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Weekly Recap: Takeaways from the Frankfurt Motor Show

We obsessively covered the 2015 Frankfurt Motor Show, and naturally, we selected our favorites from this fall's biggest automotive event. Now that the dust has settled, we're looking ahead to what it all means. Here are three takeaways from the floor in Frankfurt. The Germans are serious about electric vehicles: It's a bit cliche to say BMW, Mercedes, and Audi have downplayed electrics in favor of other technologies, like diesels. For a time that may have been true, but those three companies, along with Porsche and Volkswagen, are emerging as leaders in EV development. That was on display in Frankfurt, when all of them revealed either all-electric or plug-in hybrid models. Gas prices are relatively low in the United States, but clearly the Germans are thinking long-term and globally. Everyone is serious about SUVs: You gotta have one, even if you're Bentley or Jaguar. It's 2015 and it's what consumers want. As Jaguar design director Ian Callum put it, "Not to be in the sector would be a little naive for the sake of purity." It's not just the flashy exotic luxury makers. Nissan showed the Gripz concept, which is rakish, radical, and meant to blend traits of SUVs and sports cars into a vehicle that really crosses over. Look for more, especially in the luxury sector, as Rolls-Royce, Lamborghini, and Aston Martin ramp up their own SUV efforts. There's no ceiling to the luxury market: Speaking of high-end cars, companies are continuing to invest in extravagant wares beyond just SUVs. Even during the recession, ultra-luxury makers remained relevant, and now they're back at full stride. In Frankfurt, that was illustrated by yet another S-Class model, the cabriolet, which will come in S550 and S63 AMG variants in the United States. Ferrari also showed off the 488 Spider, and Lamborghini opened up the Huracan LP 610-4 Spyder. Meanwhile, Bugatti's Vision Grand Turismo concept reminded enthusiasts that it's plotting life after the Veyron. European auto shows always draw the glitziest reveals from luxury makers, and this year didn't disappoint. OTHER NEWS & NOTES 2016 Honda Civic redesigned with snazzier style, turbo power The 10th-generation of the Honda Civic debuted this week at events in Los Angeles and Detroit ahead of its launch in the United States this fall as a 2016 model. Honda fortified the Civic with LED lights, an available turbo engine, and a more tech-laden cabin.

European automakers gear up for Brazilian production

Brazil is the place to be, apparently. Toyota has been investing in the South American country, as has BMW, which announced a $261 million investment in October 2012, on the heels of an Audi factory announcement in San José Chiapa. The high-end immigration is only set to continue, as Mercedes-Benz and Jaguar-Land Rover have both announced plans to set up manufacturing operations there.
Mercedes is the big news here, as its new facility will see the German manufacturer invest 170-million euros for production of its next-generation C-Class and upcoming GLA-Class. "Brazil is an important future market. With our local production we accept the challenge and take on the competition," noted Andreas Renschler, Management Board member for Production and Procurement at Mercedes-Benz Cars and Mercedes-Benz Vans. Production is expected to begin by 2016.
Jaguar-Land Rover, meanwhile, isn't so concrete in its plans. The news of its investment in South America comes from a job posting for a plant quality manager in Brazil that was picked up by the UK's AutoCar. "Portuguese language skills will be definite advantage" for interested candidates, according to the job listing. The want ad follows on the heels of remarks by Jaguar Land Rover's Dr. Ralph Speth, who said there are "very intensive discussions" with Brazil's government. Unlike Mercedes, there's no mention of which vehicles will be produced in South America, although AutoCar thinks the Freelander, sold in the US as the LR2, is a leading contender.

The UK votes for Brexit and it will impact automakers

It's the first morning after the United Kingdom voted for what's become known as Brexit – that is, to leave the European Union and its tariff-free internal market. Now begins a two-year process in which the UK will have to negotiate with the rest of the EU trading bloc, which is its largest export market, about many things. One of them may be tariffs, and that could severely impact any automaker that builds cars in the UK. This doesn't just mean companies that you think of as British, like Mini and Jaguar. Both of those automakers are owned by foreign companies, incidentally. Mini and Rolls-Royce are owned by BMW, Jaguar and Land Rover by Tata Motors of India, and Bentley by the VW Group. Many other automakers produce cars in the UK for sale within that country and also export to the EU. Tariffs could damage the profits of each of these companies, and perhaps cause them to shift manufacturing out of the UK, significantly damaging the country's resurgent manufacturing industry. Autonews Europe dug up some interesting numbers on that last point. Nissan, the country's second-largest auto producer, builds 475k or so cars in the UK but the vast majority are sent abroad. Toyota built 190k cars last year in Britain, of which 75 percent went to the EU and just 10 percent were sold in the country. Investors are skittish at the news. The value of the pound sterling has plummeted by 8 percent as of this writing, at one point yesterday reaching levels not seen since 1985. Shares at Tata Motors, which counts Jaguar and Land Rover as bright jewels in its portfolio, were off by nearly 12 percent according to Autonews Europe. So what happens next? No one's terribly sure, although the feeling seems to be that the jilted EU will impost tariffs of up to 10 percent on UK exports. It's likely that the UK will reciprocate, and thus it'll be more expensive to buy a European-made car in the UK. Both situations will likely negatively affect the country, as both production of new cars and sales to UK consumers will both fall. Evercore Automotive Research figures the combined damage will be roughly $9b in lost profits to automakers, and an as-of-yet unquantified impact on auto production jobs. Perhaps the EU's leaders in Brussels will be in a better mood in two years, and the process won't devolve into a trade war. In the immediate wake of the Brexit vote, though, the mood is grim, the EU leadership is angry, and investors are spooked.