Things are not looking good for the supposedly most advanced and technically able auto industry in the world. The day of regulatory reckoning is here, in The Morning Shift for Tuesday, Oct. 2, 2018.
1st Gear: German New Car Registrations Down 30 Percent Under WLTP
For months now the German auto industry has been fearing a new, stricter, set of emissions standards called the Worldwide Harmonised Light Vehicle Test Procedure (WLTP). Well, the main thing is that WLTP is supposed to be more realistic. Also, as carmakers like Volkswagen are quick to point out, individual models, engine by engine and trim by trim, have to get individually tested now. More realistic, but also significantly more time-intensive.
This is what all of Dieselgate was about, the same with Dieselgate’s older brother called Cycle Beating—cars would technically pass emissions tests while being tested, but numbers wouldn’t match in the real world.
Seriously, German carmakers have been wildly apprehensive about WLTP. They have been dumping cars on the market trying to unload cars that presumably wouldn’t pass. Other effects too: the VW Arteon got delayed in the U.S. because of bottlenecks with WLTP, something that the U.S. doesn’t adhere to.
In any case, September was the first month where everything had to pass WLTP and, man, it does not look good. New car registrations are down by nearly a third, as Reuters reports:
New car registrations in Germany fell 30 percent in September year-on-year, a source told Reuters on Tuesday, as manufacturers struggled to adjust to the new WLTP emissions testing regime.
The source said 200,000 cars were newly registered in September.
German car authority KBA was due to publish its official September registrations data later on Tuesday.
That’s the whole report. Not a ton to go on, but we’ll hear more as the day wears on. I am shocked.
Again, the difference between WLTP and how things have been before is principally that it’s supposed to test cars closer to how they perform in the real world, as opposed to the old New European Driving Cycle (NEDC) that has grown seriously outdated over the years.
2nd Gear: Renault Boss: ‘Diesel Is Condemned,’ Plans Switch to Hybrids
The Paris Motor Show (rather, le Mondial de l’Auto 2018 à Paris) is on today and that means we get to hear auto industry execs make long speeches where they alternate between saying 1. Our company is being ruinously targeted by unfair regulation and 2. Our company is bristling with innovation that we totally wanted to do on our own because we’re so good you guys.
As such, Carlos Ghosn spoke today highlighting these two points. He made clear that consumers never really cared about diesel versus gasoline, it was the regulators who have made it their mission to destroy the fuel, as Automotive Management Online reports from the Financial Times behind a paywall:
Quoted in the Financial Times, Ghosn said that consumers buy cars based on price, running cost and resale value and “do not care” what engine their vehicles have.
He added: “Diesel is condemned because policymakers have condemned diesel. That is it.”
Ghosn also followed through on point two, declaring that Renault is going hybrid in 2020, with a hybrid version of the bread-and-butter Clio and a plug-in hybrid of the also bread-and-butter Mégane and Captur small crossover
Ghosn said: “Groupe Renault was a pioneer and is the European leader in electric vehicles. We are introducing K-ZE, an affordable, urban, SUV-inspired electric model combining the best of Groupe Renault: our leadership in EV, our expertise in affordable vehicles and in forging strong partnerships.”
Renault has also confirmed its plans to further electrify its range in its 2020 product refresh cycle, offering hybrid on Clio and plug-in hybrid on Mégane and Captur.
The brand said that it would use e-Tech, described as “an innovative, 100% Renault in-house technology which enables Renault to offer hybrid versions on B and C segment models” to implement the switch to an electrified drivetrain.
Ah, such great innovation. Wonder where Renault got that impetus from. Who can say.
3rd Gear: Merkel Cuts Diesel Deal to Limit Driving Bans In Cities
On the subject of diesel woes, there has been a lot of talk about cities banning diesel cars, particularly in Germany. Chancellor Angela Merkel has gotten involved and worked out a deal to sort out how owners of dirty diesel cars will be able to get them cleaned up, apparently as sort of an effort to prevent these driving bans from happening, as Reuters reports:
After marathon talks into the night, Chancellor Angela Merkel and leaders of her coalition partners announced in the early hours that they had agreed on a way to cut pollution in cities while avoiding unpopular driving bans.
Initially there were no details of the deal but the document said German carmakers had agreed to offer an exchange program with attractive trade-in incentives or discounts for owners of diesel vehicles of the Euro 4 and Euro 5 emissions standard.
[...]
On Monday, conservative Transport Minister Andreas Scheuer said German automakers were willing to bear most of the cost of upgrading old diesel cars to reduce air pollution in German cities, but he provided few details.
The German government did intone multiple times that it was the car companies that started this mess and it’s the car companies that should pay for it, but the precise details of how many euros each retrofit fix will cost and how much each carmaker will be able to cover makes it clear that the government will be subsidizing this to some degree.
4th Gear: Expect 100 Electrified Models on the Market... A Quarter Century After The Prius
You, the consumer, should be able to expect a wealth of hybrid and all-electric cars on sale here in America by 2022, Automotive News reports. That’s a cool quarter century after Toyota first put the Prius on sale, 22 years after it first came to America and 23 years after the little Honda Insight debuted Stateside.
It’s sort of generally understood that new technology takes about 25 years to fully integrate into the auto industry and that seems about right.
Go to Automotive News to see the full list, which includes everything from the Hyundai Kona and Jaguar I-Pace this year to a hybrid Jeep Wrangler to, wait, this list includes the Elio? Oy.
5th Gear: Aston Downplays Stock Aspirations
For whatever reason I remain fascinated with the business side of Aston Martin. Having left the clutches of Ford, it is a boutique sports car manufacturer not greatly unlike, say, Lotus. The company has worked out some interesting partnerships, like securing engines from AMG as of late, and has made some bold claims about going with EVs in the future, but Aston’s existence should never be taken for granted.
Anyway, Aston is going for an IPO soon, but today it has rolled back some of its aspirations, as Bloomberg reports in Automotive News Europe:
Aston Martin pared back its supercharged stock-market ambitions ahead of a planned initial public offering this week, lowering the top end of its targeted range by about 11 percent.
The new goal is 18.50 to 20 pounds ($24-$26) per share, the luxury car maker said Monday in an emailed term sheet.
Previously, the company had set a range of 17.50 to 22.50 pounds, as it seeks a valuation higher than its only listed rival, Ferrari.
It’s looking like Aston will end up not more valuable than Ferrari, but maybe right there on the same playing field, Bloomberg expects. Sure.
Reverse: Read This For the Brioche Line Towards The Bottom
Neutral: Is Something Like the WLTP Coming For America?
I can’t help but feel like American emissions tests are more on the unrealistic side than not. What would happen if we had a WLTP-style reckoning here? And would that happen?