Are Autonomous Cars Just Around the Corner?

Three years ago, we all believed that autonomous cars were just around the corner – and we felt that was a good thing. Retain human control for the fabled blast in the country, but let the machines take on the drudgery of commuting and long-distance motorway work – and getting us home from the pub!

Range Rover Sport that managed to drive the Coventry ring road

So what’s changed?

It was shocking to read, in Autocar, that Andy Palmer, boss of recently floated Aston Martin, quoted as saying “The idea of full autonomy being widespread in my lifetime is absurd. Full Level 5 systems are a moonshot.” As an aside, Mr Palmer was also scathing about Brexit, confirming that the delay was the worst of all worlds, preferring a decision, any decision, to be made to close down the uncertainty.

Andy Palmer of Aston Martin

We have some doubts about the direction of Aston Martin Lagonda Ltd as a company, but we respect Andy Palmer as a well-connected, senior car-industry figure. So when he says that full autonomy is a pipe-dream, we listen.

Another issue revealed to us is the autonomy “big accident” risk. When autonomous cars crash, they tend to be large ones! If humans have crashes, mostly they will realise that something has gone wrong and slam on the brakes at the last split-second. Whilst this does not prevent the crash, it does mean that some deceleration occurs before impact, and so the crash happens at much reduced speed. Typically, crashes in autonomous cars happen because of a failure to correctly interpret the surroundings of the vehicle. And thus the autonomous car hasn’t noticed anything wrong – so it ploughs into the obstruction at full speed! Ooops.

There have been two famous crashes, where Teslas have sped straight into the side of juggernauts parked across the highway. Speculation among the online community (oh dear, not the most reliable source then) is that the crashes happened because seeing a juggernaut sideways is such an unusual occurrence that the AI-developed software interprets the sight as an overpass bridge and so ignores it.

Finally, there is the fabled issue of how can one let a computer decide whether to swerve away from a man in the road, if that then endangers two children on the pavement.

However, we are not convinced that these issues will prevent autonomous cars. At its present stage of development, it appears that sensors, processing power and software are not quite there. But these are engineering problems that are easy to define and will be solved.

  1. Computers are very good at measuring distances and heights. Therefore, interpreting a truck as a truck and not a bridge can be pre-programmed. Likewise, new types of sensors will be developed so that cars will know much better than human drivers what is going on around the vehicle. Add to that car-to-car connectivity, so that each car knows the intention of all the vehicles within half a mile, and suddenly an autonomous car is much better placed to co-ordinate its movements with those of all the surrounding cars.

  2. We do not agree with the idea that humans are better at split-second, morally loaded decisions than computers. In a crash situation, the choices made by a driver will be essentially random, or pre-programmed by their normal reaction. Given a little forethought by the software programmers, 99.9% of situations can be managed for an optimal result rather than the vague human output.

  3. Convoys of communicating vehicles can travel closely together, allowing for more efficient use of roads, and greater fuel efficiency.

  4. We wonder if Mr Palmer’s reluctance over self-driving cars is that it removes a key justification for buying an Aston Martin – and that providing such systems is also beyond the capacity of a relatively tiny car company?
  5. However, combining human drivers with convoys of autonomous vehicles could be tricky.

It is this last point which is exercising us! We believe that fully autonomous roads will happen within the next 10 years. Our worry is that will the take over of roads by autonomous vehicles mean that car enthusiasts in their old-fashioned, petrol engined “classics” are banned from going out at all eventually?

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Aston Martin Still Has a Mountain to Climb*

* Which is kind of ironic given that it was named after Aston Clinton Hillclimb!

An Aston Martin – climbing a mountain

Since we yanked on the handbrake for AML shares in March, and again in May, how have things been? Initially, almost as soon as we made our most recent forecast, the pesky management went and bought a few shares for themselves, and the price rallied £2. Not the best of starts.

AML ugly price chart – and it’s down another £1 today

Since then, more teasers of the make-or-break DBX SUV have been released.

DBX on test in Sweden

Autocar are carrying a report that the order-books are to be opened next month at Pebble Beach. Despite our view that we have seen peak SUV, the DBX fits into the mould. To be fair, it’s not as ugly as a Bentley Bentayga, nor the Rolls Cullinan. To us, it looks rather like a Porsche Cayenne with an Aston-shaped grill nailed on to the front. So it should sell well initially, though we continue to fear that sales will fall off a cliff-edge in 2 or 3 years time as EV’s take over.

And the latest news?

Talking of sales falling off a cliff-edge, yesterday it was announced that deliveries to dealers in the second quarter were down 22% in UK and 28% in EMEA. Over the twenty four hours since then, the shares have collapsed from £10 to £7, which we can disclose is a 30% fall (see, we’ve always had a natural flair for numbers).

Our view remains that at some time, the shares of this iconic brand will represent good value. But it is not yet. There remains huge delivery risk on the crucial DBX project. And just too many variables in the world luxury car market.

As before, we recommend BUY THE CARS, SELL THE SHARES. Is it time for my bonus yet? (Ed. NO!)

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The New Land Rover Defender is Here! Hurrah!

Jaguar Land Rover is ramping up the excitement for the launch of the new Land Rover Defender! Like most petrolheads, we have a soft spot for the lumbering old beast – and not just the nearest muddy river in which we could go wading.

Camouflaged Defender at Goodwood

Here it is at Goodwood, with a teaser run up the hill. Picture and full story in Autocar.

Defender in Kenya on expedition!

And again, this JLR press release photo shows the chunky vehicle “in its natural surroundings”. Of course, that’s the image they would like – and to be fair, it does present a better picture than a crowded school gate or even a hipster smoothie bar in Shoreditch. But the reality is that this model is an up-market “macho” SUV, without the utility bit. So an SV… er but it isn’t really sporty either… so it is just a V!

Think of it as a replacement Discovery, now that the actual Disco has gone all curvy. Even the styling looks very much like the Disco Mk3 / Mk4.

But we like the square, tough looks. And have every expectation that the off-road performance will be excellent: look at those short overhangs for tackling ditches. The on-road ride will be good too, with independent suspension and clever suspension.

Most exciting of all, we hear rumours of the Land Rover traditional three abreast seating. That will gain acres of press coverage!

And now the bad news. The new Land Rover is not a £20,000 vehicle. Even at £30,000, only the most basic of basic specs will come close. In a usable condition, think £40,000.

But you know what, we want one!

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US Sneezed but the UK Economy Doesn’t Have Pneumonia

The US has sneezed.

China has the sniffles

The EU is going down with a cold

So has the UK caught double pneumonia?

We all know the old adage that when the US sneezes, we catch a cold. Or if you don’t know that, what was your mother doing when you were at her knee?

As mentioned before, our comfort zone for the US Non-Farm Payrolls is a monthly increase of 180,000 -200,000. So last Friday’s figure of only 75,000 was a disappointment. Could all the doom-mongering over tariffs be coming true?

Meanwhile, China and Europe continue to look weak, with the reduced car sales in the former badly hurting the latter.

This morning we had the UK GDP estimates for April. A change on the month of -0.4% appears shocking. But look behind the numbers. Do you recall that back in April there was quite a brouhaha over that Brexit thing? Right up to the end of March, we had to work on the prospect of Brexit happening on 29th of that month. Above and beyond the stock-piling resulting from all the scare-stories about Dover and Calais suffering a never-ending gridlock, most of the motor industry brought forward their annual shutdowns to the first fortnight of April. And indeed, most of the 0.4% fall in GDP was down to the 24% reduction in car manufacturing.

Another issue is reduced manufacturing activity as the unneeded stockpiles accumulated during March were utilised during April.

So the fall in GDP was almost entirely due to the promised Brexit – thus it was politically induced. Presumably, when we get to August and the usual time for car-plant shutdowns, there will be a boost in y/y GDP to reflect continued production this year? And another boost to GDP in October as we approach the new Brexit deadline.

It is only recently that ONS has released monthly GDP figures. Previously, they were resisted due to their meaningless volatility. We believe that is the case here. Quarterly GDP – which balances out the stockpiling and using up such stockpiles – remains positive 1.2% for manufacturing.

Arthur Lowe as the legendary Capt Mainwaring

The fall in GDP has made great headlines for the media, but to imply that the economy has fallen off a cliff is just plain wrong. Look through the Brexit induced see-sawing and all is fine.

Don’t Panic Mr Mainwaring, Don’t Panic!

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Peak SUV Is Now. Electric Vehicles are the Future!

We are on the cusp of Peak SUV. The automotive world has cycles of fashion. Over the last 60 years, the fads of “must-have” cars have been in regular cycles;-

1960-1975 Two-seater sports cars

1975-1990 Hot hatches

1990-2005 MPVs and retro styles

2005-2020? SUVs

Working on a 15 year popularity-life, we are due for a new type of car to become the thing to buy.

And it is clear what the new fashion is; ELECTRIC VEHICLES.

The Wonderful Jaguar I-Pace

Already, the cutting edge new automotive products are Tesla, Jaguar I-Pace and BMW i8/i3. But they are not the only ones. Waiting in the wings are premium products from Mercedes and Audi. Volkswagen have a whole range of ID EV’s to launch in the next couple of years.

My geeky engineer friends tell me that the key challenge to EV design is the balance between driving range and battery weight/cost. The standard target is to achieve 300miles between recharges. Range is driven (pardon the pun) by rolling resistance and aerodynamic drag. Rolling resistance minimisation means large wheels and stiff tyre sidewalls. Aerodynamic drag is the product of slipperiness and cross-sectional area. We all like a sleek looking car, so aerodynamic designs will be welcome.

But here is the coffin-nail for SUVs. Not only are they heavy – which increases rolling resistance – but they have large cross-sections. It is like trying to push a barn-door through the air at 60mph. Which takes much more energy than pushing a cupboard-door. This is why the Tesla Model S is a large but low car – lots of interior space, but lower air-resistance.

Autocar’s image of the Dyson EV

Interestingly, Autocar magazine reports that the new Dyson EV will be high-riding, but with much ground clearance – so that the cabin remains shallow. This gives the dual benefit of lower air-resistance from a reduced cross-sectional area, but retains the popular high-riding high-visibility seating position.

You heard it here first. The days of the SUV are numbered. Sleek, high-riding EV’s are the future.

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No U-Turn on Aston Martin (AML) – Yet!

At the time of the Geneva show, we recommended ASTON MARTIN – BUY THE CARS, AVOID THE SHARES. We didn’t buy the shares. Sadly, we weren’t able to buy the cars either. One day, it will be time to brake (break) our recommendation, reverse our view, steer in a new direction and accelerate purchases. Okay, now with the car-puns done, as before, let’s have some pictures before getting to the boring numbers.

Aston Martin Vantage – is it bonus time for me yet? (Ed; NO!)
AM-RB 003 – sold out already!

So to the financials.

AML Financials still look scary

The numbers still don’t look great, (Data from Sharecast.com) with strong growth in revenue required before a decent profit can be made. Turning the numbers around relies on the forthcoming SUV, the DBX, being introduced successfully and selling well. All the industry pointers confirm that this vehicle will sell at great speed and with good margins. However, it is being built in a new factory in Wales (not that the location is desperately relevant, I’m sure that the Welsh have produced outstanding engineering in the past, like, er…. didn’t the Sinclair C5 get built there?) Anyway, the fact is that a new factory producing a new type of car does hold some risks – just ask Elon Musk at Tesla.

AML Share Price since IPO

Here is the share price chart….. not looking like the trend has reversed yet is it? We’ve helpfully added the point where we advised not to buy last time! How modest of us!

Where Next For the Share Price?

Reasons for Up!

  1. Once sales of the DBX SUV fire up, revenues and profits should race away

  2. Autocar has reported that sales of the AM-RB 003 £1 mio hypercar are over-subscribed

 

Reasons for Down!

  1. The trend is firmly downwards – expect it be be oversold before it rebounds

  2. First quarter results confirmed our expectations that new-model investments will eat margins for the foreseeable future

  3. There remains huge delivery risk on the “saviour” SUV project

  4. Market cap remains twice revenue, whereas we would expect it to be closer to a 1:1 ratio

At some point in the future, these shares will be good value. That will be when revenues have grown, new products are selling well or at least have had good launches. Right now, we expect the selling to continue until perhaps 600p.

When we consider investing in AML shares, we find ourselves shaken, not stirred! Steer clear.

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Uber-rated, Uber-hyped, Uber-priced.

Lastminute’s post-float price chart not looking so good

Could the Uber float be this bubble’s Lastminute.com?

Anyone who lived through the 1999 tech-stock bubble will remember that the Lastminute.com float in March 2000 was as close to a huge flashing warning light (with 100 dBA klaxons sounding) that the market ever gives.  And for those too young to remember, here is Lastminute’s first-year price chart.

And now we have Uber. A company modestly valued at $90bln. Say it quickly, and it doesn’t sound so huge – but it is $90,000,000,000.00 – for a company that is a neat idea, but has yet to turn a profit.

Yet another Uber Prius

Its core business is a booking app for mini-cab drivers. We are all for making life more efficient, and Uber has first mover advantage, but the barriers to entry are pretty low. Anyone could setup a rival, and many have done so.

So one has to ask, will this core business of ordering a mini-cab ever make any money? There are some clear barriers. In London, a legal ruling has determined that the drivers are employees – and hence are due minimum wages, holiday pay and so on. This is under challenge, but potentially will load a large cost increase on to Uber. And then, if they are employees rather than independent businessmen, suddenly Uber will have to start charging VAT. That’s another 20% on the price. In addition, if all the Uber drivers are employees, will there be so many of them hanging around on the London’s Embankment waiting for your call? My guess is that Uber would work much harder at matching supply to demand – so the quick arrival of your Uber-Prius, may slip back too. Much higher prices and worse service is not a great way to develop a business!

So the core business is looking vulnerable to say the least – unprofitable and with significant extra costs on the horizon.

“Ahh” say the fans, just wait until Uber completes its self-driving technology. Than all the above listed complaints go away (with all the drivers). There are just two small problems with this vision;

  1. Such technology is a very long way into the future. My spies in the industry reckon at least 10 years.

  2. Every motor manufacturer on Earth (except Morgan, perhaps) is working at the same target of offering self-driving cars. So there will be a multitude of offerings, and it is far from clear that Uber will have any kind of first mover advantage.

The investment community is often chastised for being too short-term, and worrying only about the next quarter’s figures. We can be sure that at some point in the next 10 years, the market will lose faith in Uber and the shares will crash and burn – which is a very unfortunate event, especially for a car company.

SWERVE AWAY FROM UBER.

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Geely Is The (Chinese) Car Company of the Future

One cannot help but admire how the Chinese car-maker Geely is driving (sorry) it’s business into the major league.

The excellent Volvo XC40

Geely has only been making cars for a little over 20 years, but during that time it has made some really smart choices. Probably the second most important decision was the purchase of Volvo back in 2010. And, the first most important choice was then allowing Volvo to run without too much interference. Isn’t it funny – if not a little scary – that this fledgling company was able to build Volvo into a world-class premium brand, whereas Ford, with all its American management expertise – just spoiled it with shared platforms and imported engineering.

Polestar 1 all electric coupe

More recently, Volvo has engineered and then devolved an exciting new electric-only subsidiary Polestar.

 

 

 

Geely Borui 5 door saloon

Meanwhile, in its homeland, Geely has not been standing still, with models such as Borui (pictured left) (or below, depending on what platform you are viewing this on)

Another international brand, Proton was bought in 2017, which brought with it Lotus. Lotus, as well as building the ultimate enthusiasts’ sports cars, has an awesome engineering capability.

Lotus Evora 400. Now that is a sports car!

With state support, the Chinese Auto-Manufacturers are way ahead in the electrification of cars – and you knew that Geely own the LEVC (maiden name, London Taxi International) didn’t you? Within 12 months, there will be a wide choice of Chinese-made EVs on sale in Europe – and they will be good. You should expect them to be well-engineered, reliable, and CHEAP. Who is going to buy a Jaguar I-Pace, or an Audi E-tron at £70,000, or even a Kia Niro at £35,000 when the Geely equivalent is £22,000 and performs (and looks) just as well?

Watch out Toyota and VW, the Chinese are coming and they will eat your lunch!

Oh gosh, what a great opportunity this article has been for having lots of car pictures! Couldn’t miss this chance to show the lovely I-Pace as well.

The Wonderful Jaguar I-Pace
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Don’t Let Sadiq Khan and Uber Destroy Our Black Cabs

In London we have a world-class licenced taxi service. The iconic black cabs are famous globally for their knowledgable route-finding (Ha, knowledgable because they’ve all passed “the knowledge” – by going to Knowledge School!)

A new ‘electric’ cab

The vehicles are specially built for the job, with access for wheelchair users and the visually impaired. Their tight turning circles (the cabs not the wheelchairs) make them invaluable parts of the London mass-transport system. Taxis have the advantages of being allowed to use bus-lanes, and having street-wise route calculation! We have a strong community of cabbies who strive to offer a safe, friendly, professional and clean service. In their spare time, charitable endeavours such as outings for veterans and disadvantaged children are undertaken. Ha, this sounds like a plug for cabbies, but they really do deserve our support!

And yet they are under threat, not only from Uber, but from London Mayor Sadiq Khan too.

A campaigning cabbie

Uber is a loss-making business, and yet still contrives to ensure that its drivers earn less than the minimum wage. They were banned in London, and only continue due to legal shenanigans. (Expect a further article on the prospects of Uber as a public company in the very near future).

Yet because it is so easy to become an Uber driver, thousands of unqualified people have done so, clogging up the streets of London. One of the more vocal taxi drivers – yep, that’s quite a high level of vocality – Dale Forwood commented “us taxi drivers spend 3 to 4 years doing the ‘Knowledge’ of London, which enables us to offer a professional and safe service. However, since Uber London were licensed in 2012, the strictly-regulated taxi trade has struggled to compete with this unregulated app. The app allows drivers to virtually ply for hire, taking much of our work.”

Vocal cabbie Dale Forwood

Read more of Dale’s comments in the Taxi-Driver’s “Badge” magazine  and listen to her podcast at on www.cabchatshow.uk

And how does Sadiq Khan respond to these 50,000 Uber drivers causing such congestion in town – by closing certain streets to taxis! Where is the logic in that? Did he miss the memo perhaps?

We understand concerns about pollution – and London taxi drivers are doing their bit by changing over to LEVC Co Electric Black Cabs. This will take time – there is a limited production rate at LEVC – and the cab-drivers need to save up too. Each new cab costs £65,000! So the cab fleet cannot be changed instantaneously, but the cabbies are going in the right direction. (Ha, see what I did with “going in the right direction”?)

In the meantime, we all have to travel around London, so why not choose to use safe, trustworthy and qualified drivers in cabs made for the job? If hailing a cab with a mobile app is important to you, there are plenty from which to choose. We recommend Taxi App UK (https://www.taxiapp.uk.com/ ) which is set up and operated by licenced cabbies.

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5 Rules for Classic Car Investment and 5 Surefire Winners

Only a fool would forecast which cars will go up in value over the next 5 years……. So here goes!

Saturn Sky – too obscure for our list, but so pretty

As we explained before, generally classic car ownership costs will overcome any long term appreciation. But here are our rules to increase your chances of minimising the loss……

  1. Buy something you like, that will give you pleasure of ownership.

  2. Buy convertibles not coupes. Classic cars are built for wafting, not driving at 90mph.

  3. Buy the best condition you can find. Restoration costs nearly always outpace increases in value.

  4. Make sure you have a nice dry garage in which to store your pride and joy.

  5. Most importantly of all, buy something that is about to come into fashion! The best chance of doing this is to purchase an icon from 20 odd years ago. Think of the teenagers of 1995. What pictures did they have on the wall? What cars were driven by the cool Dads at school? Now the schoolboys (and it mostly is boys) of that time are reaching the point in their lives where they have a bit of spare cash. What do they want to buy? A toy that will remind them of their aspirations when they were young but poor. The wheels they wanted as students but couldn’t afford or couldn’t insure.

Ten years ago, it was Golf GTi’s, 205 GTi’s, Porsche 993’s and 944’s on the cusp of classicdom. And so it has proven, with good examples of such designs trebling or quadrupling in value over the last decade.

So what to buy now? We present five candidates for your garage. Fun, rewarding cars to own that will make you money over the next 5 years – probably.

A. Jaguar XKR

Jaguar XKR Convertible – yes please!

What a wonderful car! This one has everything – Well engineered V8 and supercharger, wood and leather, gentle ride and the ability to cruise to St Tropez at the drop of a hat. The superchargerless XK8 is nearly as tempting, but we’d want the full-fat XKR version to use, enjoy and to be worth more in the end.

B. Porsche 996

Porsche 911 in 996 iteration

Decried by the old git fraternity for not being air-cooled, the 996 shape 911 remains hugely competent. Our target generation aren’t as precious about air-cooled engines, and will see this as the bargain of the century at the present undervalued prices. Ensure the engine’s known weaknesses are okay (intermediate shaft bearings and liner-cracks) and don’t be worried about larger mileages as long as the condition is good.

C. Renault Twingo Mk1

Twingo being celebrated at Goodwood

Bit of a wild card here, but just how cute is this little baby? Ideal for nipping around town on a summer day. And it will make you think of Nicole every time you do!

D. BMW Z4

BMW Z4 – more serious than it looks.

A well engineered folding top coupe-convertible that looks the part and drives the part. Maybe suffers a bit of an image problem now, but it ticks all the boxes to enjoy going forward and to hold for the long term.

 

 

E. Mazda RX7 Gen 3

RX7 from Hegarty
RX7 with low Wankel -permitted bonnet

So pretty, technologically interesting and relatively rare. A car to enjoy as it appreciates. And a car to appreciate as it gains value! This is our absolute tip for price-growth. Just be careful to acquire one with good history – AND NO MODIFICATIONS!

 

 

In the manner of all financial-advice and tipster columns, the author would like to point out that he does not own any of these cars at present – but he certainly wants to invest (a word for Mrs Author’s consumption) in one or more over the course of 2019.

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