Monday, 19 September 2016

Toyota to expand Tacoma output in Mexico

U.S. sales of the Tacoma are up 4 percent this year through August, but its share of the midsize truck market has shrunk to 43 percent, from 51 percent a year earlier, amid new competition.

DALLAS — Toyota will invest $150 million at its Tijuana, Mexico, assembly plant to increase output of the popular Tacoma pickup amid tight inventory that the company says has held back sales.

The expansion will bump capacity to about 160,000 units annually in late 2017 or early 2018, from just over 100,000 currently, the company said in a statement Wednesday.

The move comes at a time when the Tacoma’s dominance of the U.S. midsize pickup market — which has grown 21 percent this year — is being challenged by General Motors, which returned to the segment for the 2016 model year with its well-received Chevrolet Colorado and GMC Canyon. Honda’s Ridgeline, too, is back in the market and selling briskly, and Nissan’s Frontier pickup is up nearly 45 percent this year. Ford plans a return with the Ranger as well.

Tacoma sales are up 4 percent this year through August, but its share of the midsize market has shrunk to 43 percent, from 51 percent a year earlier, amid the new competition. Toyota’s investment in capacity represents a bet that it can reclaim some of that share, and capture more of the segment’s growth, by increasing supply, even as the overall light-vehicle market begins to soften.

“Demand for trucks has grown exponentially,” Toyota Motor North America CEO Jim Lentz said in the statement. “By leveraging our manufacturing facilities’ availability and expertise, we can be nimbler and better adjust to market needs in a just-in-time manner.”

The Baja plant is currently stretched to its limit, having added a third shift in April 2015, executives at the plant said during a recent tour. The plant runs 24 hours a day Monday through Friday, plus two shifts on Saturday, then closes for maintenance.

Last year, Baja’s production was just over 82,000 trucks as the plant adjusted to the third shift and gradually increased output. Through August of this year, it has pumped out just over 63,000 units, according to Automotive News data.

Toyota is adding about 400 jobs in Baja, Mexico, to handle increased output of the Tacoma pickup.

The Tacoma is also produced at Toyota’s much bigger pickup plant in San Antonio, where it shares the assembly line with the full-size Tundra. San Antonio produced about 111,000 Tacomas in 2015 and 122,000 Tundras.

The Texas plant added a Saturday shift earlier this year to increase capacity to around 250,000 per year, according to David Crouch, vice president of administration and production control at the factory.

U.S. sales of the Tundra are off 7.7 percent this year through August, compared with a 2.8 percent rise for the full-size pickup segment overall. Crouch said supply is a big reason: Toyota dealers don’t have enough pickup inventory on the lot to tempt shoppers to buy.

“Obviously, one of the biggest challenges that we have for Tundra and Tacoma is we’re capacity-limited,” he told Automotive News in July. “We could sell a lot more trucks right now.”

The Baja plant is unique for Toyota in North America, since it operates around-the-clock, uses limited automation and began life in 2004 mostly to supply Tacoma truck beds to a now-closed assembly plant in California.

Toyota will add about 400 jobs in Baja to handle the new production, the company said.

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Steam cars offer glimpse of automotive history

BMW’s top brass caught in electric divide

Norbert Reithofer championed the BMW i3, shown here at its world premiere in 2013 in New York. But after lackluster sales, some senior execs are wary of more investment.

Tesla envy among German luxury carmakers remains at a fever pitch, as Automotive News pointed out this month.

Krueger: The pressure is on.

Mercedes-Benz and Audi have accelerated their own electric-car programs as they wrestle with how to react to the U.S. upstart, which has received almost 400,000 preorders for its Model 3.

Now, BMW‘s management board is holding talks aimed at breaking a deadlock over whether to produce new electric cars, including a battery-powered Mini, sources told Reuters. Indeed, BMW’s top executives will skip next week’s Paris auto show to kick it around.

Top management is said to be divided, what with expensive early investments that resulted in only lackluster sales of the i3 electric car.

Robertson: All alone in Paris

Norbert Reithofer championed the i3 project while CEO and, in his new role as supervisory board chairman, is keeping up pressure on his successor, Harald Krueger, to expand BMW’s electric program. But Reuters reports that some other senior executives are unwilling to plough more resources into EVs until i3 sales improve.

Most of BMW’s eight-member management board — which includes Krueger — traditionally attends the press days of the Paris show. But this year, only sales and marketing boss Ian Robertson will be there. The rest, according to the source, will be at a company strategy meeting at the end of September to hash out the EV plan.

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Top 5 ‘Blasphemous’ Automotive Trends that People Ended Up Loving

Top 5 ‘Blasphemous’ Automotive Trends that People Ended Up Loving

Things never stop changing in the automotive industry.

Evolving market demands and regulations keep automakers playing a constant game of catch up. Automakers, especially the ones that appeal to enthusiasts, have to hit a delicate balance of keeping their products innovative while not alienating or pissing off their faithful customers. Sometimes, automakers come out with a new car or technology that is a hit, while other times, traditionalists will whine and complain … and then end up buying it anyway.

Here are a few major changes that got a lot of hate when they were first announced, but ended up being huge successes.

SUVs from Sports Car Makers


Believe it or not, there was a time when sports car makers only made sports cars. That changed with the crossover boom, and when Porsche came out with the Cayenne in 2002, for example, enthusiasts were up in arms about how the German automaker was selling out and said it would lead to the company’s demise. They said a Porsche SUV was blasphemous and that they would boycott it. The Cayenne quickly went on to become the brand’s best-selling model, outselling the 911 by a huge margin and spawning the smaller and popular Macan.

Today, storied luxury sports car makers like Aston Martin, Alfa Romeo, Jaguar, Maserati, Bentley, Rolls-Royce and even Lamborghini either have an SUV on sale now or have one in development. They are bound to be huge sellers, which enthusiasts shouldn’t complain about because the money from those huge sales will help fund their next sports cars. Without the Cayenne and Macan, there wouldn’t be enough money to fund the development of the 918 hypercar or the 919 race car, and technology from those mega projects trickle down to the rest of Porsche’s sports car lineup, so SUVs are to thank for that.

Hybrid/Electric Sports Cars

Ferrari LaFerrari

Hybrids and green cars used to be thought of as transportation for granola-eating tree-huggers, so people generally thought hybrid/electric sports cars would make too many compromises and would ultimately fail — you can’t be green and fast at the same time, right? How things have changed. Tesla has proven that electric cars don’t have to be boring or slow, and hypercars like the LaFerrari, Porsche 918 and McLaren P1 proved that hybridization can be used to bolster performance.

Porsche bosses say it’s possible that the 911 might be hybridized one day, the Acura NSX and BMW i8 are hybrids, and Teslas are getting faster and more powerful. There are even full-on hypercars that are fully electric, like the Rimac Concept One that outputs a combined 1,088 horsepower and 1,180 pound-feet of torque and is capable of going zero to 62 mph in just 2.6 seconds. Expect hybrid and electric sports cars to dominate in the coming years.

AWD and Turbocharged Muscle Cars


It can be argued that muscle car admirers hang on to their traditions with more force than any other group of enthusiasts. They want naturally aspirated, big-displacement, rear-wheel-drive cars that are fast in a straight line and they have historically been resistant to change.

Fast forward to today where consumers can now buy Camaros and Mustangs with turbocharged four-cylinder engines, and a Dodge Challenger with a supercharger. The Dodge Challenger will also be getting all-wheel drive in the near future, which will surely be a big hit in places that see winter weather and rain. Sales of the four-cylinder Camaros and Mustangs have been strong, despite enthusiasts blasting the seemingly “sacrilegious” engines.

Automatic Transmissions in High-Performance Cars

2017 Acura NSX

There was once a time when high-performance cars only came with manual transmissions in an attempt to draw in driving enthusiasts and weed out the poseurs who couldn’t drive stick. The Volkswagen Golf R, Fiat 500 Abarth and Porsche GT3 are just a few examples of cars that were previously only offered with a manual that now have an automatic transmission in their lineup. Sure, a manual is more engaging, but enthusiasts understand that many automatic transmissions are now faster than manuals and are better on gas.

Some sports cars these days only come with an automatic: The Acura NSX, Alfa Romeo 4C, Ford GT, all Lamborghinis and Ferraris, Audi R8 and the BMW M5 are just a few examples. Expect the number of manual-only sports cars to dwindle even further in the near future.

Coupe SUVs

2015 BMW X6 M side profile

Many people are still in the camp that hates “coupe SUVs” and “four-door coupes” because coupes should only have two doors! Coupe SUVs have a raked roof design that makes them less practical versions of their donor vehicles, with less headroom, less cargo capacity, and a higher lift height. To many, their design is gaudy and the proportions are whack. Still, automakers love this trend and people continue to buy these automotive oddities. BMW and Mercedes both have coupe SUVs, Porsche is expected to jump on the bandwagon with a “coupified” Cayenne, and you can be sure that Lamborghini’s upcoming SUV will do the same.

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Wednesday, 7 September 2016

Tesla envy grips Germany’s giants

More than just a car brand, Tesla builds battery packs and installs charging infrastructure.

FRANKFURT — The gleaming white Porsche with menacing black trim took less than 8 minutes to complete the Nurburgring’s demanding Nordschleife circuit. The result was respectable but not spectacular for a 600-hp beast that sprints from 0 to 62 mph in a little more than 3 seconds.

Unlike the Panamera production car, which can easily beat its lap time, the Mission E concept doesn’t have camshafts, pistons or valves to mix air and fuel in a combustion chamber or a spark plug to ignite it. It runs on a current of pure electrons supplied by a lithium ion battery, and it can almost fully recharge itself within 15 minutes.

The Tesla Model S doesn’t come anywhere close to those specs — which is the point.

Porsche’s 1 billion euro ($1.12 billion) gamble to lure Tesla owners from their beloved electric car is just one example of how much premium European automakers are investing to try and match their Silicon Valley-based rival.

Tesla’s zero-emissions sports sedan has made Europe’s finest automakers look woefully behind the times in an area they typically dominate: technology. The question is whether established brands can win back the hearts and minds of car buyers seeking the next big thing.

“I wish we had put that car on the road and not Tesla.”
A senior engineer at Porsche

Germany’s best known sports car maker promises its Mission E, which was teased at last year’s Frankfurt auto show, will be “an electric Porsche that deserves the name.” That means it will be consistently fast over an extended period with no loss of performance despite repeated accelerating and braking. It is supposed to be the first zero-emissions car worthy of being taken to the racetrack.

Porsche, however, will need years before it can mass produce and sell its electric sports car at a decent profit. Meanwhile, Tesla will continue to deliver tens of thousands of its vaunted sedans and SUVs every year to wealthy progressives around the world, most likely at a loss.

“I wish we had put that car on the road and not Tesla,” confided a senior engineer at Porsche, not a brand typically prone to technological envy. “We have to earn money at the end of the day though.”

Speak to other developers in Germany and the same healthy respect mixed with a dose of jealousy can be heard. Whether it is the Wall Street-funded business model, outlandish marketing claims or its brash determination to ignore conventions such as independent retailers, Tesla refuses to play by the same rules as everyone else. And, so far, the company gets away with it.

How do Europe’s premium carmakers, and particularly the German luxury brands, compete against a rival like that? The truth is they can’t — at least not as long as Tesla remains a money-losing boutique manufacturer of luxury sports cars propped up by investors.

“Part of it is a cultural issue,” said a Mercedes-Benz official who asked to remain anonymous. “You can’t compare a 130-year-old company shaped by German engineering ingenuity with a startup from Silicon Valley. It’s a different approach.”

Despite those differences Audi, BMW and Mercedes are joining Porsche in the race to provide a response to Tesla’s success. Audi plans to launch a dedicated electric model in 2018. Mercedes will showcase its Tesla fighter with a concept car this month at the Paris auto show. Mercedes also plans to create a subbrand for electric cars that will offer two electric SUVs and two battery-powered sedans, people familiar with the plan told Bloomberg last month.

BMW hopes its fully autonomous iNext, due in 2021, will revolutionize the industry but in the meantime it will continue to promote its poorly performing i3 as the best option for those looking for a premium zero-emissions car. Volvo plans a Model S rival, which will arrive in 2019 and share its underpinnings with the S90, V90 and XC90. Jaguar Land Rover is expected to debut a battery-powered concept in November at the Los Angeles Auto Show.

More electric vehicles will undoubtedly follow as European Union regulators crack down on road transport emissions, announcing early next year stringent new carbon dioxide targets for the period after 2021. Carmakers have no choice but to electrify their powertrains.

New frontier

Porsche faces big technical and safety challenges to bring the Mission E to fruition and, on top of that, it is unclear whether the brand’s loyal buyers will follow it to this new frontier.

“We believe Porsche can bring to life in an electric car those kinds of values core to our brand, such as performance, sportiness and exclusivity. Whether the customers will be the same or not, we will see,” development chief Michael Steiner told Automotive News Europe.

It is too early to say whether Porsche’s customers will trade the guttural roar of their engines for a silent electric drive. It’s just as unclear whether BMW, Audi and Mercedes can win back customers lost to Tesla. German car executives claim that Musk’s customers are far more willing to accept flaws and shortcomings they wouldn’t overlook at other brands.

As a startup, the company can get away with things that make some engineers at established carmakers envious but make their legal teams sick to their stomachs. Tesla’s Autopilot function is a prime example. While the car can accelerate, brake and steer itself, it is still just a glorified form of assisted driving. Occupants have to constantly watch the controls in case the car suddenly swerves off course for no reason. German engineers bristle when asked about Autopilot.

“Part of it is a cultural issue. You can’t compare a 130-year-old company shaped by German engineering ingenuity with a startup from Silicon Valley. It’s a different approach.”
Mercedes-Benz official

“We made the very conscious decision to be conservative in our marketing since it’s not in our interest for the assistant systems to be used in circumstances they should not,” said the Mercedes official. “Once every 7.5 million kilometers (4.7 million miles) driven there is a serious accident in Germany. Our assistant systems are supposed to minimize that, not add to it by creating new accidents.”

So while many might be thrilled at the novelty of watching a steering wheel rotate left and right by itself, Germans just shake their heads in disbelief.

“Where’s the added value for the customer?” asks Klaus Verweyen, Audi’s project chief for fully piloted driving, which will debut in a limited form next year in the revamped A8. Nevertheless, the glory associated with cars that can drive themselves has gone to Tesla. The MIT Technology Review named Tesla’s “software update that suddenly made autonomous driving a reality” one of the top 10 breakthrough technologies for 2016. While it admitted the system used a “legal gray area,” Autopilot was “a grand gesture toward an ever-nearing future,” according to the magazine.

More than an EV brand

One of the mistakes many German car executives have made in recent years is believing that Tesla is an electric car brand. If that were the case they would have a strong chance to conquest sales back from Musk once they brought their own versions to market.

Yet Tesla is far more than that. It builds battery packs, installs charging infrastructure and most recently plans to integrate energy generation and storage via an acquisition of Musk’s photovoltaic company SolarCity. In the future it plans to expand into electric pickup trucks and even tractor-trailers.

Musk has built something of a theology around Tesla with himself as a high priest and sustainable mobility as his nirvana. Rivals may roll out their own Tesla fighters, but you cannot fight it because it’s a way of life, not a product.

In other words, Tesla will stand or fall regardless of what the German luxury brands attempt. Several executives admit their best chance to gain back lost sales is if the young company mismanages its transformation from serving a base of die-hard fans to becoming a profitable full-scale producer of zero-emissions vehicles. Many startups fail to surmount this hurdle. Electric car charging station provider Better Place also began life as an investor’s darling because of its charismatic young founder, Shai Agassi. Instead his company collapsed three years ago.

Tesla’s biggest strength is also its greatest weakness. Musk is the company’s most eloquent advocate and he is already the third most influential CEO on Twitter, according to research by French business school INSEAD. Musk is Tesla as much as Steve Jobs was Apple.

Moreover, reputational problems may catch up to it. Allegations have been leveled that Tesla tried to hide suspension flaws in the Model S from the public by forcing customers to sign nondisclosure agreements. More recently, a fatal accident has put its Autopilot in a negative spotlight. Also, when the Model 3 eventually debuts, Tesla will target more demanding consumers, who are not likely to be as forgiving when it comes to the inherent trade-offs of an electric car.

A senior automotive executive at Bosch is convinced that sooner or later Musk will not be able to maintain this startup style showmanship over substance: “At some point as they grow customers won’t accept this and Tesla will have to adopt a zero-tolerance approach.”

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The family car is in free fall

In August, the Toyota Camry, shown, trailed the RAV4.
Free fall
Midsize car sales have declined faster as the year goes on
Quarter YOY change
1st -3.40%
2nd -12%
3rd -22%
Source: Automotive News Data Center

The family sedan is dying, and the usual cure-all prescription — cash on the hood — isn’t working.

In one of the U.S. auto industry’s best years ever, with sales through August 0.5 percent ahead of last year’s record pace, demand for midsize cars is at a five-year low.

The segment is fading faster with each passing month. Midsize car sales fell 3.4 percent in the first quarter, 13 percent in the second quarter and 21 percent so far in the third, compared with last year.

In August alone, sales of the Nissan Altima, Ford Fusion, Hyundai Sonata and Kia Optima all plunged more than 30 percent. Chrysler 200 sales fell by two thirds. Across all 16 midsize nameplates, the declines averaged 27 percent, a loss of more than 60,000 units.

Meanwhile, sales of compact and smaller cars fell just 3.6 percent last month, in line with the industry’s overall decline of 3.5 percent, showing that the market’s shift away from sedans isn’t across the board. Some high-volume small cars, including the Chevrolet Cruze and Honda Civic, posted gains in August.

“That larger sedan buyer just sees more value in the SUVs or CUVs,” said Mike DeSilva, co-owner of Liberty Hyundai in Mahwah, N.J. “That’s just where the activity is. And heading into the end of summer and going into winter, we’re really going to get into SUV season.”

Midsize cars have been the industry’s powerhouse segment for decades, even through the SUV boom of the 1990s and early 2000s. In each of the past four years, sales have topped 2.4 million.

But for 2016, compact crossovers are poised to take over as No. 1 for the first time, as midsize cars likely will fall to fourth. Since June, midsize cars have been less popular than full-size pickups and compact cars, too.

That’s in spite of increasing discounts on midsize cars. Incentives last month on the top eight midsize nameplates were 7 percent, or $252, higher than in August 2015 and 11 percent above the industry average, according to Autodata.

“It doesn’t matter how deep you discount the leisure suit and bell-bottoms — nobody’s going to buy them if they’re not fashionable,” said Eric Lyman, vice president of industry insights at TrueCar. “I don’t think they’re ever going to go away, but there’s a lot more people who don’t consider them anymore.”

Last December, Bob Carter, Toyota’s head of U.S. operations, predicted that the Camry, America’s No. 1 car for 14 consecutive years, would be outsold by the company’s own RAV4 within five years. The fizzling of the midsize car segment could make that happen much sooner.

In August, the Camry trailed the RAV4 for the first time, according to the Automotive News Data Center. The Camry fell short of the Honda CR-V and Nissan Rogue as well.

Aside from midsize cars, sales of everything else rose 0.4 percent last month. Analysts and automakers are divided on whether the year will end up ahead of 2015, when 17.47 million vehicles were sold. Last year included the strongest fourth quarter ever, so matching that will be a challenge.

The industry’s seasonally adjusted, annualized selling rate fell to 16.97 million last month, from 17.86 million in July and 17.79 million a year ago. Still, sales have topped 1.5 million in each of the past six months, the longest such streak on record.

General Motors’ chief economist, Mustafa Mohatarem, said healthy economic indicators “point toward a strong second half of the year and another potential record year for the industry.” But Ford Motor Co. said sales have already reached a plateau, signaling that a second consecutive annual record might be slightly out of reach.

“We have a pretty high level of sales,” said Bryan Bezold, Ford’s senior U.S. economist. “It’s just we’re no longer in a period where we have a lot of pent-up demand coming out of the financial crisis.”

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