California accounts for a huge chunk of America’s new car sales (at least for the transplants). And 13 other states (Arizona, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington) follow its vehicular emissions laws. Put them together and they account for just under half of all American new vehicle sales. And now, thanks to President Obama’s decision to grant California a waiver from federal emissions regulations, they’re going to call the shots for the entire U.S. automotive industry.

President Obama will free California impose its own vehicular tailpipe regulations. Those rules, already drafted, consider CO2 a pollutant. (Global warming and all that.) Manufacturers wishing to sell vehicles in California and its legislative clones will have to meet a new, fleet-wide CO2 standard. As CO2 emissions are directly related to fuel economy, CA et. al. will be, effectively, directing the carmakers to sell higher mileage vehicles. Significantly higher.

“The California law, which was originally meant to take effect in the 2009 model year, requires automakers to cut emissions by nearly a third by 2016, four years ahead of the federal timetable,” The New York Times reports. “The result would be an increase in fuel efficiency in the American car and light truck fleet to roughly 35 miles per gallon from the current average of 27.”

There are two schools of thought on the effects of this move. First, not only can Detroit and the rest of them meet the higher standards, but it’s about fucking time.

“This is a complete reversal of President Bush’s policy of censoring or ignoring global warming science,” Daniel J. Weiss, director of climate strategy at the Center for American Progress in Washington, told the Gray Lady. “With the fuel economy measures and clean energy investments in the recovery package, President Obama has done more in one week to reduce oil dependence and global warming than George Bush did in eight years.”

For environmental activists, the idea that automakers can meet the new California standard is a given. Another shibboleth: carmakers would have already done so if not for their greedy, SUV-pimping, foot-dragging ways. The fact that $4 a gallon gas did more for the environmentalist’s cause than decades of federal corporate average fuel economy (CAFE) standards is shoved aside. As is the fact that the electorate voted with their wallets.

There’s a planet to be saved; free markets be damned. From this perspective, the federal waiver is a victory for Mother Earth that will be fully vindicated by its non-impact on the auto industry and its immeasurable impact on the earth’s climate. One way and the other, decades hence, people will wonder what all the fuss was about.

Alternatively, the decision to empower California to set national fuel economy standards will, as the automakers have warned, wreak havoc on a fragile industry, drive-up prices for consumers and, ultimately, fail.

There’s no way automakers selling cars in America can meet the California mob’s higher, fleet-wide fuel economy standards within the deadline without chopping low-mileage models from their lineup within the relevant states. (The fuel-sucking CUV halfway house, for example, just became an evolutionary dead end.) Detroit News columnist Daniel Howes described the CA mandate as the involuntary hybridization of the nation’s fleet. That sounds about right to me.

Whether manufacturers would offer low[er] mileage vehicles for sale outside of the 14-states is a tricky question, given the intersection of politics, PR and commercial reality. Whether those non-CA-friendly vehicles could be “imported” into the 14-state cabal is even trickier. And speaking of tricky…

As The NYT points out, the new laws mean “automobile manufacturers will quickly have to retool to begin producing and selling cars and trucks that get higher mileage than the national standard, and on a faster phase-in schedule.”

Has anyone looked at the U.S. new car market recently? Who’s got money for that shit? And who’s going to pay cash money to buy these newfangled fuel misers? What if these wonderful machines don’t sell?

All of which highlights the small matter of what “we” (i.e. taxpayers) are going to do about GM and Chrysler, currently (and for the foreseeable future) sucking on Uncle Sam’s teat.

While the Department of Energy is preparing to dole out dole worth $25b for retooling “loans” to build these more left-coast compliant vehicles, this turn of events suggests that Uncle Sam will be on the hook for even more more money for GM and ChryCo. Hey, you want us to build way cool fuel efficient vehicles? You gotta pay. I mean, loan.

I understand the rationale behind California’s zeal and President Obama’s support. But there’s no doubt that they’ve just invoked the law of unintended consequences. Thought politically toxic, a gas tax hike would have been a far more effective solution. As we shall soon see.

The brutal sun finally started setting as I headed up the Grapevine. Since my plan was to go for broke, I had opened the taps. According to the speedometer, I was pushing 75 mph. It had only been 50 miles since Bakersfield, but with the gas leak and increased RPM I decided I needed to refuel one more time before making the big downhill home to Los Angeles. This of course meant engaging in my own personal stupidest act of 2008: adding gas with the engine still running. I found a nice, empty looking station near Gorman. Long story short, I’m still here. And the drive into LA turned out to be cathartic.

Anyway, I’d done it. Obviously, there’d been much discussion between me and Murilee regarding the prospect of just saying “hell no” and sending the cash back to Prague. Especially after the Chrysler refused to start. His argument was, “You need to do this. Every car guy needs to have an adventure like this with a beater in the middle of nowhere.” Cruel? A bad friend? Insane? A little of all three, sure. But also wise. I did need to do this. As an automotive journalist, how could I not? Like Camus said, “In the depth of winter, I finally learned that there was within me an invincible summer.”

There is something near-magical about cruising Los Angeles at dusk in a gigantic American convertible. The provenance is spot on. Whatever other reasons there are for this car’s existence, they’re little more than hollow echoes. The Chrysler was as at home as any of the palm trees lining the freeway. Passing Dodger Stadium I actually felt near human again, after six hours of (sweaty) suffering. But you see, this was just a trick of time and circumstance. The damn Chrysler was cursed.

I drove the behemoth to a deserted street and called my lady, “Pick me up. Come pick me up, now!” Honestly, I wanted to pour gas over the 300 and strike a match. At least beat on it with a hammer. She got me home, I showered, and quite honestly forgot about the horrible car for the next few months.

Well, tried to forget. See, the Czechs still wanted the blasted thing. The problem, or precisely one of the problems, was the shipping facility’s hours are Monday through Friday, 9:00 am to 4:00 pm. Not exactly a convenient time frame, especially since it would take two drivers to tango. Also, by then, I hated the 300. I didn’t want to go anywhere near it; it’s able to produce more headaches-per-mile than any car, well, ever. Still, I had to hold up my end of the bargain and eventually blocked out a day when both me and my poor, sweet, innocent fiancée were free.

After forty-five minutes of wrenching, hammering and straight-up cussing (plus jumper cable), the once mighty 440 turned over. Victory! Now all I had to do was pilot the ship 20 miles down to the port and wash my hands of the evil bastard forever. Ha ha ha! As I began gaining speed I heard a “thwap thwap thwapping” sound. I thought it must be the roof, but it got louder as I went faster. I pulled over and — voila! — the good ole bias-ply tread had separated from the tire. At least I live two blocks from a tire shop, right?

Oh so wrong. Not only didn’t they have a suitable tire in stock, but they couldn’t think of a single tire shop in town that would stock such a size. Even the competitors three blocks away. Pricks. Well, I’d simply drive. Just kidding! The damn 300 refused to start. Then the shop monkeys told me I couldn’t park there. I’ve rarely felt so violent in my life. I raised the white flag and called AAA, explaining that I needed a flatbed. Forty-five minutes later I get a call, “Our driver’s down at Figueroa and 45th street. He can’t find you.” As calmly as possible I explained that the Chrysler was broken down on the corner of Figueroa and 45th AVENUE, you retarded motherfuckers! Come get us, now. 

The flatbed grabbed us and dropped us off without incident. Of course, seeing as how that Chrysler is for evil, the port facility had no record of the car or the buyer. Another 90 minutes of frustration right there. My girl and I did get a great tour of the shipping joint’s “good stuff” that was waiting to be sent off to Europe. But even that wasn’t worth the heartache of this Chrysler. Have I learned my lesson? You betcha. I’m looking at a 1969 Ford Torino Convertible in the morning, but this one “runs good.”

[Click here to read Pt. 1]

With all that the domestic automakers have done wrong, it’s important to remember the things they’ve done– and continue to do– well. In his post about dumb moves behind the wheel, Jonny Lieberman highlighted one of these engineering accomplishments: Heating Ventilation and Air Conditioning (HAVC). As JL pointed out, even when Detroit was making malaise-era cars that barely ran, their HVAC systems were the “envy of the world.” Sure, Volvos and Saabs had good interior heating and defrosting systems, not to mention heated seats. But Detroit led the world in keeping drivers physically comfortable. In this, geographic happenstance played a critical role.

In European cities, streets are narrow and go in all directions. The history and glamor of road racing looms large. Small cars, precise handling and confident cornering were always high priorities. In contrast, Detroit’s streets are broad and, for the most part, adhere to a 90 degree grid. Boulevard and interstate cruising defined the automotive gestalt. Motown’s suspensions were calibrated more for comfort than precision handling. And HVAC systems enjoyed pride of place.

Every year when the NAIAS rolls around, people question the wisdom of holding a big auto show in Detroit in January. The weather outside the hall isn’t Fargo or International Falls cold, but it’s enough to evoke mention of brass monkeys’ testicles witches’ mammaries. Statistically speaking, January’s average temperature: 17.8°F. Not to mention wind chill; the “breeze” coming off Lake St. Clair can cut you to the quick. And yes, there’s snow. Average annual snowfall: 41 inches.

Detroit auto execs and their contemporary counterparts may have never experienced the joys of dealer service managers and warranty work but they still had to deal with Michigan weather on the way to and from work. Auto execs don’t like to be cold. Neither do engineers. Working together, they made sure that Motown’s products could warm their bones– and keep them warm– through the worst of the midwestern winter. 

Quick digression…

I reckon the Volkswagen Beetle’s token HVAC system is one of the main reasons Motown diss-missed the small car boat. In January, Wolfsburg’s average temperature is a relatively balmy 38°F. This may account for the fact that the Bug’s heating system didn’t have an electric blower. Pressurized air was ducted off of the cooling shroud into the headers/heat exchangers. Heat, then, was speed sensitive– under the best of circumstances. 

After a Michigan winter or two, with plenty of road salt rotting the German car’s undercarriage, the Vee Dub’s heat exchangers and heat ducts were perforated with rust. Small wonder VW offered a gas heater: a self-contained 18k btu gasoline-fired furnace. 

Back to Detroit, which isn’t located in a desert. Still, the average July temperature clocks in at 83.4°F (Wolfsburg 72°F), with plenty of relative humidity to keep the sweat flowing. 

Air conditioning was originally introduced by Packard in 1939 as a $274 option. It filled up the vehicle’s entire trunk. To turn it off, the driver had to stop the car, turn off the engine, open the hood and disconnect a belt connected to the air conditioning compressor. In 1941, Cadillac built 300 equally inconvenient air-conditioned cars. 

GM’s Harrison Radiator Division developed the first efficient, affordable automotive A/C unit. Offered as an option on all 1955 V-8 Pontiacs, it featured a two-cylinder reciprocating compressor and an all-brazed condenser. Fitted with a magnetic clutch, the unit didn’t need extra power to drive the compressor, which greatly improved performance and fuel economy.

Meanwhile and anyway, by the 1960s, domestic automakers were improving ventilation systems. Cars had air vents in the fender wells, with cable actuators on the kick panel. Flow-through ventilation was soon integrated into the heating system. By the 70’s, automotive air conditioning became a factory option on Detroit’s popularly priced cars. 

Upgraded HVAC systems were an excellent way for dealers to add to a car’s bottom line. (Heaters were an extra cost option well into the 60’s.) Many of our Best and Brightest who grew up sweltering in cars without a chiller gladly paid for extra for A/C when they could afford it.  

Another digression…

My dad, may he rest in peace, loved air conditioning. American Motors used to label the maximum A/C setting “Desert Cool.” They must have had my dad in mind. Though he liked his options, as far as A/C was concerned, they could have had a single setting: max cool, max fan. In the 1970s, he switched from Oldsmobiles to Mercurys; you could have cooled your drink on the dashboard of his 1974 Grand Marquis.

Thirty-eight years later and I’ve never driven a Detroit product that couldn’t blast full heat in subzero weather, or keep you comfortable on a blistering hot summer day. Just about every automaker in the world now makes fairly sophisticated climate control systems. But it’s a clear case of meeting a high standard that Detroit, to its credit, has set.

2008 was supposed to be a banner year for Hyundai. The company predicted a huge sales jump and promised a new flagship. And then 2008 actually happened. Sales were, well, you can guess that one. From a sales and PR point-of-view, the new, V8-powered Genesis was well received. From a sales perspective, not to much. Still, as one Hyundai Marketing VP put it, “if [consumers] aren’t forced to reconsider us, they won’t.” To paraphrase Elvis, perhaps we ought to give Hyundai a little more time. Meanwhile, the comparison between Hyundai and a young Toyota seem to have faded from view. In fact, you could make the case that Hyundai is more GM than Toyota. Well, if not you, me.

Perhaps one of the biggest similarities between GM and Hyundai: a disfunctional relationship with its organized labor. Actually, the comparison leaves the GM-UAW relationship looking downright touchy-feely. In 2006 alone, Hyundai lost 118,293 vehicles worth $1.75b due to strikes and walkouts alone. When it refused to pay year-end bonuses of 1.5 times the monthly pay (even though the production goal wasn’t met… due to strikes and walkouts) workers (wait for it) walked out.

Hyundai caved a few days later, with bosses calling the bonus as a “fresh deal” and “an opportunity to clearly recognize that appropriate remuneration can only come after workers achieve the goals.” But Hyundai management is well-trained by now. Their notoriously militant union has held a strike every year since 1987. Except for 1994. Maybe NAFTA scared them for a year. In any case, if the brand that was launched by Rodney King wants to join the Toyotas of the world, something will have to be done about its labor relations.

But Hyundai management doesn’t have much moral high ground from which to fight. The antics of President Chung Mong-koo would make Blagojevich blush. Mong-koo was convicted on $100m embezzlement and bribery charges–and then freed on the grounds that he could “contribute to the company and the national economy one last time.” Although his son Chung Eui-sun has left the top spot at Kia, he’s still considered the dynastic heir apparent to his headline-grabbing father.

Kia was supposed to provide an opportunity for Eui-sun to prove himself. That hasn’t panned out. High steel prices in Asia and union turbulence have played merry hell with Kia’s thin profit margins. “Kia’s profitability this year and its longer-term competitiveness depend largely on labor flexibility,” says Stephen Ahn of Woori Investments. His theory: it will be better for Eui-sun to keep his hands clean. With another Hyundai strike looming and some serious coming to terms with economic reality ahead, he may be right.

So Eui-sun will stay on as head of Kia’s overseas operations, busying himself with successful Slovakia operations and a giant factory under construction near West Point, Georgia. While basking in the glow of Kia’s new products, from the current Euro Cee’ds to their forthcoming cousins, the Soul, Forte/Spectra and YN. But even on the product front, more symptoms of “Big  Company Syndrome” loom for the Hyundai conglomerate.

If the Genesis got people thinking differently about Hyundai, a super-Genesis will bring in the few remaining skeptics, right? That seems to be the thinking behind the Equus, the troublingly named, packed-with-technology, S-Class fighter. The car will clock-in with a reported price tag north of $95k. Luckily for Koreans, recent rumors of a stateside debut for the Equus means grey-market imports a la Genesis can begin.  

Even at a lower price, the Equus reeks of “Big Company Syndrome.” Whereas the Genesis adds least some enthusiast rear wheel-drive panache to the Hyundai brand, the Equus is a staid limousine. Its owner (Chung Mong-koo?) will likely never stray from the back seat, as he or she is shuttled from payoff to “political fundraiser.” More importantly, a $96k car in the midst of an economic downturn doesn’t say anything positive about the Hyundai brand that the Genesis doesn’t. A budget S-Class is one thing, a Hyundai Maybach is another. And that’s before you start on the name.

In reality, Hyundai is letting Kia take over as the purveyors of cheap and cheerful. And as the “junior brand” picks up its game with the Forte and Soul, Hyundai is chasing the American brands with SUVs, Crossovers and RWD offerings. Product overlap between the two brands, a coming labor confrontation and untimely upmarket ambitions by Hyundai may be enough to take some shine off the Hyundai-Kia juggernaut. Moody’s is eyeing a credit rating cut for Hyundai-Kia, as a weak Won kept things from getting too nasty in 2008. This year will be tougher still.

My Czech buddy “Bob” asked me to go on up somewhere north of Fresno and grab a 1969 Chrysler 300 Convertible for him. Low pay and the distinct possibility of bloody knuckles? Yes! Yes despite the fact I really dislike the whole middle man thing. In fact, just like the 1981 Corvette, the seller of this Chrysler “needed” the money in cash because he’d heard about internet scams involving the Czech Republic. Never mind the fact that I– a good patriotic American– would be handing him a cashier’s check from BofA. Nope, must be dead presidents, and in the flesh so to speak. So, with forty $100 bills burning my pocket, I hopped a plane up to Oakland where Jalopnik’s Murilee Martin picked me up.

Why Murilee? First I needed a ride. Second, the boy knows cars. You know when people donate their cars to charity as tax write offs? He used to have a job fixin’ what got donated. We arrive at the seller’s home and ask if we can take the car for a spin before I hop in and drive it 300 miles back to Los Angeles. Bad idea. The seller immediately begins accusing us of trying to scam him and he nearly comes to fisticuffs with Murilee. I calm things down. That is until we try and start the car. See, it won’t start. This leads to more screamin’ and cussin’ and accusations of, “I’m been working on Mopars longer than you’ve been alive!” It was lovely.

Running a wire straight the battery to the coil fires the fairly healthy 440 right up. The problem then is obviously in the ignition and more specifically has something to do with the meth lab-special wiring job (in defense of the seller; he’d purchased the car just a few weeks earlier and hadn’t done a thing save replace the battery). A trip to the hardware store later and Murilee’s all set to rig a switch that’ll allow me to get started without the key when he notices that an electrical plug on the firewall is loose. Push it back, and the old Chrysler fires right up. Of course not only is the alternator too small (90 amps instead 120) but it doesn’t seem to necessarily be connected to the battery.

“I need to warn you,” the seller says. “The bias-ply on the left rear is starting to separate. So I’d stop in Fresno and buy a new tire.” No problem I tell myself. “Also, the fuel gauge is broken, but I’d guess you’ll get around six mpg.” Did he (or Murilee) know how big the tank was? Negative. Working on Mopars your whole life, huh?

Having no clue how much gas was in the tank I proceeded to “drive” straight the nearest station. Drive is in quotes because terms like “float” or “lumber” or “slothfully crawl while rocking” would be more accurate. Hey, at least the top (somehow, miraculously) worked. Of course it was 115 degrees in the middle of the day in the middle of the San Joaquin Valley. Best to leave it up.

Twenty miles later and I’m ready to commit suicide. Any semblance of an HVAC system had eaten itself decades ago. As such, nothing but hot air blew into the cabin, and the haggard cloth top did little but add heat. Down goes the roof and good thing I brought a hat. Cooling air is now passing over my sun-roasted body. I’m worried about going much over 65 mph because of the ailing tire. This can’t be worth the money.

I find the tire shop and — JOY! — they’ve got the tire in stock. “Sir, there’s a problem,” the friendly tire guy says to me. “All five lugs are seized. And you’re leaking gas.” CRAP! We put a wreck bar into the end of tire iron and really wrenched. Nothing. Seized, totally seized. And gas was dripping from the tank. No cell phone reception, either. I eyeball the tire. It doesn’t look that bad. Just a little chunk missing. Must press on. Of course it was only later I learned that all pre-1970 Mopars (and Fords) are left hand threaded on the left side…

Figuring that the big 300 with the top down and the leak is (hopefully) getting three mpg, I stop after just 90 miles to fill up. But it won’t start. Dead battery. Turns out the alternator wasn’t connected to the “brand new battery.” Ha ha ha. Well, no biggie, as surely someone would mench up and give me a jump. An hour and fifteen minutes later when AAA finally shows I’m ready to light all of Bakersfield on fire. Despite the rapidly degenerating tire, sunburn, heatstroke, gas leak and mushrooming anger, I decided to press on. Not only press on, but I wouldn’t be switching the engine off until Los Angeles.

To be continued….

Breaking news: Fiat has just signed a “non-binding term sheet” with ChryCo. The Italian automaker will acquire a 35 percent interest in Chrysler for… nothing. No cash. No assets. Niente. And yet the Chrysler – Fiat deal comes complete with the United Auto Workers’ (UAW) blessing. It’s a nice thought: a global alliance to pull Chrysler’s fat from the fire, save the taxpayer’s bacon and uncook the UAW’s golden goose. But there’s zero chance of Fiat riding to the rescue of Chrysler. It’s just another part of Chrysler’s Big Lie.

Adolph Hitler said The Big Lie was effective because most people “would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation.” In this case, the lie is the idea that Chrysler is a viable automaker.

The fact that the company is utterly bankrupt without any chance of recovery is, obviously, besides the point. As long as there is hope that Chrysler has a future, the general public and their fear-mongering elected representatives will cling to the fiction that Chrysler can– indeed should– continue to exist.

To perpetuate that myth, to protect its federal lifeline, Chrysler must generate plausible possibility. Hence the stream of “news” coming out of Auburn Hills in recent weeks. Canada’s Magna Corporation may purchase Chrysler’s minivan plant. Nissan may produce a small car for Chrysler, and rebadge Dodge Ram pick-up trucks as Titans. A Chinese carmaker may buy unwanted (not to say unused) tooling for the soon-to-dead PT Cruiser. And now… Fiat buys into Chrysler.

In reality, Magna may want Chrysler’s Windsor minivan plant, but the company isn’t stupid enough to pay anything for it. Not when they can pick it up for pennies on the dollar after ChryCo’s collapse. In reality, Nissan is in deep trouble; it’s not going to build anything for Chrysler without [non-existent] cash on the nail. It’s also in no position to remount an attack on a market segment that’s both crowded and cratered (just ask Toyota).

In reality, China doesn’t need the PT Cruiser. And in reality, the Fiat deal has nothing to offer. Without any cash investment by the Italian automaker, without a single production-ready Italian vehicle on the horizon to lure Americans into empty, abandoned Chrysler showrooms, this non-deal does nothing whatsoever to ensure Chrysler’s long term viability.

The underlying causation for this non-news is simple enough. Lipstick. Pig. Apply.

On February 17, Chrysler will present their term paper to Congress: “How I Spent Uncle Sam’s $4b” (a.k.a. “The Three Headed Dog Ate my Automaker”). Chrysler’s representatives will attempt to prove that the company can [now] be restructured and resurrected to live a long, happy life. See? Things are happening! We’re building for the future!

Of course, Chrysler’s “business plan” was, is and will be complete BS.

CEO Bob Nardelli knew Chrysler was doomed to the dole back in December, back when he told Congress his employer could turnaround Chrysler’s fortunes with “just” $7b worth of federal loans. As is the way of such things, that was then. This is now. By mid-February, Boot ’em Bob’s boys will unveil phase II of their grand plan for Chrysler’s renaissance: get out of the manufacturing business.

The new plan is the same as the original plan: keep the brands and distribution network. Sell vehicles made by others rebadged as Chryslers. Limited capital and engineering required.

Meanwhile and in any case, Chrysler needs the same lifeblood as any other going enterprise: cash. Badge engineering and branding be damned; new car sales aren’t going to provide Chrysler with the funds it needs to sustain its operations and pay for its ongoing liabilities. Not now. Not later. Most likely, never. Asset sales won’t do the job, either. And Fiat’s sure as Hell not providing operational liquidity.

Blow away the smoke, pack away the mirrors, allow owner Cerberus to insulate themselves from accountability for their actions, and it’s clear that Chrysler has one source– and one source only– of cash: the U.S. taxpayer.

As any good politician knows, to fool some of the people all of the time, you need to change your story frequently. In other words, The Big Lie must be sustained by a steady diet of big ideas.

When it comes to Chrysler’s ongoing call on the public purse, the biggest of these is the Chrysler – GM merger. The concept: forget Chrysler and GM. We need to save American manufacturing! This American Leyland strategy is a stupendously bad plan which would make The General like Citibank: a company too big to fail with operating divisions that can never be properly integrated.

Which is exactly why it’ll happen.

My five-year-old looked into the bag and spied the chocolate-covered strawberry. “Just one?” she asked with equal parts indignation and incredulity. “That cost me six bucks,” I responded defensively. “I wish they were cheap,” Lola said as the treat succumbed to dental destruction. “Then we could have lots.” And there you have it: proof that price conquers all. If Godiva wants to sell me a dozen chocolate strawberries, all they have to do is lower the price. Dramatically. Of course, they can’t do that. Ingredients, labor, transportation, administration, marketing, rent, fancy bags– it all adds up. By the same token, there’s only one way automakers seeking to sell vehicles cars in today’s market can stimulate sales: slash their prices by 50 percent or so. Of course, they can’t do that. Or can they?

If GM and Chrysler declare bankruptcy on Monday, they can sell their cars for whatever the market will bear. Which, at this point, would be a lot less than it costs to make them. Same old, same old. The ailing American automakers have been selling cars at a loss for over a decade. Even so, The Mother of All Fire Sales would mean the end of Chrysler and GM as we know them. Without any pretense of profit, the whole house of cards would collapse. Tens of thousands of jobs would disappear. But the price collapse would clear the lots and get the U.S. new car market back in gear. 

Ask a five-year-old: everything sells at a price. The U.S. economy could be in a full-scale depression and new cars would still sell– if they were cheap enough. Anyone fancy a Chevy Malibu for $10k? Or a Jeep Cherokee for $12k? On the negative side, ultra-cheap cars would kick residual values off a cliff, locking even more people into their current whip. After the initial bonanza, the new car market may take a long time to recover. 

On the positive side, the fire sale would provide access to better quality cars for a lot of low income buyers. Parts makers, service providers, gas stations– they’d all be better off. As supply lowered to demand, and then eventually recovered, the remaining automakers would benefit. Not to mention the profits provided by an industry-wide labor cost reduction (i.e. the disappearance of the United Auto Workers).

Yes, well. For reasons that will perplex historians for decades, President Bush decided to turn his back on free market principles and bail out the U.S. auto industry. As a result, the taxpayer is now supporting the price of automobiles. 

So far, Uncle Sam has committed roughly $50b to the U.S. car industry. Let’s say ’09 sales clock in at 10m units. That’s a $5k subsidy per car. That’s if you spread the sales amongst all the companies offering new cars for sale in the U.S. If you assume that the domestics get the lion’s share of the bailout bonanza, and round-up their market share to 50 percent, that’s a whopping $10k per car.

If the total federal swag swells to $100b– a credible enough prediction when you add in big bucks for battery research, various tax credits for alt power vehicles, more “loans” for GM, Ford’s line of credit, suppliers’ call on the public purse, money for formerly captive credit companies, etc– we could be looking at a $20k per car federal price support. Add in another $50b– well, you can see where this is going.

Truth be told, your taxes are paying people to build cars that no one wants. Or, if you factor in the extended holiday break, we’re paying people to not build cars that people don’t want.

Perception gap be damned; Detroit’s cars aren’t fundamentally undesirable. They’re just too expensive. The bailout has singularly failed to change that fact. Nor will it. But that’s how government works: whatever it touches become less efficient. And there are other costs…

When the laws of supply and demand operate in a relatively unmolested marketplace, the consumer has the final say on a product’s worth, and the company’s survival. Now that GM and Chrysler have latched onto the federal teat, they are destined to be [even more] disconnected from consumer demand. 

In fact, GM and Chrysler are no longer answerable to the consumer. Forget “viability.” They must now satisfy politicians rather than the “end user.” Who knows what harm these pols will inflict on the automakers– and the car market in general– in the name of political correctness? American Leyland, here we come.

Yes, yes. Politicians already call the shots, what with Corporate Average Fuel Economy standards, E85 subsidies, safety, etc. But even those who favor government fiat in such matters must surely realize there’s a line that should not be crossed. It’s one thing to regulate, another to control the means of production. Or, as Lola said, “does anyone else make chocolate strawberries?”

Last Thursday in Detroit, General Motors presented its rescue case to the Society of Automotive Analysts, a group of Wall Street securities analysts. [pdf here] The story was chock full of “not good.” In fact, the company presented enough information to make the case that bankruptcy is inevitable. But I’m still waiting for a single report from Wall Street telling everyone what we’ve known at TTAC for at least three years. GM is bankrupt and putting another dime of government money into this car wreck is merely good money after bad. 

It’s too bad GM presented nothing more than damning evidence of why the company has to file bankruptcy. Not that management didn’t try the old positive spin manipulation of bad news – they did. But you won’t see any analyst reports coming out telling the truth that there is no where to go but to the Bankruptcy Court in Manhattan. So we’ll do it for you.

For starters, GM lowered its forecast for new car sales in the US auto market overall. As recently as December 2, when GM last presented to Congress its non-starter rescue plan, the company anticipated that 2009 car sales would come in at 12 million units.  (2008 saw 13.2 million units sold.) Now, the company sees the market at 10.5 million units, a haircut of 1.5 million units or another 300,000 units less for GM from its previous lowered forecast.

Assuming GM’s correct, and assigning a 20% market share to GM for 2009 (reduced fleet sales, negative consumer confidence, more incentives from the Toyondissan camp, etc.), GM will sell 2,100,000 units in 2009. That’s nearly 900,000 fewer units than last year or a reduction of 30%.

Add to that the desperate attempts by everyone else – and especially those manufacturers with stronger capital structures – to move units in a terrible market. The incentive money will be huge. Despite production cut backs, four day work weeks, and extended plant holidays, it’s simply too costly to just shut down for an extended period beyond a few weeks for any auto manufacturer.

The high fixed-cost nature of vehicle assembly, marketing, and white-collar staffing demands that the products keep moving out the door just to minimize losses. The Japanese will give away cars with thousands of dollars on the hood to keep the metal moving. The Europeans will provide money through the back door – so-called “trunk money” – to keep iron from stacking up at the ports. And yet GM’s management thinks it can improve the gross contribution during this period. Sure.

Revenues at GM will decline with fewer cars sold and shrinking gross contributions per unit due to incentives needed to match or exceed the competition. At an average revenue to GM of $25,000 per vehicle (my estimate before incentives which are paid after retail delivery), 900,000 fewer units sold in 2009 means a revenue loss of – ready now – $22.5 billion from the top line. And with the company already bleeding cash at the rate of $20 billion per year in 2008, is there any chance of cutting costs fast enough to become cash flow positive?

The killer chart proving my point came from Rick Henderson, the Chief Operating Officer. When the crap really started hitting the fan at GM back in 2005, management outlined its goal to reduce “structural costs” to 25% of revenue. (In 2005, GM’s structural costs were 36% of revenue.) Target date for 25% – something like 2009 if I remember correctly.

Liars may figure, but figures don’t lie. GM has never gotten close to achieving this target percent. In 2007, structural costs accounted for 29.5% of revenues, the best performance since 2005. But in 2008, they rose to 33.9% as revenues shrunk faster than costs could be cut. Anyone care to guess what will happen in 2009? GM’s simply chasing the rabbit down the hole.

But let’s heap on more bad news. GM Europe, like GMNA, will bleed cash badly in 2009. The sales projections for Western Europe are dismal. Maybe Andrea Merkel will lend GME some dough? Spain’s a write-off. And England looks like it will be a gloomy London gray for the year for car sales. GM’s key overseas unit will need cash too. 

And here’s the worse news. By next month, after the last round of government bail out loans, GM will have a staggering debt load of $76 billion (including the present value of its VEBA liability). But let’s suspend reality and assume that the unsecured public bond holders and the UAW agree to the mandated debt-to-equity conversion.

Guess what? GM will still have $43 billion in debt – practically the same amount it had in 2007 ($39 billion exclusive of the VEBA liability). On a smaller revenue base in 2009.  

And there you have it. GM itself has made the case for bankruptcy. There’s simply no point at giving this company more money to try and restructure. It just doesn’t make sense. Now let’s see when Wall Street tells the government that’s the case. Heck, we’ve done it for them.

First, I visited the Eco drive event in the basement. In past years, they stuck suppliers and the Chinese down here. This year, with Nissan and Porsche absent and others asking for less space, most everyone moved to the main floor. So what to do in the basement? How about a lavishly landscaped road course on which to sample hybrids and such?

The public will only be able to ride along; it’s been deemed too risky to let them drive. The press gets to drive, but only up to 10 mph, with a guide in the passenger seat. One guide talked my ear off– you’d think I’d never driven a car before- but the others were mercifully silent. Up to 10 mph, most hybrids and EVs feel like… any other car with lifeless steering (nothing but electric-assist systems here). To their credit, the vehicles’ brakes all felt natural; a welcome improvement from older hybrids. I sampled a Chevrolet Equinox powered by a hydrogen fuel cell. Yep, felt just like a regular Equinox, at least at these speeds.

Next, I stopped by the presentation of the “Eyes on Design” awards. Unlike most “the media are the massage” awards, the Design gongs are meaningful. Dozens of actual designers vote to decide the best vehicles at the show. Four awards are given: two for concepts and two for production cars. Unlike past years, nothing distinguished the two winners in each category. Not even first and second place.

The concept category winners were no surprise. The Cadillac Converj, based on the Chevy Volt, easily had the strongest reaction of any concept during the show. And the Audi Sportback was chock full of interesting details The only other concepts that deserved a shot were Chrysler’s 200C EV (photo in earlier post) and Volvo’s S60 precursor (photo below). Other concepts were either weird (Lincoln’s) or uninteresting (the precursor for Subaru’s next Legacy). There weren’t many concepts this year. Not much money to spend on them, and all that.

The winners in the production category were a surprise, at least to me. First up, the Audi R8 5.2. Sure the V10 is new, and I believe the body was lengthened a bit to include it, but the design isn’t new. In fact, one wonders how it even qualifies for consideration. Well, if the Malibu could win car of the year when it was a reskin of the previous year’s winner (Saturn Aura), anything’s possible.

The other winner: the BMW Z4. Which is good mainly to the extent that it isn’t bad-i.e. Bangled like the first-gen Z4. There’s nothing particularly new or exciting about it. So if an already familiar Audi and cleaned-up BMW scooped design kudos, what does this say about the designs Detroit is counting on to save it? I’m not a huge fan of the exteriors of the Buick LaCrosse, Cadillac SRX, Chevrolet Equinox, Ford Taurus or Lincoln MKT, but some of them do more for me than the BMW. Then again, the same could be said for a bar of soap.

The interiors of the Buick and Lincoln are the best yet from their manufacturers. Still, it seems that designers weren’t enthusiastic about Detroit’s 2010s. Also absent from the winners: both of Fisker’s Karmas. Apparently designers aren’t impressed when one of their own starts his own company from scratch. Or maybe they’re just past pastiche.

Finally, Tesla presented. How did they end up as the only manufacturer presenting on this sparsely attended third day? Clearly someone didn’t do their job. Or is it cheaper to present on the third day?

The focus of CEO Elon Musk’s presentation: Daimler just gave Tesla permission to announce that the Silicon Valley start-up will be supplying batteries and chargers for the upcoming Smart EV. Which will enable Tesla to reap greater economies of scale, and advance the day when electric propulsion is cheap enough for the masses. In theory.

Questions centered on Tesla’s reliance on a large number of small cells, the planned S family sedan, and what Elon Musk has learned from his venture.

Economies of scale are much greater with small cells, so it’s cheaper to use them for at least the next few years. The S sedan will cost $49,900 after a tax credit of $7,500, and will be introduced two years after they get a hoped-for Department of Energy loan. My pricing analysis: this price makes it about half that of the Fisker, so the two won’t directly compete. The Volt will be a direct competitor. In theory.

After investing $70m of his own money, Musk learned you need car people to run a car company; nearly the entire executive team has been replaced. Mr. Musk seemed a bit worn out, and less confident than the bunch across the aisle at Fisker.

Tesla also showed video of an upcoming higher-performance variant of their Elise-based roadster. Acceleration time to 60 will improve from 3.9 to 3.7. No one in the press corps seemed to care.

After a weekend of concept-touting and audacious hoping, Detroit is praying that the bitter taste of bailout beggary will be cleansed by the redemptive powers of PR. From the sight of hundreds of rallying GM workers to a lineup of future concepts, the North American International Auto Show played host to a number of highly-managed media messages aimed at convincing skeptics that it’s no longer such a lonely world for American automakers. But the emphasis on public relations highlights how far Detroit still has to go, and fails to mask the desperate need for, well, bankruptcy. And while cheerleaders for a largely-imagined Detroit renaissance hold on to that feeling, time marches remorselessly on.

The unifying theme of Detroit’s campaign for hearts and minds: a throwback to the good old days. Back when city boys were the plucky, working class heart of the nation. “Detroit: not a town of quitters,” is how the Freep‘s Sarah A Webster frames the argument, Webster posits that a car wash billboard on Woodward Ave– which reads “never give up”– exemplifies this civic pride. “For all I know,” writes Webster, “it’s been up there for years.” Which is a major part of the problem. Detroit’s automakers have been in savage decline for so long that most Americans don’t even know what they would come back to become.

Webster notes that she “quite ironically” first noticed the sign’s long-running message of not quitting “on Dec. 12, the morning after the U.S. Senate voted against lending Detroit’s automakers the $14 billion they sought to survive the global economic downturn.” At that dark hour, the sign on Woodward shone like a beacon of hope to Webster after “Congress had just voted to turn the lights out on the Motor City.” As a “darkest moment before sunrise” though, this hardly inspires the kind of faith and sympathy that Detroit is clearly looking for. It simply highlights the new reality of Detroit as an oversized, reality-ignoring, bailout-begging hype machine.

Motown’s plucky, blue-collar image overhaul depends on prodding Americans to reach back to a decades-old model of a successful, competitive Detroit. To pull off its Lazarus risen act, Detroit must also hide the fact that the road to redemption doesn’t lead through River Rouge or Hamtramack. It comes in the form of government checks. And this causes internal discord, cognitive dissonance and a renewed emphasis on style over substance.

Should Chrysler not be “stung” by GMAC’s extra $6b worth of TARP loving? After all, if one American automaker can have its self-destructive incentive binges underwritten by the government, shouldn’t they all? Besides, if Chrysler can convince no less than the LA Times‘ Dan Neil that its 200C concept is a “real-world car” and that it “will be available in two years” (actual car courtesy of Nissan), isn’t that good enough for some know-nothing congressmen?

With Obama’s vast stimulus under debate in the new congress, the Detroit Auto Show was not a showcase of the consumer-driven products that the once-big three can put on the showroom floor. It was a message to lawmakers that Detroit could fulfill their politically-driven goals as long as the checks keep coming. And the transition from a consumer-driven culture in Detroit (if such a thing ever existed) to a politically-driven one shouldn’t be difficult.

GM, Chrysler and Ford executives are forever bemoaning the American consumer’s ignorance of their product’s self-evident desirability. And the oft-touted “perception gap” is much easier to tackle among easily-influenced subsidy check signers in DC than it is among financially struggling Americans.

AdAge reports that a $50m effort to revamp the image of American automakers in the minds of consumers is failing to gain traction, despite David E. Davis’ midwifery and the blessing of Lee Iaccoca. Ford is especially trying to distance itself from these efforts, rightly believing that associating itself with the PR efforts of tax money-guzzlers is counterproductive, at least in terms of consumer opinion.

Now that GM and Chrysler are on the dole, they can not deny that they have lost their way. As TTAC’s Ken Elias wrote this morning, decades of denial can only be swept away with a quick admission of guilt and a plausible vision of a brilliant future. But Detroit chases feelings of nostalgia and futurism while remaining stuck in a dismal and seemingly eternal present.

Detroit has singularly failed to understand that the classic American narratives of rebirth and redemption begins with a dark night of the soul– not a trip to DC to ask Santa for a multi-billion dollar bailout. A bankruptcy reorganization would not only have given GM and Chrysler the tools to transform themselves, it would have given Americans a reason to cheer for new underdog brands, freed from their toxic legacies.

Instead, Detroit is trying to conjure up sympathy by ignoring the rules, begging for money and selling a future they know is out of reach without more handouts. And even, one must now conclude, with them.

GM can fix its own problems. Really. They don’t need a miracle cure or a piece of technology fabricated at MIT’s advanced labs. They don’t need a new financing scheme developed by the alchemists on Wall Street. Nor do they need Nancy Pelosi & Co. to fashion tnier future. What they need to survive can be summed-up in two words: truth and honesty. If GM would be honest about its products, finances, dealers, marketing, reliability, (lack of) executive talent, and on and on– it could begin to resurrect itself. Until and unless GM gets glasnost, the automaker will remain forever stuck in the quagmire of its own making, relegated to the support of the taxpayers, always looking for its next fix. To understand the possibilities, compare and contrast GM’s perfidy with “One Ford”….

Like GM, FoMoCo was a company headed for extinction. Sales, market share, profits, product competitiveness, branding– Ford was outclassed, out-maneuvered and out of gas. Unlike Rick Wagoner and his Board of Bystanders, Ford CEO and Chairman Bill Ford and the Ford family admitted the inevitable. In the summer of 2006, they looked outside the company– and the industry– for a well-seasoned executive to replace the family scion. Ford brought in ex-Boeing exec Alan Mulally to clean house.

Ford’s hopes for survival didn’t– and don’t rest upon CEO Alan Mulally’s engineering or union-wrangling expertise. It’s Mulally’s leadership, his impact on Ford’s culture that will leave the automaker the last man standing.

Under Mulally, Ford has publicly acknowledged and accepted the fact that the days of owning 25 to 30 percent of the U.S. new car market are gone. Profitability must come at just 15 percent. To achieve this new, more limited goal, Mulally has attacked Ford’s culture of complacency and infighting. By all accounts, Mulally demands a “truthful and honest” assessment about the company’s health. And he demands that his managers demand it.

We’re seeing the realization of this new paradigm. Ford cars more-or-less equal Toyota and Honda products’ reliability. Ford is also matching factory production to actual demand–rather than bogus sales forecasts from marketing and finance. And although Ford is talking-up an electric car that they don’t have, they understand that their survival doesn’t depend on a “leap of faith” technology. They’re looking for single, double and triples, not home runs.

GM remains stuck in its past. Whether it’s the Volt or a Volt-based Cadillac or HUMMER’s non-prospects, everything they do is shrouded in a fug of hype. Lies, half-truths and deceptions are perpetuated upon journalists and the public until they become the truth– within GM. Every statement they make– whether by marketing, dealers or top executives-– is inherently suspect. Even when the hype is demonstrably false, GM clings to the spin like grim death. Literally.

To wit: today’s NYT runs a piece by Bill Vlasic entitled “Wagoner Says G.M. Is Working on an Overhaul Tied to the Bailout.” In the story, CEO Rick Wagoner states that GM is focused on meeting the requirements of the bailout loans. He asserts that GM can become financially viable via labor cost reductions, debt swaps and reductions in brands/dealers. Wagoner provided no specifics, no proof, no concrete plan. This despite the fact that he has less than 40 days to submit the plan to Obama’s as yet unannounced car czar.

Wagoner leaves a decade of devastation in his wake. He has destroyed GM shareholder value, shed tens of thousands of high-paying jobs, sold-off once-valuable assets, lost billions on misguided foreign entanglements, failed to assure proper accounting practices and placed his company in the hands of politicians. And yet even now, he can’t tell the truth.

Rick Wagoner knows that GM can’t possibly meet the federal requirement for the $13.4b– and the rest– worth of taxpayer loans. With Uncle Sam’s wallet wide open, the mandated sacrifices will not occur. Period. Why not tell the truth to the company, its dealers and suppliers, and, above all, the American taxpayer?

If GM is to survive, Rick Wagoner should come clean. He should tell everyone that Saab, HUMMER and Saturn are toast. (How much “strategic review” do you need to figure that out?) That it’s impossible to negotiate a complicated debt-for-equity swap for $63b in two months– outside of a courtroom. That there are significant problems in amending an existing labor contract– outside of a Section 1113 motion in bankruptcy– that would overturn decades of hard-won labor gains. Wagoner should admit that GM will need additional government assistance in 2009.

The simple truth is that aGM  bankruptcy was, is and will be the only path to resurrection. As a smaller company, shorn of most of its debt and burdensome labor agreements, GM can be a smart and strong competitor in North America and around the world. But everyone at GM needs to be honest and speak the truth. The truth will set you free. Just ask Alan.

As Detroit’s struggles prove, life is a fight for resources. If you can’t get enough resources, you die. Well, in Motown’s case, you receive massive taxpayer subsidies and then you die. Taking it down to the personal level, the resources needed for survival form what Abraham Maslow called “a hierarchy of needs.” The most basic of these are lumped together: air, water, food and sex. Yup, sex is at the bottom of the pyramid. So it’s no wonder that exhibitors at The North American International Show (NAIAS) pay young, attractive females to pose next to their vehicles. It appeals to the mostly male jobbing journos’ most basic needs (after securing shrimp), drawing their attention to the automakers’ vehicles. It’s effective, morally reprehensible and now, self-defeating.

The worldwide auto industry is undergoing a major makeover. For the last few years, government regulation, economics, media fashion and (arguably) public opinion have led to the de-Luztification of the business. In other words, the horsepower uber alles halo cars worshiped by GM’s septuagenarian head of product development as a young man are no longer the sine qua non of vehicular excellence. These days, environmental responsibility is the name of the game.

High gas prices or low, good times or bad, green is the new black. Imagine this year’s don’t call it The Detroit Auto Show without the new Toyota Prius and Honda Insight hybrids vying for primacy. Today’s auto shows are all about the mpgs and alt power. To wit: would NAIAS have welcomed former coach-builder (i.e. Mercedes SL and BMW 8-Series reskinner) Henrik Fisker on center stage if his sports sedan holstered a V12 engine rather than a hybrid “Q-Drive”? Clearly not.

Sure, sheetmetal queens like the Fisker Karma still get attention, regardless of their fuel efficiency. But again, these days, even the sleekest of the sleek are swathed in the mantle of federally-mandated planet protection. If the Cadillac Converj concept car has an engine underneath its stunning creases– which I highly doubt– it’s supposed to be GM’s forthcoming if not theoretical Voltec electric – gas hybrid powerplant.

“Time was the big auto show in Detroit was all about glamorous gas guzzlers on turntables,” NPR’s intro to an interview with Car Czar Bob Lutz interview pronounces. “and models pointing suggestively at fins and fenders. Not this year…”

Yes, this year. While the gas guzzlers are conspicuous by their absence, the booth babes are still there, undermining the automakers’ credibility. The media talk about NAIAS’ new found “austerity” and “de-glamorization.” The shrimp may be smaller, but the booth babes’ dresses are just as tight and revealing. And their presence reveals the truth about these taxpayer-funded cutbacks: the carmakers still don’t “get it.”

While I’m no fan of political correctness (hence the name of the website), the debate over the morality of using women to sell goods and services was fought over forty years ago. The “sexual objectification” of women was roundly, stridently and publicly denounced. The practice was defeated. Depicting women as mindless eye candy more-or-less whoring for a product joined racial stereotyping as one of those things you just don’t do.

In practice, society reached a compromise: women can be objects of sexual desire in sexual situations. A flexible concept to be sure, but easy enough to identify. Victoria’s Secret models, OK. Booth babes, no. (Beauty pageants, as always, lost in the middle.) In other words, draping nubile women over automobiles is a throwback to– and a carry-over from– an earlier, less sensitive time.

Whether they’re hawking EVs or SUVs (God forbid), booth babery illustrates and symbolizes the auto industry’s arrogant refusal to adapt to society’s needs. Well, norms.

As I’ve pointed out in previous years, booth babes are also self-defeating. They intimidate the average showgoer and discourage female attendance (for obvious reasons). By adorning cars with attractive girls who know little to nothing about the vehicle nearby, women who don’t work for the company producing the product, the manufacturer inhibits serious discussions about the car itself. In fact, the carmaker is showing an active disregard for anything other than the vehicles’ surface.

I would be remiss if I didn’t point out that TTAC fell into this same trap with a spate of cheerleader pictures, whose ironic intent– illustrating the automotive media’s attempt to “sex up” bad news– offended our audience. Commentators rightly pointed-out that the tits and ass snaps had nothing to do with TTAC’s core mission. It lowered the site’s tone and robbed us of the one thing we depend on for survival: our reputation. We admitted our mistake, ceased the practice and moved on.

It’s time for the “serious” car shows to lose the titillation. Not because it isn’t a welcome distraction from the hype, hot air and hypocrisy that surrounds the event. But because it is.

The first presentation I attended on the second day of NAIAS was for Lincoln (no mention of Mercury). The MKT crossover has a roomy interior that manages to look and feel more upscale than that of the MKS sedan. Stitched upholstery on the center stack and center console are an improvement over silver-painted plastic. As in the MKS and the related Ford Flex, seats in the first two rows are very comfortable. So what’s not to love? That would be the clunky, chunky exterior.  

It’s not that the MKT is a bad design. It’s worse than that. Lincoln’s cetacean snout looks slightly ridiculous on its cars. On a crossover, it’s tacky enough to demand a Russ Meyer remake: faster pussycat; krill, krill, krill! From Lincoln I went to GM’s stand, where CEO Rick Wagoner announced that the batteries for the Volt would be manufactured in Michigan. And that GM was going to make battery technology a core competence, with a new 31k-square foot engineering center. And that LG Chemical (of Korea) has been selected as the supplier of the battery cells. One of these statements doesn’t fit with the others.

Then things started to really not add up. BYD, a Chinese battery and vehicle manufacturer, announced it was going to be offering a five-passenger pure electric vehicle with a 250-mile range. The vehicle in question strongly resembles Honda’s Asian-market Odyssey. (All of BYD’s cars strongly resemble someone else’s car.) The technology that makes this possible? BYD’s breakthrough “ferrous” battery technology. Now, ferrous means iron. Who knew that iron was such a good basis for a battery? Also, batteries usually combine two elements. What’s the unnamed second element? Hype?

On the subject of knockoffs, the Chinese aren’t the only ones doing it. The photo above isn’t a BYD knockoff of a second-gen Toyota Prius. It’s a Honda knockoff of a second-generation Toyota Prius. Only even more ungainly. Meanwhile, Toyota introduced the third-generation Prius, which is much better looking than both the current car and Honda’s facsimile. Check out the attractive five-spoke 17-inch alloys. The high point of the roofline has been shifted rearward by four inches. While the official reason for this is more rear seat headroom, it also greatly improves the car’s proportions. Inside, the new Prius has more room and a more nicely finished interior.

Yesterday, Lexus introduced its first efficiency-focused hybrid off the Prius platform: the HS250h. Which also happens to be the first U.S.-market Lexus with a four-cylinder engine. I took a look today. The interior is Lexian, but the exterior makes the previous generation Corolla look like a suite at the Ritz. Call me El Finesse, but I’m not seeing a Lexus in this exterior. Or in the powertrain– unless driveability is way up from the second-gen Prius.

LastIy, I attended Henrik Fisker’s presentation, where his company introduced a strikingly attractive (top up or down) hardtop convertible. The former Aston designer promises his hybrid hottie will be available for discerning customers in 2012. I’ve had a number of questions about their Karma foor-door (hint: don’t call it a sedan):

1. How can Fisker manage to offer a stylish, luxurious, large (124.4-inch wheelbase, 196.3-inch length, 78.1-inch width) four-door car with a powerful hybrid powertrain (260 horsepower turbo four plus a pair of electric motors good for 400 horsepower) and monstrous 22-inch tires for conventional S-Class money? (Base price: $87,900)

2. Can GM’s rorty turbo four possibly behave as an engine in a $90,000+ sedan is expected to behave?

3. How can such a car go 50 miles on a charge? A huge battery pack would add weight and cost. See surprisingly low price above.

4. How can a car with such swoopy sheetmetal comfortably accommodate four adults.

Well, after today’s presentation I was able to sit in the Karma four door. It’s C3 Corvette tight in the front seat, and even tighter in the back seat. (For reference, I’m 5’9″ and the front seat was perhaps and inch farther rearward than I’d set it.) There’s considerably more room inside a Mazda RX-8, which has far more compact exterior dimensions. Getting in and out of the Mazda’s rear seat is also easier. Getting in and out of the the Karma is a head-and-knee-bumping chore thanks to a low roof and small door openings. 

I will grant that Fisker’s made the seats as comfortable as possible given the low seating position and limited interior volume. Still, a third-gen Prius is a limo in comparison. The trunk was closed to the public. When I asked about cargo volume, they responded, “Enough for two golf bags.” So perhaps 8 cubic feet. That’s what happens when a designer is running the show. The Karma sedan is very much a four-door coupe-a Mercedes CLS taken to the extreme, with all of the compromises that implies.

Well, the first day at the 2009 North American International Auto Show wasn’t such a bust in the end. I began the day by attending the Intro and North American Car of the Year Awards. During the intro talk the Detroit show sought to demonstrate that it was still relevant by trotting out senior executives from the auto companies that didn’t opt to skip this year’s show. Among the execs from GM, Ford, Toyota, Honda, VW, and so forth was… Henrik Fisker. “Which one of these is not like the others…” started running through my head. Pretty good for a guy who reskinned SL’s and 8’s until he figured out it was better to ride the green gravy train. But that’s the way Detroit rolls these days.

Looking over the finalists from my place amidst a press release of journalists, I wondered what the G37 was doing amongst them. The Infiniti’s engine is new for 2009, but the rest of the car is entering its third model year. Well, it wasn’t the Infiniti. The car in question was a Hyundai Genesis, which won the award. Apparently, when you can only see the top half of the car the resemblance is rather strong.

I then attended the General Motors presentation. A couple years ago, when the then-new Cadillac CTS was introduced, I commented that it was nice to see the people involved in creating the car up on stage with it. Especially since I knew some of them. This year, GM kicked itup a notch. They brought in a crowd of 100+ employees to stand behind the seated press and engage in a pep rally. Holding signs that said things like “here to stay.” The foreign journalist besides me asked who the prostesters were.  

The presenting GM execs called for a cheer from said cheering section each time a car rolled up on stage– and they paraded about 15 of them. A couple of times the exec called for a louder response. A bit much.

Some of the new GM cars were surprisingly impressive. The interior of the 2010 Equinox compact SUV is the best interior in a Chevrolet so far. It’s much nicer than that in a Toyota RAV4, and I’d also place it ahead of the Honda CR-V. Seat comfort is also excellent, front and rear. Why aren’t the seats in the larger Lambda crossovers nearly this good?

I actually found the firmer seats in the Cadillac SRX less comfortable than those in the Chevrolet. There’s also less rear seat and cargo room in the SRX. Overall, while the Cadillac’s interior is nicer than the Chevrolet’s, it will also be much more expensive. I expect the Cadillac will have a much harder time achieving its sales targets.

The new Buick LaCrosse is a mixed bag. The exterior doesn’t quite work for me. The “sweep spear” comes up too high on the overly tall front fender. As a result, your eye is pulled in one direction by the beltline (base of the windows) and in the other by the “sweep spear.” Beyond this, the proportions of the front fender are generally forced and awkward.

On the other hand, the interior of the new LaCrosse is outstanding, the best yet from GM– better even than that in the Cadillac CTS. Real stitching on the instrument panel and door panels has been achieved at a Buick price by molding the stitching into the polymer panels. The panels aren’t actually upholstered as they are in newer Cadillacs, but they look upholstered. The center stack is nicely executed, with a definite upscale appearance. The curvy door panels are exceedingly well done. They combine a nicely padded armrest with a comfortable door pull, flowing organically into the instrument panel.

Is an outstanding interior enough to get people under 70 to consider a Buick sedan? Probably not.

Looking back across the GM area, I wondered what a previous generation Audi A4 was doing there. Another case of mistaken identity: the Chevrolet Cruze. In the metal, the Cruze looks great– at least when it’s fitted with 19-inch five-spoke alloy rims. Inside, the instrument panel in the Cruze is trimmed in a woven fabric. This might not be to everyone’s taste, but it’s a huge step up from most compact car interiors.

Ford has thoroughly revised the Taurus. The new car looks much more upscale, inside and out. Though the new grille is a bit too Subaru nondescript, the rear fenders have strong Bentley overtones. Viewed from the side the car has more presence than a Taurus has any right to.

The interior of the 2010 Ford Taurus is not far off the related Lincoln MKS’, but not up to the level of the Buick LaCrosse. The panel fits aren’t as tight or as precise, and the materials seem a bit cheaper. I was surprised to hear that features such as adaptive cruise control and massaging seats– usually only available on expensive luxury cars– will be available on the Taurus. On the downside, the interior is much less roomy than that of the current Taurus. Inside, it does not feel like a full-size car.

I skipped the Chrysler presentation, figuring the company had nothing in the pipeline. I later learned they’d shown a possible next-generation 300, billed as the 200C EV with an alt fuel powertrain. This concept’s much more curvy than the current 300; a huge advance over recent Chrysler efforts like the Sebring. But is there enough trunk space inside the sportily bobbed tail?

That’s it for today. More tomorrow.

Not only does Richard Colliver admit that ’07’s sales were a bubble– a bubble that has permanently popped– but the executive vice president of Honda America says the bailout billions thrown at banks, aspiring banks and automakers hasn’t had any impact on the credit availability underpinning the U.S. new car market. Colliver also told Reuters that HoMoCo’s given up forecasting ’09 sales. “We’re not even forecasting because whatever we forecast, we would be wrong. If you look at the last 120 days, if that trend continues then we’re looking at a significant reduction (from 2008).” So Honda’s battening down the hatches, cutting inventory to 65 to 70 days of supply in the next three months (from the current 100 days). At the same time, Honda’s planning on boosting its leasing penetration from 23 percent to 27 percent of total U.S. sales. As for the impact of Motown’s meltdown on Honda…

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