+++ It takes 10 seconds to sketch the Tonale. That’s according to ALFA ROMEO design boss Scott Krugger, who reckons this fact is a “beautiful testament” to its design strength, and to one of a pair of unusual processes that helped create it. Drawing the essence of this car in only 10 seconds might sound a little disappointing. It’s as if there’s nothing to the car, its lines simple almost to the point of crudity. But no. The ability to sketch it this fast (if you’re a highly competent sketcher, that is) stems from the fact that it carries a few strong lines that capture the character of a visually distinctive car. Part of the Tonale design process involved examining some of Alfa Romeo’s legendary back catalogue, says Krugger, and understanding the strongest elements of particular models: “You look at a car for 10 seconds, then close your eyes and sketch. That’s why we drew these old cars from memory”. And that’s precisely how the Tonale’s chief exterior designer, Alexandros Liokis, sourced some of his inspiration for this concept, which should appear in production form after the middle of next year. His inspiration boards include not only evolving renditions of the Tonale but also pleasingly crisp sketches of Alfa Romeo’s past, among them Giorgetto Giugiaro’s 1963 Giulia GT coupé, designed while he was at Bertone, aged 21. Other Alfas influenced Liokis, but the Giulia GT is the chief source and, in particular, the gently arching line that runs from the front wing through to its tail. “The simplicity and structure of this car are the key elements”, says Liokis whose daily driver, incidentally, is a 1983 Giulietta. So how close is this concept to the C-segment SUV that the late FCA boss Sergio Marchionne promised last year? Krugger says: “We are near this car. This is our goal. Some elements are conceptual, such as the lights and the mirrors. But we’ll try not to lose the sculpture”. FCA’s European design boss, Klaus Busse, adds that the Tonale was realised not digitally, nor by clay modelling, but through the medium of plaster; an old technique once widely favoured by Italian coachbuilders. Busse has hired the 75-year-old plaster modeller who developed the Lamborghini Countach and Lancia Stratos, 2 of the most dramatic supercars of the 1970s. “The eye is 50 % of the work and touch too”, says Busse. “Sculpture is very important. The translation of the sketch and how you blend the ingredients can only be done by hand”. Krugger talks of purity, too, reckoning that the Tonale “is pure in a time of hyper-design”, a perhaps euphemistic reference to the busy designs of some rivals. Which Alfa Romeo must get out and compete with, because it certainly needs this car. Its European sales have dropped precipitously during the first 5 months of this year, from 41.646 to 24.252, and US sales are down by a quarter. The Tonale, which will compete in one of the market’s hottest segments, was only born as a concept last November, appearing at the Geneva show in March. The real thing will share a platform with the Jeep Renegade, both vehicles to offer a plug-in hybrid option. It’s not yet clear whether this is an all-new platform or a modification of the existing one. Either way, Alfa Romeo will need to work hard to develop what is fundamentally a front-drive SUV platform to complement the high standards set by the Giulia and Stelvio, which benefit from their own bespoke Alfa Romeo architecture. “We have a dynamics team and they understand what an Alfa Romeo should be”, says Krugger by way of reassurance. That it will also come as a plug-in hybrid, triggering Alfa Romeo’s transition to still potent but greener powertrains, should add spice to this stylishly desirable compact SUV. It can’t come soon enough. +++ 

+++ Former Jaguar design boss Ian CALLUM and his new Callum design group are planning to build a batch of comprehensively rethought and re-engineered Aston Martin Vanquish V12s as their new business’s first bespoke car project. The Vanquish 25 project forms part of a series of R-Reforged edition cars fully endorsed by Aston Martin, with customers able to upgrade their existing car, or have R-Reforged source one for them. UK-based R-Reforged has previously worked with Aston Martin on other projects, and will play a key role in the Callum project’s customer experience. Each finished car is expected to cost £550,000 including a sourced V12 Vanquish. Delivery of finished cars is due to start late this year and the full batch of 25 should be completed and delivered at the end of 2020. The Aston Martins will be returned to bare metal and rebuilt from scratch in Callum’s new Warwick-based workshops. They will incorporate dozens of subtle and not so subtle changes, some of which Ian Callum has wanted to make since his original Vanquish design hit production in 2001. “There are things on the car I’ve always wanted to fix”, he said. “Now I have the chance”. One strong theme running through the whole car is a unique fabric and trim pattern that Ian Callum, a loyal Scot, calls his “abstract tartan”. It appears in the Vanquish in surprising places, such as air outlets and speaker grilles, as well as seating and trim panels and will be used on Callum cars in future. The vehicle features Callum’s signature motif, a design that he’s calling ‘abstract tartan”, in a number of key areas, including on the sidewalls of the bespoke Michelin tyres, the redesigned bonnet louvres, the rear parcel shelf, the seats and the cabin headlining. The changes to the bodywork include all-new headlights that incorporate indicators, allowing a fresh front bumper that does away with the old car’s indicator lamps and replaces them with brake cooling intakes. Callum believes this – plus the adoption of huge carbon-ceramic brake discs – will ease one of the Vanquish’s biggest niggles: brake fade. The partners at Callum have already built 2 Vanquish prototypes, one to show off their body and cabin developments and another to perfect a new suspension set-up that runs to bigger wheels and tyres, stiffer springs and dampers plus changes to anti-roll bars and suspension bushes. All cars also get larger-diameter carbon-ceramic brakes plus new 20 inch wheels that use the Vanquish’s original pattern but are now offset to improve stability and stance. Each V12 engine gets software, camshaft and exhaust changes to breathe more easily and boost its power by around 60 hp to between 550 hp and 600 hp, depending on the model. A modern 6-speed torque-converter automatic sourced from General Motors is offered, although many owners are expected to stick with the Vanquish’s original automated manual gearbox. Ian Callum’s “new old” Aston Martin is still very recognisable as an original Vanquish but has many modern details. There’s a new-style front bumper and grille, the latter subtly framed with carbonfibre and its horizontal bars most prominent. The lights are new LED units and the old, round foglights (Callum calls them “frog eyes”) are dropped in favour of air scoops for the bigger front brakes. There are new-design exterior mirrors (“we’ve dropped the old boxing gloves”) plus handsome side skirts incorporating a four-notch design that will become a feature of future Callum cars. The exhaust’s back box has been reduced in size and incorporated into the rear bumper assembly to improve the efficiency of the rear diffuser and the car gets new LED tail-lights, an unusual and expensive feature (but necessary, Ian Callum insists). More subtle improvements abound. Special Michelin tyres carry the Callum tartan on their sidewalls. The side windows are framed with specially fabricated trim pieces (not the Jaguar cast-offs of the original). The interior is completely retrimmed over new architecture, with the emphasis on high-quality materials and execution. The new front seats adopt a more sporting profile and the tiny rear seats have been ditched in favour of better accommodation for those in the front. There’s a new screen-based HMI and a demountable Bremont watch is fitted into the centre of every fascia.  Although Ian Callum left Jaguar only a couple of months ago, his design partners (David Fairbairn, Adam Donfrancesco and Tim Bird) have been working on the project for much longer. “We want to get back to making things”, said Ian Callum. “The idea is to do bespoke projects for customers as individuals”. ​”I like that the Callum team’s first project is based on the original V12 Vanquish designed by Ian”, Aston Martin’s chief creative officer Marek Reichman said. “Aston Martin Lagonda is very proud of the cars created during Ian’s time and they are an important part in both our heritage and evolution”. The original Vanquish, born from a 1998 concept designed by Ian Callum before he joined Jaguar, introduced a new era of Aston Martin design and construction in 2001 during his spell with the TWR engineering consultancy and led directly to the successful years of the DB9 and smaller V8 Vantage. The car, although handsome, never found buyers as readily as others and was discontinued in 2007 in favour of a new, DB9-based Vanquish in 2007. Donor Aston Martins for the Callum treatment will come either from existing owners or the company will source suitable cars itself. A fairly restricted series of colours and interior treatments will be offered: Ian Callum and his colleagues aren’t keen to over-decorate their cars or offer wide colour or trim palettes. They hope customers will accept ”design guidance” and customer reaction so far seems to back that up. “Put it this way”, said the designer bluntly: “If we don’t like it, we won’t build it”. Callum will produce a maximum of 25 examples of its Vanquish, costing from £550,000. The final chassis sign-off should take place by the autumn, with the first delivery of a customer vehicle before the end of 2019. +++ 

+++ Japan and France said they had agreed to share information and explore deeper cooperation in next-generation auto technology, a move that could also be aimed at repairing the strained ALLIANCE between Nissan and Renault. In a statement, Japan’s trade ministry said the 2 governments had agreed to start talks to bolster possible cooperation in areas such as automated driving, batteries and electric vehicles (EV). They agreed to discuss policy toward sharing information, supporting transformation of the auto industry environment and exchanging opinions about potential further cooperation in industrial policy for the automotive industry, according to a memorandum of cooperation released by the ministry. Japanese trade minister Hiroshige Seko and French finance minister Bruno Le Maire have also confirmed the need to support the alliance between Nissan and Renault, the Japanese ministry said. Automakers around the world are struggling to meet breakneck growth of an industry that has been transformed by the rise of electric vehicles, ride-hailing and autonomous driving. Nissan’s alliance with Renault, which is partially owned by the French state, has been shaken following the ouster of former chairman Carlos Ghosn. +++ 

+++ Seat’s CUPRA brand is signaling its plans for a full-electric performance car with the Tavascan crossover concept that will debut at the Frankfurt auto show on Sept. 10. The car is powered by 2 electric motors: 1 on the front axle and 1 on the rear axle. It has a total output of 306 hp and accelerates from 0 to 100 kph in less than 6.5 seconds, Cupra said. The concept is based on the MEB platform developed by Seat parent Volkswagen Group for battery-powered cars. It has a 77 kWh battery pack and a range of 450 km under Europe’s WLPT test cycle, Seat said. The Tavascan concept follows the Formentor plug-in hybrid concept which premiered at the Geneva auto show in March. A production version of the Formentor will go on sale next year. Cupra did not say when a production version of the Tavascan will launch. The Cupra Tavascan previews one of the six full-electric and plug-in hybrid Seat and Cupra models planned to go on sale by early 2021. At the Geneva show in March, Seat unveiled the el-Born compact electric car that is expected to go on sale next year. +++ 

+++ The FIAT that brought the brand back to America is going away after this year. All forms of the 500 (hatchback and convertible) are being discontinued with the current inventory being sold off through 2020. This includes the electric, standard turbo and the Abarth iterations. Once the little 500 is gone, Fiat’s lineup will consist of the 500X, 124 Spider and the 500L. The decision to cut the little 500, easily Fiat’s most identifiable model, strikes us as a bit strange. Certainly it has drawbacks, and it’s still basically the same car that was introduced in Europe over a decade ago. Its small size and 2-door form factor also aren’t particularly popular in today’s crossover-consumed market, but the 500 wasn’t Fiat’s worst seller. In fact, as of June, the most recent month for sales data available, it was leading the Italian brand’s sales. And the year before, it was the Fiat’s best seller over the same time frame. The 500L has actually been the worst seller so far this year, with only 399 being sold through June, which is a drop of 56 % versus last year. The 500X is trailing the 500 and the 124 with 1,484 sales, a drop of 54 % compared to last year. Even if other models were selling better, it would seem like a decent car to still have around to show how the bigger models got their designs. And at the very least, the 500 Abarth presented a cheaper halo option to the 124 Spider. No announcements of a 500 replacement have been made. There are rumors of a next-generation model, and it might be previewed at Geneva as a full EV. It could use the modular battery system that was featured in the Centoventi concept from the last Geneva Motor Show. Having seen the Honda E and Mini Cooper SE retro chic EVs, this could be a smart decision for Fiat and give the little hatchback some fresh relevance. +++ 

+++ Olivier FRANCOIS has a problem. He’s been nursing, nurturing and nibbling away at an idea he had several years ago (a rather good idea) and although that thought has been turned into a 3-dimensional object for us all to see, he doesn’t know when it should be turned into something that all of us might buy. François is chief marketing officer at Fiat Chrysler Automobiles (FCA) and head of the Fiat brand. His idea is how to set about replacing the Panda, Fiat’s most charmingly basic model, with a car that will have legs for a greener 21st century. One look at the Centoventi, Fiat’s concept car celebration of its 120th anniversary, tells you that François and his team have been mulling a lot more than a straightforward replacement for the third-generation Panda. The car you see here would be offered with only one main paint colour (pale grey) in its most basic form and shorn of much equipment. There would be multiple optional add-ons to configure the interior, dashboard and roof, as well as the more fundamental choice of an all-electric drivetrain. More specifically, the electric version would be an affordable battery model, coming as standard with a range of no more than 100 kilometres. You might well consider this unacceptably limiting, even for an urban runabout. In which case, you can order another 100 kilometres’ worth of add-on battery pack, by buying, leasing or even renting it, and a couple of packs beyond that, too. In fact, the Centoventi, and by implication the next Panda, could be all about the add-ons. Among the cornucopia of ideas that it carries is a one-model offering, to which you can add as many or as few options as you like, either when you buy, or after you’ve bought. One benefit of the single-model approach, says François, is that there’s only one version of the car’s wiring loom, complete with all the plug-and-play possibilities needed for post-sale upgrades and add-ons. But these are side issues compared with François’ problem, which is all about when. The new petrol Panda should arrive during 2021, but at what point should an all-electric affordable version be offered? “I want it to be a success”, says François. “It’s a radical approach to electrification. It’s a matter of timing. Some people say we should rush”. But François is not so sure. “When government incentives disappear, electric vehicle price pressure will be at its maximum”, he adds, which is when he reckons there will be room for a “better product”. Why has this exciting car taken so long to reach fruition, and then only as a concept, albeit a mighty impressive one? The answer, explains François, was the difficulty of choosing the moment to tell his late boss Sergio Marchionne about the idea. The key would be in the pitch, and interesting Marchionne in an area of the market not known for yielding much in the way of profits. François kept trying to find a suitable slot in a product meeting to present the idea but says he was conscious that Marchionne “thought I was asking for tons of money to do something relatively banal”. Instead, he “printed a pitch, removed the ‘new Panda’ name (it was a barrier to entry with Marchionne) and called it CC4, for ‘City Car, 4th generation’. “I gave the pitch on a plane and flipped through it.” Marchionne’s reaction? “I like that”. “Then we started prototyping, although it wasn’t super-urgent. It would have been too early a year ago”. Keen to find a fresh way to re-engage Marchionne (“we often discussed cars, but didn’t always agree”) François then made a 2-minute CGI video. But François will never know if Marchionne ever saw it. A link sent to the boss reportedly wouldn’t open and there was no way of telling whether a memory stick still lying on his desk after he died was ever viewed. The idea gathered momentum again when it was picked up by Michael Manley, now FCA’s CEO. “Why don’t you show us that concept of yours?” he suggested. Ask François how real this concept actually is and he’ll tell you: “I don’t know yet. I think the looks are very faithful to the next-generation Panda. But, clearly, the style is almost incidental, although it’s one that we like very much. What matters is the concept as a whole. We’ll know very quickly if it’s happening or not because we’re in the process of vetting the future of the Fiat portfolio. We’ve been very active in the last 3 months”. Part of that debate has been around the fact that Fiat’s dominance in the city car segment (it sells 1 in 3 of the breed in Europe with the 500 and Panda) stems from offering 2 very different products: the 500 being premium, the Panda more functional. Broadly, the plan is to once again offer a range of 500-inspired models, replacing the 500X SUV and the 500L, although almost certainly not with an MPV. The more functional range of family cars will include the new Panda, a new supermini inspired by the 500 Giardinera estate and a Tipo replacement that’s likely to be an SUV, with its design informed by the Centoventi. They will be “cool, affordable, stylish and have clever solutions”, says François. “They won’t have tons of tech. What really matters is a sustainable price, roominess, good design, key equipment and safety”. The shifting market won’t be the only trigger to launch the new Panda because the need to comply with tightening EU emission standards will be another driver. François says: “Let’s say it’s given the green light. Then it needs to be the next defining moment for Fiat: a socially relevant car, like the original 500 from 1957 and the 1980 Panda. I say that not because of my ego, but because that’s my ambition. We want to do a socially relevant car, a city car that’s electric and affordable. And that’s currently an oxymoron”. Will an electric Panda come? “Yes. Before 2025, perhaps around 2023”. +++ 

+++ Jim Hackett is not a prototypical car guy. Nor is he a straight-line thinker or talker. But after more than two years as CEO of FORD , amid some head-scratching and skepticism, his unorthodox methods and esoteric train of thought are making some sense and showing signs they might pay off. The former Steelcase CEO has a business history and affinity with Ford executive chairman Bill Ford, which led to Hackett first becoming a board member and then CEO after Mark Fields was let go. Hackett is fully aware of his outsider status and the controversy surrounding his tenure. But he’s convinced he is setting Ford on the right course with a mix of traditional Rust Belt ways (yet more cost cutting) and new ideas about what people want from a vehicle. Ford raised eyebrows with plans to ditch traditional sedans for car-platform vehicles sporting different body shapes. And the automaker disappointed Wall Street with promises (but few details) of electric and autonomous vehicles. It’s only recently that actions have spoken louder than words with vehicle launches and burgeoning partnerships with Volkswagen, Rivian, and Argo AI to get future tech on the road faster. Ford stock remains below $10 a share, but analysts have started to appreciate the execution of Hackett’s plans and forecast earnings to increase, citing the restructuring, product mix, partnerships, and strategic actions. Hackett continues to view a future where technology is the star but in a seamless, almost recessive role, working in the background to improve the vehicle and how the driver interacts with it. He’s also taking a page from Tesla CEO Elon Musk in mulling over how manufacturing and IT processes can change. Hackett likes to tell the story of the Mustang he ordered for his wife that was quarantined for a bad part. “They lose her car, and it doesn’t come for 95 days”, he recalls. “I ask, ‘What’s the average time for delivery?’ They say, ’81 days’. I say, ‘What was it 20 years ago?’ They say, ’81 days’. Unacceptable today when overnight parcels from Amazon have changed people’s expectations”, especially when Ford can roll a new F-150 off the assembly line every 53 seconds. Hackett likes this kind of “undercover boss” peek. He recently had senior executives don jeans and join him at a dealership where they watched customers fill out service orders and technicians wrench on cars. They also observed old-school IT practices in a world that moves at the speed of fingers on a smartphone. “I’m staring at all these processes, saying, ‘They haven’t shrunk fast enough, or they haven’t sped up.’ It’s not our finest depiction of being modern”. Because of these real-world experiences, “I’m spending all my time thinking about the future of the factory and the future of IT systems right now”, he says. He’s asking questions such as why the FordPass app can start a car on a cold morning but can’t also open the garage door. “This actually is a hint into the way my brain thinks”. To get others thinking the same way, he has worked to shed the company’s Mad Men look and feel with assistants guarding access to executives and too many walls and org charts to break down. He removed a third of the bureaucracy and cut thousands of jobs. “It’s starting to feel like our team”, he recently told the board. How long will Hackett stay in the job to see his vision through? “Well, I got to have that discussion with my wife of 43 years first, and then one of my best friends is Bill Ford, so I’ll have that discussion, but we don’t talk about it”, he says. “I didn’t come into the job saying, ‘I got X amount of time’ “. Hackett, at 64, doesn’t want to lose younger executives eying his seat. “The bigger issue is to make sure we have the right succession and I get out of the way for the next team”, he says. A succession plan is in place with strong candidates. Obvious frontrunners are president of automotive Joe Hinrichs, who runs daily operations globally, and president of new businesses, technology, and strategy Jim Farley, who is focused on the future. “We have lots of options”, Hackett says with confidence. +++ 

+++ GENERAL MOTORS has cut about 350 jobs from its Thai subsidiary’s operations, a labor representative said, slashing more than 15 % of the workforce for the U.S. automaker that has 2 factories in Thailand. Thailand is a major manufacturing hub in the competitive Southeast Asian auto market. Boonyeun Sookmai, coordinator for Labor Relations Group for Eastern Thailand, told more than 350 employees and contractors at General Motors (Thailand) were affected by the cuts, which employees and contractors were told about this week. GM did not confirm the number of layoffs but said in a statement it was “necessary to right-size” its operations. “We are taking every measure to support employees whose roles are impacted”, the statement said. It added: “There is no change to our ongoing business in Thailand. We continue to build and sell world-class trucks, SUVs and engines for Thailand and the world”. The company has about 1,900 employees in Thailand, according to the Bangkok Post, in operations that include a vehicle assembly plant that produces 180,000 units per year. Thailand is a regional vehicle production and export base for the world’s top vehicle manufacturers, including Toyota, Honda and Harley-Davidson. The auto industry accounts for about 10 % of the Thai economy and has been one of a few growth drivers at a time of falling exports. Previously booming domestic auto sales have cooled in Thailand with finance firms using stricter lending criteria. Thai domestic car sales contracted in July for a second straight month, down 1.1 % from a year earlier. GM has 2 plants in Rayong, a province on Thailand’s eastern seaboard, for vehicle assembly and another for powertrain and engines. Its vehicle assembly plant began operations in 2000 and the latter in 2011. The plants in Thailand produces vehicles for the domestic market and export under the Chevrolet and Holden nameplates. +++ 

+++ After leaving Europe, INFINITI has announced that it will exit the Australian market, too, in late 2020. Nissan introduced its premium brand Down Under in mid-2012 with the aim of rivaling the big German three and Lexus. Sadly, things did not go as planned. The Japanese car manufacturer has only sold 3,987 vehicles over the past 7 years, which averages a mere 47 units per month. By comparison, Lexus averages approximately 800 sales per month and, in June, Mercedes-Benz Australia sold no less than 4,050 vehicles, including its commercial offerings. In a press release, Infiniti said it will be selling and servicing cars from its 5 Australian dealerships until the end of 2020 or until existing stock is exhausted, and shall continue to offer support for the few thousand vehicles that it has sold across the country. A statement released by the automaker in March regarding its European exit confirmed that it will concentrate its efforts on the North American and Chinese markets in the future, so this move is not that surprising. “The company will place more focus on its SUV lineup in North America, bring 5 new vehicles to China over the next 5 years and work to improve quality of sales and residual value”, the company stated. “These actions are all part of Infiniti’s vision to become a top challenger brand in the premium segment”. Australia is proving to be a tough nut to crack for car manufacturers, as others, like Opel, Chery and Proton have also left in recent years. +++ 

+++ LAMBORGHINI has seen what the future for its glorious V12, which it has every intention of keeping alive, holds, and its name is electrification. Shortly after a report about the successor to the Aventador being pushed back until 2024 surfaced, chief technical officer Maurizio Reggiani said: “We think that the Lamborghini brand is based on the V12. And it’s clear that we need electrification because we need that to reduce (carbon dioxide) and to have additional power based on electrification, Reggiani said. Other reports stated that Lamborghini could reduce the displacement of its next-generation V12. Reggiani didn’t dispute these claims, but did confirm the company’s belief that naturally aspirated engines are the best for its supercars, ruling out the possibility of successors to the Huracan and Aventador using forced induction like the Urus. “Many of our competitors moved in the direction of a V8 turbo and we decided that natural aspirated is still the best interpretation of the brand’s super sport cars”, he said. It remains unclear what kind of hybrid powertrain Lamborghini could employ in the Aventador’s successor. It may design a system where the ebgine sends power exclusively to the rear wheels while electric motor(s) take care of the front axle. Reggiani didn’t say if this will be the case, simply stating they are indeed investigating a number of hybrid solutions. He also added that outright power isn’t all that important to the company, as it is a matter of ensuring it can be employed efficiently. “Every time you need to take into consideration that we talk about power, but the most difficult item is in the way you can discharge the power on the street”, he said. “Because the real problem is that in what way you can guarantee that you are able to use all this horsepower”. +++ 

+++ German premium automakers find themselves in unfamiliar territory: trailing mass market rivals in profitability. BMW and Daimler have seen returns shrink in the normally lucrative second quarter, pushing their profitability below those of volume peers. BMW’s closely watched automotive margin collapsed to 2.8 % in the first half, while Daimler’s Mercedes-Benz car division had a 1.4 % operating return on sales. The results are well below the 8 % to 10 % margin that BMW and Daimler strive to achieve. Volkswagen Group’s core VW passenger car brand and its Czech brand, Skoda, posted second-quarter returns of 5.2 % and 8.1 % respectively. PSA Group’s result was even better than Skoda’s as the French automaker’s adjusted automotive margin was 8.7 % over the period. Automotive equity analyst Arndt Ellinghorst of Evercore ISI believes investors have not realized shares in the premium duo are overpriced compared with volume peers such as VW, which generate far more cash. “The market seems to happily ignore this given VW trades at a 20 % discount to BMW and Daimler”, he wrote in a recent note. Results from VW Group’s Audi brand, which has suffered in past months due to WLTP-related supply constraints, look great compared with its German premium rivals as it only had a slight narrowing in operating returns to 8 % of revenue. To be fair, however, that figure is flattered somewhat by a decision this year to reallocate a chunk of turnover to the VW Group. Equivalent to roughly a tenth of its sales, the financial move lifted Audi’s margin by a full percentage point; allegedly to improve comparability with BMW and Mercedes. Investments in future technologies such as electric cars and autonomous driving are a key factor in the struggles at BMW and Daimler. As a group, Daimler spent nearly 5.8 % of its revenue on R&D in the first half. This figure has been steadily rising since 2014, breaching its previous annual peak of 5.3 % in 2009. The high came when R&D dropped at a less dramatic rate than Daimler’s revenue in the aftermath of the global financial crisis a decade ago. BMW’s R&D ratio came in at 5.9 % for the first 6 months; another increase over the previous period. Last year, the level hit 7.1 %; the highest since at least 2006 and substantially above its target corridor of 5.0 % to 5.5 %. This level of R&D spending was manageable when profits from China were soaring. That is no longer the case as China is expected to contract for a second straight year, which is a blow to German brands in particular because they are overly dependent on cash generated from the world’s biggest auto market. The recent slump, triggered by a trade dispute between China and the U.S., has coincided with new cost-cutting programs at Germany’s premium brands. Lucrative exports of U.S.-built luxury SUVs such as the Mercedes GLE and the BMW X5 have been hit by China’s retaliatory tariffs. By comparison, PSA Group’s low exposure to the spat between Washington and Beijing means that it has neither enjoyed the benefits of a significant presence in China nor the costs. The French group, like its peers at Renault and Fiat Chrysler Automobiles, has failed to establish a large-scale presence in China and as a result was never part of the profit bonanza enjoyed by German automakers. Over the past decade, the greatest strategic strength of BMW, Mercedes and other German automakers has been their dominant share of the dynamic Chinese auto market. The good news for these companies is that forecasters believe a rebound in China will come. But, for once, if briefly, the German automakers are paying the price for their success in China. +++ 

+++ I recently had dinner with the understandably twitchy sales boss at a German car firm whose registrations are, like his annual bonus, desperately down. The poor soul confided that his stressful work life is now tougher than ever; not least because of the cheap-as-chips leasing rates arch-rival, Mercedes, is daring to offer on some of its modest models. In short, my man argues that they’re unreasonably low. But he would say that, wouldn’t he? Because he and his company struggle to match them with their equivalent models. Less than €10 per day for the keys to any new car on lease/long-term rental is something of a bargain. But when that vehicle wears a 3-pointed star, and therefore occupies premium territory, the above usership prices are even more delicious to cost-conscious motorists; even if they’re ‘only’ getting a bog-standard A-Class. But Britain’s biggest-selling newspaper has just come at the brand from an entirely different angle. Its front-page headline screamed: “There’s a SPY in your Mercedes”. And the ‘Big Brother in your motor’ theme continued inside the paper, where it asked: “Oh Lord, won’t you spy me a Mercedes-Benz” (Geddit?) The alleged problem, according to furious civil-liberty groups and (British) politicians, is that Mercedes (German) has admitted fitting tracking devices to its cars that are, in effect, loaned out to motorists via signed lease-cum-rental agreements. Surprise surprise, such on-board tech enables the exact location of these vehicles (that are not owned by their users/borrowers, remember) to be pinpointed. Problem? What problem? My smartphone is always with me, therefore I know and accept that I’m tracked 24/7. I use plastic rather than cash for 99 % of purchases, so my bank/card company has a detailed diary of where I go and when. Whether I’m driving a car belonging to a maker, dealer, rental firm, relative or anyone else, I assume my precise whereabouts are known; via sat-nav, Bluetooth devices, dash cams, black boxes, plus other in-car or on-person tech. For heaven’s sake, I once spent a week driving a Ford that, among other things, monitored how smooth, fuel-efficient and law-abiding I was as a driver. And, when I gave the car back, I was handed a multi-page, second-by-second print-out of where and how I’d been driving, plus precise times for when the car was moving, idling or parked up. All this told me far more about me, my driving and my journeys than I knew myself. I considered it a fascinating education exercise, not an intrusion by Big Bro, or whatever they call him now. It’s like this: if you don’t own it but you’re in charge of a car, van, bike, boat, truck or motorhome that you’re paying to borrow or are borrowing for free, expect it to be tracked by the company or individual that owns it. Then if it goes accidentally or deliberately missing, the owner will know where to find the damn thing. What could be more fair, reasonable and logical than that? +++

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