Berlin Balks

Thrugelmir

Wonder what the outcome was?

The German government has called an emergency meeting today in Berlin with the top brass of the major car manufacturers. They will be hoping to avoid the banning of diesel cars in city centres. This is terribly important as diesel engines are at the core of their so-called ‘climate protection’ policy plus they trail well behind Asian vehicles in terms of electric cars. In the US yesterday data for July vehicle sales was grim all round. A total 16.73 million cars shifted on an annualised basis, well down from April’s 18.4 million peak. All brands saw shrinking volumes (except Toyota with a 3.6 per cent rise), BMW and GM hardest hit with an almost a 15 per cent decline.

A_Medium_Size_Jock

Thrugelmir wrote: »

Wonder what the outcome was?

If it's the following then not a heck of a lot - a "fudge", basically:

German carmakers agree to update software in 5.3 million cars - minister

http://uk.reuters.com/article/uk-germany-emissions-idUKKBN1AH5FY?il=0

I think the trade-in offer for cars over 10 years old will be particularly popular - anything to increase those sales; future large fines loom after all.

Mind you, headlines like this won't have exactly encouraged the action that's really needed:

Combustion engine ban puts 600,000 German jobs at risk: Ifo

http://uk.reuters.com/article/us-germany-emissions-idUKKBN1A319I

Conrad

And sorry to mention Brexit but the last thing the likes of BMW need is to also harm their ability to sell into the UK with the imposition of friction and tariffs, just never gonna happen.


Imagine the knock-on effects on German treasury if German sales to UK decline ON TOP OF having to make up for lost UK club fee.

A_Medium_Size_Jock

ilovehouses wrote: »

Looks like a software update, a bit of a scrappage allowance and some cash put into improving European electrification infrastructure.

BMW are still heavily reliant on diesel engines for margin so they need to buy time. A talking head on Bloomberg reckoned they were on track to make 100,000 electric vehicles next year. Meanwhile Tesla, in the land of the internal combustion engine, will hit a 5,000 vehicle week anytime soon. BMW appear to be behind the curve.

It's not just BMW who are behind the curve.
An interesting read here, "Asleep at the wheel? Germany frets about economic car crash".

Despite booming car exports and high employment in the industry, there is a sense of unease: "Is the car finished?" asked the weekly Die Zeit. "Fear in car country," said Stern magazine.

Germany has fallen behind in developing the cells that are at the heart of electric vehicles, with most imported from Asia, and has also been slow to build charging stations, abandoning a target to have 1 million electric cars on the roads by 2020.

http://uk.reuters.com/article/us-germany-election-economy-idUKKBN1AC1YC

Seabee42

The problem with widescale electric cars is the batteries currently cost $30k this is quite a cost for the average car. Not feeling overly sympathetic though especially where emission tests have been fiddled.

spadoosh

Seabee42 wrote: »

The problem with widescale electric cars is the batteries currently cost $30k this is quite a cost for the average car. Not feeling overly sympathetic though especially where emission tests have been fiddled.

So tesla have built a rather modern looking car for less than $5k? The new model 3 costs $35,000 and has $30k batteries in it?

I think you might be refferring to tesla's more expensive model S. Speculation was that the batteries cost half the car ($70k car). Although tesla have repeatedly come out and said the cost of that specific battery is dropping all the time. Not to mention that after several years of use they are showing to be much better at retaining their charge than anticipated.

The nissan leaf costs ~£21k or ~£26k wihtout government incentives. Do they have $30,000 batteries in?

Seabee42

Aye the tesla, the leaf is only $5500 but its average range is a whole 80 miles!

A_Medium_Size_Jock

ilovehouses wrote: »

Electrified cars are going to drive a coach and horses through the current business model used by ICE cars. The cars have less moving parts, are simpler to assemble and will be produced to a model more akin to consumer electronics. i.e. in lower labour cost economies. The cost of entry to the market also falls so competition will increase.

There'll still be scope for UK/ European production but probably at the luxury end and for those with better marketing. Same as anything - you can get perfectly decent sound equipment from the East but some still like to buy English made Hi Fi kit.

It's still early days. One advantage of being behind the curve it it's a good vantage point to see what's not working. I think full electric per their planned new mini is the future. BMW should be focusing in that direction (i8, i3) rather than the plug-in hybrid route (iperformance) where they're active too. Fossil fuels for personal transportation isn't where its at - diesel and petrol cars will look like dinosaurs irrespective of whether you can knock out 20 miles on battery power.

IMO of course.

I think your logic has gone a little fuzzy (no offense intended) and as such my opinion differs a little from yours.

Your surmise of possibly cheaper productivity and hence cheaper product leading to countries (like the UK) being somehow relegated to the luxury end of the market does not relate what is happening with the car market in the UK and indeed in much of the world.
Unless you are going to completely redefine what "luxury" means?

If you take the UK market as an example, at the extreme budget end currently are the likes of Dacia, agreed?
Yet the top three annual sales of cars for the past year are as follows: first the Ford Fiesta; second the Ford Focus; and third the VW Golf.
The third-placed highest-selling of these, the Golf, sold more alone than all cars sold under the brand Dacia last year.

Would you describe any of those top three as being "luxury"?
In comparison to a Dacia perhaps so.
Do you seriously think that there will be such a change in buying habits that customers would buy cheaper but more-basic rather than buy the familiar branding and comfort/equipment levels which they are so used to?
Provided admittedly that those brands are still available in the newly-dawning era of an all-electric world - but it is not likely that all our common brands will disappear, is it?

I suppose you could compare it to the similar logic as to why people spend the larger part of a thousand pounds on the latest Apple or Samsung phone, rather than buying an unknown but far less expensive and more-basic Chinese phone.

Honda seem to agree with that type of sentiment with their Clarity:

And it claims there is a big market for people who are ready to acknowledge they don't need the full range (most of them being current electric car owners), but would like to get more room and better interiors for their money.

https://www.theregister.co.uk/2017/04/13/honda_electric_car_80_miles/

Perhaps in some ways at least the UK government recognise it too with the recently-announced funding to promote battery technology here, so whilst the current business model may indeed be redrawn I believe that so long as we are prepared there is no reason why motoring should not experience a revival rather than a decline towards niche markets.

There are signs that lessons from the decline of other areas of manufacture such as the consumer electronics mentioned earlier have been learned.

A_Medium_Size_Jock

ilovehouses wrote: »

I don't think Fiesta, Focus and Golf will disappear as brand names and they'll still be mid-market cars and won't be more basic - I just don't think they'll be made in Europe or the UK. There's no need - taking out the ICE deskills the assembly even further.

Whereas I think that these countries will do everything they can to retain manufacturing; like I said - they have learned from past experiences AND I don't take such a fatalistic view.

ilovehouses wrote: »

but all made in the East. I don't think UK and Europe will go that far in car making. Depends what value they can add through their branding.

And yet some are already choosing to manufacture outside the far east: http://nypost.com/2017/07/26/apple-manufacturer-to-create-3k-us-jobs-with-new-10b-factory/
As said before, Europe and the UK will continue large-scale manufacture; it knows it has to.

ilovehouses wrote: »

It's how globalisation should work. Let people who can make cars cheaply and efficiently do so and we'll divert attention to areas where we have an advantage. It's a win win - no point wasting resource knocking together cars when we can be at the forefront of, for example, battery technology. No point flogging a horse after it dies.

That's a straightforward and simple "no".
No country is prepared to let everything it needs be made elsewhere so that your own country becomes disadvantaged, in employment and hence in earnings and subsequently national growth especially.
This was a prime factor in Trump's election; the promise of returning jobs to America.

No horses need flogging; there simply are not areas available to replace the quantity of jobs which would be lost.
Simply being at the forefront of new technologies without implementing those technologies can never replace the lost workers with ones of similar monetary value, as lots of industries here in the UK have discovered; our nuclear industry being just one example from many.
http://uk.reuters.com/article/uk-britain-nuclear-smr-idUKKBN1AG1YO?il=0

kabayiri

Re: brand, I am sure I read once that Coca Cola reckoned it took 50 years to build a proper brand, and that Google did exactly the same in less than 10 years.

I am not sure the German car companies can rely on brand alone to maintain margin.

I am old enough to remember Kia cars being sheds on wheels. But then Kia pitched it's class leading 7 year warranty, and the others were playing catch up.

So...if Google or Apple introduced a distinctive take on the electric car, do you think the brand could jump across product markets?

kabayiri

ilovehouses wrote: »

Are you getting a commission from Kia? I purchased my last BMW at the same time a neighbour purchased a Kia Sorento. Fast forward 4 years and they're driving a decidedly old car with 40k on the clock and I'm driving something 'as new' with 150k on the clock. The only time I've not had to fanny about making warranty claims was once I started buying BMWs.
...

Hmm, if I am on commission then the cheques have been misdirected from Kia.

We have a couple of year old model 5 series here, so I can't really claim to be anti-BMW.

Over in Canada, the price differences make more of an impact, and it made sense to get a Kia SUV. This wasn't the first Korean SUV the family has owned, but it is much improved....still a work in progress though.