The Truth About Cars » Q3 http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 02 Sep 2015 21:47:31 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.4 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars » Q3 http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com 2016 Audi Q3 Quattro Review – New-To-You Utility [w/ Video] http://www.thetruthaboutcars.com/2015/09/2016-audi-q3-review-video/ http://www.thetruthaboutcars.com/2015/09/2016-audi-q3-review-video/#comments Tue, 01 Sep 2015 13:00:37 +0000 http://www.thetruthaboutcars.com/?p=1155553 2016 Audi Q3 Prestige 2.0-liter, DOHC I-4, CVVT (200 horsepower @ 5,100-6,000 rpm; 207 lbs-ft @ 1,700-5,000 rpm) 6-speed Tiptronic automatic 20 city/28 highway/23 combined (EPA Rating, MPG) 20.2 mpg (Observed, MPG) Tested Options: Prestige Trim, Quattro AWD, Sport Package Base Price: $34,625* As Tested: $42,175* * Prices include $925 destination charge. Audi’s Q3 isn’t a new vehicle by any stretch. […]

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2016 Audi Q3 Exterior-002

2016 Audi Q3 Prestige

2.0-liter, DOHC I-4, CVVT (200 horsepower @ 5,100-6,000 rpm; 207 lbs-ft @ 1,700-5,000 rpm)

6-speed Tiptronic automatic

20 city/28 highway/23 combined (EPA Rating, MPG)

20.2 mpg (Observed, MPG)

Tested Options: Prestige Trim, Quattro AWD, Sport Package

Base Price:
$34,625*
As Tested:

$42,175*

* Prices include $925 destination charge.

Audi’s Q3 isn’t a new vehicle by any stretch. It was first launched in 2011 but didn’t make it to America until the 2015 model year. That’s because the Q3 plays in a segment that’s new to us — the even-smaller compact luxury crossover. This form factor isn’t new to the rest of the world, but until Land Rover brought the Range Rover Evoque to America and BMW followed up with the X1, there wasn’t a real focus on small luxury soft-roaders.

With crossovers being the latest craze and every luxury brand looking to move down-market to capture fresh young buyers, it was only a matter of time till Mercedes and Audi joined the party with the GLA and the Q3. With a “low” $33,700 starting MSRP, the baby Audi is the more practical counterpart to Audi’s sharp-looking A3 sedan. Although CamCord shoppers have to give up a great deal of room to upgrade to the A3, the Q3 has the potential to be a more sensible option.

Exterior
Outside, the Q3 plays the same farm girl card as the majority of the Audi lineup. The wholesome sheetmetal is attractive, but completely devoid of the dramatic styling cues that grace the new GLA. Closer inspection reveals that the headlamps and grille design are different from the 2015 Q5. That’s because the Q3 was one of the first Audis to wear the brand’s latest front end design. The sharper lines, crisper angles and new headlamp design can also be seen on the next generation Q5. The look is fresh and instantly recognizable, but some may call it is so restrained that it is almost boring. 

At 172.6 inches long, the Q3 is nearly a foot shorter than the X3, Q5, NX or XC60. That means the Q3 is aimed squarely at the BMW X1, Range Rover Evoque and Mercedes GLA. Unlike the GLA and X1, the Q3’s side profile screams miniaturized SUV, not jacked up hatchback.

The rear design is 8/10ths Q5 despite being totally unrelated. Unlike most crossovers, the tail lamps are housed solely on the hatch itself. You’d think that this would allow the opening to be larger, but access is somewhat limited much like its bigger brother Q5. Total cargo room suffers more than you would think since Audi decided to give the rear window a more dramatic rake than on its other crossovers.

2016 Audi Q3 Dashboard

Interior
Like the exterior, the interior design is simple almost to the point of being plain. Although the A3 came to the USA before the Q3, the latter houses an older design and that explains why the interior looks more like the rest of the Audi line up, not the minimalist design we see in the A3. Our model didn’t have the optional wood trim ($350) but I recommend it as it helps break up the black-on-black-on-black interior in our model. Also on the must-have list are the optional sport seats that add extending seat bottom cushions. Audi’s usual attention to detail is easily seen in the interior where fit and finish is notably higher than the mass-market Escape, CR-V or Tiguan.

In an unusual move, Audi makes 12-way power front seats standard and equips them with 4-way power lumbar support. This puts front seat adjustability above the GLA, which skimps on passenger seat comfort to keep the price low. Also surprising, leather seating surfaces are standard while most luxury brands have moved to imitation leather as the base material. The optional sport seats are the most comfortable seats in this segment, according to my back, besting the BMW and Mercedes. Helping my marriage out during the week I had the Q3, the passenger seat is just as comfortable (eliminating the complaints I received when I tested the RDX and GLA). Like Audi’s A3, the Q3 lacks driver’s seat memory, an odd omission when you can find that feature on less expensive Kias, not to mention the Range Rover, BMW and Mercedes. Heck, Mercedes even gives the front passenger standard 3 position seat memory.

Thanks to the Q3’s upright profile, the rear seats are surprisingly accommodating. Although combined front and rear legroom figures are lower than the Q5 and the overall vehicle is smaller than the larger Audi, the Q3 was better able to handle a rearward facing child seat behind a front passenger. The difference is down to the shape of the Q3’s dash which allows the right front seat to move farther forward, freeing up more room in the back. Headroom was equally impressive despite the panoramic moonroof. BMW is claiming a hair more room in the 2016 X1 which will mean the Audi and BMW are the best options if you plan on carrying folks in the rear. On the other hand, the GLA has a more cramped rear bench and my head touched the ceiling unless I leaned inboard. When it comes to cargo hauling, the Q3’s hold is 33-percent smaller than the next size crossover and right about the same as your average midsize sedan.

2016 Audi Q3 Dashboard-004

Infotainment
The Germans have cornered the market in controller-knob based infotainment systems since BMW first introduced iDrive in 2001. Since then, BMW and Audi have been in a gadget arms race. Taken as a whole, MMI isn’t as intuitive as iDrive with more confusing menus and illogical button placement. While I’m sure you would get used to it over time, even after a week I found myself needing to stare at the array of buttons for way too long to find what I needed. If you have another Audi in the family, the Q3’s MMI button placement will take even more getting used to since they dropped it in the dash, not the center console. On the flip side, this means you’re less likely to spill your drink on your MMI controller.

On the flip side, MMI has probably one of the most advanced feature sets on the market thanks to their well-executed Google integration. While iDrive allows you to search for Google results (as do a number of other systems), MMI takes it a step further and overlays your traditional map images with Google satellite imagery and even allows you to zoom in and view Google Street View images so you can “creep” your neighbors. On the down side, the Google map function requires a $15-$30 a month subscription after the first few years for the built-in cellular modem, and the system has troubles downloading maps fast enough when traveling at freeway speeds, leaving you with a blank screen at times.

Although navigation and the Google Map love is optional, the large LCD and iPod integration are standard, things not found in the 2015 Mercedes GLA. Likely due to the Q3’s standard LCD and upcoming 2016 X1, Mercedes has announced the 2016+ GLA will get a 7-inch LCD standard.

2016 Audi Q3 Engine-001

Drivetrain
Nestled sideways under the hood is one of VW/Audi’s ubiquitous 2.0-liter, turbocharged, four-cylinder engines. Despite having the latest in direct injection and variable valve timing tech, the engine is a little short on twist. Output comes in at 200 horsepower and 207 lb-ft of torque. This is essentially the same as the related Volkswagen Tiguan, but notably lower than the X1 (228 hp/258 lb-ft), Evoque (240 hp/250 lb-ft) or the GLA (208 hp/258 lb-ft). This is also lower than the nearly identical 2.0-liter engine in the Q5, which produces 220 hp and 258 lb-ft of torque in 2015 and 245 hp, 273 lb-ft in the upcoming next generation Q5.

In order to keep costs down, American bound Q3 models ditch Audi’s 7-speed dual clutch for a more traditional 6-speed Tiptronic automatic. This means that in addition to being down on power, the Q5 is short on gears. Although 6-speeds is the norm in the mass-market segment, the GLA has a 7-speed DCT, the X1 uses an 8-speed and the Evoque a 9-speed. While the engine is partly to blame, the lack of gears has a distinct impact on fuel economy and acceleration. Despite being heavier, producing more power, and being faster to 60, the larger Q5 2.0T nets the same EPA combined score of 23 mpg in both front-wheel and all-wheel drive models. That’s behind the 24 mpg rating for the Evoque, 27 mpg for the 2015 X1 and significantly lower than the 29 mpg delivered by the GLA 250. In a week of mixed driving, our Q3 averaged under 21 mpg.

2016 Audi Q3 Instrument Cluster

Drive
Out on the road, the first thing you need to know is that the rear wheel drive 2015 BMW X1 is not long for this world. While you may find them on dealer lots now, between the time I had the Q3 and me writing this review BMW announced the new FWD-based X1 will be arriving in the fall. This means two things. First, if you want a small luxury crossover with tail-happy RWD dynamics, you need to hurry. Second, TTAC hasn’t driven the new X1 so it’s not possible to comment on it in an intelligent fashion, but we can make some educated assumptions.

BMW is making all US-bound X1 models AWD. The logic is likely driving dynamics (like Jaguar with their ill-fated X-Type sedan) and not supposed off-road ability as found in the Land Rover Evoque. That sets the BMW apart from the Audi and Mercedes which both have front-wheel drive. Standard all-wheel drive solves the traction and torque steer problems found in a front driver, but it does little to address the nearly 60/40 weight balance found in most transverse engined vehicles. While the 2016 X1 may be the best balanced in this shoe box sized category, 56/44 (front/rear) is a far cry from BMW’s almost religious dedication to 50/50 weight balanced vehicles. This means that when chucking your 2016 crossover into a corner, the BMW no longer has a neutral handling advantage, and it’s where the strangely wide tires on the Q3 make a surprising difference.

2016 Audi Q3 Exterior-010

BMW shoes the new X1 with 225-width tires, the narrowest in the segment, while the GLA and Evoque start with 235s. Audi starts with 235s on the base model, but the Premium trim and an $800 option on the base model kick the rubber up two sizes to 255/40R18s — two sizes larger than the GLA 45 AMG and three sizes ahead of the X1. While suspension tuning obviously plays a big role in road holding, the Audi starts with more grip and then adds an excellent suspension to boot. Despite the wide 40-series tires, the Q3’s suspension is tuned more compliant than the GLA 250 and lacks the unsettled behavior on broken pavement I noted in the Evoque. While BMW’s FWD models I’ve tested in Europe aren’t as dynamic as their RWD models, they are excellent for front drivers.

Although there is clearly more body roll in the Audi than in the GLA or GLA AMG, the Audi is quite simply more sure footed. Sure, the GLA is lighter at about 3,500lbs vs the Q3’s nearly 3,700, but the 200 pound difference can’t make up for the wider rubber on the Audi. While the 2015 BMW X1 with the M Sport package was the best handling vehicle in this segment by a hair, 2016 transfers the crown to the Q3. (And the difference in 2015 was smaller than X1 buyers would like to admit.)

2016 Audi Q3 Exterior-012

On the downside, the Q3’s heritage does reveal. You see, the Q3 is not based on VW-Audi’s new MQB platform like the current Golf and A3, instead related to the older A3. That shows itself in steering feel. There isn’t any. While the rest of the competition also employs electric power steering, the Q3’s rack is particularly vague, although it is precise and well weighted. Also a problem is the Q3’s acceleration. The Audi’s 0-60 acceleration time clocked in at 7.6 seconds, slower than a Hybrid Camry and about the same as a Honda CR-V. That’s 8/10ths slower than the Evoque, a full second slower than the GLA 250 and 1.3 seconds behind BMW’s claim for the new 2016 X1. That’s before we consider the 2016 Mercedes GLA 45 AMG with its blistering 4.3 second 0-60 sprint thanks to a whopping 375 horsepower.

Although the Q3 is slower and thirstier than the GLA, value, interior accommodations and handling are where the Audi shines. Even though the $33,700 starting price of the Q3 is higher than the 2015 GLA 250 at $31,300, the Audi comes with standard leather seating, dual-zone climate control, xenon headlamps, a panoramic sunroof, keyless entry and keyless go, backup camera, iPod interface, auto dimming mirror, and HD and SiriusXM radio. All of these are extra on the Mercedes. This makes a comparably equipped GLA $3,000 more than the Audi. The Evoque is the most expensive, running $7,000-10,000 more than the Q3, and the 2016 X1 starts at $34,800 and would crest $37,000 when equipped comparably to a base Q3.

2016 Audi Q3 Exterior-011

The surprising thing about the Q3’s pricing structure is how slowly the pricing builds compared to the other luxury options. This makes the Q3 perhaps the easiest upsell from a Hyundai Tucson or a VW Tiguan. Hyundai’s 2016 Tucson Limited ranges from $29,900-34,900 with equipment levels similar to a $33,700-39,000 Q3 making the bump a reasonable $5,000 or so. That’s much narrower than the distance between the Tuscon and GLA 250, which would end up $6,400-10,000 more when comparably equipped. The Range Rover Evoque? The Baby Rover is by far the premium entry and will set you back $15,000-20,000 more than a comparable Hyundai.

I know it sounds odd to compare an Audi and a Hyundai. In most other segments I would say it’s an inappropriate comparison. However, this crop of “inexpensive” luxury vehicles was designed to attract mainstream brand shoppers, so the comparison makes sense. In this light, the Q3 also makes sense. It’s a much easier up-sell over a mainstream crossover while delivering a luxury brand, luxury interior and the best handling in the segment. The X1 and GLA are faster to 60, the Mercedes is arguably a more premium brand and the Evoque offers a level of customization that higher-end luxury shoppers demand, but none of them is as easy of a cross-shop with the top-end mainstream CUVs. For that value proposition and handling performance the Q3 is my favorite entry in this segment, and it’s a new engine and 7-speed DCT away from perfection. Let’s hope someone at Audi is listening.

Audi provided the vehicle, insurance and one tank of gas for this review.

Specifications as tested

0-30: 2.85 Seconds

0-60: 7.6 Seconds

1/4 Mile: 16 Seconds @ 89.2 MPH

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2015 Mercedes-Benz GLA250 4MATIC: Lookin’ for Love http://www.thetruthaboutcars.com/2015/07/2015-mercedes-benz-gla250-4matic-lookin-for-love/ http://www.thetruthaboutcars.com/2015/07/2015-mercedes-benz-gla250-4matic-lookin-for-love/#comments Thu, 16 Jul 2015 15:00:46 +0000 http://www.thetruthaboutcars.com/?p=1117377 The 2015 Mercedes-Benz GLA250 lives within the margins. The compact — which shares more in common with a hatchback than an SUV — has a life thanks to America’s all-things-crossover obsession. It dodges definition, shirks consistent fuel-economy ratings and even has me guessing on my own feelings toward it. For sure, I can’t find a […]

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The 2015 Mercedes-Benz GLA250 lives within the margins.

The compact — which shares more in common with a hatchback than an SUV — has a life thanks to America’s all-things-crossover obsession. It dodges definition, shirks consistent fuel-economy ratings and even has me guessing on my own feelings toward it. For sure, I can’t find a single offensive thing about the GLA. Even more, I can’t find a single thing to love.


The Tester

2015 Mercedes-Benz GLA250

Engine: 2.0-liter inline, turbocharged 4-cylinder (208 horsepower @ 5,500 rpm; 258 pound-feet @ 1,250-4,000)

Transmission: 7-speed DCT transmission with paddle shifters

Fuel Economy (rating): 24 mpg city/32 mpg highway/27 mpg combined
Fuel Economy (observed): 25.3 mpg according to trip computer in 60/40-split city/highway driving.

Options: Cocoa brown exterior paint; Satin light brown poplar wood trim; Blind-spot assist; Bi-xenon headlamps; 19-inch wheels; Premium package (satellite radio, heated front seats, harman/kardon audio, dual-zone climate control); Multimedia package (navigation, 7-inch high-resolution display, DVD player, traffic information).

Base price: $33,300
Price as tested: $41,950


Exterior
From beak to butt, the GLA looks like adolescent hatchback growing into its tall frame.

That’s not an indictment on the GLA’s overall looks. The GLA’s stretched sheet metal from front to back look downright futuristic compared to the BMW X1 and Lexus NX. Maybe not as classically handsome as the Range Rover Evoque and a coin-flip compared to the Audi Q3, but there is nothing about the GLA that outwardly screams “half-baked.” It’s clear that German engineers set out to build a handsome crossover that happened to be a Mercedes, and not a Mercedes crossover that happened to be handsome. In my opinion, the GLA is too busy to look “classic” Mercedes.

2015MercedesBenzGLA250-2

Even the tail, which has the unenviable task of tying together the multiple body lines and profile curves, looks solidly modern and scrutinized. If I had to nitpick — and I think I have to — the bulbous tail lamps have a whisper of ugly.

2015MercedesBenzGLA250-1

Up front, however, the GLA’s nose and grille present a compelling argument. The car, which starts at just over $34,000, looks more expensive from the front. It’s a case of Mercedes putting a better foot forward for entry buyers. I prefer the GLA’s nose over, say, the boxy approach of the GLK, but the GLA’s face is much less polarizing.

The thick C-pillar visually lengthens the GLA’s abrupt end and gives the car a longer approach than its 179-inch measurement would indicate. From all approaches, the GLA looks bigger outside than it actually is, and that’s not a bad thing.

Shod with our optional 19-inch wheels the GLA sits tall and muscular without being gaudy. If the Subaru Forester had a Y chromosome, it’d look like a Mercedes-Benz GLA.

2015MercedesBenzGLA250-3

Interior
If intention was everything, the GLA’s interior would shine as a paragon for what luxury crossovers should be. Unfortunately, execution factors into the final result so we have to look at these things as they are — not as they could be.

2015MercedesBenzGLA250-4

First, the familiar: the Mercedes-Benz three-spoke wheel in the GLA is an exceptional touch. The wheel feels solid and confident, and its steering wheel controls and paddle shifters are among the best in the business right now.

Additionally, Mercedes-Benz’s COMAND system (its infotainment interface) is clear and fabulously unfussy. Pairing a smartphone or dictating an address is a breeze, and the 7-inch high-resolution display is seamlessly integrated into the GLA (albeit for $2,480 extra) without looking like a 80-inch HDTV in a trailer home.

The GLA even looks the part too. The ballyhooed cross-hair air vents are impressive, and even the beige faux-leather seats would have me second-guessing shelling out $1,700 for the privilege of more hides between the doors.

But it doesn’t take long for impressions to settle into reality.

The three-spoke wheel hides the stalk and makes setting cruise control nearly impossible. The controls for the COMAND system are awkwardly placed somewhere between my elbow and my wrist, and the dash sounds unsettlingly too hollow.

2015MercedesBenzGLA250-5

Even the comfortable-looking MB-Tex seats started to flatten the longer I was in the car and after 2 hours in a hot car driving through the city, I found myself itching to get out.

If I can use a small example: the GLA’s electric-adjustable seat controls are in the doors, like every other new Mercedes-Benz. Unlike some of them, the GLA doesn’t have electrically adjustable headrests, but there’s still a piece of fixed-molded plastic where that slider would go. In short, the GLA has all the look inside that a Mercedes should have, but it’s just not as special.

(Spring for the leather seats and you get a MB-Tex-stitched dash upper, which could kill two birds with one stone.)

The rear seats are comfortable for adults on short to moderate trips. My 6-foot-2-inch frame could fold into the back behind the driver, but not with someone my size driving up front.

Infotainment
As a $2,480 option on a $33,300 car, Mercedes-Benz’s COMAND system is no minor detail. The big, bright 7-inch high-resolution display rises prominently from the middle of the dash and is distinctly an added extra — there’s no hiding that the GLA was built first without it.

However, the COMAND system is thoughtfully integrated and wasn’t much of a distraction for me. I’m incredibly familiar with the layout and controls, so it’s hard for me to comment on the system’s learning curve. However, I can report that after teaching passengers how the small-ish knob placed near the cup holders could slide AND rotate, very few people had trouble learning the system.

The good: The radio controls mimic a tuner, and the system is detailed without needing too much attention.

The bad: Adding a phone, then adding that same phone as a Bluetooth streaming device is a head scratcher.

The ugly: The control knob is far-too small for my big mitts.

In the new C-Class, the COMAND system is nearly impossible to beat. In the GLA, it’s very good.

2015MercedesBenzGLA250-7

Drivetrain

The GLA250 sports a 2.0-liter turbo four that makes an entirely approachable 208 hp. According to the manufacturer, the GLA250 runs up to 60 mph in around 7 seconds, which may not be blinding, but may not be the engine’s fault. The 7-speed DCT transmission does its very best to keep the GLA in low-rev, fuel-saving territory on the tach and it’s apparent. More than a few times, I guessed I was in third gear by the other side of the intersection, and the GLA’s long legs are built for wringing every last mile from its 15-gallon tank.

Unfortunately, it’s a losing attempt.

Despite my best efforts on long highway jaunts, I couldn’t approach 30 mpg consistently, and the GLA may be thirstier than its 27 mpg combined rating would indicate.

In combined driving, over nearly 200 miles, I managed only just over 25 mpg without over-taxing the GLA or touching the paddle shifters.

The GLA is offered in front- or all-wheel drive, which Mercedes calls 4MATIC, configurations. Our tester was the latter, but without much snow or mountain driving to be found over the past week, it’s hard to report whether the all-wheel drive is necessary. We’ll blame El Nino. Or something.

2015MercedesBenzGLA250-8

Drive
Despite being one of the least expensive cars that Mercedes-Benz offers, the GLA is surprisingly confident and nimble on the road. Its grippy, direct steering was surprising for a car that weighs nearly 3,500 pounds and forces all its energy through the front wheels under normal circumstances. I could coax the GLA250 into a push, but not without plenty of drama from the wheels first. (And that’s the way it should be.)

The GLA is easy to park and remarkably maneuverable around an Ikea parking lot (if you’re wondering what I did with it instead of driving into the Rockies.)

There are some niggles, however. The GLA is far from quiet inside. A considerable amount of road noise comes through into the cabin and it feels like Mercedes just skipped some of the sound deadening material in the final checklist.

Also, Mercedes’ collision prevention assist system isn’t any more advanced than anyone else’s, which means that it’s entirely too intrusive. In stop-and-go traffic, the system tripped a few times and warned of a low-speed collision that wasn’t going to happen anyway.

And if I could coax the transmission into shorter shifts at the risk of less impressive fuel economy (on paper), I would. Mash your right foot, count to three and then the GLA clambers forward. There’s too much time between action and reaction for a car that costs more than $40,000.

But there’s nothing wholly unsatisfactory about the GLA. It looks impressive and delivers a product that’s nearly better than anyone else’s. It’s better looking than the NX, more modern than the X1 with more interior potential than the MKC at a price that’s on target for what I’d expect from the three-star folks.

It’s just, coming from the company that recently made an extremely good C-Class car, the only thing I could define about the GLA was my extremely high expectations before I drove it. And maybe that’s just not fair.

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Tesla Loses $38 Million In Q3 http://www.thetruthaboutcars.com/2013/11/tesla-loses-38-million-in-q3/ http://www.thetruthaboutcars.com/2013/11/tesla-loses-38-million-in-q3/#comments Wed, 06 Nov 2013 11:00:22 +0000 http://www.thetruthaboutcars.com/?p=643385 After reporting a net loss of $38 million in its Q3 filings earlier today, Tesla suffered a loss of over 12% in afterhours trading. The stock, which has grown nearly 80% since the beginning of the year shot down almost $22 since the markets closed on November 5th. In my last look at Tesla in […]

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After reporting a net loss of $38 million in its Q3 filings earlier today, Tesla suffered a loss of over 12% in afterhours trading. The stock, which has grown nearly 80% since the beginning of the year shot down almost $22 since the markets closed on November 5th.

In my last look at Tesla in Q1 of 2013, the company had posted its first net income, a tidy $11 million. However, analysis revealed that the company’s profitability, which garnered praise from across the industry, could not be attributed to the OEM’s main objective, the production and subsequent sales of its automobiles. Rather, Tesla’s profit was derived from “Other Income,” which is accounting jargon for money that is made outside of the scope of the company’s normal operations.

Two fiscal quarters later, and the profitability structure of Tesla is steadily improving, with Tesla exhibiting signs of strong operational profitability. This is attributable to Tesla’s increase in gross margin to 24%, from 17% at the beginning of the year. The company reported a gross profit of about $103 million for the quarter. What this means is that by simply taking all of Tesla’s sales, less the costs of goods sold,  the company is in the black. Contrast that from a year ago, when Tesla’s gross loss was almost $9 million.

This is quite an encouraging figure, especially considering the steady decline of ZEV credit revenues. Back in Q1, ZEV credits were responsible for 12% of Tesla’s revenue, while it now equates to about 2% of total sales. Additionally, Tesla’s Statement of Cash Flows reports positive cash flows from operations of $102 million.

One thing that has not changed for the company is its struggle to manage its operating expenses. With a total of $133 million for the quarter, Tesla’s fixed costs effectively wipe out any profitability achieved on the top line. For the past two quarters, Tesla’s operating expenses equaled about 30% of sales. While gross margin has improved, there is simply not enough unit contribution to cover the remaining costs when costs of sales are 86% of revenue. The recipe to profitability is simple. Tesla must either bring down its fixed costs, or continue to improve its margins. A combination of both is the best case scenario.

In its letter to shareholders, Tesla remarks that R&D costs are up due to work on a right hand drive configuration for the Model S, and development work on the Model X. Selling General and Admin (SG&A) also increased, as the company is pushing its global expansion and growing its Supercharger network. Both of these expenses are key to Tesla’s future success. Continued development and innovation of new and existing technologies is essential for the electric automaker to diversify its product offerings while also continuing to make them more practical and accessible to the larger population. As a result, a reduction in operating expenses seems unlikely in the near future.

One of the primary responsibilities of any publicly traded company is to deliver value to its shareholders. With an earnings per share figure of $-2.09, Tesla has not done a great job of doing so to date. While it is still too early to tell whether the hype is real for Tesla, it is clear that after today’s results, some of the luster has been lost. I am no investment advisor, but I am a fan of history, and historically, Tesla’s poor profitability has remained a constant.

All figures taken from Tesla’s SEC Filing

Graeme Kreindler is an HBA Candidate at the Richard Ivey School of Business at The University of Western Ontario. 

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OMG! Toyota Makes Money At Home! What’s The Nikkei Going To Do Now? Also: Toyota Top Management Answers Mike978’s Questions http://www.thetruthaboutcars.com/2013/02/omg-toyota-makes-money-at-home-whats-the-nikkei-going-to-do-now-also-toyota-top-management-answers-mike978s-questions/ http://www.thetruthaboutcars.com/2013/02/omg-toyota-makes-money-at-home-whats-the-nikkei-going-to-do-now-also-toyota-top-management-answers-mike978s-questions/#comments Wed, 06 Feb 2013 18:09:06 +0000 http://www.thetruthaboutcars.com/?p=476586   In my report from Toyota’s quarterly results, there was one thing I forgot to mention decided to keep for later. As long as I have been going to these things, and it has been a while, the first question has always been given to a Nikkei reporter. Old Japanese custom, like AP (and recently Reuters) […]

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Waiting for Godot-san

In my report from Toyota’s quarterly results, there was one thing I forgot to mention decided to keep for later. As long as I have been going to these things, and it has been a while, the first question has always been given to a Nikkei reporter. Old Japanese custom, like AP (and recently Reuters) at the Whitehouse. As long as I have been going to these things, the Nikkei reporter always asked when Toyota wants to make a profit and pay taxes at home. That kabuki dance is disguised as “when can we expect positive results on an unconsolidated basis?” The folks in the room need no translation, they roll their eyes and pens, or check their Brakkubely. That’s a Blackberry for you. This time, it was different.

Read the fineprint

Keeping with traditions, the first question went to the Nikkei reporter. Keeping with traditions, the Nikkei reporter asked about Toyota making profit and paying taxes at home reporting positive results on an unconsolidated basis.  Takahiko Ijichi was prepared for the question.

Answering Mike978’s questions about the currency rate

Ijichi begged forgiveness for having had to book  an operating loss of  46.2 billion yen ($500 million) for the last quarter, because this is “where expenses seem to be concentrated”, but for the nine months, Toyota is in the green to the tune of 21.5 billion yen ($230 million) in at home Nipponese operating income. For the full year, Toyota expects 150 billion yen ($1.6 billion)  in at home operating income, of which 140 billion yen  ($1.5 billion) go on account of an  improving exchange rate, Ijichi said, thereby also answering a question from the ranks of the TTAC commentariat.

Now what?

Ijichi had even better news for folks who feign concern about Toyota making profits and paying taxes at home in Japan, as opposed to raking it in in far-away places such as America or Southeast-Asia, only to dump it into a strong yen-lined black hole at home:

“For the first time in five years, we now have a clear prospect of achieving positive operating income on a non-consolidated basis.”

As long as the yen is going into the right direction, that is.  The way it stands,  the Nikkei will have to re-write the kabuki script and come up with another question to be asked at every Toyota press conference.

 

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Toyota Promises Higher Profits And Flat Sales http://www.thetruthaboutcars.com/2013/02/toyota-promises-higher-profits-and-flat-sales/ http://www.thetruthaboutcars.com/2013/02/toyota-promises-higher-profits-and-flat-sales/#comments Tue, 05 Feb 2013 19:37:34 +0000 http://www.thetruthaboutcars.com/?p=476418 Presenting its Q3 financials in Tokyo today, Toyota delivered much higher profits and much higher sales while promising even higher profits at pretty much flat sales for the future. With a man on his left who looked like an accountant, and who had a big accountant’s briefcase on his knee, ready to pull whatever document […]

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Here we go. Are you sitting down?

Presenting its Q3 financials in Tokyo today, Toyota delivered much higher profits and much higher sales while promising even higher profits at pretty much flat sales for the future. With a man on his left who looked like an accountant, and who had a big accountant’s briefcase on his knee, ready to pull whatever document his master needs, and a very quiet Shigeru Hayakawa on his right, Toyota Senior Managing Officer Takahiko Ijichi did forecast a net profit of 860 billion yen ($9.3 billion) for the fiscal year ending on March 31, 2013 up from the previously forecasted 780 billion yen. He also signaled a pause in Toyota’s rapid expansion:

“We were supposed to have learned a lesson from the Lehmann shock, but maybe, these lessons have not been fully taken into consideration. Volume increase is not tantamount to growth of the company.”

Takahiko Ijichi: Remember carmageddon

Basically, Ijichi announced that Toyota will not build any new factories within the next three years. Toyota will be on the hunt for “muda”, or waste, and will maximize the production capacity of existing plants. Toyota does not want to make the before-Lehmann mistake again, where rapid build-up in volume went hand-in-hand with a rapid build-up of plants and fixed costs. Projects that are planned will be finished, but there won’t be new plans.

The profit for the quarter would have been one billion dollar higher, would there not have been the “decrease as a result of “recording costs related to the settlement of the economic loss litigation in the United States.” A billion dollars, thrown to the lawyerly wolves, was stuck into “other.” The impact barely registered on the P&L.

Ijichi and his trusted side-kick

Reporters wanted to know how China affects Toyota’s bottom line. Ijichi remained vague. Due to different fiscal calendars, the reporting quarter from October to December 2012 reflects July through September in China, which were largely unaffected by the recent China Japan relations,” as Ijichi put it. He figures, the China affair may cost Toyota “200,000 units or less” in the second half of the current fiscal.

“Volume increase is not tantamount to growth.”

Toyota appears to be quite sanguine about the China matter. The company has its eyes and focus set on Southeast Asia, a market of more than 9 million units which grew 14 percent last year. Toyota sold 1.5 million cars in this region last year, and it wants to sell more. In China, Toyota wants to sell 900,000 units this year.

Speaking of sales, Toyota again confounded the reporters that were assembled in its basement meeting room. Those who cite the press release are either completely confused, or they don’t notice the confusion. Today, Toyota announced that from April 2012 to March 2013, it intends to sell 8.85 million units worldwide.

The fourth estate, JDM spec

A week ago, Toyotas said it sold 9.75 million for calendar 2012. Some reporters, who noticed the difference, wrote the 8.85 million are without Daihatsu and Hino. A Toyota spokesman told TTAC later that Daihatsu and Hino are included in the 8.85 million, China is not. Toyota sold 840,000 units in China last year. Close enough. For this year,Toyota wants to add maybe two percent to its sales and plans for flat production numbers.

My drop in the “goiken bako” the suggestion box of the Toyota Way: Avoid quarterly muri and muda by mentioning the Chinese units somewhere, so that the numbers reconcile. A separate handout would suffice.

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October Surprise: GM’s Q3 Numbers Better Than Expected http://www.thetruthaboutcars.com/2012/10/october-surprise-gms-3q-numbers-better-than-expected/ http://www.thetruthaboutcars.com/2012/10/october-surprise-gms-3q-numbers-better-than-expected/#comments Wed, 31 Oct 2012 14:16:22 +0000 http://www.thetruthaboutcars.com/?p=465488 GM delivered its October surprise by posting what Reuters calls “a surprisingly strong profit.” In a bit of a hail Mary pass, GM said it is targeting a return to break-even levels in Europe by mid-decade. GM’s third-quarter net income fell to $1.48 billion from $1.74 billion a year earlier. Excluding one-time items, GM earned […]

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GM delivered its October surprise by posting what Reuters calls “a surprisingly strong profit.” In a bit of a hail Mary pass, GM said it is targeting a return to break-even levels in Europe by mid-decade.

GM’s third-quarter net income fell to $1.48 billion from $1.74 billion a year earlier. Excluding one-time items, GM earned 93 cents a share, surprising analysts who expected only 60 cents.

In Europe, GM expects a full-year operating loss of $1.5 billion to $1.8 billion, depending on what restructuring costs will be in the fourth quarter. GM hopes for slightly better European results in 2013, and to reach break-even there by mid-decade. Hope springs eternal, especially in  the week before the elections.

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After The Water Torture: Nissan Walks Away As The Hero http://www.thetruthaboutcars.com/2012/02/after-the-water-torture-nissan-walks-away-as-the-hero/ http://www.thetruthaboutcars.com/2012/02/after-the-water-torture-nissan-walks-away-as-the-hero/#comments Wed, 08 Feb 2012 19:26:27 +0000 http://www.thetruthaboutcars.com/?p=430079   Was it luck? Was it hard work? A mixture of both? After escaping a near collision with fate in Iwaki, and not even getting its feet wet in Thailand, Nissan emerges as the most successful after the trials brought on by the unholy triad of tsunami, flood and yen. We said this a while […]

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Was it luck? Was it hard work? A mixture of both? After escaping a near collision with fate in Iwaki, and not even getting its feet wet in Thailand, Nissan emerges as the most successful after the trials brought on by the unholy triad of tsunami, flood and yen. We said this a while ago when we compared 2011 production numbers of Japan’s majors.

Today, we go to Yokohama to check the balance sheets.

In the most unceremonious way, Japan’s second largest automaker Nissan today stands out as the country’s most profitable. On the 8th floor of Nissan’s glitzy building by the Yokohama waterfront, there is no arm-waving Carlos Ghosn today who fills the room with French-accented quotables. In his stead, Nissan fields a nondescript Nissan’s Corporate Vice President, Joji Tagawa, to present thgwe quarterly results.

The bespectacled  VP with chin fuzz and spiky hair rattles off words and numbers as if his life would depend on the speed of their delivery. It does not matter: The numbers could have been delivered by a silent nun, they still would have conveyed their punch:

Both in the October-December quarter, and also in its guidance for the results of the fiscal year which ends on March 31st, Nissan trounced Honda and Toyota. October-December, Nissan’s  operating profit was 118.1 billion yen ($1.54 billion). Net profit amounted to 82.67 billion yen ($1.07 billion.)  Even better, Nissan sticks with its profit forecast for the fiscal that calls for a net profit of 290 billion yen ($3.8 billion).

Post water torture, Nissan appears to be in the best shape of all.

While Toyota and Honda had to scrounge for cars and parts, and still are supply constrained to some extent, Nissan rebounded quickly and gained market share around the world. Toyota lost 240,000 cars to the Thai flood, Honda’s plant in Thailand was submerged for months and is a near total write-off. And Nissan? Only 33,000 units went down the drain.

Now, let’s see whether they can keep it up.

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Secret Recipe Revealed: How FAW Gets A Tiguan Without SAIC Losing Face http://www.thetruthaboutcars.com/2011/08/secret-recipe-revealed-how-faw-gets-a-tiguan-without-saic-losing-face/ http://www.thetruthaboutcars.com/2011/08/secret-recipe-revealed-how-faw-gets-a-tiguan-without-saic-losing-face/#comments Sat, 20 Aug 2011 18:12:35 +0000 http://www.thetruthaboutcars.com/?p=408153 SUVs are hot in China, and VW’s SUVlet, the Tiguan has turned into a hot seller. In the last few months, it steadily worked itself up the SUV charts and was in the second position in July, behind the Honda CR-V, and before the Nissan Qashqai. In China, the Tiguan is made by Volkswagen’s southern […]

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SUVs are hot in China, and VW’s SUVlet, the Tiguan has turned into a hot seller. In the last few months, it steadily worked itself up the SUV charts and was in the second position in July, behind the Honda CR-V, and before the Nissan Qashqai. In China, the Tiguan is made by Volkswagen’s southern joint venture with Shanghai Volkswagen. What to do when Volkswagen’s Northern joint venture with FAW develops offroadish desires?

China Car Times heard around the hot water dispenser (they like to drink hot water in China, yuck, I know) that First Automobile Works has signaled its wishes that Volkswagen should go off-road with them. Volkswagen can hardly give them the Tiguan as well. That would be taking socialism too far.  So what’s Volkswagen to do?

Best-selling SUVs, China, July 2011
Rank Model Brand Units
1 CR-V Honda 12,706
2 Tiguan VW 11,457
3 Qashqai Nissan 10,542
4 Highlander Toyota 8,817
5 Haval H series Great Wall 8,394
6 Tiggo Chery 8,295
7 ix35 Hyundai 8,139
8 RAV4 Toyota 7,189
9 5008/Nomad II Zotye 6,971
10 Sportage R Kia 5,462
Source: CAAM

According to (British born) Ash Sutcliffe of China Car Times, “FAW are working with VW to produce their own self designed VW SUV on top of the Tiguan platform.”

Now Ash, Volkswagen would NEVER do that and cheat their Shanghainese partners. Let me show you how this works at Volkswagen: Everybody knows that the Audi Q3 is coming to China next year, right? The car, unveiled at the Shanghai Motorshow with yours truly snapping away and Ash without camera, will be made by Audi’s  JV partner – FAW.

The Tiguan and the Q3 are based on the current Golf platform. (NOT MQB as erroneously stated on occasion.) Being an Audi, the Q3 will be built by FAW. FAW also makes the Golf. The Tiguan and Q3 are based on – the Golf. Now if that rumor is true, Volkswagen would never ever help FAW to build an SUV on top of the Tiguan platform. That would break the contract and good form.

They’ll help them build an SUV on the Golf platform! What’s wrong with that? It could even look a bit like the Q3. I mean, all these SUVlets look alike anyway, right? Especially in China. Everybody keeps face, everybody happy. Now, where’s the next KTV?

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Q3, Q.E.D. http://www.thetruthaboutcars.com/2011/04/q3-q-e-d/ http://www.thetruthaboutcars.com/2011/04/q3-q-e-d/#comments Thu, 14 Apr 2011 16:43:09 +0000 http://www.thetruthaboutcars.com/?p=391349 As of this moment, Audi has no plans to bring its Q3 “Crossunder” into the MINI Countryman/BMW X1/Nissan Juke/Mitsubishi Outlander Sport battle for the hearts of downsizing CUV-lovers brewing here in the US market… and yet Audi of America is teasing the thing on its Youtube channel. Does this mean we can expect this 3,300-ish […]

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As of this moment, Audi has no plans to bring its Q3 “Crossunder” into the MINI Countryman/BMW X1/Nissan Juke/Mitsubishi Outlander Sport battle for the hearts of downsizing CUV-lovers brewing here in the US market… and yet Audi of America is teasing the thing on its Youtube channel. Does this mean we can expect this 3,300-ish lb CUV, offering 48.2/16.24 cubic feet of storage (rear seats down/up) to arrive stateside at some point? We’d certainly be surprised if that didn’t happen somewhere down the line…

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Audi Q3 To Be Launched In Fall? http://www.thetruthaboutcars.com/2011/01/audi-q3-to-be-launched-in-fall/ http://www.thetruthaboutcars.com/2011/01/audi-q3-to-be-launched-in-fall/#comments Tue, 18 Jan 2011 16:19:58 +0000 http://www.thetruthaboutcars.com/?p=380954 Audi might show its SUV for Lilliputians, the Q3, at the Frankfurt Auto Show in September for a launch later in the year. At least that’s what the buzz in Europe is. The rumor mill guesses that the Q3 will be based on the Volkswagen Tiguan platform. It should look something like the Audi Cross […]

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Audi might show its SUV for Lilliputians, the Q3, at the Frankfurt Auto Show in September for a launch later in the year. At least that’s what the buzz in Europe is.

The rumor mill guesses that the Q3 will be based on the Volkswagen Tiguan platform. It should look something like the Audi Cross Coupe Quattro Concept, first shown way back in Shanghai in 2007.

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