Automotive News (sub) reports that the National Automobile Dealers Association will not be joining the Detroit Alliance to lobby congress for bailout loans. In stark contrast to the collective approach to bailout lobbying taken by the three Detroit automakers, NADA is leaving those efforts up to individual dealers. “We represent all dealers,” said David Regan, the association’s vice president of legislative affairs. “NADA members likely will have different opinions on whether government loans would be in their economic interest.” This is, in effect, the same reason for the Ford-Chrysler-GM collective approach to lobbying, rather than going through the Alliance of Automobile Manufacturers. In short, the bailout is only good for Detroit, so there’s no reason for the successful automakers to waste precious lobbying money on it. Needless to say, this all further undercuts Detroits head-in-the-sand assertion that this is not a bailout. GM admits that it has recruited its dealers to shoulder some of the lobbying burden, though Ford and Chrysler remain cagey on the subject. If the once-big three want to convince America that the entire auto industry is suffering, and that the loan program is not corporate welfare for their failed business models, they’re going to have to recruit more help from across the industry. The lack of industry interest is highly instructive.

As we’ve argued before here at length, Chrysler’s current “worst of the worst” predicament boils down to one word: product. And it’s not just that Chrysler’s current batch of products suck, there’s not much coming down the pipeline that shows any real promise. But that’s not stopping Auburn Hills from rolling out a new hype offensive, touting the awesomeness of Chrysler’s forthcoming 2010 lineup. Leading the charge is President and Vice Chairman Jim Press, who sees the Chrysler turnaround in historical terms. “For our company, we’re going to have a product renaissance in 2010 … just as the market is coming back,” Press is quoted as saying in the Detroit Free Press. “We’re not on the ropes,” he insists. “We’re not worried.” Why aren’t ya worried Jim? Because Chrysler’s going to be launching seven new vehicles in 2010, according to Press. Pinky swear. But then supply-chain philistine John Campi chimes in to promise “eight or nine” new Chryslers in the mythical 2010 model year. So which is it? Ask an analyst, and he’ll tell you that Chrysler is likely to have five new models for 2010: a new Jeep Grand Cherokee, a Dodge midsized SUV possibly called the Durango, a refreshed Chrysler 300 and Dodge Charger, and a reskinned Nissan Versa. Ask the same analyst (in this case Erich Merkle of Crowe Chizek and Co) where Press and Campi came up with their numbers, and your expert will suddenly be out of answers. “Maybe there is some variant that you could start counting. There are ways to double-count some things sometimes. It’s a bit of a stretch,” admits Merkle. Possibly indicating what the Cerburian dog might pull out of its “product pipeline” in 2010, Jim Press is going after the Chevy Volt. Having shown three “post prototype” EVs to its dealer council, Press notes “We don’t have enough money for a PR stunt. All we have is enough money to build a car that we can sell.” Luckily Chrysler still has the Freep for fawningly credulous no-cost PR. After all, getting a Chrysler dealer to publicly admit that “I am more excited about their product line than I have been in years and years and years,” is surely worth some kind of consulting fee. Or ad revenue.

Though Chrysler gets special attention from us for its supplier-gouging, the practice of sticking parts makers with cost increases is basically an industry standard. As further evidenced by a Bloomberg report that bankrupt supplier BHM is filing to be released from an unfair (it claims) contract with ToMoCo subsidiary Toyota Boshoku. BHM sells vehicle seat-frame components to Toyota Boshoku, which has refused to increase payments in line with an 80 percent rise in steel costs this year. “The supply contract is so unprofitable that the debtors’ continued performance on the current terms cannot be justified,” says BHM in its bankruptcy court filing. The firm had requested a new pricing schedule in June, which Toyota Boshoku has rejected. Interestingly, Boshoku may be facing pricing pressure of its own. BHM components go into vehicle seat frames that Toyota Boshoku manufactures for Chevrolet’s HHR hatchback. GM has not commented on the case, but the facts prove two imutable truths about the industry. First, that everything and everyone in the biz is connected, and second that every OEM would just as soon see suppliers go under as raise their own costs. Be they Chrysler, GM or Toyota.

As the U.S. struggles to adjust to fuel prices that the rest of the world has been living with for years, European cars offer the most obvious template for model-line reform. Flexible, fuel-efficient vehicles have thrived on the continent for decades, and the European’s have gotten good at squeezing space for a whole family from compact platforms. So when GM first started showing images of its new Cruze compact, this blogger bemoaned that “while the old Chevy Cruze (Suzuki Ignis) was a tall, flexible wagon, the new model sports a long front overhang and a tight greenhouse.” Long, low and wide, the new Cruze felt like downsized Americana (we don’t need no headroom or no stinkim’ hatchback), rather than a platform built for utility and flexibility. Well, my worries were mistplaced (sorta). GM is showing pictures of its Orlando concept, a three-row MPV based on the Cruze platform and aimed squarely at the Mazda5 and Euro-proven Ford Focus C-Max, headed stateside in 2010. Jalopnik notes that there aren’t currently a huge range of small, fuel-efficient family haulers for sale in the states, but this simply proves that (for once) the General may actually be ahead of the curve. There are likely  shortcomings, including an emphasis on “American” styling that appears to sacrifice space and visibility for the tight greenhouse that is so fashionable here. Still, by leveraging platforms and offering fuel-sipping transport for large families, GM only improves its chances of success. And no, I’m not kidding. Now, get ready for some major brandgineering….

In general, the Swedes are a polite, hospitable people. But doing business with Detroit is enough to test even the patience of a people who discovered good manners on a pillaging run back in 795 C.E. Automotive News [sub] has a lengthy feature on Sweden’s auto business, focusing on the deep disappointment locals feel with Ford’s management of Volvo. One worker says the mood in Volvo’s Swedish assembly plants is “depressed;” people are ready for a little change they can believe in (TM). “People just want Ford to go,” he said. “Ford is not making that much money, and neither is Volvo. Ford needs the money, so everyone expects Ford to sell.” “Ford has not been a good owner,” opines another assembly worker. “I think another owner would be better.” The locals say that whomever ends up holding Volvo ownership, they must keep Volvo’s inherent “Swedishness.” )Husker Du?) “Volvo is very much based on Swedish culture, and that would make it almost impossible to move it to China or somewhere else,” says a local chamber of commerce type. Volvo is crucial to the local economy, and Ford’s plans to bring Volvo downmarket betrays Dearborn’s lack of faith in the brand’s core values. Whether it stays with Ford or moves on, Volvo- and it’s Swedish workforce- are at the mercy of the market. And you thought Michigan was the only locality that stands to lose big from the decline of The Big 2.8. 

Automakers should start taking a page from the survival strategies of other easily-maligned industries, starting with the slogan “fuel-efficient cars don’t save the world, people save the world.” This blame-deflecting maxim encapsulates the lessons learned by researchers at UC Davis’s Institute For Transportation Studies while studying options to reduce California’s greenhouse gas (GHG) emissions by 80 percent (of 1990 levels) by 2050. Green Car Congress has all the technical minutiae on the study (as usual) for those who care much and work little. Bottom line: the “reference scenario,” which projects current trends forward, predicts a 50 percent reduction in average vehicle fuel economy. But a doubling population projected for the 1990 – 2050 period will cause GHG emissions to rise by 62 percent. Several “silver bullet” scenarios centering on large-scale shifts to biofuels, fuel-cell vehicles, electric vehicles and ICE efficiency improvements all fail to meet the ambitious 80in50 goal. The 80in50 goal can be met, albeit through either second-gen biofuel breakthroughs or a new hydrogen-based transportation infrastructure. The only way to meet the goal with only hybrids and EVs: a radical reduction in miles driven. Even then, hitting the goal exactly is only possible if you exclude inter-state transport. As the report notes, “advances in other vehicle subsectors are largely erased by activity growth in air travel and domestic and international shipping by sea and air.”

Way back in 1987, The New York Times began a story on GM with a lead that echoes through the ages: “Just about the last thing the General Motors Corporation needs these days is more ”cannibals.”’ With all the turmoil GM has endured since ’87, you might think that it would have taken The Gray Lady’s advice by now. But no. Motor Trend reports that the new Cadillac Escalade will be based on GM’s played-out Lambda platform, joining the Traverse, Enclave, Outlook and Acadia in cannibal Hell. As usual MT manages to look on the sunny side of the move, claiming that the Lambda’s “oversubscription” is precisely why “a Cadillac version makes economic sense.” And yes, it will likely be the only Lambda-based whip with a (small block- the new Northstar has been axed) V8 now that the planned Enclave Super has been canceled. Still, the new Escalade won’t just steal sales from well-equipped Enclaves, it will also put the squeeze on the Theta-based SRX CUV. Besides, if Caddy is still a legitimate luxury brand, shouldn’t its flagship Ute retain its fuel-swilling truck platform to keep it in line with such damn-the-fuel-prices competitors as the Range Rover and Hummer? After all, the new 2009 Escalade paid off its tooling costs within three months of going on sale. Unless of course this is just more cheap-and-dirty “retooling for increased energy efficiency” bailout loan fodder.

Toyota doesn’t want to gloat or anything, but it’s going to make real money on its new Prius. “We reduced costs of hybrid systems for the current Prius by 50 percent from the first generation,” ToMoCo Vice Chairman Kazuo Okamoto tells Automotive News. “For the next-generation Prius, we will be able to cut costs by another half, so I think we’ve been able to ensure profitability will be similar to regular vehicles, such as the Corolla.” And though Okamoto-san comes across as lacking empathy for the plight of the American worker in these troubled times, this isn’t the case. In fact, emotion had nothing to do with Toyota’s decision to expand battery production to the United States. “It is very difficult to make the main parts of batteries outside Japan,” says Okamoto, “but we have to have battery production in North America. We just don’t know when.” Considering that the first American-built Prius is set to roll off the lines in 2010, US battery production was only a matter of time. And the fact that it should help Toyota pull down regular-car profits on the Prius is just the icing on the cake. Oh, and what of Bob Lutz’s hating on the plug-in Prius’s (theoretical) range? Okamoto confirms that plug-in Prius prototypes currently get only 8 miles of “initial EV range,” but that chasing the Volt’s (projected) 40 mile range would compromise cargo space and price point. What, that’s it? Aren’t space and cost are mere triflings, in the face of the monumental marketing achievement it will be when someday a company finally claims to sell cars that can go 40 miles without gas. I’m sorry, did I say someday?

Supplier relations in Detroit continue to take a beating, thanks to the OEM’s insistence that parts makers can simultaneously cut costs and deliver higher quality. And nowhere has that strategy been so fully embraced and/or embarrassingly revealed as a pipe dream than at Chrysler. Under the Cerburian fist of John “win-win proposition” Campi, Chrysler has squeezed suppliers into bankruptcy while continuing to rank at or near the bottom of most quality ratings. And now it seems the Campi-led attempts to squeeze money from nothing (and his chicks for free) have conjured-up yet another egg on the Pentastar’s face. Automotive News [sub] reports that Chrysler paid consulting firm Accenture “at least” $7.7m as part of its “Project Magellan” aimed at uncovering $900m in savings by identifying suppliers in India and China. But Chrysler “saw virtually no savings,” from the project. An enraged Campi is suing the Arthur Anderson spin-off, claiming “Accenture demonstrated virtually no experience in identifying low-cost-country suppliers for the automotive business and had no knowledge of the supply base in China or South America.” So why did Chrysler pay Accenture in full for services rendered? Since Campi took over after Project Magellan fell apart, he couldn’t answer that question. How about this one: Why should our tax money be used for low-interest loans to automakers to create U.S. jobs when these same automakers are so damn busy outsourcing jobs to Mexico, Canada, China, South America, etc.?

The Bureau of Labor Statistics recently released its unemployment numbers for August, revealing that joblessness has hit a five-year high at 6.1 percent. And rather than raising some of the many legitimate concerns over the accuracy of BLS statistics, the Detroit Free Press jumped right in to throwing fuel on the presidential campaign fire. Noting that automakers and parts suppliers shed 38,000 jobs in the past 30 days, and that the industry has lost 127,800 jobs over the past year, the Freep frames these losses in the context of Detroit’s proposed $50b bailout. The industry job losses combined with 14,000 jobs cut from car dealers and auto parts vendors “could add pressure” for Congress to back the Detroit bailout, reckons the Freep, and with swing-state Michigan’s unemployment levels topping out at 8.5 percent, the news is certainly putting pressure on the presidential candidates. And as McCain and Obama trade jabs on the economy, momentum simply builds for the government to do something. Since the only proposal on the table amounts to a blank-check bailout for three firms which have conclusively proven their lack of competitiveness, isn’t it time for one of our would-be leaders to show some y’know, leadership, and propose a different option? Otherwise, the bad news will keep coming, and Washington (and its aspirants) will have no choice but to offer more bailout money than the next guy.

Ralph Nader has plenty of good reasons for opposing the $50b taxpayer bailout, sorry, “low interest federal loans” for Detroit. Namely, “decades of poor decision-making” and Detroit’s total inability to drum-up capital on Wall Street. Unfortunately, Nader’s name, reputation and government intervention fetish discredit his cause. GM wasted no time rising to the bait, brushing off Ralphie-Boy’s criticism with a suitably put-down. “There are many more relevant voices in this discussion that see the existing provision for what it is,” spinmesiter Greg Martin told The Detroit News. “A sound, smart policy to inject capital into the industry to get advanced technology vehicles on the road quickly.” For once, a GM toady gets it right. About Nader. The consumer advocate argues for government intervention on a socialist scale: a “public takeover of the corporations.” Though a thorough managerial reshuffling should be a condition for any government bailout, Nader’s proposal of a government-run U.S. auto industry is ridiculous. Any such move would lead to a British Leyland-type public ownership debacle. Opponents of the bailout plans would do well to keep their distance from his wild schemes.

Though GM’s new Cruze is likely to qualify for taxpayer funded “efficiency retooling” money, its predecessor the Cobalt is finally coming into its own. Automotive News reports that transaction prices and profitability are headed up for the Cobalt. Average transaction prices for the Cobalt rose $775 since mid-April, thanks to surging interest in one of GM’s most fuel-efficient cars. And the upswing in Cobalt-generated revenue is turning Detroit’s argument that it can’t make money on small cars on its head. GM’s marketing manager for small cars and crossovers, Brian Brown, says profits on the Cobalt are up six percent since 2007. “I don’t think anyone thought this shift of moving into smaller, more fuel-efficient vehicles would be as dramatic and happen as quickly as it did,” Brown tells AN. “I have to laugh: In the last 90 days, one of the top five trade-in vehicles for a Cobalt is an F-series pickup.” Please note that Brown is laughing about getting trade-ins from a competitor’s truck rather than his company’s total inability to see this one coming. GM added an extra Cobalt shift in August, to keep up with the 9.6 percent (supply limited) increase in Cobalt sales on the year, which still lag behind booming sales of Ford’s Focus. Sales are doubtless being helped by the addition of the fuel-efficient (25/36 mpg) Cobalt XFE model, while sales of fully-loaded models are helping profitability. Taken together, the trend is clear: well-equipped, fuel-efficient small cars can sell in volume and turn a decent profit. If only Detroit had realized this a decade ago. Everybody else did.

The LA Times blog reports that Aptera Motors, makers of press releases and $500 deposit waiting lists, have hired a new CEO. With its $30k EV still in development, Aptera has tipped to former Ford, Chrysler and Saleen man Paul Wilbur for the top spot. In a move that echoes Martin Eberhard’s ouster from Tesla, Aptera founder Steve Fambro has been pushed down from the CEO job to “chief technology officer.” This hiring of a new executive and exiling the founder to technical pursuits is fast becoming a rite of passage for up-and-coming EV companies. While Eberhart’s downgrade allowed him to “focus on…the advancement of our core technologies,” and Fambro’s demotion is being spun as allowing him “to concentrate on vehicle development,” the trendsetter was actually Phoenix Motors. Way back in 2006, Phoenix bumped its founder Daniel Riegert from CEO to (wait for it) chief technology officer. The LA Times sees a trend here, and unsurprisingly it has to do with money. Eberhart was demoted just as Tesla embarked on a $250m investment round, Riegert left Phoenix when a Dubai-based investor dropped $40m on the company, and Aptera just closed on $24m worth of venture capital. As these companies grow, their new investors do not always see eye to eye with their contrarian founders. Eberhard and Riegert both left their companies entirely after stints as technology gurus, and it would not be surprising to hear of Fambro following suit. Maybe the three former founders could start an EV supergroup?

Hell hath no fury like an executive scorned. Since being ousted from Tesla, its founder Martin Eberhard has dutifully spoken truth to hype about his erstwhile brainchild at the Tesla Founders blog. Eberhard’s latest opus is a breakdown of running costs for the Tesla Roadster based on Northern California’s PG&E electricity rate structure. Calling answers to EV running costs “squishy,” Eberhard has assembled a truly impressive spreadsheet to evaluate and compare true EV running costs. These costs vary wildly depending on whether you have a standard-rate plan, or a “Time Of Use” (TOU) plan which discounts off-peak electricity use. Other factors include whether you use electricity to heat and cool your home, and whether you have solar panels on your home. Without solar panels, Eberhard calculates that operating a Tesla Roadster will cost PG&E users between two and six cents per mile, with his own use coming in at about 3.6 cents per mile. In the comments section, Eberhard admits that these numbers are higher than initial Tesla hype indicated. “My first (naive) comments while at Tesla were between 1.5 cents and 2 cents per mile, if I recall correctly. These were just based on the lowest tier, off-peak rate for the E9 schedule. I didn’t take into account the impact of domestic consumption, usage that pushes you into higher tiers, or all the taxes and meter charges – these make a big difference.” Elsewhere, a commenter points out that the official Tesla website still lists a running cost of “roughly one cent per mile.” Though Tesla qualifies this claim with the usual “off-peak” and “your electricity rates may vary” boilerplate, it’s unfortunate that it fell to a man with no further association with the company to give consumers the real truth. If you are blessed with a fierce spreadsheet kung-fu, follow the link to help Mr. Eberhard modify his template to include other local utility rates.

Way back in 1995 a certain Robert A Lutz, then president of Chrysler, modestly claimed that “there is no other area in the field of human communications that is as rife with disinformation as the story on Chrysler quality.” Much water has passed under the bridge since ’95, but that maximum maxim echoes in eternity. As then, Chrysler’s quality ratings occupy the basement of most reliablle rankings while overstuffed suits cry perception gap. Despite flying under the industry standard in JD Power and Consumer Report rankings, Chrysler has recently taken to trumpeting a 29 percent decrease in warranty costs. Now the Cerburian dog is putting its lack of money where its mouth is, telling the Detroit Free Press that it’s setting aside less money for warranty costs. “When you ship a car, you reserve the money for its whole lifetime of warranty. Based on where you think you’re at, that’s how much money you reserve,” explains Chrysler’s chief customer officer and former Nissan man Doug Betts. “A decrease of “30% … is hundreds of millions of dollars.” But the Freep catches something that deserves some attention. “Betts said Chrysler is measuring quality by the rate of warranty claims within a new vehicle’s first 3 months in service, a reliable bellwether for predicting total problems for the life of a vehicle’s warranty.” But doesn’t reliability become most important towards the end of a vehicle’s life? Isn’t that why Chrysler introduced its “lifetime powertrain warranty?” And all this while you’re trying to squeeze suppliers for a 25 percent cost reduction? Auburn Hills must be incredibly {cash starved} confident to light this financial timebomb now.