Swap a lease: BMW increases spending, Q2 profits fall 6%

BMW reported a 6.3% dip in second quarter profits at a quarterly conference in Munich.

Earnings after taxes came out to $2.43 billion down from $2.58 in the previous year. The loss is result of the emerging trade war between the U.S and China along with increased spending develop electric and autonomous vehicles.

While it’s too early to know the impact, China retaliated to tariffs imposed with a 40% tax on US car imports forcing BMW to raise prices 4-7% on X-5 and X-6 models made in South Carolina. The impact on sales is expected to be minimal and BMW has no plans to reduce or relocate production in the United States or because of tariffs.

Despite decreased profits, BMW has seen an increase in vehicle sales, up 4,000 in the second quarter. The German Automaker prides themselves on their flexibility, claiming their long-term strategy has helped protect them from tariffs. Amid trade disputes, Harald Kruger says the company endures through the build up of local production. Vehicles are produced where BMW sells them: Asia, Europe, and The Americas.

Attributing to lower profits, BMW has been stepping up their investments. The automaker spent $50 million towards an expansion project and 2.61 billion euros on research and development focused on new technology. A key area of the spending has been on electric cars for which BMW has seen a 42% increase in sales.

Recently, the US and Europe made a trade agreement to hold off on tariffs until further talks. Kruger views this as a good step and is hopeful that trade talks “can be carried out in a constructive dialogue.”

While the Q2 decrease in profits may indicate otherwise, BMW remains the largest U.S exporter and they maintain their $600 million dollar plans to expand the Spartanburg plant, ramping up X production 450,000 cars a year.

Volkswagen may have to recall 124,000 cars for presence of poisonous cadmium

Germany’s auto industry has had a great year with a bright future ahead, but not every automaker is experiencing success. Following a massive emissions scandal, German automaker Volkswagen attempts to rebuild trust in the brand but is faced with a new crisis.

Reportedly, the presence of Cadmium, a poisonous heavy metal, was cited in the charger component of electric and hybrid cars. According to German magazine Wirtschaftswoche, Volkswagen may have to recall up to 124,000 vehicles of this kind. Audi and Porsche vehicles, the luxury brands of Volkswagen group, are included in the range of cars in question.

Cadmium is carcinogenic and therefore banned in most auto industries. With 0.0008 grams of the toxic metal each in charging device in question, Volkswagen indicates users would be protected from exposure during the vehicle’s life due to strong insulation. Allegedly, VW’s supplier never mentioned cadmium content and Volkswagen was unaware of it’s presence in the chargers.

Volkswagen is complying with the German Federal Motor Transport Authority and stated that if necessary, they will recall the vehicles. If Volkswagen recalls the vehicles, they will be faced with the major concern of safely disposing of cadmium waste.

In the meantime, series production and delivery of said vehicles was halted immediately. A new supplier replaced the charging component and production has since proceeded, cadmium free.

Volkswagen seems to have hit a rough patch and the presence of cadmium is the latest to join the long list of problems threatening profits. Now is a seemingly fit time for the VW Group to reconsider plans moving forward.

IIHS reveals top safety pick

Earning the Insurance Institute of Highway Safety (IIHS) Top Safety Pick distinction becomes increasingly challenging each year. To qualify, vehicles must earn the top score in five different crash tests which go far beyond federal tests. This year, Toyota overcame with ease and was the only vehicle in the large-car class to achieve the this years accolade.

 

IIHS has reported that 2019 Toyota Avalon has the highest safety rating, earning the Top Safety Pick award. Securing the top score in almost every category, the Avalon held strong in extensive crash testing. The Avalon’s crash-prevention technology, which boasts active and passive safety systems along with superior automatic breaking, earned an exceptional rating with impressive stats. The auto breaking system prevented crashes at 12 and 25 mph. Notably, this is safety feature is standard across all Avalon model trims.

 

Despite standard safety features, there is considerable discrepancy between trims for their headlight quality. When it came to evaluations, the more expensive trims proved superior, earning higher ratings than standard models. Thanks to LED projector headlights, the Limited and Touring models provided remarkable visibility while standard models struggled. Lacking low beam visibility generated poor ratings for XLE and XSE models.

 

The 2019 Avalon is new and greatly improved; in addition to top of the line safety, it cruises on a 3.5 L V 6 engine with 301 horsepower. The 2019 Avalon will remain Toyota’s flagship sedan,only with more upscale options and offerings. The large-car offers a comfortable interior with standard cabin tech that can be further upgraded. Safety tech features also come standard and include a lane keeping assist system, adaptive cruise control, and the award winning auto breaking system. For those looking to save on gas and, there is also an Avalon hybrid model.

Crossovers Preferred Vehicle of Choice for U.S. Consumers

With automakers selling a 2:1 ratio of trucks to cars, trucks are driving the rapid decline of sedans. We use the term “trucks” to classify SUVs, crossovers, and pickups which all fall under the broad class of “light trucks”. Though this includes a  range of vehicles, the market trend speaks volumes to the decline of the traditional car.

In the United States, crossovers are the perferred vehicle of choice. According to Automotive News, truck sales have more than doubled car sales this year. The increase in sales has some carmakers increasing their large vehicle offerings and halting their production of sedans.

Many people view the car to truck switch as an upgrade and alternative to smaller cars. Why would drivers revert back to a standard size car? With the wide range of trucks avaliable, they don’t need to; SUV, crossovers, and pickups are now easily accesible and avaliable for varying budgets, styles, and needs.

For example, a 2018 Kia Soul, a compact crossover, starts at $16,200 while the Ford F-150 pickup ranges into a high of $60,520.

According to Edmunds, forty-six percent of car shoppers are exchanging their car for an SUV, crossover, or pickup. The trend is expected to continue, becoming the overwhelming market standard by 2025, if not sooner. The Bank of America Merrill Lynch forecast predicts that between 2019 and 2022, 71 percent of vehicles released will be categorized as light trucks. More options in the truck market are likely to generate higher profits for carmakers.

The New Rolls Royce Cullinan

Make way, there’s a new player in the game. Rolls Royce is making a distinguised debut in super premium SUV space setting it apart from the pack. The new segment of luxury off road vehicles including models from Bentley and Lamborghini is expanding with the addition of the Rolls Royce new Cullinan.

With a starting price of $325,000 the tag on the new “high-sider vehicle” tops Bently’s W-12 powered Bentayga and Lamborghinis V-8 powered Urus. It’s alternative approach to the sport utility class and background defines why the Cullinan stands out amongst it’s ultra luxe competiton.

Cullinans only downer:

Air suspension and a 72.2 inch height enables the vehicle to cross flowing streams with ease. Riding high comes with no compromise, the UK based carmaker eliminates the struggle of mounting yourself in; by the tap of the stainless door levers, the Cullinan lowers 1.5 inches for an inviting entrance to the plush cabin.

Rolls Royce impressive offroad history:

Long ago, during the Scottish Reliability Trials of 1907 and the Alpine Trials of 1913 the UK based carmaker performed in rough road testing. Frank Norbury, a Brittish businessman of the time, traveled a total of 620 miles in the Rolls Silver Ghost on a jouney from Bombay to Kolhapu without a trouble. Two Silver Ghosts were also used by T.E Lawrnece transporting goods through Palestine and Sanai deserts.

It’s Solid:

The cullinan was tested to destruction across the globe and offers a different set of off road capabilites. Although it’s intended ride does not include steep hill climbs and hardcore off roading, it makes  a solid choice for venturing light tralis.

Turbocharged:

Speedy and Agile, Cullinan has a twin-turbocharged 6.75 liter V-12 capable of speedy 563 horsepower and all-wheel steering making Cullinan drive seemingly smaller than it’s frame suggests.

Equipped to Tailgate:

The boot of Cullinan contains “The Clasp”, a never before used feauture within the Rolls Royce lineup. Equipped with a fridge, whiskey decanter, champagne glasses, and plenty room to spare, Cullinan makes the perfect base for a tailgate party. If that wasn’t enough, the rear can also provide seating with two outward facing seats.

Mercedes Benz New A-Class Offering

With the new A-Class arriving for showcasing in the US this year, the luxury auto brand is taking a new approach to sales and it completely contrasts a typical dealership experience.

Mercedes-Benz has been experimenting with alternative environments for showcasing, educating and connecting with consumers. Mercedes-Benz plans to open their third pop up this year on Chicago’s Michigan Avenue after success with those prior. The venture in experimental retail began last year with one pop up store in Atlanta, and a second in Miami at Aventura Mall.

In addition to their plans to open one more pop up this year, Mercedes-Benz USA CEO Dietmar Exler adds they plan on “doing way more of them, probably focused on new product launches”.

The laid back, no pressure pop ups intend to make the Mercedes brand more approachable, especially to those who did not see the brand as an option in the past. To maintain the no pressure atmosphere, the pop ups don’t sell vehicles. Instead, employees will forward prospective customer’s email addresses to the dealerships. The approach is working; according to a company spokeswoman they “are seeing an appreciable number of people who had not previously considered the brand, but who bought a Mercedes following a visit to the brand stores”.

The modern spin on showcasing offers consumers a chance to experience the new technology Mercedes has to offer without making a purchase. In hopes to reach the millennial generation with the launch of the A class sedan; consumers will be able to test out MBUX , the new multimedia system which features predictive learning abilities, improved displays, and artificial intelligence.

The pop up stores are open for about two months and the brand is careful in selecting locations, sticking mostly to upscale areas. Unlike Porsche, Exler is not considering opening permanent accessory stores for the time being and is keeping that reserved for the dealerships.

Lincoln Announces 2019 Nautilus

Lincoln’s top-selling U.S. vehicle, the MKX is getting an upgrade price point, as well as a new name. Lincoln announced the name change to “Nautilus,” and a 3.2% price increase.  The base model will start at $41,335 and top out at $65,260.  Along with the new names comes a wealth of new design elements and technology features.

Robert Parker, Lincoln’s director of marketing, sales and service, said that everything from the A-pillar forward has been redesigned. The Nautilus is the latest Lincoln vehicle to adopt the brand’s mesh grille, which debuted on the MKZ and Continental in 2016.

The vehicle boasts a new 2.0-liter four-cylinder, twin-turbocharged engine that gets 245 hp as well as all-wheel drive.  Buyers can upgrade to a 2.7 liter V-6 that gets 335hp.  Both will have an eight-speed automatic transmission and auto-stop.

The interior includes improvements that make for extra legroom and headroom as well as 22-position front seats with lumbar massage.  The Nautilus will be the first vehicle with Lincoln Co-Pilot360, a suite of standard driver-assist features that consists of automatic emergency braking with pedestrian detection, blind spot information with cross traffic alert, lane keeping system, backup camera and auto high beams.

Top US automakers report higher vehicle sales in June

Several top US automakers reported an increase in their June sales.  Consumers continued to purchase sport utility vehicles in larger numbers amid rising tensions between the United States and its trade partners.

The tensions led to a reduction in US consumer confidence entering June, and weighed on purchase plans for big-ticket items such as automobiles.  General Motors stopped reporting monthly numbers beginning in April, said that it’s sales rose 4.6% to 758,376 for the quarter. The increase was due to strong truck sales and a wave of all-new crossovers.

“Customers are buying with confidence because the economy is strong and they expect it to remain strong,” said Kurt McNeil, GM US vice president, sales operations.

Ford said that it sold 230,635 vehicles in the month of June, compared with 227,979, a year earlier. Sales of Ford brand SUVs grew 8.1% to 77,453 vehicles, which was a record for the month, the company said.

Toyota Motor’s June US sales rose 3.6% to 209,602 vehicles, with high sales in the RAV4 and Highlander sport utility vehicle models. Toyota noted that the had the “best-ever” light truck sales for June in the United States.

Next,  Fiat Chrysler said its monthly US sales rose by 8 percent to 202,264 vehicles, most comping from the Jeep brand, which hit its best month of June with a 19% increase.

Automotive Makers Say Blockchain Could Help Resolve Consumer Safety Issues

Over 28 million vehicles were recalled in the year 2017.  As high as that number seems, it was actually higher in 2016 at 52 million vehicles recalled.

The number of recalls  had to due to with a defect in Takata airbags and their inflators.  The airbags would shoot out metal with the airbag when deployed.  Automotive makers are now saying that blockchain tracking systems can help by solving some issues around recalls, fake products, and consumer safety.

Although the Blockchain can’t help with all aspects of the car industry, it will help to alleviate the damage when people do have problems with their cars.

Blockchain is helping to protect buyers from counterfeit parts as well as accidents from defective parts. Counterfeit parts are part of a $45 billion dollar problem across the globe.  Yet very few manufacturers have adequate end-to-end visibility of parts entering and leaving their supply chain. Most do not have visibility beyond their immediate vendor, making an ideal environment for the counterfeit market.

Airbags, filters, brake pads, and radiators are common counterfeit parts, and has major safety concerns for consumers.  Accidents are more prone to happening with fake parts installed on vehicles. Blockchain is able to eliminate most counterfeit parts out of the supply chain. When parts are registered on the blockchain, companies can easily trace their provenance, create record transactions, and track changes in custody. Hypothetically, if a shipment of brake pads isn’t registered or proven authentic on the blockchain, a manufacturer can know that the parts are unusable when receiving inventory. Thus, these parts won’t be installed into new cars.

Another way that Blockchain can help automotive companies is that it’s able to pinpoint which vehicles need to be recalled.  This alleviates the need for automakers to overcompensate to protect consumers. Recalls cost automakers around $22 billion in 2016, and this would help them to better save money. With a blockchain-based system, it’s easier to track and trace parts from their source, all the way down to individual vehicles.  If a faulty product is coming from one supplier’s factory, like Takata’s, that problem can be pinpointed in the supply chain.

As cars become more automated, control of the vehicle will begin to shift from the driver to automation. Auto-park features, blind spot monitoring and automatic braking are the beginning of this process. Because of this, the integrity of electronics and software inside the car is crucial.

If individuals are going to place their trust in the technology of their car, people have to know the sensors and computers in their vehicles are working correctly—every single time. Which is another reason why it’s highly important to eliminate faulty and fake products.

Ultimately, blockchain solutions will allow for automakers to find out where the failures are and quickly alert owners when there’s an issue. It works for both seller and consumer, and equally keeps users more safe on the road.

FIFA World Cup Has Caused Shortage of Transportation

The FIFA World Cup 2018 has caused a temporary shortage of transportation in certain regions of Russia.  The shortage is due to a local rise in tariffs and regular delays at customs. Fear of Russia ceasing to import automotive parts from May 25th to June 25th due to security measures have proved to go unfounded.

Irina Novikova, the inland transport department director of Gefco said that restrictions on truck operations in Russia have also had a limited impact, leading to a small increase in transit time on the delivery of goods to the areas hosting World Cup games. Novikova stated that there have been delays at customs clearance that have also added to the shortage due to more thorough checks of cargoes and their documents.

Several governmental agencies have abandoned the idea to restrict the import of automotive parts through the Sochi Sea Port and the Port of St Petersburg. Port authorities notified their transportation companies that supplies were likely to be disrupted, according to Russian newspaper Kommersant.

It is not clear whether assembly plants located in the security zones around the football venues would be allowed to import parts overland as an alternative, and OEMs were advised to build up their inventories in advance – but were given little notice to do so.

Assembly plants operated by Toyota, Hyundai, Ford and Nissan in St Petersburg, as well as BMW, Hyundai and Kia in Kaliningrad are all affected. In late April, Nissan said it was worried that it would be left without enough airbags for the two months during the competition. Hyundai’s external relationships director, Viktor Vasilev, stated his concern about the restrictions while hoping that all sides would “keep prudence.”

The final list of goods which fell under the safety-related restrictions did not cover automotive parts and goods.