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Rising aluminum costs cut into Ford's profit

When Ford reports fourth-quarter results on Wednesday afternoon, it is expected to fret that rising metals costs have cut into profits, even as rivals say they have the problem under control. Aluminum prices have risen 20 percent in the last year and nearly 11 percent since Dec. 11. Steel prices have risen just over 9 percent in the last year. Ford uses more aluminum in its vehicles than its rivals. Aluminum is lighter but far more expensive than steel, closing at $2,229 per tonne on Tuesday. U.S. steel futures closed at $677 per ton (0.91 metric tonnes). Republican U.S. President Donald Trump's administration is weighing whether to impose tariffs on imported steel and aluminum, which could push prices even higher. Ford gave a disappointing earnings estimate for 2017 and 2018 last week, saying the higher costs for steel, aluminum and other metals, as well as currency volatility, could cost the company $1.6 billion in 2018. Ford shares took a dive after the announcement. Ford Chief Financial Officer Bob Shanks told analysts at a conference in Detroit last week that while the company benefited from low commodity prices in 2016, rising steel prices were now the main cause of higher costs, followed by aluminum. Shanks said the automaker at times relies on foreign currencies as a "natural hedge" for some commodities but those are now going in the opposite direction, so they are not working. A Ford spokesman added that the automaker also uses a mix of contracts, hedges and indexed buying. Industry analysts point to the spike in aluminum versus steel prices as a plausible reason for Ford's problems, especially since it uses far more of the expensive metal than other major automakers. "When you look at Ford in the context of the other automakers, aluminum drives a lot of their volume and I think that is the cause" of their rising costs, said Jeff Schuster, senior vice president of forecasting at auto consultancy LMC Automotive. Other major automakers say rising commodity costs are not much of a problem. At last week's Detroit auto show, Fiat Chrysler Automobiles NV's Chief Executive Officer Sergio Marchionne reiterated its earnings guidance for 2018 and held forth on a number of topics, but did not mention metals prices. General Motors Co gave a well-received profit outlook last week and did not mention the subject. "We view changes in raw material costs as something that is manageable," a GM spokesman said in an email.

Land Rover Defender V8, next Range Rover, new BMW M3 share the Nurburgring

From open-track days to 24-hour races, so many events are held on Germany's Nurburgring track that carmakers need to share the tarmac with their rivals to put new models through their paces. Industry pool days are normally closed to the public, but a seven-minute video reveals what Land Rover, BMW, and several others are testing. Posted on YouTube by StatesideSupercars, the video shows prototypes racing around the track in the mid-summer heat. Land Rover's engineers are busy putting the final touches on the V8-powered variant of the new Defender, which our spies have previously spotted testing in its home country of England, and they're developing what looks like the high-performance, SVR-badged version of the next-generation Range Rover due out in 2020. As we reported earlier in 2020, the hot-rodded Defender packs a 5.0-liter V8 between its fenders, though its horsepower and torque outputs remain under wraps. Unverified rumors claim it will arrive as a limited-edition model to avoid sending Land Rover's fleet-wide CO2 emissions through the roof. And, the video confirms chassis engineers have made extensive modifications to the SUV's suspension, partly to keep body roll in check. Walking down the pits, members of BMW's testing team are getting up early to put track miles on an enigmatic variant of the face-lifted M5, and on the next-generation M3. We've already seen the M5 in the metal, so why is it still camouflaged? One possible answer is that we're looking at the rumored CS version, which should receive a 641-horsepower V8 thanks to software tweaks and a better cooling system. The simpler (and more boring) possibility is that BMW isn't quite done testing the M5, and it doesn't want to waste time removing the black and white wrap. Your author regularly spotted i8 prototypes in full camouflage regalia months after its debut. As for the M3, much has already been said about its mammoth grille, which seemingly mirrors the one worn by the new 4 Series. Autoblog drove a pre-production prototype in June and walked away impressed. It receives an evolution of the X3 M's 3.0-liter straight-six turbocharged to 473 horsepower, though selecting the optional Competition package will increase that figure to 503. And, fear not: The six-speed stick is coming back. Land Rover and BMW aren't the only companies playing on the 'Ring.

Could Jaguar become an EV-only brand?

Just yesterday we wrote about the Heisenbergian uncertainty surrounding the future of the Jaguar F-Type. A new report in Autocar prompts us to consider extending that ambiguity to the entire Jaguar brand. The UK magazine reports the automaker's product planners have devised a ten-year plan to switch to a pure EV lineup of cars and crossovers. According to Autocar's sources this is a planning exercise and doesn't have the green light, but it's "fairly advanced" and has adherents inside the company. The first shot fired would be an all-electric XJ replacement. That sedan, a "no-holds-barred luxury car" to challenge the Tesla Model S and Porsche Taycan, would provide emissions-free motoring before the Mercedes-Benz S-Class and BMW 7 Series come with their EV propositions. Around 2023, an EV crossover a touch larger than the full-sized Audi E-tron would replace both the XF and XE sedans. Two years later, a new mid-sized I-Pace would debut as both the F-Pace and E-Pace fade out. And two years after that, around 2027, the J-Pace luxury crossover would sigh its last ICE gasp. And what about the F-Type? The report says "with no replacement for F-Type in the works," an electric sports car "is also a possibility." There's no mention of the XK revival. Right now, Jaguar sells seven models - four sedans and three crossovers. As the Autocar article's written, come 2027 Jaguar would have an electric XJ sedan, a full-sized EV crossover, the I-Pace, and perhaps an electric sports car. That's a brave new world - one we're not sure Jaguar dealers could survive in. Problem is that Jaguar and its dealers are having plenty of problems now. Chinese-market volatility, the cloud around diesels, and Brexit uncertainty have contributed to a sales slump so dire that Jaguar's Castle Bromwich plant is going to a three-day week for the rest of the year. The sales flu has spread to Land Rover, too, the brand's Solihull plant closing for two weeks to realign dealer inventory. Considering all that, and with no easy relief in sight, the product planners are apparently debating whether a new, traditional three-model sedan range is worth the investment. The upside of going all-electric is said to be higher sales, with internal estimates supposing 300,000 units annually. Last year Jaguar sold 178,500 units. The marque could rake in larger profit margins on those sales, too, thanks to premium buyers being ready to shell out big ducats for EVs.