Mazda hails more efficient petrol engine

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Image copyrightMAZDA

Image captionMazda's new petrol engine, "the sustainable Zoom-Zoom 2030", the world's first commercial gasoline engine to use compression ignition

Japanese carmaker Mazda has developed a more efficient petrol engine at a time when the industry steers toward electric vehicles.

It said the compression ignition engine was up to 30% more fuel-efficient than its current engines.

It plans to sell cars with the new engine from 2019.

Last week, Mazda said it would work with Toyota to develop electric vehicle technology and build a $1.6bn plant in the US.

Mazda research and development head Kiyoshi Fujiwara said it was imperative for the company to pursue the "ideal internal combustion engine".

"Electrification is necessary but... the internal combustion engine should come first," he said.

Mazda said the Skyactiv-X, as it is known, would be the world's first commercial petrol engine to use compression ignition.

The technology breakthrough puts the firm ahead of rivals including Daimler and General Motors that have worked on compression ignition for decades.

According to Mazda, the fuel-air mixture ignites spontaneously when compressed by the piston in the new engine.

The carmaker said the Skyactiv-X combined the advantages of petrol and diesel engines to improve efficiency.

It has no plans to supply the engine to other carmakers.

Electric ambitions

The move comes as the car industry pours massive investment into electric technology in response to stricter emissions standards around the world.

The UK will ban the sale of new petrol and diesel cars by 2040 in a bid to reduce air pollution.

In July, Volvo said all new models will have an electric motor from 2019. The Chinese-owned firm aims to sell one million electric cars by 2025.

Mazda also plans to introduce electric technology in its cars from 2019.

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Analysis: Theo Leggett, business reporter

In theory, a compression-ignition petrol engine should have big advantages. But it isn't easy to make technology work - and some of the biggest companies, including General Motors, have already tried.

So why should a relatively small Japanese manufacturer like Mazda succeed? Well, partly because - unlike the really big players - it isn't afraid to take risks. It has done in the past.

It's the only mainstream manufacturer, for example, which has persisted with rotary engines in its cars. Like compression ignition motors, they have theoretical benefits, but create complex engineering challenges.

Mazda's rotary has had some success. The company won the Le Mans 24 Hours race with it in 1991, and the latest version was fitted in its RX-8 sportscar. Popular with drivers, it was sadly unreliable.

If the new motor is to be a success, it needs to be reliable as well as efficient. And Mazda needs to be able to persuade regulators that petrol engines still have a strong future.

It may prove to be the perfect stop-gap, as electric cars are developed and charging infrastructure is created.

Or it may turn out to be a brilliant idea, which has come to fruition just a few years too late.

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Image copyrightGEOFF ROBINS

Image captionThe Mazda RX-8 sportscar was popular with drivers, but unreliable

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Americans hold more credit-card debt than ever, and a 'major tipping point' isn't far off

• Akin Oyedele
 

• 13h
• 8,578

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Credit-card debt in the US rose in June, surpassing the peak set just before the 2008 financial crisis.

Outstanding revolving credit, which includes credit-card debt, rose to $1.02 trillion in June, according to a monthly report from the Federal Reserve released Monday.

Missed debt payments have declined from the recession era, when several homes were foreclosed on because their owners got loans they wouldn't have qualified for with tighter rules.

But defaults are rising again for credit cards and auto loans. The New York Federal Reserve observed a 7.5% rise in the share of credit-card balances that were seriously delinquent, or at least 90 days past due, in the first quarter.

"We simply can't keep taking on credit card debt forever without it causing major problems," said Matt Schulz, the senior analyst at CreditCards.com. "This record probably won't be a major tipping point, but it likely isn't too far off."

Business Insider/Andy Kiersz, data from Bloomberg

Besides the New York Fed, several credit-card providers are reporting a rise in defaults. Synchrony Financial, one of the largest providers of store cards, said its provisions for loan losses — what it uses to cover for missed payments — jumped 30% year-on-year to $1.33 billion in the second quarter. That was partly because it lent out more dollars.

At American Express, loan loss provisions rose 26% from last year. And Capital One said its charge-off rate, or the share of balances it was unable to collect, rose to 5.1% in the second quarter from 4.07% a year earlier.

"It's worrisome that we are starting to see delinquency rates now begin to rise even with the unemployment rate at a cycle low," David Rosenberg, the chief economist at Gluskin Sheff, said in a note on Tuesday.

"This tells me that we are seeing escalating credit strains that have little to do just yet with a weakening economy — evidence that once again, very risky loans were extended this cycle to marginal if not sketchy borrowers."

Rosenberg said credit growth had run far in excess of work-based wage growth. And if banks tighten their lending standards, it could reduce the contribution that spending makes to economic growth.

"This record should serve as a wake-up call to Americans to focus on their credit card debt," Schulz said.

SEE ALSO: MORGAN STANLEY: Warnings about a stock market crash are 'out of whack' with reality

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Here's what a war between North Korea and the US could do to the global economy

• Will Martin
 

• 5h
• 23,874
 

North Korean leader Kim Jong Un in an undated photo released by North Korea's Korean Central News Agency in 2014. Reuters

• Tensions have escalated between the US and North Korea after threats to the US overseas territory of Guam
• Any conflict would cause major economic problems both in Korea and more widely
• Global supply chains could be severely affected
• US debt levels could spike as a result of any conflict

Tensions between the US and North Korea escalated further Tuesday evening when President Donald Trump promised "fire, fury, and frankly power, the likes of which this world has never seen before" in response to recent threats from North Korea and its leader, Kim Jong Un.

Hours later, North Korea responded by saying it was seriously considering a missile strike on the Pacific island of Guam, home to a US military base.

A physical engagement between the two nations still looks highly unlikely, but it is something that serious analysts and academics have started to talk about.

Clearly, the biggest and most important impact of any conflict between the US and North Korea — either nuclear or conventional — would be a catastrophic loss of life and huge human suffering.

But in a note circulated to clients, the staff at the research house Capital Economics has assessed the potential economic impact that a conflict could have on the world's economic prosperity.

Writing on Wednesday, Gareth Leather and Krystal Tan of Capital Economics note that countries involved in major conflicts since World War II have seen significant drops in economic output.

"The experience of past military conflicts shows how big an impact wars can have on the economy. The war in Syria has led to a 60% fall in the country's GDP," or gross domestic product, the two wrote.

"The most devastating military conflict since World War Two, however, has been the Korean War (1950-53), which led to 1.2m South Korean deaths, and saw the value of its GDP fall by over 80%."

The chart below illustrates the drop in GDP of nine economies affected by conflicts after World War II:

Capital Economics

The Korean Peninsula, the most likely center of a conflict involving North Korea, would bear the brunt of any economic shock, Capital Economics' analysts suggest, with South Korea's economy hit worst. That impact would inevitably spread to the wider global economy, which, given that South Korea accounts for 2% of global GDP, could cause significant disruption.

Supply chains globally would be affected, with Capital Economics using the major floods that hit Thailand in 2011 as a comparison "because of the huge disruption and damage they caused to the country's manufacturing industry." The writers continued: "The impact on the economy was considerable. GDP in the final quarter of 2011 fell by 4% y/y, led by a 16% contraction in manufacturing output."

Further, they said the "impact of a war in Korea would be much bigger," adding, "South Korea exports three times as many intermediate products as Thailand."

They continued: "In particular, South Korea is the biggest producer of liquid crystal displays in the world (40% of the global total) and the second biggest of semiconductors (17% market share). It is also a key automotive manufacturer and home to the world's three biggest shipbuilders.

"If South Korean production was badly damaged by a war there would be shortages across the world. The disruption would last for some time — it takes around two years to build a semi-conductor factory from scratch."

Here's the chart showing South Korea's share of global exports:

Capital Economics

A conflict could also have a major impact on the US economy, given the cost of waging a war on foreign soil.

"At its peak in 1952, the US government was spending the equivalent of 4.2% of its GDP fighting the Korean War. The total cost of the second Gulf War (2003) and its aftermath has been estimated at US$1trn (5% of one year's US GDP)," Leather and Tan wrote.

"A prolonged war in Korea would significantly push up US federal debt, which at 75% of GDP is already uncomfortably high."

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