to invest in charging infrastructure for electrified vehicles and increase customer incentives to buy them, as well as supporting the construction of a gigafactory for producing batteries in the UK. “We must make the UK the most attractive destination for investors, creating an internationally competitive business environment and developing skills in new digital technologies”, he said. “Above all, we must ensure the sector continues to enjoy, without interruption, preferential trade with critical markets around the world, including the EU. A no-deal Brexit presents an existential threat to our industry. We are highly integrated with Europe, and a no-deal Brexit would result in huge tariff costs and disruption that would threaten production, as well as further undermining international investors’ confidence in the UK. We need a deal with the EU that secures frictionless and tariff free trade. No-deal Brexit is simply not an option”. +++ 

+++ FIAT CHRYSLER AUTOMOBILES (FCA) is expected to report positive quarterly financial results as gains in North American are forecast to help offset the automaker’s slumping sales in Europe. Demand for FCA models fell 11 % to 524,846 in Europe during the first half of the year, while the overall market declined 3.1 %. Evercore ISI analyst Arndt Ellinghorst said that while FCA’s European operations will likely remain in “break-even territory” in the short term he expects things to turn “more negative due to CO2 regulation in 2020”. According to analysts from PA Consulting Group, FCA’s CO2 emissions in Europe will fall to 98.5 grams per kilometer by 2021 from 120 gram now, meaning the automaker will miss its regulatory target of 91.8 g/km. This leaves FCA at risk of an European Union fine of €700 million in 2021. George Galliers, an analyst at Goldman Sachs, is also concerned about said FCA’s emissions risks. “Given investment lead times, it will take time to bring the product portfolio up to date, leaving volumes, pricing and compliance at risk”, he wrote in a July 15 note to investors. FCA plans to spend €1.8 billion in the next 3 years to buy regulatory credits from brands such as Tesla to minimize the emissions-related fines it will pay in Europe. The automaker also needs to combat a sales slump that has affected most FCA brands in the first 6 months of the year. The automaker’s flagship Fiat brand saw sales drop 13 % to 366,779 units. Alfa Romeo deliveries fell 42 % to 29,059. Maserati’s demand suffered a 31 % drop to 3,040. Jeep deliveries were up just 0.1 % to 89,831. Lancia was the only bright spot for FCA, with a 28 % sales increase during the half. Lancia, however, is a one-model, one-country brand, with the aging Ypsilon selling 34,689 units in Italy. Yet it managed to outsell Alfa Romeo in Europe. All of Alfa Romeo’s main models lost ground in the first half of 2019. The Giulietta saw sales plummet 47 %, the Giulia dropped 44 % and the Stelvio was down 18 %. FCA has been cutting production at its Cassino plant, which produces all 3 main Alfa Romeo models. According to the FIOM metalworkers union, the plant will have been idled for half of its working days through July, mainly through temporary layoffs. Alfa Romeo was also outsold by Tesla’s Model 3, which accounted for 37,476 sales in the first half. The success of Tesla’s midsize electric sedan is actually good news for FCA because the more cars Tesla sells, the closer FCA gets to reaching its CO2 target. FCA boss Mike Manley told analysts in May that European passenger-car volumes in the first quarter were down “primarily as a result of discontinued models and the decision we have made to reduce dependence on low-margin channels including sales of self-registered cars”. In the first quarter of 2019, FCA posted a 5 % decline in revenue to €24.48 billion. Earnings before interest and taxes, adjusted for exceptional items, were down 29 % to 1.07 billion. Operating margin was down to 4.4 % from 5.8 %. In the Europe, Middle East and Africa, Fiat Chrysler lost €19 million before interest and taxes, just its second quarterly loss since 2015. Manley said the FCA expects to restore profitability in Europe by the 4th quarter or earlier through measures including “a number of restructuring activities that begin to kick in late second quarter but into the second half”. He also said inventory reduction would be among the sources of improvement in the second half. Analysts will be looking to see whether FCA has managed to keep inventory in check despite the sales decline. In the U.S., meanwhile, FCA’s first-half sales slipped 2 %, with a 28 % jump in Ram pickup deliveries failing to compensate for declines in all other FCA brands. European brands Fiat and Alfa Romeo saw U.S. sales drop 38 and 26 % respectively. The decline in Europe could hurt second-quarter results FCA. In the second quarter of 2018, the company reported a €188 million profit on €6.33 billion in revenue. Some European mass-market carmakers have published positive results for the quarter and first half of 2019 despite the overall market decline. European leader Volkswagen Group reported a 30 % rise in second-quarter operating profit, thanks to the launch of higher-margin SUVs and an increase in volumes at its Porsche and Skoda subsidiaries. The second half will be “potentially difficult” in a “weaker market environment”, VW chief financial officer Frank Witter told. France’s PSA Group saw first-half operating profit rise 11 % to €3.34 billion, with new model launches sustaining margins despite a fall in sales. PSA’s operating margin rose to a record 8.7 %. Renault, meanwhile, lowered its full-year revenue outlook after first-half profit was hit by weakening car demand in Europe, among other factors. +++ 

+++ FORD ’s second-quarter net income plummeted 86 % to $148 million as the automaker took special charges related to its restructuring in Europe and other markets. Excluding the one-time items, Ford’s earnings before interest and taxes fell just 2 % from a year earlier, to $1.65 billion. North American earnings of $1.7 billion were down 3 % from the same period a year ago. Ford’s margin in North America was 7.1 %, down 0.3 percentage points from the second quarter of 2018 amid executives’ push to achieve a double-digit margin for the region. Global restructuring actions in Europe and South America, including plant closures and job cuts, accounted for virtually all of the $1.2 billion in special charges during the quarter. Worldwide revenue was $38.9 billion, unchanged from the same period a year ago. Ford’s overall profit margin fell 2.4 percentage points to 0.4 %. “The underlying performance trends are strong”, said Tim Stone, who became Ford’s CFO on June 1. “The fundamental redesign efforts are progressing and showing benefits”. The automaker last month said it would cut 12,000 jobs in Europe by the end of 2020 and reduce its manufacturing footprint from 24 plants to 18. The automaker also said it expects adjusted earnings for the year to fall short of analysts’ estimates. In addition, Ford said it expects earnings before interest and taxes of $7 billion to $7.5 billion, which could represent growth of up to 7 %. The automaker previously only said there would be improvement. It also reiterated a prediction that free cash flow would increase. The automaker’s earnings in Europe nearly tripled to $53 million. It made $30 million in Asia Pacific, down 66 % from the same period a year ago. But other regions were in the red. It lost $45 million in the Middle East and Africa, $155 million in greater China, and $205 million in South America. Ford Credit posted earnings of $831 million, up 29 % year-over-year. “Midway through this key year of action, we are pleased with the progress we are making toward creating a more dynamic and profitable business”, CEO Jim Hackett said in a statement. Ford’s mobility business sapped $264 million from earnings, 46 % more than a year earlier. It invested $181 million in cloud-based software company Pivotal and lost $79 million on autonomous vehicle development, including the cost of adding employees to Argo AI, its robocar development partner. Ford’s wholesale sales in North America fell 7 %, including a 72,000 unit decline for the Explorer, which has been redesigned for the 2020 model year. But revenue in the region grew 1 % as a more profitable sales mix offset the lower volume. Stone called the redesigned Explorer, built at Ford’s Chicago Assembly Plant, the company’s “most complex” launch in the next 18 months as it updates a majority of its product portfolio. The vehicle was Ford’s third-best selling U.S. nameplate last year, behind the Escape (Kuga in Europe) and the F-series pickup. It’s moving to a new rear-wheel-drive platform and will include a hybrid powertrain option. +++ 

+++ GENERAL MOTORS is bracing for attacks from Democratic presidential candidates at 2 debates that begin in Detroit near its headquarters. The largest U.S. automaker preemptively released 2 fact sheets on its U.S. operations and details about its 2009 U.S. government bailout ahead of the debates, which could feature Democrats using its high-profile job cuts to attack U.S. President Donald Trump. GM announced in November it would cut a total of about 15,000 jobs and end production at five North American plants, included eliminating about 8,000 salaried workers. The company came under withering criticism from Trump and many members of Congress for the cuts, which came a decade after the company was rescued by a $50 billion U.S. government bailout. One of the plants slated for closure, Warren Transmission, is just north of Detroit and will end operations this week. The last transmission was built last week but there is some remaining work this week for maintenance and service parts, GM said. Democratic National Committee chairman Tom Perez and Representative Dan Kildee will hold a press conference with workers across the street from the Warren plant “to highlight Trump’s broken promises on the economy”, the DNC said in a statement. In October 2016, Trump came to Warren and said: “If I’m elected you won’t lose one plant. You’re going to have jobs again”. The UAW plans a separate media event with Warren workers. GM said the end of production “is an emotional time for our Warren Transmission team members” and emphasized it wants “them to stay with the company”. GM said last year that about 335 workers were employed at Warren Transmission, including 265 hourly workers. It said it has job opportunities for nearly all hourly employees at the plant and many have already transferred or accepted offers to transfer. Warren is in Macomb County, which has historically been a key presidential electoral battleground in Michigan. Trump won Michigan by 10,704 votes in 2016, or a 0.23 % margin. Another of the factories set to close, GM’s Detroit-Hamtramck plant, won a temporary reprieve in February when GM extended production into January 2020. Of 2,800 U.S. hourly workers impacted by the decisions to end production at some plants, GM says it has placed more than 1,700 employees in jobs at other locations. In May, Trump praised GM’s disclosure that it was in talks to sell an idled northeastern Ohio plant to cash-strapped electric truck-building Workhorse Group and a new entity. The United Auto Workers has criticized that decision and some lawmakers have raised concerns about the plan. In March, GM removed a Mexican-made Chevrolet Blazer from a display at Comerica Park, where the Detroit Tigers play, after some workers objected. “GM’s operations in Mexico are not a threat to U.S. jobs”, one company fact sheets states, noting GM has invested $23 billion in U.S. operations since 2009 compared with $5 billion in Mexico. The other fact sheet says GM “repaid our debts, and we have invested tens of billions of dollars back into the United States since then”. In 2014, the U.S. Treasury said it lost $11.2 billion on the GM bailout. The Treasury swapped most of its $50 billion U.S. loan to GM for a 61 % equity stake, which it sold at a loss. +++ 

+++ GERMAN AUTO SUPPLIER Eisenmann, which supplied Tesla in 2015 with a new paint shop at its Freemont plant in California, filed for insolvency, in a sign of the growing economic problems crushing profits in the auto sector. Eisenmann, which has 3,000 employees, generated annual revenues of €723 million in 2017. The Böblingern based company said it was now looking for a strategic partner for its Paint & Assembly, as well as its Application Technology businesses. Potential buyers have already expressed interest, Eisenmann said. The insolvency comes as bigger auto suppliers and carmakers including Daimler and Continental have issued profit warnings, triggered by a worse-than-expected downturn in demand for auto production. Eisenmann ran into liquidity problems because major projects started in 2018 led to a large year-on-year loss, it said. A spokeswoman declined to specify which projects had pushed the company into insolvency. “This is another example of the extreme supplier pressure these days. We do not foresee the environment getting any better soon”, analysts at Evercore ISI said in a note. +++ 

+++ Swiss prosecutors said they are assisting Japanese authorities in their investigation into former Renault and Nissan boss Carlos GHOSN , who faces charges of fraud and misconduct. Ghosn, who has denied wrongdoing and has been freed on $4.5 million bail, is pursuing claims against Nissan and Mitsubishi, who ousted him as chairman of their alliance after raising allegations of embezzlement. “The request for legal assistance from Japan has been delegated to the Zurich public prosecutor’s office for enforcement and is currently being processed”, the office said, without giving any further detail on what it had been asked for. “The Zurich public prosecutor’s office is not conducting its own proceedings”, it added. +++ 

+++ A couple of months ago, a Jeep Wrangler was spotted undergoing testing at GM’s Milford Proving Grounds. That naturally led to speculation that the company was considering a competitor for the Wrangler and the upcoming Ford Bronco. While that still remains unconfirmed, it’s possible. The company could launch a rugged SUV based on the next-generation of the Chevrolet Colorado and GMC Canyon. It might be a while before we see the vehicle as the mid-sized pickups aren’t expected to be redesigned until 2022 or later. This suggests the SUV is still several years away; assuming it’s green lighted in the first place. However, that seems likely as GM is reportedly eyeing a $1 billion investment in its Wentzville plant which currently builds the Colorado and Canyon. When reports about the investment first popped up in May, there was speculation that some of the funds could be used to build a new mid-sized SUV at the plant. Like the Colorado and Canyon, the SUV would be a body-on-frame vehicle and this would make it much more rugged and capable than crossovers such as the Acadia and Terrain. Virtually nothing is known about the SUV, but it could potentially follow in the footsteps of the Bronco and Wrangler by featuring a removable roof. That remains unconfirmed, but older full-size Jimmys had a removable hardtop and so did the 2008 Hummer HX concept. The SUV doesn’t seem to be the only new model GMC is considering either. The report also mentions a possible sub-compact crossover which could adopt the Granite name that was used on a concept in 2010. The model could arrive in 2022 or 2023, but there’s speculation it could get pushed back if GMC decides to focus on the rumored SUV instead. That could be a potentially bad move as crossovers are a hit with consumers and GMC’s smallest entry is currently the Terrain which starts at $25,000. +++ 

+++ MERCEDES-AMG has admitted that its future performance cars won’t be as loud as those in the past due to nw sound regulations imposed by the European Union. The head of product planning for AMG compact cars, Bastian Bogenschutz, said vehicles sold outside Europe will also come with the same restrictions. “It’s coming from the European regulations. We can design specific exhausts, but it’s too expensive for every market to do it, it’s pretty difficult”, Bogenschutz explained. New sound regulations in Europe are measured against the loudest setting in the car’s driver mode menu. This means that automakers cannot even design exhaust systems that are quiet most of the time but can be made much louder, such as through the opening of butterfly valves in certain driving modes. In a bid to ensure owners can enjoy an intoxicating exhaust note, Bogenschutz said that AMG has employed a sound enhancement system inside the cabin. “The regulations were getting pretty difficult for the sound to just come from the exhaust system. So we added the AMG pure performance sound, there we take the real sound from the exhaust system, the pulsation of the real sound and move it inside the car. It works together with the exhaust system”. What this means is that owners of mew Mercedes-AMG models will need to turn to the aftermarket if they want an exhaust system which pops, cracks, and bangs. Unless they, too, are banned at some point in the future. +++ 

+++ The 6th generation of OPEL ’s Corsa lays claim to being the most aerodynamic car in its segment. Thanks to a drag coefficient of 0.29 and a frontal area of only 2.13 square meters, which is significantly smaller than its predecessor’s, the 2020 Corsa manages to cut fuel consumption and emissions to new record levels. Opel’s designers and engineers achieved the low drag configuration by adopting a holistic approach. For example, the underbody from the engine compartment to the rear axle is covered with flat panelling to improve airflow under the car. Another aerodynamic element is the roof spoiler which improves airflow and reduces drag-inducing turbulence. The spoiler also cuts aerodynamic lift on the rear axle, which makes the Corsa more stable in a straight line; for example, at the high speeds typical of Germany’s Autobahn network. The Corsa has another “secret” when it comes to aerodynamic efficiency: an active grille shutter. Previously reserved to much more expensive vehicles from higher segments, it lowers drag and improves fuel efficiency by automatically closing the frontal opening when cooling air is least needed. When closed, the shutter redirects airflow around the front of the vehicle and down the sides, rather than through the engine compartment, thereby enhancing aero performance. The decision to open or close the shutter is made automatically, depending on engine coolant temperature and speed. For example, when the car is driving up a hill or in hot temperature in the city, the shutter opens. When less engine cooling is required, it closes. Opel has tested the Corsa’s aerodynamics in the wind tunnel of Stuttgart University, at the Research Institute of Automotive Engineering and Vehicle Engines. +++ 

+++ PORSCHE ’s iconic 911 sports car, which shaped the German brand’s luxurious appeal for decades, may soon be eclipsed by the battery-powered Taycan in terms of deliveries. Porsche, with just over a month before the vehicle’s official unveiling in September, has already amassed deposits for nearly 30,000 Taycans, and the early haul supports plans to lift annual production of the brand’s first all-electric model to 40,000 vehicles. With Porsche delivering 35,600 units of the 911 last year, the Taycan could zoom past the combustion-era hero to define the brand for the next generation. Success of the Taycan is critical for parent company Volkswagen Group to boost the appeal of electric cars as it prepares for a rollout of battery-powered vehicles across all price ranges. The Taycan’s arrival could also pose a fresh challenge to Tesla’s Model S, a key vehicle for Elon Musk’s effort to make the electric-car leader profitable. Tesla hasn’t detailed plans to overhaul its successful Model S luxury sedan that’s been on sale since 2012, betting on the Model 3 to target mass-market buyers instead. While sales have risen, the car’s lower returns have seen Tesla’s losses accelerate to cast fresh doubt on whether building and selling electric cars can be a sustainably profitable business. Porsche has taken a page from Tesla’s playbook. Customers can register as a prospective Taycan buyer by placing a €2,500 deposit, which gets deducted from the final purchase price. To help drive uptake, Porsche is installing fast chargers at dealerships in the U.S. and Europe that in 4 minutes will load the Taycan’s battery with enough power to drive as far as 100 km. The car’s total range on a single charge stands at about 500 km. Porsche set an initial production target of 20,000 vehicles per year, based on a 2-shift system, but that can be expanded if needed, production chief Albrecht Reimold told reporters last year. The company has been rapidly building up capacity in recent months. For the 1,500 new hires needed to produce the Taycan, Porsche said that it has recruited nearly 1,000 so far after receiving some 32,000 applications. The training process for the electric-car assembly lasts as long as 6 months. +++ 

+++ Britain’s biggest commercial vehicle plant, Vauxhall Luton, last month started production of a new Vivaro van as part of a £100 million investment under new PSA ownership that secures 1250 jobs. The new van provides Luton with long-term security, gives a huge vote of confidence in the plant’s ability to adopt PSA manufacturing and quality standards and potentially opens up opportunities to build other vehicles based on the PSA EMP2 platform, which also underpins the Opel Grandland X. “This is a very, very important investment for Vauxhall”, said plant director Mike Wright. “In less than 2 years, the workforce has turned this plant into one of PSA’s ‘European champions’. The amount of change at the plant has just been huge”. Such accolades are particularly crucial when you consider how under threat Vauxhall’s other major plant (Ellesmere Port) has appeared to be in danger. 5 years ago, Wright guided Autointernationaal.nl through a tranche of £168m of investment that put the revamped Gen-3 Vivaro into production under GM ownership in conjunction with Opel and Renault, securing the Luton plant to 2025. Now it’s all change after PSA bought Vauxhall/Opel in March 2017, with the Vivaro name switching to the design that serves as the Citroën Jumpy, Peugeot Expert and Toyota ProAce Verso. Like the outgoing Vivaro, it’s front-driven, but, being based on a platform that also supports SUVs, has refinements such as a multi-link rear axle, a more complex electrical system and a panoramic roof option for passenger versions. Switching to the new platform has required significant changes to the Luton plant layout. The bulk of the investment (£65 million) has gone into a new, heavily robotised body-in-white assembly plant for the new platform. To accommodate the new line, Vauxhall cleared out a cavernous 8000-square-feet underground car park and installed 300 new robots plus assembly jigs and mechanical handling gear capable of pushing out 24 chassis platform underbodies every hour. “With a lot of blood, sweat and tears, we’ve transformed this space and installed and commissioned a whole new chassis line in just 12 months”, said Wright. This might just be a record for a new assembly plant body shop, the urgency of PSA to speed up the turnaround providing the impetus. Such speed of delivery is possible since the line at Vauxhall replicates the one installed at Sevel Nord, PSA’s van plant at Valenciennes in northern France. Luton is now part of PSA’s ‘van cluster’, led by Sevel Nord, and featuring Luton, Sevel Sud in Italy and Gliwice in Poland. Quality is benchmarked against Nord and, on our visit, Citroën and Peugeot vans are in production as a quality yardstick. Operations at Luton have been simplified by bringing in kits of pressed body panels from Sevel Nord’s suppliers, although this has diluted local content to 22 %; below the 40 % that it was under GM. Vauxhall hopes to raise the local content in future. With panels coming in from France, Luton’s ageing press shop is quiet for now. The speed of the model changeover at Luton allows insufficient time to build new body dies, which typically takes 2 years. Previously, the press shop was fully occupied stamping out panels both for Luton and Renault’s Normandy van plant. Replacement work might include panels for the PSA family of vans. As well as the new platform bodyshop, the Luton plant has reorganised its flow of parts and assembly to use 2 floors instead of 3, dedicating the ground floor solely for assembly and final trim. A conveyor moves platforms from the new underground welding line to the first floor where the bodies are built up, before dropping down to the ground floor. Machines are crammed in to these new areas as PSA cracks the whip to improve workflow and shrink the production line footprint, one of its production efficiency measures. Body assembly starts when body panels arrive in trucks from France, crated in sets of 18 and paired left/right to ensure full sets. After being loosely ‘tabbed’ together they move into assembly, where 128 new robots are deployed on bodyside welding alone. Sparks fly, as usual, in the body-framing welding station, which is also new, and is the centrepiece of the plant. Usefully, more automation has raised output, and by mid-2020 Vauxhall plans 90,000 to 100,000 units per year, considerably more than the 60,000 annually under GM. At 100,000, the paint shop will be at full capacity. PSA has introduced innovations in final assembly, too, notably a new automated parts handling system dubbed the ‘supermarket’ that automatically loads components into bins to be delivered line-side by a fleet of 19 robotic, automatically guided vehicles (AGV). This reduces line-side clutter at the 200-plus final assembly stations, essential because the new PSA van offers more build variations, requiring more parts at each station. A spin-off from this extra complication is a slightly slower line speed and ‘Takt’ time; how long operators have to complete their assembly task. This is now 2 minutes and 10 seconds, which is 10 seconds longer than under GM ownership. As the workforce beds in, it’s possible those 10 seconds might be saved. Bright, shiny vans are lining up at the end of Luton’s production lines and the presence of Citroën and Peugeot badges are an indication of the changes already in place. Vauxhall is under new management, Luton has a new lease of life and Britain’s oldest operating car plant looks to have a secure future. Can the brand do the same at Ellesmere Port? That remains an open question. +++ 

+++ The TESLA Model 3, Model S, and Model X will soon have their infotainment systems updated to include Netflix and YouTube. Elon Musk made the announcement on Twitter (of course), saying that it will have “an amazingly immersive, cinematic feel due to the comfy seats & surround sound audio”. Tesla will only allow its owners to stream Netflix and YouTube when their car is parked. However, the company intends on updating the system to allow owners to use it when a vehicle is moving once full self-driving has been approved by regulators. However, as we have come to expect in recent years, it will likely be some time before autonomous vehicles hit public roads en masse. The Tesla Model 3 will provide the best viewing experience for users as its centrally-mounted infotainment screen is positioned horizontally while the screens of the Model S and Model X have their screens centered vertically. At one stage, there was talk about the Model S and Model X getting updated interiors to closely mimic that of the Model 3. However, recent statements from Elon Musk indicate that this won’t be the case. When Tesla does introduce YouTube and Netflix streaming to vehicles which are on the move, don’t expect it to happen without some controversy. The introduction of the streaming services is tipped to happen sometime in August. +++

+++ Tesla chief executive Elon Musk says the long-awaited TESLA PICKUP will be unveiled in the next 2 to 3 months. We’ve known for quite some time that the pickup would bow before the end of the year, but Musk’s tweet does provide us with a clearer idea of when the wraps of the Rivian R1T rival will come off. “We’re close, but the magic is in the final details. Maybe 2 to 3 months”, the tweet reads, suggesting that the car manufacturer is still putting the finishing touches to the show car. Tesla has only released a single teaser image of its pickup truck, but it didn’t really provide us with a good idea of what to expect from the vehicle’s exterior design. Nevertheless, previous statements from Musk have suggested that the vehicle’s design will be drastically different than any other Tesla. Those who’ve been critical of the cookie-cutter design of the car manufacturer’s current models should be pleased to see something a little different. In June, it was revealed that the Tesla pickup will cost less than $50,000 and handle like a Porsche 911; bold statements both of them. I understand that the vehicle will feature no less than 6 seats, as well as 645 – 800 km of range. With confirmation that Ford and GM are also developing an electric pickup truck, this segment of the market is shaping up to be very exciting in the near future. +++ 

+++ BMW and Audi will skip this year’s TOKYO MOTOR SHOW , leaving Mercedes-Benz as the only major foreign luxury automaker to showcase its models in Japan’s biggest auto industry event. Volkswagen, the PSA Group and Volvo will also be absent this year. In the past, the companies were regular participants at the show, which will be held from Oct. 24 until Nov. 4. Mercedes, however, won’t be the only foreign participant. Renault and Alpina will be attending the biennial show. The waning interest comes despite imported-car sales rising in Japan. They climbed 4.3 % last year and more than 30 % in the past decade. But Japan has long been losing appeal for carmakers, especially since the 2008-09 financial crisis. U.S. car companies such as Ford haven’t returned since. A Volkswagen representative said the group has no new models to showcase for the Japanese market, addinf that this year’s absence doesn’t mean that it will continue to skip the event. A BMW representative said the company plans to hold its own event. +++ 

+++ A high court battle to decide if VOLKSWAGEN must pay out hundreds of millions of pounds in compensation to owners of cars affected by Dieselgate is set to play out in spring next year. Volkswagen and lawyers representing around 95,000 motorists have been locked in a group action lawsuit, the biggest ever raised in the UK, for 4 years and a final pre-trial hearing in December will agree the details and set a date for the trial in 2020. Battle lines have been drawn between Volkswagen, represented by London law firm Freshfields Bruckhaus Deringer, and a consortium of 11 lawyers led by Slater and Gordon, alongside firms SPG Law and Leigh Day. The number of motorists represented, however, is fluctuating and has gone down in recent months as duplicate and irrelevant claims are weeded out. Some Jeep and Jaguar owners had to be taken off the list. The trial will be held under civil rather than criminal law: it is about compensating motorists rather than punishing any wrongdoer. As such, the legal arguments will centre on 3 points under the so-called ‘threefold test’. Slater and Gordon will have to win all 3 for motorists to gain any compensation from Volkswagen in a trial tipped to take 8 or 9 months, with both sides expected to deploy an army of technical experts to help argue their case. The first legal point will be to determine whether Volkswagen has breached its ‘duty of care’ and will hinge on whether the firm fitted a ‘defeat device’ to cars equipped with the EA189 diesel engine in 1.2, 1.6 and 2.0-litre capacities. “It remains Volkswagen Group’s case that the affected vehicles did not contain a prohibited defeat device and that any findings by foreign authorities on that point is not binding on the English Court”, the firm told in a statement. “Our consistent position has been that the instigation of legal proceedings in the high court in London is unfounded”. This defence is disputed by Slater and Gordon, since Volkswagen has admitted in the US to having fitted a defeat device that detected a rolling-road test and temporarily modified the combustion to reduce NOx emissions. This admission carries no legal weight in the UK. “VW has already admitted it programmed the vehicles to operate in 2 modes (test and road). But have failed to explain why they did this. The judge has now ordered them to explain,” said Slater and Gordon in its statement. At December’s pre-trial hearing, Slater and Gordon will argue that the English high court is bound by a finding by the KBA, the German type approval body, that Volkswagen’s software includes a defeat device. Volkswagen will counter that it believes the “switching function” between test and road modes “used in the UK and the EU is legal”. If Slater and Gordon argues this point successfully, it then has to establish ‘causation’ and prove a link between damage or harm to the car and the defeat device software. It may be more difficult to convince the judge of this. Volkswagen is firm that “our UK customers have not suffered any loss or damage as a result of the NOx issue. The affected vehicles are safe and roadworthy and perform as advertised”. Slater and Gordon argues that the cars were sold “deceitfully” and could not be lawfully sold, but once the Dieselgate scandal was exposed and Volkswagen recalled cars for a technical fix, owners suffered poorer mpg, CO2 and drivability. The headline-grabbing final point will be the size of any multimillion-pound payout, based on the losses suffered by motorists. Slater and Gordon is aiming to prove that owners have lost out on residual value owing to the defeat device and in terms of issues caused by the fix. “Our clients tell us the fix has made vehicles less fuel efficient, has impacted performance and resulted in instances of vehicles going into limp-home mode in dangerous circumstances”, said Slater and Gordon. Finally, it is pushing for “exemplary damages” to punish Volkswagen for its alleged deceit. Volkswagen, of course, will attempt to demonstrate evidence to the contrary: that there has been no adverse impact on residual value, CO2, mpg or engine performance. And it stresses that the “fix” resolved “the vast majority of complaints to our customers’ satisfaction”. If it looks as though the damages might fall short of expectations and won’t cover the legal costs, the case could be settled out of court. More twists and turns are to be expected as the case meanders its way into court later this year, but affected motorists and Volkswagen can at least look forward to the protracted process finally being resolved by the end of 2020. Behind the scenes, Volkswagen is understood to have undertaken a research project into the effects on residual values, which is where the biggest losses might be crystallised. Of course, Slater and Gordon has a big incentive to win as large a payout as possible to satisfy motorists attracted by ads taken out by the law firm as it built the group litigation. It estimates damages at more than £2000 per car; made up of losses on residual values, breach of contract and unfair trading regulations related to finance agreements, although legal costs will absorb at least 30 % of that. But a different estimate suggested was a “few hundreds of pounds” to a maximum of £1000 per car. If damages are expected to average £1000 per claim, that will be £97 million in total and well short of Slater and Gordon’s “hundreds of millions” estimate. That’s important because the law firm has financial backing from Therium Capital, which is expecting a payback on its investment. If the damages fall short of expectations, the motorists’ side might be better off settling out of court, because £97 million might only just cover legal costs. +++

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