Automotive News Europe - January 2015

Knowing where its going before it gets there.

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3AUTOMOTIVE NEWS EUROPE LETTER FROM THE EDITOR

www.autonewseurope.comJANUARY 2015

Jaguars big year

Luca Ciferri is Editor at

Automotive News Europe.He can be reached at

[email protected]

Welcome to the sixth year of the Au-tomotive News Europe monthly e-magazine. We begin 2015 with a cover story dedicated to a brand on the cusp of big things: Jaguar. The once product-starved, nearly bankrupt British brand is poised to top 100,000 global sales this year and more than double that total before the end of the decade. The turn-around follows a massive investment by Indian parent Tata Motors in products, plants and underpinnings. We look at the models and maneuvers that are being made to help lead Jaguars comeback (Page 6). We also find out why Jaguar Land Rover Sales Operations Director Andy Goss believes that 2015 will be the year of the Jaguar (Page 9).

Arguably the most sought after person at any automaker this time of year is the glob-al sales boss, who is called upon to predict the future for the 12 months ahead. To get a flavor of what to expect in Europe and around the world we spoke with four sales chiefs. Along with JLRs Goss this months issue features interviews with BMWs Ian Robertson (Page 10); Porsches Bernhard Maier (Page 11) and Tesla Motors Jerome Guillen (Page 13).

To provide a counter balance to the sales bosses views we spoke to market watch-ers to find out their predictions for Europe for 2015. The good news it that the re-gion should experience its second con-secutive year of sales growth. The bad news is that the volume will be well below record levels from 2007 (Page 14).

Europes second-largest segment, vol-ume compacts, may become a victim

of its own success this year. Why? Be-cause experts believe that double-digit 2014 sales gains from young models such as the Volkswagen Golf, Toyota Auris and Peugeot 308 will be impos-sible to match, resulting in a slight dip (Page 20). While the compact segment is expected to cool in 2015, the opposite is true for Europes SUV/crossover seg-ments as a wide variety of volume and premium models will debut in 2015. Key launches include the Audi Q7, Mercedes GLE Coupe, VW Tiguan as well as all-new compact crossovers from Renault and Toyota. See a comprehensive list of this years debuts on Page 16.

We look at what Mercedes-Benz is do-ing to win back ground lost to Audi and BMW in the worlds largest car market. One idea under consideration at Mer-cedes is becoming the first luxury car-maker to launch new models in China ahead of their debuts in Europe and the U.S. (Page 17).

While Mini has been an image booster for parent BMW analysts believe the Brit-ish brand has been a money loser. BMW doesnt release financials on Mini, but it did send a clear message that profit-ability is key when it announced Minis lineup would be trimmed to five models from eight. We look at which models have a future and which models do not (Page 19).

Our Latest Launches section offers re-views of the models that will make or break Smart, the new ForTwo and For-Four (Page 22), and the newest gen-eration of Europes best-selling midsize model, the VW Passat (Page 23).

Enjoy the issue!

Luca Ciferri, Editor

Kias Rio shook up the Russian market by rising to No. 1 in monthly sales in No-vember. Its the first time that a Lada model from domestic giant AvtoVAZ has failed to finish as Russias best-seller for an individual month in more than 40 years. AvtoVAZ said

problems with suppliers temporarily slowed production, allowing the Rio to beat the Lada Granta by 314 sales, according to AEB data. The Granta still had a commanding lead over all rivals based on 11-month sales (see ta-ble, Page 39). ANE

Kia Rio rocks Russia

JANUARY 2015

39

AUTOMOTIVE NEWS EUROPE DATA

www.autonewseurope.com

AvtoVAZ ................... 30,402 36,509 17% 351,992 417,361 16%

Datsun ....................... 4,011 6,310

Infiniti ....................... 822 666 23% 7,392 7,733 4%

Nissan ........................ 15,566 14,586 7% 141,879 128,779 10%

Renault ..................... 19,170 17,721 8% 175,268 191,215 8%

RENAULT-NISSAN ...... 69,971 69,482 1% 682,841 745,088 8%

Audi .......................... 2,683 3,468 23% 31,031 33,565 8%

Seat ........................... 162 127 28% 1,486 3,221 54%

Skoda ........................ 7,604 7,390 3% 78,223 78,943 1%

Volkswagen cars ...... 11,081 12,852 14% 114,200 142,699 20%

Volkswagen vans ..... 1,042 1,298 20% 11,423 14,180 19%

VW GROUP ................ 22,572 25,135 10% 236,363 272,608 13%

KIA ............................. 20,678 17,399 19% 175,491 181,994 4%

Lexus ......................... 2,160 1,325 63% 17,661 14,294 24%

Toyota ....................... 15,952 12,093 32% 144,418 140,070 3%

TOYOTA GROUP ........ 18,112 13,418 35% 162,079 154,364 5%

Cadillac ..................... 108 126 14% 1,167 1,384 16%

Chevrolet .................. 10,545 13,576 22% 109,687 155,894 30%

Opel .......................... 5,962 5,968 0% 58,151 72,594 20%

GM ............................. 16,615 19,670 16% 169,005 229,872 27%

HYUNDAI ................... 16,154 15,539 4% 164,396 166,982 2%

MITSUBISHI ................ 7,846 7,049 11% 67,432 70,318 4%

GAZ ............................ 6,729 6,647 1% 61,472 75,014 18%

FORD .......................... 6,581 8,928 26% 56,807 94,358 40%

UAZ ............................ 5,659 4,372 29% 42,623 45,188 6%

Mercedes-Benz cars . 4,282 4,011 7% 44,955 40,211 12%

Mercedes-Benz vans 1,311 536 145% 8,106 4,447 82%

Smart ......................... 38 15 153% 328 175 87%

DAIMLER .................... 5,631 4,562 23% 53,389 44,833 19%

MAZDA ...................... 4,548 3,654 25% 43,667 38,807 13%

BMW ......................... 3,150 4,144 24% 31,927 37,888 16%

Mini ........................... 178 260 32% 1,538 2,516 39%

BMW GROUP ............. 3,328 4,404 24% 33,465 40,404 17%

Citroen ...................... 1,439 2,287 37% 17,738 26,418 33%

Peugeot .................... 1,505 2,478 39% 18,980 31,117 39%

PSA ............................. 2,944 4,765 38% 36,718 57,535 36%

SSANGYONG ............. 2,320 2,381 3% 22,599 30,787 27%

Honda ....................... 1,977 2,137 8% 18,570 22,676 18%

Acura ......................... 163 819

HONDA GROUP ......... 2,140 2,137 0% 19,389 22,676 15%

SUZUKI ....................... 2,062 1,803 14% 17,338 25,576 32%

Jaguar ....................... 123 153 20% 1,505 1,553 3%

Land Rover ............... 1,931 2,063 6% 19,078 18,809 1%

JAGUAR LAND ROVER 2,054 2,216 7% 20,583 20,362 1%

SUBARU ..................... 1,901 1,413 35% 14,923 15,177 2%

DAEWOO ................... 1,883 5,619 67% 35,355 54,633 35%

LIFAN .......................... 1,844 2,340 21% 19,753 24,285 19%

GEELY ......................... 1,603 2,186 27% 16,122 24,260 34%

Alfa Romeo .............. 6

81

Chrysler ..................... 5 6 17% 107 151 29%

Dodge ....................... 0 4

26 188 86%

Fiat ............................ 677 796 15% 6,791 7,127 5%

Jeep ........................... 745 560 33% 7,167 4,481 60%

FIAT CHRYSLER .......... 1,433 1,366 5% 14,172 11,947 19%

CHERY ........................ 1,418 1,268 12% 15,219 17,754 14%

VOLVO ....................... 1,272 1,300 2% 13,964 13,416 4%

GREAT WALL ............. 1,153 1,409 18% 14,118 18,040 22%

PORSCHE .................... 471 304 55% 4,030 3,382 19%

FAW* ......................... 325 627 48% 2,932 4,366 33%

BRILLIANCE ................ 133 650

ISUZU ......................... 112 29 286% 578 196 195%

CHANGAN .................. 94 996

HAIMA ....................... 89 50 78% 780 326 139%

BAW ........................... 52 126 59% 1,016 1,472 31%

JAC ............................. 35 384

TAGAZ ........................ 0 11 129 359 64%

LUXGEN ..................... 0 27

81 27 200%

FOTON ....................... 2 0

63 6

ZAZ ............................. 0 335 481 3,040 84%

BYD ............................ 0 3

5 105 95%

IZH .............................. 0 6

19 684 97%

VORTEX ...................... 0 15

0 1,005

BOGDAN .................... 0 64

92 1,994 95%

Total ............................ 229,764 232,059 1% 2,221,519 2,513,240 12%

*Estimate

Russia vehicle sales by manufacturer Nov. & YTD

Nov. Nov. Percent 11 mos. 11 mos. Percent

2014 2013 change

2014 2013 change

1 Kia Rio

10,834

2 Lada Granta

10,520

3 Hyundai Solaris

10,134

4 Renault Logan

7,152

5 Renault Duster

7,009

6 Lada Largus

6,311

7 Toyota RAV4

4,769

8 Lada Kalina

4,719

9 Chevrolet Niva

4,336

10 VW Polo

4,098

11 Datsun on-Do

4,011

12 Lada Priora

3,971

13 Lada 4x4

3,873

14 Mitsubishi Outlander 3,731

15 Nissan X-Trail

3,579

16 Nissan Almera

3,461

17 Renault Sandero

3,384

18 Kia Sportage

3,345

19 Hyundai ix35

3,335

20 Nissan Qashqai

3,123

21 Skoda Octavia

2,885

22 VW Tiguan

2,854

23 Skoda Rapid

2,777

24 VW Jetta

2,543

25 Kia Ceed

2,542

November 2014 Top 25 Sellers Ranking based on new car and LCV sales in Russia

Source: AEB Automobile Manufacturers Committee

1 Lada Granta

139,405

2 Hyundai Solaris 105,142

3 Kia Rio

84,350

4 Renault Duster

69,576

5 Lada Largus

60,401

6 Lada Kalina

59,403

7 Renault Logan

54,073

8 VW Polo

52,523

9 Lada Priora

42,614

10 Nissan Almera

42,220

11 Lada 4x4

38,415

12 Chevrolet Niva

36,952

13 Toyota RAV4

34,114

14 Renault Sandero 33,269

15 Skoda Octavia

33,051

16 Hyundai ix35

31,363

17 Toyota Camry

29,941

18 Nissan Qashqai

27,323

19 Kia Sportage

27,246

20 Chevrolet Cruze

27,241

21 Kia Ceed

27,206

22 Toyota Corolla

25,612

23 Mitsubishi Outlander 24,588

24 Ford Focus

24,104

25 Nissan X-Trail

22,251

11 months 2014 Top 25 Sellers Ranking based on new car and LCV sales in Russia

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Major makeover

JANUARY 20154

AUTOMOTIVE NEWS EUROPE


INSIDE THIS ISSUE


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KC CRAINGroup Publisher

EDITORIALLUCA CIFERRIEditor+39 348 274 00 [email protected]

DOUGLAS A. BOLDUCManaging Editor+49 (0) 171 424 [email protected]

PAUL McVEIGHManaging Editor+49 (0) 176 7835 [email protected]

GEORGIA CHAPMANDesign & Art Direction+49 (0) 89 5795 [email protected]

James Clark (UK), Debra Domby (U.S.), Bruce Gain (France), Nick Gibbs (UK), Christiaan Hetzner (Germany), Gabe Nelson (U.S.), Mary Raetz (U.S.), Michael Specht (Germany)Correspondents

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COVER DESIGN: Steve Massie

INSIDE THE NOVEMBER & 11-MONTH NUMBERS

3 Letter from the Editor

COVER STORY 6 The comeback cat

Why Jaguar expects a record 2015

9 Year of the JaguarSales boss bullish about brands prospects

Q&A10 Inspired

BMW moves top i3, i8 tech into wider lineup

11 Emissions free How Porsche exec became plug-in true believer

12 Style guidelines Hyundai needs a design hierarchy, top exec says

13 Tough EV market Tesla seeks solutions in fragmented Europe

AUTOMAKERS14 Good & bad news

Europe sales to keep growing, but at slower rate

16 Class of 2015 Crossover craze accelerates in Europe

17 New priorities Mercedes increases emphasis on China

18 Going green Toyota, Renault join car-sharing rush

19 SuperheroesMini expects profits from leaner lineup

20 Segment slowdownVolume compact sales forecast to dip

29 European sales by country and brandEstonia, Hungary, Spain were big monthly winners

30 European top 50 Nissan Qashqai, Peugeot 308 make solid gains

31 European sales by modelGrand Cherokee gives Jeep a big boost

36 European production by brandKia, Seat, Porsche make double-digit gains

37 Turkey salesNovember sales rise 1%; 11-month volume down 15%

LATEST LAUNCHES22 1 Smart, 2 sizes

Daimler expands small-car brand

23 Trailer trouble VW Passat targets boat owners

PEOPLE24 Procurement pros

Check out our Guide to Purchasing Executives

SUPPLIERS26 Global gains

Honeywell turbo boss sees growth for hot sector

27 Parallel battlesMichelin CEO takes on the Chinese

28 CutawaySee who has parts in the new Renault Twingo

11Porsche sales boss Bernhard Maier

39 Russia salesNovember sales fall 1%; 11-month volume down 12%

40 U.S. sales by modelVolume tops 15 million through 11 months

DECEMBER 2014

AUTOMOTIVE NEWS

EUROPE DATA

AvtoVAZ ................

... 37,788 37,48

4 1% 321,590

380,852 16%

Datsun ....................

... 1,779

2,299

Infiniti ....................

... 649 62

4 4% 6,570

7,067 7%

Nissan .....................

... 11,924 12,22

8 3% 126,313

114,193 11%

Renault ..................

... 16,664 18,41

3 10% 156,098

173,494 10%

RENAULT-NISSAN ...

... 68,804 68,74

9 % 612,870

675,606 9%

Audi .......................

... 2,624 3,11

5 16% 28,348

30,097 6%

Seat ........................

... 78 15

5 50% 1,324

3,094 57%

Skoda .....................

... 7,440 7,05

5 6% 70,619

71,553 1%

Volkswagen cars ....

.. 9,322 12,62

5 26% 103,119

129,847 21%

Volkswagen vans ...

.. 973 1,31

0 26% 10,381

12,882 19%

VW Group ..............

.... 20,437 24,2

60 16% 213,79

1 247,473 14%

KIA ..........................

... 17,392 17,60

9 1% 154,813

164,595 6%

HYUNDAI ...............

.... 15,393 15,8

34 3% 148,24

2 151,443 2%

Lexus ......................

... 1,678 1,34

7 25% 15,501

12,969 20%

Toyota ....................

... 12,877 12,83

1 % 128,466

127,977 %

TOYOTA Group ......

... 14,555 14,17

8 3% 143,967

140,946 2%

Cadillac ..................

... 110 13

4 18% 1,059

1,258 16%

Chevrolet ...............

... 9,181 14,57

6 37% 99,142

142,318 30%

Opel .......................

... 4,695 6,58

1 29% 52,189

66,626 22%

GM ..........................

... 13,986 21,29

1 34% 152,390

210,202 28%

MITSUBISHI .............

... 7,124 7,02

9 1% 59,586

63,269 6%

UAZ .........................

... 6,843 3,92

1 75% 36,964

40,816 9%

GAZ LCV ..................

... 6,563 7,49

4 12% 54,743

68,367 20%

Mercedes-Benz car

s . 4,240 4,15

7 2% 40,673

36,200 12%

Mercedes-Benz van

s 1,178 48

9 141% 6,795

3,911 74%

Smart ......................

... 30 1

4 114% 290

160 81%

DAIMLER .................

... 5,448 4,66

0 17% 47,758

40,271 19%

FORD .......................

... 5,288 7,95

6 34% 50,226

85,430 41%

MAZDA ...................

... 3,839 3,69

1 4% 39,119

35,153 11%

SSANGYONG ...........

.. 2,815 2,66

8 6% 20,279

28,406 29%

Citroen ...................

... 1,311 2,40

0 45% 16,299

24,131 33%

Peugeot .................

... 1,388 2,71

8 49% 17,475

28,639 39%

PSA ..........................

... 2,699 5,11

8 47% 33,774

52,770 36%

BMW ......................

... 2,460 4,05

2 39% 28,777

33,744 15%

MINI .......................

... 192 20

3 5% 1,360

2,256 40%

BMW Group ............

... 2,652 4,25

5 38% 30,137

36,000 16%

LIFAN .......................

... 2,067 2,62

2 21% 17,909

21,945 18%

Jaguar ....................

... 136 15

3 11% 1,382

1,400 1%

Land Rover .............

.. 1,728 1,97

2 12% 17,147

16,746 2%

JAGUAR LAND ROVE

R 1,864 2,125 1

2% 18,529 1

8,146 2%

DAEWOO ................

... 1,819 5,92

1 69% 33,472

49,014 32%

Acura ......................

... 105

656

Honda ....................

... 1,460 1,92

9 24% 16,593

20,539 19%

HONDA Group .........

.. 1,565 1,92

9 19% 17,249

20,539 16%

SUZUKI ....................

... 1,521 1,99

0 24% 15,276

23,773 36%

SUBARU ..................

... 1,430 1,36

0 5% 13,022

13,764 5%

GEELY ......................

... 1,364 2,51

3 46% 14,519

22,074 34%

Alfa Romeo ............

.. 12

75

Chrysler ..................

... 11

4 175% 102

145 30%

Dodge ....................

... 1

0 26

184 86%

Fiat .........................

... 676 70

6 4% 6,114

6,331 3%

Jeep ........................

... 654 48

3 35% 6,422

3,921 64%

FIAT CHRYSLER ......

.... 1,353 1,2

03 13% 12,73

9 10,581 20%

GREAT WALL ..........

... 1,191 1,67

7 29% 12,965

16,631 22%

CHERY .....................

... 1,184 1,61

8 27% 13,801

16,486 16%

VOLVO ....................

... 1,137 1,22

2 7% 12,692

12,116 5%

PORSCHE .................

... 480 35

2 36% 3,559

3,078 16%

FAW* ......................

... 268 51

3 48% 2,607

3,739 30%

BRILLIANCE ..............

.. 132

517

CHANGAN .................

. 117

902

BAW ........................

... 91 8

0 14% 964

1,346 28%

HAIMA ....................

... 85 3

9 118% 691

276 150%

ISUZU ......................

... 70 3

6 94% 466

167 179%

JAC ..........................

... 51

349

TAGAZ .....................

... 4

9 56% 129

348 63%

FOTON ....................

... 2

61

6

BOGDAN ................

.... 1

27 9

2 1,930 95%

BYD .........................

...

5 1

02 95%

IZH ...........................

... 3

1 19

678 97%

LUXGEN ..................

...

81

VORTEX ...................

... 6

2 9

90

ZAZ ..........................

... 33

9 481

2,705 82%

TOTAL RUSSIA .........

... 211,633 234,48

1 10% 1,991,755

2,281,181 13%

*Estimate

Russia sales by manu

facturer October &

YTD

Oct.

Oct. Percent

10 mos. 10 mos.

Percent

2014

2013 change

2014 2013 ch

ange

1 Lada Granta

16,807

2 Hyundai Solaris

10,569

3 Kia Rio

7,100

4 Lada Largus

6,561

5 Renault Logan

6,556

6 Renault Duster

5,778

7 Lada 4x4

5,158

8 Nissan Almera

4,817

9 Lada Kalina

4,804

10 VW Polo

3,867

11 Chevrolet Niva

3,741

12 Lada Priora

3,451

13 UAZ Patriot

3,428

14 Kia Sportage

3,319

15 Mitsubishi Outla

nder 3,283

16 Kia Ceed

3,252

17 Renault Sandero

3,157

18 Skoda Rapid

3,099

19 Toyota Camry

2,869

20 Skoda Octavia

2,822

21 Hyundai ix35

2,698

22 Toyota RAV4

2,599

23 VW Tiguan

2,560

24 Mazda CX-5

2,124

25 Chevrolet Cruze

2,034

October 2014 Top 25

Sellers

Ranking based on n

ew car and LCV sales

in Russia

Source: AEB Automo

bile Manufacturers C

ommittee

1 Lada Granta

128,885

2 Hyundai Solaris

95,008

3 Kia Rio

73,516

4 Renault Duster

62,567

5 Lada Kalina

54,684

6 Lada Largus

54,090

7 VW Polo

48,425

8 Renault Logan

46,921

9 Nissan Almera

38,759

10 Lada Priora

38,643

11 Lada 4x4

34,542

12 Chevrolet Niva

32,616

13 Skoda Octavia

30,166

14 Renault Sandero

29,885

15 Toyota RAV4

29,345

16 Hyundai ix35

28,028

17 Toyota Camry

27,577

18 Chevrolet Cruze

24,930

19 Kia Ceed

24,664

20 Nissan Qashqai

24,200

21 Kia Sportage

23,901

22 Toyota Corolla

23,782

23 Ford Focus

22,526

24 Mitsubishi Outla

nder 20,857

25 Opel Astra

19,623

10 months 2014 Top

25 Sellers

Ranking based on n

ew car and LCV sales

in Russia

CONTENTS

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JANUARY 20156

AUTOMOTIVE NEWS EUROPE COVER STORY


The cat comes backJaguar expects record year on huge investment in products, plants, platform

NICK [email protected]

Jaguar is poised to have a record 2015 and to keep growing global sales to well above 200,000 this decade as a massive investment in products, plants and underpinnings starts to pay divi-dends. Its a huge turnaround for the once product-starved, nearly bankrupt British brand, whose global volume slumped to less than 43,000 in 2010. Since then Jaguar has been re-invented to aggressively challenge top German ri-vals in key global segments, and it has done this with the help of executives possessing nearly a century of experi-ence at global premium car leader BMW.

Some looming questions faced by Jag-uar, however, include: How much of a financial hit it will take from entering the highly competitive midsize segment and the price-sensitive fleet market? Can it make a noticeable dent in the huge global sales lead of its much larger, rich-er German rivals, especially in markets such as China where it is barely known?

PhenomenalJaguars revival begins in May with the arrival of the XE, which gives it a long-awaited midsize model to battle the BMW 3 series, Mercedes-Benz C class and Audi A4. The XE also is the first of many fresh Jaguars that will be underpinned by the automakers new lightweight alu-

minum platform. Jaguar Land Rover has poured 2 billion pounds (2.5 billion euros) into developing this platform along with a new range of fuel-efficient engines. Much of the bill has been paid for by profits earned from unprecedented global de-mand for Land Rovers SUVs.

The platform will also yield a replace-ment for the XF large premium model, which is expected later this year, and Jag-uars first SUV, due to be unveiled at this months Detroit auto show ahead of its 2016 sales start. When the SUV arrives, four out of five cars in Jaguars range will be less than 3 years old. Weve invested a significant amount of money in Jaguar and weve got a phenomenal model ca-dence going forward, starting with the XE, JLR Sales Operations Director Andy Goss told Automotive News Europe.

Missed targetThe British marque, which turns 80 this year, has been problematic both for JLRs previous owner, Ford, and Indias Tata Motors, which bought Jaguar and Land Rover from the U.S. automaker in 2008. A decade before the sale former Jaguar boss Nick Scheele promised he would quadruple sales to 200,000 in four years, led by a BMW 3-series fighter named the X-Type.

The big leap never happened. After reaching a global sales high of 103,300 in 2002, Jaguars total fell to the low

40,000s in 2010. The X-Type was such a financial disaster that Bernstein Re-search analyst Max Warburton esti-mates Jaguar lost 1.7 billion euros on the car, or 4,687 euros per model sold during the Ford Mondeo-based flops nine-year life cycle.

Jaguar has pulled out of that finan-cial sinkhole. Sales are expected to top 112,000 this year after surpassing 80,000 in 2014. Thats still tiny com-pared with Land Rover -- last year Jag-uar sales accounted for just one-fifth of JLRs overall total. However, the ad-dition of the XE and subsequent models such as the midsize SUV and a compact SUV that is expected to arrive in 2017 will push Jaguar sales past 200,000 by 2018, according an IHS Automotive forecast (see graphic, Page 7).

JLR declined to provide a sales forecast for Jaguar for this story, but the com-pany recently broke its silence on its overall volume goal, which is to double current JLR sales to 850,000 by 2020. Of that we see a more representative split for Jaguar to reflect market oppor-tunity, JLR Global Fleet Director Ken Forbes told Automotive News Europe.

BMW influenceJLR executives say they have learned from past mistakes and this time Jaguar will succeed. They give two key reasons for their bullishness: 1) the automaker

Jaguar is counting on models such as the XE (shown) and a pair of forthcoming crossovers to more than double global sales by 2020.

JANUARY 2015 7



has had much more freedom to develop than it ever did under Ford and 2) it has a much deeper understanding of what has made its German premium rivals so suc-cessful.

Many of JLRs directors have worked for BMW, starting with CEO Ralf Speth, who spent 20 years with the worlds No. 1 maker of premium vehicles. JLR head of r&d Wolfgang Epple worked at BMW for 24 years while engineering director Wolf-gang Ziebart worked there for 23 years. In December 2013, JLR appointed the head of BMWs Dingolfing, Germany, plant, Wolfgang Stadler, as its manufacturing director. He arrived at JLR with three de-cades of BMW knowledge.

When it comes to differences compared with the Ford days, Ziebart said one prime example is the XE, which he believes Jag-uars previous owner would have deemed too expensive to make. This car is much more advanced than the rivals. Ford management would have died if we had proposed such a car [or] they would have just killed us, Ziebart said.

The car is benchmarked mainly against the 3 series in terms of dynamic per-formance, a key driver of sales in the midsize premium segment, especially among European buyers. The body is 75 percent aluminum to save weight and like the 3 series the XE has a rear-wheel-drive configuration. The XEs integral link rear suspension is built on a sepa-rate subframe, something that is usually only found in the more expensive class above. Said Ziebart: Integral link is a BMW expression. Its a very, very stiff suspension that gives you very precise road-handling.

The XE investment also includes a range of four-cylinder diesel and gasoline en-gines built at JLRs new UK plant. Jaguar says the XEs 163-hp 2.0-liter diesel of-fers CO2 emissions as low as 99 grams per kilometer, making it the first car in the midsize premium segment to qualify for tax breaks available in many Europe-an countries given to owners of cars that produce less than 100g/km of CO2.

Cheapest JaguarAs JLRs cheapest model, the XE could end up hurting the companys currently im-pressive profit margins, especially as the car is a core part of Jaguars push into the

price-conscious fleet market. The legiti-macy of the volume car side of [Jaguars] business is still unclear, a report from UBS Global Research said earlier this year. Investment in the platform, however, will pay off as more expensive models start to use the underpinnings, analysts believe. The new platform, code-named D7A, will be used on the bulk of Jaguars range, in-cluding the midsize and compact SUVs, the XF and, much later, the XJ upper pre-mium sedan, according to IHS Automotive research. Only the F-Type sports car family isnt slated to use it.

JLR also has confirmed that Land Rover will use the platform, which is expected to underpin a model above the Range Rover Evoque compact SUV called the Grand Evoque, according to UK media reports. How do you make a small Jaguar prof-itable? Answer: You brand it as a Range Rover, Bernsteins Warburton wrote in a report on JLR in 2013. IHS estimates the D7A-based Evoque will account for global sales of about 50,000 a year following its expected launch in 2017.

Further XE variants, such as a wagon version, also are expected. Jaguars head of advanced design, Julian Thom-son, told Automotive News Europe at the

launch of the SUV concept in 2013 that the design team had developed between 20 and 30 vehicles to make sure the platform suited them all. We want lots and lots of products and we want all the incremental products as well, he said. JLR has said it will launch 50 models or updates in the next five years, and says it will have spent 3.5 billion pounds on new products and facilities in the finan-cial year ending March 2015.

Increased sharing JLR is counting on cost-saving syner-gies between Jaguar and Land Rover to win back some of its investment. As we bring the brands together we get a bigger volume in terms of economies of scale, JLR r&d boss Epple told Automo-tive News Europe. He said that instead of saving tens of thousands through com-bined procurement the sister brands could achieve savings of hundreds of thousands -- and that puts us on par with other OEMs. Technology is also shared. If we develop a system, we now do it independently of the product its going into, Epple said. That way the market-ing team can assesses the potential sales opportunities for the technology in all JLR models.

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Massive increaseJaguar global sales and forecast 2008-2020 (in 000s)

Sources: Company (2008-2013); IHS Automotive (2014-2020)

JANUARY 20158



Now that driving characteristics are con-trolled more by software, the differences between the sporting aspirations of Jag-uar and the off-road ability of Land Rovers arent as far apart in terms of hardware as they had been, he said. The number of platforms within JLR will be reduced to just three or four as legacy architectures from the Ford days are dropped or over-hauled. We would never go back to one platform, one car, Epple said.

The new engine plant reduces JLRs re-liance on Ford units, which gives the automaker more flexibility to increase its output, JLR fleet boss Forbes said. If demand goes up sometimes we cant increase our engine rate, he said. UBS was critical of JLRs decision to go it alone however. We are concerned about the buildup of an in-house engine-building capability. External sourcing would free up resources to invest in al-ternative powertrains, it said. JLR has a huge challenge to reduce average CO2 output in Europe from 180g/km now to 132g/km by 2021. Warburton at Bern-stein wrote in 2013 that the company might need to spend $1.1 billion annu-ally by 2020 to reach its target.

More capacityJLR executives say that Jaguar will ben-efit from the companys global manufac-turing expansion. At last years opening of JLRs new factory in Changshu, Chi-na, Speth confirmed a Jaguar would be made there alongside models from Land

Rover. Forbes said the first model would be the XE. Aside from low-volume kit as-sembly in India, this will be the first time a Jaguar has been built outside the UK.

The China factory will reach its produc-tion capacity of 130,000 by 2016, ac-cording to the company, and the XEs inclusion would help boost Jaguars Chi-na sales significantly from a predicted 20,000 this year. JLR sales chief Goss thinks that China could have overtaken the U.S. and UK as Jaguars biggest-sin-gle market in 2014. As recent as 2011, China was a distant third for Jaguar. Our spearhead vehicle for China is the XE. We think it could make significant in-roads, Goss said.

A growth opportunity that Jaguar sees in China is fleet sales. Today, Chinese buyers are mainly private customers, but JLR is targeting a small-but-growing premium business market that accounts for 186,000 sales annually. Overall, JLR wants global fleet sales to account for 25 percent of its volume by 2020, up from 16 percent now, and Jaguar is ex-pected to lead that growth because of its sedans. The XE and XF are our center of gravity -- they are fundamental to the success of JLRs fleet business, Forbes said, conceding that JLR has been weak in this area of the business. We have been overly reliant on the retail sector, he said. Fleets will help us de-risk our business. The reason fleet business is considered to be good is that companies generally continue to renew vehicles

even during a global downturn, whereas individuals will not. Both fleet growth and retail sales will be helped by an in-crease in dealerships JLR said it aims to boost its network to 3,300 outlets by 2020 from 2,600 now. The vast majority will combine the two brands, Goss said.

Margin declineSince 2008, JLR has gone from being more or less bankrupt, Speth said, to delivering profits of more than 1 billion pounds. Bernsteins Warburton, howev-er, believes the days of 20 percent mar-gins are over.

We take the view that margins have probably passed peak, he wrote in a report in November. JLRs EBITDA mar-gin fell to 19.4 percent in the second quarter of its 2014 fiscal year from 20.3 percent during the same period in 2013. Warburton sees the decline con-tinuing as the company launches new models at lower prices than big-earners such as the Range Rover and Range Rov-er Sport. The move down market with Jaguar and the life cycle of Range Rover means we think margins will now begin a gentle decline, he concluded.

Jaguar hopes that the XE will do for it what Range Rovers have done for Land Rover, which is provide a model custom-ers have to have regardless of the wait or the cost. Said Ziebart: Its not a sober car, like an A4. This is a car that creates some emotions. We hope it will persuade people to spend more money. ANE

Thank you, Munich! Jaguar Land Rovers upper ranks include 4 longtime BMW execs

Ralf SpethCEOYears at BMW: 20

Wolfgang ZiebartEngineering bossYears at BMW: 23

Wolfgang EppleR&D bossYears at BMW: 24

Wolfgang StadlerManufacturing bossYears at BMW: 30

JANUARY 2015 9



Fast-growing UK brands sales boss sees gains from fleet market, China

Year of the JaguarQAAfter years of weak sales because of its aging products, Jaguar is poised for a surge this year following the arrival of its new XE midsize sedan and updat-ed large premium XF. The brands first crossovers will follow as Jaguar acceler-ates its efforts to increase sales to busi-ness customers and win buyers from BMW, Audi and Mercedes-Benz. Jaguar Land Rovers global head of sales, Andy Goss, spoke about the challenges ahead with Automotive News Europe Corre-spondent Nick Gibbs.

What is the scale of opportunity for Jaguar this year?Jaguar comes back as a tour de force in 2015. Its the year of the Jaguar. We have invested a significant amount of money and we have a phenomenal model ca-dence going forward, starting with the XE. The Jaguar brand also spearheads Jaguar Land Rovers real entry into the corporate market. We have been retail based, so our first goal is to get a similar share in the corporate market as in the retail market.

Jaguar Land Rover aims to double ve-hicle sales to 850,000 by 2020. What percentage will be Jaguars? It will not be half but it will be a signifi-cant increase. Jaguar has massive head-room for growth. We have been selling 70,000 to 80,000 vehicles a year in the past couple of years. Now we are mov-ing into white-space areas of the market with the XE taking on the BMW 3 series, Audi A4 and Mercedes C class. Other ve-hicles will follow.

The F-Type sports car is a low-volume model. Has it helped Jaguar? Previously, people had a different, older image of Jaguar. When people think about Jaguar now, they think about the F-Type. It has provided an emotional fulcrum. That has been more important than the volume of F-Types sold, and it is also a massive support for the new XE, whose buyers will be making a deci-sion on image and emotion as well as cost of ownership.

Jaguar is a challenger brand to the Germans. Can that be an advantage?Jaguars volume is substantially less than theirs so clearly we have to chal-lenge the established order the way Audi had to do with BMW and Mercedes not so long ago. We are creating clear differ-entiation for people to buy Jaguar over one of the German brands, which look myopically at each other rather than anyone else.

Where do you follow the Germans and where do you differentiate?The German brands are slicing and dicing the marketplace by using existing plat-forms to find new niches to create vol-ume. We do not have to look at the prolif-eration of our product range, instead we are launching full product ranges where we have not existed before. The custom-

er does not care about any of that. What the customer wants to know is why to choose a Jaguar versus an Audi or BMW.

What are the headwinds?For a BMW 3-series owner to consider us, they want to understand what they are buying into. We have to make sure brand experience is consistent the world over. The German brands have this con-sistency. We are trying to achieve that, but also with a key point of difference. We want to justify customers decisions for them -- to make sure they are happy and turn them into advocates.

Will the X-Types failure hurt?Nobody outside media interviews men-tions the X-Type to me. Its an irrele-vance in the same way that nobody talks about past Audi problems in the U.S. Life has moved on considerably over the past eight to nine years.

Will Jaguar have interesting dealer-ship innovations such as we have seen from Audi, BMW and Mercedes?We are rolling out a new corporate deal-ership architecture globally. We are bringing the two brands, Jaguar and Land Rover, together in one common owner-ship by 2018 in every sales territory. We want the customer to walk through the door of a Jaguar Land Rover retail-er and see a proliferation of products: small, medium, large SUVs, crossovers, sports cars and sedans. Once the buyer is in that family we can migrate them throughout the product range. There will be flagship sites in addition to that.

What will make the flagship dealer-ships a unique experience?It will be a brand experience on steroids. People want to go to a destination, something that has more than the local retailers in terms of the technologies, the type of products and the experienc-es you can buy into. Clearly capital cities are important, not for just the population living there but also for people visiting who just want to see what Jaguar Land Rover is all about. ANE

Meet the sales boss NAME: Andy Goss

TITLE: Jaguar Land Rover Sales Operations Director

AGE: 57

MAIN CHALLENGE: To convince buyers to switch from German pre-mium brands to Jaguars fresh lineup.

JANUARY 201510

AUTOMOTIVE NEWS EUROPE Q&A


BMW quickly moves top technology from i3 and i8 into mainstream models

Inspired QABMW wants its mainstream models to benefit quickly from the cutting-edge technology offered in its i3 and i8, such as carbon fiber construction and high-performance, low-CO2 powertrains. BMW brand sales boss Ian Robertson ex-plained the companys strategy to Auto-motive News Europe Editor Luca Ciferri.

Will your next i model be a fuel cell called the i5, as media reports say.There is no other specific i product signed off for production. We are, how-ever, spreading some of the technology from our i models into our more main-stream cars. For example, next-genera-tion cars that are coming soon will make more extensive use of carbon fiber. They will not have full carbon fiber structures, but they are going to have carbon fiber in the structure of the passenger com-partment, in suspension components and so on.

The i8 plug-in hybrid supercar soon will be joined by plug-in variants of the 3 series and X5. Which other models will have plug-in variants?Plug-in hybrid technology is so flex-ible that it can be integrated in a wide variety of vehicles so there is clearly more to come. What is important is that the plug-in technology will be one of the key levers to bringing high-performance vehicles well below 100 grams per kilometer of CO2, while re-taining the driving pleasure and driving dynamics of a BMW.

Audi charges a premium of up to 13,000 euros on its A3 plug-in com-pared with the base gasoline model. Mercedes has priced the V-6 plug-in S class at nearly the same level as its V-8 gasoline model. What will be BMWs pricing strategy for plug-ins?We always start our projects by asking ourselves what we think the price point in the marketplace is and the price point has narrow elasticity. One of the challenges with the hybrids on the mar-ket today is that the consumer has said OK, it is very interesting, but actually, I

quite like my diesel engine, and there is not a lot of difference in terms of CO2.

I think the advent of the plug-ins is changing this perception, because here you can really drive for a good period of time in full-electric mode and at a good speed. However we are not in an indus-try where price is determined by cost-plus. You can maybe do that with mili-tary hardware, but not the automotive industry. So it always starts with where we think the price point needs to be. If you add an electric motor onto a smaller engine you generally get the output of a bigger engine and therefore you estab-lish a pricing framework.

When does BMW see electric cars costing about the same as a model with an internal combustion engine?It depends on when we reach the point where the additional costs of keeping the internal combustion engine within the legislative framework equal or ex-ceed the costs of a battery-powered vehicle. First, the electric motor is at a very early stage in development, and the batteries will see significant steps for-ward in the next few years. I think we will soon see electrification costs for the customer come down and thats a curve that were on.

At the same time, if you look at the need to put SCR [selective catalytic reduction] technology on a wide range of engines to make them compliant with Euro 6 emissions rules, you are not only add-ing a lot of cost, but, just as important, a lot of weight. At some point the elec-tric motor and the battery could be more efficient and potentially cheaper. We do not know today where that crosses over, and I dont think the industry really knows yet. However, there definitely is a trend in that direction.

What percentage of i3 buyers add a gasoline-powered range extender?About half. Many customers would like to have the range extender, but in some countries, legislation steers them to-ward pure battery power. In the UK we

have a majority of range extenders. In Norway we have virtually none because range-extended vehicles do not qualify for all the incentives given to pure BEVs [battery-electric vehicles]. Overall, I would say the mix is more regulation driven than customer driven.

Is it correct to call an i3 with a range extender a plug-in hybrid?It is not. It is a battery-powered vehicle where only the electric motor powers the wheels. ANE

Meet the sales boss NAME: Ian Robertson

TITLE: Board Member for BMW brand Sales & Marketing

AGE: 56

MAIN CHALLENGE: Determining the correct price point for BMWs growing lineup of plug-in hybrids.

JANUARY 2015 11



Porsches sales boss bullish on plug-in hybrids

Emissions free QAPorsche sales boss Bernhard Maier commutes daily to company head-quarters near Stuttgart using either a Porsche Cayenne plug-in hybrid or a Pan-amera with the low-CO2 powertrain. Re-gardless of the vehicle he uses, his goal is the same, to travel the 45km to work and the 45km home emissions free. Thats a big mindset shift for the sports car mak-er. Maier shared his views on the future of plug-ins at Porsche with Automotive News Europe Editor Luca Ciferri.

You use a Porsche plug-in hybrid for your daily commute. How do you get additional full-electric kilometers out of the battery?The Panamera and Cayenne are homolo-gated in the European NEDC cycle for 35km in pure battery mode, but by coast-ing into the traffic and recuperating en-ergy during braking you can drive emis-sions free a bit further. Depending on the traffic and the route I take, I drive 40km to 45km per trip. Most of the times I man-age to use only electric power.

Are you a true believer of plug-ins? Absolutely. People are beginning to under-stand that with a plug-in hybrid they have the ability to be totally flexible [in terms of range and performance] while having their own filling station for electricity at home or at the office, which is really convenient. You do not need to drive anywhere to get your battery filled. It happens at home, while you are sleeping.

How are customers reacting to Porsches plug-ins?On the Panamera we are already at 10 percent of global demand, while the Cay-enne was just introduced. In general, we see more potential in markets where authorities or governments subsidize models that reduce pollution, because having the best of two worlds inside one car is a little bit more expensive. When a government wants to convince inhab-itants that reducing pollution is a really important issue, and offers adequate in-centives, electrified vehicles could grow to market shares up to 50 percent.

When will there be a plug-in hybrid version of the 911?We have a lot of ideas, but we have not approved them for production yet. The 918 Spyder shows that Porsche has the capability to produce very convincing hy-brid sports cars.

What about fuel cells?Technically, they are a very interesting solution, but questions about the tech-nology go beyond how to develop a fuel station infrastructure, which, by the way, wont be quick or easy. The real issue is how can hydrogen be produced with a compelling well-to-wheel balance.

Porsche is near a sales balance of one-third of its volume in Europe, North America and Asia. What will the model split be in the three regions?In mature markets we have a higher share of two-door sports cars in com-parison to those countries that we call fast-growing markets. This is normal. In markets where individual mobility is still at a very low level, you need a car that can fit to a lot of different circumstanc-es. This is why the Cayenne and Pana-mera are the favorite choices in China. In fast-growing markets the sports car segment has not reached the share it has in Germany or the United States, but it is picking up quickly. What is impor-tant for Porsche is to have a dominant position in the sports car segment ev-erywhere. This segment in China is still small in absolute terms, but we have a share slightly higher than 50 percent, so we are in good shape.

When does a market reach the point that its mature enough to make sports cars a more viable purchase?In broader terms, when affluent buyers have met their requirements for a four-door sedan and an SUV. If they still have the space and the money for a third car, then they get a sports car.

So the 911 is a third car for most Porsche customers?We do not have many customers who

only drive the 911. The average 911 cus-tomer owns another 2.6 cars.

The Macan is off a good start. Do you need to expand production beyond the 50,000-unit installed capacity you have in Leipzig?

If we can build some more, we are really happy to do so. Nevertheless, our busi-ness principle is to balance demand and supply so that we build one car less than the market is able to absorb. Currently we have a waiting list of approximately six months for the Macan, which is a very healthy situation.

Porsche closed 2014 with a new sales record. What do you expect this year?

Further growth in line with what was de-fined in the Strategy 2018 plan. ANE

Meet the sales boss NAME: Bernhard Maier

TITLE: Porsche Board Member for Sales & Marketing

AGE: 55

MAIN CHALLENGE: Expanding plug-in hybrid lineup to help the brand reduce emissions without sacrificing performance.

JANUARY 201512



Hyundai needs a design hierarchy, top exec Schreyer says

Style guidelinesQAHyundai Motor Group President Peter Schreyer gave Kia a fresh, familywide look after being hired from Volkswagen Group in 2006. Now hes doing the same for Hyundai, for which he took design re-sponsibility in 2012. Schreyer wants to give Hyundai the equivalent of Kias tiger nose grille so all of the brands vehicles have a familiar face. The hardest part may be keeping the Genesis and Equus luxury cars in the family while signaling their premium nature. Schreyer discussed his approach with Gabe Nelson, who is a staff reporter at Automotive News Europe sister publication Automotive News.

When you sketch, what inspires you? Of course, I like to look at cars. When I drive on the autobahn in Germany or on a U.S. freeway I look at cars I see that look different in a different environment. But I think for us designers, it is impor-tant to not only look at cars, but to be interested in architecture, in art, even in music, in sports equipment, industrial design -- all sorts of things -- because in fashion they are influencing us and we are influencing them.

Sports equipment? We have made show cars with neoprene seat coverings so you can spray it [with water] when its dirty, or whatever. Things like that. Even for switches, the click mechanism may be like when you have gear shifting on a mountain bike.

You designed Kias tiger nose grille. Will all Hyundai products get the hex-agonal grille that appears on the re-designed Genesis? The Genesis is almost like a brand on its own. So the challenge for us will be to make a kind of hierarchy between the products, so you can recognize which segment that car is, somehow. So the Genesis is on the higher end, and the Equus is above -- almost like a luxury brand within the Hyundai brand. I think we cannot do it like some others, just put the identical grille on every car. There needs to be a little bit of room to play, to differentiate.

Which brands do it well? If you take the traditional German companies like Mercedes, BMW, Audi, Porsche -- they developed their own style and stuck with it. Audi developed it later, but BMW and Mercedes have very, very, very long traditions. They keep evolving it and improving it, so its changing over the years. This is where we need to get, in a shorter time.

Some critics argue the look of the redesigned Hyundai Sonata/i40 is hurting sales. The last generation was daring. This one is more conser-vative. Was it a mistake? I think it is a very substantial -- serious is not the right word -- a very substantial design. The old Sonata was a bit extreme in a way, one that I quite liked as well. I think it depends a bit on the customer that we want to approach.

What do you mean by substantial?

Not risky. Its very well balanced and worked out. When you see it on the street, I think its a very clean-looking, good car. And I think its also good that compared to the [Kia] Optima, it is a dif-ferent animal -- approaching a different kind of customer, so we dont fish in the same waters.

The Soul has Kias most iconic de-sign. In the U.S., how has that vehi-cle avoided the fate of the Chrysler PT Cruiser and the Volkswagen New Beetle, which were incredibly popu-lar at first and then faded? I dont know. Maybe were just lucky. We were surprised. The natural curve of every car is that the sales go up and then fade. The Soul was the only car Ive experienced where it went up and then still grew. I think in a way it shows that if were a little bit daring and dont always do something thats in the middle of the road, sometimes it pays off. Sometimes it works. ANE

NAME: Peter Schreyer

TITLE: Hyundai Motor Group President

AGE: 61

MAIN CHALLENGE: Providing Hyun-dai design continuity while leaving room to differentiate the brands top-of-the-line models from the rest of the family.

Meet the design boss

JANUARY 2015 13



Tesla seeks solutions in fragmented Europe

Tough EV marketQATesla Motors expects Europe to play a big part in its bid to reach an an-nualized production rate of 100,000 ve-hicles by the end of 2015, up more than threefold from last year. The challenge in Europe is the widely varying degree of support provided by governments to help promote electric vehicles such as Teslas Model S. The electric carmakers global sales boss, Jerome Guillen, dis-cussed what the company is doing to be-come a key player in sustainable trans-portation with Automotive News Europe Correspondent Bruce Gain.

How is Teslas approach to Europe different than in the U.S.? Its a lot easier to set up shop in the U.S. In Europe we have to comply with a lot of different rules in different countries and create different kinds of networks. There are different languages and other regional things to deal with, which is the main difference. Europe is a more frag-mented market than the U.S.

What are your ambitions in Europe?Our overall goal is to accelerate the tran-sition to sustainable transportation. We obviously want to be present in Europe. There are many different countries and rules to comply with, so we are putting in place the right infrastructure in every country to help with our growth. We are happy with the status quo of some coun-tries where we are present, especially in Norway. In other countries we still have some things to put into place. This includes dealerships, service centers, superchargers to enable long-distance driving and also the right partnerships for financial products and insurance.

Which European countries are lead-ers in creating an EV infrastructure and which ones still have work to do? We are a small company so we havent had a chance to develop a presence in all countries in the same way. We gave preference [to countries] where we al-ready had the most demand. Norway was a good starting point. The Nether-lands, Switzerland, Belgium, Denmark

and Sweden are also countries where were doing extremely well. We already have the infrastructure in place in those countries thanks to our superchargers. In some markets we are putting the in-frastructure in place so that people can try the car and then adopt it.

How crucial is a test drive to convinc-ing a potential customer that your models are as viable as car with an internal combustion engine?Thats the key factor. We can describe what it is like to have an electric car, but at the end of the day the best way is to really experience it for yourself. You need to see how smooth it is to drive, how quiet it is and how there is really no trouble with charging or range. People are nervous about it, which I understand, but there is no reason for it.

How important is the availability of public charging stations to the growth of EVs in Europe? I think that 98 percent of all charging is done at home so we need to realize that people tend to drive or to travel near their homes. The beauty of electric ve-hicles is that you charge them at night, so that when you get up youre electric vehicle is already charged. Its much bet-ter than a gasoline-powered car in this respect. For those long-distance trips, there are many parking areas in coun-tries in Europe where there are charg-ing stations. Additionally, to further facilitate long-distance driving, Tesla is developing a network of supercharg-ers, which are faster than anything else out there. Weve built about 70 of those stations around Europe. They let you charge [enough to travel] 300km in 20 to 30 minutes, depending on how full the battery is when you start charging. But while you do not need the supercharger to travel long distances, it just makes it that much easier.

What is slowing EV growth in Europe?Its a new technology so there are many misconceptions. Whether they buy a Nis-san Leaf or some other vehicle, it kind of

doesnt matter in the end. We still have to educate the public about how conve-nient electric is and how its not a hurdle to have an electric car. I think the big-gest hindrance is the lack of knowledge.

What else can European govern-ments do to promote EV adoption? Governments can accelerate the transi-tion to sustainable transportation, which will happen no matter what. Were going to eventually run out of oil. Its a finite supply so any effort to accelerate that transition will be welcome. There are some governments that are more proac-tive. In France, for example, the govern-ment offers generous incentives that can be applied to the price of an EV. The tran-sition will happen, but its a matter of how fast governments can facilitate it. ANE

Meet the sales boss NAME: Jerome Guillen

TITLE: Tesla Worldwide Vice President of Sales & Service

AGE: 42

MAIN CHALLENGE: Building up a Europewide network of dealerships, service centers and publically available superchargers.

JANUARY 201514

AUTOMOTIVE NEWS EUROPE AUTOMAKERS


Good news, bad newsEurope sales growth forecast to continue, but at slower rate than last year

CHRISTIAAN [email protected]

The good news for 2015 is that Eu-ropes carmakers can look forward to another year of sales growth, but while it may statistically qualify as a gradual recovery, it certainly wont feel like one. With the average age of vehicles on Euro-pean roads increasing, pent-up replace-ment demand should eventually prompt a more robust upswing after 2013 sales dropped to levels not seen in Europe for two decades.

Analysts, however, expect this years rate of increase to be 2 percent to 3 per-cent compared with last years 5 percent rise. Industry watchers see sales slowing

back down to a crawl before ever hav-ing really taken off last year as geopoliti-cal risks in Russia and the Middle East derailed a fledgling recovery in the euro area. Commodities that closely track the economic cycle are also pointing lower, with prices for crude oil recently hitting five-year lows. Big shifts in the market such as the rising cost of car ownership and a preference for car sharing among younger drivers could prevent volumes from reaching previous highs seen dur-ing the debt-fueled bubble of 2007.

No tailwinds The head of sales at money-losing Gen-eral Motors subsidiary Opel -- itself wholly

dependent on the hypercompetitive Eu-ropean market -- sees little reason to be-lieve that economic tailwinds will provide additional support to its turnaround.

Europes car market remains difficult de-spite the slight recovery in 2014. While some important markets are showing a slight upward trend, other large ones con-tinue to be weak, Opels Peter Christian Kuespert said in an emailed statement to Automotive News Europe. Bottom line, the situation in Europe overall will scarce-ly be different in 2015.

Forward indicators that track business sentiment in Europe fell to one-and-a-half-year lows in November, while con-sumer confidence has been on the de-

Opel believes it will grow faster than the overall European market this year because of models such as the new Corsa.

What a bargain Discounts on volume brands in key European markets based on % off retail price in December

Germany1. Citroen 262. Fiat 243. Opel 234. Hyundai 194. Renault 196. Ford 176. Peugeot 178. VW 14Market average 20

UK1. Citroen 232. Peugeot 193. Ford 174. Fiat 165. Renault 155. Vauxhall 157. Hyundai 138. VW 12Market average 16

France1. Opel 252. Citroen 232. Hyundai 234. Ford 225. Fiat 215. Renault 217. Peugeot 158. VW 149. Dacia 3Market average 21

Source: Barclays

JANUARY 2015 15



cline since June. Chris Williamson, chief economist at Markit, which publishes the purchasing manager index for Eu-rope, said the conflict with Russia over the Crimean peninsula served as a cata-lyst to stifle demand in its infancy.

Last month the European Central Bank slashed its forecasts for economic activ-ity in the euro zone, currently estimat-ing an expansion of just 1 percent, down from its September estimate of 1.6 per-cent. Amid a darkening outlook and dou-ble-digit unemployment, consumers lack the confidence to buy a new car, typical-ly a persons single-biggest expenditure after the purchase of a home.

Mixed marketsIn addition, concerns are starting to shift from the so-called euro zone periphery to the core countries that had largely escaped the wrath of bond markets. Germany barely grew in the third quar-ter of 2014, while Frances fiscal deficit

continues to widen as government debt increases faster than output. Holland, Belgium and Austria -- all perceived as financially sound by creditors -- are also going through tough times.

Making matters worse, carmakers can no longer expect the UK to be the en-gine of growth it has been in the past two years as volumes bump up against its historic high.

Great Britain reached its pre-crisis lev-el and hardly has upside potential. We expect only slight growth in Italy and France while we forecast stagnation for Germany, Matthias Wissmann, president of the German auto industry association (VDA), said last month, blaming political risks for carmakers problems. Much of it depends on the decisiveness of policy-makers in Berlin and Brussels, whether Germany and Europe can improve its competitiveness.

By comparison, Spain has picked up again because of its car scrapping

scheme, which allows eligible people to get a 2,000 euro subsidy financed equal-ly by the state and carmakers.

Italy remains the outlier, growing only tepidly despite decade-low market vol-umes and a large vehicle park in need of replacement.

Even if we look out to the end of the de-cade, were not expecting Italy as a mar-ket to recover to the 2.5 million [sales]in 2007, but -- due to how weak it cur-rently is -- there is scope for fairly rapid growth, said Jonathon Poskitt from market researcher LMC Automotive.

Regardless of the overall market prob-lems, Opels Kuespert sees reason to believe his company can buck the trend. Were optimistic as far as our own development is concerned since we are currently in the biggest product of-fensive of our history, which will really gather speed this year, he said. The new Corsa and the Karl will provide us a further boost. ANE

500

1,000

1,500

2,000

2,500

3,000

15,000

2013 2014 2015 2016 2017 2018 2019 2020 2021

Total EU & EFTA

Key:

Spain

Italy

France

UK

Germany

Making a comebackEuropes vehicle sales are expected to nearly reach 14.8 million in 2021; forecast for total Europe and the 5 major markets (in 000s)

2013 2014 2015 2016 2017 2018 2019 2020 2021EU + EFTA 12,363,590 12,987,556 13,296,646 13,640,535 14,016,343 14,338,611 14,634,070 14,772,985 14,791,065Germany 2,955,534 3,021,282 3,099,515 3,179,898 3,202,888 3,204,718 3,224,603 3,209,036 3,215,449UK 2,264,595 2,458,966 2,493,058 2,413,177 2,342,745 2,392,391 2,387,877 2,362,524 2,329,801France 1,790,469 1,826,243 1,892,441 1,928,328 2,003,545 1,985,643 2,010,244 1,997,957 2,034,015Italy 1,311,285 1,363,680 1,424,328 1,599,235 1,748,222 1,800,844 1,886,249 1,900,542 1,861,315Spain 722,780 835,588 852,364 898,232 971,136 1,104,365 1,185,642 1,228,202 1,213,135

Source: IHS Automotive

JANUARY 201516



Class of 2015Automakers ready new crossovers


Automakers selling cars in Europe will accelerate their expan-sion into SUV/crossover segments in 2015. Key launches this year include Audis Q7 premium large SUV, along with all-new compact crossovers from Renault and Toyota, which will compete against an upgraded Volkswagen Tiguan due to launch toward the years end. Other important arrivals include the Opel/Vauxhall Astra, Jaguar XE and Audi A4. Below is a by-brand list of debuts based on their launch dates in Germany.

Alfa Romeo4C Spider (March)

AudiTT roadster (March); Q7 (July); R8 (Octo-ber); A4 (November)

BMW 2-series convertible (February); 2-series Grand Tourer (May); 7 series (October); X1 (November)

Ferrari458 coupe replacement (summer)

Fiat 500X (March)

FordS-Max (May); Mustang (June); Galaxy (September)

Honda Jazz (July); HR-V (August)

Hyundai i20 5-door (January); i20 3-door (April); ix35 (likely September)

InfinitiQ30 (November)

JaguarXE (May); XF (November)

KiaSorento (February); Optima sedan (Sep-tember); Sportage (December)

Land RoverDiscovery Sport (February)

LamborghiniHuracan Spyder (September)

Lexus RC-300H coupe (December)

Mazda Mazda2 (February); CX-3 (July); MX-5 (August)

McLarenSports Series (October)

MercedesCLA Shooting Brake (March); AMG GT (April); GLE Coupe (July); GLC (replaces GLK, September)

MiniClubman (December)

Opel/Vauxhall Karl/Viva (May); Astra (October)

Renault Espace (April); compact crossover (June)

Skoda Fabia wagon (February); Superb (May); Superb wagon (October)

SmartForTwo convertible (December)

ToyotaMirai (August); compact crossover (launch time not available)

Volvo XC90 (March)

VolkswagenTouran (not available); Tiguan (likely late 2015)

Mercedes GLE Coupe

Audi Q7

Fiat 500X

JANUARY 2015 17



New prioritiesMercedes increases emphasis on China in bid to pass BMW and Audi

CHRISTIAAN [email protected]

Mercedes-Benz could become the first luxury carmaker to launch new models in China before rolling them out in Europe and the U.S. after strengthening its local r&d operations in a bid to narrow the gap with Audi and BMW in the worlds largest car market. Measured by global car sales, Mercedes is the smallest of the three dominant German premium brands largely because of its weaker position in China, where it had suffered in the past from having two competing sales organi-zations, a much thinner dealer network and a lack of locally built compact SUVs.

Massive investmentIntroducing future models in China first would highlight how much priorities have changed for Daimler over the past two years, when it was forced to over-haul its stagnating business there in late 2012 after witnessing its two German competitors divide up market gains for themselves. In the past China wasnt part of the first roll out phase [for new products], which is perhaps a reason why we were a little bit behind, Mer-cedes development chief Thomas Weber told Automotive News Europe during the opening of its new advanced design stu-dio in the Wang Jing district of Beijing. Why not be first at some point? Thats the trend in my view and it could not happen without a massive investment in r&d, he said.

Over the last couple of years, Daimler has appointed a new board-level execu-tive responsible solely for China, unified local sales and distribution, constructed a car engine plant (its first one outside of Germany), added 179 new dealerships and bought a 12 percent stake in joint venture partner BAIC Motor for 627 mil-lion euros.

Mercedes will begin building the GLA compact SUV early this year in addition to its midsize GLK crossover and long wheelbase versions of the E- and C-class sedans. More compact cars will roll off the assembly line at its joint venture plant

in Beijing following a 1 billion euro invest-ment by Daimler and BAIC. Ultimately Mercedes aims to sell significantly more than 300,000 cars in China in 2015, two-thirds of which it hopes to build locally.

Rising local contentWeber wouldnt say which major model Daimler might first debut in China, em-phasizing that deliberations are at a very early stage. Such a move would require a high level of local content, a larger pool of qualified suppliers in China and more testing facilities, which is where his team comes in. At the moment no one is doing it. I explicitly will not rule out launching new models and deriva-tives first in what will soon be the most important market, but in order to do so, a few conditions have to be met.

Its recent decision to invest 112 million euros to expand its Beijing research fa-cilities is closely linked to these plans, since it needs the necessary proving grounds, test benches and vetted sup-pliers in place to guarantee a smooth

launch. This includes two r&d depart-ments based at its factory in Yi Zhuang on the outskirts of Beijing that together adapt vehicles and engines to Chinese needs, ensure quality, and establish ties to local suppliers -- all crucial when launching new models. Mercedes, which has over 280 suppliers based in China, aims to increase local content to about 80 percent to 90 percent from the cur-rent 60 percent to 70 percent.

Trend trackersThe new r&d center also has other tasks beyond the design studio, such as forecasting the latest in social trends. For instance, while oversized cuphold-ers are a must in the U.S., having space for tissue boxes is crucial in China. Equally important is monitoring devel-opments in legislation and regulations, from subsidies for new energy vehicles to discussions over specific emissions targets for individual car models. From now on, Weber said, China plays a major role for our global product devel-opment process. ANE

Daimler has spent 112 million euros on its Beijing r&d center, where 500 engineers and designers will be working to make sure locally made models cater to customer demands in China.

JANUARY 201518



Going greenToyota, Renault join car-sharing rush with fleets of low-CO2 vehicles

BRUCE [email protected]

Toyota and Renault have joined Daim-ler, BMW, PSA/Peugeot-Citroen, Volkswagen and Ford in supporting car-sharing as an environmentally friendly answer to mobility needs in congested cities. Like its rivals, Toyota and Renault see car-sharing as a way to boost their green credentials. I have a very strong personal intention to fill the cities with electric vehicles worldwide, Toyota Chairman Takeshi Uchiyamada said re-cently during the launch of a car-sharing program backed by the automaker in Grenoble, France.

Toyota considers electric vehicles to be especially suited to short-distance, ur-ban journeys regularly made by city driv-ers, while hybrids, plug-in hybrids and fuel cell vehicles are more practical for longer trips. Replacing gasoline and diesel cars with electric vehicles is key to im-proving air quality in cities, according to Renault, which, like Toyota, is backing a new car-sharing program in France.

Renault has formed a joint venture with the French industrial conglomerate Bol-lore, which operates a self-service auto rental scheme called Autolib in Paris, Lyon and Bordeaux, and in Indianapolis in the U.S. The partners plan to develop electric car-sharing solutions in France and the rest of Europe. Renault says its EVs will be gradually integrated into Bol-lores AutoLib fleet to reach a proportion of 30 percent as quickly as possible.

Renault CEO Carlos Ghosn said AutoLib could offer his companys EVs in cities around the world. Our alliance with Bol-lore does not target any particular country or region. Initially, this agreement is mainly applicable to France and Europe, but it is not, of course, limited to those regions, Ghosn told Automotive News Europe at the joint ventures launch. In Grenoble, Toyota is making 35 of its the three-wheel i-Road vehicles, which seat one person, and 35 of its four-wheel COMS, with room for two, available for rent in a three-year pilot proj-ect with partners including the local city authority and local public transport provid-

er, along with the French electricity com-pany EDF. Grenoble residents can rent the Toyota electric vehicles parked around the city for short journeys after reserving the vehicle on a smartphone app.

Smart app Toyota Europe President Didier Leroy said the project is an extension of public trans-portation. Customers might, for example, use the car-sharing website to reserve a Toyota i-Road at the Grenoble train sta-tion, leave the car at one of the drop-off locations and then take a tram back to the train station. A main feature of the service is its low price: city residents can rent a Toyota EV for as little as 5 euros an hour or for 17 euros for 4 hours.

Car-sharing also brings advantages by promoting more efficient use of road and inner-city transportation infra-structure, according to a recent Frost & Sullivan report, which said that the number of people in London using car-sharing could rise to 800,000 in 2020 from 140,000 now. This would achieve a reduction in CO2 emissions from cars in the English capital of up to 6 percent, with 120,000 cars taken off the road by the end of the decade. Fewer people buy-ing cars may not be good news for auto-

makers profits but most car companies feel they have to be present in the sec-tor as increasing numbers of customers in cities in the developed world choose to rent a car when they need it instead of buying a vehicle that might remain parked outside an office or home most of the time.

Daimler, an early adopter of car-sharing in 2008, now has a global fleet of 12,000 Smart ForTwo minicars, 1,200 of which are full-electric vehicles, across 29 cities in Eu-rope and North America. Car2Go has yet to make a profit, but is moving closer. Its starting to be financially viable. In some of the cities we are profitable, Rainer Beck-er, head of business development for Asia Pacific at Daimlers mobility arm, Moovel, operator of Car2Go, told an audience at Michelins Challenge Bibendum confer-ence in Chengdu, China, in November.

BMW with DriveNow, Volkswagen with Quicar, along with Ford and PSA/Peu-geot-Citroen, are among automakers with car-sharing programs. Audi has just begun two pilot programs in Berlin and Stockholm. Opels marketing chief, Tina Mueller, said in November that General Motors German division will launch a car-sharing scheme this year.

Nick Gibbs contributed

Toyota has provided 35 three-wheel Toyota i-Road EVs for a car-sharing program in France.

JANUARY 2015 19



SuperheroesMini expects profit boost from leaner 5-car lineup and UK plant upgrade

LUCA [email protected]

To boost Minis prospects of long-term profitability parent BMW Group has decided the British brand needs to shrink its lineup to five models from eight. Mini is expected to dis-continue three slow-selling vehicles -- the Coupe, Roadster and Paceman so it can concentrate on the five model lines that accounted for about 95 percent of the 325,000 vehicles it built last year, according to data from IHS Automotive. BMW Group does not report individual financial results for the BMW, Mini and Rolls-Royce brands, which has left analysts wondering whether Mini has ever made any money.

BMW has struggled to make Mini into a profit center from the beginning, said Max Warburton, an auto analyst at Ber-nstein Research. He said that Minis cars are built on a low-volume platform and that the automaker has undergone all sorts of complex model line proliferation -- its hardly a recipe for making money, at least compared to some of their BMW-branded products. Minis industrial matrix is complex. It builds eight models underpinned by three different platforms in three different plants and has had an average annual volume of about 313,000 units in the last three years. Warburton expects Mini to become more financially viable once it starts offering a smaller, more consistent range underpinned by a single architecture, which will be shared by BMW brand models such as the 2-series Active Tourer and the next-generation 1 series.

Peter Schwarzenbauer, the BMW board member in charge of Mini, has been a strong advocate for a radical review of the Mini range. It is important to find the right balance between growth and profitability, he said late last year while announcing that Minis range would be trimmed. Schwarzenbauer said Mini would focus on superhero vehicles including the three- and five-door versions of its core hatchback, the Countryman and the Clubman station wagon, which will be renewed this year.

Like a superhero, each of these cars has its own personality and unique capabilities, Schwarzenbauer said, without iden-tifying which Minis would be cut and when. However, Oliver Friedmann, the Minis head of product management, told Au-tomotive News Europe last year that the Coupe, Roadster and Paceman are not a priority in the automakers renewal plan. The Coupe and Roadster were conceived as small-volume vari-ants that would help maintain interest in the brand as it transi-tioned to the fourth generation of its top-seller, the Mini three-door hatch, which debuted last year. IHS Automotive expects Mini to discontinue the Coupe and Roadster this year.

Industrial revampMini also is counting on profits to rise following a radical indus-trial reorganization of its main factory in Oxford, England, that has boosted daily output to 1,000 vehicles a day from about 700. A key part of that was the switch to making cars using BMW Groups UKL platform at the plant. The first Mini cars to

be underpinned by the UKL architecture are the new three- and five-door hatchbacks. The second-generation Clubman also will use the platform when production starts in Oxford later this year. Oxford builds the Convertible, Coupe and Road-ster on the platform BMW created to relaunch Mini in 2001.

Magna Steyrs plant in Graz, Austria, builds the Countryman and Paceman using a dedicated platform. BMW confirmed it will build another model in Graz after it shifts the next-gener-ation Countryman to another plant. IHS expects production of the new Countryman to start in 2016 at the VDL NedCar plant in Born, Netherlands. VDL began making the Mini three-door hatchback in July 2014 using the UKL platform.

Nick Gibbs and Bloomberg contributed

The new Mini Clubman will go on sale this year with the same 6-door layout as this concept shown in 2014.

On a dietThe Mini models that are likely to stay and likely to go

Model 2014 output(*) Whats next 1. Hatchback 3-door 150,937 New generation 20142. Hatchback 5-door 30,456 Added 20143. Convertible 16,089 New model due 20154. Clubman 7,962 New model due 20155. Countryman 102,875 New model due 2016-176. Coupe 2,404 Production ends 20157. Roadster 2,886 Production ends 20158. Paceman 11,217 Likely to be cut

(*) IHS Automotive estimates

JANUARY 201520



Segment slowdownVolume compact sales forecast to dip after strong 2014


Europes volume compact segment may become a victim of its own suc-cess this year. Because of double-digit sales gains from models such as the Volkswagen Golf and Toyota Auris, the segment was on track to nearly reach 3 million sales for in 2014. In 2015, full-year sales in Europes second-largest segment after subcompacts are fore-cast to dip below 2.9 million, according to analyst IHS Automotive.

The reason for the decline is that, un-like last year, there are no major vol-ume compacts due to launch in 2015 to help offset the continued pressure from premium rivals such as the Audi A3 and subcompact SUVs like the Renault Cap-tur. New or recent launches played a big part in the segments rise last year as sales of cars such as the Seat Leon (+60 percent through 10 months), Skoda Oc-tavia (+27 percent) and Peugeot 308 (+59 percent) overcame declines from older models such as the Opel/Vaux-hall Astra (-9 percent), Renault Megane

(-10 percent) and Hyundai i30 (-15 per-cent), according to sales data from JATO Dynamics (see table, right).

51% of salesLast year was particularly good for Volks-wagen Group. It accounted for 51 per-cent of sales among compact models in the top 10 through October because of strong demand for the Golf, Octavia, Leon and Skoda Rapid.

The third-generation Octavia, launched in early 2013, rose to third place in the first 10 months of 2014 with sales of 170,176. Since 2010 the Octavia has moved up from sixth place, passing big-sellers such as the Astra and 308. Mean-while sales of Skodas smaller sibling, the Rapid, surged 114 percent through October to rank it 10th in the segment with sales of 66,013.

Customers are attracted to Skodas space, value and increasing brand ap-peal, IHS Automotive analyst Ian Fletch-er told Automotive News Europe. Skoda is a value proposition but also a trusted

brand that has shrugged off the stigma that Eastern Bloc manufacturers had in the past, he said. This is vastly under-pinned by it being part of the VW Group.

In Germany, 10-month sales of the Oc-tavia topped the Ford Focus, Europes No. 2 seller overall, according to fig-

Demand for models such as the Skoda Octavia gave Europes compact segment a big boost last year.

The leaders Europes top-selling compacts Jan.-Oct. 2014; change from 10 months in 2013

1. VW Golf 440,838 +14% 2. Ford Focus 192,214 -1% 3. Skoda Octavia 170,176 +27% 4. Opel/Vauxhall Astra 153,933 -9% 5. Peugeot 308 131,035 +59% 6. Seat Leon 113,537 +60% 7. Renault Megane 112,858 -10% 8. Toyota Auris 108,665 +15% 9. Hyundai i30 70,945 -15%10. Skoda Rapid 66,013 +11

Automotive News Europe - January 2015

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