+++ When I drove the ASTON MARTIN DB11 for the first time, I said that it “stands out” and that “it delivers on the promise of Aston’s potential for a successful second century”. But I also said: “There must be a reason to buy the Aston Martin beyond the fact that it turns heads at the country club”. In case its stunning good looks and 608 hp 5.2-liter twinturbo V8 weren’t enough to grab your attention, how about a discount of nearly $20.000? Right now, American buyers of the DB11 are paying on average $182.435. That’s a discount of $19.385 from the British coupe’s average suggested retail price of $201.820. That’s the largest discount on a new car in U.S. this month, based on the dollar amount off the car’s sticker price. The next biggest discount is for the Mercedes-Benz S-Class. Buyers of the German brand’s range-topper are scoring an average discount of $13.816. While that’s a much smaller number than the DB11, it represents 13.5 % off the S-Class’s average retail price of $101.151 versus the 9.6 % discount of the Aston Martin. In fact, the Benz’s percentage discount means it’s the 8th-best deal in America overall. If you favor a different flavor of German luxury, the Audi A8 isn’t far behind with an average discount of $12.701 representing 12.5 % of its $101.762 average sticker. +++
+++ AUDI is bringing its bestselling premium SUV to South Korea in order to gain an edge in the increasingly competitive segment. The South Korean unit of the German auto brand announced it is commencing the sales of 2 versions of the Q5, the 45 TFSI Quattro and the 45 TFSI Quattro Premium, next week. The 2 models will be available at local Audi showrooms starting next Wednesday. Audi South Korea hopes the introduction helps drive a turnaround this year. According to data from the Korea Automobile Importers & Distributors Association the German car brand sold a total of 11.930 vehicles in Korea last year; down 4.2 % from the 12.450 units posted a year earlier. +++
+++ BMW expects the coronavirus pandemic to hit demand and earnings throughout this year, prompting the German automaker to cut its profitability forecast for passenger cars following a drop in first-quarter deliveries. The firm forecast a margin on automotive earnings before interest and taxes of 0 % to 3 % this year, versus the 2 % to 4 % seen before demand was crippled by worldwide restrictions on movement to tackle the virus. “The BMW Group still expects the spread of the coronavirus and the necessary containment measures to seriously dampen demand across all major markets over the entire year”, the Munich-based company said. BMW reported a 133 % jump in first-quarter profit to €1.38 billion. But that was against a period last year when earnings were pushed down to €589 million by a one-off €1.4 billion provision. The automotive profit margin came in at 1.3 %. Jefferies automotive analyst Philippe Houchois described the margin as disappointing, given solid sales of more profitable SUVs. BMW expects to make an operating loss in the second quarter as corona virus lockdowns continue in large markets like the United States and Britain. Like rivals, BMW also said it would throttle back investments to preserve cash. Cost savings (€12 billion) and an efficiency plan will be extended, it added, without providing further details. “In light of the current situation, we will be delaying a number of projects, like the plant in Hungary. Other projects will be carefully reconsidered”, chief financial officer Nicolas Peter said, adding the Hungary plant would be delayed by a year. Free cashflow at the automotive business was minus €2.2 billion in the first quarter and BMW said it no longer expected to achieve positive free cash flow in 2020, despite cutting back investments. BMW’s forecasts are the latest sign that profitability at traditional automakers is on the wane, as they spend huge sums to clean up combustion engines in the face of increasingly stringent emissions regulations as well as rising competition from electric vehicle specialist Tesla. Last week, Tesla said its automotive gross margin rose to 25.5 % in the first quarter from 20.2 % a year earlier, due to a 40 % rise in deliveries, helped by demand for its Model Y. By contrast, BMW’s passenger car deliveries fell 20.6 % to 477.111 cars in a quarter blighted by the virus outbreak. The company also said it had set aside a “low triple digit million” euros amount to cover potential defaults from customers buying cars on loans and leasing contracts. BMW has had to ramp up spending on hybrid petrol-electric and pure electric vehicles to try to meet emissions rules and offset its heavy reliance on petrol-guzzling SUVs. Sales of its SUVs jumped 21 % last year, making up 44 % of the BMW brand’s global total. Carbon dioxide emissions from new vehicles sold in the European Union must be 40 % lower in 2021 compared with 2007 and 37.5 % lower in 2030 versus 2021, with fines for non-compliance. BMW’s 2021 target is an EU fleet average of 102.5 grams of CO2 per kilometre. Last year, its average fell just 1 gram from a year earlier to 127 grams, while research and development spending left its automotive EBIT margin at 4.9 %. +++
+++ CADILLAC has had a 2-pronged strategy over the past couple decades as it’s looked to inject sportiness into its products while also responding to the market shift toward SUVs. Yet for all its efforts, GM’s luxury marque has struggled to reclaim its heritage as “the Standard of the World”. Now, there’s a new plan to snatch back the crown and it culminates in the flagship Celestiq. Massive executive sedans-cum-limousines may not enjoy the market share they used to, but they’re still considered the peak of autoluxury and prestige (although elephantine SUVs are making serious inroads). With the new Escalade continuing to cover the luxury SUV side, Cadillac will once again build an ultra-luxury sedan. Named Celestiq, it has been shown to media (including me) in concept form. Roughly previewed by the smaller Escala concept, the Celestiq will be a long 4-door with a liftback like an Audi A7 (rather than a Mercedes-Benz CLS with a trunk) for the full coupe effect. Built on General Motors’ new BEV3 electric vehicle architecture, the fully electric sedan will hide its batteries under the floor and could be built with anywhere from 1 to 3 electric motors. Given its class and price, I expect it to come standard with the largest battery pack and more powerful motors in GM’s toolkit, giving it the longest range and highest performance possible. Fast charging at 800 volts will allow it to be rapidly topped up at public stations. Every Celestiq will be hand-built, with extra attention paid to the interior. The rear seat will take advantage of the car’s proportions to offer a plethora of space to the captain of industry being chauffeured. Special touches will include an all-glass roof running from the windshield to the hatchback, giving occupants minimally obstructed views from the hood all the way over the top to the taillights. In the dashboard, flower petals will float in acrylic; a similar effect to a Rolls-Royce Phantom’s display case. Banner technology like Super Cruise, the highway-capable hands-off cruise-control system, will assuredly be standard. Barring any disruptions in the production timeline, Cadillac is planning to put the Celestiq on sale in 2022. Given the hand assembly and extra touches, we expect it to start at $200,000 and ratchet up quickly with personalization. +++
+++ Vehicle sales in CHINA likely rose in April from a year earlier, its top auto industry body said, ending almost 2 years of declines and signalling that the world’s biggest auto market is recovering from the coronavirus shock. April’s sales of 2 million units likely rose 0.9 % from a year earlier and 39.8 % from March, the China Association of Automobile Manufacturers (CAAM) said. It added its forecast was based on sales data it had collected from key companies, without giving further details. A gain in April would be the first rise in auto sales in China after 21 straight months of decline as the world’s second-largest economy slowed. Still, the association expects vehicle sales in January-April to fall 32.1 % on-year to 5.67 million units, after the government rolled out tough restrictions early in the year to stop the spread of the coronavirus. Many of those curbs on people’s movement have been rolled back in the past 2 months, allowing would-be buyers to visit showrooms again, while some local governments are offering incentives to revive car sales. CAAM is expected to announce final April industry sales figures on May 11. China has become one ray for hope for car makers including Volkswagen and General Motors as the global auto industry has been badly hit by the coroanvirus pandemic. Companies from Geely to Ford’s 2 ventures in China have reported year-on-year sales growth for April in recent days. +++
+++ The effects of the coronavirus on the auto industry are beginning to appear as automakers slowly restart production, and dealerships adapt to online sales and social distancing rules. We’ve already learned the pandemic has delayed the launch of some new models and not even FERRARI will emerge unscathed. The Italian automaker will launch 2 new vehicles this year, though their reveals are delayed by 3 to 4 months. Ferrari, like other automakers, had looked at its bottom line to help reduce costs and capital expenditures in 2020 due to the outbreak, which, according to Ferrari CEO Louis Camilleri, delayed some models. Camilleri said that the company felt that it could delay some while having others arrive “on time”. This comes after General Motors announced it indefinitely delayed the launch of the Hummer EV; however, the truck’s production schedule remains on track. We were supposed to see the smaller Ford Bronco Sport launch in early April, but the coronavirus delayed that, too. It’s also affecting Ford Mustang Mach-E production and deliveries. Ferrari is expecting a 4 to 15 % drop in sales compared to last year. The company will still launch this year 4 of the 5 new models it revealed in 2019. So far, only Ferrari F8 Tributo deliveries have started, with the other 3 beginning to arrive with customers in the second half of 2020. Ferrari had a busy 2019 with its onslaught of products. In late 2019, Ferrari said 2020 would be a quieter year for model launches. We doubt this is what Ferrari had in mind: 2 launches delayed by several months. We’ll have to wait until next year to see what else Ferrari has planned. +++
+++ There’s something about FIAT . The Italian brand sells tiny, distinctive cars that resonate with its fans. The cars are puppy-cute, especially in the U.S. where the roads are filled with much larger vehicles. Owners love their 500s, which came in different flavors (including convertibles and the performance Abarth) and some gravitated to the larger models with an extra set of doors. But most 500 versions have been discontinued for North America. So who has been making these decisions? Fiat is a storied Italian brand, dating back to 1899, founded in Turin by Giovanni Agnelli, whose family retains some ownership and control more than 120 years later. Today the Fiat brand is part of Fiat Chrysler Automobiles (FCA), which has 1 headquarter in Turin, Italy and 1 in Auburn Hills, Michigan, which oversees the Chrysler portion of the company. The first Fiat was exported to the U.S. in 1908 and a plant in New York started making Fiats including the 60 HP and 16-20 HP in 1909. The Italian vehicles were expensive and coveted, costing about 5 times as much as a Ford Model T. The Fiat plant was closed in 1917 after the U.S. entered World War I. Fiat returned to North America in the 1950s with the original 500, the 600 Multipla, the 1100 / 1200 and the 1300 / 1500. The U.S. also got the Fiat 124 Sport Spider and X1/9. But sales were never strong. The brand had a reputation for poor quality and Fiat pulled out of North America in 1983. It wasn’t until 2009, when a bankrupt Chrysler needed help and Fiat took a 20 % stake in the struggling American automaker, that plans were made to bring the Fiat brand back across the ocean. FCA started making the 500 at one of its plants in Mexico for sale in North America. In 2013 the electric 500e was introduced in California and then-CEO Sergio Marchionne famously said “dont buy it” because he lost money on each unit he sold. But For the 2020 model year, Fiat announced it was discontinuing the sale and production of the Fiat 500. In other words, gone are the best-looking models. In the U.S., Fiat continues to offer the larger, more practical 500X, 500L (and 124 Spider). There are poised to be more changes yet again. In December 2019, FCA signed a memorandum of understanding with PSA for the 2 automakers to merge, with an estimate of late 2020 or mid-2021 for the deal to close. The still-to-be-named automaker will be the 4th largest in the world, and some brands could be dropped as part of the reorganization, or get removed from some markets. Fiat from the U.S. for instance. +++
+++ FORD said it is planning to restart production and operations in North America in a phased manner, starting May 18. From that date, it will also start bringing back some employees whose work cannot be done remotely such as vehicle testing and design. This includes about 12.000 workers in North America, the company said. +++
+++ GENERAL MOTORS has outlined plans for a May 18 restart of most of its North American plants shut down by the coronavirus pandemic as it reported a stronger than expected quarterly profit, sending its shares up 5.3 %. The No. 1 U.S. automaker had previously suspended its 2020 profit outlook because of uncertainty over the outbreak and did not provide an update since. “With the level of uncertainty out there, it’s too early to tell until the economy starts to open up”, chief financial officer Dhivya Suryadevara told. But she said that “the second quarter will be the hardest hit” with North American production shuttered for much of the period. She said the coronavirus pandemic had reduced the automaker’s first-quarter profit by $1.4 billion, with about half of that in North America. The Detroit automaker has slashed costs and made other moves during the Covid-19 outbreak, including suspending its dividend and share buybacks, closing its Maven carsharing unit, delaying work on some product programs, reducing marketing budgets and cutting white-collar workers’ salaries. It also added $16 billion to its cash position by drawing down credit lines. GM said ended the first quarter with $33.4 billion in automotive cash, including an approximately $16 billion drawdown from its revolving credit facilities. One ray of hope has been China, where the pandemic began but where GM has resumed production. While first-quarter sales there fell 43 %, they rebounded to grow by double digits in April. That offers hope for the U.S. market, where sales declined 7 % in the first quarter. “We’re certainly seeing green shoots in China”, Suryadevara said. “Production has completely restarted and the dealers are seeing increased traffic. Sales are improving”. GM said it is aiming to increase its China market share this year. In the U.S. market, the bright spot is pickups. Suryadevara said that prior to March the truck segment accounted for 13 % – 14 % of total vehicle sales, which jumped to 18 % in March and an estimated 21 % in April. “Obviously, truck is our strong suit”, she said. “That’s something we’re going to capitalize on as we restart”. She added that pricing on trucks remained strong. U.S. auto production ground to a halt in March as the number of Covid-19 infections grew rapidly. But with president Donald Trump pushing for Americans to get back to work and several U.S. states reopening their economies, the focus in the sector has shifted to when production can safely restart. GM, Ford and Fiat Chrysler Automobiles (FCA) had aimed to resume production in May and were negotiating with the UAW union, which represents their U.S. hourly workers, about when and how to safely restart. GM chief executive Mary Barra said on a conference call with analysts that the restart at its plants will be gradual, starting with one shift and then building to two or three shifts depending on demand. This week, the UAW union, which represents GM’s U.S. hourly workers in its plants, gave its tacit approval for the Detroit automakers to restart production on May 18. FCA said it expects most of its North American plants to reopen by May 18. Ford has not announced a restart date. In its restart playbook, GM’s strategy relies heavily on social distancing, temperature checks, regular sanitizing, improved plant ventilation and use of personal protective equipment. Michigan governor Gretchen Whitmer previously extended the state’s stay-at-home order through May 15 but lifted restrictions for some businesses other than manufacturing. Neighboring Ohio allowed manufacturing to resume. Once production resumes, the question will be how fast U.S. demand rebounds, with some dealers expecting big discounts to lure consumers back to showroom floors. Some industry officials have said some level of government stimulus for the U.S. auto sector will be needed for consumers once the pandemic recedes. During the Great Recession of 2008-09, the U.S. government rolled out a “cash for clunkers” program, which offered consumers rebates of up to $4,500 to trade in older gas guzzlers. +++
+++ Turkish prosecutors have prepared an indictment charging 7 people, including 4 pilots, over former Nissan boss Carlos GHOSN ’s escape via Istanbul to Lebanon after fleeing Japan, a lawyer for one of the suspects said. The lawyer said the indictment, accepted by an Istanbul court, formally charged the four pilots and a company executive with “migrant smuggling,” a crime carrying a maximum sentence of 8 years in jail. 2 flight attendants were charged with failing to report a crime, which can carry a jail sentence of up to 1 year, lawyer Mehmet Fatih Danaci told. Turkish police detained the suspects on January 2 and an interior ministry official was cited at the time as saying that Turkish border police were not notified about Ghosn’s arrival and that neither his entry nor his exit were registered. The following day, Turkish private jet operator MNG Jet said the former Nissan boss had used 2 of its planes illegally in his escape from Japan, with an employee falsifying lease records to exclude his name from the documents. MNG Jet, which had filed a criminal complaint for the illegal use of its aircraft, said that it welcomed the prosecutor’s decision and will “continue to cooperate with Turkish and Japanese authorities to bring justice”. Ghosn has said he fled to Lebanon to escape what he called a “rigged” justice system in Japan, where he faces charges relating to alleged financial crimes, which he denies. +++
+++ Volkswagen’s new GOLF GTI should have been one of the stars of the canceled 2020 Geneva Motor Show. I couldn’t check it out in person as planned and I still haven’t seen it in the metal, but I caught up with some of the engineers and designers who created it to get insight into its development. Many enthusiasts hold the decades-old GTI formula sacred, so designing a new model requires improving it without diluting the final product or significantly changing the ingredients. That’s where heritage comes in. “Of course, there are some dos and don’ts, but they don’t act as a constraint. After looking back at 7 generations of the Golf GTI, you have a good idea of what the design of a successor should look like”, Klaus Bischoff, the Volkswagen Group’s head of design, told. Defining traits like the red accents inside and out, the plaidupholstery on the seats and the golfball-shaped shiftknob for the manual transmission are accounted for in the new model. That’s not to say it’s old-school; like the new Golf it’s based on, it’s much more digital than its predecessor. Screens take up more real estate on the dashboard than in the outgoing model, for example, and there are touch-sensitive surfaces on the steering wheel. Power comes from a 2.0-liter engine that delivers 245 hp, an increase of 15 hp over the 7th generation GTI. The 4-cylinder is once again turbocharged, to no one’s surprise, but the rumors claiming it would gain mild hybrid technology were false. “For the GTI, you do not really need the extra low-end torque of an electric motor”, said a spokesman. He added enthusiasts seeking an electrified hot hatch can look at the plug-in hybrid GTE, which offers the same amount of horsepower as the GTI but more torque (400 Nm) in a heavier package. Frontwheel drive and a 6-speed transmission come standard and a 7-speed automatic gearbox is offered at an extra cost. Although the number of buyers asking for a stick is shrinking and electric vehicles outsold vehicles with 3 pedals in the United States in 2019, Volkswagen told me the GTI has proven it bucks that trend. “In general, the higher the power, the lower the demand for a manual transmission. In the Golf GTI’s case, we do still see a demand for a manual transmission”, the firm explained. That’s good news for the give-a-shift crowd. The next GTI will arrive with a turbo four and a stick, then, but there’s more to it than that. Changes made to the hatchback’s chassis make it sharper to drive than the outgoing model, and electronic wizardry comes into play, too. Volkswagen pointed to a new control system named simply Vehicle Dynamics Manager that simultaneously controls the electronic differential lock and the lateral dynamic components of the adaptive suspension to, in the company’s words, “increase the spread between maximum comfort and maximum dynamics”. This bodes well for the Golf GTI, which is tentatively due to arrived in the showrooms in the second half of 2020. I’ll need to wait until I have the opportunity to get behind the wheel to see what it means on a twisty road. +++
+++ HYUNDAI said its provisional sales fell 57 % on year to 159.079 vehicles globally in April as the coronavirus pandemic and efforts to curb its spread sharply contracted auto demand and dealership traffic. Hyundai said last month it expects only a modest recovery in Chinese auto demand and weak sales elsewhere this year after the coronavirus pandemic caused first-quarter vehicle sales to tumble 18 %. +++
+++ The Insurance Institute for Highway Safety just tested the JEEP Wrangler, marking the group’s first test of the latest generation JL. It released a couple of photos of the test to depict what happened. The headline does most of the explaining. Yes, the Wrangler Unlimited tipped over onto its side in the driver-side small overlap front crash test performed by the IIHS. This is not the first time the new-generation Wrangler has been tested. It previously received a 1 star out of 5 rating from Euro NCAP. However, it also received a 4-star out of 5 front crash rating from NHTSA. The risks of a vehicle tipping onto its side in a crash are fairly obvious. If the occupants aren’t wearing their seatbelts, the risk of ejection or partial ejection is very real. Your odds of being ejected are higher if you happen to have the roof and doors off your Wrangler, too. Basically, be smart, and wear your seatbelt. Other than the car tipping, the IIHS was actually quite satisfied with how the Wrangler performed in the test. “The driver’s space was maintained well, and the dummy’s movement was well-controlled”, it says. This partial success combined with the tipping earned the Wrangler a Marginal rating for the specific test. That’s one step above Poor, which is the institute’s lowest rating. As for the rest of the test, the IIHS rated both headlight options (halogen or LED) Poor. Its optional front crash prevention system received a Superior (highest) rating for its ability to avoid accidents at 20 kph and 40 kph. +++
+++ MASERATI ’s super sports car, the mid-engined MC20, will start production by early July, Fiat Chrysler Automobiles boss Mike Manley shared. Manley provided the model’s timing, as well as confirmed all Maserati future product plans remain intact, during a call with investors. The MC20 is a 2-seat sports car that goes up against the likes of the Ferrari F8 Tributo and Lamborghini Huracan. We were supposed to see the MC20, which is loosely inspired by the Alfieri concept, in May, but the unveiling is now postponed until September. Production plans continue, though. The coupe is expected to birth a convertible in 2021. A new twin-turbocharged V6 (no sharing of a Ferrari engine) will initially power the model, although both gasoline-electric hybrid and battery-electric powertrains are expected to join the model line in the coming years. FCA claims the super sports car is the natural evolution of the MC12 that marked Maserati’s return to racing in 2004 following a 37-year absence. In that same sense, Maserati plans to once again return to racing with the new MC20. The MC in the modelname is an acronym for Maserati Corse (or Maserati Racing). Meanwhile, the number 20 refers to 2020, a year which Maserati claims marks the start of a new phase in its history. The car was developed at its Innovation Lab and will be built at the brand’s historical plant in Modena, Italy. To accommodate the model, Maserati is retooling the Modena plant to support the MC20’s advanced electric powertrain option. Additionally, the brand is adding a paint shop. Manley acknowledged that Maserati will have a bumpy year on the heels of a tough 2019. Still, he noted FCA “didn’t delay any Maserati product plans”. Maserati plans to overhaul its portfolio by 2023. FCA hoped to outline its objectives for Maserati at an investor day this month but that briefing is now postponed. That said, the vehicles have not skipped a beat. “Development work for future vehicles is done and now we’re working on the touch and feel areas of the vehicles”, Manley said. A second SUV that slots below the Levante is another new vehicle that Maserati plans to introduce in the coming years. FCA is adding a new production line for the vehicle at its Cassino plant in Italy, which also builds Alfa Romeos. Maserati will also incorporate electric motors in the powertrains of its future models, starting with a Ghibli hybrid. In 2021, the Italian brand will begin producing successors to the GranTurismo coupe and GranCabrio convertible. The 2-door models will serve as the first Maseratis to feature all-electric propulsion. Both will be produced at Italy’s Mirafiori plant, which will serve as a production hub for the brand’s new electrified cars. Furthermore, an electric version of the Levante aims to take on the Tesla Model X. The brand will offer a plug-in hybrid variant of its midsize SUV, too. The Quattroporte will also benefit from electrification. That said, Maserati still plans to offer internal-combustion engines even as it embraces battery-electric powertrain technology. +++
+++ In South Korea, the Environment Ministry is fining MERCEDES-BENZ 77.6 billion won for illegally tampering with emissions tests, the biggest fine ever for a carmaker here (US$1=W1,225). The ministry said Mercedes-Benz, Nissan and Porsche tampered with the emissions of around 40.000 diesel cars sold in South Korea. Mercedes-Benz issued a statement defending its data and said it has “justifiable technical and legal grounds” for them and refused to comply with the ministry’s orders. But the ministry found that the emissions data of 37.154 Mercedes-Benz diesel cars, including the C200d and another 11 models, 2.293 Nissan Qashqais and 934 Porsche Macan S diesels manufactured from 2012 to 2018 had been tampered with. They were found to emit excessive amounts of nitrogen oxide, which is a toxic air pollutant. The selective catalytic reduction devices installed in the cars effectively reduced the nitrogen oxide during testing but operated at lower rates during actual driving. The ministry accused the automakers of installing “illegal tampering software”. The 12 Mercedes models were found to emit up to 13 times the permissible amount of nitrogen oxide or 0.08 g/km. The SUVs from Nissan and Porsche emitted 10 times and 1.5 times more than the limit. The ministry ordered the 3 automakers to take corrective measures and may seek criminal charges. Nissan is expected to be fined W900 million and Porsche W1 billion. Germany’s transportation ministry was the first to raise suspicions over illegal tampering with Mercedes-Benz emissions back in June of 2018. The German government was conducting an exhaustive probe into all diesel cars on its roads after the “dieselgate” scandal triggered by Volkswagen. The Korean government followed suit in June 2018 and the probe spiraled beyond expectations when more and more different kinds of cheating software were found. The probe took more than 2 years to complete. Audi and Volkswagen, which were at the center of the scandal in 2015, cheated on 125.000 cars and 15 models, but the Environment Ministry only fined them W1.4 billion fine; a mere fifth of what Mercedes-Benz will have to pay, because the cap on fines has been raised since. Affected automakers must submit recall plans within 45 days. Mercedes-Benz says it will issue the recalls but not pay the fine. It said the affected cars are no longer produced and the current lineup is not subject to the problem while there are no safety concerns for drivers. +++
+++ On the day MEXICO saw its worst daily increase yet in coronavirus cases, foreign-owned auto plants began setting dates for reopening. Volkswagen de Mexico said late Thursday it is planning to reopen its assembly plant in Puebla state and its engine factory in Guanajuato state on June 1. General Motors said it hadn’t fixed “an exact date” for reopening its plant, also in the Guanajuato city of Silao, but some workers there reported getting notices to report for work on May 18. Pressure is growing both domestically and from the United States for Mexico to re-open manufacturing activities, something president Andrés Manuel López Obrador says could happen by May 17 in areas of the country that haven’t been hit hard by the virus. Mexico has lost about 500.000 jobs because of the pandemic lockdown, and small store owners wrote a public letter to López Obrador complaining they can’t get stocks of basic supplies because hundreds of towns in Mexico have closed themselves off for fear of contagion. In late March, the U.S. government launched a campaign to get Mexico to reopen assembly plants, suggesting the supply chain of the North American free trade zone could be permanently affected if they didn’t resume production. Mexico has said it is working on a joint plan with the U.S. and Canada to reopen factories, especially autoplants. But the dangers of re-opening are evident. On Thursday, Mexico reported its largest one-day increase so far in confirmed coronavirus cases, with almost 2.000 new infections nationwide; a 7.2 % increase compared from Wednesday’s rise. Total deaths neared the 3.000 mark. Volkswagen said in a statement it was reopening “with the aim of getting the needed elements together to ensure a stable supply chain”. In a statement on its reopening plans, GM said: “We are waiting for the plan that the Economy Department will present for a gradual resumption of activities in the automotive industry. As soon as authorities present that plan, we will be able to restart GM operations” in Mexico. But workers at the GM plant in Silao reported receiving messages with a GMC logo telling them to report for temperature checks and health questionnaires at the plant. Mexico says it wants to be cautious, and indicates that hard-hit cities like Mexico City, Tijuana, Ciudad Juarez and Villahermosa probably won’t allow widespread business reopening anytime soon. Assistant Health Secretary Hugo López-Gatell said that re-opening “doesn’t mean that every place is going to get back to the same level of normality”. In the past, officials have mentioned re-opening business in the least-affected states, but limiting inter-state travel through highway checkpoints. However, the usual measures practiced at such checkpoints (taking travelers’ temperatures and asking about symptoms) are of limited use in stopping the spread of the coronavirus. In some places, like the border assembly plants in Ciudad Juarez, across the border from El Paso, Texas, workers have demonstrated against being forced to work in close quarters and with inadequate protection measures. But in other parts of Mexico, many residents appear eager to get back to some semblance of normality. Mexican Twitter users are using the hastag #conlacervezno to bitterly complain about the scarcity of beer and the increase in price for what little remains. The National Alliance of Small Business Owners said it is getting tired of lockdown measures like roadblocks, curfews and checkpoints that are often imposed, quasi-legally, at the local level. “More than 340 townships across the country have taken unreasonable, severe and illegal measures, preventing free movement of supplies into their towns”, the group said in an open letter to federal authorities. López Obrador feels the frustration. “There are whole regions where there are no cases, so there, with a lot of care, with health checkpoints, we can start activities, depending on what happens in the coming days”, he has said. “That way we can start to see economic activity. Which one? The construction industry, export industries, the automotive industry, tourism and other activities”. +++
+++ The current MITSUBISHI Outlander is nearing the end of its lifetime. The current model has been on sale since its 2014 model year, and it’s about time for the Japanese brand to give its SUV a full revamp. It won’t be long, however, until we see the next-generation Outlander. It has been spied testing since September of last year, and it has been confirmed that a new one will debut this year. However, information about the next Outlander is still scarce at this point, as well as its expected styling. What we know is that the Mitsubishi will be sharing its underpinnings with the next-generation Nissan X-Trail, which is scheduled to debut this year, as well. Both SUVs will ride on a platform developed by the Renault-Nissan-Mitsubishi alliance. The Outlander will be using a Nissan engine under its bonnet, marking the first time that a Mitsubishi vehicle will be using a mill from this brand. This signals a deeper alliance between the 2 Japanese marques, furthering the current strategy of cutting costs by sharing product development. Of course, a plug-in hybrid system is most likely part of the powertrain options, which is reportedly going to be shared by Mitsubishi with Nissan. The first model to adopt the plug-in hybrid would be the Qashqai. +++
+++ The expansion of SOUTH AFRICA ’s auto industry is central to the government’s economic development strategy but the coronavirus crisis has forced carmakers into survival mode and could push ambitious growth plans out of reach. Industry officials say the government needs to defer some tax payments for the auto industry and relax the criteria for investment incentives and allowances, or the pandemic could deal the sector a permanent blow. Before the crisis, the government had crafted a plan to supercharge the sector to help revive the country’s struggling economy and form a beachhead for expansion within Africa, the world’s last major untapped market for new cars. But a 5-week lockdown has brought a manufacturing and retail industry that accounts for almost 7 % of South Africa’s domestic product and 30 % of its manufacturing output to a virtual standstill. “Those plans will be impacted massively”, said Mike Mabasa, chief executive of the National Association of Automobile Manufacturers of South Africa (NAAMSA). “Particularly for the short to medium term, that plan is completely out of the window”. South Africa has put its so-called automotive masterplan at the heart of attempts to revive growth through industrialisation after years of stagnation and to bring unemployment down from almost 30 %. The plan aims to boost growth and create jobs by more than doubling the industry’s annual production to 1.4 million vehicles by 2035 and raising the proportion of auto components made locally to 60 % from 39 %. The new scheme comes after a series of auto industry development plans and will be supported by investment and tax incentives that have been in place in some form for years. They include a tax-free cash grant starting at 20 % of the value of qualifying investments, rising to 25 % for component makers, and a tax perk related to vehicle production, known as the vehicle assembly allowance. Mabasa said NAAMSA has asked the government to relax the minimum plant production capacity threshold of 50.000 cars a year needed for the investment incentive as carmakers believe it’s too stringent given the fallout from the crisis. As part of series of requests on behalf of the industry, NAAMSA has also asked the government to use 2019 production numbers and targets for 2020’s vehicle assembly allowance, as output is likely to take a major hit this year. The sector had some relief with the easing of the country’s lockdown on May 1 as it allowed auto manufacturers to return to 50 % capacity. But it has had scant response from the government to its calls for specific financial help, besides requests for more information. NAAMSA represents 41 firms including BMW, Ford, Mercedes-Benz, Isuzu, Nissan, Toyota and Volkswagen, which make some 600.000 vehicles a year in South Africa and export about 65 % of them. Mercedes-Benz South Africa said it was not possible to predict the impact of Covid-19 on the 2035 industry targets. “We have constructive relationships with our key stakeholders in suppliers and the government, and are confident that we will be able to find solutions to maintain the competitiveness of the automotive manufacturing sector”, its corporate affairs manager, Thato Mntambo, told. NAAMSA’s Mabasa warned that if carmakers struggle for liquidity in the crisis they may be unable to fulfil export orders, worth $9 billion a year across the industry. Local component makers focused on autos could also suffer badly. Industry officials said the damage could be permanent and open the way for upcoming rivals such as Morocco and more established centres like Thailand to steal market share. Andrew Kirby, chief executive of Toyota South Africa, said last month that the risk to the country’s role in global auto industry supply chains stemmed mostly from the vulnerability of its smaller component manufacturers. If either vehicle makers or parts manufacturers cannot deliver their products, international customers will rapidly take their business elsewhere, industry officials said. Renai Moothilal, executive director of the National Association of Automotive Component and Allied Manufacturers, said there was a strong possibility smaller firms would not survive and that would be disastrous for the government’s drive to boost local output and double employment in the sector. He said levers the government could pull included levy waivers and support for utility and wage bills, but without help it was not hard to see how an industry that has already lost much of its business case might contract rather than expand. “Once global companies move export contracts, and invest in tools of production in another destination, the costs sunk into that move make it improbable that they would want to bring it back to South Africa”, Moothilal said. NAAMSA’s Mabasa said the overseas headquarters of some local component manufacturers had already indicated they could shift production to divisions outside South Africa. About 90 % of the business of one local supplier, SP Metal Forgings (SPF), is in the automotive sector. Chief executive Ken Manners said the initial 3-week lockdown alone had probably cost it 12 % to 15 % of annual turnover. Another local component supplier, Pressure Die Castings (PDC), said it was expecting to lose 15 % of its turnover for at least 3 months from the start of the lockdown. “If we were only in (auto) manufacturing, we probably would have closed the company”, said Graham Smith, managing director of PDC, which supplies components to several industries. The car sector will benefit from some economy-wide tax measures already announced, such as deferred payments on a carbon tax, but the demands on South Africa’s strained public finances are huge, with many key industries in trouble. With the country’s debt rating now firmly in junk territory and an economic contraction inevitable, there are questions over how it will even pay for measures already announced. Meanwhile, the risk of a return to a more expansive lockdown looms and demand for vehicles at home and abroad has plummeted. IHS Markit senior analyst Walt Madeira said car production will fall too. It forecasts global light vehicle sales will drop to 69.6 million units this year from 89.7 million in 2019, with a 20 % decline in South Africa. And any change of tack by carmakers at the top of the production pyramid will ripple through the industry. “It’s like pushing a big reset button and nobody is quite sure what that means”, SPF’s Manners said. “It’s very worrying in terms of what our businesses are going to look like in 6 months”. +++
+++ TESLA is aiming to restart production in its U.S. car plant in Fremont, according to an email sent by chief executive officer Elon Musk to the staff. The move comes a day after California Governor allowed manufacturers in the state to reopen operations closed due to coronavirus-led lockdowns, even though Alameda, the county where Tesla’s Fremont factory is located, is scheduled to remain shut until the end of May. Manufacturing operations in the county, including Tesla’s only U.S. vehicle factory, are not allowed to operate regularly, according to the county order. Musk has been criticizing the lockdown and stay-at-home orders calling them a “serious risk” to U.S. business, even tagging them “unconstitutional” and saying they would not hold up before the U.S. Supreme Court if challenged. Starting Friday, limited operation will resume at the Fremont factory with 30 % of normal headcount per shift, according to an internal company mail. “Our Gigafactories in Nevada and New York have also begun limited operations as approved by their respective states”, the mail said. However, Musk said employees who feel uncomfortable coming back to work were not obligated to do so. California’s order from Thursday does not supersede the county plan, Alameda Sheriff’s Office spokesman Ray Kelly told. The Fremont plant shut its operations in mid-March after lockdowns were imposed to curb the spread of Covid-19, which has infected over 3.8 million people globally. +++
+++ In the UNITED STATES , the coronavirus pandemic brought the auto industry to its knees, but Americans’ love affair with beefy pickups is helping the Detroit automakers get on the road to recovery. General Motors (GM), Ford and Fiat Chrysler Automobiles (FCA) are expected to resume production at their North American plants on May 18. As assembly lines begin moving, the priority will be to build fullsize pickups and SUVs; Detroit’s most profitable models and the ones most in demand amid the crisis. Overall U.S. sales of cars and light trucks crashed to the weakest pace in 50 years last month. But sales of big Detroit brand pickups, particularly in southern and western states less affected by the coronavirus outbreak, significantly outperformed the market, industry executives and analysts said. Truck sales during the week almost equaled the same week a year ago, said Tyson Jominy, vice president for data and analytics at market research firm J.D. Power. “It’s remarkable”, Mark LaNeve, Ford vice president for U.S. sales, marketing and service, said. Large pickups, including Ford’s F-series line, GM’s Chevrolet Silverado plus GMC Sierra and Fiat Chrysler’s Ram, accounted for nearly 21 % of all light vehicles sold in the United States last month, LaNeve said. Normally, the pickup segment is 13 % to 14 % of total sales. Consumer demand for trucks has held up and so far commercial customers for Ford’s trucks are sticking with orders, LaNeve said. GM chief executive Mary Barra and chief financial officer Dhivya Suryadevara highlighted the strength of U.S. trucks during a call with investors. “As we begin to replenish the pipeline, pickups and full-size SUVs will remain a very high priority”, Barra said. Fiat Chrysler Automobiles chief executive Mike Manley told investors that certain versions of the company’s Ram trucks are in short supply on dealer lots. “It will be a patchwork quilt across the country because some areas are able to sell much more effectively than others”, Manley told analysts. “But what it does mean is that we bring our plants up with a much higher level of dealer orders than people maybe expect”. The resilience of truck demand will be critical for Detroit automakers, as will how quickly the companies can restock picked-over inventories. Overall, forecasters expect global vehicle demand, and North American car and light truck sales, will be sharply lower this year because of the coronavirus. Forecasting firm IHS Markit last week forecast 2020 U.S. vehicle sales will fall to 12.5 million vehicles, warning that expected government pump-priming efforts “are not enough to prevent a collapse in auto sales”. Trucks can generate much-needed cash for the Detroit Three. Sales during the past month have been driven by discounts and manufacturers’ offers of no-interest loans for as long as 7 years, said J.D. Power’s Jominy. “You’re talking about unprecedented deals”, he said. But Ford’s LaNeve said discount costs were up only $400 to $500 a vehicle in March and April compared to earlier in the year. Deals depend on the truck. The average Ford F-series Super Duty is selling for about $56,000, LaNeve said. Discounts on those models average just $2,000. +++
+++ VOLKSWAGEN sees demand rebounding in China, helped by new buyers switching from public transport and sales of premium vehicles, but warned business would not recover from the coronavirus crisis as quickly in other parts of the world. Sales of passenger cars in China were above year-earlier levels in the last week of April, executive Jürgen Stackmann, who is responsible for passenger car sales and marketing at the VW brand, said. “It is clear to see that China will go through a V shape (recovery)”, he said. “We are not counting on a V shape recovery for Europe”. In April, sales in Germany were down 60 % on the year, with the rest of Europe down 85 % as some major markets like Italy and Spain ground to a halt, Stackmann said. Sales in North America were down 50 %, and down 81 % in South America, he added. Among the most active buying groups in China are people who do not already own a car, Stackmann said. “There might be a trend toward individual mobility since people want to avoid public transport these days”, he said, noting that VW’s Chinese budget brand Jetta had picked up market share following the relaxation of coronavirus lockdown rules. “Jetta in the first month of reopening has been a very, very strong month”, Stackmann said, adding that unlike Europe, China still had lots of first time car buyers. Volkswagen’s China executive Stephan Wöllenstein said first-time buyers now accounted for 60 % of customers in China. Wealthy customers have also returned to the market, leading Volkswagen’s upmarket Bentley, Audi and Porsche brands to record year-on-year growth in the first quarter in China, despite the lockdown aimed at containing the virus, Wöllenstein said. “Should the current trend continue, we at Volkswagen Group China can be cautiously optimistic and forecast a yearly result that is not far away from our original plan”, he added, referring to targets set before the pandemic hit demand. Outside China, factories and showrooms are only gradually re-opening, resulting in an uneven recovery in demand, Stackmann said. “We will see a 2-speed Europe. Southern Europe was hit really badly. Italy, Spain and to some extent France. We expect recovery to take much longer, it will be bathtub shaped”, he said. Northern European countries, including Norway, Sweden, Denmark and Germany fared better. In Germany, sales to fleet customers remained almost at normal levels in April compared with a year earlier, he said. Pre-booking for the ID.3 electric car stands at 37.000 vehicles, with demand coming from across Europe and strongest in Germany, Stackmann said. Aside from seeking government stimulus measures, Volkswagen is adapting its financing and leasing offers to make downpayments more palatable. Some financing offers will be stretched to 72 months, instead of 36, and Volkswagen will offer unemployment insurance, which allows new car buyers to suspend payments if they lose their job. “Financing will become the main instrument for the industry in the months to come”, Stackmann said. +++
