George W Bush is inspiring another round of “kick the can/punt the ball” criticisms today by delaying a decision on 2011-2015 CAFE rules until after Obama takes office. “The recent financial difficulties of the automobile industry will require the next administration to conduct a thorough review of matters affecting the industry, including how to effectively implement,” explains a Department of Transportation statement reported in Automotive News [sub]. Current energy policy requires a 35 mpg fleet average by 2020, a 40 percent increase over the current standard of 27.5 mpg for cars and 23.1 mpg for light trucks. Considerable controversy exists over how quickly to ramp up to that standard, as the expense to automakers competes with environmentalist agendas for political sympathy. Since Obama will end up with the final say on the current (and future) auto bailouts, CAFE-setting power will give him another bargaining chip with Detroit. He just has to make a CAFE decision by the April 1 deadline. Unless of course he scraps CAFE in favor of a carbon or gas tax. In any case, it’s just a little more uncertainty to swirl on an auto industry future that is already as clear as mud.
Posts By: Edward Niedermeyer
Bloomberg reports today that despite receiving $4b in government aid, Chrysler refuses to open its books to the public which involuntarily bailed it out. It turns out that when Robert Nardelli pledged “full financial transparency” while begging the government to buy into his Pentastarred hell, he was really offering “partial financial transparency.” As in, ChryCo will share the numbers with the Treasury, but nobody else. The weekly status reports, biweekly cash statements and monthly certifications to the Treasury are required to demonstrate that Chrysler is complying with policies on expenses. But as Chrysler Spokesperson Lori McTavish puts it “we are not in a position to mirror publicly traded companies, as our investors remain private. However, the company is obligated to our private investors and lenders, and as such, keeps them apprised.” Earth to Chrysler: your major investor is the public. And we expect more than just a thank you card.
Reported sales of hybrid cars were down by ten percent in 2008, according to Green Car Congress, who keep track of these things. Keep in mind that 2008 was the year that saw $4+ gas, $7k Geo Metros and a general wave of related hysteria. On the other hand, gas has also become quite cheap in the last few months, and hybrid sales are undeniably falling off a cliff. December hybrid sales are down 42.7 percent year-on-year, as Priora pile up on lots and Americans re-learn how to save money. But is the hybrid downturn a sign of a dying fad, or a temporary blip? There’s a strong argument to be made that the hybrid price premium will be a tough sell in weak economic times, but if another oil shock comes that premium could look like chump change. But this is not just a question of predicting the oil market. If any of us could really do that, we’d be doing the backstroke in a Scrooge McDuck-sized vault of ducats, not discussing the auto industry. Toyota thinks that they can whittle the hybrid powertrain premium down to a mere $1,500 over normal ICEs, but then they built the hybrid bandwagon nearly single-handedly. Meanwhile, Honda is attacking the Prius on price point with the Insight, and Ford is going after the Camry on patriotism with its Fusion hybrid. But will this competition saturate a still-niche market and destroy profitability? After all, hybrids still only make up 2.4 percent of the US market, causing some to call hybrids a dying fad. Or will hybrid technology eventually become ubiquitous, rewarding those who made early investments in it?
Autocar is so certain that Audi will whip up an “S”-badged version of its forthcoming A1 city car, they’re touting specs and renderings of a car that will make hot hatch lovers weak in the knees. The S1 will compete with such miniscule forces of nature as the JCW Mini and Alfa MiTo by offering 200hp, 300nm and AWD. In a package that makes the GTI look like a lumbering beast. A tuned version of the turbo- and super-charged 1.4 TFSI engine that is drawing rave reviews from European buff-books will hook up to a seven speed dual-clutch box, sending 60 percent of the power to the rear wheels. Zero to 60 should come in six seconds, reckons Autocar, while the top speed will be limited at 155 mph. And fuel consumption should stay around the 30 mpg (US) range. Throw in lowered and magnetically-damped suspension, 19 inch wheels, S-line visual cues and a possible cell phone integration option (ala KEI), and Autocar’s verdict that the S1 will be a “technological tour de force” is hard to argue with. Of course this means the price of admission is steep. $36k (25k Pounds Sterling) is a brutal entry point for a hot hatch, even if it packs more technology than an F-16. And then there’s the question of whether it will be sold in the US. Or at all, given the state of the economy. On paper though, the S1 is a near apotheosis of the hot-hatch form. I’ll take two.
Pickuptrucks.com has learned that the Pontiac G8 ST has been canceled. Incidentally, Automobile Magazine is reporting that the Suzuki Kizashi has not been canceled, but will debut in production form at this year’s New York Auto Show.
As Martin Schwoerer has pointed out, Honda is in the midst of a green-oriented rebranding. Formula One efforts and the NSX “replacement” have already been canceled, as we’ce reported. According to Autocar, more enthusiast-oriented programs are being slashed as weak markets meet green branding initiative. Planned rear-drive Acura models, including development of a V8 engine are off the table due to poor demand for luxury models. These models were planned to compete with BMW’s 3,5 and 7 series. Honda has also canned plans for a S2000 replacement, leaving it without any kind of sports car in its portfolio. Though the eagerly-anticipated CR-Z coupe is still a go, a convertible roadster version will not be pursued. This isn’t great news for enthusiasts, who have long seen Honda as the most sporting of the Japanese big three. In reality, Honda has been steadily moving away from its enthusiast roots for years now.
There’s an eerie thread of optimism weaving through a number of post-bailout, post-December bloodbath stories lately. Sure, hope dies last and all that, but as Studs Terkel put it, “hope has never trickled down, it has always sprung up.” And most of this fresh-faced optimism seems to have trickled down directly from GM PR. Take the headline “‘Happy Days’ Return For Domestic Car Dealers” over at Dealersedge.com, for example. If the use of scare quotes in the headline isn’t enough to set your PR-friendly hackery alarm ringing, well, that’s why we’re here. The entire piece is based on quotes from employees and owners of three dealerships, two in New Hampshire, one in Michigan. These ecstatic, old-timey song-referencing folks spout anecdotal evidence of a new influx of floor traffic, offering no dissent from the opinion that “happy days” are indeed here again. And why wouldn’t they say that zero percent terms on Trailblazers and Saabs have Americans flooding the showrooms?
According to the Daily Mail, you can now buy a microwave that plugs in to your car’s 12v socket. Because you need that hot pocket when you’re commuting. Because talking on your cell phone while driving is only so distracting. And because that cell phone only delivers minimal electromagnetic radiation risk. The $190 appliance made by Maplin Electronics is small enough to stash in the boot of car, features a robust steel construction with heavy duty handle and is operated by a LED touchscreen. According to a company rep, “you no longer have to worry about searching for places to eat as the microwave ensures you can plan your day as you want to and eat when you’re hungry. It gives you the flexibility and freedom to enjoy hot food wherever and whenever you wish.” Be still my fat-clogged, barely-beating heart.
The New York Times’ Dealbook blog takes it to the GMAC bailout with TTAC-like zest today, methodically doling out blame to all sides of the deal. Many of their points have been covered in TTAC’s ongoing coverage of the deal, but the Dealbook post does a good job of summarizing everything there is to hate about the handout. For one thing, there’s the fact that (unlike other TARP packages) the Treasury failed to secure warrants backed by GMAC common equity. This means that we the American taxpayers have no upside to the deal beyond earning back our money with eight percent interest. Furthermore, the warrants that Treasury did receive are worth only five percent of our $5b investment in GMAC, far less than the 15 percent warrants required of other TARP borrowers. Oh yeah, and the $1b that GM received to invest in GMAC is secured only by GM’s stake in GAMC. Not only do these considerations increase taxpayer risk, they also destroy the “our bailout is better/more fair than theirs” relativism that the auto biz rode into Bailout City.
Finishing 2008 with positive sales growth was basically unheard of this year in the US car market. Titans like Toyota, hot brands like Audi, nobody is safe from the sales downturn that is crunching the biz. Except Subaru. The all-AWD boys managed a narrow 0.3 percent sales bump for 2008, as strong Forester sales (up 62.8 percent in December, 36.4 percent on the year) helped limit December bloodletting to a 7.7 percent downturn. So even though Subaru literally sold only 491 more cars in 2008 than it did in 2007, you can’t help but call it a win. Unsurprisingly, Tribeca and Outback are the big losers, dropping 52.1 and 30.3 percent in December and 34.6 and 22.8 percent on the year. And Subaru’s short-term positioning continues to look good. Though the summer gas shock had consumers scurrying for Fits and Priora, leveling prices and a harsh winter make Subaru’s products look like a smart step for the downsizing SUV-as-luxury crowd. Subaru’s out of the WRC championship, and the Toyobaru coupe has been canceled (it should have been the Tribeca!), but in the US market Subaru looks as good as can be expected.
You might have noticed a somewhat depressing tone in car news lately. Keith Crain has, and by the tone of his latest column at Automotive News [sub], it sounds like he’s ready for a refill of his favorite SSRI. But while Crain’s beloved Detroit firms may have a monopoly on federal bailout money, they certainly aren’t the only ones suffering. In addition to shelving overseas factory plans, Suzuki has announced that their entry into the “large car” market is now on hold according to Automotive News Europe [sub]. That means the sedan based on the Kizashi 3 Concept pictured above (spy shots here) won’t be hitting markets in 2010. For what it’s worth, the concept had a 300 hp 3.6 liter V6 mated to an AWD drivetrain. If the SX-4 strategy is anything to go on, the production model could have offered a decent entry-level AWD sports sedan at a truly competitive price point. But could Suzuki really do to the A4 what Hyundai is trying to do to the Lexus LS? I suppose we’ll never know now. And even amidst all the big bad news right now, I think that’s just a bit depressing.
And the scramble for ways to say “it’s not that bad” is on. GM’s Press Release suggests pointing out that deliveries are up compared to October and November. Just don’t bring it up around your friendly local GM dealer/overstock storage depot. They’re still trying to forget October and November. And a four percent drop in inventory compared to last December doesn’t really make their collective 872k unsold units look any better. GM unit Meanwhile, GM’s total annual vehicle sales for 2008 fell below three million, at 2,980,688. That’s a 23 percent drop since 2007.
Have we mentioned recently that selling cars is difficult these days? Honda sales dropped 34.7 percent in December compared to the previous year. And that’s despite being one of the few automakers to run car-as-stocking-stuffer ads. Like this little beauty which reminds Americans that inside everyone one of us lurks a small, toy-crazed child who knows that he wants an MDX. But even “low finance and lease offers” couldn’t cut through deathly silence in credit-fueled consumptionland this holiday season, and holiday non-sales dragged Honda to its first annual US sales decline since 1993. A 34 percent monthly and 6.7 percent annual drop may look good in this market, but Honda is doing some serious stretching to proclaim the “joy” to be “back.”
Or, as the FoMoCo PR types put it, “F-Series Drives Ford To Higher Market Share For Third Straight Month.” And, to be fair, this is the first time since 2001 that the company’s Fourth Quarter market share was higher than a year ago. As usual though, the real story comes in the final sentence of Ford’s press release, which reveals that “for the full year of 2008, Ford, Lincoln and Mercury’s market share is estimated at 14.2 percent, down 0.4 points versus a year ago.” On the bright side though, “this marks the company’s smallest decline in market share this decade.” Party!
“The whole world shines shit and calls it gold,” remarked Michael Steintorf, the savvy chief of staff for The Wire’s fictional mayor of Baltimore. Which goes a long way towards explaining the one-word job description of auto show “talent.” As part of its ongoing effort to document the lifestyle formerly known as Detroit, the Freep has a list today of notable former auto show talent. And boy does that list say it all about the career opportunities for auto show personalities. Pam Dawber of “Mork and Mindy,” OJ Simpson murder non-witness Kato Kaelin, and Tim Allen are the most recognizable names listed. And besides following the luminous paths forged by those visionary performers, new auto show talent will apparently also have a leg up in the worlds of local broadcasting and trophy-wifedom. So we must know: who do you, TTAC’s Best and Brightest, think should take up the thankless task of burnishing Detroit’s products at this year’s Detroit Auto Show? William Hung? Ashley Alexandra Dupre? Barney Frank? Let us know.
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