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Auto blog

Cost-cutting measures put VW Beetle in jeopardy

Volkswagen is on a mission to cut costs. That means producing more models across its various brands based on the same platforms and powertrains, but the latest word from Germany has it that it will also mean cutting some of the VW brand's less successful models. First on the chopping block, according to German publication Der Spiegel, is the three-door version of the Polo, which will reportedly cede its place to the five-door version exclusively. The elimination of that model alone is said to save VW a good 200 million euros, putting it on its way towards reducing the brand's costs by a targeted five billion euros. The Polo isn't the only one in danger, though. The Eos, as we know, is not due to be replaced, but the future of the Beetle could be in jeopardy as well. The Beetle may be one of VW's most iconic models, but is hardly its most successful in terms of sales. With the 2014 annual report due to be released shortly, the last full-year sales figures had Volkswagen selling 109,517 Beetles in 2013. That may be more than four times the number of Scirocco models it sold, but hardly puts a dent in the 871,413 Jettas, 824,629 Golfs and 725,291 Polos it sold during the same year.

Jay Leno takes a ride in Gabriel Iglesias' classic 1966 VW bus

We've seen Jay Leno driving all manner of vehicles, many of them epically fast. But few (this is side of his steamers, anyway) have been as slow – or quite as beautiful – as this classic 1966 Volkswagen Samba. While many of the vehicles featured on episodes of Jay Leno's Garage have actually been from Jay Leno's own garage, the former talk-show host has been known to feature some interesting rides from fellow comedians. A couple of weeks ago it was Adam Carolla's '68 Lamborghini Islero, and this vintage, pristine VW bus belongs to Gabriel Iglesias. It's in beautiful condition and is a sight to see, even if it has a little trouble making its way down the highway. Or starting up again after a quick snack break.

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.