The 100mpg fuel busters!

BMW and Fiat are joining forces to bring a revolution in the market – with a pair of ‘bubble’ cars which promise world-beating economy and ultra-low CO2 emissions...

Two of the most important new cars ever are about to ‘bubble’ to the surface – and in a world exclusive head-to-head, Auto Express has brought them together for the first time!

These are the clearest illustrations yet of BMW’s new Isetta and its sister, the Fiat Topolino. They are the result of a new deal between the two firms, which will also be extended to include next-generation versions of the MINI and Alfa Romeo MiTo.

The Isetta and Topolino are crucial to BMW and Fiat’s attempts to reduce the overall CO2 emissions of their ranges – but they will also offer buyers 100mpg fuel returns! Reviving a name not seen since the bubble car of the Fifties, the Isetta will take BMW into a new sector of the motoring market.

It will be joined by the Fiat Topolino – which we featured in Issue 1,013. Both machines will offer incredible fuel consumption and low emissions, as well as tiny dimensions, and rival the imminent VW up! and Toyota iQ.

The Isetta will be hugely important, because it will help BMW comply with the European Commission’s plans to impose an average 120g/km limit on the model ranges of all firms selling cars across the Continent by 2012. And, as there are plans for an electric version, it would also enable the manufacturer to meet California’s upcoming zero-emissions vehicle legislation.

As you can see from our artist’s impression, the Isetta harks back to the original bubble car shape. But it has been given a modern reworking by the design team, with the addition of some BMW-style chunkiness. The body is made up of simple panels, likely to be fashioned from plastic to save weight and help resist parking dings.

Meanwhile, the Topolino gets a retro look inspired by the 500, with a cheeky front end featuring a smooth nose and large headlights. Under the skin
of both models lies an all-new platform that places the engine in the rear and sends drive to the back wheels.

With an electric-only Isetta some way off, small-capacity petrol and diesel engines will feature initially. And as Fiat is using a new 900cc two-cylinder petrol motor in the Topolino, the Isetta could benefit from the same unit.

The new powerplant was previewed in Fiat’s Panda Aria concept at last September’s Frankfurt Motor Show, and it arrives in dealers under the bonnet of the 500 later this year. While two outputs will be offered in this car – a 105bhp turbo and a normally aspirated 65bhp unit – it will be the latter that powers the Topolino.

Twin-clutch semi-automatic gearboxes are likely to be used by both models, as is a stop-start set-up which switches off the engine when the car
is stationary in heavy traffic. Combine this technology with a lightweight body, and the newcomers will be incredibly efficient. Expect combined fuel economy of 100mpg and CO2 emissions of less than 90g/km.

The interior layout is still up for debate, but there is likely to be enough room for three occupants with an occasional fourth seat, allowing owners
to juggle luggage capacity with passenger space.

It will be interesting to see if BMW and Fiat can make the rear-engined, rear-wheel-drive layout work efficiently. An insider at VW recently told Auto Express that a similar mechanical layout in the up! is being ditched in favour of a front-engined, front-wheel drive format, after it was found that the layout was too costly to develop and made the car unstable in cross winds.

Although official production dates have yet to be decided, the Isetta and Topolino are set to arrive some time in 2010.

Microsoft: Search the Web while driving

The software that powers infotainment systems such as Ford Sync soon may allow motorists to do Internet searches -- likely by voice -- while they drive.

Microsoft Corp. will make its Live Search Web search engine available as part of its Microsoft Auto software. Live Search is a service similar to Yahoo! or Google.

It would be up to individual automakers and suppliers to decide whether to implement Live Search in vehicles, navigation units and radios and to decide how drivers would access the information.

"Part of this should be voice-driven," said Tom Phillips, newly named general manager of Microsoft's automotive business unit. "Part of it may still require a glance or some other textual type of information."

Phillips said the search engine should start appearing in vehicles in 12 to 18 months, as portable or in-vehicle equipment.

Ford Motor Co. spokesman Alan Hall would not say whether Live Search would become part of Sync.

"We're always looking to add new applications" to Sync, he said. "Our plans have always been to leverage the platform approach of Sync and add new features and capabilities as we see fit from a customer perspective."

Hyundai-Kia Automotive Group plans to introduce an infotainment product based on the Microsoft Auto software in 2010. "We'll have the capability to offer" search, said spokesman Jim Trainor, but the carmaker "can't say yet" whether it will.

Microsoft says drivers and passengers could use Live Search to find local attractions such as restaurants. Directions, reviews and menus might be available. Search results could be narrowed to the driver's ZIP code.

"People want services that make their lives easier. They want things that save them time. They want services that do the same things for them in their vehicle that they get when they're at their desk," said Phillips, who recently succeeded Martin Thall as head of the automotive unit.

Consumers, he said, "think nothing of going to Live.com or perhaps another search site because we need information, but how is it we get into our car and we're totally cut off -- with no access to the information?"

Fiat hikes production of 500 minicar to 200,000 units

Fiat has boosted production of its popular 500 minicar to more than 200,000 units annually in response to increasing European demand for fuel-efficient compacts.

"Capacity for the 500 is now over 200,000 units a year," Fiat group CEO Sergio Marchionne said last week in a conference call with analysts.

Fiat now plans to sell 195,000 units of the popular 500 during 2008.

The Italian carmaker initially planned to sell 120,000 units this year. High demand for fuel-efficient small cars saw Fiat lift the target to 140,000 units earlier this year.

Fiat booked 230,000 dealer orders for the 500 between the car's July 2007 introduction and the end of its June 2008 reporting period, the company said.

The company said it sold 94,000 units in the first half of 2008.

Market researcher Jato Dynamics said the Fiat 500 was the Europe's second best-selling minicar over the January to May period, with 76,533 units sold.

The 500 was second to the Fiat Panda – the segment leader since 2004 – which sold 101,645 units in the first five months of the year, Jato said.

The Renault Twingo was the third best-selling minicar, with 59,855 sales over the January to May period.

Fiat launched the 500 in mid-July in India, where a 98 percent import duty has transformed the high-volume minicar into a premium model.

A 1.3-liter, 75hp diesel 500 in India costs the equivalent of 22,500 euros, compared to 14,750 euros in Italy.

Pricing is expected to limit demand and volume for the 500 in India. "This is a lifestyle product. We expect to sell a few hundred cars in the next 12 months," said Rajeev Kapoor, CEO of Fiat India Automobiles.

Fiat India Automobiles is a joint venture between the Italian automotive group and India's Tata Motors.

Ford plant in Germany might cut 700 engine-making jobs

Ford Motor's plant in Cologne, Germany might have to cut 700 out of the nearly 1,000 jobs working at the engine production plant if it is not awarded the contract to make three-cylinder engines, a company spokesman said.

He said the 700 will be transferred to other jobs elsewhere at the plant because the union has an agreement with management that there will be no mandatory layoffs until 2011.

The facility currently produces six-cylinder engines but will be stopped "in the foreseeable future". He declined to give a timeframe.

Discussions are going on whether the production of three-cylinders would be made at the Cologne plant or in Craiova, Romania, or split between the two sites.

He rejected German media reports that the Cologne plant is on the brink of being shut down.

The Cologne plant employs 17,300 people, of which almost 1,000 are in the engine production facility. The engine facility currently makes around 100,000 engines annually, mainly for the U.S. market.

Audi looks to win sales from volume brands with new SUV

Audi hopes its new Q5 SUV will help win new customers to the brand from volume manufacturers.

The German automaker expects to win sales at the expense of volume brand models such as Toyota´s RAV4, Michael Renz, Audi head of central marketing, told Automotive News Europe at a press event here.

"Obviously we are still targeting the premium SUVs like the BMW X3 or the Mercedes-Benz GLK, but we expect to draw some customers from the volume segment as well," Renz said.

He identified the Volvo XC 60 as the other main competitor for the Q5. Renz said that volume-brand customers would be attracted to the Q5 because of its "sporty design and handling."

The Q5 is positioned below the larger Q7 and will share a platform with Audi´s upper-premium A4 sedan.

It goes on sale in Europe this autumn. U.S. sales begin in the first quarter of 2009, with China following in the second quarter.

Prices start at 38,300 euros in Germany.

Despite sour economy, Lamborghini profit soars

Despite the tepid global economy, it appears that rich folks are still buying expensive toys. Automobili Lamborghini's global sales and financial results for the first half of 2008 both hit record highs.

Revenues increased 9.6 percent to 277.4 million euros ($434.5 million) from 253.1 million euros. Pretax profit increased to 35 million euros ($54.8 million) from 26.4 million euros, a 32.6 percent increase. By contrast, Lamborghini earned 47.1 million euros ($73.7 million) for all of 2007.

Global unit sales increased to 1,309 vehicles from 1,238 for the same period last year. Lamborghini now has 114 dealers around the globe, up from 65 in 2004, with eight new stores opening in the first half of the year.

Lamborghini CEO Stephan Winkelmann said sales in the United States and Europe were stable, while the Middle East was up 40 percent. Strong gains were also posted in China and Hong Kong.

"There is no brand that is immune to financial crisis," Winkelmann said, "but we always produce less than demand. We are conservative in our forecast."

Winkelmann thinks second-half revenue and profits will be even better for Lamborghini, as the redesigned Gallardo LP560-4 has just started arriving in dealerships.

Winkelmann said an internal cost-reduction program has improved profits. Also, Lamborghini is pushing an accessories program for its cars, as pricey options such as $10,000 carbon ceramic brakes typically carry better profit margin percentages than the car itself.

"We are improving the assembly time," Winkelmann said. "We are constantly talking to suppliers to get a higher quality for a reduced price. What is helping us with suppliers is that we are constantly increasing volume."

Tata open to Fiat selling Nano cars

Indian carmaker Tata Motors is open to Italy's Fiat helping to sell the ultra-cheap Nano model overseas, Chairman Ratan Tata said on Tuesday.

Tata, India's third-biggest carmaker, plans to launch the Nano later this year, priced at about $2,500.

"We have held talks about the Nano being marketed in markets where Fiat has already a strong presence. I am open to consider a partnership," he told a news conference at a forum promoting cooperation between Italian and Indian companies.

Fiat has a joint venture with Tata to manufacture and distribute cars, engines and commercial vehicles.

Tata also said the Tata group was in talks with Italian defense and aerospace company Finmeccanica about supplying helicopter parts.

Fiat Chairman Luca Cordero di Montezemolo said the company was in talks with Tata about making buses and trucks.

"We'll see if there are the conditions for us to go forward," he told reporters on the margins of the forum.

The head of Fiat's Iveco truck unit told an Italian newspaper in May he expected to resume talks with Tata on possible accords after the India partner completed its acquisition of Jaguar and Land Rover.

Cordero di Montezemolo also said he was "very optimistic" about second-quarter results due to be released on Wednesday.

Analysts polled by Reuters have forecast that Fiat would post an 11.4 percent rise in group trading profit, despite the worsening car market in Europe, thanks to strong sales in Brazil and support from its truck and tractor businesses.

Fiat shares closed down 0.92 percent at 10.432 euros as the DJ Stoxx auto index was flat.

VW second quarter profit beats expectations

Second-quarter operating profit at Volkswagen rose 22 percent to 2.12 billion euros ($3.38 billion), the world's fourth-largest car maker said on Wednesday, easily beating market expectations.

A Reuters poll of 20 analysts forecast operating profit to increase 4.4 percent on average to 1.81 billion euros in the quarter from its very strong performance a year ago, putting it on track for an estimated 6.61 billion over the full year.

VW reaffirmed its guidance for an unspecified improvement in results this year.

Renault plans production cuts in Douai, France

Renault has decided to cut production at its factory in Douai, northern France, in response to the worsening European sales outlook.

The French carmaker said last week it would also shut a factory in Sandouville, France, for seven days in September on top of a four-week closure in August.

In Douai, Renault has negotiated with unions at least 20 days of shutdown in the July-November period to counter declining demand for cars based on its Megane platform.

Renault produced 268,090 Scenic medium minivans and just more than 40,000 lower-medium Megane cars during 2007 at the Douai site, which employs 5,400 workers.

The company will present a radically restyled version of the Megane during the Paris auto show in early October.

Company sources say anticipation of the new Megane models has slowed sales for the existing versions.

The continuing slowdown in key European markets such as Italy and Spain, where Renault's Megane line has strong market shares, also contributed to weak demand for cars produced at Douai.

The Douai site was initially slated to close from late-July to late-August, for four weeks of annual maintenance.

Weak demand for the Megane and Scenic led management to negotiate a series of three-day weekends with workers in July, September, and October, a company spokesman said.

Renault will also close the Douai site from October 22 to November 12, to coincide with the French autumn school vacation and two national holidays, on November 1 and 11.

Word of the Douai slowdown comes just days after Renault announced that it would shut its factory in Sandouville, northern France, for seven days in September, on top of a planned four-week closure in August.

The Sandouville shutdown is directly linked to poor sales of Renault's upper-medium Laguna.

The French carmaker may also suspend Laguna production for at least three days in October, company sources say.

Camaro meets the press, GM execs tout mpg

Unveilings take place in Detroit, Los Angeles

General Motors today showed off the widely anticipated 2010 Chevrolet Camaro to the media, telling reporters it will beat competitors' fuel economy.

"We'll be promoting the fuel economy story very much," Ed Peper, vice president of Chevrolet, told reporters. "We are 2 or 3 mpg ahead of the competition."

The vehicle will be built at GM's Oshawa, Ontario, plant in Canada. Production is slated to begin on Feb. 16, 2009.

Peper said the V-6 version will get an estimated 26 mpg, while the V-8 version will get an estimated 23 mpg. The V-6 will get 304 hp, while the V-8 will get 422 hp.

"And we are still working on it," Peper said. He also hinted that a turbo 4-cylinder version could be in the works.

Sales begin in the first quarter of 2009, and Peper said more than 6,000 hand-raisers are interested in the car. The early-year launch will help spur sales, Peper said, because spring tends to be a popular time for consumers buying sports cars.

GM will disclose a price once the vehicle is closer to production, but Peper said the Camaro will be the "best value in the sports car segment."

The company plans to launch a convertible version in 2010.

GM is counting on the baby-boomer crowd for out-of-the-box demand, Peper said. The company's biggest challenge will be to attract buyers who aren't traditional enthusiasts.

Initially, Peper expects demand for the V-6 and V-8 versions will be split about 50-50, as enthusiasts will want the V-8. Long-term, he expects the V-6 version to be the sales leader.

Taking on the competition

GM views the Camaro's competitors as the Ford Mustang, Nissan's 350-Z and the Dodge Challenger, Cheryl Pilcher, product manager for the Camaro, said during the vehicle's unveiling in Los Angeles.

As for volumes, "we will build as many as we can sell," says Pilcher.

The production version of the Camaro doesn't stray much from the concept car GM showed in Detroit in 2006, though the chassis is different, says Vince Muniga, engineering spokesman for GM. The new Camaro is built on the GM's global rear wheel drive platform.

Says Tom Peters, design director for the Camaro exterior: "Our main goal was to get as close to the concept as possible."

The same is true for the interior, says John Zelenak, design manager for the Camaro interior.

Dealers are excited about the new Camaro.

"We have lots of lots of people waiting," to see the car, says Rusty Bunstead, sales manager at the Courtesy Chevrolet dealership in Morgan Hill, Calif., a city south of San Francisco.

Courtesy added a Camaro button on its Web site where customers could see a video and sign up to receive updates on the model long before the launch.

Courtesy Chevrolet is one of the largest Corvette dealers in the United States. It has two dealerships, one in Morgan Hill and one in San Jose, Calif.

Says Bunstead: "The Camaro is the poor man's Corvette."

Craig Trudell contributed to this report

ENLARGE Ed Welburn, GM design vice president, and Ed Peper, vice president of Chevrolet, show off the 2010 Camaro in suburban Detroit today. Photo credit: RICK KRANZ

PRESS RELEASE: Chevrolet Unveils the 2010 Camaro – A Fun, Efficient Sports Car for the 21st Century

Oshawa, Ontario (July 21, 2008) – Chevrolet today introduced the production 2010 Camaro being built at GM's Oshawa Car Assembly Plant. It is a heritage-inspired sports car for the 21st century, combining great looks and performance; advanced technology and surprising efficiency – including 9.0 L/100km estimated highway fuel consumption on the high volume V6 models. Sales begin in the first quarter of 2009.

"The new Chevrolet Camaro delivers the best of both worlds – great heritage and a thoroughly modern, advanced package of sporty driving, comfort and technology," said Marc Comeau, vice president sales, service and marketing for GM of Canada. "And it does so with styling, fuel economy and value our competitors simply can't match."

Built on GM's new, global rear-wheel-drive architecture, the Camaro is offered in V-6-powered LS and LT models, as well as the V-8-powered SS. All models and powertrain combinations include fuel-saving six-speed transmissions.

Product highlights include:

o Sleek, heritage-inspired interior and exterior styling with contemporary cues

o Robust body structure, exceptional build quality and suite of safety features including 6 standard airbags

o Advanced powertrain technologies, including engines with direct injection and Active Fuel Management, enabling a balance of performance and fuel economy

o Four-wheel independent suspension system tuned to match the performance capabilities of the respective powertrains

o Variable-rate power steering with the rack mounted forward of the front axle for better weight balance and greater driver feel

o Four-wheel disc brake systems standard on all models, including four-piston Brembo calipers on SS models

o StabiliTrak stability control system and traction control standard on all models

o Family of 18-, 19- and 20-inch wheels

The new Camaro also has technologies that enhance comfort and convenience, including:

o Bluetooth phone connectivity

o Premium Boston Acoustics audio system

o USB connectivity

o Ultrasonic rear parking assist (late introduction)

o Remote vehicle starting system

o OnStar

o XM Satellite Radio

Powertrains

An advanced, efficient 3.6L direct-injected V-6 with variable valve timing is standard on LS and LT models, which are expected to comprise at least 70% of Camaro sales in Canada. Direct injection technology helps the engine deliver more power through increased efficiency, while maintaining fuel economy and lowering emissions. That means less fuel is consumed and lower emissions generated – including a 25-percent drop in cold-start hydrocarbon emissions.

The Camaro's 3.6L engine also employs variable valve timing to optimize performance and fuel economy across the rpm range. It is rated at an estimated 300 horsepower (224 kW) and 273 lb.-ft. of torque (370 Nm). A six-speed manual transmission is standard with the 3.6L engine; a Hydra-Matic 6L50 electronically controlled six-speed automatic, with TAPshift control, is available.

The high-performance Camaro SS is equipped with a powerful 6.2L V-8, with a choice of a six-speed manual or six-speed automatic transmission. Manual-equipped models receive the LS3 engine, estimated at 422 horsepower (315 kW) and 408 lb.-ft. of torque (553 Nm) and is paired with a TR6060 six-speed transmission.

A new, L99 engine, based on the LS3, is used on automatic transmission-equipped SS models and also includes GM's fuel-saving Active Fuel Management feature to improve fuel economy. The L99 is estimated at 400 horsepower (299 kW) and 395 lb.-ft. of torque (535 Nm); and it is matched with a Hydra-Matic 6L80 six-speed transmission. This combination delivers an estimated 10.2 L/100km of fuel consumption on the highway.

The 2010 Camaro exemplifies GM's global development process. The design concept originated in the United States; engineering was directed by GM's global rear-wheel-drive team in Australia; validation was conducted on roads around the world and assembly will take place at GM's award-winning Oshawa Car Assembly Plant in Canada.

General Motors of Canada (GMCL) is engineering and manufacturing advanced environmental technologies ranging from Active Fuel Management (cylinder deactivation) and hybrid systems to E85 biofuel and fuel cell vehicles – more than any other auto company right here in Canada. Headquartered in Oshawa Ontario, GMCL employs more than 15,000 people nationwide. GM of Canada manufactures vehicles, vehicle powertrains, and markets the full range of General Motors vehicles and related services through 732 dealerships and retailers across Canada. Vehicles sold through this network include Chevrolet, Buick, Pontiac, GMC, Saturn, Hummer, Saab and Cadillac.

Honda cuts Odyssey, Pilot output; boosts Civic's

Even Honda Motor Co. is feeling the pain of consumers' stampede from light trucks to cars.

The Japanese automaker said today that it will reduce production of the Honda Odyssey minivan and Honda Pilot crossover by a combined 10,000 units this year at its Lincoln, Ala., assembly plant. In the first half of 2008, Honda built 158,316 Odysseys and Pilots in Lincoln, down 2.4 percent from the same period of 2007.

"Honda is not immune to the shift in the market," said Honda spokesman David Iida. "We don't want inventories to get too high."

The production cut will be made from August through October. The Lincoln plant will close Aug. 1 and Aug. 29, and the plant's second shift will be canceled each Friday during the three months.

Honda wants to keep Pilot and Odyssey inventory between a 45- and 60-day supply, Iida said.

On July 1, Honda had a 78-day supply of Odysseys and a 99-day supply of Pilots, according to the Automotive News Data Center.

There will be no layoffs at the plant, Iida said. Honda will use the time for employee training and other work. Workers also could take paid or unpaid vacation time, he said.

Honda will consolidate light-truck production in Lincoln by moving output of the Honda Ridgeline pickup there from Alliston, Ontario.

Ridgeline production in Lincoln will begin in early 2009. Production trials begin in a few months, Iida said.

Honda also will increase output of the Honda Civic compact at its plants in East Liberty, Ohio, and Alliston. Honda did not say how much Civic production will rise.

Great Wall banned from importing GWPeri minicar

A Turin court ruled this week that a Chinese minicar built by independent automaker Great Wall won't be allowed into Europe.

The court said the GWPeri minicar is too similar to the Fiat Panda.

Fiat sued Great Wall both in Italy and in China. Those moves were aimed at keeping the GWPeri out of the European Union and out of China. Fiat alleged that the car was a clone of its Panda minicar.

On July 16, a Turin court accepted Fiat's claims, saying in its ruling "the (GWPeri) doesn't look like a different car but is a (Fiat) Panda with a different front end."

The court ruled that Great Wall should pay a 15,000-euro fine for the first GWPeri imported in Europe. In case of further violations of the ruling, the fine grows to 50,000 euros per imported car.

Lawyers for Great Wall said the company will appeal the Turin court decision.

The court case in China is still pending. Earlier this year, Great Wall starting selling the GWPeri in China.

Fiat doesn't sell the Panda in China. The car has been Europe's best selling minicar since 2004.

New Camaro photos released

ENLARGE

One of the worst-kept secrets -- the production looks of the new Camaro -- is officially out in the open.

Several automotive Web and blog sites posted the shots of the car, which is nearly identical to what has been seen before. It goes on sale in February 2009, followed by a convertible in November.

ENLARGE

It's modified slightly, but the production car carried much of the vibe of the concept that was revealed at the Detroit auto show in 2006.

The interior has a slight retro feel, accented by halogen gauges and a racing-inspired steering wheel.

ENLARGE

The car will get a 6.0-liter V8 powerplant that makes more than 400 hp and a 3.6-liter V6 that tops 300 hp. A 2.0 liter, 260-hp turbocharged four, similar to what's in the Pontiac Solstice, will also likely be available. Engines will be mated to manual or automatic transmissions.

The car is also expected to have an SS badge.

The "official" reveal is scheduled for Monday afternoon.

All Mercedes cars to be turbocharged by 2010

Mercedes-Benz will introduce turbocharged engines across its entire lineup in the next 2½ years.

"All our vehicles will have turbocharged engines in series production by the end of 2010 at the latest," Thomas Weber, Daimler board member responsible for research and development, told Automotive News Europe at a press event here.

Forthcoming legislation in Europe and the U.S. is forcing automakers to reduce auto emissions.

Demand for turbochargers is growing because they offer a proven and relatively inexpensive way to reduce fuel consumption. With the addition of a turbocharger, Daimler will be able to install smaller, lighter and more fuel-efficient engines without sacrificing performance.

Under current proposals, the European Commission will ask the German automaker to cut its average fleet emissions from 178 grams per kilometer to 138 g/km by 2012. The Commission will fine automakers that fail to meet the targets.

Improving the efficiency of its existing engines is the first part of Daimler's strategy to reduce CO2 emission levels across its fleet. Weber said the medium-term step would be to introduce more hybrid technology. The S class -- Mercedes' flagship sedan -- will be offered as a full hybrid vehicle starting in 2009.

Weber also said that zero-emission driving is the German automaker's long-term goal. To get there, the automaker plans to use technology such as fuel cells and electric-powered vehicles. A full-electric version of the ForTwo from Mercedes sister brand Smart goes into production in 2010.

Lotus Eagle

We’ve seen the fuzzy spy image which circulated the Net a short while ago and now Lotus has come clean and revealed the first official image of its new sportscar.

The much-anticipated newcomer from Lotus, codenamed ‘Project Eagle’ is the first all-new car from the company since the Elise in 1995 and it will make its official debut at the British Motor Show on 22 July.

Styled in-house by Lotus Design, the car will be sold in a 2+2 configuration and as purely a two-seater, the space in the rear being allocated to luggage storage.

Performance won’t be lacking - the stock model will be powered by a 280PS V6 2.5-litre engine and a higher performance derivative is planned for the future, along with a convertible option.

Two thousand units is the annual production forecast and deliveries will begin in spring 2009.

Auto stocks rise and oil prices fall

Share prices for automakers climbed by their largest margins in recent months today, while oil prices have dropped by $10 a barrel in two days.

Shares of General Motors and Ford Motor Co. each gained more than 15 percent after taking almost daily beatings in the stock market in recent weeks.

At close, GM shares finished up $1.64 or 16.6 percent to $11.48 a share. Ford shares closed at $5.49, up 84 cents or 18.0 percent.

The stock market drew support from oil prices, which pulled back by a combined $10.58 a barrel in two days. Light, sweet crude fell $4.14 a barrel, to $134.60, today after a drop of $6.44 on Tuesday, July 15.

Oil prices declined after Energy Department figures showed that domestic inventories of crude oil and gasoline rose last week rather than dropping, as analysts had expected, The Associated Press reported.

The recoveries of GM and Ford stock prices came despite credit rating agencies downgrading or threatening to lower their ratings for each automaker.

Moody's Investors Service said it would review its ratings on Ford, while Fitch Ratings on Tuesday downgraded GM to B-minus from B.

The agencies cited a dire outlook for automakers trying to ride out a worse-than-expected U.S. sales year. While making $15 billion in cuts and other changes to its spending Tuesday, GM said 2008 will be the worst sales year in a decade.

The following suppliers and dealership groups also posted gains in afternoon trading today:

Dealership groups

• AutoNation Inc.: $8.00, up 5.6 percent

• Penske Automotive Group Inc.: $12.50, up 5.8 percent

• Sonic Automotive Inc.: $8.89, up 5.9 percent

• Group 1 Automotive Inc.: $16.19, up 7.3 percent

Suppliers

• Johnson Controls Inc.: $29.61, up 4.0 percent

• Lear Corp.: $14.97, up 7.7 percent

• Dana Holding Corp.: $6.56, up 7.5 percent

Minis’ safety slammed

Car makers are letting safety slide when it comes to superminis, crash test experts claim.

Despite the growing popularity of the fuel-efficient small models, only 17 per cent of those on sale in the UK are fitted with Electronic Stability Control (ESC) as standard.

The vital safety kit detects a skid and uses electronics to brake individual wheels and keep the vehicle under control. It is “the most effective safety device since the seatbelt”, according to Michiel van Ratingen, secretary general of Euro NCAP which surveyed the kit’s availability Europe-wide.

A comparison of cars revealed that Proton and Lotus were the worst culprits, with neither offering the set-up on any of their models – even as an option. Chevrolet was next on the league table, with ESC standard on none of its European cars and optional on only one-third of its range. Fiat, Suzuki and Daihatsu followed, with less than 30 per cent of theirmodels having the device fitted.

Chrysler: bankruptcy speculation has no merit

Chrysler LLC again sought to reassure dealers on Wednesday that reports of its financial distress are unfounded.

"Speculation has surfaced recently in media coverage of analyst reports suggesting Chrysler might have liquidity issues down the road if the U.S. market does not pick up," the company said in a July 9 letter signed by Jim Press, Chrysler co-president, and Steven Landry, executive vice president of North American sales.

"Chrysler has communicated to the media that the suggestion of a possible bankruptcy situation is without merit."

Press and Landry's note quoted a presentation made to the national dealer council June 27 by Lenard Tessler, managing director of Cerberus Capital Management LP. At that presentation Tessler told dealers that a $2 billion loan drawn down by Chrysler from Daimler AG and Cerberus Capital Management LP was something agreed to in the original transaction when Cerberus bought 80.1 percent of Chrysler from Daimler last August.

The loan "was not something that was a result of Chrysler having any need for incremental cash based on financial performance of the business," Tessler said in his presentation. "The company has exceeded all of its financial targets it set for itself from the day we closed the transaction on Aug. 3. The truth behind the $2 billion is that it was a contractual obligation we had to the company and we were simply meeting our obligation as it came due, and it is reflective of our confidence in the ability of the company to weather the storm and move forward."

Press and Landry noted that Chrysler recently adjusted production levels, announcing its St. Louis South minivan plant will shut down indefinitely and production at its St. Louis North truck plant will go from two shifts to one.

The company will focus on higher-mileage models for the rest of the year, the note said.

The note implored dealers to "hang in there and fight for every sale during this period."

Chrysler has been hammered by soaring gasoline prices, which have crippled sales of the pickups, minivans and SUVs that make up more than 65 percent of its sales. Chrysler LLC's car and truck sales plunged 35.9 percent in June compared with last June.

Porsche set to move closer to VW takeover

Porsche will be one step closer to acquiring majority control of Volkswagen on September 2, when its deal to buy 4.9 percent of that company's ordinary shares takes effect.

The VW takeover "will be executed piece by piece," Porsche CEO Wendelin Wiedeking said during an event in the Black Forest on Wednesday evening.

A spokesman for Porsche said the deal closes on that day in early September.

The purchase of another 4.9 percent of VW common shares was necessary before Porsche could proceed with gaining regulatory approval from the European Commission, which required further proof a takeover was indeed intended.

Once Porsche has received the green light from various antitrust authorities, it plans to raise its voting stake in Volkswagen to over 50 percent.

Dodge to launch new 2009 Ram with 0 percent loans

Chrysler LLC is offering 0 percent financing for 72 months on 2009 Dodge Ram pickups in most of its business centers. The company announced the offer in a July 8 conference call.

Dealers in several regions of the country confirmed they were scrambling to get the offer into their advertising.

Chrysler is on a company-wide summer shutdown this week. No officials were available to confirm whether the offer is nationwide.

Chuck Eddy, owner of Bob and Chuck Eddy Chrysler Dodge Jeep in Austintown, Ohio, said: "We're trying to get some lift on it (the 2008 Ram)."

Dealers want to unload their slow-selling 2008 Rams to make room for the redesigned 2009 model, which arrives in about two months.

Renaultsport Twingo 133

Renault's hot Twingo will start at £11,500 and go on sale in September.

Renault has offically taken the wraps off its entry-level hot hatch! Called the Renaultsport Twingo 133, the racey looking model will start from £11,500 and go on sale this September, with orders being taken from July.

Almost identical to the Twingo RS concept that was revealed at the Paris Motor Show back in 2006, it gets wider front and rear wings and a aerodynamic spoiler giving it a sporty and agressive look.

Inside, there's a four-spoke steering wheel and rev-counter located directly behind the steering wheel while under the skin, buyers can choose between two suspension set-ups – a standard set up and an even racier Cup chassis.

The hot hatch gets its power from a 1.6-litre 16V engine which delivers 133bhp at 6,750rpm and 160Nm of torque at 4,400rpm. A lot of time has also been spent developing a deeper engine note and the addition of a four-into-one exhaust enhances the performance whilst lowering emissions.

Renault has also announced the first 133 people to order a Twingo will receive a free track day and tuition.

Ford could face suit over troublesome truck engine

Ford Motor Co. once again could be haunted by a diesel engine problem resulting from a batch of bad engines used in 2003- and 2004-model trucks.

A federal court reinstated a lawsuit Wednesday against Ford alleging that the automaker equipped its 2004-model diesel-powered Super Duty pickups with flawed engines from the 2003 model year.

The ruling reopens a motion previously filed to give the suit against Ford class-action status.

The 6th Circuit Court of Appeals in Cincinnati ruled in favor of Kenneth E. Corder of Louisville, Ky., who sued Ford in 2005.

According to court documents, Corder purchased a 2004 F-250 Super Duty pickup that contained a 2003 model year version of the 6.0-liter Power Stroke, instead of the improved 2004-model engine.

Corder said he waited to purchase the 2004 model because of "widely reported problems" with the 2003 engine model, according to court documents.

"The engine in the 2003 F-250 truck was notorious for its deficiencies, which were widely publicized, including leaky fuel injectors, oil leaks, broken turbochargers, wiring harness troubles, faulty sensors, defective exhaust gas recirculation valves and bad computers," U.S. District Judge William Schwarzer wrote in an opinion Wednesday.

Corder sued Ford in 2005 and filed a motion for class-action status to represent anyone who bought a 2004 pickup with a 2003-model engine.

A two-judge majority of three federal judges ruled in favor of reinstating the case. The dissenting judge was U.S. District Judge David McKeague.

"Ford is disappointed with the decision," spokesman Marcey Evans wrote in an e-mail to Automotive News. "The company agrees with Judge McKeague that it is not misleading or deceptive not to inform car purchasers about the manufacturing history of vehicle components, and that the plaintiff in this case, who is satisfied with his properly-performing vehicle, has suffered no loss. We believe that a jury is likely to reach these same conclusions as well."

Ford argued that its engines do not have model years. But Schwarzer wrote today there is "substantial evidence" that Ford distinguished between the 2003 model and 2004 model diesel engines, according to court documents.

The documents cite internal letters from Ford that distinguish between a 2003 engine and 2004 engine.

A U.S. district judge dismissed the suit in 2007 before ruling on the motion seeking class-action status.

The case now returns to U.S. District Court in Louisville for further proceedings.

Ford faced engine problems in 2003- and 2004-model Power Stroke trucks. Automotive News reported in 2005 that at least 58 suits were filed against Ford involving quality problems with the engines.

Ford said in 2005 that its warranty costs soared by $500 million through the first nine months of that year compared with the same period in 2004. Part of the increased costs were to pay for repairs of the faulty diesel engine.

Chevrolet's new compact car to be called the Cruze

General Motors is calling its new compact car for Chevrolet the Cruze, the automaker confirmed late today.

"The name is a derivative of the word cruise," says Nancy Libby, GM spokeswoman.

GM will unveil the production version of the Cruze at the Paris auto show this fall, Libby confirmed.

On June 2, Automotive News reported that GM would build a new compact car to replace the Chevrolet Cobalt at its plant in Lordstown, Ohio. The next day, GM CEO Rick Wagoner confirmed that Chevrolet would get a new compact.

The Cruze will be built on GM's Delta compact car architecture. It will use a new 1.4-liter global engine that GM developed and recently announced in Europe. The turbocharged four-cylinder engine will be used in several GM vehicles worldwide.

GM says the engine will be capable of developing 120 to 140 hp. Sources say mileage could exceed 40 mpg.

Production of the Cruze is slated to start in the middle of 2010 as a 2011 model.

Libby sees the Cruze's main competitors as the Honda Civic, Volkswagen Jetta, Mazda3 and Ford Focus.

The Cruze will be sold globally and will be similar in size to the Cobalt, Libby said. The five-passenger car will be about 15 feet long.

"We're coming to market as a sedan," Libby said. "There's no news yet on any other variants that could be spun from that vehicle."

Libby said the engine will be built in Flint, Mich.

GM unveiled the Cobalt in late 2004 as a 2005 model. It's been a top-selling car since its launch, selling more than 200,000 vehicles annually. Through June, amid a spike in gasoline prices, Cobalt sales are up 18.5 percent to 114,250. In June alone, Cobalt sales rose 21.6 percent versus June 2007.

The demand for the Cobalt has prompted GM to add a third shift at its plant in Lordstown starting on Aug. 4.

Strikes cost Hyundai 2,000 vehicles

Strikes last week cost Hyundai Motor Co. an estimated 30 billion won ($28 million at recent exchange rates) and 2,000 vehicles.

Affiliate Kia Motors Corp. lost an estimated $11 million and 900 units.

Separate unions at the automakers took part in strikes against the South Korean government's deal to resume imports of American beef.

More strikes appear to be planned. Union workers at Hyundai plan to stop work for another four hours on both the day and night shifts on Thursday over a wage deal, the union said on Monday.

The strikes have been organized by a larger group called the Korean Confederation of Trade Unions. Hyundai and Kia unions are members.

The union at Hyundai struck for two shifts Wednesday, July 2, and Thursday, July 3, for a total of six hours, including overtime. The union at Kia struck for a total of four hours.

Unions at GM Daewoo Auto & Technology Co. and Ssangyong Motor Co. did not strike, and no more beef-related strikes have been announced.

But larger strikes could be on the way as all four companies have ongoing contract negotiations with unions. The talks are expected to continue well into July and perhaps into August.

Korean unions, especially the one at Hyundai, typically strike every year during contract negotiations. Last year, the union at Hyundai finished negotiations without striking. But the union joined the more aggressive Korean Federation after last year's talks. While there have been signs rank-and-file members want a more moderate stance from their union, the influence of the powerful Korean Federation could prove to be stronger on union leaders

Fiat, BMW plan small-car alliance

Fiat and BMW will cooperate to develop a new platform for small cars, supplier sources said.

The platform will underpin the next Fiat Grande Punto and BMW's third-generation Mini. Both cars are due early in the next decade.

The two companies are also considering developing a new family of gasoline and diesel engines, sources told Automotive News Europe.

Fiat Group CEO Sergio Marchionne said today that the carmaker will announce a cooperation agreement with another automaker tomorrow.

"Most likely it will be in the car business," Marchionne said on the sidelines of the press introduction of the 500 Abarth model here.

Marchionne did not give any more details on the cooperation.

But supplier sources familiar with the matter told ANE that Fiat and BMW will cooperate on a new small-car platform.

Fiat already has industrial alliances with other carmakers including PSA/Peugeot-Citroen, Suzuki and Tata.

BMW cooperates in Europe with PSA on engine production and the company has a joint venture in China with Brilliance.

Automakers increasingly are cooperating with competitors to reduce investments costs for new models.

China's Chery could bid for Volvo

China's Chery auto group is considering a bid to buy Swedish-based Volvo from Ford Motor, state media said today.

The Caijing business magazine quoted sources as saying that Chery has not yet reached any agreement or applied for permission from the government of Anhui, the company's home province.

It said Jin Yibo, an assistant to Chery's chief executive, had ruled out the possibility of buying Volvo, but other sources told the magazine that Chery had already contacted banks and private equity firms about financial backing for a possible acquisition.

Industry insiders estimated that Volvo could cost Chery more than 30 billion yuan (4.4 billion dollars), it said.

Chery produces several lines of passenger cars, mostly cheap compact models, and plans a share offer in Shanghai next year, Caijing said.

Earlier rumors reported in state media had linked the Shanghai Automotive Industry Corporation to a possible takeover of Volvo.

GM mulls job cuts, sale of brands

General Motors could shed thousands of white-collar jobs and sell or cease producing certain brands as part of a strategy reevaluation, said the Wall Street Journal, citing people familiar with the matter.

The job cuts are expected to be approved at a meeting of the GM board in early August. The management may also suggest options for raising additional cash to help GM make it through the downturn, and may discuss cutting certain brands, the sources said.

A company spokesman declined to comment on either the job or brand cuts, said the report.

GM sells under eight different brands, but most, including Buick, Saturn and Saab, struggle to attract buyers. The company has already decided to put its Hummer division up for sale.

On the job cuts, GM employs 76,000 white-collar workers globally, with the bulk of the force based in North America, said the report.

McLaren SLR Speedster

It looks like Mercedes-McLaren have big plans for its SLR farewell party! With the Mercedes supercar coming to the end of its production life, the German manufacturer has no plans to send the thoroughbred off quietly. Speculation has been growing about a final special edition speedster version of the SLR 722 - and it looks like the rumours were true. Despite the confusing disguise these exclusive spy shots, taken somewhere in the heart of Germany reveal Mercedes and McLaren have one last trick up its sleeve and it appears to be quite a special one.

We can also reveal that 75 examples of the final SLR will be produced and can confirm it will be light-weight speedster versions of the purebred supercar. The limited edition car will pay homage to the silver 300 SLR driven by Stirling Moss in the mid fifties and will have no roof and only a small wind screen in place of the car’s windshield.

Further deletion of the air conditioning system and power windows plus the use of composite materials in the body panels will shave about 440 pounds off the SLR’s kerb weight. The end result will be a car that can accelerate from 0-186 mph in just 26 seconds, on its way to a blistering top speed of about 217 mph, 8 mph faster than any previous SLR.

Sources can also reveal the limited edition SLR is expected to retail from about 450,000 euros if you can manage to get one.

Mercedes-Benz will end McLaren collaboration

Mercedes-Benz will end its partnership with British sports car manufacturer McLaren when its current agreement expires next year.

The German automaker and the British sports car manufacturer built the SLR premium roadster together.

"The partnership ends in 2009 and it will not be renewed," a Mercedes spokesman said.

Media reports say a new flagship premium roadster called the SLC will replace the SLR in 2010. It will be built by Mercedes' in-house performance unit AMG at the automaker's Sindelfingen plant, near Stuttgart, Germany.

Colin Couchman, a London-based auto analyst for Global Insight said that the German automaker needs this "halo" model to emphasize its reputation for engineering excellence.

"The Mercedes ethos has always been to be at the forefront of technology. In the past few years, the company has been distracted by other areas of its business while neglecting the top end of its lineup. They want to make up for lost time," Couchman said.

Couchman said the SLR's high price limited sales. The car starts at 452,200 euros in Germany. Mercedes has sold 1,577 SLRs worldwide since the car's launch in 2003, according to Global Insight.

The car has also suffered from technical problems. The SLR was one of the models affected in a recall of 680,000 Mercedes cars in 2004, after the electronic braking system failed on some vehicles.

In 2006, Mercedes-Benz USA recalled 433 SLRs that had developed overheating problems.

Merrill Lynch downgrades GM

General Motors will need to raise about $15 billion in cash to shore up liquidity and bankruptcy is "not impossible" if the U.S. auto market continues to slump, Merrill Lynch said on Wednesday.

Merrill Lynch analyst John Murphy said in a research note he cut GM to "underperform" from "buy" and lowered his price target for the largest U.S. automaker to $7.

GM shares fell Wednesday to as low as 10.80 on the report. As of 10:50 a.m. EDT, shares of GM were trading at 11.04, down 71 cents, or 6.0 percent.

The downgrade comes one day after GM said that June sales fell 18.5 percent from the same month a year ago. Despite the decline, GM shares closed up on Tuesday. Investors and analysts expected worse, with some predicting Toyota would pass GM in sales for the month.

For the first half of 2008, GM's U.S. sales totaled 1,604,942, down 16.5 percent from last year's 1,922,762.

Murphy also lowered his forecast for 2008 U.S. industry-wide light vehicle sales for the third time this year and said the recent drastic decline in sales would likely to continue through 2009.

He expects 14.3 million U.S. auto sales this year and 14 million units for next year. That compares with 16.15 million units in 2007.

Although analysts have said GM will need to raise capital to cover continued losses before 2010, $15 billion is a higher estimate than any other analysts have suggested.

"The recent extreme deterioration in volume and mix is driving much higher cash burn and eroding GM's cash position," Murphy said. "We believe $15 billion is necessary because there is downside risk to our current estimates and a greater cushion is essential."

Murphy said a decline of 1 million vehicles in annual U.S. auto sales equates to about $3 billion in cash burn.

Any capital GM raises has the potential to dilute equity if it's done through convertible offering, one of the possibilities for the automaker.

Volkswagen Polo

VW supermini set to get a lot more stylish thanks to Scirocco inspired design.

The Polo is getting a ‘fresher’ flavour! VW’s fifth-generation supermini will go on sale next year with a more upmarket look – and a front end which has been given ‘the Scirocco treatment’.

The car’s nose reflects the styling of VW’s sleek coupé – and inside, there is a classier cabin. A range of new engines includes hi-tech, low-emission diesels and super-turbo petrol powerplants.

As you can see from our pictures, produced using insider information, the Polo draws on the next Golf and Scirocco, dropping the large chrome grille seen on recent VWs for a simpler design with twin horizontal air intakes and angled headlights. It’s a cleaner look all-round, with uncluttered flanks, neat tail-lamps and a purposeful stance.

Under the skin, the Polo gets the new PQ25 small car platform – first used by the latest SEAT Ibiza. This means a bigger cabin, even though the dimensions are similar to the current model’s.

Quality will improve, as VW bids to address criticism over falling standards. It promises the Polo will be the best-built car in its class, with a Scirocco-style dash and soft-touch materials.

The generous kit tally will include an MP3 player input and Bluetooth connectivity on most models. Plus, the Polo could get the same sat-nav docking port as the Ibiza – this allows portable, hand-held units to be plugged into the dash.

While the car is unlikely to match the likes of Ford’s next Fiesta for driver fun, the steering will be improved and the ride made more compliant. Engine highlights will include 1.4 and 1.6-litre FSI direct-injection petrol units, plus new TDI turbodiesels.

The Polo will also make use of VW’s 1.4-litre supercharged and turbocharged TSI motor, available in a 138bhp ‘warm hatch’ and a 168bhp GTI variant. There will be a new Bluemotion model, too – this promises to emit less than 100g/km of CO2 and return 75mpg economy.

The firm’s seven-speed DSG twin-clutch box should appear as an option throughout the range. As well as three and five-doors, there will be a coupé-cabrio, inspired by the Karmann-built drop-top seen at 2007’s Frankfurt Motor Show.

In addition, buyers get the option of a four-wheel-drive SUV variant to replace the Dune – as we revealed in Issue 1,018 – and a compact MPV. These models won’t appear until at least 2010, while the hatch arrives next year, starting from around £9,000.

In a related story, VW has revealed more about its future by unveiling its first-ever plug-in hybrid. The Golf-based Twin Drive can run for up to 30 miles solely on battery power thanks to an 82bhp electric motor. When it runs out of energy, a 122bhp 2.0-litre turbodiesel takes over.

It gets stop-start technology, regenerative braking and hits a top speed of about 75mph. Energy comes from lithium-ion batteries that can be plugged into a household socket.

While there are currently no plans to put the Twin Drive into production, some of its features are set to debut on VW models within the next two years.

Ford's talks with Renault to sell Volvo

Ford Motor has had exploratory talks with French automaker Renault to sell Volvo, but the initial talks broke down due to price differences, sources familiar with the matter told Reuters.

The two parties have spoken again after their initial discussions, which were held last fall, the sources said.

Ford has also had talks with China's third-largest automaker, Dongfeng Motor Group, as a potential partner for Volvo, one of the sources said.

Ford spokesman Mark Truby declined to comment directly on the report, but said: "We announced earlier this year that Volvo is not for sale and that we are focused on improving Volvo's business results."

Automotive shares down as raw-material prices surge

Shares were lower in mid-afternoon trade as surging raw materials prices put pressure on automotive and other transport-related stocks.

Automotive stocks were particularly hit by news that oil prices reached a record high last Friday and a prerelease of auto motor und sport magazine which quoted ArcelorMittal's vice president for Automotives Jean-Luc Maurange as saying the company plans to charge higher prices to carmakers due to surging raw materials costs.

Daimler was off 0.99, or 2.48 percent, at 38.89 while BMW was down 0.15, or 0.50 percent, at 30.04.

Another factor contributing to weaker car stocks was Lehman Brothers' removal of Peugeot and Daimler from its Recommended Portfolio List, according to traders.

The only car stock on positive terrain so far was Volkswagen, up 0.86, or 0.48 percent, at 179.92. VW's management board is set to decide July 8 on the site of its new 500 million euro production site in the United States, auto motor und sport reported, citing management sources.