Looking for a campaign bounce before Obama sweeps the media away for his world tour, McCain is confronting the stagnant economy right at its rotten core. But touring the GM Design Center Dome at Warren, McCain may not have uncovered anything energizing for his campaign to latch on to. In fact, early reports seem to indicate that the Senator from Arizona is hardly bending over backwards for the General– or should that be forwards? At an early-morning town hall meeting at GM's technical center, McCain reversed his position on California's emissions regulation, saying "I guess at the end of the day I support the states being able to do that." The gaffery didn't end there. The Detroit News reports that McCain got to visit GM's Volt display, where he was joined by the top brass (CEO Rick Wagoner, Bob Lutz and pals). McCain thought it would be a great place to tout his "Lexington Plan," which includes a $5k tax incentive for buyers of zero-emissions vehicles. But without even entering the "long tailpipe" debate, McCain forgot to remember that the Volt actually has an internal combustion engine. Which means that it ain't exactly zero emissions. Luckily, GM employees have become accustomed to disingenuous pronouncements from their higher-ups. "It'd be nice to have a friend in Washington," said Don Jamison, 49, a GM bumper systems engineer. "Of course, he's politicking for votes, so he's going to be telling us all kinds of things." Roger and me that. 

In his most recent GM Deathwatch, RF raised the specter of "Bailout Fatigue." The Detroit News' Gordon Trowbridge agrees. Their man in Washington says to the government's preference for financial sector bailouts like Bear Stearns, Fannie Mae, Freddie Mac and Indy Mac will queer the pitch for Motown. Rep. John Dingell cries foul! "If Freddie Mac and Fannie Mae ask for a bailout and they get it, [automakers] should be able to ask and get it, too," says the Dearborn democrat. Former Michigan governor James Blanchard agrees: "government  seems to treat financial services with special care, and not care about manufacturing until the last minute." President Bush begs to differ: "If your question is, should the government bail out private enterprise, the answer is, no, it shouldn't." According to the Chief Excutive, the Fannie/Freddy "rescue" isn't a bailout because "the shareholders still own the company." And now a word from someone without a horse in the race. "Fannie Mae and Freddie Mac are fundamentally sound businesses," says University of Maryland economist Peter Morici, implying of course that the D3 aren't. Besides, Fanny and Freddy hold 91 percent of America's mortgage debt on houses under $470k, while Detroit only employs about as many workers as Chrysler did when it was bailed out in 1979. 

Edmunds Inside Line has dropped some cash for spy photos for Honda's new Prius-fighting dedicated hybrid model. And it seems that IL and Honda are in the same boat: they've both dropped good money on something that looks identical to a Prius. Go ahead and follow the link for actual photos, or you can just feast you eyes on any image online of a current Prius, because you're basically getting the same thing either way. KGP photography caught the forthcoming Honda Hybrid undergoing hot weather tests in California's Death Valley, going head-to-head with Honda's Civic Hybrid and a current Prius. They say the new Honda is larger than a Prius and will be a global model, though its name and performance details remain under wraps. Expect its finalized looks to be very close to the fuel-cell FCX Clarity, itself something of a dead ringer for the Prius. It's obvious that Honda wants a model that screams "saving the planet" as it drives by. Still, one can't help wondering whether a hybrid Fit (the standard version of which faces high demand from eco-types) wouldn't have achieved a similar statement with a more flexible package and more familial resemblance.

Still not sure if GM should focus on Corvettes as it cuts the fat from its racing and motorsport budgets? Check out this video of GM development driver Jim Mero lapping the Nürburgring in 7:26:4. For those that don't keep up on these things, that's over two seconds faster than the Nissan GTR's recent headline-grabbing jaunt on the Nordschleife. And seeing as the Nürburgring is the longest, baddest track out there, this is no small accomplishment. Especially when it comes to challenging the European perspective that American firms simply can't build cars that go fast and handle well. Add the Corvette's competitiveness on the GT racing circuit (when it's running on regular fuel instead of E85) to the mix, and it's one of the few things GM (and the whole of the American auto industry, really) has to be proud of right now.

With GM slashing wildly at any line items that aren't nailed down, how much of its precious cash will The General remove from its motorsports budget? The Car Connection poses the question based on the following choice snippet from Rick Wagoner's latest fireside chat o' doom: "We will implement significant reductions in promotional and event budgets, motor sports activities and back-office expenses." To be perfectly honest, cutting motorsport makes a lot of sense right now. After all, they're not winning many NASCAR races and TV ratings have been in decline for two straight years (although there's been some writers-strike rebound this year). So if GM's woes are based (even partially) on a lack of fuel-efficient vehicles, can you win on Sunday and sell on Monday when gas is over $4 per gallon? I'd hope GM will cut almost all of its motorsport to focus on the only product that even remotely relies on racing credibility: Corvettes in GT racing. Your thoughts?

After its M250 concept went down in flames, many thought Lotus wouldn't try to build a "real-world" sportscar again. Though the Europa brought a little more livability (and a lot more ugly) to the hardworking Elise platform, it hasn't done much for Colin Chapman's progeny. Car reports that Lotus is having another go, reviving the M250 concept back with a new set of clothes and a new 'tude. With a 276hp Toyota V6, the Eagle (not its real name) does zero to 60 in five seconds, hits 160mph and laps the Nurburgring considerably faster than its Elise stablemate. Unlike the spartan Elise, the new 2+2 offers traction control, cup holders, AC, Alpine ICE and antilock brakes. At about $90k, the 2009 Eagle is a little short of the "911 for Cayman money" goal. Speaking of which, the new, 2010 Porsche Cayman jumps from 245hp to 265hp. The Cayman S will offer 320 directly-injected horses. And here's news: the S gets an optional PDK dual-clutch gearbox (all versions will be more fuel-efficient). So it's Lotus prestige and limited production versus Porsche performance and cost advantages. I call dibs on the comparo.

While its competitors were bought out (Volkswagen – Audi) or formed abortive alliances (Daimler – Benz), BMW has long been fiercely, proudly, publicly independent. So much for that, then. These days, The Boys from Bavaria are embracing global alliances, developing EVs with Magna, MINI engines with PSA, and sharing small car platforms with Fiat. Und now BMW is partnering with longtime nemesis Mercedes-Benz. Auto Motor und Sport (AM&S) reports that BMW and Daimler plans to share components across each other's car lines. BMW development boss Klaus Draeger says ja, it's a logical extension of BMW and Daimler's hydrogen fuel-cell technology development thingie (available never). At the mo, we're talking air conditioning units and brakes. Soon, it'll be hybrid technology and robot tanks [just kidding, I think]. With so much technology to share, so much brand image to protect and Daimler's history of stiffing Chrysler, this is promises to be a genuine disaster.

CNBC reports that Toyota is revising its sales estimates for 2008. ToMoCo had projected sales of 9.85m units worldwide. They've dropped expectations by 300k, setting a new goal of 9.5m units. Though sales are down in Europe and Japan, Toyota is blaming the stagnant American market for the expected decrease. Having already announced production cuts at three US plants, this could be bad news for Toyota's bid to become the global volume sales leader– were it not for the fact that its competitor for the title is General Motors. While Toyota is still likely to outstrip GM despite the sales goal cutback, it's unlikely to meet GM's single-year sales record of 9.55m set back in 1978. ToMoCo shares are currently underperforming even the weak Japanese transport equipment subindex, thanks to sell-offs in anticipation of slowing demand. But, Naoki Fujiwara, fund manager at Shinkin Asset Management, reckons that Toyota's high dividend and long-term positioning make it a good buy. Roger that.

With the traditional SUV well and truly toasted, automakers are going back to the drawing board to tempt consumers back into their AWD profitmobiles. Sales numbers indicate that two-mode hybrid SUVs do not return sufficient mileage to justify their high prices. Resurrecting the segment will require even more sophisticated technology. At least that's what Nissan reckons. The automaker's displaying its vision for THE SUV OF THE FUTURE! Yes, it's a fuel-cell-powered version of its X-Trail Ute. The Evening Standard reports that Nissan unveiled its alt power concept at London's Imperial College. The FCV X-Trail represents the pinnacle of Nissan's 12-year fuel cell development program. The fuel cell is 40 percent smaller than afore, motorvating the FCV X-Trail up to 300 miles on a tank of hydrogen. The hydrogen-battery electric drive is good for up to 93 mph in EV-like silence.Of course, the research model cost millions of dollars to develop and assemble. According to Nissan spokesfolks, "the cost of the system is still too high for mass production." Nissan engineers promise to sort all that shit out [paraphrasing] by 2015. Unless of course battery development outstrips hydrogen-based technology. Which it probably will.

High gas prices are a bitch. But other factors prevent the "build a small car, stupid" strategy from rescuing the auto industry. Like the fact that steel prices have increased 60 percent this year. In the compact car market, where price point is king and profit margins are razor thin, automakers are being forced to raise prices to maintain what little profits exist. Bloomberg reports that Hyundai will increase prices on its budget cars for the second time since June, due to high steel and other component costs. The good news: Hundai's US sales are down "only" 2.3 percent and actually up 1.3 percent since the last price increase. The bad news: even the second price increase "isn't enough to cover the higher costs, but it's hard for them to boost prices more without crimping sales.'' And it gets worse too. All of Hyundai's Korean production will endure stoppages this week, thanks to labor demands for a nine percent wage increase. With sister company Kia holding on to its rock-bottom pricing, it's no wonder that Hyundai is heading upmarket. But will consumers (particularly in crucial developing markets) follow?

One of the many important lessons I learned from my father was a healthy disrespect for partisan politics. A self described "pox-on-both-your-houses" independent, the elder Mr Niedermeyer has only ever donated to one political campaign in his entire life: the effort to repeal the federal 55mph speed limit. Though he now seems more interested in hypermiling than high-speed hoonery, it may be time for the paterfamilias to reach for the checkbook once again. The Wall Street Journal reports that Senator John Warner has written the U.S. Energy Secretary and the Government Accountability Office asking them to study the possibility of once again lowering federal speed limits. Though Sen. Warner says he's not necessarily advocating a return to the double-nickel, he wants to bring the issue before congress before the fall election recess. "I am every day trying to work on concepts to achieve some conservation now," Warner says. "I mean N-O-W." In his letter, Warner requests that the feds determine the speeds at which modern vehicles operate most efficiently. It's all a bit moot of course, as NHTSA data shows that three quarters of drivers broke the speed limit within a month of being interviewed. Oh, and Senator Warner retires this fall. And, as the WSJ aptly points out: "The speed limit issue isn't really about any of that. It's a powerful, easily grasped symbol of the freedom, mobility and affluence Americans enjoyed when energy was cheap. Letting go of that sense of freedom won't be easy, even if it is the sensible thing to do." 

It's no secret that when strapped for cash the Detroit automakers often turn to Uncle Sam. Typically, these efforts involve a bailout, loan guarantees or tax breaks. But the Detroit News reports that Ford is trying a new method of squeezing cash from the feds: suing for overtaxation. Last Thursday, FoMoCo filed suit against the IRS seeking over $445m in interest on taxes it overpaid between 1983 and 1989, and between 1992 and 1994. There's no dispute from the IRS that Ford overpaid its taxes in those years, but… "We believe the IRS failed to pay the correct amount of interest," said Ford spokeswoman Marcey Evans. "We tried to resolve it at the administrative level without success. Because of the size of the amount and the dispute, we had no choice but to file." And having backed away from its promise to restore profitability by 2009, Ford could sure use a few hundred mil right about now. If Ford wins this lawsuit, it could cement its status as the best-positioned American automaker during the next several years. Then again, when that distinction is being earned by lawsuit, you have a good sense of how screwed American automakers really are.

"Everyone" knows that electric vehicles (EVs) are going to be a big part of America's long-term transportation mix. Unfortunately, the sector is currently dominated by either largely hypothetical super-expensive roadsters, far-off Hail-Marys and glorified golf carts (e.g. Zap's Xebra). At the mo, Chinese EVs are the most viable of the three for everyday use. While their classification as low speed vehicles (LSVs) helps the not-so-crashworthy vehicles circumvent strict safety standards, it limits the EVs to a 25mph top speed AND restricts them to roads with 35mph speed limits or below. The Tennessean reports that their legislature has joined Montana and Washington in lowering the regulatory bar for EVs. Starting July 1, Tennessee's LSVs are allowed to drive up to 35mph on roads with up to a 40mph top speed. The law reclassifies electric LSVs as medium speed vehicles (MSVs) if they are physically able to reach the 35mph top speed (which, ostensibly, excludes golf carts). Some 211 qualifying EVs have been registered in The Volunteer State so far. If more states adopt higher speed limits for EVs, there may be enough market demand to justify investment in more capable, versatile and SAFE battery-powered vehicles.

Chrysler set up its "ENVI" electric vehicle (EV) program  last September to develop advanced propulsion technologies for the Pentastar brand. Ten months on, Chrysler's green-eyed program has finally produced a weapon for Chrysler to use in the mounting EV wars: a press release. Today's Detroit Free Press reports that "Chrysler LLC's answer to the much-anticipated Chevrolet Volt could be three to five years away." Which is like telling the kids in the backseat that "we'll be there when we get there" five minutes into a road trip. So why even report on Chrysler's late-starting EV hopes and dreams? Because the dealers in the backseat of Chrysler's road trip to bankruptcy are starting to get antsy for some fuel-efficient product. Says one dealer: "You don't have to have every car — not everyone wants a hybrid — but it's obviously a profound proportion of the industry right now." J.D. Power's mob predicts that Chrysler will launch [non two-mode] hybrid versions of the Caravan, Avenger and and Journey over the next five years. But just like GM, Chrysler wants to do some leapfrogging. "If you want to go ahead and make everything a full hybrid system, fine, but what if you can turn everything into a range-extended vehicle and take it beyond the 2020 campaign for 35 miles per gallon?" asks Chrysler spokesperson Nick Cappa. "The new technology ENVI is developing could do that." The operative word here being could. In five years. Possibly.

Motor Trend (MT) is filling-up bandwidth and hyping-up baby boomers with a post on the forthcoming New Beetle Mk II. The bulk of it isn't all that earth-shattering: there will be a new New Beetle. MT reckons it will be based on the next Golf and it should arrive in 2010. There will likely be a hybrid version. Motor Trend says VW should (or could) make the New Beetle a hybrid-only model since "its distinctive style lends it the same kind of instant recognition as the Toyota Prius." Except that the Prius is actually aerodynamic; a far more important feature for efficiency-oriented cars than boomer nostalgiamobiles. But that isn't even MT's wildest bit of speculation. They speculate that VW's forthcoming city car, the up! could be restyled to look like a "Baby Beetle." Hmmm. The VW up! was planned as a rear-engine car, and it will cost enough to place it in the "small-but-premium" category. By giving it a Beetle-inspired shape, VW could use nostalgia to trump the price point. A light, rear-engined baby Beetle would capture more of the original kaeferwagen's appeal than another reskinned Golf. But there's a small problem with the theory. As Mr Berkowitz pointed out, the up! is no la rear-engine, rear-wheel drive car. That doesn't mean a baby Beetle isn't coming. But if it does, it will be just another reskinned FWD VW. Or will it?