Bloomberg sat down with Car Czarlet Steve Rattner to find out what he learned from his recent visit to Detroit, and his answer should surprise nobody: the automakers need more cash. When asked if aid to GM and Chrysler could be as high as $30b to $40b, Rattner replied “It could be considerably higher, I won’t deny that.” Yikes. Or should we say, yawn. Who didn’t see this coming? The folks in charge, of course. “What they’ve asked for depends on them achieving plans that are somewhat ambitious,” Rattner said. “Like all management teams they tend to take a reasonably, slightly perhaps, optimistic view of their business. So it could be more, I can’t rule that out.” Does that explain Chrysler’s recent proclamation that it’s better off than GM? “There’s no real uptick, no real sense that the company would generate meaningful amounts of cash flow on a stand-alone basis,” Rattner says of the Pentastar mess. “We have not made a determination on whether they could exist on a stand-alone basis, but we do find their idea of partnership with Fiat a worthy idea to consider.” Rattner says the Presidential Task Force On Autos will give a sense of its direction before the March 31 deadline, and will likely set a hard date for union and bondholder concessions because, as Rattner puts it, “nobody wants to go first.”
Although it’s not exactly the riddle of the Sphinx (answer: man), many of our Best and Brightest have wondered why GM can’t make a decent car interior. Even before GM Car Czar Bob Lutz assumed the throne (since abdicated), the American automaker has admitted that they need to step up their game within its vehicles. And yet, in the main, the fit and finish of GM interiors still doesn’t make the grade. Obviously, there’s a whole host of contributing factors—from supplier contracts to union work rules. A GM insider recently contacted TTAC to provide an important piece of that particular puzzle. Agent X reveals one of the main reasons GM’s interiors failed to match the competition: the executives didn’t know there was a problem. Still don’t. Here’s why . . .
China’s Chery motors has apparently decided that its fruity moniker isn’t strong enough to carry its market ambitions, and it has launched two sub-brands, creatively named Riich and Rely. Riich’s Bentley-aping winged “R” makes no secret of its premium brand ambitions, and China Car Times reports that the sub-brand will offer “technologically rich vehicles at a low price.” Rely looks to be more of a Buick or Volvo-style, entry-luxury brand. Perhaps Chery would like consumers to think of its sub-brand as “reliable”? From the US-market perspective, these branding exercises are quite crude. Not only do they closely copy existing brand imagery (did I mention that the Riich badge looks like Bentley’s?), but their names are also overly literal. So it’s not likely that these two brands will lead Chery’s charge into the global market, but their presence begs a question that cuts to the heart of automotive marketing: are sub-brands ever a good idea? Or are they just usually poorly executed? For every Lexus or MINI which show that major OEMs can branch out of their core competency, there are two Merkurs or Scions warning how pear-shaped branding exercises can get. The fall of the house of General Motors proves that too many brands can be bad juju, but are there niches for brands out there that haven’t been considered? Or do niche vehicles strengthen mainstream brands rather than distract them?
Sajeev, I was reading (a recent) TTAC diesel engine thread and got to thinking about what it would take to slap a small diesel into my Cobalt. I’ve got the super base model w/ the 5-speed and so long as I get good gas, I get really good mileage out of it. However, I’m from IN and we’ve got crappy gas with extra additives that kills my mileage from 10-20% depending on the time of year. If I decide to do this, I’d aim for a small engine with around 150 hp and mileage in the high 40s.
I guess my main question is, how involved would this project be as far as other equipment that would need to change along with the engine? New tranny, computer, driveshaft, etc?
I think it’s important to realize that the Detroit bailout is no longer an ideological battle. At the beginning of this $40 b-b-b-billion boondoggle (and counting), Motown-fed politicians defended the bailout by screaming “jobs! jobs! jobs!” even though the automakers themselves were screaming no such thing (aware as they no doubt were that those jobs! jobs! jobs! were doomed! doomed! doomed!). Now, you hear very little regarding “saving the middle class.” In fact, the rhetoric claiming we need to shell out for the domestics because “we must protect America’s industrial base” has also gone away. Now, Detroit’s new New Deal rests on a green platform (i.e., EVs), and depends entirely on “viability.” In other words, getting our freaking money back. Only not.
It figures these renderings of the new British wagon would come fromAuto Motor Sportin Sweden, a country fully in love with big wagons. OK, so the last Jaguar wagon, er, estate wasn’t exactly the height of success. Our own RF ripped the British brand a new one for building the X-Type Estate. But perhaps a larger version might do well—especially if the rumor mill is correct and those crazy Indians/Brits have jammed Jag’s in-house 510 hp supercharged V8 under the hood. We should see the Jag estate [Ed. I christen thee “Jagon”] as a completed car at Geneva by that most blessed of automotive dates: 2010. In the mean time, wagon lovers can savor whatever dreams wagon lovers dream.
Well, you knew it would. But does it really matter? Now that both Chrysler and GM depend entirely on federal tax money for their survival, who cares if they don’t sell anything? OK, back up. America’s zombie automakers need to sell enough vehicles to maintain some sort of credibility as “viable” companies. But then they can just use the federal “loans” to subsidize lower prices and keep moving the metal, as Chrysler has done. Until, of course, they can’t. Because the general public is well and truly fed-up. First, James Brown sang “Living in America” not “Paying Taxes to Support Detroit.” At the same time, the MSM’s “will they/won’t they file for C11” coverage has buyers nervous about American Leyland’s warranties and residuals. And the two failing automakers have decided to go radio silent on the whole issue (don’t want to scare the horses or queer the lobbyists’ pitch). Bottom line: falling sales and lost “consideration.” As documented by a survey of 40,000 car buyers over the last two months by CNW Research [via Automotive News, sub]:
I’ve been resisting calling Toyota “the new GM” for some time. And yet the world’s largest automaker is falling into the same traps that scuppered GM’s empire. By creating the entirely extraneous Scion “youth brand,” Toyota stole a page right out of The General’s poisoned playbook. Luxury brand reaching downwards, hoisting itself by its own petard? Lexus does as Cadillac did. Listen closely and you can hear ominous rumblings about Toyota’s declining build quality; a cancer that afflicted GM even as it soared to its zenith. And most damning of all: Toyota’s increasing portfolio of redundant, ill-conceived, poorly-executed products. Add the new Venza to that list.
“Bring on the infrastructure” roars GMC’s latest truck ad, erasing the images of American blight and decay that opened the spot. “If we’re gonna rebuild this country,” intones the tough-guy voice over, “we’re gonna need the truck that’s been doing the job for the last 100 years.” The ad, available at Jalopnik, is one tiny step away from being “brought to you by Sierra, official truck of the 2009 federal stimulus package.” On the other hand, Detroit has always relied heavily on the patriotism factor (however warped by the times), as this slightly older ad (that we could find an embed code for) proves. Maybe the latest effort just seems more cynical because, I don’t know, GM is already dependent on federal largesse. And for some reason, GM dealers seem to think the answer is more cynical posturing, reports AdAge. Dealers are “clamoring for a national ad campaign to counteract the daily drumbeat of negative news about whether the company will go belly up,” and GM’s Mark LaNeve admits that the bad news is “telling GM’s story for us.” Which heralds fewer sales-building, product-based ads and more bailout-baiting, “brand building” spots. So stand by for more of the “GM is America” nonsense.
At-home car wash season is upon us. I cringe every time I see someone cleansing their car by hand. I have never once observed a DIY auto scrubber use two buckets for the job (one for rinsing, one for soap). On the other hand, as an OCD sufferer, I don’t even crack the binding on the Griot’s Garage catalogue. Quite simply, if I started down that road, I’d never post here, ever. In fact, I’d probably start washing other people’s cars (my neighbors bless my snowblower). So, yes, I do wash and rinse my ride at an automated car wash. And then, sham wow! At one car wash I used to frequent, the owner showed me a secret stash of broken bits, mangled by the mechanical arms that put food on his table. Never went back there again. So, have you been a victim of a car wash? Or seen some poor fool get his clocked cleaned? Spill.
The Freep reports that UAW president Ron Gettelfinger will not seek re-election when his term expires in 2010. The move is not unexpected as the UAW traditionally does not allow re-elections after candidates reach the age of 65. Gettelfinger will continue to lead the UAW negotiations with the Detroit automakers through the union’s conference in June 2010. “The minute that’s over, I’m done,” says Gettelfinger. And his timing looks to be impeccable (given the situation, natch). Though Gettelfinger oversaw the 2007 labor negotiations which introduced VEBA and two-tier wages, UAW wages will not reach parity with the transplants until 2011 at the soonest. Which means Gettelfinger will not technically be in charge at the exact moment the UAW officially ceases to have any relevance.
Green Car Congress reports that an “Open Fuel Standards Act” has been introduced which would require half of all light duty vehicles sold in the US to be flex-fuel capable. The legislation would ramp up requirements to mandate 80 percent flex-fuel capability by 2015. Since ethanol has been running into trouble of late, the industry’s plan now centers on forcing OEMs to bring flex-fuel capability across their lineups, which supporters say will drive greater availability of E85 pumps. The plan would also enable the proliferation of mid-range ethanol blends like E20 and E30, since E85-capable flex-fuel vehicles would also be able to run on the intermediate blends that the ethanol industry so desperately wants to become mainstream. The only waivers for this mandate would be for OEMs who can prove that ethanol fuels prevent plug-in hybrids and other alt-energy vehicles to flunk state emission standards. Meanwhile, as rules are being written for the Renewable Fuel Standard, and a group of Senators are moving to prevent the use of indirect land use change (ILUC) to calculate the total GHG output of biofuels.
Troubled Assets Relief Program. TARP. And there I was thinking that the point of the fund was to provide “relief” for financial assets. You know; to defend and protect America’s financial institutions. But no. Ever since President Bush allowed technically bankrupt American automakers to raid the fund, the definition of the word “assets” has been… flexible. And now, it includes auto suppliers. Of course, in Bailout Nation, where the Chief Executive must form a 25-plus-member, multi-million dollar (hey, these ARE lawyers) Presidential Task Force on Automobiles to make a decision, you need a whole new level of bureaucracy to bail out auto suppliers. The AP reports.
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