Luxury car theft ring busted in NYC

Authorities say more than a dozen men arrested in overnight raids are part of a ring suspected of stealing 291 expensive cars in New York City worth more than $10 million. High end luxury cars - Lexus, big Toyota SUVs - all stolen police say in what's described as "operation made to order."Police say the men used information obtained by car dealership employees to make counterfeit keys.

"The ring was doing swift business at blue book value of nearly 10-million dollars," NYPD Commissioner Raymond Kelly said. Kelly says the 21-member ring was reselling Lexus and Toyota vehicles in the U.S. and overseas.

New York Attorney General Eric Schneiderman says 16 of the people indicted face felony enterprise corruption charges. William Cruz, the alleged operation boss, was able to run the operation for a time while in custody on Rykers Island on an unrelated charge.

"This was a multi level sophisticated operation. Even with the boss in jail they were able to carry on," Schneiderman said. To retain a car's high value, investigators say, a so-called "steal crew" would go out and target the wanted vehicles, taking down their vehicle identification number.

Police then accuse two brothers, Joey and Eddie Aviles (who they say worked at Plaza Toyota in Brooklyn), with searching data bases to find key codes for those cars . The owner of big daddy hardware, Vincent Abreu, and another man would then use the key codes to manufacturer counterfeit keys for the crew members to use going back out and grabbing the car.

"No matter how sophisticated your scheme, no matter how many insiders you think you have or how clever you are, you will be apprehended," Schneiderman said. Investigators say the entire process for one stolen car would take about two days at most, and would generate a handsome profit.

"When all was said and done, cars that retail for 30-thousand dollars were being sold for as little as three to five thousand dollars," Kelly said. According to authorities, they expected to arrest all but two ring-members Tuesday night and Wednesday morning.

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Europeans see U.S. market for new small luxury cars

As head of Mercedes-Benz USA in the late 1990s, Mike Jackson was determined to keep the ungainly, expensive A-class small car out of the United States.

"The original A class, you would say, 'Oh, my God. I will never be able to sell that to anybody. What can I do to keep it out of the U.S. so I don't have to deal with it?'" Jackson recalls. Americans were unwilling to pay premium prices for small cars then, even if the cars wore luxury nameplates. And sales of such cars remain low. But European luxury brands aim to change that dramatically in the next few years. Eager to increase sales and meet strict government fuel economy standards, they plan to roll out new small cars with premium prices and luxury content.

Now Jackson's on board. Mercedes-Benz unveiled a concept version of the redesigned A-class coupe in April at the New York auto show. Jackson, on the other side of the fence as CEO of AutoNation, the country's biggest automotive retailer, calls it "absolutely beautiful.""That's the car I want tomorrow," Jackson says.

Although other luxury brands, such as Lexus and Cadillac, are making similar moves, Europeans are leading the charge. The A class, expected in 2013 in the United States, is the first of a new generation of sub-$30,000 small cars that European automakers are convinced will sell in the United States.
Today, three European small luxury cars are on the market: the Audi A3 hatchback, the BMW 1-series coupe/convertible, and the Volvo C30 three-door hatchback. They're low-volume vehicles, with combined U.S. sales of 23,596 units last year.

A conservative tally of carmaker estimates shows U.S. sales of small European luxury cars at least doubling in the next few years. But some observers question whether the segment will ever be strong here.

"Even at 50,000 units, it is an insignificant number," says Jesse Toprak, vice president of industry trends at TrueCar.com. "The potential growth for compact crossovers is much greater because of their utility."
Mercedes-Benz and BMW will lead the effort to expand the segment. The route to success will be keeping the vehicles premium in content and performance, brand executives say.

The new cars are different from the halfhearted attempts in the late 1990s and early 2000s. At that time, BMW offered the 318ti--a 3 series with a lopped-off rear end--and Mercedes-Benz in 2002-05 sold its odd-looking C230 and C320 hatchbacks. Those cars failed after a short run. Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, says the recession and fuel prices have changed what buyers consider important. "They tend to look at it as 'What do I need versus what am I trying to show here?'" Schuster says. "Do I need a larger vehicle, or can I get away with a smaller vehicle and still have that content and desire?" Michael Cantanucci, whose New Country Motor Car Group owns three Mercedes-Benz, two BMW, and Audi and Mini stores in New York, Connecticut, and Florida, has seen prototypes of many of the new smaller vehicles.

Cantanucci says he doesn't believe they will dilute luxury brands' images: "They have the DNA in terms of product quality, styling, features and technology."That won't be a problem with the four new small luxury vehicles coming to Mercedes-Benz in the next three to four years, says Ernst Lieb, CEO of Mercedes-Benz USA. Safety features such as adaptive cruise control and traction control will come standard.

Mercedes: A, B, CLC, GLC: In addition to the A-class coupe, Mercedes-Benz plans to import the B-class small van, probably with an electric powertrain, a small sedan it will call the CLC, and a small crossover that will be called the GLC. Mercedes-Benz decided only recently to bring the smaller A class to the United States. Initially, executives wanted only the larger B class. But that decision was reversed several months ago after Steve Cannon, vice president of marketing, and a product committee including dealers, saw early versions of the new small vehicles, Lieb says. The car wowed them, as it has other dealers who saw the range last month during a trip to Mercedes-Benz headquarters in Stuttgart, Germany. Lieb says Mercedes needs to use these cars in part to protect its E class and S class: "From a strategic point, if we leave that segment for our competitors, they become stronger and branch out and give us resistance in those segments. The time is overdue."

BMW plans are not as solid: Insiders say BMW's development of smaller front-wheel-drive cars isn't as far along as Mercedes'. Jim O'Donnell, CEO of BMW of North America, says a family of new small cars will go on sale in 2014, but the company hasn't decided which body styles to sell in the United States. Last month, Ian Robertson, BMW AG board member for sales and marketing, said BMW and Mini will expand their lineups and the two brands combined will have six to nine new small cars. He did not give details on body styles.

The new BMW cars will be similar in size to Mini vehicles, O'Donnell says. Mini will be the first to use the new small platform known as UKL--an abbreviation for German for compact class cars--with its new generation Cooper hardtop due in late 2013 or early 2014. O'Donnell says BMW is confident about small cars because of the success of Mini. BMW expected Mini sales to peak at 20,000 cars in the United States, he says. "We will do nearly 60,000 this year--Americans are ready for small cars," O'Donnell says.

The United States could take a small sedan from Germany but probably not a hatchback because there's still doubt that the body style will sell in this market, O'Donnell says. He doesn't expect big sales from these small cars. "They will be nichey, under 10,000 units," he says. BMW is attacking the small car market on another front with its i sub-brand electric vehicles. First out will be the i3 electric in 2013, designed for urban drivers.
Audi: No smaller for now

Audi's A3 is as small as the brand will go in the United States for the next several years. Audi of America President Johan de Nysschen says Audi first needs to increase volume in the luxury high-end segments.
Once Audi has achieved that goal, it can turn its attention to the less-profitable smaller cars, de Nysschen says.

For now, Audi's only offering is the A3 hatchback. Audi showed a concept A3 sedan in March at the Geneva auto show. The sedan was designed with an eye to the United States and likely will be sold here in 2013.

Audi USA may import the A2, a car smaller than the A3, if the brand decides to bring back that model. The A2 was discontinued in 2005. Audi won't bring the current generation of the A1 small car to the United States, de Nysschen says, and "that is the final decision."

Volvo has other worries: With annual U.S. sales teetering at just more than 50,000 vehicles, Volvo Cars of North America is focusing on its larger, more profitable vehicles, CEO Doug Speck says. Volvo sells the C30 in the United States, but the C30 was always meant to be a niche car, Speck says. Volvo expects to sell only 4,000 to 5,000 C30s this year because the three-door hatchback has "limited appeal" in the United States and the car is pricey, Speck says. The C30 has a base price of $25,575, including destination.

Speck acknowledges that Mercedes-Benz and BMW will heat up interest in small luxury cars and says, "We need to have a plan to compete in that segment."He says he can't talk more about Volvo's product strategy, which has been fine-tuned since the brand's acquisition last August by China's Zhejiang Geely Holding Group.

Matching Ford, Chevy: Speck believes growth in small car sales and transaction prices for U.S. volume brands will drive more luxury brands into the segment. "People are out there spending $23,000 and $24,000 for a Focus because they want all the bells and whistles," Speck says.

"People do not want to sacrifice. They may say 'I can deal with a smaller space but I still want navigation, Sirius satellite radio and leather."Jackson agrees, saying there is a "risk for the luxury manufacturers if they simply benchmark against themselves.""The content certainly needs to match what you can get in a Ford or a Chevy with reasonable up-charges," Jackson says. "There is a revolution going on in the volume segment as far as content and innovation and the consumer's willingness to pay for that content and innovation."

Tom Libby, an automotive analyst with R.L. Polk and Co., says pricing small luxury cars is tricky -- if the cars are priced too close to their larger siblings, luxury buyers are unlikely to downsize. But Libby expects the Europeans to have at least a $10,000 price premium over cars such as the Chevrolet Cruze and Ford Fiesta: "I do not think Mercedes-Benz and BMW will want to go into the market with a car that is $19,000. They will start at the upper end."

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Coming to America: European Gas Sippers

European luxury-car makers are going to give U.S. consumers some tastes of the forbidden fruit they have been keeping to themselves. The goodies in question are some of the more fuel-efficient variations of popular models sold in the U.S., and perhaps some of the small cars and crossover wagons that have until now been offered only in Europe and other markets where fuel prices are high. Mercedes Benz, Audi and BMW all are planning to launch in the U.S. new cars—or new engines for existing models—that offer more advanced fuel-saving technology.

Travelers to Europe know that the big German luxury brands have been holding out on the U.S. for years. Consider BMW AG. The most efficient 3 Series model in the U.S. is the BMW 335D, a diesel model rated at 27 miles per gallon. BMW only started offering a 3 Series diesel in the U.S. about three years ago.

But the one Americans get isn't the best BMW can do when it comes to fuel-saving technology on the 3 Series line. For that, you still need to go to Europe, where BMW offers a model called the 320d Efficient Dynamics sedan (or saloon, in Euro-terms). This comes with a variety of petrol-saving features, such as an automatic start-stop function that shuts off the engine at stop lights, low-friction tires, and a system that uses braking energy to recharge the battery. These allow it to put out just 109 grams of carbon dioxide per kilometer under Europe's mileage-measuring system, which translates to roughly 57 miles per U.S. gallon. The European 335D, roughly comparable to the U.S. model, is rated at about 35 miles per gallon.

It's easy to hop on the Internet and find mileage ratings for cars sold in Europe. But comparing European and U.S. mileage and carbon-dioxide ratings is a difficult, apples-to-oranges problem, industry and government officials say.

Europe uses a different—some industry officials say overly optimistic—set of calculations to estimate fuel efficiency (usually expressed as liters per 100 kilometers or grams of carbon dioxide per kilometer, instead of miles per gallon). European regulators also give more mileage credit for technology such as stop-start systems than the U.S. does. Counting grams of carbon dioxide emitted per kilometer is a different way of measuring gasoline consumption since the more gasoline or diesel fuel a vehicle consumes, the more carbon dioxide it will emit. U.S. regulators are starting to compare vehicles based on carbon-dioxide emissions.

Europe uses different testing methods to estimate fuel consumption in city and highway driving. And U.S. regulators adjust mileage test results down in an effort to match the values advertised to consumers more closely to the likely mileage they'll get in real-world driving.

Still, it's still clear that U.S. consumers haven't gotten the most advanced fuel-efficiency technology the luxury-auto industry could offer. Among the reasons: U.S. clean-air regulations require expensive exhaust-scrubbing technology on diesel engines, and most U.S. luxury-car buyers measure prestige in terms of horsepower and performance, not fuel efficiency. Car makers worried customers wouldn't pay up for expensive technology designed to cut fuel consumption. Even now, fuel costs aren't a real financial challenge for wealthy households.

But who feels smart spending $60 or $70 filling up on premium gasoline? Moreover, U.S. regulators have signaled they plan to demand big, additional gains in fuel economy when new federal mileage targets are issued this fall for the 2017-2025 period.

Facing these pressures, European luxury-car brands are moving to offer U.S. consumers more of the high-mileage models and engines once kept back in their home markets. This will delight some Americans who have lusted after high-performance diesels and nimble four-cylinder models they once had to fly across the ocean to drive. Others will take a more practical view: Fewer top-of-the-line Mercedes models will come with a gas-guzzler tax added to the price.

Leading the parade of more Europeanized European cars is the 2012 Mercedes S Class diesel—the first diesel S Class the brand has offered in the U.S. since 1996. The all-wheel-drive, 3.0 liter, V6, S Class diesel is expected to average 20 miles to the gallon in the city, and 31 on the highway—a substantial improvement from the current S550 4Matic, which is rated at 14 city, 21 highway. The S-diesel's fuel efficiency is also better than the current S Class hybrid.

Mercedes is going for better mileage across its lineup. The brand already had added stop-start systems to its ultra-high-performance S63 and CL63 AMG models, and substituted a smaller V8 engine that uses direct fuel injection and turbo charging to boost power. The result: 563 horsepower and an Environmental Protection Agency mileage rating of 15 city, 22 highway—and no guzzler tax.

Mercedes also plans to start offering a four-cylinder version of the C Class for 2012, and replace its current 5.5-liter V8 in many models with a smaller, more efficient, 4.6-liter eight-cylinder engine.

Audi, the luxury unit of Volkswagen AG, has been relatively cautious about bringing its European diesel engines to the U.S. But for 2012, the brand plans to expand its Euro-diesel offerings in the U.S. to the top of the line A8 sedan, the A6 and the Q5 crossover. The company's best-selling model in the U.S., the A4, might be offered with a diesel at some point, but Audi isn't saying yet.

Audi is still withholding some of its most fuel-efficient vehicles, including the subcompact A1. And the company is being coy about when it will launch a U.S. version of its compact Q3 crossover, officially unveiled at the Shanghai Motor Show last month. That vehicle saves fuel with a stop-start system, but an Audi spokesman says the company isn't convinced U.S. customers will embrace the feature. "Americans think something's wrong with the car," he said.

Other car makers are starting to offer vehicles with this technology. General Motors Co.'s Buick brand plans to offer a stop-start system branded eAssist on its 2012 LaCrosse and Regal models. As for BMW, the company is making plans to offer at some point a U.S. version of its compact X1 crossover—a vehicle that is a size down from the X3 model that is currently the most-efficient crossover BMW sells in the U.S.

Whether there's a mass market in the U.S. for a BMW crossover that is roughly three inches shorter than a Ford Focus sedan is no sure thing, even if it does average about 45 miles per U.S. gallon in the European mileage tests. A BMW spokesman says the American debut of the X1 has been delayed "due to demand in other parts of the world."

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