A publication from October 2012 Volume 01 | Issue 08 global

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Fight for survival Automakers in Europe target plant closures to stop the bleeding caused by low demand, price war

A publication from © 2012 Crain Communications Inc. All rights reserved. Inc. Communications Crain © 2012 March 2012 Volume 01 | Issue 01 dAtA Keyglobal Paris monthly show Toyota wants JATO data shows brought to youwww.jato.com courtesy of designs, including more European Unit Percent Europe winners months change change– months 9 2010 9 +67,087 Panamera wagon partsmakers 2011 6,307 –20% in first 8 months 73,394 –27,600 –10% 135,284 WESTERN EUROPE SALES BY MODEL,Unit 9 MONTHSPercent 107,684 –13,065 8% months ...... 133,366 change change A1 ...... +4,062 – 9 months 9 2010 –15% 120,301 51,950 2011 –20,618 3% A3/S3/RS3 +14,255 137,093 ...... 56,012 220 26% +316 A4/S4/RS4 ...... +1,436 116,475 22% 14,475 7% ...... 12,340 +2,088 A6/S6/RS6/Allroad 5,549 +966 12,656 9,386 –9% 6,985 –9% Scenic/Grand Scenic ...... –2,466 A7 ...... 13,435 –5,538 11,474 27,159 15% ...... 14,401 –19% Espace/Grand Espace +1,085 A8/S8 59,925 –253 ...... 24,693 7,057 –45% 54,387 3% Koleos –483 TT ...... 1,318 ...... 8,142 1,075 –10% ...... 1,065 +1,618 23% Kangoo 592 –85,087 A5/S5/RS5 47,585 +1,852 ...... 832,216 –10% 49,203 68% Trafic –96,250 R8 ...... 8,004 +268 ...... 747,129 –4% 9,856 Other ...... 994,894 –48,508 ...... 395 10% 898,644 –1% Q5 663 +45,088 Total Renault brand 1,288,257 –76 ...... 1% ...... –6% Q7 463,338 +13 1,239,749 9,687 –189 ...... 508,426 981 RENAULT ...... 9,611 – Other –25% 3,150 ...... 994 –46 – RENAULT-NISSAN 2,961 –1,053 Total Audi ...... +179 ...... 1,055 –10% 184 14 –52% 9-3 2 –1,318 – Continental GT/GTC ...138 –28 9-5 ...... 13,892 –2 193 54 10% 12,574 2 –10% Continental Flying Spur +118 ...... 26 –36% Other – –1,320 Mulsanne 1,233 –5 ...... 13,894 –13% 1,351 – Total Saab ...... –876 ...... 14 12,574 6,814 –25% Other ...... 9 +22 Spyker brand –2,629 – –10% ...... 5,938 – Total Bentley –28 SPYKER 10,383 +2,048 ...... 22 293 –92% ...... 7,754 – –1% Bugatti –65 Impreza –50 ...... 265 71 33% ...... 2,048 –71% Aventador +1 9,879 ...... 6 Legacy/Outback 9,829 –2,205 3 –19% ...... 3,110 –12% Gallardo ...... 4 –70 Trezia 905 –3,712 367 2% ...... 30,186 –26% Murcielago +50 Forester –9,240 ...... 297 2,733 –5% ...... 26,474 35,751 –26% Other ...... –79 Other –3,870 2,783 1,574 –3% ...... 26,511 14,669 17% Total Lamborghini –312 SUBARU +6,546 ...... 1,495 9,301 –9% ...... 10,799 39,466 116% Boxster –436 Alto +669 ...... 8,989 5,072 48% ...... 46,012 577 –31% Cayman +4,052 Splash –4,011 4,636 309% ...... 1,246 –10% 911 ...... 8,384 +182 Swift 12,880 –2,253 ...... 12,436 13% ...... 8,869 59 Kizashi 23,070 Panamera 241 +3,457 20,817 5% ...... 27,123 –13% Jimny ...... +519 Cayenne –4,075 –77% ...... 30,580 31,083 121% SX4 ...... 10,600 –91 Other ...... +6,506 11,119 –9% 27,008 5,392 5% ...... 118 Total Porsche +5,985 Vitara/ 27 –11,731 ...... 11,898 –6% 137,131 –21% Altea 114,589 –3,234 Grand Vitara/XL-7 –3,250 ...... 120,574 –5% ...... 125,400 15,880 29% Alhambra 54,359 –986 Other +682 51,125 –88% ...... 12,630 2,389 –8% Ibiza ...... 18,124 –173 SUZUKI –189 2% 3,071 2,264 –91% ...... 17,138 196 XF ...... –747 Leon 23 +4,023 2,075 822 –16% ...... 9% XJ ...... –3,504 Exeo 223,743 +8,764 75 –67% ...... 227,766 93,051 3% XK ...... 21,355 –2,360 Other +3,066 ...... 17,851 –11% ...... 101,815 16% Other 3,504 –2,410 Total Seat 94,156 +4,731 ...... 1,144 –14% ...... 97,222 12% Total Jaguar 22,351 –1,482 Fabia 29,947 +1,845 ...... 19,941 – ...... 34,678 19% Defender 10,673 +2,426 Octavia 16,004 +5,624 ...... 9,191 – –10% ...... 17,849 –87% Freelander –1,484 Superb 29,215 –179 ...... 2,426 14,420 39% ...... 34,839 205 9% Discovery ...... +1,685 Roomster 26 +23,851 12,936 4,310 –60% ...... –56% Range Rover Evoque...... –6 Yeti 262,578 –14,223 5,995 10 –7% ...... 286,429 25,336 0% Range Rover Sport...... 4 –3,631 Other +1,129 55,268 –32% ...... 11,113 –2% Range Rover –402 Total Skoda 261,899 –7,572 ...... 51,637 1,278 –17% ...... 263,028 4% Other ...... 876 –54 Fox 367,403 +2,414 318 –71% ...... 359,831 107% Total Land Rover –716 Polo 62,784 +6,991 ...... 264 1,015 –45% 65,198 40% Indica –1,172 Golf ...... 6,550 ...... 299 2,611 –11% ...... 13,541 +48,415 5% Xenon –8,307 Golf Plus 121,056 +809 ...... 1,439 79,234 –21% 169,471 42% Other ...... –590 Jetta ...... 16,010 +668 70,927 2,765 –40% ...... 16,819 –24% Total Tata brand...... –1,595 Passat 1,604 2,175 4,023 –59% ...... 2,272 –6,653 –1% TATA MOTORS ...... –614 Passat CC 27,677 –83 2,428 1,041 –48% ...... 21,024 32% Cuore/Charade 427 –3,200 Phaeton 10,432 ...... 6,655 –82% ...... 10,349 +21,789 343% Sirion –323 Scirocco 68,935 ...... 3,455 395 –43% 90,724 +26,300 7% Materia 72 –6,322 – Eos ...... 7,674 ...... +5,286 Terios 14,879 +11,058 ...... 33,974 74,469 60% ...... 8,557 – Touran +6,297 Other –37% ...... 79,755 29% ...... 11,058 –43% Sharan 10,580 +9,220 Total Daihatsu –1,897 –3,460 ...... 16,877 5,102 –59% Tiguan 32,148 CT ...... 3,205 8,071 –512 ...... 41,368 –2% 4,611 37% Touareg –705 ...... 870 ...... –44% IS 358 +5,189 Caddy 36,198 ...... 14,043 –46% 35,493 –3,598 9% RX –8,780 ..... 8,095 ...... 19,232 19,081 0% Transporter/Caravelle/ +96,484 Other –156 4,497 8% ...... 10,301 64,398 –15% Multivan/Shuttle/T5 1,138,850 +172,946 Total Lexus –17,304 8% ...... 1,235,334 25% ...... 64,242 113,795 Other ...... 2,117,246 +1,544 IQ +4,909 2,290,192 6,237 –29% ...... 96,491 58,156 –9% Total VW brand...... –171 Aygo –474 7,781 589 –1% ...... 63,065 5,137 –47% VOLKSWAGEN –94,999 Yaris –16,920 ...... 418 ...... 4,663 36,364 –15% OTHER .... 10,003,117 Auris –6,705 – (China automakers) 9,908,118 ...... 19,444 OTHER Corolla 44,265 +13,297 ...... 37,560 – –2% GRAND TOTAL Prius ...... –501 ...... 13,297 –53% Avensis 27,348 –6,009 Excludes models registered as commerical vehicles. Europe sales by model are compiled ...... 26,847 –16% Note: Verso-S 11,376 –5,640 using sales data from the following countries: Austria, Belgium, Denmark, Finland, France, ...... 5,367 –15% Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Verso 35,679 –1,290 ...... 30,039 –52% Sweden and Switzerland. Urban Cruiser 8,445 –993 ...... 7,155 –11% RAV4 1,907 Source: JATO Dynamics +44(0) 20 8423 7100 (www.jato.com) ...... 914 –46,566 –11% Land Cruiser 425,951 379,385 –47,699 Other ...... 454,873 407,174 this global monthly is property of John doe Total Toyota brand...... TOYOTA MOTOR

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NY-12-0530-Automotive Industry Ad v2.indd 1 2/8/2012 5:07:15 PM October COMMENTARY Volume 01 | Issue 08

Hottest U.S. segment gets jolt from trio of high-demand mid-sized cars

Not only are U.S. auto sales headed labor costs, the only remaining edge for toward a third straight year of double- a competitor is in manufacturing digit growth, its hottest segment just economies of scale. got a jolt of new-product juice. In simpler times, Chevrolet sold 1 September was launch month for the million 1965 Impala sedans in an 8 Honda Accord, Ford Fusion and million U.S. market. Nobody dominates Chevrolet Malibu, three new- like that anymore. generation mid-sized sedans. All-new But the top mid-sized model is always versions of the Toyota Camry arrived America's best-selling car. Last year, last September and the Nissan Altima Toyota sold 308,510 Camrys. Next year, debuted in the spring. the winner is likely to top a third of a A buyer can walk into the showroom of million. any of the top five U.S. brands and Whoever the sales winner is -- the all- drive out in a mid-sized sedan that has new Camry has a solid but not been completely redesigned in the past Jesse Snyder is senior writer at insurmountable lead the past 12 12 months. Even the next four best- Automotive News. months -- also automatically becomes selling cars in the segment have been the "Middle C" of the U.S. car market. redesigned or greatly refreshed since 2010: the Hyundai Sonata, Volkswagen These new models are among the first Just as a piano tuner gets the Middle C Passat, Kia Optima and Chrysler 200. fully designed and developed since the key to tuning-fork perfect then adjusts 2008 auto meltdown. They have the notes and octaves of all the other The stakes are huge. Even with three features that appeal to changed keys from that, automotive designers, aging carryovers among the top five, American preferences for better fuel developers and marketers tune their the mid-sized segment grew to almost economy and connectivity. Most responses to the top car. For the past half of all passenger car sales through versions come with four cylinders and decade, the Camry has been the U.S. the first eight months, jumping 26 six-speed automatic transmissions market's Middle C -- or in less elegant percent in a U.S. market up 15 percent tuned for mileage. language, everybody's target. It's a role overall. And now that all five top the Volkswagen Golf plays in Europe. models are new and marketing In the past five years, Hyundai, Kia and competition is ramping up, forecasters Volkswagen have opened U.S. assembly Before the Camry, the Middle C was expect the entire segment to grow plants to make all their mid-size cars. the Honda Accord, and before that, the even faster. And Toyota, Nissan and Honda have Ford Taurus. Both automakers would shifted virtually all mid-sized car love to wear the target again. But with "As marketing and competition production to North America from more structural equality, there are increases, we think the entire mid-sized Japan. several automakers capable of taking a segment will expand," said Jesse shot at it. Toprak, vice president of TrueCar.com. With all competitors now North American based and roughly equal on

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How the recession hurt brand loyalty

The average American now keeps a new vehicle for about six years, according to R.L. Polk and Co. (Photo: Reuters)

Nick Bunkley As a result, Polk says the average Adding to that trend, dealers and American now keeps a new vehicle for analysts say they have seen more Many consumers who are finally ready about six years, up from around four consumers willing to cross-shop to buy a new vehicle after waiting out years before 2007. domestic and import brands recently, the recession are up for grabs. particularly after last year's earthquake "They're almost like a first-time buyer The longer an owner keeps a vehicle, in Japan caused vehicle shortages at when they return to market, and they the more likely the owner is to replace many U.S. dealerships. become a conquest opportunity," says it with a product from a competing Brad Smith, director of Polk's loyalty Big differences in market brand, according to data from R.L. Polk management practice. "It's going to be and Co. The decline in loyalty, though The market has changed significantly a situation where everyone's going to gradual, means that many automakers since many people last bought a be scrambling for every tenth of a point and dealers will need to work harder to vehicle: Brands such as Pontiac and of market share as these customers are retain customers. Mercury are kaput, while Korean and returning to market." domestic companies that many Job losses, wage cuts and general Polk's latest data show that 46.2 shoppers ignored in the past now offer economic uncertainty in recent years percent of consumers who go three much-improved lineups. Toyota and caused many people to delay buying a years between buying new vehicles Honda have even lost some of the new car or truck. Leasing, which puts choose the same manufacturer for their magic that used to bring buyers back buyers back in the market every two or next purchase. Loyalty rates decline again and again. three years, became almost nonexistent steadily for each additional year, during the downturn. "Overall, the general consumer realizes dropping to 39.8 percent at nine years. that cars are better today than they

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were in the past," says Arthur Henry, competitive or does not offer a vehicle "It's absolutely the dealership's manager of market intelligence for in the segment they now desire. relationship with the customer that Kelley Blue Book. "It emphasizes that keeps them coming back," Fein says. Shoppers also might discover that the you can't rest on your laurels. There are salesperson they liked in the past is Dealership service departments play a others around to take your place." gone or even that the dealership greater role in sales today, says Smith, On average, loyalty rates are likely to closed, further reducing their the Polk consultant. Encouraging decline across the industry as pent-up attachment to that manufacturer. customers to go there for oil changes demand from the recession is released, and repairs -- which are needed more "When you lose that connection, Henry says. with the average vehicle now about 11 you're creating a scenario where the years old -- instead of an independent Erich Merkle, chief sales analyst at Ford consumer can go cross-shop," Smith garage is critical to promoting loyalty. Motor Co., says the company has "a says. "The consumer has too many great opportunity" to get on more options." "If a dealer isn't seeing their customers people's shopping lists, given how twice a year, you can almost bet that Toyota says dealers shoulder much of much the Detroit 3 have struggled to those customers will defect," he says. the burden to keep buyers from overcome negative perceptions. "If they can get them back in for looking elsewhere because that is service, they've got a better "I'm happy that we'll have more where the relationship with the opportunity to get them back for their customers out there doing that company is formed. Having a fresh, next new vehicle." homework and comparing us to other appealing vehicle lineup is the other big automakers," Merkle says. factor, says Nancy Fein, vice president In some cases there is nothing an of customer relations at Toyota Motor automaker can do to stop consumers Analysts say Hyundai, Kia and Sales U.S.A. from switching. Volkswagen, brands that have become more prominent in the past decade, are Kelley Blue Book ranked the Toyota "They say, 'I really enjoyed this car for among those expected to have the brand first in shopper loyalty in the 10 years, but now I'm ready for most success attracting shoppers who second quarter, as it has for five of the something different,'" says Neil Kopit, want a change. nine most recent quarters. Of the director of marketing for Criswell Toyota owners shopping with the help Automotive in Gaithersburg, Md. "Five to seven years ago, people would of its Web site, 52 percent were come in and we'd have to explain why Criswell, which has Chevrolet, Honda, considering the brand again, up from a Sonata is worth buying rather than a Nissan and the full family of Chrysler 48 percent during its recalls but below Camry. They had to be convinced of Group franchises, trains its sales staff to the 56 percent that it had registered that," says Scott Falcone, owner of sell vehicles from any of those brands. before that. The industry average, World Hyundai in Matteson, Ill. "Now, Says Kopit: "That is very important, Kelley Blue Book says, is 35 percent. the product is just so good." because you keep the customer loyal to Toyota's complimentary two-year you even if they're not going to remain 'Too many options' maintenance program, begun after its loyal to the brand." In addition, people's lives can change recall crisis in 2010 and formalized as Small gains and losses in a company's considerably over six years, altering Toyota Care in early 2011, is one way loyalty rate can have a big sales impact. their vehicle needs in the process. A the company is helping to strengthen General Motors says an improvement couple with a small sedan might now the bond between dealers and of 1 percentage point means about have several children and want a customers. Fein says getting buyers to 25,000 vehicles and $700 million in minivan, or empty nesters could be visit their Toyota dealership for service revenue annually. ready to ditch their SUV for a luxury three to five times doubles the vehicle or a sports car. They could find likelihood they will stay with the brand. Mike Colias contributed to this report that their current brand is less

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A new heyday for J Mays

Once criticized as an underachiever, Ford's design chief feels vindicated by raves for the Fusion

Bradford Wernle Designs such as the Ford Five Hundred sedan and Freestyle crossover, dubbed "Stylefree" by some wags, seemed DETROIT -- J Mays says his days as an egotistical artiste-car competent but bland and failed to catch on in the market. designer are ancient history. The retro Thunderbird, introduced for 2002, was a "My head would barely fit through the door some days," disappointment and Mays took the flak for it. Some critics Ford's chief creative officer says with a laugh. "I've long since thought he was being moved aside so Peter Horbury, gotten over myself. I haven't had that opinion of myself in a brought in from Volvo, could ride to the rescue in his new decade." capacity as head of North American design.

As the last member of Ford's senior executive team hired by In 2004, Autoextremist.com, a blog noted for sometimes former CEO Jacques Nasser, Mays has had his share of ups scathing criticisms of automakers, wrote that while Mays was and downs since arriving at Ford in 1997 as head of design. "extremely bright and very talented," his fixation on etrr o designs had hurt Ford: "In embracing Ford's glorious history, In 2002, he was feted with a solo exhibition at the Museum J missed a golden opportunity to set a new, cohesive design of Contemporary Art in Los Angeles called "Retrofuturism: standard for Ford, which in the end, was the one task the The Car Design of J Mays." He has lured gifted designers to company needed him desperately to do. ... The real problem Ford's brands, assembling one of the industry's deepest for J Mays came down to the fact that he never delivered a staffs. But he was also once criticized as a talented 'hit' vehicle for the masses for Ford." underachiever who pre-sided over bland designs that failed to connect with consumers. Mays readily admits some of the cars from that period weren't Ford's best, but he says car design is a team sport. These days, Mays, 57, feels vindicated because the 2013 Ford Fusion was a smash at the Detroit auto show, winning best- "I don't want to push this onto somebody else," he says. "I in-show raves from many critics. The car embodies Mays' don't think the Five Hundred or Freestyle was one of my long sought vision for a global Ford design language. The brighter moments in Ford, but designing a car is not a solo 2013 Escape shares that language. Lincoln has built a new effort and a lot of people have input on the kind of product design studio and new style with the 2013 MKZ. they want. I've been at the company 13 years and I've been through five CEOs. Some of those CEOs have had more What a contrast from the middle of the last decade when conservative tastes than others. And thankfully the one we Mays' star seemed to be fading. He moved to London to have now lets me swing for the fences." take a more strategic design role over all Ford brands, which then included Aston Martin, Jaguar, Land Rover and Volvo. Mays is referring to CEO Alan Mulally, whose One Ford The move was a promotion and Mays received a new, grand global product plan means that Ford is adopting a common sounding title: chief creative officer. family look around the world. One Ford gave Mays a free hand to bring the European designs he always liked to North But some critics thought Mays was being kicked upstairs for America. failing to deliver a hit in the home North American market. While Mays headed off to wrestle with Ford's unwieldy Ford is about to launch the 2013 Fusion sedan. As the latest European luxury portfolio, vehicle design in North America interpretation of Ford's kinetic design language, the Fusion seemed to be languishing. has drawn comparisons to luxury brands such as Aston Martin and Maserati. The Fusion, which is virtually identical

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to the Mondeo, as it is known in Europe, follows on the heels of the Ford Escape crossover, already a hot seller. Together, they embody Mays' ambition to bring beautiful design to the masses.

"Not since the '60s have we had such great looking cars on the road," Mays said during a recent interview at his Dearborn office. He still lives in London, but makes frequent trips across the Atlantic.

John Wolkonowicz, an automotive historian and a former independent design consultant to Ford, says of Mays: "He's got his mojo back. His talent was always picking the right people and he put together the right team. They've developed a noticeable design signature I'm very excited about. That's something Ford hasn't had for a while."

With its curves and creases derived from the European kinetic design, the 2013 Fusion moves away from the North American "red, white and bold" look of the outgoing model with bold chrome grille bars and a more slab-sided appearance. Mays says Ford's designs in Asia have been a "mishmash" and he's happy to see the company come up with a unified appearance.

Mays, who worked for BMW, Audi and Volkswagen before coming to Ford, says he was thrilled last January "when all the Volkswagen and Audi designers pitched up on the Ford stand with their mouths open trying to figure out how we made the Fusion look like that. I would argue that car looks J Mays, Ford's chief creative officer as good as any German luxury design on the market today and it's a much better value."

Mays says American cars don't have to imitate European How does a designer identify character? designs to achieve an upscale feel. For too long, the world "We talk to the customer a lot and we listen very, very has thought of American vehicle design only for classic carefully, but you have to be careful of which customers you vehicles made decades ago, he says. listen to," he says. "If you try to make every single customer "When the Europeans talk about American design, they happy, you'll find that you've got the lowest common don't talk about now, unless they're talking about Apple," denominator design and that's not what we're after." he says. "So you've got to get a design out there that allows Mays says it is critical for Lincoln's new look to connect with not only the American public but the rest of the world to younger customers. understand we're capable of doing advanced design that's not fleeting but that's going to have some relevance." "I suppose people are underestimating where we want to go with the Lincoln brand," he says. "We can make Lincoln a He wants Ford and Lincoln vehicles to have "character." much more bespoke brand than probably most people are "That is the elusive thing that most manufacturers have anticipating so that it has a slightly more exotic feeling to it trouble identifying," he says. "And once they identify it they as opposed to just our version of a German manufacturers' beat it out of the product before it comes to market." car."

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Mays doesn't miss having to worry about Ford's stable of Mays remains eager to bring new talent to Ford but says: European luxury brands, which the company sold near the "I'm pretty picky. I've got a very good black book. I know end of the last decade. With the closure of Mercury, Mays where everybody is and what they're capable of. It's not a now has only two brands to think about instead of seven. very large world. There's a lot of car designers, but you can count on 10 fingers the ones you want to work for you." "I was designing a lot more cars in 2005 for a lot more brands than I am now. I was putting a different hat on One of those Mays and his team wooed was Wolff, an literally every day, and kind of killing myself flying around the Australian who came from Cadillac in early 2011 to world trying to design luxury cars and coming back here reinvigorate Lincoln design. Wolff didn't know Mays except doing F-150s and Mustangs. I wasn't spending the amount by reputation, but came away from their first interview of time on the cars individually simply because of the sheer "feeling very refreshed by J's candor and directness, his sense number and volume of cars we had to design for the of humor. He understood what it's about working in a large individual brands." corporation and being a creative person."

During his tenure, Mays' studios have attracted some of the Wolff arrived when work was nearly complete on the industry's best talent, such as Gerry McGovern (Lincoln and concept and production versions of the MKZ sedan, but he Land Rover), Henrik Fisker (Aston Martin), brothers Ian added a horizontal spread-wing grille that Mays liked (Jaguar) and Moray Callum (Mazda and now Ford North immediately. America), Martin Smith (now head of Ford of Europe design) Says Wolff: "J's not afraid of getting his hands dirty. He and most recently Max Wolff, who heads the new Lincoln certainly gets involved at the bigger picture level. As opposed design studio in Dearborn. to some of other senior management types, J's not afraid to Jim Hall, managing director of 2953 Analytics who got to come into the studio and lay tape on a car." know Mays when the two were students at the Art Center A native of the tiny town of Maysville, Okla. (population College of Design in Pasadena, Calif., says Mays kept Ford's about 1,000), Mays has lost none his Midwestern bluntness huge design department on an even keel through turmoil despite nearly two decades living in Europe. It's a trait he and management changes. shares with Mulally, a Kansas native. "The job of the head of design is not just to draw cars; it's to Mays is crystal clear that he is not a fan of designs that manage the sometimes spectacular egos of automotive polarize. designers," Hall says. "The concept of trying to find a unified Ford design theme for the world and pickup trucks is not "We're not in this business to provoke our customers. We're easy to do." in this business to seduce our customers," he says.

Hall says managing creative egos "is a very, very, very rare "The shorthand for polarization is not many people like it. I skill. Normally it's easier for the head of design to become a don't want people thinking about Fords like that. I want design tyrant." people saying, 'god I love those Fords. I think they look fantastic.' There's a shortage of beautiful cars in the world."

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Designing for 2016: It's all about aerodynamics

The new Mazda6's body lines are broken up, a sign of things to come.

Diana T. Kurylko & Ryan Beene We're not guessing here; that's the view of several designers who discussed styling elements that will be prominent on Four years from now, vehicles emerging from the world's vehicles in 2016 and beyond. design studios will be more aerodynamic -- and more sculpted. Of course, each brand will take its own approach, but general themes will emerge. They always do. Extreme design will be out of favor. You'll see fewer bumps and bulges and asymmetrical shapes, the kinds of things that "First of all, we reverse the wedge," says Gorden Wagener, kept popping up in the past decade. Mercedes-Benz's design chief. "We are coming out of a generation that is very wedge-shaped and developed in the Glitzy, blinged-out headlights may disappear, too, but in late '90s." general front ends will be more distinctive and more expressive of the brand. Wheels could be smaller, and Also, he says, today's soft curves will be replaced with downsized engines may allow for shorter overhangs and sculpted lines that have a defined surge or crest. longer wheelbases. At Mercedes, Wagener says: "We will go more into a drop But above all, designers toiling away today are driven by the shape, with the dropping line on the side of the car. That need to smooth the progress of air flow over the body becomes more of our signature." surface. Yes, aerodynamics is once again dictating design, Take a look at the teaser shot Mercedes has released for next though not in the way it did 30 years ago, in the era of jelly year's redesigned S class. An accent line that begins high on bean cars. the silhouette, in front of the driver-side door, lowers as it runs through the rear door.

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Indeed, brands are trying out more interesting lines and He says fuel economy will have a "huge influence" on design curves. but a positive one.

"Everybody's looking for their version of more sculpted, "How design can affect that is in the efficiency of the design, contoured body surfaces," says Derek Jenkins, Mazda's in its size and in the aerodynamics of the vehicle," Welburn North American design boss. "That's an area where we're says. really focused -- trying to break away from some of the BMW's Habib says aerodynamics is changing the brand's traditional body creases and lines that every car has had for entire approach to styling new vehicles. the last whatever number of years." "We are embracing certain things we ignored in the past," Jenkins says Mazda's new design philosophy, called kodo he says. "Like how do you treat an arrow edge in the rear of (Japanese for "soul of motion"), is "breaking away from the the car or the spoiler? The surface in front of the front wheel traditional body construction, typical fender lines, hood lines. has to be at an angle to flow along the body." "You're going to see a lot more adventurous explorations of Habib says some of the solutions will be seen on show cars how companies are going to do the shoulder of the car, the debuting at the Paris auto show, which opens this week. fenders, the sculpting of the car." "The way we design the rear of the car has changed a lot," The "twist and transition" on the new Mazda6 provide an he says. "For instance, we used to use an aerodynamic edge example. just on the taillamp. Now we are experimenting with taking "You see the body lines are broken up on the car, the them out of the tail and putting them on the body below." prominent front fender and the subtle feature line that Tom Kearns, chief designer of Kia Motors America, says, comes after that and the main shoulder line in the rear," he "Wheel design is one of the first things manufacturers go says. after to save weight," reversing the trend of wheels getting The previous generation mid-sized sedans, including the larger and larger. Mazda6, "still have the typical shoulder line running through "We have to find a way to give a certain look to a vehicle the front fender, very traditional construction," Jenkins says. that looks modern and fresh but also doesn't fly in the face Karim Habib, head of BMW design, says the German brand's of functionality and the weight," he says. "We're going to body design philosophy is changing. find a way to make wheels of a large diameter, but the thickness may change. Or maybe there will have to be "We try to break out a surface by pulling lines in and out and lightweight materials or lightweight tires that don't add by puffing up the volume or flattening it to sculpt it," he weight." says. New powertrain technology will have an influence. Mazda's The goal: To create a shape that looks lightweight. Jenkins says downsized engines and transmissions may let The effort to improve fuel economy will be visible on the cars designers create vehicles with smaller front and rear and trucks of 2016. Look for changes to front ends in the overhangs with longer wheelbases. quest for better aerodynamics, says J Mays, Ford's global He says the Tesla Model S is an example. design chief. "The batteries are all in the floor. The car has a very small "You're going to see the introduction of movable grille front overhang; its hood is low to the ground because of the apertures that close, but you're also going to eventually see small engine, so they're getting a very, very contemporary slightly smaller grille openings," he says. expression for a sedan and very dynamic overall proportions Front ends will become "more identifiable with the brand," because of those technologies." but not necessarily as large as those on Audis, Mays says. Christopher Weil, director of BMW's DesignworksUSA studio General Motors design chief Ed Welburn says all vehicles in Newbury Park, California, says the choice of exterior won't have that homogenous shape last seen in the 1980s. materials will begin to have a strong influence. For instance, BMW's new i subbrand vehicles with their carbon fiber

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bodies would look totally different if they were done in aluminum and metal. Sheet metal isn't as strong or thick, and "it has a different criteria the designer has to play with," he says.

Mark West, chairman of transportation design at the College for Creative Studies in Detroit, expects more glass and new materials -- including inside where translucent and mesh fabric could be used -- as cars become more lightweight. This tease of next year's redesigned S class shows a character line that will become Mercedes' signature. Geoff Wardle, director of advanced mobility research at the Art Center College of Design in Pasadena, Calif., predicts there will be fewer "gratuitous and overstyled cars" than example, whereas today, the basic headlight scale and size is have debuted in the past three to four years. still quite large." Toyota's Scion cars, the Nissan Juke and even some General Smaller lights mean extra space, giving designers greater Motors SUVs and crossovers were designed with stretched creative flexibility in how they choose to integrate headlights lamps, bulges and other exaggerated features in an effort to into designs. differentiate them, Wardle says. "You've seen this trend on concept cars for several years "I think the pendulum will swing the other way," he says. now, but we're on the verge of being able to realize that," He cites Volkswagen and Audi as two brands that resisted he says. the trend. Still, some independent designers aren't so optimistic about "Audi is handsome and quite restrained," he says. "The VWs the overall trend in vehicle styling. Roberto Piatti, CEO of that are on the market are almost very plain in their Italy's Torino Design, doesn't see a design revolution in the appearance, but a lot of attention has gone into the detail next four years or even further out. and they are fairly refined. We will see some more of that." "We are living in a strange time," says Piatti, who has J Mays says Ford won't follow the trend of so-called jewelry - worked on concepts and production cars for many European - LED patterns and unique shapes -- in headlamps and carmakers and Chinese brands. taillamps but rather will make "lamps that reflect the Piatti says carmakers "are scared of shocking the customer, technical object of what they're there for." and this means cars are going to remain pretty much the He says: "There are some excellent examples of high-tech same." headlamps. And there are some that are simply jewelry. A big factor, he says, is the growth of new markets around Headlamps aren't jewelry. They're headlamps. They are the world that have yet to develop sophisticated national supposed to shine light down the road. If you overstyle a style appreciation. headlamp, nothing gets older faster." "New markets do not have independent taste, and they Mazda's Jenkins says automakers will be more expressive in follow what is established and this moves everything in the designing front ends. He says grilles will be more three- same direction." dimensional, with trim and brightwork becoming more central to an overall look rather than just accenting a design. Of course, design is ever the moving target. What will we see on the new cars debuting in autumn 2016? Inside the Lighting will be a major enabler. studios, that's already old news. What they are really "As headlight technologies improve and become smaller, the thinking about is 2020. headlight assembly can be broken up," Jenkins says. "You Bradford Wernle contributed can have a much more slim and precise headlight graphic for

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Ford, GM co-design transmissions

Mike Colias & Bradford Wernle Ford and GM each appear to be altering plans for eight-speed DETROIT -- General Motors and Ford transmissions with an eye toward the Motor Co. are jointly designing nine- greater savings that could come from and 10-speed automatic transmissions more gears, one of the sources said. for broad use across their vehicle lineups in a bid to boost fuel economy. In June 2011, Ford announced plans for its own eight-speed automatic, but the GM is leading the design of a nine- GM and Ford are playing catchup as company did not specify an application. speed gearbox for use in front-wheel- other automakers hit the market with The company has said little about the drive vehicles, said three people familiar gearboxes ranging from seven to nine transmission since then. Some news with the companies' plans. speeds. outlets reported it was designed for the Ford is taking the lead on a 10-speed Chrysler, via a joint venture with ZF F-150 pickup. transmission, which would be used in Friedrichshafen, offers an eight-speed One of the sources with knowledge of rear-wheel-drive vehicles such as automatic on its 300 sedan and the its plans says Ford scrapped a pickups, SUVs and performance cars, 2013 Ram pickup. In 2013 Chrysler will homegrown eight-speed transmission the sources said. offer a ZF-built nine-speed fwd transmission for small and mid-sized program within the past year, before it The companies began working on the vehicles. began working with GM. transmission program early this year, Last year, GM CEO Dan Akerson said one source said. They still are in the Audi, BMW and Lexus all offer eight- that GM would spend $204 million to design phase and likely won't be ready speeds, while Mercedes-Benz offers a equip its Toledo, Ohio, powertrain plant for production before 2015, one source seven-speed. to build a homegrown eight-speed said. Mike Omotoso, powertrain analyst for gearbox. He wouldn't say what vehicles A GM spokesman confirmed that the LMC Automotive, says the main it would go into or when it would two companies "are in discussions" benefits of adding more gears are fuel reach production. and have signed a memorandum of economy and refinement. Two sources said that that transmission understanding "to jointly develop a "The engine has to do less work, so is on track for a mid-2014 launch and variety of all-new, fuel-efficient they aren't revving as much as they probably would go into at least one transmissions." He would not discuss used to with fewer forward gears," he Cadillac, likely the CTS sedan, and details and said the companies "hope said. eventually GM's pickups and SUVs. One to announce a definitive agreement of the sources said that GM has soon." The partnership extends a transmission pact that dates to 2002, when Ford reduced the volume projections for the A Ford spokesman said: "We always and GM agreed to work together on a eight-speed. talk to other companies, including family of six-speed automatics for fwd The person said: "That rear-drive eight- GM." He declined to elaborate. vehicles. The transmissions, including speed is likely to be very, very low The New York Times reported that Ford the Ford 6F-35 and GM 6T70, have volume now." and GM plan to jointly develop been installed in millions of vehicles, automatics and are considering a including the Ford Fusion and Escape manufacturing alliance. and the Chevrolet Malibu.

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Toyota's engine overhaul

Hans Greimel

TOKYO -- For years, Toyota Motor Corp. has put hybrids at the center of its powertrain technology strategy, all but oblivious to the rapid fuel economy advancements rivals have made in the humble gasoline engine.

Meanwhile, Ford, Honda, Mazda, Hyundai, Volkswagen and others have turned to gasoline direct fuel injection and turbochargers. For them, those technologies were a quick, cost-effective route to better mpg. Turbochargers, for example, allowed them to maintain power output while making engines smaller, for a significant weight savings and higher fuel economy.

Now, in a major overhaul of its lineup, Toyota is playing catchup. It will introduce a new direct-injection engine next Moreover, Toyota plans to combine direct injection with its year and follow with a downsized turbocharged powerplant hybrid system to deliver a new generation of hybrids that are -- its first -- in 2014. It is also committing to continuously all the more miserly with fuel. variable transmissions across its range of small- to medium- Key elements of Toyota's plan: sized cars. • A 2.5-liter direct-injection, Atkinson cycle engine, to Toyota is hardly forsaking gasoline-electric hybrids. It plans to be deployed first in hybrids in 2013. introduce 14 new hybrids by 2015. But hybrids, led by the • A 2.0-liter downsized turbo-charged engine in Prius, still represent only 10 percent of Toyota's global sales. 2014. Toyota's latest environmental technology game plan, • A shift to CVTs in small- to mid-sized vehicles. unveiled in Tokyo, shows it will start doubling down on the • More six- and eight-speed automatic transmissions standard powertrains that are the backbone of its offerings. for larger cars. And Toyota expects big gains in fuel economy for its Today, the company doesn't offer any turbocharged vehicles. nonhybrid vehicles. It experimented briefly with turbos in the 1980s but chiefly "By 2015, through improvement in the engine and as a way to boost output from already powerful engines -- powertrain alone, we aim to achieve a fuel-efficiency not as a way of getting more oomph from smaller, more improvement of 10 percent to 20 percent on the models efficient ones. And direct injection is limited to a handful of adopting the improvements," Takeshi Uchiyamada, Toyota's large-displacement V-6 and V-8 luxury sedans, such as the outgoing product development chief, said. Lexus LS.

The rollout won't happen overnight. Engineers are still Compare that with rivals' lineups. Ford Motor Co., for debating how widely technologies such as direct injection instance, makes extensive use of turbocharging, from and turbocharging should be applied. engines with displacements as small as 1.0 liter to engines in its big pickups. Honda Motor Co. and Mazda Motor Corp. Insiders say President Akio Toyoda, who wanted to make his are overhauling their engine lineups to make fuel injection company's cars zippier to drive without sacrificing fuel their base technology. economy, urged his staff to embrace nonhybrid technologies.

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Starting next year, Toyota will answer by piggybacking its hybrids with engine displacements of 2.0, 2.5 or 3.0 liters. D-4S direct-injection technology onto its AR family of four- But he said using it in a 1.6-liter hybrid would be cylinder gasoline engines. Toyota's AR engines are used in "borderline" -- delivering only incremental benefit for the such models as the Toyota Camry, RAV4, Highlander and added cost. Venza and the Lexus RX. The injectors are supplied by Denso The current Prius has a 1.8-liter engine. Corp. Toyota will use a newly refined version of the Denso-made A direct-injection, 2.5-liter AR four-banger initially will go D-4S injector. It was first used this year in the Lexus GS and into the hybrid version of the Toyota Crown, a Japan-market the Scion FR-S sporty car manufactured by Subaru-builder sedan. Future deployments could go in the Camry or other Fuji Heavy Industries Ltd. AR cars. It improves mileage about 1 percent over Toyota's earlier "This is the beginning of gasoline direct injection for the D-4S injector, which debuted in 2006. It gets better results four-cylinder engines," said Takashi Shimura, general by using a slit-shaped, instead of a multihole, injector manager for engine development. "Smaller engines will be opening. That creates a richer fuel mixture inside the following this engine. As a trend, this is right. It will be cylinder. standard." Toyota's embrace of more widely used technologies comes as Shimura said direct injection will start in bigger engines and it concedes it misread market demand for other alternative trickle down to smaller ones. He didn't give a timeline. drivetrain technologies, including electric vehicles and plug-in In 2014, Toyota will introduce a downsized 2.0-liter, four- hybrids. cylinder turbocharged AR engine based on the 2.5-liter In announcing plans for Toyota's own EV, Uchiyamada said powerplant. Toyota declined to identify the model or the the company would sell only about 100 of the cars in the turbocharger supplier. United States and Japan on a limited basis, starting this Pairing direct injection with Toyota's hybrid technology can December. boost the system's overall fuel efficiency by 10 percent, said Two years ago, he predicted Toyota would be selling Satoshi Ogiso, chief engineer for the Prius family of hybrids. thousands of the EV, which is based on the Scion iQ minicar But it is still unclear whether the next-generation Prius, due and called the eQ. around 2014, will get direct injection. "But two years later, we found other conditions prevailing in Cost issues the market, and we'll undertake a limited introduction," he said, in a tacit nod to the tepid sales of other makers' electric The problem is balancing the added cost of fuel injection cars. against the goal of making the Prius as affordable as possible. Cost sensitivity is compounded because the Prius, Uchiyamada added that sales of the Prius Plug-in, which with its extra battery, electric motor and inverter, is already began in Japan in January, were lower than expected. He pricey to build. Direct injection would add an extra said that car needs better marketing. andyen;10,000 ($128) to the car's cost, engineers say. But Toyota is bullish on hybrids. "It may be possible, but it still has to undergo a lot of Toyota plans to launch 21 new or redesigned hybrid vehicles discussion," Ogiso said. "That's because the Prius engine by the end of 2015. Toyota didn't name the models. But 14 already has very good fuel efficiency without direct will be either all-new nameplates or hybrid versions of injection." vehicles that don't currently come with an electric-gasoline Yoshihiko Matsuda, field general manager in charge of option. engine engineering, says direct injection could be applied in

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Brain Drain?

Auto companies try new recruiting techniques and workplace practices to fill engineering vacancies in Detroit

Lindsay Chappell executives recognize that they are $1,500 apiece. She has not yet competing against such employers to approved that expense. Carla Bailo winces at what she is attract scarce engineers. She has been thinking about doing to recruit and At Continental Automotive Systems, making the rounds benchmarking their keep automotive engineers at her the U.S. unit of the German electronics, practices to figure out how to compete company. She may offer to let them brake and tire supplier, the human -- something automakers never had to bring their pets to work. resources department recently worry about before. embraced the idea of permitting blue "If it's a little lap dog, I really don't Bailo has instructed her office building jeans once a week, says Ann Baker- care," she sighs. "If there's anything I to keep its on-site gymnasium open Zainea, Continental's manager for can do to show that auto is a great throughout the day and into the night, North American staffing. place to work, I need to do that." rather than its past routine of being The suburban Detroit employer also has Threatened by a chronic shortage of open a short time in the mornings, an begun allowing engineers to work from engineers -- exacerbated by years of hour at lunch and a short time after home two days a month. industry restructuring -- auto work. companies are having trouble filling job "That might not sound like such a big "If you have a free hour from 2 to 3 vacancies in Detroit now that the deal," Baker-Zainea says, reflecting on and want to go jogging, go do it," she industry is coming back to health. That the evolving national economy of says. is particularly alarming for Detroit, a private contractors and insurance sales massive engineering hub for the entire She has expanded lunchtime for tech reps working from their dining room industry. center employees from one hour to 90 tables. "But for a traditional German minutes, and told her engineers that if engineering company -- believe me, it's To deal with the shortage, auto they need two hours to go to a child's a big deal." companies are trying new recruiting ballet recital, they can leave. They are techniques and changing workplace To recruit engineers, Continental is now required to be in the office practices. And for jobs that are still casting a wider net, talking to routinely only from 10 a.m. to 2 p.m. years away, they are even reaching out candidates in the medical and defense They must still give her eight hours a to schoolchildren -- some as young as industries, meeting with engineers in day. But now they can come in at 6 kindergartners -- to plant the notion of California, Texas and Florida. The a.m. and leave at 2 p.m., or come in at an engineering career. supplier also is putting the final touches 10 and leave at 6. on a new concierge service to make life Bailo, Nissan North America's senior Blue jeans at Conti easier for employees. The staff would vice president in charge of its provide lifestyle assistance, such as 1,100-person technical center in The bigger question -- can they work helping find a kennel to board a pet suburban Detroit, is serious about the from home? -- is trickier. during an overseas trip; providing lawn dogs. Theoretically, yes, Bailo says. But that mowing service when work hours cut Pet-friendly workplaces are something would require her to buy a mountain of into home time; opening an on-site dry that free-spirited New Age powerhouse new laptop computers, loaded with cleaner; and arranging child care when employers such as Google and proprietary software and costing about a project runs overtime. Microsoft permit. Bailo and other auto

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The company has about 165 engineering openings to fill.

"Most of the people we want to hire are probably currently employed somewhere else," Baker-Zainea says. "The old days of being able to just post a job opening and fill it are gone."

Her lament is widely expressed across the United States. But in Detroit, with its engineering and manufacturing-oriented economy, the problem is acute. Engineers 'disappeared'

North American automakers and their suppliers are back in ramp-up mode, preparing for business growth and Researcher Peter Aurora runs a test at Nissan's technical dramatically different products and technologies. But center in suburban Detroit. Faced with an acute shortage of engineers, auto companies are resorting to new tactics to according to many industry insiders, there simply aren't stock their randd centers. (JOE WILSSENS) enough qualified engineers around. After a decade of layoffs, outsourcing, salary cuts, bankruptcies and restructurings, Detroit's automotive engineers have scattered. This year the society held another fair. This time, 51 "A lot of people have disappeared," Bailo says. "They've left companies came seeking still more job candidates. Only 613 their jobs. They've left the auto industry. They've left the engineers showed up. state of Michigan. They've retired. And young people have The society now plans another fair for Oct. 29, and Trudell decided they don't want to go to school to become estimates there will be more than 50 companies with as engineers." many as 5,000 positions to fill.

Corroborating that view is Darlene Trudell, executive vice "Where did all the engineers go?" she ponders. "Or more president of the Engineering Society of Detroit, a century-old importantly, how do we get them back?" professional association representing thousands of North American engineers. Trudell says the supply of automotive Back to Michigan? engineers has been dwindling for a decade, and only To address the shortage, Michigan last year launched a worsened with the crisis of 2008 and 2009. program it calls MichAGAIN. It is a campaign to travel the "We have a strategic board representing a lot of employers, country in search of engineers and other skilled technical auto companies, manufacturers, unions and local colleges," people who left Michigan to pursue careers elsewhere. The she says. "When I first came here in 2003, they were goal: persuade them to move back. warning me that an engineering shortage was coming. A lot "The need to attract talent into Michigan has never been of people pooh-poohed the idea. But guess what? There is greater," says Amy Cell, senior vice president of talent now a huge shortage of engineers here. enhancement at the Michigan Economic Development Corp. "The pool of available engineers is smaller. There are fewer "We think there are a lot of people who would move back if young people applying for engineering schools, and those presented with the chance." students who are coming out are not necessarily interested in A separate initiative called LiveWorkDetroit! has begun working in automotive." inviting busloads of college engineering students from as far She recounts that in 2009, the society held a job fair to help away as Notre Dame University -- in South Bend, Ind., about bring together employers and badly needed engineers. 200 miles from Detroit -- to the city to show them that as a Thirty-one companies attended the fair, with 3,000 job place to live and work, it is nicer than they probably think. openings. Only 1,389 engineers were available to consider Cell recently met with three Detroit companies to discuss the positions. expanding LiveWorkDetroit! to older engineers. If pursued, the plan would bring engineers from around the country,

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with their spouses, to Detroit to line them up with real-estate buoyed by young people interested in fields such as professionals and local school representatives to help them telecommunications and computers. Motschenbacher says picture life as an engineer in Detroit. some automotive companies that scaled back on engineering recruitment in recent years, such as Chrysler and Robert But some engineers driven out of town by the auto collapse Bosch, are returning to campus with a vengeance. But they of 2008-09 say they will never return. now must compete for students' attention with the likes of Christian Berges may be typical of what hungry recruiters are Microsoft and Google. up against. Continental also is stepping up its school recruiting efforts -- Five years ago Berges was in charge of a $60 million even talking to elementary schoolers about the pizazz of the development program for a Tier 1 supplier in Detroit, auto field. working 70-hour weeks and seeing no salary increases. He "We need to position ourselves for the future," says left the auto industry and moved with his family to Continental's Trisha Boehler, whose HR title of "senior Minneapolis, where he now works happily for a medical employer branding specialist" reflects the new emphasis on instruments company, making 30 percent more than he did shaping how an automotive engineering career looks. "If we in Detroit. can show them some of the fun stuff we're working on, we "I have absolutely no sympathy for the auto industry now," can still capture them." Berges says. "They did this to themselves. They beat us down Other companies are broadening their search. Nissan, which and made us feel like we were very disposable." hopes to fill 100 engineering spots over the next year, is Berges says two Detroit-area job recruiters have been trying actively recruiting young engineers from schools in the aggressively to entice him away from Minneapolis lately. But South, including Tennessee Tech and Vanderbilt University, as he enjoys his newly discovered life -- including his medical well as in Georgia and South Carolina to work in Detroit. company's practice of knocking off work every day at 3 p.m. But the company also is looking into different areas of -- too much to leave. engineering. "I've been offered considerable sums to go back," he says. "Until a few years ago, we were looking for mostly "It's not going to happen." mechanical engineers and a few electrical," Bailo says. Faced with obstacles like that, the Detroit engineering society "We're still looking for those people. But now the type of and some automotive companies are drilling even deeper work we need to do is changing. Our technologies are into potential future engineers, visiting Michigan high changing. Our cars are changing. schools, middle schools and even elementary schools in "Today we need biomedical engineers who can work on the hopes of sparking the flame of an automotive career. safety and ergonomics issues we're facing. We need their Another problem: As the industry suffered over the past few help on the psychological issues of how drivers react to years, many engineering-oriented parents steered their different menus and components. And we desperately need children away from automotive careers. Companies reduced chemical engineers now because we're working on fuel cells or eliminated school internship and apprentice programs. The and lightweight materials. pipeline of young people got broken. "When you start looking for those people, you're not At one traditional source of Detroit's auto engineers, competing with the same old companies," she says. "We're Michigan State University, enrollment of engineering suddenly competing for people with oil and gas companies, students dropped from 3,800 a decade ago to around 2,400 with the paint and adhesives industry, and even with in 2009. pharmaceutical companies.

It is rising again, says Garth Motschenbacher, the university's "That's a whole different spin on what type of engineer we director of employer engagement, but the numbers are need for the future."

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A big bet on EVs

Nissan's $1.6 billion Leaf plant in Tennessee is ready to roll, but the EV market hasn't blossomed as many had expected

Lindsay Chappell

NASHVILLE -- More than three years after embarking on a plan to mass produce electric cars in America, Nissan North America is putting the final touches on its $1.6 billion factory in Smyrna, Tenn.

But it's all happening as the electric-vehicle market is falling far short of the rosy projections made back in 2009. Nissan and other manufacturers are facing a daunting scenario, and some are rethinking their EV strategies.

In late September, Toyota Motor Corp. shelved its plan to sell an all-electric Scion eQ. At the same time, Smith Electric Co., At the recent National Plug-in Day ceremony at Nissan's U.S. the Kansas City, Mo., manufacturer of electric delivery trucks, headquarters near Nashville, the small crowd reflected the abruptly cancelled its plan for an initial public stock offering slow growth of the EV market. (LINDSAY CHAPPELL) the night before it was to take place, saying the offering would not have delivered the valuation the company needed. The cheering was loud. Participating Leaf owners spoke Battery supplier A123 Systems, which supports several enthusiastically about their vehicles. But the bottom line was electric vehicle programs, including General Motors' Volt, clear: There simply are not very many of them. says it will diversify into other automotive uses for its lithium ion batteries -- such as start-stop technology, which shuts off That fact is painfully obvious around the industry. and restarts engines at traffic lights -- because of the Through September, U.S. consumers purchased fewer than changing outlook for EVs. 25,000 Nissan Leafs, Chevrolet Volts, Mitsubishi i-MiEVs, The disappointing market was symbolized by a crowd that Ford Focus Electrics, and Toyota Prius Plug-Ins. Pike Research Nissan convened recently under sunny skies on the front forecasts that by 2015, total cumulative EV and plug-in sales lawn of its U.S. headquarters near Nashville. They were for all manufacturers since 2011 will reach just 410,000 participating in Plug-In Day, a national celebration of electric vehicles. cars and plug-in hybrids sponsored by environmental That would fall far below the national target, set by President organizations. But only a small group showed up for the Barack Obama, of 1 million EVs and plug-ins on the road by event, counting the company's own employees, local 2015. politicians and a few environmentalists. According to Pike, the 1 million mark will be achieved, but A cross-town parade of about 50 electric cars included not until 2018. numerous vehicles owned by Nissan itself. A solitary, unsold Mitsubishi i-MiEV electric car came for the parade, supplied Meanwhile, Nissan is just weeks away from starting EV by a local Mitsubishi dealership. operations in Smyrna. Using a $1.4 billion low-interest loan from the U.S. Department of Energy, Nissan has invested $1.6 billion to build capacity for 150,000 Leafs and 200,000 lithium ion battery modules annually at Smyrna.

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The new battery plant, adjacent to its Smyrna vehicle • Gasoline prices are now lower than the doomsday assembly plant, is a state-of-the-art, clean-room expectations of 2008 and 2009. The $4-plus price manufacturing operation. In the next few days Nissan spike of 2008 raised consumer anxiety and calls for workers will begin cautiously making the first trickle of alternatives to gas-powered vehicles. But now that tabletop-sized battery modules before the start of Leaf gasoline prices are closer to $3.80 a gallon, the production in December. industry is seeing sales of big pickups increase. • The high costs of battery systems resulted in vehicle But how many takers will there be for EVs? sticker prices that are out of line with U.S. buyer "The demand for electric vehicles won't be anywhere near habits. Though smaller than a $16,000 Honda Fit, 200,000 before the end of this decade," says Michael the subcompact Mitsubishi i-MiEV retails for nearly Holman, research director for Lux Research Inc. in Boston. $30,000, before counting a $7,500 federal "And the entire global market for electric vehicles won't be a purchase credit. Even with that credit, the Volt third of what Nissan is planning. This is all the result of retails for around $33,500. industry market projections that just weren't realistic." • The high value of the Japanese yen has made it difficult for Nissan to fan sales for its imported Leaf Speaking to reporters at the Paris auto show at the end of this year. The car retails for $36,050, including September, Nissan CEO Carlos Ghosn defended his bullish shipping, before the government incentives are vision for the EV production capacity in Smyrna. applied. "I think the capacity that we built is adequate for the • High-visibility quality problems for two of the new potential we see for the mid term for the United States," cars, the Volt and Fisker Karma, have tainted Ghosn said. "When we decided to make our investment in battery-powered vehicles in general. Nissan spent electric cars, we didn't take a very short-term perspective. the summer fielding complaints from a small We took a longer-term perspective." number of Leaf owners in Phoenix who alleged that their batteries were aging too quickly. But Leaf sales have remained puny. Last year Ghosn and other executives predicted 2012 sales of 20,000, doubling Nissan engineers have said the Phoenix phenomenon the 9,674 Leafs Nissan sold in 2011. That doesn't seem likely resulted from greater than normal driving by those owners -- now. Through September, Nissan dealerships had sold just more than 19,000 miles a year, rather than the predicted 5,212 Leafs -- fewer than the 7,199 sold in the first nine 12,500 miles. But Nissan has called for an international panel months of 2011, even after the Japanese earthquake of green-car enthusiasts to help it address customer interrupted Leaf shipments from Japan. concerns.

Things also have been touch-and-go with Chevrolet's Volt Meanwhile, an array of emerging fuel-economy technologies plug-in hybrid. GM once envisioned building 45,000 Volts in on internal-combustion vehicles, such as start-stop systems, 2012, but it sold just 16,348 through September. GM has are challenging the underlying mpg advantage of electrics. backed off that forecast and temporarily suspended Pike Research forecasts that start-stop technology is catching production in September. on so fast around the world that by 2020 it will appear on 41 million new vehicles a year. GM and Nissan are cutting prices. According to Truecar.com, the industry pricing analysis firm, the Chevy Volt now is In Paris, Ghosn acknowledged that Leaf sales are slower than selling at a $10,000 discount from sticker, and the Leaf is expected, and blamed it on the lack of public vehicle selling at a $3,250 discount, including incentives such as charging stations. dealer cash and low finance rates. In September, Nissan also "If the level of sales is not at the level we expected, why?" reduced the standard monthly lease rate on the Leaf to $219 he asked. "Is it related to the product, to the batteries, to a month for 39 months, down from $249. attractiveness, or to the infrastructure? The slow level of sales Shift in the market is mainly due to the fact that people are worried about the absence of infrastructure. And we are mainly lobbying in Multiple issues are at play as demand for electric vehicles order to make sure that in some cities and in some states a stalls.

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better job is done, a quicker job is done in terms of infrastructure.

Ghosn counseled patience.

"We are going to have to be resilient," he said, "we are going to have to do our job, we are going to have to make sure that we are systematically not only innovating in terms of marketing and selling the car, but also doing our job with local government, states, cities, municipalities in order to push forward what is the main concern of the consumer -- which is, 'I buy the electric car, where am I going to charge it?' I'm talking about quick charge."

He added: "This is not a normal car. This is something which is going to require a profound change in the attitude of the consumer."

Few doubt that there will be growth in EV and plug-in hybrid Ghosn acknowledged that sales of the Leaf electric car have segments. been slower than expected. "While it is true that plug-in electric vehicles have seen delays in arriving on the market and have sold in fewer numbers than originally anticipated, we expect strong "The challenge will be converting early intenders to growth as global PEV [plug-in electric] sales volumes will mainstream buyers," he says. "The people who already nearly triple between 2012 and 2014," Pike Research bought Leafs and Volts were never really concerned about Director John Gartner says. the price. They wanted the technology. That won't be the case for the next wave." "Automotive companies have made a strong commitment to electric vehicles, and their viability as a transportation As for Nissan's plan to lower the price of the Leaf by building platform is no longer in doubt." the car in the United States, Omotoso remains doubtful.

But the question is how much and how soon? "Can you get mainstream buyers to spend $30,000 or $40,000 on an EV when for $15,000 they can buy a Mike Omotoso, a senior partner with industry forecasting subcompact that gets 40 miles per gallon?" he asks. "We firm LMC Automotive US Inc., says EV sales growth will be see that, even moving the Leaf to Tennessee, sales still won't slower than the automakers hope. LMC predicts combined take off." 2012 sales of electrics and plug-in hybrids will come in at around 41,000, and increase to only about 115,000 in 2013, with plug-in hybrids outselling electrics.

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Ford would have shut without GM, Chrysler aid, Rattner says

Angela Greiling Keane between Obama and Republican Mitt Romney as they compete for votes in DETROIT (Bloomberg) -- Ford Motor swing states including Ohio, home to Co., the only large U.S. automaker that U.S. automaker and parts-supplier didn't receive a U.S. government plants. Romney opposed the bailout, would've failed along with government bailout. General Motors and Chrysler if President Barack Obama's Ford's view administration hadn't rescued the Ford CEO Alan Mulally last month industry, said Steven Rattner, who concurred with Rattner's view, saying headed Obama's auto task force. he testified before Congress in support "Ford would have closed because it of taxpayer support for his competitors wouldn't have been able to get parts, because it also saved Ford. because the parts industry in this "We think about that a lot, should we country was in arguably worse shape have gone back and testified on behalf than the assemblers," Rattner said of our competitors who were today at the Center for American bankrupt," Mulally told reporters Sept. Progress in Washington. Ford CEO Alan Mulally said last month 18 in New York. "I would do the same he testified before Congress in support Rattner, now chairman of the Willett thing again today." of the auto bailout on behalf of his Advisors LLC investment firm, led the competitors because it also saved Ford. Mulally said he agreed with the $63.4 billion bailout in 2009 of GM assessment of "the economic advisers and Chrysler, which he said would have of the Bush administration and the fired all their workers and ceased to private capital into GM and Chrysler at Obama administration that if GM and exist without the bailout. the beginning of 2009, Rattner said. Chrysler had gone into free fall, they President George W. Bush, who could have taken the United States "If you can't pay your workers, if you preceded Obama, "did the right thing" from a recession into a depression." can't pay your suppliers, if you can't by beginning the bailout process, giving pay your electric bills, then you have to The U.S. government was the only $17.5 billion to GM and Chrysler in liquidate," he said. "This is what entity that could save the domestic 2008, Rattner said. government is set up to do." automakers because no one, including The auto bailout has been a point of banks that were dealing with their own contention in the presidential race financial crises, was willing to put

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Building brands by design

GM's new setup divides stylists based on marques

Mike Colias That job falls to Parkinson, 49, who as of Aug. 1 became executive director of DETROIT -- General Motors' design global Chevrolet and GMC design. His studio in Korea is GM's go-to center for new job shows how GM's brands have small cars, responsible for the look and taken on greater importance under the feel of diminutive rides such as the new structure. Chevrolet Spark and Sonic. Before, Parkinson oversaw exterior But that doesn't give the studio's head design in North America across all designer, Mike Simcoe, carte blanche in brands and platforms. While he also that size category. Under a new brand- was charged with preserving focused structure for GM's design Chevrolet's design traits through his division, Simcoe confers closely on any dual job of Chevy "brand champion," Chevrolet design with Ken Parkinson, reporting to him were sculptors and who is head of Chevy design globally at GM design chief Ed Welburn aims to get more inspired designs. designers who might be working on GM's design center in Warren, Mich. Cadillacs and Buicks. That seems to make sense. But it hasn't Under the restructuring, Mark Adams, always worked that way. styling cues. Then he might move on to who led Opel design since 2007, has a GMC assignment and reboot. For the last decade or so, GM has relocated to Warren and will lead divided its 10 global design studios "But if all they did were Buicks, they global Cadillac and Buick design. roughly by platform. So designers at wouldn't just take that Buick rule book There are cost savings to be had under GM's design center who were assigned and develop a vehicle based on it," the new structure, too, Welburn said. to the company's mid-sized sedan Welburn said. "They would advance For example, he said his head of GMC platform might work on a redesign of the design language even further, interiors, Pete Lawlis, quickly can the Chevy Malibu for several months deliver designs with more reach." pinpoint variations in the cost of before switching to, say, the Buick Maintaining consistent designs globally common components as he moves LaCrosse. has become increasingly important as between projects. That system worked OK, said Ed GM seeks to expand those brands Welburn pointed to one other bonus of Welburn, GM's design chief since further into Europe, China and other the new setup: He said it has energized 2003. But Welburn, 61, believes that overseas markets. his design staffers, who can take a he will get more inspired designs by The new structure should help deliver pride of ownership in their brands. putting most of his 2,000 designers, that consistency, Welburn said. It also sculptors and other personnel under "They go home at night and tell their should drive distinction between brands specific brands. families, 'I'm working on GMCs'" in the same markets that share Welburn said. "It's not, 'I'm working on Before, a designer might get a Buick platforms, such as Chevrolet and GMC crossovers, or some mid-sized yada assignment and immerse himself in the in trucks. Welburn believes GM "can yada platform.' " intricacies of porthole vents and make the GMCs more distinct than we waterfall grilles and other trademark already have."

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Volkswagen will add dealers in U.S.

Diana T. Kurylko The redesigned Passat went on sale a year ago when production began at PARIS -- Volkswagen expects to add up VW's factory in Chattanooga, to 15 new dealers by year end in the Tennessee. The Passat's previous U.S. United States, bringing the brand's sales record was 77,523 units in 2001. dealer count to 615 in the country. Passat sales are expected to continue at "We are adding very selectively and a brisk rate because VW has increased there are a number of changes buying production capacity in Chattanooga by and selling, but the main focus is 10 percent for the 2.0-liter turbodiesel seeing the throughput increase," said four-cylinder model. Diesel has Jonathan Browning, CEO of accounted for about 20 percent of the Volkswagen of America, at the Paris Passat sales mix, and that is expected to auto show last week. increase to 30 percent in the fourth Meanwhile, Browning said sales of He said about 91 percent of VW's quarter, Browning said. Volkswagen's Passat sedan built in the dealers were profitable through July United States hit a one-year historic Browning would not predict VW brand compared with 89 percent in 2011 and high of 79,000 vehicles through Sept. sales for 2012 but said growth will 83 percent in 2010. 16. continue at "a very significant double- "This is the first phase of growth digit" pace. In the first nine months, "Passat has resonated in the through the existing dealer body," he the VW brand sold 323,089 vehicles, marketplace because of the said. "Later on, we will see that up 37 percent from a year earlier. configuration, size, content and value," footprint expand." Browning said.

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Young, pragmatic Chinese managers key to domestics' turnaround prospects

SHANGHAI -- Relatively few top Auto. "At the joint venture we executives of Chinese automakers (Chinese managers) were denied access showed up in Chengdu last week to to the randd work conducted," he said. attend an automotive forum organized And here's a third example: After years by the China Council for Promotion of of reckless expansion, the state-owned International Trade. Chery Automobile Co. is struggling But that was a good thing. with declining sales and rising debt.

Most domestic automakers instead sent Asked what went wrong, company middle-level managers to speak at the sales chief Zhen Zhaorui admitted that event. These people are in their 30s or Chery paid too much attention to early 40s, and they represent a new short-term sales. "We strived to rank generation that is open and pragmatic. first or second in sales among domestic brands," he said. "But we forgot to ask By contrast, their bosses at most what our future direction should be." Chinese automakers generally are more than 50 years old. Yang Jian is managing editor of In the eyes of many Chinese people, Automotive News China. domestic car brands are associated with Old-school Chinese executives also tend national pride. But that can be a to be media-shy and evasive with the distraction, warned Yang Song, deputy press. But the younger generation is A second example: Foreign automakers sales chief of Dongfeng Nissan. more candid. They dare to speak up are required to form joint ventures with their mind and care less about political Chinese companies in order to share Last year, his company -- a joint venture correctness. cutting-edge technology with their between Nissan Motor Co. and Dongfeng Motor Corp. -- created the Here's an example: The government partners. domestic Venucia brand. favors development of pure electric Has the policy worked? We will never vehicles and plug-in hybrids instead of get a clear answer from senior Chinese "Running a brand is basically running a conventional hybrids. executives. business," said Yang, who oversees Venucia. "I only need to do well in my But at the Chengdu forum, Zhu But Xu Yulin, vice general manager of business and don't want to complicate Huarong, a vice president of Changan Guangzhou Automobile Group Co.'s it." Automobile Co., dismissed China's EV passenger vehicle unit, says the policy policy as "merely public relations." has failed. Global automakers carefully Over the past two years, Chinese brands have steadily lost market share "You will find there are still a lot of shield their technology from their to their international rivals. As this new problems with these vehicles when you Chinese partners, Xu asserts. generation of young, pragmatic develop them with taxpayers' money," As proof, Xu noted his previous managers rise to senior positions, Zhu warned. experience as sales manager of perhaps they will turn their companies Guangqi Honda, a partnership between around. Honda Motor Co. and Guangzhou

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U.S. tariffs on Chinese tire imports expire; prices likely to fall

Bloomberg Chinese tire makers faced a 35 percent tariff in 2009 that was lowered by 5 In the United States, tires are poised to percentage points each year. For get cheaper. companies like Hangzhou Zhongce, the Bridgestone Corp., the world's largest end of the punitive duties mean higher maker of tires, is preparing for overseas sales. Exports to the U.S. may increased competition after a 25 recover to about 70 percent of levels percent punitive duty imposed by the last seen in 2008, said Hangzhou Chinese tire makers faced a 35 percent United States against Chinese tires Zhongce's Ni. tariff in 2009 that was lowered by 5 expired on Sept. 26, company percentage points each year. (Photo: Chinese prepare Reuters) spokesman Yuki Kawasoe said. "We've been preparing for the tariff China's Hangzhou Zhongce Rubber expiration for some time," Ni said in a Co., the nation's largest tire maker, "There will be an impact on the entire phone interview Thursday. said it's ready to boost its exports to market," Kawasoe at Bridgestone said. the United States, said Ni Guoliang, The end of tariffs is "bullish" for "We will work to boost efficiency and head of the company's general office. China's tire industry, said Li Zhongxing, cut costs to maintain competitiveness." vice general manager at Qingdao The end of the tariffs means Chinese Sumitomo Rubber Industries Ltd., Segrift International Logistics Co., a producers will be able to compete on Japan's third-largest tire maker, has no unit of Shanghai-traded Sailun Co. equal terms in the United States for the plans at present to introduce discounts Most passenger-car tire plants are first time in three years. President or cheaper products to counter the already running at full capacity catering Barack Obama began imposing tariffs expected increase in competition from to domestic demand, limiting their on $1.8 billion (11.3 billion yuan) of Chinese exports, said Kumiko Makino, ability to boost production for exports, Chinese auto tires since 2009, acting a spokeswoman for the Japanese Li said. on a labor union complaint that surging company. imports were pushing U.S. factory Keith Price, a spokesman for Akron, The tire maker, which gets about 12 workers out of jobs. Ohio-based Goodyear Tire and Rubber percent of its sales from North America, Co., the largest U.S. tire maker, "With the tariff gone, Chinese tire plans to maintain its competitiveness couldn't be reached for comment. makers will be able to increase exports with "quality products and services," to the U.S.," said Lee Sang Hyun, an The tariffs had driven up industry prices Makino said, without elaborating. automotive analyst at NH Investment by 10 to 15 percent and mainly and Securities Co. in Seoul. "This, in benefited South Korean tire makers, turn, will ease the hyper- Bret Jordan, an analyst at BBandT competitiveness in the Chinese Capital Markets in Boston, wrote in a market." report this week.

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U.S. files trade complaint against Chinese auto parts exports

President Obama has said Beijing is abusing trade laws by imposing more than $3 billion (18.9 billion yuan) in duties on U.S. auto exports. (Photo: Reuters)

Reuters subsidies for automobiles and auto interests of a major job-providing parts. industry in a state that could tip the WASHINGTON -- The United States balance in a close election. His launched a trade complaint against Obama has said Beijing is abusing trade opponent, Mitt Romney, has attacked China over what the Obama laws by imposing more than $3 billion Obama for what he says is an overly administration says is Beijing's unfair (18.9 billion yuan) in duties on U.S. cautious approach to pressuring China government backing of its auto auto exports. In addition to launching into observing international norms for industry. the subsidies case, the president is trade, foreign exchange, and patents taking the next formal step in the President Barack Obama announced and trademarks. World Trade Organization to protest during a campaign tour of Ohio those duties. Ohio relies heavily on the auto industry Monday that he is initiating a case and is a politically important swing against China at the World Trade The move allows Obama to take a state. Organization over allegedly illegal stand on China and advance the

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In making their case to the world trade international pressure, China has let the body in Geneva, Switzerland, U.S. yuan appreciate in recent years. officials say the Chinese government is Even so, the U.S. trade deficit with providing prohibited subsidies to auto China hit a record $295 billion (1.9 and auto parts producers in 12 trillion yuan) in 2011. designated "export bases." Illegal subsidies were worth $1 billion (6.3 Romney has pledged to formally billion yuan) between 2009 and 2011, declare China a currency manipulator the administration official said. on his first day in office. The Obama administration has declined to label "The key principle at stake is that China China in seven semi-annual Treasury must play by the rules of the global Department reports. trading system," a White House official said. "When it does not, the Obama Barack Obama Administration officials say they have administration will take action to made progress with China on the ensure that American businesses and currency issue over the past few years workers are competing on a level powerhouse and has promised to be without ratcheting up tensions by playing field." tougher on issues such as trade and formally labeling Beijing a currency currency manipulation. The Obama manipulator. The next semi-annual The trade enforcement steps come as campaign has frequently stated that, report is due on Oct 15. Obama and Romney vie for a few during his business career, Romney was important states, including Ohio, that In the meantime, Beijing showed no responsible for sending many U.S. jobs could determine the outcome of the such reticence to invoke trade rules, overseas, including to China. Nov. 6 presidential election. Obama slapping duties on U.S. auto exports in holds a narrow lead in polls, but the In Ohio, the auto-parts industry directly December 2011 on roughly 92,000 sluggish economy and unemployment employs 54,200 people, the autos and SUVs, worth 20.8 billion rate have weighed on the president's administration official said. When yuan in annual U.S. exports. re-election bid. related industries like steel, aluminum, Those duties fell disproportionately on plastics and electronics are taken into In recent days, Obama's handling of General Motors and Chrysler because account, the auto sector supports foreign affairs has jumped to the of the actions that President Obama about 12 percent of the state's total forefront of the campaign debate as took to support the U.S. auto industry employment, the official added. tensions boil over in the Middle East. during the financial crisis. China trade case may shift the focus to Obama constantly reminds Ohio The trade duties cover more than 80 the president's management of the audiences of his administration's percent of U.S. auto exports to China, sometimes contentious U.S. decision to throw a lifeline to auto including cars manufactured in Toledo relationship with China and his support companies during the recession and and Marysville, Ohio, and Detroit and for the auto industry, which faced the Romney's opposition to that bailout. Lansing, Michigan. prospect of auto maker bankruptcies in Beijing's willingness to hold the value the depths of the financial crisis and of its yuan currency low, making its recession. goods cheap abroad, has been a sore Romney has accused Obama of making point between the United States and too many concessions to the Asian China. As a result of U.S.-led

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5 auto execs on list of China's 100 richest people

Automotive News China

SHANGHAI -- Five of China's 100 richest people are connected to the auto industry, according to the Hurun Research Institute, which has released its annual list of China's wealthiest individuals.

In 17th place with $4.3 billion (27 billion yuan) in assets is Sun Guangxin, chairman of the China Grand Auto Group, a network of auto dealerships.

In 18th place with 26 billion yuan is Lu Guanqiu, president of the Wanxiang Group, a major supplier of chassis components.

Wei Jianjun, CEO of Great Wall Motor Co., is the 35th-richest Lu Guanqiu, president of the Wanxiang Group, ranks 82nd individual with 17.7 billion yuan. Great Wall is China's among China's 100 richest people. (Photo: Reuters) leading producer of SUVs.

Lv Xiangyang, of Guangzhou Youngy Investment and Corp. in 2010, moved all the way up from 255th place a year Management Group, ranks 73rd with 12 billion yuan. earlier. In 82nd place is Li Shufu, chairman of Geely Group, with Wang Chuanfu, CEO of BYD Co., is just below the top 100 11.5 billion yuan. Li, whose company bought Volvo Car with assets of 10 billion yuan.

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China slowdown could be lengthy, economist says

(Bloomberg) -- China's current make a turnaround, because things economic slowdown may last longer can't get worse." than the 2008-09 global financial crisis With the 2008 crisis, China enacted a 4 because of worsening external demand trillion yuan ($586 billion at the time) and limited lending to smaller stimulus and opened up bank lending. companies, a state researcher said. After for seven quarters, year-over-year Growth may slow for a ninth straight economic growth bottomed at 6.2 period to below 7 percent in the first percent in the first quarter of 2009 and quarter, said Yuan Gangming, an accelerated to 11.9 percent a year later. economist with the Chinese Academy In contrast with Yuan, economists of Social Sciences, in an interview in surveyed by Bloomberg News this Beijing. month expect growth to rebound next Yuan, who formerly headed CASS's quarter. Median estimates for Office of Macroeconomic Research in expansion were 7.4 percent for the the Institute of Economics, forecast 7.4 third quarter, 7.7 percent in the fourth percent expansion in the third quarter quarter and 7.9 percent in the first and 7.2 percent in the last period of period of 2013. the year. Data for the past two months point to Yuan, who also teaches at Tsinghua The slowdown may pressure new a deepening slowdown after growth University in Beijing, said unsustainable leaders of the Communist Party, set to decelerated to a three-year-low of 7.6 local-government spending plans also be named this year in a once-a-decade percent last quarter. will contribute to the slowdown. power handover, to step up stimulus Even so, the People's Bank of China has efforts. A report yesterday showed "China's medium and small-sized held off from easing after cutting China's manufacturing may contract businesses are finding it increasingly interest rates in June and July and for an 11th month, and Yuan said the hard to borrow money from banks -- lowering lenders' reserve requirement central bank has been too focused on the most fundamental part of the ratio. controlling inflation at the expense of economy is suffering," Yuan said. growth. The Communist Party has yet to Chinese Premier Wen Jiabao, who announce a date for the congress this "The slowdown will definitely extend pledged last week to employ monetary year that will start the process of the into the first quarter of next year," said and fiscal policies to spur growth, has leadership handover. Lu Ting, chief Yuan, 58, who advises the government accelerated infrastructure-project Greater China economist at Bank of without being directly involved in policy approvals while refraining from America Corp., said this month that the making. introducing a stimulus package on the nation had "policy paralysis" as a result scale of the one during the financial "That will provide a good starting point of the pending transition. crisis. for the new generation of leadership to

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China's automakers find new success at making better cars

BEIJING (Reuters) -- China keeps getting better at making cars. One reason: It's getting better at cutting corners.

Zhejiang Geely Holding Group Co., one of China's biggest carmakers, conducted 20 to 25 crash tests when it developed its popular Panda model, engineers involved in developing the car told Reuters.

Global car makers typically conduct 125 to 150 crash tests for each new model. By relying more on computer simulations, Geely saved at least 200 million yuan ($31.57 million) and two years in development time on the Panda, the engineers said.

Paring back on crash tests, skimping on frills, simplifying designs, using cheaper materials and, in a departure for the Geely conducted 20 to 25 crash tests when it developed its industry, outsourcing most of their design and engineering popular Panda model. (Photo: Reuters) are having a profound effect on the cost bases of China's dozens of automakers. Some automotive analysts are predicting a 50 percent Some are now able to sell cheap and cheerful small cars for increase to 1.25 million vehicles. about 40,000 yuan ($6,350) -- less than half the price of a plain vanilla Toyota. Some executives at big foreign manufacturers say China's new model of creating good-enough cars poses a serious Ten years ago, no discerning Chinese consumer would have challenge to the way the international industry operates. bought China-designed cars. Not only were such vehicles accused of being illegal counterfeits of foreign models, but "This is a warning shot to the established engineers who their quality and safety were also mistrusted. have told their management time and time and again that this is the minimum cost they can achieve with their existing Now, despite their homely looks, some indigenous models design and production methodology," says Shiro Nakamura, are striking a balance between no-frills affordability and a top Nissan Motor Co. executive and the company's chief acceptable quality. In China, it is the age of the good- designer. "Now the Chinese are saying they can cut another enough car -- and that has potentially significant implications 30, 40 percent of the cost." for the world auto industry. It normally takes four to five years for established players like Models such as the Panda and the Great Wall Haval H3 are General Motors and Toyota Motor Corp. to come up with a becoming popular not only in China but increasingly so in new car from the ground up. Chinese manufacturers can emerging markets, from Indonesia to Egypt and Ukraine. now do so in just two and half years by deploying an They are driving China's auto exports to record levels, even abbreviated design process. as growth in China's auto market slows down. "Perhaps the Chinese achieve their low cost by sacrificing Exports of Chinese-produced vehicles are forecast to hit one quality standards," says Nakamura. "But in many ways their million vehicles this year from 849,500 vehicles last year.

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way also points to 'over quality' or 'waste' we have built into Automotive analysts say these houses are responsible for our conventional design process over the years." helping engineer seven to eight out of every 10 cars China's indigenous car makers sell here. By using the same few The copy cats design and engineering firms, Chinese car makers have The Chinese approach is a product of the extraordinarily fast effectively created a shared pool of home-grown automotive rise of its auto industry. As the country opened up to the technology. West, carmakers were faced with relatively poor customers at CH-Auto, for instance, has helped design an array of cars home and sophisticated products made abroad. Global over the past decade, each time gaining fresh expertise, automakers could sell their pricey cars to rich Chinese, but which it deploys for its next project -- in most cases for a local Chinese automakers had to come up with cheap cars different company. CH-Auto was established in 2003 by a for the masses. small group of jobless Chinese engineers who had trained Rapid growth in the economy spurred the creation of more with Beijing Jeep, a now-defunct joint venture set up initially than 100 registered automakers across China by the early by Beijing Automotive Industry Holding Co. and American 2000s -- but they lacked expertise. Their solution in coming Motors Corp. up with affordable cars was simple: copy the designs of CH-Auto and its rivals say they have moved beyond aping foreign makers. foreign designs. Instead of copying the shape of a "Around 2000, China began embracing an approach it component or an entire foreign car, they try to match its described as 'reverse-engineering.' It was essentially a fancy performance as well - often successfully - even as they word for copying," says Dai Ming, a senior engineer at CH- improvise and simplify the original design to cut costs. The Auto Technology Corp., an independent design and aim is to make cars affordable to China's emerging middle engineering company based in Beijing. "The problem with class, people who are earning 50,000 to 60,000 yuan a year those copied cars was that the Chinese were able to emulate ($7,900-$9,500). the shape of a foreign car, but not its soul." "It's not copying. It's not that simple anymore," said Wang Chinese carmakers tended to sift through a foreign vehicle to Kejian, president of CH-Auto, a former Beijing Jeep engineer identify expensive, non-critical features and functions to who was trained for a time in Detroit by Chrysler. "Since skimp on or eliminate, such as a door that closes with a Chinese car makers have no accumulated vehicle design proper "thump," as well as power windows and passenger- technology or know-how, we have to develop our own by airbags. The result was often dubious quality and durability. studying foreign cars and use local parts suppliers to After a few years of use, bumpers and door handles would approximate the components and the cars." start falling off. Geely Automobile, which owns Swedish carmaker Volvo, Dai says of the typical cheap knock-off model: "It didn't drive turned to CH-Auto around 2005 for help on a project that well like the foreign car, either, and in some cases it was a led to the Panda, now one of China's most popular small safety hazard on the road." cars. CH-Auto was responsible for the exterior styling and engineering the underpinnings. The rest was handled by Outsourcing design Geely, according to the two companies. A clutch of design firms is driving the advances in CH-Auto and Geely made a clear departure from copying affordability and quality in the industry, including CH-Auto, with the Panda. To be sure, they still selected a car to where Dai works; IAT Automobile Technology Co. of Beijing; emulate or bench-mark -- in this case, the Aygo, a "city car" and TJ Innova Engineering and Technology Co. of Shanghai. that Toyota produces in Czech Republic and has been selling China's indigenous automakers are so new many have not in Europe since 2005. had time to groom their own engineers, and their best But instead of simply producing a fake Aygo, engineers at engineers are usually occupied more with manufacturing CH-Auto first studied and tested the Aygo and its than design. Companies thus often outsource product design components -- often with the help of three-dimensional and development to outside engineering houses filled with digital scanners -- to collect data on their design and Chinese engineers trained overseas. performance. Then they tried to manufacture components by

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adapting parts made in China to match desired functions and What's more, Chinese car makers ignore what they consider performance. If suitable local parts weren't available, they minor, non-critical risks, such as using far fewer crash tests worked with suppliers to create new ones by simplifying the with dummies. scanned Aygo designs. "If the client only gives me two-and-a-half years to design a The purpose was "not to copy but approximate the Aygo," car, then I can only eliminate major risks. And the smaller Dai said. risks, well, there's nothing we can do," says CH-Auto's president Wang. One example is the Panda's chassis. The under-body carriage, which the suspension and wheels are attached to, is key to China does have vehicle safety standards, and any automaker how a vehicle handles corners on the road. launching a new car needs to meet them. But there is no required number of crash tests. The Aygo, which starts at 6,462 pounds (about $10,000) in Britain, has a relatively sophisticated under-body structure Geely and CH-Auto do not want to do as much crash-testing formed in a single piece by using a process called as global automakers because creating prototype cars costs "hydroforming," in which pressurized water is used to shape up to 2 million yuan a car ($316,000), CH-Auto's Wang said. metal. For the Chinese this was a problem. A Geely spokesman, Victor Yang, would not say how many CH-Auto and its chassis suppliers have no proven know-how crash tests Geely conducted on the Panda. But Yang noted in hydroforming. And the light-weight steel that Toyota uses that the Hangzhou-based automaker conducted "more than for the Aygo's under-body carriage was too pricey for Geely what's typically performed in China." For cars being to use in a car to be sold in China. developed today, it routinely conducts more than 70 crash tests, Yang says. Geely and CH-Auto's solution was to use cheap "everyday" steel commonly available in China, Dai said. Geely and CH- By contrast, an established global player such as Toyota Auto divided the Panda's chassis frame into two pieces - routinely tests a new car by crashing it a "minimum 120 to upper and lower units - to simplify their structure so they 150 times," according to a Toyota chief engineer who spoke could be easily stamped rather than using the more on condition of anonymity. If the car is sold in many different expensive hydroforming method. Then Geely welded those markets around the world, Toyota crashes even more cars, he two pieces to create a chassis frame for the car. said. "The problem was our solution compromised the Panda's The road ahead NVH," Dai says, using the acronym for noise, vibration and Nevertheless, the Panda is a watershed product for both harshness, the key attributes of drive feel. Geely and CH-Auto. The car's stylized exterior -- featuring a Despite using cheaper materials and processes, Geely and Panda-eyed grill and tail lamps in the shape of paws -- was CH-Auto were able to largely match the performance of the considered cute and timely when launched in 2008 to Aygo's platform in terms of the vehicle handling and NVH, coincide with the Beijing Olympics. which Dai says was confirmed by a third-party testing The advent of the good-enough car is emboldening Chinese company. More important, by tweaking the design and using automakers to build up their own product development cheaper materials and manufacturing processes, Geely and capabilities to rely less on CH-Auto and other independent CH-Auto were able to produce a platform for the Panda with engineering houses. Geely, one of China's top indigenous "roughly half" the Aygo's cost, according to Dai. car makers, is expected to sell about 370,000 cars in China Despite the advances in design, safety standards in Chinese- and 90,000 abroad this year. By 2016 the company forecasts made cars still lag those of U.S. and European its export volume will hit as high as 300,000 or possibly manufacturers, in part because its government doesn't 400,000. impose as stringent a body of safety requirements. "My vision," said Geely Chairman Li Shufu, "is to sell outside China the same number of cars we sell within China."

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Hyundai, Kia gain at Japanese rivals' expense

(Bloomberg) -- Combined China sales The China gains failed to impress of Hyundai Motor Co. and affiliate Kia investors as Hyundai Motor shares fell Motors Corp. last month rose 10 for a fourth day, dropping 2 percent to percent to 127,827 units, as rival 237,500 won (1,338 yuan) at the close Japanese automakers were hurt by in Seoul trading. Macquarie Group Ltd. anti-Japan protests. analysts wrote last week that third- quarter deliveries worldwide at Hyundai The two companies now expect to more vehicles in China, though Kia Motor and Kia were about 4 percent exceed their combined sales target of won't be able to expand much further lower than expected. 1.25 million units this year, Hyundai because its plants in the country are Motor said in a statement. Nissan Motor Co., which has the already operating at full capacity, NH highest market share in China among Investment's Lee said. Non-Japanese brands stand to gain as Japanese carmakers, had September Chinese consumers shun products from Japanese vehicle manufacturers cut sales fall about 35 percent, while Toyota Motor Corp. to Sony Corp. after output in China in August and officials Toyota plans to cut October production a territorial dispute escalated last at the companies said sales and 50 percent from a year earlier, the month, when Japan decided to buy a production were poised to deteriorate Mainichi newspaper reported on group of islands claimed by both in September amid the deepening Saturday, without saying where it got countries. territorial row that has become the the information. worst diplomatic crisis between the two Last week, JPMorgan Chase and Co. Tumbling sales nations since 2005, when thousands of economists warned that the political Chinese protested Japanese textbooks row between Asia's two largest Mazda Motor Corp. reported Thursday that downplayed wartime atrocities. economies will cause Japan's gross that deliveries in the country tumbled domestic product to contract this 35 percent to the lowest in 19 months, The dispute escalated when Japan said quarter. while Mitsubishi Motors Corp. said a Sept. 11 that it would buy the islands, day later that Chinese sales plunged 63 known as Diaoyu in China and Senkaku "Although the China sales results are percent. in Japan, from a private owner. definitely good news for Hyundai and Kia as a whole, the benefits from the In September, traditionally a major Nissan expects anti-Japanese sentiment anti-Japan movements aren't likely to shopping season in China, Hyundai to hit September sales, Executive Vice last long," said Lee Sang Hyun, an Motor sales in the country were driven President Takao Katagiri said on Friday. analyst at NH Investment and Securities by the Langdong and Kia sales by the The company will weigh the impact of Co. "Also, Japanese automakers that K2. Deliveries at Hyundai Motor the Chinese protests before deciding resume production today will try to increased 15 percent to 84,188 units, whether to revise its sales target there, make up their losses." and climbed to 43,639 units from Katagiri said. 43,508 units at Kia. Production in China is typically shut Japan's three largest automakers plan down for the annual so-called Golden Hyundai Motor's third Chinese plant, to cut production to half of normal Week holiday that started Oct. 1. which opened this year, may help the levels in China, the Nikkei newspaper company increase production and sell reported Monday.

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Inside this issue: As price war escalates, Europe must address overcapacity

The cover story of the eighth issue of that it expects will boost sales to the Automotive News Europe Global 100,000 units by 2014 from next to Monthly focuses on the pressing need nothing just a couple years ago. By for automakers to restructure the 2020, the French automaker wants a manufacturing footprint in Europe. 5 percent market share in India, Asia's third-largest economy. With the region in the midst of a five- • Toyota Motor Corp. is showing a year slump that is not forecast to end new openness to working with until 2015 at the earliest, about 40 car globally positioned non-Japanese plants in Europe last year were running suppliers. Germany's Robert Bosch below their financial breakeven point of and France's Valeo are among the 75 to 80 percent capacity utilization, companies that are in a position to AlixPartners estimates. win more business from Toyota. Morgan Stanley analyst Adam Jonas • China's tire makers could get a boost said that Europe is currently burdened from Europe's new labeling rules, by nearly 30 percent excess capacity, which go into effect Nov. 1. The new equivalent to 15 assembly plants. Luca Ciferri is Editor-in-Chief at rules, which provide aftermarket tire Automotive News Europe. consumers information on fuel But the threat for Europe could go economy, wet grip and noise, could beyond job cuts and plant closures be an opportunity for Chinese needed to align capacity to sales, which steal each other's customers in a profit- makers to reduce the dominance of are likely to slip to their lowest level killing price war. Volume brands are long-established brands such as since 1995 as austerity measures offering average discounts of 20 Michelin, market watchers say. reduce consumers' buying power. percent in key European markets, • There was no good news for "It is unclear if all carmakers will survive research from Barclays Capital shows. Europe's top 10 as every model without government help," VW Group "Nobody can make money in Europe suffered a sales decline during the Chief Financial Officer Hans Dieter when you've got incentives at that first eight months of 2012 compared Poetsch said. "Carmakers in southern level," said Susan Docherty, head of with 2011, data from our partner Europe that produce small cars will be Chevrolet in Europe. JATO Dynamics show. especially affected." Also in this issue you will find: We hope you enjoy this richly varied Renault-Nissan CEO Carlos Ghosn said issue. he is sure Europe will rebound but he • Ford of Europe's newly appointed fears that some automakers will not be head of quality, Gunnar Herrmann, around once the tough times have explains why he sees the passed. differentiation between premium and non-premium brands disappearing. Tensions also are rising among car • After a false start, Renault is in the Luca Ciferri, Editor-in-Chief manufacturers in Europe as they try to midst of a product offensive in India

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Korea's Mando plans 1.4 billion yuan China IPO

(Bloomberg) -- Mando Corp., the Visteon, the U.S. auto-parts maker that largest unit of South Korea's Halla was spun off from Ford Motor Co. in Group, plans to raise 1.4 billion yuan 2000, tried to buy the remaining 30 ($225 million) from an initial public percent of Halla Climate last July. South offering in Hong Kong for its Chinese Korea's National Pension Service, which unit, two people familiar with the owns 8.1 percent of Halla Climate, matter said. rejected the U.S. company's offer. The pension fund also reached a preliminary The company plans to sell new stock agreement to give Mando preferential equivalent to a 25 percent stake in late rights to bid for the fund's stake in November and price the shares to value Halla Climate. Mando China Holdings Ltd. at 5.7 Earlier this month, UBS AG analysts billion yuan, said the sources, who wrote that the China affiliates will Last week, Visteon said that it plans to asked not to be identified because the account for 18 percent of Mando's sell its climate business to Halla Climate plans haven't been made public. total revenue and 32 percent of its for cash, creating the Halla-Visteon operating profit in 2012. Mando Climate Group. Morgan Stanley and Deutsche Bank AG China's listing could help strengthen are handling the deal, they said. The move, which Visteon wants to the parent company's balance sheet complete in the first quarter of next The proceeds may help Mando, Korea's and lower financial expenses, they year, will make the combined entity a second largest automotive supplier, to wrote in a Sept. 3 report. "predator not prey" in the industry, raise funds for a possible purchase of Rebuilding Group Tim Leuliette, Visteon's then-interim former affiliate Halla Climate Control chief executive officer, said at an Corp. from Visteon Corp. In August, Halla Group Chairman Chung Mong investor conference in Boston. Mando said it may offer to buy Won, who also is chairman of Mando, Customers have wanted such Visteon's 70 percent stake in Halla has been seeking to rebuild the group. consolidation for more than a decade Climate. Mando went bankrupt in 1997 after and the transaction won't be subject to Mando spokesmen said they could not years of overexpansion saddled it with a shareholder vote, he said. immediately comment. at least 6.5 trillion won (37 billion yuan) On Monday, Leuliette was name CEO in debt. Chung regained control of Last month, the Korean company and president of Visteon. Mando in 2008 after Halla Group sold established Mando China Holdings by the company in 1999 following the reorganizing eight affiliates, according Asian financial crisis. to a regulatory filing on Sept. 3.

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Fight for survival

Plant closures targeted by volume brands to stop the bleeding caused by weak demand

Luca Ciferri

PARIS -- With Europe in the midst of a five-year sales slump that is not forecast to end until 2015 at the earliest, volume automakers are taking dramatic steps to stop bleeding cash. This has put thousands of jobs and nearly a half dozen plants at risk, but that is the price some automakers will have to pay if they want to survive.

How serious is the threat? Serious enough for top-ranking executives to publicly state their concerns on whether all of today's competitors in Europe will be alive in the future.

"It is unclear if all carmakers will survive without government help," Volkswagen Group Chief Financial Officer Hans Dieter Poetsch said last month. "Carmakers in southern Europe that produce small cars will be especially affected." The global economic downturn of 2008-2009 contributed to Renault-Nissan CEO Carlos Ghosn said he is sure Europe will the death of car plants in Belgium, Italy and Sweden. rebound but some automakers will not be around once the Europe's current debt crisis will claim at least two and as many as five more factories. tough times have passed. Separately, Ghosn warned that Renault would need to close a plant -- or plants -- in France if the country does not become more globally competitive. Ford of Europe communications director John Gardiner said Multiple plants at risk the company would not comment on Genk's future. He said Ford "will continue to implement our plan to match General Motors Co. and PSA/Peugeot-Citroen are production to demand." considering combining GM's money losing Opel/Vauxhall unit with PSA's automotive operations in a joint venture, Italian unions fear that Fiat's 500 million euro cut in new according to media reports. The proposal shows how the product investment leaves Italian plants in Cassino and Melfi slumping European car market is likely to reshape the vulnerable to closure. Both factories are producing at less region's auto industry. than 50 percent of capacity utilization.

PSA announced earlier this year it will shut down a factory Through September, car sales in western Europe dropped 7.7 near Paris in 2014 and will cut its work force at a second percent to 9.1 million, according to LMC Automotive. French plant. Opel does not expect to continue output at its September was the 12th straight monthly decrease. LMC plant in Bochum, Germany, beyond 2016. forecasts full-year sales will fall 7.7 percent to 11.83 million units, almost 3 million units below western Europe's peak of Ford is "most likely" to close its assembly plant in Genk, 14.8 million in 2007. Belgium, Colin Langan, an analyst at UBS Investment Research, wrote in a Sept. 17 report. Shutting the Genk plant LMC doesn't see western European car sales reaching the would result in potential annual savings of about $500 2007 level again before 2019 while consultants at million and may be completed by the end of 2013, he wrote.

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AlixPartners say that the European auto Tough times Market mayhem market won't return to pre-crisis levels Top-selling brands in Europe Jan.-Aug; 8-month sales in top European countries; until the end of the decade. % change from Jan.-Aug. 2011 % change from Jan.-Aug. 2011 No coordinated response 1. VW 1,109,901 -2.0 1. Germany 2,108,716 -0.6 About 40 car plants in Europe last year 2. Ford 644,997 -12.0 2. France 1,293,973 -13.4 were running below their financial 3. Opel/Vauxhall 573,793 -15.2 3. UK 1,260,997 +3.3 breakeven point of 75 percent to 80 4. Renault 565,147 -19.6 4. Italy 981,030 -19.9 percent capacity utilization, AlixPartners estimates. The consultants say the 40 5. Peugeot 551,379 -14.5 5. Spain 520,216 -8.5 plants would need to build an 6. Audi 483,841 +5.9 6. Netherlands 396,101 -3.3 additional 1.4 million units a year to 7. Citroen 473,861 -12.0 7. Belgium 353,073 -11.5 breakeven. 8. BMW 416,591 -2.4 8. Austria 239,796 -1.2 Morgan Stanley analyst Adam Jonas 9. Fiat 401,876 -16.9 9. Switzerland 224,360 +8.8 said: "Europe is currently burdened by nearly 30 percent excess capacity, 10. Mercedes 389,452 -0.3 10. Poland 188,178 +3.7 roughly equivalent to 15 assembly All brands 8,591,968 -6.6 Total 8,591,968 -6.6 plants."

With no recovery in sight, more plants Source: ACEA Source: ACEA are likely to join the list of factories closed this decade that already includes Opel's plant in Antwerp, Belgium He believes that even if ACEA members restructuring in the United States in (2010); Saab's factory in Trollhattan, decided to address overcapacity on 2009, spurred by the bankruptcies of Sweden (2011) and Fiat's plant in their own, the industry must still General Motors and Chrysler. Termini Imerese, Italy (2011). address excess production. "Every company is going to have to Jonas said a further deterioration in car "I am concerned that if we don't find a deal with its own problems," Ghosn demand in 2013 could be enough to collective will to resolve this at a told Reuters at the Paris show. force European automaker, political European level this is going to become Morgan Stanley's Jonas said PSA, Fiat, and labor leaders to address as much as a permanent crisis," Marchionne said in Renault, Opel and Ford should be half of this excess. Brussels on Oct. 10. leading the way in reducing capacity Fiat-Chrysler CEO Sergio Marchionne Automakers in Europe have enough but added: "We are unlikely to see a has been pushing for that type of factory capacity to build 18 million sweeping exodus of capacity like the coordinated effort for more than a passenger cars and light commercial U.S. experienced in 2008 and 2009." vehicles a year, but sales are running at year, but his latest attempt, at the Paris Taking action auto show on Sept. 28, failed. After less than a 12 million annual rate. This European automotive chiefs held a is leading to an escalating price war Europe's mass-market automakers are meeting on the sidelines of the show, that is putting profits under growing already taking steps to address Marchionne said: "There was an pressure. overproduction. agreement that all the member "We keep on fighting with the same Earlier this month, PSA and Fiat companies would discuss and resolve competitors, we all drink from the announced further temporary closures [the overcapacity] issue on their own, same trough and resources are at some of their plants to cope with as there is no common position on the limited," Marchionne said. weak European demand. matter at ACEA." Marchionne is chairman of ACEA, the European auto Ghosn, however, sees "zero chance" of PSA said it will stop production at its industry association. a government-led restructuring of plant in Trnava in Slovakia, which builds Europe's auto industry similar to the the Peugeot 208 and Citroen C3

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Picasso subcompact models, for 21 Volkswagen also has cut its internal "The European car market is a days in the fourth quarter. The 2012 sales target for western Europe. disaster," Marchionne told reporters at company has already shut production "The VW Group is tentatively selling the Paris show. "I think we're scraping in Trnava for 12 days this year. more cars this year than last year. But it the bottom of the barrel. The problem is correct that it will be somewhat less with scraping is that you never know Fiat stopped production at its plant in than what was originally planned," when you're finished, and so we're Pomigliano, Italy, for two more weeks Bernd Osterloh told German business bouncing along the bottom here." at the end of October. Fiat has placed newspaperandnbsp;Handelsblatt early workers at Pomigliano, Italy, where it Renault Chief Operating Officer Carlos this month. "We are talking however makes the Panda, Europe's best-selling Tavares said the European market has of a maximum of 140,000 cars." minicar, on a temporary layoff scheme not touched the bottom yet and added: until Nov. 9. These are just the latest temporary "We can't see the beginning of the closures and sales target adjustments beginning of a rebound." Opel introduced a four-day workweek that European automakers are applying at its Ruesselsheim, Germany, plant, Said Volkswagen Group sales boss to balance inventories in a slowing which builds the Insignia mid-sized Christian Klingler: "We're bracing for market, but with a recovery at least model. Renault will halve the daily more negative surprises in 2013, some years ahead, more radical output of Twingo minicars at its factory perhaps also in 2014." restructuring may follow. in Novo Mesto, Slovenia. Bloomberg and Reuters contributed

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Europe price war ramps up automaker tensions

Discounting said to be at worst levels since Lehman crisis

Luca Ciferri Europe this year compared with a 500 Price-cutters million euros loss in the region last PARIS -- Tensions are rising among car Volume brands offering the biggest year. Ford of Europe's pretax operating manufacturers in Europe as they blame average-price discounts in key loss grew to $404 million in the second each other for a profit-killing price war. European markets (based on % off quarter compared with a profit of $176 retail price in September) With European car sales likely to slip to million a year earlier. Ford now expects their lowest level since 1995 as to lose more than $1 billion in Europe, Germany austerity measures reduce consumers' which is nearly double its earlier buying power, volume brands are forecast. 1. Opel 27 offering average discounts of 20 2. Ford 23 Chevrolet's Docherty said the current percent in key European markets to try situation in Europe reminded her of the 3. Renault 23 and sell their new cars. tense market conditions that forced 4. Hyundai 23 The price war in Europe is "quite General Motors Co. into bankruptcy in 5. Peugeot 23 serious and possibly becoming worse 2009, at which time Docherty was a because of some desperate moves of GM executive in Detroit. Market Average 23 people who have cash issues," Renault Colin Dodge, who holds various Chief Operating Officer Carlos Tavares UK positions at Nissan, including told Automotive News Europe. 1. Vauxhall 24 responsibility for Europe, told Susan Docherty, head of Chevrolet in Automotive News Europe the 2. Citroen 22 Europe, said Fiat and PSA/Peugeot- discounting that occurred in Europe 3. Ford 20 Citroen are producing "very scary this summer was the most intense he 4. Peugeot 20 numbers" with discounts of as much as has seen since late-2008 when the 30 percent off gross retail prices. Lehman Brothers collapse caused 5. Renault 18 "Nobody can make money in Europe cutthroat pricing in the United States. Market Average 19 when you've got incentives at that "I don't recall a period, besides the level." Lehman shock itself, where people France were doing anything worse," he said. Erich Hauser, a London-based analyst at 1. Renault 28 Credit Suisse, agrees: "The biggest Dodge said discounting waned in 2. Opel 23 problem for the industry is the September, but the lack of cut-rate 3. Ford 21 complete meltdown of pricing deals caused European new-car sales to discipline," he said. worsen last month. Western European 4. Peugeot 17 car sales fell 11.4 percent to less than 5. Hyundai 17 That meltdown has led to declining net 1.1 million in September, which was prices -- what automakers make from Market Average 20 the largest year-on-year contraction in vehicle sales -- which is hitting profits. the last 12 months, according to LMC Fiat Group's brands are on track to lose Barclays Capital Automotive. 700 million euros ($900 million) in

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"Because everybody's been stuck with a load of inventory [in the last three months], they pushed it, which artificially raised the total industry sales," Dodge said. "Now they're taking their money off the bonnet, and the total number of cars being sold is dropping" to match demand.

Dodge's assessment is supported by Barclays Capital Equity Research data, which shows that auto pricing in Europe was flat in September. Discounts in the mass-market segment continue to hover around 20 percent (see tables, first page), while in the premium segment the figure is closer to 12 percent.

"A tight rein on inventories means carmakers do not have to throw more cash at customers -- yet," Barclays noted. up or capacity is adjusted to the situation, it's unlikely to The company's research shows that discounts on volume change." brands in Germany rose to 24 percent in June and July before dropping to 20 percent in August and September. In Ford estimates that self-registrations accounted for 30 France, average discounts climbed to 20 percent in percent of total German car sales in the first eight months of September from 19 percent in August and 18 percent in July. 2012. Self-registrations GM's Opel/Vauxhall unit expects to sell 200,000 fewer vehicles this year, ahead of an even tougher market in 2013. Another tactic used boost sales is self-registrations. Here a "I can tell you though that we will not be chasing the market retailer registers a new vehicle as sold to the dealership then by buying sales through the increased use of incentives," offers a big discount on a model that is considered a used Opel sales chief Alfred Rieck said. car. Despite Rieck's statement, Barclays' research shows that Ford of Europe sales chief Roelant de Waard said his Opel/Vauxhall offered the highest average discounts in company is trying to limit its participation in self-registrations Germany and UK last month and was the No. 2 discounter in to protect profit margins, but "you have to live with the France after Renault (see tables, first page). realities of the industry." Dave Guilford, Bloomberg and Reuters contributed to this He said: "If you don't participate in something that is a report phenomenon, that would make you uncompetitive. It is a very aggressive environment and until either demand picks

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VW widens finance edge after Fiat, PSA downgrade by Moody's

BERLIN (Bloomberg) -- Volkswagen drain in Europe, Moody's analyst Falk Group widened its auto financing edge Frey said Wednesday. in Europe after Moody's Investors In response, Fiat CEO Sergio Service lowered the debt ratings on Fiat Marchionne said: "The downgrade and PSA/Peugeot-Citroen to six levels doesn't reflect Fiat's financial below VW, the region's biggest conditions globally. They highlight an carmaker. issue that impacts the whole industry, Fiat and PSA both were cut one level to not just Fiat." Ba3 from Ba2 by Moody's. The ratings Hard hit service, which rates VW at A3, has a "negative" outlook on the Italian and PSA and Fiat have been hard hit by the French companies. effects of the European debt crisis on the region's auto demand, which is set Moody's also said PSA's financing arm, to fall to a 17-year low in 2012. Banque PSA Finance, is on review for a shy away from a high-yield investment, downgrade. The French and Italian carmakers rely Bergeron said. on their home region for the bulk of VW's financing muscle helps it offer sales and lack major operations PSA is determined to retain full control better deals to dealers and consumers. elsewhere to soften the blow. of BPF, dismissing calls by bondholders The German carmaker's share of the to sell a stake. European market through August rose PSA's credit grade was cut by all three to 25 percent from 23.2 percent, while main rating services in July after the PSA Chief Financial Officer Jean- Fiat and PSA's fell, according to the company reported a 662 million-euro Baptiste de Chatillon said the auto ACEA trade group. first-half loss at its automaking unit. lender can boost funding through securitization in the event of a The Moody's downgrades, which were PSA's downgrade may soon trigger a downgrade. announced Oct. 10, affect about 14.9 further lowering of its fully owned billion euros ($19 billion) of debt, banking unit, Banque PSA Finance Moody's said that the bank's including about 9.3 billion euros from (BPF). "I'm expecting the downgrade to "creditworthiness is inherently linked" Fiat and 5.6 billion euros from PSA, happen very shortly, as Moody's made to PSA's because of "intricate strategic, Moody's said. it clear that it would keep its two-notch commercial and financial ties." gap between BPF and PSA," Pierre Moody's said PSA's efforts to shore up Industry insiders don't expect a quick Bergeron, a credit analyst at Societe its finances "may not be sufficient" recovery for Europe's car market. Full- Generale, said. "The move would with western European vehicle demand year industrywide car sales will drop 8 increase financing costs of BPF and hit poised to fall a further 3 percent next percent to 10 percent this year, ACEA its operational margin." year and pricing pressure increasing. said Oct. 9. LMC Automotive believes BPF's downgrade to one level below car demand in western Europe will Fiat is burdened by a deteriorating investment grade would narrow its probably remain below pre-crisis levels home market and lacks access to funds pool of investors, as mutual funds may until at least 2019. held by its Chrysler unit to offset cash

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The end of premium vs. non premium

Ford of Europe quality boss aims to close gaps with German rivals

There are no premium brands any internal data to pinpoint problems more, just rivals. That's the view of Ford much faster. of Europe's newly appointed head of Herrmann is looking for good scores on quality, Gunnar Herrmann, who is all three key areas of the automotive working to try to close the gap against version of the famous Kano model of Audi, BMW and Mercedes-Benz. customer satisfaction: base quality, "Take BMW. In the near term, they will performance, and surprise and delight. have nine entries in the compact "If you really want to step up you need segment. This is basically our to score well on surprise and delight, heartland," he told me on the sidelines which is where customers get of the Paris auto show. "With the something they really don't expect," he brand reputation they have, you start said. to have a massive problem." He points to Ford's Sync infotainment For example, in the UK the entry BMW Nick Gibbs is UK correspondent at system as an example. But everything 1-series five-door powered by a Automotive News Europe. about the car has to work -- and work gasoline turbo engine costs just 400 well. pounds (500 euros) more than a mid- range Focus with a gasoline turbo approached to switch jobs earlier this "You can have surprise and delight and engine with comparable power. year, he had to ask what the head of get killed because your performance is screwed and your base [quality] is "The differentiation we had in the past quality job entailed. lousy," he said. of premium and non-premium brands His task is this: Apply the One Ford is disappearing," Herrmann said. strategy to quality processes in Europe, If Ford can get these things right, it can compete with the German premium That means any gaps in quality then ensure high craftsmanship brands because it has the scale differentiation have to disappear as standards are introduced much earlier advantage, Herrmann said: "We're well. the development stage. buying at a completely different cost When Herrmann, the former director of The goal is to get the external data level." Ford's C-segment vehicles,was from customer satisfaction surveys and repairs per 1,000 cars aligned with

europe.autonews.com/GlobalMonthly October COMMENTARY Volume 01 | Issue 08

Lexus may be profitable in Europe in two years

Toyota expects its Lexus brand to make Leroy also said its Lexus sales volumes money soon in Europe despite a very in Europe were not high enough to tough competitive environment and an produce the car locally in the region at unfavorable yen/euro exchange rate. the moment but he did not rule out future production in the region. "Lexus can be profitable in two to three years even though production will Leroy expects Lexus sales in Europe, remain in Japan," said Didier Leroy, the including Russia, to be 46,000 units this CEO of Toyota Motor Europe, on the year compared with 44,000 in 2011. sidelines of the Paris auto show. Toyota Motors Europe, including the Leroy did not talk specifics about how Toyota and Lexus brands, was much Lexus loses in Europe. profitable during its last fiscal year thanks to its financial services division A Lexus spokesman told Automotive but its automotive unit lost money. News Europe that the brand's profits in Bruce Gain is an Automotive News Leroy said Toyota Europe's automotive Europe hinge on its hybrid lineup, Europe correspondent in France. business and its financial services which accounts for 85 percent of its division in Europe should be in profit sales in western Europe and 60 percent for the fiscal year ending in March 31 of its sales in Russia. Lexus is preparing to launch a new hybrid model based on the Lexus LF-CC 2013. hybrid coupe concept it unveiled at the show.

europe.autonews.com/GlobalMonthly October COMMENTARY Volume 01 | Issue 08

VW Golf debut may not be a big deal

The debut of its latest generation by the Passat built in the automaker's Volkswagen Golf at the Paris auto show new U.S. factory. today may be the last time there is such More bad news for the Golf: Mercedes- a big hype about Europe's best-selling Benz with the new A class, BMW with car. the 1 series and models from VW Looking at the global picture, the Golf Group's own Audi marque are is now VW's third most important poaching from above in the Golf's vehicle counted by units produced, segment while value-for-money brands according to Ferdinand Dudenhoeffer, such as VW Group subsidiary Skoda, as head of the Center for Automotive well as Hyundai and Kia, are stealing Research at the University of Duisburg- sales from below. Essen, Germany. Discounts of up to 33 percent offered In 2005, the Golf accounted for 41 on pre-registered Golfs in Germany will percent of VW brand's global not help the new model, Dudenhoeffer production of nearly 2 million says. Buyers of the new Golf will arrive passenger cars, ahead of the Passat/ in showrooms expecting price Santana at 19 percent and the Jetta/ reductions on the new car, he says. Bora at just 6 percent. Last year, the Paul McVeigh is managing editor at The Passat, not the Golf, is the car of Passat/Santana was No. 1 by Automotive News Europe. the future for the automaker, production, accounting for nearly 22 concludes the German academic. percent of the brand's 5.3 million Thr Golf's importance will decline even output. The Golf was second at 17.3 more in the future as the Chinese percent, but the Jetta/Bora was close market continues to grow and as VW behind at 17.1 percent. sales increase in North America helped

europe.autonews.com/GlobalMonthly October EUROPE Volume 01 | Issue 08

Renault turns to India for relief from Europe slump

Automaker aims to boost market share to 5% from almost zero in growing market

Renault says the debut of the Scala gives it models across all of India's key segments.

Bruce Gain 673 during the same period in 2011, Expanding lineup according to JATO Dynamics. Renault's product offensive in India has Renault's India market launches grown to five cars in the last 18 months Renault aims to boost its annual sales in Fluence -- June 2011 as the automaker looks for ways to India to 100,000 by 2014. Koleos -- September 2011 compensate for falling sales in Europe. Reaching that target might be tough. Pulse -- January 2012 The launch of the Scala subcompact Earlier this month the Society of Indian Duster -- May 2012 last month is part of Renault's goal to Automobile Manufacturers cut its car boost its market share in Asia's third- sales growth forecast for the year to as Scala -- September 2012 largest economy to 5 percent by 2020 low as 1 percent. That's down from a

from next to nothing. July forecast of about 9 percent and an Source: Company estimate of 10 percent to 12 percent After eight months, Renault had sold growth given in April. 10,259 vehicles in India compared with

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While India's car-sales growth appears a hit in India, but the original starting Busy times ready for a slowdown, the country is price was too high, causing weak sales. Milestones for Renault and Nissan in expected to see strong long-term gains. Mahindra, India's largest SUV maker, India bought out Renault's 49 percent stake "Renault really needs to keep investing in the JV in 2010 and sells the Logan, 2005 -- Renault India established in India where it is more fruitful and which was renamed the Verito, under a 2006 -- Renault and Mahindra & cost effective" to invest than Europe, license agreement. Mahindra sign memorandum of said IHS Automotive analyst Ian understanding to establish JV to make Fletcher. Also in 2010, Renault created its own and sell Logan in India distribution network. "We learned that Renault's push into India is part of its customers could not connect with us if 2008 -- Renault Nissan alliance signs plans to expand sales in fast-growing we didn't have our own distribution MoU for a greenfield plant with markets, also including Russia, Brazil network," said Renault's India boss, 400,000-unit annual capacity in and China, to reduce its reliance on Marc Nassif. "You need your own Chennai Europe, which is headed for a fifth dealerships, which shows commitment. 2010 -- Renault sets up its own consecutive year of declining sales. Otherwise, people will not trust you." distribution Renault sold a record of 2.7 million vehicles worldwide in 2011, of which Before year ends, Renault plans to open 2010 -- Renault-Nissan alliance opens 43 percent were outside Europe 100 new dealerships in India. At the Chennai plant compared with 37 percent in 2010. end of 2011, it had just 14 stores. 2010 -- Renault ends JV with Renault also plans to boost its models In India, the new Scala joins a lineup Mahindra & Mahindra; output and available for the Indian market from that includes the Fluence mid-sized distribution of the Logan licensed to five to more than 10 by 2015. sedan, Koleos compact SUV, Pulse Mahindra & Mahindra compact hatchback and Duster small Renault builds cars in Chennai at a 2010 -- Nissan starts production of SUV. plant it shares with alliance partner Micra in Chennai Nissan. The factory has a capacity to Renault says that the Scala's arrival 2011 -- Renault starts output of make 400,000 vehicles a year. gives it a competitor across all of India's Fluence and Koleos in Chennai key car segments. This is a rapid In the long term, Renault's India 2012 -- Renault starts output of Pulse, change as the Renault brand was not investment should pay off, Fletcher Duster and Scala in Chennai present in the market until last year. said: "Renault has used its time wisely

That is because Renault tried to break to figure out what kinds of vehicles it Source: Company into India via a joint venture formed in should build there." 2006 with local automaker Mahindra Bloomberg contributed and Mahindra. The partners thought the Renault's low-cost Logan would be

europe.autonews.com/GlobalMonthly October EUROPE Volume 01 | Issue 08

Citroen launches service that helps customers rent their cars

French carmaker is first in Europe to offer peer-to-peer car-sharing

Citroen offers buyers who join its Multicity program a lower rental rate for the C-Zero electric car (shown).

Bruce Gain to discover and test drive our cars," a associated with car ownership but need spokesman said. a mobility solution to complement Citroen is offering a new variation of public transport, taxis, or other means car-sharing that it hopes will improve Car-sharing is becoming more popular, of transport. Unlike traditional car the brand's recognition among younger especially with young people who balk rental services, car-sharing programs buyers and boost new-car sales. at high ownership costs and among can offer more flexible rental options, people who lives in crowded cities The French company's Multicity allowing consumers to rent vehicles on where parking spaces are hard to find. program enables Citroen owners to an hourly basis, often at nearby "pods" rent their vehicles to other people. Other automakers, such as BMW, where customers can pick up and drop Citroen is the first to offer the peer-to- Daimler's Smart, Renault, Volkswagen off vehicles. peer car-sharing in Europe. In the and Citroen's sister brand, Peugeot, Consultancy Frost and Sullivan expects United States, General Motors Co. offer short-term rentals of new vehicles the number of people using car-sharing offers a similar program with its partner with their car-sharing services. programs in the European Union to RelayRides. These services are a way in which increase to 15 million by 2020 from Citroen sees the service as a way to automakers are looking beyond their 700,000 in 2011. attract potential customers who may traditional roles of building and selling Citroen aims to boost sales of its decide to own a car in the future. cars to win new business. electric cars through Multicity. The "Citroen Multicity serves as a way for The service model meets demand by brand offers buyers who join Multicity future customers who rent Citroen cars customers who seek to avoid the costs the chance to lease the C-Zero for 90

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euros a month instead of 459 euros. rental agreement is signed and the keys The service should entice customers to "When C-Zero owners are not driving are handed over. rent out their cars to earn extra money their cars, they can rent it out and with a minimum of hassle since Citroen To protect the owners and borrowers, promote it to other potential customers manages the rental Web site and 10 percent of the rental price of the car who would otherwise not have test processes the payments, said Ian is applied to an all-risk insurance, with driven the car at a dealership," the Fletcher, an analyst for IHS Automotive. a deductible of 1,500 euros for theft Citroen spokesman said. and 800 euros for all other damages. Frost and Sullivan analyst Vishwas Car owners who join Multicity can set The Citroen Multicity Web site serves as Shankar thinks the scheme will help their own rental rates or can follow the interface with which payments are Citroen expand its mobility service by Citroen's suggested hourly rates processed and distributed to car offering an alternative for younger according to make and model. Citroen owners. drivers who wish to one day own a car suggests a per-day rental price of 30 but are not yet financially able to. "It The service first became available in euros for the C-Zero, for example. If will promote the brand to younger France and Germany earlier this year someone is in interested in the offer, customers to get an early relationship and is planned for rollout throughout they contact the vehicle owner directly with younger drivers," he said. Europe by the end of 2014. by e-mail or phone to arrange a meeting date and place where the

europe.autonews.com/GlobalMonthly October EUROPE Volume 01 | Issue 08

Ferrari shows off hybrid supercar's chassis

Enzo replacement expected to deliver 900 hp

Luca Ciferri

TURIN -- Ferrari says it will launch its most powerful road car ever next year: a gasoline-electric hybrid that replaces the limited-edition Enzo.

Sources say the model will deliver 900 hp, combining a new V-12 normally aspirated gasoline direct-injection engine with an electric motor, part of a high-performance hybrid system Ferrari calls HY-KERS. Ferrari showed the chassis of the Enzo successor in Paris. Ferrari says the Enzo replacement will surpass the F12 Carbon fiber makes it 20 percent lighter than the Enzo Berlinetta's 740 hp. A carbon fiber chassis of the vehicle was chassis. unveiled at the Paris auto show last month. Although Ferrari is keeping the name a secret, the Italian Ferrari is using carbon fiber to keep the eightw as close as press has speculated that the car will be called the F70. possible to the Enzo's 1,365kg (3,009 pounds). The hybrid Ferrari used F40 for the model launched to celebrate the system will add about 150kg to the car's weight -- 50kg for company's 40th anniversary in 1987 and F50 for a supercar the electric motor and controls and 100kg for batteries. that came 10 years later. The latest limited-edition supercar was named Enzo after company founder Enzo Ferrari. "To save weight, we switched to the carbon fiber used in Formula One racecars rather than the Resin Transfer Molding In Paris, Ferrari Chairman Luca Cordero di Montezemolo said: normally used," Ferrari CEO Amedeo Felisa told Automotive "You can be sure it will not be called Luca." News Europe. Despite Europe's sovereign debt crisis, fears of another U.S. That allowed Ferrari to make the chassis 20 percent lighter recession and China's recent economic slowdown, he is than the Enzo's chassis, though torsional rigidity has been confident that Ferrari is on course for another record year. increased 27 percent and beam stiffness is up by 22 percent. "This year we expect to exceed 7,400 unit sales, setting the pace to also make this year another record year for revenue Another way they reduced weight was by eliminating the and profit," Montezemolo said. car's seat structures. The driver and passenger will sit on upholstery that is directly fixed to the carbon fiber chassis. Last year was Ferrari's best ever with 7,195 sales and a 321 Felisa said the car's pedals and steering wheel will be million euro operating profit, equivalent to a 14 percent moveable to compensate for having a seat that cannot be operating margin. adjusted. In the first half, Ferrari increased sales 7 percent to 3,664 Samsung Electronics will provide lithium ion cells to Ferrari, vehicles, of which more than a quarter of the cars were sold which will assemble battery packs at its F1 racing in the United States. Helped by a 66 percent increase in first- headquarters, in Fiorano, northern Italy. half sales of V-12 models, which are among the brand's most expensive, the company's operating profit rose 13 percent to 152 million euros, equivalent a 13 percent operating margin.

europe.autonews.com/GlobalMonthly October EUROPE Volume 01 | Issue 08

JLR seeks new design impulses

Automaker to open studios in the U.S., China

Jaguar design boss Ian Callum, introducing the new F-Type last month in Paris, wants a deeper understanding of what customers outside of Europe want from the brand.

Nick Gibbs The United States is JLR's second- No timeframe or location for the JLR biggest market after the UK based on studios was given. Callum stressed that Jaguar Land Rover will follow premium last year's sales figures, with China the design of Jaguars and Land Rovers rivals by opening design studios outside closely following in third. would remain British. "We will never its UK home market, Jaguar's design design a car around another culture," chief Ian Callum said. JLR's competitors already have multiple he said, "but we will certainly build into design centers outside their home The company will set up studios in that vehicle certain national tastes for markets around the world. In April, China and the United States to better that market." BMW Group subsidiary understand local tastes in those DesignworksUSA opened a studio in JLR, owned by Indian's Tata Motors, markets, Callum told Automotive News Shanghai. BMW's California-based said it has seen a 40 percent sales Europe. design consultancy also has studios in growth in the first six months of this "We have to design cars in the JLR Los Angeles, Munich and Singapore. year, largely because of strong demand ethos, but there are details we have to Mercedes-Benz and Audi opened for the Range Rover Evoque SUV. To know about," the designer said on the studios in Beijing last year. In addition, keep up the momentum, the company sidelines of the Paris auto show. "We Mercedes, Audi and Volvo all have plans to start building cars in China are going to go out there to get a studios in California, while Mercedes with joint venture partner Chery feeling for what the market is and what also has design centers in Tokyo and Automotive and says it has found a people like." Italy and Volvo has a studio in Spain. factory site just north of Shanghai.

europe.autonews.com/GlobalMonthly October COMMENTARY Volume 01 | Issue 08

Panamera wagon ranks among 10 most significant designs from Paris auto show

The gloomy European market outlook French front-end logos: Anyone who and a worsening price war were the thought the huge Peugeot lion logo on dominant topics of discussion at last the new 208 was impressive will month's Paris auto show, but the probably love the massive Renault Mondial de l'Automobile -- as the lozenge on the new Clio. Each model is French call their home show -- also crucial to its automaker's future so I delivered a number of significant new have to wonder whether the French products. Here is an alphabetical listing think there is a competitive advantage of the 10 designs/design elements that to having the largest chrome surface captured my attention. dedicated to a nose logo.

Audi Crosslane: The crossover concept Porsche Panamera Sport Turismo: stands out because of its sharp lines Although I have loved the 911's design and for showing the evolution of Audi's since I was kid, I don't like the look of distinctive single-frame grille. The new the Panamera and I was ready to dislike grille, which is intended for future its wagon variant. Therefore I was crossovers of the Q family, is more stunned by how attractive I found the Luca Ciferri is Editor-in-Chief at three-dimensional and puts more Panamera Sport Turismo concept. This Automotive News Europe. emphasis on the four-ring logo. concept shows us how the Panamera should have looked from day one. BMW Active Tourer: The first concept based on BMW's new front-wheel-drive 500 and for Volkswagen with the Renault Clio Sportour: A subcompact architecture tries to do something that Beetle. Porsche's 911 continues to wagon should be practical, which is nearly impossible: make a people honor the look of the original car. Why means an efficient powertrain and mover look sporty from the side. Audi doesn't Citroen offer a flagship that is a maximum cargo space trump a flashy tried this in 2006 with the Roadjet modern reinterpretation of the original design. The new Clio Sportour is one of concept, which it decided not to build. DS design and concept: a true sofa on the few wagons available that Mercedes-Benz introduced a hydro pneumatic suspensions? combines sporty looks with all the completely different, dedicated visual practicality you'd expect from a car in Dacia Sandero Stepway: The second- identity for its compact minivans with this class. generation Dacia Logan looks good the first- and second-generation A compared with the first-generation Toyota Auris: Since taking over as global class. Maybe BMW should give its sedan, which was a modern-day design boss for Toyota, Lexus and Scion design team another try before freezing benchmark for ugly design. Even more in April 2011, Tokuo Fukuichi said he the production model? impressive is the new Sandero Stepway would work hard to break the Citroen DS 9: I grew up as a passenger hatchback. With its attractive crossover- company's habit of creating cars that in the back of Citroen's original DS like looks, the new Sandero Stepway appear "watered down" by a design models so it's painful for me to see the will steal SUV and compact hatch steering committee. Perhaps Fukuichi DS badge on an uninspired large sedan. customers from established automakers arrived in his new job too late to Retro design has been a hit for BMW for more than just its cheap price influence the new Auris sedan and with the Mini, and also for Fiat with the

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wagon because both cars look like the watered down designs of the past.

Volkswagen Golf: The seventh generation of Europe's best- selling model is hardly a styling revolution. Nevertheless, rival chief designers -- speaking strictly off the record -- said the Golf's front end is perfectly executed and, in general, they admired the small details that only professional eyes would notice. To me, however, the side of the Golf is so clean that it almost looks bland.

Apple iPad: No, it is not a car design, but in Paris the iPad was the dominant solution chosen to display the characteristics of new models. The preferred color was white and very few automakers tried to put their own stamp on The Porsche Panamera Sport Turismo concept shows us how the iPad. The most interesting feature about the hundreds of the Panamera four-door should have looked from day one. iPads at the Paris show? The different strategies automakers used to avoid having them stolen!

europe.autonews.com/GlobalMonthly October EUROPE Volume 01 | Issue 08

Toyota wants to boost European supplier base

European partsmakers could become global suppliers to Toyota in the near future

Michael Knauer Toyota Europe purchasing and development chief Masahisa Nagata Toyota Motor Corp.'s new openness to told Automobilwoche that European working with globally positioned non- suppliers are at the forefront of plastics Japanese suppliers is expected to be processing while domestic Japanese good news for Europe's partsmakers. suppliers had special strengths in metal "We are seeking many more working. partnerships with European suppliers "In the past, our business volume with than has been the case in the past," European suppliers has not been very Toyota Motor Europe CEO Didier Leroy great, but this has already changed," told Automotive News Europe sister he said. "European companies have publication Automobilwoche. Toyota is become much more interesting to us as already in talks with Germany's Robert suppliers. Our doors are wide open." Bosch and France's Valeo -- and other companies have opportunities as well, Toyota's goal is to continue increasing Leroy said. its degree of localization. The share of local parts for European manufacture Business relationships that were once of the new Auris is already more than inconceivable are now possible, the 80 percent at its Burnaston, England, executive added. Toyota Europe CEO Didier Leroy said factory. Only the compact car's hybrid the automaker is in talks with Valeo "Quite a few suppliers in Europe could and Bosch on doing more business version is still using a fairly large share become global suppliers to Toyota in together. of pre-fabricated Japanese parts. "Our the near future," he said. goal is to build our vehicles close to the customer in every region," Nagata said. The change at Toyota follows the decades-old "keiretsu" policy, the catastrophic March 2011 earthquake He emphasized that Toyota is not just cross-industry interweaving of industrial and tsunami in Japan. After the interested in the largest Tier 1 suppliers companies within Japan. This policy led disasters Toyota decided its long- as partners: "We want to maintain Japan's automakers to purchase a large nurtured business relationships with good relationships with all suppliers." share of their components from a single suppliers made it vulnerable. tightly knit, purely Japanese group of Toyota also is reducing its reliance on its companies.

europe.autonews.com/GlobalMonthly October EUROPE Volume 01 | Issue 08

Qoros to display its first car at Geneva auto show

Qoros CEO Guo Qian during a presentation of a Qoros prototype car in Shanghai.

Staff report Jiangsu province. The plant is due to technology that's easy to use and will start trial production toward the end of be affordable, priced between 11,000 SHANGHAI -- Qoros Auto Co., a 50-50 this year and will initially build up to and 15,000 euros in Europe. joint venture between Chery 150,000 vehicles a year. Long-term Automobile and Israeli investment Qoros says its cars will meet Western annual production is projected at company Israel Corp., will display its standards for quality, safety and fuel 300,000 units with half of the output first model at the Geneva auto show economy. The aim is for the cars to planned for export to Europe. next March. achieve top-level crash-test ratings from Vice Chairman Volker Steinwascher, a safety organization EuroNCAP. The company says the car, a compact former head of Volkswagen's North sedan, will be introduced Qoros is relying heavily on Western America region, has recruited a number simultaneously in China and Europe expertise. The brand is sourcing of German executives, including the late next year. It will target consumers components from German suppliers former designer for BMW's Mini brand, aged between 25 and 35. In 2014, such as Robert Bosch, Continental and Gert Hildebrand, to join Qoros. Qoros will launch hatchback and SUV ZF Friedrichshafen. Austria's AVL is versions of the car. Steinwascher said earlier this year that adapting Chery's gasoline and diesel the company won't try and rival the engines for the brand. Magna Steyr has Previously known as Chery Quantum driving dynamics and technology of done most of the development for the Auto, Qoros will build vehicles at its Western rivals. Its cars will have company's first prototypes. plant in Changshu in east China's

europe.autonews.com/GlobalMonthly October EUROPE Volume 01 | Issue 08

Chinese companies poised to gain from Europe's new tire-label rules

Staff Report Growing market Market watchers believe China's tire Total EU light vehicle tire sales makers will get a boost from Europe's 2011: 290 million new labeling rules, which go into effect 2010: 280 million Nov. 1. 2009: 250 million "We believe tire makers [from China] will want to use this label as a Source: Morgan Stanley marketing tool to gain more market share; more visibility and -- as a secondary objective -- to gain pricing power," said Shanghai-based Morgan name Western brands, they will be able Stanley analyst Edoardo Spina. to sell for higher prices. Tires imported from China make up about 15 percent Typically, a Michelin tire is taken as the of Europe's replacement market, price benchmark of 100. An equivalent according to Morgan Stanley data. In Bridgestone or Continental tire will sell the past, Chinese tire manufacturers for 90 to 95 percent of the Michelin have chosen to compete on price rather price, while a Chinese import might sell than technical performance. European tire labels provide for 60 percent of the benchmark. To change this, Chinese tire makers information on fuel economy, wet grip and noise. Some of this price premium is based on have spent recent years recruiting tire performance, but brand value also engineers from the premium brands plays a role. and working with Western suppliers of Similar labels also will become materials and machinery to develop Leading Chinese tire makers such as mandatory in Korea starting Nov. 1. better tires. There is no single secret to Hangzhou Zhongce, Triangle and Jilin Brazil's government is actively making a tire with a good label. It takes Tire see the European label rules, which discussing a label that will be almost in-depth understanding, good technical provide aftermarket tire consumers identical to the EU scheme. The United expertise, good manufacturing information on fuel economy, wet grip States has similar legislation on its technology and attention to detail in and noise, as an opportunity to reduce books, but progress on the detailed many different areas of design, the effect of long-established brands implementation has been slow due to modeling and manufacture. and improve the selling prices of their the presidential election. tires. Initial results show that new tires European Rubber Journal contributed The thinking is that, if the Chinese launched in the EU show improvements companies can produce tires with a in the scores on the label, but at the label similar to the standard of the big- sacrifice of wear life.

europe.autonews.com/GlobalMonthly October EUROPE Volume 01 | Issue 08

IEE seat sensors help optimize the airbags in the new Mini Coupe

James Clark sensitive matrix sensor in the seat. information is used to control how the Pattern recognition and anthropometric airbag is deployed if there is an Safety specialist IEE equips the Mini parameters tell the airbag control unit if accident. Coupe with an occupant sensing the seat is vacant, occupied by a child system that adjusts the operation of the seat, a child or an adult. The airbag with help from a pressure-

europe.autonews.com/GlobalMonthly October 2012 EUROPE Volume 01 | Issue 08

VW Golf extends Europe sales lead despite 7.4% decline

The VW Golf's European sales lead over its closest competitor grew to more than 88,200 units in August.

Douglas A. Bolduc month volume was down 0.2 percent Europe's 2012 top sellers after 8 to 147,908. Despite nearing the end of its life cycle, months; % chg Jan.-Aug. 2011 the Volkswagen Golf continued to The Golf was one of three VW models units % dominate European new-car sales in the top 10. The others were the Polo sold change during the first eight months of 2012. (ranked 3rd) and the Passat (ranked 1. VW Golf 307,641 -7.4 VW's top-selling compact outsold its 10th). 2. Ford Fiesta 219,408 -13.2 nearest competitor, the No. 2 Ford The Passat nearly climbed up to ninth Fiesta, by more than 88,200 units, 3. VW Polo 212,789 -14.9 place overall based on January-August according to market researchers JATO sales. Only 301 sales separated it from 4. Opel/ Dynamics. Its lead grew despite a 7.4 the Renault Megane after eight Vauxhall 189,531 -12.7 percent sales decline to 307,641 during Corsa months. (See chart, right) the period. 5. Ford Focus 177,187 -16.4

There was little good news for in 6. Opel/ 170,364 -19.5 Europe's top 10 as every model JATO sales data Vauxhall Astra suffered a sales decline during the first Please see the back of the 7. Renault eight months of 2012 compared with 167,664 -18.5 Automotive News Europe Global Clio the same period in 2011. Monthly for the complete by-model 8. Nissan European sales results for the first 147,908 -0.2 Even the Nissan Qashqai, the only Qashqai model in the top 10 that was quarter. 9. Renault consistently making sales gains 143,341 -14.8 Megane compared with last year through the first seventh months, dipped into 10. VW Passat 143,040 -12.0 negative territory by August. Its eight-

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Europe's 2012 top sellers after 8 months; % chg Jan.-Aug. 2011

JATO Dynamics

www.ane-globalmonthly.com October 2012 Volume 01 ❙ Issue 08

brought to you courtesy of EUROPE SALES BY MODEL, AUGUST & 8 MONTHS www.jato.com

Aug. Aug. 8 mos. 8 mos. Aug. Aug. 8 mos. 8 mos. 2012 2011 2012 2011 2012 2011 2012 2011 V8/V12 Vantage 45 54 525 647 458 Italia 69 52 1,200 1,056 DBS 7 18 161 257 California 37 38 467 746 Rapide 11 21 181 391 FF 17 17 383 37 Other 18 50 407 403 599 GTB Fiorano 3 19 62 280 ASTON MARTIN 81 143 1,274 1,698 Other 13 11 81 72 Niva/Taiga 151 136 1,321 1,798 Total Ferrari 139 137 2,193 2,191 Other 26 22 196 318 500 7,165 6,955 99,236 110,517 Total Lada 177 158 1,517 2,116 Panda 8,624 8,219 126,089 130,404 AVTOVAZ 177 158 1,517 2,116 Punto 5,885 10,873 99,968 158,186 1 series 8,551 5,652 98,988 87,368 Albea 2 392 1,013 5,918 3 series 9,395 10,737 114,994 113,325 Linea 2,459 2,372 21,747 22,406 5 series 7,900 10,571 81,156 99,382 Bravo 800 1,507 13,034 23,732 7 series 582 783 4,945 6,487 Sedici 837 589 5,971 10,441 Z4 341 644 5,863 7,114 Freemont 1,845 1,530 18,184 5,490 6 series 612 183 5,904 2,644 Fiorino/Qubo 853 1,210 11,832 14,374 X1 4,145 5,242 41,269 53,547 Doblo 526 1,076 6,750 12,535 X3 3,636 4,360 47,986 37,042 Ducato 1,312 1,225 17,519 15,889 X5 976 1,697 14,187 17,409 Idea 209 66 2,737 3,929 X6 875 1,070 8,591 9,769 Other 319 388 2,451 5,043 Other 68 109 514 619 Total Fiat brand 30,836 36,402 426,531 518,864 Total BMW brand 37,081 41,048 424,397 434,706 Ypsilon 1,975 3,654 39,310 38,743 Mini 4,470 5,625 68,613 73,968 Musa 666 351 10,293 13,163 Countryman 2,644 3,120 34,718 33,209 Delta 523 762 9,717 14,121 Total Mini 7,114 8,745 103,331 107,177 Flavia 26 – 422 – Phantom 6 11 69 104 Thema 108 12 1,089 12 Ghost 19 18 227 251 Voyager 322 – 3,714 – Other – 1 3 4 Other – 1 10 164 Total Rolls-Royce 25 30 299 359 Total Lancia 3,620 4,780 64,555 66,203 BMW AG 44,220 49,823 528,027 542,242 Maybach 6 16 32 40 GranTurismo 50 41 397 664 A class 2,477 8,446 39,454 47,563 GranCabrio 17 21 272 373 B class 9,561 1,664 82,376 50,719 Quattroporte 8 20 89 211 C class 10,475 11,538 112,360 112,957 Other – 2 16 19 E class 5,538 7,436 70,172 88,004 Total Maserati 75 84 774 1,267 S class 383 492 5,227 7,134 Other 55 61 483 487 CLS 651 1,003 8,197 11,817 FIAT S.P.A. 38,860 47,473 560,253 684,140 CLC – 20 10 2,146 FIAT-CHYRSLER 40,713 49,342 582,789 704,824 SLK 936 1,550 13,112 11,293 Ka 2,674 3,806 42,635 50,790 SL 422 84 2,949 929 Fiesta 14,923 18,678 219,408 252,738 SLS AMG 36 68 933 1,297 Focus 11,371 19,726 177,187 211,822 R class 114 277 1,700 2,830 Fusion 320 1,329 7,767 12,969 GLK 3,361 1,761 20,306 20,878 Mondeo 3,561 5,210 50,104 58,393 Vito/Viano 1,453 2,042 18,288 20,427 C-Max/Grand C–Max 7,687 7,151 81,811 84,132 Sprinter 451 340 3,762 3,468 S-Max 1,765 2,423 29,354 32,281 M class 1,867 804 22,328 11,873 Galaxy 925 1,609 17,614 18,303 G class 164 98 1,250 1,249 Kuga 3,157 3,687 41,437 46,740 GL 71 175 919 1,680 Transit/Tourneo 1,458 1,465 11,686 11,333 Other 105 151 1,117 1,539 Other 226 222 1,854 2,119 Total Mercedes-Benz 38,065 37,949 404,460 397,803 Total Ford brand 48,067 65,306 680,857 781,620 ForTwo 3,767 4,032 48,878 54,693 Lincoln – 2 6 9 Other – 1 2 31 Mercury – – 1 3 Total Smart 3,767 4,033 48,880 54,724 FORD MOTOR 48,067 65,308 680,864 781,632 DAIMLER AG 41,838 41,998 453,372 452,567 Geely 105 120 681 549 DR1 7 119 119 1,676 C30 387 642 7,625 10,334 DR5 18 17 261 478 V40 934 – 2,522 2 Other 2 8 130 211 S40 254 461 6,289 7,113 DR MOTOR COMPANY 27 144 510 2,365 V50 828 1,996 24,128 28,157 Ypsilon 74 1 1,215 1 S60 872 1,088 11,977 16,808 Delta 12 54 574 54 V60 2,017 2,308 28,995 28,694 300C 5 10 160 431 V70/XC70 2,302 3,095 29,991 31,658 Grand Voyager/Town & Country 27 101 403 2,960 S80 232 269 3,195 3,642 Other 14 17 119 144 C70 147 222 2,343 3,152 Total Chrysler brand 132 183 2,471 3,590 XC60 2,054 1,665 31,198 34,635 Caliber 1 8 24 761 XC90 414 475 6,406 8,903 Journey 3 23 39 842 Other 12 34 229 294 Other 17 28 734 292 Total Volvo 10,453 12,255 154,898 173,392 Total Dodge 21 59 797 1,895 GEELY GROUP 10,558 12,375 155,579 173,941 Compass 516 505 6,606 3,665 Buick – – 5 5 Patriot 4 52 103 2,264 Cadillac 18 35 315 393 Wrangler 493 432 5,285 4,773 Cherokee/Liberty 27 93 421 1,413 Matiz/Spark 1,960 3,575 36,286 46,565 Grand Cherokee 660 542 6,827 3,051 Aveo 3,159 2,985 40,512 28,448 Other – 3 24 33 Cruze 2,736 2,805 25,869 24,331 Total Jeep 1,700 1,627 19,266 15,199 Malibu 285 – 661 2 Other – – 2 – Captiva 1,634 1,603 16,869 14,970 CHRYSLER GROUP 1,853 1,869 22,536 20,684 Orlando 1,276 1,733 17,059 13,873 MiTo 1,299 1,891 18,651 29,659 Camaro 122 49 1,708 305 Giulietta 2,659 3,651 44,138 56,611 Other 22 79 266 2,257 159 174 428 2,792 7,402 Total Chevrolet 11,194 12,829 139,230 130,751 Other 3 39 136 1,456 GMC – 5 10 17 Total Alfa Romeo 4,135 6,009 65,717 95,128 Hummer 1 2 13 47 October 2012 Volume 01 ❙ Issue 08

brought to you courtesy of EUROPE SALES BY MODEL, AUGUST & 8 MONTHS www.jato.com

Aug. Aug. 8 mos. 8 mos. Aug. Aug. 8 mos. 8 mos. 2012 2011 2012 2011 2012 2011 2012 2011 Agila 1,156 1,624 16,501 17,559 C-Zero 611 105 2,150 1,205 Corsa 14,205 17,495 189,531 217,160 C1 3,590 4,713 44,889 56,675 Astra/Astra Classic 14,459 19,332 175,071 223,184 C3 6,811 10,697 110,605 127,854 Insignia 4,404 6,777 69,925 94,091 DS3 2,837 3,915 43,219 50,145 Meriva 4,339 6,534 56,144 93,370 C4 5,846 5,469 71,717 80,129 Zafira 5,719 3,747 68,730 50,337 DS4 1,532 2,120 21,686 10,554 Antara 1,117 857 11,267 5,636 C5 2,101 3,117 28,464 44,426 Vivaro 426 664 5,163 4,832 DS5 1,301 183 15,155 534 Ampera 344 10 3,594 63 C4 Aircross 812 – 4,858 – Other 452 119 3,767 1,311 C-Crosser 103 348 1,697 2,861 Total Opel/Vauxhall 46,621 57,159 599,693 707,543 Nemo 253 444 3,005 5,658 Other – 2 – 7 Berlingo 2,894 3,404 31,184 32,623 GENERAL MOTORS 57,834 70,032 739,266 838,763 C3 Picasso 2,757 3,762 37,088 47,375 Steed 28 42 343 395 Xsara Picasso – 39 36 5,005 Hover 1 44 8 814 C4 Picasso/Grand C4 Picasso 4,265 4,800 57,264 74,113 Other 2 – 5 1 C8 211 286 2,958 4,157 GREAT WALL 31 86 356 1,210 Other 602 380 5,022 4,546 Jazz 2,916 2,819 33,588 34,787 Total Citroen 36,526 43,782 480,997 547,860 Civic 3,603 2,564 35,686 32,220 iOn 692 134 1,745 1,245 Insight 150 256 2,564 4,047 107 4,131 4,394 49,423 60,092 Accord 585 664 6,040 8,867 206 2,122 4,554 30,541 64,826 CR-Z 2,416 1,655 22,275 23,145 207 3,122 12,997 98,950 174,279 CR-V 85 254 1,620 2,802 208 14,887 – 74,487 – Other 1 28 58 787 308 6,705 8,460 89,348 109,634 HONDA MOTOR 9,756 8,240 101,831 106,655 407 11 77 209 4,652 i10 4,082 4,128 45,941 48,819 508 4,537 5,720 61,631 54,114 i20 6,527 6,145 57,957 52,662 RCZ 529 733 7,106 11,456 i30 6,163 6,923 66,716 73,089 3008 4,680 6,165 67,586 80,032 i40 2,004 2,105 21,127 2,547 4008 333 – 1,801 – H-1/Starex/Satellite 140 160 2,403 1,895 5008 2,507 3,872 38,961 50,199 Accent 1,113 1,553 8,438 14,667 807 330 395 3,577 4,641 Elantra 535 558 4,209 1,449 4007 70 282 1,064 2,567 ix20 2,806 3,141 31,134 33,244 Bipper 260 413 3,554 5,703 ix35 5,316 3,463 64,137 46,643 Partner/Ranch 1,790 2,339 22,852 24,659 Genesis 25 136 830 1,251 Expert 226 292 3,381 3,764 Santa Fe 696 1,035 6,493 8,833 Other 122 95 1,080 1,100 Veloster 195 941 4,485 1,512 Total Peugeot 47,054 50,922 557,296 652,963 Other 48 235 751 3,896 Other – – – 2 Total Hyundai brand 29,650 30,523 314,621 290,507 PSA 83,580 94,704 1,038,293 1,200,825 Picanto 4,134 3,768 41,156 31,992 M 29 34 443 400 Rio 5,372 1,198 52,040 12,065 EX 17 26 258 364 Cee'd 5,003 4,975 48,682 47,332 FX 85 125 1,251 1,503 Optima 259 2 2,813 8 Other 11 16 175 265 Venga 2,013 2,503 21,053 30,854 Total Infiniti 142 201 2,127 2,532 Soul 406 645 4,329 8,286 Pixo 376 660 6,156 9,985 Sportage 5,638 4,593 58,605 43,544 Micra 3,437 3,633 41,856 48,392 Sorento 669 870 7,461 9,139 Juke 5,443 6,102 71,090 69,081 Other 94 309 974 3,428 Leaf 328 109 3,016 845 Total Kia 23,588 18,863 237,113 186,648 Qashqai 11,736 12,160 147,908 148,211 HYUNDAI-KIA 53,238 49,386 551,734 477,155 370Z 48 74 779 1,120 Mahindra 4 9 107 468 Note 1,661 1,622 21,299 23,154 Korando 292 413 3,155 3,032 X-Trail 448 525 5,739 6,095 Actyon 3 18 19 214 Pathfinder 139 214 1,954 2,871 Kyron 5 56 175 788 Murano 96 177 1,208 2,230 Rexton 16 27 278 394 NV200/Evalia 449 317 4,460 2,799 Rodius/Stavic 61 45 407 528 Other 168 252 2,158 4,350 Other – 1 – 2 Total Nissan 24,329 25,845 307,623 319,133 Total Ssangyong 377 560 4,034 4,958 NISSAN 24,471 26,046 309,750 321,665 MAHINDRA & MAHINDRA 381 569 4,141 5,426 Duster 7,538 9,531 79,493 95,037 MX-5 404 482 5,260 6,379 Sandero 5,744 4,178 54,910 46,644 Mazda2 1,750 2,428 21,947 25,434 Logan 2,873 3,448 29,228 29,368 Mazda3 1,337 1,995 18,086 23,783 Lodgy 4,027 – 13,227 – Mazda5 716 1,150 9,063 13,389 Other 9 3 12 17 Mazda6 1,046 1,552 12,815 20,178 Total Dacia 20,191 17,160 176,870 171,066 CX-5 1,859 1 16,252 1 Twingo 4,761 7,229 66,059 85,600 CX-7 206 526 3,382 7,425 Clio 14,567 15,856 167,664 205,769 Other 11 20 110 756 Symbol/Thalia 1,150 3,160 17,629 29,812 MAZDA 7,329 8,154 86,915 97,345 Megane 12,246 13,890 143,341 168,332 i 79 171 1,183 1,970 Fluence 1,663 3,041 23,740 29,343 Colt 1,150 1,662 13,006 19,112 Laguna 1,458 2,885 21,545 35,835 Lancer 299 885 4,358 10,306 Latitude 226 647 3,399 7,841 ASX 2,269 3,333 24,411 34,105 Wind 62 320 1,377 5,370 Outlander 905 1,099 8,606 12,236 Modus/Grand Modus 1,605 2,410 21,516 32,401 Pajero/Montero/Shogun 254 342 2,996 4,615 Scenic/Grand Scenic 6,205 8,109 93,266 105,836 Other 47 80 442 1,210 Espace/Grand Espace 483 1,087 8,895 11,938 MITSUBISHI 5,003 7,572 55,002 83,554 Koleos 903 893 10,592 10,889 Elise 18 25 168 254 Kangoo 1,409 1,466 20,836 23,364 Evora 8 18 126 294 Trafic 703 892 8,315 8,583 Other 2 5 15 93 Other 93 102 1,233 658 Total Lotus 28 48 309 641 Total Renault brand 47,534 61,987 609,407 761,571 Proton 32 87 898 933 RENAULT SA 67,725 79,147 786,277 932,637 PROTON 60 135 1,207 1,574 RENAULT-NISSAN 92,196 105,193 1,096,027 1,254,302 October 2012 Volume 01 ❙ Issue 08

brought to you courtesy of EUROPE SALES BY MODEL, AUGUST & 8 MONTHS www.jato.com

Aug. Aug. 8 mos. 8 mos. Aug. Aug. 8 mos. 8 mos. 2012 2011 2012 2011 2012 2011 2012 2011 Impreza 159 549 1,978 5,667 Q5 2,289 4,649 34,136 45,438 XV 1,895 – 9,167 – Q7 618 632 7,646 9,200 Legacy/Outback 571 688 6,520 8,492 Other 39 23 321 241 Trezia 180 256 1,505 1,743 Total Audi 48,607 44,450 492,082 464,685 Forester 1,164 981 8,686 10,288 Continental GT/GTC 103 78 1,250 902 Other 77 47 370 998 Continental Flying Spur 6 9 132 119 SUBARU 4,046 2,521 28,226 27,188 Mulsanne 5 11 114 171 Alto 1,780 2,013 16,887 24,133 Other 1 4 21 25 Splash 1,028 864 11,613 10,450 Total Bentley 115 102 1,517 1,217 Swift 4,134 3,887 41,299 41,798 Bugatti – 1 6 9 Kizashi 68 118 846 1,188 Gallardo 6 12 185 258 Jimny 763 378 8,277 8,545 Aventador 8 4 170 15 SX4 1,946 2,444 20,071 23,181 Murcielago – 2 11 6 Vitara/Grand Vitara/XL-7 788 1,029 8,399 10,850 Other – – 5 2 Other – 3 33 53 Total Lamborghini 14 18 371 281 SUZUKI 10,507 10,736 107,425 120,198 Boxster 261 211 2,626 2,563 9-3 58 223 930 9,325 Cayman 38 99 766 1,297 9-5 14 100 245 2,948 911 512 577 8,976 8,112 Other – – 5 2 Panamera 419 411 5,608 4,094 Total Saab 72 323 1,180 12,275 Cayenne 1,203 1,009 13,996 11,297 SWEDISH AUTOMOBILE 72 323 1,180 12,275 Other 10 4 172 122 XF 550 582 12,148 9,622 Total Porsche 2,443 2,311 32,144 27,485 XJ 65 137 1,454 2,677 Altea 1,733 2,211 20,923 26,001 XK 98 95 1,199 1,627 Alhambra 1,241 1,305 13,084 10,955 Other 3 5 89 65 Mii 2,134 – 8,879 – Total Jaguar 716 819 14,890 13,991 Ibiza 7,950 9,812 88,009 113,835 Defender 31 67 606 1,067 Leon 4,734 4,797 41,146 49,010 Freelander 422 881 11,528 18,083 Exeo 621 1,290 8,577 15,408 Discovery 348 384 8,183 8,291 Other 19 6 67 42 Range Rover Evoque 2,311 48 34,704 246 Total Seat 18,432 19,421 180,685 215,251 Range Rover Sport 620 651 10,588 11,874 Citigo 2,944 – 10,971 – Range Rover 231 236 4,056 5,238 Fabia 7,870 10,488 100,936 113,251 Other 3 8 93 75 Octavia 11,367 11,713 126,398 123,733 Total Land Rover 3,966 2,275 69,758 44,874 Superb 3,467 3,438 36,652 38,415 Indica 102 187 652 1,544 Roomster 2,383 2,091 22,205 19,652 Xenon 9 14 121 250 Yeti 4,262 3,047 42,452 35,601 Other 21 22 54 532 Other 15 65 299 452 Total Tata brand 132 223 827 2,326 Total Skoda 32,308 30,842 339,913 331,104 TATA MOTORS 4,814 3,317 85,475 61,191 Up 8,630 71 67,957 113 Cuore/Charade 108 158 901 2,030 Fox 1 748 552 9,767 Sirion 57 174 685 2,253 Polo 17,720 22,677 212,789 249,932 Materia – 30 71 400 Golf 29,875 33,861 307,641 332,377 Terios 98 139 1,506 3,550 Golf Plus 3,845 4,782 46,863 56,820 Other 1 4 10 64 Jetta 3,070 3,272 23,493 23,341 Total Daihatsu 264 505 3,173 8,297 Passat 12,727 16,008 143,040 162,584 CT 717 1,350 11,238 9,566 CC 1,555 1,525 16,669 16,761 IS 140 186 1,736 2,894 Phaeton 104 155 1,478 2,007 GS 182 17 1,369 247 Beetle 2,942 6 15,808 22 RX 378 273 4,674 4,176 Scirocco 947 1,537 12,028 19,326 Other 5 16 80 159 Eos 288 686 5,047 9,490 Total Lexus 1,422 1,842 19,097 17,042 Touran 6,819 6,164 74,017 82,259 iQ 411 592 6,628 9,024 Sharan 2,454 3,457 26,925 31,772 Aygo 3,774 5,085 47,086 55,141 Tiguan 9,418 6,626 106,413 75,900 Yaris 10,001 8,007 118,136 95,487 Touareg 1,054 1,625 14,196 16,128 Auris 5,461 6,150 53,470 65,086 Caddy 3,501 4,843 36,361 38,838 Corolla 1,157 1,453 10,964 17,529 Transporter/Caravelle/Multivan/ Prius 1,951 1,312 15,504 16,972 Shuttle/T5 3,748 3,131 35,632 33,990 Prius+ 1,725 – 3,365 – Other 321 358 2,522 3,665 Avensis 3,061 3,817 41,781 39,219 Total VW brand 109,019 111,532 1,149,431 1,165,092 Verso–S 1,112 1,631 14,006 11,275 Other 3 4 46 50 Verso 2,180 2,919 22,986 26,524 VOLKSWAGEN 210,941 208,681 2,196,195 2,205,174 Urban Cruiser 224 414 2,415 4,757 OTHER 628 731 8,435 7,352 RAV4 2,320 2,654 24,391 28,307 OTHER (China automakers) 60 124 1,272 1,984 Land Cruiser 602 644 6,460 7,215 GRAND TOTAL 762,247 826,886 8,898,703 9,566,362 GT 86 390 – 1,693 – Other 35 66 636 931 Note: Excludes models registered as commercial vehicles. Europe sales by model are Total Toyota brand 34,404 34,744 369,521 377,467 compiled using sales data from the following countries: Austria, Belgium, Cyprus, Czech TOYOTA MOTOR 36,090 37,091 391,791 402,806 Republic, Denmark, Estonia, Finland, France, Germany, Great Britain, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, A1 6,232 4,166 67,958 65,832 Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and Turkey. A3/S3/RS3 8,995 9,733 92,216 98,534 A4/S4/RS4 11,506 10,931 96,907 108,267 Source: JATO Dynamics +44(0) 20 8423 7100 (www.jato.com) A6/S6/RS6/allroad 7,397 6,901 72,918 53,049 A7/S7 570 1,154 8,223 13,203 A8/S8 415 733 4,866 6,686 TT 706 803 9,814 12,706 A5/S5/RS5 3,974 4,565 47,462 50,102 R8 49 59 780 989 Q3 5,817 101 48,835 438 Event-Driven Learning Market and vehicle intelligence delivered direct to the hands of your dealership sales people Today’s automotive market is constantly changing, Event-Driven Learning is an innovative new solution that resulting in an increasingly complex, competitive provides timely, relevant and up-to-date market and landscape. This, together with a more knowledgeable, vehicle information, within a competitive context, directly sophisticated and demanding consumer, is placing ever to the hands of dealership sales people. Event-Driven more demands on dealership sales people to keep ahead. 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