Automotive News [AN, sub] does an excellent job covering the industry. Most of the time, AN is an unbiased if largely toothless conduit of autoblogospherical fodder. In other words, they report, we decide. But today’s column by Editor David Sedgwick is, well, appalling. No, really. I am shocked at the depths of disinformation, dissembling and, yes, dishonor to which AN and Sedgwick have sunk. “GMAC’s chief has a chance to earn his millions” begins by asking “Is Al de Molina worth $11.6 million?” The obvious answer has Will Smith written all over it: oh, HELL no. Unless, of course, you’re one of the Cerberus insiders who benefited from the Fed’s last minute rule change. You know, the one allowing GMAC to become a bank when it didn’t qualify for bank status. Oh, and then there’s Uncle Sam’s $6B GMAC bailout. So yes, I guess Al de Molina is worth the big bucks to someone. Sedgwick’s column, on the other hand, isn’t worth the paper it’s printed on.
Category: Editorials
TTAC Commentator Heath writes:
A couple of months ago I got the SVT suspension for my Focus. Not want to blow the budget any more I left the 205/50/16s that the Focus came with and there is a unhealthy amount of sidewall flex with the 50 (Pirelli P6). The SVT had 215/45/17.
My question is when its time for new tires, should I go for 40 or the 45. I’d like to stay on the 16″ rims as don’t really want to get new 17″ rims as well.
Sajeev responds:
If you stay with 16″ rims and go for a lower profile tire, the change in circumference messes up the speedometer, gearing (lower profile means more gear and less economy) and increases the unsightly gap between the tire and the body. We did this for TTAC’s entry for the 24hours of LeMons, and the gearing advantage was totally worth it. On a street car? I doubt it.
The president who did more to expand the federal government than any other in modern history began his first term assuring Americans that the only thing they had to fear was fear itself. Flash forward seventy-six years and FDR’s spiritual successor wants his fellow countrymen to live in fear—so his administration can achieve the same Big Government goal. Lets call it the Fram filter doctrine. Remember the old Fram filter ad? “You can pay me now or you can pay me later.” There’s your philosophical justification for the Detroit bailout. We have to bail out Motown (and everyone else) NOW or the whole economy will go to hell and we’ll WISH we’d made the “investment.” Rubbish.
There’s only one way Bailout Nation makes sense: if you accept the supposedly “inevitable outcome” of failing to prop-up failed enterprise. Oh, hell. You don’t even have to accept it; you just have to be afraid that it’s true. If GM catches a cold, Americans will die of plague. Are we really that stupid?
Cravenly, disgustingly, to their eternal shame, GM and Chrysler Gulfstreamed to Washington to flim-flam the fruits of their epic mismanagement as a threat to all taxpayers. Their CEOs testified that if we didn’t hand them $19.4B worth of taxpayers’ money, the “ripple effect” of a Chrysler and GM Chapter 11 would kill the economy dead.
No! Worse! If we “let” GM and Chrysler slide into bankruptcy, it will destroy America’s entire industrial base. Foreigners—foreigners!—will steal our middle class and, eventually, turn us into their bitch.
So we paid up. And now the zombies are back, using the same tactics that loosened the public purse strings the first time. Pols and press are busy perpetuating the same flawed, fear-based logic which obviously, catastrophically, nearasdammit immediately failed. In fact, we’re post-Fram. The new thinking: we can pay them MORE now and we can pay them MORE later. And… that’s it. Oh yes, we eventually get electric cars.
Here’s another idea. How about we pay Chrysler and GM NOTHING now so we don’t destroy the entire United States economy later? I’m serious. Forget debtor-in-possession financing. If the markets won’t embrace Chrysler and GM’s C11 turnaround plans why should the American taxpayer?
If America wants to clean up the aftermath of a Chrysler and GM C11 by creating a new health care, pension and unemployment safety net, if John Q. Public feels sorry enough for displaced auto workers to spread boondoggle billions over the bankruptcy-blighted landscape, go ahead. But for God’s sake, let these automakers die. It’s gonna be ugly. But over-capacity is over-capacity. There’s no way for GM to avoid the consequences of its inability to make itself indispensable. None. When the bailout music stops, GM still won’t have a chair.
If we continue to bail out Detroit, and extend that largess to automotive suppliers, dealers, etc., we’ll screw-up the economic fundamentals that made this country the world’s greatest economic power: minimal government intervention in fair, free and open markets. We’ll be stealing food from the tables of those companies and workers that didn’t end up in DC. Who didn’t use threats, bribes and extortion to avoid the consequences of their own actions. And we’ll be running-up the price of transportation for the average consumer.
Bankruptcy was designed for this exact situation. Do we really have so little faith in our existing institutions that we want to create some special exemption for a gang of bombastic millionaires that somehow got the idea that they deserve a pass that we, the people, would never receive? What’s wrong with Chapter 11 anyway? GM and Chrysler are afraid of that no one will buy a car from them in bankruptcy. And they want us to “take ownership” of their fear. With our cash.
Someone needs to stare these fear-mongering whiners in the face and tell them to man up. If it’s true that consumers won’t buy your products after you’ve declared bankruptcy, it’s your fault. Not ours. YOU killed your brands, not US. Instead of holding a gun to our head, why don’t use your valuable—make that expensive—time devising a way OUT of bankruptcy. Find some way to come back from the dead that doesn’t steal money from the mouths of productive citizens and taxpayers.
Yes, we’re afraid for our economic survival. Yes, we feel for others who will suffer for their boss’ incompetence, arrogance, short-sightedness and greed. But we must not abandon who we are as Americans and what we believe in.
Faith, hope and charity are wonderful, noble ideals. But they’re not what makes America strong. That would be independence, creativity, hard work, determination and a deep-rooted belief in fair play. Now is not the time to abandon our principles. Now is the time to embrace them, come what may. Yes, we can pay Detroit now. But mark my words: we will pay for it later.
Despite General Motors’ epic slide into Chapter 11, or perhaps because of it, its defenders are busy re-writing history. It’s the Poseidon Adventure redux: a huge, well-run ship overwhelmed by a sudden, terrible force of nature. Except this ship will eventually right itself. In truth, GM really is the Titanic: a badly built vessel helmed by men blinded by short-term greed and long-term hubris headed for Davey Jones’ locker. Make no mistake: GM CEO Rick Wagoner had the chance to return GM to dry dock, repair the company’s flaws, and make it across turbulent seas. But then Wagoner is a GM lifer—his cowardice is both genetic and institutional. What’s the mainstream media’s excuse?
This is the day after GM’s auditors told the world that the automaker may not be a “going concern.” It’s also the day the MSM has finally come to grips with GM’s utter ruination at the hands of its tacitly incompetent management. Or not.
For example, Daniel Howes’ column in the Detroit News is the same as it ever was. Although Howes chastises “the skeptics, the deniers and the deluded” for not facing the truth about GM, and his tone has switched from enthusiastic cheerleader to horrified bystander, he still believes that GM has a future– under Uncle Sam’s taxpayer supported wing.
“[The auditors’ report] also should remind the White House just how perilous a GM failure could be for their friends in labor, voters in the industrial Midwest and a fragile national economy.”
As John McEnroe used to say (before CBS signed his paychecks), you CANNOT be serious. Mr. Howes has been carrying the can/pouring the Kool-Aid/providing aid and succor/kissing the ass of these GM C11 deniers for years. This morning’s minimum opus proves he still doesn’t get it: GM is toast.
It’s bizarre. An MSM industry insider reckons the auditors’ report declaring GM kaput will help his hometown heroes confront the reality of GM’s bottom line—so they can avoid the reality of GM’s bottom line. Get out of denial to jump back in. At the taxpayer’s expense. Without anything remotely resembling a coherent and believable “return to viability” plan.
It may arrive as a piercing glimpse into the obvious, but even after GM’s “we’re NSFWed” SEC filing, the agenda-driven MSM continues to view GM’s death throes through the prism of their pre-existing prejudice.
NPR’s The Takeaway interviewed me this morning about the “automotive bubble.” Host John Hockenberry seemed more concerned with the Obama Administration’s electric car future than the fact that “big bad” GM (as opposed to naughty truck-building Toyota) is going away.
Sad but true: MSM’s failure to “move the needle” in its understanding and presentation of the scope, scale and immutability of GM’s perils has enabled the company’s outrageous call on the public purse. In fact, it’s increasingly clear that both GM and the MSM see down as the new up. The worse the news, the greater the justification for the feds to hang another multi-billion dollar bag on Motown’s IV pole.
Just this morning, GM admitted that its request for an additional $30B federal “loan”—on top of the $13.4B already pissed away—won’t be enough to dig it out of its hole. You heard right. Please sir, may I have some more? (As spoken by Frank L. “Bobo” Marrapese Jr.) There’s no way GM could have gone public with this admission without a mostly complacent MSM. In a world with a properly informed and skeptical media, GM’s begging bowl would have been smashed to pieces.
I repeat: where is the media reporting on this fresh, unsustainable assault on taxpayer largesse? In the Detroit Free Press’ case, they’re chewing the fat with GM’s CFO. The Freep reports that Ray Young claims to be “monitoring the situation closely.” Not to worry; Young had “planned for a weak first quarter.” Huh. Does that mean GM intentionally low-balled their initial suckle request?
CNNMoney isn’t bothered. The simply parrot GM’s PR spinmeister’s Fastlane Blog defense of the company’s long term future. The New York Times also isn’t interested in ripping GM a new one. “The [SEC] announcement does not mean bankruptcy is imminent. But it underscores how difficult it will be for GM to successfully complete the restructuring plan that it filed with the Treasury Department last month.”
Hang on . . . didn’t Young just say GM can’t complete their restructuring plan as written?
Meanwhile, the Wall Street Journal continues its descent into the journalistic abyss. Once again, they’re basing a story on “a person close the matter.” This time he’s saying GM’s open to a government-sponsored C11. Yeah right.
When GM finally files for C11, the MSM will continue the spin. They won’t even blink when GM asks for tens of billions for debtor-in-possession financing. The tough questions—which should have been asked five years ago—will once again go unasked.
Too big to fail? As far as the media’s concerned, the answer’s yes. Even when it’s no.
Back in Motown’s heyday, in-house design giants like Harley Earl set the automotive fashion trends. Rockets, airplanes, Googie, breasts—vehicular taste-makers drew inspiration from the pop culture gestalt. Today’s car designers are no different. Specifically, they’ve turned to urban parade makers for their sheetmetal cues, favoring designs that evoke the wretched excess of a rapper’s bling. Unlike Earl and his cohorts, contemporary car designers suffer from Marty McFly Complex: they try dangerous things to show that they’re not creative cowards. The Ray Gun Gothic designs of day’s past had “it.” Our time’s blingmobiles are just plain embarrassing.
Yes, it’s true: bling lives. Although MTV’s Pimp my Ride has jumped the shark, anyone who’s anyone (i.e., someone who wants everyone to think he’s someone) still feels obliged to take a perfectly decent automobile and add several hundred pounds of accessories: spinners, woofers, gold plating, and neon. Anti-stock is the new stock. Or, as the marketing folks at the accessory-based Scion brand so aptly put it, hundreds of thousands of consumers are united by individuality.
Locked as they are into a three to five year lead time, automakers are just now unleashing designs that echo the PMR generation’s obsession with avoiding Prudy Square. Exhibit A: the ridiculously oversized badges sported by today’s whips.
Driving down our interstate highway system for a few hours, I began to notice the big print badges favored by Ford, Dodge, VW, Mercedes and Caddy.
The new F150 sports a badge on the tailgate that would be at home around the neck of any 80s rapper (should his chiropractor approve), especially when compared to the older truck. The New Dodge Ram trucks look as though they could lose a few pounds—say 100 or so—if only they’d put their logos on a diet.
The Buick Enclave’s badge is so big they had to form the rear window around it. Mercedes once restricted their nostril mounted three-pointed star to a single model (500 SEC I believe). Today’s entry-level C-Class’ snout sports an embedded logo that makes the old Merc long for Enzyte.
Volkswagen has surrendered to the forces of largeness, Big Style. Space shuttle crews report that the ill-fated Phaeton’s trunk-mounted logo can be seen from low-earth orbit. At the same time, BMW’s kidney-shaped grills have become swollen, bloated and distended parodies of themselves.
So why the bling thing? In much the same way that hunters spritz themselves with deer musk and a doe’s rutting blood in order to afford themselves some natural cover, perhaps the uber-badges allows manufacturers to look as if they’re hip to the bling thang, and allow them to attract prospects in heat for some new wheels.
The badge engorgement also reflects federal safety and fuel economy regulations. The government is asking all automakers the same questions; it’s no surprise they’re all coming up with the same answers. In other words, there’s a reason why today’s cars look strikingly—or not so strikingly—similar. (If not to you, to the average buyer.) Badges have become an increasingly important way to differentiate one design from another.
And yet, pre-blinging defeats the whole point of pimping a ride; it’s no fun to drive in a car sporting the same tasteless crap accoutrements as everybody else. So the tuner crowd are busy modifying vehicles that have already been modified to look like they’ve been modified. Just as the Cold War led to a $75K coffee maker in the B-1 bomber, I suspect things will get a lot worse (read: “bigger and more obnoxious”) before they get better (“back to normal”).
Then again, the ecoNazis may be bling’s undoing. Once some enterprising Greenie (or heaven forefend, a member of Obama’s Task Force) starts looking at factors like the bling-to-gross vehicle weight ratios, we’re likely to be treated to umpteen stories of how Big Bad Detroit is letting their love of self-promotion run amuck, at the expense of resources.
I can foresee a cottage industry for body shops, de-badging trucks and SUVs to assuage the conscience of those that insist on livin’ large in a rolling land yacht.
Then again, again, it could go the other way: blinged-out government eco-badges. How long before the government enlarges carpool lane stickers, or PZEV designations? Big ass emissions test stickers? How long? Not long. I may not get there with you, but I’ve seen the gi-normous hybrid stickers adorning GM’s gas-electric truck. I’ve seen the PC land.
While I’m all for the auto industry trying to get in touch with their “inner customer,” I’m not so thrilled about the blingalicious look of their new product. If I wanted to drive around a billboard, I would. If they’re going to insist on having their names writ large across the backside of my vehicle, then I should get paid to drive their ads across my city. Less is more.
TTAC reader JG writes:
Sajeev, do I have a question for you! Knowing the roads (and potholes) of Houston (like I know you do) here goes. I own a 2001 Ford Explorer 4-door. My pregnant wife curses the ride every time she’s in the car (whether it’s moving, or not). I have recently replaced the tires, which helped a little and ball joints up front. I’d love to get out of this car into something safer, but it’s not an option for a few more years. Is there anything I can do to improve the ride quality? I know I’m dealing with limited options with the solid rear axle, but there has to be something, right?
Sajeev writes:
I see two quick fixes: put several bags of mulch in the cargo area, or hack the muffler and run a straight pipe. (You can get away with it in Texas.) The mulch takes the bite off the leaf springs, and a large amount of ride quality comes from the rear suspension, fuel economy penalty be damned. But the straight pipe ensures your wife will never complain about the Explorer’s terrible ride. Ever.
Last year in Geneva, I grumbled about how the annual car show was all green talk and no green action. This year, in contrast, I found few new cars worth writing about: the VW Polo is a bore, the Daewoo/GM Spark is a joke, exotics are an anachronism, and the A4 Allroad is a good sequel—but why waste any bandwidth on it? On the other hand, there are some pretty exciting alternative-fuel vehicles on display. (And, predictably, some big disappointments, too).
One of the good things about a show is that you can talk with the industry’s grands fromages on an off-the-record level, to get a feeling of what’s buzzing. Basically, there seems to be an understanding that government support will make electric propulsion feasible for small, lightweight cars in selected countries such as France and Israel. Second, hybrids are a good idea for heavyweight cars and trucks. Finally, electric sports cars are good testing beds for new technology—but not much more. (But where does that leave the Volt? Exactly. But I digress).
Starting with the lightweight-but-serious stuff, I really like the Michelin-Heuliez “Active Wheel” joint venture. The main thought is: an advanced electric car doesn’t have to have a conventional gasoline-engine configuration. You don’t need a large engine bay; why not save the space for luggage, crashroom and legroom? So the Heuliez (you pronounce it “Early-Ezz”) “Will” has its electric motors, brakes, and suspension elements encased in the wheels’ hubs. At 450 mm, the Will’s roll center of gravity is low. Each front wheel allocates the power it puts on the road according to available traction, and steering is 100% electronic: there is no mechanical connection between the steering wheel and the wheels, just as in an Airbus. But what about all the unsprung weight you get from putting everything in the wheel? This is where the Will is remarkable: unsprung weight in each front wheel is only 32kg. This means a mere 7kg more unsprung weight in comparison to a conventional layout. The Will (not the wheel) looks boring, but that’s because Heuliez concentrated on technology, not on the car’s appearance. Future generations will look more advanced, but in the meantime, the press will be allowed to drive the first Wills this July.
It would be great if the Mindset held the same promise, but I doubt it. Mindset is a company with a prototype designed by Murat Günak, the guy who penned epic cars such as the Mercedes SLK, Mercedes SLR and the Peugeot 206. It uses Heuliez’ e-technology. The Heuliez engineers I spoke with think it is a true dream car concept. I like it too as a complete re-think of what a modern car could be: fast but bench-seated, aerodynamic but unblobby, sporty yet replete with high ground clearance. The word in Geneva however was that Mindset is not getting crucial second-stage investors funding. We’ll see.
When I took the Mitsubishi iMiev for a test drive six months ago, I was impressed. And in Geneva, most e-engineers opined they have high hopes for the iMiev being a significant advancement because, uniquely, it is more than just an urban vehicle. PSA (France’s Peugeot Citroen group) in Geneva announced it will be adopting iMievs for their home market. It seems that once you have a usable electric drivetrain, it’s not too difficult to adapt it to different lines of cars. For a start, Mitsubishi in Geneva is showing a wacky coupe variant of the iMiev called the Sport Air. My girlfriend loved it, but I reserve judgment.
How to reserve judgment for Tesla when they hide themselves away in a sad, dark, minor area of the Geneva show, with Uzbeki LPG-adopters as neighbors? So these are the guys who want Europeans to send down payments for their pricey sports cars? It seems they’ve had a major management malfunction somewhere.
Talking about major malfunctions, it was endearing and bizarre to listen to the MSM journalists interview Opel’s operators about the Ampera, Europe’s Predator-faced adaptation of the Chevy Volt. Here are some questions I eavesdropped on: Will the rear-view mirrors look like that on the actual 2011 model? Regular or premium? How about the warranty? I was impressed with the Ampera’s claim of a 500km range, but I also like Orson Wells’ “F for Fake”.
For a taste of proper things to come, look at the official Swiss electric vehicle showcase stand, splendidly located in the middle of the most important hall of the motor show. There, the Honda Insight was displayed right next to the new Prius. Bad news: inside, in comparison to the Toyota, the Insight looks every penny saved. I was more than disappointed how cheap and unappealing the dashboard and some of the interior fittings appeared. Altogether nicer is the e’mo, a prototype developed by the University of Applied Science of Rapperswil (I’m not joking, and neither are they). The e’mo was designed to be superlight (350kg), fun to drive and sexy-looking. A sandwich-plate structure makes it stable and crashworthy, and non-golfcart-ish. I can hardly imagine a more appealing urban vehicle (but that may be because I yearn for a Citroen Méhari).
Another advanced electric car I could imagine driving is the Protoscar Lampo. Impressively, the Lampo has four-wheel drive and a GPS-based range estimator which they say is more accurate because it integrates data about hills and freeways. 268 hp and a range of 200 km sound nice for this LiIon sports car that sports a composite material body. The selection of beep tones (from freight train to wolf whistle) to alert pedestrians was an auto show hit, too.
Since it stores its energy in the form of compressed air, the MDI Airpod would probably be able to do wolf whistles, too. Honestly, how wacky can you get? It is hard to take such an odd job seriously, but MDI is actually already selling vehicles to various airports. The thing about compressed air, an MDI official told me, is that you don’t need expensive, heavy and complicated batteries. Sound logical? The AirPod, of course, is strictly urban, but the MiniFlowAir is a bit closer to, er, conventional concepts of what a passenger car might be. They showed it in Geneva and it was hard not to find it impressive.
In the mean time, some people will make do with the Smart ed, which is in the first year of four years of testing in England. A Smartish guy told me nobody had yet returned a FourTwo ed, and that the driving experience was generally seen to be superior to the regular Smart (with no jerky shifts). Surprisingly, only 60% of the 100 participants live in urban London. Mr. Smart said that in contrast to Germans, the English seem to take reducing their CO2 footprint quite seriously. It’s strange times we live in.
Was Aston Martin’s expansion into lower reaches of the luxury automotive food chain a good idea? The development of the AM V8 Vantage was at best a dangerous move. Why risk devaluing a storied brand? Looking at top line figures, it seems as if Aston’s “entry level” model is a solid success. Aston Martin’s sales have increased to levels the company hasn’t experienced since . . . ever. Thanks in part to the AM V8, Aston Martin turned a profit in the two years prior to its removal from the FoMoCo family. But looking one level deeper, the British automotive brand’s move down market triggered several less-than-savory consequences. They may be returning to bespoke, fragrant leather coops, but the prodigal chickens are back, and they’re bad.
When a luxury brand faces introduces a substantially cheaper offering, it “pulls forward” potential sales. Aston’s cheaper alternative to a previously ultra-exclusive automotive product gave people who very much wanted to buy into the brand a chance to do it a lot sooner. This sounds exciting to the marketing folks, both in terms of total revenue generated and brand prominence. But the fact that AM intenders were fulfilling their yearning for a luxury product at a much lower price got lost in the buzz.
In other words, in a related, unintended, but hardly unpredictable consequence of lowering the barrier to entry, Aston’s V8 sales reduced the pool of potential customers. Did the AM V8 attract buyers who would otherwise never have thought of an AM? Unlikely. But by putting more people into a cheaper AM, the company ran the very real risk of those customers failing to upgrade to a more expensive model later on. The chances are high that the Vantage V8 fully scratched their owners’ AM itch. Oops.
You can see the same thing happening over at Porsche. Although the Boxster/Cayman twins are cheaper, less powerful and less prestigious than the 911, they’re damn fine automobiles in their own right. If you really love your Boxster or Cayman, why not save yourself some money and stand pat? Which is exactly what has happened.
The 911 is a vastly more profitable car for Porsche. Hence Stuttgart fought nail and claw against this happy-Boxster owner dynamic. It took, what, 13 years before the Germans offered a limited slip differential in their mid-engined marvel? And yet, they caved anyway, offering the usual minor upgrades on their lower-priced model, giving Boxster/Cayman owners an excellent reason not to make the jump to hyper-price.
Note: the Boxster and Cayman did not cannibalize 911 sales directly. I highly doubt many Porsche owners traded down from a 911 to a Boxster. If you look just at the sales numbers, there was no initial negative effect from the Boxster. Armchair analysts tend to forget that Porsche was on the ropes when the Boxster was launched, and customer loyalty meant that 911 sales were relatively robust and stable. However, when the economy boomed in the ’90s and early 2000s, the 911 sales bump was way under expectations, exactly because of the Boxster.
Let’s have a look at Aston Martin’s numbers. [Click here for AM sales chart]
In 2006, the take-off of DB9 and Vanquish sales (seen in 2004 and 2005) reversed abruptly. When the V8 Vantage came to market, the 2005 levels of the high margin cars effectively halved. [I apologize for having only the European numbers in the graph, since I do not have access to global sales ones.]
It’s a familiar story. Jaguar XJ sales effectively halved with the arrival of the S-Type and never recovered. S-Type sales dropped by 40% with the introduction of the X-Type. Other premium brands have perhaps not experienced as pronounced an effect, simply because the much cheaper offering sold in much higher numbers (declines of 30-50 percent For the Bentley Arnage and Lamborghini Murcielago upon the arrivals of Conti GT/Flying Spur and Gallardo). Are these brands really better off for opening the gates wider?
For Aston, the answer seems pretty obvious. If nothing else, Aston residuals have started dropping rapidly. Most of this is due to the current economic crisis, but pre-AM V8 Vantage, the fall would not have been nearly so dramatic. When a seller gets rid of a two-year-old V8 Vantage for $60K, this drives down residuals for the DB9s and Vanquishes as well.
The new Aston Martin Rapide aims to add some luster to a brand tarnished by its own short-sighted model management. Oddly, both Porsche and Lamborghini are following the exact same trajectory at the same time. In all three cases, the brands are ignoring Ben Franklin’s sage advice: it takes many good deeds to build a good reputation, and only one bad one to lose it.
More than that, just as you can’t unring a bell, you can’t drag a brand back upmarket—at least not without waiting a long time for the dissonant echoes to fade.
For the last 20 years or so, I’ve been fighting traffic tickets in the New York area. My business is not “normal.” No matter how easy I make the process, no matter what the outcome, half of my final client conversations contain the words “I hope I never see you again.” (It’s OK, I understand. You came in with a “gun to your head.”) While the client kiss-off never changes, my ticket defense work fluctuates with the level of traffic enforcement. Weather, gas prices and terrorism alerts (post-9/11) all impact the number of tickets issued. I’ve survived a few up and down cycles. And with a steady client base and wide professional contacts I can draw a few conclusions. The recession is here. Government budgets are under threat. The word has gone out: write tickets!
Most people know that highway speed limits are set 10 to 15 mph below design speed (i.e., limits that would be set by traffic engineering surveys). That means pretty much everyone is speeding—in a strictly legal sense. But not from a safety perspective. Going with the flow or five mph faster is the safest way to drive; and yet the flow is usually “illegal.”
Debate that as you will, but the police allow some leeway. Most 55 mph roads are “stay under 70.” Most 65 mph roads are “stay under 80.” In New York City, rare is the speeding ticket under 70 mph in a 50 mph zone (rare, not nonexistent, so don’t go 70 and blame me later). It’s also worth noting that most ticket writing involves random selection from a pack of traffic. (This is where the silver Accord beats the red Corvette.)
The “system” is set up with a level of enforcement such that a normal, sane and flow-following driver will still catch a ticket every two to five years. From the government’s point of view, this is the ideal “threshold of pain.” The speed limit remains “the law.” Police can give “courtesy” or “use discretion,” which garners significant goodwill. The normal driver gets a ticket often enough to remind him or her to pay attention, but not so much as to take them off the road. Cash is extracted. Insurance company surcharges. Next customer please.
In New York, a very typical 77/55 is a six point ticket. The motorist pays approximately $250 to the Court. They’re taxed a second time by our “Driver Responsibility Assessment.” That’ll be $300. Each ticket is a $500 + nut. An industrious cop can write 20 per shift. Surcharges and other “fees” are attached, limited only by the inventiveness of the State Legislature at midnight. The public never notices till THEY are caught in the net.
Cops know how much traffic tickets make. So when police have a contract issue, or when overtime is cut, the radar guns are quietly turned off. Most police have a variety of tasks they can do on duty, so this is hard to trace. The power of the “off switch” has been a quiet factor in many police contract actions. When tickets (revenues) drop, the money requested by the police union suddenly becomes more reasonable. We saw this recently in New York State.
Those most likely to make an effective political stink to change the low speed limits are the same sort of person who’d go to Court (or retain Counsel) and fight the ticket. Once their ticket is taken care of, they stop caring and the whole incident falls in the Hole of Denial, never to be thought of again.
Letters to Congressmen and the Editor of the local paper are forgotten about in the wash of the reduction from six to three points—and that is the REAL reason you get a break if you fight the Ticket. The “deal” is essential to defusing organized resistance to the “system.” Arizona is learning this with the speed cameras. No deal = political resistance.
The recession has made a few changes, even with the uptick in volume. Tickets are coming to my office later, or only after the Court Clerk has refused the client’s third postponement attempt. They forget somehow to tell me this. More clients are price shopping.
Often, after doing one ticket, the client admits they have . . . two others. One of which is late. Denial again! Ticket fighting is a recession-resistant business, but not recession-proof. Lack of money, real or felt, is hitting all levels of society. Never mind the fact that a client was ticketed while driving the Range Rover up to the ski house. My pre-contractual client conversations are more strained than they were a year ago.
Courthouses are more full than last year, reflecting the overall increase in tickets issued. The word is out. Watch the medians, and watch your wallet. A hungry Government is very, very dangerous.
[Casey Raskob can contacted via Speedlaw.net]
CarMax prides itself on creating a dealership experience unlike any other. Well, now that Saturn is going Tango Uniform. CarMax emphasizes no haggle pricing, easy financing, and a process that involves only one person. No more having your salesperson go back and forth between you and “Bubba” (or “Cowboy” if you are Dodge). You’re greeted warmly, shown any car you like, and guided through a completely transparent transaction, with nothing hidden. That’s the theory. How does it hold up in practice? In true TTAC tradition, I offer a personal critique of one of our biggest sponsors.
My first CarMax transaction occurred before my prose ever graced the pages of TTAC. After buying a Ford F-150 I didn’t need, I decided to celebrate two years cancer-free and 40 lbs. of weight loss by purchasing a sports car I could drive on the weekends.
After wandering through the four-square, fishbowl wilderness, I pulled into my local CarMax. A salesperson immediately guided me to a computer to search the dealer’s nationwide inventory. I’d already settled on a Porsche Boxster S. They located a bright red model in Houston. For a modest $250, they’d transfer the Porker to my 10-20.
Inexpensive relocation is CarMax’s trump card. However, there’s a string attached. When the car shows up, if it’s not to your liking, you can walk away. But your up-front transfer fee payment is toast. To forestall this possibility, CarMax provides an electronic “walk around.” Customers submit questions about the vehicle of their choice to a representative at the relevant dealership. Within a short time, the answers are transmitted back
Like with any computerized solution, there’s a large element of garbage in, garbage out. The remote CarMax rep will answer all your questions, but you’re still talking to a car salesman. A question on how the wear of the driver’s seat returned “normal wear, some wrinkles, looks great! Ready for purchase!” The more specific your questions, the better information you receive.
Once you decide to purchase said vehicle, financing is a simple process. You plug in your vital information on a computer, wait fifteen minutes, and choose which bank loan fits your needs best. Easy. No dealing with an F & I guy breathing down your neck. No fancy calculations, hidden fees or emotional games.
Next: your trade-in appraisal. The sales rep plugs-in the salient facts about your gem/turd into the same computer. While you wait with your salesperson, going over warranty information and other plugs for add-ons (yes there is still that), CarMax’ trade-in expert gives it the once-over.
CarMax describes their trade-in prices as fair, and many times they are. However, top dollar is not yours for the taking.
My Ford F-150 was valued at $14,000 at the Ford dealership, and $15,500 at CarMax. Seems reasonable—until you realize Ford completely low-balled the offer with the full expectation of giving more on the trade to sweeten the deal.
Cars above 100K miles are given paltry values, as CarMax doesn’t sell high mileage vehicles; restricting their income to auction values (where 100K-mile cars are almost worthless).
To my mind, CarMax’s non-negotiation policy is the mega-dealer’s biggest flaw. While it’s great for people inexperienced, wary or anxious at the prospect of haggling, the lack of any sort of negotiation proves troublesome for experienced buyers, especially when they realize they’re going to pay more for a vehicle than they would at a “traditional” dealership.
CarMax justifies their higher prices with a simple guarantee: the vehicle they’re selling you has never been in a frame damaging accident, flooded, or experienced any other incident that would make it an “undesirable.” CarMax has so much faith in the quality of their vehicle selection that all of their vehicles are available with an extended warranty.
To be fair, I’ve found that nearly every car that I’ve inspected on a CarMax lot looks clean and tidy. More often than not, it’s in much better condition than an equivalent vehicle waiting for unsuspecting punters across the street at Super Bob’s Auto Liquidators. WYSIWYG.
For example, I’ve been trying to find a steed to take to Europe. I tried to buy a Dodge Challenger SRT-8. The Dodge Boys changed the numbers overnight. I then attempted to buy a brand new Audi A3 DSG from a franchised store. Audi’s finance company wouldn’t approve it for export. Whilst wrangling with Audi, I looked across at a CarMax lot and spotted a 2004 Pontiac GTO.
Clean as a whistle. Burbled like a dream. Did I pay more than I could have? Yes, I did. Did I get an exceptionally clean car and a decent offer on my trade? Yes, I did.
CarMax provides a welcome departure from the high pressure, cloak and dagger methods of a “normal” dealership. They charge a premium for the lack of aggro and peace of mind. For me and for hundreds of thousands of customers, it’s worth it.
Moral relativism is inherently childish, as demonstrated by my eleven-year-old. “You don’t make Lola take her plate into the kitchen.” Any assertion that her sister’s age removes her from the obligation meets with a derisive snort. In fact, Sasha reckons she’s a victim of a cruel, capricious system. “It’s not fair!” she cries, storming off—until I threaten to yank her poker chip pay. Then, grudgingly, she does what needs doing. All of which reminds me of GM’s PR “narrative.” As their sales dip by half, they cry “Everyone’s sales numbers are a disaster! You can’t blame US for this mess.” And then they walk off and we clean up (i.e., pay for) their mess.
GM’s bondholders and union leaders “get it.” They know that GM lives in a world where actions don’t have consequences. No matter what The General does or doesn’t do, no matter what they build or don’t build, kindly Uncle Sam will keeping throwing them chips.
And who do you think scoops up those plastic pieces at the so-called bargaining table? Why the bondholders and union leaders, of course. When it comes to securing “their” stake, General Motors and its camp followers have learned that whining speaks louder than action.
“These are obviously unsustainable levels which are causing almost every major auto manufacturer across the world to look for government aid,” GM’s chief sales analyst Michael DiGiovanni said during a post-February sales numbers conference call.
See! Nobody else has to file bankruptcy! You want us to go C11? I hate you! I wish you were never born!
Plug your ears for a second and think about that. General Motors has just publicly admitted that they’re no longer a viable business. And no wonder.
When GM first suckled from the federal teat, their loan request was based on grabbing their “usual” share of an estimated seasonally adjusted annual sales rate (SAAR) of 11m vehicles. February’s SAAR clocked in at 9.8m. Oh, did you mean retail sales? That’s 7.5m. Nissan’s CEO figures SAAR will drop to 8.5m.
Bottom line: GM is too big to survive in such a small market, never mind the weakness of their products.
You could make a case that the precipitous sales drop was due to the unforeseeable collapse of the credit market. You could argue there was “no way” GM could have predicted these terrible times (although I won’t be joining you in that belief). But clearly, indisputably, GM should have known the way the winds were blowing back in December.
So how come GMNA’s Best and Brightest’s “worst case scenario” wasn’t even close to reality? Either GM management was woefully ignorant of their own business, or they were lying to Congress to minimize their [initial] call on the public purse.
After ten years charting this company’s course, watching as the crew plowed it straight into a killer iceberg (that a faltering economy has now revealed in all its terrible glory), I’d have to say GM’s misinformation was based on willful ignorance. And cowardice.
These are tough times. Times that try a man’s soul. What GM needs, what we all need, is true grit.
True grit refers to the character of a person who can look at their perilous situation without flinching, then devise a realistic plan to deal with it. Sometimes, the odds are insurmountable; even the best possible plan is doomed to failure. And then a person with real character does what has to be done; whatever they can do. No matter what the personal cost.
It’s no coincidence that The Alamo is one of John Wayne’s best-loved movies. It’s no coincidence that GM is bankrupt, without anything like a coherent plan to file for C11, reinvent itself and save what can be saved.
And here’s the missing puzzle piece: the aforementioned willingness to make a personal sacrifice.
Last year, at The New York Auto Show, I asked GM Car Czar Bob Lutz if his pension was bankruptcy-proof. I was really asking if he was personally committed to saving GM. Lutz’ derisive prevarication, followed by his recent retirement, answers that question once and for all.
In fact, GM’s management team are like a bunch of eleven-year-olds, willing to do most anything, blame anyone, to avoid accountability for the mess they’ve created. By the same token, they refuse to take responsibility for cleaning it up.
Unfortunately, it’s is no longer their problem. It’s ours. BUT, contrary to growing sentiment, it’s not our job to let management walk; take control and clean the god damn table ourselves.
GM is not our child. We can’t afford to feed it and take care of our own family. Nor should we let GM’s parents avoid responsibility for their own progeny. We’ve served them a hot meal. We’ve done more than our fair share. It’s time to show GM the door. Anything less is simply enabling and encouraging bad behavior.
Kevin writes:
I currently own a 2000 A6 Avant, and I’m moving from college to Chicago soon. I do love my car, except when it comes to paying the repair and gas bills. I’ve given up on anything even pretending to be sporty and I’d rather rent a car for track days.
I’m a consultant so I have to drive regardless of weather conditions, but maintain a sort-of-professional look (I’m afraid an F-150 won’t make it). My budget is less than $15,000 (2nd hand cars), and looking for a safe, reliable vehicle that doesn’t need lots of visits to the mechanic.
Sajeev responds:
I would recommend getting a Japanese or American sedan/CUV for maximum durability, efficiency and ease of finding cheap replacement parts. Steven Lang has mentioned that Toyotas, Hondas and some Detroit models fare well in the used car market. Which is good for you too: a last-gen Accord and the Ford Fusion have been reliable (in whatever short term evaluations I’ve seen) and are quite fun to drive to boot. One of my friends is a consultant (for one of the big firms) and his Accord EX fits the bill nicely.
In a recent editorial on TTAC, Jack Baruth described a harrowing incident that nearly led to the demise of his beloved Volkswagen Phaeton. The editorial claimed the incident was the masturbatory fantasy of every “driver training” and “active safety” advocate. He concludes that he lived to write another day not because of his driver training, but rather dumb luck. Not so fast, Mr. Baruth.
From his story, we know that Jack was operating a vehicle capable of .82 g’s lateral acceleration at a rate of 123 MPH in the left lane of an AASHTO-compliant interstate highway. As a crash was unfolding in front of him, he recognized that his only avenue of escape was partially blocked so he rapidly decelerated to a speed of 70 mph and then executed his first steering input.
By his own admission, Baruth’s only inputs: hard braking and slow steering. What we don’t know is whether solving this particular problem in the way that he did required the skills of a highly trained driver, the technological wizardry of computer aided driving systems or whether the outcome can be attributed to just plain luck. To see if we can’t figure that out, we’ll have to take a closer look at the three critical components of this and every other behind-the-wheel emergency: the driver, the vehicle and the environment.
Because the crash took Jack by surprise and presented a relatively complex set of problems, it most likely took him 1.2 seconds to understand the problem and come up with a plan to resolve it. It likely took him another .3 seconds to get from the throttle to the brake pedal. By the way, that’s not me saying that; it’s Dr. Marc Green, the world renowned psychologist whose 34 years of research into driver reaction time is universally accepted by accident reconstruction experts around the world.
By then, Jack VeeDub had traveled 271.22 feet.
Based on Jack’s recounting of the tale, the first steering input was made at 70 mph. At that speed, the tightest radius his black panzer would be able to tolerate before it began to slide or lift was 398 feet.
For argument’s sake, and given that Jack had to drop two wheels off the road surface in order to get his 6.24 foot wide car around the problem, let’s say there was 5 feet of clear pavement for him to work with. That means Jack would have had to turn the wheel at least 255.5 feet from the crash in order to safely execute the maneuver in question.
That’s assuming he was capable of operating the vehicle at peak efficiency under significant stress, which is the sort of stuff Lewis Hamilton and Michael Schumacher are made of. While that’s not likely the case, we’ll give him the benefit of the doubt and say he was capable of operating his vehicle at about 85 percent of peak efficiency, in which case he would have had to turn the wheel no less than 277.5 feet from the crash.
Because we’re a little short on hard data, we’ll make a generous assumption in favor of jack’s marvel of German engineering. We’ll estimate that it required 230 feet to bleed off enough energy to drop from 123 mph to 70 mph. So, to hear the story as Jack tells it, and to solve the problem in the manner he described, he would have needed nearly 779 feet—or close to 46 car lengths—of distance to make his decisions and take the actions he did without overreaching the existing driver/vehicle capability envelope.
With that much room between himself and the problem, had he simply slammed on the brakes when he first noticed the crash he would have come to a stop more than 300 feet from the crash site and have avoided all the other theatrics.
Based on that fact, I dare say that on that fateful day in question, Jack did not find himself in a life or death situation. Nor was it one that required advanced driver training, the technological wizardry of ESC, or any amount of luck to resolve.
All things considered, this story told by Jack, from the dramatic fashion in which it unfolded to the conclusions he draws from it is not the masturbatory fantasy of some “driver training” or “active safety” advocate. This fantasy is his and his alone.
Having said all that, there is some indication that advanced driver training played a role in this scenario, even if it did originate in the author’s fertile mind. After all, weren’t we told that he immediately recognized that “at his current speed the right lane was unreachable”? Now that’s a skill you just can’t get from a basic drivers ed course.
TTAC hammers the auto manufacturers for their lack of branding fortitude on a daily basis. But my time earning an MBA mentioned something else: diversify your portfolio, lest you wither and die. Which, ’round these parts of the autoblogosphere, makes even more sense in tough financial times. So with RF’s blessing, The Truth About Cars ventures into the world of self-help auto advice. With a twist, because that’s how we roll.
Right. So here’s the plan. You email me (sajeev.mehta@thetruthaboutcars.com) with a question about your car. It can range from a technical or cosmetic problem, basic maintainence, performance modifications, or even make-specific used car purchasing advice. Using my 10+ years as a forum moderator and my accidential grease monkey knowledge, I will shine some light on the situation in true TTAC style. And that becomes a blog for the B&B to discuss. After all, the people who read this website have a collectively bottomless knowledge base, why not use it for the Greater Good?
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.
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