At one time, the nations of Europe took great pride in their cavalry divisions, horses and men numbering tens of thousands. Then Gatling gun made its debut, and all those horses and all that equipment became sausages and bric-a-brac. And so it is with the SUV. The Gatling gun of rising gas prices has laid waste to The Big 2.8's armies, throwing their plans into complete chaos. To its credit, Ford is attempting to regroup, rearm and re-engage. So how's it going?

Early days. Bad days. Light truck cash cows are queued-up at the slaughterhouse. Ford's leasing department is sending seas of rolling metal to auction to sell (or not) at bargain basement prices. FoMoCo Credit took a $294m hit in the second financial quarter, reversing last year's $112m profit. Ford's North American market share is now 14.4 percent, down 1.2 percent. On the revenue side, FoMoCo's North American Q2 results sank to $14.2b, down from last year's $19b take.   

The bottom line: Ford booked a $8.7b loss for Q2. Downsizing accounts for the lion's share of that loss. Since 2005, Ford NA has closed 12 factories and eliminated 51k jobs or 38 percent of its workforce. The American automaker claims it's on track to reduce its annual operating costs by $5b by the end of 2008 (compared with 2005). That's some serious cost-cutting.

And it comes at a serious cost: some $700m per month, and rising. To pay the bills, Ford created a $26b war chest- mortgaging everything up to and including its logo. Equally important, the company gave itself serious reality check, in the form of Alan Mulally. "Adapt or die" may not be tattooed on the FoMoCo CEO's forehead, but it might as well be.

After contemplating the numbers, Mike Jackson praised Mulally's moves Fordward in yesterday's Guardian. The CEO of AutoNation says it's amazing to watch the speed at which Ford has slashed production and begun switching from trucks to cars. "The old Detroit [GM?] would have taken ages to come to terms with this," he opined.

"This" is the need for small, competitive, profitable products in the North American market. It's that last element that's caused Ford's corporate culture conniptions.

Mulally is up against Old Detroit, right there in his own office. During Thursday meetings, the former Boeing exec heard the "can't make money on small cars" mantra so often he [almost literally] hit his execs over the head with a simple stat. Worldwide, large cars account for 15 percent of the market. Small cars account for 60 percent of units sold.   

FoMoCo NA suits' recalcitrance is understandable. The American car market was founded on cheap gas. To suggest that the U.S. market will soon mirror its overseas equivalents requires a paradigm shift in thinking, and a leap of faith. And, again, there is that thorny question of profitability. Decades of failure have taught Motown small cars equal small profits. 

Mulally is counting on replicating Toyota's success. Ford's "global platform" strategy: simplify products and production on a worldwide basis, then leverage the resulting economies of scale to reap massive profits. It's a good plan- if only because Toyota's already made it work. But there are several rocks upon which Mulally's vision may founder.

Toyota's American adventure was hardly an overnight success. In fact, their success still depends on long-term, long-haul thinking. The first fruits of Mulally's global plan– the Euro-designed mass market models– arrive in two year's time. Given Ford's parlous finances, they may have one chance to "get it right:" to adapt (or not) these cars for American tastes. History suggests staving off the beancounters will be a "challenge." And if you doubt the importance of trial and error, have a look at the first generation Toyota Prius.

There's also the question of branding. What is a Ford? It will have to be something that applies across its model range that commands a premium price. Toyota owns reliability. Style, safety, green, fuel economy, gizmos, driving pleasure? Ford's three-pronged "Drive" campaign indicates a bad case of ADD. In that same vein, Ford has too many models. Simply adding European-style vehicles to a bloated product portfolio will not help.

Equally worrying: Mercury. The latest product announcements contain an unspecified role for Jill Wagner's brand. That's not good. Mercury blurs the branding message for both Ford and Lincoln, and stops both brands from seeking sales in the near-luxury middle ground. It may be cheaper to keep Mercury than kill it, it may even deliver profits/volume for Lincoln dealers, but it's the wrong thing to do.

At a recent town hall-style meeting, a Ford worker suggested that making small cars was a money-losing proposition. "Why can't we make money on small cars?" Mr. Mulally demanded. "Do you think Toyota can't make money on small cars?" The question is, can Ford be Toyota?

Since this summer's sales slump, Detroit's stopped bitching about the so-called "perception gap." That's the alleged difference between consumers' idea of their vehicles' quality– relative to their Asian rivals– and "the reality." Suddenly, the concept is a lot less important than finding something, anything fuel-efficient to sell. Besides, there's a far more catastrophic "gap" in play, one that threatens Motown's very survival: the "gap" between what a SUV is worth new and its value come trade-in time.

For most of the SUV boom, U.S. truck resale values bucked the domestic passenger car trend toward higher (not to say killer) depreciation. These SUV residual values allowed the boys from Detroit to deploy a whole list of sales tricks no longer available in the car market, especially leases.

It also made it much less painful to get an SUV owner into a new loan before the old one was paid off. Resale values stayed high both because of demand (aspirational buyers who couldn't afford the full price) and general ruggedness (they WERE trucks after all). When the boom was in full swing, SUVs were both selling at huge mark-ups and "selling-on" to new owners long before the vehicles wore out. It was a license to print money.

SUV resale values held up well during the incentive wars of the last five years or so. You would have thought increased incentives would draw more "second-buyers" to buy new, but no. The most likely explanation: increasingly easy credit stretching the resale market ever lower. The Big 2.8  held their market share, at an ever-increasing cost to profits.

There was no way that the recent run-up in gas prices would NOT impact SUV demand. That said, the drop for The Big 2.8 has been dramatic, past the point of catastrophic. Some of this is due to the SUV market's violent contraction, making the domestics a victim of their old success. But the truth is rather darker, and does not bode well for any near-term recovery of light-truck sales.

There are two essential problems. First, obviously enough, supply and demand.

Just about everyone who wanted to buy a truck in the last five years has one. Aside from vehicles wearing out and people reaching driving age (or truck-love age), there is little "need" for more vehicles new or used– especially as the "fashion" SUV owners, looking for a way out, outnumber the new blood. This surfeit of sellers is driving SUV and pickup truck prices into the basement, and then padlocking the door.

This is bad enough. But the second factor makes the situation much worse. 

These days, most truck owners are "upside down" or "backwards" on their loan; they owe more than the vehicles' resale value. As re-sale prices continue to crater, their numbers are swelling into the millions. As the "gap" in value grows in a predictably ruinous way, truck leasing becomes practically impossible.

The only way to lure more buyers is with lower prices. This lowers resale value– again, more, still– and shuts more current owners out of the new market, as the depreciation exceeds the discounting. Again, the fact that these trucks/SUVs are quite durable (one reason they held value) is a bad thing.   

At some reasonable level of industry production, it will probably take five years to get the glut through the market, and perhaps another three to get prices back up. BUT the domestic truck makers can't afford to throttle back on light truck production. The Big 2.8 have counted on trucks to bring home the bacon for over a decade. As we've said here many times before, don't have a plan B ready to go.

Toyondissan are a little less exposed to this light truck debacle– they can count on making money in cars. Aside from pickups, they stayed out of the most vicious price wars. While this kept their sales volumes comparatively low, the strategy maintained resale values at a survivable rate. 

The Dai-san can shuffle factories, sell to the "choir" and maintain a presence in the U.S. market– until the sales environment recovers enough to sell to the "other" truck owners. Toyota can afford to take the long view on the Tundra. Honda can get by selling 200K "trucks" (Pilots, Ridgelines, Odysseys) to their loyal customers. Nissan can't afford the same luxury with the Titan; it's days are numbered.

For The Big 2.8, circles don't come any more vicious. They are STILL collectively building far more trucks than the U.S. market can absorb at a profit. If they cut production, they allow their competition to raise their prices just a little at the old volume. Cutting pickup production to salable levels would help the doer, but it would help the other two even more. 

In other words, Detroit's game of Last Man Standing is also a matter of waiting for the other guy to blink. When one U.S. SUV/pickup truck manufacturer cuts back, bails out or goes under, the others will prosper. Relatively speaking. Realistically speaking, in the next five years, this is the only way Detroit's truck glut could turn back into a short term asset.  

At 4pm Monday, GM pulled the wraps off the new Chevrolet Camaro. I didn't watch the live press conference. No surprise there. Literally. Everything about the car had been leaked in the week leading up to the curtain pull: exterior, interior, engines and transmissions. Other than that, only two numbers held any mystery: price and zero to sixty sprint times. GM only told us the latter. I'm excited, as a car fan. As an armchair CEO…

Yes, I know: this retro pony/muscle car is a sharp-looking old– I mean new, thing.  And the V6 base coupe will power from rest to 60mph in an entirely credible 6.1 seconds. The automatic V8 version will hit 60 from stop in a truly impressive 4.6 seconds, roaring like a tiger about to grab a mouthful of Roy Horn. Every Camaro, V6 or V8, stick or automatic, will have six gears. The car may even handle well. So credit where it's due. Rock on! So who wants one of these things?

Camaro buyers will come in two basic flavors (watch it). Group One: traditionalists. They already think this article is pointless, full of shit and flat out wrong. They've been waiting to buy this thing since there was this thing to wait to buy ('87?). You can no more persuade them that GM should have spent the Camaro's development money improving the Cobalt than you can convince them that mullets were not, at any point in time, deeply fashionable.

The second group: people who want a cool car. They couldn't care less about zero to sixty times or skid pad numbers (ew) or lateral Gs (isn't that a drug-related term?). All they want to know is… price. Which is the only thing GM won't tell them. Provided it's within spitting distance of a fully-loaded Camry, they're going to like the Camaro. A lot. It's cool. And the ones who take the plunge will buy a V6 Camaro (with 300 horses, no shame in that) with an automatic.

While GM will be only-too-happy to suck-up trad buyers' money and props– look for "friends and family" discounts for the old white men who dominate the mainstream media — they know the Camaro's target market will be blue or slightly white collar mainstreamers stretching to make their car payment. That's why GM put-out the word on the Camaro's fuel economy at the press conference: 26mpg highway! How great is that?

Meh. Competitors with 250-300 horsepower (Charger, Challenger, Mustang) all offer comparable MPGs. These days, fuel-conscious secretaries consumers are lined-up none deep for FoMoCo's retro ride. 'Stang sales slipped 14.8 percent in June, down 28.8 percent year-to-date. During the same period, Charger sales tumbled 27.6 percent, down 11.3 percent year-to-date. And LOTS of those sales sailed with the fleets. 

Clearly, this is NOT the time to launch a better, cooler, faster Mustang with the same lack of practicality and piggish ways. And that's not because the majority of American consumers suddenly want to go to Vermont to marry their Prius and raise your taxes so they can help people downtrodden by a racist, uncaring society. It's just that these potential buyers are backwards on their "cool" SUV, they're freaked by gas prices AND there are plenty of fun, frugal alternatives. I mean, there will be. You know; next spring. 

 Sure, there are plenty of old school muscle car guys (Group One) that wouldn't buy a "little rice burner" if you offered it to them for $100 and threw in a case of Jackie D. But they aren't the Camaro's core demographic. And the core demo is tapped-out and moved onto a Scion tC, or an Altima Coupe, or at the more expensive end of things, an Infiniti G37. At best, the Camaro can carve out a big slice of small– and rapidly diminishing– pie. Once again, GM's timing sucks.

Even worse, The General looks set to, once again, turn its back on its sense of identity/history. The last time gas prices whacked distinctively American cars, Detroit neutered everything. Responding to fuel price escalation, they fit their mid to late-70's land yachts with woefully-underpowered engines. In the face of the current gas crisis, GM "tempts" us with talk of a Camaro with a turbo-charged four-cylinder Ecotec engine.

While it's impossible to imagine a Camaro as bad as the old Iron Duke, the turbo 4 runs the risk of either being craptastic, or too good and thus killing V6 Camaro sales. GM made this bed. One way or another, they're going to have to lie in it. But that's no reason to lie about it. Trying to pretend the new Camaro's a Futon couch instead of California King-sized four-poster will fool some of the people some of the time, but not many. This is the time that GM must stick to its guns and get the marketing mavens to earn their crust. 

All across the nation, SUV Sally's and Sam's are cussing at the pumps. They're watching the readout with mounting horror: $80, $100, $120+ per fill up. The automotive source of this pain of portly plenitude is has become the pink elephant of the American lifestyle. And it's true: SUVs suck. Not just gas. Depreciation, insurance and street cred. And so, the "Livin' Large" folks of the Oil War Era are giving up their SUVs en masse. Which brings us to a simple question. Should you?

The first thing you should consider is whether anyone wants your SUV. Really. That's not a misprint. The purveyors of maximum mass, maximum profit vehicles have been overproducing these beasts for nearly a decade. GM, Ford, Chrysler, Toyondissan, Audi, Porsche, Saab and even granola-happy Subaru joined the fray of seemingly endless profit and demand. And now we have the Mother of All Gluts. On EBay, you'll find a 2006, 23k-mile Ford Explorer Limited ($33k new, at least in theory). The owner's asking $23k. Good luck with that; there isn't a single bid on the vehicle. Not one.

We hear reports that some dealers won't take your SUV in trade. Period. Of course, everything sells at a price. So take four good pictures of your vehicle. Write a glorious soliloquy of its qualities. Price it according to the completed items section on EBay. Put ads on Craigslist and Autotrader. Once you get two serious inquiries on your vehicle that don't involve low-balling, you'll see how bad things really are. And they are very bad indeed. And getting worse.

OK, so, you sell X. You buy Y. The cost to trade is pretty easy to determine (if hard to stomach). The hard part: take into account all the other costs that go into the equation. Depreciation (again), insurance, maintenance, even the ungainly pitfall that is financing are part of the wallet-draining process. These "hidden costs" determine the real cost of escaping your Escape.

A buyer of a Mercedes 320 CDI may love to brag about their outstanding fuel economy– until they start paying for the outstandingly expensive blue urea fluid that can only be had at the dealer. Likewise, a friend of mine absolutely adored his Jetta Diesel– until the dealer billed him over $1300 for 'regular maintenance.' One call to a dealer (or independent shop), a quick visit to an enthusiast's site can add an awful lot of wisdom to your final decision.

When it comes to car buying, knowledge is more important than imagination or instinct.
Along the same lines, you have to be honest with yourself, and God forbid, your spouse. Would either of you really feel comfortable making a leap from Canyonero to Cobalt? Safety, interior quality, and dare I say it, the pleasures of driving these money-suckers should be given weighty consideration over the course of weeks.

In my experiences, folks who drive Suburbans rarely fit in Fits. But they can be more than fine in a Camry hybrid or Malibu. By the same token, drivers who own and enjoy a compact SUV may be perfectly happy in a compact car. My wife went from Volvo wagons and minivans into a Honda Fit without any regrets. However the Scion xB and xD were rolling Edsels in her eyes. We all have our likes and dislikes. Be true to them.

Finally don't be sold on being sold; $2.99 gas, free maintenance programs and lifetime warranties may be a dream come true. But the car behind the fine print 'bling' may be a rolling shit can. When you drive away from the lot, the car will determine the quality of your "ownership experience." If you decide to buy used, it will be the prior owner. And if you keep what you have, it will be your own driving style and maintenance regimen that will likely have the most impact on your satisfaction.

It's true. In these days of $4 gas, many of us have been able to achieve fuel economy figures which exceed the EPA ratings by anywhere from 20 to 30 percent, just by changing the way we drive. Learn to coast. Keep the rpm's low. Pay attention to the traffic. Turn that cell phone off and make driving a 'mileage' game. Hypermiling– within reason– can put dollars back in your pocket and add years to your SUVs life.

In an SUV buyer's market, it's best not to sell an SUV. So how long before the market recovers? At best, two years. At worst, never. If it galls you that you're now an SUV owner for life, don't panic. Drive less. Drive more sensibly. And relax. It still beats walking.

BMW doesn’t need to advertise their “ultimate driving machines.” After decades building and selling vehicles offering sporting luxury, BMW has trained its customers to intuitively understand their products' appeal. Brands take years if not decades to develop, millions to billions of dollars to engender, and require careful stewardship to sustain. Contrary to much of this website’s commentary, GM’s management is not stupid. They know that Buick, GMC, Pontiac, Saab and Saturn are “damaged brands” in North America. But unless General Motors’ execs follow Bimmer's lead, and soon, the company will fail.

Branding isn’t metaphysics. It’s simple economics. Well defined brands lower the costs of customer acquisition and retention. Last year, GM spent some three billion dollars marketing and advertising in North America. But with eight supposedly unique brands, the vast majority of these dollars are wasted. (This doesn’t include the billions spent engineering and/or badge-engineering dozens of also-ran products to fill-out the eight brands’ portfolios.) Question: why bother?

In 2007, Buick/Pontiac/GMC’s combined market share stood at 6.4 percent. That’s roughly the same share as Dodge (6.6 percent) and only slightly more than Nissan (5.8 percent). Despite a largely revised lineup, Saturn’s mustered a 1.5 percent market share. Saab barely shows up at 0.2 percent.

These five GM brands combined account for 8.1 percent of 2007 total U.S. light vehicle. Honda’s U.S. market share was 8.5 percent. In other words, five of GM’s seven domestic brands (assuming HUMMER goes away) don’t even equal the total sales of a [growing] competitor with a single, well-defined brand image. 

All of these five money-sucking GM brands are damaged beyond repair. Buick’s website doesn’t even offer a strapline (“When better Buicks are built…”). GMCs are all Chevy clones. Pontiac is car? How generic can you get? Again, Saab isn’t on the radar– even if it is “Born from Jets.” Saturn never made money and consumers shunned/ignored/never heard about its recent Euro-flavored makeover. 

Here’s the rub: it’s too late to cut the deadwood. Even with GM’s four new “sales channels” (Buick/Pontiac/GMC; HUMMER/Cadillac/Saab; Saturn and Chevrolet), the automaker can no longer afford to euthanize its zombies. Chief Financial Officer (now COO) Fritz Henderson admits the math doesn’t work; the cost to terminate the brands (a decision that would launch a thousand franchised dealer lawsuits) and the loss of cash flow would doom GM.

It’s the ultimate quandary. GM can’t afford to bolster its brands with distinct and appropriate vehicles and effective marketing. But The General can’t not feed them– else the brands will wither and die and take GM down with them. This is, of course, exactly what’s happening right now.

Bankruptcy protection provides one way out: an escape from all GM’s dealer and brand commitments– at an unknown but cataclysmic cost to consumer confidence in the company. Otherwise, there’s only one option. GM must replicate their HUMMER strategy and stop all corporate support for Buick, GMC, Pontiac, Saab and Saturn dealers.

We’re talking about cutting off all product development and advertising– other than promoting current sales. Crucially, GM must also refuse to pay its franchised dealers to close; the store owners will eventually see there’s no future and take appropriate action to shutter their stores (i.e. disappear like Isuzu).

As GM slices spending on soon-to-be dead brands, it must also pour all of its remaining resources into Chevrolet and Cadillac. 

Any forthcoming product refreshes should be channeled into these two remaining brands. For example, the Traverse CUV remains a Chevrolet, the GMC Acadia and Saturn Outlook go away, and the next Buick Enclave becomes a Cadillac. In this case, GM pares four vehicles into two, and the Lamda- platformed Chevy and Caddy are clearly differentiated in price, design and amenities. 

By the same token, the Australian Pontiac G8 becomes a limited edition Chevrolet, while the rest of Pontiac’s lineup takes a dirt nap. The next Buick Lucerne becomes Chevrolet’s large car (which its current lineup lacks).

GM can and must rearm Chevrolet and Cadillac with unique, differentiated vehicles supported by marketing that best defines each brand. Vehicles that will make consumers stand up and notice.

Chevrolet can take the fight straight to Toyondissan with refined, value-priced Chevrolet products, boldly and widely marketed. Who knows? Chevy might even start a genuine American Revolution. Meanwhile, with unique styling, concentrated engineering and “American” comfort, Cadillac could return to its upmarket roots as the “World Standard,” competing with the Germans and Japanese.

As the Robert Burton said, there’s many a slip 'twixt the cup and the lip. There’s no guarantee that GM could survive with two excellent brands. But it’s a sure bet that it CAN’T survive with any MORE than two brands. The old adage recommending concentrated firepower is no less true for carmakers than military campaigners.

In 2001, Robert A. Lutz jumped on the GM gravy train as the automaker’s vice chairman of product development. Since then, The General has continued its inexorable march to oblivion. Car-wise, Lutz’ regime has been marked by brand-defiling badge engineering and a seemingly endless stream of “nearly there” products. And yet the automaker’s camp followers continue to give Lutz a free pass. There’s only one reason for this blind spot: they don’t pay attention to what he does OR what he says. Perhaps they failed to notice that the guy’s got a blog.

Maximum Bob’s latest FastLane entry arrived the day CEO Rick Wagoner revealed his new new new new turnaround plan. Once again, there were no sales or market share targets, or a date for a return to profitability. So, once more into the breach dear Maximo. After all, vehicles, the income side of the ledger, are Lutz’ thing.

“Working Hard on Tomorrow Today.” At the risk of sounding like a Bugs Bunny routine, what happened to working hard on today yesterday? We’ll get to that.

“As you’ve no doubt heard me say before, we've made a lot of progress in the past few years at General Motors. And we’ve delivered on what we said we would do. We went from having, at least in North America, some mediocre products to having acclaimed products that are selling extremely well, especially on the passenger car side. In June, for example, in a slow market, our retail car sales were up 8 percent.”

It’s hard to criticize Bob for failing to deliver on his promises when he doesn’t specify what promises he’s talking about. Not that this really matters. Again, GM’s various turnaround plans have had about as much “granularity” as a house-sized boulder.

But Bob’s numbers are deliberately, shamefully misleading. In June, GM’s passenger car sales fell 18.3 percent. Year-to-date, they're down 8.2 percent. To spin an 18.3 percent drop as an eight percent rise, Bob’s using adjusted sales numbers (for “selling days”) and inserted the word “retail” (as opposed to total, retail AND fleet).

Anyway, who cares? Every single one of GM’s eight NA brands lost sales and market share in June. Trucks, upon which GM’s income is staked, were down 24 percent. And falling fast.

“But even with all the changes we've made and the actions we've taken, our business results aren't yet what we want them to be. Why not? What went wrong?”

Hey Bob, what EXACTLY do you want your business results to be? Oh right, sorry. Ahem.

Maximum Bob blames GM's woes on a “generalized economic weakness due to the mortgage meltdown,” a “big decline in the dollar” and “an unpredictable and very rapid rise in fuel prices.” So much for personal accountability.

“’They should have seen it [gas price rises] coming.’ My answer to that is nobody saw it coming. Not the economists, not the governments, not the oil companies, not the smartest pundits in the world — no one saw it coming, not this kind of rise.”

I’ve got plenty of Death Watch ammo to debate that point. But the bottom line is this: if your entire business model depends on gas prices, shouldn’t you be ready for sudden, dramatic gas price inflation? Especially if it’s happened before. Twice. And if you’re NOT ready, who’s fault is that? Nobody’s?

“And to say that we recklessly and stupidly kept producing trucks in the face of it is just wrong. In fact, if we hadn’t kept producing trucks before the fuel prices rose, we would’ve been in a lot worse shape, and a lot more quickly. And if everyone is so smart except us, how come most of our import competition was rapidly rushing into the full-size truck market, just as the party was almost over?”

TTAC’s Best and Brightest will no doubt make mincemeat of this tomfoolery. The question is, does Bob Lutz actually believe it? The answer is, I’m afraid, yes. The statement reveals Lutz’s ignorance, arrogance, petulance, vindictiveness and complete lack of situational awareness.

“Being a leader means doing what must be done. Let it not be said that we won't make the calls and take the actions that are necessary to keep GM viable and ensure that we remain the best automaker in the world — which I fully believe we are and will remain.”

GM's management hasn’t made the calls and taken the actions necessary to keep GM viable and ensure profitability, never mind being the biggest or “best” automaker in the world. There I said it.

“So while some may choose to see the glass half-empty, I couldn't disagree more, or more loudly. As the saying goes, "Those who say something is impossible should refrain from interrupting those who are doing it."

Don’t you mean “if” they’re doing it?

[read Bob Lutz' FastLane blog here.] 

In the ancient Buddhist text Visuddhi-Magga, "name" and "form" are described as powerless in their respective isolation. But when they propitiously combine and mutually support one another, they attain power and "spring up and go forth." GM's announcement that the 2010 Chevy Cruze would [eventually] replace the Cobalt marks a dubious milestone in its continuing struggle to establish a lasting presence in the all-important compact car market. The Cruze will be the recipient of the eightieth name that GM has used on one of its mid-sized or smaller sedans since 1968.

Why 1968? It's the year Toyota introduced the Corolla. We could have started with 1973 (Civic), 1976 (Accord) or 1982 (Camry). But you get my drift: consistency and the lack thereof.

A recent QOTD posed the question "Why are the Japanese so smart (successful)?" Smartness may have little to do with it. Try "tenacious" or "one-pointed." The last Japanese soldiers in the Philippine jungle didn't surrendered until 1974, and then only after their [former] commanding officers were flown-in with written proof that the war was over. The soldiers' rifles and ammo were still in perfect condition. I suspect strongly that my (possible) grandchildren will still be cross-shopping Corollas.

When GM's obituary is written, it will be long and complicated. But this line alone would be adequate: "they failed to execute a consistent program of small car development and refinement." Yes, there were random moments of transcendence: Corvair, Opel 1900, and… your nominations, please. Lots of these vehicles had one, sometimes even two uplifting features. The Vega, for example, was button-cute and handled really well.

But GM's utter lack of a consistent effort to cultivate any continuity, build name and, thereby, brand equity, is distinctly unenlightened. Even with its competitive Japanese captive imports (GEO), GM displayed ignorance. The current version of the Metro, Suzuki's Swift, is a highly regarded sub-compact. It would likely beat the pants off the Daewoo-sourced Chevy BEAT. Oh, right, we're not actually getting that cute hatch, despite almost one million votes cast in favor of the BEAT on Chevy's web site. Another GM exercise in mental masturbation.

Despite GM's claims to have learned from their mistakes, their (re)naming mania continues. The Cruze will supplant/replace the Cobalt. Is this a tacit admission that the Cobalt failed to live up to its makers' grand ambitions when it replaced the Cavalier? While not exactly a class-leader, the Cobalt's not quite the class dunce (you know who you are). It was a substantial improvement over the decrepit Cavalier in every way; it just needed more TLC. Given that the Cobalt and Astra share the competent Delta platform, the requisite interior parts and chassis calibrations are just a Saturn dealer away.

Instead, GM stumbles blindly down the same road of ignorance it has traveled so many times before. When the Cruze arrives in 2010, the Cobalt will continue as the low MSRP/fleet queen special. In GM's high-priest Bob Lutz's own words of prophesy, "the Cobalt is nowhere near the end of its life-cycle." Great; think immortal Buick Century and Chevy Malibu. Classic fleet-mobiles. Not only is GM living in delusion about building name equity, it has become the Shiva of car names.

Ironically, GM religiously guards the one exception, the longest-lived continuous name plate in the whole industry: Corvette. Need I say more? The Corvette is the perfect antithesis to everything that has ailed GM in its passenger car programs. The 'Vette offers its devotees– and they are legion– fifty-five years of focus and improvement, if not always in a perfectly straight line.

I'm not implying that name continuity guarantees success. But it tends to be emblematic of the pride and perseverance that a successful automaker commits to its cars. Think BMW 3-series. Mercedes S-Class. And it sure helps with top of mind name recognition: When a supplicant asks the auto-guru for a recommendation for a good compact car, he can always say "Civic" in an eye-blink without ever having to stretch the brain cells trying to remember what GM's current offerings are called.

For what it's worth, Toyota's only name-and-form stumble corresponded with relatively weak sales. The all-new Yaris (European Car of the Year 2000) was inexplicably called Echo for North America, as well as suffering from an ugly trunk and mug. It ended a long streak of popular sub-compact Tercels. Anyway, Toyota's eleven small and mid-size car names in forty years (Crown, Cressida, Matrix, Tercel, Echo, Yaris, Corona, Mark II, Carina, Camry and Corolla) seem downright profligate compared to Honda.

Civic and Accord. Name and form. The two best selling cars in the land have "sprung up and gone forth" for over thirty years. Automotive immortality attained. Note to GM: endless reincarnation is not a goal worthy of aspiration. Bad karma.

Ford’s survival may depend on the U.S. success of the European-designed Focus and Fiesta. An embattled GM agrees with FoMoCo's "world car" strategy, talking up its "global platforms." Meanwhile, Honda and Toyota’s dominant Camcordias were designed predominantly with the North American market in mind. Does success in the brutally competitive American market demand specifically tailored designs? Or are “world cars” the salvation to Detroit’s passenger car woes?

Detroit has been vacillating on this subject since the fifties, when they imported Opels and Euro-Fords. After 1960, these “captive imports” took a back seat to home-grown compacts, on the assumption that the hometown team knew better what Americans wanted: lazy six-cylinders and soft suspensions.

When these “compacts” became obese in the sixties, GM resumed importing the tin(n)y Kadett. By 1969, the Opel was the number two selling import. Turns out Americans really did like genuine Europeans– even if they were sold at the Buick dealer. So in its usual hubris, Detroit decided it could “leapfrog” the imports. Hence the Chevy Vega and Ford Pinto.

Suffice it to say, that didn’t work out so well.  Meanwhile, the Japanese invasion became a tsunami. GM’s GEO resumed importing captives from Isuzu, Suzuki, Toyota and Daewoo, with varying degrees of success. Ford’s European imports were a mixed bag. The “baby Mustang” Capri and the little front wheel-drive hatch Fiesta were genuine hits (for a while). But FoMoCo struck out with the [Bob Lutz-championed] Merkur-badged XR4ti and Scorpio.

Detroit’s big leap into “world cars” began in the late seventies, in response to expensive gas and inexpensive competition. First up: Chrysler’s 1978 Omni/Horizon twins. Designed in Europe, the “Americanized” Omnirizon (a.k.a Simca) was a success. But it didn’t receive the continuous development that the Japanese and Europeans lavished on their small cars. The models finally died in 1990, essentially unchanged from their original incarnation.

Ford’s global 1981 Escort was heavily (and dubiously) touted as the first “world car.” In its home market, the European Escort was a decent Golf-fighter. The U.S. version was flawed in the usual Detroit way: soft suspension, lousy gear ratios and cheap, ugly Americanized interiors.

GM committed its version of the crime on an even grander scale with its highly-promoted world car J-body of 1981. Known (and then despised) as the Cavalier in these Land of the Free, GM of Europe successfully adapted the same basic car as the Opel/Vauxhall Ascona.

These three world cars demonstrated that The Big Three were perfectly capable of designing world cars that could compete with Europe’s home grown best (e.g. the VW Golf and Passat). But it was their “Americanization”– especially reliability issues– that doomed them to declining market shares.

Even VW made the same deadly miscalculations. The Rabbit arrived in the US in 1975 as a totally unadulterated crisp German import. In 1978, the falling dollar inspired VW to open the States’ first transplant factory (sound familiar?) to build a U.S. version. 

Former GM exec James McLernon was hired to meet the 200k annual sales goal. His solution: “Malibuize” the Rabbit with cheaper and softer plush seats, softer suspension, dorky full wheel covers and (!) a smaller 1.4-liter engine. The result was largely a disaster, at least from the typical VW buyer’s point of view. The plant closed in 1989.

Meanwhile, the Japanese were happily selling their “world cars” in the U.S. It helped that seventies Japanese designs were closer to American tastes (think vinyl roofs, heavy chrome grilles and weird C-pillars). But Toyondissan’s ever-growing reputation for reliable, economical transportation transcended taste. That alone is a huge lesson. 

Ford essentially repeated its Escort mistake with the Mondeo/Contour/Mystique mid-size world-car. Designed jointly with the Europeans, the American version was flawed by being too compact, not to mention the usual reliability issues.

By the mid nineties, the Honda Accord and Toyota Camry were split from their home-market versions, due to the Japanese tax on vehicle width. But the “American” versions were– and are– also sold globally and in Japan, under different names.

The old rationale Detroit used for “Americanizing” their world cars or global platforms is now essentially dead. Taste in design was once provincial; it’s now global. We all shop at IKEA. Yes, some parts of the world prefer trunks while others hatchbacks. VW solved that problem decades ago with the Golf/Jetta twins. And European cars have grown to world standards (the new Mondeo is huge).

Ford and GM’s adoption of true world cars is economically obvious and long overdue. But their success hinges entirely on the exact same criteria that have always been the life-or-death determinants in this country: design, utility, price/value relationship, reliability, marketing and dealer support. That is, versus the competition. Which is… brutal.

If there's one thing Wall Street’s wizards are taking away from Rick Wagoner's morning press conference, it's that money's too tight to mention. Meanwhile product is, was and always will be the real meat of the matter. On this score, Wagoner doesn't. "Eighteen of the next 19 products will be cars or crossovers." Sounds good– provided you don't ask "what are they?" The answer to that question flags the fact that General Motors still doesn't realize that they're in a business of building cars and convincing people to exchange their money for those cars.   

While cutting models presents labor and contract challenges, green-lighting new products is even riskier. And GM is approving cars that are either crossovers (sales in the crapper) or niche vehicles (competing in the most volatile, risky market segments). 

Cadillac, for example, is getting a new crossover: the BRX. The SRX it replaces was better than the Lexus RX, but never approached the Lexus's sales. Why follow-up with another trucklette, especially as the market is shrinking? And to this tall Cadillac wagon GM is adding… a CTS wagon. BMW can barely move its 3-Series wagon in the US. Benz passed on offering its new C-Class in wagon form to U.S. customers. So Cadillac is entering a market where even more established competitors fear to tread.

GM's "luxe" brand will add a CTS coupe to its showrooms. It’s the two-door version of the current entry-level Caddy, presented in concept form at the Detroit auto show. Armchair CEOs are fond of describing the coupe market as "fickle." Yes it is. It's also tiny, crowded, seasonal and shrinking.

And everyone knows it. Toyota is killing its Solara coupe. After selling 154 units in June, the Lexus SC430 is on death row. Lest we forget, the last Cadillac coupe– the Eldorado– ended in abject failure. And the current XLR coupe/convertible sold just 117 units last month. Unless you are Porsche, expecting to make money on coupe sales is akin to trying to earn an annual income at the horse track. 

Next up: the new Saab 9-4X. Wagoner announced that the ostensibly Swedish crossover is headed for production. And why not? GM spent a lot of money developing this beast (ahem, sunk cost). It’s the first new Saab product since the Saabaru and Saablazer debacles. But it’s not that simple. 

For one thing, GM's crossover sales have cratered. All of its Lambda-platformed barges are underwater, sinking fast or launching straight into the teeth of a howling gale. We're talking double digit sales declines.

Saab needs less expensive hatchbacks and wagons, not another competitor for the GMC, Chevy, Buick, Saturn and Cadillac crossovers. This is the time to rekindle Saab's green image, or at least offer adequate performance. The 9-4X's planned turbocharged 2.0-liter gas engine won't cut the lingenberry jam.  

Pontiac is getting the Solstice coupe (not a targa) and the G8 Sport Truck. They should be cool-looking and fun to drive. But this is niche within niche. Neither is bound to pass 1000 sales per month.

We now learn that Buick (U.S.) will be blessed a rear wheel-drive (RWD) Invicta sedan come spring 2009. GM’s RWD program is like Homer Simpson at the light switch (on, off, on, off), I’ll believe it when I see it. And anyway, awesome as it might be, Buick dealers are going to sell it alongside the Pontiac G8 GT, across the street from the Cadillac CTS and STS? Oy vey.

Chevy’s ostensibly good news: the mostly somewhat probably partially all new Chevy Cruze compact car is go. From spy shots, the wee bow tie beastie looks promising– especially inside. And the promised 40mpg is extremely appealing in these fuel conscious times– even if the turbo-charged engine will require pricey premium.

Marketing? Who needs marketing? Once again, GM is rolling-out a new product name. The Cruze replaces the Cobalt, which replaced the Cavalier, which replaced the Monza, Chevette and Vega.

Unlike the plug-in hybrid electric gas vehicles destined for the Eurozone, the Cruze will sell in Europe as a Chevrolet. And that means one of two losing options: (A) It's going to be a piece of crap, because Chevy Europe competes at the very bottom of the new car market; or (B) It’s going to be good; in which case they are competing with the established GM Opel brand.

GM’s die-hard (with a vengeance) CEO can talk all he wants about cutting costs and securing flammable cash. At the end of the day, The General’s in the automotive business. If it wants to stay in business, the automaker needs to build and sell the right cars at the right time. And do it better than their competition. This they haven’t done. This they aren’t doing. And it is this failure that will ultimately be their undoing. 

Earlier this morning, GM CEO Rick Wagoner announced a cost-cutting package designed to "better align the business to the current market condition." He's cutting bonuses, pushing salarymen out the door, disappearing the dividend, postponing the union's health care payment, putting truck development on ice, yada yada yada. While the media focuses on the scope and scale of Rick's "right-sizing," the money shot arrives in the last six words of the official press release. Apparently, GM has "an ever stronger and competitive product line-up." Nonsense. And until that's true, GM's doomed. Which means GM's doomed. 

Those of you who've been following this sad saga of missed opportunity, bungled branding, disconnected development and arrogant administration will know that the markets normally react to GM's slicing and dicing with some enthusiasm. And why wouldn't they? Rick's regular rescue remedy is offered by an accountant, for accountants. But this time it's different. The dividend cut is a tacit admission of failure. And Rick tenuous statement that The General's willing to kinda maybe sorta if they have to oh what the Hell hock their last meaningful asset– GM's foreign ops– is a fire sale too far.  

By now it's clear that GM's burning down the house. The automaker is already paying $3b in interest; the last thing they need is billions of additional debt. Especially as GM [still] has no coherent plan for building profitable products for the U.S. new car market. A market which is contracting violently, which has yet to hit bottom. By now, even the money men understand that one.

Wagoner says his new new new new turnaround plan will raise (raise?) some $10b and save another $5b. That should be enough to see GM through, well, until it burns through the money. In fact, this move only makes sense if GM is stocking-up its war chest in anticipation of bankruptcy. No matter how much cash GM stuffs in its coffers, the automaker has too many unkillable dealers, unattractive brands, untenable products and expensive obligations. C11 is the only way out.

The ur-problem is that Rick Wagoner doesn't have the stones for the job. Wagoner simply refuses to do what must be done, and done soon.

Yes there is that. While a GM bankruptcy may be unthinkable for the GM lifer in charge of its fortunes (or lack thereof), there is only a small window of opportunity for a court-protected, dealer-dumping GM restructuring.

In case GM hadn't noticed, the U.S. is in the midst of a major mortgage meltdown. "Solving" the banking problem will require trillions of dollars of federal "assistance." There could well be a political backlash, or, of you prefer "bailout fatigue."

At the same time, it's entirely possible Chrysler will file for Chapter 11 in the next few weeks/months. When the world doesn't stop spinning, the psychological non-impact of a Chrysler C11 could make GM's inevitable bleating at the pre-C11 begging bowl seem less… credible. And let's not forget Ford. Same deal, only on a much larger scale.

If Ford goes C11 first and receives federal loan guarantees, wouldn't GM be more likely to be able to do the same? Maybe. Maybe not. Again, bailout fatigue. And what of the competitive threat posed by a dealer and brand-liberated FoMoCo? Maybe Motown's game of last man standing actually means the first one into bankruptcy wins?

It has been said many times by many people, including Mr. Wagoner, that a GM Chapter 11 would eliminate the American automaker. Bankruptcy's opponents always trot-out the argument that a bankrupt airline (the most common example) is not the same as a bankrupt car company. A plane ticket is not as great an investment as a car. No one would buy a car from a bankrupt carmaker.

This is patently untrue. Everything sells at a price. How about a new Buick LaCrosse for under ten grand? Seven? Six? And a GM C11 would NOT prevent GM (or some third party) from honoring its existing or future vehicle warrantees. And it's important to see this from the other side of the equation. American Airlines is generally considered to be in worse shape than its competitors because it didn't file for Chapter 11.

While bankruptcy would be an enormous shock to GM's system, that's exactly what they need. GM NEEDS Chapter 11 to get their house in order, to perform the root and branch reform upon which their future– if they are to have one– depends. And the longer they deny, dismiss and delay the inevitable, the less chance they have of emerging from the process. Ever.

Things are bad for Chrysler, Ford and GM. The Big 2.8 are burning precious cash, shedding valuable market share, choking on unwanted trucks, attempting to nurture (or excise) damaged brands and outmoded models, and struggling to bring relevant products to market. Bankruptcy looms large. And yet, there’s a silver lining to the recent, calamitous downturn in the U.S. new car market. But before we reveal the sliver of hope, let’s check in with the main engines of their destruction: Honda, Nissan and Toyota…

For Toyota, whose annual profits are more than twice GM’s entire market capitalization, the American consumer’s switch from light trucks to lighter cars is extremely annoying.

After investing some $2b in a brand new pickup truck plant in Texas, ToMoCo had to slash prices to the bone to move the metal. Now that their sales target is a cruel joke, they’ve backed off on discounting. Sales are sinking fast. Although Toyota’s still selling over 100k Tundras per year (at current rates), the plant was designed to build more than twice that amount.

As ToMoCo shuffles and “right sizes” production, the prescient addition of Camry production in Subaru’s space is paying off in spades. The “extra” capacity has allowed an increase in U.S. rental sales. Even so, the increase in total sales means the fleet percentage is well under 20 percent for the Camry/Corolla, which bodes well for maintaining the vehicles’ re-sale value (historically what kills fleet-queens). 

In this not-so-brave new market, Toyota’s biggest obstacle to further growth is structural; they can’t build popular models fast enough. The vehicle that best exemplifies gas-sipping, the Toyota Prius, can’t be constructed in anything other than a purpose-built (or highly modified) assembly plant. Equally important, battery suppliers must expand to meet the demand. Back when Toyota announced a target of over 200k Priora per year, there was talk of them being too ambitious. Turns out, they weren’t ambitious enough.

If the pickup truck debacle dented Toyota, it gutted Nissan. Even matching mad pricing only moved 80k Titans last year. With the ’08 numbers plunging off a cliff, Nissan is looking to get out of big-truck building (sourcing the Ram, if Chrysler’s still around). Meanwhile, the company’s juggling output to keep their factories busy. This is the first major market downturn since Nissan merger with Renault; it’s time to find out if they can thrive in adversity. 

The biggest issue Nissan faces in the U.S.: a lack of “first choice” vehicles. The Quest is off most minivan buyers’ radar. As good as they are, the Altima/Versa are on the tip of no one’s tongue. The Murano, one of Nissan’s only “stand out” vehicles, is slumping badly. The model’s thirst, extra size (without a compensatory third row) and cannibalistic smaller sib (the Rogue) have done it in.

So, while a truck-liberated Nissan will have the production space to grow, there’s not much hope for growth in the near future. 

Right now, Honda is the only major manufacturer increasing U.S. sales over last year– by about five percent. Offering a small-car heavy line-up has helped their bottom line. But so did limiting large vehicle production.

Last year, Honda changed over one line from making Pilot/sized vehicles to Civics. That left them with a natural cap of around 200k Pilots, Ridgelines and MDXs, and a similar limit on Odysseys. If the Odyssey outsells the Dodge Caravan this year, it will be a result of the Caravan falling (which it has been), not increases on Honda’s side.

All this shuffling freed production space to increase the sales of Civics, Fits and CRVs. The Accord is selling well enough, but there is a natural “cap” of about 450K. Given strong TL and Inspire (JDM US-style Accord) sales, they may not reach that. The limit on Civic sales are much higher; half a million would not be a shock. 

Even better, Honda is getting ready to open a new assembly plant in Indiana. While it has been listed to build Civics, it may directly or indirectly allow higher Fit sales. Even with a new plant online, Honda’s U.S. sales cannot get much above two million units per year without even more investment and time.

The good thing about this market-share-loss is that it’s mostly relative. Chrysler, Ford and GM have too many factories for what they sell, but they are also the only companies that could fill the gap if/when one of them shuts down. 

And there’s your silver lining. Assuming Chrysler's the first to go, assuming the American market doesn’t contract even more violently than at present, Ford and GM will be uniquely positioned to increase production to take-up the sales slack; which could be measured in hundreds of thousands. No one else has the necessary plant capacity. Last man standing. Dead cat bounce. Silver lining. Take your pick.

The breakup of Chrysler has begun. It’s been done quietly, in the open, but under obnubilating nomenclature. That last phrase says it all. Why lie when you can make the truth so damn confusing? While Cerberus denies imminent sell-off, a cadre of automotive executives has Chrysler on a hook, passing around a felt tip pen. In fact, a pre-break up party is the only way of explaining some of the crazy-ass deals the three-headed dog has been fetching lately.

To wit: April 15. Chrysler and Nissan agree to build big vehicles for each other. Nissan will make a small, fuel-efficient car for Chrysler, shoring-up a hole they created by letting the once successful Neon whither and die. This makes sense, kind of, for the dog.  Chrysler has no small car in a blooming small car market. 

Nissan, on the other paw, generates a new competitor for itself. The Versa and Sentra are performing well in the new $4.25 a gallon US. But not as well as Honda’s Fit or Civic, or Toyota’s Corolla.  So let’s see… if you are in third place, what’s the best thing to do? Take a lesson from the leaders and refine your product? Or, take a lesson from the guys running in the opposite direction and badge engineer your current cars into vapor?

And that’s just half the deal. Chrysler’s going to build a new full-size truck for Nissan. Who the what now?  Chrysler’s truck business fell 48.1 percent in June. It’s off 30.4 percent for the year, and last year wasn’t that great. Nissan wants a piece of that? Doesn’t Nissan already have a full-size truck?  Built in Canton, Mississippi? Yeah, let’s ditch that for a Ram knock-off from Saltillo, Mexico. 

Again, let Toyota keep working their platform till they get it right. It’s foolish when you can just go buy a bunch of Dodges. That’s supposing that you need a full-size truck on your lots in the first place, which is debatable when you’ve made it from 1914 to 2004 without one.

Exactly how much of Renault – Nissan’s resurgence can be attributed to CEO Carlos Ghosn’s brilliance is always up for discussion. It’s tough to find someone who says he’s outright stupid, though. Most reports label him smart. Ghosn says the Chrysler deal will save millions in development costs and provide more efficient use of manufacturing capacity. It’s the kind of statement that seems to make sense– until you place it in context. The American market has contracted, the dollar is down against the everything and trucks are no one’s growth potential. 

Ghosn also said he wants a third, preferably North American, leg for his stool. He played with GM two years ago, but that went the way of the Datsun. Nissan and Chrysler forged a transmission deal in 2004 and announced a Versa re-badge for South America back in January. He’s been trying to form a backroom mega manufacturer for years. Ghosn doesn’t want trucks. He wants inroads.

Nissan is not the only “strategic partnership” with a knife and fork, waiting until everyone is seated. Chrysler builds the Routan for Volkswagen (a match made in purgatory.) They buy hybrid systems from General Motors to disguise Durangos and Aspens as modern vehicles. Chrysler has some kind of deal with Chery Motors, though its importance outside of China is unclear. They’ve also had talks with Mahindra & Mahindra. (Although who hasn’t, really.)

Chrysler has lost billions of dollars for its canine overlords, none of who got into the car business to make cars. They want to make money. Exactly how long they are going to wait for a profit is an X in the equation. Anyone looking at current sales figures and all the new product Chrysler’s not preparing can tell you positive cash flow is years away. As opposed to slicing off branches, divisions and units, which can serve-up cash tomorrow.

It is easier to sell to people with whom you are already doing business. If your plant is tooled-up to build Nissan Titans, why not become a Nissan Titan plant? Getting a hold of 3,700 Chrysler dealers across the heartland of America is, conceivably, a good idea for someone who needs a U.S. presence. OK, maybe not all of the Chrysler, Dodge and Jeep shops. But about 1400 stores might look tasty. 

VW wants to increase North American sales by a billion percent. In this economy, if you want to sell cars in the States, you better build them in the states. Yes, VeeDub’s looking to cut a deal down south. Meanwhile, anyone got a Sebring plant they’re not using?

Cerberus can tout all the synergistic original equipment manufacturing global positioning alliances it wants. The lines will have been drawn. Dotted lines. As in, cut here. 

The Wall Street Journal put itself in the headlines this week. The august paper reported that General Motors may be considering (i.e. thinking about thinking about) shedding brands. While some of us have been saying– for years– that GM should refine, resell and/or retire it's octo-branded U.S. portfolio, this is the first time the mainstream media covered the issue since Oldsmobile was bricked-over in 2002. Not surprisingly, GM issued a flat-out denial, followed by a little deal hand-holding. Apparently, The General won’t shutter brands, only “reduce overlapping models.” Yes, it's the same old song, with a different Beat since you've been gone. 

On May 1, 2008, GM Car Czar Bob Lutz claimed GM was moving “beyond brand engineering.” Writing on his ironically named Fast Lane Blog, Maximum Bob crowed that “The progress we’re making is real. It’s not just chest thumping talk. We have a ways to go yet, but we’re getting there.”  

October 30, 2006: John Larson, General Manager of the newly-formed Pontiac-Buick-GMC "sales channel" tells Automotive News that consolidating those three brands in dealerships will “allow General Motors to eliminate badge engineering.”

March 5, 2006: Bob Lutz tells the Washington Post bluntly “We've put an end to badge engineering." Maximum Bob's mea culpa: “I can’t believe we were so stupid.”

October 16, 2005, in an interview with The New York Times, Lutz declares “We're definitely not going to badge-engineer Saab.”

Since 2005, GM has killed some of its badge engineering disasters. The TTAC Ten Worst-winning “Crossover Utility Vans”– the Buick Terraza, Chevy Uplander, Saturn Relay and Pontiac Montana SV6– were terminated. And yet… GM replaced these models with the badge-engineered Lambda-platform CUVs: the Buick Enclave, Chevy Traverse, Saturn Outlook and GMC Acadia. The Buick and GMC share showroom space, and Chevy’s Traverse (a.k.a. Maliclave) competes on the floor with the Tahoe, Suburban, and Trailblazer SUVs.

While Pontiac missed the big CUV badge-engineering debacle, they experienced cannibalism elsewhere. For 2006, GM rebadged the not-so-hot Chevy Equinox SUV as a Pontiac Torrent. Difference? Logos and Pontiac's raging bull nostrils. In 2007, GM rebadged the Chevy Cobalt as a Pontiac G5 for the American market. Difference? Ditto. Last month, we discovered that GM was planning to rebadge the Chevy Aveo as a Pontiac G3 in the US. Difference? You got it.

In 2006, Pontiac also rolled out the Solstice roadster. Lutz’s “baby”– a two-seat roadster with a top that would confound an MG owner– began competing with its fraternal twin, the Saturn Sky. Different front ends, different rears, mostly different interiors. And yet how big is the market for two-seat roadsters? Not so big, Mr. Bond.

Also this year, GM introduced the new Chevy Malibu. Great car. Seems a lot like the Saturn Aura. Alike as in engine, transmissions, platform, interior components, size, shape, and price. These couldn’t be more directly overlapping products if they tried. And it looks like they did.

Of course, the badge-engineered and exceptionally slow-selling GMT-900 trucks are still competing for the same handful of buyers: the Cadillac Escalade vs. the Chevy Suburban, Tahoe, and Avalance vs. the GMC Yukon and XL.

More badge engineering is on its way. Saab is testing its 9-4x crossover SUV, which will be closely related the SRX-replacement from Cadillac (and both are in GM’s premium sales channel). The 2010 Equinox looks to be competing directly with its sibling, the upcoming 2010 GMC Terrain SUV.

These aren’t products that were in the pipeline before Maximum Bob joined GM. So now, when MB says GM's “not killing brands, only killing overlap,” there's no reason to believe him. Although GM's corporate structure has been consolidated into four sales channels– Buick, Pontiac, GMC; HUMMER, Cadillac, Saab; Saturn and Chevrolet– it's clear GM doesn't have enough distinctive, desirable products to feed even four hungry mouths.  

Did I say HUMMER? HUMMER's dead. Or is it? It's been cut-off from all product development and promotional spending while it's under "strategic review." It's a perfect example of the mixed messages and lack of clarity coming from Rick Wagoner's administration at RenCen. The "sense of urgency" urged by analyst Maryanne Keller MAY have arrived, but it hasn't created the necessary decisiveness. At the very least, GM should cut Daewoo a blank check to build them a small car they can sell. And sell and sell.

This past week, GM made announcements about both the Beat concept car and some product called the Cruze. And for both stories, GM used a bureaucratic passive voice to vaguely imply that they were looking into maybe speeding-up their development. Small cars are the next boom; every engineer should be on them. As President Bush said, “Fool me once, shame on you. Fool me – you can’t get fooled again.”

Everyone in the car biz knows that June was a catastrophic month for the U.S. new car market. Total sales dropped by 18.3 percent. The big change this time 'round: it wasn't just light trucks that took it on the chin. Car sales received some body blows, as well. If you're an auto industry exec [still] living in denial, it's best to stop here. If not, read 'em and weep. [NB: As per TTAC policy, sales numbers not adjusted for "sales days."] 

Family Cars

As SUV refugees seek car-shaped shelter, there were some big winners in June. Sales of the Chevy Malibu* rose by an astounding 73.4 percent over last June, up 31.2 percent year to date (YTD). Honda's Accord chalked-up a 37.3 percent gain for the month, up 12.9 percent YTD. Ford's Fusion finished the month 18.4 percent ahead of last June, up 11.7 percent YTD. Meanwhile… Chrysler's once-proud full-size sedan continues to tank; 300 sales dropped 61.6 percent from last June, down 36.5 percent YTD. And surprise: the Toyota Camry took a hard hit, dipping 10.8 percent below last June, posting a 0.3 percent loss for the year.  

Compacts

The Chevy Cobalt was another winner for GM, up 21.6 percent for the month and 18.5 percent YTD.  The Dodge Caliber was another loser for Chrysler, down 43.6 percent for the month and down 0.5 percent YTD. Worryingly, Ford's Focus dropped 5.5 percent in June. But it's still 27.6 percent ahead of last year. The Toyota Corolla** continues strong sales, up 15.6 percent on month. Yet it still trails last year by 3.8 percent. Honda's Civic* finished the month 9.5 percent ahead of last June and 17.9 percent ahead of last year. The Sentra didn't do as well for Nissan.  It was down nine percent on month, struggling to finish the first half of the year up 3.5 percent.

Subcompacts

Honda's fuel-efficient Fit was a big winner. Sales leaped 78.2 percent ahead of last June, finishing the semester up 67.4 percent. Nissan's Versa finished the month up 17.4 percent for June and 20.7 percent ahead YTD. GM's entry in this genre ran out gas. Sales of their Korean econobox Aveo were down 19.7 percent; down 1.7 percent YTD. Toyota's Yaris also lost ground, ending June down 7.5 percent; though staying 39 percent ahead YTD. 

Trucks

Brace yourself. Chevy's Silverado* sales tumbled by 23.7 percent on the month, 25.6 percent YTD. Dodge's Ram fell 48.1 percent in June, down 30.4 percent for the first six months.  Ford's F-Series sales dropped by 40.5 percent from June '07, ending the first two quarters down 22.7 percent. The Toyota Tundra , which had posted sales gains for the first quarter, finished the second quarter down 52.9 percent from last June; down 7.6 percent YTD. The Texas-built Tundra may soon drop below 2006's sales line.

Truck-Based SUVs

Chevy's Tahoe* showed a surprising gain from May (fleet sales?), adding about 2.5k units to the tally. finishing the month "just" 9.8 percent below last June. However, Tahoe sales are still down 26.6 percent YTD. The Dodge Durango continued its descent into oblivion, dropping a massive  67.3 percent in June, down 48.4 percent on the year.  The Ford Explorer showed an equally abysmal June, losing 52 percent from last June and 33.2 percent from last year.  Toyota's Sequoia continued its death-defying growth, surging by 25.1 percent in June, showing a 28.8 percent gain YTD.

Crossovers

The crossover bubble's burst. Thanks to a slow start last year, GMC's Acadia is up 8.5 percent on the year. But June sales fell off a cliff, down 40.1 percent from last June. Ford's Edge also dropped in June, this time by 19.9 percent. Robust sales earlier this year puts it 16.9 percent ahead of last year– for now. Toyota's woes continued, with Highlander* sales down 38.9 percent in June and 5.2 percent compared to 2007. The new Honda Pilot wasn't exactly pulling them in either; sales were down 29.8 percent for the month and 16.7 percent YTD.

Prius

Toyota's Prius dropped for the second month in a row. Due to short supplies and high demand worldwide, stateside sales are down 33.7 percent from last June. Sales drops in May and June pulled its year-to-date sales to 3.2 percent below last year. Toyota plans to produce 450k Priora in 2008; they've already sold 91.4k of them in North America alone so far this year. So look for their sales numbers to remain relatively low, in spite of growing demand.

By Manufacturer

GM's Hail Mary end-of-month 0% financing deal helped stave off a total rout. The General managed to finish June a "mere" 18.2 percent below last June's pace, down 16.3 percent for the year. Toyota's performance was June's shocker. ToMoCo ended the month 21.4 percent below June '07 (well below GM's dismal performance), dropping 6.8 percent on the year. Meanwhile, Chrysler sales fell by a staggering 35.9 percent for the month. ChryCo's trailing last year's sales by 22 percent. Ford was down 29.5 percent for June, 14.5 percent YTD. Honda managed to finish the month relatively unscathed, showing a 1.1 percent increase, with a 4.1 percent increase year to date.

Looking Ahead

July's misery may well eclipse June's. GM ran their 0% financing deal for the first week of the month, so they've up you-know-where without a you-know-what (small car?). Ford, Chrysler and Toyota are all offering incentives of varying sizes, particularly on the trucks and SUVs nobody wants. At what point will the deals become sweet enough to overcome the fuel bill? The sales numbers show we aren't there yet. As fuel prices climb, or even just hold steady, as the Fed declares that the economic gloom will extend well into '09, it's clear we're still a long way from the bottom of this combination of a violent contraction and a wholesale shift in product preference.

*Includes hybrids
** Includes Matrix

Click here for June's market share numbers 

Scott Held draws a line in the sand. “I firmly believe we will be selling Chrysler for quite a long time.” Held is the president and managing partner of Sherwood Partners. In the same year that Chrysler’s U.S. sales have shrunk by 35.9 percent, his group has just spent CA$18m on a new, super-sized Chrysler dealership in Edmonton, Alberta. What if Held’s wrong and Chrysler goes belly up? “I know I am taking a risk,” Held admits. "But I have faith."

Held’s been in the business for fourteen years, including the last three managing or running dealerships. He’s lived through Chrysler’s chequered past– and sees good things in its future. He disputes the widely-held belief that Daimler-Benz pillaged Chrysler.

“Yeah, it was a take-over. I mean, all the Chrysler execs were fired and replaced with Benz guys. But under Benz, I saw some of the product development; it gave us access to some high-technology Mercedes components we would never have had access to,” he states matter-of-factly. “It was better for Chrysler than it was for Benz. Benz bought the company for $40b and sold it for $7b,” he reminds me.

And yet, the sharp decline in bankable market value didn’t set off warning signs that Chrysler may be in bad shape.

Several factors fuel Scott Held’s optimism, not the least of which is the 22 straight months of sales increases for Chrysler’s Canadian retail operations. The success is in stark contrast to Chrysler’s U.S. misfortunes. Held attributes the Chrysler’s Canadian success to “aggressive marketing and incentives”, and, surprisingly, product.

“The Patriot, Caliber and Compass are giving us access to young people we’d never have seen… The Caliber is doing much better than the Neon.”

It’s difficult to say if Held’s analysis is on the mark. Though smaller SUVs have always fared better in Canada (where gas prices are currently hovering near $5.20/gallon), Chrysler advertises heavily in the U.S. also, and all of the models Held named are also on sale there. And doing badly.

Chrysler was one of the earliest automakers to cut Canadian MSRP to achieve parity with U.S. prices. I asked Held if he thought the move created a sales bubble, foreshadowing an eventual decline.

“They addressed the [rising dollar] very early. It didn’t give us a boost. November and December [2007] were tough months for all of Canada but we still kicked ass. If anything that just let us keep our customers we would have lost to the U.S.”

Held is fully confident in Canadian demand for Chrysler products; no bubble here, move along.

Held admits Chrysler has made a few mistakes over the years, most visibly on the Sebring. “That’s an easy one to pick on,” he jests. He was also worried about Chrysler dropping the short-wheel base Caravan for the new 2008 generation. “It did a lot of stuff for not a lot of money.”

But the bravado of the salesman always returns to the discourse. Those things “have been addressed” now. Old Sebring buyers are going for the Avenger, and SWB Caravan shoppers are going for the new Dodge Journey. “I’m surprised at how well that thing is doing,” he muses. 

Despite the “good years” under Daimler, Held thinks Cerberus is a better fit for the troubled Detroit automaker. “I’ve met Bob Nardelli,” he mentions. “They’ve done a significant amount of restructuring. They’ve committed to spending large dollar amounts on product development and on hybrids.”

Daimler, he recalls, was much more obsessed with diesel-powered cars, as befitted its European heritage. Held thinks the hybrid Durango/Aspen twins will be some great sellers. He’s so confident, that he’s ordered a “bunch of them” for his dealership. “A more volume-selling [i.e., smaller] hybrid is on the way. I think that’s where Jim Press wants to go.”

When prodded about Chrysler’s lengthy development time, Held concedes that Chrysler is a bit late to the hybrid party, but it still has to be done. “Honda and Toyota have the most success with hybrids on cars that are already fuel-efficient. We’ll be a bit late to the party, but I don’t think the party will be over.”

Held isn’t sure when such a car will come, as he doesn’t hear from Chrysler’s new, mysterious overlords much earlier than the Internet does, but his optimism isn’t tainted.

To my relief, Held’s not fazed by any of the doom-and-gloom I bring to the conversation. “I think that ‘operational bankruptcy’ thing was played up by the press because it makes a good story. The brand isn’t going to disappear.” One thing’s for sure: time will tell.