Sports Direct increases Debenhams stake to 16%

Sports Direct boss Mike Ashley

Mike Ashley’s Sports Direct has raised its stake in High Street department store chain Debenhams.

Sports Direct has now upped its interest in Debenhams stock from 13.38% to 16.09%.

But instead of buying Debenhams shares outright, the sports firm instead holds “options in stock”, which gives it a right to buy shares at a future date.

It also holds “contracts for differences”, a form of financial bet on the future Debenhams share price.

Sports Direct first more than three years ago.

Sports Direct has 420 UK stores and owns several brands including Dunlop, Slazenger, Everlast and Karrimor.

It was taken public by Mr Ashley in February 2007 and is a member of the FTSE 250, having spent two-and-a-half years years in the FTSE 100.

Debenhams has 240 stores in 27 countries and reports its half-year results on 20 April.

Shares in the company were trading as high as 81.55p last April, but now stand at 54.40p.

Quality takes toll on Ford exec bonuses

DETROIT — Ford Motor Co. fell short of its internal quality targets in 2016, meaning executives lost out on hundreds of thousands of bonus dollars.

The automaker’s top brass achieved 52 percent of the quality goals its board of directors set in 2016, down from 118 percent in 2015, according to its annual shareholder proxy statement released last week.

Ford measures quality in three ways: things gone wrong at three months of ownership, customer satisfaction at three months of ownership, and warranty spending per business unit. Each of those three metrics is recorded for Ford’s five business regions: North America, South America, Europe, Middle East and Africa, and Asia Pacific.

Ford hit 41 percent of its goals for things gone wrong, 27 percent of its customer satisfaction goals, and 88 percent of its warranty goals.

Ford declined to break down each segment performance across the company’s individual business units. It did say that its North American performance on things gone wrong was similar in 2015 and 2016, but the company set more stringent targets for itself last year.

Compensation for Ford executives

Base salaryBonusesStock awardsTotal*
Mark Fields$1.8 million$2.7 milllion$14.3 million$22.1 million
Bill Ford$1.6 million$760,000$8.7 million$13.9 million
Joe Hinrichs$1.1 million$807,880$3.9 million$6.7 million
Jim Farley$918,750$703,000$3.6 million$6.6 million
Bob Shanks$858,000$656,640$3.8 million$6.3 million
*Includes changes in pension value and deferred compensation earnings, and other compensation including perquisites such as private use of company aircraft.
Source: Proxy statement

Door-latch recall

Part of the miss stems from a $640 million warranty hit Ford took in the third quarter for a recall of 1.5 million vehicles with faulty door latches.

The Ford brand ranked 15th out of 29 brands in Consumer Reports‘ annual owner satisfaction study.In that study, 72 percent of owners said they’d buy a Ford again. Lincoln ranked 12th, with 73 percent of owners saying they would buy the brand again. The survey focused on the 2014-17 model years.

The quality shortfall drove down Ford’s overall performance measurements — used as the basis for executive bonuses — to 76 percent in 2016, down from 113 percent in 2015.

Management achieved 8 percent of their targets for automotive segment revenue and 82 percent of Ford Credit pretax profit goals. They exceeded expectations for automotive operating margin and operating cash flow.

Bonus cuts

The missed expectations were costly. CEO Mark Fields, for example, made a $2.7 million incentive bonus from hitting 76 percent of Ford’s total goals. He could have earned $864,000 more if the company reached 100 percent.

Fields’ total compensation was $22.1 million, which included a $2.5 million equity incentive grant for the progress he’s made expanding the company’s alternative mobility services. (For details, see chart).

Joe Hinrichs, president of the Americas, would have made an additional $255,120; Executive Chairman Bill Ford would have made an additional $240,000; President of Europe, Middle East and Africa Jim Farley could have made an additional $222,000; and CFO Bob Shanks could have earned an additional $207,360.

The compensation committee of Ford’s board of directors has set 2017 targets, which will be disclosed in next year’s proxy.

Ford’s annual shareholders meeting will be May 11, but this year it will be virtual. Normally the meeting has been held in Delaware, where the automaker is incorporated.

Bill Ford said in a statement that the virtual meeting “will enable us to increase shareholder accessibility, while improving efficiency and reducing costs.” Shareholders will be able to listen, vote and submit questions from any location with Internet connectivity.

On the agenda again is a shareholder proposal to end Ford’s two-tier class stock system, which allows family members to maintain control of the company.

Acura thinks small on its big hybrid

SEATTLE — The forthcoming Acura MDX Sport Hybrid is the largest hybrid variant American Honda has brought to market. Yet the company is thinking small.

Acura is expecting this new hybrid model of its three-row midsize crossover to account for just 5 percent of total MDX sales, or between 2,000 and 3,000 units annually. That’s a surprisingly conservative goal considering the MDX has been Acura’s best-selling vehicle since 2010, regularly reaping sales of more than 50,000 units a year.

Honda’s luxury division is basing much of its expectations for the MDX hybrid on the performance of the Lexus RX 450h — the volume leader among premium hybrid crossovers. That variant has accounted for an average of 9.5 percent of all RX sales over the past five years, according to Lexus.

But Acura has reasons to tamp down expectations.

First, in a market where light trucks are practically selling themselves, the gasoline-powered MDX isn’t doing so well. The MDX ended 2016 down 4.7 percent overall and is down another 13 percent in the first two months of 2017.

Part of the 2016 decline for the MDX was due to Honda’s issues with light-truck capacity. Compounding matters last year was the fact that a refreshed MDX, with a more conservative grille design, went on sale during the summer. This put Acura in sell-down mode for the first half of 2016.

Second, for all its greenness as a brand, American Honda has never been particularly good at selling hybrid vehicles. Its past (and present) is littered with models that never quite resonated with consumers, including Honda’s CR-Z, Accord hybrid and Insight and Acura’s current RLX hybrid and earlier ILX hybrid.

Even so, Acura — like other brands — will continue to expand its green lineup.

For its part, Acura says a hybrid entry in the luxury crossover world is a must-have.

“SUVs are definitely a place we need to be looking at. That’s where the market is,” Jon Ikeda, general manager of Acura, told Automotive News at the press launch of the MDX hybrid here. “So I think [it’s] important for us to do this since it helps us with the performance image as well as just some of the uniqueness of the product.”

The grandfather of the premium hybrid crossover is the Lexus RX, though in recent years the field has grown thanks to additions from Infiniti, Mercedes-Benz, BMW and Volvo; Audi will join the fray soon.

“We believe this is actually a really significant and future-telling segment in the premium market,” Gary Robinson, manager of product planning for Acura, said at the press launch.

The MDX hybrid is arguably the most compelling hybrid version of a gas-powered model American Honda has made to date. On paper, it stacks up strongly against competitors, particularly the two Acura is targeting directly: the Infiniti QX60 hybrid and the Lexus RX 450h.

Rather than a pure green play chasing fuel economy, Acura is positioning the MDX hybrid as a higher-performance variant of the gas model — hence the name Sport Hybrid.

2017 Acura MDX Sport Hybrid

Honda has only modest sales expectations for the MDX hybrid, a 3-row crossover that will compete against Lexus’ smaller RX 450h.
2017 Acrua MDX Sport Hybrid2017 Lexus RX 450h
Wheelbase111 in.109.8 in.
Length196.2 in.192.5 in.
Width77.7 in.74.6 in.
Height67.4 in.67.7 in.
Curb weight4,471 lbs.4,740 lbs.
Cargo volume68.4 cu. ft.55.9 cu. ft.
Engine3.0-liter V-6, 3 electric-drive motors3.5-liter V-6, 2 electric-drive motors
BatteryLithium ionNickel-metal hydride
System horsepower321 hp308 hp
EPA mpg26 city/27 hwy.30 city/28 hwy.
Base price*$52,935$54,030
*Includes shipping

The extra kick falls in line with Acura’s current brand reinvention pegged to its old slogan, “precision-crafted performance.”

The MDX hybrid offers 321 total horsepower and combined fuel economy of 27 mpg, 31 more horsepower and 23 percent better combined fuel economy than the standard gasoline MDX.

Honda designed the MDX’s light-truck platform — which also underpins the Odyssey minivan and Pilot crossover — to accommodate the battery pack and hybrid running gear from the start. While the battery sits below the middle-row passengers, the added components don’t eat into the MDX hybrid’s interior space.

Acura is also keen to point out that the all-wheel-drive hybrid system in the MDX is nearly the same as that in its headline-grabbing sports car, the NSX.

The hybrid model operates in a unique sweet spot among midsize hybrid luxury crossovers that Acura hopes will serve it well: seven seats, lowest price in its segment, more power than the Lexus and Infiniti, and better fuel economy than the Infiniti.

The MDX Hybrid will start at $52,935 including shipping when it hits showrooms nationwide in late April; that’s $1,500 more than a comparable gasoline-powered MDX.

Should all this add up to a sales hit, Acura isn’t worried about outrunning its own modest projections.

“Hey, nobody’s saying we can’t make more,” Ikeda said.

Genesis fashions itself as South Korea’s Tesla

SEOUL — Hyundai Motor Group’s plan to create a spectrum of green vehicles will extend to its budding Genesis luxury brand, which will receive a plug-in hybrid and an electric vehicle in the next four years.

The products should help the new luxury contender fashion itself as South Korea’s riposte to upscale Tesla.

The plug-in hybrid will enter the Genesis lineup in 2019 and the EV will follow in 2021, global brand chief Manfred Fitzgerald said last week at the Seoul Motor Show.

Genesis is fleshing out its fledgling model range. In September, it will add the G70 sport sedan, the third of six nameplates planned by 2020. The G70 will complete a sedan lineup topped by the G90 and G80.

Still on tap are a coupe and two crossovers, Fitzgerald said.

The plug-in hybrid will be based on an existing Genesis nameplate, while the EV will represent a new dedicated EV platform Hyundai Motor Group is developing, Fitz-gerald said.

The EV will be a new nameplate that extends the Genesis lineup beyond the six promised, Fitzgerald said. A second EV also might be introduced after 2021, he added.

That second EV could be based on another platform. Fitzgerald said the company is considering two EV architectures: one for small- and medium-sized vehicles, another for larger ones.

Fitzgerald declined to say what body type the first EV will be, but said the all-electric layout gives “design total liberty to do something we haven’t done before.”

Fitzgerald also wouldn’t identify what nameplate would get the plug-in hybrid variant. But he envisions plug-in hybrid technology spreading across the lineup.

“We’re going to try to bring to our entire lineup electrification,” Fitzgerald said. “So, you’ll take this step by step — a transition technology will be plug-in before you arrive at a full EV.”

Genesis wants to leapfrog standard hybrid systems because plug-in hybrids offer better electric-only driving range and because Genesis can absorb their higher cost better than volume brands can, he said.

In January, Hyundai Motor Group’s eco-car boss said Genesis can expect to have as many as three EV models by 2025, with the first arriving around 2020.

Additional EV nameplates will arrive at around three-year intervals, said Lee Ki-sang, senior vice president at Hyundai Motor Group’s Eco Technology Center.

The Genesis entries will be dedicated stand-alone EVs on a new electric-only platform being developed, he said.

The goal, he said, is a flagship Genesis EV that can outperform the best from Tesla and others.

Ford recalls F-250 pickups that could roll while in park

Ford Motor Co. said it is recalling about 52,600 F-250 pickup trucks in the U.S. and Canada because the vehicles could roll after the driver moves the automatic transmission lever into park position.

The recall, the third announced by Ford this week, affects 2017 model year F-250 vehicles powered by 6.2-liter gasoline engines and built in its Louisville, Kentucky, truck plant, it said in a statement.

Ford said in a statement on Saturday it was unaware of any injuries or accidents associated with the latest issue.

On Wednesday, Ford also said it was recalling 211,000 vehicles in North America to replace potentially faulty side door latches.

Another recall involves 230,000 vehicles that present a fire risk in the engine compartment. Ford said it had reports of 29 fires related to that issue but no injuries.

The automaker had previously recalled nearly 4 million vehicles for door latch issues in six separate announcements since 2014, including 2.4 million vehicles recalled in late 2016.

Ford recalls 52,000 F-250 pick-up trucks over park fault

Ford symbol

Ford is recalling 52,000 F-250 pick-up trucks over a fault which can cause the vehicle to roll while the automatic transmission lever is in park position.

In , the company advised users of the 2017 vehicles, sold in the US and Canada, to use the hand brake when shifting the car into park mode.

It said it was not aware of any accidents or injuries associated with the issue.

It is the Michigan-based automaker’s third recall in a week.

On Wednesday, Ford recalled 211,000 vehicles in North America over potentially faulty side door latches.

It also recalled 360,000 vehicles in North America and Europe that present a fire risk in the engine compartment. Ford said it had reports of 29 fires related to that issue but no injuries.

Chevrolet Bolt sells out in tech-savvy South Korea

SEOUL — The new Chevrolet Bolt EV was unveiled to South Korean consumers only last week here at the Seoul Motor Show. But it is already getting a warm welcome in South Korea, where the car was designed and sources its key components.

General Motors Korea began taking Bolt orders on March 17 for an initial allotment of 400 vehicles. Those cars sold out in less than two hours, and by the end of the day, GM had received nearly 2,000 orders.

“It completely sold out,” GM Korea CEO James Kim said while unveiling the Bolt. “Next year, we will make an effort to prepare more Bolt EVs.”

GM hopes the Bolt gains traction in South Korea as customers here show increasing interest in green cars. Hyundai, the country’s best-selling brand, has an all-electric version of its Ioniq compact. Other carmakers, including Renault Samsung, BMW and Nissan, have entered the market as well with pure EVs. GM already sells the Chevy Volt plug-in hybrid here.

The technology resonates with tech-savvy South Koreans, said the Bolt’s chief engineer, Mike Lelli.

“People are drawn to things that are on the forefront of technology,” Lelli said of the local market. “The IT infrastructure is extremely strong here. It sort of lends itself to a technical car as well. I think that can help move this from those early adopters to mass ownership.”

The wedge-shaped Bolt has deep Korean roots.

GM tasked its South Korean design center with penning the Bolt in 2012. The car’s chief designer, Stuart Norris, took over as head of the design studio in 2015.

Its breakthrough battery technology was also developed by the Korean supplier LG Chem. It enabled the Bolt to offer a range of more than 200 miles on a full charge. LG Chem also manufactures the Bolt’s electric motor and drive unit in South Korea.

“I don’t know if I’d position it as a homecoming, because we worked so closely from the beginning, both in the United States and Korea,” Lelli said. “We’ve been together on this thing from the get-go.”

In South Korea, the Bolt is certified for a range of 383 kilometers, or 238 miles.

But in a recent trial drive, a team of EV enthusiasts drove one from Seoul to the southern end of South Korea, achieving a range of 292 miles on a single charge.

The Bolt EV stickers at 47.79 million won ($42,987) in South Korea, but the price drops below 30 million won ($26,985) after government subsidies.

GM Korea could use a boost.

Sales, including exports and domestic Korean sales, declined 1.7 percent to 92,208 units in the first two months of 2017 from a year earlier.

The Korean operation lost one of its reasons for being when headquarters decided in late 2013 to pull the plug on Chevrolet in Europe, which GM Korea’s assembly plants had been supplying. The plants accounted for as much as 20 percent of GM’s worldwide sales, and Chevy’s European retreat saddled GM Korea with excess capacity of 150,000 vehicles a year.

To offset slowing overseas shipments, GM Korea is trying to boost sales at home, where South Korean consumers are buying foreign brands at record levels.

The company recruited Kim from Microsoft Korea in June 2015 and named him CEO on Jan. 1, 2016. Last year, Kim said GM Korea was aiming for double-digit market share in Korea.

GM Korea’s all-time high market share was 10.7 percent in 2006.

As part of the push, GM Korea restructured its local dealer network to improve sales.

GM Korea sells the Spark, Aveo, Cruze, Malibu, Trax, Orlando, Captiva, Camaro, Impala and electrified vehicles such as the Volt and Bolt EV. Several offerings are locally built at GM Korea’s four assembly plants, including the Spark, Aveo, Cruze, Malibu, Trax, Orlando and Captiva.

Honda, IBM create Dave to solve recall riddle

Deeply concerned about potentially deadly Takata inflators in its vehicles, Honda has added a powerful tool to help customers get their cars fixed.

His name is Dave.

Dave — for Digital Assisted Virtual Engineer — is a virtual online agent Honda created in conjunction with IBM’s Watson artificial intelligence system. Essentially a highly developed online chat bot run out of Honda’s Chino, Calif., call center, Dave is designed to answer consumer questions about Honda and Acura recalls 24/7.

“The concept of this was to say if we want to really service our customers in general, what is the gap?” Tony Gomes, assistant vice president of the parts, service and technical division at Honda, told Automotive News. “The gap is when the centers are closed.”

Since it launched in October, Honda has found that a third of all customer interactions with Dave happen when its call centers are closed. This gives the automaker a crucial line of communication to get as many faulty Takata inflators fixed as soon as possible.

The stakes couldn’t be higher for Honda and Acura.

Faulty inflators have led to 10 deaths in Honda and Acura vehicles in the U.S. Eight of them involved the particularly fraught Alpha inflators from Takata. The defect can cause the airbags to explode in a crash, rupturing the inflator and sending metal parts flying.

Last June, testing by the National Highway Traffic Safety Administration found that Alpha inflators had a rupture rate as high as 50 percent.

To date, 74 percent — or about 794,000 — of the Honda and Acura vehicles with Alpha inflators have been replaced, Honda said. Getting the remaining 275,000 vehicles accounted for and fixed is a critical task. Honda believes a potentially significant number of those vehicles are no longer on the road.

The idea for involving IBM’s Watson system came to Honda in 2014. At the time, Honda knew only that it wanted to supplement its Chino call center with the system to take advantage of its ability to respond to a variety of speech patterns and questions. The decision to use it for Takata-related recall info came as Honda recognized the airbag crisis was the source of most call center volume.

With the help of IBM engineers, Honda identified 2,500 recall-related questions customers were asking, Tony Fiteni, manager of the Chino center, told Automotive News.

The group sorted those questions into categories and wrote the answers. The Dave system has 300 answers it can give a customer — each vetted by Honda lawyers.

Every interaction a customer has with Dave is analyzed by humans to see how well Dave responded and whether tweaks are necessary.

Volvo gets emotional over wagons

Volvo is re-entering the American station wagon market with a vehicle that caters to a driver’s needs, big and small.

The V90 Cross Country hit U.S. dealerships in March and is a raised version of the V90, which is available only online or through Volvo’s overseas delivery program that includes a trip to Sweden. Despite its ride height — it offers 8.3 inches of ground clearance, about an inch shy of the XC90 — and off-road capability, the V90 Cross Country won’t convert SUV lovers, but is instead intended to be a niche vehicle with a Swedish personality.

Volvo is undergoing a brand revival under Geely, the Chinese company that bought the automaker from Ford Motor Co. in 2010. The blockbuster sales of the XC90 large crossover — which sold 92,449 new and XC90 Classic units globally in 2016, more than doubling 2015 sales — are the most obvious indicator of Volvo’s resurgence, and have given the automaker some room to experiment with the final member of its 90 series family.

But Volvo can’t rely on crossovers alone for its resurgence. Wagons have historically been the cornerstone of Volvo’s fleets. The automaker established its dominance in the segment more than 60 years ago with the sturdy and long-lasting Duett, and later iterations soon became status symbols for middle-class American families.

“Volvo is wagons,” Lex Kerssemakers, CEO of Volvo Car USA, told Automotive News in January.

Stefan Saellqvist, Volvo’s global product manager for the 90 series, said now that the brand has established itself, it can focus on more “emotional” and “personalized” design, as evidenced by the smaller convenience features.

There’s a hook by the front seat to hold takeout or grocery bags, and the trailer hitch retracts at the push of a button. Even the tires, which were developed by Volvo with help from Pirelli, Michelin and Continental, are customized to transition between highway and off-road driving.

While the wagon has many utility features of an SUV, including cargo space and off-road capability, the lower height allows for a smoother entrance, and for easier access to the roof for storage.

The hardest part of designing the V90 Cross Country, Saellqvist said, was narrowing the list of convenience features to those that would be the most useful to the most drivers while still giving a customized feel.

Still, Volvo recognizes that bringing wagons back to the U.S. will be a slow process. Volvo discontinued sales of the V70 wagon in 2011 after larger SUVs and crossovers pushed station wagons aside.

“Wagons won’t be as big as SUVs,” Saellqvist said. “But there is a market.”