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Innovation. It starts with a strategy. Fromcustomer-led innovation to creating a corporate culture of innovation, the key to success begins with a well-defined innovation strategy. It can mean the difference between being a leader or fallingbehind.

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3AUTOMOTIVE NEWS EUROPE LETTER FROM THE EDITOR

www.autonewseurope.comSEPTEMBER 2014

No passage to India?

Luca Ciferri is Editor at

Automotive News Europe.He can be reached at

[email protected]

India was expected to become the new China and provide European automak-ers such as Volkswagen Group with high growth rates and fat profits. That hasnt happened so far. Indias slumping sales and its unpredictable government regu-lations have hurt automakers. Growth also has been slowed by automakers failed local partnerships and bad prod-uct decisions. The result? The No. 1 European brand in India, Renault, ranks ninth overall with a mere 2 percent mar-ket share. Our cover story looks at what went wrong and what European auto-makers are doing to turn things around in the high-potential market (Page 6).

Infiniti Chairman Andy Palmer is working to reposition the brand as a design- and technology-driven alternative to Germa-nys premium automakers. In an inter-view he explained what Infiniti is doing to capture the attention of young, affluent customers who dont want to drive the same brands as their fathers (Page 10).

Citroens new CEO, Linda Jackson, has a tough task ahead. She has to keep growing sales in the tough European mainstream market without help from Citroens former subbrand, DS, which is being transformed into a stand-alone marque. Jackson shares her strategy for Citroens future (Page 11).

Jaguar Land Rovers head of product de-velopment, Wolfgang Ziebart, is leading the rapid expansion of the British luxury

brands. The former BMW executive tells us why he believes JLR has the techni-cal and financial resources to make life tougher on Germanys dominant premi-um brands (Page 12).

Supercar sales are expected to surge again following some lean years caused by Europes prolonged recession. Re-newed consumer confidence and fresh models are driving the rebound. See which supercars are poised to be the biggest winners (Page 14).

Volkswagen Group has Europes largest network of company-owned dealerships, but auto retailing is not something the company wants to make a core part of its business. The same is true at PSA/Peugeot-Citroen and Daimler. We ex-

plain why (Page 20). We also provide our annual ranking of Europes 50 biggest independent dealer groups (Page 21).

Our Latest Launches section has re-views of the feature-laden, 126,000-euro Mercedes-Benz S-class premium coupe (Page 16) and, at the other end of the price spectrum, the 10,000-euro Citroen C1 minicar (Page 18).

Enjoy the issue!

Luca Ciferri, Editor

The European market un-derwent a big shake-up in the first half as there was a change at the top of nine of the 24 segments monitored by Automotive News Europe.

First-half sales of the Renault Captur small crossover qua-drupled, helping the French

automaker take over the top spot in Europes fastest-growing volume segment. Automakers increased small SUV and crossover sales by 89 percent in Europe to 390,100 from January to June, according to data from JATO. Electric cars remained

Europes fastest-growing segment overall, up by 91 percent to 23,826 units. Leading the surge were the Tesla Model S and BMW i3 (see story, Page 29; H1 segment tables, Pages 30, 31 & 34). ANE

Segment shake-up

Thanks to the success of the Duster crossover built in Chennai (shown), Renault was the top-selling European brand in India in the first half.

SEPTEMBER 2014

29

AUTOMOTIVE NEWS EUROPE DATA

www.autonewseurope.com

Big gains for small SUVs European segment winners and losers in the first half of 2014Electric

+91%Small SUV & Crossover +89%Premium Coupe

+34%Upper Premium

+34%Premium Large SUV & Crossover +15%Premium Compact SUV & Crossover +9%Compact

+9%Large Minivan

+9%Compact SUV & Crossover +6%Total market

+6%Compact Minivan +4%

Large SUV & Crossover +3%Large Premium

+3%Subcompact

+3%Exotic

+2%Midsize Premium

+2%Compact Premium

+1%Car Derived Van

0%Minicar

-2%Premium Convertible

-3%Entry Premium

-6%Midsize

-6%Small Minivan

-9%Convertible

-12%Coupe

-26% Source: JATO Dynamics

Changing niche H1 2014 and 2013 full-year European sales of coupes and convertiblesPremium coupes 55,071 79,858Volume coupes 26,908 64,869Premium convertibles 50,158 81,241Volume convertible 43,281 81,909

Source: JATO Dynamics

Segment shake-up

Premium push

BMW 4 series, Citroen C4 Picasso, Fiat 500L, Ford Fiesta, Mercedes S class climb to the top in H1LUCA [email protected]

The European market underwent a big shake-up in the first half as there was a change at the top of nine of the 24 segments tracked by Automotive News Europe. First-half sales of the Renault Captur small crossover quadrupled to 87,396 units, helping the French auto-maker overtake the Nissan Juke at the top of Europes fastest-growing volume segment. Automakers increased small SUV and crossover sales in Europe by 89 percent to 390,100 from January to June, according to data from JATO (see tables Pages 30, 31 & 34).Electric cars remained Europes fastest-growing segment overall, up by 91 per-cent to 23,826 units. Leading the surge were the Tesla Model S and BMW i3. De-mand for last years first-half sales lead-er in the electric niche, the Renault Zoe, declined by almost a quarter dropping the subcompact into fourth place. The

Zoe was replaced at the top by the Leaf from Renaults alliance partner Nissan. Leaf sales in the half rose 56 percent to 7,127 units.Other significant first-half changes at the top of the segments included: the Fiat 500L overtaking the Ford B-Max for the lead in small minivans; the Ford Fi-esta surpassing the Renault Clio in the subcompact class; and the new BMW 4-series getting ahead of Mercedes of-ferings in both the premium coupe and premium convertible niches.Meanwhile the BMW X5, Citroen C4 Pi-

casso and Mercedes S class reclaimed the No. 1 spots in their respective segments during the half because of strong demand for the new generations of each vehicle.From January to June, nine of the 24 seg-

ments grew at a faster pace than the market, which was up by 6 percent to 6.82 million units. Eight other segments were in positive territory during the half but didnt beat the overall market. ANE

The Renault Captur (left) was No. 1 among small SUVs and crossovers in the first half, while the Tesla Model S (right)

gave a big boost to EV sales. Electric cars and small SUVs were Europes two fastest-growing segments in the half.

Premium automakers are progres-sively pushing volume rivals out of the profit-rich coupe and convert-ible niches. In the first half, 67 per-cent of all coupes sold in Europe were from premium brands, thats up from 55 percent in 2013. Premium auto-makers also outsold volume brands by about 7,000 units in the convert-ible niche during the half. During

2013, volume brands topped premium brands by a small margin. The lead in both segments is likely to grow as pre-mium automakers such as Audi, BMW and Mercedes continue to have suc-cess and volume brands abandon the niches. Press reports say Volkswagen will not replace its Eos and Peugeot will have a single successor for the 207CC and 308CC models. ANE

4AUTOMOTIVE NEWS EUROPE


INSIDE THIS ISSUE

SEPTEMBER 2014


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KC CRAINGroup Publisher

EDITORIALLUCA CIFERRIEditor+39 348 274 00 [email protected]

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GEORGIA CHAPMANDesign & Art Direction+49 (0) 89 5795 [email protected]

James Clark (UK), Debra Domby (U.S.), Bruce Gain (France), Nick Gibbs (UK), Christiaan Hetzner (Germany), Mary Raetz (U.S.), Michael Specht (Germany), John Stanley (Ireland)Correspondents

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COVER DESIGN: Steve MassieCOVER PHOTO: Bloomberg

INSIDE THE JULY & 7 MONTH NUMBERS

3 Letter from the Editor

COVER STORY 6 Uphill battle

VW, other European automakers seek firmer foothold in India

Q&A10 Time for a change

How Infiniti boss plans to capture the new breed of premium customers

11 A fresh start Citroen CEO Jackson says C4 Cactus embodies brands new values

13 Engine upgradeJLR engineering czar Ziebart details British brands CO2-cutting revamp

AUTOMAKERS14 Surging supercars

Sales of exotics forecast to rise more than 60% in Europe by 2017

LATEST LAUNCHES16 S class gets coupe

Mercedes expects strong demand for CLs high-tech successor

18 The cheerful C1Citroen gives minicar a brand-new face

24 European sales by country and brandPortugal, Romania, Ireland were monthly winners

25 European top 50 VW Golf, Renault Clio make strong gains

26 European sales by modelOpel Mokka, Peugeot 308 give their brands a lift

29 Segment championsBMW 4 series, Ford Fiesta, Fiat 500L, reach the top in H1

35 European production by brandPorsche, Suzuki, Kia make double-digit gains

36 Turkey sales7-month volume down 24%

RETAILERS20 Reluctant retailers

VW Group, other OEMs sell off company-owned dealerships

21 Dealer giantsEuropes top 50 independent retail groups

SUPPLIERS22 On a mission

Spains Grupo Antolin aims to be the worlds No. 1 interiors supplier

23 CutawaySee who has parts in the new Mercedes GLA

10Infiniti Chairman Andy Palmer

38 Russia salesJuly sales fall 23%; 7-month sales slip 10%

39 U.S. sales by modelMarket up 5% to 9.6 million through 7 months

42 Shareholder value Automakers have positive Q2; retailers and suppliers slide

AUTOMOTIVE NEWS

EUROPE DATA

EUROPE SALES BY M

ODEL, JULY

brought to you court

esy of

www.jat

o.com

V8/V12 Vantage.......

................... 5

1 60

479 486

DBS .............................

.................. 19

19 169

201

Vanquish ....................

.................. 27

23 226

258

Rapide ........................

.................. 8

20 93

150

Other ..........................

.................. 4

11 47

129

ASTON MARTIN ............

................ 109

133 1,014

1,224

Niva ............................

.................. 102

142 777

939

Other ..........................

.................. 1

11 42

57

Total Lada ....................

................. 103

153 819

996

AVTOVAZ ....................

.................. 103

153 819

996

1 series .......................

.................. 9,873

11,521 79,967

90,273

2 series .......................

.................. 1,674

7,543

3 series .......................

.................. 13,344

16,702 105,767

120,102

4 series .......................

.................. 4,991

106 29,577

121

5 series .......................

.................. 7,457

7,336 62,053

62,452

6 series .......................

.................. 517

706 5,122

5,383

7 series .......................

.................. 367

490 3,150

3,701

Z4 ................................

.................. 467

627 3,776

4,238

X1................................

.................. 4,563

4,919 37,574

37,472

X3................................

.................. 4,311

5,103 29,535

37,091

X4................................

.................. 1,322

2,114

X5................................

.................. 3,385

951 22,718

9,504

X6................................

.................. 288

525 3,245

5,346

i3 .................................

.................. 793

23 5,527

149

i8 .................................

.................. 131

7 261

48

Other ..........................

.................. 23

95 389

602

Total BMW brand........

................ 53,506

49,111 398,318

376,482

Mini ............................

.................. 8,750

7,218 46,308

56,307

Countryman/Paceman

............... 4,213

4,513 37,264

34,444

Total Mini ...................

.................. 12,963

11,731 83,572

90,751

Phantom ...................

...................

6 15

70 85

Ghost ..........................

.................. 11

22 121

175

Wraith ........................

.................. 26

2 208

5

Other ..........................

.................. 2

20

4

Total Rolls-Royce ........

................. 45

39 419

269

BMW AG ......................

.................. 66,514

60,881 482,309

467,502

Maybach .....................

..................

1

9

A class .........................

.................. 10,219

9,727 72,736

80,060

B class .........................

.................. 7,584

7,996 55,093

63,255

CLA .............................

.................. 3,385

3,345 22,326

15,544

C class .........................

.................. 9,396

9,306 71,983

71,624

E class .........................

.................. 8,720

10,915 63,172

60,761

S class..........................

.................. 1,769

653 10,987

3,379

CLS ..............................

.................. 605 1

,221 6,301

9,392

SLK ..............................

.................. 811

911 7,762

8,964

SL ................................

.................. 202

272 1,957

2,406

SLS AMG ....................

.................. 40

27 352

372

R class .........................

..................

41 24

951

Citan ...........................

.................. 393

185 2,567

1,724

V class .........................

.................. 1,602

2 3,447

7

Vito/Viano .................

.................. 1,204

2,441 11,943

13,901

Sprinter ......................

.................. 704

508 3,630

3,073

GLA .............................

.................. 4,716

21,781

GLK .............................

.................. 2,143

2,113 15,014

17,347

M class ........................

.................. 1,843

2,084 13,775

17,178

G class .........................

.................. 218

213 1,374

1,536

GL................................

.................. 350

368 2,614

2,929

Other ..........................

.................. 163

125 851

747

Total Mercedes-Benz

.................. 56,067

52,453 389,689

375,150

ForTwo .......................

.................. 4,250

4,923 35,790

41,198

Other ..........................

.................. 3

5 43

18

Total Smart .................

.................. 4,253

4,928 35,833

41,216

DAIMLER AG .................

................ 60,320

57,381 425,523

416,375

DR1 .............................

..................

13 8 1

65

DR5 .............................

.................. 5

22 36

141

Other ..........................

.................. 14

5 120

30

DR MOTOR COMPANY

................ 19

40 164

336

Ypsilon .......................

.................. 67

133 830 1

,233

Delta ...........................

..................

1 7

33

300C............................

.................. 8

14 46

121

Grand Voyager/Town

& Country 62

32 378

229

Other ..........................

.................. 17

6 96

51

Total Chrysler brand ..

................. 154

186 1,357

1,667

Total Dodge ...............

.................. 69

28 414

306

Compass .....................

.................. 409

518 3,829

3,956

6

2 7

13

443 430 3

,043 3,448

3,603 285

July

July 7 mos.

7 mos.

2014

2013 2014

2013MiTo .......

......................................

1,183 1,405

10,569 10,902

Giulietta .....................

.................. 3,678

4,223 26,379

30,586

159 ..............................

.................. 4

11 12

238

4C ................................

.................. 64

672

Other ..........................

.................. 3

12 63

67

Total Alfa Romeo ......

.................. 4,932

5,651 37,695

41,793

458 Italia ...................

................... 16

3 137 1,

054 998

California ...................

.................. 79

44 203

268

FF ................................

.................. 12

26 120

151

F12 ..............................

.................. 45

54 326

483

Other ..........................

.................. 26

6 109

38

Total Ferrari .................

................. 325

267 1,812

1,938

500 ..............................

.................. 15,196

13,076 111,858

96,814

Panda .........................

.................. 12,482

11,316 94,263

99,516

Punto ..........................

.................. 8,083

9,054 55,266

68,572

Linea ...........................

.................. 6

43 159

415

Bravo ..........................

.................. 323

517 2,605

6,025

Sedici ..........................

.................. 230

441 1,765

3,762

Freemont ...................

.................. 1,475

1,828 10,421

12,785

Fiorino/Qubo .............

.................. 896 1

,114 6,678

8,683

Doblo .........................

.................. 761

664 4,323

4,922

Ducato........................

.................. 2,273

1,982 18,647

16,712

500L ............................

.................. 8,023

7,294 64,854

44,909

Other ..........................

.................. 245

256 1,578

1,553

Total Fiat brand .........

.................. 49,993

47,585 372,417

364,668

Ypsilon .......................

.................. 4,389

5,169 39,167

35,462

Musa ...........................

.................. 1

46 9 1,1

53

Delta ...........................

.................. 277

742 2,803

5,467

Flavia ..........................

.................. 11

47 113

398

Thema ........................

.................. 52

398 276 1

,734

Voyager .....................

.................. 370

322 2,351

2,140

Other ..........................

.................. 2

3 12

17

Total Lancia ................

.................. 5,102

6,727 44,731

46,371

GranTurismo .............

.................. 41

38 243

339

GranCabrio ................

.................. 25

27 164

201

Ghibli ..........................

.................. 480

2,793

Quattroporte ............

.................. 86

31 517

181

Other ..........................

.................. 8

39

7

Total Maserati ............

.................. 640

96 3,756

728

Other ...........................

.................. 55

43 335

361

FIAT S.P.A. ...................

.................. 61,047

60,369 460,746

455,859

FIAT-CHRYSLER ...........

.................. 64,285

62,640 481,355

471,146

Ka................................

.................. 3,946

3,709 33,375

31,336

Fiesta ..........................

.................. 23,742

22,379 190,816

175,433

Focus...........................

.................. 17,715

18,984 138,755

141,237

Fusion .........................

.................. 2

1 23

30

Mondeo .....................

.................. 4,333

5,194 30,533

30,167

B-Max .........................

.................. 4,727

6,012 36,167

44,928

C-Max/Grand C-Max.

.................. 7,562

8,143 57,520

61,650

S-Max .........................

.................. 2,522

3,262 19,847

17,963

Galaxy ........................

.................. 1,650

1,987 12,298

11,186

Ecosport .....................

.................. 1,135

4,032

Kuga ...........................

.................. 7,795

6,067 49,425

37,838

Transit/Tourneo .........

................. 312 1

,126 3,437

7,367

Other ..........................

.................. 3,182

1,063 15,578

5,567

Total Ford brand .......

.................. 78,623

77,927 591,806

564,702

Lincoln .........................

..................

3

Mercury.......................

..................

4

FORD MOTOR ..............

................. 78,623

77,927 591,813

564,702

C30 ..............................

.................. 11

68 92 2,

110

V40 .............................

.................. 7,235

6,202 43,778

43,080

S40 ..............................

.................. 1

4 2 1

37

V50 .............................

..................

3 17

162

S60 ..............................

.................. 831

952 7,054

6,612

V60 .............................

.................. 3,117

3,127 24,836

22,187

V70/XC70 ...................

.................. 2,964

2,825 25,868

22,479

S80 ..............................

.................. 220

274 1,824

1,945

C70 ..............................

.................. 5 2

06 162 1

,632

XC60 ...........................

.................. 4,873

3,468 34,351

25,736

XC90 ...........................

.................. 976

557 5,534

4,354

Other ..........................

.................. 17

14 75

48

Total Volvo .................

.................. 20,250

17,700 143,593

130,482

GEELY GROUP ...............

................ 20,250

17,700 143,593

130,482

Buick ............................

.................. 2

11

2

Cadillac ........................

.................. 35

38 238

249

Matiz/Spark ................

................. 255 3

,011 9,315

23,183

Aveo ...........................

.................. 131 1

,755 3,327

16,620

Cruze ..........................

.................. 219 3

,428 6,675

22,138

Malibu ........................

.................. 12

248 305 1

,195

Trax .............................

.................. 229 2

,603 8,701

6,272

Captiva .......................

.................. 56 1,

289 2,686

8,322

81 1,4

30 2,786 8

,967

43 121

678 1,038

442 1

43

July

July 7 mos.

7 mos.

2014

2013 2014

2013

CONTENTS

1.888.565.0052

The road to success runs through Michigan.

Through a series of recent initiatives, Michigan

is once again becoming a preferred place for business.

Starting with a new flat 6% business tax. The pending

elimination of personal property taxes. New right-to-work

legislation. All added to redesigned incentive programs

and streamlined regulatory processes. All to create an

ideal combination of opportunity, resources and passion

for business right here in Michigan.

Michigan Economic Development Corporationmichiganbusiness.org/ANE

busiNEssgreen light

what happens when

meets

SEPTEMBER 20146

AUTOMOTIVE NEWS EUROPE COVER STORY


Uphill battle VW, other European automakers seek firmer foothold in India

CHRISTIAAN [email protected]

When Volkswagen reported group vehicle sales in India had more than doubled in 2011, vaulting over the 100,000 mark, it looked as if everything was going according to the carmakers meticulous plan to seize global vehicle sales leadership within a single decade.

India was one of the few glaring white spots left on Volkswagens map of the world, and amid all the euphoria sur-rounding developing economies at the time, analysts at Booz & Company

predicted the country would overtake Germany to become the worlds fourth- largest auto market by 2015 with a vol-ume of more than 5 million vehicles.

On schedule, Volkswagen added a third shift to a new factory in Pune by April 2011, churning out VW Vento and Skoda Rapid sedans specifically designed to meet the tastes of Indian car buyers. The full-scale manufacturing plant opened two years earlier after completion in record time. At 580 million euros, the plant represented the single-biggest in-vestment by a German company in India.

Since almost three-quarters of new car sales in India are bought with loans, an unusually high financing level much more common to mature markets, Volkswagen gained approval from authorities to be-gin offering customers tailored financ-ing packages as well. By leveraging its global scale, diverse product range and decades-long experience in emerging markets such as China and Brazil, the group seemed well on its way toward es-tablishing itself as a major player on the Indian subcontinent, quickly catching up to rivals such as Toyota and Honda, which already enjoyed a big head start.

VW has to sell the India-made Vento (shown) in 32 other markets to keep its Pune factory operating at breakeven.

Major markets Indias light-vehicle sales dipped sharply in 2013 after 7 years of growth (markets listed alphabetically)

2005 2006 2007 2008 2009 2010 2011 2012 2013Brazil 1,369,182 1,556,220 1,975,518 2,193,277 2,474,764 2,644,706 2,647,250 2,851,540 2,763,718Germany 3,319,259 3,467,961 3,148,163 3,090,040 3,807,175 2,916,259 3,173,634 3,082,504 2,952,431India 1,106,863 1,311,373 1,511,812 1,545,414 1,816,878 2,387,197 2,510,313 2,781,919 2,553,979Russia 1,520,225 1,911,240 2,514,920 2,897,459 1,465,742 1,912,794 2,653,688 2,755,384 2,597,720 Source: OICA

Phot

o: R

eute

rs

SEPTEMBER 2014 7



Fast forward to today and VW Group serves as a warning to other European carmakers, such as PSA/Peugeot-Citroen, which are considering another foray into India.

The market shrank last year by 8 percent to 2.55 million vehicles, returning to the level of 2011, after interest rates on car loans soared to about 12 percent in the midst of a currency crisis. Sales of VW brand and Skoda cars have fallen even more drastically. VW Groups share has dwindled and the automaker has quietly shelved overly ambitious targets after management misjudged political risks, muddled its brand strategy and botched both its model and powertrain lineups.

We want to be a significant player in the Indian market, too. However, our fo-cus is not on mere market share, said Mahesh Kodumudi, head of VW Group India, in an e-mailed reply to questions from Automotive News Europe.

VW isnt the only automaker to stumble as India remains one of the worlds most challenging car markets, having claimed more than one European victim. Peugeot was one of the first to enter the market, assembling the 309 in the mid-1990s. Heavy losses, a months-long labor dis-pute at its Kalyan plant and problems with local partner Premier prompted Peugeot to back out of the market just a few years later. Fiat has been under-mined by multiple changes in its India strategy over the years, while General Motors simply pulled the plug on Ger-man brand Opel there in 2006.

Some successAfter ditching its joint venture with Indias Mahindra four years ago and launching a string of flops, Renault finally landed a hit with its Duster, one of the only affordable SUVs on the market. Thanks to the Dust-ers appeal with the countrys extremely cost-conscious middle-class custom-ers, Renault is now the No. 1 European brand in the market. Yet it still sold only about 24,000 vehicles in India during the first half, according to data from Focus-2Move, 90 percent of that volume came from the Duster. While German premium brands Audi, BMW and Mercedes-Benz dominate the countrys luxury segment, their success means little given that pre-mium models account for just 2 percent of overall demand in the market.

Part of the problem for European auto-makers is their inability to lower their manufacturing costs through economies

of scale. With Maruti Suzuki capturing 44 percent of the market and Hyundai another 16 percent, the remaining doz-en or so car brands are competing for a little more than one-third of the market. Subtract the premium players and that leaves about 800,000 unit sales that are split 12 ways. The bulk of that volume is in the extremely cost-competitive small and minicar segments.

Thats a very small, very fragmented pie that is being divided up. So if the market becomes sluggish then earnings will be very badly hit, said Mohit Arora, execu-tive director at J.D. Power Asia Pacific. I dont think many of the European or even American manufacturers in India are profitable at this time.

In an attempt to gain scale, carmakers are forced to turn their Indian plants into export hubs. VW, for example, now sells the Vento in 32 other markets, such as Mexico, just to keep the plant operating at about 75 percent capacity utilization, a level generally seen as needed for a factory to break even. Roughly half of all production out of VWs Pune plant is des-tined for overseas markets this year.

Another problem is the unique dif-ficulties and pitfalls associated with running a business in India, a country whose recent rapid growth masked deep-seated structural problems in the broader economy and the transport sector more specifically.

Home to 1.2 billion people and Asias third-largest economy, India has long been regarded by carmakers as the next China because of the emergence of its overwhelmingly young and educated middle class. While the countrys un-

Strong demand for the Duster (shown) has made Renault the top-selling European brand in India. Pictured is a ceremony at a Renault dealership in Chennai meant to bring good luck to a new vehicle and its owner.

No Europeans includedIndias first-half sales leaders; H1 market share

1. Maruti 569,239 44.4%2. Hyundai 207,380 16.2%3. Mahindra 111,420 8.7%4. Honda 89,384 7.0%5. Toyota 60,621 4.7%

Source: Focus2Move

Long way to goTop-selling European brands in first half; H1 share; overall rank in India

1. Renault 24,073 2.0% 9th 2. VW 20,125 1.6% 11th3. Skoda 7,383 0.6% 13th4. Fiat 6,619 0.5% 14th5. Mercedes 5,198 0.4% 15th6. Audi 5,133 0.4% 16th7. BMW 4,487 0.4% 17th8. Land Rover 1,098 0.1% 19th

Source: Focus2Move

SEPTEMBER 20148



tapped potential is massive with about 20 cars per 1,000 people less than half the level of China poverty remains rampant. Indias per capita income rivals parts of sub-Saharan Africa and one-third of the worlds poor live in the coun-try. Fuel costs remain a major concern, leading to the widespread popularity of thrifty diesels and minicars. Road build-ing cant keep pace with car sales, poor surfaces and traffic conditions require dealers to maintain a robust spare parts and service network, and congestion ef-fectively serves as a natural bottleneck for demand. The countrys infrastruc-ture needs are massive, the World Bank said in a report.

Because so few people own cars, tastes have yet to mature, which makes it diffi-cult to predict the behavior of Indian car buyers. Its easier to make a splash with a single model like the Duster. Indias own Tata Motors got it horribly wrong when it made a huge bet that families traveling on the back of a single scooter would happily trade in their two-wheeler for the comfort of a car if they could just afford one. Tatas visionary answer, the Nano, flopped as buyers feared the stigma attached to a vehicle marketed as the worlds cheapest car.

Business unfriendlyCarmakers complain that much of the difficulty stems from Indias own in-flexible bureaucracy, chronic lack of supply-side reforms, numerous tariffs and a government resorting to whatever means necessary to boost tax revenue. A study published by the McKinsey consultancy in February, for example, criticized Indias complex and archaic regulations, balkanized tax regime, and web of at least 43 national laws and many more state laws governing labor conditions. Indias manufactur-ing sector is characterized by a glut of sub-scale, low-productivity enterprises, McKinsey concluded.

Companies with more than 100 em-ployees on their payrolls need to obtain government approval for layoffs, which encourages the harmful creation of a two-tier work force that sparks social tensions between permanent staff and their lower paid contract brethren. India loses more days every year as a result of strikes and lockouts than any other coun-try, employer association AIOE wrote in a study published in 2012. Only weeks later, fresh clashes at a Maruti Suzuki plant claimed the life of an HR official, the

fourth auto industry manager to die at the hands of his own employees since 2008.

Nothing to offerWhile Volkswagen enjoyed an initial boom thanks to the Vento and Rapid, growth began to stall in 2012 after management failed to spot a key trend that emerged due to changes in the regulatory environment. To reduce traf-fic on congested roads and gain control of widening fiscal and trade deficits by cutting down on subsidies and crude oil imports, the Indian government low-ered excise duties for vehicles shorter than 4 meters and equipped with small engines. Carmakers such as Maruti Su-zuki picked up on that, launching the popular Dzire notchback.

After the change in the regulatory en-vironment, the two fastest-growing seg-ments in the Indian car market are se-dans and SUVs below 4 meters and we currently have nothing to offer, a VW source said. While other import brands are already succeeding with their sub-4 meter cars, such as the Honda Amaze sedan and Ford EcoSport SUV, Wolfsburg could only muster up the Taigun SUV study at the Delhi auto show earlier this year. Worse, VW has been slow to offer a competitive diesel. Only with the July launch of the refreshed Polo hatchback did VW start offering a 1.5-liter turbo-diesel specially designed to fulfill Indian excise tax requirements. VW just an-nounced it would soon start building the motor in Pune in order to avoid incurring import duties.

As a result the Polo is the only car in VWs range that receives the lowest possible excise duty of 8 percent. Unfortunately for Volkswagen, hatchbacks are not in fashion. The slightly longer, Polo-derived Vento sedan, by comparison, is slapped with a 20 percent charge, a huge differ-ence for cost-sensitive Indian car buyers.

Of course, demand could swing in the other direction should Delhi decide to reduce the gap in preferential tax treat-ment. To enhance our presence in the Indian market, we would need a wider portfolio of products, Kodumudi said. Volkswagen is considering options for new models in these segments [of sub-4 meter sedans and SUVs], but no deci-sions have been taken so far.

Sacrificing SkodaVW Group made matters worse by also willingly sacrificing Skoda volumes to align its brand strategy in India with the rest of the world, where its flagship VWs are more upmarket than those of the groups Czech marque. In India, however, Skoda is seen as an aspirational brand that has a premium cachet dating back to its launch in 2001. The effort to repo-sition it below VW did not go over well with Skoda customers and sales of the brand in India have suffered. You may have a strategy that you can eloquently explain to an investment community, but the man on the street believes Volks- wagen is out here to kill Skoda as a brand, said an India-based analyst who asked to remain anonymous. In the end, the automaker ended up with some VW

A man bikes past Mercedes dealership in New Delhi. Mercedes was Indias top-selling European premium brand in the first half but No. 15 overall.

Phot

o: B

loom

berg

SEPTEMBER 2014 9



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models that were priced at a premium to Skoda, and others that were priced at a discount, which confused customers, analysts said.

VW was forced to lower its targets for In-dia, aiming for a market share in the high single-digit percentage range across all brands instead of the double-digit share it previously hoped for. Back in 2009 when Pune went on stream, there was a phase of euphoria surrounding emerging markets such as India. But the economy and overall business conditions devel-oped much differently than the assump-tions made at the time, so we had to adjust our targets, the VW source said.

VW is not the only European carmaker to experience difficulty breaking into the Indian market. Fiat allied with Tata, building and selling cars via a joint ven-ture until deciding to set up a network of exclusive showrooms with the goal of reaching 150 dealerships by the end of this year. But service problems and a product range consisting currently of just two models have limited its growth.

Given the crowded state of the market, IHS Automotive analyst Anil Sharma rec-ommends that Frances PSA avoid the high entry barriers in the volume seg-ment by returning to India using its up-market DS brand as an alternative to the more mainstream Germans.

Good days are aheadOverall, the outlook for car sales in India is brightening, even for VW Group. Gujarats pro-growth minister was swept to power in national elections after promising that good days are ahead, handing his party the first absolute majority in decades.

The landslide election victory by Prime Minister Narendra Modi, combined with governor Raghuram Rajan at the helm of [Indian central bank] RBI, is a potential game-changer for India, Japanese bro-kerage Nomura said. It is not an exag-geration to expect India to stand out as the biggest EM [emerging market] turnaround story in the next five years. Indias carmakers are also happy, calling budget proposals by the new Modi govern-

ment the right message to foreign inves-tors. Auto sales rose in May for the first time in more than 15 months, according to Indian vehicle association SIAM, helped by an extension of the cut in the excise duty for cars until December 2014.

The changes also offer an opportunity for Europes carmakers, since the govern-ment is looking to strengthen outdated safety rules. India has the highest over-all number of reported road deaths in the world and roughly one out of every 3.5 accidents results in a fatality as most cars lack basic safety features such as antilock brakes. The Volkswagen Polo is the first car in its class to offer airbags as standard equipment in all trim lines. If some of those safety norms were to come, the European manufacturers could find a more even ground to play on, J.D. Powers Arora said.

With the government no longer acting as a key part of the problem and instead be-coming a part of the solution, it is now up to Europes carmakers to execute on their India strategies. ANE

SEPTEMBER 201410

AUTOMOTIVE NEWS EUROPE Q&A


How Infiniti plans to capture the new breed of premium customers

Time for a changeQAAs Infiniti Chairman, Nissan Chief Planning Officer Andy Palmer is working to reposition the brand as a design- and technology-driven alterna-tive to Germanys premium automakers. Palmer discussed Infinitis future with Automotive News Europe Editor Luca Ciferri on the sidelines of the British For-mula One Grand Prix.

What does Infiniti offer that its pre-mium car rivals dont?Something that is different, personalized and provocative. If you look at the Mil-lennial Generation, what we call Gen Y [people born between the 1980s and the early 2000s], they dont want to drive a car that their father drove.

What does Gen Y want from a car?They do not buy a standard car off the shelf anymore, even in the volume seg-ment. Thats whats driving Nissan Juke, Citroen DS or Fiat 500 sales. Everybody wants a personalized car. Now, in the premium space, they have a choice of essentially three manufacturers [Audi, BMW and Mercedes-Benz]. You can ar-gue maybe to include Lexus or Volvo, but the main players are the three Ger-man automakers.

And they keep breaking their own sales records. What can Infiniti do to successfully challenge them?They produce very, very good cars, but theyre all much the same. I mean, theyre all drawn with a ruler, straight lines, very rational. What Infiniti can do is provide the technology, the ride and handling, the NVH [noise, vibration and harshness] that is equal to those guys this is one of the benefits of our relation-ship with Daimler. But Infiniti will put all this in a package that is first of all, by its nature, smaller volume therefore its more unique.

So design makes the difference?Our design is provocative. Some peo-ple like it, some people dont, but its basically there to look very different. So its not drawn with a ruler, its not

straight lines, its very sensual and will become even more so. It will be all about design motion.

Which current model best exempli-fies Infinitis vision?The QX70. Its my personal car. I drive the Vettel edition [named after Infiniti-sponsored F1 driver Sebastian Vet-tel]. When you drive a QX70 in Europe it turns heads. It turns heads because its such a stand-out design. First and foremost, thats the differentiation. Its basically for people who are bored with Germanic, Teutonic looking designs. But it is, in every other aspect, just a great car, on par with them.

Infinitis first-half European sales were below 1,800 units. Is your 100,000-unit target for the region by 2020 achievable?Yes, but our Europe region also includes eastern Europe and Russia, so our sales were about 7,000 from January to June.

Which Germany premium brand has the market positioning in Europe that Infiniti wants to match?I would say Audi is close to what we target. Audi is new money, the newest member to the club. And I would say if I want to make a simile of who we de-sire to be cross-shopped with, its Audi, product-wise and price-wise.

Infinitis European sales will get a big boost from the UK-built Q30 compact model and the QX30 compact SUV due next year. What are your volume predictions?We have installed a 60,000-unit annual capacity in our Sunderland plant for global supply of both models.

The Q50s powertrain lineup includes gasoline, diesel, hybrid and four-wheel-drive variants. Are more alter-natives coming?We still have a downsized gasoline en-gine to come, but the Q50 starts to make the connection between quite a signifi-cant improvement in brand awareness in terms of familiarity, overall opinion, pur-chasing considerations. At the moment, compared with our volume, weve got an overleveraged brand opinion. Its high, and its thanks mainly to Formula One.

How do you measure your return on investment from sponsoring the Red Bull F1 team?If I look at exposure alone, we measure it ever week, every month, every year. The first year, 2011, our F1 involvement gave us a $250 million exposure. In the second year, 2012, it was $339 million, last year $1.2 billion. F1 brand exposure translates into awareness and then that augmented translates into opinion. So we are very happy. ANE

Meet the boss NAME: Andy Palmer

TITLE: Infiniti Chairman and interim CEO; Nissan Chief Planning Officer

AGE: 51

MAIN CHALLENGE: Establish Infiniti as a design-driven alternative to German premium automakers.

SEPTEMBER 2014 11



Citroen CEO Jackson says C4 Cactus embodies brands revised values

Coming-out partyQACitroens new CEO Linda Jackson has a tough task ahead to ensure that the brand is successful in the tough main-stream market now that its upscale DS line has been made into a stand-alone marque. A key to the brands future will be offering models that offer technol-ogy that is useful. Jackson, an English national, is the first woman to lead the brand and the first non-French execu-tive to hold the post. Jackson spoke with Automotive News Europe France Corre-spondent Bruce Gain.

What are your priorities for Citroen now that DS is a stand-alone unit run by your colleague Yves Bonnefont?It is a good opportunity for Citroen to go back to what we were always extremely good at, which was designing cars that offer an innovative difference. Citroen is renowned for its design at affordable prices for mainstream customers. We clearly need to focus on our four key pillars: design, creative and useful tech-nology, comfort and our optimized bud-get initiative.

Could you provide more details on your optimized budget initiative?For example, in Spain, customers pay a certain amount, which covers costs such as insurance and parts replace-ment. This way, the customer can spend what they want to spend. If they want to spend more, they move up a level. In the UK insurance is very expensive so we of-fered the previous C1 with an insurance deal for 18-year-olds.

What is the focus for new Citroens?We want our customers to be at ease when they are sitting in the car. We need to offer technology, but we want it to be useful. Cars now have so many gadgets that half of the customers dont know how to use them. What we are trying to do with the C4 Cactus and future vehi-cles is to offer technology that is useful.

So the new C4 Cactus is the coming-out party for the new Citroen?That is exactly it. We see the C4 Cactus

as the first example of where we want the brand to go.

In the UK, you reduced image-and profit-harming discounts? Will you fo-cus on this in the rest of Europe?Yes. Offering discounts does not help Citroen as a brand. We need to move for-ward by having innovative offers, such as the C4 Cactus monthly rental program. We dont want the situation where the customer goes to a Citroen dealership and they dont know what they are pay-ing for and have to negotiate the price.

PSA CEO Carlos Tavares wants to shrink Citroens lineup to seven models by 2022 from 15 now. Which models will Citroen concentrate on in future?Citroen needs models that can be sold in

Europe and in other regions. We current-ly dont have many models that cover all of those areas. Reducing the number of models makes sense when you take a common platform and model to cover a number of zones. What you then have to do is choose whether a particular model must be a crossover, a SUV or whatever. It is too early to say what we will do.

Will the next C3 subcompact get a makeover similar to the C4 Cactus?We will not be niche but will look at a suite of vehicles that will cover the whole range of mainstream customers. We also have a wide range of loyal cus-tomers whom we obviously want to keep and our product portfolio must meet their needs as well.

The C4 Cactus has air-filled plastic panels on the doors and bumpers to protect the bodywork from minor col-lisions. Will these so-called Airbumps be offered on other Citroens? Very possibly. It is unique to Citroen, so why wouldnt we think about using that for other models. Will we use it for every model? That depends on where the mod-el is in the segment. But the Airbumps will become part of Citroens signature.

Will you build a C4 successor?We do not yet have a new C4. This is part of the debate. We are in the stage where we are looking at which models, seg-ments and customers we are targeting.

What are Citroens plans for the large-car and midsize segments in Europe now occupied only by the C5 after the C6 was dropped in 2012?That will involve how we develop plat-forms that will cover China, South Amer-ica and elsewhere, as well as Europe. China customers prefer large-type ve-hicles so if there is an opportunity, that is something that is in the melting pot.

Why wont the C8 minivan be replaced?We believe we have something in the C4 Picasso seven-seat model that will be able to answer that demand. ANE

Meet the boss NAME: Linda Jackson

TITLE: Citroen CEO

AGE: 55

MAIN CHALLENGE: Using innovative sales offers to reduce reliance on discounts that can hurt the brands image and bottom line.

SEPTEMBER 201412



SEPTEMBER 2014 13



JLR engineering czar Ziebart details British brands CO2-cutting revamp

Engine upgradeQAJaguar Land Rovers head of product development, Wolfgang Ziebart, is guiding the rapid expansion of the Land Rover and Jaguar ranges. The former BMW product development chief shared details of the companys plans to expand its vehicle and engine lineups, while re-ducing CO2 emissions. He spoke with Automotive News Europe UK Correspon-dent Nick Gibbs.

How difficult will it be for Jaguar Land Rover to reach average CO2 emis-sions of 132g/km in Europe by 2020?We dont need completely new inven-tions. The technology to meet the tar-gets is available. For 2020, it will be very much about selecting which technical solutions are appropriate so that the tar-gets are met, but at a cost thats within certain limits.

One analyst estimate said JLR could spend $1.1 billion a year by 2020 to hit global CO2 targets.Were not going to spend more than oth-er manufacturers. No one manufacturer has a particular advantage over the oth-er. It will be challenging for larger vehi-cles, but its also challenging for smaller vehicles in that they have less freedom to maneuver in terms of which technol-ogy you can bring.

JLR will launch more hybrids as well as its first plug-in hybrids. When will we see them?We cant talk about specific dates, but you can expect progress along the route we started with the current hybrid elec-tric [system used in the Range Rover Hy-brid and Range Rover Sport Hybrid with the SDV6 diesel]. The share of electric power will increase and the combustion will be downsized so that you have more opportunity to drive electrically.

Will you go full electric with any car?The market is in two areas. The first one being inner-city urban transportation. Thats less a market for us. The second is as a second or third car for a wealthy family. This is more a market for us.

Here we see some Range Rover owners or owners of high-end Jaguars as poten-tially being attracted to electric vehicles. That is why we are carefully monitoring how this market develops.

If its a second or third car then its usually smaller, right?The Tesla is not a small vehicle. Its a 5-meter car. Its XJ size. The demand is different all over the world. Europe would like to have an electric car that is small, like the BMW i3 or below. Where-as the U.S. and China would prefer a larger car, and the Tesla direction clearly shows this.

The Jaguar XE sedan will be revealed this month with a range of new JLR engines. JLR also still gets engines from Ford. At what point will JLR be-come self-sufficient in engines?The question is whether this is desirable at all. I could see that the market for eight cylinders becomes so small that it doesnt make sense for one individual automaker to do its own. Also, if we have a demand for very low-end engines, for example for legal requirements for small displacement in a certain country, we will continue to be open to buying these engines from others.

Will the modular Ingenium engine range allow flexibility in the number of cylinders?Weve introduced the four-cylinder diesel engine mid-spec and also as a high-spec with two turbos. Then a [four-cylinder] gasoline will come. I could see a 4.0-liter eight-cylinder engine. That is what BMW is doing with 500cc per cylinder. We could do a three-cylinder, but that has not been determined yet. In general the engine platform is modu-lar. As long there is at least one cylinder you can do anything.

Do your r&d budgets match those of your German premium rivals?We dont have similar budgets. Our ve-hicle offering is not as broad as some of our competitors, this then naturally re-duces the effort we have to take. We are smaller and faster. Something executed in a large company costs significantly more than something executed in our company. I am absolutely not concerned that we would get into a position in which we could not afford a certain technology.

Will JLR have to form a partnership to continue growing or will you strive to remain independent?Everybody talks about partnerships and the need to grow, so maybe. So far we see that the program we intend to ex-ecute can be executed on our own. ANE

Meet the r&d boss NAME: Wolfgang Ziebart

TITLE: head of product develop-ment, Jaguar Land Rover

AGE: 64

MAIN CHALLENGE: Ensure all-new engines and architectures for Jaguar and Land Rovers rapidly expanding ranges keep pace with German rivals while delivering significantly lower CO2 emissions.

SEPTEMBER 201414

AUTOMOTIVE NEWS EUROPE AUTOMAKERS


Surging supercarsSales of exotics forecast to rise more than 60% in Europe by 2017

NICK [email protected]

The slump in the European market for supercars exceeding 100,000 euros is coming to an end as confidence re-turns following the regions prolonged recession and automakers begin to re-place aging models. Led by models such as the BMW i8 and Audi R8, European sales in the segment are forecast rise to 21,000 units by 2017, up from 13,000 last year, according to figures from IHS Automotive. The consultancy predicts that the rebound for cars costing more than 125,000 euros will start this year.

The return of consumer confidence is perhaps the biggest tailwind. Last year was one where we were still seeing eco-nomic pressures in the region, which was likely to have made some people reluctant to buy something extrava-gant, IHS Automotive senior analyst Ian Fletcher told Automotive News Europe.

He said the problem was worse in Ita-ly, where a crackdown on tax evasion has hit sales at brands such as Ferrari, Lamborghini and Maserati. Lamborghini CEO Stephan Winkelmann told Automo-tive News Europe earlier this year that the supercar makers customers were targeted. Some of our customers were stopped by the Italian finance police while driving, which they said made them feel hunted, Winkelmann said.

More buyers also will drawn back into the market by a growing number of re-newed and all-new models. IHS predicts several cars will break the 1,000-sales mark in 2016 whereas in recent years only the Bentley Continental GT, Fer-rari 458 Italia and Audi R8 managed to achieve four-digit sales.

Bullish on BMW i8, Audi R8IHS predicts the newly launched BMW i8 plug-in hybrid supercar, which starts at 126,000 euros in Germany, will out-sell all other supercars in 2015 with a volume of about 1,700. Next year is also when McLarens lowest-priced model, code-named P13, will debut. McLaren has said the cars base price will be

about 160,000 euros. The segment is forecast to get another boost in 2016 with the arrival of the new generations of the Audi R8 and Ferrari 458 Italia.

IHS predicts that Ferrari will sell nearly 1,500 units of its revised 458 in 2016 and that Audi will lead the segment with a volume of nearly 2,400 R8s. New models do certainly drag those with the money into the market, Fletcher said.

McLaren executives say that automak-ers have to be fast in updating or replac-ing older models. Theres an element of customers wanting something quicker, the desire to have something newest and best, McLaren Chief Financial Of-ficer Richard Molyneaux told Automotive News Europe earlier this year. Some-thing like an Astra or Corsa is typically in a five-year cycle. You cant have that at this level of the market.

One company suffering from slow prod-uct renewals is Aston Martin, which is a key player in the European sector with three cars in the top 10 (see chart). As-ton Martin, however, is at a low ebb, Fletcher said. The company is in the pro-cess of developing a new architecture to replace the 10-year-old VH (vertical horizontal) platform that was created

under previous owner Ford Motor and underpins all its current cars. In May the company announced the biggest in-vestment program in the 101-year histo-ry of the brand with 500 million pounds to be spent on the next generation of high-performance sports cars, it said in a statement. The cars will also use V-8 engines supplied by Daimlers perfor-mance arm, AMG, in a deal announced

The Ferrari 458 Italia was Europes No. 2-selling supercar in the first half.

The leaders Europes top-selling exotics in H1 2014; % change from H1 2013

1. Bentley Continental 874 -10 GT/GTC 2. Ferrari 458 Italia 871 +3 3. Audi R8 545 -23 4. Maserati Quattroporte 423 +184 5. Aston Martin V8/ 419 +1 V12 Vantage 6. Bentley Flying Spur 340 (new) 7. Ferrari F12 277 -35 8. Aston Martin Vanquish 197 -15 9. Rolls-Royce Wraith 179 (new) 10. Aston Martin DB9 146 -19

Source: JATO Dynamics

SEPTEMBER 2014 15

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last December, replacing the current Ford-built units. The changes will give the company the boost it needs, accord-ing to IHS, which predicts sales of As-ton Martins new V8 Vantage will jump to about 1,500 in 2016 from about 650 units for the older version in 2015.

What analysts say is increasing the at-traction of very high-end cars is their improving usability and economy. Bent-ley, owned by the Volkswagen Group, has said that to make its cars more fuel-efficient it will offer a plug-in hybrid option on 90 percent of its models by the end of the decade, starting with the forthcoming SUV in 2017. Ferrari, mean-while, told Automotive News Europe that CO2 from its cars has been cut by 40 percent since 2007 and that it wants to cut another 20 percent by 2021.

The VW Group is now in a position to see cost savings from platform and tech-nology sharing from its luxury brands, Fletcher said. Bentley said its new SUV,

due in 2016, will share a platform with the new Audi Q7 large SUV, while sister brand Lamborghini will also use the un-derpinnings for its Urus SUV, which is due in 2017. In April sources at VW told Automotive News Europe the Urus will be built at VWs plant in Bratislava, Slo-vakia, alongside the Audi Q7 and bod-ies for the Bentley SUV. In July Bentley head Wolfgang Duerheimer confirmed the bodies-in-white for the SUV will be

made outside its Crewe, England, base without giving a location. Duerheimer also said the brand is working closely with Porsche, and that a planned fifth model following the SUV could use a Porsche-engineered front-engine, rear-drive platform internally known as MSB (German for Modularer Standardantrieb-Baukasten, which is modular standard platform in English).

Those lacking the synergies of a wider group often struggle. Production num-bers of more than one unit a day require substantial investment into facilities and quality control, as well as sales network and vehicle servicing, and that hurdle is often hard to overcome, Christoph Stuermer, global lead analyst for PwC Au-tofacts said. However the big advantage luxury and sports car makers of all sizes have right now are the rising markets. Said Fletcher: Purchases of vehicles at this end of the market, particularly sports cars, are mainly driven by confidence in what the future holds. ANE

The BMW i8 is forecast to be Eu-ropes best-selling supercar in 2015.

SEPTEMBER 201416

AUTOMOTIVE NEWS EUROPE LATEST LAUNCHES


The S-class coupe has a sportier look than its CL predecessor.

S class gets a coupeMercedes-Benz expects a new name, fresh design and innovative technology will double sales of the S-class coupe compared with the model it replaces, the CL. In keeping with the brands tradition, the coupe has technol-ogy not offered in other Mercedes mod-els, in this case a suspension system with a curve tilting function. The vehicle leans into bends much like a motorcy-clist, said Hermann Storp, chief devel-oper for the S-class line. Our aim was not a higher cornering speed but more comfort and fun for the driver, he said. Mercedes decided to drop the CL name for the coupe version of the S class be-cause some customers confused the CL with the smaller CLS coupe-styled four-door sedan, which is based on the E class. Mercedes expects the S-class coupes annual sales to be about 10 per-cent of the total volume of the S-class

How does the curve tilting func-tion work?The system adjusts the force in each suspension strut individually after a ste-reo camera behind the windshield and a lateral acceleration sensor register the road curvature up to 15 meters ahead.

Target buyers? Wealthy customers who want luxury combined with standout design.

Engines?Only one engine will be offered initially, a 455-hp, 4.7-liter V-8 gasoline unit. A

V-12 comes next year. No diesel or hy-brid powertrains are planned.

Which will be the biggest markets?

One-third will be sold in the U.S.; one third in Europe; another third in Asia and rest of the world.

Launch dates: September (Europe); October (U.S.)

Base price: 125,691 euros (Ger-many)

Platform: MRA (Mercedes rear wheel architecture)

Where built: Sindelfingen, Germany

Lowest CO2 emissions: 219 g/km Main rivals: Bentley Continental Coupe, BMW 6-series Gran Coupe

The Basics

Fast facts

line, which would mean sales of between 8,000 and 10,000 units for the coupe.The coupe is the third variant of the new S class after the base version and an extend-

ed wheelbase variant both went on sale last year. A convertible is also planned.

Michael Specht

Division ContiTech of Continental AG

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the value of better interiors

Life inside a car can be tough. But theres no need to show it.

SEPTEMBER 201418



The C1 has the brands new front-end, which is characterized by split headlights.

Citroen touts cheerful C1Citroen is touting the C1s cheerful front-end design, open-air variant and a modern infotainment system as key attractions for the latest-generation minicar. The C1 is a sibling to the Peu-geot 108 and Toyota Aygo but neither the Aygo nor the 108 offer an open-top version like the C1 Airscape. Its only ri-val in the segment is the Fiat 500C. The C1 Airscape has a canvas softtop running along almost the entire length of the roof. It is rolled back electronically by a switch in the ceiling panel. Citroen product chief Pierre Monferrini said the Airscape vari-ant and a touchscreen that is compatible with smartphones make the C1 like a subcompact car for the minicar sector. The C1, Peugeot 108 and Toyota Aygo share a platform and engines and are built in the same factory. Only their front ends and rear bumpers are different. The

New technologyThe C1 is Citroens first model to fea-ture Mirror Screen technology, which allows the motorist to access and use smartphone content such as naviga-tion, music and the phone on the 7-inch touchscreen interface.

Target buyersTwo main customer demographics are targeted: Young, mostly women drivers typically under 30 and older couples looking to downsize.

EnginesTwo gasoline engines (82 hp, 1.2 liter and 69 hp 1.0 liter).

Cargo space196-liter trunk space rises to 780-liters with the rear seats folded down.

Is the Airscape noisy when driven with the roof open?An aero-acoustic deflector deploys when the roof is open to reduce turbu-lence and limit noise in the cabin.

Launch date: June to October (Eu-rope)

Base price: 9,950 euros (France)

Where built: Kolin, Czech Republic

Annual production: 100,000 units

Lowest CO2 emissions: 88g/km

Main rivals: Kia Picanto, Seat Mii, Hyundai i10

The Basics Fast facts

C1s front end has the key characteristics of the brands newest models, with a two-part headlight signature and integrated LED daytime running lights. The front-end styling creates a smiling front-end gaze

and emphasizes the cars cheerful de-sign, Citroen says. The C1 is available in three- and five-door versions.

-- Bruce Gain

SEPTEMBER 2014 19



SEPTEMBER 201420

AUTOMOTIVE NEWS EUROPE RETAILERS


Reluctant retail giantsVW Group, other OEMs aim to slash the size of their company-owned dealerships

NICK [email protected]

Volkswagen Group has Europes big-gest company-owned dealership network even as the automaker and its rivals attempt to reduce the number of their wholly owned retail outlets.

VW owns 564 dealerships across Eu-rope, 214 more than Emil Frey, which has the largest number of franchise points among independent dealer groups (see ranking, Page 21), according to data from UK-based auto retail analyst ICDP.

Volkswagen gained the bulk of its deal-erships when it bought Austria-based Porsche Holding Salzburg in 2011 for 3.3 billion euros ($4.4 billion) as part of its acquisition of the Porsche car brand. Porsche Holding Salzburg, previ-ously owned by the Porsche and Piech families, has 391 dealers. Most of the stores are in France and central and eastern Europe.

Volkswagen is selling some of its Ger-man dealerships to private investors. VW sales and marketing chief Christian Klingler has said the automaker has a long-term strategy to sell off its dealer-ships in Germany.

Earlier this year, PSA/Peugeot-Citroen said it would sell or close a small number of its German retail outlets to help make the rest of its network profitable. In July, Daimler reached an agreement with la-bor representatives to sell some of the 213 Mercedes-Benz dealerships that it owns in Germany.

ICDP Managing Director Steve Young said automakers are reluctant owners of dealerships because dealer margins are low. On average dealers make a 2 per-cent margin, with the best making 5 per-cent, regardless of the brand sold, ICDP estimates. In most cases automakers ownership of dealers is largely a quirk of history, Young said.

Automakers, especially Frances Renault and PSA/Peugeot-Citroen, are unable to reduce their networks significantly be-cause of labor agreement constraints, Young said.

The number of both company-owned and independent dealerships has fallen by 12 percent to 47,500 in western Eu-rope since 2007, according to a Bern-stein Research report. The sharpest re-duction was in Spain, down 24 percent, followed by Italy, where the countrys dealership network has been reduced by 15 percent. BMW, which cut its network by 13 percent, and VW Group, which re-duced its network by 9 percent, look to have made progress and now arguably have the best dealer networks in Eu-rope, the report said. ANE

Daimler is selling company-owned Mercedes dealerships in Germany to help boost the automakers profitability.

Whos who Alphabetical listing of OEMs with the largest retail divisions in Europe

Retail group Home countryBMW BMW GermanyDaimler Mercedes Benz Retail GermanyDaimler Mercedes Benz Retail UK UKFord Ford Retail UKPSA Peugeot Retail France FrancePSA Peugeot Retail UK (Robins & Day) UKPSA Peugeot Retail Germany GermanyPSA Peugeot Retail Spain SpainPSA Citroen Retail FrancePSA Citroen Retail UK UKRenault Renault Retail FranceVW Group Porsche Holding Austria

Source: ICDP

Wheeling & dealing Ranking of OEM-owned retail networks in Europe based on franchise points

1. VW Group 5642. PSA 259 3. Daimler 2524. Renault 2095. Ford 566. BMW 43 Source: ICDP

SEPTEMBER 2014 21

AUTOMOTIVE NEWS EUROPE RETAILERS


1 Pendragon UK 23 225 115,000 150,000 265,000 4.602 Emil Frey* Switzerland 25 350 40,000 85,000 59,000 184,000 4.003 Sytner (Penske) UK 21 129 46,074 55,849 101,923 3.864 AMAG* Switzerland 6 171 46,000 55,000 60,000 161,000 3.675 Inchcape Europe* UK 13 160 27,000 65,000 60,000 152,000 3.606 Arnold Clark UK 22 198 88,697 142,964 231,661 3.497 Pon Holdings* Netherlands 8 62 85,652 18,348 13,000 117,000 3.258 Lookers UK 29 119 63,608 53,713 117,321 2.959 DIeteren Belgium 8 25 103,534 9,343 2,257 115,134 2.6310 MoellerBil Norway 3 63 6,233 36,661 26,691 69,585 2.4311 Vertu UK 18 104 65,132 54,411 119,543 2.2912 Bilia Sweden 8 94 35,627 33,600 69,227 2.0413 Jardine UK 22 70 28,780 25,082 53,862 1.6414 Louwman Netherlands 15 40 35,042 7,903 6,864 49,809 1.5015 AVAG Holding Germany 14 131 44,909 36,212 81,121 1.3116 Gottfried Schultz Germany 7 45 25,988 25,115 51,103 1.2817 Alcopa* Belgium 29 60 33,000 25,000 9,000 67,000 1.2218 Listers UK 13 43 28,050 16,873 44,923 1.1919 Marshall Motor Group UK 22 66 27,250 23,395 50,645 1.1720 JCT600* UK 19 45 26,500 25,000 51,500 1.0921 Salvador Caetano* Portugal 25 175 28,800 15,600 44,400 1.0222 Feser, Graf & Co. Germany 7 55 20,910 27,507 48,417 1.0223 Stern Netherlands 17 82 25,050 21,551 46,601 0.9224 Autobinck* Netherlands 15 31 26,000 10,000 5,000 41,000 0.90 Wellergruppe Germany 7 66 14,112 31,180 45,292 0.90 Gueudet France 8 94 23,000 23,000 46,000 0.9027 Bernard France 7 55 27,780 23,300 51,080 0.8828 Greenhous UK 6 16 45,432 53,353 98,785 0.8329 By My car France 14 44 29,000 18,000 47,000 0.7730 VV Auto* Finland 3 10 16,600 7,000 5,000 28,600 0.7531 Group 1 Automotive UK 4 19 13,699 16,844 30,543 0.7432 Benfield Motor Group UK 14 37 25,501 15,301 40,802 0.7333 Ridgeway Group UK 10 29 13,871 10,831 24,702 0.7234 Quadis Spain 23 77 14,020 7,774 21,794 0.68435 Rouyer France 15 48 18,204 20,457 38,661 0.68136 LUEG Germany 6 29 11,394 11,700 23,094 0.6737 Loehr Gruppe Germany 6 35 10,948 12,512 23,460 0.6338 Senger Group Germany 8 43 8,011 10,442 18,453 0.6139 Neubauer France 19 73 16,460 10,128 26,588 0.6040 Perrys Group UK 15 54 20,279 18,671 38,950 0.5941 David Gerbier France 13 32 24,000 16,000 40,000 0.58042 Camden Ventures UK 2 15 12,049 7,399 19,448 0.57843 Schuller France 16 49 17,240 17,698 34,938 0.57544 John Clark Motor Group UK 9 21 11,101 9,023 20,124 0.56245 Rosier Germany 5 32 7,602 8,164 15,766 0.56046 Priod France 7 38 14,550 7,000 21,550 0.5447 Cloppenburg Automobil Germany 10 33 5,824 6,484 12,308 0.5348 Autohaus Wolfsburg Hotz & Heitmann Germany 4 6 9,189 13,016 22,205 0.5249 Guenther Graf von Hardenberg-Stiftung Germany 6 27 11,555 11,035 22,590 0.51150 Kroely France 7 27 11,700 10,200 21,900 0.510

Source: IDCP *Includes estimates

2014 Guide to Europes biggest dealers

Rank Company Home Country Brands Franchise New New Used Total Revenue points wholesale retail vehicles Vehicles in bn vehicles vehicles

SEPTEMBER 201422

AUTOMOTIVE NEWS EUROPE SUPPLIERS


Spains Grupo Antolin aims to be the worlds No. 1 interiors supplier

On a missionQAGrupo Antolin -- already global No. 1 for vehicle headliners -- has set its sights on a much more ambitious tar-get. The family-owned Spanish company wants to become the worlds largest sup-plier of automotive interiors. To get there Grupo Antolin, which estimates it is a top 10 interiors supplier now, will have to pass giants such as Magna International, Faurecia and Johnson Controls. Ernesto Antolin, who has been vice chairman since 1995, discussed the firms future with Automotive News Europe Managing Edi-tor Douglas A. Bolduc.

What is Grupo Antolins long-term goal?To become the worlds largest interiors supplier.

Is Grupo Antolin looking to grow through acquisitions?We are becoming a bigger company and, of course, we analyze all the possibilities in the market, mostly to increase the products we can offer in our doors and lighting business units.

And for your other two divisions, seating and overheads? We are not looking in seating. For head-liners, globally we are No. 1. That is more than enough.

Will we see more consolidation? There are a lot of opportunities to con-solidate in interiors. I think there will be a maximum of seven to 10 interiors sup-pliers and three or four of them will be key global suppliers, but not 50 like we have today.

What is driving this?Today, everybody is talking about mega-platforms and carryover parts to get economies of scale and being able to supply the components to factories producing that same car with the same standards all over the world.

How do you meet that challenge?We are already global, which gives us a big advantage when it comes to supply-ing to platforms used around the world.

What about organic growth? Where are you looking to expand?Regions where the GDP and population are growing and will keep growing, such as Indonesia, and where we already are active. For example, we will produce in-terior parts for the new Q5 in Mexico to support production at Audis new plant in San Jose Chiapa. That will boost our presence in the NAFTA region.What is Grupo Antolins sales outlook for the rest of the year and for 2015?We see strong growth in NAFTA, especial-ly Mexico, and Asia. A little bit of growth in Europe. South America is tough. The market and economy in Brazil are very bad; Argentina is terrible. In South Amer-ica we are restructuring our factories be-cause we are preparing for a slump. For

next year, Europe, Asia and NAFTA will grow and we will grow with them. China wont grow 60 percent like in some pre-vious years but more like 6 to 7 percent.

What about Russia?All the forecasts of production for our customers have been reduced. They are slowing output and sometimes stopping it. They are in a crisis. We have to be patient.

Is there any hope for a turnaround?I dont feel any hope. We are struggling with the investments weve already made in St. Petersburg. If you asked Faurecia or Johnson Controls or Magna, I think they would say the same.

Will you lose money in Russia?We already anticipated some losses. In St. Petersburg the situation is very dif-ficult and results from our plant there are worse than expected. At our plant in Nizhny Novgorod, however, it seems the situation is more stable because it supplies GAZ in the same town and VW in Kaluga.

Will your success in other markets offset the loss?Absolutely. This is the benefit of being a global company. The total Russia busi-ness is not that big. I mean, its impor-tant because St. Petersburg is one of the few factories that is losing money, but it represents a relatively small percentage of the total. We are not willing to invest more in Russia at the moment. ANE

Meet the boss NAME: Ernesto Antolin

TITLE: Grupo Antolin Vice Chairman

AGE: 49

MAIN CHALLENGE: Making the company the worlds largest supplier of vehicle interiors.

Company snapshot Key facts based on 2013 figures

Revenue: 2.13 billion euros*EBITDA: 238 million euros*Top customer: VW Group Top product: HeadlinersOther products: Doors, seats, lights

*New recordSource: Company

SEPTEMBER 2014 23

AUTOMOTIVE NEWS EUROPE SUPPLIERS


Suppliers to the new Mercedes-Benz GLA

Suppliers wanted: If you are a supplier and have questions or want your information considered for our cutaway features, contact James Clark at [email protected] or visit www.supplierbusiness.com

CRANKSHAFT [K9K, I4 2.2L DIESEL, I4 2.0L GAS (AMG 45)]THYSSENKRUPP

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Automotive News Europe

SupplierBusiness

Magna Powertrain supplies the all-wheel-drive system for the new Mercedes-Benz GLA compact SUV. The Magna International subsidiary co-developed the system with Mercedes parent Daimler. Magna Powertrain eliminated seal rings and bearings in the system to reduce drag by about 14 percent and decrease weight by more than 2kg. James Clark

Magna unit helps GLA stay on track

David [email protected]

Hyundai is trying to bring the vener-able written CSI survey into the age ofthe cloud, Twitter and Facebook.

The brand has devised a new method,using e-mail and three-day turn-arounds, to change the way it deter-mines customer satisfaction, address-

ing a problem thathas long plagueddealerships thathave had to wait toolong for results.

Under the plan,which Hyundai Mo-tor America testedlast year and whichwill be rolled out na-tionally in July, ser-vice customers willget a three-questione-mail survey. Re-sults come backwith a one- to five-star rating and feed-back that allowsdealers to act quick-

ly on suggestions and complaints, saidSeattle-area Hyundai dealer Gary Mi-callef, one of 25 Hyundai dealers in-volved in the pilot project last year.

The star ratings program will be op-tional for dealers. All dealers will con-tinue to be measured by a more tradi-tional, but much shorter CSI surveyform that was introduced nationallythis month.

David [email protected]

Last week, Consumer Reports once againrapped MyFord Touch.

Fords infotainment system is needlesslycomplicated and finicky, the magazine con-cluded.

And the problem of difficult-to-use infotain-ment isnt limited to Ford. Also last week, a J.D.Power and Associates study concluded thatfactory-installed navigation systems have

been getting harder to use.But what isnt in the news is an intense, be-

hind-the-scenes race to find what automakerssee as the cure to clunky infotainment sys-tems: natural language.

If all goes well, natural language systems which not only understand precise, rigid com-mands but can deduce a users intent by thecontext will enable motorists to activate in-fotainment apps by using conversationalphrases just as users of iPhone or Androidsmartphones do.

For example, a traditional command menumight require the driver to say, USB, playartist Beyonce. If the user gets one word

NEWSPAPER

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a u t o n e w s . c o m

JANUARY 28, 2013

INSIDE TODAY

On the WebThis week at autonews.com: Tuesday: Fords earnings;taking stock of Europes toll Wednesday: Chryslers 4th-qtr.results, revised product plan Friday: January U.S. sales another 15 million-plus SAAR?

see APPS, Page 31

Plan kicksCSI intocyber era

GM: Iowa dealer faked salesEric Freedman and Mike [email protected]

General Motors is suing a Daven-port, Iowa, Chevrolet dealership tostop what the automaker calls awidespread fraudulent and unlaw-ful scheme to falsely report retailnew-vehicle sales.

The federal court suit accusesLeep Chevrolet, which does busi-ness as Lujack Chevrolet, of trans-ferring vehicles to affiliated non-

Chevy dealerships in Iowa and In-diana for resale in what is knownwithin the Leep enterprise as DaisyChain sales.

Leep claimed incentives forsome or all of the purported buy-ers, submitted fraudulent cus-tomer surveys and collected un-

earned GM Standards for Excel-lence payments, the suit says.

GM seeks an injunction, as well asdamages for fraud, conspiracy andbreach of contract.

Leep reported dozens, if not hun-dreds of retail sales to individuals,but many of the reported pur-

chasers did not purchase the vehi-cles in bona fide transactions, didnot take delivery and did not use thevehicles for personal use, GM says.Other Leep-affiliated stores, includ-ing Honda dealerships, resold thevehicles as used but like new,the suit says.

In a statement, Don Reese, COOof Gurley Leep Automotive, which

Micallef: Quickfeedback helpsdealers.

Suit comes as company cracks downon retailers over ordering, reporting

Hyundai seeks fast,brief e-mail feedback

see CSI, Page 31

Natural language should make infotainment systems easier to use

Building buzz

Why cant cars do what phones do?The traditionalCSI needs anoverhaul, andnows the timefor it. | PAGE 12 |

see GM SUIT, Page 33

Rags to riches to courtAfter 24 years on the run, ex-GMdealer Jun Reodica faces trial inwhat prosecutors call one of thelargest fraud schemes in autoretailing history. | PAGE 3 |

Gizmos over gutsMost pickup unveilings are aboutguts: horsepower, towing, torque;Fords Atlas concept is heavy ongizmos meant to boost fueleconomy and utility. | PAGE 4 |

OK, wholl be the CEO?A new book by former CEO Ed

Whitacre describesGMs chaoticprocess of pickingit

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