The Wall Street Journal reports that GM will go back to its leasing habit in August, after nearly a year of cold turkey. According to the WSJ‘s anonymous sources, GM “is looking at various models across its four-brand lineup as candidates for leasing. Those include the Cadillac CTS, which competes in a luxury market that is heavily dependent on the availability of lease deals.” CTS sales which had hovered around the 5k units/month level since the last redesign are now fighting to hold on to 3k units/month. And that’s the latest, hottest Caddy out there. GM and GMAC probably see no alternative to burning even more bailout cash trying to move the CTS oversupply. But the source of the burnt cash is the only thing that has changed since they walked away from leasing. The WSJ notes that the “firming up of resale values” is contributing to GM’s decision to go back to leasing. Maybe they can’t smell the desperation. If you want a whiff of why this is a bad idea, check out eBay’s recently completed CTS auctions, where 2006 and 2007 CTS 3.6 models are consistently failing to attract $15K bids.
Think your clunker gets 18 mpg combined? Plan on cashing in on the CARS clunker rebate program? You might want to double check those EPA numbers over at fueleconomy.gov. As part of the buildup to the Cash For Clunker program, the EPA undertook “quality assurance and quality control effort regarding fuel economy calculations on more than 30,000 vehicle model types spanning the past 25 years.” But according to CNN Money, this pre-stimulus housecleaning turned up bad data for about 100 vehicles and ended up changing their clunker rebate eligibility. Although “roughly” the same number of cars became newly eligible as became newly ineligible, this news came as a nasty surprise to owners of the 1993 Camry V6 wagon, 1995 Saab 900S, 1988 Toyota 4Runner and the 1987 Mercury Grand Marquis. And since the EPA’s statistical quality control didn’t take place until the official launch of the program, some shoppers had their deals planned out before realizing that their trade-ins were too efficient to qualify. Meanwhile, dealers have their own complaints about the program.
One anonymous dealer writes:
I wish you would let us opt out of the cash for clunkers deal. Three dealers on the conference call stated that they were not fucking with this bullshit. You wouldn’t believe the bullshit involved in this. I don’t see this costing us any significant sales. We will waste more time fucking with this than it will ever be worth. The rebates are in place to subsidize the deal. Collecting our money will be a full time job.
Ford Explorer Sport Trac went into production in 2000 and will be leaving us next year, reports Automotive News [sub]. But what, you might ask, will happen to the “torn between Explorer and Ranger” market segment? Will they have to choose?
Old GM ran afoul of the requirements for the original bailout ($25 billion worth of Department of Energy retooling loans). Something about a DOE requirement that the recipients be running a viable business. Now that it’s emerged from bankruptcy with taxpayer assistance, “New GM” wants . . . taxpayer assistance. In fact, it doesn’t just want the money. It’s counting on it. According to The Wall Street Journal, GM Treasurer Walter Borst told a congressional oversight panel that securing $10 billion in no-to-low interest, twenty-five year DOE retooling loans was “a component of GM’s shorter-term liquidity assumptions.” C’mon. Really? “He pointed to those funds as one of the sources of liquidity GM is factoring into its plans in order to meet its capital requirements in the future.” Later, Borst decided to added [what he thought was] a suitable qualifier: “We’re not dependent on them.” Join us next time, for other phrases that you might hear from a drug addict.
Toyota has been remarkably upfront about its struggles with “Big Company Syndrome.” The fate of Toyota’s predecessor as the world’s largest automaker is an unavoidable example of what awaits giant manufacturers that lose their focus. And yet, as Toyota has replaced GM as the big daddy of car building, it keeps making eerily familiar mistakes. And its no surprise that Toyota’s challenges tend to center around marketing and brand management (hello, Scion). Toyota’s brand is a by-product of its obsession with manufacturing, rather than an independently developed, carefully-maintained image. The trademark Toyota brand qualities of quality and reliability are built on dedication and reputation, not the modern-day alchemy of marketing, sales strategies and brand-pushing. So why is Toyota telling Automotive News [sub] that it’s creating a wholly-owned subsidiary to coordinate global marketing and advertising? And why is Akio Toyoda going to be running the new marketing realm?
The list of CAFE violators (in PDF form) reads like a valet’s to-do list: Mercedes, Porsche, Ferrari, Maserati. These firms pay CAFE fines because, well, they can. CAFE fines are calculated by multiplying each tenth of a mile per gallon of average non-compliance by $5.50, then multiplying that dollar amount by the number of vehicles sold. As a result, luxury firms pay the highest fines when they try to go mass market: Merecedes paid about $30 million for 2007. But if CAFE is already weighted to let small companies off the hook, why are we hearing about new rules which seem to relax standards for firms selling fewer than 400k vehicles per term? Aren’t the regular loopholes enough?
The Congressional Oversight Panel, tasked with monitoring TARP expenditures, is holding hearings on the auto bailout. Even as you read, Wayne State University is home to serious CYA action. In the blue corner: the post-Rattner head of the twenty-four (now) member Presidential Task Force on Automobiles (PTFOA) Ron Bloom. Big Ron II is expected to hew even more closely to its previous proclivity for a passive/aggressive approach to GM’s non-management management. “Given the emergence of the new GM and the new Chrysler, the involvement of the Auto Task Force with the companies will now change,” Bloom told the panel [via Market Watch]. Once again, Ron proclaims that only “core governance issues including the selection of a company’s board of directors and major corporate events or transactions” will be subject to PTFOA meddling going forward. (After all, they’ve got Advertising Czar Bob Lutz to handle the little things like “crapping on advertising.”) But even though the White House is on hand to show how easy putting your best platitude forward can be, the UAW won’t be joining the testimonial fun.
No big deal. Just $650m net income over the last three months. That’s almost double what analysts expected, and comes despite an 11 percent drop in global sales (not including affiliates). Hyundai’s worldwide market share hit five percent for the first time though, with US share up over 1 percent in the last year. 56 percent sales growth in China didn’t hurt either. Forget the Genesis, Hyundai’s financial news is going to be what stirs up the competitors’ boardrooms.
One of the enduring lessons of the car game is that good vehicles don’t always sell well. As a car writer who took on news analysis before ever getting manufacturer-sponsored time behind the wheel, this lesson can’t help but tinge my impressions of a road test. So when my first weeklong tester arrived in the form of a Q7 TDI, I felt no desire to justify Audi’s decision to bring the thing to market. After all, by any reasonable analysis, the brand built by Quattro wagons should have been the primary beneficiary of America’s SUV craze. Or, at least its worst enemy. Instead the Q7 showed up for the party fashionably dressed but fashionably late. And very few wanted to buy it. With the high price of luxo ute party fuel already killing the festive vibes, is switching to a new drink enough to make Audi’s SUV sales party like its 1999?
Autocar reports that Honda is fast-tracking an upgrade to the its Insight “dedicated hybrid,” which debuted this year to mixedreviews. After much hype, Honda’s derivative hatch is off to a weak start in the US and falling behind in Japan (where it now sells worse than the Fit). But don’t expect the Prius Lite to go from “biblically terrible” to “Clarksonian.” Catching up with 3rd-gen Prius efficiency levels and sorting the low-speed ride quality are said to be the areas of focus. While I’d agree that the latter needs improvement, you know that when even Consumer Reports cries for more power, boosting efficiency alone probably isn’t the answer.
Start saving those pennies, kids! Fiat CEO Sergio “Mad” Marchionne tells the Wall Street Journal that “the true value of Chrysler could emerge when the company would be listed, but this will take a while — not sooner than 2½ years.” Better yet, Marchionne suggests that Chrysler will create “healthy profit margins” if the market has recovered to a 13-14m unit SAAR. Can you dig it? In the meantime, Fiat will be loading up even more debt, offering $1.8 billion worth of bonds at 9.25 percent. Although this rate is lower than the 9.75 percent guidance, it still sent Fiat credit default swaps up six points. Fiat’s second quarter losses hit about $240 million, which is worse than analysts expected. And as Forbes explains, debt, not earnings is the real challenge for Fiat. But as long as things keep chugging along, there might be a Fiat Nano in it for you (especially if you live in Latin America). Which would probably be a better investment of your saved pennies anyway.
Well how do you like that? My very first editorial for TTAC took GM to task for spending (at least) a quarter of a billion bucks on its overly complex Two-Mode hybrid drivetrain. Way back in February 2008, I noted that “the chances increase daily that BMW will join Mercedes in washing its hands of two-mode technology entirely.” And guess what? It’s looking more likely by the day. Automotive News [sub] reports that Two-Mode co-developers BMW and Daimler will probably end their participation in the ill-fated alliance by year’s end (Chrysler is AWOL). BMW will launch a Two-Mode X6 globally and Daimler will bring a Two-Mode ML stateside this year, and then . . . basta. “None of the other hybrid development work in our company is based on the two-mode technology,” say BMW sources. Well that was a cool billion (split four ways) well spent. At least they got Automobilemagazine’s “Technology of the Year” award.
No, we’re not talking about stalking women of a certain age. To my summer flu-addled mind, this Focus-based softroader should be on the US market already, cashing in on one of the few successful segments left here. We hear it’s going to be built in Kentucky, but when?
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