The Canadian dollar is back. After a thirty-year slump, the “loonie” is now staring eye-to-eye at the American greenback. The strong Canadian economy, the worldwide thirst for oil, and George Bush using The Fed as a money tree have all converged to push the Canadian dollar skyward. The meteoric rise of the dollar has given Canadians incredible arbitrage opportunities with American products; especially cars. The Canadian car industry ain’t pleased– and for good reason.

In 2006, Canadians imported 112k new and used vehicles from their neighbors to the south. That stat represents over 50 percent growth in US imports over the last two years. The crux of the problem: many retail prices in Canada are based on an exchange rate more appropriate for the Clinton era. To wit: Buying a Nissan 350Z Coupé in the United States will cost you $29,000. A similarly optioned car in Canada will cost – wait for this – $51,000.

Now, converting the US price of $29k at a rate of about 1.06 yields $30,740. Throw in $2k for shipping (you can drive it up yourself on a temp plate), $1800 in import duties (which you don’t pay on any vehicle assembled in the NAFTA zone), $5,200 in taxes (assuming Quebec and Ontario’s rates) and you’ve pocketed a cool CA$13k by buying your new Z stateside.

The downside, of course, is that Nissan, like most manufacturers, doesn’t honor warranties in any country other than the country of purchase. One notable exception (of course): Toyota. The Japanese automaker honors warranties all across North America. It’s good for the whole family, too: Lexus, Scion, Toyota and the newest addition, Subaru, are all included. Still, if you’re not expecting 13 grand’s worth of warranty repairs on a reliable car like the 350Z, the deal is hotter than a dancing bobcat with its ass on fire.

The other problem is red tape. In order to get a US-spec vehicle on the road in Canada, it must first be admissible for import. The government has printed a list of such vehicles on http://www.riv.ca. Conspicuous by their inadmissibility are the Pontiac GTO and the Mistubishi Lancer Evolution IX, which have failed Canadian bumper and emissions tests. Export papers need to be filed at U.S. customs, and import papers at Canadian customs, including a manufacturer’s letter stating that no outstanding recalls apply to the vehicle in question.

Once imported, a vehicle has to be converted to display kilometer-based readings, and have daytime running lights installed. Finally, the vehicle must be inspected and (possibly) emissions tested before it can be registered in a province of Canada. Other annoyances may apply. For example, if the vehicle comes from a state with lax tint and modification laws, you might end up needing to make cosmetic adjustments as well.

The fact that new cars start so much lower on the MRSP ladder in the U.S. also has ramifications in the used market. A 2005 Honda Accord EX-L with 14k miles will fetch about US$18k stateside. The same car will cost $23,400 in Canada. Converting 18-grand to Canadian and applying taxes will give us a car that costs $21,050. The best part? Since the Accord is assembled in Ohio, it’s a NAFTA car! On savings of $2,350, the day trip to upstate New York pays for itself. Even greater savings can be had on big-time depreciators like the Cadillac CTS-V or the Porsche 911 Turbo.

I picked the 350Z scenario because it’s a more extreme example of manufacturers being too greedily lethargic to adjust their Canadian pricing. Driving.ca recently quoted an average difference to be about $5,800 across international lines in one of its articles. The difference is still important enough to encourage a steady, increasingly large parade of vehicles across the border.

The government of Canada is hemming and hawing about ways to protect Canadian dealers while in some ways paying lip service to NAFTA. For their part,  manufacturers are now threatening U.S. dealers with a loss of franchise if they continue selling to Canadians. Meanwhile, the market is busy reacting predictably. For those too lazy to go through all the hoops, vast arrays of brokers and importers have put out a shingle and are waiting for your business.

Eventually, something will break. Either the manufacturers will adjust Canadian pricing, outright ban the sale of cars in the United States to non-residents or the Canadian government will impose an automotive tariff.

The medium-term outlook for the U.S. dollar is particularly bearish. Therefore, there is no reason to expect an abatement of any kind in Canadian imports. It’s a strange role reversal for many Americans, to think their country has become Canada’s automotive outlet mall. Quite soon, Canadians will be making fun of that “funny, two-tone money,” too.

The New York Times may be called The Old Gray Lady, but I reckon it’s one of those old gray ladies you find lingering at lunch counters, constantly sticking their nose into everyone’s business. In today’s Op Ed piece, Thomas L Friedman takes Toyota to task. He's miffed that the Japanese automaker's siding with The Big 2.8 against proposed federal regs raising the required corporate average fuel economy (CAFE) figure to 35mpg by 2020. The arguments behind “Et tu Toyota?” may be old news to TTAC readers, but like the Times itself, we can’t resist a bit of nasty gossip.

“What is it about Michigan that seems to encourage assisted suicide? That is all I can think watching Michigan congressmen and senators, led by Representative John Dingell, doing their best imitations of Jack Kevorkian and once again trying to water down efforts by Congress to legislate improved mileage standards for Detroit in the latest draft energy bill.”

It’s not the most coherent of leads, but the point of Friedman’s opening salvo’s is clear: Detroit’s ongoing campaign to oppose radical changes to federal mileage standards works against the domestic automakers’ best interests. This shibboleth is not unknown in these parts: Detroit COULD meet higher fuel economy standards by building more miserly machines, but it CHOOSES not to. Instead, it CHEATS in Washington and then PAYS THE PENALTY.

You’d kinda think Friedman and his fellow Detroit bashers would be happy with this karmic payback. But no. ‘Cause that would make them anti-American. So Friedman says he "gets" pork barrel politics- but only if they work. 

“What I don’t get is empty-barrel politics — Michigan lawmakers year after year shielding Detroit from pressure to innovate on higher mileage standards, even though Detroit’s failure to sell more energy-efficient vehicles has clearly contributed to its brush with bankruptcy, its loss of market share to Toyota and Honda — whose fleets beat all U.S. automakers in fuel economy in 2007 — and its loss of jobs. G.M. today has 73,000 working U.A.W. members, compared with 225,000 a decade ago.”

Nope. In fact, you could argue that forcing The Big 2.8 to make [crap] small cars to average-out their fleet's fuel economy has hurt them more than Toyota and Honda ever could. But Friedman saves his biggest rhetorical blast for Toyota, whose decision to join Detroit in its opposition to the draft Senate energy bill puts ToMoCo beyond the pundit's pale.

“Now why would Toyota, which has used the Prius to brand itself as the greenest car company, pull such a stunt? Is it because Toyota wants to slow down innovation in Detroit on more energy efficient vehicles, which Toyota already dominates, while also keeping mileage room to build giant pickup trucks, like the Toyota Tundra, at the gas-guzzler end of the U.S. market?”

Although Toyota has not sold itself as the treehugger’s friend (they adopted the brand on their own), Friedman's got it half right. Obviously, Toyota is against the higher CAFE numbers because they wants to sell loads of "giant, gas-guzzling" (a.k.a. full-sized) pickups. But they're not supporting Detroit's position to gain a competitive advantage. If anything Toyota's trying to help Detroit stay in business– avoiding a US auto industry strengthened by Chapter 11 and/or a transplant backlash.

After quoting ToMoCo’s Prez’ declaration of support for higher fuel economy standards, Friedman counters with “the truth:”

“Not so fast. Here are the facts: Thanks to the Michigan delegation, U.S. mileage standards for passenger car fleets have been frozen at 27.5 miles per gallon since 1985. Light trucks are even worse.”

And there you have it: the crux of the matter. Friedman’s use of the word “worse” to describe the mandatory corporate average fuel economy for light trucks proves that he’s operating from the same position of simplistic ignorance that informs this whole “debate.” As far as environmentalists and their allies are concerned, the higher the required mileage, the better. Period. Anyone who dares suggest otherwise is a sleazy, money-grubbing planet killer.

It’s a shame that Friedman couldn’t move this debate on a bit like, I dunno, suggesting we scrap the whole CAFE system and put a big old tax on gas (if we must). But good governance is besides the point. Better to dredge-up the old “free market capitalism sucks” argument and be done with it.

“Hey, Toyota, if you are going to become the biggest U.S. automaker, could you at least bring to America your best practices — the ones that made you the world leader — instead of prolonging our worst practices? We have enough people helping us commit suicide.”

Friedman’s plea betrays the worst kind of American self-loathing. More to the point, the New York Times scribe believes that the regulatory framework surrounding the US automotive industry’s fuel efficiency standards is fundamentally flawed and inherently corrupt. In this we agree. 

[Read the full text of "Et tu Toyota" here.] 

GM’s decline began fifty years ago, when the domestic automaker failed to repel import sales with competitive products. GM’s rear-engined air-cooled Corvair provided the template: technically advanced, but too expensive to provide profit. A string of over-ambitious and ultimately doomed imports fighters followed: aluminum-engined Vega, the Wankel, X-Body FWD, Olds Diesel V8, Cadillac V8-6-4 and EV-1. Now, when it can least afford a costly mistake, GM is launching a blitz of four different hybrid systems in a desperate attempt to counter Toyota’s successful Hybrid Synergy Drive (HSD). Is GM’s Volt the Corvair reincarnated?

Toyota’s ascendancy has been well documented: the tortoise approach to continuously improved products, processes and technologies. The Prius was born in the early nineties when oil was $15 a barrel. Initially subsidized by Toyota, the Prius is now a profitable product. And Toyota continues to relentlessly wring-out the costs of HSD; the Japanese automaker expects its hybrids to have the same (high) profit margins as its conventional cars by 2010.

Instead of figuring out how to make its (conventional) small cars profitably, GM has opened the floodgates to hybrid development. In fall ’06, Saturn introduced the belt-assist (BAS) or “mild hybrid” Saturn Vue. While GM’s BAS system allowed the domestic automaker to crow that it was, finally, in the hybrid business, sales are… unknown. [GM is the only automaker that doesn’t to break out hybrid sales numbers.]  

The two-mode hybrid system set to be introduced on the Chevrolet Tahoe and GMC Yukon is classic GM: a technically ambitious product that costs too much money. GM has publicly stated that the two-mode costs the company $10k. Try amortizing that with three dollar gas; it just doesn’t pan out. No surprise that development partners Daimler and BMW are quietly walking away from the two-mode in favor of their own cheaper partial-hybrid systems. Even using six bucks a gallon gas, Europeans can’t justify the extra investment.

GM will sell a few thousand hybrid Tahoes and Suburbans to politicians, celebrities and the like, so they can ride in their behemoths “guilt free.” Meanwhile, GM is rushing their new light-truck diesel to market. The oil burner’s a better and cheaper choice for the real world conditions in which pickups and SUV’s operate (highway mileage improvement of the hybrid Tahoe is all of 2 mpg). And just who’s going to buy a Chevrolet Malibu with a $10k two-mode hybrid system?

Now, “plug-in hybrids” have replaced the fuel cell as the eco-darling concept du jour. GM has no fewer than two such systems in development. A plug-in version of the Vue could well end up costing $45k ($6 to $10k on top of the $10k cost of the two-mode system).

And then there’s the Volt. According to GM’s Bob Lutz, “Five years from now there will be one technology leader in the world, and it will be GM.” That boast has a familiar ring to it. And even if it turns out to be true, it will be a hollow (i.e. unprofitable) victory.

GM is sending its series-hybrid Volt to a showdown at the ECO corral against the parallel-hybrid Prius. With its projected 40 miles plug-in range and on-board generator, the Volt sounds impressive. But the Gen3 Prius due out in 2010 (like the Volt?), may well equal and even eclipse the Volt’s efficiency.

The Volt’s weakness– intrinsic drive train inefficiencies– show up as soon as its battery range is exhausted. While GM projects 50mpg during “charge sustaining operation” operation, that’s a misleading claim. The batteries will need to be charged by the generator– as well as keeping the car moving. Like all electric vehicles, the Volt will do best in shorter-range city driving.

The Prius’ HSD drive feeds the output of its gas engine directly to the wheels at higher speeds. It’s an intrinsically more efficient solution than using a generator to send power to an electric motor via the batteries. And Gen3 Prius will easily meet or exceed the Volt’s 50mpg continuous-use projection; Toyota projects a 15 to 20 percent improvement over the Prius’ current 46mpg EPA rating. Gen3 Prius will also have expanded electric-only range, as well as an optional plug-in range extender, approaching the Volt’s electric-only range.

GM will milk all the publicity it can get from the Volt. Hard-core eco-poseurs will buy in. After spending a billion dollars developing the Volt, they’re looking to sell some 60k annually at $30k apiece.  GM is anxious about that price, and is already floating the idea of renting the battery pack separately from the car (negating any actual savings from plug-in electric energy) to try to blunt the impact (“We’ll sell you a Volt for $20k, battery not included”).  

Meanwhile, Toyota will be selling 150k similarly-efficient Prii for a mere $20k, and making a tidy profit doing so. 

After perusing the United Auto Workers’ (UAW) contract with GM, I reckon both sides got a good deal. The UAW secured job guarantees: assurances that GM won’t off-shore new and existing products for the North American market. For its part, The General gets to off-load the lion’s share of its fixed costs AND a chance to lower the pay scale for a third of its hourly workforce. If the contract is ratified, the UAW protects its existing members’ livelihoods and GM becomes a lower-cost producer. No question: it’s a new lease on life. 

By removing The Mother of All Fixed Costs (retiree health care), GM will have the chance to do something it couldn’t do for decades: stop making cars. That may sound like the very definition of a Pyrrhic victory, but GM’s always-on product spigot has been the bane of its existence. Sure, it generated cash to pay the hired help's health care, but it also created a tsunami of new product. The flood drove down new car prices, lowered used car residuals and dragged all eight GM brands (including Cadillac) into K-Mart country.

Under the new contract, GM can throttle back factory output to more closely match supply with demand. With careful husbandry, residual values of used GM vehicles will rise. Even better, with all that slop drained from the system, GM can (at least in theory) make greater profits on lower volumes, or lower prices further to gain market share, or add content, or some combination thereof. What was once a desperate struggle to sell whatever came out the factory gates suddenly becomes a more considered battle to meet or beat the competition.

Actually, this has always been CEO Rick Wagoner’s turnaround plan: cut costs until they match production and then build the business back up from there. And a damn fine plan it was too, back in ’05; back when GM’s US market share stood at 26.2 percent. And it was still a pretty good idea the next year, when GM’s market share sank to 24.7 percent. And you gotta love it today, when GM’s market share has tumbled to 22.1 percent. The question is, how low can GM go?

The short answer: another three or four percentage points of US market share. If GM production drops below that level– 12 percent or 500k units in production terms– the business will rapidly become unsustainable.

Prior to '05, GM has been shedding four percent US market share roughly every six years. The company lost that much ground from 1991 (35 percent) to 1997 (31.3 percent); and from 2000 (28.2 percent) to 2006 (24.7 percent). But those were good years for the US car industry. Considering the four percent hit since '05 and today’s contracting new car market, it's easy to imagine that timeline could contract violently. And then it’s lights out.  

I repeat: all the cost savings won’t be enough if GM’s North American profits continue to fall faster than its savings– which is what’s happening now. Yes, GM’s sold its remaining "non core" assets and put together a nice little $32b nest egg. Even after deducting $5b to $6b to pay for the new health care VEBA (the remainder involves a transfer of existing VEBA control from GM to the UAW), that still leaves the automaker plenty of time to lose plenty of money. But postponing defeat is not the same as assuring victory.

The new UAW contract could be a genuine "get out of jail free" card, but GM still can’t cut their way to prosperity. That’s the mantra pundits chanted two years ago, when Rick Wagoner announced the first “historic health care giveback” (a.k.a. a $3b GM-funded health care VEBA). It’s just as true now, with a $29.9b union-controlled health care VEBA in the works. Until and unless GM recaptures lost ground in the sales charts, or at least holds steady, the company is on a downwards trajectory, spiraling into the abyss.

Course correction requires reversing a 17-year trend. With eight brands and 7100 dealers selling some 65 models, what are the chances GM has the focus it needs to reignite vehicle sales across the board? Has GM’s management team learned their lessons re: badge engineering, brand positioning, customer service, product quality and long-term marketing? Are they now ready to put in the long, hard slog needed to gradually and steadily improve their existing products, rather than swinging for the fences with Hail Mary newbies like, dare I say it, the Chevrolet Volt?

Dream on. If anything, this bold UAW contract will create a new sense of complacency, as both union and management congratulate and [generously] reward themselves for pulling back from the brink of disaster. Whatever brave plans GM has for its future, its stultifying bureaucracy will, as always, have the last word.  

Clearly, nothing about the United Auto Workers (UAW) proposed contract with GM is clear. Until we see the precise details, the agreement's ramifications are unknown and unknowable. Meanwhile, you'd expect the media to hang fire. Yeah right. "For GM, deal is a game changer" proclaims the Globe and Mail. "GM Labor Deal Ushers In New Era for Auto Industry" the Wall Street Journal advises. "Deal gives GM cash to build better cars" predicts The Detroit Free Press. Scanning these Pollyanna prognostications, the Freep provides the greatest insight. Not because I believe a word of Mark Phelan's thesis. Because I don't.

I reckon the UAW's new contract will not deliver one dime of short-term savings to GM. If anything, it will add to their overheads– especially the interest on the money that will pay for the multi-billion dollar union-controlled VEBA health care superfund). This has been the pattern since GM CEO Rick Wagoner started his campaign to trim his employer's overheads to match their falling income. Wagoner announces plant closures and union buyouts that transfer costs from now to later. Why would this new contract be any different? As Frank Williams pointed-out, the contract calls for a "targeted special attrition program" for "non-core workers."

But let's assume Phelan's giant leap of faith is correct and [for reasons I can't possibly fathom] this new contract reduces GM's labor costs by $2k per car produced (presuming GM's output hasn't declined further since he wrote the piece). Is the scribe right to suggest that GM would– sorry, "will" use the extra cash to build better cars? Could this really be a turning point, where GM rides to glory on the back of a product renaissance? In a word, no.

In any discussion about GM's future, you have to consider the unavoidable truism that you can't fix stupid. In other words, no matter how much more money GM spends on improving its products, it runs the [usual] risk of spending the "extra" money on the wrong cars, in the wrong way, with little of nothing to show for it. When it comes to creating competitive product, financial resources are key. But a coherent strategy is more important. And a healthy corporate culture is the most important element of all. In this case, one out of three sucks. To wit:

Building a down market Caddy is stupid. Selling two different versions of the same CUV in the same dealership (Buick Enclave, GMC Acadia) is absurd. Rebadging a Chevy Trailblazer as a SAAB 9-7x is dumb. Sticking a $65k Corvette next to a $13k Aveo in a Chevy showroom is idiotic. Building a Corvette-engined folding hardtop pickup truck (SSR) is seriously misguided. Letting the Pontiac Grand Prix rot on the vine for a decade is asinine. Selling better Buicks in China than the US is ridiculous. And so on.

Now you could posit that these mistakes are somehow cost-related. And you'd be wrong. An extra $2k lavished on any of these vehicles would not have corrected the underlying strategic blunders that led to their realization. As Phelan himself points out, the fact that GM could sell the new, improved Cadillac CTS for the same price as the previous model puts paid to the "we don't have enough money to build competitive models" argument.

We've spoken before about the all-conquering corrosiveness of GM's multi-divisional corporate culture. The automaker is a labyrinth of beancounters and middle managers whose interdepartmental skills make Kafka's nightmarish bureaucracy seem like a well-run America's Cup team. It's important to realize that this kind of diseased corporate culture spends resources with all the efficiency and effectiveness of a government agency.

When I moved to the UK, the Labor party had the same answer for every problem: more money. When they assumed power, they raised taxes and spent the money. And… nothing. Anyone who holds the belief that an extra billion or two or five pumped into GM's stultified product development process will be a "game changer" is sorely mistaken. The money would– sorry, "will" disappear down the same rat hole that currently swallows GM's development cash and produces substandard, bone-headed products.

Fortunately, not all journalists are lining-up at the GM water cooler to drink the company's Kool-Aid. Like many TTAC commentators, some news outlets are pointing out that GM CEO Rick Wagoner's post-strike comment– "This agreement helps us close the fundamental competitive gaps that exist in our business"– finally puts his ass on the line. By his own admission, Wagoner can no longer point to labor costs as the weights around GM's ankles preventing it from running with (ahead of?) the Toyotas, Hondas and Nissans of the world.

Yes, well, there's still Japanese currency manipulation, the mortgage crisis, a general economic downturn and all the other excuses the company has been trotting-out since GM found itself having to explain why its indeterminate turnaround plan has failed to gain traction. Look for more of the same.

Well exactly. GM's new union contract– if ratified– will not save the automaker from its fundamental weaknesses. Going forward, in 2008, GM will be in for a long, tough slog, warmed only by its own cash conflagration. During this time, GM's labor costs will not come down dramatically, its health costs will not be reined in and its Hail Mary products won't save its soul.

I recently found myself in London working on a large project for an even larger corporation. I took particular interest in the Ford models plying British roads. In contrast to America’s Blue Oval offerings, these Euro-Fords looked clean, modern and, above all, right-sized. And then, bombing around London in a Ford Mondeo estate (station wagon), the chariot’s gentle diesel clatter brought sudden clarity. If Ford hopes to preserve America’s mildewed Mercury brand, Euro-Fords are the way to go.

Well, maybe not THAT Ford. My last gen Mondeo hire car made an avocado-hued dinette look modern. That said, the little estate’s lack of style was no match for its undeniable substance. Respect to interior materials that wouldn’t seem out of place in a “proper” VW and the Duratorq’s prodigious oil-burning grunt. And despite CUV-levels of space, the Mondeo’s suspension means you’ll never utter the phrase “car-like handling” again.

But wait, there’s more! Gazing over London’s M4 gridlock brought mass awareness of the Blue Oval kind. The Ford Galaxy MPV, the spawn of a Honda Odyssey and a personal trainer, is everywhere. You can’t sneeze without hitting a Ford Transit, the workhorse of an entire nation. And then there’s the big shock: the Euro-spec Focus is even better than Google tells you. 

To reiterate: the Focus is not just easy on the eyes; it brings tears to them. And that’s just the base model. The Focus ST makes any red-blooded Yank lust for this Englishman in New York. And everyone from urban youth to the middle-aged stealth wealth-set are spotted (or not) in a Focus.

And yet, America gets no love. This despite [what I sense to be] pent-up demand for something (anything?) from The Blue Oval Boyz with unique style, innovative engineering, fuel-efficient dimensions and sporting dynamics. So bring this Euro-stuff over, rebadge it Mercury, get Jill Wagner to wear something suitably slinky and growl at the new car and call it good. No, call it great.

In theory, Saturnalian Euro-transplantation is a slam dunk for a Ford brand without any discernible identity– or future. In practice, there are plenty of excellent reasons why it hasn’t happened. 

For one thing, the weak US dollar makes a mockery of any Ford exec stupid (brave?) enough to suggest UK to US Ford exports. A UK buyer can pick-up a new Ford Mondeo “Edge” with a 2.0-liter engine for around ₤16k. At today’s exchange rate, that’s $32,253.18. Add on another $5k or so for federalization and transportation, and you’re looking at a US sticker price that’s nearasdammit $40k.

A US buyer can pick-up a loaded BMW 325i for the same wedge. By the same token, you’d have a very hard time indeed spending that much money on a Lincoln MKZ. I mean, the Mondeo may be a better car than a tarted-up Ford Fusion, but inserting it into Mercury’s lineup at that price point would play merry Hell with what remains of Ford’s brand delineations.

Anyway, the United Auto Workers (UAW) would never let it happen. A financial agreement this side of Bretton Woods would be required to keep the UAW’s finger off the supply chain’s big red button. Fresh from their GM strike, methinks union leaders aren't about to turn to Ford CEO Alan Mulally and say “Bring in some European Fords for Mercury? Sure! Whatever it takes Al, whatever it takes.”

Even if Ford could surmount these hurdles, history tells us that any such technology transfer is doomed to failure. Witness the hot/cold reaction to the Cougar hatchback-transplant and its Mercury Mistake Mystique cousin. Or the sunk-without-a-trace new-wave Merkurs. While pistonheads like your author may love clean-looking, tight-handling European Fords, there’s no guarantee anyone else will.

So, basically, the law of supply and demand says it ain’t gonna happen. But the spirit of the law says that Ford can, should and will capitalize on its excellence abroad to revive its moribund market at home. And despite all the critics who’ve written-off Mercury, it’s not impossible to surmise that the brand could benefit from Alan Mulally’s ongoing realization that product excellence doesn’t live here anymore. 

Ford’s sale of Jaguar will free Lincoln to reach higher [than rebadging Fords]. This opens a big space between everyman Ford and upscale Lincoln. In fact, it’s Mercury’s old stomping ground: affordable style. What’s to stop Mercury from capitalizing on Ford’s Euro-style and Euro-excellence by building “world” cars in, dare I say it, Mexico with, dare I say it, grace and pace?

The hypothetical Euro-Mercury brand could have the best of everything: a highly-rated dealer network (that’s Lincoln-Mercury), products that go toe-to-toe with anything in their class and a brand name (formerly) known for selling upscale iron that most anyone can afford. Get it done and it won’t be long before Jill Wagner is the most forgettable part of Mercury.

The strike is over. The United Autoworkers Union (UAW) has announced they've reached an agreement with General Motors which will lead to a new contract for their members. Everyone's gone back to work. Everyone is happy, and all's right with the world– at least until the full impact of the agreement hits the workers. At that point, they might realize that they gave up two days' pay and got practically nothing in return. Let's see how it adds up.  

The exact details of the agreement haven't been released. They won't be final until the members ratify the new contract. However, the Detroit Free Press has released what "a person briefed on the deal said" would be included in the new contract. 

The biggest change: the establishment of a Voluntary Employee Beneficiary Association (VEBA). This health care superfund is designed to pay for UAW members' health care for "the next 80 years" (according to UAW boss Ron Gettelfinger). For GM, the VEBA unloads transfers health care responsibilities to the union. Industry soothsayers are currently pegging GM's contribution to the VEBA at around $35b. That's substantially less than the over $50b bill GM faced.

The amount of cash vs. stock GM will use to pay for the VEBA is the big question hanging over this part of the deal. Even if GM has to pile on even more debt to git 'er done, the Street loves this VEBA. So it's a big win for GM– for now. Whether or not it will work out for the UAW is a whole 'nother story, as it puts the union into the unfamiliar position of administering their members' soaring health care costs and raises the possibility of massive fraud and mismanagement. Score: GM 1, UAW 0.

GM and the UAW disagreed over wage structures. GM wanted to institute a two-tier structure where new workers receive lower pay and different benefits from current workers' compensation. Of course, the union found the idea entirely unacceptable. And then gave in. However, since this fits right in with the "just don't mess with my benefits" mentality most UAW members exhibit, GM gets the win. Score: GM 2, UAW 0.

The UAW also agreed on different wage structures for "non-core" jobs: those workers who don't actually assemble vehicles. As compensation to non-core workers who currently enjoy full pay and benefits, GM will offer a "targeted special attrition program" to "relieve the pain of the wage reductions." In other words, GM will eventually pay some of their workers less. Score: GM 3, UAW 0.

The new contract doesn't include any wage increases per se, but it does include a $3k bribe to accept the contract signing bonus. The signing bonus will cost GM much less than a strike or any other form of compensation. Score: GM 4, UAW 0.

The contract contains another bonus: lump sum payments over the last three years of the four-year contract. The bonuses are roughly equal to three percent of annual wages. That works out to an $1,800 payment for someone who makes $60K per year. It's still a lot cheaper than across-the-board raises and if it's tied to profits, well, what profits? Score: GM 5, UAW 0.

Other terms in the agreement include the "possibility" of GM maintaining the level of its union workforce in the U.S. and modifications to the jobs bank program. The details of the jobs bank changes aren't available yet, so it's too early to score that one. Getting even the hint of a promise that GM won't cut its UAW workforce is a major point for the union. Score: GM 5, UAW 1.

The UAW's national leaders will convene late this week to vote on the deal. The full membership will vote on it this weekend. The UAW's president is optimistic it'll be approved. "It's an agreement we're proud to recommend to our membership," Gettelfinger crowed. "This contract will be better in some ways; it will be different in some ways. Our retirees will be exceptionally pleased with the contract." 

Different? Of course, GM CEO Rick Wagoner had his sound bite as well: "This agreement helps us close the fundamental competitive gaps that exist in our business. The projected competitive improvements in this agreement will allow us to maintain a strong manufacturing presence in the United States along with significant future investments."

Wagoner's statement reveals an inconvenient truth: GM management continues to see labor at the root of all their problems. Unloading retiree health care costs, not giving raises and paying new workers less won't close any "fundamental competitive gaps." To be competitive they have to offer a competitive product.

The new UAW contract may improve the bottom line for a few quarters, but until GM sorts out its brands, trims its dealers and starts designing world-class, brand-unique products for those workers to assemble, there's nothing any contractual fine-tuning can do to save the company's failing North American operations.

Day two of the UAW strike and media consensus has been reached: chill. Amongst The Detroit News’ (DTN) hopeful headlines: “Gettelfinger: Strike may prod bargainers to end stalemate.” Uh, isn’t that the point of a strike? Anyway, in a piece entitled “GM Can Handle A Short Strike,” the DTN rounds-up the usual suspects to allay fears that the automaker and its union are headed straight to Hell. In sum, “Analysts view GM's tough bargaining as a calculated gamble that is likely to pay off.” That’s a bit like saying Russian roulette offers its players terrific odds.

The party line: GM is finally getting tough with the UAW. According to auto insiders, that’s a good thing (unless the strike goes on too long and then it bloody well isn’t). But those analysts who view the UAW’s company-wide walkout through the prism of traditional labor relations– it’s high time GM “taught the union a lesson”– fail to understand that this isn’t about GM getting tough. It’s about GM not being able to afford its union.

This is the idée fixe that informed GM’s side of the negotiations. And it’s true. Unless GM pares down its labor costs, overseas profits or no, they’re headed straight for Chapter 11. But, the union counters, that’s only true because of YOUR incompetence. If you designed better cars you'd make enough money to pay us what we want. That’s the UAW’s idée fixe and it’s also true. GM’s erstwhile leadership has shown no ability to get its product-related shit together in the US market. 

So here we have the UAW and GM management blaming each other for the poisoned fruits of their shared arrogance, incompetence, intransigence and greed. The obvious answer: both sides should sit down and figure out the best possible way to work together to right the ship, setting aside all past agreements. That’s about as likely as Tom and Jerry getting married in Mississippi.

The single largest roadblock to union – management cooperation is GM management’s refusal to accept the fact that their entire North American business is going down in flames. GM’s brands are meaningless, its products uncompetitive and its dealer network bloated beyond any rational idea of sustainability. “Tweaking” the underlying business model– whether through a $51b union health care superfund or a reduction in union salaries– won’t rescue GM from the abyss.

What’s needed is radical surgery. Given the franchise law strait-jacket prohibiting the required dealericide, and the union’s satisfaction (indeed love of) the status quo, there’s only one way GM management could sort out both its labor problem and its business fundamentals: Chapter 11.

Most people consider Chapter 11 a way to jettison union contracts and hire scab labor. This is far from the case. GM would a very hard time indeed finding a federal judge willing to [risk life and limb and] toss the UAW aside. The situation over at bankrupt parts maker Delphi illustrates the point perfectly; UAW workers worked under their “old” contract from bankruptcy declaration (October ’05) to July ’07.

Even in Chapter 11, GM would have to work with the UAW to find a way to reinvent their relationship. Why wait? GM could use this strike as an opportunity/excuse to approach the UAW ahead of a bankruptcy petition and say “We’re all in this together guys. Let’s find a way to start with a clean slate. What would a commercially successful, American-based, fully unionized automaker look like?”

And then I woke up.

It’s a Catch 22. The sort of management team who could even consider this strategy is not the sort of management team that would have put the company in this position in the first place. The fact that GM’s top brass drew down millions in compensation as the company’s market share sank, profits dwindled and union negotiations loomed is all the proof– if proof be needed– that GM management doesn’t have the humility required to admit that everything they know is wrong.

So, will the UAW strike last more than a week? If so, GM is doomed. An analyst for Lehman Brothers told the Associated Press that the UAW strike would cost GM around $8b per month. Speaking to the DTN, BNP-Paribas analyst Brad Rubin pegs the cost of a month-long GM strike at $4b, and adds that the hit would likely tip the automaker into bankruptcy. And therein lies the tale…

Is it really possible that GM is now so weak that a “mere” $4b loss could send them into federal court clutching bankruptcy papers, hoping against hope that they have enough cash to recover? If so, it doesn’t really matter if the UAW and GM sign a new contract. The ongoing slide in GM’s US profits will top that number by year’s end. Chapter 11? Anyway you look at this, they lose.

When I first picked up Car and Driver’s (C&D) fateful December 2006 issue, I was convinced that the splashy, graphics-heavy revamp sounded the death knell for my favorite buff book. But the resulting reader backlash was so loud I felt sure Ann Arbor’s finest would be scared straight. A plaintive apology followed the editor’s arrogant dismissal of the reader revolt. C&D seemed poised for a revival. Nope. The October 2007 issue isn’t just the lowest point in the mag’s inexorable descent; it’s a dive below the limits of acceptability.

The buff books’ decline is inversely proportionate to digital media’s rise. Why fork over good money for a magazine subscription, endure two-month old editorials and wade through dozens of ads when the web provides fresh, instant and less ad-intrusive content for free? For the mags, there's an obvious answer: an upmarket re-imagining of the paper-based genre, like the UK’s elegant, ballsy evo magazine.

No such luck. Like The Big 2.8, even a precipitous decline in market share and profits hasn’t convinced the powers-that-be at Car and Driver, Road & Track and Motor Trend that there's a pressing need for radical change. The buff book Old Guard eschews brave revolution in favor of gentle evolution. Even worse, they throw poisoned fruit at the web-slingers– even as these digital vanguards saw away the branch upon which they sit.

In C&D’s October review of the Mercedes-Benz CL63 AMG, the editors make their opinion of webheads– their own no less– abundantly clear. “When [the CL63] arrived on Hogback Road, it caused all the web-site interns to run outside and gawk… The rest of the staff wasn’t easily beguiled by the CL63… because the CL600 can do everything the CL63 does without the fanfare and flamboyance of the AMG car.”

Yep, that’s us: tacky, juvenile, given to fleeting fads. But where is the cold-eyed, experience-hardened objectivity of these experts in their own evaluations? Well, as concerns the CL63 vs. CL600 debate, here’s how the pros’ prose goes: “You can’t really go wrong with either, so which would you rather live with?” Thanks, Motor Trend.

On the next page, we see more journalistic brilliance, this time applied to the Mercedes-Benz SLR McLaren Roadster: “…the SLR’s dynamics are hard to love… It’s hard to be smooth with this car. But whaddaya want for a half-million bucks?” I’ll tell you what I want for twelve bucks a year: the occasional negative comment about a car that deserves it.

You won’t find any in the October issue’s “Short Takes.” The executive summary of the Subaru Tribeca’s driving dynamics: “Its fun-to-drive index is low, but its road manners are almost beyond reproach.” And there I was thinking that a low fun-to-drive index equaled middle-of-the-road road manners. The closing paragraph of the Taurus write-up compares the refreshed Five Hundred to the 1985 Taurus, rather than the new car’s current competitors.

The Buick Enclave review quotes a 0 to 60 time of nine seconds, 14 mpg fuel economy and an as-tested price of $43,950. C&D’s conclusion? The Enclave “undercuts the pricing of key competitors: Acura MDX, Lexus RX350, Volvo XC90. And the Enclave measures up well against any of them.” Uh-huh. The intro to that piece damns a New York Times writer for telling GM to build vehicles that people “actually want to buy;” a “dazzling insight,” says C&D. 

C&D’s “Road Test” is a format that usually allows more candor. In this case, the mag reviews the new Volvo C30– a car aimed straight at the MINI– without once describing how it handles in the twisties. “The steering zeroes in on ‘straight down the road’ when you cruise,” they assure us. “Expect understeer,” they elaborate, kind of. Their “Verdict:” it’s “a Swede to be seen with.” As for the Audi S5: “What the Audi brings to the party is a real sense of style… isn’t that what coupes are all about?” Um… what do you think?

Methinks C&D’s increasingly bitter tone stems from the passionate, seasoned, talented auto writers’ need to sacrifice every last shred of journalistic integrity on the altar of diminishing ad revenue. They can’t possibly enjoy it.

To their credit, the October issue does include a well-written comparison of the Dodge Viper and Corvette Z06. It seems clear that as long as the iron involved is sufficiently unattainable to the mere motoring public, C&D can muster its mojo and call a spade a spade.

But that’s not enough to save a magazine that’s gotten too big for its britches. If a car mag can’t be bothered to spill the beans on the sort of cars real-world enthusiasts drive– you know, the lowly souls that might write for a “web-site”– it simply can’t expect to survive.

Brando got fat. Jacko got crazy. And America’s best buff book has lost it. Good night, C&D. Thanks for the memories.

After more than a week of overtime negotiations, the United Auto Workers (UAW) is on strike at General Motors. For those who think this action signals the beginning of the end for The General: yes and no. On the yes side, the strike will highlight the original sins that led both sides to this point. The executive greed and mismanagement. The union intransigence and denial. The strike will alert the dim-witted media that the Emperor hasn’t been wearing any clothes for decades, ding GM's rep, and make it even more difficult for the carmaker to sell cars. On the no side, GM will settle. A compromise will be reached. The same players will resume the game, poorer but no wiser.

The strike stems from one simple fact: the UAW is unwilling to take a hit for the team. As I’ve stated many times, trade unions are not in the business of surrendering wages, benefits or working conditions. It’s not in their nature. All the previous UAW “givebacks”– which supposedly signaled the union’s willingness to sacrifice for the good of the company– were nothing of the sort. They were payoffs. You want us to give up jobs? Create an attrition program. You want to increase our health care co-pays? Stick $2b in the bank. The UAW puts the “pro” in quid pro quo.

Can you really blame the UAW for holding fast to this "you'll get what you pay for" philosophy? Sure, analysts and media pundits have been bleating on about the need for GM to trim its labor costs to keep pace with their non-union competition. But how can a union member be expected to make a sacrifice when the company’s top players are paying themselves tens of millions of dollars in salary and bonuses? Do as I say, not as I do? I don’t think so.

GM went into these negotiations determined to create a $51b union-administered VEBA health care superfund. As always, the UAW was listening to WIIFM (What’s In It For Me?). You want to dump your health care liabilities on us? Show me the money. Not 65 cents on a dollar. Not 50 percent stock, 50 percent cash. A $51b health care VEBA will cost you… $51b. And while we’re at it, let’s have some job guarantees and a nice fat signing bonus.

The fact that GM didn’t give the union what it wanted has nothing to do with testicular fortitude. If GM had the money to cut the deal, they would have cut the deal. But they don’t, so they didn’t. Ten or twenty years ago, GM could have written a check or, at the least, rung-up a few bankers and arranged favorable financing. No more. Cash-wise, Forbes says they're sitting on $32b. Take off a $10b float, add up their ongoing liabilities, consider the cost of borrowing $51b and it's no wonder the VEBA was a stock-heavy deal. Or that the union walked. 

Which leaves us here: either GM will borrow the “extra” money at usurious rates to establish their beloved VEBA and settle the strike, or they’ll dump the VEBA and settle the strike with a new wage structure and working conditions. That's provided GM has the money to pay off the union for these “givebacks.” If GM can't pay the freight for ANY changes in the UAW's wages, benefits or working rules, they’ve either got to keep on paying the current rate plus a little bit ‘mo (‘cause there’s always a little bit ‘mo) or go nuclear: sit it out, file chapter 11 and hit reset.

Again, in all likelihood, GM will cave. Just as the UAW never surrenders, GM never stares them down. Meanwhile, the UAW strike is pouring gas on GM's cash conflagration. The UAW's 53-day, 9200 worker strike against GM in 1998 cost the automaker an estimated $2b or roughly $37m a day. This time 'round, 73k UAW members are on strike. This industrial action could cost GM as much as $300m per day. At that rate, GM's entire cash pile would be gone in 106 days. What's more, if GM is too cash-strapped to buy off the union now, what hope will there be in a month or more?

At the same time, the more GM publicly justifies its negotiating position– we can't keep up with the Toyotas of the world with our sky-high UAW labor costs– the more people will hear "GM can't compete." And that story renders GM's PR narrative– our house is now in order and we're on the cusp of a major product-led renaissance– meaningless. In fact, with each passing day of this strike, GM will look more and more like what it is: an old-fashioned, incompetent, easily-distracted automaker caught flat-footed by its modern, focused, streamlined, non-union competition. 

A couple of days ago, we published an editorial taking English auto scribe James May to task for flaming American cars. For this, we were flamed. Despite TTAC’s blanket ban on comments that diss the website, and our ban on [off topic] comments questioning our editorial stance or style, many of you cried foul. How could Mr. Swanson accuse a British writer of an anti-American car bias when TTAC [obviously] shared this same prejudice? After damping down the flames of perceived hypocrisy, I promised to provide offended readers a place to fire at will. And here it is.

Longtime visitors will know TTAC’s fought the bias battle before. From the very first GM Death Watch, any and all criticism of GM or GM products used to ignite a conflagration of condemnation. The flames soon spread to our coverage of Ford and Chrysler. For several years, TTAC was consistently and persistently attacked as a fundamentally anti-American website. We were considered the enemy within.

Many commentators felt compelled to vent their ire at our [perceived] anti-American bias at the bottom of any editorial that even touched on the subject of a domestic automaker or domestic car. When they were warned to make their point without personally criticizing this website, its authors or fellow commentators; more than a few penned expletive-laden emails accusing me of Stalinist censorship. Not to mention conjecture about sexual relations with farm animals, doubts about my patriotism and good old-fashioned death threats.  

As The Big 2.8’s troubles have become evident to all but the most blinkered observers, the majority of our readers have begun to appreciate the fact that TTAC’s take on the American automotive industry isn’t entirely divorced from reality. Of course, our policy of permanently banning flamers has also quieted this little corner of cyberspace. In any case, by and large, our domestic-oriented editorials and car reviews are no longer greeted with a not-so-stately line of flame throwers.

I mustard mitt I was a bit surprised when our Mr. Swanson's analysis of Mr. May's editorial reignited charges of hypocrisy and anti-American bias. Surprised, but not concerned. As I said, we’ve been here before. And at the risk of repeating myself, I’ll repeat myself: TTAC does not have an anti-American car or automaker bias.

Yes, a great deal of our coverage focuses on the foibles and failures of The Big 2.8. For this I make no apologies. The Decline and Fall of Detroit is arguably the most important automotive story of our time. While the media coverage of unfolding events has been generally excellent, I’ve attempted to write, commission and publish articles that look at the lay of the land that little bit harder. That dig that little bit deeper for the truth. 

At the same time, it should be noted that TTAC hasn’t spared non-domestic automakers the same scrutiny. We’ve taken Toyota to task for greenwashing, lambasted Lexus for ill-advised line extensions, mocked Mercedes for creating Maybach, bashed BMW for bad branding, and so on. In my more egocentric moments, I like to think that TTAC as the conscience of an industry. The ENTIRE industry: American, transplanted and foreign. 

It’s also worth mentioning that TTAC is a catholic (small c) website. We invite submissions from anyone who cares to tap plastic on our behalf. We do not dictate the writer’s editorial perspective, nor reject their work on that basis. There is no “house line” on any given issue. There are enough counterpoint editorials to back up the assertion that we genuinely enjoy genuine debate. And, lest we forget, our comments section is a playground for civilized dissent.

That said, yes, we are a group of like-minded people. Just as CBS' newsroom contains more liberals than a Hollywood madam's black book, the people who regularly write for TTAC share certain values, experiences, perspectives and abilities. But one thing they do NOT share is a bias against American automakers or their products per se.

Peruse our archives for reviews of American cars and you’ll find plenty of praise. Read our reviews of non-domestically owned or produced makes and models, and you’ll see plenty of criticism. NOBODY gets a free ride at TTAC. The fact that so many American cars take it on the chin hereabouts says everything about the cars, and little about our editorial preconceptions. 

So why did Mr. Swanson stick it to Mr. May if “we” generally agree about the relative quality of American (i.e. GM, Ford and Chrysler) cars? Because May was saying all American cars suck. Mr. Swanson felt that the criticism was based on anti-Americanism, rather than carefully calculated analysis. More importantly, Mr. Swanson believed it was untrue. As long as I’m at the helm of this website, I will continue to publish work that attempts to expose the truth, regardless of the consequences.  

Since Cerberus removed Chrysler from German control, the crisis corporation’s modus operandi appears to remain unchanged. Other than some relatively minor dealer antagonism (since smoothed over), there’s been none of the slash-and-burn stylings formerly attributed to ex-Home Depot CEO Bob Nardelli and his new, private equity employers. Perhaps a companywide excrement – fan collision awaits the conclusion of United Auto Workers negotiations. Meanwhile, Chrysler better start getting its you-know-what together on the product front, ‘cause the cupboard is almost completely bare.  

In the last year or so, Chrysler has rolled out over a half-dozen new models. Only one can legitimately be called a “hit”: the Wrangler Unlimited. Yes but– much of the buzz surrounding the vehicle can be attributed to low supply. We’ll have to wait for the initial rush to end before we'll know if the Jeep model has "legs:'" sufficient staying power to match increased production and become a corporate cash cow. 

Elsewhere, the bloom is off the 300 and its derivatives. Sales are down 15 percent year-to-date. The good news: Chrysler has the relatively affordable, large-and-in-charge American sedan market to themselves for a while longer. And the “niche” is generating a cool quarter million sales per year. The bad news: the previous regime pushed 300 production well past consumer demand, and then dumped 44 percent of total production into fleet sales. Owners are heading for a major hit at trade in time– which will do neither 300 sales nor the brand any favors. 

At the same time, the company’s REAL profit centers are rotting on the vine and taking it on the chin. The Dodge Durango and Chrysler Aspen (a TTAC Ten Worst Automobiles Today (TWAT) winner) are both down by double digits. And again, Chrysler sent its “extra” units to bulk buyers. Some 33 percent of Durangos and 31.2 percent of Aspens sailed with the fleets.

Ye Olde Ram pickup is also in dire straits. The Ram was always going to have problems keeping up with the refreshed Chevrolet Silverado and “newer than thou” Ford F-150. With the slump in the building trades and Toyota jumping in and playing price war games with their Tundra, the Ram is on a hiding to nowhere.

Chrysler’s “new” introductions are also lost in [dealer lot] space. Though let down by poor reliability, the designs that fueled Chrysler’s pre-merger renaissance were daring and innovative (e.g. the cab-forward line and the Neon). They kept their competition awake nights and wrote the tickets for more than a few former Chrysler hands (one of whom has been chasing the magic at GM ever since). 

After the 300, Chrysler’s new models landed with a gigantic thud. Jeep Commander excepted, they weren’t “bad” designs; just incredibly bland. The much-anticipated Sebring hit the market and went straight to rentals. Even the nicest of the buff books could find little nice to say. The Caliber was an interesting idea that can only dream of the old Neon’s volumes. And the lack of a model priced beneath the Caliber is crippling.

The Pacifica has been cut and reprieved several times. At the moment, as Chrysler supposedly considers paring down its offerings, there isn't even an update on the drawing board. As Chrysler’s only entry in the hot large-CUV market, the Pacifica should be capturing some of the more profitable parts of the SUV refugee and people-hauler business. The Pacific wasn’t quite good enough when it was new. It’s less so now.     

Other than their new minivan, Chrysler has one– count it one– more new vehicle on the near horizon. The new retro-styled Challenger has been getting good ink, but it’s diving into a shrinking pool (Mustang sales are tanking) and competing directly with Chevy’s new Camaro.

At least Chrysler doesn’t share GM’s and Ford’s worries about trying to eke out a profit from imported Europe-designed models. Chrysler don’t have any. One of the main “reasons” behind the now-abandoned DCX merger: Chrysler had no overseas presence. Their European subsidiaries were dogs, and got sold off during Iacocca’s reign. Chrysler Europe isn’t a great drain, but it sure isn’t going to be the company's savior.     

Worse, Chrysler’s old “partner/contract designer” Mitsubishi has been twisting in the wind for the last decade. Historically, designing and selling parts/designs to other manufacturers has been Mitsubishi’s path to success (such as they’ve had). Surveying Mitsi's equally aged line of lackluster models indicates that a last-second hook-up with Chrysler won’t help either of them.

Whatever the new regime has planned for Chrysler, it looks like DCX shot their wad before handing over the keys. The new minivan better be “number one with a bullet," 'cause it’s the only one Chrysler's got chambered. Meanwhile, the lack of bold decisions on the new/refreshed product front may indicate management indecisiveness, a secret plan to tie-up with foreign automakers or an equally covert op aimed at stripping and flipping the core business (loans). Or, perhaps, all three.

Cadillac is something of a comeback kid. The first time the brand was on the ropes, its divisional president interrupted a GM board meeting with a winning proposal: sell Caddies to America’s burgeoning black population. In the ‘90’s, America’s African-American community once again rescued the struggling brand; their passion for a rebadged Yukon infused the ailing automaker with fresh marketing momentum and a pile of cash. Now that the Escalade’s a bomb instead of da bomb, and Caddy’s passenger cars can’t cut the transplanted and/or imported mustard, Cadillac has a new plan. I call it The Beginning of the End. 

Of course that’s not strictly true. Caddy’s been on a downward slope since the aforementioned Depression-era board meeting. While catering to America’s neglected African-American population saved Cadillac from oblivion, it moved the marque drastically down market. Caddy used the same “get out of jail by cheapening the product” card in the ‘70’s. And here we go again, with a new, even lower-priced Caddy. But first, the good news: Cadillac’s killing the DTS.

The DTS is a fat, ugly, front-wheel-drive pile of crap. The model only appeals to people old enough to remember when Cadillac was the Cadillac of cars– and never drove an imported automobile. The DTS is not nearly as good as the cheaper CTS, which is now a lot better than before and almost as large as the DTS. Although GM's erstwhile luxury division [somehow] sold 33,386 DTS year-to-date, and they only cost GM $1.99 a pop, the DTS was always destined to follow its owners into the grave. Good riddance to bad rubbish.

And now the bad news: Cadillac is also dumping the STS. On one hand, yes, of course. STS sales have been playing a game of “how low can you go” since ever (13,156 sales year-to-date). Robert Farago’s review of the model left little doubt that the current STS lacks that certain… anything to make it a suitable alternative to a European or Japanese luxobarge. But that doesn't mean GM should spike the STS and walk. It means they should make the right-sized (i.e. big) STS better.

They could start by upgrading the powertrain. The STS’ V6 stumps-up 302 horsepower, which helps it keeps up with the Lexi of this world– and nothing more. Caddy should make the optional 320 horsepower Northstar V8 standard. Power junkies could still opt for the STS-V's 469 horsepower supercharged Northstar engine. What about mileage? What about it? If a Caddy doesn’t have enough torque to luxuriate down the road, it might as well be/is a gussied-up Buick (i.e. a DTS).

More to the point, a Cadillac should make drivers and passengers feel like millionaires sipping Moet at the Ritz. The STS makes its passengers feel like alcoholics sharing a nip bottle of generic whiskey in a Holiday Inn Express. If Cadillac’s CTS can get a superb interior upgrade, why not the STS? Even without some seriously sharp sheetmetal changes– or better yet with some better creases– a truly sumptuous STS would make the model a viable choice for those who value style above all.

Instead, GM’s decided to build a new $40k to $50k DTS/STS replacement. While engineers and marketers love a clean sheet and a fresh start, the costs of engineering a brand new STS equivalent would be FAR better spent upgrading the STS. The STS doesn’t need class-leading fuel economy or Nürburgring-fettled handling or 500hp (although…). It needs one thing sur tout: pizzazz.  

While it might sound like I’m suggesting Caddy craft some spizzarkle on the cheap, I’m not. Above all, a Caddy must offer high class spizzarkle. And that’s why the decision to offer an “entry level” Caddy (below the CTS) will kill the brand faster than chugging Clorox. Even if the new pocket Caddy is a peach, even if it matches the German and Japanese low-end models, it’s an unconscionable miscalculation. Do Caddy’s keepers really fail to understand that “small” is to Cadillac what “slow” is to Porsche? Have they forgotten the multi-decade mess initiated by the execrable Cimarron? 

I don’t even want to talk about the forthcoming, hecho-en-Mexico Cadillac CUV. More than any other new model, the wannabe X3 shows that Caddy follows (not leads) competitors into market segments– regardless of the impact on the brand’s image or profits.

Despite the hoopla, the European-styled and tuned CTS was not the most successful Cadillac model in recent times. It was the Escalade SUV. But of course it was. The ‘Sclade is immense and intimidating. It’s expensive ($55k just to get in the door). It’s dripping in chrome. It has a pronounceable name and a gargantuan engine with prodigious thrust that says “Rich people don’t care about the price of gas.” Despite its shortcomings, the Escalade is the only “real” Cadillac left. And I reckon it'll be the last.

About 20 years ago, my wife and I visited Japan on behalf of a travel magazine. We explored the area around rural Kyushu, Japan’s Polish joke. Back then, Japanese travel was still a little adventuresome. And it was hard to scope out Japanese customs in these hinterlands. After a couple of mornings at Japanese inns, we realized that we were the only guests who didn’t breakfast in our bathrobes (kimonos). The next day we came down naked as Britney under our bathrobes. For reasons I never discerned, everybody else was dressed in suits. Lamborghini must have felt the same way at the Frankfurt Auto Show. 

You may have noticed that Germany’s international exposition of automotive excellence is now greener than Kermit the Frog. Mercedes is showing a 1.8-liter four in a luxocar. There’s electricity in the air waiting for a new generation of plug-ins. The Japanese have every form of hybrid imaginable. Even Porsche, while girding itself for a fight against new, more stringent EU CO2 legislation, is hyping hybrid Cayennes. And Lamborghini shows up with a nine-mpg supercar.

The Reventón is a 12-cylinder, 650-hp supercar named after a bull famous for goring Felix Guzman to death. (I could have sworn I’ve seen Guzman in The Sopranos, but the “real” Reventón shanked Guzman in 1943.) Worse, Lamborghini has the stones to price the Reventón at a cool one million euros (that’s $1.4m to you and me). I mean, what was the marketing meeting like?

“So what should we charge for this pig?  After all, it may be the world’s last stupidcar…”

“How about billion euros?”

“Yeah, that’s the ticket, a billion.”

“Did you hear the one about the guy who told George Bush that 185 Brazilians died in a plane crash? Bush says, ‘Remind me again, how many is a brazilian?’”

“Okay, very funny, but a billion is a little high. How about we make it a million?"

“Done.”

Appealing straight to the collector market, Lamborghini announced that it will only make 20 Reventóns– which makes the German-owned Italian model the stupid-rich version of the Indy pace-car limited edition of a Malibu.  

An hour and a half ago, $450k was the price of admission to the ultra-exclusive 200mph+ supercar club (e.g. Porsche Carrera GT, Mercedes McLaren). The equally German-owned Bugatti Veyron changed that in a hurry. At least Audi’s other supercar has as many turbochargers as it has wheels, boasts the production car world’s only four-digit horsepower number and you have to change into your land-speed-record tires every time you want to show off (and clean underwear afterward). 

The Reventón has less horsepower than a Saleen and acceleration and top speed identical to a Murcielago LP640. Which reminds me: all you suckers who bought a Murcielago at full whack– who probably paid $600 for your iPhone– are now driving the car Lamborghini refers to as “the base model.” The good news (for someone) is that the new Reventón costs four times as much as Lambo’s base model (or 3500 times as much as an iPhone).

And you get a G-meter. “The G-Force-Meter is completely new,” trumpets Lamborghini’s press material, sounding a bit like the Soviets’ claim to have invented the telephone. “This display shows the dynamic drive forces, longitudinal acceleration during acceleration and braking as well as transversal acceleration around bends…. A similar instrument can be found in airplanes.”

Well, yes, but it didn’t costs me a million euros to install one in my aerobatic Falco; more like a couple hun.

Everything about the Reventón is, like the accelerometer, described in the greatest possible number of words, as though each one is worth 50,000 euros. “The instrument on the left of the speedometer associates the number of revolutions in the form of a luminous column with a display of the selected gear.” The designers’ “love for detail is beautifully illustrated by the fuel tank lid [Italian for gas cap]: a small mechanical work of art, achieved by milling a solid aluminum block.” Incredible! The miracle of milling!

“Another technical innovation is found in the rear light LEDs. Because of high temperature in the rear low part of the car, special heatproof LEDs are used for the indicator and hazard lights, stoplights and rear lights with a triple arrow optical effect.” Isn’t it amazing what a million euros will buy you? High-quality LEDs (there’s $150 right there) plus UPS-truck turn signals. I love this stuff.

What you’re really getting for your brazillion euros: an IP utilizing TFT-display tech “just like in modern airplanes (and some high-end laptops).” So here we [may] have 20 people dumb enough to pay $1.4m for a Lambo, driving around staring at their in-living-color instrument clusters. Or not. After all, who would actually drive one of these things? You could end up like Felix Guzman. 

Top Gear (TG) presenter James May’s nickname is Captain Slow. As you’d expect from a country where sarcasm is a team sport, the moniker disses Mr. May’s driving skills. But the nickname could just as easily refer to May’s intellectual agility. Like automotive alpha Jeremy Clarkson, May is always happy to take an analytical shortcut, especially if it leads to some good old fashioned America bashing. Writing about his recent stateside sojourn in the Telegraph– "Eat Junk, Drive Junk"– May once again reveals that the U.S. and the UK are two nations separated by British snobbery.

“Since I'm still in the States this week, I thought I'd have another go at headbanging that old chestnut about American cars and why they never work in Europe. Because, let's be honest, they generally don't. There have been one or two surprising successes in recent years, such as the Jeep 4x4s, but on the whole you drive an American car only if you're an Elvis impersonator or a dealer in vintage Wurlitzer jukeboxes. That is, a bit unhinged.”

Fair enough. American cars are generally larger and thirstier than the European sedans. Provided you’re not an Elvis fan or jukebox collector, you can spot May the “unhinged” comment. But what follows has nothing to do with American cars and Eurozone roads. It’s impure, adulterated bile.

“I've been driving a few this week… the Dodge Grand Caravan (a large MPV, or what the yanks would call a ‘minivan’), the Dodge Ram 1500 Big Horn Edition (no, honestly, it's a pick-up) and the new Mustang convertible. And there is a common characteristic that is apparent in all of them and in every other mainstream American car I've ever tried. They don't seem to be very good.”

One wonders if May’s Ram was built in Coahulia, and whether his definition of “mainstream American cars” includes U.S.-built Toyotas, Hondas, etc. In any case, May’s Caravan and Mustang are part of a contracting niche. And while the Ram may not be class-leader, it’s very good at doing what it’s supposed to do. But Captain Slow’s driven a bunch of Yank tanks and they all suck. Really? Really.

“In the past, this has been explained away as a fundamental disparity in the remit of the car between the old world and the new… I think it might be something a bit more complex than that. American cars might genuinely be a bit rubbish, and to explain why I'd like to return to the tiresome and pretentious subject of food.”

And then May gets genuinely insulting. He slams American cuisine “because it would appear that the principal job of food is to be thrown away.” For some reason, this insight inspires May to buy some local ingredients and make a shepherd’s pie (ground meat and mashed potato topped with melted cheese). The pie turns out “twice as big [as UK pies] that had cost half as much and yet tasted pretty much of the square root of Monterey Jack.” 

“And if it's true of pie, it must be true of cars. We are constantly amazed at how cheap American cars seem to be, but only until we try one. The Grand Caravan is a miserable conveyance with a clumsy, antiquated gearchange, meanly upholstered seats and an interior that would make Alcatraz look inviting. The Ram is probably the worst car I've ever driven. It looks absurd, the ride is truly atrocious and the relationship between the steering wheel and its road behaviour borders on the hazardous. I dearly want to love the Mustang because it at least seems to stand for what the American car was once all about, but with the best will in the world it's a bit of a phoney pony with sloppy deportment and a cabin that came out of a Kinder egg.”

May’s unconsummated Mustang love says it all. On one hand, he admires America’s automotive exuberance. On the other hand, he can’t. And that’s because validating– or even tolerating– this country’s “can do” spirit would mean rejecting the po-faced, post-Empire, acid-tongued cynicism that informs everything he does, says, writes and is. 

Speaking to May’s main point, do American cars deserve such blanket dismissal? This collection of writers– scribes who regularly and fully criticize American automobiles as and when they deserve it– thinks not. As our forthcoming review of the new Honda Accord will testify, there are plenty of superb mainstream American cars. And yes, we’ve reviewed some solid “domestic” efforts as well.

In short, May’s prose is tainted by [the same old] British anti-American prejudice. In fact, the next time Captain Slow wants to visit the states; I suggest he needn't bother. As May’s clearly incapable of the intellectual rigor required to keep an open mind and a balanced perspective, he might as well just phone it in. Again. 

 [Read Mr. May's full Telegraph article here.]