|Bid||64.67 x 0|
|Ask||64.68 x 0|
|Day's range||64.24 - 64.87|
|52-week range||58.04 - 86.74|
|Beta (3Y monthly)||0.78|
|PE ratio (TTM)||8.82|
|Forward dividend & yield||3.50 (5.42%)|
|1y target est||N/A|
(Bloomberg) -- President Donald Trump said he will revoke California’s authority to regulate greenhouse gas emissions from autos, his latest clash with the state that threatens to plunge the auto industry into protracted legal uncertainty.“This is the fight of a lifetime for us. We have to win this and I believe we will,” California Air Resources Board Chairman Mary Nichols said during a defiant press conference after Trump’s announcement Wednesday.Trump’s decision, announced on Twitter, adds to his long-running disputes with liberal California. As he began a two-day fundraising trip in the state Tuesday, Trump derided its homeless crisis while calling out the “tremendous taxes” its property owners pay. That comes on top of his criticism of the state’s management of immigration, forest fires and water policy.California, a heavily Democratic state that’s home to one in eight Americans, has filed more than 50 lawsuits and other protests over the president’s actions.Taking away California’s clean-car authority upends fuel-economy rules negotiated with the auto industry by President Barack Obama. Trump said his administration’s replacement efficiency standards, which are being finalized by federal agencies for cars built after 2020, will lead to greater vehicle production by reducing the cost of new vehicles.“Many more cars will be produced under the new and uniform standard, meaning significantly more JOBS, JOBS, JOBS! Automakers should seize this opportunity because without this alternative to California, you will be out of business,” Trump said in a tweet.Legal experts said the Trump administration may have a tough time defending a suit. A waiver has never been revoked in the 50-year-history of the Clean Air Act, said Julia Stein, a University of California at Los Angeles environmental law expert.“Ironically, even though the administration insists that it will be creating ‘one national standard’ by revoking California’s waiver, it will actually be doing the opposite,” Stein wrote in a blog post Thursday.California officials including Governor Gavin Newsom and Attorney General Xavier Becerra said in a press conference that the state has received roughly 100 waivers to combat air pollution and they would defend the one underpinning its vehicle rules.“This is such a pivotal moment in the history of climate change,” Newsom said, citing statistics on the role of transportation in greenhouse gas emissions. “This is our legacy moment.”With some 35 million vehicles in the state, and the transportation sector’s role as the top contributor of greenhouse gas emissions, Becerra said California’s ability to combat vehicle greenhouse gas emissions is critical to the state’s clean-air goals.“Our message to those who claim to support states rights: don’t trample on ours,” Becerra said. “Doing so would be an attempt to undo the progress we’ve made over the past decades.”Under Trump’s plan, the Environmental Protection Agency will revoke the so-called waiver underpinning the state’s ability to set tailpipe greenhouse-gas emissions standards that are more stringent, as well as the state’s electric vehicle sales mandate. The Transportation Department meanwhile will assert that the California rules are preempted by federal fuel-economy standards administered by the National Highway Traffic Safety Administration.EPA Administrator Andrew Wheeler and Transportation Secretary Elaine Chao have a “major policy announcement” planned at the EPA’s headquarters Thursday morning, the agency said in a statement following Trump’s tweet.Why Trump Attacks California’s Anti-Pollution Powers: QuickTakeDave Schwietert, interim president of the Alliance of Automobile Manufacturers, said the group will review the action and the still-pending federal emissions and fuel-economy standards for 2021 to 2026 to evaluate how they effect its member companies, employees and consumers.Predictable emissions and fuel economy standards are vital for automakers because as they plan production and model offerings several years in the future.“Automakers support year-over-year increases in fuel economy standards that align with marketplace realities, and we support one national program as the best path to preserve good auto jobs, keep new vehicles affordable for more Americans and avoid a marketplace with different standards,” Schwietert said in a statement.The move will shatter a nearly decade-long regulatory arrangement between NHTSA, EPA and the California Air Resources Board that has allowed automakers to satisfy fuel economy and efficiency standards administered by each agency with a single fleet of vehicles that can be sold nationwide.“Our viewpoint is that we want one national fleet” standard for fuel economy and emissions, said Art St. Cyr, vice president of auto operations at American Honda Morot Co. “We don’t want to have a split fleet.”Trump’s move “is bad for California and it’s bad for the country,” said California Democratic Senator Dianne Feinstein. “Revoking California’s authority will lead not only to more pollution, it will cost consumers billions of dollars a year in increased fuel consumption.”California’s Weak Case in Emissions War With Trump: Noah FeldmanThe Trump administration in August 2018 proposed stripping California’s authority as part of its broader plan to slash federal emissions and fuel-economy requirements enacted by the Obama administration.The plan initially recommended capping requirements after 2020 at a 37 mile-per-gallon fleet average, instead of rising each year to roughly 50 mpg. U.S. officials have since signaled that the final rule may require small annual improvements, but at levels far less than required under the current standards. Separating the attack on California’s authority allows that piece of the rule to proceed while federal agencies continue to finalize the new replacement requirements.CARB announced in July an accord with the Ford Motor Co., Honda Motor Co., BMW AG and Volkswagen AG on compromise tailpipe greenhouse gas emissions regulations, drawing Trump’s ire.The carmakers agreed with the state’s clean-air regulator to boost the fuel efficiency of autos sold in the U.S through 2026.Earlier this month, Trump’s Justice Department opened an antitrust probe into the deal.Free-market groups that have been pushing the administration to roll back the standard cheered the move while environmentalists decried it.“Withdrawing the California waiver is great news for car buyers and drivers. The rapid increase in new car prices should slow down, which means more people will be able to afford to buy a new car,” said Myron Ebell, a director at the Competitive Enterprise Institute, who is one of the main proponents of revoking California’s waiver. “The decision also restores our federalist system. With the waiver, California was for practical purposes put in charge of deciding what kinds of cars people across the nation can buy.”Paul Cort, an attorney for the environmental group Earthjustice, said “It’s bad enough the administration won’t take any meaningful action to clean our air or fight the warming climate that threatens us all; now they want to prevent California and other states from filling that gap.”\--With assistance from Keith Naughton and Andrew Harris.To contact the reporters on this story: Ryan Beene in Washington at email@example.com;Ari Natter in Washington at firstname.lastname@example.org;Jennifer A. Dlouhy in Washington at email@example.comTo contact the editors responsible for this story: Jon Morgan at firstname.lastname@example.org, Elizabeth WassermanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- The Trump administration is gearing up for its next big legal fight, taking on California’s long-established authority to set vehicle emission standards for new cars. Because the state is so large, this effectively creates national miles-per-gallon targets for any manufacturer selling vehicles in the U.S. Trump would like to take this power away from California and set lower national MPG standards.The question is, can he do it? Or is this just another example of presidential overreach in an administration that specializes in going too far?The answer turns out to be more complicated than you might think. California’s practices do have a strong basis in a federal law created to let the state fight smog. Yet California may have gone beyond this original mandate and become a regulator acting on par with the federal government — a strange deviation from the norms of U.S. federalism. The issue may eventually make its way to the Supreme Court, and with its current conservative majority, the court could very well decide in favor of Trump.The origin of California’s unusual powers goes back to the Clean Air Act of 1963. The law gives the Environmental Protection Agency authority to set emission standards, and bars states and local governments from setting standards of their own. But Section 209 allows California to apply for a waiver from that ban to allow it to set its own emission standards. The EPA is required to grant California’s waiver unless it finds that California doesn’t need the standards “to meet compelling and extraordinary conditions” or that California was “arbitrary and capricious in its finding that its standards are, in the aggregate, at least as protective of public health and welfare as applicable federal standards.”The reason California got this special treatment back in 1963 was that Congress recognized that the terrible smog in Southern California was largely a product of vehicle emissions. The idea was that California could clean up its air by requiring things like catalytic converters and “check engine” systems to limit tailpipe emissions.It worked, more or less, and California’s skies got somewhat cleaner. And because California was and remains such a huge auto market, manufacturers came to treat the California standards as their de facto requirements for the whole country.The Trump administration is targeting California’s power because of a fight over a proposed EPA rule that reduces 2026 mileage targets of 51 MPG established under the Obama administration. After the Trump administration proposed lowering the standard to 37 MPG, California signed a separate deal with Ford, Honda, Volkswagen, and BMW in which the automakers said they would aim to meet the original target.As far as California is concerned, it’s still simply limiting carbon dioxide emissions and attempting to fight smog … but it’s doing so by setting mileage standards. The Trump administration is poised to argue that California has used its waiver to get into the business of regulating carmakers generally — not just to keep the skies clear over California. Effectively, the Trump demonstration says, California is competing with the EPA as a policymaker setting national standards.If you care about climate change, you might think that’s perfectly fine, especially because California can only set standards that are tougher than the federal government’s, not weaker.But from the standpoint of government design, it’s pretty strange that one state can thwart the will of the executive branch. The governor of California represents Californians; the U.S. president represents the entire country. Even if you don’t like Trump’s policies, you should be willing to admit that he’s the elected president.The technical name for a situation where one state has special powers is “asymmetrical federalism.” The Clean Air Act waiver is one of those highly unusual cases where the U.S. Congress has given asymmetrical powers to one state. Lots of other states have pledged to follow California’s standards; but they don’t have the same legal authority to set standards of their own.When conservative courts come to consider whether California’s mileage standards go too far, expect them to analyze the issue against the backdrop of federalism. Sure, conservatives like states’ rights. But they may not like the idea that one state out of all the others has the capacity to compete with the federal government to make policy. And frankly, if it were not for the environmental twist, many liberal judges would also be skeptical of a state pushing the boundaries of its unique powers.The legal fight is just getting started, and it will take years to wend its way through the courts. If Donald Trump isn’t re-elected, the whole issue will probably go away. If he is, however, we are very likely to see a lengthy fight over federalism, the environment, and just how unique California really is.To contact the author of this story: Noah Feldman at email@example.comTo contact the editor responsible for this story: Sarah Green Carmichael at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Noah Feldman is a Bloomberg Opinion columnist. He is a professor of law at Harvard University and was a clerk to U.S. Supreme Court Justice David Souter. His books include “The Three Lives of James Madison: Genius, Partisan, President.” For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- European car sales fell sharply in August, deepening the woes of an industry battling sluggish demand in key markets and the challenge of rolling out electric vehicles.Registrations dropped 8.4%, the steepest monthly decline this year, according to the European Automobile Manufacturers Association. The fall was partly due to exceptionally high growth a year earlier as manufacturers rushed out models ahead of tough new emissions-testing rules. Volkswagen AG shares lost 0.4% in early trading in Frankfurt and BMW AG was 0.3% lower.In addition to the risk of a recession in Germany, carmakers are also facing a slowdown in the Chinese car market. European sales over the year to date are down 3.2% and the continent’s five biggest markets all contracted in August, with Spain and France posting the biggest slowdowns. The drop last month brought registrations down to 1.04 million units.Nissan Motor Co. and Fiat Chrysler Automobiles NV saw the biggest slowdown in August sales at 47.5% and 26.5% respectively.The industry’s predicament took center stage at the Frankfurt auto show, where thousands of protesters demanded political and industry action to combat climate change. The head of Germany’s auto lobby group also unexpectedly announced his resignation last week.Carmakers at the show displayed their new electric models, which will become crucial in coming months as the companies race to meet new European carbon-dioxide emissions rules. Carlos Tavares, head of the ACEA and chief executive officer of Groupe PSA, last week called for more charging infrastructure to encourage consumers to buy the vehicles.After the August 2018 boost, auto sales dropped dramatically overall and have failed to pick up since, with the association forecasting a 1% drop for the year.While the ongoing issues in the car industry are hitting Germany in particular, there are signs of weakness in manufacturing across Europe. Euro-area economic growth is forecast to slow to 1.1% this year from 1.9% in 2018, which would be its worst performance in six years.The weakness in industry hasn’t had a dramatic impact on the labor market so far. If that changes, and unemployment starts to rise, that would mark a step up in the seriousness of the slowdown. It would also further hurt car sales as consumers rein in big-ticket purchases.Europe’s July sales increase, one of only two monthly gains in 12 months, was almost entirely down to Central European countries, the association said. Only Germany showed positive growth that month among Western European countries.(Adds shares in second paragraph.)\--With assistance from Fergal O'Brien.To contact the reporter on this story: Oliver Sachgau in Munich at email@example.comTo contact the editors responsible for this story: Tara Patel at firstname.lastname@example.org, John BowkerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Bayerische Motoren...
(Bloomberg) -- Chancellor Angela Merkel wants to help offset the higher costs of cleaner vehicles by putting a price on carbon-dioxide emissions, potentially offering a lift to Germany’s vital auto industry as it grapples with the high-risk transition away from the combustion engine.Germany and its automakers are facing a “Herculean task,” Merkel said Thursday at a ceremony opening the Frankfurt car show to the public. While short on specifics, the German leader backed efforts to encourage consumers to buy more environmentally friendly products such as battery-powered cars fueled by renewable power.“We want to direct the behavior of people in a certain direction,” she said. “The pricing of CO2 is the right way to make clear that all innovations should follow the goal of emitting less CO2. If we do this in a long-term and accountable way, there will be the incentives to move innovation in the right direction.”Volkswagen AG, Daimler AG and BMW AG are facing tough times. Pollution concerns -- intensified by VW’s 2015 diesel-cheating scandal -- have tarnished the industry’s image and triggered massive investment in electric vehicles. Those costs had already started squeezing earnings when almost a decade of uninterrupted industry growth led by China came to a halt. The consequence is Germany’s car production slumping to the lowest level since at least 2010.The looming end of the combustion-engine era and the dramatically-increasing importance of digital technologies in cars, pose an unprecedented threat to the industry’s traditional business model. A slew of profit warnings from manufacturers like Mercedes-Benz maker Daimler to parts makers like Continental AG provided fresh evidence that times have become rough.Merkel spoke after John Krafcik, the chief executive officer of Waymo. The Alphabet Inc. unit is widely regarded as the global leader in self-driving technology and represents a risk to the country’s car brands, which are largely focused on motoring thrills. Krafcik offered a cooperative tone, even though German manufacturers are wary of allowing the Google parent access to sensitive customer data.“It’s not about competing with car companies. It’s to enable, not disrupt companies in the automotive space,” said Krafcik. “Developing self-driving technology takes a lot of time. There are no shortcuts. We can’t do this on our own.”Germany is teetering on the brink of recession, and the auto industry is pivotal to the economy’s health. Carmakers such as Volkswagen, Daimler and BMW as well as parts suppliers like Robert Bosch GmbH and Continental employ about 830,000 people in the country and support everything from machine makers to advertising agencies and cleaning services.Germany’s auto industry is trying to respond. Electric cars, such as the flashy Porsche Taycan and more affordable VW ID.3, dominated media presentations this week at the Frankfurt trade fair and more models are in the pipeline.Daimler CEO Ola Kallenius backed Merkel’s CO2 pricing plan, saying at panel discussion in Frankfurt that there are costs related to fossil-fuels and it would make sense for a global plan to help fight climate change.For the auto industry, any signs of support would be welcome. Demand for electric cars has been sluggish, and Merkel had to surrender her goal to have 1 million electric cars on German roads by 2020. Sales of hybrid and electric cars in the country last year totaled a mere 55,000 vehicles, or 1.6% of the market.In addition to boosting efficient technologies, the country needs to accelerate the roll-out of charging stations to ease consumer concerns, she said.“If one believes that climate protection is a task for mankind, and I believe it is, then we must pay this price because otherwise we will have to pay a totally different price,” Merkel said.(Adds comment from Daimler CEO in 10th paragraph)To contact the reporters on this story: Christoph Rauwald in Frankfurt at email@example.com;Arne Delfs in Berlin at firstname.lastname@example.orgTo contact the editors responsible for this story: Anthony Palazzo at email@example.com, Chris Reiter, Raymond ColittFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- It only took a decade for traditional automakers to take electric cars seriously and offer more than a smattering of test-the-water models.Now comes the hard part: Getting consumers to buy them.At Frankfurt’s 2019 car show, Volkswagen AG Chief Executive Officer Herbert Diess laid it on thick, calling on governments to give up coal-fired power as he unveiled the electric ID.3 car-for-the-masses. At the Mercedes-Benz stand, where the Daimler AG brand was showing the prototype of an electric S-Class sibling, real beech trees framed massive screens displaying schools of digital fish.The message to environmentally conscious consumers: we’re with you. But a marketing blitz alone won’t wash away the deep uncertainties facing electric cars -- obstacles little changed since carmakers’ initial forays with models like the Nissan Leaf and BMW AG i3. Customers don’t like paying up for new technology they’re unsure about, and they’re worried they won’t reliably get to where they want to go.“The next big thing is not going to be about the cars, because they will come,” Carlos Tavares, president of the European Automobile Manufacturers Association and CEO of Groupe PSA, said Wednesday. “The next big thing is about affordable mobility. The next big thing is about how we make this work for the biggest number of people.”So far, electric cars have only proliferated in countries with significant sweeteners. Once they go, sales of battery models crater. Demand in China, the world’s biggest electric car market, fell 16% in August -- its second straight decline -- after the government scaled back subsidies. Carmakers can reduce prices, but then only cut into profitability that in most cases has been nonexistent.Consumers are similarly sensitive elsewhere. Demand in Denmark collapsed when the government phased out tax breaks in 2016.“We’ve been talking about EVs for years, but this year the real production cars showed up,” Max Warburton, an analyst at Sanford C. Bernstein, wrote in a note. “Should we be celebrating these cars, given the poor margins that most will have?”Across Europe, sales of new plug-in hybrids and fully-electric cars last year made up 2% of total registrations. That’s a tiny market to tussle over for the likes of VW’s ID.3, with a price point below 30,000 euros ($33,009), Tesla Inc.’s Model 3 and Mercedes’s gleaming lineup of plug-ins. Yet carmakers have little choice but to boost their offering to keep pace with regulation, or face fines.Consumer demand “can’t be mandated,” Daimler CEO Ola Kallenius said at the show. Mercedes-Benz is adding at least 10 purely battery-powered cars through 2022 at a cost of more than 10 billion euros, starting with last year’s EQC SUV, so the carmaker’s lineup can to meet stricter emission limits.A lot of factors are moving in the right direction. The ID.3’s price point and basic range of 330 kilometers (205 miles) sets the car apart from previous efforts that needed meticulous pre-planning for longer trips. At the top end, there’s now the $185,000 Porsche Taycan Turbo S, and a mid-range that’s rapidly filling out from SUVs like the Jaguar I-Pace and Audi e-tron.Patchy charging infrastructure is improving too. Ionity, a consortium of Daimler, VW, Ford Motor Co., BMW and now Hyundai Motor Co., is on track to finish building a network of 400 European fast-charging stations by next year to make long-distance travel easier.Lean YearsFor carmakers, this will mean some lean years -- at least to 2025 when battery prices are expected to come down -- during which lucrative conventional SUVs must subsidize poor returns from their electric cousins. VW will need “patience” until the ID.3 brings significant profit “joy,” Chairman Hans Dieter Poetsch said.To bridge the gap, the industry is lobbying hard for governments to step up incentives to get to the oft-cited tipping point where driving without a combustion engine becomes normal. In Germany, home to VW, Mercedes and BMW as well as world-leading suppliers like Continental AG, the government sits down next week to discuss broad climate measures. Carmakers are hoping for a bigger slice of subsidies than they got so far.The ACEA on Wednesday called on national governments to boost charging points in Europe to 2.8 million by 2030, a 20-fold increase from 2018.“We need strong support, because if we don’t do it,” simply offering electric cars won’t be enough for sales to take off, PSA’s Tavares said.\--With assistance from Richard Weiss.To contact the reporters on this story: Oliver Sachgau in Munich at firstname.lastname@example.org;Christoph Rauwald in Frankfurt at email@example.comTo contact the editors responsible for this story: Anthony Palazzo at firstname.lastname@example.org, Elisabeth BehrmannFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Volkswagen AG and other carmakers warned that trade tensions risk dragging the global economy into a recession as the fallout starts to hit consumers.The gloom of the U.S. and China’s tit-for-tat tariffs cast a shadow over the Frankfurt Auto Show this week, where carmakers were seeking to whip up interest in critical new electric models. The geopolitical volatility adds another layer of uncertainty to an industry in the midst of a radical overhaul as the end of combustion-engine era looms.“We come now into a situation where this trade war is really influencing the mood of the customers, and it has the chance to really disrupt the world economy,” Volkswagen Chief Executive Officer Herbert Diess said in an interview with Bloomberg TV. “China is basically a healthy market, but because of the trade war, the car market is basically in a recession. So that’s a new situation. That’s scary for us.”Concerns about global trade have reached nearly 10 times the peaks seen in previous decades and could shave about 0.75 percentage points off world economic growth this year, according to data compiled by the International Monetary Fund. The auto industry is particularly exposed because of its global network of assembly plants and parts suppliers. Daimler AG, for instance, makes many of its Mercedes-Benz’s SUVs in Alabama and exports them to China and other markets.“What will happen in 2020 will very much depend on what happens with the U.S. and China in the coming weeks,” BMW AG Chief Financial Officer Nicolas Peter said in an interview with Bloomberg TV at the Frankfurt show, Germany’s premier auto exhibition. The German manufacturer assembles most of its sport utility vehicles in South Carolina.After months of talks, the tensions between the U.S. and China remain high. Ted McKinney, the top trade official in U.S. President Donald Trump’s Agriculture Department, called Chinese President Xi Jinping a “communist zealot” in the mold of Mao Zedong. After a summer of bombast and tariff escalation, the two sides have agreed to hold face-to-face working-level staff talks in the coming weeks and a ministerial meeting in Washington in early October.“Everyone is affected by the industry downturn, everyone is suffering,” Continental AG CEO Elmar Degenhart told reporters Tuesday in Frankfurt. Europe’s second-largest auto supplier plans to finalize a review of its sprawling global manufacturing network by the end of this year and doesn’t rule out factory closures or layoffs as part sweeping restructuring plans.Outside the car show, other German industry leaders voiced their concerns about trade risks. Siemens AG Chief Executive Officer Joe Kaeser urged the European Union to assert its voice in the trade conflict between the U.S. and China, saying the specter of a “decoupling” of political and economic systems would break with decades of integration and ultimately risk a global slowdown.“Europe would be well advised to avoid this bilateral decoupling, but it can only achieve this when it is heard as a third force in the world, and that’s not the case at the moment,” Kaeser told journalists in Berlin. There’s a sense that the world is reorganizing into new economic spheres, making it harder for export-oriented companies to do business and creating the risk of “having to decide between friend and foe,” said the executive, who recently returned from a trip to China with German Chancellor Angela Merkel.‘Good Sense’ BrexitOn top of the U.S.-China spat and Trump’s recurring threat to impose levies on European car imports, the industry is bracing for the potential of the U.K. crashing out of the EU without a deal in a few weeks. BMW, which owns the British-based Mini and Rolls-Royce car brands, has set up a 300 million-euro ($330 million) fund to deal with a possible hard Brexit and would reduce output at its plant in Oxford, England, by eliminating a work shift if that happens, CFO Peter said.“We’d have to increase prices, and we have to curtail production to react to such a development,” Peter said on BMW’s contingency preparations for a crash British exit. “The plans are in the drawer.”In a Bloomberg TV interview, PSA Group CEO Carlos Tavares called the prospect “not acceptable” on ethical grounds and appealed to European and British leaders to show “good sense” and avoid a no-deal Brexit.Ralf Speth, the CEO of Jaguar Land Rover, laid out the complexity of an abrupt disruption to trade flows, saying the British manufacturer needs as many 25 million parts a day to be delivered on time and requires six to eight weeks to decide on ordering components. With Prime Minister Boris Johnson insisting that the U.K. will leave the EU on Oct. 31 “do or die,” the auto industry is facing its Brexit crunch time now.“Free and fair trade is best for society. Currently we’re falling back on that,” said Speth, who unveiled a resurrected version of the Land Rover Defender offroader in Frankfurt. “It’s so critical to prepare in the very best way for alternatives. But in the end, no one really knows.For the auto industry, the trade squeeze clouds efforts to show off slick new models like the Porsche Taycan and VW ID.3 as German brands ramp up electric offerings to meet increasingly stringent environmental regulations. Demand disruptions threaten to squeeze profits needed to fund the high-risk rollout.“We hope there won’t be any recession in the mid term or long term, because it would be a self-made recession,” Diess said.(Adds comments from Jaguar Land Rover CEO in third-to-last paragraph.)\--With assistance from Matthew Miller, Benedikt Kammel and Elisabeth Behrmann.To contact the reporters on this story: Christoph Rauwald in Frankfurt at email@example.com;Oliver Sachgau in Frankfurt at firstname.lastname@example.orgTo contact the editors responsible for this story: Anthony Palazzo at email@example.com, Chris Reiter, Chad ThomasFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
BMW will halt production at its Oxford plant on Oct. 31 and Nov. 1 and is considering removing a shift there in case the United Kingdom leaves the European Union without a deal, its Chief Financial Officer Nicolas Peter said on Tuesday. Peter said a no-deal Brexit would impact production, adding that suspending production on the date of Britain's scheduled departure from the EU and the following day would shield BMW from losses in its logistics.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Germany is at a crossroads, and nowhere will that be more evident than at the Frankfurt auto show this week.Despite sleek new electric models like the Porsche Taycan, the traditional showcase of German automotive excellence risks becoming a platform for protest rather than preening, drawing attention to a generation of young consumers more likely to demonstrate against the car’s role in global warming than shop for a new VW, BMW or Mercedes-Benz.Autos have made Germany into a global manufacturing powerhouse, but pollution concerns -- intensified by Volkswagen AG’s 2015 diesel-cheating scandal -- have sullied the reputation of a product that once embodied individual freedom. More recently, trade woes and slowing economies have hit demand. The consequence is Germany’s car production slumping to the lowest level since at least 2010.“Investors have been fearful about the industry’s prospects for a number of years, and the list of things to worry about doesn’t seem to be getting shorter,” said Max Warburton, a London-based analyst with Sanford C. Bernstein. “There is a general sense that things are about to get worse.”The end of the combustion-engine era and car buyers more interested in data connectivity than horsepower threaten Germany’s spot at the top of the automotive pecking order. Signs of trouble abound. In addition to numerous profit warnings this year, Mercedes maker Daimler AG delayed a plan to expand capacity at a Hungarian factory, parts giant Continental AG has started talks to cut jobs, and automotive supplier Eisenmann filed for insolvency.The car’s fragile standing was evident in the reaction to a deadly accident in Berlin on Friday evening when a Porsche SUV crashed into a group of pedestrians. Stephan von Dassel, the mayor of the district where the incident took place, said on Twitter that “such tank-like vehicles” should be banned in the city.Germany is teetering on the brink of recession, and the auto industry is pivotal to the economy’s health. Carmakers such as Volkswagen, Daimler and BMW AG as well as parts suppliers like Robert Bosch GmbH and Continental employ about 830,000 people in the country and support everything from machine makers to advertising agencies and cleaning services. With factories from Portugal to Poland, the importance of the sector radiates across Europe as well.With emissions regulations set to tighten starting next year, concerns are mounting that companies across the country’s industrial landscape are ill-equipped to deal with the technology transition resulting from climate change and increasing levels of digitalization. IG Metall organized a demonstration in June, with more than 50,000 people rallying in Berlin, to draw attention to the risk of widespread layoffs from what Germany’s biggest industrial union calls “the transformation.”“Far too many companies stick their heads in the sand and rest on their laurels,” IG Metall Chairman Joerg Hofmann said. “If companies continue to act so defensively, they’re playing roulette with the futures of their workers.”The concern is that the future of Germany’s car towns could look something like Ruesselsheim. The home of the Opel brand, which once rivaled VW as the German leader, has faded along with the carmaker’s performance. After years of losses, it was sold in 2017 by General Motors Co. to France’s PSA Group, which is slashing the Opel’s 20,000-strong German workforce by nearly a fifth.“Everybody in Ruesselsheim is worried,” said Servet Ibrahimoglu, owner of a kebab restaurant down the street from Opel’s factory, adding that his business has dropped by a third. “Before at lunchtime, this place was full. Now there’s no one.”The auto industry’s efforts to adapt to the risks will be on display in Frankfurt, and the stakes couldn’t be higher for models like the VW ID.3. The battery-powered hatchback is the auto giant’s first effort in an aggressive push into electric cars, which will make its debut at the Germany’s premier auto exhibition.Under bright lights and blaring music, the show is a throwback to the auto industry’s glory days, but it’s fading as public interest in old-school car show wanes. Toyota, Volvo and Ferrari are among the 30 brands skipping the show. For those still there, the displays will predominantly feature traditional gas guzzlers and other cash cows. Land Rover will unveil a resurrected version of the Defender, the British brand’s iconic offroader.“Instead of presenting new mobility concepts for the future, we’ll see lots of SUVs on stands that have become few and far between,” said Ferdinand Dudenhoeffer, director of the University of Duisburg-Essen’s Center for Automotive Research. “The recession in the global auto business is forcing savings cuts for car manufacturers and suppliers, along with a rapid loss of attractiveness of the classic ‘analog’ car shows.”Make or BreakWhere German brands once tried to outdo one another with outlandish displays like indoor tracks and multistory exhibition spaces, the main drama may take place outside Frankfurt’s sprawling fairgrounds. Greenpeace and Germany’s BUND have called for a mass march on the site on Saturday, joined by groups of cyclists setting off from around Frankfurt to underscore their call for the end of the combustion engine. Organizers are expecting at least 10,000 people. “We’re in the middle of a climate crisis,” said Marion Thiemann, transport-policy expert at Greenpeace. “The biggest problem is the automobile industry.”Despite doubts from environmentalists, automakers have gotten the message that they’re facing a make-or-break moment. The industry is spending billions of euros to develop cleaner vehicles and counter the emergence of ride-sharing services like Uber Technologies Inc., which has a market value equivalent to Daimler, the inventor of the automobile.“I’m absolutely convinced that carmakers will adapt to the situation,” BMW’s labor head Manfred Schoch said during a testy panel discussion with activists in Berlin last week. “Those that don’t will go out of business.”(Adds comment from activist in third-to-last paragraph)\--With assistance from Kristie Pladson, Andrew Blackman and William Wilkes.To contact the reporters on this story: Christoph Rauwald in Frankfurt at firstname.lastname@example.org;Carolynn Look in Frankfurt at email@example.com;Elisabeth Behrmann in Munich at firstname.lastname@example.orgTo contact the editors responsible for this story: Anthony Palazzo at email@example.com, Christoph Rauwald, Chris ReiterFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- The sad degradation of the Department of Justice’s antitrust division continues. An agency charged with upholding the nation’s antitrust laws, without fear or favor, has become just another tool President Donald Trump uses to reward his friends and punish his enemies in corporate America.I don’t know how else you can characterize the news, reported by the Wall Street Journal on Friday, that the DOJ is investigating four major automakers that agreed to abide by California’s stringent tailpipe-emissions standards -- and chose to ignore less onerous rules the Trump administration has proposed.Wrote the Journal: “The Justice Department’s antitrust division is acting on its own accord and without direction from or coordination with the White House, according to one of the people familiar with the investigation.”Sure.And the division didn’t consult with the White House when it tried to block the AT&T Inc.--Time Warner deal in 2017. It was just pure coincidence that Time Warner owned the news network Trump loathed more than any other, CNN. Nor did it consult the White House when it let the Walt Disney Co.--21st Century Fox Inc. deal sail through with only minor changes. Who could possibly have known that Fox chairman Rupert Murdoch was the closest ally the president has in the media?It could well be true that the White House wasn’t consulted before the antitrust division acted. Before he was the named the Justice Department’s antitrust chief, Makan Delrahim was the deputy counsel for the Trump White House. Maybe he doesn’t have to talk to the White House to intuit what Trump wants. He knows who butters his bread.Here’s a little thought exercise. Suppose the four companies -- Ford Motor Co., Honda Motor Co., BMW AG and Volkswagen AG -- had jointly decided to sign onto Trump’s lower emissions plan. Do you think Delrahim’s antitrust minions would be launching an antitrust investigation? I don’t either.The very idea that an automaker can violate antitrust laws by adhering to higher emissions standards is ludicrous. The theory is that the four companies may have talked to each other and then approached California with a proposal. This is apparently evidenced by the fact that the state agreed to lower its emissions standards by a small amount. I have no doubt that the companies consulted with each other before talking to California. No company wants to go up against Trump alone; it makes perfect sense that they would want to band together. It also makes sense that they would negotiate with the state, just as any regulated industry might. That behavior is hardly an antitrust violation.The Journal story also said that the Justice Department fears the deal would limit competition. But for decades, federal and state emissions regulations have kept automakers from courting buyers by competing on emissions standards -- at least on lower ones. The competition that has existed has long been to produce cars that exceed the emissions standards. That kind of competition will remain robust only if automakers wind up abiding by California’s standards.The truth, of course, is that Trump is at war with California, and has been since he took office. California voted overwhelming for Hillary Clinton. California is a blue state. California is in the vanguard of the resistance. (In May, California filed its 50th lawsuit against the Trump administration.)Battling emissions standards is part of that war. It is widely expected that the administration will soon attempt to revoke California’s ability to set its own emissions standards, and declare that they are “preempted” by federal law. This will undoubtedly lead to a court fight, though as my colleague Noah Feldman has pointed out, California’s waiver was built into the Clean Air Act by Congress. Trump’s Environmental Protection Agency really doesn’t have the legal right to withdraw the waiver, but that reality has rarely stopped Trump before.Automakers are now in an awful spot. They’d all made their peace with higher emissions standards, which also allows them to be good corporate citizens. They are technologically capable of meeting the standards. They can satisfy environmentally--conscious car buyers. Because the California standards are followed by 15 other states, automakers have largely used its standards for the entire country. It’s really a nonissue.Or it was until Trump decided to roll back the higher standards the Obama administration had proposed. The California standards offer predictability and certainty. The Trump plan creates uncertainty. It is exactly what companies don’t need, and don’t want.The Justice Department’s decision to scrutinize the agreement between California and the four car companies injects another kind of uncertainty -- a more menacing kind. It suggests that Trump will use the power of the state to bend companies to his will. That’s what happens in places like Russia, or China. It’s not supposed to happen in the U.S.Companies need to know that they can count on the rule of law. There is hardly anything more important. That’s the scariest part of what the antitrust division appears to be doing. Investigating companies for seemingly political reasons makes a mockery of the fundamental idea that the U.S. has a government of laws, not thugs.To contact the author of this story: Joe Nocera at firstname.lastname@example.orgTo contact the editor responsible for this story: Timothy L. O'Brien at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast "The Shrink Next Door."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
For the 2019 model year, the BMW X5 is all new, and that is a very good thing. '2 Dudes in a Car' takes the new X5 for a spin.
The U.S. Justice Department is investigating whether the decision of four automakers in July to reach a voluntary agreement with California to adopt state emissions standards violated antitrust law, people briefed on the matter said on Friday. The antitrust division's chief, Makan Delrahim, sent Aug. 28 letters to the four automakers saying the government was concerned the agreement "may violate federal antitrust laws" but adding it had "reached no conclusions," according to documents seen by Reuters. The disclosure comes as the Trump administration has ramped up its opposition to automakers seeking to sidestep it on rolling back Obama era fuel-efficiency rules.
Britain should delay Brexit beyond Oct. 31 rather than leave the European Union without a deal, which would be particularly harmful to large carmakers, the head of the sector's industry body told Reuters on Friday. As Britain spins towards an election, Brexit remains up in the air more than three years after Britons voted to leave the world's biggest trading bloc in a 2016 referendum leading to the country's biggest political crisis in decades. The autos sector, the country's biggest exporter of goods, has been one of the most vocal opponents of a no-deal Brexit, warning that production would be hit with tariffs, border delays and new bureaucracy, ruining the viability of many plants.
European markets extended gains for a third day on Friday, as China's move to boost bank lending outweighed data showing slower-than-expected U.S. job growth and a fall in German industrial output. Shares in trade-sensitive chemical and industrial companies were the biggest percentage gainers on the STOXX index after China's central bank said it was cutting the amount of cash that banks must hold as reserves, boosting liquidity to shore up the slowing economy. Hopes of stimulus for major economies, hurt by a bruising trade war between the United States and China, have encouraged investors to take risk despite lingering worries about a recession.
(Bloomberg) -- BMW AG’s top labor representative is batting away gloomy predictions for the industry, saying he expects global demand to recover and the luxury carmaker’s output to jump by as much as a fifth over the next few years.BMW, which includes the Mini and Rolls-Royce brands, will grow production by a market-beating 2% to 3% annually until about 2025, Manfred Schoch, who’s also deputy chairman of the company’s supervisory board, said in an interview. The forecast -- against a backdrop of shrinking key markets -- will require BMW to build two new plants.“We don’t expect the global car market to stagnate but grow by 1% to 2%,” said Schoch. “Based on our model planning at BMW we expect annual growth of 2% to 3%. So we need two more plants to do this, one in China and one in Europe.”A spokesman for BMW declined to comment.Such a rise would equate to as many as 500,000 additional cars by 2025, on top of the 2.5 million sold last year. BMW recently started output at a new factory in Mexico, and plans a 1 billion-euro ($1.1 billion) site in Hungary. It’s also boosting capacity in China to 650,000 cars from about 400,000 currently.The rosy assessment from Schoch contrasts with signs of gloom in the industry, which is under pressure from a global economic slowdown and the strains of investing in electric-car production. Munich-based BMW, which this month replaced its chief executive officer after just one term, cut its outlook in May after making a provision in an alleged cartel case.Even excluding this charge, automotive returns have dropped to the lowest point in 10 years.BMW in June moved up a goal for a lineup of 25 electric and plug-in vehicles by two years to 2023. This puts the maker of the X7 sport utility vehicle on track to sell roughly 700,000 electrified vehicles by 2025. The manufacturer currently builds the i3 electric city car in Leipzig, Germany, and will make the upcoming iNext and i4 battery sedan at two other German sites.“Setting up for the i4 in Munich will mean closing down the plant for nearly three months,” said Schoch. “But we’ve got to ready factories here to make electric cars. Otherwise we face sitting among ruins like in Detroit.”And the pressure doesn’t stop there. At next week’s Frankfurt car show, anti-climate change protesters plan to bring the world’s biggest vehicle show to a standstill as manufacturers’ electric-car offerings sit next to gas-guzzling SUVs.“If you look at an average household today, from the fridge to the hair dryer to the razor, all of these things are electric, the only thing that isn’t is the car,” said Schoch. “Cars will turn electric too, and whoever isn’t on board with this is a goner.”To contact the reporter on this story: Elisabeth Behrmann in Munich at firstname.lastname@example.orgTo contact the editors responsible for this story: Anthony Palazzo at email@example.com, Elisabeth Behrmann, John BowkerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Glencore Inc's penchant for risk has long been mining industry lore, but the company is quickly expanding into a part of the world that would have been improbable just a few years ago: Minnesota. The Swiss-based commodity trader took majority control last June of PolyMet Mining Corp, which is developing a mine in the Midwest state near the Canadian border estimated to hold a century's worth of copper and nickel, critical to the development of electric vehicles. It is the first time that Glencore has controlled a major mining project in the United States, where President Donald Trump has cut mining regulations and red tape in a bid to encourage domestic mining, a marked change from predecessor Barack Obama, who favored stricter oversight of the sector and slowed or halted several large mining projects.
(Bloomberg) -- Once a household name for its satellite navigation for cars, TomTom NV has taken a backseat in recent years as smartphones, loaded with apps like Google maps, surged in popularity.Now the Dutch digital mapping company is betting that your car needs directions more than you do. Over the past few years, TomTom has been building high-definition or “dynamic” maps for self-driving cars. It’s a decision that could help it challenge tech platforms, like Alphabet Inc.’s Google, as cars are increasingly sold with more autonomous capabilities.“We used to make maps for humans, but now we make maps for robots,” Alain De Taeye, member of TomTom’s management board, said at a journalist briefing in Amsterdam.TomTom’s share price peaked in 2007 at around 100 euros a share. But this summit coincided with the launch of the iPhone. A year later, TomTom reported sales of more than 12 million personal navigation devices, it’s record high. By 2011, it announced a restructuring program that included forced lay-offs to counter lower sales and in 2017, TomTom took a 169 million-euro write down on its consumer unit. It’s share price has since hovered at around 20 euros.TomTom now finds itself with several deep-pocketed rivals battling for the future of car navigation, including Apple Inc., Google and HERE Technologies, the digital mapping company controlled by BMW AG and other German car makers. In a blow for TomTom, longtime partner Renault SA and associates Nissan Motor Co. and Mitsubishi Motors Corp. last year signed on with Google’s Android operating system to supply standard-definition maps.On a quest to claw its way back, TomTom is ditching unwanted business lines, like the Telematics fleet-management business, and doubling down on HD maps. TomTom says it’s been able to differentiate itself from competitors on HD maps by being independent and not having an advertising-based business model like Google’s.In addition to sensors and other features, HD maps are an important part of autonomous driving, which can incorporate different levels of human assistance – from very little to none whatsoever in even the harshest weather conditions.HD maps, stored on a car’s computer system, replicate every lane, guard-rail, road edge and pole that a vehicle sees, helping cars locate their positions within centimeters. Those features are critical to avoid crashing into nearby cars, but they also help the car discern which traffic light at a busy cross-section it should obey or identify a speed sign hidden by a truck.So far, TomTom has publicly announced HD partnerships with Baidu Inc. on its Apollo driverless project, and with Renault on the carmaker’s SYMBIOZ autonomous driving program. It announced in March that it had won multiple deals to provide HD maps to major car makers, but declined to say which ones. Those contracts, which typically last more than 10 years because of ongoing service needs, have so far resulted in a roughly 60% market share in HD maps for TomTom, according to Willem Strijbosch, the company’s head of autonomous driving.“Not every car maker has made their decision yet on who will support them on HD maps,” said Strijbosch. “But out of all the car makers that have made a decision, we see that the big ones – the top 10 – are picking TomTom.”TomTom collects traffic and road data on more than 67 million kilometers around the world using 600 million different devices – including its mobile mapping cars, sat navs, and mobile phones. Of those roads, TomTom has so far covered only 400,000 kilometers in HD. Its HD maps are currently only available on highways in the U.S., Canada, Europe, South Korea and Japan but it is working to add more side roads as the technology advances.The mapping firm doesn’t disclose revenue from HD maps but in July it boosted its full-year guidance, saying it now expects sales from its location technology to grow 17% to 435 million euros, up from 430 million euros forecast in April. That amounts to around two-thirds of the group’s overall expected revenue.“The single biggest risk to the TomTom investment case is costs,” said Wim Gille, head of equity research at ABN AMRO. He said the company still has lots of ground to cover on HD maps compared to its standard definition maps and clients will want reassurance that the company can continue to serve them in a decade from now.While HERE is out-earning TomTom in revenues, Gille said, it’s also spending around 1 billion euros a year in operating expenses, about twice as much as TomTom. Still, he said both companies have what it takes to build and maintain an HD map.“The market is big enough for both of them,” he said.To contact the reporter on this story: Natalia Drozdiak in Brussels at firstname.lastname@example.orgTo contact the editors responsible for this story: Giles Turner at email@example.com, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Faraday Future, the electric-vehicle upstart that was on the brink of insolvency last year, hired a BMW AG veteran to lead efforts to finally bring its debut car to market and raise more money.Carsten Breitfeld, who spent two decades at BMW and then 3 1/2 years leading two other electric-vehicle startups, will take over as chief executive officer from Faraday founder Jia Yueting, who’s becoming chief product and user officer. Faraday aims to start production of its 1,050-horsepower FF 91 model next year and follow that up with its mass-market offering, the FF 81, in 2021.“The top priority right now is fundraising. We will have to go to the capital markets,” Breitfeld said in an interview with Bloomberg Television. “In the first stage, it will be a three-digit million dollar amount that’s still missing to make all of this happen.”Breitfeld will also focus on hiring around Silicon Valley. Faraday has 600 employees globally now, almost half of which are in California.The FF 91 will be be available in two- or three-motor configurations and be built in small numbers in Hanford, California. It’ll sell for upwards of $150,000 and come standard with zero-gravity, lie-flat rear seats. Eleven screens inside the cabin boast about 100 inches worth of displays, including a 27-inch fold-down monitor for passengers.Breitfeld expects production to start in Hanford within the next 12 months. The FF 81 and another mass-market car being developed will be built in China, which he expects to begin within 2 1/2 years.Faraday won a much-needed cash infusion when it formed a joint venture earlier this year with The9 Ltd., the Chinese online-gaming company. A unit of China Evergrande Group, the property developer owned by Hui Ka Yan, China’s third-richest man, pursued a $2 billion investment last year, though the deal soured over Faraday’s ability to take on additional investors.Jia, who left for the U.S. two years ago amid a cash crunch at his companies in China, is establishing a repayment trust with Faraday equity to resolve his debts, according to the company. In July 2017, a Shanghai court froze 1.24 billion yuan ($182 million) of assets that he and his tech conglomerate LeEco held at the time.Before Breitfeld left BMW, he led the German carmaker’s development of the i8 plug-in hybrid sports car. He became CEO of Byton Ltd. in 2016 and was chief of Iconiq Motors for a few months earlier this year.“What is missing now is execution,” Breitfeld said of Faraday. “This is where I see a bit of my value coming in here, because this company has a great vision.”To contact the reporter on this story: Ed Ludlow in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Craig Trudell at email@example.com, Jonathan RoederFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Today we're going to take a look at the well-established Bayerische Motoren Werke Aktiengesellschaft (FRA:BMW). The...
(Bloomberg) -- Tesla Inc. raised car prices in China, responding to trade tensions that weigh on the country’s currency and have led to oscillating import tariffs on vehicles.The price of a basic level imported Model 3 sedan went up more than 2% to 363,900 yuan ($50,900), Tesla’s website showed Friday. Prices for basic level Model S sedans and Model X sport utility vehicles increased by a similar percentage, to 793,900 yuan and 809,900 yuan, respectively.Tesla is among automakers most affected by the U.S.-China trade tensions, because it has no local production yet and therefore gets directly hit by any increases in tariffs. China threatened last week to increase duties on U.S.-made cars to as high as 50% in retaliation for President Donald Trump’s latest planned levies on Chinese goods.A Tesla spokesperson in China declined to elaborate on the price change, referring to information available on the company’s website.Tesla is constructing a plant in China, an increasingly important market for the loss-making company as incentives for electric vehicles in the U.S. wane. Tesla plans to start producing cars at the factory near Shanghai, Tesla’s first outside of the U.S., by the end of 2019.Chief Executive Officer Elon Musk was in China this week, with his trip including a visit to the new Tesla site. He also made an appearance at the World Artificial Intelligence Conference in Shanghai on Thursday.At the event, Musk said he has never seen anything getting built as fast as the Tesla facility, saying he is “astounded” by the progress at the site. “I really think China’s the future. It’s very impressive,” he said.A decline in the yuan reduces the value of any earnings that Tesla brings back from China and converts to dollars. Earlier this week, the Chinese currency fell to an 11-year low against the dollar.To contact Bloomberg News staff for this story: Chunying Zhang in Shanghai at firstname.lastname@example.orgTo contact the editors responsible for this story: Young-Sam Cho at email@example.com, Ville HeiskanenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Ferdinand Karl Piech, Volkswagen AG's former chairman and chief executive, who transformed the German company from a struggling midsized carmaker into a global automotive powerhouse, has died, his wife said in a statement. Piech, 82, who had 13 children by four different women, died suddenly on Sunday, his wife Ursula said. A brilliant engineer, Piech turned around VW after betting on a modular construction technique which allowed Audi , Skoda and VW brands to share up to 65% common parts, helping Volkswagen Group, the world's largest carmaker by sales, to attain greater economies of scale.