Kia hires Bill Peffer to fill long-vacant sales job

LOS ANGELES — Kia Motors America is adding another industry veteran to its executive ranks with the hiring of former Cadillac sales chief Bill Peffer as its vice president of sales.

The move, effective July 24, comes just two months after Kia hired marketing guru Saad Chehab as its chief marketing officer.

Peffer, 46, comes to the long-vacant sales role at Kia from the New England dealership group Balise Motor Sales, where he’s been president since 2014. Before that, he had a 10-month stint as Cadillac’s head of sales after leaving Nissan Australia as its CEO. He has also worked for Ford Motor Co.

“Bill Peffer brings vast experience and a global perspective to Kia’s U.S. operations, and we are pleased to welcome him to the team,” Justin Sohn, CEO of Kia Motors America, said in a statement. “Bill’s commitment to dealers and focus on the customer experience are a perfect fit for Kia.”

Peffer will report to Kia’s U.S. COO Michael Sprague, who last held the sales job at Kia before he was promoted to his current post in 2015.

In his new role, Peffer will need to navigate selling a lineup of vehicles that’s heavy on cars in a light truck-friendly market. Kia’s sales are down 9.8 percent this year through May to 239,593 units. It sold a record 647,598 vehicles in 2016.

Accolades such as two consecutive wins as J.D. Power’s top automaker for the Initial Quality Study have helped. The onetime budget brand is also on the cusp of new territory with the coming launch of its Stinger sport sedan. A large luxury SUV based on the Telluride concept from the 2016 Detroit auto show is also widely expected to join the Kia lineup in the near future.

Kia hired Chehab in April, hoping he can spark interest in the brand’s new upward direction. Chehab is best known for his work with the Chrysler brand earlier this decade, including the “Born of Fire” spot from the 2011 Super Bowl showcasing Detroit and featuring Eminem.

Balise, headquartered in West Springfield, Mass., ranks No. 57 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with retail sales of 16,906 new vehicles in 2016.

U.S. auto sales on track to drop for 6th straight month

Another month, another drop in U.S. new-vehicle sales.

Analysts expect June to mark the industry’s sixth consecutive year-over-year decline, closing out the worst first half of a year since 2014. The slowing market has prompted LMC Automotive and General Motors to pull back their full-year outlooks.

For June, forecasts from LMC, Kelley Blue Book and Edmunds show sales coming in about 2 percent to 4 percent less than a year ago. The projections translate to a seasonally adjusted, annualized selling rate of 16.3 million to 16.6 million, which would be the lowest monthly rate in more than two years.

“With manufacturers continuing to announce production cuts at their plants following weaker consumer demand, it all but solidifies 2017 as a down year,” KBB analyst Tim Fleming said.

At this point, with the SAAR falling below 17 million for four consecutive months after topping 18 million in December, “nerves are being tested,” said Jeff Schuster, LMC’s senior vice president of forecasting. But even the most conservative projections call for 2017 to be no worse than the fifth-best year in history.

“It will be challenging in the second half of the year to keep pace with 2016, so some additional weakness and further risk are expected in both fleet and retail volume, but a year still expected above 17 million units should not be considered a poor performance,” Schuster said in a statement.

LMC this week cut its 2017 forecast by 100,000 units to 17.1 million, 2.6 percent fewer than the record 17.55 million vehicles that automakers sold in the U.S. last year.

GM reduced its projection to “the low 17 million-unit” range, after previously estimating that industry sales would be roughly equal to 2016. “A more challenging environment for sure,” CFO Chuck Stevens told analysts and reporters on a conference call.

Fleet down

Fleet deliveries, which LMC said are down about 8 percent on the year, are the primary reason sales have fallen short of initial expectations in the first half. GM in particular has significantly cut back on its fleet business, preferring to focus on more profitable sales to individual consumers.

Retail sales, a better measure of the industry’s health, are down less than 1 percent so far from last year’s record pace. At the same time, the industry’s average transaction price climbed to $31,720 in the first half of June, a record for the month and 2.1 percent more than a year ago, according to J.D. Power.

But there are some ominous signs, such as ballooning discounts to keep vehicles moving off dealership lots. J.D. Power, which provides data for LMC, said the industry’s total incentive spending rose 12 percent in the first half of the year, to a record $25.2 billion.

The blowout deals are not just on sedans that consumers are shunning en masse. J.D. Power’s data shows that incentive spending on light trucks is up 15 percent so far this year.

“For the last few years, SUVs almost seemed to sell themselves,” Jessica Caldwell, Edmunds’ executive director of industry analysis, said in a statement. “But as the market starts to level off, automakers are having to work a little harder and make the deals a little bit sweeter to hit their sales targets. The silver lining is that SUV demand isn’t completely hitting the wall, but even this hot segment isn’t immune to the dip the entire market is experiencing this year.”

Long weekend

Automakers are scheduled to report June sales on Monday, July 3.

David Lim, a senior analyst with Wells Fargo, said many automakers have been counting on the long weekend leading up to the July 4 holiday get demand back on track. “We believe the industry is throwing in the towel for June and the focus will be on July,” Lim wrote in a note to clients this week.

GM, Toyota Motor Sales U.S.A., American Honda and Volkswagen Group of America are projected to gain market share in June, KBB and Edmunds said. Ford Motor Co. and Fiat Chrysler Automobiles are expected to lose share, while the forecasts for Nissan North America and Hyundai-Kia are mixed.

U.S. auto sales on track to drop for 6th straight month in June

Another month, another drop in U.S. new-vehicle sales.

Analysts expect June to mark the industry’s sixth consecutive year-over-year decline, closing out the worst first half of a year since 2014. The slowing market has prompted LMC Automotive and General Motors to pull back their full-year outlooks.

For June, forecasts from LMC, Kelley Blue Book and Edmunds show sales coming in about 2 percent to 4 percent less than a year ago. The projections translate to a seasonally adjusted, annualized selling rate of 16.3 million to 16.6 million, which would be the lowest monthly rate in more than two years.

“With manufacturers continuing to announce production cuts at their plants following weaker consumer demand, it all but solidifies 2017 as a down year,” KBB analyst Tim Fleming said.

At this point, with the SAAR falling below 17 million for four consecutive months after topping 18 million in December, “nerves are being tested,” said Jeff Schuster, LMC’s senior vice president of forecasting. But even the most conservative projections call for 2017 to be no worse than the fifth-best year in history.

“It will be challenging in the second half of the year to keep pace with 2016, so some additional weakness and further risk are expected in both fleet and retail volume, but a year still expected above 17 million units should not be considered a poor performance,” Schuster said in a statement.

LMC this week cut its 2017 forecast by 100,000 units to 17.1 million, 2.6 percent fewer than the record 17.55 million vehicles that automakers sold in the U.S. last year.

GM reduced its projection to “the low 17 million-unit” range, after previously estimating that industry sales would be roughly equal to 2016. “A more challenging environment for sure,” CFO Chuck Stevens told analysts and reporters on a conference call.

Fleet down

Fleet deliveries, which LMC said are down about 8 percent on the year, are the primary reason sales have fallen short of initial expectations in the first half. GM in particular has significantly cut back on its fleet business, preferring to focus on more profitable sales to individual consumers.

Retail sales, a better measure of the industry’s health, are down less than 1 percent so far from last year’s record pace. At the same time, the industry’s average transaction price climbed to $31,720 in the first half of June, a record for the month and 2.1 percent more than a year ago, according to J.D. Power.

But there are some ominous signs, such as ballooning discounts to keep vehicles moving off dealership lots. J.D. Power, which provides data for LMC, said the industry’s total incentive spending rose 12 percent in the first half of the year, to a record $25.2 billion.

The blowout deals are not just on sedans that consumers are shunning en masse. J.D. Power’s data shows that incentive spending on light trucks is up 15 percent so far this year.

“For the last few years, SUVs almost seemed to sell themselves,” Jessica Caldwell, Edmunds’ executive director of industry analysis, said in a statement. “But as the market starts to level off, automakers are having to work a little harder and make the deals a little bit sweeter to hit their sales targets. The silver lining is that SUV demand isn’t completely hitting the wall, but even this hot segment isn’t immune to the dip the entire market is experiencing this year.”

Long weekend

Automakers are scheduled to report June sales on Monday, July 3.

David Lim, a senior analyst with Wells Fargo, said many automakers have been counting on the long weekend leading up to the July 4 holiday get demand back on track. “We believe the industry is throwing in the towel for June and the focus will be on July,” Lim wrote in a note to clients this week.

GM, Toyota Motor Sales U.S.A., American Honda and Volkswagen Group of America are projected to gain market share in June, KBB and Edmunds said. Ford Motor Co. and Fiat Chrysler Automobiles are expected to lose share, while the forecasts for Nissan North America and Hyundai-Kia are mixed.

California dealers file complaint over online broker

A California dealers group has filed a formal complaint with the state seeking to prevent Carjojo Corp., which the group calls a car broker, from using unauthorized data to advertise dealership vehicles at false prices.

The grievance comes after the California New Car Dealers Association discovered the company uses software to copy inventory data from dealership websites and then posts the vehicles to its own site at prices far below sticker prices.

Carjojo finds vehicles and effectively negotiates a price on behalf of consumers.

The association, which represents 1,110 new-car dealers in California, submitted a formal report Tuesday to the state’s Department of Motor Vehicles, citing several violations of both state and federal consumer-protection statutes.

The complaint, for example, said Carjojo had advertised a 2017 Toyota Corolla LE sedan in stock at City Toyota in Daly City for $15,478. In fact, the car had been sold months earlier, the association said.

“This isn’t the dealer’s ad, this is Carjojo’s ad,” Brian Maas, the association president, told Automotive News on Thursday. “But still, people come in expecting those prices to be honored.”

California rules

Vehicles on the broker’s website include vehicle identification numbers, which is prohibited under state law unless the seller owns the car. As an authorized broker, Carjojo doesn’t own the vehicles, Maas said.

He added that some vehicles are listed on Carjojo for several thousands of dollars less than the sticker price and are often linked to dealerships that don’t exist. “In certain cases, not even the vehicles existed,” Maas said. “And the price was nothing the dealer had ever advertised.”

Peter Levy, CEO of Carjojo, said, “Since I just received [the complaint], I can’t directly comment on it until we fully digest it.”

He said the Silicon Valley start-up provides car data to customers, but the exchange is ultimately up to the dealership.

“We’ve provided thousands of free leads to dealers,” Levy said. “Of course it is their job to make the sale.”

He added that Carjojo has received an influx of positive feedback in the several months it has been operating, with some customers claiming the company negotiated less-than-sticker prices for them.

“I believe what we do — deep analytics to predict prices based on a complex proprietary database and analysis, with an Internet portal — will ultimately be the prevailing way that new vehicles are purchased,” Levy said.

How Carjojo works

Levy previously founded IntelliChoice, which he said in the 1990s was one of the companies that made “factory invoice” available to consumers, which was “Controversial then, standard now.”

Here is how he explained Carjojo’s operation to Automotive News in January during the National Automobile Dealers Association’s annual convention.

Carjojo’s software tracks the roughly 3.7 million unsold new cars and light trucks on U.S. dealership lots at any given time, while also analyzing transaction prices and available incentives. “We know the lowest price a given car will be sold for,” Levy said in January, which allows the website to effectively tell the shopper, “You should be able to buy this car for this price.”

The shopper picks three specific vehicles, say Honda Civics, which can be at three different dealerships, and enters their credit card and other information. Carjojo then emails or texts each dealership in turn, asking if it is willing to sell that Civic at that price. If the first dealership says no but the second says yes, the consumer is alerted and advised to contact that dealership within 24 hours. The car is not held. The shopper pays Carjojo a fee of $199, but Carjojo does not buy the car itself or have any formal relationship with that or other dealerships.

Levy said the process allows consumers to avoid haggling over price, while sending customers to dealerships for cars at a price the dealerships agree to.

Broker?

According to California state law, an auto broker must inform customers that they do not posses the vehicles and that they can only arrange, negotiate and assist with car sales. But, Maas said, the association found the website mislead buyers for multiple pages before disclosing that information.

“They can tell folks ‘We can get you a Honda Accord,’ but they can’t say they have the actual cars or the VINs,” Maas said.

On its site, Carjojo offers this explanation of how it differs from typical auto brokers: “Carjojo is data driven, does not take a penny from any dealer, and treats all dealers the same. The broker is not data driven but is relationship driven, and works to protect and promote his relationship with his set of ‘in’ dealers. You get a lower price and a larger vehicle selection with Carjojo.”

It added, “Carjojo is an auto broker like an orchestra is a barbershop quartet.”

Cease and desist

Along with the letter sent to the DMV, the association also delivered a cease and desist notice to Carjojo, in which the company is asked to stop “all unauthorized and/or illegal advertisement of our dealership’s vehicles.”

A copy of the letter was mailed to every dealer member of the association, with a request that they forward it to Carjojo on behalf of their dealership.

“There’s no disclosure that Carjojo got the information [on vehicles] in the way that they did,” Maas said. “And they certainly did it without the dealer’s permission.”

James B. Treece contributed to this report.

Mazda recalls 227,814 vehicles for faulty parking brake

Mazda North America is recalling 227,814 Mazda3 and Mazda6 vehicles in the U.S. because parking brakes may drag when driving or slip when cars are parked on a slope, increasing the chance of a crash.

The recall includes the Mazda3 from the 2014 and 2016 model years and the Mazda6 from model years 2014-2015.

No injuries related to the defect have been reported to the automaker, according to a Mazda spokesman.

The company says water could get into the vehicle’s brake caliper, causing parking brakes to lose holding force while parked or drag while driving, according to the National Highway Safety Administration’s recall report.

Mazda will notify dealers of the recall on Aug. 7. Owners will be made aware starting Aug. 21.

Mazda dealers will check the parking brake actuator shafts inside brake calipers and if a shaft is corroded, the caliper will be replaced. If not, the dealer will replace the protective boot kit with improved parts.

Mazda first became aware of the defect on the Mazda6 in 2015 when a brake drag incident was reported in Canada.

Another 80,000 of the vehicles are being recalled in Canada.

In 2016, a Mazda6 owner in Germany was involved in a collision where the vehicle unexpectedly rolled backward despite the parking brake being in place.

A U.S. owner had also reported a brake drag incident in 2016. In January of 2017, the automaker began working on a boot replacement kit, which will be available to dealers for recall repairs.

There are thirteen total reports of the defect in the U.S.

Japanese supplier Akebono Brake Industries Co. manufactured the brake components for the Mazda3 and Mazda6.

Racing icon Ron Dennis to exit McLaren as his successor pledges ‘evolution’

Ron Dennis is selling his stakes in British motor racing and manufacturing conglomerate McLaren and will step down as chairman after already being forced out as chief executive officer of part of the business.

A new holding company called McLaren Group will combine the McLaren Technology Group Ltd. and McLaren Automotive Ltd. arms, with sovereign wealth fund Bahrain Mumtalakat Holding Co. and TAG Group set to remain majority shareholders, according to a statement Friday.

Sheikh Mohammed bin Essa Al Khalifa of Bahrain will become executive chairman of the new group, valued at 2.4 billion pounds ($3.1 billion), and pledged to follow a policy of “evolution, not revolution” building on Dennis’s achievements. He added that there is no truth “whatsoever” in suggestions that Mumtalakat is seeking to sell its stake.

McLaren, best known for its Formula 1 racing team, has been the subject of takeover speculation in recent years, with reported bidders including Apple Inc. and Chinese interests. Dennis, 70, said after losing the CEO role at McLaren Technology in November that the grounds for his removal were “entirely spurious” and came after clashes with Mumtalakat and TAG over his views on outside investment and the future of the business.

The motorsport patriarch has spent 37 years at the helm of Woking, England-based McLaren and led the team to 158 Grand Prix wins, 10 Formula 1 driver’s championships and seven team triumphs. McLaren International was valued at 3 million pounds when he became involved in 1980. The group had combined revenues of 898 million pounds in 2016 and employed more than 3,400 people.

Delivery surge

Dennis successfully leveraged McLaren’s sporting prowess, second only to Ferrari in Formula 1, to establish the McLaren Automotive supercar arm. The company on Thursday rolled out the 570S Spider, a low-slung two-seater that’s part of a plan for 15 new models and variants by 2022. Deliveries nearly doubled to a record 3,286 vehicles last year, boosting pretax profit 70 percent to 9.2 million pounds ($12 million).

“We want to build on what he’s achieved,” Al Khalifa said of Dennis. “We’ve also secured finance in order to stimulate growth in all our businesses, consolidate our financial structure and reorganize our shareholder base.”

Dennis’s stock is set to be allocated to other shareholders, largely Mumtalakat and TAG, though the transactions are not yet concluded. McLaren Group will meet with debt investors next week.

Though Al Khalifa said he’ll spend a lot of time in Woking and “select and indicate McLaren’s overall direction of travel” along with TAG’s Mansour Ojjeh, he doesn’t plan to move permanently to the U.K.

That will leave Mike Flewitt, the CEO of McLaren Automotive, together with Jonathan Neale and Zak Brown, chief operating officer and executive director respectively at McLaren Technology, in day-to-day control.

Dennis said in McLaren’s statement that he’ll continue to consult for various companies and work with the U.K Ministry of Defence Innovation Advisory Panel to help to improve technology relevant to national security.

JPMorgan Chase & Co. advised McLaren Group on the transaction.

China’s plans for lithium-ion battery production could overtake Tesla

As Elon Musk races to finish building the world’s biggest battery factory in the Nevada desert, China is poised to leave him in the dust.

Chinese companies have plans for additional factories with the capacity to pump out more than 120 gigawatt-hours a year by 2021, according to a report published this week by Bloomberg Intelligence. That’s enough to supply batteries for around 1.5 million Tesla Model S vehicles or 13.7 million Toyota Prius Plug-in Hybrids per year, according to Bloomberg New Energy Finance.

By comparison, when completed in 2018, Tesla Inc.’s massive Gigafactory will crank out up to 35 gigawatt-hours of battery cells annually.

Lithium-ion batteries have long been used in smartphones, laptops, and other personal electronics, but demand is forecast to explode in the next five years as electric vehicles proliferate and power companies install giant storage systems to smooth the ebb and flow of wind and solar.

Telsa produced nearly 84,000 vehicles in 2016 and has said it plans to make 500,000 in 2018.

While Tesla may be building the biggest and splashiest factory, the Chinese government has launched a sweeping effort to increase the country’s dominant market share.

Roughly 55 percent of global lithium-ion battery production is already based in China, compared with 10 percent in the U.S. By 2021, China’s share is forecast to grow to 65 percent, according to Bloomberg New Energy Finance.

“This is about industrial policy. The Chinese government sees lithium-ion batteries as a hugely important industry in the 2020s and beyond,” Bloomberg New Energy Finance analyst Colin McKerracher said.

In all, global battery-making capacity is forecast to more than double by 2021 to 273 gigawatt-hours, up from about 103 gigawatt-hours today. That’s a huge opportunity — and China doesn’t want to miss it.

“The Gigafactory announced three years ago sparked a global battery arms race,” said Simon Moores, a managing director at Benchmark Mineral Intelligence. “China is making a big push.”

But don’t count Tesla out. The company could announce locations for up to four new battery factories by the end of 2017. (It’s exploring at least one site in Shanghai.) And there are few, if any, individual Chinese battery companies that can match the scale of Tesla’s production toe to toe.

Yet while China lacks a dominant battery behemoth, it makes up for it with a constellation of smaller players, including Amperex Technology Ltd., Tianjin Lishen Battery Joint-Stock Co. and dozens of others.

Earlier this year, the Chinese government announced plans to consolidate battery manufacturers to help the industry mature. The initiative goes hand in hand with China’s plans to flood highways with five million electric vehicles by 2020.

China’s ambition to become the global leader in clean cars stems in part from pressure to clear pollution from smog-choked streets in Baoding, Xingtai, Shijiazhuang, and other cities. There’s a second reason: creating a domestic market for Chinese battery manufacturers, said Logan Goldie-Scot, a Bloomberg New Energy Finance analyst.

“The Chinese government wants to encourage the creation of a domestic market to create a large enough base and gain a foothold,” Goldie-Scot said. “From there, they can expand and sell globally.”

BA to get strike cover from Qatar Airways

British Airways planes at Heathrow airport

The government says it will allow the lease by British Airways of some Qatar Airways planes and crew to help cover a 16-day strike by some UK staff.

Transport Secretary Chris Grayling says BA can lease nine Qatar A320 and 321 planes and crew after advice from the Civil Aviation Authority (CAA).

BA will use the staffed planes to minimise flight cancellations and passenger disruption from Saturday.

The 16-day strike was prompted by what Unite union calls BA’s “poverty pay”.

The long-running industrial action concerns around 2,000 of the airline’s mixed-fleet staff who, if they joined since 2010, fly short and long-haul routes mainly from Heathrow airport and earn less than cabin crew on earlier agreements.

The airline has already cancelled a small number of flights from Heathrow and merged others, but the leasing deal with Qatar means BA will be able to get the vast majority of passengers to their destinations.

A spokeswoman for the carrier said: “We will operate 99.5% of our schedule. Our Oneworld partner, Qatar Airways, will be operating a small number of short-haul flights on our behalf.”

“We have merged a very small number of Heathrow long-haul services and all customers affected have been notified over the past week.”

The airline needed to apply for approval from Mr Grayling and the CAA had to make a recommendation to the minister because the Qatari aircraft and crew are coming in from outside the European Union.

A spokesperson for the UK Civil Aviation Authority said: “An application by British Airways to temporarily ‘wet lease’ [hiring plane and crew] nine Qatar-registered aircraft has today been approved by the UK Department for Transport.”

Unite had requested the CAA recommend blocking the wet-lease deal, claiming it broke EU regulations and cited concerns over Qatar’s human rights and labour standards record.

The union brought about the unprecedented strike action because of a pay dispute and it claimed the airlines had removed concessions and perks for staff if they had taken part in previous strike action.

Unite national officer Oliver Richardson said: “Vindictive threats from British Airways amount to corporate bullying from an airline more interested in punishing workers on poverty pay than addressing why cabin crew have been striking.”

Musk tweets he’ll have Tesla Model 3 news on Sunday

Tesla Inc. CEO Elon Musk signaled the electric automaker may have “news” on Sunday related to the release date of its first mass-market Model 3 sedan.

Musk wrote there would be “News on Sunday,” in reply to a tweet by Sydney-based Douglas Bailey who asked Musk to end the speculation on the Model 3 release date.

Musk had said in May that Tesla was on track to begin production of the Model 3 sedan in July. The car will be priced at about $35,000. Tesla expects to produce over 5,000 Model 3s per week by the end of this year and 10,000 vehicles per week “at some point in 2018.”

Musk had said the car will first be offered only with two-wheel drive and that the all-wheel drive version will likely arrive early next year.

Qatari riyals no longer available at many UK banks

Qatar riyals

A number of UK High Street banks have stopped trading in Qatari riyals.

Individual customers at Barclays, RBS, Lloyds Banking Group and Tesco Bank cannot currently buy or sell riyals.

Qatar is isolated by its neighbours, who accuse it of backing terrorism.

Its central bank says it will guarantee all transactions for customers inside and outside the country. It also told the Reuters news agency that all banks and foreign exchange companies are committed to trading riyals as usual.

In early June, Qatar’s Gulf neighbours Saudi Arabia, UAE, Bahrain and Egypt ceased air, sea and land links with the country, which has been accused of funding terrorism. Qatar denies the claim.

The cutting of diplomatic ties by Qatar’s neighbours has prompted wide fluctuations in the value of the country’s currency.

A spokeswoman for Barclays said: “In common with other banks, Barclays’ high street foreign exchange service is supplied by a third party, which has stopped providing the Qatari riyal.

“Unfortunately, we are therefore currently unable to buy the Riyal from or sell it to our retail customers.”

A spokeswoman for Lloyds Banking Group also said that a “third-party supplier” which carries out its foreign exchange service had ceased trading Qatar riyals from 21 June.

She said: “This currency is no longer available for sale or buy-back across our high street banks including Lloyds Bank, Bank of Scotland and Halifax.”

HSBC was unavailable for comment on its current position. Reuters reported that the Post Office had stopped buying and selling the currency earlier this month.

Currency supplier Travelex said trading in riyals had been suspended in some markets due to “business challenges”.

But it added: “Travelex is pleased to announce it has resumed purchasing Qatar riyal globally.”