Fuel Type: Batterieelektrisch (BEV)

How will technology shape the future of fleets?

The automotive industry has been dominated by a few specific topics in the last year; from coronavirus (COVID-19) to electromobility and the advance of new technologies. But how have these subjects impacted one of the most important automotive sectors? In a new series, Autovista Group’s Daily Brief journalist, Tom Geggus, speaks with industry insiders to discover how these themes are changing fleets. In this third instalment: technology.

COVID-19 has impacted fleets, electromobility is changing fleets, but how will technology shape the future of fleets? From long-awaited self-driving capabilities to the potential for data-driven vehicle management, there exists a smorgasbord of technological advancements for fleets. But if necessity truly is the mother of invention, then fresh approaches to electrically-chargeable vehicle (EV) infrastructure would satisfy an industry-wide appetite. As Chinese OEMs look to the European market, this may be a hunger they could satisfy.

Game-changing services

Even before COVID-19, Chinese OEMs were ready to join the European market. ‘They have the supply; they have the vehicles. So, they are really eager and ready to offer their product and meet the growing demand for EVs,’ explained Mathijs van der Goot, global lead on electric vehicles for LeasePlan. These new entrants look to Europe as a priority. So, it might not be long before alternative ownership concepts, different distribution systems and new technologies create new dynamics in the market.

Mathijs van der Goot
Mathijs van der Goot

For example, Chinese OEMs could bring with them a new approach to vehicle supply and distribution. ‘They want to move faster. Asking questions like; do we really need that, can we do it differently, can we do it smarter? And each of them does it a little differently. But you see extremely interesting supply chains being created by how they look at their business – it is exciting for the whole market.’

One Chinese OEM is approaching the issue of EV charging differently. Nio recently launched Battery-as-a-Service, where subscribers can swap out and even upgrade their batteries as needed. ‘So, you drive into a garage, and they swap the battery at once, and you can continue. There is no need to plug it in,’ said Van der Goot. With no wall-box installation necessary and no electricity bills to be submitted, a service like this could transform the way fleets manage EVs and their infrastructure.

However, this does not look to be the only service with the potential to disrupt the world of fleets. Alain Duez, co-founder of management consulting company, let it fleet, highlighted the market absence of a multi-model mobility management application. This would serve as a universally applicable system, capable of managing a range of different services, from a car to an electric scooter and even public transport.

‘A real application that could help to integrate all these aspects in an e-system will be key, and it does not exist on the market yet,’ he explained. Duez went also outlined the potential for an app like this to exist within the next five to 10 years. The concept of Mobility as a Service (Maas) has been around for a while. Still, a system capable of supporting the continued demand for the company car, while also equipping fleets with every other transport option would be a game-changer.

The new oil

So, service-based innovations like these could alter how fleets operate, not to mention help end the drought of EV infrastructure. But the automotive industry has yet to plumb the depths of another one of its major technological resources. When explaining what could drive the future of fleets, Paul Hollick, chairman of the Association of Fleet Professionals (AFP), took a deep dive into data.

‘Data. Insight, through data. Not data for data’s sake. Data is the new oil,’ he said. ‘Data and the production of data into indices and metrics to be able to drive down efficiencies. Work out what the best powertrain is per-employee, based on where they live, where they work, their driving styles, their trips, and how many accidents they have,’ Paul said.

But he explained that this information must be utilised properly to provide insights to that can drive change, rather than just generating lists which serve no true purpose. ‘A fleet manager has never had so much opportunity to be able to get the data to be able to shape their strategies.’ This can then be used to reduce carbon, cost, and accident rates.

While telematics technology has continued to take leaps and bounds within the world of heavy goods vehicles (HGVs), there has been little news on the topic for passenger cars. Wim Buzzi, co-founder of let it fleet, highlighted how strange this is given the amount of data a car is now capable of generating, processing and potentially utilising. Successful deployment of data could fundamentally change how a car is managed.

Wim Buzzi
Wim Buzzi

‘Your car could schedule an appointment for maintenance, by first checking your calendar, if it fits with work, then sending a message to the dealership that they need to order parts A, B and C because that is what will need to be replaced,’ Buzzi said. ‘This means dealerships are not sitting with a whole warehouse full of parts, which is dead money.’

Technology like this does already exist Buzzi explained. By connecting smartphones with cars, events are scheduled, with information about routes and traffic jams made available and emails automatically sent to cover late arrivals.

The manufacturer can also benefit from the proper utilisation of data. Getting a better understanding of the life expectancy of a part, when it will need to be changed and how it could be upgraded. ‘So, we will avoid more damage, manufacturers will know how to upgrade their parts and improve their service,’ he said. ‘But for that we will need 5G, because we need the data to send all of this information. It is coming, and it will definitely affect how we approach mobility and fleet management.’ But all of this progress is dependent upon the foundation of fleets, which is the car, and this foundation has to be well managed first and foremost.

Putting safety first

Buzzi also sees the rollout of advanced driving assistance systems (ADAS) as playing a major role in the development of fleets. The advance of lower-level autonomous capabilities is making its way down the vehicle food chain. Buzzi pointed out that it is only a matter of time until these systems are seen in more affordable fleet cars.

The technology holds a huge potential to advance road safety. For example, Automated Lane-Keeping System (ALKS), takes over control of a vehicle at low speeds, keeping it in a lane, especially on dual-carriageways and motorways. This technology could help reduce fatigue for drivers on long stretches of roads, in theory reducing the rate of accidents.

‘[Autonomous technology] could make our roads safer,’ the UK’s secretary of state for transport Grant Shapps commented in August, as the UK began seeking evidence to shape autonomous legislation. ‘In 2018, 85% of road collisions in the UK that resulted in injury involved human error. Automated vehicles could reduce these errors as they will not get tired or distracted. Other countries around Europe are also committing to self-driving technology. The German government is reportedly consulting on a €2 billion automotive aid package, part of which looks to back the advancement of autonomous capabilities.

OEMs are investing heavily in these capabilities as well.  Daimler Trucks has partnered with Waymo to develop SAE Level 4 trucks, as they both look to further road safety and efficiency for fleet customers. The autonomous Freightliner Cascadia truck will be available to customers in the US in the coming years, with the partnership investigating potential expansion to other markets and brands in the near future.

‘The combination of increased road freight volumes and the need and vision of fleet operators for highly automated trucks, is what fuels our relentless pursuit of innovation,’ said Roger Nielsen, member of the board of management of Daimler Truck AG. ‘We are pushing engineering solutions that strive above all to increase safety and help our customers improve business efficiencies. Based on our collaboration with Waymo, we will be in the unique position to be able to provide our fleet customers with a choice among the best solutions for their individual requirements.’

DHL’s trend radar shows that while self-driving vehicles are categorised as having a potentially high impact on logistics, this may not be a relevant influence for another five to 10 years because of legal, technical and social barriers.

DHL’s Logistics Trend Radar

DHL’s Logistics Trend Radar

Source: DHL

So, autonomous technologies contain the potential for safer roads, decreasing fleet costs and inefficiencies. But with legislation and technology still taking shape, it may be some time before fully self-driving cars are chauffeuring staff members to meetings, while autonomous commercial vehicles make deliveries. While lower-level autonomous support systems make fleets safer in the interim, other automotive technologies like data analysis and mobility services can help shape the future of fleets.

Want to know how COVID-19 has impacted fleets? Catch up with the first fleets series instalment here. Interested in how electromobility is changing fleets? Read the second article here. Still hungry for more insights? Then stay tuned for a special fleet focused podcast coming next week, featuring Autovista Group’s chief economist Christof Engelskirchen.

UK sees registrations drop as it enters second lockdown

The UK has seen its weakest October registrations performance for nine years, as a ‘firebreak’ lockdown in Wales hindered sales of new vehicles and contributed to a 1.6% drop in the market.

The latest data, provided by the Society of Motor Manufacturers and Traders (SMMT), shows that 140,945 units were registered last month, making it the weakest October since 2011 and 10.1% lower than the average recorded over the last decade, according to the industry body.

The arrival of new models and ongoing financial incentives around battery-electric vehicles (BEVs) helped initially to sustain UK demand in the month, but the introduction of a lockdown in Wales on 23 October contributed to the nation recording 25.5% fewer registrations by the end of the month, which accounted for more than half of the overall UK decline.

Grafik: Neuwagen-Anmeldungen Oktober 2020 SMMT

Source: SMMT

Trouble ahead

Year-to-date, the market is down by 31%, according to the SMMT, with 620,921 fewer vehicles on the road. However, the UK is now in a month-long lockdown period that will see all but essential services closed – including car dealership showrooms. This means that only registrations made up until 5 November, when the lockdown started, will count in the November figures, and the SMMT’s expectation is in line with Autovista Group’s predictions that this month will see 100,000 fewer vehicles registered in the country as a result.

‘When showrooms shut, demand drops, so there is a real danger that with England today entering a second lockdown, both dealers and manufacturers could face temporary closure,’ comments SMMT chief executive Mike Hawes. ‘What is not in doubt, however, is that the entire industry now faces an even tougher end to the year as businesses desperately try to manage resources, stock, production and cashflow in the penultimate month before the inevitable upheaval of Brexit. Keeping showrooms open – some of the most COVID-secure retail environments around – would help cushion the blow but, more than ever, we need a tariff-free deal with the EU to provide some much-needed respite for an industry that is resilient but massively challenged.”

UK new-car registrations, January 2018 to December 2020 (forecast from November 2020)

Pkw-Neuzulassungen in Großbritannien, Januar 2018 bis Dezember 2020 (Prognose ab November 2020)

Source: SMMT and Autovista Group

‘While the continuation of click & collect and delivery services is welcome, and should help prevent a return to the sales wipe-out experienced in the spring, it cannot offset the loss of custom from the closure of showrooms themselves, given the unique nature of the car purchase process,’ the SMMT said.

Brexit uncertainty also continues to complicate matters. Tariffs of 10% could be added to imports and exports in the event of no free-trade agreement between the UK and European Union. Carmakers are already highlighting their inability to absorb this tariff, meaning they could tag it onto the price of new cars imported into the country.

With dealerships closed in November, this only leaves one month for consumers and businesses to update their vehicles before factoring in any potential cost increase. This may mean that pent-up demand will aid the market in December. However, as this is traditionally a poor-trading month for the automotive industry, with consumer spending concentrated elsewhere, and with an extension to the UK government’s furlough scheme meaning many consumers are economically worse off during lockdowns, pent-up demand is unlikely to drive the market back to pre-lockdown levels.

UK forecast to fall 32%

To this end, Autovista Group is forecasting a 32% drop in registrations in the UK for 2020. The Autovista Group forecast, first published in June, was a downgrade from the 23% decline forecast in May and 20% forecast in April. In March, before the coronavirus (COVID-19) pandemic took hold, the expectation was that the UK market would only experience a 3% fall in 2020.

The UK’s market continues to be driven by alternatively-fuelled vehicle sales, as petrol and diesel models register declines. In October, petrol fell 21.3%, while diesel dropped by 38.4%.

However, BEVs saw a 195.2% increase in registrations, albeit on smaller figures, with 9,335 units hitting the road in October. Year-to-date, BEVs are up 168.7% as new models and improving infrastructure helped 75,946 vehicles roll out of showrooms. Following a decline due to the abolishing of government grants, plug-in hybrids (PHEVs) are also making a comeback. In October, 7,775 units were registered, representing growth of 148.7%, while year-to-date, PHEVs are up 91.5%.

Video: Carmakers pooling to reduce emissions

As carmakers look to reduce their average CO2 emissions, many are collaborating in pools to spread their figures across a wider fleet. Autovista Group Daily Brief editor Phil Curry explains the benefits…

To get notifications for all the latest videos, you can subscribe for free to the Autovista Group Daily Brief YouTube channel. There you will find videos on a range of subjects including autonomous vehicles, new-car registrations, safety systems, and electrification.

New-car registrations recede across Europe in October

Autovista Group senior data journalist Neil King considers the slump in registrations in France, Italy and Spain in October.

Despite the existence of government-backed incentives in France, Italy and Spain, new-car registrations in October have dropped over the month, according to the respective automotive trade associations.

Following the lifting of coronavirus (COVID-19) related lockdowns earlier in the year, the countries’ automotive markets had shown signs of recovery. However, all three contracted for the third consecutive month in October, with the exception of the incentive-induced growth in Italy during September.

New-car registrations, France, Italy and Spain, year-on-year percentage change, January to October 2020

Pkw-Neuzulassungen, Frankreich, Italien und Spanien, Veränderung gegenüber dem Vorjahr in Prozent, Januar bis Oktober 2020

Source: CCFA, ANFIA, ANFAC

New-car registrations were 9.5% lower in France in October 2020 than in the same month of 2019 (there was one less working day in the month than in October 2019), according to the latest data released by the CCFA, the French automotive industry association. This is a greater downturn than the 3.0% year-on-year contraction in new-car registrations in the country in September. However, factoring in the lower number of working days (22 in October 2020 versus 23 in October 2019), the CCFA has calculated that the market declined by 5.4% based on an equal comparison.

The incentives introduced on 1 June for new battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs) remain, but the additional bonus for trading in older cars for cleaner new and used cars was exhausted before the end of July. The scrappage scheme reached its 200,000-vehicle cap after just two months, although the Ministry of Ecological Transition did announce the replacement of the recovery scheme with a conversion bonus, which has been in effect since 3 August.

‘Orders were quite good at the start of October, but they deteriorated sharply at the end of the month,’ explained François Roudier, spokesperson for the CCFA. Roudier added that sales revenues are ‘healthier’ than is usual for the end of the year, with more sales to private buyers and less discounted prices meaning ‘margins have held up well.’

In the first 10 months of 2020, new-car registrations in France were 26.9% lower than in the same period in 2019. However, the CCFA reports that demand is 39.1% lower on the basis of a comparable number of working days.

Roudier warned that ‘we must remain cautious about the management of the last months of 2020.’ Between the unpredictable behaviour of consumers in the face of bonuses and penalties, and the ongoing effects of COVID-19, ‘we have a difficult end of the year,’ he concluded.

Pain in Spain

In Spain, 74,228 new cars were registered during October, 21.0% fewer than in October 2019 according to ANFAC, the Spanish vehicle manufacturers’ association. ‘The negative evolution of the pandemic, together with the uncertainty regarding the related social and economic consequences, is causing a generalised fall in sales, which could be even worse without the support plans approved for the sector,’ ANFAC commented.

The MOVES II and RENOVE schemes were introduced in July and the new-car market saw a 1.1% increase in the month. Since then, however, there have been respective monthly declines of 10.1% and 13.5% in August and September, and now 21.0% in October. It is therefore clear that weak underlying consumer demand is the problem in the country. Measures to deal with the second wave of COVID-19 infections, and the calculation of the registration tax based on WLTP emissions figures from January 2021 are further complicating the recovery.

Noemi Navas, communications director of ANFAC, explained that ‘the purchase assistance plans are good tools to achieve stimulation of the market and prevent the falls from being even worse. The crisis situation is going to extend into 2021 and if we do not want the sector and its employment to fall even more, it will be necessary to maintain the support. At ANFAC, we are very concerned about the effect that an increase in the registration tax would have, due to the switch to WLTP, in a market that cannot overcome the COVID-19 crisis.’

‘It is important to make the buyer understand that if they intend to change cars, they should not postpone the decision. From January, there is a risk of a rise in prices as a consequence of the entry into force of the WLTP regulation, which will mean that vehicles that were previously exempt from registration tax will have to pay as the parameters for measuring CO2 emissions change,’ added Tania Puche, communications director of the Spanish dealer association GANVAM.

Italy back in negative territory

In Italy, the year-on-year downturn in October reported by the industry association ANFIA was just 0.2%, although the result would have been positive (up by about 4%) had there not been one less working day. Nevertheless, this does mark a return for the country to negative territory following the 9.5% growth in new-car registrations in September due to the new government incentives that came into effect at the beginning of August as part of the Decreto Rilancio (Relaunch Decree). While the market still contracted in that month, demand improved but delivery times delayed many registrations until September.

‘In this phase, we are engaged in ministerial meetings for the presentation of the proposals of the Italian automotive industry in relation to the recovery plan, an opportunity not to be missed to support the sector in this difficult industrial transition. We are working on the four pillars necessary to guarantee its strategic repositioning and competitive advantage: interventions to support investment in research and innovation; the promotion of smart and shared-mobility projects; interventions on human capital and financial interventions to support businesses. We hope that these lines of action are considered a priority and may have sufficient space in the final plan,’ commented Paolo Scudieri, president of ANFIA.

The key to recovery of new-car markets revolves around countries agreeing budgets for 2021, and improving economic certainty and consumer confidence to boost spending. However, with a second wave of COVID-19 cases washing across Europe, and accompanying lockdowns, the industry certainly does face a difficult end to 2020.

Ford and Volvo to pool emissions as recalls wreak havoc

Ford will enter a pool with Volvo Cars to meet its 2020 European CO2 emissions target. The recall of the Kuga plug-in hybrid (PHEV) reduced the number of low-emissions models the carmaker could sell this year, impacting its fleet-average CO2 level.

But while Volvo Cars announced it was set to overachieve on this year’s targets, its subsidiary Polestar confirmed it is also initiating a recall. As safety concerns continue to plague electric vehicles (EVs) and shake consumer confidence, manufacturers will need to act decisively if they want to meet their respective emissions targets.

Ford’s recall

In August, Ford recalled and suspended sales of Kuga PHEVs built up until 26 June, after four vehicles reportedly caught fire. The problem was traced back to the potential for water to cause an electrical short, which could then lead to overheated battery cells. It was estimated that over 20,000 models could be affected. With the Mustang Mach-E not yet in showrooms, Ford lacks a mass-market EV, leaving it heavily reliant on PHEVs to meet its emissions obligations.

‘Ford always has, and will continue to meet, the EU’s emissions targets. Based on our product roadmap and production schedule for this year, we expected to comply with the new regulations, and this was still our intent with the COVID-related disruption to manufacturing,’ the carmaker said in a statement sent to Autovista Group. ‘However, given the current supplier battery issue with the Kuga PHEV, Ford now will enter a pool to meet the EU’s 2020 emissions regulations without penalty for passenger vehicles, just as many other OEMs have done in Europe.’

‘We recently declared our intent to join an open pool with other OEMs and can confirm we are doing so with Volvo Car Corporation,’ Ford added. ‘Conversely, as we anticipate over achieving our CO2 targets on light commercial vehicles, we have filed separately our intent to form an open pool so other OEMs can benefit from the positive CO2 performance of our light commercial fleet.’

Pooling with Volo

At the end of October, Volvo Cars and its EV affiliate Polestar confirmed they would be able to reduce fleet emissions beyond their joint CO2 target. This left them with enough surplus to enter a pool with Ford, with the resulting revenue from the deal to be reinvested in new green-technology projects.

‘For Volvo Car Group, the future is electric and we are transforming our company through concrete action,’ said Håkan Samuelsson, chief executive of Volvo Car Group. ‘I am pleased to see that we are exceeding our CO2 reduction targets. It proves our strategy is the right one for our business and for the planet.’

PHEVs made up more than a quarter of Volvo Cars’ sales in Europe during the first three quarters of 2020. By 2025, the carmaker aims for its global sales volume to consist of 50% BEVs, with the rest made up from hybrids. Meanwhile, Volvo’s EV brand began deliveries of the Polestar 2 in July. But as Ford joins Volvo’s emissions pool, the Polestar 2 has climbed into the same boat as the Kuga PHEV, as it too hits stormy waters.

Polestar recalls

In a statement issued at the end of October, the BEV-maker confirmed it is initiating a recall as well as a service campaign of the Polestar 2. The recall will involve the replacement of faulty inverters on most delivered customer vehicles. This unit transforms stored energy in the battery into the power required by the electric motors. Polestar confirmed the total number of affected vehicles delivered to customers is 4,586.

Meanwhile, the service campaign relates to the high-voltage coolant heater, which is responsible for both cabin and high-voltage battery heating. The carmaker confirmed that faulty parts fitted to early production cars need to be replaced. The total number of affected vehicles delivered to customers is 3,150.

So, in the wake of the Kuga PHEV recall, Ford found emissions regulations relief in Volvo Cars, whose affiliate is now coming face to face with EV issues itself. As recalls ravage new EV models, carmakers must act quickly to ensure consumer confidence does not take too much of a nosedive. If public opinion takes a dramatic turn against PHEVs and BEVs, the potential for manufacturers to achieve their emissions targets will plunge.

Mini model range to expand and electrify

BMW has outlined new plans for its Mini brand, including the electrification of the entire model range, in cooperation with Chinese manufacturer Great Wall, and the addition of two new crossover models.

Mini started on the road to electrification in 2008, with the low-volume production of the Mini E. With the plug-in hybrid (PHEV) variant of the Mini Countryman alone, electric vehicles (EVs) accounted for 5% of the brand’s total sales in 2019, according to a BMW Group release. Following the launch of the Mini Electric earlier this year, the EV share has doubled to 10% of all new registrations for the brand.

Looking forward, Mini ‘will enable customers all over the world to have emission-free driving with a completely electrified model family.’ However, the brand will continue to offer internal combustion engines (ICEs) as they remain an ‘ideal solution for target groups and regions whose mobility needs are not yet met by all-electric vehicles.’

‘With the two pillars of our drivetrain strategy, we are pursuing the Power of Choice approach to meet the needs of our customers around the world,’ Bernd Körber, head of Mini, said in the statement. ‘This will create the conditions for further growth and actively shape the transformation of mobility.’

Speaking to the German publication WirtschaftsWoche, Körber commented that ‘we will electrify the whole Mini portfolio by 2024.’ He added that there will be Mini cars with ICE until 2030 but the brand will be ‘completely electric earlier than most other brands.’ Körber predicts that beyond 2025, more than half of all Minis sold will be purely electric, and Mini could be an electric brand in 2030. ‘Already at the end of 2020, the share of pure-electric and plug-in hybrid Minis sold will be about 10% to 15%. In 2021, it should then be about 15-20%.’

Crossing over

The future Mini range of all-electric vehicles will include the three-door hatchback, a new crossover model in the small-car segment and a compact crossover model. The Mini Countryman compact crossover will therefore be joined by a new crossover model in the small-car segment, which will be supplied exclusively with an all-electric drive. The next-generation Countryman will be available with both ICE and electrified powertrains.

However, this does leave a question mark over the future of the Mini Clubman compact hatchback model, which is produced at Mini’s plant in Oxford, UK. The Clubman spearheaded Mini’s move into the premium compact segment before being joined by the Countryman. Around 40% of the brand’s vehicle sales are in this segment.

Building with Great Wall of China

The Chinese vehicle market continues to grow and will become even more important for Mini in the future. Currently, around 10% of all new vehicles produced for the brand are delivered to customers in China. It comes as little surprise, therefore, that Mini will move from being an import brand to producing cars locally.

Based on a new vehicle architecture, developed from the ground up for pure e-mobility, battery-electric vehicles will be produced in China from 2023, in cooperation with local manufacturer; Great Wall Motor.

‘This venture will enable Mini to meet the rising demand for emission-free driving both in China and in the other global markets. Cooperation with the Chinese partner will be based on a clearly defined principle: production follows the market. With locally manufactured vehicles, Mini will serve the growing Chinese automotive market whilst maintaining stable production at other locations,’ BMW Group said in its statement.

Video: Emissions anxiety for carmakers

Autovista Group Daily Brief editor Phil Curry explains why some carmakers are concerned about rising CO2 levels, and how the industry has got to this point with a strict European target in place…

To get notifications for all the latest videos, you can subscribe for free to the Autovista Group Daily Brief YouTube channel. There you will also find videos on a range of subjects including autonomous vehicles, new-car registrations, safety systems, and electrification.

How is electromobility changing fleets?

The automotive industry has been dominated by a few specific topics in the last year; from coronavirus (COVID-19) to electromobility and the advance of new technologies. But how have these subjects impacted one of the industry’s most important sectors? In a new series, Autovista Group’s Daily Brief journalist, Tom Geggus, speaks with industry insiders to discover how these themes are changing fleets. In this second instalment: electromobility.

While COVID-19’s impact on the automotive industry has been sharp and sudden, the effect of environmental concerns can be considered tectonic. But now the two phenomena are driving change in tandem, with COVID-19 acting as a catalyst for a shift to greener mobility. Pandemic recovery plans and environmental regulations are leading automotive companies and consumers down the road of electrification. Leaders of the European Automobile Manufacturers’ Association (ACEA) recently called for pandemic recovery funds to be channelled into a green comeback.

Analysis conducted by Transport and Environment (T&E) revealed that electric cars will treble their market share in Europe in 2020, with most carmakers on track to meet their EU emissions targets. The environmental lobbying group also pointed to company cars as the ‘low-hanging fruit’ of electrification. T&E claim the segment could be utilised to achieve national climate goals, given that six out of 10 cars sold in Europe are company cars, and that last year 96% of new registrations belonging to the sector were petrol or diesel. So how are fleets adapting to electrification in the wake of COVID-19?

PHEVs meet policy

Management consulting company let it fleet sees the high life cycle cost of vehicles and increasing congestion in cities as cars are chosen over public transport, alongside the desire and need to be environmentally friendly, as leading people to alternative modes of transportation. This means a fundamental role change for fleet managers.

On top of looking after company vehicles, fleet managers will now oversee a wider variety of transport options, not to mention learning about new mobility technologies. As travel needs change with new working practices, combined with the influence of environmental consciousness, flexible approaches to mobility and policy will be essential. Plug-in hybrid electric vehicles (PHEVs) are one key example, as government incentives, OEM supply and emissions regulations drive adoption.

‘Maybe the leasing will be over five to six years into the future because you will be driving less,’ said Alain Duez, co-founder of let it fleet. ‘It could also be that you will have more hybrid cars because driving less means that it will be more in favour of the hybrids tomorrow.’

Wim Buzzi
Wim Buzzi, co-founder, let it fleet

‘If we look at what the market is offering, you cannot do without the plug-in hybrid, because there is not enough offering yet,’ explained Wim Buzzi, co-founder of let it fleet. ‘It is a good technology. But if you’re going to allow your people to drive plug-in hybrids without recharging them, then you have a crucial error in your policy.’

This opens up the potential for the creation of specific strategies to deal with how these vehicles are used, in line with day-to-day operations. For example, over-reliance on the internal combustion engine (ICE) could render a PHEV’s electric capacities pointless if not properly utilised, making its green credentials effectively null and void. Companies could lay out comprehensive policies for when, where and how to recharge, all dictated by how the car is driven. Equally. the employee could simply submit their fuel bill, so long as it reflects responsible use.

This also lays the road for onboard technologies, like telematics and smartphone applications, all allowing fleet managers to determine employee travel patterns. Accompanied by open communication and transparency, this would help assess the potential options for reducing costs and emissions without affecting efficiency or productivity. However, while driver behaviour might change as well as powertrain technology, the basic need for mobility will not.

‘Maybe in 10 years’ time, people will not have a dedicated company car parked in their car park every day, and they will have a subscription model. But they will always need the car,’ said Buzzi. ‘So, in whatever form, that car will always be included.’

Online trends drive on-road vehicles

Zitat zu Elektromobilität DPDHL

COVID-19 also resulted in a surge of online shopping, with 52% of consumers buying more online from domestic retailers and 49% stating they will do so more in the future. But as concerns over the environmental impact of these trends grow, logistics companies are having to double-down on green initiatives.

Deutsche Post DHL (DPDHL) recently announced it is further committing to reducing emissions, in line with its GoGreen programme. By 2050, DPDHL aims to reduce all logistics-related emissions to zero. EVs currently make up 15% of DPDHL’s fleets, an increase of 10% over the last three years. In its 2019 Sustainability Report, the logistics company revealed that it uses over 13,000 vehicles with alternative drive systems, including more than 11,600 EVs.

‘In terms of e-mobility, especially in terms of electrification of our delivery fleet, I believe that we are really one of the leaders in the global market, and we are very proud of that position,’ said Nancy Cui, vice president for global car and van procurement at DPDHL. ‘I think that the percentage of our electric van fleet is, in comparison to the rest of the market, very high, especially in the LCV segment.’ However, integrating EVs into a demanding delivery role did initially invoke some range anxiety.  

‘With the introduction of these electric vans in domestic parcel and letter services, we saw at the very beginning some kind of range anxiety of the couriers,’ explained Lars Pappe, Vice President of eMobility design and development at DPDHL. ‘But pretty soon the drivers found out they have an average route length of only 25 to 40 kilometres a day, while the battery capacity of these vehicles exceeds this by far. So even in wintertime, there is enough battery capacity left to return to the depot.’ This realisation, coupled with proper route planning and staff training packages, helped reduce driver range anxiety to a minimum.

Alongside its delivery vehicle subsidiary, StreetScooter, DPDHL also has a strong focus on infrastructure. ‘DPDHL Group has installed more than 15,000 charging points throughout Germany in our depots and electrified roughly 13,000 of our delivery routes here,’ said Pappe.

Presently, the logistics company is tasking a dedicated team with assessing DPDHL sites around the world, working out the electrification needs in terms of infrastructure and energy supply.

Going carbon negative

Microsoft began a PHEV project in Germany roughly three years ago, before the implementation of green incentive schemes. The team discovered the powertrain could be a useful tool when tackling fleet emission targets. However, the PHEVs had to make optimum use of their electric capacities, which meant charging them as often as possible, and not over-using the ICE.

This push to make the most of different environmentally-friendly technologies will be essential for Microsoft as it looks to meet its own green targets. At the start of this year, the computing giant announced it will become carbon negative by 2030, and, by 2050, will have removed all of the environmental carbon it has emitted, either directly or by electrical consumption, since it was founded in 1975.

To combat this, Microsoft is working on a number of measures. It is forming new strategic alliances with existing partners like Shell, to secure supplies of renewable energy. It is extending its internal carbon tax to tackle indirect emissions, as well as electrify its global campus operations vehicle fleet by 2030. How the company goes about acquiring vehicles like these for its fleets involves a rigorous procurement process.

‘We work with a selected number of OEMs,’ explained Michael Pohl, senior procurement engagement manager fleet at Microsoft. ‘We tender them every three to four years, which we just did last year, and now the result is a new setup. With those OEMs, we work closely on our strategy, on discounts, on bonuses, and on agreements.‘

‘Some OEMs do offer discounts for electric vehicles, but this is not common, and they are not in the same league as the discounts on standard drivetrains. Of course, every OEM is keen for us to purchase as many electrified cars as possible, because it will help them with their CO2 emissions and potential penalties they have to pay to the EU, but they cannot necessarily deliver the number of cars we would need in a given or required timeframe.’

Essential infrastructure

Zitat zu den Kosten von Elektrofahrzeugen

As EV demand builds momentum, OEMs must boost manufacturing processes to keep pace while suppliers incentivise sales. These measures will have to go into overdrive as consumers and fleet managers alike begin to see the long-term benefit of electromobility. One of these benefits is the overall cost of owning an EV.

At the end of September, LeasePlan released its annual Car Cost Index, which reveals the true cost of owning a car, including fuel, depreciation, taxes, insurance and maintenance. EVs in the compact and mid-size segment are fully cost-competitive compared to ICE-powered vehicles in countries including France, Germany, and the UK. Autovista Group analysis also reveals that B-segment and C-segment BEVs are competitive compared to petrol models, albeit only because of government incentives.

‘The good news is that the costs of EVs are coming down and we are seeing the development of a strong second-hand market for quality used EVs,’ said Tex Gunning, CEO of LeasePlan. ‘The bad news is that governments are failing to provide the charging infrastructure necessary to satisfy market demand.’

In a recent blog post, Mathijs van der Goot, global lead on EVs for LeasePlan said, ‘it is essential to ensure that the charging infrastructure is aligned with the flourishing e-mobility market.’ There are currently more than 195,000 public charging in Europe, a rise of over 300% since 2014. But this falls a long way short of how many the industry needs. Last year, LeasePlan called for one million charging stations by 2025 and the European Commission estimates 2.8 million will be required by 2030.

A report filed by Technology intelligence company IDTechEX in September outlines the unique demands fleets could have on EV infrastructure. ‘Although electric fleet charging represents roughly 3% of the total charging infrastructure in volume, it constitutes over 20% of the total market value due to the added cost associated with the high-power requirements,’ the report states.

So, the need for improved charging infrastructure to support fleet electrification is vital, even as EVs become more affordably priced. If fleet managers are going to adopt these vehicles on a wide scale, charging anxiety will need to be tackled alongside shrinking price tags. Subsidies and governmental schemes will help tackle this challenge, but the advancement of charging technology will also play its part. But will this be the only big tech change coming to fleets within the next few years?

Want to know how COVID-19 has impacted fleets? Catch up with the series by reading the first instalment here.

Podcast: Tracking automotive markets, recalls and emissions

In its latest podcast, the Autovista Group Daily Brief team discusses the new Monthly Market Dashboard, plug-in hybrid (PHEV) recalls and manufacturer emissions targets…

https://soundcloud.com/autovistagroup/mmd-recalls-and-emissions

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify, Google Podcasts and search for Autovista Group Podcast on Amazon Music.

Click here to access our Brexit survey, and tell us how the negotiation uncertainty and the UK leaving the EU is impacting your business and industry.

BMW hybrid recall reignites PHEV fire concerns

BMW is carrying out a global recall of some of its plug-in hybrids (PHEVs) produced this year, due to battery fire concerns. The carmaker is also suspending delivery of affected vehicles as part of a ‘preventative measure.’

The recall notice will come as a blow to the manufacturer, which recently revealed promising third-quarter free cash flow figures. Thanks to a fast recovery in several markets, BMW saw higher sales growth compared to the same period last year, on top of optimised working capital and a reduction of fixed costs. The manufacturer’s free cash flow from the automotive segment in Q3 2020 amounted to over €3 billion, compared with €714 million in Q3 2019.

But more widely, the recall could have a knock-on effect on vehicles equipped with alternative powertrains. With faults being reported by the likes of BMW and Ford, consumer confidence could take a real hit, alongside the residual values (RVs) of these electric vehicles (EVs).

Worldwide recall

In a statement to Autovista Group’s Daily Brief, the German carmaker confirmed the details of the recall. ‘BMW Group has launched a worldwide safety recall and stopped delivery of a small number of plug-in hybrid vehicles as a preventative measure to check the high-voltage battery,’ it said.

‘Internal analysis has shown that in very rare cases, particles may have entered the battery during the production process. When the battery is fully charged this could lead to a short circuit within the battery cells, which may lead to a fire.

‘A total of 26,700 vehicles are affected worldwide, of which only around 9,000 vehicles are already with customers and have been recalled. BMW apologises for the inconvenience caused to customers, but of course, safety must come first,’ the carmaker concluded.

In the US, National Highway Traffic Safety Administration (NHTSA) documents reveal that BMW became aware of an incident involving a 2021 BMW X5 on 4 August 2020, where the vehicle experienced a ‘thermal event’, whereupon it began analysis. Then, between early August and mid-September, the manufacturer became aware of three additional incidents.

‘A review of supplier production and process change records indicated that for the incident vehicles, battery-cell production at the supplier occurred during a specific and limited time period,’ the document states. The NHTSA document identifies Samsung as a component manufacturer. Autovista Group’s Daily Brief did approach the battery maker for comment, but it did not respond prior to publication.

On 23 September, BMW decided to conduct a voluntary safety recall. According to the NHTSA report, there are some 4,509 recalled PHEVs in the US, including 2,441 X3 xDrive30e (2020-2021), 1,228 X5 xDrive 45e (2021), and 33 Mini Cooper Countryman All4 SE (2020-2021). BMW is currently working on a solution to the fault. Until a remedy is available, drivers will be instructed to not charge their vehicle, not to drive in manual or sport mode, and to not use the shift paddles.

Wider EV impact

BMW is not alone when it comes to EV difficulties. Both Audi and Jaguar recalled their battery-electric vehicles (BEVs) in June 2019. Audi experienced issues with the e-Tron’s battery cells, while Jaguar recalled the I-Pace because of a software fault that could have resulted in the failure of the electric braking system.

In August, Ford issued a recall notice for Kuga PHEVs it built up until 26 June, after four vehicles reportedly caught fire. The problem was traced back to the potential for water to cause an electrical short, which could then lead to overheated battery cells. It was estimated that over 20,000 models could be affected.

Recently, Ford Werke GmbH posted a video to YouTube, with managing director Hans Jörg Klein, apologising for issues with the model and asking for customer patience as troubleshooting could take months rather than weeks.

With manufacturers pushing to make an electrified COVID-19 comeback, the success of their electrified models is of paramount importance. Carmakers are considering PHEVs as an essential stepping stone for some consumers on the road to full BEVs. If big brands like BMW and Ford produce problematic PHEVs, consumer confidence in electrified vehicles could take a hit.

This could then have a knock-on effect on RVs, as consumers shy away from vehicles linked to recalls, potentially in favour of models with internal combustion engines. As pointed out in the Autovista Group and Twaice Power of Signalling whitepaper, information on battery condition can be invaluable to help combat the asymmetry of information, and could significantly increase RVs.

UK to adopt EU emissions regulations following Brexit transition period

The UK government has confirmed it will adopt European Union (EU) emissions targets for 2021 and beyond at the end of its Brexit transition period on 31 December 2020.

Following a consultation, the government said that the existing target of 95g/km CO2 emissions averaged across a vehicle fleet would remain, meaning carmakers may continue with their current strategies to ensure they meet the strict regulations. Many are looking to achieve this by selling a greater number of battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs). However, all must now be aware of their performance in two markets, rather than a single one.

Had the UK government decided to go its own way with regards emission targets, there were fears that the supply of BEVs and PHEVs in the country would become limited, as carmakers focused on supplying Europe to meet the needs of a bigger market.

The new UK rules will mirror those in the EU, including an £86 (€95) fine for each g/km above the carmakers’ respective targets multiplied by the number of vehicles registered in the year.

Changing figures

As the UK’s average fleet mass is heavier than that of the EU, the UK government has highlighted that the sum of individual manufacturer targets in the UK will be slightly higher than the sum of targets in the EU.

‘While this may therefore appear to be a slight relaxation of standards, by retaining the average EU mass value, it replicates the same level of effort required by manufacturers as under the current scheme in the EU,’ the government said. ‘This ensures that the regulation is as ambitious as existing arrangements.

‘If the UK average mass value was used to calculate manufacturer targets instead, it would make targets immediately more challenging.’

The UK average mass is updated every three years and will be used in calculations from the next due update onwards.

Future targets

The UK will also adopt EU targets set for 2025 and 2030 for a further reduction in vehicle CO2 emissions, meaning manufacturers will have to reduce output by 15% (based on 2021 levels) in 2025, with a 37.5% reduction in 2030.

European regulations (EU) 2017/1152 and (EU) 2017/1153 establish the correlation procedure to be used during the regulation’s conversion from New European Driving Cycle (NEDC)-derived targets and calculations to Worldwide Harmonised Light-Vehicle Test Procedure (WLTP)-derived targets and calculations.

While the corrections needed to ensure these regulations continue to function in the UK are minor, the EU dataset will be used as a basis for the correlation between NEDC and WLTP, providing further clarity for carmakers.

Super credits

One of the biggest changes in the government’s consultation announcement is the lowering of the CO2 g/km threshold for carmakers to apply for ‘super credits’. The credits can be used against emissions targets, and work as an incentive for manufacturers to sell more zero- and low-emission electric vehicles (ZLEVs) as they will multiply within a fleet. For 2020, one super credit counts as two vehicles, with this dropping to 1.67 in 2021, and 1.33 in 2022.

In the EU, the amount that manufacturers may benefit from the use of super credits is capped at 7.5g/km cumulatively over 2020-2022.

As the new regulations will only take effect from 2021, the UK government has decided to reduce the cap for two years to 3.75g/km. This received a mixed response in the consultation, some arguing that the figure was too high as carmakers may have already used their EU-mandated 7.5g cap, others suggesting it was too low, unfairly affecting those looking to bring more ZLEVs to the market in 2021 and 2022.

‘It is evident via the nature of the responses that this issue is complicated,’ the government said. ‘An increase in the super credits can act as an incentive for car manufacturers to put more ZLEVs on to the market, which is in line with the government’s net-zero and decarbonisation commitments.

‘Equally, the government recognises super credits can artificially lower manufacturer targets, thus providing the opportunity for higher emission vehicles to be sold. There is the possibility that manufacturers will use their EU-allocated 7.5g CO2/km cap in 2020 alone, meaning the 3.75g CO2/km cap available across 2021 and 2022 will be in addition to the super credits offered in the EU regime. Whilst this is possible, due to the timelines for enforcing the regulation, it will not be known until October 2021.’

Launch report: Volkswagen ID.3

The Volkswagen (VW) ID.3 is the carmaker’s first dedicated battery-electric vehicle (BEV) and features a futuristic look to appeal to both a new and existing customer base. The interior is ultramodern, and the powertrain is beaten only by the Nissan Leaf.

The BEV market is expanding rapidly, thanks mostly to the emissions targets set by the European Union and a collapse in diesel sales. As Europe’s market leader, and a company heavily reliant on internal combustion engine (ICE) sales, VW has to succeed with its BEV plans, and has therefore conceived a new sub-brand to carry the weight of this expectation. The ID.3 is the first offering, and the carmaker has promoted the vehicle extensively prior to it going on sale.

As an important car, it has received a lot of attention from VW, and this shows in its development with a competitive range and fast charging times.

As a rapidly expanding market, the ID.3 needs to compete with established models such as the Nissan Leaf, as well as newer options from Asian carmakers, like the Kia e-Niro and Hyundai e-Ioniq.

Click here or on the image below to read Autovista Group’s benchmarking of the VW ID.3 in France, Germany, Spain and the UK.

We present new prices, forecast residual values and SWOT (strengths, weaknesses, opportunities and threats) analysis.

ID3 SWOT dashboard - click here

How has COVID-19 impacted fleets?

The automotive industry has been dominated by a specific number of topics in the last year. From coronavirus (COVID-19) to electromobility and the advance of new technologies. But how have these topics impacted one of the industry’s most important sectors? In a new series, Autovista Group’s Daily Brief journalist, Tom Geggus, speaks with industry insiders to discover how these themes are changing fleets. Up first, COVID-19.

As countries went into lockdown to prevent the spread of coronavirus, the toll on the automotive industry was enormous. Between February and April registrations went into free fall, manufacturing ground to a halt and supply chains froze. Currently, incentive schemes are providing short-term stimulation, but the long-term consequences of the pandemic could be much further reaching, for fleets in particular.

In the beginning

Peter Golding, managing director of fleet management company FleetCheck, explained that early on in the pandemic there was a binary divide between essential service operators and those companies which had to put business on hold.

‘If we look at the impact to essential, they had a significant challenge because there was an expectation that they could increase capacity,’ he said. Some vehicles were seeing an exceptional jump in usage, which meant implementing increased sanitisation practices and policies to protect staff. Some companies even found themselves taking on board furloughed staff to meet demand, which meant training inexperienced drivers how to operate a vehicle that was completely new to them, all in non-ideal conditions.

Meanwhile, companies that found themselves operating out of their employees’ homes were without the integral systems that only functioned in an office environment due to safety restrictions. So the businesses with fleet-management software tied to localised intranets were at a distinct disadvantage to those with a cloud-based system. Meanwhile, those companies needing to pause operations and lay up a fleet were faced with a different conundrum.

‘If we are dealing with the issues of laying up fleet, the uncertainty of the duration of COVID-19 and how long the shutdown was going to last,’ said Golding. ‘Having a vehicle stand down for a month is quite different than having a vehicle stood down for five months.’

As time passes

Formed in March this year, the Association of Fleet Professionals (AFP) serves over 1,000 members in the UK, providing best-practice advice, training and representation. As the number of COVID-19 cases continues to fluctuate, fleets may find themselves facing fresh challenges as more time passes.

‘I think the reality for fleet operators, is that they’re likely to see impacts well into 2021,’ said Paul Hollick, chairman of the AFP. This could include vehicle safety, as cars sit unused and uninspected for long periods of time, particularly if they are not company assets. Both the driver’s physical and mental health also become a cause for concern, whether they are having to risk commuting into the office or if they are becoming more confined to their home.

‘The other big thing, of course, is cost-saving and cost-reduction as everybody starts to tighten their belts,’ Hollick said. Trying to deliver savings at a time of economic fallout has meant reviewing and re-reviewing budgets to reduce the impact on bottom lines.

But as with operation types, not all vehicle types have suffered the same effects at the hands of the pandemic. ‘The van market has just gone crazy because of course, the delivery sector in a COVID-19 world requires a lot more vans on the road to be able to lift goods and services to people’s address rather than to deliver to depots.’

Lars Pappe, vice president of e-mobility design and development at Deutsche Post DHL, considered that even after COVID-19 some trends may persist, particularly in relation to online shopping. ‘So I think the average amount of parcels we ship in B2C-related business, I think it will remain on the high volume level in comparison to before the COVID-19 situation.’

Since parcel volumes are expected to remain on the current high level, for some logistics providers this might mean increasing the number of light commercial vehicles (LCVs) in their fleet, to cope with a greater number of deliveries. Meanwhile, other operators might decide to increase the size of the LCVs they operate, to deal with larger loads. But whether operators are able to acquire additional vehicles, or even refresh their fleet from the currently distressed supply chain is another question.

Uncertain times

‘Many companies have pushed to extend their contracts for various reasons,’ Sjoerd Brenters, head of international consultancy services at LeasePlan explained. ‘Clients might be more careful with leasing new vehicles and instead extend existing contracts given the uncertain times we live in,’ he said.

Upon impact, COVID-19 caused OEM supply chains to come to a standstill as the delivery of vehicles became problematic. However, these issues could be rectified as manufacturing restarted. The longer-term changes look to involve order completion and getting the car to the customer. Considering the impact on used-car sales, for example, Brenters explained how the LeasePlan subsidiary CarNext.com was well-positioned to handle the pandemic. With vehicles being ordered online, delivered directly, and all with little to no human interaction, CarNext.com could easily deliver vehicles in a safe way.

There is even the potential for a short testing period, with the option to return the car after a trial period for a relatively low amount. If this were to be the case, the relationship between those who supply fleet vehicles and those who use them could become far more direct, without the need for human interaction.

However, how these vehicles might be used is another matter. While at the start of the pandemic, cars were parked up, the need for these vehicles was not drawn into doubt. ‘Employees and employers are starting to rethink the usage of the vehicle. This doesn’t mean less usage, it just means different usage.’ said Brenters. ‘A car may be used less for commuting to work, but used more for vacations, for example, especially with people wanting to avoid flying.’

Therefore, the need for higher-end vehicles in which a member of staff spends a lot of time travelling would not decrease, its use would just shift. This will surely also influence the size and type of car which employees choose going forward.

On top of the pile

Operating a benefit fleet for its employees, Microsoft leases roughly 9,200 cars across nearly 50 countries. Managing the company’s vehicles in 10 of these European countries including Germany, Austria and Switzerland is Michael Pohl, senior procurement engagement manager fleet at Microsoft.

In the early stages of the COVID-19 pandemic, Pohl’s team received advice that vehicle orders should go on hold, but this was not the path he chose. ‘I remember saying, if everything is piling up, I want to be on top of the pile. We agreed that we are not going to stop anything. We continue to order cars, as well as possible. Within the limitations of operations in spring of this year,’ he said.

‘The only thing we did was to give the employees more time, because it was not possible for them to do test drives, for example. They need more time to figure out what type of car they want to drive in the future,’ Pohl explained.

Looking back, it is not a decision Pohl regrets for a moment. As production lines became operational, Microsoft orders were fulfilled with a shorter lead time, compared to the companies who decided to go on hold.

Looking forward, Pohl explained that COVID-19 is not the death of the company car, it is in fact far from it. ‘Since COVID, people have realised that having a company car gives you an incredible freedom,’ he said. These vehicles open up the potential for commutes without public transport, holidays without aeroplanes, and freedom without compromise.’

Right strategy for tomorrow

The coronavirus crisis has taken so much. It has taken lives and it has taken livelihoods. But it did provide one thing; time. As automotive production paused, distribution dried up and sales stopped, Alain Duez and Wim Buzzi used their time in lockdown to found a new company; let it fleet.

Drawing on their combined 45 years’ worth of experience in the automotive industry, the pair built the company on the pillars of people, procurement and process. Driven by a desire to approach vehicle supply from a customer perspective, let it fleet aims to create customised support that addresses every element of fleet management. This covers a wide gambit from policy assessment, to contract management and recruitment support.

As Duez and Buzzi established their new venture amid the pandemic, others in the automotive and fleet industry also had time to reflect. ‘Coronavirus right now has meant that a lot of companies have time,’ explained Buzzi. ‘They had frozen their car orders or extended their contracts because nobody is driving. And it gave them time to look at things.’

COVID-19 has meant the restructuring of fleet strategies. At present, liquidity remains at the top of the agenda while leasing costs mount. New-car sales have plummeted while lead times increase and manufacturers wrestle with their supply chains. Looking down the road, the company car faces a new world with the likes of more home-based working and the tightening of purse strings.

‘So, the way we will use a car will be totally different in the next few months, maybe even in the next few years. There are a lot of things that will be changing around,’ Duez said. ‘So, I think that we need to anticipate as much as possible for clients, to put in place the right strategy for tomorrow,’ he added.

COVID-19 has acted as a sudden catalyst for change when it comes to fleets. How vehicles are sourced, managed and operated. But the immediacy of the pandemic’s impact has acted as a trojan horse for a change that looks to tectonic. The age of electromobility has arrived, and the automotive industry is plugging in.

Video: Incentives improve September registrations in Germany and Italy

Autovista Group Daily Brief editor Phil Curry guides you through the September registration figures of Germany, Italy, Spain, France and the UK, as the industry continues to see mixed results following the relaxation of coronavirus (COVID-19) lockdowns.

To get a notification for the second part of our ‘Keeping up with autonomous cars’ episode, subscribe to the Autovista Group Daily Brief YouTube channel. There you will also find videos on a range of subjects including incentive schemes, safety systems, electrification and event reviews.

Podcast: Stalling sales and Brexit woes

In its latest podcast, the Autovista Group Daily Brief team discusses Europe’s fluctuating registrations, developments in EV battery manufacturing and more complications arising from Brexit…

https://soundcloud.com/autovistagroup/stalling-sales-and-brexit-woes

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify, Google Podcasts and search for Autovista Group Podcast on Amazon Music.

Podcast: How design plays a part in car residuals

Zeitgeist, Bauhaus, cartoonesque Fiat 500, impish Mini… The quest to develop the perfect vehicle design, which captures the essence of a brand, sets the vehicle apart and lets it appear fresh and up to date for several years, is a major challenge for all design teams. There have been expensive mistakes and some overwhelming success stories.

Autovista Group’s Chief Economist Christof Engelskirchen talks with Sam Livingstone, director at Car Design Research, about the role of design in the success of a newly launched vehicle, how little things can add a lot of character and the impact design can have on residual values. Sam shares several precise insights that you really should not miss…

https://soundcloud.com/autovistagroup/the-quest-for-perfection-in-vehicle-design

You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify, Google Podcasts and search for Autovista Group Podcast on Amazon Music.

Japanese carmakers look for UK government compensation on no-deal Brexit

With just over 12 weeks until the UK’s transition period with the European Union (EU) ends, and no trade deal yet agreed, carmakers with British-based plants are starting to worry about the possibility of tariffs on their imported and exported parts and vehicles. In particular, Japanese manufacturers Toyota and Nissan are demanding that the UK government cover any additional tariffs should a free-trade agreement with the EU fail to materialise, according to Nikkei.

Without a deal, a 10% tariff would be added to any parts imported and exported to and from the UK. With thousands of parts crossing the border as carmakers rely on ‘just in time’ deliveries, plus a high number of vehicles exported from British plants to European markets, the imposition of tariffs would dramatically impact the profits of those building automotive-related products in the country.

According to the UK Society of Motor Manufacturers and Traders (SMMT), around 1.3 million passenger cars were built in the UK during 2019, 1.05 million of which were exported, with 55% of these going to the EU. In addition, 88.6% of the 2.3 million passenger cars sold in the UK during 2019 were imported, with 78.1% of these coming from the EU.

In 2018, the SMMT claimed that import tariffs would push up the cost of UK-built cars sold in the EU by an average £2,700 (€3,000) and that of light commercial vehicles by £2,000, impacting demand, profitability and jobs. UK buyers of EU cars or vans would also face additional costs – an average of £1,500 per car, £1,700 per van – if manufacturers or dealers were unable to absorb the costs.

Less competitive

Nikkei reports that Nissan and Toyota’s profit margins are expected to be in a ‘narrow range of several percent.’ Therefore, it would be impossible for the manufacturers to absorb the cost of tariffs, and would likely have to increase prices of vehicles as a result. Should this happen, the carmakers would become less competitive in the EU market, making it difficult to continue doing business in the UK. Nikkei also reports that Nissan and Toyota executives acknowledge they are demanding that the UK cover an increase in tariffs.

Volkswagen has warned that it would be unable to absorb any tariffs placed on vehicle imports. The carmaker has no manufacturing presence in the UK. As the country’s second-largest brand by market share (according to SMMT figures), it is possible the company will look to stockpile vehicles in the country before the end of the transition period.

No guarantees

The Japanese carmakers may be unable to avoid tariffs, even if a trade deal is struck, as the EU is refusing to mark Japanese and Turkish-built car parts as ‘British-made’. This will alter the balance of components in a vehicle towards the ‘non-UK’ threshold that would impose tariffs on exports from the country to the EU, even if a free-trade agreement is reached.

Manufacturers with plants based in the UK will need to prove that exported goods are actually British-made, with a specified threshold of British parts, expected to be around 50%. Under the terms of any anticipated deal with the EU, components from countries in the bloc will count as British, a move known as ‘cumulation’.

This move could see Toyota and Nissan look to pull some production back to Japan, as has already occurred with the Nissan X-Trail. The fact that the UK has negotiated a free-trade agreement with Japan would make this process easier, as vehicles can then be imported to the country tariff-free.

UK Prime Minister Boris Johnson has said that going into next year ‘without a deal’ is acceptable if the UK and the EU cannot agree on one by the time of an EU summit on 15 October.

‘We remain committed to working with the automotive industry to try to ensure an outcome that reflects business interests across the UK,’ a government spokesperson told Nikkei. ‘A negotiated outcome remains our clear preference. We have put forward our proposals and are working hard to reach a deal with the EU. Our aim is a zero tariff, zero quota-free trade agreement, as avoiding tariffs is beneficial to both sides.’

Coming Soon: The Autovista Group survey on Brexit exploring your views on its impact on trade and business. Sign up to the Autovista Group Daily Brief for notifications.

German new-car registrations rise by 8.4% in September

New-car registrations increased in Germany by 8.4% last month, compared to September 2019. A total of 265,227 passenger vehicles were registered according to the latest figures published by the automotive authority Kraftfahrt-Bundesamt (KBA).

This marks the first month of growth for Germany this year. So far, the country has recorded double-declines almost every month in 2020, reaching of its biggest decline of minus 60% in April as the coronavirus (COVID-19) pandemic froze the automotive market.

New-car registrations, Germany, year-on-year percentage change, January to September 2020

Pkw-Neuzulassungen, Deutschland, Veränderung gegenüber dem Vorjahr in Prozent, Januar bis September 2020

Source: KBA

Powered by electric incentives

In some cases, alternative drivetrains underwent three-digit increases compared to the same month last year, no doubt buoyed by incentives. From 1 July, Germany increased its incentives for BEVs costing up to €40,000. The one-off payment rose from €6,000 to €9,000 and for models costing between €40,000 and €65,000, the incentive is now €7,500.

A total of 21,188 battery-electric vehicles (BEVs) were registered, up 260.3% compared to September 2019, capturing a market share of 8%. With 20.4% of the market, 54,036 hybrids were registered, up 185.2%, including 20,127 plug-ins (PHEVs), with a share of 7.6%, up 463.5%. LPG experienced an increase of 176.1% with 809 vehicles and a 0.3% market share. A total of 606 natural-gas vehicles was registered, up 17.9% with a share of 0.2%. 

Meanwhile, not benefitting from any incentives, cars powered with internal combustion engines (ICE) saw double-digit drops. Petrol fell by 17.6%, with 120,645 new cars registered and 45.5% of the market. A total of 67,901 new cars were powered by diesel, decreasing 6.4%, and a 25.6% market share. The average CO2 emissions fell by 13.4% in September at 134.3g/km.

With a share of 21.2%, most of the new vehicles were allocated to the SUV segment, up 9.7%. After an increase of 5.7 %, the compact class achieved a share of 21%. Small cars held a share of 16.8%, up 28.9%. However, not all segments faired so well. Mini vans fell by 46.8% to a 1.3% market share, sports cars to 1.0%, down 12.1%, and minis down 2.8% to 6.0%.

Brand performance

Audi recorded a double-digit increase in new registrations at 42.2%. Other German brands like Mini (4.7%), BMW and Mercedes (1.9% each) and VW (1.6%), showed single-digit increases. Meanwhile, Smart suffered one of the worst declines in registrations at -41.2%, followed by Opel (-27.6%), Porsche (-19.7%) and Ford (-0.8%). The VW brand claimed the largest share of new registrations at 15.2%.

As for imported brands, Tesla (82.7%), Seat (71.1%), Subaru (70.4%), Alfa Romeo (59.5%) and Renault (58.4%) all experienced increases of more than 50%. In contrast, DS (-41.5%), Ssangyong (-29.0%) and Mazda (-24.7%) all saw double-digit declines. Recording a 29.6% increase in registrations, Skoda claimed 6.8% of the market share.

New-car registrations fluctuate across Europe in September

Automotive associations in France and Spain have reported declines in their September registrations, while Italy has recorded its first increase of 2020, largely thanks to government-backed incentives finally boosting registration figures. Autovista Group Daily Brief editor Phil Curry assesses the results.

Following the lifting of coronavirus (COVID-19) related lockdowns, the automotive industry in some of Europe’s biggest markets has shown signs of recovery. However, as the year goes on, pent-up demand and incentive schemes are making way for a drop in consumer spending due to economic woes, while a second wave could also impact sales.

New-car registrations, France, Italy and Spain, year-on-year percentage change, September and year-to-date 2020

Pkw-Neuzulassungen, Frankreich, Italien und Spanien, Veränderung gegenüber dem Vorjahr in Prozent, September und seit Jahresbeginn 2020

Source: CCFA, ANFAC, ANFIA

New-car registrations in France fell 3% during September, according to the latest data released by the country’s automotive authority, the CCFA. Taking into account the number of working days in September 2020 compared to the same month last year (22 days compared to 21), this decline increases to 7.4%

Despite positive increases in June and July, thanks to a comprehensive incentive scheme, the removal of financial bonuses, following the cap in the budget being reached, have seen sales drop in the last two months.

Although a 3% decline is an improvement over August results, the market is still 28.9% down year-to-date. Over nine months, registrations stood at 1,166,699 units. The CCFA is forecasting the market as declining by 25-30% over the whole of 2020, amounting to the lowest number of registrations in 15 years.

Spain too logged a decline in registrations, with the market down 13.5% in September, according to the latest data from ANFAC. This is a decrease from August, despite the introduction of an incentive scheme in the country. Just 81,746 units were registered in the month.

Spain was one of the worst-hit markets in Europe, and the country’s government has recently introduced a number of local lockdowns, including the city of Madrid, as COVID-19 cases start to increase again.

While this move may not have impacted heavily on September figures, it highlights the changing situation in Europe, and how the automotive industry may struggle for the rest of the year. The Spanish market is down 38.3% year-to-date, according to the latest figures, with 595,435 registrations.

‘The drop in registrations worsened again in September compared to August,’ explained Noemi Navas, communications director of ANFAC. ‘Sales continue to fall in all channels, and this has a serious impact on employment, industry (because one in four cars manufactured in Spain stays in the country) and society as a whole. Without forgetting, due to its impact, that the renovation of the parc is slowed down and with it, the necessary reduction of CO2 emissions that we have to undertake. The RENOVE Plan [Spain’s incentive scheme] still has sufficient funds to boost sales for the last quarter, and we hope that the evolution of the virus will not slow down the market even more.’

Positive aspects

Italy offered an exception to the trend currently being seen in Europe, posting an increase in registrations of 9.5% in September, according to Italian industry association ANFIA. This is likely due to the country’s incentive scheme, which began in August. While sales in that month declined, delivery times would likely have pushed registrations back into September, boosting figures.

The country was the first to go into lockdown, doing so in March of this year. Since these measures were lifted, the Italian automotive market has shown a slow but steady increase in registrations, leading to the increase over the same month last year. This is in contrast to other markets, which have shown rapid increases followed by further declines.

‘The incentives introduced have contributed to this result,’ said Paolo Scudieri, chairman of ANFIA. ‘Funding for the 91-110g/km CO2 vehicle band was quickly exhausted, while those available for the 61-90g/km CO2 bracket will soon be depleted.’

Year-to-date figures show the Italian market is still down 34.2%, with 966,017 passenger cars registered.

Incentive burnout

The results show a mixed impact of incentive results. In France, the scheme was well received and depleted quickly, leaving the market at the mercy of a drop in consumer spending.

New-car registrations, France, Italy and Spain, year-on-year percentage change, January to September 2020

Pkw-Neuzulassungen, Frankreich, Italien und Spanien, Veränderung gegenüber dem Vorjahr in Prozent, Januar bis September 2020

Source: CCFA, ANFIA, ANFAC

However, in Spain, the RENOVE scheme seems to have passed many buyers by, with funding still available, but a minimal impact on sales. The market saw a 1.1% increase in July, the first month of the MOVES II and RENOVE scheme introduction, but since then has posted declines of 10.1% (August) and now 13.5%. With funding still available, it is clear that consumer demand is the problem in the country. With the implementation of local measures to deal with a second-wave of COVID-19 infections, a further complication to recovery is being added.

‘In September there was a market slowdown,’ said Raúl Morales, communications director of Faconauto. ‘The evolution is not good, but we are still at a registration volume that is better than expected thanks largely to the effect of the RENOVE.

‘Undoubtedly, the worsening of the health situation and a new decline in confidence is already weighing on consumers, who view not only the present but also the future with suspicion. This slowdown was the fear we had, and that leaves us facing a last quarter of the year marked by uncertainty.’

Japanese and Turkish car parts may not count as ‘local’ in Brexit blow

In a new blow for UK-based car manufacturers, the European Union (EU) looks unlikely to sanction some third-party country vehicle parts as ‘British-made’, leaving the door open to tariffs on exports even if a Brexit deal is reached.

According to a letter sent to the automotive industry in the UK, and seen by the BBC, chief negotiator Lord Frost says one of their key priorities – that parts and components from Japan and Turkey count as British in any deal – has been rejected by the European Commission. Therefore the UK ‘obviously cannot insist on it’ according to Frost.

A separate draft legal text also asks the EU to treat battery-electric vehicles (BEVs) manufactured in the UK favourably, especially as many of the components within will not be supplied by UK-based businesses.

Cumulation

Manufacturers with plants based in the UK will need to prove that exported goods are actually British-made, with a specified threshold of British parts, expected to be around 50%. Under the terms of any anticipated deal with the EU, components from countries in the bloc will count as British, a move known as ‘cumulation’.

However, car parts imported to the UK from Japan and Turkey are not treated as British, and therefore these will count against locally sourced and European components. This means that even if a trade deal is put in place, some vehicles could end up attracting tariffs when exported.

Brexit negotiators have tried to get the cumulation agreement extended for Japanese and Turkish components, with both markets currently supplying European factories under trade agreements, but with little success.

According to the BBC, the letter says: ‘I am sorry to say that so far they [EU negotiators] have neither been willing to discuss these nor share any proposed text with us.’

It is believed that discussions over the situation have stalled due to negotiators attempting to clear an impasse around fishing rights and subsidy powers.

Speaking to the BBC, Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: ‘Given its importance to the economy and livelihoods and the damaging consequences of tariffs we need the sector prioritised in negotiations, not traded off against other industries.’

Electric issues

One big issue around the subject of cumulation is the manufacturing of BEVs in the UK. Currently, a majority of battery components are sourced and assembled outside of the EU, and therefore battery cells would significantly count against British and European parts.

The original Brexit deal negotiated by former prime minister Theresa May contained a route to minimise checks on what are known as ‘rules of origin’. That option was removed as part of the revision to the withdrawal agreement a year ago. But Lord Frost pointed out that the UK and EU27 car industries have jointly asked for such arrangements, including special consideration for electric vehicle exports.

Bad timing

The news will come as a blow to an automotive industry that is already mired in Brexit confusion, with the current transition period between the UK and the EU coming to an end on 31 December 2020. Without a trade deal in place, parts and vehicles will be subject to tariffs when imported and exported, potentially up to 10%. Should cumulation not include Turkish and Japanese components, a deal would be irrelevant until such a time that supply-chains can be amended – a move that would likely increase costs anyway.

In an additional blow, the UK recently agreed a free-trade deal with Japan, the first such deal following Brexit taking place at the end of January 2020. At the time, the automotive industry lauded the deal, however, if parts count against locally-sourced components, it nullifies any potential benefit from tariff-free imports.

There may also be a likelihood that the situation could see car making pulled out of the UK. Japanese carmaker Nissan has often speculated about the future of its Sunderland plant should a Brexit deal not materialise. The factory counts the Leaf BEV model amongst its output, and there is potential for the carmaker to move production elsewhere should components in the battery count against locally-sourced parts, meaning tariffs on exports. Japan also has a free-trade agreement with the EU, so by pulling production elsewhere, it could concentrate on shipping its leading BEV model to European markets tariff-free.