Articles in Category: Automotive

Apparently, when the government is a shareholder in your business. Questions are being raised as to why the French government has gone soft on Renault‘s emissions probe, omitting crucial details a Financial Times article states.

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The government report, published last month, concluded that some Renault models emitted nitrogen oxide at nine to 11 times higher than European Union limits, the article states. But three of the 17 members of the commission said that the published report did not include the full details of their findings, including the fact that a NOx “trap” in the Renault Captur went into overdrive when the sport-utility vehicle was prepared for emissions testing but not during normal driving conditions.

It was similar software that induced changes in behavior that tipped off U.S. authorities investigating Volkswagen “defeat devices” last year.

Apparently, Renault was not the only manufacturer to fare badly in the probe, which covered some 86 vehicles from a dozen automakers; yet the report did not find any cases of intentional attempts to cheat emissions, admitting that the government tries to give a positive brand image to firms it was invested in and hoped to push manufacturers in the right direction rather than seek prosecution.

One wonders what their attitude would be if it were Toyota or General Motors found to be posting erroneous data? The same article said the Fiat 500x registered NOx emissions almost 17 times European Union limits.

In Renault’s case, the Captur’s NOx trap purged five times in rapid succession at the end of scripted test preparations, allowing the car to produce much lower emissions than on the road the article explained, suggesting the car’s software could have detected that a test was being performed.

“Everything in a car is controlled by software now,” one commission member said, many of whom asked to remain anonymous. “We can’t be sure that Renault’s software detected the test like Volkswagen’s, but it seems that Renault has optimized the NOx filter to target this very specific set of conditions.”

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It would seem it may well have benefited Renault to have both the judge and jury in the dock with you, but does it benefit the wider community the government was elected to represent? This story, no doubt, has further to run.

The decision to set up a modern, state-of-the-art auto shredding/recycling plant in India could not have come at a more opportune time. Many Indian provinces, led by New Delhi, are starting to come around to the view that older vehicles, especially those running on diesel, need to be banned.

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Older cars pollute more than the ones that adhere to the India’s latest “Bharat Stage” (pollution control) norms. The Mahindra/MSTC joint-venture is also planned to be able to scrap ships and machines.

India’s National Green Tribunal (NGT) recently asked the New Delhi local government to deregister diesel cars 10 years or older. That’s a large chunk of the approx. 8.5 million cars registered in New Delhi, which would end up being either sold outside New Delhi or totally scrapped.

The number of cars sold in India was expected to grow from 2.2 million vehicles back in 2010 to 10.6 million units by 2020. At present, about 28 million vehicles are said to be over 15 years old and ready for the scrap heap.

India’s Cash for Clunkers

The Indian Government was actively contemplating better policies in the organized and mandatory vehicle recycling business when this project came along. India had the potential to become one of largest car recycling regions, according to SteelMint Events, and the rise of recycling-friendly legislation was one of the topics to be discussed at the Scrap Recycling – Emerging Markets conference to be held in September in New Delhi.

The vehicle scrapping policy is formalized in legislation as the Voluntary Vehicle Fleet Modernization Plan (V-VMP). The bill is currently in its draft stage but, when passed, it would apply to all vehicles, regardless of engine type, bought on or before March 31, 2005. The Ministry of Road Transport and Highways (MoRTH) submitted the draft policy to the Ministry of Finance for approval. The government also recently proposed offering consumers an incentive of $375 for any passenger car handed in for scrapping to boost recycling rates.

When the policy is implemented, analysts predict about 28 million older, polluting vehicles will be taken off the roads. So, while automakers moan the NGT’s order on diesel cars in the short term, in the long-term, companies such as Maruti Suzuki India Ltd. are very happy that the policy means sales of more cars.

Maruti Suzuki India Ltd. is India’s largest car maker. It believes the local car market will reach 5 million units in annual sales by 2020, making the country the fourth-largest market in the world, if the V-VMP is passed.

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The automaker’s forecast is in line with the central government’s Auto Mission Plan II that forecasts the passenger vehicle (PV) market to more than triple to 9.4 million units by 2026 from 2.8 million now if the economy grows at an average rate of 5.8% a year. If the economy grows at an average yearly pace of 7.5%, the size of the passenger vehicle market is forecast to rise to 13.4 million units, making it the world’s second-largest after China.

The boost that the Automotive MMI recently felt from platinum and palladium continues as automotive catalyst prices continued to post strong increases, bolstering our sub-index to a 3% increase.

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Yet, end user automotive sales are starting to show signs of plateauing after years of increases. Sales for the top three automakers selling in the U.S. increased, but slipped off their record pace in July as the strong growth rate that defined the past six years slowed to a crawl.

Automotive_Chart_Aug-2016_FNL

Declines at General Motors Co., Ford Motor Co. and Toyota Motor Corp. overshadowed increases by smaller rivals, including Nissan Motor Co. and Honda Motor Co. Sales were on pace to set another record this year but that’s in serious doubt after this report.

Analysts say sales incentives and fleet sales need to play a bigger role in the market to get back on that record pace. Overall sales increased modestly in July, rising 0.7% to 1.52 million, according to research firm Autodata Corp., translating to a seasonally adjusted annualized selling pace of 17.9 million.

While higher than the prior July, the adjusted sales pace has leveled off compared with the sizable year-over-year increases from 2015’s final six months, which drove the U.S. light-vehicle market last year to its first record in a decade and a half.

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Meanwhile, prices of automotive metals are still being buoyed by the bull run in precious metals. Catalysts are no exception and platinum and palladium prices posted strong increases while offsetting losses by other automotive metals, such as hot-dipped galvanized steel. With no sign of an increase in interest rates from the Federal Reserve anytime soon, expect the calalyst metals — and gold and silver — to continue increasing.

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A major merger in green power and automobile manufacturing saw Elon Musk’s Tesla Motors buy his other green company, panel manufacturer SolarCity. Japanese steelmakers increased output for the first time since 2014.

Tesla to Buy SolarCity

Tesla Motors said it will buy solar panel installer SolarCity for $2.6 billion in shares to form a one-stop clean energy shop.

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The deal is a major part of Tesla Chief Executive Elon Musk’s master plan “part deux” that calls for the company to offer consumers a single source of hardware to power a low-carbon lifestyle. Musk is also a major shareholder in SolarCity. The combined entity will offer consumers solar panels, home battery storage systems and electric cars under a single brand.

The actual purchase price in the all-stock deal is $25.83 a share for Tesla to buy SolarCity’s stock. SolarCity actually closed at $26/share on Friday.

Japan’s Top Steelmakers Boost Output

Japanese steelmakers boosted output over April to June, with top producer Nippon Steel & Sumitomo Metal posting its first such increase since 2014 on improved prices, but their annual profits are expected to be eroded as a firm yen hurts key customers.

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Higher Japanese output, at a time when the world’s biggest producer China is also churning out record volumes, could dent a recovery in Shanghai steel futures that have risen 40%t in 2016 after plunging 70% over the past six years on a global supply glut.

The Steel Market Development Institute (SMDI), a business unit of the American Iron and Steel Institute (AISI), today released statements about the release of the draft Technical Assessment Report (TAR) by the U.S. Environmental Protection Agency, Department of Transportation and California’s Air Resources Board.

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The report is the first step in the mid-term evaluation of fuel economy and greenhouse gas emissions regulations and it examines a wide range of technology factors relevant to the 2022-2025 automotive model year standards.

Hybrid Car

Can a 54.5-miles-per-gallon average for all cars on the road be reached by 2025? Source: Adobe Stock/6th Gear.

The main question the report was created to address is should federal authorities adjust miles-per-gallon calculations in order to meet greenhouse gas reduction targets for the 2022-2025 model years. The stated goal by the Obama administration is to cut carbon emissions radically with rules that tighten to a nominal 54.5 mile-per-gallon average by 2025. Read more

This week, we saw nickel prices reach an eight-month high as metals suddenly became a sexy pick for investors again. Gold hit a two-year high as worried stockholders abandoned markets and looked for safe havens after the tempest created by Brexit.

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This week was more about markets shaking out from the initial shock of the U.K. actually voting to leave the European Union. U.K. politicians tried to stress stability, assuring India’s Tata Steel that the nation is still offering a lucrative equity stake and pension relief deal to keep the company’s sprawling Port Talbot, South Wales, steelworks open. Of course, Tata’s not buying it. At least not yet, as the whole steel deal making landscape has shifted in Europe. Could be that Tata just realized it has all of the leverage right now and U.K. politicians will have to sweeten the pot to keep Port Talbot’s doors open.

Are gold prices really going to keep rising? Source: Adobe Stock/Nikonomad.

Gold is up as investors look to shield their money from volatile stock markets.  Source: Adobe Stock/Nikonomad.

But things aren’t all unicorns and rainbows back in the E.U., either. Regulators in Germany are investigating the novel idea of a buyers’ price fixing cartel. You heard that right. Not a conspiracy of sellers to fix prices — like when Apple and several publishers colluded to set e-book prices and we all got Amazon credits for it — but one by German automakers and original equipment manufacturers such as BMW, Volkswagen, Robert Bosch, ZF Friedrichshafen and Daimler to somehow fix prices of the steel that they buy to create the cars they sell.

The fact that the buyers don’t have the power to set prices like sellers do did not deter the Federal Cartel Office, also known as the Bundeskartellamt, an independent “higher federal authority” established to protect competition in Germany.

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MetalMiner Executive Editor and Co-Founder Lisa Reisman pointed out that it’s highly unlikely that all six companies decided that they would collude to extract steel price concessions from Germany’s largest steelmaker ThyssenKrupp AG, leaving ThyssenKrupp without a home for all of that hot-dipped galvanized steel it’s trying to sell to automakers. In that scenario, where would Germany’s automakers go for all of their steel? China? The U.S.? Good luck with your investigation, Bundeskartellamt.

U.S. Auto sales through June were up 1.5% to 8.65 million, eclipsing last year’s record for the first half of the year of 8.5 million, according Autodata Corp.

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Although sales are back on pace to break last year’s record, there are still signs that the auto sector’s momentum might finally be flagging. Sales are not increasing over the previous year’s levels by as much as they were at this time in 2015.

Automotive_Chart_July-2016_FNL

After six straight years of growth and record sales of 17.5 million last year, U.S. sales are beginning to plateau. In the first six months of last year, for example, sales were up 4%, or more than double the pace of this year. Low gas prices, low interest rates, enticing new vehicles and strong consumer confidence are keeping sales high.

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Our Automotive MMI showed a 3% increase based mostly on increasing demand from automakers. General Motors Co. said its sales dropped 2% in June to 255,210, but Ford Motor Co.’s sales rose 6% to 240,109. Sales of its F-Series pickup truck, the nation’s best-selling vehicle, jumped 29% to nearly 71,000 vehicles, or more than one every minute. Fiat Chrysler said its June sales rose 7% to 197,073.

US Steel Separated From Global Prices

Backed by anti-dumping and countervailing duties, U.S. steel prices continue to enjoy price increases not available elsewhere in the global market. It will be interesting to see if automakers can continue to offer the level of discounts that consumers have grown accustomed as their own supply chain prices go up.

Automakers are getting a sales boost, however, from oil prices which — while they have gone up this year — are still hovering around $50 a barrel. Consumers are still being incentivized to buy new vehicles by gas prices around $2.00 a gallon in much of the nation.

Chinese Sales Soaring, Too

Overseas, growth in car sales in China reached a five-month high in May. Automakers delivered a total of 1.79 million passenger vehicles — sedans, sport-utility vehicles and minivans — to dealers in the world’s largest auto market last month, up 11% from a year earlier, the government-backed China Association of Automobile Manufacturers said on Monday.

Automotive metals are still in the sweet spot they’ve enjoyed for much of the year with low oil prices, strong demand for new vehicles and lighter, stronger metals available to create efficient, desirable cars, trucks and SUVs. Investors have bullishly moved into precious metals due to economic instability in world markets recently but those price increases for catalysts such as platinum and palladium have not yet been felt by automakers. While the auto market is still not growing as fast as it did last year, things could be far, far worse.

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Volkswagen has settled the U.S. portion of its emissions scandal litigation and the Securities and Exchange Commission has written new rules for disclosure of donations by oil, gas and mining companies.

VW Settles U.S. Lawsuts for Nearly $15 Billion

Volkswagen AG will spend more than $15 billion to settle consumer lawsuits and government allegations that it cheated on emissions tests in what lawyers are calling the largest auto-related class-action settlement in U.S. history.

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Under the settlement revealed Tuesday by a U.S. District Court in San Francisco, VW will pay just over $10 billion to either buy back or repair about 475,000 vehicles with cheating 2-liter diesel engines. The company also will compensate owners with payments of $5,100 to $10,000, depending on the age of their vehicles.

SEC Passes New Oil/Gas, Mining Disclosure Rule

The Securities and Exchange Commission on Monday approved a rule requiring oil, gas and mining companies to disclose payments made to foreign governments, capping a process stalled in the courts for years.The rule requires companies to state publicly starting in 2018 how much they pay governments in taxes, royalties and other types of fees for exploration, extraction and other activities.

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An earlier version of the rule was thrown out for being overly broad by a federal judge and the American Petroleum Institute said it is reviewing the new rule and would consider legal action if necessary.

For decades, the hospitality, retail, food and construction industries have taken particular advantage of the European Union’s rules allowing freedom of movement, meaning Europeans can work legally in any of the 28 countries that are members, even if they are unskilled laborers. Non-Europeans must obtain work visas under immigration rules that require graduate-level skills and a minimum annual salary of 20,800 pounds.

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Now that the U.K. has voted to leave the E.U., though, that could all change. When the U.K. does finally untangle itself from its E.U. member-state neighbors — a process that many are promising will be complete within two years — it’s likely to start requiring European citizens to clear the same visa hurdles as other foreign workers. Three-quarters of the 2.2 million people from other E.U. countries currently working in Britain wouldn’t make the cut, according to the Migration Observatory at Oxford University.

Migrants Take the Blame for UK Unemployment

The Leave campaign convinced a slim majority of U.K. citizens, 52%, that it has been too easy for “migrant workers” from Europe to waltz into the country and take British jobs.

Who would benefit from a Brexit? Not the EU. Source: Adobe Stock/Stephen Finn.

Now that the U.K. is officially leaving the European Union, what will happen to non-citizens with jobs on the island?  Source: Adobe Stock/Stephen Finn.

“We have absolutely no power to control the numbers who are coming with no job offers and no qualifications from the 28 E.U. countries,” former London Mayor Boris Johnson said in a speech before the vote. Read more

Almost no one seems to think this is a good idea, but the British people have gone and Brexited the European Union anyway.

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Britain has voted by a narrow majority 51.8/48.2 to leave the EU. What happens now is anyone’s guess. We are in uncharted territory, even those leading the charge for a Leave vote seem somewhat perplexed by the outcome and have been busy backtracking on promises and commitments made during the campaign about what they could deliver.

New Leadership

David Cameron, Britain’s prime minister, has announced he will step down before the conference season in October to make way for a new leader of the party’s choosing. The automatic assumption is this will be Boris Johnson with Michael Gove as Chancellor, but the party is deeply divided and a lot could happen between now and the Fall.

Screen Shot 2016-06-24 at 10.42.36

Source: BBC

In the meantime, the markets have taken the decision badly. The FTSE 250 — which is considered a close barometer of the UK economy — fell by 12.3% before paring losses back to 7.1%, while the pound tumbled to $1.30, before recovering slightly to $1.36 against the dollar. Read more