As GM’s journey to bankruptcy nears its conclusion, the punditocracy is busy contemplating the company’s afterlife. The current line of thinking: the feds will cleave General Motors in two. Bad GM gets Buick, GMC, HUMMER, Pontiac, Saab and Saturn. Good GM “buys” Chevrolet and Cadillac. It emerges from Chapter 11 unencumbered by outdated production facilities, warring management, befuddled marketing, over-priced labor, restrictive union work rules, astronomical pensions and onerous health care obligations. Chevillac rises from the ashes to steal share from both mainstream and luxury brands, repay its debts and thumb its nose at Bailout Nation’s critics. But here’s the thing: good GM is “saving” the wrong brands.

“What’s a Chevrolet?” branding guru Al Reis asks, rhetorically. “It’s a small or large cheap or expensive car, truck, SUV or sports car.” Reis has been sounding the alarm on Chevy’s branding for over twenty years, claiming the company lacks the focus it needs to survive in a market place with over 40 competitors.

So how could the liberated Chevrolet rebrand itself for success? “Get rid of the trucks,” Big Al suggests. “Take Chevy back to its roots. Make it what it was before Saturn arrived: an entry level car brand.”

Yes, well, what would distinguish this new Chevy from its competitors? Toyota owns reliability. Hyundai owns price. Nissan owns value. BMW owns driving pleasure. So. . . what? “It should be an American brand,” Reis says. Even if the cars are made somewhere else like, say, South Korea? “These days consumers don’t care where their products come from. Ralph Lauren’s clothing is made in China.”

When I push Reis for a unique selling point for Chevy, he hesitates. I can almost hear him shaking his head. “It’s too late to narrow its focus,” he says. “Other than appealing to patriotism, there isn’t anything left.”

I suppose Chevy could play the patriotic card, returning to the brand’s former “baseball, hotdogs and Chevrolet” appeal. It could even play off its taxpayer subsidy to assert itself as “America’s car company” (yes way). Chevrolet could offer comfortable, affordable and reliable American-styled sedans. Sort of like the groundbreaking Chrysler 300, only better.

Fine, but I doubt the US market would value four-wheeled flag waving enough to make Chevrolet profitable. Remember: Ralph Lauren’s WASPy brand ID convinces customers to pay a premium for his Chinese made apparel. If Chevy can’t charge a premium for these “all-American” products, it will have to compete on price with some of the world’s most efficient automakers. Why would the end result be any different than it is today?

Cadillac sits on the opposite end of the scale. As Lexus, Mercedes and Audi have proven, you don’t have to restrict yourself to one automotive genre to be a successful luxury automaker. But, like Chevy, like any car company, it’s all about the brand. The CTS may be as good as an equivalent BMW, but in this rarefied air, perception trumps product.

“If someone goes down to their golf club and says ‘I just bought a Cadillac,'” Reis says, “it doesn’t mean anything. It doesn’t mean you’ve made it.”

Restoring the Cadillac brand to the pinnacle of automotive desirability would require a multi-billion dollar investment in new products and an equally expensive marketing effort. At the same time, Cadillac would have to abandon its current willingness to maintain volumes with badge-engineered bling. Does Cadillac have the time/will/money to ditch/evolve their current lineup and make and promote the kind of world class cars that could reinvigorate the brand?

No.

Meanwhile, GM is throwing the baby out with the bath water. Buick, meh. But GMC is a strong brand that would gain strength the moment Chevy transfers all its SUVs and pickup trucks to the professional graders. Assuming the US economy recovers sometime before the next century, the pickup market will return. And after driving the Chevy Tahoe hybrid, I’m convinced there’s more room for the genre’s fuel efficiency, packaging, durability, safety, style, convenience, etc.

HUMMER may be the antithesis of President Obama’s vision of the American automobile’s future, but it’s an instantly recognizable brand. HUMMER’s underlying concept—SUV as survivalist’s enclave—still has resonance. Saturn has the touchy feely thing happening. It could be the home of green vehicles. American sports cars? Give Pontiac the Corvette, Solstice, Camaro and a performance brand is born. Saab could return to its roots an, uh, do whatever it is Saab used to do.

Alternatively, nothing. While resurrecting two or more of GM’s eight brands is doable, so is going to the moon. Judging from recent polls, Americans are more willing to fund lunar colonies than pour endless billions into GM.

That’s because they know that Uncle Sam isn’t “protecting ” or “investing” taxpayer’s money by subsidizing GM. They’re gambling on a loser. “GM has destroyed the equity of eight car brands,” Reis says. “You could almost say that’s what they do best.”

Mike writes:

I just thought I’d pass on an ongoing good/bad incident. First the bad: my wife’s 2003 Neon went into the dealer with a mysterious problem that they have determined requires replacement of the cylinder head. In a dramatic departure from my usual luck, the car is still under the 7/70 warranty so the expense will be small.

However the factory has informed them that they do not have a replacement. They are now checking with other dealers. Given that the Neon sold in numbers that Chrysler can only dream about attaining now, I cannot imagine this bodes well for anyone who bought a current Chrysler product.

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Chrysler bondholders have officially rejected the Presidential Task Force on Automobiles’ (PTFOA) “offer” to exchange 85 percent of their secured debt ($6.9B) for a stake in a reconstituted ChyrCo. The Wall Street Journal reports the bondholders’ counteroffer: the lenders would cut Chrysler’s first-lien debt by $2.4 billion, in exchange for a 40 percent equity stake and a Chrysler board seat. Oh, and they want Fiat to put up a billion dollars. Which Fiat won’t do because . . . it doesn’t have it. The bondholders’ position sounds about right. Remember: this is secured debt. If/when Chrysler is sold off in pieces, the bondholders would recoup about 65 cents on a dollar. Settling for anything less would be against their financial interest. But not their political interest. Not only has the US Treasury rejected the bondholder’s proposal, they’ve cast aspersions on the banks’ patriotism. No, really.

“It is neither in the interest of Chrysler’s senior lenders nor the country for them to advance a proposal that would yield them an unjustified return as Chrysler, its employees and other stakeholders are working tirelessly to help this company restructure,” the Treasury said in a statement.

With just eight days left before ChyrCo’s latest restructuring deadline, this one’s getting seriously ugly. We hear rumors that Chrysler CEO Bob Nardelli is going to resign this week. And there’s plenty of talk from Motown politicians pressuring Chrysler bondholders to suck it up—or face the consequences.

Late Wednesday, Michigan Gov. Jennifer Granholm blasted the banks’ counteroffer, urging them to “do the right thing.”

“They need to collapse their debt as the Obama administration has asked to ensure the viability of the company, which is critical for the families, employees, retirees, dealers, suppliers and others who rely on it,” Granhom said. “To do otherwise is not only disappointing, it is unconscionable at best.”

U.S. Rep. Gary Peters, whose district is home to Chrysler’s Auburn Hills headquarters, called the banks’ offer “an affront to taxpayers” and Chrysler employees and retirees.

“These debt holders were offered fair market value for their debt and the banks have responded by asking for a windfall,” Peters said in a statement.

Windfall? As in undeserved profits? How long before someone trots out ye olde Jewish banking conspiracy? Like I said, real ugly.

Back to the Fiat deal, upon which President Obama so publicly staked Chrysler’s future. The bondholders’ billion dollar “put up or shut up” salvo against the Italians is really just a clever way of saying no freakin’ way.

The lenders also questioned the logic of having Chrysler pair up with Fiat. The Italian company, they said, would bring “negative synergies for the first 3 years” and would enter the alliance with “limited downside for a deal of this size.” Moreover, they said it could result in a “wealth transfer from the U.S. taxpayer to a foreign company of potentially $10 billion or more.”

I spit on you spitting on me for spitting on my country. Or something like that. And wouldn’t you just know it: the PTFOA is, as predicted here, happy to walk away from the $4 billion US taxpayers have already shoveled down the ChryCo rathole. And THEN toss them EVEN MORE money.

The counteroffer also came about a week after the government presented Chrysler lenders with more than 60 pages of financial assumptions for a combined, restructured Chrysler. The government projects that Fiat-Chrysler wouldn’t be able to start making payments on its debt until 2012, said several people familiar with the report.

The government also assumes that the $4 billion it lent Chrysler largely will be wiped out, as will a combined $2 billion Chrysler owes Cerberus Capital Management LP and Daimler AG, Chrysler’s last two owners. The government would then put in an additional $6 billion to fund the operations of Fiat-Chrysler.

Not to mention the $3 billion Uncle Sam would fork over to the United Auto Workers health care fund—cause that would be churlish. More on the unions in another post. Meanwhile, the WSJ saves the story’s most fascinating aspect for the end. It seems that ChyrCo bondholders’ are at war with each other, in a David and Goliath kinda way.

In the red corner: the nestling-in-the-pocket-of-the-feds crew: J.P. Morgan, Citigroup, Goldman Sachs Group Inc. and Morgan Stanley. In the green corner: a bunch of “little guys”: Elliott Management, Stairway Capital Management, OppenheimerFunds, Perella Weinberg Partners and three dozen of so relatively small lenders. Seems . . .

Not everyone was on the same page. The big bank view was “hey guys, the offer back can’t be outrageous. This is the government,” said one of these people. “There were others, smaller lenders, who wanted to be a lot more aggressive.”

In the end, the big banks “came closer to the smaller lender view,” said another person familiar with the talks.

What was that about a nation at war with itself? Anyway, C7 or boondoggle billions. We shall see.

You know those anti-meth ads, which graphically show the physiological effects of speed—lots of bad skin and rotten teeth? Well, this car is the automotive equivalent of the tweaker. I found it sitting forlorn among the garbage cans in a dirty alley, complete with lumpy, flaking yellow skin, bald tires revealing their cords, and exuding the smell of cold, stale tobacco. And desperately awaiting its next hit of crank. The Duster 340 is the speed freak incarnate. Read More >

dperaza writes:

I need your opinion and that of the B&B. I need to change my current vehicle (1997 Honda Civic 2dr) for a car with room for 2 car seats because starting in August I will be taking the twins to daycare in the mornings before heading to work. We have a minivan as the “main vehicle” for long trips, going out with family, grocery shopping, etc. So I do not need or want another minivan nor an SUV. Taking into consideration all variables (price, fuel efficiency, resale value, reliability, maintenance, safety and performance) a 2009 Civic Si Sedan seems like a good all around car for what I need but somehow I keep thinking it comes up short in the performance dept. Second choice is the Mazdaspeed 3 but I am afraid of its long term reliability, resale value, integrity and maintenance costs. Third choice is the 2009 WRX but they seem to be having problems with rod bearings and quality seems down.

What other cars around this price would you consider that can offer similar attributes to these three? What about pricier cars, around $28K?
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A few weeks of vacation from the blogosphere’s non-stop news cycle can leave a blogger feeling a bit behind the times. Two weeks is an eternity in internet time, but stepping away from the barrage of news, spin, hype and hysteria is good for the sense of perspective. Especially if the down time is spent exploring countries on the local typical family vehicle, complete with two wheels, four speeds and about 100ccs of thundering power. Beyond the sheer novelty of seeing entire families commuting on a moped (“Daddy, Nguyen isn’t staying on his side of the pillion seat”), travel in the developing world shows how insulated America is from the transportation realities of the rest of the world. If the $1,000 entry to the world of moped ownership is a major (if attainable) hurdle for workaday Vietnamese, even sub-$10K vehicles face what a GM sales release might call “a challenging sales environment.” Try to explain the “green premium” for hybrids and plug-in vehicles to an auto-aspirational third-worlder, and watch as the idea of paying more for less room and power draws only puzzled bemusement. Hair shirts, it appears, are strictly a fad for the western and wealthy. Case in point: the world’s first plug-in hybrid, the Chinese BYD F3DM.

BYD’s Corolla-aping PHEV raised more than a few eyebrows (many skeptical) when specs and concepts first appeared. Warren Buffet’s hefty investment into the cell phone battery maker quieted the skeptics and gave green-hued futurists a license to thrill. A 60-mile plug-in range, a multiple-mode hybrid system and a price tag under $25K had American hypermilers factoring in local tax credits and greengasming at the fantasy of it all. But in the world’s new largest market for automobiles, even $20K is a huge amount of money. And it turns out that one society’s eco-fantasy is another society’s overpriced, overly-complex answer to a question nobody has asked.

Xinhua reports (yes, nearly a week ago) that BYD’s F3DM has utterly failed to attract Chinese consumers; the firm has sold only 80 models since it went on sale in December. Apparently 20 of those were bought by the city of Shenzhen (think China’s Detroit) with the rest going to the local branch of China Construction Branch. In fact, BYD never even attempted to target private consumers with the model, despite the fact that an F3DM costs 30-40 percent less than a Toyota Prius (which only sold about 3,500 units in China between 2006 and 2008). Even the government isn’t rushing to put its citizens in the alleged volks-hybrid, offering a $7K hybrid subsidy to fleet buyers only.

Even with government help bringing the F3DM’s price under $20K, fleet sales aren’t as strong as BYD had hoped. Shenzen’s plan to buy more for the city’s taxi fleet is on hold as even BYD officials admit that the price needs to come down. BYD’s CEO Wang Chuanfu says that increasing production volume could help bring the F3DM’s price to a more-realistic $15K, but without institutions stepping up to prime the sales pump, the promise of a sub-$10K PHEV (after government subsidies)—and mass market sales—remain out of reach.

And even though the F3DM isn’t dependent on a charging-station infrastructure, price isn’t the only concern keeping buyers away. BYD faces an image challenge having never made anything more car-like than a laptop battery just a few years ago, and even its much-vaunted battery technology seems to struggle to meet on-paper performance numbers. According to Xinhua (hardly bomb-throwers when it comes to Chinese businesses), the 60-mile electric range is only attainable driving at a steady 30 mph. And recharging from a home wall socket takes nine hours.

But these tradeoffs and the correlating plug-in efficiency rewards only have meaning in the context of price, and here the lesson for Chevy’s Volt are plain to see. GM’s $40K profitless wonder defies fiscal logic on a comparable scale, offering only the most image-conscious greenies a value proposition worth even including. Like the F3DM, the Volt’s target audience (if not consumer) is the government, and the same increased volume-decreased price mirage lingers on the horizon. But unlike China (BYD expects its sales to double for the second year in a row, hitting 400,000 units), America’s demand for automobiles is in double-digit decline. And that includes demand for the much cheaper hybrids that are already available in the marketplace.

But we don’t have theorize about private PHEV sales levels for much longer. Shenzhen rolled out hybrid subsidies for private consumers this month which would cut the price of an F3DM in half, to about $10K. This coincides with a BYD plan to launch “a mass marketing excercise to promote the car to private buyers.” But if the car-crazed, yet pragmatic Chinese do start buying the F3DM, it will be at half the original MSRP, a feat that GM can’t hope to pull off with its Volt. Unless they just slap in powertrains from BYD, which is hedging its consumer-market gamble by offering to license technology to Western firms. In any case, BYD’s consumer sales push will give us some idea of private PHEV demand (and its required stimulus) by the time the Volt launches. Sales trends are easier to follow when they start at 80 units per quarter.

Props to automotive consultant Maryann Keller for calling for GM to get its shit together, I mean “create a sense of urgency” since 1875, or thereabouts. Kudos for Keller’s willingness to predict a GM C11 early and often. And praise be for loaning TTAC the writing talents of Mr. Ken Elias. OK, so. . . Keller’s column in Automotive News [sub] is suffused with Annie-like optimism for a post-C11 GM. With one a catch. Chevillac’s success depends on the “smaller, leaner and cost-competitive company‘s” ability to secure a champion who can administer strong medicine to GM’s poisonous corporate culture. Before we deal with Ms. Keller’s “if you build it, he will come” theory, here’s a taste of her sunwillcomeouttomorrowism:

Let’s face it: Much of the success of the Japanese auto companies in the United States came about as a result of Detroit’s failures. GM, Ford Motor Co. and Chrysler made it easy for the competition by not matching them in quality, not renewing their product lineups on a timely basis, virtually ignoring the sedan buyer and diverting resources away from North America and even away from auto assembly.

If GM restructures quickly, it can emerge as the low-cost producer in North America and use that position to gain market share quickly.

I don’t see how Chevrolet or Cadillac can become low-cost producers in North America. Does anyone seriously expect Chevillac’s UAW employees to labor for lower wages than their non-union American counterparts? Or, for that matter, Korean or Chinese workers? So where’s the competitive cost advantage going to come from? More efficient factories? Streamlined management? Better marketing? What?

Even if Chevy could undercut its competitors’ costs, gaining marketshare, never mind gaining market share quickly, is so far from a done deal it may not even be possible, never mind likely.

Chevrolet is not a viable automaker. Aside from pickups and a superabundance of dealerships, they ain’t got game. The Volt is an inside joke.The Malibu isn’t stealing significant sales from Toyonidssan. The new Camaro is a niche product. Ditto the Corvette, only more so. The Aveo is a piece of crap. The Traverse surmounts nada. Etc.

In fact, rebuilding Chevy isn’t simply a matter of throwing billions at existing products, or spending billions on creating new ones. It would take at least decade to do something about the brand itself, which is both damaged and virtually meaningless.

In contrast, Cadillac doesn’t need cost savings; it need vehicles that are significantly better than those made by Lexus, Audi, BMW and Mercedes. Cadillac also needs a stronger brand than its German or Japanes competitors. This for the automaker hell bent on building a station wagon, a rebadged SUV-lite, a blinged-out Tahoe and a lower-priced sedan than the CTS.

While MAK’s right that the transplants built their initial success on Detroit’s failures, there’s no reason to think the “usurpers” will now drop the ball. Though MAK tries to make the case:

Ironically, some of GM’s competitors aren’t looking invincible anymore. At ¥100 to the dollar, imports from Japan aren’t profitable. Nissan Motor Co. will lose money this year; and, despite Carlos Ghosn’s magic, it has yet to demonstrate consistent product strength.

Toyota Motor Corp.’s quality is not rock-solid anymore. The residual values of its vehicles are falling, and product proliferation is confusing buyers and dealers. The blind quest to be No. 1 left Toyota with global excess capacity.

Sorry, but Toyota and Nissan are hardly standing still. They’re rectifying their mistakes, readying themselves to keep kicking Motown’s ass. And what of Honda? Hyundai? Ford? Fiat? Just joking.

Anyway, MAK thinks Chevillac’s future comes down to people. True, but what are GM’s chances of finding someone to lead Chevillac to victory?

The GM board of directors bears responsibility for the company’s fate. The most important responsibility of the board is naming and firing the CEO. . .

The GM board deserves a failing grade, and the new GM deserves directors who will be fully engaged. The new board has to ensure that the vitality of the new company isn’t squandered as soon as there is evidence of a comeback.

This would be a good time to mention the fact that a federal committee is in complete control of GM’s Board of Directors. They just fired GM’s CEO, and installed his clone at the helm. How confident does that make you feel?

Not that I’m suggesting that an unelected federal quango made up of bankers and non-auto industry types is incapable of choosing a kick-ass BOD for GM, who would choose the right CEO for the job. I’m saying it.

I never owned a share of General Motors during my 28 years on Wall Street and in the 10 years since. But if bankruptcy delivers a low-cost, competitive company, I’m ready to buy.

And if there’s a clean, low-mileage 2007 Ferrari F360 going for $20k, I’m in. Meanwhile, not.

There are growing indications that GM’s “surgical bankruptcy” is imminent. They are already scrubbing down the surgical theaters around the world. The operation may just happen within a few weeks, and the “good brands”/”bad brands” not-so-final solution will create another mushrooming government agency that would be loath to put itself out of business. One of the many indications for rapid action: The patents tug-of-war between Opel and General Motors (or rather between the German and US governments) appears to be solved.

Bloomberg reports that “General Motors Corp. and its Adam Opel GmbH division reached an agreement on exchanging patents for debt. The accord, requiring U.S. government approval, would make up for billions of euros worth of technology that Rüsselsheim, Germany-based Opel has transferred to the parent company in previous years and protect the division in the event GM files for Chapter 11 bankruptcy in the U.S.”

The Süddeutsche Zeitung (Southern Germany Newspaper) goes into more detail. It reports that the swap became super urgent, because Opel had “sold” its patents to the mothership years ago. The invoice, however, was never paid. According to the Süddeutsche, GM is in arrears to the tune of “several billion Euro.” If GM goes C11, which the paper expects “shortly,” Opel would have to write off the receivables. Opel would have been caught both patentless and penniless and would have to close down.

The Süddeutsche says everything is cool between Opel and GM. All that is missing is a signature of the US government, which has to bless the deal. Opel management thinks that Washington will be amenable. Actually, DC should find the solution “charming” because it lowers the debt on the books of GM. Quite ominously, the usually well informed Süddeutsche adds: “Politically, Washington should have no interest in added problems concerning Opel.”

With the patent question solved, Opel can go about finding an investor. The Abwrackprämien boom and the Insignia’s success have washed fresh money into Opel’s coffers. Opel is liquid at least until August, the paper reports. “We now have time to build Opel Europe” said Klaus Franz, chief of Opel’s workers council.

Any private deal to take over Opel is likely to include some form of government help. Even with fresh money, Opel will need loan guarantees of €3.3 billion to make an engagement interesting to an investor. Both the German national government and those of the federal states in which Opel facilities are located have expressed interest in keeping the company afloat.

“How that might be accomplished is a hot-button political issue,” Deutsche Welle reports. “The Social Democrats and others have pledged that they would go so far as taking a stake in the company to rescue it from extinction. Chancellor Angela Merkel and her Christian Democratic colleagues, meanwhile, say providing preferential loans or issuing bonds is as far as they would be willing to go.”

According to Deutsche Welle, at least six investors have signaled interest in taking a stake in the company’s German-based subsidiary Opel.

“These are serious people,” GM Chief Executive Fritz Henderson said. “Many of them are financial players, some of them are industrial players. I would expect that work would get done in the next two to three weeks.” No names were named, rumors are running the gamut from sovereign wealth funds in Asia and the Gulf all the way to Fiat. Yes, Fiat. The very same that is supposedly rescuing Chrysler.

Fiat may form an alliance with General Motors’ core operations in Europe and Latin America, a source “familiar with the matter” told Automotive News on Friday. The deal would be on top of Fiat’s plan to merge with Chrysler LLC and would create the world’s second-largest auto group. No doubt with Sergio Marchionne on top. A frightening thought.

Luca di Montezemolo, the company’s chairman, quickly poured cold water on that rumor. “They’ve written about it in the newspapers? No, no,” he told reporters. As a result, “Fiat shares raced higher in relief,” writes Reuters.

In the meantime, the cutting of the umbilical cord between Opel and GM has progressed so far that even a new Opel CEO is being floated.

Reuters says that Bernd Pischetsrieder, ex-CEO of Volkswagen “could be a suitable head of a new Opel company independent of troubled US parent General Motors Corp” if an Opel dealer group in Germany gets its wish. When a new Opel company is established in Europe, it should be led by a person independent of GM, the head of German automobile retail trading group AVAG Holding AG, told Automobilwoche [sub]. AVAG is the biggest Opel dealership in Germany. Opel dealers want to participate in a rescue plan for the German car maker by taking as much as a 20 percent stake in a new company.

Pischetsrieder was chief executive of Volkswagen between 2002 and 2006. Pischetsrieder couldn’t get along with Piech, and was succeeded by Piech confidante Winterkorn. To this date, Pischetsrieder is still on VW’s payroll, but Wolfsburg would probably be happy to close that chapter also. One well placed—and obviously Winterkorn-washed—VW source said on the phone: “We wouldn’t mind Pischetsrieder in Rüsselsheim. He would make sure that Opel won’t be much of a threat.”

I oppose driver cell phone usage bans on principle. It is already against the law to drive while distracted in every State of the Union. Even so, several states and many cities have enacted wholesale bans on the use of hand-held cell phones by drivers. Other states and local governments ban teenagers from using the devices or prohibit their use in school zones. So what’s the harm? The additional legislation is surely no worse than wearing a belt and suspenders—by itself either will keep your pants up, but it’s nice to know that there’s a backup in case one of the modesty preservation systems fails. Comforting, isn’t it? NO! It makes my liberty loving soul retch. I say, down with the tyranny of the Nanny State! Nonetheless, the more time I spend outside of my ivory attic and driving America’s highways and byways, the harder it is for me to maintain this ideal.

I must confess that I occasionally talk on the cell phone when I drive. I commute nearly twenty miles to my office each day. I probably average one brief cell phone conversation a day while at the helm. Doing so has never impeded my ability to maintain my lane, react to slowing traffic ahead, or otherwise lose track of where I am or where I’m going. How can I be sure that I’m not making a nuisance of myself while I obliviously chat away on my phone? Call it the finger test; I don’t see any more of them with the cell phone than I do without.

I’m not alone. Four out of every five drivers surveyed by Nationwide Insurance in 2007 admitted to driving distracted. Their list of 26 distractions includes fiddling with the radio (82%); drinking a beverage (80%); operating a cell phone (73%); snacking (68%); and eating (41%). Personally I’m guilty of doing everything on the list except smoking (21%); applying make-up (12%); driving with a pet on my lap (8%); reading (5%); driving while intoxicated (4%); and shaving (2%).

Lest we lose perspective, some of the Nationwide Insurance survey’s write-in responses make it clear that drivers can become seriously distracted even without a cell phone.  “Peed out the window while going down the road. Well, you asked.”—Baby Boomer male, Sacramento [Ed.: Welcome to Sacramento!]. “I wear sandals or slip on shoes 90% of the time. So I always take my left shoe off and put my foot up in the seat. I have a drink in one hand, smoke in the other hand, and drive with my left foot.”—Gen Y female, Memphis. “Shaved legs, eaten a taco, put on make-up and drank alcohol at the same time.”—Gen Y female, San Antonio.

Yet somehow cell phone distracted drivers seem to be causing all of the noticeable problems. I used to presume that people were drunk when I saw an idiot driver cut cross two lanes to turn right from the left lane, meander off the road, drive obnoxiously slow, or make any number of obvious driving errors. Now I think (sometimes out loud), “I’ll bet that jackass is talking on his cell phone!”  I can’t remember the last time I was wrong.

Science bears this out. Multiple studies show that reaction times in drivers using cell phones are as much as a quarter second longer than non-distracted drivers. Hands free phones aren’t much better. The worst results are among elderly cell phone users and multitaskers who try to drive, talk and do something else like eat or paint toenails. A driving simulator study at the University of Utah found that test subjects with 0.08% blood alcohol content performed better than sober subjects yapping on cell phones.

So, there ought to be a law . . . Right? If only it were as simple as passing a law to create our own nirvana. Just when I am ready to break with my libertarian proclivities, I find this headline in the Dallas Morning News: “Study: Cellphone bans in school zones have no effect on drivers’ behavior.” Speed Measurement Laboratories, in a study commissioned by “several law enforcement publications,” monitored school zones in the Dallas-Fort Worth metroplex. They found that as many drivers, about 1 in 10, used their cell phones in school zones during banned hours as they did during non-banned hours. They also found no difference in drivers between these school zones with bans and zones without them. Still, Speed Measurement Laboratories’ front man Carl Fors maintains his support for the National Safety Council’s recommendation for a comprehensive ban of all cell phone usage by drivers, including hands free devices.

Unfortunately, laws can’t always fix things. A constitutional amendment banning booze could not excise America of the moral turpitude of alcoholism. If drivers are going to ignore cell phone driving prohibitions, what’s the point?

TTAC’s very own William C. Montgomery writes:

I have a friend that is an incurable GM F-Body fanatic; he currently owns a Camaro (daily driver) and a Firebird (big block restoration project). He just turned 29 and should have outgrown these pubescent urges by now. His life is a never ending automotive drama of slumming around junk yards for cheap fixes, trolling online forums and classified ads, and experimenting with mail order enhancements to cure perceived performance problems.

I know you haven’t been able to kick your Fox Platform habit. Even so, I would like to know what you think I could do to help cure him from this filthy F-Body addiction.

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Next week I’ll be knee deep in carnauba, doing Q&A with the folks at Turtle Wax in Willowbrook, IL. I have questions of my own and none pertain to the wine they’ll serve at dinner. Readers of this series expect more than the standard PR spin; commenter Tosh previously warned me of giving hollow endorsements. With that—and TTAC’s mission—in mind, I will never forget who is the boss ’round here (hint: you).

So what would you like to know about wash/wax/polish/glaze/clay or interior care? Questions can be general or relate specifically to Turtle Wax branded stuff. No holds barred, obviously. And while we’re at it, thank you all for your continued support of “Piston Slap.”

In November 2007, VeeDub head honcho Martin Winterkorn announced his version of the Schlieffen Plan. Dubbed “Strategie 2018,” Winterkorn plotted the overthrow of GM and Toyota from the top of the worldwide sales charts. Winterkorn called for VW to rule the world in sales, profits, innovation and customer satisfaction by 2018. When the plan was announced, the MSM feted it, insiders (this reporter included) rolled their eyes and denounced the announcement as the usual hubris of an incoming CEO, a suit who’d be busy collecting his pension by the time 2018 rolled around. In any case, by 2018, the Generalstabsplan would long be forgotten and superseded by at least five other grand strategies.

A month ago, the worker’s council at Volkswagen said that the plan has merit. “All at Volkswagen agree that the targets of Strategie 2018 haven’t changed and that we will reach them,” said workers council chief Bernd Osterloh. That story didn’t get much traction. The few who read it sighed. Through plain dumb luck and the incompetence of others, VW may be closer to “mission accomplished” than anybody dared to think.

It’s a done deal: VW will surpass GM in sales this year to become world number two, behind Toyota. Now, Reuters reports that “Volkswagen AG may have overtaken Toyota Motor Co to become the world’s top-selling carmaker in the first quarter, thanks to government incentives that fueled demand in VW’s major markets.”

VW’s overall deliveries to customers worldwide fell 11 percent to around 1.39m vehicles in Q1. Others fell faster and harder, enabling VW to increase its share of the global passenger car market by 130 basis points to 11.0 percent.

“Toyota has given no forecast for retail sales, but its latest estimate for shipments for the 2009 first quarter is 1.23m vehicles, down 47 percent from a year earlier,” Reuters says.

“Volkswagen has the luck of being strong in the markets that are currently growing, while Toyota is exposed to those that are collapsing,” says motor mouth Ferdinand Dudenhoeffer in a rare case of seeing the obvious. VW’s failure to get anywhere in the toxic US market is now its savior. Where you have no significant sales, you cannot have significant losses.

Volkswagen has a very strong position in the world’s only significant growth market, China. In the PRC, VW surpassed the 1m mark last year. It produced more cars in China than Germany. Toyota has seen sales fall every month of this year in China, its third-biggest market. Volkswagen is benefiting from government stimulus plans for the car industry that have boosted demand in Germany, China and Brazil, its three biggest markets that together accounted for half of all group sales in the first quarter.

While VW is lucky to be in the right place at the right time, Toyota definitely finds itself in the wrong places at the wrong time: Toyota’s first-quarter US sales fell 36 percent, while sales in Japan for the core Toyota brand plummeted 31 percent. The two markets account for just under half of its global sales.

Volkswagen China’s Winfried Vahland quickly positioned himself as the top general in Volkswagen’s audacious plan to subjugate Toyota. “We have launched Strategy 2018 in line with the long-term objectives of the Volkswagen Group in China,” Vahland said to China Daily. Note the “We have launched.” Vahland said he would increase annual vehicles sales in China from the current 1 to 2 million units as well as enlarging its fleet by least four models per year by 2018.

The former controller, Vahland, had an uneventful career at VW and his dispatch to Beijing as head of the Volkswagen Group in Beijing was widely seen as a promotion to Volkswagen’s Siberia. The real power centers of VW China are at SAIC in Shanghai and FAW in Changchun. Now, Vahland basks in the limelight of being the frontline general of Volkswagen’s attack on a weakened Japan.

In Germany, VW benefited from the Abwrackprämien boom. Deliveries rose 4.5 percent to about 251,500 vehicles during the quarter. More than 160,000 new orders were booked as owners turn in their clunkers for a new one and €2.5K from the government.

Even in cratering Russia VW grows. Despite a 39 percent contraction in overall Russian demand, Volkswagen grew its volume by 14 percent, making VW the fourth-largest manufacturer in the country.

NPR can’t believe their ears: “Come on? Volkswagen? The world’s top selling automaker? That sounds impossible. Last year, Toyota crushed VW, selling almost three million more cars and trucks. But in the first quarter, Volkswagen sold more vehicles than Toyota even estimates it shipped. Analyst John Wolkonowicz at IHS Global Insight calls it a fluke.”

The disturbing news of the arrival of the former axis member at the gates of Aichi, Nagoya, results in grave head-nodding in the land of the rising sun. “Volkswagen is a big competitor for Toyota,” said Koji Endo, auto analyst at Credit Suisse in Tokyo. “Audi is strong, Volkswagen is strong, and they’re making good use of their small cars.”

The stock market greeted the news by lifting VW’s tock price. VW has also moved up in stock value ranking, grabbing the No. 2 spot behind Toyota, whose market capitalization of $133b still outstrips the German carmaker’s $100b. For now.

C’mon. This whole Fiat and Chrysler hook-up is a joke, right? I mean, what could possibly motivate an Italian car company that got its ass kicked seven ways to Sunday in the US market for peddling sorry-ass rust buckets and [almost] providing some of the worst dealer service in the history of four-wheeled transportation to re-enter the fray under the Chrysler banner? That’s like Kodak teaming-up with Polaroid to make high end digital cameras for the Japanese. Like Cambridge’s instant photo folk, ChryCo’s business model is so busted all they’ve got left is an iconic brand name (Jeep). And there are still plenty of Americans who know that Fiat stands for “Fix It Again Tony.” So what’s it all about Alfetta?

Explanatory theories are floating through the autoblogosphere. The Fiat – Chrysler plan is an Italian head-fake. They’re having a peek at what they can buy when pennies from C11 heaven start to fall. Or Fiat’s “rescue” plan is a cunning ploy to use U.S. taxpayer money to fund Fiat’s American aspirations. After all, they got $2b from GM for not merging with GM. With inflation, that’s got to be worth at least $8b in today’s freshly-printed dollars. And then there’s a far more likely motivation for all this Mopar madness: ego.

The US car industry is a “yeah, too quiet” kinda place these days. The Presidential Task Force on Automobiles (PTFOA) has done the cappo si tutti cappo thing at GM: silencing Car Czar Bob Lutz and cashing ex-CEO Rick Wagoner’s bankruptcy-proof pension check. Wagoner’s clone, an overpaid caretaker who goes by the name of Fritz Henderson, has all the charisma of four-day old cod fish.

Ford CEO Alan Mulally is the same again, only fresher and more swordfish-like (if you know what I mean). And having learned that discretion is the better part of a $240m severance package, Chrysler CEO Bob Nardelli has sent out a memo saying, “Him! Let him run the company! Or them!”

In short, the American automotive industry doesn’t have a single charismatic spokesman at this, its hour of need. Which no doubt suits PTFOA chairman Steve “Chooch” Rattner. But it doesn’t alter an immutable fact: the auto industry is an ego-driven business.

Remember when we were discussing the strategy of Kirk “The Lion of Las Vegas” Kerkorian (ready to chill with Walt Disney), as his major domo (arrigato) Jerry York joined GM’s board and told them to sell something, anything, before the lights went out? Or the going, going, Ghosn GM – Renault merger?

That was then, and this is now. Now we have Sergio Marchionne. The Italian auto exec’s stolen the spotlight. He’s busy holding court—I mean chairing meetings. Issuing pronouncements. Making ultimatums. Flying hither and yon in Fiat’s private jets (yes, they still have them). Scheming. Dreaming. Coveting ChryCo’s CEOship. And putting on a show for Fiat’s shareholders.

To wit, the Wall Street Journal reports that “Italian carmaker Fiat SpA (F.MI) shares surged over 10% in Milan Friday, as investors expect a deal between the Torino-based company and Chrysler to be finalized by the end of April.”

How a ChryCo hook-up will help Fiat’s CEO achieve his profit target ($1.3b for 2009) in this moribund market is anybody’s guess. But the limelight does wonders for Marchionne’s rep in his native Italy, insulating him from the sales disaster waiting for Fiat’s politically-fixed sales incentives to expire.

Lest we forget, Sergio is, like Wagoner and Henderson, an accountant by training. Who started his career as a tax specialist. In other words, Marchionne’s a man whose craves attention not to say adulation. Which motivates the Canadian – Italian to rush in where any sensible corporation fears to tread. No, really.

“Canada was a mixture of pain and pleasure for the Italian teenager,” Canada’s Globe and Mail reported in a Marchionne profile. ‘Trying to get friendly with girls with whom you cannot communicate was a problem,’ he said.”

Surely this isn’t all about appearances, is it? Don’t call Sergio Shirley.

“The [Fiat] board room has a frescoed ceiling that would not look out of place in the Vatican Museum,” the Globe reports in a more recent article. “Coffee is served in fine china on a silver tray. The employees make sure the place is well stocked with Murattis.”

And so, here we aren’t. Chrysler’s private equity owners tried to dump the failed American automaker on China’s Chery (Hornet much?). Cerberus then tried to off-load their automotive non-fortunes onto Nissan (Hornet that, Titan this). And now they’re trying to palm off the whole schmeer on Fiat. Well, the U.S. government really. With the help of an egomaniacal Italian who either knows better and doesn’t care, or should.

Of course, you could say that the same thing about all parties concerned with this, Chrysler’s final fling, before it slinks off into that long goodnight.

Northyadams writes:

I have a 2004 GMC Yukon XL that’s developed a coolant leak that three shops can’t identify. Someone mentioned something about it on here. Does anyone have any more info—is this another GM problem?

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As TTAC’s Bailout Watch series heads for the initially improbable quingenta mark, it looks like the GM C11 naysayers are just about all nayed out. In his column, Detroit News Auto Editor Manny Lopez finally admits that a Chrysler/GM bankruptcy is . . . an option. Meanwhile, the self-styled AutoExtremist has thrown in the towel. In fact, Peter DeLorenzo now reckons GM is damaged beyond repair. A PR/marketing guy to the end, DeLorenzo has a solution: change GM’s name. “One hundred years of accomplishment and historic value to the American industrial fabric has been decimated in a matter of months. Once one of America’s corporate icons, GM has now been reduced to being a punchline for a running national joke, and this new car company will have to be unburdened of the GM name, pronto.” A matter of months? Clearly, DeLorenzo hasn’t been paying attention for the last decade or three.

GM isn’t the only one whose name is mud these days. Our neighbors to the north weren’t exactly thrilled when Chrysler told the Canadian Auto Workers to concede, the government to cough-up the bailout bucks or we’ll take our toys and go home. And now Ex-CEO Rick Wagoner stands accused of screwing GM’s Canadian subsidiary to secure taxpayer funding for his employer.

Bloomberg reports that “General Motors said it moved almost C$600 million ($495 million) from a Canadian unit to the U.S. [in March] as part of a deal with banks to strengthen U.S. operations and win government bailout money.”

Anyone remember when freshly-minted GM CEO Fritz Henderson announced the startling news that they didn’t have to draw down “extra” billions by the end of the month to keep the lights on? Apologists put it down to careful husbandry. Well, now we know the truth about GM’s sudden (if temporary) push away from the bailout buffet.

Of course, there’s the small matter of the bondholders left behind by GM’s run on the bank. And boy are THEY pissed.

Aurelius, Appaloosa and five other funds, who hold notes valued at 377 million pounds ($562 million), sued March 2 to have the money returned to the GM unit in Nova Scotia, which in 2003 issued the two series of notes.

The funds claim GM, the parent company, is either insolvent or on the brink of insolvency and knows it won’t be able to honor its obligation to the noteholders.

The parent company “has been or will be unjustly enriched at the expense” of Nova Scotia Finance and its creditors, the funds said.

See you in court? Hello? Chapter 11? Take a number and get in line, bud.

And join Pontiac and GMC dealers. Bloomberg also reports that “people familiar with the [federal] discussions” about GM’s train wreck say that the Pontiac and GMC may/will/might/could get the axe. This as GM’s “Savings Push Deepens.” It has to be asked: Fritz, do you like it like this?

GM’s spinmeisters responded to Bloomberg‘s Wild Ass Rumor with the kind of openness you’d expect from federal employees. “We are continuing to assess our global operations, brand portfolio and nameplates, and will take further actions to more aggressively restructure our business,” Renee Rashid-Merem, a GM spokeswoman, said yesterday. “It’s premature to comment on what those actions could entail.”

GM is talking muy macho for a company about to enter the Mother of All C11s. Ford, on the other hand, is talking softly and offering its dealers a big shtick.

The Detroit News curmudgeon Daniel Howes has finally broken radio silence to reveal that The Blue Oval Boyz have sent their dealers $1K in conquest cash with which to lure fleeing GM and Chrysler customers.

“Domestic intenders for Chrysler and GM have been defecting to Ford and Lincoln Mercury products in great numbers since the beginning of the year,” Amanda DeMouthe, marketing manager for Ford’s Boston, New York, Philadelphia and Washington regions, wrote dealers in an internal memo.

“And as media continues to speculate on the possibility of bankruptcy, those defections will surely continue. Please be sure your teams are aware of this new incentive. It is stackable with Customer Cash, Bonus Cash and 0% APR!”

You want domestic metal cheap? You know where to go. As Mr. Howes reminds us, it remains to be seen if FoMoCo can avoid the same fate awaiting General Motors at the hands of the feds. Meanwhile, everyone even remotely connected with Chrysler and GM is getting hammered, or is about to get hammered.

“Customers ask that question almost every day and they expect you to give the cars away because they say you’re in bankruptcy or soon will be,” New York Chrysler dealer Jonathan Grant tells our Mr. Howes. “This thing’s like a cloud that is hanging over us.”