Toyota’s Solid Performance in North America Fuels Profit

Toyota Motor Corp. powered through a car-market halt and put on record the solid profits in its fiscal third quarter, but it raised concerned in China by the virus outbreak. Toyota, the world’s biggest car maker by market capitalization, recorded operating profit of $5.96 billion in the October-December quarter, somewhat below last year’s numbers. The quarterly profile would have been as much as $900 million higher than a year ago, the company said.

Operating profit in North America quadrupled during the quarter even though unit sales slightly decreased.  Looking back on Toyota’s shift to higher-margin trucks and sport-utility vehicles, roughly two-thirds of Toyota vehicles sold in the U.S belong in that category. The popularity of models such as the Highlander SUV and the Tacoma pick up has increased. In North America, “we are selling more trucks than before because we shifted to more trucks including in our production volume,” said Didier Leroy, an executive vice president.

In comparison, Toyota’s somewhat healthy performance contrasts with the challenges of U.S. and Japanese competitors including Ford Motor Co. which said this week that its fourth-quarter operating income sank by two-thirds. Subaru Corp’s operating profit decreased 42% in the most recent quarter. Toyota somewhat raised its projected profit for the current fiscal year, which ends in March, but said it hasn’t yet taken into consideration the possible impact of the coronavirus outbreak emanating from China. Masayoshi Shirayanagi, head of public relations, said Toyota factories in China are going to remain closed, and they still remain uncertain when the restart date will be.

He expressed concerned about some workers returning from visiting families during the Lunar New Year holiday, especially those coming from the center of the virus outbreak which is the Hubei province. “Some provinces are ordering people to stay at home for 14 days after they come back from other provinces. We’ll have to take that kind of thing into account and look at parts procurement and the logistics situation before deciding when to restart,” Mr. Shirayanagi said. He said factories outside China, including those in the U.S. and Japan, were operating normally and any potential shortages of parts from China have not had an impact. However, he was not sure that would continue. “We’re examining every part one by one, looking at inventories and how the possibility or necessity of alternative production,” he said.

Subaru Pushing for 40% of Sales to be Electrified by 2030

Subaru plans to go greener with a target to get at least 40 percent of its global sales from full-electric or hybrid vehicles by 2030. The Japanese automaker plans to electrify every vehicle in it’s lineup globally. Subaru also released its first design study for a fully electric crossover its co-developing with Toyota as well. They would like the vehicle to be for sale before 2025.

The full-sized electric vehicle was presented during a technology briefing at Subaru’s global headquarters.  The car features rear windows, elongated body style and digital sideview mirrors with short front and rear overhangs. The front is creased, while the wheel wells have heavy black cladding for an oversized look. Subaru plans to achieve the electrification goals by introducing the EV along with a range of what it calls “strong hybrids” based off Toyota’s system, Chief Technology Officer Tetsuo Onuki said.

This is all part of a larger objective to reduce their carbon footprint, while improving the safety and drivability of Subaru vehicles. As Subaru looks to fix its all-wheel-drive lineup to escalate demand for expensive next-generation technology, covering everything from electrification and autonomous driving to connectivity. Subaru said that by 2050 it will cut the average well-to-wheel carbon dioxide emissions of new vehicles by 90 percent, compared with 2010 levels.

It will also remove direct carbon dioxide emissions from its factories, offices, and other facilities by 30%.
Additionally, Subaru wants to ensure there will be no fatalities among occupants of its vehicles by 2030. This can be done by improving responsiveness and stability of the vehicles and upgrading its Eyesight driver-assist system with new high-tech functions.

Subaru’s new global platform is intended to accommodate gasoline-only and hybrid layouts. “It will grasp that flexibility in electrifying more offerings,” Onuki said. Subaru will lean on partner Toyota for help with the hybrids. It will acclimatize Toyota’s two motor system to Subaru’s horizontally opposed engine and all-wheel-drive layout. The setup positions the two motors in a longitudinal array, behind the engine and along the axis of the propeller shaft. However, Subaru is not prioritizing a U.S. rollout for the new battery-powered offerings.

Mercedes to Discontinue the Production of its X-class Pick-Up Truck

Mercedes-Benz will no longer produce its X-Class pickup, which was created to expand Mercedes global reach of commercial vehicles. The vehicle was first launched in 2017 in competition with other brands carrying similar body styles such as the Volkswagen Amarok, Ford Ranger and Toyota Hilux. The goal was to compete in the midsize pickup market, which is projected to grow to 3.2 million units in the next 10 years. However, buyers were not prepared to pay the high price tag that came with the vehicle.

In its first year, global sales of the X-Class were just around 16.700 in Europe, Australia and South Africa. According to Mercedes, about 10,000 of those were sold in the first nine months. In the United States, the X-Class was never introduced, despite a stronger demand for full-size pickups. Mercedes’ light commercial vehicles unit said it will end production at its plant in Barcelona, Spain by June.

A representative from Mercedes noted, “It has been decided that from the end of May 2020, we will no longer produce this relatively young model.” However a spokesperson for Mercedes-Benz Vans said customers were able to still order an X class to their specific configuration until February 11.

The X Class was created to help grow the Mercedes-Benz brand of vans. Mercedes gave the X Class more complex and expensive features usually found in passenger cars compared with its rivals, the Navara and the Renault Alaskan. The future production of the X Class was put into question last year when Mercedes released the plans to build the vehicle in Argentina in addition to its current location in Barcelona.

Buyers in South America are unwilling to pay the high prices needed to maintain local production, meaning Australia and South Africa are the only two markets that have demand for the vehicle. Market researchers JATO Dynamics had said the X class would be challenging to sell in Europe where customers consider to be work vehicles and prefer smaller cars. Volkswagen’s Amarok has similar problems as well, and will model its future based on sales of the Ford Ranger.

Fossil Fuels Estimated to Only Have 15 Years Left in the United Kingdom

In 2035, Britain will begin to ban sales of new gasoline and diesel cars the ban will start five years earlier than planned. For the first time, hybrid vehicles will also be included in the ban. The UK government felt it was necessary to fight the climate crisis by helping the country to cut carbon emissions to “net zero” by the year of 2050.

The accelerated time frame drew pushback from automakers, who have concerns about the lack of clarification on whether the government would continue to subsidize sales of electric vehicles, as there is currently limited charging infrastructure. Automakers expect there to be several job losses. The new commitment puts the UK in a group of countries taking charge to phase out cars that are run by fossil fuels.

Norway is another country that wants all passenger cars and vans sold in the country to be zero-emission by the year 20205. India has also called for any new cars sold in the country to be electric by 2030.  If the UK wants to meet the 2035 goal, it would require an entire transformation of the UK car market.

The use of battery-powered electric vehicles has increase in Britain by over 144% since last year, but sales still only made up for a total of 2% of automakers revenue. Hybrids, which is also included to be in the ban under the new policy in 2035, made up for about 8% of total vehicle sales.

Automakers like Volkswagen are investing billions of dollars in developing electric cars. According to data from the Society of Motor Manufactures and Traders, UK car production decreased by 14% last year. The shift away from diesel in Europe plated a significant role in the decline. Many automakers feel the interrupt in production will ultimately erode their bottom line.

Hyundai is at a Standstill with Korea Production as Coronavirus Causes Parts Shortage

Hyundai Motor said it will cease production in South Korea, its biggest manufacturing base. They are the first major automaker to do so outside of China due to the lack of supply and parts resulting from the coronavirus outbreak. Hyundai has seven factories in South Korea, providing for the local market as well as the U.S, Europe, Middle East and other countries. Hyundai’s production in South Korea accounts for about 40 percent of its global business.

The cease of production follows a shortage in wiring harnesses that Hyundai uses mainly in its cars distributed in China.

Kyungshin and Yura Corporation are the two main suppliers who will be affected. They have both noted they are trying to increase production at their factories to reimburse Hyundai for any short supply in China.  They both also plan to resume production at their Chinese factories after Feb. 9.

“Hyundai and Kia may be more affected as they tend to import more parts from China than other global automakers,” a representative from the company said.  Hyundai has grown to be more and more reliant on China as there was built a huge production capacity in the country several years ago when its business was booming there.  According to trade data it shows South Korea imported $1.56 billion worth of auto parts from China in 2019 versus $1.47 billion in 2018. Japanese trading house Mitsui & Co has also warned that due to the virus outbreak may slow down manufacturing activities in automobiles and other sectors.

Other global automakers, including Tesla, Ford, PSA Group Nissan and Honda, have already halted their production efforts in China this week along with government guidelines. The flu-like virus has killed over 420 people and has spread to about 24 countries. Many fear for global economic growth and a downslide in markets, with Shanghai’s stock index losing about $400 billion in market value.

Hyundai’s decision to freeze assembly lines could delay its recovery form a sales slump. The automaker recently had  its best quarterly profit in over two years and said it projected for higher profit margins. They expect more sales of SUVs such as the Palisade and Kona. The production of the Palisade has been stopped by Hyundai due to a shortage of components from China. Hyundai’s South Korean factories are expected to restart Feb.11 or Feb 12, a union official said. “Hyundai Motor will closely monitor developments in China and take all necessary measures to ensure the prompt normalization of its operations,” the automaker said.

The New Hyundai Genesis Luxury SUV is Completely Electric

Genesis, the luxury brand of the Hyundai Motor Group that launched back in 2015, will have a lineup of vehicles that will be closer to what is trending in the automotive world, with intentions adding three crossovers in the next two years- one of them will be a fully electric vehicle. This is good news, because Genesis’s models so far consist of only sedans such as: the G70 which was the 2019 MotorTrend Car of the Year, the G80, and the recently improved G90. Only having a car lineup in an SUV world could be restricting the brand’s growth.

Genesis only unveiled its first SUV in the midsize GV80; it’s the first vehicle on a new rear-wheel-drive platform known as M3 and which will soon also be categorized under the next-generation G80. The current G80 was launched back in 2016. In addition to the new fully electric Genesis there will be a new smaller GV70 compact crossover that shares a separate rear-drive platform with the G70 sport sedan; this model was introduced in 2017.

Genesis executives have previously stated the lineup is planned to have six vehicles by 2021. The plan has three sedans, two crossovers, and a coupe. Since that plan has been created, Genesis has seen changes in leadership and market tastes. The new lineup plan contains and even split consisting traditional sedans and crossovers. This results to the coupe being on the back burner for right now. Genesis displayed the Essentia electric two door concept with butterfly doors at the 2018 New York auto show.

Infiniti To Delay Production Of New Models

Infiniti recently announced there will be a delay to start the production of its QX55 by five months. The original projected date was supposed to be in the beginning in June. Now the date has been now moved to November of 2020. Nissan’s North America’s manufacturing team in Aguascalientes, Mexico sent out a letter to its suppliers dated January13th to inform them about the change of date. The letter vaguely disclosed that the plant needed “to ensure production capability.” A U.S. spokesman for Infiniti did not expand on the situation, except this was noted in the letter “from the production facility to supplies, operational efficiencies drive projects to move- sometimes forward, sometimes backward- as we progress toward the start of production of a new model.”

The Infiniti QX55, like the QX50, will also be assembled at the $1.4 billion joint-venture Aguascalientes plant co-owned by Nissan and Daimler. The inspiring first-generation FX performance crossover influenced the designs for the QX55. Even though the models QX55 and QX50 share similar design elements, there are some differences between the two such as the fascia and the grille has a new sporty design. The QX55’s audience targets mostly couples and singles who are willing to give up some space for style in return.

The coupe-like derivative is a low investment way to try and get interest from new customers into the brand. The launch of the model QX50 did not have a very successful launch. Executives held the QX50 at high steaks because it was considered to be the brand’s most important product since the original Q45 luxury sedan three decades ago. The model was unsuccessful and failed to gain market traction. U.S. sales of the crossover decreased 27 percent last year. Last year the brand’s management recognized that the QX50 was not launched with the correct configurations.

Could Smartglass Technology Improve Noise Reduction in Vehicles of the Future?

Smartglass technology is known for producing noise reduction glass for the interiors of aircrafts and other commercial vehicles. One of the things that the auto industry is very proactive about is decreasing the internal sound pollution, even if it is only a few decibels.

Paring Smartglass with electric vehicles could spur a new level of sound reduction. As autonomous vehicle technology continues to expand, so will passenger experience.

Original Equipment Manufacturers (OEMs) are making glass a much bigger focal point on developing “AV-First” passenger experiences. For example, instead of using traditional windows, the use of Smartglass could transform the interior of the vehicle into an entertainment hub for the passenger to enjoy. The technology may also aid in allowing or blocking interaction between occupants and the outside environment, or make use of the windows as forms of external communication.

In todays day and age, turning up the radio is the norm.  However future AV passengers may want to take advantage of their traveling time to do work or sleep. Research on noise reduction is expected to continue at a rapid rate. Noise reductions not the only feature that smartglass can provide.

Not only is Smartglass effective in noise reduction, it’s considered sustainable.  Due to increasing demand and new regulations that require sustainable technology, the glass was also created with this benefit in mind. New Environmental regulations, primarily in Europe, require new vehicles to have some level of sustainability. 

In addition to being sustainable, the technology has the ability to raise the EV driving range by over 5% and reduce CO2 emissions by four grams per kilometer. 

BMW Has Record Year

BMW recently announced that they had a record year for car sales and that 2020 could be even better. The automaker sold 2.52 million vehicles in 2019, sales chief Pieter Nota said in an emailed statement. The result is a 1.2 percent increase over 2018, when BMW sold 2.49 million cars.

“We look at the coming year with confidence and aim to increase sales again in 2020,” Nota said in the statement.

The company is optimistic as high-end utility vehicles like the flagship X7 and an upgrade to the stalwart M8 performance coupe are their bread-and-butter.

German car production fell to its lowest in almost a quarter of a century last year as Europe’s biggest economy suffers from the fallout of a global trade war, according to the country’s VDA car lobby group.

Like many of their competitors, BMW had to balance their reliance on gasoline-powered vehicles and shift toward electric cars to avoid emissions fines from the EU, who recently enacted strict emissions laws. The rules will sharpen again next year, leaving automakers potentially facing billions in fines if their fleets don’t meet the average emission targets.

The Automotive Industry in Transition for 2020

Automotive is the second most data-driven industry in the world. Growing IoT and mobile technology manufacturers are able collect tons of information about drivers, their destinations, the routes they’re taking, traffic patterns, and even predict when maintenance will be required.

Now more than ever, customers are always connected and want a seamless experience. In 2020 and beyond, that means not just connection via mobile phone, home, and office, but in their vehicles, as well.  Drivers want to be connected to their apps, music and entertainment while kids are connected to games or homework. We’ve seen car-equipped WiFi in the past, but moving into the 2020s, we’ll see it become a staple of every new car purchase, rather than an upgrade.

Level 4 fully autonomous vehicles have continued to be the holy grail and with the likes of Waymo, Uber, Tesla and plenty of other companies showing off their capabilities in the space, there is still a ways to go before the average consumer is going to buy their own fully autonomous vehicle and sip a latte while plugging away on their laptop on their way to work. However, many expect a bigger dose of autonomous technology coming post CES.

In the navigation, most cars have voice control systems.  Many companies are improving the customer experience by using systems like Apple Car Play that will mirror what’s on your iPhone creating a seamless transition between phone and car. The pressure to digitize is about more than adding new digital features to every vehicle. It also means that the average car lifecycle will be modeling technology’s lifecycle, with drivers trading up when new technology becomes available.

Imagine if you didn’t need to stop into your local mechanic shop every time the check-engine light in your car turned on. Moving forward, you won’t have to, thanks to always-on connectivity. Using remote access, manufacturers will be able to provide technology updates, safety updates, recall information, etc., like magic—without you ever needing to set foot in a repair location.

Today, cars are able to pull multitudes of data and send it up to the cloud for processing, alerting drivers of potential issues they may be about to experience in the future, from engine trouble to faulty brakes, or a taillight that’s about to burn out.

As in all industries, digital transformation trend in automotive are shaking things up moving into 2020 and beyond. By and large, these changes will be huge improvements for drivers, making time in the car safer and more enjoyable for the long haul.