Newsflash: Volkswagen stelt introductie ID.4 cross-over uit

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+++ Tesla’s remarkable 36 % rally over the past week is lifting the shares of South Korean electric vehicle BATTERY MAKERS . It’s being called the “Tesla effect”. Investors are betting that the stock price rise of the world’s leading EV maker, which came after the company reported an earnings surprise, suggests that the age of the EV is coming, despite nagging doubts about the practicality of the vehicles and the true potential of the market. Tesla shares rose more than 36 % from $650.57 to $887.06. At one point, the company’s shares hit $961. With demand strong for the Model 3 and Model S, Tesla’s revenue hit $7.38 billion in the 4th quarter, beating a forecast of $7.06 billion. The knock-on effect was almost immediate, with South Korean EV battery manufacturers doing especially well on the local stock market. This week, LG Chem added 13.2 % to reach 382,000 won ($323), while Samsung SDI rose 13.8 % to 314,000 won. SK Innovation’s share price added 3.08 % to 134,000 won during the same period. The share prices of other companies related to EV battery manufacturing rose at least 3 %. The sudden surge of the stock prices of EV battery manufacturers in Korea hints to a turn to positive for the global EV market, analysts say. They say that if Telsa does well, it is almost certain that the battery makers will do well too. The earnings report “signifies that the EV and battery industries resolved the problem of profitability”, said Moon Nam-joong, an analyst at Daishin Securities. Analysts also say that the local EV battery manufacturers will experience additional growth throughout the year, as global EV sales will increase from tightening governmental regulations of fossil fuel vehicles. As a result, they expect stock values of the South Korean companies to continue rising in the long term, even though some of them could nevertheless report not-so-great earnings in the first quarter. “Until now, the problem of profitability has always troubled the fortune of electric cars and electric car batteries due to the expensive price of batteries”, Moon said. The analyst added that many worried that demand for the products would fall without government subsidies. “But the battery price level has steadily fallen thanks to technology developments, and profit levels are improving for related businesses as the overall size of the market is growing”. +++ 

+++ BMW is gearing up to launch the iX3 later this year and the company has announced the electric SUV will be equipped with aerodynamically-optimized wheels. According to the automaker, wheels on modern automobiles influence a vehicle’s overall efficiency by up to 30 %. As a result, they have a significant impact on electric vehicles where range is a priority. Given this importance, BMW created unique wheels for the iX3 which are constructed out of aluminum and feature angular accents between the spokes. The company says the design help to reduce drag by approximately 5 % when compared to the conventionally powered X3. They are also incredibly lightweight as they are “15 % lighter than the aerodynamic wheels previously fitted by BMW”. Thanks to the combination of lightweight construction and aerodynamic styling, the wheels lower the power consumption of the iX3 by 2 % in the European WLTP test cycle. That doesn’t sound like much, but it helps to extend the SUV’s range by 10 km. BMW says the wheels don’t require any special tools to produce and noted their “appearance can be varied in numerous different ways, enabling a vast variety of possibilities for the design of wheels on future models”. That’s something to keep in mind as the company confirmed aerodynamic wheels will also be used on the i4 and iNext. Besides the aerodynamic wheels, the iX3 have a 74 kWh battery pack and an electric motor that develops 286 hp and 400 Nm. The motor powers the rear wheels and will give the SUV a range in excess of 440 km in the WLTP test cycle. BMW said it is increasing production of electric vehicle powertrain components at its plant in Dingolfing, Bavaria, and raising its staff numbers to 1.400 this year, from 600 at present. Responding to tougher emissions rules and the threat of multi-million euro fines, carmakers are stepping up efforts to sell electric and hybrid cars. BMW aims for hybrid and electric cars to make up a quarter of new vehicle registrations by 2021. The number of employees assembling electric motors in Dingolfing will rise to 1.400 by the end of 2020, and is slated to grow to 2.000 over the mid-term, BMW added. Around 18.000 people work at the Dingolfing plant, located 85 kilometers northeast of Munich, where BMW also builds its 3-series, 4-series, 7-series and 8-series luxury vehicles. +++ 

+++ The prolonged outbreak of novel CORONA VIRUS has taken a toll on South Korean companies, especially automakers, due to their high dependence on various types of irreplaceable auto parts manufactured in China. 4 of the country’s 5 major carmakers (Hyundai, Kia, SsangYong and Renault Samsung) have decided to temporarily suspend operations at their plants here due to the shortage of a crucial auto part called wiring harness. Renault Samsung was the latest to announce that it is reviewing whether to suspend the production for 2 or 3 days from Tuesday, when the China-made wiring harness stocks will be depleted. Supplies will inevitably be hit as the sourcing factory in China remains shut due to the extended Lunar New Year holiday and it will take about 2 or 3 days for production to fully mobilize, sources said. According to industry data, some 100.000 manufacturing plants for auto parts are located across China, responsible for 38 % of the global supplies. The Chinese government has extended the holiday break with workplaces closed to curb potential exposure to the virus. Of the mainland’s 31 provinces, 11 have extended the holiday period for all nonessential businesses. Following the factory closures in China, Korean automakers are experiencing inventory shortage of wiring harnesses. Wiring harness is an essential part of a vehicle, which serves a nerve network-like role by connecting electric signals inside the car. Handmade wiring harnesses are laid on the floor of the vehicles during the initial assembly. “Wiring harness was never considering an auto part that is difficult to get. Many industry insiders viewed that it can be substituted by local-made wiring harness or those from factories in Southeast Asian countries. That’s why many carmakers only keep stocks that can last for a week”, an official from a local carmaker told. He added that as different wiring harnesses are used for every car model, or even for the same model with different trims, it is not common for automakers to order large quantities in advance due to complicated stock management. According to market experts, wiring harnesses cannot be replaced or be compatible with other auto parts. “A vehicle is completed by assembling some 30,000 auto parts. Shortage of even one compatible auto part will put the brakes on production”, said another industry insider. Market experts viewed that if the disruption of parts supplies in China continues, the industry’s earnings shortfall this year is inevitable. Market research firm IHS Markit predicted that if the coronavirus spreads rapidly across the country it could trigger plant closures until mid-March, reducing output by more than 1.7 million vehicles annually; a decline of 32 % from last year. Another market researcher Berstein said that major global automakers such as Volkswagen and BMW will see at least 5 % fall in sales. Meanwhile, some experts pointed to the automotive industry’s low dependency on plant operation automation as the reason why automakers are struggling. According to industry sources, manufacturers in other sectors such as semiconductor, petrochemicals and display panels are seeing less damages from plant closures in China, as their production is done by robots through automated processes. Volkswagen is the automaker most exposed to the coronavirus outbreak in China, according to Standard & Poors. The VW Group produces and sells almost 40 % of its cars in China, and while its main plants are outside of the epicenter in Hubei province, they are likely to be closed for extended periods by government restrictions aimed at combating the disease, S&P said. At risk are about €3 billion in dividends that Volkswagen’s Chinese joint ventures pay to their German parent, according to the report from S&P analysts led by Vittoria Ferraris. The virus forced S&P to rip up its forecast for a recovery of the Chinese market after 2 down years. Sales in the world’s biggest automotive market are no longer expected to meet the analysts’ base case for 1 % to 2 % growth in 2020. Nissan was singled out for having relatively high risk “considering its high exposure and recently weak performance”, S&P said. Honda has a production base in the outbreak city of Wuhan and relies on China for 30 % of sales and output, the analysts said. Supply chains are also at risk, S&P said, with Robert Bosch, the largest global automotive supplier, expected to be “hard hit”. Most Bosch sites “are preparing to resume production in the next days”, Bosch said earlier this week. “We constantly evaluate the situation”. French supplier Valeo said it is not experiencing any major disruption to its supply chain in China for now. Last month, Valeo said it would be extending its plant closures in China’s Wuhan until at least February 13. Valeo operates 3 sites in Wuhan, which employ 1.900 people. Premium Italian brakes producer Brembo said it sees no major impact on its operations. “The immediate impact is very limited because what we make in the Chinese plants stays in China”, chairman Alberto Bombassei said. Brembo has a factory in Nanjing. It expects to restart production on February 10. The virus outbreak has started to hit auto production outside of China. Hyundai is suspending production in South Korea because of a shortage of wire harness parts produced by Chinese suppliers. Tesla said last week a 1 week to 1.5 week delay to ramp up production of its Model 3 built in Shanghai due to a factory shutdown would slightly impact profitability in the March quarter. The company is also evaluating whether the supply chain for cars built in its Fremont, California plant will be affected. Automakers have prolonged holiday shutdowns at their China operations due to the virus outbreak. BMW’s China venture with Brilliance plans to restart car production on February 17. Ford plans to resume production on February 10 at its factories in Chongqing and Hangzhou with joint venture partner Chongqing Changan Auto. Ford excluded any potential impact from its already weaker-than-expected forecast for the year, saying it was too early to make an estimate. Honda plans to extend the closure period for its 3 car plants in Wuhan, which it operates with Dongfeng Group, until February 13. Nissan said it is considering restarting production in China in its venture with Dongfeng sometime after February 10. Production in Hubei will start sometime after February 14, it said. PSA said its 3 plants in Wuhan, the epicenter of the outbreak, will remain closed until February 14. Toyota shut factories in China through February 9. The automaker, which runs plants in regions such as the northern city of Tianjin and the southern province of Guangdong, said it was assessing its parts supply situation. +++ 

+++ 9 automotive groups delivered more than 100,000 plug-in ELECTRIC cars in 2019, but only 5 delivered more than 100.000 full battery EVs. Without any surprise, Tesla turned out to be the number 1 manufacturer (even if some other brands were counted as a single automotive group). Moreover, Tesla actually strengthened its first place position compared to the previous year, taking 17 % share (compared to 12 % in 2018). The order of the top 5 manufacturers didn’t change, but it seems that BYD and the Renault-Nissan-Mitsubishi alliance noted a slight decline, while Volkswagen Group went up 3 places to number 6. The list is as follows: 1. Tesla: 367.849 (17 % share), 2. BYD: 225.757 (10 % share), 3. Renault-Nissan-Mitsubishi alliance: 183.299 (8 % share), 4. BAIC: 163.838 (7 % share), 5. BMW Group: 145.815 (7 % share), 6. Volkswagen Group: 140.604 (6 % share), 7. SAIC: 137.666 (6 % share), 8. Hyundai Group (including Kia): 126.436 (6 % share), 9. Geely Group: 121.802 (6 % share), 10. Toyota Group: 55.155 (2 % share). Additionally, let’s take a look at the same comparison, but limited to all-electric cars. Obviously, Tesla remains numer 1 (with nearly one-quarter of the total volume), but number 2 is now BAIC as the Chinese group also offers only BEVs. Noteworthy is that third now is BYD since it significantly improved its BEV sales last year. In 2018, most of BYD’s plug-in sales were PHEVs. All-electric car sales in 2019: 1. Tesla: 367.849 (23 % share), 2. BAIC: 163.838 (10 % share), 3. BYD: 153.085 (9 % share), 4. Renault-Nissan-Mitsubishi alliance: 132.762 (8 % share), 5. SAIC: 105.573 (6 % share), 6. Volkswagen Group: 78.213 (5 % share), 7. Hyundai Group (including Kia): 86.296 (5 % share), 8. Geely Group: 52.620 (3 % share), 9. GAC: 44.642 (3 % share), 10. BMW Group: 42.253 (3 % share). +++ 

+++ FIAT CHRYSLER AUTOMOBILES (FCA) posted a 7 % rise in 4th quarter profit, boosted by strong business in North America and better results in Latin America as it headed into a merger with PSA. In a briefing with analysts, chief executive officer Michael Manley said FCA was still “firm” on its financial guidance for 2020. Still, he warned that disruptions due to the deadly coronavirus outbreak in China could threaten production at one of Fiat Chrysler’s European plants within two to four weeks. He did not identify which plant could be affected. FCA so far has not reported production shutdowns at plants outside China related to the outbreak. Chinese auto parts and assembly plants have extended previously planned Lunar New Year’s shutdowns through February 9, and some have pushed the shutdowns out further. FCA operates in China through a loss-making joint venture with Guangzhou Automobile Group (GAC) and has a 0.35 % share of the Chinese passenger car market. Manley said FCA plans to meet tighter emissions regulations in Europe initially with new hybrid gasoline-electric versions of several Jeep models, with plans to shift eventually to more pure electric models beyond 2025. He said the automaker expected to meet future emissions standards without buying credits from electric carmaker Tesla after 2021 in Europe and after 2023 in the United States as it introduces more hybrid models that produce lower emissions. “Beyond 2025, full electric vehicles will become the norm” across the industry, Manley said, ultimately replacing hybrids which are facing future bans in several countries. Asked about FCA’s short-term reliance on hybrids rather than pure electric vehicles to meet lower CO2 levels, he said, “We are going to be part of that solution” with future electric vehicles, but “in the most cost-effective way we possibly can”. The Italian-American carmaker said adjusted earnings rose to €2.12 billion; in line with a €2.11 billion forecast in a poll of analysts. That left its adjusted operating profit for the year at €6.67 billion; just shy of its target of over €6.7 billion. Its adjusted profit margin came in at 6.2 %; in line with its target of more than 6.1 %. A trader said FCA results were “a touch above” expectations. FCA and PSA agreed in December to combine forces in a $50 billion deal to create the world’s No. 4 carmaker, in response to slower global demand and the mounting cost of making cleaner cars amid tighter emissions rules. Manley said last month that talks with PSA were progressing and he hoped to complete the deal by early 2021. FCA reiterated its plan to boost adjusted profit to more than €7 billion this year. Disruptions to auto parts production caused by the deadly virus outbreak in China could threaten production at one of FCA’s European plants within 2 to 4 weeks, Manley told. FCA so far has not reported production shutdowns at plants outside China related to the virus outbreak. If the disruptions to production and shipment of auto parts get worse, Manley said FCA could potentially see a risk to production at a European plant within by the end of February or early March. FCA did not identify which plant could be affected. +++ 

+++ FORD will make big enough reductions to CO2 levels across the models it sells in Europe to avoid paying fines under tough new European Union emissions targets that started this year, the company has said. Ford will roll out 14 new electrified vehicles models this year as part of plan to achieve the target, said Ford’s global automotive head, Joe Hinrichs. “Our plan is definitely product driven. We do not expect to incur any fines, or have to pool with anybody else, or purchase credits”, Hinrichs, told. Ford needs to hit a CO2 target of 96.6 grams per km in 2021; down from a 2018 figure of 122.7 g/km, according to an analysis from PA Consulting. The automaker’s new electrified vehicles include mild hybrids, full hybrids and plug-in hybrids. The automaker will also start selling the Mustang Mach E by the end of the year.  The new Kuga, which goes on sale early this year, has the widest range of electrified options, including plug-in-hybrid, full-hybrid and mild-hybrid versions. +++ 

+++ In GERMANY , Tesla, Lexus, DS and Jaguar were among brands that saw the strongest sales gains in January in an overall market down 7.3 %. Total registrations fell year-on-year to 246.300 last month, according to data released by the KBA motor transport authority. Tesla’s registrations rose by 168 % to 367 units, boosted by demand for the Model 3. Tesla is aiming to open a factory near Berlin in July 2021. Overall sales of full-electric vehicles were up 61 %, giving them a 3 % market share. Sales of hybrid vehicles grew by 103 % for a 12.5 % market share. Included in the figure is a 307 % jump in plug-in hybrid sales for a 3.5 % share. Sales of gasoline cars fell 17 %, resulting in a 51.5 % share. Diesel sales dropped 12 % for a 32.6 % share. Among brands which saw big volume rises were Lexus sales, up 110 %; DS rose 65 %; Jaguar, up 63 % and Porsche, up 53 %. Germany’s main premium brands had a positive month with BMW registrations increasing by 6.5 %, Mercedes-Benz by 2.9 % and Audi by 1.2 %. Germany’s top-selling brand, Volkswagen, saw its sales drop by 4.1 %. Opel’s registrations dropped by 24 %, while Ford’s volume fell 18 %. Brands that saw steep sales drops included Smart, which fell 97 %; Suzuki, down 56 %; Subaru; down 54 %; and Dacia, which fell 42 %. The importers association expects the German market to decline by 7 % to 3.35 million vehicles this year. +++ 

+++ KIA is discussing with the Indian state of Tamil Nadu the possibility of moving a $1.1 billion plant out of neighboring Andhra Pradesh only months after it fully opened, due to policy changes last year. Kia inaugurated the Andhra plant, its first in the world’s fifth-largest car market, in December after 2 years of construction. It has an annual capacity of some 300.000 units and created 12.000 direct and indirect jobs. However, Kia is now in talks with the nearby state of Tamil Nadu, home to many major auto parts suppliers, about potentially relocating the plant, a senior state government official and a second source familiar with the discussions said. “Kia are facing problems in Andhra Pradesh. They have been in preliminary negotiations with us. There is a secretary-level meeting next week. We might have more clarity then”, the official told. Kia said in a statement it has a long-term commitment to the Indian market and it aims to utilize the full capacity of its Andhra plant “before considering further expansion. We do not have any plans to shift the manufacturing facility from the current location”, it said, without commenting on any policy concerns or talks with Tamil Nadu, which are at an early stage. Kia is being represented in the talks by executives at its sister company Hyundai, which is India’s second-largest automaker and has all its car production facilities in Tamil Nadu, the state official added. Kia has been troubled by a new Andhra state law on local hiring and by the new state government wanting to review the incentives given out by the previous administration to encourage the company to set up the plant. Moving the plant to Tamil Nadu could also help Kia in reducing logistics costs as it would bring it closer to some of its parts suppliers. It was not immediately clear how swiftly Kia could move production lines from a plant in one state to another, or what sort of disruption that would entail. Kia started building the new plant in 2017 and formally inaugurated it in December, when it said the 23 million square foot facility would manufacture vehicles like its Seltos for both the Indian and overseas markets. It said the facility would “become a vital part” of its global production network in the long term. But considering relocation within months of the inauguration highlights the challenges foreign investors face while dealing with policy changes at federal or state level in India. Kia was caught off guard in July after the new state government in Andhra mandated companies to reserve 75 % of all jobs for locals from the state, making it much harder for the company to find suitable employees, two of the sources said. Kia has also been unnerved by the new state government’s bid to review certain financial incentives (such as breaks on electricity tax and deferred land payments) given to the company by the previous administration, one of the sources said. After taking control of Andhra in 2019, a new government has decided to review agreements signed with several companies, including from the renewable energy sector, sparking concerns among foreign investors around sanctity of contracts in India. The Japanese ambassador to India, given Japanese companies interest in the region, told Andhra Pradesh not to renegotiate renewables contracts as it would hit business sentiment in the region. Prime Minister Narendra Modi’s federal government is separately working on a foreign investor protection law to safeguard against policy changes. “This is a problem for all companies including Kia. The cost of moving the plant would be too high and would set the company back by about 2 years and they have made huge investments”, said one of the sources aware of Kia’s concerns. +++ 

+++ NISSAN and Renault can improve their alliance without altering their ownership structure, the chairman of the Franco-Japanese partnership said on Thursday, rolling back a previous push towards a full-blown merger that rankled Nissan. The comments from Jean-Dominique Senard point to an emphasis on more cooperation and operational efficiency as the automakers and junior partner Mitsubishi strive to rebuild profits, which have slumped in the wake of former chairman Carlos Ghosn’s arrest in 2018. Renault and Nissan have struggled to repair a relationship badly strained after the arrest of Ghosn, who fled Japan to his childhood home of Lebanon at the end of last year. He has been charged with financial misconduct, which he denies. “We all share a sense of urgency”, Senard told reporters in Yokohama, after he and the heads of the 3 automakers met. He said there was “no other option” but to change, but added reforms could be made without a shift in the capital structure. “The priority as clearly stated was to increase significantly the efficiency of the alliance”, he said. Renault, which is part-owned by the French state, owns 43 % of Nissan, while the Japanese firm has 15 % of the French carmaker, with no voting rights; a structure that has caused friction in Japan, given Nissan is the larger of the 2. Renault has previously indicated a desire to move towards a full merger, something Ghosn is said to have championed and which Nissan has strongly opposed. Nissan CEO Makoto Uchida told reporters that in order to leverage their respective strengths, Nissan would take an operational lead in China, where it leads its partners in sales, Renault on its home turf in Europe and Mitsubishi in southeast Asia, an area it dominates. A similar model will be taken for engineering, where one company will lead in developing a key technology that would then be shared among the partners, the companies said in a statement. Fuel economy credits would be pooled by the 3 in Europe, they added. The 3 companies, which together sold nearly 11 million vehicles in 2018, will announce revised mid-term plans by May, Uchida said. The automakers need to improve profitability to compete with global rivals, which are investing heavily to develop electric vehicles, self-driving cars and other new technologies that are transforming the industry. Nissan is set to eliminate at least 4.300 white-collar jobs and shut 2 manufacturing sites as part of broader plans to add at least 480 billion yen ($4.4 billion) to its bottom line by 2023. +++ 

+++ RENAULT SAMSUNG is bolstering its customer service capabilities to up its game in the Korean auto market despite aggravated market conditions. The carmaker said it has become the first among domestic brands to have recently introduced the “RSM Service Menu”; a customer service program where customers can learn about a total expense prior to service. Based on that information, customers can decide which service to receive without having to worry about bills later. In 2019, the automaker assumed the top spot in the customer satisfaction questionnaire by Consumer Insight, taking the lead for 4 consecutive years. “RSM endeavors to improve customer satisfaction by providing various service programs and launching seasonal promotions that pay attention to the voices of customers”, a company official said. Launching the car management My Renault Samsung application to stay digital-friendly in 2018, the company has been faithful to its base services, it said. Basic services include free exchanges of consumables like engine oil, oil filters and air filters. “Premiere” customers who own flagship QM6 and SM6 models can benefit from free pickup and delivery services twice within three years after delivery. +++ 

+++ In SOUTH KOREA , Japanese car imports halved in the 4th quarter last year as the boycott of Japanese products in the country continued, latest data showed. The value of imported Japanese cars in South Korea amounted to $203 million in the period; a 51.9 % drop from $422 million a year earlier, according to data from the Korea Customs Service. The market share of Japanese cars (which commanded 15.2 % of total imported cars) plummeted to 6.2 % in the same period. It has been on a constant decline, falling to 15 % and 9.6 % in the second quarter and third quarter, respectively. Major Japanese automakers suffered a sales slump in 2019, except for Honda, which saw a rise of 10.1 % on-year from 7.956 to 8.760 units. Toyota, Nissan, Lexus and Infiniti each saw a fall in sales by 36.7 %, 39.7 %, 8.2 % and 6.1 % respectively. Sales for Toyota models dipped from 16.774 to 10.611 units; Nissan from 5.053 to 3.049 units, Lexus from 13.340 to 12.241 units and Infiniti from 2.130 to 2.000 units on year. In total, 5 major Japanese brands witnessed 18.9 % fall in sales, from 45.253 to 36.661 units. +++ 

+++ TOYOTA nudged up its annual operating profit forecast by 4.2 % on favorable currency rates and better-than-expected sales, but added the impact of the new coronavirus was hard to gauge and had not yet been factored in. Automakers have suspended output at many factories in China in line with government guidelines to prevent the spread of the virus which has led to some 560 deaths in the country. The epidemic is likely to wreak havoc on China auto sales and production in the first quarter, and has disrupted the supply of parts for some car makers with Hyundai this week saying it would have to suspend production in South Korea. “We are looking very closely at inventories of components which are made in China and used in other countries, including Japan, and at the possibility of alternative production”, operating officer Masayoshi Shirayanagi told. S&P credit analyst Vittoria Ferraris has estimated “up to one-half” of vehicles and components that would normally be produced in China could be affected if shutdowns are extended further. Production at many plants across China, including Toyota’s, has currently been halted through to February 9. Toyota has said it plans to resume production on February 10 although this could change if the situation worsens. Japan’s biggest automaker said it now expects operating profit for the year to end-March to climb to 2.5 trillion yen ($22.7 billion), up from 2.47 trillion yen a year earlier and in line with market estimates. The outlook is based on a new assumption for the Japanese currency to average around 108 yen to the U.S. dollar during the current business year versus 107 yen previously. It also expects to sell 10.73 million vehicles, slightly higher than a previous forecast for 10.7 million. Third-quarter profit, however, declined 3.2 % to 654.4 billion yen as the yen trended higher than expected during the period and due to softer vehicle sales, though the result was slightly higher than market expectations. Sales in Asia tumbled 12.5 % with demand slow in Indonesia and Thailand, while sales in North America, Toyota’s biggest market, slipped 1.8 %. Toyota also said it was seeking more discussion with the British government, which announced plans this week to ban the sale of new petrol, diesel and hybrid cars in the country from 2035. That is 5 years ahead of many other countries with similar targets in what has been seen as a victory for battery-electric cars. “We don’t believe it’s possible to suddenly say ‘OK, let’s move to something like this and ban everything in one shot’. We should have steps to do this kind of thing”, executive vice president Didier Leroy said. “It’s going to create big trouble for all carmakers in the world and even for customers in the UK”. Toyota operates a plant in Derbyshire, central England and produced roughly 8 % of the 1.52 million cars made in Britain in 2018. It also produces engines at a factory in Wales. +++ 

+++ In the UNITED KINGDOM , car output dropped last year at the fastest rate since the 2008-9 recession, hit by slumping exports and diesel demand. The fall spurred an industry body to call for an ambitious post-Brexit trade deal to protect the sector. Production fell by an annual 14.2 % to 1.3 million cars in 2019; the third consecutive annual slide. Some automakers’ decision to close factories for additional days in case of Brexit-related disruption also hurt sales, according to the Society of Motor Manufacturers and Traders (SMMT). Investment last year, however, nearly doubled to 1.1 billion pounds ($1.5 billion) due to a decision by Jaguar Land Rover to build electric vehicles in Britain. “It is essential we re-establish our global competitiveness and that starts with an ambitious free trade agreement with Europe”, said SMMT chief executive Mike Hawes. The global sector has been hit by declining sales in key countries such as China, the world’s biggest auto market, and the need for investment in electric models. In Britain, exports were hit worst, with demand down 26.4 % from China and 17.7 % from Japan. The UK’s biggest exporter of goods is now seeking the closest possible relationship with the EU, its largest market, where over half of auto exports are sent. When Britain leaves the EU on January 31, a transition period will come into play for the rest of the year during which time little will change. But politicians will then need to negotiate future partnerships to take effect from 2021. Output is forecast to fall only marginally in 2020, but a series of investments are due which will affect future levels. PSA warned last year that a decision to keep open its Ellesmere Port Vauxhall car plant in Cheshire is dependent on Britain’s future relationship with the EU. Production following the warning dropped 20 percent in 2019. Nissan is due to begin making its new Qashqai at its Sunderland factory, where output dropped 22 %. The company has warned that any tariffs or extra duties would put its entire European business model in jeopardy. Prime Minister Boris Johnson is keen to use Brexit as an opportunity to improve trade with the United States, to which 19 % of exported cars are sent. But the industry is focused on maintaining frictionless trade with the Europe. “The US is not our priority compared to the EU”, Hawes said. Thorny issues remain over whether British and EU components can continue to be counted together in trade deals. The sector has warned that regulatory divergence could cost billions and lead to some models not being sold in Britain. “If the cost of compliance can’t be met by the margin you are going to make on total sales in the UK, then you say’I can’t afford to engineer that model for the UK market’ “, Hawes said. +++ 

+++ Seoul court levied a fine of 26 billion won ($22 million) on Audi VOLKSWAGEN Korea (AVK), the local unit of the German carmakers, for fabricating emissions test results for their cars imported here and producing false advertisements about the results. The Seoul Central District Court handed out the sentence to the German companies about 3 years after AVK was indicted in January 2017 on charges of importing cars that didn’t meet local standards for emissions and noise in violation of the Clean Air Conservation Act. Park Dong-hoon, former chief executive of AVK, who was also indicted 3 years ago on the same charges together with AVK, was sentenced to 2 years in prison, while a former AVK executive, surnamed Yoon, who was in charge of obtaining emissions-related approval from the Seoul government, was given a one-year imprisonment. Despite the jail terms, the court didn’t order the immediate detention of Park and Yoon. The Seoul court also handed out suspended jail sentences ranging from 4 to 8 months to 4 AVK officials. AVK was accused of importing about 120.000 diesel vehicles that failed to meet European emissions standards from 2008 to 2015. The company used a so-called defeat device to manipulate the emissions results for the imported cars to get approval from the Korean government, according to prosecutors. The company was also accused of importing about 41.000 vehicles from Germany from 2010 to 2015 after doctoring 149 documents on their emissions and noise tests. Volkswagen’s next ID production model, the ID.4, won’t be revealed at the New York motor show as originally planned. The April event was originally due to play host to the electric-powered model up until last month, but it is understood the revamped Detroit motor show, held in the summer for the first time, is now the favoured site of the unveiling. The electric crossover will be an important part of the ID brand’s range offensive in the US, as well as in Europe, following the launch of the ID.3 hatchback. There will be 2 versions of the electric cross-over: a standard model and a coupe in the vein of the original concept, which are expected to be named the ID.4 and ID.5 respectively. The ID.5 will be revealed at a later date. +++

+++ VOLVO reported an 18 % rise in fourth-quarter operating profit as cost cuts and growing sales more than offset the impact of subdued global auto markets. The Gothenburg-based carmaker, which Geely acquired from Ford in 2010, reported operating earnings of 5.29 billion Swedish crowns as revenues rose 8.4 % to 79.2 billion. Sales rose nearly 10 % in 2019 (with growth of 23.4 % in the 4th quarter alone) as increases in China and the United States and strong demand for a line of SUVs, its best-selling models, gave a boost. “During the second half of the year, and specifically during the fourth quarter, both profit and profit margin outperformed the comparative period in 2018”, chief executive Håkan Samuelsson said. “This is a result of continued strong growth in volume, especially in SUVs, as well as cost efficiency measurements initiated early in 2019”. Automakers have been under pressure over the past year, contending with heavy investment needs in the electric and self-driving technology that is seen reshaping the industry in the years to come, as well as softer demand in many major markets. While Volvo has also faced higher capital spending needs, which it has sought to offset with 2 billion crowns of cost cuts, its niche position in the premium market and continued expansion in China have left it fairly unscathed by a broader slump in car sales. Volvo sold a record number of cars last year, with the firm’s sales exceeding 700.000 for the first time and company bosses say surging demand for plug-in hybrid models mean it is on course to avoid having to pay any European Union CO2 emission penalties in 2020. The company sold 705.452 cars last year; up from 642.253 in 2018 and the 6th consecutive year in which the Swedish company has hit a new sales high. Of those sales, European sales rose 7.2 % to 341.200, while sales in China were up 18.7 % to 154.961. Those sales resulted in operating profit rising 0.8 %. Like other car firms, Volvo has been working intensively to electrify its range, and with the imminent release of the XC40 Recharge Plug-In Hybrid T5 will offer a PHEV version of every model. It sold a total of 45.933 plug-in hybrids (led by the V60 and S60) during the year, up 22.9 % compared to 2018. Plug-in hybrids accounted for 18 % of Volvo models sold in Europe in December. Notably, 15.594 of the firm’s plug-in hybrid sales came during during the final 3 months of the year, led by high demand in European markets for the XC60 and XC90. The company has also launched the new Recharge brand, which will include all its plug-in and full electric models. Volvo says it has secured extra battery capacity from partners CTAL and LG Chem to increase production of plug-in hybrid models and that, combined with the arrival later this year of the XC40 Recharge Pure Electric T8, will help it avoid fines by reaching the European Union’s CO2 fleet average targets. Carla De Geyseleer, Volvo’s financial boss, said the firm’s plug-in hybrid sales growth meant the firm was confident that “we will meet our emissions targets in Europe by 2020”. Volvo expects PHEVs to account for 20 % of total sales this year, and De Geyseleer added: “We are not planning to pay any penalties whatsoever”. The electric XC40 will be the first of five full EVs that Volvo will launch by 2025, with Samuelsson saying the firm has secured battery capacity from CTAL and LG Chem “to ensure that half of our production cars can be fully electric by 2025”. By 2025, Volvo is aiming to reduce its total carbon footprint by 40 %, including a 50 % reduction in the CO2 emitted by a vehicle during its lifespan, and 25 % reductions in CO2 output from Volvo’s production and operations. Samuelsson reaffirmed that the company has made sustainability “something we will work towards as we worked towards safety. We have very clear targets to fulfil, and to meet them we must take action now”. The XC60 remains Volvo’s best-selling model, with 204.981 reaching buyers in 2019; a rise of 8.4 %. Demand for the XC40 increased sharply, with the 139.847 sold; an 84.4 % year-on-year increase. The XC90 was the firm’s third best-seller, with 100.729 sales. As said, Volvo is boldly claiming that it will avoid paying any CO2 related fines in 2020. While other manufacturers struggle to get their average CO2 below the EU target of 95 g/km to avoid fines, Volvo is confident that its average will be below that figure. For each g/km over that target, manufacturers risk penalties that could run into millions of Euros. However, Volvo says that the combination of plug-in Recharge models and mild hybrids that it’s rolling out across its range means that it will avoid any fines. Mattias Berglund, senior manager Propulsion Strategy, said: “We are not planning to pay any fines. We’re aiming for more than 20 % of our sales in 2020 to be plug-in models, which will lower our average CO2. And we have tripled our battery capacity this year compared with last year”. As part of the implementation of the new CO2 targets, cars sold with CO2 emissions below 50 g/km this year will count as double towards a company’s overall CO2 target. With cars like the new XC40 Recharge Plug-in Hybrid, which emits just 41 g/km, and every other model in its line-up available with a PHEV powertrain, Volvo is well positioned to take advantage of the 2020 loophole. Volvo has big plans to reduce its average CO2 even further, though. “The XC40 Recharge will be the first of five full EVs we’ll launch in the next 5 years”, Berglund told. “By 2025, we aim for 50 % of all the cars we sell to be full EVs”. Volvo claims that it already has ‘thousands’ of orders for its fully-electric XC40 Recharge model, which goes on sale in the second half of 2020. A fully electric version of an all-new XC90 is expected to be the next EV to be launched in 2021. Volvo expects to lose at least 2 weeks’ worth of sales, production and supply deliveries in China because of the Wuhan coronavirus outbreak, Samuelsson said. “China has come to a standstill and that will affect our company, as well as other companies”, he added. Volvo has a number of factories in China. It makes the XC60 in Chengdu, the XC40 in Luqiao and the S90 in Daqing. In addition, Volvo’s Polestar electric sub-brand has opened a separate factory in Chengdu. It also has several engine assembly plants. Those facilities have remained closed after the New Year holiday break, Samuelsson said. “We’re following the recommendations of local authorities, which means we avoid bringing people together, the factories have not opened, and people are requested to stay home and avoid contact”, he said. “It’s like time has stopped”, he said of the situation in China. “It’s basically 2 weeks of sales, of production, of supply chain that have been taken out”. Samuelsson said the disruption was mostly contained to China, and that Volvo’s plants and operations in North America and Europe were largely unaffected, although there could be a shortage of parts exported from China. Volvo said in its annual report that the coronavirus outbreak would affect first-quarter operations. Samuelsson said he expected Volvo to recoup any lost sales and production over the rest of this year. “We think the effect for the whole year will be relatively minor”. Samuelsson said the virus in China had made it “extra difficult” to forecast overall results in 2020, but added that Volvo was still maintaining its outlook for continued growth and improved profits. A report this week from LMC Automotive said that in the most likely scenario, the virus outbreak could push down sales and production in China by 3 % to 5 % this year. Other possible outcomes included a quick containment of the virus in the first quarter, which could lead to modest growth for the year. In the worst case, the virus continues into the third quarter, with “enormous” macroeconomic impact, and the Chinese auto market would fall by at least 10 %. +++

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