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+++ After selling almost all 30 of its €3.5 million special-edition Chiron supercars over dinner, BUGATTI is moving to double its lineup by adding a second model. Unlike the limited-run Chiron (a version of the car that set a 489 kph record earlier this month) the new vehicle may take the shape of a 4-seater, Bugatti President Stephan Winkelmann said in an interview. It could also leave the world’s racetracks for some off-road driving, he said, a departure for a brand honed on producing race cars going at incredible speeds. Bugatti, one of a stable of super-premium Volkswagen Group-owned brands including Porsche, Lamborghini and Bentley, is looking at “sexy” financing for the new model, Winkelmann said. Porsche used a German promissory note called a Schuldschein to partially fund the development and production of the battery- powered Taycan. Demand for supercars remains unbroken, judging by a dinner held at Bugatti’s headquarters in Molsheim, France, over the weekend. Nearly all of the Chiron Super Sport 300+ models slated for production were sold, Winkelmann said. Even so, the focus at the Frankfurt auto show this week will be on electric vehicles like the Taycan and Volkswagen’s coming ID3. A battery version of the Chiron would not work, Winkelmann said: hypercars still need combustion fire power. But he could see a less-expensive daily driver at a lower price, say in the $1 million range, working in a hybrid-electric set-up. “There is still a lot of time for internal combustion engines”, the 54-year-old said. The Chiron Super Sport 300+ has some modifications and is 20 centimeters longer than the version that raced around a recently resurfaced Volkswagen track in Ehra-Lessien, Germany. Winkelmann briefly discussed the idea of uniting Volkswagen’s luxury brands under one umbrella. He declined to be drawn on the prospects of Bugatti holding a public stock offering, saying it’s not his decision to make. “If we put those type of brands together it’s unique in the automotive industry”, Winkelmann said. +++

+++ FORD boss Jim Hackett has been dealt a major blow by Moody’s Investors Service, which cut the automaker’s credit rating to junk over doubt his plans to fix the company will soon generate earnings and cash. Moody’s downgraded Ford to the highest non-investment grade rating, Ba1, saying the automaker’s cash flow and profit margins are below expectations and likely to remain weak over the next two years. The descent to junk status affects one of the 15 biggest corporate bond issuers in the U.S. outside the financial sector. The lower rating reflects “the considerable operating and market challenges facing Ford, and the weak earnings and cash generation likely as the company pursues a lengthy and costly restructuring plan,” Moody’s analyst Bruce Clark said in a statement. Ford’s most actively-traded bonds, Ford Motor Credit’s 5.113 % bonds due 2029, weakened relative to Treasuries. The extra yield, or spread, the notes pay widened 0.13 percentage point to 3.27 percentage points, according to Trace. The automaker’s shares plunged as much as 4.2 % to $9.14 in late trading. Investors have been contemplating whether Ford would be able to maintain its investment-grade status for the past year, as slowing sales have weighed on profits. Hackett has struggled to win over Wall Street with an overhaul that calls for cutting thousands of jobs, reviving an aging line of SUVs and pickups and ditching slow-selling sedans. “Ford remains very confident in our plan and progress”, the automaker said in an emailed statement. “Our underlying business is strong, our balance sheet is solid and we have plenty of liquidity to invest in our compelling strategy for the future”. S&P Global Ratings and Fitch Ratings have a BBB grade on Ford, which is two steps above junk. Both have a negative outlook. “We think there’s a high probability that if they were to downgrade Ford to BBB-, it would come along with a stable outlook,” said Joel Levington, an analyst at Bloomberg Intelligence. “And if that happened, then you would still be an investment-grade issuer for bond index purposes”. In July, Ford issued an annual profit forecast that disappointed investors as the automaker struggles to compete in China’s slumping car market. New versions of Ford’s Explorer and Escape utility vehicles debut this year, and it’s bringing back the Bronco off-roader in 2020. The cost of insuring Ford’s bonds against default jumped in the derivatives market. Guaranteeing Ford debt now costs 1.83 % a year; up 0.15 percentage point from Friday’s levels, according to data compiled by Bloomberg. That’s the biggest one-day jump since May. +++

+++ China’s GREAT WALL MOTOR may consider building a plant in the European Union once again if its sales there hit 50,000 units a year, its Chairman Wei Jianjun said, as part of a push to seek growth in overseas markets. The automaker has already had one attempt to produce vehicles in Europe after it opened a factory in Bulgaria in 2012 to assemble SUVs, pickup trucks and city cars. The plant closed in 2017. Great Wall, the top SUV and pickup manufacturer in China, is now exploring sales and production in overseas markets to expand its global influence and seek higher profit, as growth in the world’s largest auto market slows. The company plans to start selling Wey-branded SUVs to the European Union in 2 years, Wei Jianjun told in an interview on the sidelines of the Frankfurt auto show, referring to its more premium brand. “We plan to produce cars from China and export to the EU in the early stage”, Wei said, adding the company also plans to sell battery electric and plug-in hybrid vehicles to Europe. “We believe once we sell more than 50,000 units in the EU, we will begin to consider building a factory there”, Wei said. Asked if Great Wall might acquire a foreign brand, he said it did not need a new brand to enter new markets. Great Wall, whose mass-market brand is Haval, also exports some pickup truck models to Italy, its website shows. In June, Great Wall started production at a plant in the Tula region of central Russia with a manufacturing capacity of 80,000 cars a year. Great Wall is not the only Chinese automaker to plan car production in Europe. Geely has manufacturing facilities for Volvo cars in Sweden and Belgium and also has plants in Belarus for its own Geely brand. Great Wall previously expressed interest in entering the United States market, but the plan has been postponed due to the trade tension between the world’s largest 2 economies. Great Wall is one of the few car companies to report sales growth this year in China, which is enduring a prolonged auto sales slowdown. The company sold 624,000 units in the first 8 months this year, 5.7 % higher than the figure in the same period last year. Great Wall will “offer more discounts and boost advertisements” to keep market share, Wei said, as a way to secure market share, a key indicator for car companies in major markets. Great Wall’s profit fell by around 60 percent in the first half of this year after it changed its pricing strategy, prompting some analysts to question whether this could continue to harm the company’s profitability. However, others argued that it was important to prevent market share loss. Wei has previously defended the company’s sales strategy, saying Great Wall would not give up market share for profit, and would not go back to its old ways of promoting its cars as being cost-effective. “We hope to take market share from foreign brands, we are vigorously investing in r&d. The technology we’re focused on developing now is technology that will be suitable for use in the 2030s”, Wei told. “We are not cutting down r&d expenditure because the market is not good”. +++

+++ BMW would reduce output at its MINI plant in Oxford, England, by eliminating a work shift should the UK opt for a hard Brexit, according to its chief financial officer. BMW already plans to suspend Mini production on the Oct. 31 deadline when Britain is expected to leave the European Union, as well as on Nov. 1, Chief Financial Officer Nicolas Peter told reporters on the sidelines of the Frankfurt auto show. “We would have to increase prices, and we have to curtail production to react to such a development”, Peter said on BMW’s contingency plans should the U.K. drop out of the EU without an agreement. “The plans are in the drawer”. Suspending production on the date of Britain’s scheduled departure from the EU and the following day would shield BMW from logistics problems, he said. BMW has set aside €300 million to deal with any Brexit-related costs. Peter also confirmed BMW’s 2019 financial targets, but said it was too early to make a forecast for 2020 which would partly depend the developments in the trade dispute between the United States and China. Carmakers have for over a year warned a no-deal Brexit would mean shifting production out of the UK. Toyota said last week it would stop Corolla production at its Burnaston factory in England on the day of departure. +++

+++ TOYOTA Europe has dropped more hints it will launch a new small SUV after releasing details about its flexible new small car platform. The automaker is one of the last companies to enter the booming small SUV segment but is expected to add the car to its Valenciennes, France, plant alongside the replacement Yaris. No timing or confirmation has been given for either cars. The new models will use new TGNA architecture, but optimized for small cars. Toyota said the small-car platform, called GA-B, would allow a “a variety of wheelbase lengths, vehicle heights and track widths” in a statement, meaning the company could produce a higher car alongside the Yaris. The current generation Yaris has been on sale since 2011, but still sells well thanks to the popularity of the hybrid model which joined the range in 2012. In the first 6 months of this year Toyota sold 116,469 of the Yaris in Europe; up 1.3 % on the same period the year before, figures from market analysts JATO Dynamics show. Toyota announced it was bringing the TNGA platform to the Valenciennes plants at the beginning of 2018 at an investment cost of more than €300 million. It said the investment would enable the plant to be able to produce 300,000 cars annually. Toyota added a third shift to the plant in 2014 to bring production to 220,000 cars annually after dropping it to two shifts in 2010. Toyota said the new GA-B platform would improve handling ability thanks to increased rigidity and a lower center of gravity. It can accommodate 2 different types of rear suspension: a cheaper torsion beam or a more sophisticated multi-link set-up, depending on the vehicle type. The platform also allows designers to create visually distinctive models with “appealing proportions”, Toyota said. The positioning of the wheels creates smaller overhangs front and rear, a set-up valued by designers to make the cars look more dynamic. +++

+++ The VOLKSWAGEN Group and other automakers warned that trade tensions risk dragging the global economy into a recession as the fallout starts to hit consumers. The gloom of the U.S. and China’s tit-for-tat tariffs cast a shadow over the Frankfurt auto show this week, where automakers were seeking to whip up interest in critical new electric models. The geopolitical volatility adds another layer of uncertainty to an industry in the midst of a radical overhaul as the end of combustion-engine era looms. “We come now into a situation where this trade war is really influencing the mood of the customers, and it has the chance to really disrupt the world economy”, Volkswagen CEO Herbert Diess said in an interview. “China is basically a healthy market, but because of the trade war, the car market is basically in a recession. So that’s a new situation. That’s scary for us”. Concerns about global trade have reached nearly 10 times the peaks seen in previous decades and could shave about 0.75 percentage points off world economic growth this year, according to data compiled by the International Monetary Fund. The auto industry is particularly exposed because of its global network of assembly plants and parts suppliers. Daimler, for instance, makes many of its Mercedes-Benz’s SUVs in Alabama and exports them to China and other markets. “What will happen in 2020 will very much depend on what happens with the U.S. and China in the coming weeks”, BMW Group CFO Nicolas Peter said in an interview. The automaker makes most of its SUVs in South Carolina. After months of talks, the tensions between the U.S. and China remain high. Ted McKinney, the top trade official in President Donald Trump’s Agriculture Department, called Chinese President Xi Jinping a “communist zealot” in the mold of Mao Zedong. After a summer of bombast and tariff escalation, the 2 sides have agreed to hold face-to-face, working-level staff talks in the coming weeks and a ministerial meeting in Washington in early October. On top of the U.S.-China spat and Trump’s recurring threat to impose levies on European car imports, the industry is bracing for the potential of the UK crashing out of the European Union without a deal in a few weeks. BMW, which owns the British-based Mini and Rolls-Royce car brands, has set up a 300 million-euro ($331 million) fund to deal with a possible hard Brexit and will look to slow and temporarily halt production at its Mini factory in Oxford, England, CFO Peter said. In a Bloomberg TV interview, PSA Group CEO Carlos Tavares called the prospect “not acceptable” on ethical grounds and appealed to European and British leaders to show “good sense” and avoid a no-deal Brexit. For the auto industry, the trade squeeze clouds efforts to show off slick new models like the Porsche Taycan and VW ID3 as German brands ramp up electric offerings to meet increasingly stringent environmental regulations. Demand disruptions threaten to squeeze profits needed to fund the high-risk rollout. “We hope there won’t be any recession in the midterm or long term, because it would be a self-made recession”, Diess said. +++

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