Tag Archive | "Volkswagen"

December Auto Sales Soar 9% in Record Year

Automakers posted a solid 9% sales gain in December, an exclamation point that sealed 2015 as the biggest sales year ever for the industry, reported USA Today.

All told, automakers sold 17.47 million new vehicles for the year, Autodata reported, besting the previous record set in 2000 by 68,138 vehicles. Low gas prices, cheap credit, low unemployment, soaring consumer confidence and warm weather fueled a rush into showrooms in December.

“The U.S. economy continues to expand, and the most important factors that drive demand for new vehicles are in place, so we expect to see a second consecutive year of record industry sales in 2016,” said Mustafa Mohatarem, GM’s chief economist, in a statement.

Still, sales success for individual automakers presented a mixed bag. Detroit’s Big 3 fared well for December and the year. General Motors had a 5.7% sales increase in December, Ford Motor saw an 8.3% boost and Fiat Chrysler sales rose 12.6%, according to Autodata. Tesla Motors doubled sales during the month and sold 23,650 of its luxury electric cars in the U.S. for the year, but came in at the low end of its delivery guidance on worldwide deliveries.

Among Asian makers, Toyota saw a 10.3% increase for the month, Honda was at 9.9% and Nissan at 8.7%. But for the full year, they came in lower, with Toyota posting a 5.3% increase compared to the industry average of 5.7%

One laggard was German automaker Volkswagen Group, which still cannot sell diesel vehicles amid an emissions scandal, down 3.4% overall. The automaker’s Volkswagen brand sales fell 9.1% in December and 4.8% for the year. The company’s Audi luxury brand, which has felt a smaller impact from the scandal, achieved a 6% gain in December and 11.1% for the year. Another loser for the month was Hyundai, saddled with a car-heavy lineup during the SUV surge, down 1.5%.

Consumers continued their exodus from less-lucrative cars into crossovers, sport-utility vehicles and pickups amid low gasoline prices.

At 13.9% market share, the small SUV segment is now the largest category of vehicles in the U.S., trailed by small cars and midsize cars at 13.7% apiece, according to Kelley Blue Book.

“There’s no end in sight to those trends,” AutoTrader.com analyst Michelle Krebs said. “You’re going to hear the same broken record next year.”

Crossovers like the Toyota RAV4, the Nissan Rogue and the Jeep Renegade delivered a robust showing in December.

“The segment is in demand with Baby Boomers and Millennials both looking for increased utility. We think this is a long-term trend,” Ford sales analyst Erich Merkle said on a conference call.

Unlike 2000, when automakers were piling on discounts to sell vehicles despite a strong economy, the industry is financially fit and has spurned steep incentives. Average incentives rose 3.9% in December, compared with a year earlier, to $3,063 per vehicle, according to TrueCar.

Toyota division general manager Bill Fay told reporters it was a “standout year,” though he projects sales to “start to level off a bit” in 2016.

Even as crossovers gain, the industry’s stalwart full-size pickup trucks have also flourished, in addition to new midsize pickups.

The Ford F-Series pickup, the most popular vehicle in the U.S., rose 14.6% to 85,211 units in December. Sales were up 3.5% for the year to 780,354.

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VW Faces Billions in Fines as U.S. Sues for Environmental Violations

The U.S. Justice Department has sued Volkswagen for up to $48 billion for allegedly violating environmental laws – a reminder of the carmaker’s problems nearly four months after its emissions scandal broke.

Although such U.S. lawsuits are typically settled at a fraction of the theoretical maximum penalty, analysts said the size of the claim meant Volkswagen (VW) could face a larger bill than previously anticipated.

“The announcement serves as a reminder/reality check of VW’s still unresolved emissions issues,” Goldman Sachs analysts wrote in a note, maintaining their “sell” recommendation on the stock.

VW shares fell as much as 6 percent to a six-week low on Tuesday, the biggest drop on Germany’s blue-chip DAX index.

The civil lawsuit, announced on Monday, reflects the growing number of allegations against VW since the German company admitted in September to installing devices to cheat emissions tests in several 2.0 liter diesel vehicle models.

According to a Reuters review of the U.S. complaint, VW could in theory face fines of as much as $37,500 per vehicle for each of two violations of the law; up to $3,750 per “defeat device”; and another $37,500 for each day of violation.

The complaint says illegal devices to impair emission control systems were installed in nearly 600,000 vehicles in the United States.

In September, U.S. regulators initially said Europe’s biggest carmaker could face fines in excess of $18 billion.

The lawsuit had been expected, and analysts believe any fine will be far below the theoretical maximum. Although U.S. authorities sued Toyota for up to $58 billion for environmental violations around the turn of the century, they agreed a settlement that cost the Japanese carmaker about $34 million.

“We have not enumerated a maximum possible penalty, and will decline to speculate on what the court may ultimately choose to do,” said U.S. Justice Department spokesman Wyn Hornbuckle.

Equinet analyst Holger Schmidt cut his rating on VW shares to “reduce” from “neutral”.

“We continue to believe that no one is able to make anything else than a wild guess on potential fines,” he said.

During December, VW’s shares had been recovering as the carmaker announced incrementally positive news such as simple fixes for about 8.5 million affected cars in Europe.

The stock fell on Tuesday 22 percent below pre-scandal levels, with analysts particularly concerned about the impact on VW in the United States, where the firm has long struggled to make inroads and tougher regulations mean it faces bigger potential fines.

The lawsuit, filed on behalf of the U.S. Environmental Protection Agency (EPA), accuses VW of four counts of violating the U.S. Clean Air Act, including tampering with the emissions control system and failing to report violations.

“The United States will pursue all appropriate remedies against Volkswagen to redress the violations of our nation’s clean air laws,” said Assistant Attorney General John Cruden, head of the Justice Department’s environment and natural resources division.

The lawsuit is being filed in the Eastern District of Michigan and then transferred to northern California, where class-action lawsuits against VW are pending.

“We’re alleging that they knew what they were doing, they intentionally violated the law and that the consequences were significant to health,” said a senior Justice Department official.

VW’s cheating of diesel emissions tests allowed it to avoid a costly revamp of engines to meet new U.S. standards.

The Justice Department has also been investigating criminal fraud allegations against VW for misleading U.S. consumers and regulators. Criminal charges would require a higher burden of proof than the civil lawsuit.

The U.S. lawsuit also alleges VW gamed emissions controls in many of its 3.0 liter diesel models, including the Audi Q7, and the Porsche Cayenne.

VW’s earlier admissions eliminate almost any possibility that the automaker could defend itself in court, Daniel Riesel of Sive, Paget & Riesel P.C, who defends companies accused of environmental crimes, said.

To win the civil case, the government does not need to prove the degree of intentional deception at VW – just that the cheating occurred, Riesel said. “I don’t think there is any defense in a civil suit,” he said.

Instead, the automaker will seek to negotiate a lower penalty by arguing that the maximum would be “crippling to the company and lead to massive layoffs”, Riesel said.

Even after VW first admitted to using cheat devices in certain models, the automaker “failed to come forward and reveal” that other vehicles contained such devices, the government said.

To cheat the emissions controls, VW installed software that allowed the vehicles to detect when they were being tested on a flatbed. When the vehicles detected they were actually on the road, the software caused the emissions control systems to underperform or shutdown, the government said, allowing the cars to emit dangerous levels of air pollution.

The civil lawsuit does not preclude the Justice Department from pursuing criminal charges against VW, said the Justice Department official.

VW said in a statement: “Volkswagen will continue to work cooperatively with the EPA on developing remedies.”

“We will continue to cooperate with all government agencies investigating these matters.”

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U.S. Brands Tap European Auto Recovery as Volkswagen Left Behind

European car sales rose 13.7 percent in November, according to industry data published on Tuesday, with U.S. brands recording strong gains as Volkswagen continued to pay the price of its diesel emissions test-rigging scandal, reports Reuters.

Registrations rose to 1.12 million cars last month from 989,758 a year earlier, the Brussels-based Association of European Carmakers said, with Ford and General Motors’ Opel among the best performers.

Volkswagen, Europe’s biggest carmaker by sales, saw its core brand market share tumble to 12.2 percent from 13.5 percent, as sales edged just 3.1 percent higher, underperforming the market. The German group as a whole posted a 3.9 percent gain.

The VW brand, struggling to contain the damage after being exposed in September for cheating U.S. tests for toxic diesel emissions, suffered a more marked 20 percent sales decline in Britain, according to data release on Dec. 4.

The broader European auto recovery is set to continue into 2016 after an 8.6 percent expansion in January-November, Ernst & Young analyst Anil Valsan said.

“The car market is expected to remain on the growth track driven by the positive economic environment, low financing costs, low fuel prices, high discounts and some remaining pent-up demand,” Valsan said.

“However, growth is expected to be slower, with interest rates likely to edge up.”

Fiat Chrysler, Ford and Opel all saw November sales rise more than 18 percent, with GM’s European arm helped by the recently launched Astra compact.

Sales by France’s Renault advanced 15.1 percent, while domestic rival PSA Peugeot Citroen rose 12.8 percent, with a buoyant Peugeot brand tempered by a weaker Citroen performance.

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VW Will Cut Spending By $1 Billion, Launch All-Electric Phaeton in EV push

MUNICH — Volkswagen Group said it will reduce investment spending at the VW brand by 1 billion euros ($1.1 billion) a year, as well as switch to a different diesel emissions treatment technology and launch an all-electric Phaeton sedan as the flagship for a new focus on electrification, reports Automotive News.

VW will increase its focus on long range plug-in hybrids and high-volume electric vehicles with a range of up to 300 km (186 miles), the company said in a statement today. The automaker also said it will speed up cost cuts and will overhaul the VW brand model strategy.

“The Volkswagen brand is repositioning itself for the future. We are becoming more efficient. We are giving our product range and our core technologies a new focus,” VW brand chief Herbert Diess said in the statement.

Diess said the brand will create room for forward-looking technologies by speeding up an efficiency program that targeted 5 billion euros in savings and operational improvements by 2017.

VW will cut spending on models, technology and production facilities at the VW brand by 1 billion euros a year through 2019 from its previous plans, a spokesman said. He declined to say what those investment plans had been.

Audi, Porsche to seek savings

In November, VW announced 85.6 billion euros of investments across the group between 2015 and 2019, with half earmarked for modernizing and expanding the model range.

Other brands in the group, which includes Audi, Porsche, Seat and Skoda, are working on similar efficiency-boosting programs, the spokesman said, without giving details.

Audi, the biggest earnings contributor at VW Group, is continuing an efficiency program that started before the diesel scandal hit, spokesman Juergen de Graeve said. The luxury-car unit planned last year to rein in annual costs by about 2 billion euros to offset spending on new technology, according to people familiar with the matter.

Pushed by Diess, who joined in July from BMW, VW will adopt diesel technology it previously eschewed for smaller models. The brand is now moving to the “best environmental technology” for its diesel cars, the statement said.

VW said it has decided to switch over to installing only diesel drivetrains with selective catalytic reduction (SCR) and AdBlue technology in Europe and North America “as soon as possible.”

VW engines affected by the diesel emissions rigging scandal used lean NOx traps to reduce nitrogen oxides emissions rather than the more expensive urea-based SCR and AdBlue systems. The tanks make diesel models heavier and more expensive, and they also must be refilled, making the cars less convenient to own.

Electric architecture

With diesel technology under pressure, VW plans to develop standardized components for electric vehicles with ranges as far as 500 km (310 miles).

VW said it will develop a new modular electric architecture dubbed MEB for compact vehicles for all group brands. The architecture will be designed for all body structures and vehicle types. It would allow the development of “particularly emotional vehicle concepts” and an all-electric range of 250 km to 500 km, the statement said.

At the Frankfurt auto show last month, VW said it would launch 20 battery-powered and plug-in hybrid vehicles by the end of the decade, including the first all-electric Porsche based on the Mission E concept and a production version of Audi’s e-tron Quattro concept.

The shift includes redesigning the Phaeton as an all-electric model. The current model’s gasoline and diesel versions will be axed. The next-generation Phaeton is due to hit showrooms by about 2019-2020.

“There is a real chance for VW to even extract something positive from the diesel fiasco,” said Stefan Bratzel, head of the Center of Automotive Management near Cologne. “Funneling more resources into electric mobility gives them a credible future perspective to try to overcome this crisis.”

The VW brand is likely to slump to a loss this year as it will shoulder the bulk of costs from the diesel emissions cheating that also affected the Audi, Skoda, Seat and light commercial vehicle brands, Reuters reported on Friday.

Supplier cuts

VW wants to extract 3 billion euros ($3.41 billion) in price cuts from its suppliers to help mitigate the costs of the emissions scandal, German newspaper Handelsblatt reported.

The measure would be part of a broader cost-cutting program including pay, marketing and sponsoring activities to help VW bear an estimated 40 billion euros in costs of the scandal, the paper reported, citing company sources.

The cuts come amid renewed criticism for Volkswagen’s handling of the scandal, which affects some 11 million cars worldwide. The company was far too slow to disclose its use of software to enable its diesel cars to pass U.S. laboratory emissions tests despite far higher on-road pollution, said Stephan Weil, prime minister of the German state of Lower Saxony and a VW board member.

“This admission should clearly have come much sooner — a further serious mistake,” Weil told the Lower Saxony parliament today. “Who decided this course of action and when is also something that’s being investigated.”

A VW supervisory board committee charged with overseeing the external investigation into the emissions cheating was meeting today in Wolfsburg.

VW presented German authorities with a plan last week for fixing affected cars in its home market. Regulators are still reviewing the proposals, which range from a software update to new parts for diesel engines.

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VW CEO Resigns Amid Emissions Scandal

Volkswagen AG has accepted the resignation of CEO Martin Winterkorn, who said in a statement posted today on the automaker’s media site that he was shocked and stunned by the revelation that the company’s diesel vehicles included software to evade emissions standards.

A separate statement from the company’s executive board was posted to its media site. In it, the board noted that it has accepted Winterkorn’s resignation but maintained that he had no knowledge of the manipulation.

“I am shocked by the events of the past few days,” read Winterkorn’s statement, in part. “Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group. As CEO, I accept responsibility for the irregularities that have been found in diesel engines and have therefore requested the supervisory board to agree on terminating my function as CEO of the Volkswagen Group. I am doing this in the interests of the company, even though I am not aware of any wrong doing on my part.”

On Sept. 18, the EPA accused Audi and Volkswagen of using a software algorithm in its four-cylinder diesel engines to circumvent federal emissions standards. The vehicles, model years 2009 to 2015, are able to detect when they are undergoing official emissions testing and were programmed to turn on full emissions controls only during that test — a violation of the Clean Air Act.

The allegations cover about 482,000 models, including the Jetta TDI, Beetle TDI, Golf TDI, and Audi A3 TDI. The Passat TDI is affected from the 2014-MY and 2015-MY.

In accepting Winkerkorn’s resignation, Volkswagen’s executive committee praised his contribution to the company. The board plans to make a recommendation about his replacement at its Sept. 25 board meeting.

“Winterkorn had no knowledge of the manipulation of emissions data,” read the board’s Sept. 23 statement, in part. “The executive committee has tremendous respect for his willingness to nevertheless assume responsibility and, in so doing, to send a strong signal both internally and externally. Winterkorn has made invaluable contributions to Volkswagen. The company’s rise to global company is inextricably linked to his name.”

In addition to federal and California probes, Volkswagen officials said they are conducting their own internal review. Those responsible “will be subject to the full consequences,” the board said. The board has set up an ad hoc committee to determine the company’s next steps. It added a criminal investigation may be necessary and submitted a complaint to the state prosecutor’s office in Brunswick, Germany.

Winterkorn departure comes at a time when the German automaker surpassed Toyota as the world’s largest automaker for the first half of 2015.

“Volkswagen needs a fresh start — also in terms of personnel,” Winterkorn said. “I am clearing the way for this fresh start with my resignation. The process of clarification and transparency must continue. This is the only way to win back trust. I am convinced that the Volkswagen Group and its team will overcome this grave crisis.”

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VW Interim Chairman to Stay On, Hunt for Piech Successor Continues: Bild

Volkswagen is still looking for a successor to former chairman Ferdinand Piech, meaning the interim holder of the position, Berthold Huber, is likely to stay until at least the end of the year, reports Reuters.

Following the departure of patriarch Ferdinand Piech in April, who resigned after losing a showdown with Chief Executive Martin Winterkorn, former union boss Huber was meant to hold the role for only a few months, Bild am Sonntag reported.

But one candidate, Wolfgang Porsche, who already sits on the supervisory board, has said he is not available for role, Bild said without citing its sources.

The paper said Porsche’s nephew, Ferdinand Oliver Porsche, is also a candidate, as is Winterkorn.

Volkswagen declined to comment on the article.

Separately, Sueddeutsche Zeitung reported on Saturday that works council boss Bernd Osterloh felt he was better off staying as part of the works council, rather than taking up a position on the carmaker’s executive board, as had been under discussion.

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