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ECG – The Association of European Vehicle Logistics Issue 12.10, 05th

–09th

March 2012

CONTENTS NEWS FROM BRUSSELS 2

EP TRAN Comm. discusses report on Digital Tachograph 2 Exchange of views on the TEN-T Guidelines in TRAN Comm. 2 EP discussions on Cohesion Fund, ERDF and on Common provisions on European Funds 3

AUTOMOTIVE INDUSTRY 4

GM-PSA could benefit from GEFCO footprint 4 Manufacturing: Hopes are pinned on flexible modularity 5 Gaz reaps the benefits of paying on time 5 Financing: Incentives to buy play a bigger role 6 Switch to hybrids and electric likely to be slow 7 PSA determined to keep French factory open after Fiat deal ends 8

EUROPE 9

Höegh Autoliners commences regular Sagunto service 9 Renault-Nissan may develop cars for Russian market 9

REST OF THE WORLD 9

Ford chief warns of car ‘global gridlock’ 9

PRESS RELEASES 10

ECG calls for new scrapping incentives as car sales stall 10 ACUMEN Automotive Logistics wins Chevrolet contract 11 CECRA and ECD express support for the views of the President of ACEA Sergio Marchionne at ACEA annual reception 11 Council adopts its first-reading position on single European railway area directive 12

ECG – The Association of European Vehicle Logistics No. 11/ 14-18 March 2012

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2

NEWS FROM BRUSSELS

EP TRAN Committee discusses report on Digital Tachograph (Source: TRAN Newsletter, 05

th March 2012) On 28

th February the European

Parliament’s Transport Committee (TRAN) discussed their draft report on the Digital Tachograph. The rapporteur – Romanian Member of the European Parliament (MEP), Silvia-Adriana Ţicău, presented in the first reading the rationale for the revision which is to make fraud more difficult, to better enforce social rules, and to reduce the administrative burden by making use of new technologies and by introducing a number of new regulatory measures. Ms. Ţicău explained that the standards and specifications in the current Regulation were limited to the description of the vehicle unit as a black box recording driver activity data. Due to the fact that the technical design of the downloading and interpretation tools was left to Member States, it had led to large disparities. These included the capacity and the efficiency of enforcement instruments as well as the tachograph's limited ability to support the application of social legislation with interpreted data. The rapporteur proposed to encourage the development of an application through the harmonised interface of the tachograph providing interpretation and guidance to drivers and to introduce type approval of the software used by control officers to interpret data stored by the tachograph. Other amendments of the draft report related to the definition of essential requirements for the construction, installation, use, check and control of the tachograph, the insertion of an article listing its functions, another on data to be recorded and provisions to ensure data protection. All these objectives can be achieved only if the Member States would commit themselves to improving the enforcement of the Regulation. Thus the introduction of a harmonised examination for control officers is essential, as well as a binding categorisation of very serious infringements against the tachograph Regulation and a step further in the harmonisation proposed by the Commission in relation to sanctions. The most controversial points seemed to be the rules regarding possible conflicts of interest between workshops and transport companies, the provision for exemptions, their ratio and the rationale for the merge of driving licences with driving cards. The Commission supported Ms Ţicău's amendments in relation to deadlines, use of delegated acts, improvement of enforcers' training, the insertion of a common definition of very serious infringements and exemptions based on a ratio of 100km. Next steps: April 2012 - Vote in TRAN Committee. May/June 2012 - vote in plenary.

Exchange of views on the TEN-T Guidelines in TRAN Comm. (Source: TRAN Newsletter, Dods Briefing, ECG, 28

th February - 05

th March 2012)

During the 2 days sessions of the TRAN committee an exchange of views on the TEN-T Guidelines also took place. The 2 co-rapporteurs, Greek MEP Koumoutsakos and German MEP Ertug, stated the fact that there was still no European transport network but only a patchwork of national networks. The rapporteurs highlighted the enormous investment needs and the challenges in times of the current economic and financial crisis. They pointed out that investments in transport infrastructure could help to overcome the crisis creating jobs and economic growth. The rapporteurs shared the Commission's view and approach on: 1) The dual layer approach with a comprehensive and a core network for each mode of transport -based on a methodology rather than on Member States' political priorities; 2) The stronger prioritisation of projects, focusing on key elements of the TEN-T (bottlenecks, cross-border sections and multi-modal nodes) and on the European added value; 3) The proposed better co-ordination of the different measures and funding instruments through enhancing the role of the European Co-ordinators and through the corridor approach for the core network; 4) Stricter conditionality provisions; 5) Deadlines for the completion of the comprehensive (2050) and core networks (2030). The 2

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rapporteurs requested more explanation of the proposed TEN-T methodology. This was also needed for the concept of Multimodal Corridors and their integration in the TEN-T guidelines and the Connecting Europe Facility (CEF). The rapporteurs expected the key debates to revolve around: a) The requirements for the various transport modes and the upgrades of existing infrastructure; b) Potential requests for modifications in the comprehensive and core network versus the question of how to maintain a coherent approach based on a correctly applied methodology; c) How to deal with the concept 'motorways of the seas'; d) The need for sufficient financial amounts dedicated to TEN-T. Finally, the rapporteurs pointed out the potentially difficult negotiations with the Council and highlighted the need for a coherent approach and a sound majority in the Parliament. On the same day, the TRAN committee was given a presentation of a draft study on the TEN-T financing instruments. These instruments are: the TEN-T Programme, the Connecting Europe Facility (CEF) proposal, the Cohesion Fund (CF) and the European Fund for Regional Development (ERDF). Furthermore, instruments managed by the EIB benefitting from EU funding or the EIB's own financial products as well as the role of public private partnerships (PPP) were addressed. It showed the current financial framework had reserved €52 billion for the TEN-T by the ERDF and other sources (excluding the contributions by the European Investment Bank (EIB) which were estimated at around €53 billion in the current financing period). The total investment in TEN-T under the current financial period had been €390 billion whereas €540 billion would be needed for the next financing period. A significant part of the TEN-T funds was still being used in the EU—15 although this was changing. Furthermore, member states’ coverage of the current €390 billion used was 3/4 whereas the remaining part was covered by “others”, such as investors. Concerning the upcoming financial period, there would be €21, 7 billion available under the CEF and €10 billion coming from the Cohesion Fund. Altogether, there would be almost €63 billion available. The EIB’s share of financing is not yet sure because it s demand-driven. Furthermore, innovative financing instruments such as Projects Bonds and PPPs were discussed, whereas the presentation continued with hypothetical user charges, such as charges in rail traffic, which can play a role in financing infrastructure and help to attract private investors. Nevertheless, user charges are not preferred by the cohesion funds and indirectly this favours road projects over rail. Innovative financial instruments and PPPs may help reducing the financial gap. The final version of the study will be revised to take account of the questions raised during the discussion.

EP discussions on Cohesion Fund, ERDF and on Common provisions on European Funds (Source: TRAN Committee, 05

th March 2012) The TRAN Committee furthermore

discussed the financial instruments concerning transport The German Green rapporteur MEP Michael Cramer discussed these three proposals together as their provisions were interlinked. He said he intended to put more focus on the eligibility conditions for the European funds, sustainability of transport projects and inclusion of tourism, which had been neglected in the initial proposal. In his view, in order to promote sustainable transport, the EU had to learn from mistakes made during the last and current programming periods by increasing the share of funds attributed to rail and urban transport at the expense of the road transport. According to the rapporteur, developing intermodal solutions such as metro, tramways and trains for European cities and filling the gaps in the trans-boarder "missing links" would be crucial to the new structural funds' success. Most Members agreed on the goals of making transport more sustainable, less polluting and more investor-friendly. There was also a wide consensus on the integrated approach to the three proposals, the "use it or lose it" principle as well as ex-ante conditionality and better control mechanisms. However, a clear division in views could be seen when discussing conditionality and priorities of

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spending. Some Members questioned the definition of European added value, described the idea of partnership contracts as vague and not sufficiently defined in order to ensure the equal footing between the regional and national authorities. They also feared the top-down management of €10 billion reserved for the Connecting Europe Facility within the Cohesion Fund would actually deprive less developed regions of their allocations and wished to see more safeguards for these regions.

AUTOMOTIVE INDUSTRY

GM-PSA could benefit from GEFCO footprint (Source: Automotive Logistics News 07

th – 13

th March 2012) The news that GM is

taking a 7% stake in PSA Peugeot-Citroën and will establish "a strategic, commercial co-operation" with PSA's logistics subsidiary means that both carmakers could potentially increase sales opportunities in markets beyond Europe. The new deal also offers GEFCO the opportunity to benefit from economies of scale critical to the carmakers just-in-time delivery priorities. A week earlier, GM and PSA released a joint statement that outlined plans for an alliance based on shared global vehicle platforms and components, as well as the creation of a global purchasing joint venture for the sourcing of those components and other goods and services. One of those services being logistics, the carmakers now stand to benefit from an increase in logistics services provided by GEFCO, which has a global logistics footprint in established European markets as well as a strong showing in the BRIC nations. They will also benefit from the efficiencies derived from a lower percentage of shipping cost as a proportion of the manufacturing process, including leveraged volumes. The companies have stated that they are jointly exploring areas for further cooperation, such as integrated logistics and transport, and to this end GM intends to establish a relationship with GEFCO for the provision of logistics services in Europe and Russia (regions where it already has business contracted with the provider). While the carmakers remain unwilling to comment more on the specific opportunities for increased efficiency through a shared logistics network, the benefit is that, with GEFCO's infrastructure and networks already formed, these can be exploited to GM/PSA advantage and implemented relatively quickly. According to Frost & Sullivan analysts Martyn Briggs and Pietro Boggia, this depends on the current relationships that GM/PSA have in these regions in terms of logistics, "but a first impression is that this could be a cost effective way of gaining access to these markets," they said. The integration of transport and logistics services is not without its challenges, including the usual cross-border issues, but the key challenge will be managing shipping cost compared to end market positioning. "As markets start to develop and grow, there becomes a trade-off between shipping costs and where it is more efficient to produce the vehicles in that particular region," said Briggs and Boggia. This could mean consolidation of production and logistics, certainly in Western Europe, to realise the economies of scale that are critical for just-in-time management. "In general there is overcapacity in the sector in Western Europe and firms are looking at ways to offset that, primarily through alliances. GEFCO could be well positioned to take advantage of this trend," said Frost & Sullivan's analysts. While GEFCO also declined to comment at this stage, sources at the company told Automotive Logistics that the provider's management saw the development of both the GM agreement, as well as PSA's intention to sell part of the company, as extremely positive and providing further opportunities for expansion. The question remains how soon could GM and PSA integrate their global vehicle platforms and components and begin to make savings in logistics costs. Considering the integration of Renault and Nissan, it took around a decade before more serious efforts were made to combine logistics and supply chain management operations.

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ECG - The Association of European Vehicle Logistics, Diamant Building, Bd. Reyers 80, 1030 Brussels,

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ECG AGENDA ► The ECG Dinner Debate will be held in the European Parliament on 20

th March 2012

in Brussels ► The ECG Board Meeting will be held on 21

st March 2012 in

Brussels ►The ECG High & Heavy Commmission will be held on 18

th April in Brussels

►The ECG Eastern Regional Meeting will be held on 19

th

April 2012 in Gdansk, Poland ► The ECG Board Meeting will be held on 29

th June 2012 in St.

Petersburg, Russia

Manufacturing: Hopes are pinned on flexible modularity (Source: FT Special Report “The future of the car” 05

th March 2012) Known as

the Modular Transverse Matrix, abbreviated in German to MQB, this vehicle platform will be replicated in dozens of VW, Audi, Skoda and Seat models over the coming years. By using common building blocks to construct high-volume cars such as the A3, VW Golf and VW Polo, the German carmaker aims to slash vehicle production costs by 20% and manufacturing time by 30%. Platform sharing is not new. Carmakers, led by the likes of Toyota, have long used common platforms to cut the cost of mass-producing advanced vehicles. But in the past, these platforms rigidly prescribed the dimensions of basic structural elements such as the floorpan and suspension. In contrast, modular construction allows far greater variation, say its proponents. Modularisation requires that only a few elements and proportions remain constant. For VW, these include the distance between the accelerator pedal and front axle and the engine mounting position. “As we’re using modularity across multiple brands we had to come up with something that gives us maximum freedom to really design in an individual way,” Achim Badstübner, head of exterior design at Audi, says. VW is simultaneously conducting an overhaul of its production facilities so that it will be possible to produce different MQB models, with different wheelbase dimensions, on the same assembly line. Hubert Waltl, head of production and logistics for VW passenger cars, described this standardisation of production tools and systems as a “revolution”. Carmakers are attracted to modular construction because it reduces complexity, lets them to more easily customise vehicles for different regions and can allow for better technology and safety systems at lower cost in cheaper vehicles. The A3, for example, will have a multimedia touchpad previously found in the luxury A8 saloon. But greater commonality is also a financial imperative for carmakers as they push ever deeper into emerging markets and struggle to cope with the technological upheaval caused by the move to electric vehicles. This in turn means that more vehicles are set to be built on fewer platforms even as the diversity of models produced on each platform increases. Analysts at the Frost & Sullivan consultancy last year estimated that by 2020, the 12 largest carmakers would cut the number of platforms from 223 in 2010 to 154, with the top 10 platforms accounting for more than 33m vehicles, or almost double 2010’s figure. General Motors last year said that by 2018, it planned to roughly halve the number of vehicle platforms to 14. “More of our components will be common, and more of our vehicles will be on global architectures,” Dan Akerson, GM chief executive, said.

Gaz reaps the benefits of paying on time (Source: Automotive Logistics News, 07

th - 13

th March 2012) Russia's largest

commercial vehicle maker Gaz is working to improve its logistics processes as part of an ongoing overhaul of operations designed to cut its high debt ration and build on an impressive return to profitability since 2008. Under the leadership of president and CEO Bo Andersson, formerly global purchasing and supply chain chief for GM, discipline in purchasing and supply chain management has been at the heart of its turnaround, which is estimated to see a 4.5% net income for 2011. Speaking at last week's Automotive Logistics Europe conference in Bonn, Germany, Andersson told delegates that the debt the company owed to the supply base was personally embarrassing when he took over as president in June 2009. That debt has now been paid back, including to Gaz's logistics service providers, an achievement all the more significant given the culture of non-payment in the country. "There is a culture in Russia not to pay," said Andersson. "I don't believe in it [and] we have improved our operating cash to $200m by paying on time and getting better terms." Gaz has 1,345 major suppliers, with roughly 400 within 3 hours of its main manufacturing plant in Nizhny Novgorod. It manages 56,000 part numbers from those suppliers to build around 105,000 LCVs per year, 14,000 buses and 10,000 military trucks. Productivity was also poor when Andersson joined, despite a workforce of

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Upcoming Events in Brussels

EU Debate on Electromobility “Challenges & priorities towards ZERO emissions”, 20

th March 2012, Autoworld,

Brussels (http://www.emcnet.eu/event/PROG_VCC.pdf)

“Policy Innovation & Jobs for Competitive Automotive Industry” organised by Baden-Wuerttemberg Representation in Brussels, on 24th April 2012 (12:45-14:30) (http://www.autoandsociety.com/programme.php)

Conference: Key Developments in the Port and Maritime Sector, 21

st – 22

nd

May 2012, Antwerp (http://webh01.ua.ac.be/sig2/wctrs/html/activities.html)

100,000. Under Andersson's leadership Gaz has taken out 50,000 people and doubled the turnover. "The first step I took was to take out 10,000 managers or 66% of the management group. Secondly I took down all salaries by 30% until we reached profitability in February 2010," he said. Supply chain consolidation Gaz is working on the consolidation of its supply network and at the same time is planning to consolidate the number of its plants from 13 down to five (from an original 18). It is also working on standardised transport times and introducing milk runs, no small feat in a country that moves 80% of freight volume in tonnes by road, with 80% of imports moved by truck on a poorly maintained road network covering 933,000km. As for IT solutions, he pointed out that they were very simple compared to his experience in the military but that the company was making improvements using internet tools step by step. One of the logistics advantages Gaz has is that it produces the main components for its light commercial vehicle production in house. "We are good with local transport, and we own the trucks ourselves," he revealed. He also pointed out that Gaz handles its own customs clearance, an area of Russian logistics well-documented for its inherent difficulties. "We have in-house customs clearance, which means we are one of the few factories that have customs officers in our plant and we run this as a business," said Andersson. Customs clearance as critical for Gaz's contract manufacturing operations, which will rely on SKD/CKD imports. While the OEM abandoned the production of its own passenger cars in 2010, it has agreements for contract manufacturing with the VW Group, GM and Daimler. "This is important because we have the 2

nd largest automotive assembly area in the

world, in Nizhgy Novgorod. It is on 3,000 hectares of land [and] we have filled up our old passenger car factories today making Skodas." Gaz imports SKDs for Skoda Yeti production and later this year will start making the Octavia from CKD kits. It has signed an agreement with VW to build 110,000 units a year. The company is also due to assemble the VW Jetta, Chevrolet Aveo, and Mercedes Benz Sprinter van this year. Dealer schedules While Andersson admitted that his new role as president of Gaz had taken him away from a pure focus on supply chain logistics he said moving from the production of 200 LCVs a day in 2009 to the current output of 500 required a lot of focus on supply chain and scheduling. One of the biggest changes was the move to build-to-order set by a monthly fixed forecast delivered by the dealers on the 10th of every month, along with a forecast for the following month. "What is revolutionary, and what I like, is that on the 25th of that month the dealer pays for those vehicles in cash." Andersson explained that the decision to implement such discipline was to remove the number of late or unfinished vehicles from the process. "Since they are not our vehicles, they need to leave the line everyday," he said. "The logistics supplier takes them out of the door and they have 2-5 days to deliver them to the dealers (if it is not in the Far East). We measure them on delivery precision, quality and cost. It is a very big change and to compensate the dealers we gave them a 4% greater margin, so they are guaranteed an 8% margin to do this prepayment."

Financing: Incentives to buy play a bigger role (Source: FT Special Report “The future of the car” 05

th March 2012) In a business

characterised by feverish excitement over the looks and performance of new cars, financing options might seem a rather prosaic topic. But in the coming years, the way car purchases are financed is set to become more important in helping to drive revenue growth in the industry. As new technologies emerge, carmakers will have to offer innovative financial products to promote customer loyalty and support the long-term residual value of their vehicles. The switch to new forms of mobility, such as car-sharing, will also force the industry to think far beyond the provision of basic car loans and corporate leasing. Meanwhile, the adoption of electric vehicles (EVs) and the roll-out of infrastructure to keep them running will also require carmakers to introduce new financing options. Renault,

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for example, broke new ground when it announced that buyers of its new range of EVs will sign a separate battery hire agreement, to reduce the purchase price and stop the car depreciating rapidly in value. Daimler’s Smart brand is also set to rent lithium batteries with its new electric cars. “The most interesting time for [automotive] financial services lie ahead; this will be an exciting period for financial and mobility services,” says Klaus Entenmann, head of Daimler Financial Services. An immediate priority for carmakers is to extend the provision of traditional car finance in emerging markets, where the bulk of growth in sales is set to occur. According to the Finance & Leasing Association, 63% of new cars were bought last year in the UK using dealer finance; in the US the figure is thought to be higher still. But 75-80% of consumers in China, the world’s largest car market, still pay cash when buying new vehicles. “If you look at emerging markets such as Asia – and here I don’t mean just China and India – there is huge potential,” Mr Entenmann says. But even in developed markets, there is room for carmakers to deepen financial relationships with clients. VW, for example, has begun to offer all-in-one packages covering insurance and other services. “A pure financing solution is not sufficient anymore; we are really successful when we offer additional products, such as insurance and maintenance,” says Lars-Henner Santelmann, a member of the board of VW Financial Services. After-sales activity helps carmakers to retain a close relationship with customers, enabling them to win new sales and cross-sell products. Specialised automotive services are also unlikely to be available at a local bank, giving carmakers an advantage. In addition to greater simplicity, customers are also demanding more flexibility. This could be as basic as having a lower rate of interest at the start of loan repayments or the ability to switch to a different car model during the finance period. But an increasing number of young people in cities are rejecting ownership altogether in favour of car-sharing pools or short-term rental. Carmakers have responded by establishing their own car-sharing schemes, offering pay-as-you go services metered according to usage and inclusive of petrol, tax, insurance and sometimes even parking charges. It remains to be seen, though, how great the take-up of such services will be. In the meantime, car manufacturers are trying to lure new customers with private leasing packages that offer the comforts of ownership without the financial risk. The new Mercedes B-Class, for example, is available, fully insured, for a flat monthly fee, with maintenance available as an optional add-on. “By offering attractive, flexible products, we can win new and younger customers from new demographic groups,” Mr Entenmann says. In the commercial leasing sector, carmakers are also offering products that mitigate various financial risks, such as when a company pays for cars that it is later unable to use. For example, VW offers rental contracts of 1-12 months to businesses that have employees on short-term or trial-period contracts. If these cars are later returned, carmakers know they must have other sales outlets for them. Dealerships are therefore increasingly interested in second-hand sales and services. “The next development is to offer these products and services for new cars in the used segment. If successful, this will be hugely important for [supporting] residual values,” Mr Santelmann says. “The residual value risk lies in a carmaker getting the vehicle back during times of economic volatility. But if the car is continually reused, this risk can be overcome.” The rise of the “connected car” – incorporating multimedia, communication and web-enabled services – also offers great potential for innovation in financial services, particularly in fleet management. A business that is able to monitor how safely employees drive could receive cheaper insurance premiums, for example. And technology that measures fuel efficient driving can help businesses cut fuel bills.

Switch to hybrids and electric likely to be slow (Source: FT Special Report “The future of the car” 05

th March 2012) Car

manufacturers seem to have conceded that electric vehicles and plug-in hybrids are part of the industry’s future. All the world’s big carmakers – even the diesel-obsessed, initially electric-sceptical Germans – have launched or plan to launch

ECG Office

Mike Sturgeon, Executive Director T: +32 2 706 8282 Mike.sturgeon@ecgassociation.eu Tom Antonissen

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battery-powered cars. Aggressive emissions-cutting targets being demanded by lawmakers in the European Union and elsewhere mean that all producers need some kind of plug-in car in their line-up. The EU drafted its legislation in a way that punishes the trace amounts of nitrogen oxide and particulates emitted by even the cleanest diesel cars. Electric vehicles, meanwhile, earn producers “super-credits” that greatly flatter their fleets’ average CO2. With Europe’s ambitious 130 g/km CO2 industry average target now clearly in sight in 2015, the industry faces a tougher threshold in 2020, probably 95g/km. To meet this, plug-in cars must be part of the mix. “Manufacturers are putting electric cars on the market to meet their fleet average or because they are getting super-credits – or they are doing it for green credentials, or to test the market,” says Mark James, head of engineering at UK sports car maker Lotus. The more pressing questions now being discussed about plug-in cars concern how many global consumers will buy, and how much more they will be willing to pay for them. Within this discussion, there is debate about whether electric vehicles – given their limited range – have a future beyond a small niche of eco-conscious suburban commuters and delivery fleets. On one side of the argument is Carlos Ghosn, chief executive of Renault and Nissan, and the industry’s biggest champion of all-electric driving. The companies between them are investing €4bn in electric cars and batteries, and now bringing to market vehicles such as Nissan’s Leaf and Renault’s electric Kangoo van. In January, Mr Ghosn stood by his forecast that plug-in cars would account for 10% of the overall car market by 2020 – a bullish prognosis not shared by most industry analysts. Today, hybrids such as Toyota’s Prius make up less than 3% of the world car market. Surveys of consumers show that they are receptive to the idea of buying electric cars. In a poll on “sustainable mobility” in the UK conducted last October, GfK Automotive found that 8% of drivers would seriously consider buying one, and of these 14% intended to do so within a year. However, more than half of the same sample of 243 drivers had an unrealistic expectation of what an electric car such as Nissan’s Leaf would cost: Most expected to pay less than £20,000, compared with the roughly £24,000 cost. Overall, the UK saw fewer than 2,000 plug-in cars registered in 2011, despite Britain’s low-emission vehicle grant worth up to £5,000. Worldwide, Nissan sold about 20,000 Leafs in 2011 – somewhat below its expectations. In part that was because of Japan’s earthquake and tsunami in March, which disrupted its supply chain. General Motors’ Chevrolet Volt extended-range electric car failed to meet the US producer’s 10,000 sales target last year. Toyota, which launched the Prius as the industry’s first commercially successful hybrid in 1997, also plans a battery-powered EV. However, Toyota’s signature plug-in car will be a rechargeable Prius. The car will be more expensive than the current version, though offset in part by incentives for plug-in cars. Because the car is a hybrid, it will not have the limited driving range of pure EVs such as the Leaf. “The step we are taking the consumer on is a baby step compared with Nissan going from nowhere to battery-electric,” says Graham Smith, who heads Toyota’s UK operation. Toyota says that it believes a market for EVs will develop, and points out that it already exists for bikes, small vehicles, city cars and delivery vans. However, says Mr Smith, the technology and cost of batteries now and in the immediate future “do not in our view support a mainstream mass market in pure battery EVs”. Consumers’ adoption of EVs is likely to be cautious, he adds, in part because of concerns about residual values and the cost of the batteries. Toyota faced similar doubts when it launched the Prius, which it initially offered in the UK only on a lease basis. Toyota, which has sold 3.5m hybrids to date, is using the technology as a platform to support further projects, including plug-in hybrids, EVs, and hydrogen fuel cell vehicles. “As we shift from conventional fuel technologies, we’re not moving into a single silver-bullet technology,” says Mr Smith. “We’re moving into a portfolio of technologies.”

PSA determined to keep French factory open after Fiat deal ends (Source: Automotive News Europe, 09

th March 2012) PSA/Peugeot-Citroen said it was determined to keep

open its Sevelnord plant in northern France, where it jointly assembles light commercial vehicles with Fiat, France's Industry Ministry said. Fiat is pulling out of the venture when the current partnership agreement expires in 2017, raising questions about the future of the plant. The facility also builds the Peugeot 807 and Citroen C8 large minivans, which are not part of the joint venture. The assurance came during a meeting on the site's future called by Industry Minister Eric Besson and including company executives and workers from the factory, at which PSA "confirmed its full determination to keep the Sevelnord site," an Industry Ministry statement said. PSA, which announced a wide-ranging joint venture with General Motors, also said at the meeting it was actively looking for new partners to help it launch new vehicles at the site, Besson said. PSA said in January that it was looking for a new partner with which it could share the cost of developing and manufacturing its Peugeot Expert and Citroen Jumpy vans assembled at the Sevelnord plant. The plant was one of two French plants which have been seen as candidates for closure as PSA - like other European

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mass-market automakers - grapples with overcapacity. One union official said he was unconvinced by the latest assurances. "The first step was not to be forgotten and today's announcement goes in the right direction," said Pascal Lucas, a representative of the CGC union at the plant. "The problem is that they may be simply be stalling to win time until after the presidential election." Sevelnord, which has been in operation since 1992, employs 2,800 workers. In 2010, the plant produced 89,862 vehicles, according to PSA.

EUROPE

Höegh Autoliners commences regular Sagunto service (Source: Automotive Logistics News, 07

th - 13

th March 2012) Höegh Autoliners has launched a new regular

service from the Spanish Mediterranean port of Sagunto to the US East Coast, complementing existing services from Sagunto to the Far East, the Black Sea, the Mediterranean and Northern Europe. Vessels will call on a three-week rotation. The service was inaugurated with a 5,200-unit vessel, which loaded 1,000 Ford Transit Connect vans at the public Carport terminal. Sagunto first began handling outbound vehicles from Ford's plant near Valencia two years ago, involving shipments to Mexico, but this is the first time a regular service has been established with United States, with vessels scheduled to call at Baltimore, Jacksonville, New York, Halifax and Galveston. The Ford Transit Connect vans were built at the Turkish factory of Kocaeli, with forecasts for 50,000 similar units to be handled at Sagunto during 2012. Significantly, Höegh Autoliners already calls at the nearby port of Valencia, where it offers a regular service linking the US, the Mediterranean, the Middle East and Far East. The ports of Sagunto and Valencia are both managed by the port authority of Valencia. The addition of a new service has not come soon enough, since Sagunto reported a 30% drop in the number of new vehicles handled in 2011, following 5 years of uninterrupted growth. In total, it handled 66,000 units, similar to the 60,000 units it reported in 2008.

Renault-Nissan may develop cars for Russian market (Source: Automotive News Europe, 08

th March 2012) Renault may join Japanese affiliate Nissan in

developing models targeted at Russia once the companies complete a deal to buy a majority stake in Russian carmaker AvtoVAZ. The French carmaker may seek to make use of AvtoVAZ's facilities to develop vehicles destined for the Russian market, Philippe Klein, head of Renault's product planning, said in an interview Tuesday at the Geneva auto show. Nissan Chief Performance Officer Colin Dodge said at the show that the Japan-based carmaker intends to add 3 models built in Russia. "We do have the situation in India, where we launched the Renault Pulse, and we leveraged the assets of Nissan in this region to expand our line-up," Klein said. "We have a global strategy as well as this kind of pragmatic approach that we are undertaking when it makes sense." The Renault-Nissan alliance expects to conclude an agreement with AvtoVAZ's top two Russian shareholders to buy a controlling stake in the automaker in coming weeks, Carlos Ghosn, CEO of Renault and its Japanese partner, said recently in Geneva. The process of expanding the stake in the Russian company will probably accelerate now that Russia's presidential elections are finished, Ghosn said. The 3 partners will produce cars from a joint platform used for Renault's Dacia Sandero and Logan models, Klein said. Renault already owns 25% of AvtoVAZ. Russia's car and light-truck market expanded 39% in 2011 to 2.65 million vehicles, and AvtoVAZ, the country's biggest automaker, said on March 5 that its sales in February jumped 33%. Christian Klingler, sales chief at VW said that Russia, along with China and the US will help keep global auto-industry growth at a "low single-digit" rate this year as Europe's market shrinks. Carmakers currently undertaking projects in Russia include Fiat, which signed a letter of intent in February with Moscow-based Sberbank to set up a jointly owned factory with capacity for 120,000 vehicles that may also involve U.S. brand Chrysler, and Ford, which is scheduled this year to introduce SUVs made with local partner Sollers.

REST OF THE WORLD Ford chief warns of car ‘global gridlock’ (Source: Financial Times, 27

th February 2012) The world faces the threat of “global gridlock” as the number

of cars surges from 1bn to a projected 4bn by 2050, Bill Ford, Ford Motor’s chairman and head of the US carmaker’s founding family, warned. Mr. Ford made a keynote speech at the Mobile World Congress in Barcelona to outline the company’s proposal for a future of connected cars and intelligent transport systems

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(ITS), which he argued is essential to avoid a future marred by crippling congestion. “There is a new worry, and that is we could go to global gridlock as cars rise to 4bn by mid-century,” Mr Ford said in an interview ahead of his speech. “If we do nothing, the sheer number of people and cars in urban areas will mean global gridlock.” As record numbers of people buy cars – especially in developing countries such as China and India – the concept of mobility pioneered by industry founders such as his great-grandfather Henry is under threat, Mr Ford argued. Ford’s “blueprint for mobility” will call for greater co-operation between rival carmakers, governments and mobile phone companies to create a transport network in which pedestrians, bicycles, cars and commercial and public transport are part of an interconnected system. “Now is the time for all of us to be looking at vehicles on the road the same way we look at smart phones, laptops and tablets: as pieces of a much bigger, richer network,” Mr Ford told the Financial Times. Mr Ford, who stepped down as the carmaker’s chief executive in 2006, has championed environmental issues in the past. His speech in Barcelona will signal the US carmaker’s intention to seize leadership in the field of urban, networked driving – a growing preoccupation across the car industry. Ford and other carmakers are rushing to develop new products and services that capitalise on the possibilities opened by new telecommunications and cloud-computing technology, even as they sell more cars than ever in densely urbanised emerging markets. Carmakers are worried that if they do not help to find solutions to ease congestion in “megacities” such as Beijing, Mumbai and São Paulo, their sales growth could slow or their products become obsolete. Among Ford’s rivals, General Motors is developing the EN-V, an electric, self-piloting two-seat micro-vehicle that it showcased at the Shanghai World Expo in 2010. GM is now developing a second generation of the experimental car for use in a new “Eco-City” near Tianjin. Audi, the German premium car brand owned by Volkswagen, is also calling for greater co-operation between carmakers and other industries to address urban congestion. Among the ideas it is proposing is the roll-out of “intelligent” road surfaces capable of organising traffic more efficiently.

PRESS RELEASES

ECG calls for new scrapping incentives as car sales stall (Source: ECG, 05

th March 2012) Sharp drop in Italian and French demand signals trouble across Europe.

ECG has reiterated its call for a renewal of scrapping incentives for older vehicles in a bid to kick-start demand for cars around Europe. “The latest statistics from Italy and France suggest a catastrophic drop in the sale of new cars is now underway that is likely to be repeated across the struggling European economy,” asserted ECG president Costantino Baldissara. “Unless we take action to stimulate demand now, we risk a devastating impact on jobs and economic activity across the industry, with knock-on effects for the wider European economy. Scrapping incentives have worked before to underpin demand in difficult times, easing the industry through the storm until sales revived. Carefully structured, they can work again.” Baldissara’s comments follow the release on Monday of alarming figures for new cars registrations in Italy. According to UNRAE, which represents foreign car companies in the country, registrations fell 18.9% in February to just 130,661. After the worst January sales figures for more than 20 years, registrations for the first two months of this year are now down 17.8% on the same 2011 period. This poses real dangers for the year ahead. Indeed, UNRAE anticipates a 22% drop in sales this year to just 1,370,000, resulting in 10,000 job losses across the industry, from factory workers to dealers, repair mechanics to logistics providers. The resulting €13bn drop in revenues for the industry would also slash the Italian government’s VAT receipts by €2.3bn. For Italy, read a number of other countries around Europe. Car registrations in France were down by more than 20% in January, other countries such as the UK and Spain were stable at anaemic levels, and Europe as a whole slipped 6.6% compared with January of last year. As a result, calls for a renewal of scrapping incentives for vehicles in excess of ten years of age are mounting around Europe. ECG supports just such a policy. “Look at Germany,” Baldissara said, “where such incentives provided assistance at a difficult time and where, despite the crisis, production has since risen from 3m cars a year to

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4.5m cars a year.” As he also noted, “the auto industry is a major employer and a generator of growth whose health is vital to that of the European economy as a whole.

ACUMEN Automotive Logistics wins Chevrolet contract

(Source: ACUMEN, 06th March 2012) Chevrolet has entered into a

three-year contract with Coventry based Acumen Automotive Logistics Ltd, a wholly owned subsidiary of the Acumen Logistics Group, for the movement and delivery of Chevrolet vehicles from the Royal Portbury Dock in Somerset to the Midlands, North Wales and Northern England. The contract, which began on the 1st January, was won in an open tender against fierce competition and has subsequently been increased to include North American produced Cadillac and Corvette vehicles.

The news of the contract follows a significant upgrading of Acumen Automobile Logistics Midlands’ hub in Coventry, which has been undertaken in line with the company’s planned future expansion within the Automotive Logistics Sector. Chevrolet is Acumen’s first contract with a GM company and also the first from Portbury. It will compliment the company’s existing traffic from the Midlands to the South and South West of England with anticipated annual volumes of between 5,000 and 10,000 vehicles including fleet vehicles. Peter Raybould, Director of Acumen Automotive Logistics describes the contract win as a major validation of the Acumen's expertise in the finished vehicles market and says that it highlights the service differentials which resulted in its selection by Chevrolet. “We have been delighted to have been awarded such a prestigious contract and look forward to consolidating our ever growing reputation for excellence with Chevrolet. We have an increasing number of customers for whom we provide high quality, transport services for movements to UK ports and dealerships and plan to further expand our portfolio throughout 2012 and beyond.” Acumen has been growing steadily over the past three years by offering customers a diverse range of services. These include inbound automotive parts, kerbside-recycling collections and distribution as well as finished vehicle transportation

The European Council for Motors Trades and Repairs (CECRA) and its European Car Dealers (ECD) express support for the views of the President of ACEA Sergio Marchionne at ACEA annual reception.

(Source: CECRA, 29th February 2012 as reported in the 1

st article of ECG News 12.09) In responding to a

message from [Commission] President Barroso and the opening address from William E. Kennard the US ambassador to the EU, Mr. Marchionne said that at this critical time, following the global recession, there needed to be a call for action to Europe, of which the motor industry is a major part of the team. He referred to the challenges, and especially the overcapacity issues, which hinder the competitiveness of the EU industry and which had been described by Mr Kennard in reference to the American experience in his opening address. Mr. Marchionne identified the solutions, also supported by CECRA, of a competitive industry and continuing R&D generating an engine for prosperity for Europe. However, it is necessary to retain a humane attitude to the social impact of the transition process and to focus on the need for high quality education. All the solutions referred to by Mr. Marchionne should eventually contribute to sustainable mobility for consumers. In particular CECRA supports Mr. Marchionne’s views for a long-term industrial policy within a regulatory framework that secures and attracts investments which CECRA believes are also key to the retail motor industry. CECRA also agrees that regulation should be sufficiently flexible in these difficult times to achieve sensible targets in respect of safety and environmental objectives through an integrated approach and common standards across Europe.

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In particular CECRA also supports a level competitive playing field in respect to the trade negotiations being in process with other parts of the world in that free trade agreements must truly exist for import and export in both directions. Mr. Bailly, President of CECRA and a member of the HLG [High Level Group] Cars 21 said “many of these issues are discussed within Cars 21 and we support the conclusion of Mr. Marchionne that “words on paper are not enough”.

Council adopts its first-reading position on single European railway area directive (Source: Council of the EU, 08

th March 2012) The Council adopted its position at first reading on a draft

directive establishing a single European railway area, following the political agreement reached last December. Initial technical discussions with the European Parliament have already started in order to seek agreement on a final text to be adopted jointly by both institutions at second reading. The draft directive is a recast merging and amending the three directives of the "first railway package" on the development of European railways, the licensing of railway undertakings and the management of railway infrastructure. The 2001 package launched a gradual opening-up of the railway sector to competition at European level. The purpose of the recast is to simplify, clarify and update this regulatory framework so as to increase competition, strengthen market supervision and improve conditions for investment in the sector. Whilst agreeing with the objective of the recast proposal, the Council considers a number of its provisions to be too far-reaching or not clear and simple enough. It therefore modified the Commission's proposal, and in particular its key parts, namely the conditions of access by railway undertakings to service facilities; the financing of railway infrastructures and charging for their use; and the functions of the regulatory body supervising the railway market. The Council's position towards the initial Commission proposal and the European Parliament's first-reading position is explained in detail in its "statement of reasons". For the main points summarised in the official Press Release, please access: http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/trans/128825.pdf