The KitchenAid Espresso Pro Line—delivering 15 bars of pressure with a separate steam unit pump. Just holding it in my hands at the store convinced me. Solid weight, no rattle. Cast iron and proper machining, no plastic cheats anywhere. I was tempted to take the lid off and peek inside but didn’t. Given what would follow I should have pulled out an Umbraco-set and given it a go.

The steamer didn’t steam. Didn’t matter what setting I used. Water came out of the nozzle, but nothing you’d call steam. Dreams of frothy Cappuccinos were postponed, and I returned the unit. Got a phone call the same day telling me to come by and pick up a new one. Apparently, the problem was a well known one, and dismantling my Pro Line to fix it was too much bother.

I didn’t mind. Have never had the misfortune to get a true lemon from a car dealer, but as I understand it, you have to threaten them with abducting their closest relatives before they’ll even dream of letting you have a new replacement.

The Pro Line now delivered a fine jet of steam, and I was shooting Cappuccinos with the dexterity of a Milanese barista.

Until a few weeks in when the 15-bar pressure dropped to a trickle. I checked the metallic filter but it wasn’t clogged nor were the five feeder tubes. But the pressure wouldn’t have kept Costeau alive in the kids-only end of a pool.

I returned to the store. This time, the phone call came after a week. KitchenAid were pleased to offer me a replacement unit, “would I like the same color?” By now I had developed buyer’s remorse. When first wondering about which espresso-maker to buy, I had checked out a few. The exterior design of the KitchenAid, as well as the build, had lured me—but I had been thisclose to buying an Italian one. I knew that if I requested a switch they’d go along . . .
Couldn’t possibly be so unlucky that I’d get a third red lemon?

You bet I could. This one also developed a leak. A different symptom this time around. 15 atmospheres builds pressure, and if the hoses and tubing are not doing what they’re supposed to, liquid under pressure finds ways of escaping. The two dials fogged up from the excess moisture. I kept on making espressos that weekend. By Sunday evening the leak had developed into a spill, with water seeping out onto the kitchen bench. When I lifted the Pro Line the seep became a splash. Submerged electrics. Great.

I returned the unit. And got a new one. If you check Amazon and other sellers, you’ll find there are “remanufactured” Pro Line Espresso makers. These have been returned to Kitchenaid for a bionic redo. Bad initial design has its cost, and for Kitchenaid it must have been substantial. Someone had screwed up when spec’ing this espresso maker.

At this point I knew I’d never buy anything from KitchenAid again, another side effect of bad design. Disappoint a customer once too often, and you’ll find bagging them again just about impossible.

The fourth unit lasted six months before it blew a gasket, literally. This time it was the steamer unit, bringing me full cycle. Turned out that the seal of the top entry valve would burn off when the steam heater was left on. By now I was really longing for that Italian espresso maker—I knew it could be left on from now until 2012 without any trouble. A friend had one at work and always had it ready to go.

I didn’t return the clunker. Took it apart. What the heck. Even if they offered me another replacement it was just too much pain. I wanted an espresso maker that heated quickly (check), that had the proper pressure (check) and that was reliable (uncheck). The Pro Line was not it.

Disassembling was fun, though I can understand why they’re offering customers new ones. Fixing this unit is at least a day’s job, even with replacement parts handy. I’ve located the cause of the pressure loss, why leaks develop, and why the design makes the steamer moody. They haven’t been on a GM cost-cutting binge when putting it together. The parts are good, but the pressure and the heat build up is overwhelming the tubing and seals, which can’t keep up with repeated use.

I feel like the owner of a 2001 Land Rover Freelander, who finds out that LR effed up a whole engine design and that your only hope is a new engine under warranty.

Building a consumer product requires experience-based initial design, good prototyping, and some proper testing before you release it. KitchenAid, like quite a few car makers, are doing their testing in the field. Not recommended.

It seems straightforward enough: federal vouchers for old clunkers. Takes old heaps off the road. Stimulates new car sales. Done. Of course, we are talking about a government program here. And that means that H.R. 1550, the “Consumer Assistance to Recycle and Save Act of 2009,” has quickly become a cat fight amongst interested parties (manufacturers, dealers, dismantlers, after-market parts makers, trade protectionists, etc.). If passed, 1550 will surely evoke the law of unintended consequences. At the moment, the bill’s been referred to the House Transportation and Infrastructure committee, so that august body can breathe their magic upon it. Ahead of that joyful event, 1550 contains some HIGHLY contentious sections. How about a stricture for the new car purchase that stipulates different minimum levels of highway fuel economy depending on whether the vehicle was manufactured in the United States or “North America” (i.e., Canada or Mexico)? Yes, way.

The money shot: Section 3 mandates a $4K voucher for “passenger automobile assembled in the United States with a minimum highway label fuel economy of 27 miles per gallon.” The same four grand goes to “passenger automobile assembled in North America with a minimum highway label fuel economy of 30 miles per gallon.” I guess our neighbors to the north and south must. Try. Harder.

If the new “passenger automobile assembled in the United States” achieves that same [higher] 30 miles per gallon highway mpg standard, the US vehicle gets an extra grand: a $5K voucher. Oh, and if that “passenger automobile assembled in the United States” happens to be an electric or plug-in electric vehicle, the voucheree scores $7500. At the moment, the money would go to someone looking at a $100K+ Tesla Roadster or one of those NEV golf cart thingies.

AND if the new “passenger automobile assembled in the United States” only achieves 24 mpg highway, don’t worry too much. The feds would like to present you with a $3K voucher.

The bill also stipulates a lower minimum for trucks, ’cause we don’t want to leave out trucks, a domestic mainstay, do we? “Non-passenger” vehicles must achieve “only” 24 miles per gallon highway to qualify for that $5K voucher. [Look for some tall ass gearing if this passes.]

As for the imports—Saturn Astra, Toyota Prius, Honda Fit, etc.—their buyers are  SOL, voucher-wise. Which, of course, threatens to evoke a trade war. Which could well be the last thing the US economy needs right now [see: Great Depression].

As for the cost to dealers and dismantler of making all these sales, which should generate some kind of profit, 1550 throws in $50 per transaction. Hey, why not? It’s not as if the dismantling industry has a history of title washing or any sort of thing. And while we’re on the subject, who’s in charge of making sure all the clunkers are crushed, the toxic waste removed and the registrations destroyed? Uh . . .

At the moment, the Automotive Aftermarket Industry Association (AAIA) is 1550’s most vociferous opponent. Well they would be, wouldn’t they? Aaron Lowe, the org.’s vice president of government affairs for the AAIA, sent out a press release countering any suggestion that their opposition has anything to do with their members’ profits.

“Proponents of the Cash for Clunkers bill say that it will benefit the environment because it will take older cars off the road, replacing them with new, more fuel efficient vehicles… What will become of all these old cars? The answer you don’t hear from the backers of Cash for Clunkers is that these scrapped vehicles will more than likely be sent to landfills, creating more pollution, not less.”

The AAIA has created a website—fightcashforclunkers.com—to carry their banner forth. While there’s a debate to be had about the relative pollution of old vs. new, let’s file this one under Where’s MY NSFW Bailout?

The Cash for Clunkers program would earmark federal funds for car owners to trade-in their sport utility vehicles in exchange for vouchers to be used to obtain newer, more fuel efficient vehicles. On the surface the program may sound reasonable, but its consequences will increase the nation’s carbon footprint, create issues for those not fortunate enough to afford the cost of a new vehicle and be a waste of taxpayer dollars.

The Fight Cash for Clunkers organization… instead favoring tax credits to help upgrade, repair or maintain older vehicles, as well as tax deductions for interest on car loans and state sales tax.

Death would be too good for this bill. And the idea that the feds should do something, ANYTHING, to stimulate the US new car market is sadly, badly mistaken. The best thing our government could do for the UScar industry is to let Chrysler and GM go C11 and/or C7.  The resulting flood of new, highly discounted product will drive down prices and, perhaps, encourage buyers to trade-in their old cars for new.

On Thursday, Audi of America president, Johan de Nysschen, will meet with journalists to explore the question “how has the international recession impacted Audi and the luxury segment?” The obvious answer: sinking sales. The not-so-obvious conundrum: what next? How does a luxury brand position itself for survival when class war is breaking out all over? Of course, the professional pundocrats aren’t using “C” word just yet. The euphemism du jour for the “where’s MY bailout” anger that may or may not be sweeping the nation—as taxpayer-owned AIG execs collect their bonuses and Bernie Madoff’s wife shelters in a penthouse funded by her husband’s ill-gotten gains—is “vengeful populism.” Whatever you call it, Audi and its luxury competitors are sitting in the cross-hairs of growing anti-conspicuous consumption. The recession/depression is going to kick the NSFW out of them.

Audi, BMW, Cadillac, Lexus and Mercedes have all poorly positioned themselves for these belt-tightening times. All five brands spent the last decade or more stretching their model range down into near-luxury and even non-luxury pricing territory. Not so long ago, none of these brands were available to average buyers (save on used car lots, where maintenance costs kept them clean of ten-foot pole marks). All five luxury brands couldn’t resist picking the low-hanging fruit, convincing themselves that they could democratize an exclusive brand.

Of course it worked. What aspirational car buyer wouldn’t prefer an up-market marque to a Ford, Hyundai, Toyota, Nissan, etc.? Thanks to a combination of affordable models and cheap credit, the “Big Five” have all experienced sales growth that makes Jack’s beanstalk seem like a redwood. BMW’s inexpensive leasing deals, in particular, created ultimate profits. But the move down market has created a vast flock of prodigal, homeward-seeking chickens.

For one thing, profits at Audi, BMW, Cadillac, Lexus and Mercedes are now dependent on relatively high sales volumes. In 2007, Mercedes-Benz NA sold 253,433 vehicles. Audi’s US sales jumped 11 percent, to 93,506 vehicles. Cadillac’s sales rose 13 percent. BMW’s ascended by 14 percent. Lexus took a hit that year, but they still managed to shift 342,000 units in North America. Compared to the mainstream manufacturers it’s small beer; but it still requires many pubs to serve it. All five luxury brands expanded their dealer networks. Which are now, or soon will be, struggling for survival. Last month, Lexus sales took a 35.8 percent year-on-year dip. Audi lost 25.4 percent of its previous year’s monthly totals. And so on, right on down the line.

Brand equity has also taken a huge hit. Although you might think the luxury car brands’ democratization makes them less vulnerable to a class-related backlash, nope. Let’s face it: it’s not a great time to be seen “splurging” on a luxury car. The car brands’ upmarket cachet has suddenly turned into a liability. Real world employees worried about their paychecks—and that’s all of them—are not going to stunt and floss in the company parking lot behind the wheel of a brand new Audi, BMW, Cadillac, Lexus or Mercedes. They know that rolling phat in a luxury-branded whip would be tantamount to wearing a little button emblazoned “overpaid.” Fuhgeddaboutit.

Even worse, the customers with real money, where profits fall like rain, have already left the building. They’ve opted for more genuinely exclusive marques. Audi and Mercedes recognized this problem before the axe fell; buying (Lamborghini), creating (AMG, S-Line) or resurrecting (Maybach, Bugatti) über-luxury off-shoots. But even if Audi and Mercedes managed to skim the cream off their own coffee, they face the same danger as their less brand-savvy luxury competitors: stagnation. Now that upmarket brands offer a wide range of models, cash-strapped or cash-aversive buyers can either stand pat (i.e., not trade-up) or, worse, opt for less expensive alternatives within the brand family.

So why would Mercedes create the GLK, when it already offers a full-size SUV AND a smaller alternative? Why would Mercedes market the GLK as a vehicle containing the same technological excellence as its bigger brothers, only in a smaller (read: cheaper) package? The Bama-built German “cute ute” represents a failure to communicate luxury brand values—and price points—within Mercedes’ corporate culture. It’s the same hubris that led to the Audi A3, BMW 1-Series, Cadillac CTS (sorry guys), Lexus IS250 and Mercedes C-Class. Short term greed over careful, long-term brand husbandry.

I know TTAC’s Best and Brightest have hashed this out many times. Many of you don’t see a price point as a brand barrier. But it’s petard hoisting time folks, and you’re about to see the brands reap what I said they’d sowed. In this suddenly, violently downsized, flash-aversive sales environment, brand-extended luxury automotive marques must either redefine “luxury” (as reliability, longevity, etc.), move back up-market (a slow, painful process) or die. And the longer the downturn lasts, the greater the chances that one or more of these brands will never recover.

America is addicted to oil. I’m sure this revelation ranks with “Chrysler’s in a spot of bother” on the scale of surprises. Everyone from the Sierra Club to President George W. Bush has lectured the country about its dependence on oil in general and foreign oil in particular. Pistonhead, blame thyself! Transportation fuels make up between 25 and 30 percent of total US energy demand. Needless to say, nearly all of that fraction is petroleum. Nicolas-Joseph Cugnot and the Stanley twins may have powered their jalopies on steam (even then, the Stanley Steamer was kerosene-fired), but modern vehicles are all about the distillates, baby.

A number of highly profitable oil companies provide America its 20M barrels per day (bpd) “fix” of refinery products. We mainline about nine million bpd of gasoline and shoot up another four million bpd of diesel fuel. We chase that with a 150K bpd shot of lubricants, and our cars snort along lines of oil-derived asphalt to the tune of another 500K bpd.

The “high” from all this hydrocarbon huffing: the world’s most mobile society. Americans can go just about anywhere we want anytime we please, bus schedules be damned. And we do. We pack like lemmings into our combined 250 million shiny metal boxes and rack up three trillion miles per year. That’s over half a light-year.

Yet all is not well. Like any other addict, American society is developing resistance to its petroleum addiction. We’re consuming more and enjoying it less. Using statistics on fuel use, vehicle miles and time spent driving, the math tells us that the average American car travels at five mph and gets 15 mpg in the process. While these averages may be somewhat misleading, there is plenty of research to confirm what we’ve all observed: we’re driving longer, going slower and consuming more fuel in the process.

Furthermore, like any other drug, petroleum has numerous side effects, for both ourselves and our society. From oil spills to asthma, from funding terrorism to expanding our waistlines, from purchased politicians to suburban sprawl, our addiction has downsides both obvious and subtle.

The first step to dealing with any addiction is admitting you have a problem (done!). The next step is figuring out how you got there. With petroleum, cars were clearly the gateway drug to our dependence. While oil had been used on a small scale since Biblical times, it fit the internal combustion engine like cocaine on dopamine receptors.

And the first thing those engines wanted was more petroleum. Oil companies, like other drug dealers, were only too happy to keep supplying their addicts customers with their products, and at enormous profits.

The American automotive/petroleum party lasted nearly six decades, transforming our landscape, culture, and commerce. Only when party-pooper OPEC didn’t bring their stash in the 1970s did Americans realize that the buzz wouldn’t go on forever.

But America’s sobriety was short-lived. We rejected President Carter’s stern temperance lectures and embraced President Reagan’s Morning in America optimism. When downsized cars, fuel economy standards, lower speed limits and other efficiency measures caused oil prices to collapse in 1986, America partied until it was 1999 . . . and a few years beyond that. Even buzz-kill Middle Eastern wars and the events of 9/11 didn’t stop the music.

To the contrary, after substantial fuel economy gains from the 1970s to about 1990, US fuel economy fleet averages have leveled off at about 22 mpg for cars and 17 mpg for trucks/van/SUVs. Even that level-off is a minor miracle given America’s stoner-with-munchies appetite for ever larger, heavier and faster cars.

Compare, for example, a 2009 Honda Accord (4 cylinder) to a 1990 model. The new car has 10 inches, 600 lb, 2 EPA size classes, 70 horsepower, and 2.5 fewer seconds in 0 to 60 mph acceleration over its ancestor but with nearly identical fuel economy.

It wasn’t until oil prices more than tripled between 2003 and 2008 that Americans once again started coming down off of their happy horsepower binge. Hybrids replaced HUMMERs as the cool personal fashion statement, and even the truck-dependent Detroit 2.8 started touting fuel economy again.

Despite this cultural shift and our recent economic woes, America is still a petroleum junkie. Consumption is only slightly off from previous years and US oil imports remain at near-record levels. Economic uncertainty means fewer people buying newer fuel-efficient cars and less capital for developing the next generation of miserly models.

However, we are not necessarily doomed to a massive post-petroleum hangover. Petroleum may be the easiest (and until recently the cheapest) way of fueling America’s automotive habit. But it is not the only way. In our next installment, we’ll look at some 19th-century chemistry that may keep us rolling into an automotive future.

My brother fixes industrial machinery for a living. The range of skills he needs—mechanical, electronic, hardware, software, CNC stuff, as well as troubleshooting abilities—makes that kind of work as technically demanding as just about any job there is. You can’t learn to do what he does in a university. So for-profit ventures like ITT Technical Institute, Universal Technical Institute, New Horizons computer training centers and others fill a needed role. It’s understandable also that during difficult economic times those schools would market themselves aggressively to people looking for new career opportunities. There’s a fine line, of course, between providing educational opportunity and exploiting people’s desperation about the economy.

Universal Technical Institute and its affiliated schools (e.g., Motorcycle Mechanics Institute, Marine Mechanic Institute, and NASCAR Technical Institute are reputable institutions. They have an A+ rating from the Better Business Bureau and I wasn’t able to find any consumer complaints online from disgruntled students. They provide certified technician training programs for major automobile and motorcycle companies like BMW, Honda, Mercedes-Benz, Ford and Porsche, so UTI is obviously not a schlock outfit.

UTI is also a major advertiser on the Fox-owned SpeedTV cable network. UTI advertises and arranges product placement on SpeedTV shows as well as buys big chunks of time for infomercials. During the Daytona 500 weekend and Speed Week coverage on SpeedTV, UTI ran an ad for their NASCAR Technical Institute in Mooresville, NC. UTI advertises that students get training on the latest technologies and up-to-date technical information from the auto companies with which UTI works. The NTI training may be up-to-date, but the ad that UTI is running is so out-of-date that it makes them look out of touch and incompetent.

UTI stresses successful job placement in their advertising. The NASCAR Technical Institute ad currently running on Speed, though, is oblivious to the changes in NASCAR due to the economic crisis. With all the team mergers, consolidations and technical partnerships, at least 1000 employees of NASCAR teams have been laid off. Jeremy Mayfield raced his way into the Daytona 500 this year with a team made up entirely of people laid off from other race teams. Meanwhile, NTI keeps talking about all the opportunity there is for entry level jobs with NASCAR teams.

The NTI ad features Kyle Petty talking about how Petty Enterprises has six graduates of NTI working for them. Now I like Kyle Petty. Growing up in the shadow of a legendary grandfather and a superstar father, he’s managed to be his own man and has done a lot of good with the Victory Junction Gang camps.

The ad had to have been filmed some time ago because Petty Enterprises no longer exists as a race team. One of the aforementioned mergers was a deal Richard Petty made with Gillett Evernham Racing, which is now known as Richard Petty Motorsports. The Petty race shop has been closed since the end of last year, all the employees have been laid off and the team’s assets have been liquidated. The racing team Lee Petty started is no longer and King Richard is leasing his face and name to George Gillett Jr., who has deep enough pockets to fund a competitive team.

Like I said, Kyle’s not the bad guy. Just like the six NTI graduates that used to work at Petty Enterprises, Kyle’s out of a NASCAR job. He’s not racing at Daytona for the first time in 30 years. I’m sure he doesn’t mind the residual payments from NTI for doing the ad, but it must be a little embarrassing for him to watch the ad while the Speed announcers keep mentioning the economic changes in NASCAR.

UTI isn’t a bad guy either. I spoke to Valerie Monaco, head of public relations for UTI and she said that she’d check with their advertising production team and get back to me. I made it clear that I didn’t think they were doing anything wrong, just that the situation had changed and the ad made NTI look silly.  She pointed out that ad buys for events like Daytona Speed Week are made well in advance and as is advertising. I have to say that Monaco kept considerable good humor for someone who was just told that her employer looked foolish.

I’m sure the ad buys were done a long time ago. I’m also sure that UTI wants to keep ad production costs down, but considering how this ad undermines their credibility, I think they’d at least consider pulling it. UTI isn’t trying to be deceptive here, they’re just not on the ball. The people they are marketing NTI to are knowledgeable NASCAR fans and know what’s happened with Petty Enterprises so the ads aren’t doing NTI any good.

Today’s automotive industry stands on the cusp of great change. The automobile will remain but its powerplant will change and evolve. Within two to three decades, today’s hybrid systems will look like museum pieces, as engineering resources around the world are devoted to alt power propulsion. For the United States to participate fully in this coming technological revolution, it needs a healthy automotive industry. It must fix the fundamentals.

The Presidential Task Force on Automobiles is supposedly addressing Detroit’s structural problems. But one thing will not change: the automotive industry requires massive capital investment. The blistering pace of technological innovation forces every automaker to invest heavily in research and development, to prevent obsolescence and provide a marketing advantage. Rapidly evolving government safety and environmental regulations place enormous pressures on resources, in both the short (three to five years) and long term (ten years and beyond). And competition for consumer loyalty has never been more fierce—or expensive.

General Motors and Chrysler have reached the point of no returns: their capital bases are essentially non-existent. Even if the US government wrote GM a check for $100B and gave Chrysler $30B, it’s highly unlikely either company could regain profitability. It’s still not enough money. In fact, to paraphrase Don Henley, there’s not enough cash in the world to resurrect their fortunes.

It’s not all about money. Chrysler and GM’s de facto bankruptcies (and Ford’s potential C11) are not merely the result of the credit crisis (as they claim). Their plight reflects decades of philosophical weakness: management’s determined and misguided pursuit of short-term gains at the expense of long-term goals and sustainability.

Don’t blame Wall Street. Chrysler’s private equity owners have proven that Motown makes its own bed. As does history. For decades, Chrysler, Ford and GM have failed to address their own weaknesses and their competition’s strength in their core market. Instead, The Big Three have looked elsewhere for profits and growth. Sometimes this quest occurred within the industry (through acquisitions or global expansion), sometimes without (non-related industries with which they had no experience).

Unfortunately, it worked (right until it didn’t). The bottom line appeared healthy, even as Chrysler, Ford and GM surrendered US market share. Worse, risk avoidance and short termism at the top trickled down throughout the entire management system. Up and down the executive food chain, the message was the same: don’t rock the boat. Why would you? There was plenty of room—and money—for yes men.

Outside reformers never stood a chance, even when the need for root and branch reform became obvious. When GM acquired Ross Perot’s EDS—a business with solid margins and rapid growth though wholly unrelated to vehicle design and assembly—it acquired a proven entrepreneur with an instinct for action not discussion. Board Member Perot was paid to go away. In 2006, investor Kirk Kerkorian installed former Chrysler and IBM finance executive Jerry York on GM’s Board. York pleaded for GM to cull brands and address domestic woes. York and Captain Kirk were shown the door.

Instead, The Big Three embarked on countless, indeed endless rounds of restructuring, reorganizations and renegotiation. Every attempt at incremental change proved fruitless. Head counts were reduced, production curtailed, suppliers squeezed and labor contracts restructured. None of this mattered to consumers. Motown’s mission critical U.S. market share continued its inexorable march downwards.

To hit reset, The Big Three must refocus on their core operations. To start, they must mimic Michelangelo’s philosophy when creating David: they must remove the bits that aren’t David. GM’S foreign operations are, to them, a lost cause. They must abandon their dreams of global domination as unaffordable and, frankly, unattainable. Then they must slice brands, kill models and cull dealers.

Second, they must recapitalize. Whether it’s by government debtor-in-possession financing or Chapter 7 re-imagining, they must make return as much, MUCH smaller companies. Third, they must redefine their corporate culture; management rewards must be tagged to long term reinvestment and sustainable profits, not short term “boosts.” And lastly, a new generation of leaders must be installed: outsiders with fresh ideas and a track record of success in other industries.

Ford Motor Company provides a template for the future. Just a few years ago, Ford was no better off than its Detroit brethren. Bill Ford, Jr. threw in the towel and tapped Boeing exec Alan Mulally to run the family firm. Mulally’s focused Ford on a few key markets, forced commonality of platforms around the world, and eliminated distractions (e.g., Jaguar, Land Rover and, soon, Volvo). Equally important, Ford has continued to strategically invest in new technology for new products.

Lead, follow or get out of the way. The feds should force GM to follow Ford’s example. Chrysler should get out of the way. And then, with American talent and determination, our auto industry can once again be the envy of the world.

GM and Chrysler both must go bankrupt. Only then, out of the ashes, can a new company emerge, taking control of the best assets of both companies, with a new management team and a clean balance sheet.  All financed by private equity and bank debt, not the government, and free from the political machinations that would result. It’s pure business—of making and selling vehicles here in North America and in selected markets around the world. It’s past time for the old empire of GM to make room for a new vision of the future based on market realities.

Before we examine the future, it’s worth repeating: anyway you slice and dice General Motors (and its sister sibling Chrysler), there’s not a chance to resuscitate the company in its present form. Trying to do this out of bankruptcy makes no sense at all, even with various parties making accommodations of trading debt for equity, wage/benefit cuts, or simply making “shared sacrifices.” In the end, the balance sheet still has too much debt, brands and dealers. Not mention the fact that the existing management team (and BoD) has proven itself incompetent after years of failing to address its structural problems in a meaningful way.

Extricating Chrysler and GM from this mess will require the “mother of all private equity” equity deals, the biggest one yet, and likely one of the most profitable when the company goes public. And that’s the New General Motors Corporation in 2012. Here’s how it works.

From the bankruptcy, the judge allows the sale (via Section 363 of the Bankruptcy Code) of assets to raise proceeds for the debtor. The beauty of the asset sale comes from the ability to cherry pick the best assets. GM has a lot of assets that are worth lots of money once they’re free of the associated liabilities. So a new buyer gets to assemble a new GM out of the ashes of the old.

The way I see it, a new company would acquire Chevrolet and Cadillac (and some models from its other brands), associated assembly plants, its huge trove of patents and marques, and some of its foreign operations (like Canada, Mexico, Latin America and Eastern Europe). In North America, the new company would not acquire any franchise agreements; instead it would sign “operating agreements” with dealers for the interim as it figures out the right-sizing of its ultimate distribution network. And best of all, it would have a new management team properly motivated to make decisions that maximize value and profits unburdened by any legacies.

The New GM would not take the union contracts with it. Those were signed with the old companies. Many hourly workers would have the choice to gain employment with the New GM, at parity labor wages and benefits with the transplants. Work rules would also be re-written to mirror those of Honda and Toyota, not echoing Detroit’s featherbedding past. Better to have a good paying job than no job at all.

As for the old GM and Chrysler, the debtors wind down through a process of selling the remaining assets to others and dividing up the proceeds among creditors as directed by the Court. For example, the Chinese JVs should be sold back to their partners (SAIC and Wuling) for cash and the rights to use certain marques within certain geographies (like Buick only in China). The remainder of the foreign assets, like Opel, Vauxhall, and Holden, can be sold to others (like foreign governments?) or simply shut down.

As for suppliers, many will fail. But those critical for the support of the new GM will have their pre-petition claims accelerated and paid. The Court can determine that this will be necessary to enhance and preserve the value of the assets being sold to the New GM; without key suppliers, there would be nothing to sell (i.e., if the new company can’t get parts).

For private equity investors and their lenders, the new GM would be acquired at the bottom, not the top, of the auto market. My guess is that these assets are worth at least $20 billion. That’s cash that goes to satisfy the liabilities of the old GM. Operating cash for the New GM would be provided by commercial lenders and debt offerings—all untainted by the old GM.

So imagine a New GM free from its past and run by private equity investors, not the government. Two strong brands—Chevrolet and Cadillac and a minor brand of Jeep—with the best vehicles and dealers from the old GM. Perhaps it would have a US market share of 15 percent, making it smaller than Toyota but similar to Ford. And when the car market comes back (and it will), the New GM can be a successful and vibrant company. That’s what’s called a real investment.

What to do with all of GM’s brands? That’s one of the big questions that will vex the Presidential Task Force on Automobiles, as it makes its final determination on Chrysler and GM’s fates. Robert Farago’s branding guru Al Ries thinks The General should give Buick, Saab, Saturn, HUMMER and Pontiac their discharge papers. Keep Saturn for entry level cars, Chevy for the mass market, Cadillac for luxury cars and GMC for trucks. Coincidentally, while RF was talking to his marketing maven, I was exchanging emails with Paul Earle, president and founder of River West Brands. Earle specializes in revitalizing distressed, orphaned and ghost consumer brands.

River West’s properties include Coleco, Bonwit Teller, Underalls and Brim, among others. River West and similar companies (e.g., the Himmel Group) identify strong brands whose current owners have allowed them to languish or lie dormant. They buy or license the distressed or orphaned brand, resuscitate it, manage it profitably or sell it, sometimes back to the original owner.

If any company has squandered brand equity it’s General Motors. I asked Earle what he’d do with GM’s brands. Interestingly, he disagrees with Al Reis and thinks that GM shouldn’t dump the majority of its brand portfolio.

Earle said that he’d seen a lot of articles and remarks about discontinuing Buick and selling off Saab. The challenge for GM shouldn’t be having an “attic sale,” but rather how to manage the company’s intellectual property, specifically its brand names and trademarks. He thinks the current crisis is “an innovative development opportunity” and that GM’s brands “could be great platforms for learning labs for new concepts.”

Instead of thinking about which brands to keep, which to sell and which to kill, GM should be thinking about what opportunities there are to repurpose those brands down the road. GM needs to identify which are its core brands and which are non-core brands and then use the non-core brands as “springboards to new ideas.”

Using an existing albeit dormant or moribund brand for a new idea provides consumers with comfort, familiarity and trust. Introduce a new concept with a familiar name. Once the idea is proven in the market, you have data points to work with. The concept can be transitioned to the core brand.

With Earle’s model, GM may have been wiser to make the Chevy Volt a Pontiac or Buick. If successful, the electric/gas hybrid could have helped revive these distressed brands. GM could then have moved the cutting edge technology to its core nameplate (Chevy) or its premium brand (Cadillac).

I asked Earle if he was euphemizing. Were GM’s “distressed” brands actually “damaged”? “Not per se,” he answered. “GM needs to identify what each brand is on it’s own, what each brand is as a member of a family of brands and how those brands can enhance technologies . . . GM still has a treasure trove of IP in terms of brand marks, designs and technology. GM can leverage that IP with partnerships inside and outside the auto industry.”

Earle strongly disagrees with the idea of killing off any of GM’s eight US brands. “Killing off a brand means walking away from an asset.” Earl says the value of the brand may be diminished without the core industry, but any brand with name recognition has intrinsic worth, whether that’s inside or outside its home territory (e.g., Buick in China) or within or without its core products area (HUMMER camping equipment).

Earle notes that introducing a new Chinese or Indian automobile brand to North America would be a far greater/more expensive marketing challenge than restoring the Buick or Pontiac brand, whether that restoration is done by GM or by someone else. Lest we forget, it’s taken Hyundai and Kia 15 to 20 years to establish brand names in the US, at a cost of billions of dollars.

By the same token, even orphan and ghost brands long off the market still have brand equity. Earle says automotive brands may have even longer shelf lives than consumer products. Studebaker and Packard are still recognized by consumers 50 and 60 years after they disappeared from the US market. Though Chrysler does nothing with the IP, since buying American Motors and Jeep, it’s continuously maintained the trademarks on Willys.

Brands are valuable things even if squandered. Killing a brand can create uncertainties about trademark ownership as well. Earle thinks it’s prudent to maintain doing commerce with a brand to avoid losing IP rights.

Many people believe that brands like Saturn, Pontiac, HUMMER and Buick are irreparably tainted. Earle, on the other hand, would relish the opportunity to revive them. It’s something Rick Wagoner, Congress and/or a bankruptcy judge should keep in mind.

[Editor’s Note: This is the last part of a four-part series by Dr. Rob Kleinbaum. Here are parts 1, 2, 3. A PDF version of the entire editorial is available, courtesy of Dr. Kleinbaum, here.]

Serious consideration needs to be given to a radically different organization that would give people overall business responsibility and accountability and increase their contact with markets and the external world. The current direction is to move away from integrated business responsibility by creating strong functions with weak business units, and the problem is compounded by making the transition slowly, so there is continual confusion and conflict over who is responsible for what. The company is doing this to “leverage its global strengths” but the real effect is to create an organization where fewer and fewer people are actually running a business or have contact with the outside world and control is becoming more and more concentrated in a few people.

Education and training need to be made part of everyone’s life, from the most junior to the most senior. This becomes even more important in times of stress, as it demonstrates long term commitment to people and, more importantly, to the future. A portion of this education should take place outside of GM to increase exposure to people outside the industry. In the scheme of things, the costs of education and training are truly negligible. If someone asks to calculate the ROI, it should be used as a litmus test for determining candidates for structural cost reductions.

GM’s decision making processes need serious revamping. Despite improvements, most meetings are still exercises in procrastination, rubber stamping or idea killing, without anything that would pass for genuine debate and dialogue. Dealing with complex issues requires genuine discussion, feedback, and intellectual engagement. Changing the people, along with the structure, should help enable this key cultural change but there must also be a conscious choice among the leadership that they want to make this transformation.

These modifications would also disrupt patronage relationships and should permit merit to become more important, especially if there is an influx of outsiders and overseas managers. Also, in the same way that having an African American become president of the United States will change many American’s notion of what it means to be an American and what can be accomplished, having someone who is genuinely “different” will help many people in the company see GM differently. If the competent people in Brazil see that there is a real chance they can reach the top, it will change their level of engagement and the company will be much better for it.

Implementing these changes piecemeal will not be enough to make meaningful changes in GM’s culture, because they are all necessary to reinforce one another to grow a different and progressive culture that is self-sustaining. The more challenging question is whether they would ever be implemented in the climate of crisis by the people currently running the enterprise.

They are certainly intellectually capable of doing so, but seem wedded to the momentum plan and believe that their main task is to get through the current crisis and to re-negotiate its labor contracts, trim its dealer body and brand portfolio, and lower its cost structure, not deal with cultural drivers. The mainstay belief is that all will turn out well if only they have the chance to implement their plans, starting with the much heralded Volt. Then they will consider turning their attention to considering these types of “secondary” issues.

What you believe about this position depends on your level of confidence in the company’s ability to execute its plans, which have always sounded good and well reasoned. These operational issues are absolutely critical to the future of GM. The importance of dealing with the culture is that unless there is a substantial change in the company’s beliefs and values, the most likely outcome is that, once again, too little will be done too late.

The very real crisis the company is in would permit GM to make the cultural changes that would be very difficult in “normal” times and provide a once-in-a-generation opportunity to transform GM back into a global powerhouse. GM has so many talented people in it and almost certainly has the potential to turn around, but not until it develops a culture that lets it be truly progressive rather than one that continually defers the hard choices, holds it back, stops talented people from making contributions consistent with their ability, and prevents its plans from becoming reality.

It was my last meeting with Saab. The new marketing director had decided that we were just too difficult to work with, and wanted a new team. When his predecessor introduced us to the new guy, he had no idea that we’d be working together again soon, for Lexus Europe. Meanwhile, he’d be moving on inside GM to work on the launch of the new Cadillac platform, and the later Lexus work would bring us into contact with the man who is presently heading Bentley’s sales and marketing. The car world is a small world. Back to the meeting. New guy is drawing a very sketchy car on the whiteboard.

My Saab journey had been part thrill, part misery. The thrills: First worked on the international launch of the 900 cab, where I met the designer Einar Hareide, which led to my sitting on the board of his design company some years later. Was then brought in to work on the 9-5 launch by a brilliant Finnish creative director and designer whose car credentials cover Audi-Porsche-Saab-Lexus. Jari Ullakko and I enjoyed frequent trips to Trollhättan, long discussions with the engineers, and the general joy of being in a company with spirit and soul – still not beat to pulp by GM.

My encounters with ENGINEer Per Gillebrand were thrilling (if GM then had used a quarter of the engine improvement ideas he and his team cooked up …) I spoke with the geniuses who designed the crash protection in the 9-5, they laughed with pride when describing they could open the doors of the first prototype crashed in a test – the survival space intact.

The first 9-x concept, not the BioHybrid PR rehash, but the first one. I rode shotgun with a Saab stuntdriver along a donkey-trail in Almeria, at 200 km/h, two meters from the edge, heading for a steep cliff, where he did a 90 degree sliding turn and straightened out the car just before we went over. Thrills.

The misery: Realizing that GM didn’t get the car, and didn’t want to. New guy is at the whiteboard. Yes, definitely sketching a car – looks like a Volvo. Figures, he was brought in from Volvo to head up international marketing. “My goal is to move the metal!”

How about moving minds and souls? How would that work out for you? See, to move metal, you must first move minds and souls. GM managers would rotate in for two years, just enough to begin getting the car, before scooting off to the next brand.

GM wanted Cross-Platform Synergies, and didn’t pay much attention to the individual brands. Just look at www.gm.com – I hate that place – they still think there is such a thing as a GM-car, at the expense of the individual brands, and they’re never going to abandon that mindset.

“I have looked at your advertising. The cars are too small in the spreads. I want to fill the pages with the cars.” New guy has a strategy, he thinks.

GM killed the “Saab versus …” campaign after a year – they had tested it in the new markets they wanted to enter (Texas), oblivious to the fact that it was a huge success with established customers and with Saab enthusiasts. “It’s too intellectual. Fucking high-brow stuff doesn’t sell cars.” Saabish people still remember that campaign.

New guy is clueless that no one will remember any of the ads he will be signing off on, since they’ll look like all bland car ads out there. In desperation, at the end of the run and when it’s too late, they’ll grasp for Born from Jets, after GM having nixed Saab’s aircraft heritage for fifteen years. GM: “That’s not appropriate for the luxury segment.”

New guy is drawing a rectangle tightly around the Volvo he has sketched on the whiteboard in the Saab conference room. Ah, it’s a two-page ad. He tries to draw the “chicken with a party hat” logo in the bottom right-hand corner. Looks like a pineapple.

“This is how much I want the car to fill the pages. To move the metal, we must show the metal.”

We presented our last attempt to move Saabish minds. A commercial with a 900 cab flying on ice, powder rising like a contrail, and stopping next to some ice fishermen. The top opens. Grey haired father with son, the father with his leg in a cast. He is greeted by the other fishermen, and then drills a hole in the ice next to the car. Spot ends with father and son fishing, seated in the car.

“There is no luxury in this,” says new guy.

That was my last day working for Saab.

[Stein X Leikanger is a brand conceptualizer, brought in by brands to create their communication platforms. His advice is often ignored, yet handsomely rewarded.]

[Editor’s Note: This is the third part of a four-part series by Dr. Rob Kleinbaum. Parts one and two are still available.]

What is fascinating about GM, and offers some hope, is that it really has two cultures. The one described above is an accurate depiction of the culture in North America and Western Europe but there is another in the rest of the world that is very different. The culture of GM’s operations in Asia, Latin America, Africa and Middle East, Russia and Eastern Europe, is much more progressive and it is in these areas that GM is doing very well. On almost all of the measures listed above, they would come out on the progressive side. Working for GM in Asia Pacific, Latin America or the Middle East, you would think you were in a completely different company. People are very forward looking, they are capable of making the tough decisions, they are business focused, debate is tolerated but discipline is enforced, relations with their labor force and dealers are usually positive, and authority is genuinely dispersed to the smaller business units within each of the regions.

Read More >

[Editor’s Note: This is the second of a four-part series by Dr. Rob Kleinbaum. Read the first part here.]

The scholars Lawrence Harrison, Samuel Huntington and their colleagues have addressed the fundamental question of whether culture “matters” in how societies develop and make a compelling case that it matters a great deal.  They have also outlined the specific traits that lead a society to progress or prevent it from doing so and their work provides a rigorous way to think about culture that is based on substantial evidence. These traits seem applicable to a private enterprise, especially one that is larger and older than many countries.

Read More >

[Editor’s Note: This is part one of a four-part series. The author writes: I have been a consultant for GM for 15 years and an employee for 9 years prior to that, and have worked at one time or another in almost every region and function. This paper has not been endorsed or supported in any way by anyone at GM; I suspect it will be harshly rejected (or simply ignored) at the senior levels but will strike a deep chord a few levels down. This is written out of the deepest affection for the company and it is an attempt to deal with a fundamental issue that has kept the company from success and is now critical to its long term viability. The people who do care about GM—there are many—and who think a future is still possible need to stand up and try to make a difference, regardless of the short run costs.]

GM has developed a plan, currently before Congress, which is supposed to demonstrate its long run viability. The company is looking at its products, brands, manufacturing footprint and capacity, health care, and “structural costs,” while negotiating with the UAW to further reduce labor costs. All this is well and good but it is almost certain that GM is not addressing an issue that, in the long run, could be more important than all these others: its culture.

Mentioning the “C” word makes eyes roll, as it is seen as too “soft” to deal with in a meaningful way and does not matter anyway once the “real” stuff has been taken care. But to a long-run observer of the company, it is apparent that unless GM’s culture is fundamentally changed, especially in North America (its true heart), GM will likely be back at the public trough again and again until the public finally grows weary and allows its demise. It is unlikely to achieve sustained profitability unless it fixes its culture and it may even be true that once the culture is fixed the business will take care of itself.

Culture means the “values, attitudes, beliefs, and underlying assumptions.”¹ The importance of culture is that it forms the foundation of the business logic brought to any specific decision or problem; there is little chance something will be done that violates the culture, as it would mean contradicting fundamental beliefs. The success of many companies, including McKinsey, P&G, and Pixar, is attributed to their cultures, and a recent study of Toyota concluded its success is due as much to its culture as the Toyota Production System.² Sometimes societies may change their culture in response to a major disruption, as Germany and Japan did after World War II; and companies have as well, such as GE, IBM and Alberto-Culver³, after their own near-death experiences.

But in all of these cases there was a consensus among the leadership that the culture needed to change and serious efforts were put in place to implement those changes. It is fairly apparent from their behavior and statements that GM’s leaders in North America do not believe there is anything fundamentally wrong with the company’s culture; indeed, they seem firmly convinced that they were well on their way to recovery but were overtaken by events beyond their control (specifically the large spike in energy prices and the collapse of the credit markets) that have led to the current recession.

GM’s current response seems to reflect its fundamental beliefs about the way the world works and it’s almost identical to what it has been doing for the last 30 years: cut “structural costs,” wait for future products to bring salvation, and count on cash from the other regions (and, now, the government) to help prop things up in the meantime. But they effect no truly fundamental changes in the business, its structure or the people running it (as they are clearly the best and brightest, know how to manage things in a serious way, and have a sound plan).

The proposed changes are touted as “profound” and “fundamental” but are really the minimum change from status quo the company believes it can get away with. There is a profound reluctance to make hard decisions that would cause short term pain but would lead to fixing the problem in the long run; instead there is a continual compromise of action that leads to “too little, too late” but defers immediate catastrophe. This is reflected in every aspect of the enterprise, from decisions on manufacturing, which never bring capacity into line with market realities, to people, where almost no one is ever fired for poor performance. This has not worked before and it is difficult to believe it will work now.

[To be continued . . . In Part Two, the author discusses the traits that characterize progressive cultures and how these traits (or lack thereof) affect General Motors.]

There’s a certain raw satisfaction to be had in seeing a man go utterly, completely mad in public, particularly when there’s a plateful of free bacon in front of you and an attentive server standing behind you, ready to swap your newly emptied bacon-plate for a full one at the slightest, Sotheby’s-private-bidder-esque, wave of a hand. This happy spectacle was available to all and sundry at the media breakfast that opened the 2009 Chicago Auto Show yesterday morning, courtesy of Hyundai’s American CEO, John Krafcik.

“Let me start my short comments today with a pair of quotes from two great Americans,” Krafcik opened. “Thomas Jefferson said that a government big enough to give you everything you want, is strong enough to take everything you have . . .

“For example, it’s difficult to put a finger on exactly when China moved from a purely Communist country, to an energetic proponent of a new form of capitalism.” The statement led one colleague to wonder aloud whether that “new form” included the “energetic” harvesting of organs from members of the Falun Gong. Another one observed, “If this guy’s lucky, nobody back home cares enough to translate this speech into Korean.”

The irony that the Chinese government is strong enough to take everything that South Korea has seemed utterly lost on Hyundai’s senior American executive.

But before anybody could stop chewing their bacon long enough to ponder Krafcik’s iffy grasp of the geopolitical scene, he dropped all remaining un-dropped jaws by stating that “change” called for “a more equitable distribution of income.”

The steady susurrus of surreptitious cell-phone use and side conversations came to a crashing halt as various members of the Midwest Automotive Media Association, the folks who traditionally host the Chicago morning breakfast, started nervously catching each other’s eye, wondering exactly who made the decision to invite Chairman Mao to speak at this event.

Having swiftly disposed of the American way of life in just a few opening paragraphs, Krafcik got into the real meat of his speech: a two-fisted attack on the “industry” and its “greed.”

“Turning our industry around will require some revolutionary thinking,” he said. And to prove it he went to declare that Hyundai would meet a fleet average of 35 miles per gallon by 2015. “A bold position perhaps, but we were honestly surprised to be alone amongst all automakers in taking a position like this one. Going forward, we’d love to have some company here.”

This “bold position” was revealed, in post-speech questioning, to be anything but: Hyundai will have a “Sonata-class hybrid” in 2010. But Krafcik was quick to assure the audience that the fleet average would come from “downsizing engine packages, taking weight out of the cars, a thousand little things.”

In other words, a provider of relatively crappy little cars is going to make more crappy little cars, with smaller engines and aluminum decklids.

[It’s worth noting that this “revolutionary thinking” actually dates back to when Lee Iacocca unveiled the Plymouth Horizon “Miser,” a car which had been so ruthlessly optimized towards 50mpg on the highway that they had, apparently, left the final “y” off the nameplate.]

With this not-entirely-revolutionary disclosure, Krafcik returned to his Timberlakian mission of bringing Trotsky back by suggesting “a more inclusive form of capitalism” in which executive salaries would be limited to a certain multiplier of average pay. It was not immediately clear as to whether this form of capitalism would be exactly like that exciting new Chinese form to which he had referred earlier, but if I were a member of an obscure religious sect in America right now, I’d be counting my kidneys.

Last but not least, it was time for some bragging.

Hyundai has managed to increase both market share and sales in the past few months. Lest anyone think that this was a simple matter of newly impoverished consumers buying cheaper vehicles, Krafcik took some time to lavishly praise the “Hyundai Assurance” program.

“The Assurance Program did not require government support. But it has delivered benefits to all stakeholders, and to society . . . This is how private enterprise should work. Somewhere, Thomas Jefferson is smiling.”

And why shouldn’t he smile? After all, Hyundai is on the way to becoming an American company! “The lines between domestic and import will become increasingly blurred. We will exercise more sensitivity, more discipline, and be more inclusive, in all aspects of our business.”

Having unintentionally closed an insensitive and undisciplined speech by calling for sensitivity and discipline, Mr. Krafcik allowed the media to finish their bacon and stumble, blinking, into the light of McCormick’s million-plus-square-foot arena, wondering what the hell they’d just heard.

I reckon Mr. Krafcik chose the wrong Thomas Jefferson quote. The one that comes to my mind: “He who knows best knows how little he knows.”

GM’s ex-Vice Chairman of Global Product Development left on a sour note. Bob Lutz claimed America is a nation that hates its own auto industry. It’s a remarkably nasty remark that’s almost as paranoid as it is insensitive. But not quite. The truth is much more specific and the other way around: GM executives hated their own customers. Why else would they have treated them with such contempt, selling them non-competitive products and inflicting such abysmal dealer service? (Heard the news?) Never mind. GM has built some tremendous enthusiasts’ cars: Corvette, G8, CTS and more. And now, the U.S. auto industry in general is about to experience a convulsive, cataclysmic change. Is that a good thing?

Where the future of automobiles is concerned, we, the American consumer, have become hostage to fortune. In any hostage or abuse situation, there will be some victims who come to identify with their captors. It’s no surprise, then, that some enthusiasts have reacted to the industry’s impending collapse by adopting the words, attitudes and beliefs of our “captors” in the worlds of finance, business and government.

Across the Internet, even here among the B&B, people are responding to this crisis, not as enthusiasts, but as craven cowards who believe that appeasement of, and identification with, those captors will somehow “save us” from what lies ahead. In doing so, these people are not only betraying their fellow enthusiasts, they are ignoring their own self-interest in favor of ephemeral, dimly understood goals.

Consider, if you will, the oft-repeated canard that “cutting brands, product variety, and dealership presence is a good thing.” For whom, exactly? Every time a manufacturer cuts a brand, thousands of enthusiasts are denied the chance to buy the car they really want. You may not have been an Oldsmobile fan, but somebody was, and that person can no longer purchase a new Oldsmobile.

Here on TTAC and elsewhere, pistonheads are ruthlessly cheering-on the death of Pontiac.  But what about the people who have driven and loved Pontiacs all their lives? Are “they” less important than “we” are? Are we superior to them because we don’t like ribbed lower-body panels or superfluous eyeball vents?

When our favorite brand, whether it be Porsche, Lexus, or Hyundai, falls under the knife in the future, will we find it as ironically amusing as the death of “the excitement company”? Where has our empathy for fellow enthusiasts gone?

What about cutting product? The business press applauded when Chrysler cut the Dodge Magnum from its lineup, but why did we?  How can reducing choice be a good thing? Sure, it may make business sense, at least according to the wizards of Wall Street. But who here values a number on a balance sheet more than a rip-snorting, tire-smoking Magnum SRT-8? I continually read members of the B&B talking about how a particular product needs to be “put to death.” Where’s the fun in that?

Here’s another slice of reality for you: when dealership counts dwindle, the customer suffers. The primary reason Honda and Toyota hold retail price levels better than the Detroit competition isn’t the excellence of the product. Rather, it’s the lack of intra-dealer competition, plain and simple. When dealers compete, to paraphrase the TV ad, you win.

I cannot think of any reason for anyone outside Wall Street to want a reduction in operating dealers. Trust me on this: unless you have a seven-figure investment in an auto company, you stand to gain more personally from saving money on a new car than you do from some stock-price bump resulting from closed doors at your local Ford store.

The facile response to every concern I’ve raised above is always “Toyota.” Toyota doesn’t maintain superfluous brands. (Except, um, Scion.) Toyota doesn’t pamper enthusiasts with money-losing models. Toyota doesn’t have enough dealers to result in bare-knuckle newspaper-ad price wars. Toyota holds its nose, curbs its enthusiasm, and sells more cars than anyone else in the world, primarily to people who hate cars.

Unless you’re a major Toyota stockholder, however, this doesn’t help you one bit. The companies that do go out of their way to connect with you, the automotive enthusiast . . . well, they may be irrationally exuberant, they may not always show a nine-figure profit, and once every so often they may require a helping hand. But they are on our side.

The bankers don’t care about cars; they care about money. The government, in general, hates automobiles and everything they represent. The mainstream media finds automotive enthusiasm to be amusing at best and despicable at worst. Who’s on our side? Who’s trying to provide exciting cars at affordable prices?

Answer that question for yourself, honestly, and then see if it doesn’t affect your attitude towards everything from gas tax to the much-derided bailout. Stop being ashamed, stop loving your tormentors and aping their discourse. The future those people envision—an endless series of identical, zero-impact crapwagons shuffling in a low-speed line down a carpool lane to nowhere—may be good for business, but it’s bad for us.