Author: CNBC Online news

VW pounds another nail in the coffin of the station wagon, drops Golf SportWagen and Golf Alltrack

Volkswagen Golf Sportwagen Alltrack seen at the New York International Auto Show at the Jacob K. Javits Convention Center in New York. (Photo by Michael Brochstein/SOPA Images/LightRocket via Getty Images)Michael Brochstein | LightRocket | Getty ImagesAs it gets ready to wrap up the 2019 model year, Volkswagen says it will drop both the Golf SportWagen and Golf Alltrack models from its lineup.
The move announced Wednesday comes as a major blow to station wagons, a body style that was ubiquitous in the years when baby boomers were still in knee pants, but which has all but vanished in today's SUV-crazed market.
“SUVs have definitely assumed the mantle of family haulers from the station wagons and minivans we remember from our childhoods,” said Scott Keogh, president and CEO of Volkswagen of America.
2018 Buick Regal Tour XSource: General MotorsNot a wagonThe list of wagons has grown steadily thinner over the last several decades, with only one now offered by the Detroit-based manufacturers that produced them by the millions in the 1950s, 1960s and into the 1970s. Buick has a station wagon it doesn't even call a wagon, hoping it can generate more enthusiasm by dubbing it the Regal TourX.
Volvo, a brand long associated with wagons, has taken the same approach with some of its models. If you want the V60 it announced last year, you will have to special order the compact wagon. It has had more success by taking some models, boosting their height, adding SUV-style cladding and dubbing them with names like the V90 Cross Country.
The luxury market was one of the last bastions for wagon fans. But even there, the market is fading out. BMW decided not to bring the new wagon version of its updated 3 Series to the U.S. this year, and Jaguar is widely expected to phase out its XF Sportbrake which got little momentum out of using the British term for wagon.
Demand tumblesVolkswagen had been intent on remaining in the segment but the sales numbers just couldn't support a sound business case.
For all of 2018, the German automaker sold a grand total of just 14,123 Golf SportWagens, a 47% decline. Demand tumbled another 36% for the first seven months of this year, averaging out to barely 750 of the wagons a month. The Alltrack faced a similar decline.
By comparison, U.S. sales of Volkswagen's various SUVs rose 12% through the end of July, despite the phaseout of the original Touareg model. And it is planning to add three more SUVs by 2021, including the five-seat Atlas Cross Sport, the all-electric ID. Crozz and a subcompact that has not yet been named.
“Consumers want utility vehicle and so, for the U.S. market, automakers are adding more of them while taking wagons away,” said Stephanie Brinley, principle auto analyst with IHS Markit.
The 2020 Subaru Outback is revealed at the 2019 New York International Auto Show in New York City, April 17, 2019.Shannon Stapleton | ReutersSubaru's committedThere still are some options for wagon fans, including the Buick Regal TourX, Volvo V90 and, for the moment, the Jaguar XF Sportbrake. Mercedes-Benz offers several versions of the E-Class, including the high-performance AMG E63 S Wagon. Porsche has a wagon version of the four-door Panamera, the Sport Turismo, and Mini offers the Cooper Clubman /S.
But no manufacturer remains more committed to the body style than Subaru, with three different models: the Outback, Crosstrek and Impreza.
With the vultures circling around the Jaguar, observers are wondering which of these current offerings might be the next to fall by the side of the road. Brinley doesn't see much life left in the segment, but she doesn't think automakers are ready to give up entirely.
They've tried coming up with more appealing names, like TourX and Sportbrake. But they've also been tinkering with hybrid designs that are meant to blend the best of wagon and utility vehicle. So far, that hasn't worked very well, with models like the Accord CrossTour, Acura ZDX, BMW 5-Series GT and Toyota Venza failing to click with consumers.
“They haven't found the right answer to that fill-in-the-gap question,” she said, “but they're likely to keep trying.”

Peugeot-maker PSA is testing autonomous driving technologies in Spain

urbancow | E+ | Getty ImagesAutos giant PSA is conducting tests in the Spanish city of Vigo to “advance the development of autonomous driving”.
The work, which is focusing on vehicle-to-infrastructure-communications, is being carried out by Groupe PSA – whose brands include Peugeot, Opel and Citroen – and the Automotive Technology Centre of Galicia (CTAG).
In an announcement Tuesday, Groupe PSA said the goal of the testing was to see how vehicles could communicate with “surrounding infrastructure in a complex urban environment.”
The collaboration will focus on a number of areas, including the protection of vulnerable users; automated valet parking; autonomous driving in urban areas; and “optimal speed regulation” when vehicles approach traffic lights.
“This project in Vigo supplements the trials already carried out by Groupe PSA in Galicia, other parts of Europe and China,” Ignacio Bueno, the director of Groupe PSA's Vigo plant, said in a statement Tuesday.
“These initiatives bring together the various components of the ecosystem that need to be created in order to deploy the technologies enabling connected, autonomous vehicles,” Bueno added.
The tests in Vigo fall under the umbrella of the European AUTOPILOT (Automated Driving Progressed by Internet of Things) project, which began in 2017 and aims to utilize internet of things technologies to improve automated driving.
Vigo is one of six pilot areas being used for the project. The others are Tampere, Finland; Versailles, France; Livorno, Italy; Daejeon, South Korea; and Brainport, the Netherlands.
Over the last few years, the development of technology has led to several trial runs of autonomous vehicles.
In August 2018, for example, the Hyundai Motor Company announced that the first journey by an autonomous truck on a South Korean highway had taken place. The firm's Xcient truck, which has a maximum load capacity of 40 tons, drove around 40 kilometers between Uiwang and Incheon.
The vehicle used an autonomous driving system that allowed it to accelerate, decelerate, steer and maneuver through traffic without needing input from a human, although one was on board to take control as and when required.
In February 2019, the CEO of Arm Holdings told CNBC that it would be “a while” before self-driving cars became mainstream.
“It is a phenomenally hard problem to anticipate what a car could do under absolutely any set of circumstances,” Simon Segars, who was speaking to CNBC's Karen Tso at the Mobile World Congress in Barcelona, Spain, added.
“I think you're going to start to see early services, in quite a constrained way, quite soon over the next couple of years,” he said, explaining that there was “some way to come” before the technology was “completely mainstream.”

Renault invests $144 million into China’s electric vehicle sector

Loic Venance | AFP | Getty Images Auto maker Renault and the Jiangling Motors Corporation Group (JMCG) have officially set up a joint venture for electric vehicles in China.
In an announcement Wednesday, Renault said that the venture would look to “further promote the development” of China's electric vehicle industry.
Renault will increase its share capital by around 128.5 million euros ($144.1 million) to become a major shareholder of JMEV, a subsidiary of JMCG. Renault's stake in JMEV will increase to 50%.
Francois Provost, senior vice president and chairman of the China region for Groupe Renault, described China as a key market for the firm. “This partnership in electric vehicle business with JMCG will support our growth plan in China and our EV capabilities,” Provost added.
Worldwide electric car sales hit 1.98 million in 2018, according to the International Energy Agency (IEA), with global stock reaching 5.12 million.
China's electric car market is the biggest on the planet, the IEA says, with Europe and the U.S. following behind. There were 2.3 million electric cars on China's roads last year, according to the IEA, representing roughly 45% of the world's total.

Fiat Chrysler falls 4% after Goldman initiates at sell, citing North American growth struggles

2019 Ram 1500 pickup truck of the Fiat Chrysler Automobiles (FCA) is displayed at the North American International Auto Show (NAIAS) on January 15, 2018 in Detroit, Michigan.The Asahi Shimbun | Getty ImagesAutomaker Fiat Chrysler's stock fell more than 4% Tuesday after Goldman Sachs initiated the company's stock at a sell rating, citing growth concerns in North America and challenges in Europe for its opinion.
The investment bank set a price target of 11.50 euros ($12.90) giving the company a 7% downside.
“North America accounts for a disproportionate percentage of FCA's earnings. Additionally, it was the principal driver of FCA's earnings improvement over the last five-year business plan. However, we do not forecast the company's earnings in North America growing through its next five-year (2018-22) plan,” said Goldman analyst George Galliers, in a research note.
North American sales accounted for 93% of the company's adjusted earnings before interest and tax in 2018.
In the European market, the automaker is struggling with old products that need to be refreshed. Galliers said the company's average product age is 7.4 years, which is a cause for concern given the time it will take to update the portfolio. The Dodge Challenger, for example, hasn't been fully redesigned since 2008 and the Chrysler 300 since 2011. Fiat Chrysler plans to redesign both in 2021.
Analysts said the company would make for an attractive acquisition, but the recent U.S. designation that automotive research and development is critical to national security, complicates things for the Italian-American automaker. Galliers added that major marquee brands like Jeep were “too integral” to sell off.
Fiat Chrysler could also face EU emission penalties of up to 746 million euros ($837 million) if they fail to meet the European Union's 2021 emissions targets, though Galliers expects Fiat Chrysler will avoid the fine since the cost is “too punitive.”
Despite the downbeat expectations, Galliers said the company's brands and its heritage has appeal, and strong European sales could help offset some of its troubles.
The car maker will report its next earnings on July 31. Analysts estimate Fiat Chrysler will earn 84 cents a share in the third quarter.
Fiat Chrysler's stock has lost 30% of its value since last year.
VIDEO9:2409:24Why Italian classic Fiat is failing in the U.S.Autos

GM CEO to United Auto Workers: ‘Our collective future is at stake’

UAW President Gary Jones and GM CEO and Chairman Mary Barra shaking hands at the event.Source: General MotorsDETROIT — General Motors CEO and Chairman Mary Barra on Tuesday pleaded for United Auto Workers union leaders to assist, not hinder, the company's ongoing restructuring efforts to better position GM for the future.
Barra, speaking during a ceremony to officially begin negotiations with the union, said the company and union need to be “agile, decisive and disciplined” together more than ever amid a “rapidly” changing auto industry.
“Today, we are at a turning point when it comes to the transformation of the industry and this company,” she said during the event inside GM's global headquarters in Detroit. “Our collective future is at stake. We cannot move forward without one another.”
UAW leaders took a different position, pledging to use contract negotiations this year with GM to fight the company's plans to potentially close four U.S. plants.
“Speaking on behalf of my brothers and sisters, know this, we will not leave no stone unturned,” UAW President Gary Jones said during the event. “We will fight to keep these union plants open and allocate more products here on American soil. It can be done.”
His comments came as about 80 laid-off workers and supporters from Lordstown Assembly, a plant in Ohio that GM idled in March, picketed outside GM's headquarters.
Barra did not directly address Lordstown or the other impacted plants in Michigan and Maryland during her remarks. She instead cited a need to be “proactive on all fronts because we are not here merely to survive, we are here to lead it and we are here to win.”
Impacted plantsIn November, GM initially announced five plants in North America, including one in Canada, would be “unallocated” of product and potentially close as part of a corporate restructuring aimed to cut $6 billion in costs a year by 2020. The plans, which impacted roughly 14,000 U.S. salaried and hourly workers, were hailed by investors as a way for the automaker to address production overcapacity in the U.S. but heavily criticized by union leaders and President Donald Trump, who demanded the company sell or reopen Lordstown.
Workers picketing outside GM's headquartersMichael Wayland | CNBC “Get that big, beautiful plant in Ohio open now,” Trump tweeted in March. “Close a plant in China or Mexico, where you invested so heavily pre-Trump, but not in the U.S.A. Bring jobs home!”
In May, GM announced it was in discussions with Workhorse Group Inc, a Cincinnati-based EV manufacturer, and an affiliate company to sell Lordstown Assembly. The plan was hailed by Trump but criticized by other public officials and union members for not being enough to fill the plant.
Dave Smith, a laid-off Lordstown worker who was picketing Tuesday in Detroit, said he hopes the union can deliver on bringing new product to the Ohio plant.
“It's going to kind of break up our family if I have to move,” said the 49-year-old Lordstown resident about potentially being assigned to another plant. Smith, who says he has worked at Lordstown Assembly for 24 years, also said “hopefully” Trump continues to push the company and helps the union “get a product back in there.”
Contract negotiationsThis year's contract talks between the union and Big Three Detroit automakers are expected to be the most contentious in at least a decade amid “America first” policies from the Trump administration, a tight labor market and thousands of job cuts and cost reductions as the industry prepares for an expected economic downturn.
Union leaders said this year's negotiations will set the wages and benefits for about 158,000 members. The outcome will also help steer investment plans for GM, Ford and Fiat Chrysler in the U.S. for the next several years.
UAW members and supporters from General Motors' Lordstown Assembly plant, which was idled in March, picket outside GM's headquarters, as 2019 contract negotiations get underway.Michael Wayland | CNBCGM is expected to have toughest negotiations this year with the union due to the automaker's potential plant closures.
The UAW and Ford were the first to officially open their negotiations Monday, followed by GM Tuesday morning and Fiat Chrysler Tuesday afternoon.
Mark Stewart, chief operating officer of FCA – North America, discussed the company's need to negotiate a flexible contract that will allow it to adapt to changes in the economy and automotive industry.
“We've got to continue to make the right strategic decisions together to continue our profitable growth so we can to invest right here in the U.S.,” he said during the event at the automaker's North American headquarters in Auburn Hills, Mich.
His remarks were similar to those of executives at GM and Ford, while the UAW's Jones reiterated the union's objectives to secure future investment and award UAW members for assisting the companies in achieving record profits in recent years.
“We are the voice of the American worker. We are the defenders of the middle class. And we are ready to talk,” Jones said to end his prepared remarks with each automaker, including Fiat Chrysler.
The contracts between the union and automakers all expire on Sept. 14, however it's common for that deadline to be pushed back weeks, if not months.
GM shares were relatively unchanged in trading Tuesday. The stock, which has a market value of $55.8 billion, is up 17% since January.
VIDEO9:2409:24Why Italian classic Fiat is failing in the U.S.Autos

Tesla CEO Elon Musk pours cold water on fans waiting for Model S, Model X refresh

Elon Musk, co-founder and chief executive officer of Tesla Motors.Yuriko Nakao | Bloomberg | Getty ImagesTesla CEO Elon Musk said on Twitter Monday night that the company is planning “a series of minor ongoing changes” for its older Model S and Model X vehicles, but not a major refresh.
Musk's declaration follows the departure of Tesla's former vice president of production, Peter Hochholdinger, who oversaw Model S and X manufacturing during his tenure there. Hochholdinger has joined Lucid Motors, a would-be Tesla competitor that plans to ship its first electric vehicle next year. Lucid CEO Peter Rawlinson was previously the chief engineer of Tesla Model S.
In May, Tesla employees told CNBC the company was then planning a Model S refresh that would potentially include a 400-mile range battery — a goal that Musk later nodded to during a shareholders' meeting, although he didn't say it would be for the Model S — and could use Model 3 seats. They also said Tesla was rejiggering its Fremont, California, factory to make way for the refresh and for production of its upcoming Model Y crossover.
While plans for the Model S refresh have been reined in, changes at the Fremont plant are underway, according to a passel of new filings with the City of Fremont.
Specifically, the filings reveal that Tesla aims to overhaul its body-in-white and paint facilities and equipment in Fremont before embarking on its next phase of electric vehicle production.
Musk promised that Tesla would deliver between 90,000 and 100,000 vehicles for the second quarter of 2019, and this time, his forecasting was right on target with Tesla reporting deliveries of 95,200 cars to customers for the second quarter.
A Tesla Model S is displayed during the London Motor and Tech Show at ExCel on May 16, 2019 in London, England.John Keeble | Getty Images News | Getty ImagesWaxing optimistic about demand in its production and deliveries report last week, Tesla stated:
“Orders generated during the quarter exceeded our deliveries, thus we are entering Q3 with an increase in our order backlog. We believe we are well positioned to continue growing total production and deliveries in Q3.”
However, the company did not specify if “orders generated” included those for vehicles besides their Model 3, S and X. Tesla has already begun taking orders for its Model Y, which is a crossover SUV, and for its electric Semi. It has a Roadster refresh and Tesla pickup in the works, as well.
None are in commercial production yet.
On its existing lines, Tesla produced a record87,048 electric vehicles during the second quarter of 2019. Tesla's earlier record was in the fourth quarter of 2018, when it produced 86,555 vehicles.
Company executives have repeatedly stated that Tesla expects to deliver at least 360,000 vehicles to customers in 2019, meaning they have to deliver 201,650 to hit their own guidance in the second half of the year.
That will require production to ramp significantly beyond previous levels.
WATCH: Elon Musk says Tesla will have 'robotaxis' on the road by 2020
VIDEO1:2601:26Elon Musk says Tesla will have 'robotaxis' on the road by 2020The Bottom LineFollow @CNBCtech on Twitter for the latest tech industry news.

Tesla proved it can hit production targets. Now investors want to see profits

Workers assemble cars on the line at Tesla's factory in Fremont.David Butow | Corbis News | Getty ImagesTesla CEO Elon Musk proved to analysts Tuesday that he can hit his lofty production and delivery targets, but now investors want to know if he can do the same with profits.
The company's second-quarter production and delivery numbers, released late Tuesday, eased investors' concerns about demand for its electric cars and SUVs with the company delivering a record 95,200 vehicles in the last quarter. Tesla's stock shot up by as much as 8% in after-market trading Tuesday and was up by about 5% Wednesday afternoon.
“While there were a good amount of 'leaked' emails and reports prophesizing a potential 'record quarter' for deliveries, we had not spoken to any investors that expected deliveries to be this high,” Morgan Stanley analyst Adam Jonas said in a research note.
The results mark “a turning point for the Tesla story,” Gene Munster, an analyst Loup Ventures, said in an interview on CNBC. “The key takeaway here is there is an undeniable truth that is starting to happen, and that is that demand of EVs is starting to go up.”
VIDEO6:2706:27Tesla reported 2nd-quarter numbers—Here's what 6 experts say to watchTrading NationInvestors want to know whether the quarter's performance is repeatable, especially after losing several key production executives ahead of the announcement. They also want to see whether Tesla sacrificed profit margins in its efforts to ramp up production.
“Tesla may/is likely to overproduce in a quarter or two this year, and investors will have no sense if the excess production ended up entirely in inventory, or is legitimately destined for customers,” analysts at Bernstein research wrote in a note to investors Wednesday.
The company delivered 77,750 of its best-selling Model 3 sedan, beating analysts' estimates by 3,650, according to data compiled by FactSet.
Dan Ives, an analyst at Wedbush Securities, called the Model 3 results the “linchpin of the Tesla growth story for the coming years.”
To be sure, Tesla's buyers lost part of a key tax credit that subsidized the cost of the electric cars and the company cut prices on several models throughout the quarter to boost demand. The federal tax credit for Tesla's cars was cut from $7,750 last year to just $1,875 on Monday. Musk even took to Twitter to remind people to take advantage before the credit shrank. That's something that could “weigh on profitability” when the company reports its earnings in a few weeks, analysts said.
“The Q2 delivery beat does not change our cautious view on Q2 earnings,” UBS analyst Colin Langan said in a note to investors. “Price reductions, the wider availability of cheaper versions of the Model 3, and the phase out of the US EV tax credit ($1,875) helped Q2 deliveries. The price cuts will likely result in margin pressure.”
The company is also facing increased competition in the high-end electric sports car market as automakers from Ford to Jaguar invest billions of dollars to develop their own electric lineups. It's something analysts at Goldman Sachs pointed to as they saw Tesla's competitive lead beginning to wane in the face of other EV launches. Volkswagen and Mercedes-Benz began taking orders in May for new battery-electric vehicles with plans to roll out more models in the coming years. Jaguar's I-Pace all-electric SUV swept industry awards at the New York Auto Show in April.
The report however, gave some analysts reason for optimism.
“After what's been, in my opinion, the darkest chapter in the company's history, finally some good news for Tesla going into a holiday weekend,” Ives said.

Auto executive Bob Lutz said Lee Iacocca was ‘a master salesman’

Chrysler Corp. Chmn. Lee Iacocca posing in front of full-sized clay model of the proposed Viper sports car being worked on by staff technicians in the Advanced International Design studio at the new Chrysler Tech Center.Taro Yamasaki | The LIFE Images Collection | Getty ImagesBob Lutz, a longtime executive who worked closely with the late Lee Iacocca, called his mentor and colleague “a master salesman, brilliant communicator and extremely convincing.”
“Sometimes it was dangerous to listen to him because he could make the illogical seem logical and you believed him till you walked out of the office again,” Lutz said in an interview with CNBC's “Squawk on the Street ” on Wednesday — the day after Iacocca's death. “Whether it was devising the plan, executing the plan, eliminating the obstacles or selling something that was difficult to sell, he was a master of all of those things.”
VIDEO6:1006:10Former GM vice chair Bob Lutz remembers auto legend Lee IacoccaSquawk on the StreetThe former Ford and Chrysler executive praised Iacocca's leadership and willingness to hear different opinions.
“Large organizations respond to leadership, not administrative heads and not managers but leaders, and Iaococca was a brilliant leader,” Lutz said, adding that he wasn't always right and sometimes made mistakes. “He valued people who would stand up to him and explain to him when he wasn't right and I think all strong leaders will do that because they like to get the job done, but they also like to stay out of trouble.”
Lutz was also quick to point out that though Iacocca is being remembered for pioneering the Mustang and the Minivan, his greatest achievement is still paying dividends for his former company today.
“His biggest accomplishment was in 1987, when against all advice from Wall Street and internally and I admit I was against it — the purchase of American Motors. We barely had the cash to do it but what came with American Motors? The Jeep brand and the Jeep brand today is the goose that laid the golden egg” for Fiat Chrysler.
Lee Iacocca was 94. He is survived by two daughters and eight grandchildren.