Newsflash II

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+++ New technology designed to thwart vehicle collisions is often ineffective when it comes to AVOIDING PEDESTRIANS , according to a new study. In tests conducted by U.S. motoring organization AAA, cars equipped with automated emergency braking systems struck adult dummy pedestrian targets crossing the road 60 % of the time. Those closed-street tests were done during daylight hours with cars traveling 32 kph. When researchers made the tests more challenging by swapping adult dummies for child dummies, testing at night or driving at higher speeds, the performance of the emergency braking systems deteriorated. “We wanted to understand how the systems work and get a feel for where they work well”, said Greg Brannon, AAA’s director of automotive engineering and industry relations. “We had hoped they would work well across all scenarios. What we found was something quite different”. The findings come at a time when pedestrian deaths have reached their highest levels in almost 3 decades and new collision-avoidance technology is widely seen as a potential solution. According to estimates provided by the Governors Highway Safety Association, 6,227 pedestrians died on U.S. roads in 2018. That would be higher than the 5,977 fatalities recorded in the previous year and the highest number since 6,482 were killed in 1990. Amid the recent increase, pedestrians have accounted for a greater percentage of overall traffic fatalities. Pedestrians made up 12 % of such fatalities in 2008; a decade later, that share increased to 16 %, according to the association. “The alarm bells continue to sound on this issue”, said Jonathan Adkins, the organization’s director. “It’s clear we need to fortify our collective efforts to protect pedestrians and reverse the trend”. AAA’s findings show just how far technology needs to improve to be a more comprehensive part of a solution. When the tested systems detected a child at 32 kph, a collision occurred 89 % of the time. At 48 kph, none of the systems avoided a collision. When the systems encountered an adult immediately after a right-hand turn (a common scenario that leads to real-world injuries and deaths) none of the vehicles avoided a collision or even mitigated their impact speed, AAA said. “Shockingly, there weren’t notifications or speed reductions at night”, Brannon said. “That’s very troubling, considering 75 % of pedestrian deaths happen at night. That’s a definite concern”. 4 vehicles from the 2019 model year were used for testing: a Chevrolet Malibu, Honda Accord, Tesla Model 3 and Toyota Camry. Each vehicle was outfitted with sensors and cameras to capture information about vehicle dynamics, position data and visual notifications from the detection systems. Despite the underwhelming results, Brannon offered a silver lining. Though systems struck adult dummies 60 % of the time in optimal conditions, that means they prevented 4 in 10 collisions. “If it can save one life, it’s worth the investment”, Brannon said. “So we’re absolutely supportive, and we want to see the systems made as effective as possible, minimizing false positives while maximizing the effectiveness. They’re a good backstop to an engaged driver. They have the capability of potentially reducing these deaths, and it’s a great area for automakers to be exploring”. +++ 

+++ BENTLEY , the British ultraluxury brand that turned 100 this year, has a slew of products to commemorate the milestone. They include pens that start at more than $500, sunglasses for $895 and even a set of golf clubs that costs as much as a small sedan. And for a customer base that can afford to spend $500 on a pen instead of a car payment, Bentley has a number of new vehicles after a dry spell for the brand in the key U.S. market. Except for the Mulsanne, every nameplate will have a redesign or at least one significant addition arriving in the U.S. in the next several months. For a brand whose low volume and exclusivity normally keep it out of the spotlight, Bentley is relishing the extra attention created by its centennial and product overhaul. “What we have just done is the total replacement of our traditional lineup, plus with an SUV on top”, Christophe Georges, CEO of Bentley Motors, the brand’s Americas unit, told. The third-generation Continental GT coupe and convertible with V8s are arriving at dealerships, to be followed soon by the more powerful W12 variants. Europe will have to wait until the first quarter of 2020 for these models. Bentley’s Bentayga, a pioneer in the bustling ultraluxury and exotic SUV segment, will have 2 new variants on sale soon. The Bentayga plug-in hybrid, which is already on sale in Europe, is the brand’s first foray into electrification and will arrive in the U.S. early next year. On the other end of the SUV’s lineup is the high-performance Bentayga Speed, which will be arriving by year end in the U.S. and Europe. Rounding out the product rush is a redesigned Flying Spur sedan, which arrives in early 2020 in U.S. and European markets. Bentley has positioned the redesigned version above the outgoing Flying Spur to further differentiate the nameplate from the AMG and Maybach versions of the Mercedes-Benz S class. The big change to its lineup should bode well for the brand and bring attention to Bentley overall. “They’re really well positioned because as an ultraluxury brand, it’s not common for them to have as wide a spectrum of models that they offer, as well as so many new ones in such a short time frame”, an analyst said. “It’s definitely going to be a very high-profile, high-visibility next 12-plus months for the brand”. The influx of redesigned products is evident. “The introduction of Continental GT and convertible is creating, from this month, a surge in our business”, Georges said. Georges, named to his post last year after being Bentley’s global director of product and marketing, is in his second stint running the Americas region, having held the same title from 2007-15. For Bentley, the surge has been a long time coming. The redesigned Continental GT was unveiled in August 2017 ahead of its auto show debut a month later in Frankfurt. But new European emissions regulations created certification delays for the brand, so instead of launching the redesigned nameplate with a W12, Bentley is launching the Continental GT coupe and convertible with a V8 in the U.S. That delay meant Bentley’s 51 American dealerships were without the latest and best of one of the brand’s most pivotal products.The impact was significant over the last 12 months. Instead of the U.S. being Bentley’s No. 1 market, Europe became its sales leader. “But now that the Continental GT coupe and convertible are coming into the marketplace, America will be back to this No. 1 position for Bentley”, Georges said. The Continental GT, introduced in 2003, has been a sales success for the brand. With the latest redesign, now on a new platform, Bentley focused on performance and technology. “Dealers were waiting for Continental products to land in the market because they had customers waiting for those cars”, Georges said. “They’ve been quite impatient to get the car, but I really understand. We were impatient, too. But from the start of the year, we had good clarity of when this introduction would happen and therefore, we’ve been able to join forces and work together in order to confirm the introduction timing plan to customers and to book allocations for them”. Georges said Bentley and its retailers spent the first half of this year preparing for the Continental GT’s arrival. Apollo Chang, general manager at Bentley of Austin in Texas, credits the automaker with keeping dealers and customers interested in the nameplate through display and test-drive events for the Continental GT lineup. “It was not easy because customers wanted it and it was overdue, but at the same time I would say Bentley has done everything they could to try to maintain that relationship with customers and dealers”, Chang said. He said his store expects to sell 4 to 5 Continental GTs a month, now that the models are arriving. “That would be pretty significant considering the average gross profit for these cars”, Chang said, noting that around half of the Continental GTs headed to his store are custom orders. “It’s kind of like Porsche and the 911. Even though the 911 isn’t the bestselling car, it’s still the most identifiable vehicle for that brand, and I think the same is true of Continental GT within Bentley. Its level of success of the last 15 years is unquestioned. They’ve done important upgrades to its mechanicals and its structure, but they have not lost the original look and feel proportions that it succeeded with”, the analyst said. Bentley also found a way for its products, including the Continental GTs, to get in on the centennial celebration. Each Bentley manufactured in 2019 receives “centenary specification” design touches marking the brand’s 100th year, including a gold metallic finish around the ‘B’ in the badge on the hood, rear and wheels. The years 1919 and 2019 are on the door tread plates as well as on the hood and rear badges. The ‘B’ logos on the steering wheel, gear shifter and the vehicle’s key also get the metallic gold detail. While much of the product spotlight is on the Continental GTs, interest in the Bentayga has remained strong, especially after the addition of a V8-powered version late last year and despite new SUV offerings from Lamborghini and Rolls-Royce. “Following the introduction of other luxury brand SUVs, so far, our Bentayga sales in America have increased this year by 35 %”, said Georges, noting that the U.S. is the largest market for the Bentayga. During the pause in Bentley’s product rollout, the Bentayga picked up the slack. “The Bentayga has done a great job carrying us through”, Chang said, “because we sell about 3 to 4 Bentaygas a month”. The plug-in Bentayga Hybrid will be the brand’s lowest-priced model. It also has expanded the reach of the brand’s portfolio overall. Said Georges: “Now we have a product lineup with a very high level of technology but still being totally consistent with what makes a Bentley a Bentley, which is a perfect combination between sports and luxury attributes, which is simply unique as a proposition in the marketplace”. +++ 

+++ When French automakers jumped into CHINA , they thought Chinese consumers’ appetite for French design and luxury goods would translate into booming car sales. That hasn’t been the case. After several years of growth in China, sales at PSA Group and Renault have dropped sharply. True, the slumping Chinese economy has affected sales at almost every automaker, but Renault and PSA were down 62 % overall in the first half compared with the same period last year and hold just a 0.7 % market share. At PSA, group sales have slid from a high of more than 730,000 in 2014 to less than 250,000 last year, and 2019 looks to be even worse, with only 64,000 vehicles sold in the first half. The decline at PSA has been so dizzying that the automaker is reportedly preparing to sell 2 of its JV plants and lay off thousands of workers. The factory it has with Dongfeng Motor is operating at 22 % of capacity and its factory with Changan Automobile is nearly idled. Renault has done somewhat better, although that comes with a major qualification. Under former CEO Carlos Ghosn, the automaker had set a target of selling 550,000 vehicles in China by 2022 and sales last year rose 200 % to 216,699. However, all of that growth came as a result of consolidating sales from a joint venture with Brilliance China Automotive, a domestic producer of SUVs and MPVs. Even so, group sales are down 24 % in the first half of this year and sales at the Renault-Dongfeng joint venture plunged by 73 % through August. But while French automakers are struggling, French luxury companies are thriving despite an overall slowdown in the Chinese economy. LVMH, which owns dozens of upscale labels including Louis Vuitton, TAG Heuer watches and Dom Perignon champagne, said it was seeing “unheard of” growth in China. A strong performance in China (and overseas buying by Chinese tourists) have helped LVMH’s main rival, Kering, the parent company of Gucci, Ulysse Nardin watches and Balenciaga, to double-digit growth. Overall, exports of French fashion products to China grew by 21 % in 2018, a French trade group said. The French may be fighting against Chinese consumer behavior, said Isabelle Chaboud, a luxury brands expert at French business school Grenoble Ecole de Management. Chinese buyers “don’t consider French cars as luxury brands”, she said. Chaboud pointed to the annual Interbrand top 100 list, which ranks brands according to their value. Toyota ranks 7th, Mercedes-Benz 8th and BMW 13th on the list, with Honda, Ford, Hyundai, Nissan, Volkswagen and Audi all holding positions in the top 50. There isn’t a single French car brand in the top 100. Yet French fashion brands dominate: Louis Vuitton is 18th, Chanel is 23rd and Hermes 32nd. “I don’t think it’s a problem of quality”, Chaboud said. “It’s more a problem of image or how they communicate”. The larger question, especially for PSA, is whether to leave China, where its JV with Dongfeng lost more than $363 million in the first half after losing more than $550 million in 2018. Tavares may not quite be ready to quit, insisting at this year’s Frankfurt auto show that his company is putting a “common sense” and “rigorous” action plan in place, similar to the one PSA instituted in Europe in 2012-13 as it was emerging from near bankruptcy. Nonetheless, a source close to PSA told in August: “We’re just a whisker away from having to withdraw from China. It really is that serious”. Tavares seems to recognize his company’s image problem in China. Noting that China was “different from Europe”, he said in Frankfurt, “It takes more passion to communicate the values, the history of these brands and all that we have done over the last century”. +++ 

+++ DENMARK , backed by 10 other European Union countries, called for an EU-wide ban on diesel and petrol cars by 2040 to combat climate change. Denmark made the proposal came during a meeting of EU environment ministers in Luxembourg. The EU aims to cut carbon emissions in the bloc by 40 % by 2030 while its executive, the Commission, plans to reduce them to zero by 2050 to help stop global warming. “We need to acknowledge that we are in a bit of a hurry”, Danish Climate and Energy minister Dan Jorgensen told. He said the diesel and petrol car ban will hopefully put pressure on the Commission to propose a phasing out of fossil fuel-powered vehicles in the bloc in the coming 2 decades. Denmark made headlines in October 2018 when its government announced that it would ban the sale of all fossil fuel-powered cars by 2030 but it subsequently scrapped the idea because this would have breached EU rules. Jorgensen said if the EU could not agree on a union-wide ban, it would be good if individual countries were allowed to implement such a measure. “Plan A would be to make it a European ban”, he said. Lithuania, Latvia, Slovenia, Bulgaria and several other countries however suggested that more must be done to stop the “carbon leakage” of selling second-hand autos from western Europe to the eastern region. Jorgensen said it was important to communicate the bloc’s long-term policy directions to carmakers and that Denmark’s next step was to set up an alliance with the 10 member states that support its proposal. “Then I think others will follow”, he said. +++ 

+++ Volvo will merge its engine development and manufacturing assets with those of parent GEELY , creating a division to supply in-house brands Lotus, Lynk & CO and Proton, and also potential rivals with next-generation combustion and hybrid engines. It marks the latest example of consolidation in the engine manufacturing sector as tighter emissions rules hike development costs at a time when the expansion of electric cars calls into question the long-term demand for gas guzzlers. Rival Volkswagen, which is in the midst of ramping up mass production of electric cars, has already warned its in-house suppliers to create structures to consolidate combustion engine assets. Volvo currently builds 600,000 combustion engines, a number that rises to about 2 million when combined with Geely’s assets, allowing for savings on components and development costs, Volvo chief executive Håkan Samuelsson told. That will allow the Gothenburg, Sweden-based brand to more sharply focus its resources on building and developing a range of entirely electrified premium cars. “As a general business, combustion engines is most probably not growing. It is important to consolidate and seek synergies. It is another step transforming our company in the direction of electrification”, Samuelsson said. In the medium term, Volvo will drop diesel engines altogether in favor of focusing on hybrid and electric powertrains, requiring further investments in fuel injection, turbo charging and brake recovery technologies. Combining its operations with those of Chinese partner Geely will help achieve cost savings, Samuelsson said. “On a component level, I see considerable cost savings. Most important is the development side. The engineers will get the resources to take the next step to develop top-notch hybrid engines”, Samuelsson said. Geely in August reported a 40 % drop in net profit, citing a sharp slowdown in demand for cars, while Volvo has rejigged its global production plans in an effort to reduce the impact of tariffs. Geely bought Volvo in 2010 from Ford, allowing the Swedish brand to operate on an arms-length basis. But in recent years, it has deepened cooperation between the 2 brands. Volvo already supplies engines to some Geely-branded vehicles, sharing technology through Geely’s Lynk brand. Both companies share and develop common vehicle platforms. Global tariffs, accelerated by a trade war between China and the United States, as well as higher investment requirements for electric and autonomous vehicles, are forcing carmakers to seek new ways to cut and share costs. Volvo in 2018 postponed plans to seek a separate stock market listing for the Swedish carmaker, blaming trade tensions. The tightening of emissions requirements in both Europe and China is strengthening the industrial logic for combining Volvo’s and Geely’s operations, the Swedish executive said. “The emissions requirements are getting tougher everywhere. China is catching up very rapidly. The days when China had outdated technology are gone”, Samuelsson said. The new combustion engines business will combine 3,000 employees from Volvo Cars with 5,000 employees from Geely’s combustion engine operations, and include research, development, procurement, manufacturing, IT and finance functions, Volvo said. The creation of the stand-alone business will result in no job losses, Volvo said. The new stand-alone supplier could also equip outside rivals struggling to keep up with more stringent regulation. “It can be an interesting alternative to third-party customers”, Samuelsson said. +++ 

+++ GENERAL MOTORS ‘ U.S. workforce productivity has declined since the automaker recovered from a 2009 bankruptcy, even as its profit per employee has risen. Those trends point to some of the root causes of the United Auto Workers (UAW) strike that has shut down the automaker’s U.S. manufacturing plants for 18 days, already costing the company about $100 million a day. The No. 1 U.S. automaker wants to boost productivity to offset financial pressure from a slowing global economy and investments in electric vehicles. The UAW is focused on increasing the share of profit going to workers, and closing wage gaps between full-time and temporary employees in GM factories. GM’s unionized workers in the United States build some of the company’s most profitable pickups and SUVs. GM does not publish direct measures of U.S. productivity. But the number of vehicles the Detroit automaker built in the United States per U.S. employee fell to about 19 in 2018, down 13.5 % from the 2010 level. The calculation is based on GM annual production numbers sourced from research firm Wards Intelligence and the U.S. employee count in GM’s annual filings. A GM spokesman declined to comment on the analysis, saying that the automaker was “focused on negotiating a new labor agreement that builds a stronger future for the company and our workers”. The UAW said it believes GM’s productivity is better since 2010 and the data would be more accurate based on total hours worked rather than employment. Between 2010 and 2018 GM’s estimated U.S. profit per employee surged 40 % to about $94,097 last year, based on analysts’ assumptions that U.S. operations generate about 90 % of the automaker’s North American operating profit disclosed in GM filings. However, productivity and operating profit per worker have both slipped at GM between 2017 and 2018. A broader measure of productivity in the U.S. auto sector shows declining productivity starting in 2013, according to data published by the Center for Automotive Research. One possible reason for the broad productivity declines at manufacturers including GM is the increasing complexity of vehicles and the federally mandated items, which result in more work elements, industry experts say. Increasing production of large pickups and SUVs is another factor causing potential productivity declines. “The mix change to SUVs and pickups requires more work”, said Ron Harbour, senior vice president for global automotive manufacturing at consulting firm Oliver Wyman. “Pickups for example are the most complex vehicles to build these days”. GM’s U.S. vehicle production increased 15.5 % to about 1.99 million vehicles in 2018, compared with the 2010 level. GM’s U.S. hourly employment remained largely stable or fell slightly during that period, while the number of U.S. salaried jobs rose and eventually exceeded hourly workers. The company’s salaried hiring was part of a recovery from bankruptcy, as it added a finance arm and information technology staff. GM’s salaried employees (engineers, accountants, HR managers, marketers and other staff) nearly doubled to 53,000 in 2018 from 2010, lifting overall U.S. worker numbers by 34 % to 103,000 last year. Last November, GM chief executive Mary Barra ordered 15,000 jobs cut from GM’s North American workforce to boost profitability at a time when the company is spending billions to develop next-generation technologies. GM also said at the time that 5 North American factories had no future product assignments and could be shut down, including car assembly plants in Lordstown, Ohio; Detroit-Hamtramck, and Oshawa, Ontario. “These are things we are doing to strengthen our core business”, Barra said in November. “We are right-sizing capacity for the realities of the marketplace”. GM argues the plant shutdowns are necessary responses to market shifts, and that UAW wages and benefits are $13 an hour higher than competing nonunion auto plants in southern U.S. states. UAW said hourly labor costs equate to just 5 % to 6 % of the price of a vehicle. The productivity figures were made by looking at GM’s annual U.S. vehicle production as reported by Wards Intelligence and adjusted earnings before interest and taxes from the automaker’s annual reports, and dividing those by GM’s total U.S. salaried and hourly employees combined. However, when GM’s U.S. salaried employees, which include workers not directly involved in the manufacturing process, are left out of the equation, the company’s productivity per employee rose between 2010 and 2016, while slightly dipping year-over-year in 2017 and 2018. +++ 

+++ Carlos GHOSN , still barred from leaving Japan as he awaits trial on financial misconduct charges, spends his days convening not only with lawyers but also his personal trainer. It is no coincidence the indicted former Nissan chairman is working out, walking and bicycling to regain weight he lost during his 129 days of lockup in Tokyo. To hear his wife, Carole Ghosn, tell it, the fallen auto legend is gearing up for the battle of his life, not unlike a boxer in training for a big fight. “He’s healthy in body and mind. He’s getting weight again, and he’s combative”, Carole said in a phone interview last week. “He’s ready to defend himself and prove his innocence”. One thing 65-year-old Carlos will not be doing is pleading his case in public anytime soon. Carole says plans for a long-anticipated news conference are on indefinite pause because his advisers fear reprisals from prosecutors. Carlos, she notes, was arrested and jailed in April just a day after he, then free on bail, took to Twitter to say he would hold a presser. “He’s not going to speak out. He’s scared”, Carole said. “No more press conference. After what happened to him last time, it was a very clear signal that ‘You keep your mouth shut’ ”. Carlos remains on a short leash of stringent bail conditions that restrict everything from his Internet access to his contact with his wife; the couple is barred from direct communication. Running afoul of prosecutors, she said, invites even closer scrutiny. “He’s not going to shoot himself in the foot”, said Carole, adding that she only hears how Carlos is doing through third parties such as lawyers. “He’s not going to do anything when he’s under their control and speak out against them when they can very easily find any excuse to put him in detention”, she said. Carole said she hasn’t seen her husband since April 4 and that 5 applications to visit him were rejected. The Tokyo prosecutor has opposed a meeting, citing a risk of evidence tampering. Carole counters that barring contact is a warrantless pressure tactic for strong-arming a confession. Prosecutors have said they arrested Carlos Ghosn in April (the 4th time) on legitimate suspicion of a separate crime, breach of trust. Shin Kukimoto, deputy chief prosecutor at the Tokyo District Public Prosecutors Office, said in July that Ghosn was not prohibited from holding a press conference. But he added that if there were any evidence justifying a rearrest, that could happen at any time. Carole Ghosn said her husband was innocent of all charges and contended that he was a victim of a corporate coup that culminated in his stunning Nov. 19 arrest on the tarmac of Tokyo’s Haneda airport. She also claimed Japanese authorities were unfairly singling out Ghosn for prosecution because he wasn’t Japanese. Carole contended that Japan’s Ministry of Economy, Trade and Industry conspired with forces inside Nissan to block what they feared would be a full merger with French partner Renault. “They wanted to go back to Japan Inc. They were scared of this merger”, she said. “And they were trying to dig up something on Carlos, get rid of him and stop the merger”. Nissan said it was not in a position to comment on judicial processes or decisions. But the company has said the “sole cause of this chain of events” was financial misconduct by Ghosn. “Nissan’s internal investigation uncovered substantial evidence of blatantly unethical conduct. This resulted in a unanimous board vote to discharge Ghosn”, Nissan said in a statement. Ghosn faces 4 indictments in Japan. The first 2 are charges of failing to disclose tens of millions of dollars in deferred compensation. The 2 other counts are breach of trust charges that accuse Ghosn of diverting company money for personal gain. Ghosn, who denies the entire slate of charges, faces up 15 years in prison and a fine of up to 150 million yen ($1.4 million) if convicted on all 4 counts. As Ghosn gears up to finally tell his side of the story in court, expect a drawn-out affair. Japan’s Kyodo News agency reported last month that the Tokyo court plans to hold the first hearing for Ghosn, on the compensation disclosure charges, only on April 21. When the court finally convenes, Carole Ghosn doubts whether her husband can get a fair trial. Clearing him on all charges would be an embarrassing indictment of Japan’s justice system, she suggested. “They’re going to say, ‘We did all this, and now he’s innocent?’ What’s going to happen to their government or their judicial system?” she said. “Is it going to collapse? Is it going to change? Of course, to save face, they’re going to have to find him guilty on something. The system is rigged”. +++ 

+++ Sales of the first 2 models launched last month in China under Volkswagen’s JETTA subbrand beat expectations, according to a Chinese car website. The VS5 compact crossover and the VS3 compact sedan combined for 11,080 deliveries by the end of September, after going on sale on the 5th and 16th of the month, respectively, Beijing-based Auto Market Online reported, citing information released by Jetta. The number was 30 % higher than expected by Jetta’s management team. The majority of the volume was generated by the VS5, which has a starting price of 81,800 yuan ($11,489). The VS3, a 3-box sedan, is priced at 65,800 yuan ($9,203) and above. In February 2019, Jetta, previously sold only as a volume model under the VW brand, was unveiled as an entry-level subbrand for China. VW expects Jetta to gain market share in China’s entry-level segment, which has been dominated by domestic Chinese brands. The third product to arrive will be the VS7: a crossover that is slightly bigger than VS5. The 3 Jetta models were revealed in the southwest China city of Chengdu last year. They were designed at VW’s headquarters in Wolfsburg and built at the Chengdu plant of VW’s joint venture with China FAW Group. +++ 

+++ Hari Nada, a central figure at NISSAN who was instrumental in the downfall of former Chairman Carlos Ghosn and a key go-between in the automaker’s talks with partner Renault, is under pressure to leave the company following a pay scandal, people with knowledge of the matter said. The push to oust Nada, 55, which has the support of Renault, may lead to him being forced to resign and could come as soon as the next board meeting, the people said, asking not to be identified because the information is not public. Nada is cooperating with Japanese prosecutors under a plea-bargaining agreement in their case against Ghosn for financial crimes, the people told. Nada is under pressure to quit as powerful internal factions wrestle for control of the automaker. Nissan’s struggle to fill the leadership vacuum left by Ghosn’s arrest has led to a boardroom civil war. There have been increasing questions from executives at Nissan and Renault into why Nada was allowed to remain involved in the probe on Ghosn in recent months. Pressure for his removal is widespread. A lawyer who studied in the UK and Japan, Nada is a senior vice president at Nissan and worked in the CEO’s office under Ghosn and his successor, Hiroto Saikawa. Nada was recently implicated in a scandal at the company involving excess stock-linked compensation, which led to Saikawa’s resignation last month. Nada is expected to be a key witness in Ghosn’s trial next year. Malaysian-born Nada has been at Nissan since the 1990s and had worked closely with Greg Kelly, the other Nissan executive arrested along with Ghosn in November. Ghosn and Kelly have denied all charges. Nada is said to have been closely involved with many aspects of the chairman’s compensation, serving as one of three administrators of Zi-A Capital BV, a Dutch subsidiary of Nissan created by Kelly that purchased a house for Ghosn in Beirut. Nada was also aware of documents proposing that payments totaling as much as $80 million be made to Ghosn after his eventual retirement, people with knowledge of the matter have said. Prior to Ghosn’s arrest, Nada and an administrator named Toshiaki Onuma were said to have become concerned that some of what they saw might be criminal, and eventually approached Japanese authorities. Facing the risk of becoming subjects of interest in the inquiry, they secured cooperation agreements under new judicial rules allowing plea bargains, in exchange for providing evidence against Ghosn. “He will continuously be a Nissan member and he has no reason to leave”, Nissan spokeswoman Azusa Momose said of Nada, and declined to make him available for comment. Nissan’s board is scheduled to meet this month, where they will discuss candidates for CEO. The directors have set a deadline for end-October to announce a new leader, and are considering a short list of three candidates, people with knowledge of the matter said. +++ 

+++ Automakers in Europe fear a lukewarm consumer response to the fleet of electric vehicles they are preparing to launch to comply with tougher emissions regulations, but they do have one lifeline: the PLUG-IN hybrid electric vehicle. The PHEV is in some respects an almost magical vehicle. Adding a battery and electric motor to a conventionally powered vehicle preserves most of the usability that consumers know while also allowing the automaker to reduce CO2 output by between 50 % and 80 %. Because of the way emissions are calculated, PHEVs are easily capable of recording a CO2 figure of below 50 grams per kilometer. That means their sales will not only help reduce automakers’ average CO2 when the 95 g/km average kicks in next year, they also count as so-called “supercredit” sales until 2023, letting automakers offset purchases of their higher-emissions cars. On top of all that, the PHEV also qualifies for various tax incentives and purchase grants within numerous EU countries. In addition, they qualify for entry into many cities’ ultra-low emissions zones, where conventional vehicles will be banned from entering. But there are also huge pitfalls for automakers relying on PHEVs. Most worrying is the potential backlash among environmental groups, city mayors and ruling governments if they decide that PHEVs are nowhere near as green as the stated CO2 figure claims. “The climate credentials of plug-in hybrids are directly proportional to how much they drive on their electric motor”, said Julia Poliscanova, director of clean vehicles and e-mobility for European pressure group Transport & Environment. “If, as the evidence seems to show, most people don’t charge them, then they are worse than previous-generation cars”. As far as customers reading the label know, these cars are second only to full-electric vehicles in terms of CO2 output. The EU-mandated WLTP emissions tests, which replaced the outdated NEDC cycle, states that is the case. For example, the range of new PHEVs launched by PSA Group, including the midsize Peugeot 508 and Opel Grandland X, record figures as low as 29 g/km, and that is on the WLTP cycle before it has been translated back to NEDC values, a process known as NEDC correlation. By comparison a Peugeot 108, weighing half as much as a plug-in hybrid SUV, emits 93 g/km. Do not blame us for the figure, said PSA CEO Carlos Tavares at Frankfurt auto show last month. “We were not the ones that created that cycle. It was created as a consequence of the previous one, which we considered simplistic”, he said. The PHEV has often been described as a gateway technology to get consumers comfortable with the idea of plugging in their car before taking the more radical step of going full electric. The EU’s seeming generosity in classifying PHEVs as ultra-low emissions vehicles via the test cycle was a calculated decision to boost availability of electrified vehicles, believes Jeff Schuster, global forecasting director for analyst firm LMC Automotive. “I suspect it’s the EU giving the automakers a get-out clause. I don’t think anyone wants to go down the scandal road again”, he said, eluding to Volkswagen Group’s cheating on emissions tests. Even before VW Group admitted to using software that made its engines operate more efficiently during testing than on the road, it was known that automakers were exploiting loopholes in the old NEDC cycle to avoid fitting expensive exhaust cleaning technology to their vehicles. LMC predicts that PHEV sales will more than double in Europe next year to 590,000, up from a full-year estimate of 220,000 in 2019. That would give them a market share of 3.1 % and briefly help them overtake full-electric vehicles. LMC believes that by 2025 PHEV sales will top 1 million and take a 5.2 % share. The problem that automakers now have to deal with is that PHEVs are unavoidably costly, restricting their rollout. “The plug-in hybrid is a very expensive technology so it makes sense on heavier, bigger, higher-CO2 vehicles where it does more for CO2 reduction and the premium is not as big as small cars”, Roelant de Waard, general manager for passenger vehicles at Ford of Europe, said at the launch of the new Kuga, which will offer a PHEV variant. Fitting a battery, electric motor and the power electronics to an existing combustion-engine car adds about €5,00, according to research from German engineering specialists FEV. The expense is such that a plug-in hybrid drivetrain with a battery big enough to reduce CO2 below 50 g/km (the threshold automakers need to qualify for both EU supercredits and many local tax incentives) actually costs more than a drivetrain for a small electric car with a 32 kWh battery, FEV said. Getting the consumer to shoulder the extra cost will be almost impossible, Bernstein analyst Max Warburton believes. Instead, he expects that automakers will have to absorb about 60 % of the cost of the PHEV technology themselves to be able to sell the cars at the volume required to achieve the EU’s 2020-21 CO2 targets. “It’s going to require the industry to force quite a lot of cars into the market. It’s going to require them to do very favorable fleet deals. It might require them to sell these cars to their own employees”, Warburton wrote in an August report. Automakers will have help from local incentives, ranging from purchase grants, company-car tax breaks and permission to drive in restricted low-emission zones. In those countries where incentives are generous, the cars will almost sell themselves. “It’s not so much that we have to persuade buyers; in some countries the tax system will persuade them for us”, Ford’s de Waard said. He cited Germany, where the tax on PHEV company cars is half that of conventional cars, and France, which has a steep curve in CO2-based taxation that heavily penalizes large non-hybrid cars. De Waard predicts “a lot of demand” for Ford’s PHEVs from those 2 countries. The danger is that incentives can be removed as quickly as they are applied. “Sales of PHEVs have been very volatile so far and they really depend on the governments’ support”, Kia Europe chief operating officer Emilio Herrera told. He cited 2 cases where local PHEV sales have collapsed. The first was the Netherlands, which was Europe’s leading market for PHEVs in 2015. Sales, however, fell fast after the government sharply cut generous company-car tax breaks. By 2017, sales had plummeted 96 % compared with 2 years earlier. The second case is the UK, which had risen to become Europe’s biggest market for PHEVs in 2018. But late last year the government removed a €2,800 purchase grant and as a consequence sales in the first 8 months of this year fell 37 %, compared with a rise of 93 % for full-electric vehicles. The fall was also partly caused by automakers such as VW, BMW and Porsche removing many of their PHEVs from the market in the run up to the launch of WLTP standards. There’s a risk of backlash against PHEVs if legislators discover that a large portion of government incentives are going to wealthy car buyers choosing premium SUVs fitted with the technology to gain access to low-emission zones or tax breaks, particularly if they’re suspicious they are not being re-charged. The Netherlands has already put a cap of €50,000 on the list price for a full-electric vehicle to qualify for tax breaks. This led to a run on sales last year so frenzied that it helped make the Jaguar I-Pace the country’s overall best-seller in December. The PHEV has really taken off among users of premium cars. For example, 52 % of Porsche Panamera’s European sales were plug-in hybrids in the first 5 months of the year. This happened despite a huge decline in sales for the car while Porsche worked to make it WLTP compliant. Meanwhile BMW, Mercedes-Benz, Volvo, Land Rover and Audi now all have plug-in hybrid versions of their large SUVs and are steadily moving down the range with the technology. Mercedes showed a plug-in hybrid version of its smallest car, the A-class, at the Frankfurt show. All models are vulnerable to losing incentives if legislators do not believe they are being plugged in. The Dutch government abruptly removed PHEV incentives after an analysis of fuel-card data showed drivers were not re-charging them and just using them as normal hybrids. The UK government’s decision was partly made due to the Dutch data, according to one automaker source. “People often get plug-in hybrids as a company car for which they get fuel paid on a fuel card, but they don’t get electricity paid so there’s no incentive to charge”, T&E’s Poliscanova said. If the cars aren’t charged then the combination of a downsized gasoline engine propelling a vehicle made heavier by the addition of a battery and other components can mean emissions are much higher than a conventional diesel. “We call them fake electric cars”, Poliscanova added. Plug-in hybrids could lose their reputation for being merely “compliance cars” with the increase in battery range. The tightening of the rules in the switch to WLTP, a requirement for all new cars since September 2018, meant that automakers had to increase the electric-only range equipping their PHEVs with bigger batteries or lose the benefits that achieving 50 g/km or less bring. So, for example, the new plug-in hybrid version of the BMW X5 has a 24 kWh battery pack compared with a 9.2 kWh system for the previous model. BMW says the electric-only range increases to 87 km under WLTP. Meanwhile, the VW Passat GTE’s new 31 kWh battery is 30 % bigger than the one in the previous model, increasing the car’s electric range to 70 km from 50 km in the NEDC cycle. In addition, the Mitsubishi Outlander PHEV, one of the few models that was ready for the WLTP change, switched to a 13.8 kWh battery from a 12 kWh one. The extra range means that cars could theoretically not need their gasoline (or diesel) engine on shorter commutes and might come close to achieving the impressive CO2 emissions figures promised by the WLTP cycle. German supplier ZF Friedrichshafen believes the plug-in hybrid could go even farther in electric mode. It showed a BMW 3-series prototype at the Frankfurt show with a 35 kWh battery capable of giving the car an electric-only range of 100 km. The EVplus “marks a paradigm change with plug-in hybrids”, Stephan von Schuckmann, ZF’s head of powertrain technology for cars, said in a statement. “Often, the drivers of current PHEVs do not even charge the battery. The reason for this is that the purely electric range is not sufficient for day-to-day life”, Schuckmann added. As well as the extra range, the prototype featured a 127 hp electric motor, which was powerful enough for drivers not to feel shortchanged, ZF said. The upgrade addresses one complaint about current PHEVs: The e-motor is often too small to deliver the power drivers expect, particularly from larger premium models. To get the performance they are used to, PHEVs driver will often accelerate to the point that the combustion engine kicks in, raising CO2. Eventually PHEVs will not be needed. Batteries will get better and cheaper, meaning full-electric cars will become just as viable as their combustion-powered counterparts. LMC believes that next year will be the last in which PHEVs beat or even come close to outselling EVs in Europe. It predicts that full-electric cars will surpass 1 million sales annually in the region 3 years before PHEVs. Despite plug-in hybrids seemingly offering the best of both worlds, consumers will not necessarily buy them at full price. “Incentives are required for plug-in hybrids, and you will see the manufacturers essentially force through product introductions”, LMC’s Schuster said. “It’s a gamble but it’s one that the industry has no choice but to make”. +++ 

+++ German automotive supplier Robert Bosch is launching production of silicon carbide automotive chips, in a move to address the RANGE ANXIETY that deters many drivers from switching to electric vehicles. Silicon carbide is more conductive than more widely-used silicon, making it possible for the chips that manage the motors in battery-powered vehicles to have higher switching frequencies and to throw off less heat. “Silicon carbide semiconductors bring more power to electric vehicles. For motorists, this means a 6 % increase in range”, Bosch board member Harald Kröger said. Bosch will make the silicon carbide chips at its existing plant in Reutlingen, near its Stuttgart headquarters, executives said at an event to update on progress in building a new €1 billion chip fabrication plant in Dresden. The Dresden ‘fab’, Bosch’s largest single investment, seeks to build on its leadership in sensor chips used to ensure that smartphone screens show images the right way up, and to activate airbag- or automated braking systems in cars. Bosch also wants to strengthen its position in so-called Application-Specific Integrated Circuits (ASICs) that decide how to act on sensor inputs; and in power electronics that manage everything from a car’s electric windows to its drivetrain. The first production run at the facility in the center of Germany’s high-tech hub known as ‘Silicon Saxony’ is planned for late 2021. The ‘fab’ will employ 700 staff. It will use silicon wafers with a diameter of 300 mm that make it possible to cram more chips onto a single wafer than existing production methods using diameters of 150-200 mm. Privately held Bosch, the leading automotive ‘Tier 1’ supplier, is positioning itself as a supplier of the full range of semiconductor products for the electric, connected and self-driving cars of the future. The average car contains chips worth $370, according to industry estimates, but that figure rises by $450 for emission-free electric vehicles. Another $1,000 will be packed into the future self-driving cars, making semiconductors a growth opportunity in a car industry struggling with stagnant sales. Throw in $100 for infotainment features, and the typical car will pack more than $1,900 in semiconductors as technology advances and as features now seen only in luxury vehicles spread to mass-market models, Bosch reckons. Bosch ranked as the 6th largest supplier on the $38 billion automotive semiconductor market last year with a share of 5.4 %, according to Strategy Analytics. The market leader was NXP on 12 %, followed by German competitor Infineon on 11.2 %. Infineon already runs a 300 mm fab in Dresden and is building a second here in Villach, Austria. +++ 

+++ Australia’s consumer watchdog urged the owners of 20,000 vehicles with defective TAKATA AIRBAG classified as particularly unsafe to stop driving immediately. In an urgent safety alert, the Australian Competition and Consumer Commission (ACCC) said a total of 425,971 vehicles are still to be fixed under a compulsory recall. Car makers like BMW, Honda, Mitsubishi and Toyota have classified 20,000 of these vehicles as “critical” and they should not be driven, the regulator said. At least 23 deaths worldwide have been linked to the rupturing of faulty Takata airbag inflators and millions of vehicles worldwide have been recalled. Honda Australia said it has replaced 90.9 % of Takata airbags in its cars, adding that remaining affected customers should act on the recall notice urgently. Toyota’s RAV4 produced between 2003 and 2005 has been classified as critical, Toyota Australia said in an emailed statement, urging customers with airbags still be replaced not to drive. +++ 

+++ U.S. regulators are looking into parking lot crashes involving TESLA cars driving themselves to their owners using the company’s Smart Summon feature, the National Highway Traffic Safety Administration (NHTSA) said. Several users have posted videos on social media of Tesla vehicles that appear to have been in near accidents. One posted a video of a Tesla striking a garage wall and another of a Tesla being struck by a vehicle backing up. A Tesla software update last week added its Smart Summon feature for some customers. When the car is within 200 feet and in their line of sight, they use a phone app to summon the vehicle in a parking lot. On its website, Tesla’s description of Summon reads: “Your parked car will come find you anywhere in a parking lot. Really”. Asked about reports of crashes, NHTSA said it “is aware of reports related to Tesla’s Summon feature. We are in ongoing contact with the company and we continue to gather information. Safety is NHTSA’s top priority and the agency will not hesitate to act if it finds evidence of a safety-related defect”. Tesla chief executive Elon Musk tweeted that there were more than 550,000 Smart Summon uses in the first few days. Tesla says users of Smart Summon should have a clear line of sight and check the surroundings. It said the vehicle “will maneuver around or stop for objects and notify you when detected”. Users can stop the car from driving by releasing the app’s button, it says, adding, “You are still responsible for your car and  must monitor it and its surroundings at all times and be within your line of sight because it may not detect all obstacles. Be especially careful around quick moving people, bicycles and cars”. While Tesla said Summon is to be used only in private parking lots and driveways, the feature breaks new ground by allowing operation of a vehicle without a driver behind the wheel. Federal vehicle safety regulations were written decades ago, before such technology existed. In addition to the crashes depicted on social media, there are also videos of several near misses. In one Twitter video, a Tesla exits a parking space and starts to cross a driveway when an SUV nearly collides with the driverless car. A voice is heard gasping and exclaiming, “Oh my God!” The poster, Dallas-based solutions architect Roddie Hasan, commented that his “first test of Smart Summon didn’t go so well”. “A car pulled in from the road and around the corner into the lot, and I expected the Tesla to ‘see’ it and stop, however I had to take my finger off the (app) button when I saw that my Tesla wasn’t slowing down”, Hasan told. Another Twitter user, Mark Solomon, also posted a video that showed his car was not able to park itself properly using the feature. “Not sure what the problem was but I think an older map of the parking lot was being used”, he said. Tesla’s website warns that drivers “are still responsible for your car and  must monitor it and its surroundings at all times  and be within your line of sight because it may not detect all obstacles. Be especially careful around quick moving people, bicycles and cars”. Other users had positive reviews. One posted a video of a white Tesla that slowly maneuvered around a parking lot for over a minute, ultimately arriving safely next to where the operator was standing. “It was a very profound moment to see this technology live! People don’t understand the depths and multitude of challenges to make this happen”, the Twitter user told. The summon feature is one of a suite of automated driving features that Musk has promised customers who have paid $6,000 for optional “Full Self Driving” packages of hardware and software. Automated driving features are one way Tesla hopes to stay ahead of traditional automakers, which have been more conservative about enabling vehicles to operate without drivers. +++ 

+++ The VOLKSWAGEN Group is in talks with other manufacturers on sharing the key technology underpinning its future Porsche and Audi electric cars as it seeks to build scale and spread development costs. “There’s definitely interest”, Ulrich Widmann, head of development at Audi for the joint engineering project, said at a press briefing in Munich. “We’re having conversations. Sharing technology to generate scale effects is the only way to achieve the turnaround in electric cars, both economically and ecologically”. Widmann declined to identify manufacturers who have shown interest in adopting the so-called Premium Platform Electric (PPE) underpinnings, which are being developed by Porsche and Audi as the basis for their full-electric vehicles starting in 2021. “Given the huge research and development investment required for the transition to battery-electric vehicles, many smaller luxury names could be interested including Aston Martin, McLaren and Maserati”, Bloomberg Intelligence analyst Michael Dean said. “You couldn’t rule out BMW and Mercedes-Benz, which would provide a German premium solution”, he added. Volkswagen is making an unprecedented push to dethrone Tesla as the leader of premium electric cars while at the same time keeping at bay traditional rivals that include Toyota and General Motors. VW’s mass-market electric technology will debut with the namesake brand’s ID3. Deals to share electric expertise are already advancing, with Ford agreeing earlier this year to use VW’s main electric-car platform for a high-volume car in Europe. The pact is worth between $10 billion and $20 billion over 6 years and the manufacturers are in talks over adding a second model that would be based on VW technology. Audi plans to launch 30 electrified vehicles by 2025, two-thirds of them will be full-electric models. The timeline is part of the effort by VW Group’s largest profit contributor to electrify its entire lineup, including compact models such as the A3. Following the delayed start of Audi’s e-tron, based on tweaked technology from the brand’s combustion-engine underpinnings, the manufacturer will tap the Porsche Taycan’s J1 platform to introduce the high-performance e-tron GT toward the end of 2020. Audi’s Q4 e-tron will be based on another platform, the MEB, and produced starting in 2021 in Zwickau, Germany, alongside the ID3. Audi’s presentation in Munich included a thinly veiled challenge to Tesla in the form of a futuristic design concept for a midsize sedan (the E6) that could be launched “after 2021,” according to design chief Marc Lichte. He declined to comment on the exact timing and price, but the presentation left little doubt about the strategic importance of the project and that Tesla’s Model 3 is the prime target. Still, Audi is struggling to reverse declining sales and risks falling further behind German rivals Mercedes and BMW if it doesn’t turn the corner soon. Talks with labor unions over cost cuts and the location of future car production have been dragging on for months. The difficulties of complying with more complex emission tests that took effect last year have weighed on the manufacturer and labor officials have sharpened rhetoric against CEO Bram Schot. Parent VW could ill-afford a decline in Audi (a cash cow within the group) pledging to revive profits through €15 billion in savings by 2022. Earlier this year, Schot mapped out plans to cease making Audi’s iconic TT coupe and replace it with a battery-powered model. The next version of its flagship A8 sedan could also go emissions free. Audi is also mulling an end to the R8 as it funnels spending into the rollout of 20 full-electric cars by 2025. Sales of electrified vehicles, including hybrids, are forecast to account for 40 % of deliveries by then. Audi is targeting slightly higher deliveries and revenue this year and an operating profit margin between 7 % and 8.5 %. That should shift to between 9 % and 11 % as early as next year, helped by a sales reorganization. +++ 

+++ VOLVO ’s deliveries in China rose 13 % year on year to 14,920 in last month, extending double-digit sales growth in its largest market so far this year. Through September, its deliveries in China totaled 109,512; an increase of 14 % from a year earlier, Volvo said. The Swedish automaker attributed the robust sales to sustained strong demand for 2 locally built models: the XC60 and the S90. In China, Volvo also produces the XC40 and the long-wheelbase version of the S60. Volvo has also started production for its electrified performance-vehicle brand, Polestar, in China. A plant jointly built by Volvo and Chinese parent Zhejiang Geely Holding Group in the southwest China city of Chengdu is producing its first product, the Polestar 1 plug-in hybrid coupe. Output of the brand’s second product, the Polestar 2 full-electric compact sedan, is due to begin in early 2020 at Geely’s Luqiao plant in east China’s Zhejiang province. Other global luxury brands have yet to disclose their September sales for China. +++

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