Even though China is the largest car market in the world at the moment, Chinese car designers have a tough row to hoe. The Wall Street Journal’s China Journal blog explains that while there are plenty of well-educated Chinese industrial designers, the prevalent design philosophy keeps their best work in school. According to an unnamed Chinese auto exec, the competitive advantage for Chinese automakers vis-à-vis their foreign partnership competitors is that they never start engineering or designing from a blank sheet of paper. Rather, the standard practice is to “tell an outside engineering consultant which existing model they want to copy, and ask them to come up with a product counterfeited in a way that it won’t attract intellectual property lawsuits. In some cases that means companies combining styling ideas from two separate cars into one.”
Chrysler’s Robert “Fed Cheddar” Nardelli knows his automaker needs $5B, but what about that other once-lucrative side business turned new economy shakedown, Chrysler Financial? Having copped $1.5B back in January, ChryFi’s been slamming record incentives ever since, and now the buzz is wearing off. Which has Nardelli sounding decidedly thuggish. “We have gone back to Treasury and said ‘we need to re-up that amount,’” he tells Bloomberg. “We saw the evidence of how that works.” For real, dawg? What about the fact that sales are down 50 percent since ChryFi took its last tasty hit of government cheese? Fuhgeddaboutit. See, if you look at Chrysler’s retail sales and compare them to declines in the broader market while getting high off your own supply, things don’t look so bad for the Pentastar Posse. Reportedly. The irony is that if Nardelli really was hustling hard drugs on the street corner, well, he’d be selling something.
“Dangerous innuendo” is CAW Prez Ken Lawenza’s sultry summary of Chrysler’s plan to interruptus its Canadian operations if labor won’t agree to further concessions, reports Bloomberg. Chrysler is holding out for wage and benefit concessions that are “considerably larger” than those given to GM. The current GM agreement, when applied to Chrysler, cuts just $7.25 an hour Canadian from the company’s labor costs, according to a document obtained by Bloomberg. The same document reportedly shows that Chrysler requires $11.75 Canadian an hour in additional savings to be competitive. Meanwhile, Automotive News [sub] reports that GM is playing a similar game in its UAW negotiations. CEO Rick Wagoner says Ford’s agreement with the UAW “does not meet our needs” and that GM is working with the UAW to “do something different.” But despite the bloodthirsty negotiations, all three Detroit automakers are standing by their union allies in DC and on the pages of the Freep, calling for an American cash-for-clunker program. Because, hey, even Malaysia is doing it, according to Ward’s [sub].
As rumors filter in about GM’s Volt battery program, the faithful must be experiencing a certain amount of restless discomfort. After all, it’s not like this couldn’t be seen coming. Let’s just say that when I asked the guys from A123 systems (then bidding on the project) about the Volt battery development program at SEMA last October, they took full advantage of the fact that SEC silent periods don’t forbid eye-rolling. Though non-verbal communication can (and in this case, did) speak volumes, we like to get our facts in writing. Which, thanks to the truth-proof wall surrounding the Volt’s development, usually means going through GM’s PR-exercise interviews with reliable Volt boosters and mining them for some kind of meaning. And hey, there’s an interview at Volt cheerleader HQ gm-volt.com which suggests that the Volt’s battery development is being rushed. And engineers are complaining to blogs? Fancy that!
The $13K-$15K American compact market is going to get another player, as Automotive News [sub] reports that VW’s Polo is coming stateside. But VW won’t be selling the traditional Yaris-fighting small hatch version of the Polo here, says VOA CEO Stefan Jacoby. Instead VW is easing into the segment Toyota-style, offering an Echo-echoing four-door sedan version of the Polo alongside a “Polo Plus” mini MPV. “It’s more like a cross between a compact minivan and a hatchback. In other words, it’s more like the Honda Fit,” says Jacoby of the “American fatty” version of the Polo. Expect the Polo to be built in Mexico in hopes of keeping the cost down, a consideration that takes on more importance thanks to VW’s decision to focus on the sedan/MPV approach. “We have to come in at the sweet spot of this market or else it makes no sense—and we come too close to the Jetta,” says Jacoby. So why sell a sedan at all? More importantly, why go with the cheap Hecho-En-Mexico approach when it prevents the US Polos from offering the real jewels of VW’s small-car portfolio: high-tech engines like its direct-injection, turbo- and super-charged 1.4 TFSI.
The New York Times has an interesting piece today comparing automotive rescue plans to earlier government intervention in the railroads. As apt a comparison as it might be, the piece ultimately advocates exploring an option for the auto rescue based on Conrail, the government-owned rail holding company created in 1976. If the American Leyland model worked for trains it might just work for autos, right? “The ideological debate already in progress,” says Wharton prof Peter Cappelli, “is whether government should actually direct the auto companies, stepping into management, or passively give them more loans, and then get out of the way.” Hows that for a choice?
The Freep’s Carol Cain has gone one better on the crazies who suggested that Steve Jobs should take over Detroit, nominating Oprah Winfrey to become Detroit’s cheerleader-in-chief. Noting calls from Senators for GM to declare bankruptcy and falling public support for the Detroit bailout, Cain suggests that desperate times call for desperate gimmicks. “I don’t know what kind of vehicle Oprah owns or if she even drives. I don’t know what she thinks about the auto industry or if she could be convinced to help. I know she likely wouldn’t be in this for the money, glory or stature,” writes Cain. But, “perhaps someone could appeal to her sense of patriotism in helping this industry that has been the bedrock of our nation for generations. Like many Americans, perhaps some family member worked in one of the auto factories. The industry still has dramatic impact on all 50 states and many livelihoods are impacted by it.” And hey, she has experience giving away cars!
The Freep reports that Obama’s Car Czarlet, Steve Rattner, is steering his Presidential Task Force On Autos away from earlier considerations of bankruptcy for GM. “Bankruptcy is not our goal,” Rattner tells the Freep after a week of Kool-Aid sampling in Detroit. “I’ve been in and around bankruptcy for 26 years as part of my private-sector work. It is never a good outcome for any company, and it’s never a first choice.” And by turning away from bankruptcy restructuring, the PTFOA has eliminated the only real possibility for comprehensive, radical changes to Detroit’s business model. The result? Don’t expect a single major turnaround effort to tackle Detroit’s unsustainable posture.
And with the Phaeton rumored to be coming back like déjà vu, why would Audi mess with the A8’s lean, mean luxo-niche? Motorauthority reports that the new A8’s curb weight will top out at 4,180 lb, down from the current 4.2 Quattro’s 4,409 lb. Even crazier? There’s serious consideration being given to a front-wheel drive, turbocharged-four base model with 230 hp pulling a meager 3,630 lb. But this brand blemish is being built to satisfy European emissions standards, not the MKS “crowd” in the US market. A three-liter V6 with 290 hp could make it to the US, complimenting the 372 hp 4.2 V8, with the W12 a solid “maybe”. Crazies and one-uppers will have to wait for a 620 hp 5-liter V10 exclusive to the S8. The new Quattro system features a “torque vectoring SportDifferential,” and styling will be . . . different. “The first generation was very dogmatic and product-design-like. With the second generation, the theme was ‘elegance’—softer, flowing lines. The upcoming third generation will be stronger, sharper, and more precise,” says Audi design boss Stefan Sielaff.
As a condition of its government-funded restructuring, GM was supposed to wrangle concessions from its unions and bondholders. So far, the General has struck out with the major bondholder committee and the UAW, and has only had its agreement with the Canadian Auto Workers to crow about. But now that agreement appears to be in peril, as Reuters reports that Chrysler and Ford are rejecting the terms of the GM CAW restructuring. “The current agreement with GM is unacceptable and we have to break the pattern,” Chrysler’s Robert Nardelli told Canada’s House of Commons. “We believe the recently negotiated agreement between General Motors Canada and the Canadian Auto Workers will not keep Ford’s Canadian operations competitive in today’s global economy,” concurs Ford Manufacturing Maven Joe Hinrichs. While GM claims that its CAW deal brings labor costs in Canada in line with US transplants, Nardelli claims “the union agreement with GM, if applied to Chrysler, would not eliminate even half the labor cost gap Chrysler Canada has with its Asian competitors in Canada.”
Given GM’s well-proven love for inflating the importance of even the tiniest achievements, you’d think they would muster up something a little more, uh, celebratory than this. After all, they could be slurping up $2B of treasury money (but aren’t). For now. And all they’ve got to celebrate the moment is Ray Young joylessly repeating coporate pablum while looking like he recently took a sip from the wrong grail. Get some sleep guys!
Say you’re a small electric car maker in bankruptcy restructuring. You have no current production, you’ve only ever built a couple thousand street-legal cars and you’re operating on $6M in interim financing. With credit markets in turmoil and the car biz taking a beating, what’s a game changer to do? Luckily for you, the various governments of the United States seem to have acquired the reputation of being run by the kind of people PT Barnum would have loved. And as Autoweek reports, this opportunity has even the tiniest mice in global auto game warming up their vocal cords, hoping to pull off an American taxpayer-assisted roar.
Automotive News [sub] reports that GM spin-off supplier Delphi has received approval from bankruptcy court to cut benefits to 15k non-union retirees. The ruling will save Delphi an estimated $70M per year, improving the chances Delphi will end its nearly 3.5-year sojourn in Chapter 11 restructuring. GM has been helping generously towards that end, having offered to buy Delphi’s steering component business for an undisclosed sum and funneled hundreds of millions to its crucial supplier. Or quasi-independent division. Or whatever Delphi really is to GM. The full text of the order in question is here (pdf). It’s long, so check out a few highlights after the jump.
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