+++ BENTLEY says it’s braced for a “challenging” second half of the year after posting a drop in sales for the first 6 months of 2023. This was down to “continued economic uncertainties” which has affected supply of parts and “difficult trading conditions” for the Crewe-based manufacturer; something it expects will continue. Despite the 302-car fall (7.096; -4% on 2022), the firm held onto its 8-month order book which it said showed demand hadn’t waived. This was backed by revenue (£1.44 billion; -2%) and pre-tax profits (£33.3 million; -2%) remaining stable, with any larger drop saved by an increased demand for personalisation from its Mulliner division. This resulted in an average selling price of £225,000 per car, up from £213,000 in the same period last year. A push for exclusive and limited-edition models, like the Continental GT Le Mans special and the £1.5 million coachbuilt Bentley Mulliner Bacalar, again added to this. The Bentayga again was the brand’s most popular model, with 44% of total sales (3.122). The Bentley Flying Spur accounted for 24% (1.703) and the Continental GT plus Continental GTC combined for 32% (2.271). Across the globe, the drop in sales was mainly seen in the Chinese (1.512; -7%), European (1.340; -12%) and the United Kingdom (688; -13%) markets. The Americas (Bentley’s biggest market) saw a minor 3-car drop to 2.065. Only the Asian Pacific (963; +5%) and Middle Eastern (528; +11%) markets posted upticks in sales. Boss Adrian Hallmark called the results “positive”, but noted caution. “The positive results for the first 6 months are largely a reflection of a consistent order bank amassed over the previous months and years. Although our current order run rate is good, it is slightly down on the highs we reached in some of our key markets last year. “We expect challenging conditions in the second half of the year and so will monitor our supply and stock levels accordingly to ensure our quality of sales is maintained, and adjusted, if we so need as the year continues”. +++
+++ For foreign automakers in CHINA , it is time to double down on a turnaround or cut losses after ceding their leadership of the world’s biggest auto market to local, upstart brands. Announcements from some of the world’s largest automakers in recent days show they are taking a divergent path: some German brands and General Motors are betting on new electric vehicles, while Toyota and others have shifted to cost-cutting mode. For the first time, Chinese brands are market leaders, taking a 53% share in the first half of 2023, data from the China Association of Automobile Manufacturers (CAAM) showed. Global automakers, who for years have dominated the market along with their Chinese state-run partners, have been slow to pivot to the fast-growing market for EVs with competitive offerings. That has been costly. Tesla, which has its largest factory in China, was the only foreign brand to take share in the first half, topping BMW in popularity, according to CAAM data. With added pressure on China margins from a brutal price war this year, some automakers are scaling back with production cuts and layoffs, including Toyota and Mitsubishi. But brands that drew a third of their sales from China before this year’s wipeout have no choice but to double down, said Yale Zhang, managing director at Shanghai-based consultancy Automotive Foresight. That includes Volkswagen and General Motors. Volkswagen, which has been outsold by BYD since late 2022, announced 2 agreements on Wednesday aimed at strengthening its position in China: a partnership with China’s Xpeng to build 2 new models from 2026 featuring Xpeng’s software, and plans to jointly develop Audi models and a new platform with its Chinese partner SAIC. “This major collaboration between VW and Xpeng is a milestone for our electrification strategy ‘in China for China’ “, said Ralf Brandstatter, a Volkswagen board member on his social media account. GM, which saw a 9% decline in its Buick, Chevrolet and Cadillac sales in China in the first half, has been counting on EVs developed on its Ultium platform to turn things around. It has sold more than 12.000 Ultium-based EVs since the first model, the Cadillac Lyriq, started sales a year ago. Last month, General Motors cut the price of the luxury Lyriq by 14% in China. “We’ve got to have the right EVs at the right price with the right technology”, General Motors CEO Mary Barra told investors on a conference call, referring to the company’s China strategy. “Volkswagen and General Motors, who have historically been leaders in the market, both believe they can salvage their positioning and protect the share they currently have”, said Tu Le, an analyst at China-based research firm Sino Auto Insights. “It points to how important China is for their global ambitions and, to a lesser degree, the confidence that they can ultimately design, engineer and manufacture products that can compete with Tesla and China EV Inc”. The price war has cut into margins for Chinese EV makers too, and many remain unprofitable. Their deeper pockets give established foreign automakers who are determined to fight for share in China, the ability to play a long game. “We’ll allow our enemies to fight first, and we will come back with bags of money and technologies to take them”, Yang Honghai, chief operating officer of Kia China, said at an industry forum in June. “We are not giving up on the market but only choosing to come back at a more appropriate time”, he said. Kia is to enter China’s EV market with its first electric car, the EV6, via imports in August. German luxury brands BMW, Mercedes Benz and Volkswagen’s Audi managed to hold share roughly flat in China in the first half after offering dealer discounts that topped 25% in some cases, according to sales data and analysts who track pricing. BMW also announced an increased investment in product development in China with a new research and development hub in Shanghai to develop EVs to be sold globally. “The German brands benefit from significant global scale”, said He Lei, CEO of Chinese EV trading platform xChuxing. “Meanwhile, they are continuously chasing Chinese competitors with China-developed products. How can they not be competitive?” Some are pulling back. Mitsubishi has closed a plant run with a joint-venture partner that makes the Outlander while the 2 companies try to negotiate a restructuring after sharp sales declines. Toyota, which fell to No. 3 in China in the first half, has slowed production at a joint-venture plant that makes its BZ4X and laid off 1.000 contract workers. Nissan, which will bring 4 new models to China, including an EV, said this week it would consider exporting cars from China to other regions to take advantage of China’s cost advantages; a strategy Tesla, BMW, Ford and Renault have also pursued. “China is not just a place to sell cars. It’s also a place to drive economies of scale, which lower your cost and improve your ability to compete internationally”, said Bill Russo of Automobility, an industry consultancy in Shanghai. +++
+++ HYUNDAI said Wednesday that its second-quarter revenue increased 17.4 percent year-on-year to 42.2 trillion won ($33 billion), and operating profit rose 42.2 percent to 4.2 trillion won. This was backed by continued strong demand for its electric vehicles (EV), SUVs and luxury models around the world. The company’s operating profit margin for the period hit 10 percent, the highest since the second quarter of 2013. Its net profit including non-controlling interest was also up by 8.5 percent to 3.35 trillion won. Hyundai sold over 1.05 million vehicles around the globe in the second quarter, an 8.5 percent increase from a year earlier. Sales in markets outside of Korea were up by 7.6 percent to 854.210, and sales in Korea increased by 12.7 percent to 205.503. The overall sales increase, especially for SUV and Genesis luxury models, as well as favorable exchange rates, helped lift revenue in the second quarter. Hyundai also sold nearly 78.000 EVs in the period; an increase of 47 percent from a year earlier. The company expects to strengthen sales momentum through production improvements as chip and component supplies stabilize worldwide, cementing demand for the brand. It will enhance profitability despite global uncertainties, such as interest rate fluctuations and accelerating inflation. Hyundai maintains its annual sales target of 4.32 million cars and investment plans totaling 10.5 trillion won. The firm said it will continue its dividend policy of guaranteeing a payout ratio of 25 percent or higher as well as quarterly dividend of 1.500 won per common share starting from the second quarter, the firm said during a conference call. “We will secure robust profitability and achieve its annual guidance through increased sales, enhanced product mix with more SUVs and luxury models, and production rate recovery; factors that will translate into a high dividend payout ratio”, a Hyundai official said. “The company will continue to strengthen its global leadership position in eco-friendly EVs including the Ioniq 6 and Ioniq 5 and more models, like the Kona EV, the Genesis GV60, the Electrified G80 and the Electrified GV70 in markets around the world”. It launched the Ioniq 5 N, its first high-performance EV model, to further solidify its global EV leadership. In addition, the Ioniq 6 will be introduced in more markets around the globe. Hyundai expects its fifth-generation Santa Fe midsize SUV will strengthen its solid sales momentum this year. +++
+++ The Hyundai Motor Group is poised to produce electric vehicles, including the flagship Ioniq 5, in INDONESIA equipped with battery packs made at its manufacturing plant there from August 2024, ramping up production to allow hefty EV tax incentives. “Hyundai Energy Indonesia will be producing battery packs from July 2024 using cells made by Hyundai Motor Group and LG Energy Solution’s joint battery manufacturing plant. A month later, the packs will be put into EVs produced in Indonesia”, said Lee Young-tack, president of Asean headquarters at the Hyundai Motor Group, during a panel discussion at the Business Forum on 50 years of Indonesia-Korea Relations held at a Seoul hotel on Tuesday. Hyundai Energy Indonesia is a battery pack manufacturing joint venture by Hyundai Motor Group and its automotive parts unit Hyundai Mobis. Producing electric cars with battery packs made in Indonesia “will help Hyundai to manufacture more than 40 percent of EVs locally and even up to 60 percent”, Lee added. “It will allow us to be the only automaker eligible for tax incentives, including exemption on the 15 percent luxury tax”. The Indonesian government cuts value-added tax from 11 percent to 1 percent and provides exemptions on the 15 percent luxury tax once more than 40 percent of the manufacturing process of EVs is carried out locally. Hyundai’s Ioniq 5, together with the China-based Wuling Air EV, are eligible for additional subsidies worth 70 million rupiah ($4.700) per car. Highlighting the company’s grand plan to expand exports to Southeast Asia from Indonesia, Lee said, “Asean countries like Indonesia grant tariff-free exports if a carmaker meets the 40 percent requirement. Thailand and Indonesia, in particular, are scrambling to secure the upper hand in the EV market. We can export battery cells and packs from Indonesia to Thailand and benefit from Thailand’s government’s EV incentives as well”. With a $1.1 billion investment, the Hyundai Motor Group and LG Energy Solution set up a joint venture called HLI Green Power. It plans to construct a battery cell manufacturing plant in Karawang, Indonesia, adjacent to Hyundai’s Indonesia plant in Bekasi. Scheduled for commercial operation in April 2024, its annual production capacity is projected to be 10 gigawatt-hours. According to Gabungan Industri Kendaraan Bermotor Indonesia, Hyundai’s Indonesia branch sold a total of 18.208 cars, up 93.1 percent from last year, during the January-June period. The Ioniq 5 sold over 3.500 units. Its market share increased to 3.6 percent. Following the Indonesian government’s incentives, the automaker increased its monthly target production volume to more than 1.000 units from May. +++
+++ KIA said Thursday its second-quarter net profit jumped 50 percent from a year earlier, helped by a weak won and an improved product mix. For the 3 months ended in June, net profit soared to 2.82 trillion won ($2.2 billion) from 1.88 trillion won during the same period of last year, the company said in a statement. “A combination of a weak won, increased production amid eased chip shortages, increased sales of high-end models, and reduced incentives for customers who purchase Hyundai vehicles gave a boost to the quarterly bottom line”, the statement said. The U.S. dollar rose to an average of 1,315 won in the second quarter from 1,260 won a year earlier. A weak won drives up the value of an exporter’s dollar-denominated earnings when converted into the local currency. Robust demand for the all-electric EV9, launched in the domestic market in June, and other high-end SUVs also helped the quarterly results, Kia said. Operating profit also jumped 52 percent to 3.4 trillion won in the second quarter from 2.23 trillion won a year earlier. Sales rose 20 percent to 26.24 trillion won from 21.88 trillion won during the cited period. Looking ahead, Kia expected high interest rates, high consumer prices, and geopolitical risks will remain worries for the company in competition with its rivals in global markets. From January to June, net income surged 69 percent to 4.94 trillion won from 2.91 trillion won a year earlier. Operating profit soared 63 percent to 6.28 trillion won in the first half from 3.84 trillion won a year ago. Sales were up 24 percent to 49.94 trillion won from 40.23 trillion won. +++
+++ NISSAN plans to invest 600 million euros in Ampere, Renault’s electric vehicle and software entity in Europe. The 2 companies also plan to establish more equal cross-shareholdings in the French-Japanese auto alliance, they said Wednesday. The change will end a disparity that had caused friction between the automakers. The Renault Group and Nissan will retain 15% cross-shareholdings in each other, and Renault will transfer 28.4% of its Nissan shares into a French trust, to keep voting rights of each side at 15% of the total, the companies said in a statement. “The agreements that have been signed today allow us to step into the next chapter of the alliance”, said Jean-Dominique Senard, chairman of the alliance. The change is subject to regulatory approval. When the alliance was set up in 1999, Nissan was on the verge of bankruptcy. The deal initially announced earlier this year also calls for the companies to work together on marketing, vehicles and technology in Latin America, India and Europe. Nissan also announced financial results, which showed that its net profit more than doubled to 105.5 billion yen in April-June. Sales in most markets were robust, offsetting weakness in China, it said. Weakness in the Japanese yen also helped Nissan’s bottom line. A weak yen raises the value of Japanese companies’ overseas earnings when they are converted into yen. Quarterly sales grew 36% from a year earlier to 2.92 trillion yen ($20.8 billion). Nissan lowered its sales forecast for the year through March 2024 to 3.7 million vehicles, down from an earlier projection of 4 million vehicles. That target is still better than the 3.3 million vehicles sold in the previous fiscal year. The Yokohama-based maker of the Leaf and Infiniti luxury brands still expects its profit to hold up thanks to the boost from the weak yen. Nissan is forecasting a 340 billion yen ($2.4 billion) net profit for the fiscal year through March 31, 2024. It earlier forecast a 310 billion yen profit. It earned nearly 222 billion yen the year before. The Nissan-Renault alliance has had its ups and downs. Carlos Ghosn, sent in by Renault to lead a turnaround at Nissan, was a star executive until his arrest in Japan in late 2018 on various financial misconduct charges. The alliance, which includes smaller Japanese automaker Mitsubishi, has sought to put that scandal behind it. Ghosn now lives in Lebanon, after jumping bail in late 2019. He recently filed a $1 billion lawsuit in Lebanon against Nissan. Lebanon has no extradition treaty with Japan. A hearing date for the case in Lebanon is set for September 18. Ghosn said half the money he is seeking is for damages, while the other half is for compensation including salary, retirement funds and stock options. Nissan has declined comment. Chief executive Makoto Uchida said reset alliance is moving ahead with its electrification drive. “With the finalization of the definitive agreements, we have entered the next phase of collaboration with Renault and Mitsubishi in mutually beneficial areas of innovations”, he said. Uchida acknowledged that the China market is a challenge. “As the business environment in China is changing drastically and competition is becoming fiercer, it will be difficult to rebuild our business overnight”, he said. +++
+++ The popularity of coupe-type SUVs like the XM3, or RENAULT ARKANA , manufactured by Renault Korea Motors is increasing, as evidenced by the June sales of the vehicle model jumping to 4.956, up 29.3 percent from the year before, according to the firm, Monday. A total of 97.652 units of Renault Arkana were sold over the past year, leading the Korean automaker’s export growth. Anchoring the robust sales is its soaring popularity in Europe where over 80.000 Arkanas were sold last year, nearly double from 41.800 a year earlier. Renault Korea exceeded 100.000 sales in June of last year less than 2 years after it first exported the Arkana in 2021. The SUV topped 100.000 additional sales the following year. The firm said the SUV is gaining popularity for its stylish design, fuel economy and steering performance sturdy enough to travel rough roads in Europe. The CMF-B platform used in Renault and Nissan is famous for its ability to maintain stability at high speeds. The platform-commanded suspension holds to any road, making for stable, fast and safe driving. The SUV model has plenty of cargo room of 516 liters and back seat leg room, providing a comfortable space. XM3 E-Tech Hybrid has a fuel efficiency of 17.5 kilometers per liter in Korea. It provides one-pedal driving and a 100 percent electric mode, both of which have been well received. One-pedal driving lets drivers use only the accelerator pedal to help control the deceleration of the vehicle or bring it to a complete stop under certain conditions. The vehicle’s engine and the electric motor run together, making it possible to drive dynamically with high-efficiency fast acceleration functions. In 2021, the Renault Arkana won Car of the Year and Hybrid of the Year in Spain and Sweden. In 2022, it won Best Hybrid and Best Compact SUV awards in the United Kingdom and France. +++
+++ TOYOTA ranked top in global vehicle sales in the first half of 2023, according to data released by the leading Japanese automaker Friday. The group retained the top spot for the 4th straight year on the first-half basis. Its global automobile sales, including those by subsidiaries Daihatsu and Hino, rose 5.5 pct from a year earlier to 5.41 million units, exceeding 4.37 million units sold by the Volkswagen Group in the first 6 months of this year. The Toyota group’s rosy sales were supported by the popularity of the Camry and the RAV4 in North America, and of the Yaris and the Corolla in Japan. Global sales of Toyota alone in January-June surged 12.1 pct to a record 4.89 million units, surpassing 4.64 million units set in the first half of 2019, before the Covid-19 pandemic. The climb was due to an easing in semiconductor shortages and production cutbacks reflecting the pandemic. Toyota was able to boost auto output by implementing measures, such as increasing production lines, at plants in North America, Europe and Asia. +++