Ford CEO doesn’t see robot army on roads anytime soon

SAN FRANCISCO — Ford Motor Co. CEO Jim Hackett doesn’t foresee a robot takeover when it comes to the advent of autonomous vehicles.

Hackett outlined his vision for future mobility at Ford’s City of Tomorrow event in San Francisco on Thursday. Rather than predict an all pod-car streetscape within the next decade, he said technology will gradually augment current challenges, easing pain points such as limited parking and vehicle access that commuters deal with on a daily basis.

“When you paint the robots as perfect and humans as imperfect, we’ve made a big mistake,” Hackett said. “We don’t need the robot to get around.”

Hackett, who formerly headed Ford’s Smart Mobility subsidiary before replacingMark Fields as CEO in May, has been tasked with formulating Ford’s mobility strategy in an increasingly competitive field. The company has invested in various transportation technologies, including lidar-maker Velodyne, mapping startup Civil Maps, bikeshare company Motivate, ride-sharing startup Chariot and autonomous driving startup Argo AI.

In July, Hackett said he was using his first 100 days as CEO to review Ford’s future product plans — which includes the introduction of a Level 4 self-driving vehicle for commercial use by 2021.

To make the most of technological innovations in transportation, companies must examine every perspective, Hackett said, and work to create an egalitarian system. While automated technology can ease problems such as crash avoidance, navigating traffic accidents and parking options, it can’t fully address problems of equal access on its own.

Hackett said a combination of analog and new technologies will be necessary to create a better transportation environment.

“Networks only get stronger by inclusion, there’s no gain by carving someone out,” he said.

Hackett acknowledged that some of Ford’s competitors in autonomous vehicle development have gained an advantage in data collection by operating services off of smartphones, adding that to deliver effective mobility services, Ford must be able to understand consumer patterns and preferences.

“We need to be able to piece together these attributes of what inside a city are the pain points for customers today,” he said. “We can then marry that technological capability to the stepping stones of the pain points in a city.”

Detroit 3 to tout performance and vintage cars at Woodward Dream Cruise

DERTOIT — Ford, Chevy and Dodge will turn to the Woodward Dream Cruise, a classic-car celebration in suburban Detroit, on Saturday to generate some marketing buzz on their offerings.

Ford signed on in June on as the event’s one-year presenting sponsor, replacing Chevrolet’s previous six-year sponsorship. The extravaganza is expected to draw around 1.5 million people.

While Ford will host its mainstay event, Mustang Alley, a pony car display, it will also introduce a new driving-skills exhibit. The Driving Skills for Life program will teach drivers safety techniques through a virtual reality app, made to simulate the experience of driving a Ford vehicle.

For more Dream Cruise coverage from Autoweek, the auto enthusiast affiliate of Automotive News, click here.

“This year we are expanding Mustang Alley west for the first time to create a larger footprint than years past,” a spokesman for Ford said. “We’re also adding the Driving Skills exhibit as a free event to draw in more people.”

Dodge, on the other hand, wants racing enthusiasts to take a shot at smoky burnouts during Roadkill Nights “Powered by Dodge.” The thousands of people expected at Roadkill Nights can also take a thrill ride with a professional driver in a Dodge Challenger SRT Hellcat, Charger SRT Hellcat or Viper.

Chevrolet will occupy its traditional spot at the “triangle” — where Woodward and Old Woodward meet north of Detroit in Birmingham — to show off its pickups and the Camaro and Corvette.

Although the event entertains thousands with food, music and speedsters, Ford also sees it as an opportunity to extend its marketing reach.

“Dream Cruise is all about the sheer joy and freedom of the automobile, and Ford has always celebrated car culture,” Ford marketing chief Mark LaNeve said in a statement. “From Fiesta to GT, we’re obsessed with making driving fun and we’re committed to celebrating that passion with enthusiasts of all ages in the birthplace of motoring.”

Here are additional details about the brands’ plans:

Ford Performance

    • Mustang Alley , in its 19th year at the Dream Cruise, features an array of muscle cars and the 2018 Mustang.

    • Vaugn Gittin Jr. will show off his toy collection, including an RTR Mustang and Formula D race car.

    • At multiple spots along Woodward, Ford will display its performance catalog, including the 2018 Mustang Shelby GT, Focus RS and F-150 Raptor.

    • The Driving Skills for Life exhibit will help new drivers master their vehicles by simulating the experience of driving through virtual reality.

    • Ford car clubs that don’t have a separate location on Woodward can show their vehicles at the enthusiast meetup at Memorial Park in nearby Pleasant Ridge.

    Dodge Showcase

      • Dodge’s celebration of old-style muscle, Roadkill Nights, started on Aug. 12 on one-quarter mile of Woodward in Pontiac. It will continue through Saturday Aug. 19.

      • An M-1 course neighboring the Roadkill Nights track will host a car show, simulators and dyno tests. Last year the event drew around 30,000 spectators.

      • A celebrity drag race will take place that evening at 6:30 p.m., featuring Roadkill hosts and celebrities from “House of Muscle” and “Hot Rod Garage.”

      Chevy Showcase

        • Chevy will have Heritage displays of its pickups aand the Camaro and Corvette as well as Redline Edition models and the full Chevy lineup at the confluence of Woodward and Old Woodward in Birmingham.

        • The triangle formed by Woodward and Old Woodward will also showcase the new Camaro ZL1 NASCAR Cup Series Race.

        • At 13 Mile and Woodward, Chevy will have a Performance and Motorsports display including concepts that feature performance parts and accessories. Race cars will also be on display here.

        • The Corvettes on Woodward Event — a main attraction for Corvette owners in past years — has been canceled this year, with hopes of resuming in 2018.

BMW remaps the roadster with Concept Z4



BMW Group on Thursday unveiled a long-awaited concept car that indicates the design direction for the next-generation Z4 roadster.

The Concept Z4, introduced during Monterey Car Week in Pebble Beach, Calif., is BMW’s vision of a modern roadster. It is a preview of the production car that BMW says is set “to be revealed over the course of next year.” The next-generation Z4 is expected to go on sale in the U.S. in the first half of 2019.

BMW Group design chief Adrian van Hooydonk says the Z4 concept “expresses the new BMW design language from all perspectives and in all details.”

“Stripping the car back to the essentials allows the driver to experience all the ingredients of motoring pleasure with supreme directness,” Hooydonk said in a statement. “This is total freedom on four wheels.”

Compact, sporty cars are a small but bright spot in an overall U.S. car market that is expected to shrink for the fourth consecutive year in 2017. U.S. sales of small sporty cars, largely behind the Mazda MX-5 Miata and Fiat Spider, are up 9 percent this year while the overall car market has slumped 12 percent.

The last Z4 went out of production in August 2016. BMW is working with Toyota to jointly develop the Z4’s replacement and a Toyota sports coupe speculated to be a revived Toyota Supra. The cars will use a new lightweight platform, and the next-generation Z4 is expected to grow in size.

The Concept Z4 has classic roadster design cues such as a long wheelbase, a low-slung and stretched silhouette and a compact rear end. But a shorter hood and “crisp” overhangs in the wedge-shaped concept put the driver closer to the center of the car than in previous BMW roadsters, the company says.

It also notes that juxtaposition of the low-set kidney grille and higher-up headlights makes for a deliberate association with the old BMW Z8. Instead of the customary bars, the inside of the kidney grille uses an elaborate mesh meant to recall the design of early BMW roadsters such as the BMW 328 Mille Miglia. The vehicle’s interior is designed for a total focus on the driving experience. Display screens are integrated into the driver’s cockpit, and all controls are grouped into what are called function islands.

There had been speculation that the Z4’s successor would be named the Z5, but that will not happen. Whether the new car will include a manual transmission had been in question. But reports indicate that a manual will be offered, along with new four- and six-cylinder engines. A plug-in hybrid variant is possible. A fabric roof will replace the retractable hard top on the previous-generation Z4.

GM thwarts plaintiffs’ $1 billion accord with Old GM trust fund

NEW YORK — General Motors thwarted a $15 million settlement between the company’s bankruptcy trust and thousands of plaintiffs that would have forced the automaker to contribute $1 billion in stock, prompting claims of a plot cooked up behind closed doors.

The now-derailed deal was intended to resolve hundreds of personal-injury cases stemming from GM’s faulty ignition switches, as well as a class-action suit over millions of vehicles that allegedly lost value due to a series of recalls in 2014. In a letter filed Thursday in U.S. Bankruptcy Court in Manhattan, lawyers for the plaintiffs said GM conspired with the trust to block the accord after GM previously accused the trust and the plaintiffs of engaging in the same behavior in negotiations last week.

GM “undertook a secret, contrived scheme to undermine the settlement agreement through a campaign of threats, intimidation and payoffs,” plaintiffs attorney Edward Weisfelner said in the letter, which was dated Wednesday. “At a minimum, it is the pot calling the kettle black.”

GM had fumed at the settlement and promised a court fight over what it called a “contrived scheme” to extract the $1 billion in stock. The company has been fighting to move on from the litigation after previously paying at least $870 million to settle claims and an additional $900 million to the Department of Justice to resolve a criminal probe.

GM spokesman Jim Cain said “we are pleased” that the company can continue fighting what it calls bogus personal injury claims in court instead of settling.

“Now the focus can return to where it belongs, which is the merits of the plaintiffs’ remaining claims,” he said in an email. “We will demonstrate that those claims lack merit.”

The General Unsecured Creditors Trust said it reached a separate agreement with GM under which the auto maker will pay the trust an unspecified sum to cover legal expenses for fighting the claims, according to a separate letter filed Wednesday in court.

“The GUC Trust has decided to resolve this dispute through a proposed settlement agreement with New GM,” the trust’s attorney, Matthew J. Williams, said in the letter. The previous talks with plaintiffs “did not result in a final or binding agreement.”

The settlement between the plaintiffs and the trust was due to be signed Aug. 15 and discussed at a hearing in bankruptcy court Thursday. Under that deal, the trust would have paid plaintiffs $15 million and accepted $10 billion in previously disputed claims, which would have pushed total approved claims in the case beyond a critical threshold of $35 billion.

That would have triggered a provision of the 2009 bankruptcy sale that would have forced GM to contribute $1 billion in stock to help pay the claims. GM argues the $10 billion figure had no basis in fact, and that the claims are barred because they were filed too late after the bankruptcy.

GM was encouraged to keep fighting the claims after recent court rulings narrowed the types of cases that can survive the litigation. One such ruling in July 2016 found the plaintiffs’ broadest theory of damages as “unprecedented and unsound.” GM has also come out on top in a series of test trials in cases over faulty switches that the company didn’t believe were legitimate.

The case is In Re: General Motors Ignition Switch Litigation, 14-MD-2543, U.S. District Court, Southern District of New York (Manhattan).

Ford settles racial, sexual harassment probe for $10.1 million

Ford Motor Co. agreed to pay $10.1 million to settle sexual and racial harassment allegations by workers at two Chicago plants, resolving an investigation by the U.S. Equal Employment Opportunity Commission.

The investigation yielded reasonable cause that personnel at the Chicago Assembly Plant and the Chicago Stamping Plant had subjected African-American and female employees to racial and sexual harassment — violating Title VII of the Civil Rights Act of 1964, the agency said in a statement Tuesday,

The agency also said the company retaliated against employees who complained about harassment or discrimination.

Ford, in a statement, said it agreed to close the matter without admission of liability to “avoid an extended dispute.”

The automaker added that after conducting its own investigation “appropriate action” was taken, including “disciplinary action up to and including dismissal for individuals who violated the company’s anti-harassment policy.”

Eligible employees are entitled to a portion of the settlement via a claims process outlined in the agreement.

It also ensures that during the next five years, Ford will conduct training regularly at the Chicago facilities, and “continue to disseminate” anti-harassment and anti-discrimination policies and procedures to employees and new hires.

A spokeswoman for the agency declined to add any additional information about the case.

Ford said the group of employees eligible for settlement money are either women or African-American men who began working at the plant after Jan. 1, 2010, the Detroit Free Press reported.

The automaker will also consult the EEOC regarding complaints of harassment and related discrimination; and monitor its workforce regarding issues of that nature.

BMW’s ‘future-proof’ EV strategy

BMW is hedging its bets on the future by planning combustion, hybrid and electric versions of its core nameplates — with all three varieties capable of coming from the same assembly line.

The idea, BMW executives say, is to flex production among powertrain types according to the whims of the market. Today’s uncertain forecasts for electric vehicles are the motivator.

“Nobody knows how many electric vehicles you’ll sell in 2020, 2021 and 2025,” BMW CEO Harald Krueger said. “You don’t know how many plug-in hybrids you will sell, and you don’t know how many combustion engines you will sell. The only answer is flexibility [to] deliver all three.”

The approach can help the automaker avoid having to idle some factories while other plants can’t keep up when demand diverges from forecasts. The strategy also calls for BMW to develop “future-proof” platforms that can handle electric powertrains as well as combustion engines.

Future Product: BMW, Mini brand timelines

Future Product: Mercedes-Benz, Smart brand timelines

PDF: BMW, Mercedes-Benz, Mini and Smart Future Products

Future Product Pipeline

The X3 crossover and 3-series sedan are among the first vehicles likely to offer all available powertrain types. BMW has confirmed it will introduce an electric X3 in 2020, and an electric 3 series is expected in 2019 or 2020, after the compact sedan is redesigned. Both the X3 and 3 series will move to BMW’s CLAR cluster architecture, a highly flexible vehicle platform that allows for any of the planned powertrains.

“The strategy for the future is to integrate all drivetrains, whether it’s purely battery-electric, whether it’s a hybrid or a purely combustion engine,” said Oliver Zipse, BMW AG board member in charge of production. “You will see battery-electric right after diesel right after hybrid on the assembly line. That’s the only way we think to respond to the necessary flexibility because we don’t know the demand.”

The approach is a major departure from the philosophy employed today. When BMW launched its i3 electric compact and i8 plug-in hybrid sports car in 2013 and 2014, it created dedicated production systems in its Leipzig, Germany, assembly plant.

“It was a plant inside a plant, so to say,” Zipse recalled. “Completely separated. That is not our strategy for the future.”

Moving to the new integration concept will require investment in BMW’s assembly plants, Zipse said. For instance, body shops need to make changes to fit big, flat battery packs into the floor of the vehicle. The company would set up a side line inside the body shop to assemble the differently shaped floors, and everything would then come together in the main framing station, he said.

Because EV batteries are so heavy — around 900 to 2,000 pounds — having battery assembly on-site or very close to the assembly plant also is important, Zipse said. That will avoid the cost and complexity of having to ship such a heavy component.

BMW’s plant in Spartanburg, S.C., is starting down the path toward a more flexible production system. The plant assembles the X5 crossover, with a plug-in hybrid variant already integrated into the production line, Zipse said. “You can do the same thing with a purely battery-electric,” he said.

The plant has produced about 25,000 plug-in hybrid X5s since production started in 2015, said Knudt Flor, CEO of BMW Manufacturing Co. in Spartanburg. Battery production already is done on-site for that vehicle.

Going forward, Spartanburg will be configured to assemble EV versions of its vehicles. BMW assembles the X3 through X6 crossovers in Spartanburg and will add the X7 large crossover in late 2018.

Spartanburg will be able to produce the full range of combustion, plug-in hybrid and electric powertrains with coming models, Flor said. The X3 would be a “good option” for the approach if there’s demand for that powertrain range, he added.

“Everything depends on what the customer demands, but then we need to be able to integrate very fast,” Flor said. “We need to have this production-ready.”

Even with the plan for electric versions of its core models, BMW will continue its i electric car subbrand. The next new i nameplate will be the iNEXT, with advanced autonomous driving features, in 2021.

But BMW doesn’t want to split all EVs into a separate line, Krueger says.

“What might happen is, you can destroy the brand,” Krueger said. “You have your old-fashioned business and a modern business, and in between, you’ve killed the brand.”

Genesis plans clean break from Hyundai

LOS ANGELES — Hyundai’s fledgling Genesis marque wants out of the nest — now.

This month, the brand plans to announce a new retail strategy for the U.S. that will accelerate its separation from the Hyundai marque and significantly cut the number of dealerships authorized to sell Genesis models.

The transition, which was supposed to be several years off, likely will be messy and costly for Hyundai and the culled Genesis dealers. It comes less than two years after Hyundai announced the creation of the Genesis brand, barely a year after it officially put the G80 and G90 sedans on sale and just ahead of the launch of a critical new vehicle, a BMW 3-series fighter called the G70.

And it will require a delicate dance by Hyundai Motor America to protect its relationships with castoff dealers, who will retain their Hyundai franchises after the dust settles.

“We don’t see a path forward without a good, strong dealer network that’s also profitable,” Genesis General Manager Erwin Raphael told Automotive News. “And we sometimes have to make

very difficult decisions in the short run in order to ensure that we take care of our … dealers in the long run.”

Genesis plans to have the framework in place by the middle of next year, it says.

The planned reset comes amid a debacle in Louisiana, where Hyundai Motor America last month grounded all sales of Genesis vehicles after allegations from the state’s Motor Vehicle Commission that the automaker and the dealers lacked proper licenses to sell vehicles under the new brand. A month earlier, dealers said, Hyundai had outlined plans to trim its Genesis network in the state to just two dealers from 13.

The automaker has nearly completed the paperwork to put it in good standing with the commission, Raphael said, attributing the problem to a hasty ramp-up.

Tangled web

Genesis’ retail network is a bit of a tangle, owing to its awkward start as a Hyundai nameplate and then a distinct brand that absorbed two Hyundai luxury models. Hyundai allows any of its 835 dealerships nationwide to sell the Genesis G80 sedan, which was formerly called the Hyundai Genesis. Of those stores, 352 also have opted to carry the larger G90 sedan, which requires them to create a showroom-within-a-showroom for the Genesis brand.

This select group emerged from Hyundai’s efforts to create a special retail environment for a top-of-the-line model that was called the Hyundai Equus before Genesis became its own marque.

Under the original plan, Genesis-only stores were to be phased in two to three years after Genesis started selling vehicles last August. Genesis planned to use them concurrently with the showroom-within-a-showroom setup, along with some dealerships that had separate sales facilities for Hyundai and Genesis but shared service centers. Those Hyundai dealers selling the G80 were then to be phased out when the next generation of the car arrived around 2019.

The updated plan moves that timetable forward by one to two years and will focus solely on separating the two makes, though details haven’t yet been made available to dealers, Raphael said.

It will shift from the store-within-a-store approach to a distinct Genesis presence.

Hyundai dealers will be allowed to apply for Genesis franchises, with priority given to locations in and around urban areas.

Only full Genesis franchisees will be able to do warranty repairs on Genesis vehicles, a condition that’s certain to be a sticking point with dealers, who had expected to be able to do factory-paid warranty work on Genesis vehicles under the previous plan.

“For this brand to really survive and thrive, and for us to develop the culture within ourselves and within our dealer network to support and take care of these customers, we do in fact have to expedite our process of separating our brands,” Raphael said.

Genesis has sold 11,563 vehicles this year through July.

Raphael declined to say how many stores Genesis wanted, though the number is expected to be significantly smaller than the 352 that carry the G90, according to several Hyundai dealers.

Genesis has retained outside legal counsel — which it declined to identify — to help it extricate itself from agreements with dealers who invested considerable time and money in the Genesis brand. The automaker also has hired a trio of outside consulting agencies to help it properly set up the new dealer plan, a spokesman said.

Customers balk

Raphael said the decision to fast-track Genesis’ separation came after feedback from Genesis dealers indicated that a smaller retail network was necessary to maximize profits.

He also cited data from customer clinics showing that buyers disliked the idea of shopping for a $50,000 or $60,000 luxury vehicle at a Hyundai showroom amid Elantras and Accents.

That posed a sensitive problem as Genesis prepares to launch its first new vehicle, the G70 sedan, which is expected to debut this year and be on sale in the U.S. in early 2018. Raphael said the timing of the new strategy wasn’t tied to the G70 launch.

Trimming the dealer network has long been a goal of Genesis execs. The problem, Raphael said, is that while most Genesis dealers agree on the need for fewer storefronts, no one wants to give up the franchise.

That much was clear to execs even at the dawn of Genesis, which raises the question of why the company required retailers to spend thousands of dollars on dealership improvements, new hires and training, service and parts upgrades and marketing, only to have to scale them back later.

The answer, says Andrew DiFeo, chairman of the Hyundai National Dealer Council, was haste in getting the luxury brand off the ground.

“The directive to launch the brand trumped that,” said DiFeo, whose St. Augustine, Fla., Hyundai store carries Genesis vehicles. “At the time, this was maybe the easiest, least-painful route in the short term. But it affected the brand negatively in the long term.”

Rolls-Royce’s smaller models open doors for a younger audience

PHOTO GALLERY: Rolls-Royce Phantom VIII


LONDON — In 2003, Rolls-Royce pinned the future of its brand on the then-new Phantom VII sedan. The massive vehicle — literally and figuratively — was the first Rolls designed and built under the financial and technological stewardship of parent company BMW, and it firmly planted the once-staid Rolls brand in the 21st century.

Fast-forward 14 years to the July debut of its successor, the Phantom VIII, and the model is still very much a behemoth (287 pounds of sound deadening). It still sits atop the Rolls/BMW hierarchy, and company executives still refer to it in reverential terms such as “pinnacle,” “flagship” and “ultimate.”

But over that decade and a half, Rolls-Royce has changed.

The Phantom has eroded almost to professor emeritus status within the Rolls-Royce lineup. Smaller, more approachable models have surged to the top of Rolls’ sales charts, accounting for roughly 85 percent of Rolls’ 4,011 global sales in 2016, according to the automaker.

Those sales came from a trio of models, starting with the Ghost sedan introduced in 2010, which was later spun into a coupe variant called the Wraith and a convertible dubbed the Dawn. Performance-minded Black Badge variations of all three were tasked with enhancing the brand’s appeal among a younger set of global 1 percenters.

And 2018 will mark the arrival of what Rolls is calling Project Cullinan: a crossover built on the Phantom VIII’s aluminum architecture.

These broader horizons have had the kind of effect at Rolls that all automakers covet: Its buyers are now younger. Before the Ghost was launched, the average age of a Rolls buyer was 56. Today, it’s 45, according to the automaker.

Those buyers include the same captains of industry, heads of state and professional athletes and entertainers who gravitated toward the Rolls of yore. But this modern era has pulled in a wider audience, Torsten Mueller-Oetvoes, CEO of Rolls-Royce, told Automotive News.

That’s backed up by what dealers see, too, particularly the introduction of the Wraith coupe and the Black Badge models.

“That has really, really gone a long way in actually bringing in a totally new buyer and shedding that stigma of Rolls-Royce being the old man’s car, so to speak,” said Alan Sheynin, Rolls-Royce sales manager at Miller Motorcars in Greenwich, Conn..

Relaunching the brand in the modern era with the Phantom VII in 2003 provided a halo that could spread to the lesser subsequent models.

“I think it was wise to relaunch the brand with Phantom to come from the top and not to come from somewhere in between and then to go up to the top,” Mueller-Oetvoes said. “That never works for a lot of branding reasons.”

With less riding on its shoulders, the Phantom VIII doesn’t change the recipe of its predecessor. It has a 6.75-liter V-12 (now twin-turbocharged where it was previously naturally aspirated), a satellite-linked eight-speed transmission from ZF and some of the softest leather in the industry.

To this, Rolls added more modern amenities (digital screens in the instrument panel, a Wi-Fi hot spot and power doors that close at the touch of the valet’s hand), rear-wheel steering, more trunk space and bespoke options.

Bigger changes to the car loom, including a jump into full electrification sometime in the next decade, Mueller-Oetvoes said.

Despite the success that the Ghost, Wraith and Dawn have had in broadening Rolls’ customer base, there is a firm floor to where Mueller-Oetvoes wants to take the brand.

A V-8 model in the name of higher volumes? Never.

That would be like asking a Swiss-watch enthusiast to accept a less-intricate movement, he said.

“This is detrimental for luxury,” Mueller-Oetvoes said. “It’s not what we would do.”

Detroit wants Trump to play offense in trade talks

Standard issue
U.S. automakers are pushing for broader acceptance of U.S. vehicle standards as a way to increase exports.

  • Mexico, Canada: Accept motor vehicles certified to U.S. safety and environmental standards
  • Japan, European Union: Require vehicles to be significantly modified to comply with U.N. Economic Commission for Europe safety standards, plus unique national auto standards
  • South Korea: Allows 25,000 U.S. imports per year, per manufacturer as long as they meet U.S. safety standards. Emission and other standards are not included, so modifications are still needed to sell in Korea

WASHINGTON — They say defense wins championships. But in the context of trade, U.S. automakers want the Trump administration to go on offense, arguing that eliminating barriers to exports will do more to support the domestic industry than defensive measures to punish imports.

A big part of their game plan: get U.S. negotiators to aggressively push other nations to accept U.S. safety and performance standards for vehicles, alongside European Union or domestic standards.

The standards issue factors in the heated competition between U.S. and European manufacturers for global sales. Broader acceptance of U.S. standards is needed, U.S. automakers say, because it is too expensive to build vehicles to comply with disparate standards.

“Inaction in the face of the EU’s efforts to promote its auto safety standards, and inaction in response to the broader regulatory fragmentation the industry is experiencing will lead to a further isolation of the U.S. and a shrinking ability to export vehicles to key emerging and growing markets,” the American Automotive Policy Council, which represents the Detroit 3, said recently in comments submitted to the U.S. Trade Representative as part of its investigation into trade deficits.

Upcoming talks to renegotiate the North American Free Trade Agreement and tweak the bilateral trade pact with South Korea are expected to heavily focus on automobiles.

Industry officials and trade experts say the European Union in recent years has masterfully persuaded countries in other regions to accept vehicles certified to European safety standards, which often effectively freezes out cars built to U.S. standards. The potential damage to U.S. companies is even greater when EU standards are incorporated into free-trade agreements, such as with Vietnam, because regulators in participating countries often interpret the language as an exclusive standard.

European officials have marketed their auto standards as a de facto international standard because they are developed through the U.N. Economic Commission for Europe, which all countries can participate in even though it is a regional body.

A U.S.-certified vehicle must undergo 26 changes, including for external mirrors and defrosting systems, to make it compliant for the EU market. Those changes can cost as much as $1,150 per unit, making it unprofitable for certain U.S.-made vehicles to be sold in markets that exclusively recognize EU standards, according to the American Automotive Policy Council filing.

“What we encourage other countries to do is to accept both,” council President Matt Blunt said in an interview.

Japan and South Korea, notably, have long had standards that effectively limit U.S. auto imports. In the 1990s, Japan approved U.S. vehicle standards, but only for a small annual quota.

The U.S. has had modest success countering EU efforts in Latin America and the Middle East. However, a more sustained global effort is necessary to keep open markets that accept U.S.-certified vehicles, as well as to expand the number of countries that accept U.S. auto standards, the American Automotive Policy Council said.

It also urged the government to re-engage with the U.N.’s special working group where global technical regulations are negotiated to jump-start a moribund process.

Automakers saw the Obama administration’s pursuit of a U.S.-EU free-trade agreement as an opportunity to achieve mutual recognition of auto standards, which could have opened other markets that endorse the European standards. But the Trump administration, which is hostile to multilateral trade pacts, has scuttled the Transatlantic Trade and Investment Partnership.

“The challenge for U.S. negotiators is how to get greater acceptance of U.S. standards by other countries, while for our own domestic purposes we make sure that the high level of standards the U.S. has are maintained,” said Robert Holleyman, deputy U.S. trade representative under President Barack Obama and now president of Crowell & Moring’s government affairs affiliate. “The U.S. may have the gold standard and doesn’t want to water it down.”

The automakers’ new game plan includes an old play: pushing the U.S. government to write strong, enforceable rules against currency manipulation into free-trade agreements. Countries such as South Korea and Japan, they argue, have benefited from keeping their currency artificially weak to boost exports and deter imports.

Other trade associations for U.S.-based automakers and suppliers have joined the Detroit 3 to urge the Trump administration to lock in standards recognition and currency manipulation as provisions in NAFTA so it can be a model for future deals, even though the problems don’t exist in Canada and Mexico.

Standard issue
U.S. automakers are pushing for broader acceptance of U.S. vehicle standards as a way to increase exports.

  • Mexico, Canada: Accept motor vehicles certified to U.S. safety and environmental standards
  • Japan, European Union: Require vehicles to be significantly modified to comply with U.N. Economic Commission for Europe safety standards, plus unique national auto standards
  • South Korea: Allows 25,000 U.S. imports per year, per manufacturer as long as they meet U.S. safety standards. Emission and other standards are not included, so modifications are still needed to sell in Korea

VW exec who oversaw U.S. environmental compliance pleads guilty to lesser charges

DETROIT — Oliver Schmidt, the former chief of Volkswagen AG’s environmental and engineering center in Michigan, pleaded guilty to reduced charges Friday as part of a plea deal for his role in the company’s diesel emissions scandal.

Schmidt, wearing shackles and a burgundy jail uniform, pleaded guilty in U.S. District Court here to charges of conspiracy to defraud the United States and violating the Clean Air Act. A third charge of aiding and abetting wire fraud that was originally expected to be part of the plea was rolled into the conspiracy charge.

Schmidt, a German citizen, will remain in custody until sentencing on Dec. 6.

Under the terms of a plea agreement with federal prosecutors, he faces up to 84 months in prison and a fine ranging from $40,000 to $400,000. Although the agreement does not call for him to pay any restitution, it would require him to be deported after completing the sentence.

The plea agreement does not include any mention of Schmidt agreeing to cooperate with prosecutors.

Schmidt was originally charged with 11 felony counts. Federal prosecutors said at the time that he could face a maximum of 169 years in prison.

The deal allows Schmidtto avoid a trial that likely would have been lengthy. As part of the plea and proceeding, Schmidt admitted he was aware that the company for years used “defeat device” software to cheat on U.S. emissions tests. He also admitted to being involved with other company executives on how to answer questions about discrepancies with the emissions of the affected vehicles without revealing the defeat devices.

He said he was made aware of the software in the summer of 2015. He then submitted fraudulent and misleading emissions defect information reports to the federal government for vehicles with the defeat devices.

Schmidt, aside from reading prepared remarks about why he believes he is guilty, spent most of the proceeding replying directly to U.S. District Judge Sean Cox with “yes, your honor” or “no, your honor.”

A lawyer for Schmidt, David DuMouchel, declined to comment.

Schmidt has been held since January when he was arrested in Miami while trying to return to Germany. It was unclear whether Schmidt is still employed by the company. He has been in custody since his arrest and was denied bail.

He is one of eight current and former executives charged in the U.S. emissions probe. However, most charged are in Germany and may not travel to the United States because Germany typically does not extradite its citizens.

In July, the Justice Department charged former Audi manager Giovanni Pamio with directing employees to design software enabling thousands of Audi diesel cars to beat U.S. emissions tests. He was arrested in Germany.

James Liang, a VW employee who pleaded guilty to misleading regulators, is cooperating with prosecutors and is expected to be sentenced on Aug. 25.

Volkswagen has agreed to spend as much as $25 billion in the U.S. to resolve claims from owners and regulators over polluting diesel vehicles and offered to buy back about 500,000 vehicles.