Tag Archives: Automotive industry

Toyota – 7m hybrids should make more noise

Toyota_celebrates_100_000_UK_hybrid_sales_Toyota_54952Toyota tells us it has just clocked up 100,000 hybrids in the UK market, almost 14 years after the first Prius went on sale. Not a huge tally if we’re honest. But Toyota was way ahead of the game back then, and globally it’s now nudging seven million hybrid sales.

That is impressive, because by my calculation it equates to savings of around 47 million tonnes of CO2 and 16.5 billion litres of fuel. And as the company is currently selling 1 million hybrids annually and launching around a dozen more hybrid models by next year, the numbers are accelerating.

But Toyota didn’t give us those stats, which is a pity because it’s a great story. And also because it’s in danger of losing the high ground to noisier companies which are newer on the scene and happy to motor down a hybrid highway paved by the Japanese giant.

Electric vehicles are now firmly in the mainstream, even if they’re not selling in truly large numbers yet. Every manufacturer has an EV of some sort. BMW has moved the game on for EVs with its cool and urban i3. Toyota’s rival for the global no 1 car group, VW, has finally launched its first EVs. And both are offering battery-only products.

But hybrids are the way forward for mass adoption of electric vehicles. The hybrid drivetrain, previously regarded as a slightly clumsy compromise, is now seen as the bridge to fully electric motoring the world isn’t yet ready for. And Toyota’s first-mover status should mean that it owns that space.

It still can. Hybrid technology is finding its way into luxury brands; even Formula 1 has gone hybrid. This is transforming favourability among prospective hybrid car buyers which Toyota, with a large existing hybrid customer base – unlike its competitors – can exploit.

The next few years should be Toyota’s. But it will need to invest in its brand and marketing as much as in its R&D if it’s to hold the high ground it’s already taken technologically.

Bentley, Beijing and the hybrid halo

Mercedes recently said that the combustion engine is with us for at least 20 more years. No doubt that’s right, but it has a particular interest. The fact that it still produces a V12 is a badge of honour for the brand. And no doubt a purchase trigger for Asian plutocrats who absolutely must have the highest in perceived luxury.

bentley-mulsanne-hybrid-concept-2014-beijing-auto-show_100463149_lContrast that with last week’s debut of a hybrid Bentley. It’s an important moment, the more so because it was at the Beijing auto show – a place where the brands don’t normally make concessions to the distinctly Western concept of sustainable luxury. The Bentley is officially a concept car, but significantly it’s a version of the Mulsanne, a production model and the brand’s flagship: if hybrid technology it can be accepted at the pinnacle of traditional, conservative luxury, it can fit with any brand.

With the Bentley, and the simultaneous Beijing launch of a production long-wheelbase hybrid Range Rover, the time when luxury and premium car buyers will want to know why they haven’t got hybrid power is surely approaching. Hybrid systems are at the apex of powertrain technology right now, and if seen as such customers will demand them.

Bentley’s VW Group sister brand Porsche already offers a hybrid Cayenne and Panamera, but they don’t sell. Same for Range Rover’s standard-wheelbase hybrid Range Rover: they’re not proper Porsches or real Range Rovers. But the Bentley and the LWB Range Rover can change this. If the idea of a hybrid Bentley goes down well with Chinese luxury car buyers, it will gain acceptance for Porsche’s hybrids. And if hybrid power is accepted in the limousine version of the Range Rover it won’t be perceived as a dilution of the brand in the standard car.

Creating hybrid versions of range-topping cars enables VW Group and Jaguar Land Rover to exploit the higher margins of big-ticket products and, in time, as the halo effect occurs, to sell hybrid versions of lower-price, higher volume products at a profit. Larger volumes will in turn reduce the cost of hybrid technology.

China is key to widespread adoption of future electric vehicle technologies: as a growing car market with vast volume potential it makes no sense to continue building only a combustion-engine infrastructure to meet the needs of the emerging motorised masses. Last month the premier declared a war on air pollution, yet the country still lacks a vehicle charging infrastructure. Hybrids are therefore the catalyst. It’s good strategy for the carmakers to push hybrid products in China, and to do so top-down, using halo brands and models as cultural influencers. Plug-in hybrids and battery-only vehicles will follow when the infrastructure is there.

So the challenge for global mass-adoption is one of communications, and the audience it needs to communicate with is as likely to read Wired as Forbes. Hybrid systems need to be positioned not so much as a means to supplemental performance or a cleaner, greener conscience as simply the latest and best technology, a must-have.

A premium car without sat nav? No chance. The same surely applies to the technology which is the beating heart of a car.

Ford drives a future with fewer cars

Shanghai overpassAlmost hidden behind the parade of new cars signalling a rejuvenated motor industry at the Detroit motor show, Ford has made some interesting minor headlines with CEO Alan Mulally talking about the bigger issue of future personal mobility. The remarkable fact here is that other carmakers aren’t also speaking out on the subject.

The motor industry is changing faster than ever before. But it’s a bigger picture than that. Cars are just one form of personal mobility. Private and public transport are merging. The whole transport landscape is becoming integrated, inseparable from energy considerations and the environment. Major cities are already at car capacity and struggling to develop mobility solutions which will work. Which are sustainable.

Part of this involves excluding cars from city centres, yet that is precisely why the car companies should be leading discussion and planning for future urban mobility. They need to not only offer temporary or complementary solutions but to be at the core of the new transport model, whether in providing micro-footprint mobility devices, public transport vehicles, components or infrastructure.

Easier for a Tesla than a Toyota for sure. But before long, car companies will not be able to exist in their current form. Mulally cut to the point, saying that simply building more and more cars is “not going to work”. The industry is currently focused almost solely on the existing model: customer buys car, uses it in all situations, swaps it for another. It gives the customer huge choice – of different brands and variants which don’t fit the world we’re about to be living in. It doesn’t reflect the culture now required.

Already, buying habits are changing. Consumers are eschewing larger cars. Younger people are putting off buying vehicles. Existing cities are adding pedestrian areas, bike lanes and trees. Megacities are evolving to a new, connected blueprint. Quality of life is as much a driver as consumerism.

Car companies traditionally don’t lead. They follow legislative requirement and market imperative. But when they do so they excel – look at the extraordinary reduction in CO2 emissions and increases in engine efficiency and performance over the past few years. They could do so in the wider, emerging mobility landscape too.

Credit to Mulally for being so direct. And why shouldn’t Ford be the car company to lead opinion? More than any other it has the mobility credentials. It’s an everyman brand, started by a man who gave motoring to the masses with the Model T, and in recent years it’s invested huge amounts in to environmental R&D.

Credit to Mulally also for admitting to not yet knowing precisely what role Ford will play in future mobility. But he’s giving it the thought it needs. And with that approach Ford could be a vital part of the big mobility plan. A mobility brand.

 

Frankfurt reflection #4: transformational Tesla needs transforming

The most important new car at the Frankfurt show. BMW i3? No. Jaguar X-C17? No. Porsche 918 Spyder? No.

The most important car was the Tesla Model S. This is a car from a company most people have never heard of, which has done what none of the major carmakers has managed. It is an all-electric vehicle without serious range issues, which competes on performance and price with hybrid offerings from Porsche, BMW, Audi and Mercedes.

However, pleasing though it looks, its styling is more stretched Mazda than premium, differentiated, cutting-edge, game-changing automotive landmark. It’s not just too conventional. The grille has a large, shiny-black-plastic element which looks cheap. And the interior materials are not good enough. One look at the BMW i3, costing close to a third of the price, tells you how a car like this should be executed.

Frankfurt - TeslaThese things can be forgiven and overcome. But the way the car was presented at Frankfurt was a brand crime. The stand was a bare, sorry affair surrounded by hall clutter and no attempt to communicate the significance of the car or the Tesla experience. The display was as underwhelming as the car’s technical prowess is astonishing. This from a company run by Elon Musk, PayPal billionaire and space pioneer as well as automotive trailblazer.

As battery technology improves, Tesla will be able to develop smaller, cheaper, battery-only electric vehicles which could take on the big players in the segments of the market which matter for volumes. But only if it realises it has a brand engineering job to do too.

Frankfurt reflection #3: Toyota – market leaders playing catch-up

The Frankfurt show was the moment when electric vehicles not only moved into the mainstream of the displays, but when they became the stars. Everyone had some kind of EV to show, and it was clear that the technology can be used equally well for economy and performance. BMW covered both angles by using the i3 as shuttles displaying and its production i8 big brother, which has been conceived around the performance and handling advantages of electric motors. A big slam dunk for the Germans.

Frankfurt - YarisAll of which was bad news for Toyota. Its Prius pioneered hybrids, which most people agree present the immediate way forward for EV technology, but it does not enjoy the recognition it deserves. The stats are remarkable: 5.5m Toyota and Lexus hybrids sold to date, resulting in savings of 37m tonnes of CO2 and 13bn litres of fuel. It’s now selling 1m hybrids a year and will launch 15 new hybrid models by 2015, so the stats will accelerate.

So Toyota owns this territory, yet it’s playing PR catch-up with companies whose EVs have only recently begun to surface – not just BMW but VW, Mercedes, Renault and others. I was in PR at Toyota in the 1990s and was constantly frustrated at the lack of recognition in Japan of valuable brand messages, how easy it was to uncover PR nuggets yet how difficult it was to use them.

In Frankfurt Toyota showed a high-performance hybrid concept of its Yaris supermini and gave its entire stand over to hybrids. The next few years belong to Toyota, but it will need to give its PR and marketing people as much credibility as its engineers if it is to take the high ground it’s already scaled in technical terms.

Frankfurt reflection #2: no escaping Mercedes

Frankfurt - MB confFrankfurt is a show of strength for the German motor industry: the local car companies have their own halls, each of which would accommodate an entire regional motor show.

For the last couple of events BMW has had a driving circuit in its hall, snaking around above the floor displays. Audi had one at the last Frankfurt event too, so this time it went for an upside-down night-time metropolis hanging from the ceiling. Why? No idea. But as VW Group’s premium volume brand, which has overtaken both BMW and Mercedes, it gets its own hall, separate from VW’s other seven car brands, and has to do something different.

But it’s still Mercedes which dominates. In the domed Festhalle building, opened by Kaiser Wilhelm II in 1909, it creates an extravagant world over three floors which is impossible to ignore and equally difficult to escape. Its press conference, allocated 45 minutes – longer than any other – attracts most of the 10,000 attending media. Almost no-one can see anything but, more important, once in you can’t leave.

Take the escalators and you’re on the top level and can descend only floor-by-floor, looping past endless displays like a nightmare vision of an automotive supermarket. But when there are 10,000-plus people standing, waiting for a press conference, unwilling to move an inch, you’re stuck. No chance of going down the stairs, and one lift for staff only.

I’m not sure what German Health and Safety’s like, but if there had been a fire or a security alert you may as well have reclined a seat in one of the new S-Classes, turned on the back massager and hoped for the best.

Frankfurt reflection #1: i3 makes an impact

Frankfurt i3The BMW i3s shuttling journalists around the vast Frankfurt IAA showground last week may have given us a glimpse of the future in more ways than one.

With its road network, surrounding office blocks and on-site railway station and hotels, the Frankfurt Messe site perfectly created a vision of the megacity which BMW has been planting in our minds as the habitat for electric vehicles. And the i3 was in its element, moving four adults around in style and surprising comfort, with zero tailpipe emissions, swiftly – excitingly even, with huge and immediate torque on tap – and silently.

And that’s the thing. So silent were they, with almost no noise from the skinny tyres, that it was almost impossible not to step in front of one. I nearly did. The drivers learned to play it very safe, assuming that pedestrians would not notice the car and giving them a 5-metre berth. One admitted to having hit someone on the first day.

It demonstrated how much we depend on our hearing in such situations, and makes you wonder if some sort of pedestrian avoidance system will become necessary. Or perhaps a horn with a V8 soundtrack.

Frankfurt shows the way forward

Frankfurt - MBUnlike the Geneva motor show, Frankfurt isn’t an annual event – it alternates with Paris. But it’s the big one. A vast, sprawling mini-metropolis of a show, a temple to the German auto industry which powers the European market.

But the 2013 event came at a time of severe market decline. Five years of sliding volumes, sales down 6.7% in the first half of the year, and the mighty German market falling by over 8%. Meanwhile Spain’s decline is such that the Big Five has become a Big Four of just Germany, the UK, France and Italy. The region’s manufacturing base needs major surgery, with VW Group boss Martin Winterkorn saying in Frankfurt that 10 factories should be closed to relieve the industry’s chronic overcapacity, and none of his counterparts is under any illusion that weak lending and high unemployment mean recovery will be anything other than slow and long.

Yet Frankfurt 2013 was the most positive for years. OEMs like Nissan which didn’t attend two years ago were back. There was no single stand-out high-volume model launch – partly because these days there are so many niches – but you couldn’t move for new product. Concept cars were strewn like confetti. Cutting-edge technology oozed out of the products. The feeling was that the market has hit the bottom and there’s only one way to go from here, so let’s design and engineer our way out of this.

Renault, the company which has fallen hardest in the downturn, had no less than five concepts. You have to hand it to them – after the massive commitment to launching five battery-only EVs at the worst possible time it’s going on another product offensive. But a statement by the company that it’s aiming to get 60% of its business outside Europe is telling: it’s pinning hopes on emerging markets and the continuing growth of the Dacia budget brand.

Nevertheless, the strategy is in sharp contrast with Fiat Group, which is failing to invest in new product, and also, when you look closely, Volkswagen. VW Group has very nearly 25% of the European market – helped by the decline of Renault, PSA and Opel but with the VW brand alone now accounting for a larger share than other OEM group. Yet apart from the Golf and Up! its huge Frankfurt stand was filled with ageing product.

What was new was the showing of its first electric production vehicles, the e-Up! and e-Golf. Always one to enter new segments when the market has already been primed and with well-proven offerings, VW has come late to the party but with impact, talking of up to 40 electric or hybrid variants, 14 of which will arrive by next year.

Frankfurt marked the moment when EVs began to move seamlessly into the mainstream of the displays, with almost every manufacturer showing versions of existing models with electric powertrains of various sorts. EVs were part of Frankfurt - i3 shuttlesthe show’s fabric as soon as you entered the gates, BMW providing a fleet of i3s to shuttle press around the showground, a high-impact demonstration of the car doing what it does best – moving four adults around a confined, busy road space in swish, stylish silence, and here giving a glimpse of the megacity. Mercedes and Kia also provided hybrid shuttles but everyone wanted to ride in the i3, which says a lot about the fascination it holds. Elsewhere the production version of Tesla’s Model S, a car as remarkable the i3, was displayed on a stand as underwhelming as its technical prowess is astonishing. This is a landmark car presented and styled like a Mazda.

Porsche showed how it should be done with the $1.05m 918 Spyder and a Porsche Design recharging point but, back in the real world, Volvo displayed the world’s first diesel PHEV (plug-in hybrid) engine. Range Rover launched and began taking orders for diesel hybrid versions of both the Sport and flagship Vogue models, Mercedes had a PHEV version of the brand new S Class, and BMW revealed a prototype PHEV system in its new X5. The trend for hybrid technologies to be used for performance as well as efficiency and performance is very much on its way.

Toyota even showed a high-performance hybrid concept of its Yaris supermini, developing 420PS. But its core message was giving its entire stand over to hybrids as it rather belatedly tries to establish perceived ownership of hybrid technology leadership. Since it launched the first Prius it’s quietly – too quietly – sold 5.5m hybrids, resulting in savings of 37m tonnes of CO2 and 13bn litres of fuel. It’s now selling 1m hybrids a year and will launch 15 new hybrid models by 2015, so the stats will accelerate. The next three years should belong to Toyota.

The growth of the B-segment crossover is one of the key current trends in Europe, and it Frankfurt - GLAwas moved onto a new level in Frankfurt by the introduction of the Mercedes GLA. Audi has inevitably already entered the segment with its something-for-everyone product strategy, and BMW has extended its X range down to a 1-Series model, but the Mercedes, with less of a scaled-down SUV shape, could be the most popular of all. This could conquest sales from the mainstream offerings of Peugeot, Renault and Opel, and to make their lives more difficult Lexus previewed its own crossover with a leftfield Darth-Vader-like concept. But the car which stole the Mercedes show at its massive hall was a concept S-Class coupe set to replace the CL next year. Even stripped of some of the chrome and detailing, the production version will be a must-have in Florida, LA, the Middle-East, Moscow and Shanghai.

BMW’s hall was demure by comparison. The production i8 electric supercar was there, albeit rather shyly presented, which is no bad thing. BMW likes to manage – and exceed – expectation, and no doubt it will with the i8. It’s no 918 Spyder, but then it will cost a mere $150,000, and in its own way it’s just as clever, with super-lightweight carbon and aluminium architecture, a futuristic body form, 100 mpg and the performance of an M3. Talking of which, the M3’s replacement, the M4 coupe, also debuted at Frankfurt.

BMW’s big rival Audi, for all its sales success, seems to be running into a designer’s equivalent of writer’s block. It trumpeted the Quattro concept, an homage to the original, groundbreaking Quattro of 30 years ago. Yet this looked very similar to – and not as well resolved as – a concept shown 2010. Its other Frankfurt concept, the Nanuk, was a total surprise and yet familiar. Anyone who was in Geneva earlier this year would have seen this, less some Audi detailing and minor styling changes, on the Italdesign Giugiaro stand as the Parcour concept. As an off-road supercar it’s interesting, but it should have been designed as an Audi from the start.

Where Audi has been hugely successful in recent years is in introducing premium products in lower market segments. Like Renault with its Initiale sub-brand, Ford is now attempting to go in the opposite direction by providing a premium experience for its mainstream models using the Vignale banner. The company showed a restyled Mondeo, a conventional product in the declining D segment, which under the Vignale name will give customers a dedicated dealer contact and concierge services. It’s a tough goal and Ford may well be better off letting the product do the talking– the S Max concept in Frankfurt is a compelling design and clearly close to production.

Frankfurt - C-X17But perhaps the most significant show theme was platforms and specifically scalable and flexible architecture. In addition to the Renault-Nissan architecture showcased in the new Nissan X-Trail, PSA’s low-cost, low-weight platform underpins the vital new Peugeot 308 launched at Frankfurt. But the importance of platform strategy is underlined by being absolutely vital to the fortunes of two smaller companies – Jaguar Land Rover and Volvo.  Volvo’s star was the Concept Coupe, sitting on the next XC90’s platform, which has been designed to accommodate Volvo’s new family of four-cylinder-only engines and hybrid drivetrains announced in Frankfurt. Jaguar’s C-X17 concept, built on a new aluminium architecture, is a remarkably successful styling interpretation of the brand in an SUV form. It’s clearly intended for production, and Jaguar will be expecting a Cayenne-like uplift when it launches. But more importantly the same unerpinnings will give rise to a compact model family to compete with the BMW 3-Series off in 2015, transforming volumes and potentially changing the motor industry order: the C-X17 is not merely an SUV and the first iteration of a new architecture, but a disruptor, a catalyst to the change within Jaguar necessary for growth.

This may have been the most significant Frankfurt show for decades.

Sales not the key to European recovery

eu-flag1When European car sales figures for the first half the year were released recently they were met with positive noises that after a massive slide the market had bottomed out. The Eurozone crisis has gone quiet, stability beckons and next year will see the recovery start, so the story goes.  Now there’s the news that the Eurozone’s economy moved out of recession in the second quarter, and year-on-year Western Europe car sales were up in July, with signs of life in France and Spain. Meanwhile UK sales have actually grown by over 10% this year, with private purchases up by over 16%. Good news all round then.

But look more closely, and one of the key things analysts have attributed the UK success to in 2013 has been PPI windfalls. You know you’re not necessarily looking at a sustainable economic trend when that’s cited as a major factor.

And in Europe even Europe’s economic and automotive powerhouse, Germany, has been hit hard, down over 8% in the first half of the year. That’s more than the 6.6% for the EU as a whole and sends out a tough message to everyone including the UK. The fall European sales since 2007 has been catastrophic – three million units a year have been wiped from the spreadsheets. That’s over 20% of the market.  The Club Med basket cases like Greece and Portugal are minor car markets but three of the big five markets in Europe – Italy, Spain and France – have nosedived during the downturn. No-one on the inside is really expecting Europe to bounce back properly for a long time, and despite the positive signs the forecasts are still for a contraction of over 3% for the year.

But the point is this. Things may be about to start improving, slowly. But the car industry should not be trying simply to recover on the basis of having hit the bottom. It has huge structural and cultural problems – massive overcapacity, market saturation, a squeezed mid-market, changing consumer dynamics, a reliance on an old fashioned retail model, and the dominance of China. Now is the time to change. To reduce capacity. To recognise when a brand is unviable. To drop models in declining market segments. To invest in outstanding new product people actually want. To focus on design. To develop distribution models which are right for different markets. To embrace digital retailing.

The car industry is brilliant at smoke-and-mirrors and at reinventing itself. If it concentrates on the latter over the next five years it may emerge from the downturn stronger and more fit-for-purpose.