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Kristofer Harrison, The National Interest / October 25, 2016 Think the public doesn’t care about foreign policy? Ask Barack Obama, who built his 2008 campaign on a foundation of popular anger over Iraq. Yet, Congress—the people’s representatives and the branch closest to the mood of the country—routinely cedes foreign policy decision-making to executive branch bureaucrats. Like everything else, the Founders subjected foreign policy power to checks and balances, but Congress routinely leaves its most powerful tools fallow. Now and then, the House of Representatives threatens to withhold funds for a significant foreign policy issue (e.g. Iraq), and, occasionally, the Senate will block an ambassador about whom nobody cares. But otherwise, the Congress seems to throw its hands up and give the executive free reign. Syria presents a looming civics lesson. All indicators point to a Clinton presidency, which means a push for no-fly zones in Syria. Congress had better be careful. Voters may not support a no-fly zone, and if Congress becomes complicit in pushing one forward, the country's politics will look far Trumpier than even now. Unless Congress relearns how to influence foreign policy, the country will sleepwalk into Hillary Clinton’s proposed half-baked military solution just because the think tank community wants it and because it appears to be the opposite of President Obama’s Alfred E. Neuman approach to Syria. If public opinion gels against it, the GOP will pay dearly at the polls. Congress needs to do its political due diligence. Be wary of following experts over a cliff. The first thing Congress should do is knock off the nonsense that resistance to no-fly zones means someone is an isolationist, pro-Russian or okay with genocide. Those are infuriating arguments for opponents (i.e. voters) whose concern typically revolves around a no-fly zone’s efficacy—why are we doing it?—or mission creep. The GOP has still not come to terms with Iraq. Witness Senator Rubio. He ran for president on a platform that the Iraq war was a good thing and that Syria needs similar medicine. Understandably, voters view GOP foreign policy with a skeptical eye. “What is the goal?” "How do no-fly zones achieve it?" “Would this not only reprise the 1990s creeping mission against Saddam Hussein?” If the public approves of those answers, proceed. Yet, teasing out these answers falls to Congress. The executive branch will not do it. Remember, they have experts who think they know the answer. Congress must start small. Define the threat. Pass legislation spelling out that there are multiple issues in Syria: ISIS, Assad, and Russia. Make clear that no-fly zones address the latter, and do not let the administration conflate the threats. Teasing out those questions will require Congress to make better use of hearings. Congress must relearn the art of holding them. Carefully conducted, hearings should powerfully amplify a message and frame political contrasts. Beltway wonks relish a good game of gotcha, but using basic policy questions (e.g., “Who do you want to achieve in Syria?”) is a better way to embarrass and pressure the executive. Incidentally, message to Congress: think tanks are not your audience; voters are. Hearings should generate headlines. Congress needs to invite better witnesses—not just think tank experts—and ask better questions. Members must stop asking questions that generate minutiae. Nobody cares, and, besides, that is why Congress has staff. Ask questions that prompt answers voters care about. Here, topics matter, too. Here’s one: Obama’s Syria policy creates a situation where Iran has thousands of ground troops, Russia bombs with impunity, we stand at cross purposes with our NATO ally Turkey, and we expend enormous effort to force our Sunni Arab allies in the Gulf to stand idly by and observe a Sunni Arab genocide. This strategy, such that it is, has an obvious problem. Eventually, our Sunni Arab allies will involve themselves, and they will stop listening to us. The corollary is that Assad labels all dissenters as terrorists and kills them, so when our Gulf Arab allies do lose all patience with us, their only remaining potential partners on the ground will be ISIS and Al Qaeda. Surely, the public cares about a strategy that will force our allies into the arms of Al Qaeda. Congress can do more than just hold hearings. Without dispute, the president is the chief diplomat, but that does not mean Congress cannot communicate with our allies. Invite Gulf Arab allies to address Congress and hold consultations. Do what our diplomats cannot do and explain our political constraints. Ask them, “Given those constraints, how can the United States and its allies defeat ISIS?” In reality, Clinton should welcome this as she helped plant the seeds of Obama’s Syria policy while secretary of state. No president wants to admit failure, and, with Obama planning to remain in Washington D.C. after his presidency, she may be loath to criticize him. Realistically, she may chafe at Congress’ efforts. Good. Congress can do this seven times, once with each Gulf Arab country. If Clinton still refuses to work with Congress, it can start highlighting the immigration crisis caused by Syria and start inviting our 28 NATO allies, one-by-one to talk about it. Heretofore, Congress has done little more than appeal to virtue and hope that voters pressure the president and his experts to change course for having a lack of it. Half a million dead Syrians speaks volumes their relative immunity from political pressure, though. Corralling moral outrage is not enough. Congress needs to relate the foreign policy to the public. Syria presents plenty of issues that people care about: immigration, giving allies no choice but to work with Islamic radicals, potential mission creep that could see the United States reprising some of the 20 year Iraq saga, cost, and so on. Even if the voters do not get animated about Syria wonkiness, they will start reacting to the domestic implications. George Washington made this point multiple times in his Farewell Address when talking about "enlightened" public opinion. But that only works—Congress’ check on the Executive only has traction—when Congress enlightens it. That does not mean educating them or trying to spark moral outrage; it means highlighting political contrasts and relating the issues to a local audience. Nobody should excel at that more than members of Congress, but currently they do not. Kristofer Harrison served in both the Departments of Defense and State during the George W. Bush administration on issues ranging from Russia to Iraq. During the primaries he served as a foreign policy advisor to Senator Ted Cruz (R-TX).

Arizona Sheriff who arrests illegal immigrants charged with criminal contempt Associated Press / October 26, 2016 The longtime sheriff of metropolitan Phoenix was charged Tuesday with criminal contempt-of-court for ignoring a judge's order in a racial-profiling case, leaving the 84-year-old lawman in a tough spot two weeks before Election Day as he seeks a seventh term. The U.S. Department of Justice promised two weeks ago that it would prosecute Sheriff Joe Arpaio, but the misdemeanor count wasn't officially filed against him until U.S. District Judge Susan Bolton signed it. Arpaio could face up to six months in jail if convicted. A misdemeanor conviction would not bar Arpaio from serving as sheriff. Democratic challenger Paul Penzone said Arpaio, through his acts of political defiance, has no one to blame but himself for the charge. "It's another example of the sheriff putting his own personal objectives ahead of the best interest of the community at our expense," Penzone said. Arpaio lawyer Mel McDonald said the sheriff will contest the charge. "We believe that when the final chapter is written, he will be vindicated," McDonald said. McDonald said Arpaio will not be arrested and no mugshot will be taken. He will plead not guilty in a court filing. The criminal charges stem from the profiling case that Arpaio lost three years ago that morphed into a contempt case after the sheriff was accused of defying a 2011 court order to stop his signature immigration patrols. Arpaio has acknowledged violating U.S. District Judge Murray Snow's order but insists his disobedience was not intentional. Snow disagreed, concluding Arpaio knowingly continued the patrols because he believed his immigration enforcement efforts would help his 2012 re-election campaign. Arpaio ran a TV political ad last week saying the Obama administration's Justice Department planned to prosecute him because of its opposition to his immigration enforcement efforts. In the past, Arpaio has walked away from criminal investigations without facing charges and still has managed to get re-elected. He faced a federal investigation four years ago on allegations that he retaliated against two local officials and a judge at odds with him by accusing them of corruption. His office also was investigated for misspending more than $100 million in jail funds, including on those failed investigations into rival officials and his traffic patrols targeting immigrants who are in the country illegally. Neither investigation led to prosecution of the sheriff or his employees. County taxpayers have spent $48 million so far to defend Arpaio and his office in the profiling case. The cost is expected to reach $72 million by next summer. The contempt violation led the judge to order the creation of a taxpayer-funded system for compensating Latinos who were illegally detained when Arpaio ignored the order. Maricopa County officials have set aside $1 million for funding the system. A Dec. 6 trial has been scheduled in Arpaio's criminal contempt case. .

Volvo anticipating further decline in Class 8 truck market Truck News / October 25, 2016 Volvo Trucks is projecting North American Class 8 truck sales are going to get worse before they get better. Magnus Koeck, vice-president of marketing and brand management, told the truck press Monday that Volvo is predicting a total North American Class 8 market of 215,000 units for 2017. That’s down from the 240,000 that will be sold this year and way off 2015’s mark of more than 300,000 units. “We believe it’s going to continue to decline a bit going into next year,” Koeck said. “We have a lot of inventory for the industry out there at the dealers. When the market came to a halt in June and July of last year, OEMs, including ourselves, continued to produce trucks in our factories as if nothing has happened and eventually that became a lot of trucks at dealers and that’s, I’d say, the major impact that we can see now for new orders for the industry.” Dealer inventories are being reduced, Koeck said, but they will still be a factor into next year. The inventory glut has been exacerbated by a slowdown in freight volumes. The reduced order intake is especially acute in the long-haul segment, which is down about 35-40% and regional haul, down about 32%, and these are the two segments in which Volvo is strongest, Koeck pointed out. The construction segment is up about 3-4% this year. This is a trend that could continue. Koeck said the expansion of the Panama Canal will bring more freight to the eastern seaboard, which could be a boon for regional trucking. And the industry’s inability to find linehaul drivers will also drive the regionalization of trucking. Koeck said longhaul’s share of the Class 8 market could fall from about 50% today to 43% of the total market while regional haul increases its share from about 27% today to about 35%. Natural gas today comprises just 2% of the US market and Koeck said he doesn’t expect that to change in the near future. Koeck made the comments prior to Volvo’s Safety Symposium, where it demonstrated safety systems such as Volvo Enhanced Stability Technology and its new Volvo Active Driver Assist. More than 100 customer and dealers were invited to attend.

Commercial Carrier Journal (CCJ) / October 25, 2016 A group representing concrete haulers and their drivers has asked the Federal Motor Carrier Safety Administration for an exemption from the required 30-minute break stipulated by hours of service regulations. The American Concrete Pumping Association’s exemption request would apply across the concrete pumping industry to all concrete pump operators, concrete pumping companies and drivers who deliver, set up and operate concrete pumps across the U.S. ACPA says many of the trucks operate intrastate and wouldn’t be covered under the exemption, but “an unknown number of the pumping trucks are operated in metropolitan areas and do routinely cross state lines.” The association says it has several reasons behind the exemption request. First, ACPA says the mandatory 30-minute break increases the risk of dangerous conditions on job sites because it would require the concrete pump on a job site to the shut down. The association says stopping the flow of concrete can allow air to enter the pipes, which could cause hoses to whip around and hit a pump operator. Additionally, the association says the pump operators already take breaks throughout the day, so an additional 30-minute break doesn’t enhance safety. Another factor, ACPA says, is that the operators only drive approximately between 25 and 32 percent of their shift and average daily driving distances of just 20-25 miles. Finally, ACPA says that because ready-mixed concrete truck drivers were granted a permanent exemption from keeping logs if operating within a 100-mile radius, its concrete pump operators don’t have time to take a break because of the perishable nature of concrete. The concrete hardens within 90 minutes of the ingredients being mixed, ACPA says. FMCSA is seeking public comment on the request, which can be made here on or before Nov. 25, or by searching Docket No. FMCSA-2016-0342 at www.regulations.gov.

Paccar Profit Falls as Market Share Moves Higher Heavy Duty Trucking / October 25, 2016 At a time when many trucking companies are reporting lower third quarter earnings, truck and engine manufacturer Paccar saw earnings fall by 19.7%. Paccar, the parent to truck brands Kenworth, Peterbilt and DAF, reported its profit declined to $346.2 million, or 98 cents per share, for the third quarter of 2016 compared to $431.2 million, or $1.21 per share a year earlier. The per share missed a consensus estimate from analysts by 1 cent. Revenue for Paccar in the most recent quarter totaled $4.25 billion compared to $4.85 billion for the same period last year. Net income for the first nine months of the year is down considerably, hitting $232.9 million, versus $1.26 billion in the first nine months of 2015. Despite lower numbers, Paccar CEO Ron Armstrong described the company as having reported good revenues and net income for the third quarter of 2016. “Paccar’s third quarter results reflect strong truck markets in Europe, increased heavy-duty truck market share in North America and Europe, and good aftermarket parts and financial services results worldwide,” he said. According to the Washington state-based company, Peterbilt and Kenworth’s record third quarter U.S. and Canada Class 8 retail sales market share of 31% increased their year-to-date market share to 27.9%. Despite this hike, Paccar revenue from its truck, parts and other operations fell to $3.95 billion in the most recent quarter from $4.5 billion a year earlier. The earnings report follows those from rivals Daimler Trucks reporting increased profits while Volvo Group saw its earnings decline. Paccar noted that Class 8 truck industry retail sales for the U.S. and Canada are expected to be 215,000-225,000 vehicles in 2016, and 200,000-230,000 in 2017.

Paccar Press Release / October 25, 2016 “Paccar reported good revenues and net income for the third quarter of 2016,” said Ron Armstrong, chief executive officer. “Paccar’s third quarter results reflect strong truck markets in Europe, increased heavy-duty truck market share in North America and Europe, and good aftermarket parts and financial services results worldwide. I am very proud of our 23,000 employees who have delivered industry-leading products and services to our customers.” PACCAR earned $346.2 million ($.98 per diluted share) for the third quarter of 2016 compared to $431.2 million ($1.21 per diluted share) earned in the third quarter of 2015. Third quarter net sales and financial services revenues were $4.25 billion this year compared to $4.85 billion for the same period last year. For the first nine months of 2016, PACCAR reported adjusted net income (non-GAAP) of $1.07 billion ($3.03 per diluted share), excluding an $833.0 million non-tax-deductible, non-recurring charge for a European Commission (EC) settlement. The company earned $1.26 billion ($3.53 per diluted share) in the first nine months of 2015. PACCAR reported net income of $232.9 million ($.66 per diluted share) in the first nine months of 2016, including the non-recurring charge. Net sales and financial services revenues for the first nine months of 2016 were $12.96 billion compared to $14.76 billion last year. PACCAR Celebrates 20 Years of DAF Trucks PACCAR acquired DAF in 1996 and has increased its above 16-tonne market share in Europe from nine percent in 1996 to 15.6 percent this year. DAF is the overall above 16-tonne market share leader in the U.K., the Netherlands, Poland and Hungary. DAF manufactures trucks in Europe, South America and Asia, and sells trucks, engines and aftermarket parts in over 100 countries worldwide. Kenworth and Peterbilt have benefited from DAF’s leadership in the design and production of commercial vehicle diesel engines. The success of PACCAR’s MX engines in North America, produced in PACCAR’s Mississippi engine factory, has contributed to Kenworth and Peterbilt’s U.S. and Canada Class 8 market share growth to a quarterly record of 31 percent. Financial Highlights – Third Quarter 2016 Highlights of PACCAR’s financial results for the third quarter of 2016 include: Consolidated sales and revenues of $4.25 billion. Net income of $346.2 million. PACCAR Parts quarterly pre-tax income of $138.3 million. Financial Services quarterly pre-tax income of $71.0 million. Manufacturing cash and marketable securities of $2.80 billion. Financial Highlights – Nine Months 2016 Highlights of PACCAR’s financial results for the first nine months of 2016 include: Consolidated sales and revenues of $12.96 billion. Adjusted net income of $1.07 billion (non-GAAP), excluding an $833.0 million non-tax-deductible, non-recurring charge for the EC settlement. Net income of $232.9 million. PACCAR Parts pre-tax income of $406.3 million. Financial Services pre-tax income of $228.6 million. Cash generated from operations of $1.49 billion. Combined capital and research and development expenditures of $445.4 million. Medium-term note issuances of $1.84 billion. Bank credit facilities of $3.0 billion renewed. Global Truck Markets “Customers recognize DAF’s product quality leadership, low operating costs and excellent resale value,” said Preston Feight, DAF president and PACCAR vice president. “DAF achieved year-to-date European above 16-tonne truck market share of 15.6 percent compared to 14.6 percent in the same period last year.” It is estimated that the European truck industry sales in the above 16-tonne market will be in the range of 290,000-300,000 units this year, one of the best markets in history, and are projected to be in the range of 260,000-290,000 units in 2017. Class 8 truck industry retail sales for the U.S. and Canada are expected to be in a range of 215,000-225,000 vehicles in 2016. Class 8 truck industry retail sales for the U.S. and Canada are estimated to be in the range of 200,000-230,000 vehicles in 2017. Peterbilt and Kenworth’s record third quarter U.S. and Canada Class 8 retail sales market share of 31 percent increased their year-to-date market share to 27.9 percent. “Our customers are benefiting from the excellent operating efficiency of Peterbilt and Kenworth trucks,” said Gary Moore, PACCAR executive vice president. PACCAR Launches Proprietary Axle in North America PACCAR has launched a new proprietary tandem axle in North America that is the industry’s lightest and most efficient axle in its class. The axle will be available to customers in January 2017. “PACCAR’s axle reduces vehicle weight by up to 150 lbs. and improves fuel economy,” noted Landon Sproull, PACCAR vice president. A unique design simplifies power flow in the axle for enhanced efficiency, and innovative fluid distribution technology reduces weight and improves fuel economy. The axle is rated at 40,000 lbs., supporting a gross combination weight of 80,000 lbs. PACCAR Enhances MX-13 and MX-11 Engines PACCAR is enhancing its range of MX engines for 2017. The updated PACCAR engines deliver increased power and reduced operating costs for North American customers. PACCAR increased the MX-13 engine’s output to 510 hp and 1,850 lb-ft of torque and increased the MX-11 engine’s output to 430 hp and 1,650 lb-ft of torque. PACCAR’s MX engines deliver peak torque at 900 RPM for the majority of engine ratings, supporting increased performance and driving flexibility. “The 2017 PACCAR MX-13 and MX-11 engines provide customers with up to four percent fuel economy gains,” said Kyle Quinn, PACCAR senior vice president. “The MX engines’ oil and filter change intervals have been extended from 60,000 miles to 75,000 miles. These enhancements will deliver excellent cost savings for customers over the life of the vehicle.” DAF Introduces DAF Connect Telematics System at IAA Truck Show DAF launched DAF Connect at the IAA truck show in Hanover, Germany last month. DAF Connect provides customers with fleet management data to enhance vehicle and driver performance. Customers access the information through an online service, enabling them to optimize vehicle utilization and uptime, reduce operational expenses and enhance logistical efficiency. DAF Connect provides a unique open technology platform, which can seamlessly interface with customers’ other telematics systems. Peterbilt Launches SuperTruck II Program Peterbilt and Cummins are partnering to launch their five-year U.S. Department of Energy SuperTruck II program. The goal of the program is to double Class 8 vehicle freight efficiency in order to achieve Greenhouse Gas emissions requirements for model years 2021, 2024 and 2027. Peterbilt is targeting aerodynamics improvements of 15 percent, which would provide customers with up to 7.5 percent improvement in fuel economy. Peterbilt is partnering with suppliers to develop low rolling resistance tires and fuel-saving technologies in auxiliary systems, such as air compressors, power steering pumps and cooling pumps. Peterbilt and Cummins partnered in the original SuperTruck program, which culminated in 2013 with the production of the Peterbilt Model 579 SuperTruck. Many of the technologies developed in the original SuperTruck program are available in the fuel-efficient Peterbilt Model 579 EPIQ. PACCAR Parts Expands TRP Stores DAF, Kenworth and Peterbilt dealers have opened 58 TRP retail stores, which provide high quality aftermarket products and services to owners of all makes of light-, medium- and heavy-duty trucks, trailers, buses and engines. TRP stores are strategically located close to customers in order to provide TRP products and technical expertise. The first TRP store opened in Poland in 2013, and there are now retail stores in Europe, North America, South America, Australia and Africa. “PACCAR Parts’ TRP brand increases the aftermarket parts and service business available to our dealers and is supported by our global distribution network,” commented Dick Leek, PACCAR Parts Europe general manager. PACCAR Parts’ TRP Store in Madrid, Spain PACCAR Parts generated pre-tax profit of $138.3 million in the third quarter of 2016, compared to $145.4 million achieved in the third quarter of 2015. Third quarter 2016 revenues were $764.8 million, compared to $778.0 million earned in the third quarter last year. PACCAR Parts achieved pre-tax profit of $406.3 million in the first nine months of 2016, compared to $430.0 million in the first nine months of 2015. PACCAR Parts’ nine month revenues were $2.24 billion, compared to $2.31 billion for the same period last year. Increased Capital Investment and Product Development PACCAR’s excellent long-term profits, strong balance sheet and intense focus on quality have enabled the company to invest $6.1 billion in capital projects, innovative products and new technologies during the past decade. Capital investments of $375-$400 million and research and development expenses of $240-$250 million in 2016 are delivering new products, enhanced manufacturing and parts distribution facilities, and innovative aftermarket support programs. Capital investments are projected to be $375-$425 million, and research and development expenses are estimated to increase to $270-$300 million in 2017. “The company is investing for future growth in PACCAR integrated powertrain components, advanced driver assistance and truck connectivity technologies, and enhanced manufacturing and parts distribution facilities,” said Bob Christensen, PACCAR president and chief financial officer. “DAF’s new $110 million cab paint facility is on schedule to open in mid-2017. PACCAR Financial Services will open its new used truck center in Chicago early next year, reflecting Kenworth and Peterbilt’s increased sales to fleet customers.” Financial Services Companies Launch Mobile Applications PACCAR Financial Services (PFS) offers competitive retail financing to Peterbilt, Kenworth and DAF dealers and customers. PFS has a portfolio of 176,000 trucks and trailers, with total assets of $12.37 billion. PacLease, a major full-service truck leasing company in North America and Europe, with a fleet of nearly 38,000 vehicles, is included in this segment. PFS provides leading-edge technology solutions, excellent customer service and dedicated support to the transportation industry. PFS recently introduced a mobile sales and credit system, which allows customers and dealers to complete a loan application, receive an expedited credit decision and electronically sign a contract on a mobile device. “Kenworth, Peterbilt and DAF dealers and customers appreciate the ease of doing business with PFS due to its innovative technology solutions,” said Todd Hubbard, PACCAR Financial president. PACCAR’s strong balance sheet, complemented by its A+/A1 credit ratings, enables PFS to have excellent access to the commercial paper and medium-term note markets. PFS profitably supports the sale of PACCAR trucks in 23 countries on four continents. PFS achieved good profits during the third quarter and first nine months of 2016 due to excellent portfolio performance. PFS earned $71.0 million in the third quarter this year compared to $92.9 million earned in the same period last year. Third quarter 2016 revenues were $296.2 million compared to $301.0 million in the same quarter of 2015. For the nine-month period, PFS pre-tax income was $228.6 million in 2016 compared to $272.7 million last year. Nine-month revenues were $883.0 million in 2016 compared with $879.5 million for the same period a year ago. Environmental Leadership Kenworth’s truck factories in Chillicothe, Ohio and Renton, Washington were honored recently with awards for environmental leadership. The Kenworth Chillicothe factory earned the 2016 Ohio Energy Efficiency Award presented by American Electric Power, a large electric utility in Ohio. Kenworth Chillicothe was honored for reducing its energy consumption by five million kilowatt hours over a two year period. The Kenworth Renton factory earned two King County, Washington environmental leadership awards. The Kenworth Renton factory was honored with the 2016 Best Workplace for Waste Prevention and Recycling Award for its exceptional recycling programs. Kenworth Renton also earned the Gold Award, recognizing the outstanding results of its wastewater treatment programs. .

Daimler Press Release / October 21, 2016 Unit sales 5% above prior-year level at 754,100 vehicles Revenue up by 4% to €38.6 billion Significant increase in Group EBIT to €4,037 million (Q3 2015: €3,661 million) Group EBIT adjusted for special items at highest level to date of €4,010 million (Q3 2015: €3,657 million) Net profit of €2,726 million (Q3 2015: €2,415 million) Good level of free cash flow of industrial business despite special items Slight growth in unit sales and revenue at prior-year’s level anticipated for full-year 2016 Group EBIT adjusted for special items still expected to be slightly higher than in 2015 Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars: “Daimler again posted record earnings in the third quarter. We will make the year 2016 into another successful year for Daimler.” Bodo Uebber, Member of the Board of Management of Daimler AG for Finance & Controlling and Daimler Financial Services: “We are growing sustainably and profitably. Daimler remains on track to achieve our earnings forecasts for the full year, despite volatile sales and finance markets.” Stuttgart, Germany – Daimler AG (ticker symbol DAI) posted record unit sales and EBIT adjusted for special items, thus continuing along its successful path. In the third quarter of 2016, Daimler sold 754,100 cars and commercial vehicles worldwide, more than ever before in a third quarter and surpassing the total for the prior-year period by 5%. In the first nine months of the year, the Group’s unit sales increased by 6% to 2.2 million vehicles. The Daimler Group’s third-quarter revenue amounted to €38.6 billion, which is 4% higher than in the third quarter of 2015. Adjusted for exchange-rate effects, revenue grew by 3%. The Daimler Group achieved third-quarter EBIT of €4,037 million, thus significantly surpassing its prior-year earnings of €3,661 million. Group EBIT adjusted for special items reached its highest level to date of €4,010 million (Q3 2015: €3,657 million). Net profit improved to €2,726 million (Q3 2015: €2,415 million). Net profit attributable to the shareholders of Daimler AG increased to €2,595 million (Q3 2015: €2,385 million), leading to an increase in earnings per share to €2.43 (Q3 2015: €2.23). “Daimler again posted record earnings in the third quarter. So we have proven one more time that we are pursuing the right strategy. We will systematically continue along our course,” stated Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. “Our attractive products and innovative services provide us with good momentum. We will use this to utilize the great potential of electric mobility. With our new product brand, EQ, we have established an important basis for leadership also with electric drive systems. But first of all, we will make the year 2016 into another successful year for Daimler.” The EBIT of the Mercedes-Benz Cars division increased significantly, due in particular to growing unit sales in the SUV segment and the market success of the new E-Class. The Mercedes-Benz Vans division also increased its EBIT significantly, as a result of higher revenue. However, Daimler Trucks and Daimler Buses could not match their high earnings of the prior-year quarter. Among other things, this was caused by sharp decreases in unit sales in some key markets. At Daimler Financial Services, earnings increased significantly primarily due to growth in contract volume. Exchange-rate effects had an overall positive effect on operating profit. The special items in the third quarters of 2016 and 2015 are shown in the table on page 13. “Due to our global positioning, our attractive products and above all our highly motivated workforce, we are growing sustainably and profitably. Daimler remains on track to achieve our earnings forecasts for the full year, despite volatile sales and finance markets,” said Bodo Uebber, Member of the Board of Management of Daimler AG for Finance & Controlling and Daimler Financial Services. “With our strong balance sheet, we have a very good basis to invest substantially in the future areas of digitization and electrification. Despite our financial strength, we also have to remain focused and disciplined. One of the great challenges for the automotive industry will be to optimize and prioritize budgets not only for the ongoing business, but for structural technological developments.” Free cash flow In the first nine months of 2016, the free cash flow of the industrial business resulted in a cash inflow of €2.6 billion (Q3 2015: €4.8 billion). This decrease was due to different factors. The payment of the fine imposed by the European Commission in the context of the settlement in the truck antitrust proceedings against Daimler AG reduced the free cash flow of the industrial business by €1.0 billion. Furthermore, there were higher tax payments, as the prior-year period was influenced by tax refunds. The free cash flow of the industrial business was also impacted by higher investments in intangible assets and property, plant and equipment. Positive effects resulted from the development of working capital. Net liquidity Compared with December 31, 2015, the net liquidity of the industrial business decreased from €18.6 billion to €17.9 billion. The decrease was mainly caused by the dividend payment to the shareholders of Daimler AG, which more than offset the positive free cash flow. Workforce At the end of the third quarter of 2016, Daimler employed 284,482 people worldwide (Q3 2015: 286,248; end of 2015: 284,015). Of that total, 172,857 were employed in Germany (Q3 2015: 172,561; end of 2015: 170,454) and 22,145 in the United States (Q3 2015: 24,588; end of 2015: 24,607). Details of the divisions Mercedes-Benz Cars’ third-quarter unit sales increased by 11% to 565,600 vehicles. The car division thus set another record in the past quarter. In Europe, Mercedes-Benz Cars achieved another high, selling 12% more vehicles than in the prior-year period. Double-digit growth was recorded in the United Kingdom, France, Italy, Spain and Belgium. In Germany, 8% more units of the Mercedes-Benz and smart brands were sold. In China, sales increased by 20% to a record level, and records were set also in Japan (+8%), South Korea (+40%), Australia (+8%) and Taiwan (+13%). Unit sales were higher than ever before in a third quarter also in the NAFTA region. In the United States, sales in the period of July through September rose by 2%. The largest division’s revenue increased by 12% to the best-ever figure of €23.3 billion in the third quarter. Mercedes-Benz Cars’ EBIT also increased significantly to €2,746 million – another record (Q3 2015: €2,183 million). Return on sales rose accordingly to 11.8% (Q3 2015: 10.5%). The very positive earnings development was primarily a reflection of growth in unit sales in the SUV segment and the new E-Class. Favorable exchange-rate developments and improved pricing also had a positive impact on EBIT. There were opposing effects from advance expenditure for new technologies and vehicles. Daimler Trucks sold 97,100 vehicles in the third quarter of this year (Q3 2015: 128,500). The decrease is the result of lower demand for trucks in many key markets. In the NAFTA region, unit sales by Daimler Trucks decreased to 31,400 units in a declining market (Q3 2015: 52,200). At the same time, the division succeeded in further extending its market leadership in Classes 6-8, taking 39.3% of the market (Q3 2015: 38.1%). Daimler Trucks delivered 3,500 units in a contracting market in Brazil, which is fewer than in the third quarter of last year (Q3 2015: 4,300). In the EU30 region (European Union, Switzerland and Norway), sales growth of 7% was achieved to 21,300 units. Daimler Trucks sold more vehicles than in the prior-year period also in Germany (+4%). In Turkey, the truck division was not immune to the difficult conditions and its sales decreased to 1,700 units in the third quarter (Q3 2015: 4,500). The fall in unit sales to 3,300 (Q3 2015: 9,700) vehicles in the Middle East mainly caused the negative development in Asia. In Japan, the region’s major market, sales of 11,700 units were at the level of the prior-year quarter. Sales in Indonesia amounted to 6,700 units (Q3 2015: 5,400). The joint venture in China achieved sales growth of 18% with Auman trucks, selling 16,900 vehicles. The division’s revenue decreased from €9.7 billion to €7.9 billion. Daimler Trucks’ EBIT of €464 million and return on sales of 5.9% were significantly lower than the high levels of the prior-year period (Q3 2015: €791 million and 8.2%). Negative effects on the division’s earnings primarily resulted from lower unit sales in the NAFTA region, Turkey and the Middle East. Earnings were also reduced by intense competition in Europe. The realization of further efficiency improvements and exchange-rate effects had positive effects on earnings. EBIT also includes expenses for workforce adjustments in the context of ongoing optimization programs in Brazil. Mercedes-Benz Vans increased its unit sales by 13% to the new record of 85,200 vehicles in the third quarter of 2016. In its core region of Western Europe, the van division achieved growth in unit sales of 13%. Strong growth was achieved once again in France (+16%), Spain (+14%) and Italy (+40%). In Germany, the important domestic market, Mercedes-Benz Vans achieved a record in a third quarter (+19%). In Eastern Europe, however, unit sales decreased by 19%; sales in that region were primarily influenced by weak demand in Turkey (-50%) and Russia (-32%). Developments in the NAFTA region were positive once again with an increase of 14%. The market environment in Latin America remained difficult, but unit sales stabilized there (-3%). In China, unit sales more than doubled following the launch of the Vito. The division’s revenue grew by 13% to €3.1 billion. EBIT increased by 62% to €312 million. Return on sales also increased significantly to 10.0%, compared to 7.0% in the third quarter of last year. The division’s EBIT reflects the very positive development of unit sales, especially in Europe, the NAFTA region and China, as well as further efficiency improvements. Exchange-rate effects had a positive effect on earnings. Third-quarter sales by Daimler Buses decreased by 17% to 6,200 units. In Western Europe, 1,700 buses of the Mercedes-Benz and Setra brands were sold despite supply bottlenecks in the logistics chain (Q3 2015: 1,800). Sales in Germany, the domestic market, improved to 600 units and the division’s undisputed market leadership continued. In Turkey, sales were significantly lower than in the third quarter of last year due to the current difficult situation in that country. Also in Latin America (excluding Mexico), the ongoing difficult economic situation in Brazil continued to have a negative impact on demand for bus chassis, so sales of 2,200 units were significantly lower than in the prior-year period (Q3 2015: 3,500). In Mexico, 1,200 units were sold (Q3 2015: 1,200). The division’s revenue of €0.9 billion was lower than in the prior-year period due to the decrease in unit sales (Q3 2015: €1.0 billion). Daimler Buses’ EBIT of €45 million was significantly below the very high prior-year level (Q3 2015: €89 million). Return on sales was 4.8% (Q3 2015: 8.7%). The persistently difficult economic situation in Brazil and the associated decline in demand for chassis negatively affected earnings also in the third quarter. In addition, significantly lower unit sales in Turkey due to the uncertain economic situation and cost inflation in Latin America had a negative impact on earnings. However, further efficiency improvements had a positive effect on earnings. The automotive divisions were also affected by the restructuring of their own dealer network. At Daimler Financial Services, new business increased also in the third quarter of 2016: Worldwide, approximately 415,000 new leasing and financing contracts were concluded with a total volume of €15.7 billion, an increase of 7% over the prior-year period. Contract volume reached €122.1 billion at the end of September and was 5% above the level of year-end 2015. Adjusted for exchange-rate effects, contract volume grew by 6%. The division’s EBIT increased significantly to €438 million (Q3 2015: €378 million) and return on equity rose accordingly. The main reasons for the positive development were the growth in contract volume and a slight improvement in cost of risk. On the other hand, earnings were reduced by negative exchange-rate effects. The reconciliation of the divisions’ EBIT to Group EBIT comprises gains at the corporate level and the effects on earnings of eliminating intra-group transactions between the divisions. Items at the corporate level resulted in income of €39 million in the third quarter of 2016 (Q3 2015: €11 million). The elimination of intra-group transactions resulted in an expense of €7 million (Q3 2015: income of €16 million). Investment in the future The Daimler Group invested €1.4 billion in property, plant and equipment in the third quarter of this year (Q3 2015: €1.1 billion). Most of that investment, €1.1 billion, was at the Mercedes-Benz Cars division (Q3 2015: €0.8 billion). The main focus of capital expenditure was on production preparations for new models, in particular the derivatives of the C-Class and the E-Class, as well as investments for new transmissions and engine versions. Another area of capital expenditure was for the ongoing expansion of the international production and component plants. At Daimler Trucks, the main investments were for engines, transmissions and new vehicles, as well as the optimization of the worldwide production network. The Daimler Group’s research and development spending in the third quarter of the year amounted to €1.9 billion (Q3 2015: €1.6 billion), of which €0.6 billion was capitalized (Q3 2015: €0.5 billion). More than two thirds of the research and development spending (€1.4 billion) was at the Mercedes-Benz Cars segment (Q3 2015: €1.2 billion). A substantial proportion of that amount represents advance expenditure for the mobility of the future. The other main areas there, as at Daimler Trucks, were new vehicle models, particularly fuel-efficient and environmentally friendly drive systems, and the intensification of the modular strategy. Outlook for the markets At the beginning of the fourth quarter, the fundamental situation of the world economy has not changed; there are no perceptible indications of either acceleration or deceleration of growth. Although moderate expansion can be expected for the fourth quarter, full-year 2016 will probably have the lowest growth rate since the financial crisis, with expansion of global gross domestic product (GDP) of just under 2.5%. According to recent assessments, worldwide demand for cars is likely to increase from its already high level by about 2% in 2016. Once again, the biggest contribution to this global growth should come from the Chinese market, which is likely to continue expanding at a significant rate. But the expected increase in demand will to a great extent be due to state stimulus. No more growth is expected for the US market for cars and light trucks, and sales volumes there will be slightly below the high level of the previous year. Significant growth is anticipated for the car market of Western Europe. With a view to the individual markets, this growth is continuing on a relatively broad base. Despite the vote in favor of Brexit, current assessments are that the British market will remain at its unusually high level. In Japan, a slight decrease in demand is to be expected following the significant market correction of 2015. Prospects for the major emerging markets remain mixed. In India, market growth is likely to remain solid. In Russia, however, the ongoing difficult economic situation will probably result in another double-digit drop in car sales. Demand for medium- and heavy-duty trucks in the regions important for Daimler should be perceptibly below the prior-year volume. A major negative factor is the expected significant market contraction in North America. In a comparatively weak overall investment environment, from today’s perspective, demand in the market for Classes 6­8 trucks can be expected to decrease by approximately 15%. But the European market has so far proven to be relatively resilient and should continue its recovery with growth of 5-10% in the full year. There is still no turnaround in sight for the Brazilian market; due to the ongoing economic recession, the company has to anticipate further market contraction there in the magnitude of 25%. The situation of the Russian market has meanwhile stabilized somewhat, so it should not contract any further than its very low prior-year level. Demand in China will recover significantly after last year’s sharp market contraction. The Japanese market for light-, medium- and heavy-duty trucks continues its solid development and should be close to its level of 2015. The Indonesian truck market is likely to contract once again, however; from today’s perspective, Daimler anticipates contraction of approximately 15%. In India, only slight growth is meanwhile expected in the segment of medium- and heavy-duty trucks. The Group expects significant growth in the markets for mid-size, large and small vans in Western Europe in 2016. Significant growth in demand for large vans is anticipated also in the United States. In Latin America, however, Daimler expects further significant contraction in the market for large vans. In China, significantly lower demand is now anticipated in the market addressed there. Daimler now expects a significantly larger market volume for buses in Western Europe in 2016 than in 2015. In Brazil, further significant market contraction is anticipated in full-year 2016. Outlook for the divisions On the basis of the assumptions presented above on the development of important markets and of the division’s current assessments, Daimler expects to slightly increase its total unit sales in the year 2016. Following the strongest first three quarters of a year for Mercedes-Benz Cars, the division intends to continue its growth in the fourth quarter and thus to significantly increase its unit sales in full-year 2016. This will be primarily driven by the new E-Class sedan, which has made a successful start, as well as by the new wagon version of the E-Class, deliveries of which will start in Europe in October. Sales will be boosted also by the market launch of the GLC Coupe in the United States – a model without a direct predecessor in the product portfolio. The Mercedes-AMG GT R and its convertible version, the Mercedes-AMG GT Roadster, will be available to customers as of the end of the year. This year’s model offensive will be concluded with the market launch of the new smart fortwo coupe electric drive in the USA. Due to negative developments in many truck markets, Daimler Trucks assumes that unit sales in full-year 2016 will be significantly lower than in the previous year. Weaker development of demand for heavy-duty trucks in the NAFTA region will have a significant impact on sales. A significantly weaker sales development is anticipated also in Brazil, in a sharply declining market environment. Increased sales of trucks should be achieved in the EU30 region (European Union, Switzerland and Norway). In Turkey, Daimler Trucks anticipates a significant decrease in unit sales in the full year. This is due to purchases being brought forward to 2015 because of the new emission standard taking effect in 2016, as well as the current economic environment. The low level of oil prices is negatively impacting demand in the Middle East, so a substantial reduction in unit sales is expected in that region. It is assumed that unit sales in the full year will be significantly lower also in Indonesia for market-related reasons. Truck sales in Japan should be at the level of the previous year. In India, unit sales are expected to be slightly higher than in 2015. And additional unit sales will be generated with the expanded range of FUSO trucks produced in India, especially in Asia and Africa. Mercedes-Benz Vans plans to achieve significant growth in unit sales in 2016. The van division anticipates further significant increases in sales of vans especially in Western Europe, the core market. Significant growth in unit sales is expected also in the NAFTA region. In the context of the division’s strategy, »Mercedes-Benz Vans goes global«, following the successful market launch of the V-Class in China in spring 2016, the new Vito was also launched there in September. This will allow further expansion in the market addressed in that country. Daimler Buses assumes that it will be able to defend its market leadership in its core markets for buses above 8 tons with innovative, high-quality and modern products. However, the bus division anticipates total unit sales in 2016 at slightly below the prior-year level. It is assumed that unit sales in Western Europe will continue to grow at a significant rate. Following the substantial decrease in Brazil in 2015, another significant fall in unit sales is anticipated in 2016. In Mexico, unit sales are now expected to be slightly below the prior-year level. Daimler Financial Services anticipates slight growth in new business and further growth in contract volume in the year 2016, driven by the growth offensives of the automotive divisions. In addition, the division is utilizing new market potential especially in Asia, and is applying new and digital possibilities for customer contacts – in particular by systematically further developing its online sales channels. Daimler Financial Services continues to see good growth opportunities also in the field of innovative mobility services. Outlook for the Group Daimler assumes Group revenue in 2016 in the magnitude of the previous year. Revenue growth is expected in Western Europe and Asia, while revenue in the NAFTA region is likely to be below the prior-year level. On the basis of the anticipated market development and the assessments of the divisions, Daimler assumes that EBIT adjusted for special items will increase slightly in 2016. The individual divisions have the following expectations for EBIT adjusted for special items in the year 2016: – Mercedes-Benz Cars: slightly above the prior-year level, – Daimler Trucks: significantly below the prior-year level, – Mercedes-Benz Vans: significantly above the prior-year level, – Daimler Buses: slightly above the prior-year level, and – Daimler Financial Services: slightly above the prior-year level. The anticipated development of earnings in the automotive divisions will have a positive impact on the free cash flow of the industrial business also in 2016. The free cash flow in the year 2015 was significantly affected by extraordinary contributions to the German and American pension-plan assets of €1.2 billion, as well as by the acquisition of a stake in the digital mapping business, HERE, for an amount of €0.7 billion. As the investment offensive in products and technologies will be continued and intensified, the free cash flow of the industrial business adjusted for special items should be significantly lower in 2016 than the comparable amount of €5.9 billion in 2015. Daimler assumes, however, that it will be significantly higher than the dividend distribution in the year 2016. In order to achieve its ambitious growth targets, Daimler will once again significantly increase its already very high investment in property, plant and equipment in the year 2016 (2015: €5.1 billion). In addition to capital expenditure, the Group is developing its position in the emerging markets by means of targeted financial investments in joint ventures and equity interests. With its research and development activities, Daimler anticipates a total volume significantly above the previous year’s spending of €6.6 billion. Key projects at Mercedes-Benz Cars include successor models for the current compact class, the GLS and GLE SUVs, and the S-Class. In addition, the Group is investing in the automotive divisions in new, low-emission and fuel-efficient engines, alternative drive systems, autonomous driving and the connected and digital user interface. Key projects at Daimler Trucks include the development of tailored products and technologies for the Brazilian market and for the FUSO product portfolio. From today’s perspective, we assume that the size of the worldwide workforce will be at the level of year-end 2015. Other important events The Supervisory Board of Daimler AG has appointed Britta Seeger as a member of the Board of Management, effective as of January 1, 2017. Britta Seeger will be responsible for Mercedes-Benz Cars Marketing and Sales, succeeding to Ola Källenius, who at the same time will assume responsibility for Group Research and Mercedes-Benz Cars Development. Britta Seeger is currently President & CEO of Mercedes-Benz Türk A.S. The Supervisory Board has extended the contract of service of Wilfried Porth as Board of Management member for Human Resources and Labor Relations Director, IT & Mercedes-Benz Vans by five years until April 30, 2022. At the Paris Motor Show, Mercedes-Benz presented its new product brand for electric mobility: EQ. The name EQ stands for »Electric Intelligence« and is derived from the Mercedes-Benz brand values »Emotion and Intelligence«. The new brand includes all the key aspects for customer-oriented electric mobility and goes beyond the car itself. EQ offers a comprehensive electric-mobility ecosystem consisting of products, services, technologies and innovations. The spectrum reaches from electric vehicles to wallboxes and charging services and to home energy storage. A precursor of the new brand is the EQ showcar, which is close to a series version and had its world premiere in Paris. Before the end of this decade, the first EQ series-produced model will be launched in the SUV segment. This will be followed by a model offensive that will gradually supplement the Mercedes-Benz Cars portfolio with electrified vehicles. Daimler Financial Services is making strategic investments in the fleet-management business and is acquiring 100% ownership of Athlon Car Lease International B.V., a subsidiary of the Dutch Rabobank Group. Athlon’s portfolio will be merged with that of Daimler Fleet Management under the Athlon brand. This will create one of the leading providers in the European fleet-management business with a portfolio of approximately 340,000 cars and vans. The transaction is awaiting the required approvals from antitrust and other regulatory authorities, and is likely to be closed in the fourth quarter of 2016. Daimler has made the final decision on a new engine plant in Jawor, Poland, and has signed a contract to acquire land there together with its Polish partners in mid October. The engines will be produced under the roof of the newly established company »Mercedes-Benz Manufacturing Poland« (MBMP). Investment of approximately €500 million is planned in the new engine production in Jawor, which is approximately 70 kilometers west of Wroclaw. Jawor is Mercedes-Benz Cars’ first production facility in Poland. The high-tech factory will produce four-cylinder engines for Mercedes-Benz automobiles. Start of production at the new Daimler site is planned for the year 2019 and construction is to commence in 2017. The worldwide car-sharing community of car2go continues to grow: In September, the company passed the mark of two million customers. The car-sharing provider, a subsidiary of Daimler AG, has thus extended its market leadership in Germany, Europe and the world. The two million customers worldwide include 1.1 million in Europe, thereof more than 550,000 in Germany. Within one year, the number of car2go customers has increased by 43%, demonstrating the rapid growth in the fully flexible car-sharing business. One of the 14,000 car2go vehicles worldwide is rented every 1.5 seconds. Daimler Financial Services is the world´s largest financer of commercial vehicles: Approximately 940,000 commercial vehicles worth some €34 billion are on the road with a leasing, financing or rental contract from Daimler’s finance division. This represents an increase of 8% compared with a year earlier. More than half of the contracts are in the European market. In Germany, over 250,000 or more than 50% of the commercial vehicles with the three-pointed star are financed through Mercedes-Benz Bank. The Daimler commercial-vehicle brands underscored their leading role for connectivity, efficiency and safety with a large number of new products and services at the 66th IAA Commercial Vehicles trade fair in Hannover in September. Mercedes-Benz Urban eTruck, Future Bus and Vision Van provided an outlook onto the future of the transportation industry at the IAA. Daimler Trucks is pushing forward with the systematic connectivity of its vehicles with all parties involved in the logistics and transport process. The fully connected truck will lead to a radical transformation, making the transportation of goods by road even more effective and efficient – not only for drivers, haulage companies and truck manufacturers, but also for society as a whole. In the next five years alone, the company will invest about €0.5 billion in the connectivity of its trucks and the creation of related services and digital solutions. The following table summarizes the special items that affected EBIT in the third quarters of 2016 and 2015: Special items affecting EBIT In millions of euros Q3 2016 Q3 2015 Mercedes-Benz Cars Profit in connection with remeasurement of inventories +46 - Restructuring of own dealer network +41 +21 Relocation of headquarters of MBUSA - +1 Daimler Trucks Workforce adjustments -49 -10 Restructuring of own dealer network +3 -4 Mercedes-Benz Vans Expenses in connection with Takata airbags -7 - Restructuring of own dealer network - -3 Daimler Buses Workforce adjustments -8 - Restructuring of own dealer network +1 -1

Sean Kilcarr, Fleet Owner / October 25, 2016 So by now you’ve no doubt heard about the first “live load” of freight hauled by Otto the self-driving truck (go here and here for more on that.) And while that’s all well and good for the future – if the industry and the general public as a whole actually get comfortable with the idea of self-driving vehicles on our roads – it doesn’t necessary offer a solution to a lot of near-term issues motor carriers now face. The biggest one right now, though, may be freight rates – and things are not looking pretty at all on rate front for truckers right now. John Larkin, head of the transportation & logistics equity research group at Stifel Capital Markets, offered some fairly gloomy analysis where the pricing of freight rates is concerned at the recent Surface Transportation Summit earlier this month. Based on his analysis, Larkin said truckload (TL) pricing in the last 12 months or so, however, “has really fallen apart, particularly in the spot market, where we’ve seen reductions on the order of 10% to 15% and in some cases 20%.” It’s reached the point, in his view, that many small carriers participating in the spot market “are really getting hammered; they’re having trouble making their truck payments and so forth.” And if you’re having trouble making truck payments at the current freight level, I think that trouble will only be magnified by self-driving trucks, which are already predicted to be costlier than the current “human-piloted” models. Larkin added that contract rate pressure really didn’t materialize until early this year, but the pinch on contract rates “really accelerated through” the first half of the year based on his data. “Anybody who tells you that their rates are up year over year is probably telling you a bit of a fib,” he noted. “That would be my sense of it.” Where less-than-truckload (LTL) rates are concerned, Larkin believes they are “holding up quite nicely” as the LTL sector is more consolidated, less fragmented, and the participants are “very disciplined” in terms of rate pricing. But not everyone agrees with that rosier LTL sentiment – even within Stifel’s own shop. For example, Larkin’s compatriot David Ross recently noted that LTL volumes in July and August were poor, with September mixed at best as most of the LTL carriers Ross talked with indicating “continued softness” in freight pricing, while others experienced “further deterioration” in his words. “Any way you slice it, the industrial economy in the U.S. – the main driver of LTL freight – remains weak, if not still in recession, in our opinion,” he said in a research update. “We think overall freight is now at best flat from year-ago levels as we enter the fourth quarter,” Ross added. “Differences in carrier experience are due mainly to geography, customer base, and pricing discipline, in our view. Our optimism for volume recovery in the LTL group this cycle keeps getting pushed out, looking for one more leg higher. And the longer it takes freight to return, the more at risk pricing becomes.” Another issue compounding the “soft freight” environment is the willingness of shippers to revert to what Larkin bluntly describes as “Neanderthal practices.” “I would tell you that there are a couple of different kinds of shippers,” he explained. “There are [those] that we call ‘enlightened’ shippers. They talk about collaboration and partnerships [with motor carriers]. But roughly half of them have reverted back to Neanderthal behavior and they don’t talk much about service anymore. They talk about price.” For example, what that means in practice, Larkin said, is if shippers can save some money by shifting from intermodal to trucking because the spot rates are so low in the trucking market and because fuel prices are relatively low they will go ahead and do that. “That is one of the main reasons why you’ve seen intermodal loadings down year over year, certainly,” he said. A similar “pricing-first” mindset has affected the LTL sector, too, said Larkin. “LTL lost a lot of market share to TL as the big box retailer phenomenon played out,” he emphasized. “People discovered that you could move larger quantities at a much cheaper rate via truckload or intermodal into DCs [distribution centers] and then use, basically, a TL-based dedicated fleet or private fleet carriage to keep the stores properly loaded up with the right goods.” Now, going forward, Larkin thinks with all the regulations coming “down the pipeline” in the U.S. at trucking there will be an inevitable “tightening” of supply and demand, especially as 2017 develops. He believes by the middle to late part of 2017, trucking should see freight rates shift to its favor – what Larkin terms a “pricing upcycle” – if the U.S. economy continues to cook along at a 1.5% to 2% gross domestic product growth rate. We’ll see if that comes to pass. For now, all the industry can do its wait.

GHG Phase 2 Rule Published Heavy Duty Trucking / October 25, 2016 The Environmental Protection Agency and the National Highway Traffic Safety Administration have officially published the Phase 2 greenhouse gas/ fuel efficiency rule for commercial vehicles in the Federal Register. The rule was finalized in August and now that it has been published it in the Federal Register, it has an effective date of December 27, 2016. In more than 2,000 pages, the GHG Phase 2 rule sets new standards for commercial vehicle and trailer manufacturers to further reduce greenhouse gas emissions and increase fuel economy goals. It expands on the GHG Phase 1 goals and is aimed at creating a cleaner and more efficient generation of commercial vehicles through existing technologies and new innovations. The rule sets CO2 limits for Model Year 2021 to 2027 trucks and tractors and Model Year 2018 to 2027 trailers as entire vehicles. The rule also sets separate engine fuel-efficiency standards for each category of commercial vehicle, including light-, medium- and heavy-duty vehicles. Also, for the first time, the GHG Phase 2 rule will regulate trailers. Taken as a whole, the rule requires engine manufacturers to reduce CO2 emissions by 4%-5% from 2017 through 2027 and to attain fuel efficiency improvements of 16% or better for vocational and heavy-duty vehicles. GHG Phase 2 also includes rules for natural gas vehicles and engines to reduce methane emissions and regulates glider kits, requiring engines to meet the same standards as new vehicles.

Fleet Owner / October 25, 2016 Volvo Trucks North America (VTNA) still sees North American Class 8 truck sales of 240,000 this year — which an exec said is "more normal" following a banner year in 2015 — but next year, the number will dip somewhat lower, the OEM predicts, noting a few additional trends. "You know about last year, which was fantastic with over 300,000 [Class 8] units sold across North America," said Magnus Koeck, vice president of marketing and brand management at VTNA. And while the industry could "easily get used to" such numbers, he noted that that expectation was what led truck OEMs to continue higher production rates into a market slowdown, which built up inventory on dealers' lots. "There's still a lot of inventory out there at the dealers," Koeck said, speaking at the company's first Safety Symposium held at the Michelin Laurens Proving Grounds in Laurens, SC. "That's the major impact we've seen on new orders for the industry. We are seeing those inventories coming down, but they will probably be out there for at least this year and probably into next year, and then we may see an upturn in the market." Even with a slight increase in sales over the summer, going forward, "we believe there will be a 215,000 total [Class 8] North American market next year," he added. "We believe it's going to continue to decline a little bit." With VTNA's core business segments — long haul and regional haul — the company continues to observe a shift from the former to the latter in the North American market. Regional haul rose from 27.7% of the North American market last year to about 29% this year, and VTNA believes that will grow to about 35% in the near future. Long haul, Koeck noted, dropped from 50.4% of the North American market in 2015 to about 46% for this year, and VTNA sees that continuing to settle to about 43%. It's due mostly to continued driver shortages and shifting distribution models, he added, and so far not from the Panama Canal being opened up this year to allow large container ships through. VTNA has also seen an uptick in the construction sector this year by about 3-4%, which has boosted sales a bit although it's "not our strongest segment," Koeck said. The company predicts that trend will continue in the coming years. And as far as the fuel behind heavy trucking, not surprisingly, it's diesel, diesel, diesel, and VTNA believes that won't change anytime soon. Koeck noted that the U.S. Dept. of Energy expects diesel prices will climb at a rate of 2.2% annually through 2040. While crude oil and diesel prices indeed have increased a bit in the second half of 2016, "diesel is still cheap," noted Koeck, and that has held back growth in natural gas. That alternative fuel powers about 2% of the North American heavy trucking market, and VTNA believes that will stay about flat for the time being. .

Fleet Owner / October 25, 2016 It’s official: The Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) on Tuesday published in the Federal Register 2,762 pages of the next truck fuel efficiency rule, “Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles - Phase 2.” The rule was finalized in mid-August; Tuesday’s publication starts a 60-day countdown to the date the rule takes effect. Called for by President Obama’s Climate Action Plan, the rule sets GHG emissions targets through 2027, and is a follow-up the Phase 1 targets put in place by the Obama administration in 2011. That initial round covered model years 2014-2018. The rule regulates four "official" categories of commercial vehicles and related equipment: combination tractors; for the first time, trailers used in combination with those tractors; heavy-duty pickup trucks and vans; and vocational vehicles. The final standards are expected to lower CO2 emissions by approximately 1.1 billion metric tons, save vehicle owners fuel costs of about $170 billion, and reduce oil consumption by up to two billion barrels over the lifetime of the vehicles sold under the program. NHTSA projects the trucking industry should save somewhere between $7.8 billion to $8.5 billion per year due to the Phase 2 GHG rules. “This rule builds on our commitment to robust collaboration with stakeholders and the public,” the agencies say in the executive summary of the rule. “It follows an expansive and thorough outreach effort in which the agencies gathered input, data and views from many interested stakeholders, involving over 400 meetings with heavy-duty vehicle and engine manufacturers, technology suppliers, trucking fleets, truck drivers, dealerships, environmental organizations, and state agencies.” And then there are the more than 230,000 formally filed public comments, with the government response taking another 2,169 pages in the rulemaking docket. Following up on the “win-win” Phase 1 truck fuel efficiency/greenhouse gas emissions standards, the Phase 2 goals are specific and challenging but the rule is flexible enough that truck and engine makers will be able to meet them without disruption, explained Sean Waters, director of compliance and regulatory affairs for Daimler Trucks North America. Waters spoke earlier this month at the American Trucking Assns. annual meeting. “We picked low-hanging fruit first, the quick, easy wins for our customers,” Waters said, referring to the 2011 standards. “This is a much tougher rule. We’ll have to spend hundreds of millions of dollars in R&D to hit the targets, but we’re confident we can hit those targets in a way that will still provide benefits for our customers. If the technology saves the customer money at the end of the day, then they’re going to buy it and we’ll see environmental benefits as well as fuel economy benefits.”

Transport Topics / October 25, 2016 New and net trailer orders significantly disappointed in September, conflicting with a seasonally anticipated double-digit gain. Net orders posted were 12,993, marking the lowest volume since August 2010. “September’s weakness is further indication of fleet reticence toward equipment investment,”, said one industry analyst. “The current environment of low freight rates and uneven freight volumes, along with over-capacity resulting from a long run of equipment purchases, is not conducive to short-term capex commitments.”

Otto the autonomous truck hauls its first live load Fleet Owner / October 25, 2016 Autonomous vehicle development firm Otto and beer maker Anheuser-Busch recently completed what they claim is the world's first commercial shipment via self-driving truck: transporting a full-loaded trailer of Budweiser beer more than 120 miles along Colorado highway I-25 from Fort Collins through Denver to Colorado Springs. Otto Co-Founder Lior Ron noted that a human truck driver remained aboard the vehicle for the entire route, monitoring the delivery from the sleeper berth as the truck completed the 120-mile route, exit-to-exit, entirely on its own without any driver intervention. "The incredible success of this pilot shipment is an example of what is possible when you deploy self-driving technology. It also showcases the importance of collaboration with forward-looking states like Colorado and companies like Anheuser-Busch," Ron said in a statement. "By embracing this technology, both organizations are actively contributing to the creation of a safer and more efficient transportation network," he added. The load originated at Anheuser-Busch's facility in Loveland, Colorado and departed for its journey from the Fort Collins, Colorado weigh station. Otto’s Ron reiterated that the “vision” for self-driving technology is to help transform the trucking industry by: Reducing the number of fatalities on U.S. roads. Nearly half of fatalities happen on highways and 94% of accidents are caused by human error. Enabling fuel-efficient driving and therefore reducing emissions from freight trucks, which are currently responsible for 28% of all road vehicle carbon dioxide (CO2) emissions. Enhancing truck utilization and providing a sustainable solution for the driver shortage that continues to put pressure on drivers to work long hours at the risk of safe driving. He also noted that one “major opportunity” presented by its self-driving technology is that truck drivers will be able to rest during long stretches of highway, and perhaps even catch up on sleep. That begs the question of whether the driver is "on-duty" with respect to hours of service laws while they are resting, the company stressed in its release, as its self-driving technology "has the potential to extend productive hours without forcing drivers to choose between safety and earnings." "Teaming with Otto to deploy self-driving technology on the roads of Colorado is a monumental step forward in advancing safety solutions that will help Colorado move towards zero deaths on our roads," noted Colorado Department of Transportation Executive Director Shailen Bhatt in a statement. "Colorado will continue to focus on working with Otto and others on how to safely deploy this technology on our roads."

Otto's Beer Delivery Hailed as First Shipment by Self-Driving Truck Transport Topics / October 25, 2016 Otto announced Oct. 25 that one of its heavy-duty, self-driving trucks completed a 120-mile delivery for Anheuser-Busch InBev the week of Oct 17 in what it called the world’s first shipment by a self-driving truck. Otto is a subsidiary of Uber Technologies Inc. The Class 8 tractor and its trailer, loaded with 51,744 cans of beer, traveled on Interstate 25 from Fort Collins through downtown Denver, to Colorado Springs, Otto said. “We wanted to show that the basic building blocks of the technology are here; we have the capability of doing that on a highway,” Lior Ron, the president and co-founder of Uber's Otto unit, told Bloomberg News. “We are still in the development stages, iterating on the hardware and software.” AB InBev said it could save $50 million a year in the U.S. if the beverage giant could deploy autonomous trucks across its distribution network, even if drivers continued to ride along and supplement the technology. Those savings would come from reduced fuel costs and a more frequent delivery schedule. The Volvo Class 8 truck was guided by cameras, radar, and lidar sensors mounted on the vehicle to ‘see’ the road. Otto’s system controlled the acceleration, braking, and steering of the truck to carry the beer exit-to-exit without any human intervention. A professional driver was monitoring the trip while sitting in the sleeper portion of the cab, the company said. “With an Otto-equipped vehicle, truck drivers will have the opportunity to rest during long stretches of highway while the truck continues to drive and make money for them. ... Our partnership with Anheuser-Busch is just beginning, and our companies are excited to transform commercial transportation together,” Otto wrote on its blog. Anheuser-Busch ranks No. 88 on the Transport Topics Top 100 list of the largest private carriers in North America.

Jacobs Offers Improved Engine Brake for 2017 X15 Engine Heavy Duty Trucking / October 25, 2016 Jacobs Vehicle Systems has announced an optimized engine brake for the 2017 Cummins X15 engine designed to add additional braking power from the engine compared to past models. Improving on the design of the integrated Jake Brake for the 15-liter engine, the 2017 X15 engine offers around 10% additional braking power at engine speeds under 1,700 RPM. At a typical engine speed of 1500 RPM, drivers have access to 450 horsepower of braking power while in traffic or descending a hill. With a downshift, the engine brake on the X15 Performance Series will deliver a retarding force of up to 600 horsepower at 2,100 RPM. “With the Cummins X15, equipped with an integrated Jacobs Engine Brake, truckers will experience safer travel and the improved comfort they demand, while reducing the wear of foundation brakes, downtime and service costs,” said Steve Ernest, vice president, engineering and business development. .

Kenworth T680 To Deliver 52nd U.S. Capitol Christmas Tree Kenworth Truck Company Press Release / October 25, 2016 This fall, a specially-decaled Kenworth T680 will transport the 52nd U.S. Capitol Christmas Tree on a special cross-country tour to the U.S. Capitol. The tour will visit 26 community celebrations during the 2,800-mile journey. After its arrival and set-up on the West Lawn of the U.S. Capitol, the tree will be illuminated during a special ceremony in early December that will be presided over by U.S. Speaker of the House Paul Ryan. The 80-foot Englemann Spruce will be cut on Nov. 2 near McCall, Idaho, and placed on a trailer designed for the tree. Following the tree-cutting and send-off at the Payette National Forest Headquarters in McCall, Idaho, the Kenworth T680 equipped with a 76-inch sleeper, PACCAR MX-13 engine, Eaton Fuller Advantage™ 10-speed automated transmission and Kenworth TruckTech+ will haul the tree to a community event in downtown McCall. The T680’s distinctive decal design features the tree and the U.S. Capitol beneath the words “From Tree to Shining Tree.” Gary Amoth, owner of Gary Amoth Trucking, will be the primary driver of the special T680. Gary Amoth Trucking and its new Kenworth T680 with 76-inch sleeper was chosen as the hauler for this year’s tree at the recommendation of local Kenworth dealer – Kenworth Sales Co. and based on Amoth’s reputation in the trucking industry in Idaho, according to Bruce Ward, president of Choose Outdoors. Amoth, who started his trucking company hauling agricultural commodities with one truck in 1983, expanded the business into a Twin Falls, Idaho-based full-service carrier with a fleet of more than 100 trucks hauling overseas containers for the drayage market, as well as flatbed and container freight. Choose Outdoors is a non-profit organization that assists the U.S. Forest Service with coordinating the annual tour. The T680 tour truck will be accompanied by the Great Big Idaho Potato Truck, a Kenworth T680 hauling a 6-ton, 28-foot long replica of an Idaho russet potato. The Great Big Potato Truck was created in 2012 by the Idaho Potato Commission (bigidahopotato.com/the-truck). The hollow potato will carry some of the 8,000 ornaments Idaho school children and other residents crafted to adorn the tree and 70 other Christmas trees from the Payette National Forest. “It is an honor for Kenworth to participate in this event delivering the ‘The People’s Tree’ for the third year in a row,” said Kurt Swihart, Kenworth marketing director. “We’re especially proud that two Kenworth T680s will play key roles in completing this important tour, which offers Americans the opportunity to see this national symbol of celebration. Both trucks provide tour drivers comfortable work environments and their colorful and attractive graphics offer visitors at each stop a strong visual reminder of the origin of this year’s U.S. Capitol Christmas Tree.” The Capitol Christmas Tree Tour will make several stops in Idaho before continuing on through Utah, Colorado, Missouri, Kentucky, Tennessee, and Virginia. It arrives Nov. 27 at Joint Base Andrews in Maryland, where it will be uncrated and prepared for its final trip into Washington, D.C., the next day. For more information, including a complete tour schedule, visit the 2016 U.S. Capitol Christmas Tree website (www.capitolchristmastree.com), which is administrated and updated by Choose Outdoors. The public can track the truck’s progress at Trackthetree.com. .

Transport Topics / October 25, 2016 Twin Falls, Idaho, truck driver and business owner Gary Amoth has been selected to drive the truck that will take the U.S. Capitol Christmas tree from McCall, Idaho, to Washington, D.C., in November. Amoth will leave for McCall on Oct. 31, and within days will begin the longest drive of his 35-year career. But Twin Falls residents will get to see the truck (and Amoth) again, soon — at a Nov. 14 celebration at City Park, during the tree’s eastbound journey. “I’m looking forward to it,” Amoth said. “It’s an honor to be chosen. It’s an honor for our entire company.” Amoth grew up in Buhl, where he started his company, Gary Amoth Trucking, in 1983. He still lives in Buhl but has since moved the business to Twin Falls. With another lot in Nampa, Gary Amoth Trucking employs about 150 drivers with more than 130 semi-trucks. In March, Amoth received a call from Kenworth Sales Co. in Boise, asking if he’d be willing to haul the 80-foot Engelmann spruce during a 2,800-mile cross-country tour. The U.S. Forest Service chose the Payette National Forest to provide the tree this year. Salesman Keith MacKenzie recommended Amoth for the job because of the professionalism of his company, the image he projects and the care he takes for his vehicles. “When one of his trucks goes down the road, you turn your head,” MacKenzie said. “Image is important to him.” Amoth accepted the offer gladly and purchased a red Kenworth T680 for the occasion. “They had certain specifications the truck was required to have,” Amoth said. The nearly 10-ton truck has capacity of about 40 tons and comes with its own special decals, Wi-Fi and refrigerator, he said. “It’s designed for driver comfort and fuel efficiency,” MacKenzie said. The decal includes a map of the tree’s journey and the words “From Tree to Shining Tree.” “It is an honor for Kenworth to participate in this event delivering ‘The People’s Tree’ for the third year in a row,” Kenworth Marketing Director Kurt Swihart said in a statement. According to capitolchristmastree.com, the Capitol Christmas tree tradition started in 1964 when Speaker of the House John W. McCormack (D-Mass.) placed a live Christmas tree on the lawn of the Capitol. It lived three years, and the U.S. Forest Service has been asked to provide “The People’s Tree” each year since 1970. A different Forest Service region is chosen for the tree every year, said Bruce Ward, president of Choose Outdoors — the nonprofit organization that assists the U.S. Forest Service in coordinating the annual tour. The only other time Idaho has been selected was 2003, providing an Engelmann spruce from the Boise National Forest. After the Nov. 2 tree cutting in McCall, Amoth will depart Nov. 6 with the U.S. Capitol Christmas tree, making 27 stops on his way to D.C. He prepared for the trip by securing additional permits for each of the states he’ll pass through. And he won’t be alone. Amoth’s truck will be accompanied by an entourage including the Idaho Potato Commission’s Big Idaho Potato Truck — another T680 hauling a 6-ton, 28-foot-long replica of an Idaho russet potato. Inside, the hollow potato will hold around 8,000 Christmas ornaments, created with a “reuse and recycle” theme. “Those are made by school kids all over the state,” Ward said. The ornaments will decorate The People’s Tree, as well as 70 more Christmas trees that will go in government offices, he said. The trees will be hauled from Idaho tree farms in another companion truck that will meet up with Amoth. They were purchased at a reduced cost from a donation by St. Luke’s, Ward said. Along the route, smokejumper Chris Niccoli will be in charge of caring for the tree, Amoth said. The Engelmann spruce will be watered using an 80-gallon bladder that will be filled nightly, he said. “It drinks between 20 and 40 gallons of water a day,” Amoth said. The top 16 feet of the tree will be encased in plastic glass, for viewing, and decorated with lights at each of the stops, he said. Amoth plans to drive the whole way himself. The trip concludes Nov. 28, and one Idaho student will be selected to attend a Dec. 6 tree lighting ceremony.

Car & Driver / October 25, 2016 Insurance is the root canal of automotive enthusiasm. It’s fine print, inscrutable terms, disaster scenarios, and just-tell-me-where-to-send-the-damned-check resignation. It gets more obscure when insuring collectible cars. “An auto policy is an auto policy,” explains Jonathan Klinger, public-relations manager for Hagerty Insurance. “The difference between a regular auto policy and a collector policy is how it treats the value of the vehicle.” For most of the 260 million or so cars on America’s roads, that value is set according to relatively straightforward depreciation schedules. But about 18 million to 20 million cars in the United States (Hagerty’s guess; the company says it insures about 1.2 million of them) qualify ­generally as custom, collectible, antique, or classic cars. They’re normally not used every day, they’re driven few miles every year, and their true value usually has nothing to do with depreciation. Classic-car insurance policies are typically based on an “agreed value” assessment of a car’s worth. For restored or preserved classics, that’s usually based on sales and auction results. Most of the time, Klinger says, an appraisal isn’t necessary. But one can be used in determining a specialty vehicle’s value or in resolving a disagreement. Hot rods, for example, tend to reflect the initial builder’s taste and personality, which doesn’t always translate into widespread desire in the market. Those cases may involve more negotiations on value based on the effort and money sunk into the car. The largest populations of collector-car owners are in these five states: 1. California 2. Michigan 3. New York 4. Florida 5. Texas These are the 10 most common collector models: 1. Chevrolet Corvette 2. Ford Mustang 3. Chevrolet Camaro 4. Chevrolet Bel Air 5. Ford Model A 6. Ford Thunderbird 7. Volkswagen Beetle 8. Chevrolet C10 pickup 9. Chevrolet Impala 10. Chevrolet Chevelle Limited-use insurance for collectible cars is available from specialists such as Hagerty and Grundy, as well as national players like State Farm. There’s no specific mileage limitation in most cases, but piling on 15,000 commuter miles in a year might result in some policy changes. And if you get into a fender bender at Home Depot while your Ferrari 275 GTB/4 is overloaded with lumber and house paint, your insurer may suspect that you’re not treating the car like a cherished icon. Many common collector-car claims originate in the garage. Specialty insurers are used to dealing with cases such as carburetor fires, plummeting boxes, or a car that falls off its jack stands. But the big advantage of collector-car insurance is cost. According to Klinger, collector policies only generate around one-tenth the number of claims of standard insurance. Fewer claims usually translate into lower prices. Tammy Dobrotin, a State Farm agent in collector-rich Santa Barbara, ­California, explains that while many individual variables go into calculating pre­miums, a $20,000 collectible in her area may be insured for as little as $90 every six months. A regular-use policy on a similarly valuable daily driver may run four to five times that. So, while your agent will always be happy to tell you where to send the damned check, at least the check will be a little smaller. Lincoln’s Lincoln Big-ticket cars—from the mid-six-figure range on up—are practically impossible to total. As long as the vehicle’s identification plate can be salvaged, the car can be rebuilt around it. Specialty insurers are used to dealing with such claims and accommodating repairs that may require expertise unavailable at the local Maaco. They also may be more understanding when an owner makes a total-loss claim but wants to retain the wreckage.

Germany's VW probe hasn't implicated leading execs, prosecutors say Bloomberg / October 25, 2016 Volkswagen Group has been under investigation for more than a year, as officials on three continents have pored over documents and testimony, digging for evidence that the automaker's top leadership approved the diesel-cheating program that has plunged the company into crisis. In Germany, the hunt has come up empty so far, prosecutors say. In Brunswick, the closest office to Volkswagen's home town of Wolfsburg, prosecutors are investigating 21 people and have a "fairly good" picture of how the scandal evolved, according to Klaus Ziehe, the spokesman. That doesn't include any clear-cut link between top executives -- who make up the company's management board -- and the decisions to implement the scheme. "If we had reasonable indications in the diesel probe suggesting that board members knew something about illegal action, we would put them on the suspect list, and we would also have communicated that to the public," Ziehe said, speaking of the management board. "You may understand from the fact that this didn’t happen that so far we don’t have these indications." The automaker admitted last year to systematically rigging environmental tests for diesel emissions, forcing its former CEO Martin Winterkorn to resign and exposing it to fines and other costs that have already reached $20 billion. Volkswagen has had to cope with a ban on sales of diesel models from the group in the U.S. and an avalanche of lawsuits and probes over the issue that have pushed to find how high up the decision-making went. The company has repeatedly said there was a limited group of engineers behind the wrongdoing and no one at the top was a part of it. Internal investigation Like many European companies, Volkswagen has a management board made up of top executives as well as a U.S.-style board of directors known as a supervisory board. VW’s supervisory board hired U.S. law firm Jones Day last year to run an internal investigation to get to the bottom of the matter. Those lawyers report to the U.S. Department of Justice and VW’s supervisory board, which created a special six-member committee to deal with the diesel-emissions scandal. The Justice Department is conducting its own criminal probe and may reach a settlement with the carmaker by January. It secured one guilty plea by a veteran engineer last month. VW has repeatedly stated that top management were unaware of the decision to install the software to cheat emissions tests. "The then and current board of management of Volkswagen AG had, at any rate, no knowledge of the use of unlawful engine management software at the time," Volkswagen wrote in its annual report for 2015. Later reports declared that nothing changed in that statement. The carmaker declined to go beyond those written statements. "Due to the ongoing investigations the company can’t comment on this," VW spokesman Eric Felber said by phone. "This remains an ongoing investigation," said Peter Carr, a spokesman for the U.S. Justice Department, who declined to comment further. Jones Day didn’t respond to two phone calls requesting comment. Evidence could emerge Still, new evidence could emerge as the probe winds on, said Michael Kubiciel, a law professor at Cologne University. White-collar cases tend to take years both in Germany and the U.S. "It would certainly be ideal for VW if nothing more surfaced as to whether board members were involved," Kubiciel said. "In a case of that magnitude, one year isn’t that much. You can’t generally say there won’t be anything new surfacing." The VW leadership’s ignorance of the scheme wouldn’t bar German prosecutors from seeking fines, Kubiciel said. It’s enough to show that a midlevel manager participated in the crime. Yet knowledge by the management board could make it easier to prove fraud, the central allegation in the German criminal case, said Uwe Hellmann, a professor of criminal law at the University of Potsdam. Without the involvement of top leadership, prosecutors may have a hard time showing that the goal was to gain illegal profits, a prerequisite for fraud, he said. Engineers may have manipulated the software simply because they found no other way to satisfy demands by higher ups to meet strict U.S. emission standards. Their motive may not have been money, Hellmann said. Investor lawsuits The issue of what top executives knew and when they knew it is also crucial for a series of German investor lawsuits that seek about 8 billion euros ($8.7 billion) in damages. Brunswick prosecutors won’t discuss fine amounts with VW before the probe nears its final stage, said Ziehe, the spokesman. The inquiry is likely run through much of next year, or perhaps longer, he said. His office is investigating six additional suspects for manipulation of CO2 emissions data, another one for allegedly destroying information relevant to the probe. "Some of the suspects have comprehensively testified and there are also witnesses who told us a lot," Ziehe said. Former CEO Martin Winterkorn and VW brand chief Herbert Diess are also under investigation for alleged market-manipulation over how they disclosed the scandal to investors. VW has said it informed markets properly. Law professor Hellmann said it’s unlikely a smoking gun will suddenly appear, such as an email by a board member showing he was involved. Instead, investigators will likely look for enough circumstantial evidence to build a case that a top leader knew what was going on. "I can’t image such complex events can simply go unnoticed by the management board," he said. "That’s the gut feeling, at least. But for a criminal charge you need evidence."

VW's $14.7 billion court settlement over diesel vehicles approved by U.S. judge Reuters / October 25, 2016 A U.S. federal judge today approved Volkswagen AG's record $14.7 billion settlement with regulators and owners of 475,000 polluting diesel vehicles, and the German automaker said it would begin buying back the cars in mid-November. It represented one of the biggest corporate settlements of any kind. The action by U.S. District Judge Charles Breyer in San Francisco marked a pivotal moment for VW as it aims to move past a scandal that has engulfed the company since it admitted in September 2015 to installing secret software in diesel cars to cheat exhaust emissions tests and make them appear cleaner than they really were. Hinrich Woebcken, CEO of Volkswagen Group of America Inc., called final approval of a settlement first announced in June "an important milestone in our journey to making things right in the United States," and pledged to carry out the terms "as seamlessly as possible." The VW emissions scandal: A year of turmoil Breyer turned away objections from car owners who thought the settlement did not provide enough money, saying it "adequately and fairly compensates" them. In addition to the pre-scandal "trade in" value of the vehicle, owners will receive $5,100 to $10,000 in additional compensation. "Given the risks of prolonged litigation, the immediate settlement of this matter is far preferable," Breyer wrote. Agencies settle The settlement was reached with the U.S. Justice Department, Federal Trade Commission, the state of California and vehicle owners who had filed a class action lawsuit against the world's No. 2 automaker. VW has admitted to misleading regulators and still faces an ongoing criminal investigation. Volkswagen agreed to spend up to $10.033 billion on the buybacks and owner compensation and $4.7 billion on programs to offset excess emissions and boost clean-vehicle projects. VW may also be allowed to repair vehicles if regulators approve fixes. The affected vehicles emit up to 40 times legally allowable pollution levels. It represented the largest civil settlement worldwide ever reached with an automaker accused of misconduct. While huge, the approved deal was still smaller than the $246 billion settlement reached by cigarette makers with 46 U.S. states in 1998 and the $53 billion by BP to address costs and penalties arising from the 2010 Gulf of Mexico oil spill. Billions of dollars In total, Volkswagen has agreed to date to spend up to $16.5 billion in connection with the scandal, including payments to dealers, states and attorneys for owners. The scandal rattled VW's global business, harmed its reputation and prompted the ouster of longtime CEO Martin Winterkorn. The settlement covers 2.0-liter polluting diesel Beetle, Golf, Jetta, Passat and Audi A3 cars from the 2009 through 2015 model years. Up to 490,000 people will take part in the settlement because some vehicles had multiple owners. Volkswagen spokeswoman Jeannine Ginivan said the automaker expects to begin buying back vehicles in mid-November. VW has hired 900 people, including one to be stationed at each dealership, to handle buybacks. Most costs to come VW still faces billions more in costs to address 85,000 polluting 3.0-liter vehicles and Justice Department fines for violating clean air laws. It also faces lawsuits from at least 16 U.S. states for additional claims that could hike the company's overall costs. Last month, a Volkswagen engineer pleaded guilty to helping the company evade U.S. emission standards. His lawyer said he would cooperate with federal authorities in their criminal probe. In 2013, a non-profit group commissioned researchers at West Virginia University to test diesel car emissions, and found excess emissions in two VW diesels. After the U.S. Environmental Protection Agency and California spent more than a year trying to understand the cause, VW admitted last year it secretly installed software to turn off emissions equipment in real-world driving. "Today is a landmark day, when this innovative settlement can be put into action, investing billions of dollars into public health protections to remedy these serious violations," Cynthia Giles, the EPA's assistant administrator, said in a statement. VW will provide $2 billion over 10 years to fund programs to promote construction of electric vehicle charging infrastructure, development of zero-emission ride-sharing fleets and other efforts to boost sales of cars that do not burn petroleum. Volkswagen has been in intensive talks over how much compensation it may offer owners of the larger 3.0-liter diesel Porsche, Audi and Volkswagen vehicles that emit up to nine times legally allowable emissions and whether it will offer buybacks for some of the polluting SUVs but no final agreement has been reached. Volkswagen faces a Nov. 3 court hearing to update the court on those vehicles' status. Volkswagen agreed to make up to $1.21 billion in payments to 652 U.S. VW brand dealers and $600 million to 44 U.S. states to address some state claims. Nearly 340,000 owners have registered to take part in the settlement. About 3,500 owners have opted out. Volkswagen must fix or buy back 85 percent of the 475,000 vehicles under the agreement by June 2019 or face additional costs.

Self-Driving Beer Truck Makes 120-Mile Delivery—But There’s One Concern Car & Driver / October 25, 2016 Fully loaded with a cargo of Budweiser beer, a self-driving truck delivered the first known commercial shipment of goods under autonomous operations last week. With software created by self-driving truck pioneer Otto, a tractor-trailer departed a weigh station along Interstate 25 in Fort Collins, Colorado, last week, and drove without incident in fully autonomous mode 120 miles south to Colorado Springs, reaching a maximum speed of 55 mph along the way. Otto and Anheuser-Busch announced the development this morning. The truck completed the on-ramp-to-exit journey without human intervention. Otto executives and Colorado Department of Transportation (CDOT) officials hailed the demonstration as a landmark step toward safer roads and a trucking industry that could be more nimble if drivers are able to rest while the truck drives for portions of the journey. But there are questions about how the project was vetted. In a press release summarizing the venture, Otto says a professional truck driver was in the vehicle the entire route, monitoring the delivery from the sleeper berth—a location that would leave him or her unable to respond to any immediate problems that arose along the way. For testing purposes, other states require a driver behind the wheel. In California, for example, where more than a dozen automotive and technology companies have logged years of experience testing self-driving vehicles, a law requires that a human operator be present behind the wheel for testing on public roads. Other states have similar laws that govern testing of autonomous vehicles on public roads. But not Colorado. “We don’t really have regulations that have expressly enabled or prohibited a driverless vehicle,” says Shailen Bhatt, executive director of CDOT. “So it was sort of in this gray area. We’ll work on this going forward.” Otto contacted Colorado officials about three months ago to gauge their interest in partnering on the project. Since the state had no established parameters for examining or vetting autonomous technology, Bhatt said, they worked with Otto to set up benchmarks and used state troopers to monitor the technology on previous treks between Fort Collins and Colorado Springs. “Over the last month, we’ve required hundreds of hours of testing, both with us and the state patrol in the vehicle, and said, ‘Prove to us that this technology works,’ ” he said. “Our state-patrol partners convinced us, through ride-alongs and data, that we can green-light this [????]. We had to be careful of the driver at the wheel not taking control. So we said the truck had to complete the full distance, and only then we said okay.” Bhatt said the truck completed the route six to eight times with troopers watching and no interventions prior to the demonstration. “Once they accomplished that, it was obvious the technology could handle it,” he said. By contrast, Uber, which purchased Otto for a reported $680 million earlier this year, requires human safety drivers behind the wheel of its autonomous vehicles that are currently picking up passengers as part of a pilot project in Pittsburgh. Google, which tests extensively in California as well as in Arizona, Texas, and Washington, also has human safety drivers behind the wheel for its more than 2.1 million miles of testing in autonomous mode, an average of about 25,000 miles per week. Earlier this year, a Toyota executive said that millions of miles weren’t enough to measure the reliability of autonomous technology. He said, “We need trillion-mile reliability.” On its website, Otto reports it has accumulated “hundreds of thousands” of miles of testing. A spokesperson did not return a request for specific information on the number of miles of autonomous testing it had conducted. CDOT workers ensured the road striping along I-25 was adequate during the testing. A convoy of state troopers and support vehicles escorted the vehicle down the interstate when the official driverless journey took place last week. That convoy included a state trooper who drove about a minute ahead of the vehicle, a trooper 10 seconds ahead of the vehicle and a lead car immediately in front of the truck, according to Bhatt. Another state trooper trailed the truck, along with two more vehicles with technicians and engineers aboard. Bhatt observed the testing from one of the trailing cars. “You know, it’s incredibly boring and incredibly terrifying at the same time, to watch a driverless car carry a load of freight—and potentially your career—at a pretty sedate speed down the road,” Bhatt said. He said that testing on public roads is necessary to ensure the safety of the technology before it’s deployed for widespread use. “This technology has been tested on tracks and roadways,” Bhatt said. “So this, at some point, had to happen. To the extent we can deploy this technology, it will help save lives and reduce congestion. So to me, that is the whole purpose.” For whatever short-term concerns about the rigor of safety benchmarks for testing this fledgling technology, there’s potential for massive, long-term safety benefits. In 2015, there were 4067 fatalities on U.S. roads in crashes involving large trucks, according to the National Highway Traffic Safety Administration. That’s an increase of 4.1 percent from the previous year, and it comes amid a series of high-profile crashes involving tired truck drivers. Overall, 94 percent of all traffic crashes are attributable to human error or human behavior, according to NHTSA. Eliminating those errors, for Anheuser-Busch and Otto, is one of the biggest benefits of this self-driving technology. “By embracing this technology, both organizations are actively contributing to the creation of a safer and more efficient transportation network,” said Otto co-founder Lior Ron. “We are excited to have reached this milestone together, and look forward to further rolling out our technology on the nation’s highways.” [Translation: We’re looking forward to huge profits]

Mercedes X class will target families, outdoor enthusiasts Automotive News / October 25, 2016 Daimler's Mercedes-Benz brand today unveiled two concepts for its first pickup that will go on sale next year called the X class. The midsize vehicle will target families, outdoor enthusiasts and commercial customers. Mercedes said Europe, Latin America, South Africa, and Australia will be key markets for the pickup. The brand also said it is examining whether to sell the vehicle in the U.S. market, but it pointed out that U.S. demand for pickups has shrunk dramatically. "We are keeping a close eye on the U.S. market," Volker Mornhinweg, head of Mercedes Vans, said in an emailed statement. No decision has been taken. "We are evaluating the conditions for such a move," he said. U.S. pickup sales have risen 5.8 percent this year through September in an overall market that's barely ahead of a record 2015 pace. Most of the pickup growth has been in the mid-size segment, up 24 percent. Sales of full-size models are up 2.7 percent. The X class will share underpinnings with the Nissan NP300/Navara and Renault Alaskan. It will be built by Nissan in Spain starting next year and by Renault in Argentina in 2018. The pickup is the latest product in an industrial alliance between Daimler and Renault-Nissan. The X class will fill one of the last remaining gaps in Mercedes' product range, CEO Dieter Zetsche said. The automaker believes midsize pickups are becoming increasingly attractive for private use in additional to their reputation as commercial workhorses. Double cabs that seat up to five have emerged as the dominant body style. The X class will compete in a global market of 2 million units that Mercedes believes is set to grow by nearly 40 percent by 2025. At an event in Stockholm, the company unveiled at two concepts previewing the production X class: the SUV-like "Stylish Explorer" and the "Powerful Adventurer" with more traditional pickup truck looks. Mercedes-Benz Vans expects to invest close to 1 billion euros by the time the vehicle is ready for production start. Mercedes said the X class with its high-torque six-cylinder engine and permanent all-wheel-drive will be capable of towing 3.5 tons while carrying a payload of more than 1.1 tons. It said the pickup will offer the same levels of comfort, safety, driving dynamics and design that customers expect from Mercedes cars. Target customers for the pickup would be "families with an active lifestyle and an affinity to premium products," Mercedes said, as well as outdoor enthusiasts who need a comfortable premium vehicle for everyday use that also offers a lot of cargo space and towing capacity. Business owners such as building contractors, architects, and service providers were also potential buyers, it said.

Uber begins self-driving truck deliveries with 50,000 cans of Budweiser Bloomberg / October 25, 2016 A tractor trailer full of beer drove itself down Colorado's I-25 last week with nobody behind the wheel. Uber Technologies Inc. and Anheuser-Busch InBev NV teamed up on the delivery, which they said is the first time a self-driving truck had been used to make a commercial shipment. With a police cruiser in tow, the 18-wheeler cruised more than 120 miles while a truck driver hung out back in the sleeper cab, the companies said. The delivery appears to be mostly a stunt—proof that Otto, the self-driving vehicle group that Uber acquired in July, could successfully put an autonomous truck into the wild. "We wanted to show that the basic building blocks of the technology are here; we have the capability of doing that on a highway," said Lior Ron, the president and co-founder of Uber's Otto unit. "We are still in the development stages, iterating on the hardware and software." AB InBev said it could save $50 million a year in the U.S. if the beverage giant could deploy autonomous trucks across its distribution network, even if drivers continued to ride along and supplement the technology. Those savings would come from reduced fuel costs and a more frequent delivery schedule. Proving the viability of autonomous trucking has become more important amid mounting regulatory and public scrutiny. Surveys show most Americans aren't sold on the technology. The U.S. trucking industry is particularly sensitive to it. While fatalities in the industry far exceed those of other businesses and could therefore benefit from improved safety, it employed 1.5 million people in September, jobs that may be threatened by autonomous vehicles. The death of a driver using Tesla Motors Inc.'s autopilot system in May has focused political attention on self-driving vehicles and hastened calls for regulations to keep pace with the technological advances. The U.S. Transportation Department released policy guidelines for autonomous driving, which acknowledged the technology's life-saving potential while warning of a world of "human guinea pigs." Uber's Otto team worked with Colorado regulators to get permission for the delivery and to arrange for police supervision of the shipment, said Ron. Otto spent two weeks scoping out the driving route from Fort Collins to Colorado Springs, carefully mapping the road to make sure the technology could handle it. The team wanted the trip to take place in the early morning when traffic would be relatively light and on a day when the weather was clear. Those conditions were met last Thursday, when the delivery took place. Ron said Uber does not plan to build its own trucks and instead wants to partner with automakers, as it's doing with Volvo on self-driving cars. He said the company's discussions with truck manufacturers are in early phases. The software still has a long way to go, too. The autonomous drive in Colorado was limited to the highway, meaning truck drivers shouldn't have to worry about finding a new profession anytime soon. "The focus has really been and will be for the future on the highway. Over 95 percent of the hours driven are on the highway," Ron said. "Even in the future as we start doing more, we still think a driver is needed in terms of supervising the vehicle." .

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