The increase in taxation on diesel-powered vehicles and its potential effects on the already struggling diesel market are among the key stories from around the world. This is highlighted in the second automotive insights of 2018.
The future of diesel
A new increase in taxation on diesel-powered vehicles came into force on 1 April 20181. Every new diesel car on sale after that date will be pushed up a tax band, while those with a diesel-powered company car will experience a percentage point increase in their benefit-in-kind supplement tax from 3% to 4%. While the increase does not apply to vehicles that meet the Euro 6d standard of air quality, this is unlikely to be much comfort to consumers. The government-backed Low Carbon Vehicle Partnership thinks there are currently no new diesel vehicles that meet this standard.
The news adds further uncertainty to the future of diesel, as consumers continue to turn their backs on the engine technology due to tax hikes and possible bans in several countries. Jaguar Land Rover, which has heavily focused on diesel in recent years, has seen a 26% drop in sales in Jaguar vehicles and a 20% drop in Land Rover sales in 20182. In the face of 'continuing headwinds' the company will be cutting output at both Solihull and Castle Bromwich, news that puts up to 1,000 production jobs at risk. Dropping diesel sales were also cited by Nissan as the reason it will be cutting jobs at its Sunderland car plant3.
The picture isn’t entirely bleak for diesel though, as some of the industry’s best minds continue to innovate. Bosch unveiled a new diesel-exhaust system it believes will cut emissions below the legal limits coming into force in 20204. The new system focuses on thermal management of exhaust temperatures and bringing NOx emissions down to a tenth of the legally allowed limit. The company hopes that the technology will help diesel 'resume its success story'5.
PSA to boost output at Luton Vauxhall plant
Although the company has cut around a third of the workforce of the Vauxhall Ellesmere Port plant, unions celebrated the news that PSA is likely to add around 400 jobs to the UK economy as it moves Peugeot and Citroen models to its Vauxhall van plant in Luton. As well as the next-generation Vauxhall/Opel Vivaro Van (which will utilise PSA’s new EMP2 platform), the factory will start churning out Peugeot’s Expert and Citroen’s Jumpy vans. The company is predicting that annual production will rise to 100,000 vans in 2019, up from the 60,000 hit last year6. PSA CEO Carlos Tavares said the decision was made in spite of the uncertainty surrounding the UK’s imminent exit from the EU, saying that Brexit isn’t among the biggest uncertainties the company is currently facing.
Volkswagen makes big management changes
There are some large-scale changes happening at Volkswagen, starting right at the top with Matthias Müller stepping down to make way for former BMW executive Herbet Diess7. The world’s largest carmaker also implemented sweeping changes to its management team and structure, looking to streamline and speed up decision-making across its multi-brand operation. The company will now be made up of three groups: volume, premium and super premium.
Volkswagen Truck & Bus will be entering into a strategic tie-up with Toyota subsidiary Hino Motors8, in an effort to take on the high-costs of developing self-driving vehicles and new services such as ride-sharing. The two companies said that their partnership may not end there, with other areas of potential cooperation highlighted being hybrid engines, connectivity and other self-driving technologies. Volkswagen reportedly has other plans for the Truck & Bus division, with Der Spiegel claiming that the company hopes to raise six to seven billion euros by selling up to 25% of the division through a listing9. Analysts are speculating that the money raised will go towards Volkswagen’s huge electrification project.
First autonomous vehicle deaths
The progress towards self-driving cars going mainstream hit a serious bump, as both Uber and Tesla vehicles were involved in tragic accidents involving members of the public. In the case of Uber, a woman in Arizona was killed as a result of a collision with one of the company’s fully autonomous vehicles10. The incident took place at night as the woman in question crossed the road. Shortly afterwards, a Tesla Model X with the driver assist system on hit a barrier on a highway in Mountain View, California. The driver was rushed to hospital but later died of his injuries.
The investigations into both incidents are ongoing, but with so many companies heavily invested in self-driving technology it seems unlikely that other work in the sector will slow down. These two tragic events do however, provide a stark reminder of just how important it is that this work is carried out carefully and safely.
Another recent incident fortunately involved no deaths, but saw a UK Tesla driver banned from driving after engaging advanced driver assist (auto-pilot), then climbing out of the driver's seat11. Reminding companies that the capabilities and limitations of advanced driver assistance systems need to be carefully marketed to the public.
China commits to lower import tariffs
Chinese president Xi Jinping has promised to cut import tariffs in an effort to cool the simmering trade disputes between the United States and China12. The apparent move to allow the Yuan to rise against the dollar was also welcomed as a positive sign that the war of words between the two economic powerhouses may not lead to significant effects on the global economy. It was also reported that China is considering cutting the levy on imported cars from 25% to 10%13. For those in the automotive industry who have long felt that the Chinese government has been placing obstacles in their path to Chinese consumers, this could prove to be a significant development.
- ‘New UK diesel car tax hike now in force.’, Autocar, 6 April 2018
- ‘Jaguar Land Rover to cut output and jobs due to Brexit, diesel slump’, Reuters, 13 April 2018
- ‘Nissan to cut hundreds of UK jobs’, BBC News, 20 April 2018
- ‘Growth, earnings, environmental protection: in its quest to make mobility as emissions-free as possible Bosch has achieved a breakthrough’ Bosch Press, 25 April 2018
- 'Growth, earnings, environmental protection: in its quest to make mobility as emissions-free as possible Bosch has achieved a breakthrough’ Bosch Press, 25 April 2018
- ‘PSA will boost van production at Vauxhall plant in UK’, Automotive News Europe, 4 April 2018
- ‘Volkswagen appoints new CEO, overhauls corporate structure’, Financial Times, 12 April 2018
- ‘Toyota’s Hino, VW’s truck unit tie up to reduce R&D costs’, Reuters, 12 April 2018
- ‘VW trucks IPO to bring in up to 7 billion euros – Spiegel’, Reuters, 13 April 2018
- ‘Uber halts self-driving car tests after death’, BBC News, 20 March 2018
- 'Tesla driver banned for M1 autopilot seat switch', BBC News, 28 April 2018
- ‘Global stocks up as Xi calms US.-China trade fears;oil rallies’, Reuters, 10 April 2018
- ‘China considering cutting duty on imported cars by about half – Bloomberg’, Reuters, 26 April 2018