While the political battle lines over increasing CAFE standards are being drawn in Washington, with the industry taking on both environmentalists and itself, a line of analysis that’s been around since 2009 is exacerbating the industry’s internal divisions over the impact of CAFE increases. A two-year-old University of Michigan study has been exhumed and expanded upon in a new CitiGroup report which makes a bold claim: CAFE will actually improve both sales and profits for the industry. And with Detroit taking the lead in resisting CAFE increases, one might think that the industry’s “turncoats” like Toyota and Hyundai, who have made marketing-led decisions to support CAFE increases, would be the main beneficiaries of these reports. Not so. According to this battle-line-confounding analysis, the biggest beneficiary of CAFE increases will be… Detroit. Madness you say? You may well be right…

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The combined market share of GM and Ford will reach 40% of the US market by the end of 2015. Yes, you just read that correctly. That’s a full five percent more share than what they have today, or a gain of just one percent a year. Call me crazy… but recall that Farago and I called the GM bankruptcy way before most industry observers (and certainly before the BoD of Old GM) could see it coming. Long time TTAC readers will also remember my call to buy Ford’s stock in April 2009 when it was trading in the three buck range. So calm those gut-reactions for a few minutes and let’s walk through this.

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On my way home from Toronto’s trendy Queen West nightlife district, I often take the long way home, up through the newly gentrified working class neighborhoods of the city’s west end, which gives the chance to drive past a row of exotic car dealerships. A quarter mile stretch is home to Rolls-Royce, Aston Martin, Bentley, Land Rover and Lotus. The Lotus dealer formerly sold Ferraris as well, and the place was a long-time haunt when I was a child, where the only two cars in stock were a Mondial T and a gorgeous British Racing Green Esprit S4.

The same Esprit later ended up in the hands of a neighbor, a geeky looking guy who was probably in IT and also owned an Oldsmobile Eighty-Eight LSS. I had no real idea about the Esprit’s mechanical content, just that it made a fantastic racket when it would tear through the flat, straight stretches of my neighborhood – and I loved the color.

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Though the EPA won’t actually announce its 2025 CAFE standard until September, the California Air Resources Board’ insistence on a 62 MPG standard for ’25 has the industry’s analysts and talking heads in something of a frenzy. Smelling the smoke on the breeze, Automotive News [via AutoWeek] trots out a range of interpretations of the proposed 62 MPG standard, from the frightening to the apocalyptic. Cost increases per vehicle for a 62 MPG by 2025 standard are estimated by government agencies at $3,500 “at most,” while Alliance of Automotive Manufacturers reckons they’ll run “as much as $6,400.” Sean McAlinden of the notoriously industry-friendly Center for Automotive Research figures the market will have to shift to 64% plug-in hybrids, at a price increase of $9,970 per vehicle, while the AAM adds that 62 by 20205 “could cut car sales by 25 percent, costing the industry 220,000 jobs.” And the EPA seems to be listening to the rising chorus of grumbles, as the agency’s Margo Oge soothed the locals on a recent visit to Detroit with the words

We will be very mindful — and I underline ‘mindful’ — of the consumer throughout this process. Unless people buy these new clean cars and trucks, and buy them in large numbers, everyone loses.

But if CARB wants 62 MPG by 2025, it will get it from the EPA. Which means the real question is simply how much will the standard actually add to per-vehicle costs? Is the industry inflating its numbers in hope of a teaspoon of federal sugar to help the medicine go down? Is the 62 MPG standard really an industry killer?

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For years now the Chinese automakers have been the bête noir of the global car industry, inspiring equal parts fear and contempt in boardrooms and editorial meetings from Detroit to Stuttgart. In an industry built on scale, China’s huge population and rapid growth can not be ignored as one scans the horizon for dark horse competitors. And yet no Chinese automaker has yet been able to get even a firm toehold in the market China recently passed as the world’s largest: the United States.

Certainly many have tried, as the last decade is littered with companies who have tried to import Chinese vehicles, only to go out of business or radically rethink their strategy (think Zap for the former and Miles/CODA for the latter). Others, like BYD (or India’s Mahindra), have teased America endlessly with big promises of low costs and high efficiency, only to delay launch dates endlessly. In short, a huge gulf has emerged between overblown fears of developing world (particularly Chinese) auto imports and the ability of Chinese automakers to actually deliver anything. No wonder then, that we found what appears to be the first legitimate attempt at importing Chinese cars to the US quite by accident…

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When you have a problem, there usually is no shortage of well-meant advice. When it emerged that power shortage is the biggest problem of the quake- and tsunami-stricken Japanese auto industry, or the Japanese industry as whole, good advice came pouring in. It ranged from “why don’t they just park an aircraft carrier by the dock” to “what’s wrong with using generators?” What’s wrong with them? Read More >

Back in 1976, the Italian automaker Fiat had been badly battered by a global energy crisis and the resulting malaise infecting the global auto industry. In what Time Magazine described at the time as “a devastatingly ironic example of petropower,” Col. Muammar Gaddafi instructed his Libyan Arab Foreign Bank to invest some $415m into the Italian automaker, giving it a stake that would eventually grow to some 14 percent of the firm’s equity.

By 1986, Fiat’s Libyan stakeholders were becoming more trouble than they were worth. In the wake of the Lockerbie bombings, the US introduced sanctions on Libya, and Fiat’s Libyan connection left its attempts to bid for US military contracts (particularly those related to Ronald Reagan’s Strategic Defense Initiative) dead on arrival. As a result, Fiat and its shareholders bought back the entire 14 percent Libyan stake in the firm, presenting the Libyan Arab Foreign Bank-controlled Banca UBAE with a $3.1b check. And, according to what a Fiat spokesperson told us yesterday, that is where the story ends. But thanks to the now-ubiquitous Wikileaks, we have found that this story may in fact go farther than that. In fact, as the evidence stands right now, either the US State Department is working with bad information (which major news sources have yet to correct), or Fiat is lying about its ties to the embattled Gaddafi regime.

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On Wednesday, March 9th, Toyota will announce its new long term strategy plan to the public. A core piece will be a push into emerging markets. TTAC has been following signs of this for a while. The signs range from a car, the Etios, designed exclusively for the emerging markets, to a factory up in the woods near Sendai, Japan, that looks very much like a prototype for Toyota’s latest export product: Low cost car factories.

The Nikkei [sub] agrees and says that “Toyota Motor Corp. is overhauling its strategy because it is now clear that emerging nations will replace industrialized ones as its most important markets.” Will replace? Wake up! Read More >

Today, I saw a new, and so far the finest specimen of Japan’s new export products: A car factory. Remember when the Nikkei wrote about a new Toyota factory in the Miyagi Prefecture with a U-shaped assembly line where the assembly time is cut down to a third? Not only did they get it wrong. They missed the best part of the story: Budget car factories, ready for export. Of course, that’s not how it was sold to the natives.

Ohira is a little village near Sendai. Sendai is a town two Shinkansen hours north of Tokyo. The area is famous for its beef tongue, not the hottest export item. Ohira was known for exactly nothing until Toyota decided in 2007 to relocate their factory from Sagamihara, in the outskirts of Tokyo, up into the woods of Ohira.

A year later, the whole region went into shock: Read More >

Japan’s Chief Cabinet Secretary Yukio Edano today took the unusual step of publicly voicing the Japanese government’s satisfaction with the U.S. government’s findings that Toyota’s electronic throttle control system is free of glitches, ghosts and malfunctions. It was a not so subtle reminder that politics weighed heavily in Toyota’s SUA scandal. Read More >

Chrysler’s Super Bowl ad starring the city of Detroit and its new 200 sedan may have captured the imagination of American industry-watchers, but its timing was highly inauspicious. As the ad was launched, Chrysler was being thrust into a kind of transnational custody battle between US taxpayers and the Italian government, a battle that underscores the ambiguous benefits of national bailouts of multinational companies. At the same time, Chrysler workers have once again made news by getting caught partaking in controlled substances during a lunch break, an awkward representation of the culture of the city that Chrysler is so desperate to re-inspire faith in. And even outside of the controversies swirling around America’s most challenged domestic automaker, there are signs that the phenomenon that can be termed “automotive nationalism” is outliving its usefulness. Chrysler may argue that “what we make makes us,” but appeals to the national or regional character of a car are not simply misleading… they’re downright dangerous.
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On the road, behind the wheel, there is no such thing as an accident. There is only a swelling potential of mistakes, building towards an event that happens or does not. You are drunk but the road is empty and you know the way; not enough potential. You are tired, the phone is ringing, and your left front tire is underinflated; now we’re talking. Then you swerve to avoid a pothole and the oscillation chain begins. Potential fulfilled. You are about to have an “accident”.

I say this because I do not remember the “accident” that put me on my back for nearly a month in a disinfectant-stinking hospital room, my eyes taped from the airbag burn, my arms broken, pumped-up on a cocktail of things I cannot even pronounce. They say my Town Car hit the edge of a line of Jersey barriers and flipped forward, landing on the top edge in a ballet of megaton kinetic energy that shattered the windshield and creased the roof down into the bench seats. Single car. I don’t remember. But I remember what happened afterwards.
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In recent years the organizers of the North American International Auto Show (NAIAS) have been especially eager to demonstrate that Detroit’s show is still relevant. Yet they crammed every OEM press conference save Volvo’s into a single day, leaving the second day for Li-ion Motors Corp., Mach 7 Motor Sports, and such. In years past there were two-and-a-half days of manufacturer press conferences, with little filler. Maybe next year everything will be back to normal?

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GM and its Korean battery partner LG Chem have signed licensing agreements with the Department of Energy’s Argonne National Laboratory, giving the two firms access to Argonne’s proprietary lithium and manganese-rich metal oxide mix for use in lithium battery cell cathodes. The material will need “several years of testing” according to The General, but could extend battery life, increase charging voltages and storage, and make Li-ion cells safer. Energy Secretary Stephen Chu says GM’s agreement with the publicly-funded lab

gives General Motors the ability to use cutting-edge battery technology throughout its supply chain. The licensing of this technology will also spur the renewal of the American battery industry, creating hundreds of new jobs where they are needed most.

But that’s not quite the whole story. According to press releases, GM’s deal with Argonne allows the automaker to

to use Argonne’s patented composite cathode material to make advanced lithium-ion batteries

But LG Chem’s agreement allows the Korean firm

to make and use Argonne’s patented cathode material technology in lithium-ion battery cells

In short, a publicly-funded lab has licensed technology in a way that appears to deepen the (partially) government-owned automaker’s dependence on a foreign firm. Confused? So is the mainstream media. And so, to some extent, are we.

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Bill Mitchell, only the second man to head General Motors styling when he took over from the monumental Harley Earl, was not a man about whom people were impartial. GM’s official history reveres him. Harley Earl’s family reviles him. His coworkers and subordinates at GM either loved him or despised the man. Even landmark designs that were signatures of his reign at GM Styling, the split-window 1963 Corvette Sting Ray and the boat tail Rivieras, are polarizing designs that had detractors, including some on the GM Styling staff. He admittedly ran that department like a dictator, though he rarely fired anyone. Mercurial in temper, he’d have screaming fits at his design staff, laced with the most vulgar epithets, then defuse the tension with an offhand joke as he left the room. Shamelessly ambitious and self-promoting, often taking personal credit for his staffs’ designs, had the term “larger than life” not existed, Mitchell would have coined it to describe himself.

By today’s standards of workplace political correctness, diversity and racial and sexual harassment law, Bill Mitchell was an atavistic throwback to an age when ethnic jokes by supervisors were uncomfortably endured by the brunt of that ‘humor’. An executive then could tell his secretary to order him up some hookers after a multiple martini lunch, knowing that she’d hold all calls and cover for him if his wife (or another executive) got jealous. As a result, in addition to whatever praise and criticism his aesthetic direction and management skills have garnered, Bill Mitchell’s legacy has been somewhat tarred with the brush of bigotry.

The question is are we being fair to the man? Are we applying contemporary standards to an era that was simultaneously more innocent and more evil in terms of racial, ethnic and other prejudice?

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