The auto industry's $50b bailout plan should, by all  accounts, be a fairly controversial issue. Detroit wants a re-do after chasing SUV profits off a cliff, but can't even guarantee that $50b will be enough. So why are industry pundits so unified in their support for the industry plan? To be fair, there is some opposition to the bailout plan among the chattering classes. Curiously it seems to be limited to John McCain, SUV-haters and everyone on Wall Street. Oh yeah, and TTAC. Meanwhile  every buff-book columnist and "car-guy" commentator worth his junket airfare is parroting the same two basic arguments. First: it's not a bailout. Second: America, Fuck Yeah.

The "it's not a bailout" meme began when Jalopnik's Ray Wert went on CNBC's Street Signs and argued that the proposed plan was "just" loan guarantees. As in "not exactly the same as Bear Stearns." Within days of Wert's Clintonian parsing, Danny Howess of the Detroit News penned a column titled "Big 3's $50b Plea Is No Bailout".

Howes even lets an unnamed "industry executive with intimate knowledge of the policy discussions" make the crux of his argument. "We're not saying give us money. We're saying give us a reasonable cost of capital to invest in the United States. This is not a bailout."

In reality, the distinctions between Bear's "emergency line of credit," and the low-interest loans that Detroit is requesting are largely academic. Detroit is joining Bear, Fanny and Freddie in requesting that American taxpayers invest in their future when Wall Street won't.

Wall Street makes decisions on dollars and cents, but Washington runs on emotion and spectacle. A day late and several credit-ratings short, Detroit and its apologists fled for the last refuge of the scoundrel: blind Patriotism.

For Angus MacKenzie of Motor Trend, propping-up Detroit is nothing short of a matter of national security. "Think about it," writes MacKenzie. "If you know how to make a car, you know how to make a lot of other stuff — everything from air-conditioners to aircraft carriers." Later he dedicates an entire paragraph to straight-out assertion that "Manufacturing — auto manufacturing — is a strategically important business." In short, Detroit must be sheltered from competition, whatever the cost.

And with that, MacKenzie weaves Detroit's woes into the fabric of American economic decline. Like the subprime mortgage crisis, the downfall of America's "manufacturing– auto manufacturing" sector was the result of an economic "imbalance" he argues. Besides encouraging a blind investment in auto builders, this narrative also conveniently absolves Motown's CEOs of all responsibility for their situation.

This isn't overly surprising, as MacKenzie tends to side with Detroit wherever possible. After all, when times are bad, ad budgets get cut first. When Detroit does well, Motor Trend does well. But there's a big difference from reading MT fawning over sub-par Detroit iron and reading MT suggesting that taxpayers hand over $50b to the sub-prime auto business. Especially when we're told that if "even one" of the once-big three make it, "it will have been worth the investment. For America's sake."

Peter DeLorenzo of Autoextremist notoriety isn't afraid to call Detroit's predicament like it is. But when he's done admitting that even $40b worth of bailout is "mind numbing" and undeserved, he can't help but cop out.

Like MacKenzie, the specter of a general malaise– this time as a cultural decline– takes center stage in DeLorenzo's analysis. "We cannot come to the table in this new global economy only as… a people who have completely lost the ability to create or manufacture things… because once we lose that, then the day we lose touch with the basic fabric of our nation won't be far behind. "

But clearly we haven't lost our ability to create or manufacture things. After all, auto factories in America build competitive products for profitable companies every day. They just happen to have names like Toyota, Honda and BMW.

It's easy to equate giving Detroit money with helping America, but what exactly are we trying to save? These three companies which have struggled to make competitive products or turn a profit for decades. A $70m lobby gorging on federal pork, from the $1b PNGV boondoggle to the ethanol lunacy. The Chrysler Sebring.

The American "automotive sector" has not failed. Nor have Americans forgotten how to make stuff. The Big 2.8's plight is the simple, inevitable result of tragic mismanagement. Using tax money to enable them, promoting this policy, is not patriotic. It's a complete betrayal of the principles of hard work and fair competition, and the necessary balance of risk and reward, that made this country great. 

Psychologists tell us it's important to vent, so every so often I have to clear the air and discuss what really grizzles my gristle. I can't take it anymore, and it's possible– even likely– that I'm not alone on this. So, without further ado, you know what really grinds my gears?

For starters: Edmunds' Inside Line. While all the rest of us in the internet-car world (by which I mean all of us– TTAC, WorldCarFans, Jalopnik, Autoblog, whoever) are busy posting pictures of some car released at 12:01 AM, EIL already has a review of that car up. I mean, for heaven's sake, even Pulitzer Prize-winner Dan Neil is often stuck waiting behind them in the queue. Just yesterday, for example, InsideLine posted a drive of a Camaro mule and reviews of the Cadillac CTS-V and the new European Ford Fiesta. They can go straight to hell.

The upshot, however, is when Edmunds described the 2008 Lancer: "This weightiness similarly describes the car's ride quality and chassis reactions, but in a good way." I more candidly reported that "Mitsu has fitted the base car with a suspension made out of Twinkies." I'll always take free market capitalism over a well funded command economy.

You know what else really grinds my gears? The lack of good seat coverings in cars. If you're buying a regular car, you can choose between cloth and plasticky over-treated leather. On the other hand, in nearly all luxury cars you're limited to Dow Chemical leather– or the occasional cheap-ass vinyl posing as leather. Where is the nice cloth in a luxury car? Especially the cushy cars that deserve cushy cloth seats. You wouldn't wrap yourself up in a leather blanket when you're cold, and I'm not sure that leather chairs in the car are much different. Hot in the summer, cold in the winter, they seem to be frequently uncomfortable. What they do have going for them is that they're pretty stain resistant and take longer to show wear. But can't they do something about the hide? If they have to use leather, at least use quality leather. I'd pay more money for a car with leather seats if they felt like my girlfriend's Coach purse.

The next issue that's been grinding my gear this week is crummy car websites. It seems like the manufacturers have no interest in leveraging the benefits of the internet at all. The web interface on so many manufacturers' sites appears to have been designed by a ninth-grade kid. Bandwidth is apparently so expensive that we are limited to only 6 photos, including an obligatory picture of the plastic shroud that covered the engine.

This last one is even more useless than when the dealer tries to show you the engine, as if it means anything at all to see "Honda V6" under the hood. The "estimate payment" functions tend to be so useless that it's better to leave them off entirely. What I want in a manufacturer's website: easily accessible stats (which aren't buried in sub menus), tons of photos, and a functional inventory locater.

Special tuner-edition German cars also grind my gears. Every day we learn about yet another ABC Tuninghaus that has a new version of the Audi A6/Mercedes SL/BMW 5-Series that has 904 horsepower and a tragically ugly bodykit. And, it's only $100,000 more than the original version of the car, which the manufacturer spent billions developing. But hey, a few guys say they can crank your new German sports saloon up to methamphetamine levels.

You know what I want to see them tune? My Volkswagen GTI. I want it to drive exactly the same, but to get 80 miles per gallon on regular 87 octane (on the tow truck on the way to the mechanic doesn't count).

I close by giving a nod to all the "midsize" luxury SUVs out there– the Mercedes ML, BMW X5, Audi Q7, Acura MDX, and all their cohorts. They all grind my gears. I don't care how carlike their are to drive, or how decently they handle, or that when equipped with the optional $10,000 V8 (sorry Acura), they can out-accelerate a Honda Accord, ten year old Porsche or attack helicopter.

I don't care because they are ugly. They are not as good to drive as sedans and wagons. They are not ideal off-roaders (in spite of gadgets) because the bodywork costs trillions to repair, and because they all weigh 15,000 lbs. And they are all chasing some holy grail of the most sports car-like SUV. I like sports cars too, which is why if I wanted one, I'd buy one. I wouldn't buy Pringles Pizza Flavor chips because they taste "just like pizza"; I'd buy a pizza.

And that, ladies and gentlemen, is what grinds my gears. For now, at least.

Montagues vs. Capulets. Crips vs. Bloods. ‘Vette vs. Porsche. How do I plead? Nolo contendere. Technically, I qualify as an "auto journalist." But I'm a lot more interested in the companies that build the cars than in the cars themselves. I just don't have quite the same level of fire as some of my fellow writers; so it's impossible for me to be much of a "car snob." Beer is a different matter.

One of the most important lessons I took to heart back in college: "life is too short to drink cheap beer." While I've tried not to be an arrogant bastard about it, I've made it my policy to spend the extra money to upgrade my suds. If no alternative is available, I'll stick to regular draft (life is also too short to drink light beer, ditto cans) or longnecks (as a last resort). I've held to this vow fairly tightly, except for one "guys game night." Sad but true: I drank Schlitz.

Right now, you're reacting in one of three ways: "Ewww!" "Huh?" or "Hey wait a minute!" You see, back in the day, Schlitz was the second-best selling brew in America, the "beer that made Milwaukee famous." Now it's an only-occasionally-made regional discount brew. And therein lies the tale, and the warning for the other guys on the Great Lakes.

Back around the mid 1970s, the president of Schlitz faced a choice. While his brew had national reach, he'd run up against stalling sales volume. Winning more market share would require a massive investment in advertising– that might not pay off. Instead, he chose to increase profits without growing his market share, with disastrous results.

Given the usual jokes made about American beer, you might be surprised that there are still corners that can be cut. These shortcuts mostly involve shortening the brewing process. In so doing, a brewery can produce more beer with the same equipment, thus reducing their costs and raising their profits.

The shortcuts done, and redone, Schlitz was riding high. According to their marketing, their customers couldn't tell the difference. Then things went to pieces.

It's hard to nail down exactly what started the slide. Philip Van Munching's excellent "Beer Blast" offers two reasonable guesses.  First, while you can't taste the difference between process A and B or D and E, you can tell the difference between A and E. Second, there were preservation issues (what he calls "snot-ridden" beer). 

Whatever the cause, the "retribution" was swift. Schlitz sales fell, forcing discounting. This led to further sales drops, which resulted in a drop from number two all the way to regional discount brew. At the same time, Schlitz' reputation fell all the way from "bad" to "bad joke."

The important lesson to be taken from this incident: once you drop into discount territory– selling on price and to the die-hards– there's virtually no going back. Oh, there's precious little money to be made in discount Hell.

How does this relate to the auto industry? Well, you could stick Budweiser in a list with Chevrolet, or Ford for that matter. These are powerful extremely mainstream brands with strong ties to grass-roots America. Historically, Chevy and Ford have been carefully priced to be affordable by practically anyone gainfully employed in the USA.

But the automakers now face the same choices as Schlitz: stick to your guns and watch market share erode, or cut prices in search of volume?

Lately, these car brands have been selling almost exclusively on price. They're falling into the bargain basement. Getting out of it can take years. Ask Hyundai, who aren't quite out of it yet. Or Cadillac, who fell in, climbed out, and are threatening to fall back in again.

Losing the last bit of brand cachet not only hurts the main brands, it threatens their "premium" brands because, well, halos shine both ways. Bud can "support" Michelob, Iron City can't. If you think Lincoln and Buick are hurting now, it could get much worse. 

With years of inflated sales and fleet dumps racked-up, can The Big 2.8 stay out of the "discount" trap? Chrysler looks to already be in it.  Plymouth can't take the blame anymore and even in their best years their sweet spot was set very low (K-car, Neon). Worse, Chrysler the "premium" brand has virtual no cachet left. 

Ford seems the safest, partially because of better products but mostly, forgive the pun, because their focus. GM's vehicles aren't much worse than Ford's; what's driving them down is the division structure.  Instead of missing one sales target, they are missing three or four. Every discounted Pontiac or Saturn pushes Chevy lower and lower to keep up their volume, which forces more cutting, which forces more incentives.

GM desperately needs to hold the line with Chevy and the only realistic way is killing off the "middle" brands. They are holding the price points Chevy needs, and they are pushing it into a hole it will never climb out of. It's one thing to be affordable, quite another to be cheap.

In George Orwell's Animal Farm, the farmyard creatures create seven commandments to ensure harmony and protect against human cruelty. The seventh commandment, "all animals are equal," eventually gets a rider: "but some animals are more equal than others." For most, it's satire. For others, it's a way of life. To wit: federal politicians, whose interest in special interests far outweighs their concern for the "average" voter– if only because taxpayers are too busy earning money to pay their taxes to notice how the cash is being wasted. Except when they're not. The plan to bailout Detroit's automakers looks set to be one of those times.  

Today's Wall Street Journal gives the public its first glimpse of Detroit's planned assault on federal funds. Surprisingly, ALL THREE domestic automakers are banding together to hit-up Uncle Sam for a $25b loan. What's more, the automakers want the money at a 4.5 percent interest rate. AND they're seeking a proviso that the feds can defer ANY interest payments for five years. You know; if the automakers can lobby elected representatives hard enough.

This is not what most analysts expected– even the ones who didn't expect it (if you know what I mean).

Surprisingly, The Big 2.8 are asking for cash money. A loan is a  far less politically palatable "request" than federal loan guarantees. There can only be one reason why Detroit went for the more dangerous, direct approach: the banks won't touch them even WITH federal backing. It's a sure indication that the money men have finally (and correctly) reached the conclusion that Detroit's current business model is well and truly dysfunctional. Dead, even. They are not going to throw good money after bad.

Which is, to Motown's way of thinking, beside the point. After all, the $25b loan will be spun as an investment in new technology, not a bailout per se. It's simply a way to help us "modernize" our old factories to build THE CAR OF THE FUTURE. In other words, if you really want those EVs, you gotta pay. Us. 

But why so little money?

Seriously; $25b is not enough cash to sustain GM for a couple of years– never mind GM, Ford AND Chrysler. To put that number in perspective, when Ford doubled-down and mortgaged the farm (including their logo) in 2006, they raised $23b. GM's contribution to the United Auto Workers health care VEBA fund is (i.e. was) $29.9b. A $25b federal loan may be The Mother of All Band-Aids, but it's nowhere near enough cash for The Big 2.8 to reinvent themselves.

It is, however, a "doable" sum if you're dressing-up a bailout as an "investment." No doubt supporters of the domestically-owned automobile industry are already comparing the $25b figure to the cost of the war in Iraq, or the space shuttle, or tax breaks given to oil companies, or some such thing.

And anyway, it's a prelude to a kiss: the REAL bailout (in for $25b, in for another $25b). Truth is, it would extremely difficult for The Big 2.8 to ask for a "realistic" loan– or loan guarantee– to turn all their asses around. That number would be near-as-dammit a trillion dollars.

Of course, like all trillion dollar– or, I should say $25b federal expenditures, the vast majority of the money would disappear down a rathole, never to be seen again. American-owned automakers are not a cash-starved start-up looking for enough money to bring PC products to market. They're a motley crew of failed businessmen and women who've demonstrated an abject and ongoing inability to develop competitive products. Giving them more money to piss away would not solve anything.

The operative word here is "would." This is not a done deal. For one thing, as the failing financial industry hoovers-up federal funds, there is the very real prospect of "bailout (yes bailout) fatigue." For another, painting Motown as a "good investment" will be an extremely tough sell. The public currently sees The D2.8 as EV-killing gluttons who feasted on SUV profits when they should have been building small, fuel-efficient cars. The hundreds of millions of dollars pocketed by D2.8 executives will do them no favors in this regard.

The real deal killer: Detroit's irrelevance. The gas – electric hybrid Prius already exists. Fuel efficient small cars already exist (some of them sold by Detroit). As far as the general public is concerned, even the plug-in Volt is coming along nicely–  without federal funds. The public can easily see this $25b "green loan" for what it is: an attempt to help Detroit do what should have been doing all along. A reward for incompetence.

Giving The Big 2.8 federal tax money to play with is also a bad idea for Detroit. Even if the operation is a success, without Chapter 11 reorganization, the patient will die.

What if GM Car Czar Bob Lutz is the kind of hero General Motors needs, hurling Volts from high atop the Ren Center to stave off Chapters 7 and 11? What if he's fighting the bureaucratic beast from within, under the guise of corporate tool, a double agent, if you will? Could Maximum Bob be one of the good guys? Double Lutz?

The General has had a tough couple of decades. Lutz arrived at his current job in 2002, hopping on the continuous market share slide. He is Vice Chairman, charged with global product development. During his tenure, the General has leaked significant levels of everything used to value a corporation: cash, investor confidence, consumer confidence, brand strength, hope, faith and charity. GM kissed away 23 percent of the US market since 1979, five of that during Lutz's stint.

Yet Lutz and his boss Rick Wagoner are still calling the shots, with the full backing of the Board. In most companies losing seven million dollars an hour, this is not the case. So why aren't these guys sitting on the curb with cardboard boxes on their laps? 

There are several possible explanations. 1. The Board is stupid. 2. Inter-mingling with other blue-chip boards has created a web of complicity. 3. They invite bankruptcy. 4. They're telling it like it is: the Board believes in what Wagoner and Lutz are doing to turn the company around. This one is the hardest believe– unless all is not as it appears.

Robert A. Lutz is a retired Marine Corps aviator who speaks three languages. Born in Switzerland, 1932, he joined General Motors Europe in 1963. He worked at BMW in the early 70s, where he took part in the development of the storied 3-Series. At Ford, he rose through the Chairmanship of Ford of Europe all the way to the Ford Board. From there, he jumped to Chrysler, where he oversaw the Viper, Prowler and LH platform. Four years as CEO of Exide brings him back to GM.

Lutz has never been cocooned in Detroit. He's continuously championed European driving dynamics and technology in America. He's lead and lost political battles at each of the Detroit marks. It is difficult to accept him as a clueless– or even disinterested– Hindenburg pilot. The alternative, then, is Lutz at the stick of a Raptor.

The Chevy Volt project is being run unlike anything in GM's recent corporate memory. No curtains. No tarps. Everything everyone is doing is out in the open, blasted at the press and rocketing forward at twice normal development speed. This is GM's moon shot. 

The Volt is anti-GM culture to its core.  Literally.  They ridiculed hybrids not five years ago and shot their own electric car in the back. Now, The General is throwing resources it doesn't have and what's left of its reputation at a vehicle that, as of right now, will not work.

Lutz is the father of the Volt. At Exide, he became enamored with batteries and electric drive and saw potential freedom from Saudi and Venezuelan oil. In 2006, he commissioned something striking for the 2007 Detroit Autoshow, telling his engineers and designers he wanted a game-changer.

The game he wants to change, though, is inside the Ren Center. A full century of corporate calcification has made it near impossible to do anything, let alone anything well. GM is notorious for tall decision trees, needing months to climb, and middle managers who've learned that sticking your neck out is the surest way to get cut down to size. 

All of this is antithetical to a way a fighter pilot thinks. Marines understand chain of command. They are not above their brand of bureaucracy, but they are trained to get their orders and get the job done. The job in this case: overtake the former axis powers and regain US supremacy of the roads.

For victory, the Volt will need to zap GM's corporate mindset on sustainability, environmental policy, accountability and resource allocation. It has to turn around the crowd that killed the EV1 and dozens of other start-stop projects that sapped GM resources and credibility for a generation. And that, even more than build a cool car, is what Lutz really wants to do.

Lutz has repeatedly stated that this project is important not just to GM, but to the whole US auto industry. Yeah, he blankets the media jungle with crazy-palm. He has to. He needs to stoke what fire is left at GM and he can't use the truth to do it. How could he not sound ludicrous most of the time?

That expression about turning around an aircraft carrier doesn't apply to the General. It's more like a whole fleet. Maybe, just maybe, Maximum Bob is using the Volt to light the way.

GM’s North American Operations will go bankrupt. This statement will not come as a “revelation” to many TTAC readers. Of course, there are still some who will continue to claim that this website is “crying wolf” regarding The General's descent into ignominy. But to challenge any outcome other than a Chapter 11 filing borders on lunacy. As its centennial mark approaches, the vertex of the perfect storm now engulfs The General. Like it or not, believe it nor not, it's a tempest that will engulf the ship and send it to a rocky bottom. 

The storm has three main components. First, higher costs for diesel and gasoline.

Not to belabor the obvious, but higher fuel prices have dramatically lowered demand for big rigs. Until recent "End of Days," GM’s domestic production was geared 60 percent (plus) towards fuel-hungry trucks and SUVs. GM’s suits only built cars as a way to satisfy requirement for corporate average fleet economy (a.k.a. CAFE) regulations, and to keep a full line-up of choices amongst six of its seven brands.

GM doesn’t make money on cars. It hasn’t done so for well over a decade. The domestic automaker is the high-cost producer in a competitive car environment, where its passenger cars are mostly inferior to the offerings of Toyondissan. Even when a particular GM car is in demand, it’s still a losing proposition– when you you consider (as you must) the aggregate profit and loss across all of GM’s automotive offerings. Now, without truck sales to bolster gross contribution, the money just drains away.

Second, the finance crisis continues full tilt.

The current “downturn” is mostly a result of the debacle in the housing market (which resulted from a finance system flush with excess liquidity just a few years ago). Lenders find their balance sheets under pressure and contracting. This obviates the possibility of making credit available at reasonable terms, and then only to the least risky of borrowers.

That’s a huge downer for the car market. Without lenders willing to finance a new car to a 650 FICO score borrower, dealers might as well kiss the metal goodnight every evening– since they’ll see it again in the morning. And the next. And the next.

Third, the general economy stinks no matter what the President and the Fed’s Bernanke say.

Americans feel mostly poorer (surprise – they are!) and are acting accordingly. That means big time cash conservation. Anyone who can or needs to defer buying (heck, you can’t lease a domestic car anymore!) will do just that. They’ll sit on the sidelines. The sales numbers for all manufacturers (except Honda) prove the point; total '08 auto industry turnover is now expected to come in at around 14m units. That’s at least two million units under trend. Or think of it this way: at $28k for the average selling price of a new car, that’s $56b in lost revenues.

And there you have it. All three Motown automakers relied on trucks to cover their asses on cars. The plan worked great as long as they shared the big rig market to themselves, gas was cheap and anyone who had a job and half-decent credit could get financing. That’s all gone away and, well, we know where The Big 2.8 stand today: teetering on the abyss of bankruptcy. With GM closest to the edge. (Chrysler’s a black hole of info, but let’s suspend reality and believe Nardelli’s telling the truth.)

All the signs are there. At $10/share, GM’s stock price yields a total market value of less than $6b for a $160B revenue company. The credit agencies all mark the corporate credit of the company just a few notches above default, and that’s a gift. The bond market trades GM’s debt securities at close to recovery values.

The company’s financial statements chart the changes; GM’s just a breath away from insolvency. As of June 30th, GM's working capital stands at a deficit of $20b. Total shareholder equity is a staggering $56b in the hole. GM’s net liquidity (cash less debt) remains underwater at $15b. How can GM escape?

It can’t. There is no light at the end of the tunnel. There’s no amount of restructuring that can save this company. GM will do what automotive suppliers before it-– Delphi, Tower, Dana– have done. File bankruptcy for its North American operations. End the misery, pare the company’s balance sheet, shed brands, complete the transformation.  

The new round of employee pricing marks the last gasp of life prior to a filing. Yes, this time GM's lowered its dealer inventory to 750k units (as of July 31st). That's 300k units lower than the last time General Motors ran its "I'm an Employee, You're an Employee" sale, in June, 2005. But there's no mistaking the urgency involved. The General must get its dealers to order new vehicles at a rapid pace. That's the only way they can keep the factories humming and life-sustaining cash flow coming… for a few more months.

In fact, Captain Rick Wagoner's recent "We're OK through to the end of 2009" pronouncement is more of a timeline for C11 than a RenCen renaissance. Maybe the perfect storm will pass by then? If it doesn’t, it’s lights out. Sooner, rather than later.

With Chrysler’s slide well underway, it’s only a matter of time before Honda becomes America’s fourth largest automaker (behind Toyota, GM and Ford). Honda will then hold the same rank stateside as it occupies in Japan– behind Toyota, Nissan, and Suzuki. While Honda’s relative success in its home territory may surprise some American industry watchers, the automaker’s contrasting strategy in the Japanese Domestic Market (JDM) reveals a hidden “secret” to their U.S. success.

The outlines of the Japanese car market are simple enough. Toyota OWNS the JDM, with a 50 percent market share (GM at its 1960 level). Many automakers have tried to go head-to-head with ToMoCo. Mazda tried; Ford had to take over to bail them out. Nissan has been chasing ToMoCo for over 50 years. It almost killed them. Honda was Japan’s number two at that point. But once Renault got Nissan back in shape, Honda faded back to third (and recently fourth).

It should be remembered that Honda is Japan’s new kid on the block. Taking the top slot at home simply doesn’t hold the same thrill for them as it does for their older rivals (the motorcycle market is another matter.) Considering what has happened to the challengers, it’s probably a sensible decision. 

At the moment, the total Japanese market accounts for 3.2m units a year, equivalent to around 20 percent of total U.S. production. Honda's share: somewhere between 500k and 1m. It’s the breadth of Honda’s JDM lineup that's the most interesting aspect of its home market. Honda sells three sizes of Minivan, Kei-cars with engines that would embarrass motorcycles, station wagons, sedans, compacts, crossovers, you name it. 

Honda Japan offers most of the models familiar to North American buyers, but often in strange configurations (e.g. all-wheel drive Odyssey minivans and Civic sedans and hatchbacks). Only the Pilot is notable by its absence; the boxier and cheaper (than the CR-V) three-row “Crossroad” serves in its stead. 

In stark contrast, the most interesting thing about Honda’s North American offerings is what the brand doesn’t offer. Compared to most of its competition, Honda is missing several sizes of vehicle. Other car companies moving the metal in The Land of the Free sell four sizes of car. Honda has three. Other makers have two kinds of two-row S/CUVs. Honda has one (in three varieties). Even little Mazda has three different mini-vans. Honda NA has one.

A glance at Honda’s oversea website shows that the Japanese automaker produces the vehicles it needs to match the competition, model-for-model. So why hasn’t Honda they brought reinforcements from the land of the horse chestnuts? The answer lies within Honda NA’s option lists.

As far as conventional options go, Honda follows the classic “Japanese import” option path. Every model has two or three basic trims that differ mostly in terms of cosmetic and “convenience” items (CD-changers, moon roofs, alloy wheels etc.). Electronic Stability Control (ESC) is standard across most of the range. Honda's only real “factory” options are satellite navigation and driven wheels (2WD/AWD for the S/CUVs). 

The CR-V, Honda’s perennially popular CUV slash wagon, is available in two-and-a-half trims, plus a pair of “niche-y” cousins. They all come with the same four-cylinder engine (Acura gets a turbo-charger) and two rows of seats. Almost all its rivals offer a V6 engine; several (including Toyota), and provide an optional third row. Despite this supposed deficit, the Honda CR-V has outsold the Toyota RAV-4 for a decade, and looks to be thriving in a bad market (sales on target for 200k).

Minivans? Same deal. Toyota will sell you an AWD mini-van, Honda NA doesn’t. And yet the Odyssey out-sells the Sienna.

This lack of choice is the "secret" key to Honda's success. And it's aimed– rightly– at Honda dealers, rather than the brand’s U.S. customers. By limiting options, Honda keeps it dealers focused on making volume sales, rather than gorging on limited editions. Keeping the models distinct also prevents new vehicles from eating the old. Witness what the Nissan Rogue is doing to the Murano.

Honda’s policy points up its strength (premium prices) and weakness (lack of capacity) in the NA market. Honda sells vehicles that use either 80 to 90 percent or 10 to 20 percent of their production line’s capacity. There is little “sharing.”  Filtering in additional models and variants would increase sales, but it would take a larger percentage of capacity (flexible manufacturing or no).

Honda’s is not the only formula for success in NA. BMW makes plenty of profits by selling dozens of variants of a handful of platforms, with expensive options aplenty. But then, the Bavarians play at a different price point. Selling generic (if loaded) vehicles works well in the American mass market. And no one seems quite as focused on that task as Honda, regardless of their market share here, or at home.

We recently pitted the next gen Toyota Prius against the forthcoming Chevrolet Volt. The contest was theoretical, predicated on the arrival of the Volt in 2010 (and performing as advertised). Meanwhile, there’s no question about the reality (and viability) of Honda’s new hybrid sedan. It’s set to hit the showroom floor in April 2009, around the same time as the new Prius. While the Volt waits in the wings, the Toyota – Honda gas – electric rivalry will be an epic showdown.

Honda has stumbled around trying to find the right hybrid formula since 1999 when it introduced the gas – electric Insight. The ultra-light two-seater scored a record-breaking 70mpg on the [old] EPA highway test, but broke no sales records. The ensuing Accord hybrid was D.O.A. The follow-up Civic hybrid sells reasonably well, but it’s a wallflower compared to segment-buster Prius.

It looks like Honda’s finally found the right formula. Spy shots reveal a distinctly familiar shape: a combination of Prius flattery, Honda’s fuel-cell Clarity and the relentless pursuit of aerodynamics. Equally important, Richard Colliver, exec Veep of American Honda recently revealed that a base Honda hybrid will sticker at $18,500. If true, it will undercut its Toyota competitor by a healthy $3k.

Honda’s hybrid (“Hh”) is based on the Fit platform, stretched a few inches. Since the Fit already offers excellent space utilization, the Hh may give the Prius a run for the money in terms of interior volume. But what’s going on under the hood is more intriguing.

For now, Honda is stuck with its IMA (Integrated Motor Assist) “mild-hybrid” technology. The system essentially negates electric-only drive, except for 26 seconds every fifth Tuesday of the month. Further tweaks may increase that slightly, but forget about silently sneaking-up on unsuspecting blind pedestrians.

Honda’s trump card is rationalizing IMA production, bringing the hybrid premium of the system, batteries and all, down to about $1500 (as compared to a conventional drive-train). That makes the target $18.5k price look a bit less of a bargain, compared to a $14k Fit. What, a profitable hybrid right out of the starting gate (I’m looking at you, Volt)?

As usual, Honda achieves much with little. The technically-similar Civic hybrid’s 42mpg EPA combined rating is only eight percent less than the (current) Prius’ 46mpg. That wasn’t close enough to overcome the $22.6k Civic hybrid’s cloak of invisibility. But I’m guessing the lighter/more aerodynamic Fit-based hybrid will yield a (current) Prius-like 46 mpg EPA combined rating. Meanwhile, the new Prius will be deemed a flop if it’s combined rating doesn’t break the half-century mark.

Let’s put those numbers in perspective. Incremental efficiency gains at these sippy-cup levels become increasingly insignificant– unless gas prices really explode. At four-bucks a gallon, a 51mpg Prius saves $119/year (@14k miles). Even at six dollars, the annual fuel savings would be all of $180. It would take 25 (or 17) years to amortize the Prius’ higher price. You’d have to be a committed Peak-Oiler to justify the Prius’ premium on fuel savings.

So what will the latest Prius have going for it above the upstart Hh? It might still be a bit roomier, and have a smoother ride. But if four adults and their luggage can be comfortably accommodated in the Honda, that may be good enough for many hybrid intenders.

The Prius’ presumed higher EPA numbers might offer a smidgeon of green bragging rights, but the Honda’s shape has “hybrid” written all over it, so who cares? The Honda guarantees hyper-mileage and Green-creds, all at a lower price point.

What the Honda hybrid lacks is any viable upgrade/expansion into the plug-in future. Its IMA system is not socket friendly. Toyota will offer a Li-ion plug-in Prius to fleets in 2010, and to the public in 2011.

It would be a mistake to under-estimate the importance of plug-ability for the serious eco-road-warriors. For green halo seekers, nobody’s going to know whether your Prius is a plug-in or not, except for the port and attending badges. An aftermarket in fake plug-in ports (and badges) is as assured as the current market for fake Buick Lucerne portholes.

Is there a winner in this dual-mode duel? You bet: the consumer. Toyota’s plans to double Prius annual production to 480k, and Honda’s plans to sell 200k annually of its keenly-priced new entry, mean that street prices will be mean. Transaction prices of Priora historically have tracked gas prices. If the current pull-back in oil prices lasts into next year (my guess), expect to see the return of hybrid incentives, bigger than ever.

And then the real hybrid showdown begins, and history has a chance to repeat itself: GM’s latest Johnny-come-lately, technologically-ambitious, expensive/unprofitable, fully-fledged (one hopes) entry into the segment arrives (a.k.a. Volt). It will take on the well-established, low-cost, high-mileage competition from Japan– just like in the sixties, seventies, eighties, nineties, aughts…

Earlier today, GM’s purchasing chief warned his light truck parts suppliers that he’s looking to halve their number. No surprise there. GM’s SUV and pickup truck sales (and margins) have fallen like a stone thrown in a deep, dark well. But here’s the strange thing: Bo Anderson wants credit for his forward thinking. “The effort is proactive," he told the Traverse City management seminar. "To be sure that we get the best suppliers." Bo’s boast is based on GM’s faith that it will persevere through the current unpleasantness because yes, Virginia, you CAN cut your way to prosperity. Only no, Bo, you can’t. But hey, it’s something to do.

And by God, GM’s determined to do it. On Wednesday, freshly-minted GM CFO Ray Young cart-and-ponied automotive analysts at a JPMorgan conference in Dearborn. Young reaffirmed boss Rick Wagoner’s quasi-religious commitment to cost-cutting. And then he revealed glad tidings! The automaker would realize some of their projected savings sooner, rather than later. “We're accelerating all of this stuff,” Young pronounced.

All this stuff, indeed. Even a die-hard death watcher has trouble keeping-up with all the “normal” calls on GM’s remaining cash pile, versus the company’s efforts to trim its operating overheads, versus the “exceptional” costs of those cuts, versus, and here’s the key bit (to anyone who thinks a company should take in more money than it spends), the automaker’s sinking market share and cratering revenues. This in a declining market that’s undergoing a radical shift in consumer tastes. It’s no wonder that Young’s fellow bean counters chose to focus on cuts. It’s so much easier.

But that doesn’t make it right. And even if it IS right (for management karma), it’s not good enough for those who check the corporate body for signs of terminal cancer. Ask Moody’s. Just before Ray’s presentation, they downgraded GM’s credit, again, to Caa1. That’s seven levels below investment grade. With a negative outlook. The move slams the door even tighter on any chance that GM might borrow money Ford-style to “invest” its way out its hole (you know, if they had something approximating a plan).

Clearly, money’s too tight to mention. Literally. When asked about the $1.5b line of credit GM used in the last financial quarter, Mighty Ray Young claimed The General borrowed the money to ”test the mechanism” and help meet costs at a “seasonal low point.” (Try THAT one when your wife asks you why you put an HDTV on the credit card.) When reporters asked Young when that loan might be, you know, repaid, Young refused to give a date. GM will decide later, after it “monitors the U.S. auto industry's performance over the next couple months.”

Obviously, Young doesn’t expect the U.S. auto industry in general– or The General in specific– to recover by October. GM, once the world’s largest and most profitable company, has been reduced to scrounging behind the sofa.

And if that’s not enough to signal lifeboat lowering, Young also warned that “if the market shrinks further” the automaker will have to “reconsider” its scheduled contributions to the multi-billion dollar union-run health care superfund. And consider “how strategic” its 49 percent share of lender GMAC may be. Oh, and it’s selling more assets, ASAP.

So it’s the market’s fault. Not GM’s. The lack of accountability, the denial of reality, continues apace. Meanwhile, thanks to the festering sore that is former division and bankrupt parts supplier Delphi, the decline could soon become the final death spiral. When (no longer if) Delphi enters Chapter 7 liquidation, GM may not be able to take the monetary hit or supply chain disruption. Speaking of which…

There is nothing on GM’s product horizon that can generate sufficient revenues to slow– never mind stop– GM’s descent into insolvency. Even if the plug-in electric – gas hybrid Hail Mary known (but not yet realized) as the Volt arrived in Chevy showrooms next Thursday, even if it was a smash hit straight out of the box, the vehicle can not, will not generate enough profits (i.e. cash) to save GM. 

Someone should tell GM CEO Rick Wagoner that every day he doesn’t file for Chapter 11 brings him one day closer to something far worse.

By selling everything he can to buy more time for a market turnaround that can't come soon enough, propping-up a product renaissance that can't possibly sustain eight increasingly meaningless U.S. brands, Wagoner is in real danger of emptying the larder and destroying any remaining corporate value, leading GM into Chapter 7. 

As we’ve said before, there will be a federal loan guarantees, tax credits, perhaps a bailout and for sure a whole lot of wasted tax money before we reach this sad denouement. But reach it we will. Because you can trim a diseased tree all you like, but everything either grows or dies.

All car manufacturers would like you to believe they're turning their back on fleet sales. It simply doesn't pay to be known as a "pile 'em high and sell 'em cheap" automaker– even if that's exactly what you are. Hence manufacturers' quarterly reports that highlight models whose rental sales have fallen. I repeat, rental. Lest we forget, companies and government agencies are also significant bulk buyers. So, BS aside, who leads the pack in the fleet sales that all carmakers say they don't rely upon to drive up their numbers and keep the factories humming?

Surprise! Chrysler is the admiral of the fleet. Statistics for the first half of the year reveal that fleet sales make up 35.6 percent of their total 2008 sales. Of those, fully 75.1 percent went to the rental companies. Jeep's fleet sales are low, but if you look at the Dodge division, 39.4 percent of their production went to fleets, led by the lame duck Magnum (75.4 percent) and Avenger (65.5 percent). 

That's nothing compared to Chrysler Division, though. Just under half— 44.9 percent – of their '08 model year cars have gone to fleets, with 63.8 percent of PT Cruisers and 66.1 percent of Sebrings at the head of that line.

Ford claims decreased fleet sales is one of the main reasons their sales are down this year. Yet 32.7 percent of their ‘08 sales sailed with the fleets. As Crown Vic and Town Car sales are restricted to taxi and livery use, only 41.5% of Ford's fleet sales have been to rental companies. 

Breaking it down by division, the Crown Vic is the undisputed leader, with 94.2 percent of production serving fleet duty. Taurus and Taurus X are next, with 48.1 and 54.8 percent respectively, accounting for 34.1 percent of the nameplates' total sales. Bulk buyers scarfed 55.3 percent of Grand Marquis sales. And that helped drive 31.5 percent of Mercury's sales to the fleets. There is some good news for FoMoCo. Even with 59.9 percent of Town Car production sold for fleets, Lincoln's overall fleet share is only 23.4 percent of production

GM may have cut fleet sales, but over a quarter (26.4 percent) of their production found its way into fleets. Over half of those (57.8 percent) went to rental companies. Excluding models built specifically for commercial use, Chevy's Impala led the parade; 49.9 percent of total production sold to fleets. Trailblazer (39.6 percent) and Cobalt (38.7 percent) were next. Even though GM says the new Malibu is going great guns, 33 percent of the ‘08's went to fleets. Overall, 31.5 percent of Chevy's production ended-up in the fleets.

Pontiac is GM's hands-down fleet champion. Four out of every ten ‘08 Pontiacs ended up in the hands of fleet managers. They're loading the fleets with Grands Prix (64.6 percent of production), G6's (44.8 percent) and G5's (30.5 percent). The other GM divisions averaged less than 15 percent fleet sales.

Most of the imported nameplates also averaged below 15 percent total fleet sales. Kia led the imports, with 34.3 percent of U.S. cars going to fleets, the majority of which went to rental companies.  Sedona and Rondo are almost tied with 46.2 and 45.6 percent fleet sales respectively. 

Mitsubishi was the second most popular fleet queen amongst the import brands. A bit over one quarter (25.7 percent) of Mitsubishi's sales were to fleets, almost exclusively for rentals. The Galant the most popular (45.3 percent). Endeavor was a close second (42.6 percent). 

Mazda was close third, trailing Mitsu by 0.4 percent (25.3 percent). Like Mitsubishi, almost all of the fleet sales ended up in rental lots. The Mazda6 and Mazda5 were the most popular models, with 59.5 percent of 6's and 47.7 percent of 5's available for daily use at a nominal charge.

Hyundai used the fleet market to sell 23.9 percent of their vehicles, again with almost all going to rental companies. Forty percent of Sonatas and 25.3 percent of Azeras were fleetward bound. 

As for the other transplants, there were a few interesting data points– even if the manufactures didn't show anything surprising overall.

Toyota (who says they restrict sales to fleets) unloaded 25.6 percent of their Avalons in that manner, mostly to rental companies. Volvo found fleets to be a good dumping ground for S40 (48.9 percent) and S60 (45.5 percent). And although the overall sales numbers are low, 20.2 percent of Jag X-types joined them. 

There may be some real interesting results once July and August's figures are posted. For example, Nissan's inventory of Titans dropped from a 400+ day supply to just over 100 days in July. Toyota and other manufacturers have huge numbers of full-sized pickup trucks they also need to off-load, stat. Anyone fancy a Tundra for a company car?

For 33 years Jane Hoyt has been driving her baby blue 1975 VW Beetle. Is it love? Madness? A '70's thing? When I asked her about the appeal of her longtime automotive companion, it was none of the above. "It's a story of inertia. Really, it's a metaphor for my life. I always stay too long at the fair." That last word struck me as kinda funny. If a car ownership is a metaphorical "fair," can you get a lifetime of kicks from a four-wheeled Ferris Wheel? 

Yes, the Ferris Wheel. It's a nice, simple machine. Like the Model A, VW Beetle and 1960's Chevy Pickup. While reliability-crazed motorists tend to focus on things not going wrong, it's important to remember that simplicity means ease of repair, and that's the real key to longevity

Simply put, if a mechanic working on a vehicle can quickly figure out what fig-a-ma-jig needs to be replaced, the car in question can usually be repaired in matter of hours, rather than days or weeks. It's going to be easier for an aspiring lifer to tolerate the problems that come along. Because once you pass a certain point in a car's lifespan, come along they will. 

Thankfully (for you if not the manufacturer), that point of plenty of returns is stretching-out further and further. Six Sigma, lean production and a variety of manufacturing standards and practices that you've likely only heard in passing have enabled all carmakers to move towards incredible heights of build quality and mechanical robustness.

At the same time, there've been steady improvements on the repair front. For example, mechanics– be they shade-tree or franchised– now use an OBDII scanner and Alldata (the name says it all) to diagnose and repair vehicles. Identifying electrical problems has never been easier.

Well, at least post'95 or so. From the mid-90's back to time memoriam, each manufacturer had their own unique way of doing things. To wit: most pre-'96 Volvos had little plastic inserts that looked like a magic wand which went into little holes of a diagnosis system. Toyota's diagnostic system was completely different from GM's, and Honda had their own system. 

In fact, cars often had several unique "languages." A mid-1980's Jeep Cherokee may have been given a computer system from AMC, an engine from one of three automakers and a transmission from one of six completely different companies. Throw in a multitude of carburetors and a diagnosing system from a long-ago defunct AMC, and it's no wonder motorists longed for cars that never, ever broke.

It was an automotive Tower of Babel, that forced mechanics to specialize. Which kept both labor and parts prices high. So how come there are still "lifers" out there that stretch back to this pre-historic times? 

As I perused the web in search of lifer stories, I found that most of the cars were those made by companies that churned out the same powertrain for as long as possible. Mercedes and Volvo are the two mantle holders of many elderly lifers. Daimler offered very long model runs for the S, SL and E-Classes; the Swedes finished a 20-year run for the Volvo 200 series.

The thinking back then: if a car model made money and customers kept coming back for new ones, keep making the same thing. Only do it a little better every time. Improving the design, making the parts more durable and maintaining the language of diagnosis and repair kept more of these vehicles on the road past the average life expectancy of their rivals.

And then we have to consider the owner. Lifers tend to have what I call a 'blue jean' mentality when it comes to cars. That is, if the basic shape and design of the vehicle fits their needs, they just keep wearing it regardless of the current fashion. They realize that holes can always be sewn or patched, tastes change with time, and that in the end what really matters in most daily driving is that you're comfortable.

But they also don't "let things go"– as most owners do. If they sense a problem with the vehicle, they make sure it gets taken care of by someone who can be a good steward for that vehicle. That makes a huge difference in their overall happiness with that car. In the end, 'knowledge' and automotive excellence enable them to do what they want to do rather than what society, friends or the modern media encourages them to do.

So, if you're looking for a lifetime automotive companion, you're a lot better off now than at any time in the past. But the rules still apply: simple is best, mainstream is cheapest and regular maintenance is critical. With a bit of luck, you'll avoid the roller coaster of high monthly payments, rapid depreciation, repair and hassle. 

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In a recent article, The Economist wondered if Detroit's automakers would win their "race against time." In other words, will Ford, GM or Chrysler return to profitability before their cash conflagration throws them into the Chapter 11 burn unit? At the risk of providing a piercing glimpse into the obvious, The Big 2.8 need to change course or flame out. STAT. The Economist rightly suggests that Ford is the only carmaker of the three with a coherent strategy for escaping C11. For contrast, let's recap GM's and Chrysler's plans…

GM's roadmap: pare structural costs out of its bloated North American installed capacity until they can replace high profit light trucks with… something. To that end, The General's axing people and factories like they're going out of style (which they have), costing the company billions. The overarching problem: GM's market share and revenues are falling faster than the cuts. GM might be able to scrounge additional capital, but that's merely delaying the inevitable.

Chrysler's plan: become a distributor of cars made by others. Someone. Anyone. Aside from the fact that it won't work– branding still counts for everything– the outsourcing effort can't happen soon enough to save the company. Chrysler's product-related income stream is evaporating faster than a Texas rain puddle, and owners Cerberus have no hope (and no intention) of raising (or providing) sufficient capital to transform Chrysler into a viable carmaker, rebadged products or no.

In a nutshell, GM's still in denial, bleeding a slow death (in North America), while Chrysler is running around like a headless chicken, running out of money.    

Meanwhile, Ford's been executing a focused, determined and sensible new new turnaround plan since the arrival of the aluminum-winged savior from Boeing.

Alan Mulally's strategy: transform Ford into a smaller, more nimble company by leveraging its global resources (which are mostly smaller vehicles in Europe) to reduce platforms and costs. Build quality products in North America (as done by Ford Europe today) offering excellent fuel economy and class-competitive value for money.  

It doesn't sound crazy, and it might just work. But there are more than a few hurdles Mulally and his Blue Oval Boys must jump before they can beat their cross-town rivals to the "no C11" finish line.

First, Big Al must break down Ford's bloated bureaucracy and legendary in-fighting. No more individual unit fiefdoms. Intra-national waste and duplication of effort must be ruthlessly eliminated. Consolidation must be pursued without fear or favor.

Big Al's got to look outside Ford for expertise where needed. This he's done, hiring marketing whiz Jim Farley from Lexus and Ken Czubay (U.S. Sales and Marketing Chief) from Southeast Toyota Distributors. The more top-notch outside talent brought on board Ford, the better.

Second, Ford's got to jettison those parts of the company that don't fit to the global strategy. Throwing Jaguar/Land Rover and Aston overboard was the right thing to do. Volvo can't be offed soon enough.

Third, Ford's got to develop a profitable product plan for North America.

Ford's newfound commitment to smaller cars, more efficient engines and better design makes perfect sense. The new Fiesta and Euro Focus are overdue, but they will be welcome. When the company restyles the Taurus and drops the Freestyle, we'll know they're getting their you-know-what together. Turbocharged engines also make sense: more horsepower, better fuel efficiency.  No wacky bets on unproven electric go karts.

Finally, Ford must challenge the entire organization to perform to stated goals. They must energize the engineers, design staff, factory workers and dealers with their plan. And when I say Ford, I mean Alan Mulally.

The importance of leadership in a crisis can never be overstated. GM's got the same old tired financial guy trying to make it look like he's addressing the problem without really solving the crux of the matter. Chrysler's in the hands of the Home Depot despot– a proven cost-cutter who lacks any feel for the customer experience. Only Ford's Mulally has the skills– and credibility– to successfully energize his troops.  Kind of like the way he brought the B-777 to fruition.

Even so, there's no getting around the possibility that Ford may, indeed, run out of time. They may not get the small car products they need to the North American market soon enough. (Not to mention the possibility that those hecho en Mexico products may not be popular enough to generate those now-elusive profits.) The fact that Ford has withdrawn its "return to profitability" deadline is worrying.

But at least Ford has its eyes on the prize. Mulally may not know exactly when the ship will stop taking on water, but he knows Ford's got to get rich or die trying. He's laid out a viable plan, and he's sticking to it. Every Ford employee, supplier, and dealer knows the plan. We know the plan. 

John Lennon observed that "life is what happens when you're making other plans." But genuine progress is only possible when you realize that you must adapt or die.

TTAC's Best and Brightest have spoken. You provided us with 81 nominations for our Ten Best award, from the Aston Martin Vanquish to the HUMMER H2. From this cornucopia of cars, our ever-eager writers selected the short list of 20 finalists. As you might expect, the final list leans heavily towards vehicles notable for their performance and driving excellence. Half of this year's contenders were also finalists last year [indicated by an asterisk]. So here they are, along with some of your more "colorful" comments. Once you've had a look, please step into the e-voting booth and choose TTAC's Ten Best.

The inventory levels and average sales per franchise (SPF) numbers as of August first are out and almost everyone looks good on the car side of the inventory sheet. Trucks are a whole ‘nother matter, though.  Dealers are doing whatever they have to– including half price sales– to move body-on-frame trucks but inventory is still piling up. Just how bad is it? Well, let's take a look… 

Chrysler has fewer vehicles sitting around than at the same time last year, but sales are so bad that "abysmal" would be an optimistic appraisal. In July, Chrysler sold only seven vehicles per franchise (SPF). Jeep was marginally better with eight SPF, while Dodge sold 20 vehicles per franchise. High inventory numbers reflect those low sales. Jeep dealers have to contend with a 168-day supply of Liberty, a 156-day stock of Wrangler and 118 days' worth of both Compass and Grand Cherokee.

Dodge is even worse. While their passenger car inventories are at manageable levels, they have enough Rams for 111 days, enough Journeys for 132 days, enough Nitros for 224 days and– get this– enough Durangos to last 354 days. Chrysler franchisees don't have a lot of room on their lots, either. The 300 inventory represents 116 days of sales, and they have enough Town & Countrys and Aspens to last 111 and 158 days respectively.

Ford dealers are faring better, moving 37 units each. Lincoln and Mercury peddlers didn't fare so well, selling six and four vehicles each respectively. FoMoCo inventories looked pretty good on the car side, with only the MKZ and Milan into three digits (102 days for both). Ford's car-based CUVs are doing well– except for the Flex's 134-day supply. Dealer stock of body-on-frame trucks– F-Series (107 days), Explorer (111 days) and Expedition (125 days)– are piling up. The stalwart Ranger is looking good, with a mere 68 day supply.

Saturn leads the GM dealer hit parade with 41 average sales per franchise, followed not too closely by Chevy dealers with 34 sales each. After that, GM's SPF stats drop it like its hot. GMC franchisees managed to sell just 12 trucks each. Hummer dealers somehow got 11 units each out the door. Pontiac dealers averaged 10 vehicles. Cadillac and Saab dealers tallied nine sales each, while Buickmongers only eked-out three sales apiece in July. 

With a few exceptions like the LaCrosse (121 days), Lucerne (125 days), and Corvette (145 days), GM's passenger car inventory looks pretty good. But, like everyone else, traditional trucks are available in abundance. The three Escalade models average 152 days. Every Chevy truck with exception of Tahoe is in the triple-digit club, with Avalanche leading the parade at 156 days. The Tahoe barely escaped membership with a 98-day supply on the lots. All of the GMC SUVs and pickups are well over the hundred-day mark. 

The Big 2.8 aren't the only ones sitting on oodles of trucks. Honda dealers have a 111-day supply of Pilots and a 127-day supply of Ridgelines to unload. Acura dealers have a similar excess of MDX (120 days) and RDX (113 days). On the positive side, Honda dealers managed to sell 81 cars and 42 trucks per franchise, while Acura dealers moved 30 cars and 18 trucks each.

For some reason, Toyota won't break their inventory down by model. All we know is that Toyota/Scion dealers started the month with a 29-day supply of cars and a 99-day supply of trucks, while Lexus dealerships had 42 days' worth of cars and enough trucks for 60 days. Toyota placed first in sales per franchise, moving 94 cars and 49 trucks each in July. Even with the economic downturn, Lexus dealers averaged 60 cars and 40 trucks each.

Nissan follows the same inventory trend as the rest of the industry. The only Nissan cars exceeding the ideal 60-day inventory level are the Maxima (62 days) and 350Z (182 days). The inventory report also shows 600 GT-R's in the U.S…. somewhere. Trucks look surprisingly good, too, except for Murano (134 days), Armada (143 days) and Titan (down from 489 to 144– does anyone else smell massive fleet sales?). Nissan's 47 cars and 34 trucks SPF placed it fourth overall, behind Toyota, Honda and Lexus.

Other manufactures show similar numbers. Mazda has a 46-day supply of cars and a 108-day supply of trucks. Mitsubishi follows suit, with 65/125-day averages.  Hyundai and Kia dealers are sitting on a 42-day supply of cars and a 61-day supply of trucks. Hyundai dealers sold an average of 52 vehicles each, while Kia dealers pushed 43 units out the door in July. Mazda moved 33 vehicles per franchise while Mitsubishi dealers managed 19 sales each.

You can expect these inventory numbers to fluctuate quite a bit over the next few months, as manufacturers continue to adjust production mixes to cut back on trucks and increase cars. Sales per dealership seem to remain fairly constant, moving maybe one or two places in either direction from month to month. As always, we'll keep an eye on them and let you know what happens.

Chrysler doesn't do well outside it own backyard, or play well with others. The American automaker's attempts to expand globally in the early ‘60s ended with Chrysler selling their European operations (Rootes Group, Simca and Barreiros) to PSA Peugeot Citroën. In the 70's, Chrysler off-loaded their Australian subsidiary to Mitsubishi. ChryCo's last U.S. partnership with a Japanese manufacturer (Mitsubishi again) ended on less than cordial terms. The "merger of equals" with Germany's Mercedes-Benz almost [may actually have] killed it. So why would Chrysler entertain the idea of another off-shore partnership? And why would Nissan ever want to partner with an automaker as moribund as Chrysler?

Chrysler has inked an agreement with Nissan whereby the Yanks will build a full-sized pickup to replace the transplant's dead-in-the-water Titan. Should the deal come to fruition, Nissan will be "free" to stop producing their four-wheeled Dodo. They can then convert their Mississippi Titan plant to produce more commercial, commercial vehicles.

In return, Nissan will build a small car for Chrysler. And now, even as Chrysler says they have "no new alliances" to announce, the media suggests that Nissan will also build some version or another of their Altima midsized sedan for Chrysler dealers. Although the move transforms the much-touted "Project D" into "Project Dead," the automotive "outsourcing" would save Chrysler tens of millions of precious dollars in product development. Oh, did I mention Chrysler's contract with China's Chery to produce a subcompact for Dodge? Same deal.

Connect the dots and you have the meta-strategy outlined here before: Chrysler as K-Mart. It's only a matter of time before ALL of Chrysler and Dodge's products would be, in effect, store brands: other people's products labeled as Chryslers/Dodges. IF it has the time, Chrysler will maintain factories for their truck lines (operating at a reduced capacity) and get out of the automobile manufacturing business entirely. 

So what's in it for Nissan? A line of rebadged Nissans may sound like just what the doctor (Z) ordered for Chrysler, but what chance does a Nissan badged Ram have?

History says not much. In the ‘90s, Ford assembled and sold the first generation Nissan Quest minivan as the Mercury Villager. Splat! After 2002 Ford and Nissan went their separate ways. In fact, American-badged versions of imported brand vehicles have always sold poorly, especially compared to the original. Think Quest/Villager, Matrix/Vibe, Eclipse/Talon, Corolla/Prizm.

Likewise, the import-branded version of American trucks have been sales zombies. Chevy Colorados did nothing as Isuzus. The Ford Ranger goes nowhere as the Mazda B-series. The Dodge Dakota sells even more poorly as a Mitsubishi Raider. A Nissan Dodge Ram might do better than the Titan, but that says nothing good about either truck.  

One can only surmise (as many have) that Nissan's simply testing the waters, trawling for the remnants of Chrysler's production capacity, easing the eventual hauling-up of same. One can also look at history and see why Nissan would consider cozying-up to Chrysler: the company's [once and sole remaining] "crown" jewel. Jeep.  

Obviously, DaimlerChrysler/Chrysler has done much to damage the iconic brand. Jeep sales are down 21.2 percent year-to-date (YTD). The Commander (down 54 percent in July) and the Compass (down 45.9 percent in July) are disasters. And yet the not-so-great Jeep Patriot is up four percent last month. The model offers proof– if proof be needed– that Jeep remains a powerful brand with excellent potential.

European and U.S. fuel economy regulations or no, with Nissan's connections in Asia and Renault's presence in Europe, a Nissan-owned Jeep could become a world-wide brand. Yes, Jeep's cursed; every company that's bought it has gone to the wall or belly-up at some point. But the brand still sings its siren song, all these years later.

The question is, of course, can Cerberus hang on long enough to strip and flip Chrysler/Jeep outside of C11? Moody's just downgraded ChryCo deeper into junk bond territory and bestowed B2 status on Chrysler Financial. Cerberus isn't in the habit of losing money. They'll have to do something soon. Selling off Chrysler NOW seems to be the best way to stop the cash hemorrhage.

Nissan isn't stupid enough to swallow Chrysler whole (especially bits and pieces can be had for pennies on the dollar). Nissan would end up with unneeded production capacity, outdated factories, the UAW, segment-trailing models and an executive staff that seems to excel at losing money. Other than the full-sized truck lines and Jeep, everything else would be surplus to requirements. Any thought of taking Chrysler back upscale would run headlong into Infiniti.

Nissan's supposed production agreements with Chrysler give Cerberus more credibility (i.e. time) with its financial backers. They also give Nissan a chance to see what's under the hood before the auction starts. It's a win – win situation– until someone loses. Whatever happens, that won't be Nissan.