2019 is a Transition Year: Audi Has a Plan to Get Back on Top in the Automotive Market

Audi announced that by May it will have plan to get itself back on track in the automotive market. This announcement comes after a series of consistent slumps that have impeded Audi, causing it to fall behind its competition: Mercedes-Benz and BMW.

Over time, Audi’s profitability has declined. Its return on sales went from 7.8 percent to 6 percent, its European sales fell by 14 percent and its global deliveries dropped by 3.5 percent. This decline is due to the current climate of the automotive industry; including the Worldwide Harmonized Light Vehicle Test Procedure, escalated ramp-up costs and escalated advance expenditure for electric vehicles. The increased spending on electric cars and the new emissions test in Europe that have already begun to affect the organization. Take, for instance, the incident that took place last year: multiple Audi deliveries to Europe failed and costed dearly when Audi did not have enough time to make its vehicles WLTP compliant.

To counter these obstacles and recent decline, Audi has decided to head into 2019 as a transition year. While Audi knows a transition year will most likely cause financial strain, it is confident that the results will make it worth it.

Before Audi releases its new plan, it will continue its present turnaround plan of conserving costs and ramping up production. By May 23, at its annual meeting, Audi says the final plan that they propose will help in improving plant capacity, employing the bundle of platforms and producing new vehicle construction. Besides the plan, Audi wants to also focus on two things: high-end cars, electric vehicle effort.

Audi wants to produce more high-end cars; reconstructing the entire lineup of vehicles they offer at the moment. It will pay particular attention to the upper premium, upper mid-range and full-size segments. Audi’s goal is to have increased its number of models to 15 by 2025.

Lastly, Audi wants to expand its presence in the electric, green vehicle movement. In 24 months, it plans to produce 5 full-electric and 7 plug-in hybrid models. Past that, by 2025, Audi wants to have 30 electrified cars in its lineup.

Infiniti Decides to Leave Western Europe

Infiniti, Nissan’s premium vehicle line, announced it will leave Western Europe by early next year. According to Infiniti, this move from Western Europe is so more focus can be put on their global operations; including sales marketed toward China and the United States.

To smoothly transition out of Western Europe, Infiniti plans to slowly withdraw from the Nissan Plant in Sutherland, England. The Q30 and QX30 models will be immediately discontinued before all production stopping by mid-2019.

This move may be beneficial to Infiniti, but it will bring a level of hardships to the citizens of the U.K. With a total of 55 retail stores and the plant in Sutherland, a number of workers will be laid off. However, with this realization in mind, Infiniti has promised to help these employees find alternative jobs.

The decision to move was brought on by several factors, one of the biggest being the condition of the market in Western Europe. While luxury brand vehicles are in, Western Europeans seem to prefer luxury brand vehicles local to the area; including brands like Audi, BMW, and Mercedes Benz. As a result, Infiniti has been struggling to keep sales up; evident in their lackluster sale of only 5,800 vehicles last year. Not to mention, the vehicle standards in Western Europe have become quite high; causing Infiniti to not always be able to meet regulatory and Euro 6 emission requirements.

Another big factor that swayed Infiniti was the political climate. The U.K. not too long ago made the choice to leave the European Union; making themselves no longer apart of Europe and their own separate country. This choice caused an amount of economic instability Infiniti and Nissan are unwilling to deal with. A telltale sign not only being this recent announcement by Infiniti but Nissan’s decision to build its new X-Trail SUV in Japan instead of Britain.

With this move from Western Europe, Infiniti sees a bright future. According to Infiniti, it gives them to chance to work more on making their 2021 vehicles electric and halting the production of diesel options. In addition to this, Infiniti wants to begin marketing their sales more to the U.S. and China. This marketing initiative will be led by turning its attention to the crossover/SUV line in the U.S and in five years, five new vehicles for China. This is all done with the hope that over the years there will be an increase in sales, residual value and synergies.

Leasing May Be Safer Option for Car Buyers

In today’s economy, it is not odd for you, a family member or a friend to want to buy a used car. For the price, it may seem like the perfect choice. Beware, however, because pushy salespeople are not the only thing you’ll have to deal with. More factors must be considered, according to a few experts, if the used car you purchase is ever going to be a benefit.

The first piece of advice is to be careful. Ira Rheingold, executive director of the National Association of Consumer Advocates, explains that in today’s used car industry there a lot of people that will try and take advantage of you. Rheingold’s exact words were, “It is a particularly predatory industry.” If you are not careful, one to three things could happen. One, the car salesperson could get you to sign to an overrated, overinflated price for the vehicle. Two, the car salesperson could get you a car that is not in the best condition or has hidden issues. Or, three, you end up having to deal with the wrong deal and the poorly conditioned vehicle together.

The second piece of advice is to treat it as if you were buying a house. This means, that the purchase and the finance of your car should be completely separate. It is important to keep these two things separate because when combined it gives the seller an easier chance to rip you off. The better option would be to go to a source other than the seller, like a bank or a credit union, and secure a loan prior to buying the car. By doing this, you have the security of having the money needed for the entire payment.

The third piece of advice is when in doubt, get a professional opinion. If you can get a mechanic or someone to look at the car, that is not bias toward the seller you can get an honest opinion as to the condition of the car. Rheingold and Andy Wolf, a consumer protection attorney, agree that this is a very smart thing to do.

The final and fourth piece of advice is to know your rights as a consumer and to seek legal help if needed. No seller should ever bind you into a contract you find unjust. If you think you’ve been taken advantage of, the legal system is there to help.

When you go to buy a used car, the last thing you want to worry about is being taken advantage of by the seller. With these four tips, you can feel more confident in yourself; finding the perfect used vehicle for you.  Lease swapping websites line Swapalease.com give customers searching for a vehicle a safer option, as opposed to using a private seller.

The White House and Auto Industry at Odds When it Comes to the Fuel Economy

Carmakers and the White House are at a current impasse with issues regarding fuel economy. The White House stands firm in its demand: Support the plan to roll back fuel economy criteria or don’t and deal with President Trump backing California’s emissions requisites. This demand was given at the end of February by the president’s administration officials to auto executives in a conference call.

It came after the administration officials shutdown federal regulators, and California officials discussions on unified emission standards; tanking automakers attempt to get the two parties to agree to avoid a legal battle that could lead to court decided emission rules. The reason for this shutdown according to a Feb. 21 statement by the White House: “Despite the administration’s best efforts to reach a common-sense solution, it is time to acknowledge that CARB has failed to put forward a productive alternative.”

The White House or administrations’ involvement in trying to change the fuel economy and the auto industry is nothing new. Back in August, the administration began trying to reverse rules made by the Obama administration on the tailpipe carbon emissions standards and fuel economy requirements. Instead of allowing the tailpipe carbon emissions standards and fuel economy requirements to rise to 47 mpg by the end of 2020, they want to try to stop it at 37 mpg. This was part of a proposal by the EPA and the traffic safety administration wanting to try to rid of California’s ability to dictate its own greenhouse standards for vehicles.

Most carmakers in the auto industry have wanted a change with the fuel economy and tailpipe greenhouse gas emissions standards, yet they are still hesitant to be as drastic as the administration has wanted them to be. They have tried to get the two sides, the administration and the California Air Resources Board, to instead come to an agreement. By coming to an agreement, the auto industry could avoid dealing with legal battles that could leave the industry in a state of unpredictability. The motive behind this neutral standing ties into the looming threat of Trump’s 25 percent tariffs and how the industry is currently holding up.

Honda Decides to Close U.K. and Turkey Plant by 2021

In response to the recent movement in trade relations and the desire to move toward electrification, Honda has decided to stop production in the U.K. and Turkey by 2021.

Honda is one of several companies that have decided to leave or make cuts in the U.K. Along with Honda, Nissan and Toyota have removed themselves from the country. In regards to making cuts, Ford Motor has already declared they are going to get rid of thousands of job and Jaguar said they were going to eliminate 4,500 positions by this January.

This recent pullback from multiple auto companies is recently due to Brexit; causing political and economic instability. Consequently, this has created another strain on the U.K. auto industry, which has already had to deal with Brexit-related issues, possible tariffs and supply bottlenecks prior to the exit from the EU on March 29.

Despite this decision coinciding with Britain removing itself from the European Union, Honda’s CEO Takahiro Hachigo said it was not a factor in their decision. Honda, instead, planned the cease of their production to correlate with the end of their Honda Civic’s life.

Honda’s removal from the U.K. and Turkey is one part of their plan, their goal to become more efficient, and more attuned to local markets. With this upcoming change, Honda will be able to shorten its global production capacity from 5.4 million to 5.1 million vehicles and increase its utilization rate over time from about 97 percent to over 100 percent.

The plant Honda will be closing in the U.K. is in Swindon. This plant, established in 1985, focuses on producing the Civic five-door hatchback. Over the years, the plant has employed 3,500 people and delivered 150,000 vehicles annually.  When this plant is shut down, and the new line of Civics come out, Honda says other regions will pick up the output left by the Swindon plant; including North American plants.

The plant Honda will be closing in Turkey focuses on producing the Civic sedan, delivering 38,000 vehicles annually. While the Turkey plant in Turkey will be shut down, Honda plans to carry on with sales and marketing operations.

Possible Increase on Automotive Tariffs

A report given to President Trump by the U.S. Commerce Department could lead to increased tariffs. These tariffs could directly effect imported cars and auto parts, creating a massive loss for the auto industry.

The report is just one of the many recent hits the auto industry has had to deal with after obstacles of low sales, China’s tariffs on auto parts and Trump’s tariffs on steel and aluminum.

The report is the conclusion of an investigation that began in May 2018. This investigation, also known as the Section 232 investigation, was done at the request of the President to understand national security and how imports impacted it. The Commerce Department implied that the investigation was also to concentrate on vehicle technology. However, the overarching goal was more likely to help with President Trump and his aspirations in the trade industry. Administration officials say the potential tariffs could be a way to win concessions in Japan and the EU. The president states that tariffs protect the industry and also help win trade agreements.

While details of the report are unknown, President Trump has 90 days to decide on the incorporated recommendations. Auto industry officials suspect these recommendations to involve tariffs on manufactured vehicles or technology or areas related to electric, automated, connected and shared vehicles.

Automakers and part suppliers believe these recommendations to involve wide-ranging tariffs of 20 to 25 percent on cars and parts, or more restrictive tariffs concerning areas related to electric, automated, connected and shared vehicles.

Since its submission, the auto industry has worked hard to combat the report in a full-fledged campaign.  In this campaign, the industry stresses just how much damage such tariffs could do to the industry; including a steep increase of thousands of dollars in vehicle costs and possibly hundreds of thousands rise in job losses if the tariff is at 25 percent. The Motor and Equipment Manufacturers Association adds to the industry’s sentiment as they warn about the tariffs affecting the amount of investment in the United States; encouraging more offshore production.

The Center for Automotive Research puts the fears of the auto industry into light when they detail a worst-case scenario in which a tariff of 25 percent would end in a loss of 366, 900 jobs. Think Tank does something similar when they say, U.S. light duty vehicle prices would increase by $2,750 on average, including U.S.-built vehicles, reducing annual U.S. sales by 1.3 million units and forcing many consumers to the used car market.

According to a New Cox Automotive Analysis, Ford and Mercedes are at the Top of the Class for Dealers

Ford and Mercedes-Benz scored the maximum grade in their class in a Cox Automotive analysis of the benefits brought to dealers by their brands.

According to the analysis, Ford tallied four A’s and two A-minuses and collected enough bonus points to outrank Toyota at the top of the non-luxury ranking. The only imperfection for Mercedes on the luxury report card was an A-minus as it scarcely topped Lexus. Cox’s Retail Brand Scorecards Study, compiled in conjunction with Automotive News, measures a brand’s performance primarily through surveys and online participation on Cox-branded websites.

Cox used a classroom-style evaluation in six categories to give each brand an overall grade-point average. Extra points were added and subtracted for “geographic consistency” in delivering share across market areas and the probability of dealers to report difficulties in dealing with their manufacturers. As with students in classrooms, brands may outshine in some subjects but not others. Tesla, for example, got one A-plus for the quality of its customers and another for their perception of the brand. Unfortunately, the electric vehicle maker drew an F for its product range and was also penalized because of its geographical limits. Overall, Tesla ranked just above Jaguar at the bottom of the luxury chart.

Yet Mitsubishi, came up to an A-minus for the newness of its products. But it finished at the bottom of the non-luxury class thanks to F’s in traffic, loyalty and product range.

As far as brands that were able to earn extra credit, Chevrolet garnered points for its market-share balance across the U.S. This distinction is a major plus to potential buyers of a dealership, Cox says. Conversely, Chevrolet also ranked as one of the industry’s worst performers when it comes to franchised dealers citing automaker mandates and restrictions that hold back business.

Audi and GMC were considered the most likely to have such complaint-inducing issues with factories, while Honda and VW were least likely. Those figures were assimilated into the Brand Scorecards from Cox’s quarterly Dealer Sentiment Index.

All luxury brands and many of the non-luxury brands earned A-level grades for drawing the best customers — those who frequently purchase new vehicles at the same dealership and obtain financing and service repairs in-house.

“The people who scored highest on best customers, quite literally much of their sales are to the people who do all those behaviors,” Cox says.

SiriusXM Expands Availability Within Toyota Lineup

Dealerships that eventually will have 2020 Toyota models in their inventory now have another feature to propose to potential buyers. SiriusXM announced that it has reached what the company called a “landmark” agreement with Toyota that will expand the installation of SiriusXM to all Toyota models and trims sold in the continental U.S.

Officials said the development is expected to start with 2020 model year vehicles produced in the fall of this coming year. They further stated that the agreement will result in SiriusXM becoming a standard feature as Toyota’s next generation head units are rolled out to Toyota cars, trucks and SUVs.  SiriusXM also revealed that the agreement encompasses the long-term relationship between the two companies into 2028.

Toyota consumers will remain receiving a three-month introductory subscription to SiriusXM All Access, which is SiriusXM’s most expansive programming package and gives the subscriber admission to SiriusXM both on the radio and via the SiriusXM app. “This extension represents a milestone agreement between our two companies,” said Christopher Lam, senior vice president and general manager of automotive partnerships for SiriusXM.  “Our long-standing relationship with Toyota has helped grow SiriusXM to over 34 million subscribers, and we’re excited that Toyota will now offer even more customers access to all of SiriusXM’s exclusive, award-winning content,” Lam continued.

Of particular interest in the used-vehicle space, the companies emphasized customers who purchase or lease Toyota certified pre-owned vehicles will also continue to receive a three-month introductory subscription to SiriusXM All Access. “We are committed to delivering our customers the features and services they want, and because of the strong demand we see for SiriusXM, both from our customers and dealers, we’re making SiriusXM standard across our entire model lineup,” said Steve Basra, vice president of connected technologies for Toyota Motor North America. “By building SiriusXM into every model and trim level, it will enable us to deliver SiriusXM to more Toyota drivers than ever before,” Basra went on to say.

Mazda 3 Redesign Program is Focused on the Human Physique

Traditionally, major vehicle redesigns begin with a review of such hardware as cylinder heads, suspension arms and chassis legs. The remake of the compact Mazda 3 sedan and hatchback focused on those items as well as a detailed study of human arms, legs and heads as well as spines, pelvises and necks.

The 2019 Mazda 3 new engineering goal is to create a tremendously balanced car that is as natural for humans to drive as it is for them to walk.

Quite an ambitious claim and during their recent media presentation, Mazda engineers spoke of their comprehensive studies of human bodies and how the car was designed to decrease stress and drastically improve comfort. Instead of talking as much about the usual redesign metrics of stopping distances, horsepower, torque or 0-to-60.

According to Mazda engineers the new Mazda 3 is all about one word: balance.

The redesign started with an in-depth study of how the body maintains balance when walking, said Kota Beppu, Mazda3 program manager. Mazda engineers were particularly interested in preventing unwanted head movement. To do that, engineers redesigned the Mazda 3’s body and suspension so that when the car encounters a bump in the road, the shock absorbed by the suspension system is channeled behind the driver. Engineers also studied the human spine and developed seats that put the driver in the optimum position to maintain balance. The tilting lower seat cushion helps keep the thighs firmly planted in the seat. This keeps the pelvis in an upright position and the spine in its natural S shape, Mazda says.

While the Mazda 3 uses conventional electric rack-and-pinion steering and hydraulic four-wheel disc brakes, engineers kept a keen eye on removing jerkiness in the car’s behavior. The brakes initially feel as though they don’t have significant bite. But a little extra pressure on the pedal slows the car quickly and smoothly. Mazda calibrated the brake feel to eradicate abruptness that can force passengers to lurch forward. The power steering also has been fine-tuned to reduce coarse movements.

On a 50-mile test drive, the Mazda3 proved easy to handle, with comfortable and supportive seats, unobstructed front and rear views and simple-to-manage controls. The car was said to be quiet, took curves at speed with ease and drove smoothly in heavy stop-and-go traffic. The sedan and hatchback go on sale in March. Prices start at $21,895 for the front-wheel-drive sedan and $24,495 for the hatchback. Adding all-wheel drive and other premium features pushes prices close to $30,000 for both body styles.

Infiniti plans a shift in marketing for its Anniversary Models

Infiniti has announced that they will launch a portfolio of anniversary-edition models in 2019 to mark the brand’s 30 years in business. Infiniti Americas Vice President Mike Colleran devoted a large part of his NADA session to reassure dealers that new vehicles are on the way, said Mario Murgado, CEO of Brickell Motors in Miami and chairman of the Infiniti National Dealer Advisory Board. “We have the oldest portfolio of products in the business, and Infiniti is working hard to renew that portfolio, and to be transparent with its retailers to tell us that they are fixing it,” Murgado said. While not offering details such as when the models will appear, Colleran told dealers the anniversary plan will include multiple nameplates. He said Infiniti will reveal details in a series of start-up meetings commencing this month around the country.

In an interview, Colleran said Infiniti wanted to specify dealers with new offerings as they await the brand’s next great product modification. According to retailers who attended this meeting, that will be a remodeled QX60 crossover, due next year. Infiniti also expressed to dealers that specific electric vehicle plans are in the works, following its proclamation a year ago of an electrification strategy set to begin after 2021. In its 2018 announcement, Infiniti said every new vehicle introduced after 2021 will be a full EV or have an electrified powertrain — except for Infiniti’s full-size SUV, the QX80.

The electrification approach will begin revealing itself “very soon in automotive years,” Colleran said after the meeting. “We have changes going on and we want to make sure we have open communications with our dealers to keep them involved.” Phil O’Connor, Infiniti director of marketing communications and media, told vendors the company plans a new marketing tactic this year, aiming for likely buyers instead of relying on broad market campaigns. “It’s about reaching to a specific household that is currently in-market, as opposed to covering an entire city, including consumers who are not planning to buy a new vehicle,” O’Connor said after the meeting. “We now have the tools to know who is likely to be ready to buy a vehicle, and who is likely to buy a premium vehicle.” O’Connor told the suppliers the new tactic will not replace Infiniti’s national advertising, which traditionally becomes more visible during the college basketball season, leading up to the March Madness national college basketball tournament. He said Infiniti’s new advertising tactic came about at vendors’ request.