US auto workers' strike: What are the implications?

NEW YORK — Unionized auto workers in the United States have launched a strike at three factories in a historic walkout after failing to reach a deal with Detroit's "Big Three" automakers.

With the automotive sector being a major part of the world's biggest economy, here is a summary of the implications.

Millions of jobs

The automotive ecosystem drives some $1 trillion into the US economy each year, nearly five percent of gross domestic product, according to the Alliance for Automotive Innovation.

The group, which represents the auto industry, said in a 2022 report that the sector supports 9.6 million jobs.

In its industry report, the alliance noted that "more than $220 billion in federal and state revenue is generated annually by the manufacture, sale and maintenance of autos."

And the sector is benefiting from the rapid growth of electric carmaker Tesla, which delivered 1.3 million EVs in 2022.

'The Big Three'

General Motors, Ford and Stellantis are dubbed the "Big Three" in US carmakers and have production facilities in the Detroit, Michigan, area.

They operate 60% of the country's assembly plants, according to the American Automotive Policy Council, which represents the three companies.

The United Auto Workers strike involves only 12,700 of 150,000 members represented by the union, but the action could broaden in the coming days.

A major risk in the event of a prolonged strike is "degradation of the supply chain and the financial health of the parts and equipment suppliers," said CFRA analyst Garrett Nelson.

Michael Pearce of Oxford Economics added in a note that "a total walkout would reduce motor vehicle output by over 30%."

Scale of operations

GM employs over 92,000 people in the United States according to its website, and delivered 2.3 million vehicles in the country last year under the Chevrolet, Buick, GMC and Cadillac brands.

In 2022, its revenue rose by 23% to $157 billion, while its net income came in at $9.9 billion.

Ford — founded 120 years ago — hires some 177,000 people including about 86,000 in the United States.

It manufactures the Ford brand including the F-150 pickup truck, which the company calls "America's truck" because it is assembled entirely in the United States and has been the country's most popular vehicle for more than four decades.

Meanwhile US-European auto giant Stellantis, whose brands include Jeep, Chrysler and Peugeot, has 264,000 staff globally.

In 2022, it posted profits of 16.8 billion euros.

Foreign automakers

Apart from US carmakers, international automakers produced 4.4 million vehicles in the United States last year, according to Autos Drive America.

Their production volume has ballooned by over 85% in more than two decades.

And this has brought their share of US production from one percent in 1979 to 45% in 2022.

Among global brands that have plants in America are BMW, Kia, Honda, Lexus, Volkswagen and Hyundai.

In 2022, international automakers directly employed 156,000 US employees.

Agence France-Presse

New Zealand to boost electric car sales

WELLINGTON — New Zealanders who trade in their gas-guzzling car will get financial aid towards buying a cleaner alternative, in one of a raft of climate change initiatives announced by Jacinda Ardern's government Monday.

The country's first Emissions Reduction Plan, costing nearly 3 billion NZ dollars (1.88 billion US dollars), outlined spending for the next 4 years to help meet its goal of cutting carbon dioxide emissions to net-zero by 2050.

A "scrap and replace" pilot scheme will initially give 2,500 low-income families financial support towards an electric or hybrid vehicle if they replace their petrol- or diesel-powered car.

Transport Minister Michael Wood said the scheme's details were yet to be finalized but he envisaged it would expand rapidly to include "tens of thousands" of New Zealanders.

He said the government's ultimate goal was for less reliance on all cars by 2035 by getting people to switch to public transport or other alternatives.

The government also allocated 650 million NZ dollars to help cut fossil fuel use in the industrial sector over the next 4 years.

There will also be an investment in developing agricultural technology -- regarded as critical in an economy heavily reliant on farming exports.

Conservationists noted the timing of the investment, coming on the same day scientists announced they had recorded a mass bleaching of sea sponges in New Zealand waters for the first time ever.

An ocean heatwave damaged the sponges in the normally cold waters off Fiordland, in the country's southwest, raising concern about the impact climate change is having on marine ecosystems in the region.

Agence France-Presse

Ferrari to recall more than 2,200 cars in China over brake risk

Italian luxury carmaker Ferrari has issued a recall plan with Chinese regulators over potential brake problems in its vehicles, an official notice said Friday.

The recall affects 2,222 vehicles over a brake fluid issue, said a notice by China's State Administration for Market Regulation (SAMR).

This figure is almost the total number of cars Ferrari sold in mainland China, Hong Kong and Taiwan over the past three years, based on the company's annual report.

"Vehicles covered by this recall... could see a higher risk of brake fluid leakage, resulting in reduced braking performance or brake failure, posing a safety hazard," SAMR said.

The recall covers a portion of imported 458 Italia, 458 Speciale, 458 Speciale A, 458 Spider, 488 GTB and 488 Spider series cars that were made between March 2, 2010 and March 12, 2019, the regulator said Friday.

It added that these vehicles should be driven with caution, and should be stopped immediately if a low brake fluid level warning light appears.

Ferrari will replace the problematic car parts free of charge for the cars covered by the recall, the notice said.

The recall starts on May 30.

The state market regulator this month also announced US electric car giant Tesla's recall of nearly 128,000 vehicles in China over a fault that could raise the risk of vehicle collision.

Agence France-Presse

GM, Honda announce North America car alliance

NEW YORK - General Motors and Honda announced Thursday they were establishing a strategic alliance in North America to share vehicle platforms and development costs.

The venture builds on existing partnerships on electric cars and fuel cell systems and comes as automakers face pressure to develop autonomous driving and other envelope-pushing technologies amid uncertain vehicle demand in the wake of the economic downturn due to the coronavirus.

A joint press release said the venture would save money from shared vehicle platforms and propulsion systems, joint purchasing and shared research and development spending. 

GM's US rival Ford has teamed up with German giant Volkswagen to jointly develop electric and self-driving vehicles, and a pending merger between Fiat Chrysler and Peugeot also aims to hold costs down.

Morningstar analyst David Whiston said there few details offered on the extent of the financial savings to either firm, but that "the alliance can make sense" if Honda makes headway in some of the truck segments where it lags and GM benefits from Honda's expertise with smaller cars.

"We see the agreement as a low-risk and potentially high-reward move for both firms, and their prior history lowers the risk of tension and poor cooperation," Whiston said.

Agence France-Presse

Tesla mocks shortsellers with sale of red satin shorts

After surpassing Toyota Motor Corp as the world's most valuable automaker and stunning with forecast-beating deliveries, Tesla Inc has taken time out to poke fun at the company's naysayers - with sales of red satin shorts.

"Limited edition short shorts now available," CEO Elon Musk tweeted on Sunday.

Musk has often taken umbrage at short-sellers and in 2018 sent a box of shorts to hedge fund owner and Tesla short-seller David Einhorn.

The "Short Shorts" on the Tesla shop website feature gold trim and “S3XY” in gold across the back, which also happens to be formed from Tesla model names.

The shorts cost $69.420, the last 3 digits an apparent reference to Musk's infamous tweet in 2018 that he was considering taking Tesla private for $420 per share, with 420 also a code word for marijuana.

That tweet landed him in hot water with the US securities regulator, costing him his position as Tesla chairman.

Limited edition short shorts now available at https://t.co/5EmNcTBvJv

— Elon Musk (@elonmusk) July 5, 2020

The Silicon Valley car maker, however, has reason to crow. Its stock has almost tripled in value this year to just over $1,200 per share and it sold more than 90,000 of its electric vehicles in the second quarter, defying a trend of plummeting sales for other automakers hit by coronavirus-induced lockdowns.

"Run like the wind or entertain like Liberace," the product description says, adding: "Enjoy exceptional comfort from the closing bell." It will ship within 2-4 weeks.

Tesla is expected to announce earnings results for April-June quarter this month, with analysts saying the second-quarter deliveries had heightened expectations that it will report 4 consecutive quarters of profit for the first time in its history.

-reuters-

China's passenger car sales fall 80 percent in Feb on coronavirus

BEIJING - Passenger car retail sales in China, the world's biggest auto market, fell 80 percent in February because of the coronavirus epidemic, one of the country's industry associations said on Wednesday.

The China Passenger Car Association (CPCA) said in a statement that China's overall passenger car sales dropped 80 percent, without giving a full sales figure for the month.

"Dealers returned to work gradually in the first three weeks of February and their showroom traffic is very low," CPCA said, adding it expects February's sales drop will be the steepest of this year.

Japanese automaker Toyota, the first major global automaker to report its February sales in China, said it sold 23,800 Toyota and premium Lexus cars last month, down by 70 percent from a year earlier.

The world's biggest car market is bracing for further bad news as efforts to curb the spread of the coronavirus, which has killed more than 2,900 people in mainland China, disrupt global supply chains and dampens consumer demand.

Toyota rival General Motors, China's second biggest foreign automaker, said the industry will face "serious challenges" in the first quarter this year, but anticipates the situation will ease in the second quarter, its China president Matt Tsien said in a post on GM's official WeChat account.

GM hopes China's auto sales will report year-on-year growth in the second half of this year, Tsien added. 

(Reporting by Norihiko Shirouzu, Yilei Sun and Brenda Goh; editing by David Evans and Barbara Lewis)

source: news.abs-cbn.com

Toyota to recall 3.4 million vehicles worldwide, air bags may not deploy in crashes

WASHINGTON - Toyota Motor Corp said Tuesday it would recall 3.4 million vehicles worldwide because of an electronic defect that could result in air bags not deploying in crashes.

The recall, which includes 2.9 million US vehicles, covers 2011-2019 Corolla, 2011-2013 Matrix, 2012-2018 Avalon and 2013-2018 Avalon Hybrid vehicles and is tied to a report of one fatal crash.

The vehicles may have an electronic control unit that does not have adequate protection against electrical noise that can occur in crashes, which could lead to incomplete or non-deployment of the air bags. It could also impede the operation of seat-belt pretensioners.

In April, the US National Highway Traffic Safety Administration (NHTSA) expanded a probe into 12.3 million potentially defective air bags covering a number of automakers, including the vehicles Toyota is recalling.

NHTSA said in April it had identified two frontal crash events, including one fatal crash "involving Toyota products where (electrical overstress) is suspected as the likely cause" of air bags not deploying. Both involved newer Corolla cars.

NHTSA said the air bags under investigation were installed in more than 12 million vehicles from 2010 through 2019 sold by Toyota, Fiat Chrysler Automobiles NV, Honda Motor Co , Hyundai Motor Co, Kia Motors Corp and Mitsubishi.

They were equipped with an air bag control unit initially produced by TRW Automotive Holdings Corp, which is now owned by ZF Friedrichshafen.

In total, NHTSA said as many as 8 deaths could be tied to the issue.

Hyundai, Kia and Fiat Chrysler previously issued recalls for more than 2.5 million vehicles with the TRW air bag control units in question that might not deploy in crashes.

When it recalled nearly 2 million vehicles for air bag non-deployments in 2016, Fiat Chrysler said it had reports of three deaths and five injuries that might be related to the defect.

Hyundai and Kia ultimately recalled more than 1 million vehicles for air bag non-deployment concerns in 2018. Hyundai and Kia in 2018 said they had reports of four deaths and six injuries in North America tied to the issue.

Toyota dealers will install a noise filter between the air bag control module and its wire harness if needed.

Toyota declined to say how many deaths or injuries have been tied to the defect. Toyota will notify vehicle owners of the recall by mid-March.

Agence France-Presse

Car covered in Taal volcano ash? Experts share tips

MANILA – Personal safety should be the number one priority as Taal Volcano remains on the brink of a “hazardous eruption,” but it wouldn’t hurt to know how to properly care for a vehicle affected by ashfall.

On Monday, experts reminded car owners not to wipe their ash-covered vehicles as particles can damage the paint.

Toyota Motor Philippines instead suggested to wash cars with pressurized water to remove ash while preventing scratches.

It added that the air filters of vehicles driven in areas affected by the ashfall should be thoroughly cleaned.


Automotive shop Aegis Detailing Philippines, for its part, said a thick layer of wax will help protect a car that is not glass-coated.

Those who are unsure of what to do, meanwhile, are advised to bring their ash-coated vehicles to a professional to avoid further damage.

source: news.abs-cbn.com

PSA and Fiat Chrysler unveil merger of equals

PARIS -- PSA and Fiat Chrysler unveiled Thursday a plan for a 50-50 merger of their operations to create the world's fourth-largest car manufacturer that would generate billions in savings without factory closures.

In a joint statement the French and US-Italian carmakers said their boards of directors "have each unanimously agreed to work towards a full combination of their respective businesses by way of a 50/50 merger."

It would be achieved via the creation of a parent company in the Netherlands in which the shareholders of each current group would own half.

The merged company would have combined sales of nearly 170 billion euros per year and 11 billion euros of operating profits, the carmakers said.

The Dutch-based parent company would have balanced representation and a majority of independent directors with FCA's John Elkann as chairman and PSA's Carlos Tavares as CEO and member of the board.

The boards of both carmakers "both share the conviction that there is compelling logic for a bold and decisive move that would create an industry leader with the scale, capabilities and resources to capture successfully the opportunities and manage effectively the challenges of the new era in mobility," said the statement.

A merger would create significant savings as both firms share the costs of developing electric vehicles that are expected to dominate personal transportation in the future as the world strives to reduce carbon emissions to limit climate change.

"The significant value accretion resulting from the transaction is estimated to be approximately 3.7 billion euros in annual run-rate synergies derived principally from a more efficient allocation of resources for large-scale investments in vehicle platforms, powertrain and technology and from the enhanced purchasing capability inherent in the combined group’s new scale," it said.

"These synergy estimates are not based on any plant closures," it added.

France, which owns a stake in PSA and earlier this year opposed a mooted tie-up between Renault and Fiat Chrysler, signaled it favours the project.

French Economy Minister Bruno Le Maire "favorably greets the entry into negotiations" of the two carmakers, said a statement from his office.

However, it warned the French government "will remain particularly vigilant on the industrial footprint in France, where decision making will be located and promises by the new group to create in Europe the infrastructure to build electric batteries" needed for the shift to new vehicles.

source: news.abs-cbn.com

Swiss to auction 25 super cars seized from E. Guinea leader's son

CHÉSEREX, Switzerland - A collection of luxury cars seized from Equatorial Guinea's vice president Teodorin Obiang Nguema will be auctioned off in Switzerland on Sunday and are estimated to bring in 18.5 million Swiss francs ($18.7 million).

"This is an exceptional sale," Philip Kantor, of British auctioneers Bonhams, told AFP. "It's a private collection of supercars, with very low mileage.

Among the cars, to go under the hammer at a Geneva golf club, are seven Ferraris, three Lamborghinis, five Bentleys, a Maserati and a McLaren. 

The most expensive lots are a Lamborghini Veneno Roadster, valued at between 4.8 million and 5.7 million euros ($5.2-6.2 million) and yellow Ferrari hybrid at 2.4-2.6 million euros.

The cars were all confiscated by Swiss justice after the opening in 2016 of a financial wrongdoing case against Obiang, son and likely heir of Equatorial Guinea's authoritarian President Teodoro Obiang Nguema who has ruled for 40 years.

All will be sold with no reserve price. 

In February Swiss prosecutors said they were dropping charges of financial wrongdoing against Teodorin Obiang Nguema but were confiscating the luxury cars as part of the case.

Under the Swiss penal code, prosecutors can choose to drop charges in this category if defendants offer compensation "and restore a situation that is in conformity with the law." 

Playboy reputation 

Equatorial Guinea has also agreed to give Geneva 1.3 million Swiss francs to cover the costs of the case.

Vice president with responsibility for defense and security, Teodorin Obiang has a reputation for a playboy lifestyle.

In October 2017, a Paris court handed him a three-year suspended jail term after convicting Obiang of siphoning off public money to buy assets in France.

He was accused of spending more than 1,000 times his official annual salary on a six-story mansion in a posh part of the French capital, a fleet of fast cars and artworks, among other assets.

He was also given a suspended fine of 30 million euros.

In September, Brazilian media said that more than $16 million in cash and luxury watches were seized by Brazilian police and customs officers from the luggage of a delegation accompanying Obiang on a private visit.

Brazilian daily O Estado de Sao Paulo quoted a diplomatic source from Equatorial Guinea as saying the money was to pay for medical treatment Obiang was to undergo in Sao Paulo. 

The watches were for the "personal use" of the president's son and were engraved with his initials, the report said.

Obiang is reputedly on a fast track to succeed his father.

Last October, he was promoted from colonel directly to division general, without passing through the normal intermediary rank of brigade general.

The following month, he presided over a cabinet meeting for the first time.

The tiny West African nation is one of the continent's top petroleum producers and has a population of just 1.2 million.

The country is regularly cited by NGOs as one of the most corrupt in the world.

source: news.abs-cbn.com

Architect of Volkswagen's global expansion, Ferdinand Piech, dies aged 82

FRANKFURT -- Ferdinand Piech, Volkswagen AG's former chairman and chief executive, who transformed the German company from a struggling midsized carmaker into a global automotive powerhouse, has died, German tabloid Bild said on Monday.

Piech, 82, died on Sunday in Rosenheim, Bavaria, the German tabloid said, without citing sources.

A representative for the Piech and Porsche families, who still control a majority stake in Volkswagen through their family holding company Porsche SE, had no immediate comment.

Volkswagen could not be reached for comment.

Piech was a grandson of Ferdinand Porsche, the father of the iconic Volkswagen Beetle and part of the Porsche and Piech clans which today still control VW Group.

A brilliant engineer, Piech turned around VW after betting on a modular construction technique which allowed Audi, Skoda and VW brands to share up to 65 percent common parts, helping Volkswagen Group to attain greater economies of scale.

Under Piech's leadership, VW emphasized engineering brilliance ahead of profits, and went on an expansion spree, adding high-margin luxury marques Bentley, Bugatti and Lamborghini brands in a single year.

"First and foremost I always saw myself as a product person, and relied on gut instinct for market demand. Business and politics never distracted me from the core of our mission: to develop and make attractive cars," Piech wrote in his autobiography.

During his 9-year tenure Piech turned a loss equivalent of 1 billion euros into a 2.6 billion euro profit while spearheading VW's' expansion into a 12-brand empire which includes the Seat, Skoda, Bentley, Audi, Porsche, Bentley and Ducati brands in addition to the MAN and Scania truck brands.

Piech was known for his ability to outmaneuver competitors by stoking internal rivalries to his own advantage, even if it resulted in turning against his own managers, including VW Chief Executive Bernd Pischetsrieder, to side with VW's labor leaders.

While working as a 31-year old development chief at Porsche in 1968, he invested two thirds of Porsche's annual racing budget to build 25 Porsche 917 race cars with an untested radical 600 horsepower air-cooled 12-cylinder engine design.

Family members accused Piech of being an irresponsible manager after risking the company's budget, but the Porsche 917 went on to become one of the most successful race cars in history.

"It is not possible to take a company to the top by focusing on the highest level of harmony," Piech, who has 12 children from four different women, explained in his autobiography.

Governance at Porsche and VW was for decades marked by encouraging in-house rivalries.

While working as development chief at Audi, Piech decided to keep his top engineers in the dark about the aerodynamic qualities of the Audi 100 by using wind tunnels in Hamburg, Stuttgart, Wolfsburg and Turin to develop the vehicle.

That way no single engineer could defect to a rival with crucial know-how.

"I was in the middle of it all, putting together the pieces of the puzzle," Piech said in his autobiography.

Piech held various senior positions within the VW empire, including development jobs at Audi where he developed the brand's quattro four-wheel drive technology, and transformed the unit into a credible competitor to Mercedes-Benz and Audi.

He became Volkswagen's chief executive in 1993 and chairman in 2002 after a brief stint at Mercedes-Benz where he developed diesel engines.

By the late 1990's VW was selling more than 5 million cars a year with industry analysts crediting Piech for improving VW's image as a quality manufacturer.

Max Warburton, an analyst at Bernstein Research, described Piech as the architect of VW’s global success in a note from 2012.

"His stewardship of VW has been indisputably successful. Piech will go down in history as an automotive legend, in the same class as Gottlieb Daimler, Henry Ford and Kiichiro Toyoda."

Piech, resigned as Volkswagen chairman in April 2015 after falling out with his chief executive Martin Winterkorn. Volkswagen would become embroiled in an emissions cheating scandal only months later.

The fourth generation of the Porsche and Piech families now sit on the board of directors of Porsche Automobil Holding SE which controls a 52.2 percent stake in Volkswagen, the world's largest carmaker.

source: news.abs-cbn.com

Fearing no-deal Brexit, UK carmakers slam brakes on investment

LONDON - Britain's carmakers, fearful of a chaotic no-deal Brexit and global economic turmoil, are slamming the brakes on investment, the nation's automotive industry warned on Wednesday.

New investment in the sector crashed 70 percent to £90 million ($109 million, 98 million euros) in the six months to June, the Society of Motor Manufacturers and Traders said in a statement.

That contrasted sharply with an annual average of £2.7 billion over the previous seven years.

"Today's figures are the result of global instability compounded by ongoing fear of no-deal," said Mike Hawes, chief executive of the SMMT industry organization. 

"This fear is causing investment to stall, as hundreds of millions of pounds are diverted to Brexit cliff-edge mitigation -- money that would be better spent tackling technological and environmental challenges."

The SMMT also revealed that total production tumbled by a fifth to 1.7 million vehicles in the first half of 2019 from a year earlier.

In another worrying Brexit signpost, British-based carmakers meanwhile suffered their 13th successive monthly output drop in June.

The industry organization has long argued that a no-deal Brexit would ramp up costs and hurt supply chains, while tariffs would undermine competitiveness and bite into profits.

Newly-installed British Prime Minister Boris Johnson has vowed to leave the European Union on October 31 come what may -- with or without a trade deal with Brussels.

Britain's biggest trade union Unite however called Wednesday on Johnson's Conservative administration to stem the loss of valuable investment and protect jobs.

"Prime Minister Johnson and his government cannot bat this aside," said Unite's assistant general secretary for manufacturing Steve Turner.

"There is a £330 million hole in investment into the UK auto sector because money must now be diverted into no deal preparations, draining the life out of the industry.

"That is money that ought to be creating new jobs and investing in new models and a future dedicated to the UK."

source: news.abs-cbn.com

BMW names new boss as it looks to speed up electric transition

BERLIN -- BMW said Thursday that its production chief Oliver Zipse will replace Harald Krueger as chief executive in August, as the German auto giant looks to accelerate its transition to electric cars.

Krueger, who had been criticized for not steering the group quickly enough towards electric technology, said earlier this month that he would not seek another term when his current office runs out next April.

However BMW's supervisory board said in a statement on Thursday that Zipse will take his place on August 16.

Zipse, 55, began as a trainee at BMW in 1991 and has since held various management positions. 

As current head of the product division he supervised 31 factories worldwide as they were in the process of transitioning to electric car production.

The other main contender to head the car behemoth was believed to have been BMW research chief Klaus Froehlich.

One of the main tasks facing the new boss will be shifting gears to an electric future ahead of tougher anti-pollution measures gradually coming into force in the EU.

Supervisory board chairman Nobert Reithofer said that "decisive strategic and analytical leader" Zipse will "provide the BMW Group with fresh momentum in shaping the mobility of the future".

source: news.abs-cbn.com

Nissan grants Renault execs boardroom seats, ending dispute

TOKYO/PARIS - Japan's Nissan said on Friday it would grant alliance member Renault's representatives seats on key committees of its board, ending a dispute between the 2 automakers.

Nissan said it would give Renault Chief Executive Thierry Bollore a seat on its board's audit committee and Renault Chairman Jean-Dominique Senard a seat on its nomination committee. Senard will also become vice-chairman of the board.

The move comes after demands by Senard for representation on the committees in return for approving Nissan's overhauled governance structure plunged the 2-decade-old partnership into crisis.

"Groupe Renault welcomes Nissan's decision to grant Renault's representatives a seat on the committees of the Nissan board, which will be presented to the general shareholders' meeting on June 25," Renault said in a statement.

"The agreement reached on Renault's presence in Nissan's new governance confirms the spirit of dialogue and mutual respect that exists within the alliance," added Renault, whose merger talks with Fiat-Chrysler broke down this month.

Nissan also said it would nominate Yasushi Kimura, adviser at JXTG Holdings Inc, to chair its board.

The French state has a 15 percent stake in Renault, while Renault itself owns 43.4 percent of Nissan.

French ministers have consistently highlighted the importance of ensuring the Renault-Nissan alliance remains strong, before planning any further consolidation with the likes of Fiat-Chrysler.

The 20-year-old partnership between Renault and Nissan has been strained since former leader Carlos Ghosn was arrested for suspected financial misconduct last year. Ghosn denies wrongdoing.

source: news.abs-cbn.com

Fiat Chrysler, Renault pursue $35 billion merger to fight auto upheaval

MILAN/PARIS -- Fiat Chrysler pitched a finely balanced merger of equals to Renault on Monday to tackle the costs of far-reaching technological and regulatory changes by creating the world's third-biggest automaker.

If it goes ahead, the $35 billion-plus tie-up would alter the landscape for rivals including General Motors and Peugeot maker PSA Group, which recently held inconclusive talks with Fiat Chrysler (FCA), and could spur more deals.

Renault said it was studying the proposal from Italian-American FCA with interest, and considered it friendly.

Shares in both companies jumped more than 10 percent as investors welcomed the prospect of an enlarged business capable of producing more than 8.7 million vehicles a year and aiming for 5 billion euros ($5.6 billion) in annual savings.

It would rank third in the global auto industry behind Japan's Toyota and Germany's Volkswagen.

But analysts also warned of big complications, including Renault's existing alliance with Nissan, the French state's role as Renault's largest shareholder and potential opposition from politicians and workers to any cutbacks.

"The market will be careful with these synergy numbers as much has been promised before and there isn’t a single merger of equals that has ever succeeded in autos," Evercore ISI analyst Arndt Ellinghorst said.

With these sensitivities in mind, FCA proposed an all-share merger under a listed Dutch holding company. After a 2.5 billion euro dividend for existing FCA shareholders - giving a big upfront boost to the Agnelli family that controls 29 percent of FCA - investors in each firm would hold half of the new entity.

The merged group would be chaired by Agnelli family scion John Elkann, sources familiar with the talks told Reuters, while Renault chairman Jean-Dominique Senard would likely become CEO.

Renault's board will hold informal work sessions within days and likely decide next week whether to enter an agreement with FCA to proceed with merger talks, two sources said.

Italian Deputy Prime Minister Matteo Salvini welcomed the merger proposal but said Rome may need to acquire a stake, balancing France's 15 percent Renault holding - which is set to be diluted to 7.5 percent of the combined group.

A deal could also have profound repercussions for Renault's 20-year-old alliance with Nissan, already weakened by the crisis surrounding the arrest and ouster of former chairman Carlos Ghosn late last year. The Japanese carmaker has yet to comment on FCA's proposal.

In a letter to employees seen by Reuters, FCA chief executive Mike Manley cautioned a merger with Renault could take more than a year to finalize.

'BOLD DECISIONS'

A deal could help both companies address some of the shortcomings that have led their market valuations to lag major rivals, as well as the shift to electric and self-driving technologies amid tightening emissions regulations.

FCA has a highly profitable businesses in North America with its RAM trucks and Jeep brand, but lost money last quarter in Europe, where most of its plants are running below 50 percent capacity and it faces a struggle with new emissions curbs.

Renault, by contrast, was an early mover in electric cars, has relatively fuel-efficient engine technologies and a strong presence in emerging markets, but no US business.

A deal would do little, however, to address both firms' limited presence in China, the world's biggest auto market.

It would also create the challenge of managing a large number of brands, from high-end Maseratis to budget Dacias.

The huge cost of countering disruptive new entrants such as Tesla's electric cars or future autonomous vehicles from Uber and Google has pushed other automakers to collaborate, including Volkswagen and Ford.

FCA-Renault, like almost every possible automotive pairing, has been studied intermittently for years by dealmakers. But the fractious relations between Ghosn and FCA's long-standing boss Sergio Marchionne made constructive talks impossible before Marchionne's sudden death last July, banking sources said.

Renault shares were up 15 percent to 57.46 euros at 1320 GMT, while FCA's Milan-listed stock was up 11.3 percent at 12.75 euros. PSA , widely seen as an industry consolidator, was off 3 percent.

PARIS AND ROME

The French government, Renault's biggest shareholder, supports a merger with FCA in principle but will need to see more details, its main spokeswoman said.

France will be "particularly vigilant regarding employment and industrial footprint," another Paris official said, adding any deal must safeguard Renault's alliance with Nissan, which recently rebuffed a merger proposal from its partner.

Seeking to soothe concerns, FCA said the deal plans "are not predicated on plant closures, but would be achieved through more capital-efficient investment".

The carmakers have given commitments to maintain industrial jobs and sites, one source said - leaving room for white-collar and engineering layoffs as well as some plant downsizing.

Early areas for potential convergence include Renault's next electric car platform being launched at its Douai site in France, the source said, adding all of Renault's board members backed the decision to study FCA's proposal with the exception of the leftist CGT union, which abstained.

In a sign of potential future tensions, the CGT demanded the French state retained a blocking stake in any merged group.

Appealing to Nissan, which is 43.4 percent-owned by Renault, FCA said the Japanese carmaker would nominate a director to the 11-member board of the new company. Nissan and affiliate Mitsubishi would also benefit from 1 billion euros in cost and investment savings, it added.

Decision-making by such a board is unlikely to be straightforward, some analysts warned.

"We now have the French, the Italians, the Japanese and the Americans needing to find consensus on the board of a Dutch company, where the French state stands to lose its special status," Ellinghorst said.

"This requires quite a bit of creativity."

source: news.abs-cbn.com

Fiat Chrysler and Renault in talks on possible alliance

Fiat Chrysler Automobiles and the French carmaker Renault are holding discussions about a possible alliance aimed at strengthening both companies’ competitiveness in Europe and other parts of the world, a person familiar with the matter said Saturday.

The talks are still in early stages and could still collapse, but they come amid significant technological and regulatory changes that are pressuring automakers and spurring some to join forces.

Ford Motor and Volkswagen recently agreed to work together in pickup trucks and commercial vans and are in talks about combining their efforts to develop self-driving cars.

The specifics of the discussions between Fiat Chrysler and Renault were unclear on Saturday. They could potentially combine operations in Europe, where the companies compete directly in small and midsize cars. One option could be developing the underpinnings of cars jointly and manufacturing vehicles in each other’s plants, both money-saving moves. Working together could also allow both companies to close plants.

In Europe, the two companies face tighter environmental regulations that are forcing carmakers to invest billions in electric vehicles and other new technologies that cut tailpipe emissions. Both are also struggling to gain ground in China, the world’s largest auto market, and have been slower than some rivals in developing autonomous vehicles.

Renault officials declined to comment.

An alliance with Fiat Chrysler could give Renault access to the US market, where it currently has no presence. It was not clear how Nissan, Renault’s partner of nearly 20 years, would fit into a tie-up with Fiat Chrysler.

Renault needs Nissan, the dominant performer in the alliance, to continue contributing to Renault financially as the French automaker’s performance slips in Europe.

Carlos Ghosn, the former chief executive of both Renault and Nissan, had sought to tie the two companies more closely by floating the idea of a merger or the creation of a joint holding company to face stiffening market competition.

But the ties between the companies have frayed since November, when Ghosn was arrested and charged with financial wrongdoing in Japan, then ousted from his posts by both companies.


2019 New York Times News Service

source: news.abs-cbn.com

Ford, VW call off joint auto show appearance to announce alliance

DETROIT -- The Detroit auto show was abuzz over what Ford and Volkswagen would announce Tuesday, after the car giants called off a joint appearance during which they were widely expected to announce an alliance.

The two car giants have been in discussions for more than 6 months over a partnership to develop self-driving and electric technologies. But a source close to the talks told AFP that they had so far only produced a deal over commercial vehicles.

A highly-anticipated announcement at the US's premiere auto show in the Motor City was called off late Monday, and the two sides planned a conference call with reporters instead for the following morning.

"We don't have enough details yet to go out in front of more than 500 journalists, so we decided to call it off," Ford spokesman Mark Truby told AFP.

Earlier in the day, Ford Chairman Bill Ford had told reporters that discussions were going well but that they would have "more to say later this week."

Both Ford and Volkswagen CEO Herbert Diess appeared optimistic about a potential partnership.

"Volkswagen is a really big car company worldwide... but we are not as big in small commercial vehicles," Diess told the Detroit Free Press newspaper.

"So we decided to join forces there. And we will become very, very competitive together in this segment -- which consists of small commercial vans and small and midsize pickup trucks."

TRUCKS AND SPORTS CARS

Aside from the abrupt cancellation by Ford and VW, the show began as scripted, with SUVs, trucks and sports cars center stage, with extra showmanship to pump up the excitement despite fewer carmakers and more uncertainty this year.

Automakers have all but abandoned compact cars and sedans, an ever-shrinking portion of the North American market, as evidenced by what models were on display.

Trucks, SUVs and high-performance vehicles dominated the new debuts. Volkswagen was among the few exceptions with a new Passat sedan.

For the first time, Ford publicly displayed a redesigned Explorer SUV, including a hybrid version, which first debuted in Detroit on Friday.

Fiat Chrysler unveiled redesigns of larger models of its popular Ram truck.

For those looking for an alternative, carmakers were emphasizing sporty cars and nostalgic pasts -- largely eschewing the traditional sedan in favor of flashier options.

With a flair of showmanship that included virtual-reality goggles and a sports car levitating down from the ceiling, Ford revealed a high-powered version of the Mustang called the Shelby GT500 -- boasting of more than 700 horsepower.

A practically jubilant Akio Toyoda introduced a refresh of his beloved sports car Supra, which Toyota stopped producing 17 years ago.

Toyoda trotted out Spanish racecar driver Fernando Alonso to attest to the car's racing authenticity with an everyman appeal.

"It's like a race car you can drive quite comfortably every day," Alonso said during a scripted presentation.

FUTURE 'LESS POSITIVE'

Aside from VW, German carmakers abandoned the Detroit show this year, amid competition from events in New York, Miami and Las Vegas where increasingly tech-centered car announcements were presented.

Hoping to revitalize the show, organizers were holding the event for the last time in January and will move to June next year to allow for outdoor activities such as test drives.

For the industry at large, the hope was that bigger and more profitable SUVs and trucks would help weather economic storms -- whether from tariffs or fewer consumers buying cars due to rising prices, higher interest rates or a lagging world economy.

Analysts predicted slowing sales in 2019, following a decade of growth.

The Detroit show was also clouded by uncertainty in US trade policy.

Beijing and Washington remained locked in a trade war that could escalate as soon as next month, when the Commerce Department is expected to deliver a report on possible new auto tariffs.

Analysts predict rapid contraction in the auto industry should more tariffs take effect.

"Tariffs would be devastating to the entire industry," said Robert Carter, chief of Toyota's North American sales, adding that vehicle prices would increase and suppress sales.

"Not only would it affect the Toyota brand, it's going to affect every brand in the industry, every car in the industry."

The president of Chinese automaker GAC, Yu Jun, said the ongoing trade war had delayed the company's entry into the US market from 2019 to the first half of 2020.

"We have postponed our plans due to the recent development on trade. We're making steady progress towards it," Yu said, according to a company interpreter.

source: news.abs-cbn.com

Detroit auto show, and industry, prepare for transition

DETROIT -- The auto industry gathered in Detroit on Sunday, on the eve of the last winter edition of North America's premiere auto show, as carmakers grapple with a contracting market and uncertainty in the year ahead.

Concerns over the health of the global economy and a US-China trade war loomed over the North American International Auto Show, as it prepared to open Monday with the first five days dedicated to the media and industry insiders. The show opens to the general public on Jan. 19.

While a number of major announcements were expected -- including an anticipated strategic alliance between Ford and Volkswagen -- there will be fewer automakers and new car unveilings, making it more subdued.

"This is a transition year for the Detroit show," said analyst Michelle Krebs of Autotrader. "It's kind of emblematic of where the industry is. We're in a transition in the industry."

After a 10-year boom, analysts expect North American auto sales to contract in 2019, as consumers face pressures and carmakers grapple with multiple uncertainties.

Rising interest rates and car prices have squeezed car buyers, and fewer of them are able to afford increasingly pricey, technology-heavy cars.

Kelley Blue Book predicted the average new-car price was up about three percent in 2018 to more than $36,000.

TARIFFS CAUSE UNCERTAINTY

Meanwhile, tariffs on imported steel and aluminum products and a potentially intensifying trade dispute between the Donald Trump administration and Beijing has automakers spooked, analysts said.

"Tariffs already had an impact in 2018," said Cox Automotive chief analyst Jonathan Smoke, adding that 47 percent of the vehicles sold in the US in 2018 were imported.

"We believe about 2 percent of today's prices are because of the tariffs that were already implemented."

The US is considering additional tariffs of 25 percent. Should it announce such a move by the February 17 deadline, it could have a substantial impact on the industry and stock markets, Smoke said.

"We believe that they are likely to move forward with some form of that tariff, because it becomes then a lever for them to force... further negotiations."

Should tariffs raise car prices further, analysts said it could substantially depress the new car market. Consumers would flock to relatively cheaper used cars, which are in ample supply.

A growing number of lightly-used, tech-heavy vehicles leased during the sales boom of the last few years are being returned to dealerships.

The auto dealers association, which organizes the show, also was contending with the uncertainty of the show's very relevance. Almost all German carmakers abandoned the show this year, as more and more important announcements are made at other gatherings.

Next year, the Detroit show will move from January, when it has been held for some 40 years, to June.

GOODBYE WINTER

Organizers hope the summer weather will allow for outdoor events that allow attendees to try out the new cars and technologies on display.

"It's run out of gas now," said Krebs. "June could be a rebirth for the show."

Among the few notable unveilings this year will be from Ford, which is expected to display a redesigned Explorer SUV and a more powerful version of its iconic Mustang sports car under the name Shelby GT500.

SUVs and trucks will once again be the highlight, a symptom of North American consumers' shift away from sedans and small cars. Trucks and SUVs made up a majority of new purchases in the US last year.

"The SUVs have become cars with SUV bodies sitting on top of them," said Karl Brauer of Kelly Blue Book.

Detroit's big three automakers have been ending production of almost all of their sedans and small cars, succumbing to the pressure of falling demand.

To hedge against the threat of a global economic downturn, GM has announced plans to close underutilized US plants that made smaller, less profitable vehicles.

Ford planned similar cost-cutting moves in Europe.

source: news.abs-cbn.com

Toyota recalls 1.7 million more autos in North America over airbag defects

NEW YORK -- Toyota on Wednesday announced a recall of 1.7 million vehicles in North America as part of a general effort to replace defective Takata airbags tied to some 20 deaths worldwide.

The Japanese auto manufacturer did not say whether it had been notified of injuries or serious incidents related to the latest recall.

The sprawling recall concerned 4Runner SUVs from model years 2010 to 2016, Corolla sedans and Matrix hatchbacks from 2010 to 2013 and Sienna minivans from 2011 to 2014.

The recall also involves Luxury Lexus models: ES 350 sedans (2010-2012), GX 460 SUVs (2010-2017), IS 250C and IS 350C convertibles (2010-2015), IS 250 and IS 350 sedans (2010-2013) and Lexus IS-F sedans (2010-2014).

Scion XB compacts from the 2010 to 2015 model years are also involved.

Dealerships will replace either the airbag inflators or entire airbag systems.

Last week, US automaker Ford recalled 953,000 vehicles to address Takata airbag problems.

This is Toyota's third large-scale Takata-related recall in 5 months. In November, the firm recalled 1.6 million vehicles worldwide.

US authorities in 2014 exposed the Takata airbag defect, which has since resulted in a series of massive recalls concerning at least 100 million units worldwide from multiple manufacturers.

About 20 people have died in accidents linked to the defect while the number of wounded is near 300.

The US National Highway Traffic Safety Administration says the Takata matter concerns 34 million vehicles and 46 million airbags in the United States but this could rise to 70 million by the end of 2019.

Founded in 1933, Takata went of business in June 2017 because of the crisis. The company was finally acquired last April for $1.6 billion by the equipment maker Key Safety Systems, with the resulting entity renamed Joyson Safety Systems.

source: news.abs-cbn.com

For auto tech at CES, 'user experience' becomes the key

LAS VEGAS -- Technology firms tackling the challenge of autonomous driving are focusing on the "user experience" of vehicles that are increasingly becoming an extension of people's digital life.

Carmakers and tech firms are refining the systems for self-driving navigation and safety. But with full autonomy still likely years away, there is a growing interest in making cars a place to live, work, communicate and enjoy the ride.

At the Consumer Electronics Show this week, exhibitors were showcasing technology for comfort, safety, entertainment and personalization.

Byton, the China-based electric carmaker expected to launch its first vehicles late this year, showed its sedan with a 48-inch display panel, covering the width of the dash, where riders can watch movies, check messages and get other information -- although the full array of services won't be offered while someone is driving.

The Byton car will use facial recognition to customize the experience for drivers and passengers, with personalized music and recommendations.

The car would know who is inside and how long they have been traveling, and in one example cited by the company, make recommendations for restaurants along a particular route.

"The car could become the most important device in your digital life," said Carsten Breitfeld, co-founder and chief executive of Byton.

Byton will offer the potential for partial autonomy, allowing riders to focus on other things such as watching movies, shopping with a voice assistant or browsing the internet.

The vehicle will work through voice, touch, gestures or facial recognition.

"It's all about the customer experience," Carsten told a media event at the Las Vegas show, while noting that more of the enhanced features will be used when the car is in autonomous mode or stationary.

EMPATHY AND EMOTION

Gawain Morrison, co-founder of the British-based artificial intelligence startup Sensum, said the human factor was becoming more important in the automobile sector.

"A lot of the technology up to now has been about moving from point A to point B," he said.

"The next generation is about how to interact with the humans. They need an understanding about the human state at any point in the journey."

Sensum and its auto-supplier partner Valeo showed what it called "empathic mobility tech" which can measure occupants' emotional state and physiological comfort, and adjust its environmental settings accordingly.

The South Korean automaker Kia dubbed its system "'Real-time Emotion Adaptive Driving," or READ with an emotional AI-based cabin which analyzes a driver's emotional state by monitoring facial expressions, heart rate and electrodermal activity.

"The system enables continuous communication between driver and vehicle through the unspoken language of 'feeling', thereby providing an optimal, human-sense oriented space for the driver in real-time," said Albert Biermann, president and head of research for Kia parent Hyundai.

WARNINGS FOR DROWSINESS

German auto equipment maker Continental was showing its monitoring system which can detect if a driver is distracted or drowsy, in line with recommendations from the European Union.

"You may get a visual warning, or the seat will vibrate, or the steering wheel will vibrate," said Continental executive Heinz Abel. "This is part of an effort to guide your attention back to the road."

Several equipment makers were showcasing what they called the "cockpit of the future" which could be available for conventional vehicles and adapted for autonomous mode.

Visteon, a former Ford unit which makes automotive equipment, displayed its electronic control unit which integrates the driving and manages other system such as information and entertainment.

Upton Bowden, the head of new technology for Visteon, said equipment makers would be offering a "transitional cockpit" which helps people understand what is happening in autonomous mode.

"You want the occupants to trust the system," Bowden told AFP.

"When you get into an automated vehicle you have no knowledge of that system, so you have some level of discomfort."

The key to overcoming mistrust, he said, is to offer more transparency: "We can give you a real-time digital picture of what's going on by taking the data and transforming it into a graphical user experience."

Bowden said these systems could be especially useful for autonomous rideshare vehicles, allowing personalization of the experience through cloud-based technology.

"It would recognize who you were and handle payment through facial recognition," he said.

"It can instantly pair to your cloud account and bring in your favorite radio stations and other information."

source: news.abs-cbn.com