True story: as a kid, every fall I’d ride my single-speed bike three miles to the local Chevy dealer. Inexplicably, the dealer staff let this mouthy, curious kid sit in their expensive, newly launched iron. In the autumn of 1968, I clambered into a brand spankin’ new ’69 Impala. Its lines were angular where the old ones were bulbous. As a “Chevy man” (boy), I was ready to show it some major love. But one detail grabbed my eye and just wouldn’t let go. Unlike previous Impalas, the dash and doors were covered with very large expanses of fake wood. A pet peeve was born.

If you haven’t spent quality time in a ‘70s GM car, you don’t what I’m talking about. The fake wood of the day was so bad it couldn’t fool a 13-year-old brand apostle who wanted to be fooled. The material had strange angular and cylindrical indentations: the obvious products of metal stamping. The screen-printing dots were so coarse they could be seen with the naked eye from a normal viewing distance. In short, the Impala’s fake wood made today’s Buick LaCrosse look like yesterday’s Rolls-Royce Silver Shadow.

Decades later, I read there was a GM CEO who had a thing for fake wood. He thought the public would regard it as classy. So he ordered it installed into virtually every higher trim level GM product. Yet another clear case of the blind trying to lead the [perceived] dumb.

Fast forward a few decades, GM’s in decline, the transplants have arrived and horrendous fake wood is still with us. For example, the Hyundai Azera’s faux timber radiates a half-coagulated blood maroon unlike any tree product on planet Earth. It blights the dash, doors, console edges, shift knob and interior door handles. Worst of all, fake wood informs the majority of the steering wheel. It’s bad enough to make you long for the lower-line Azera with its all-leather helm.

Why do they do it? Most of the other materials that make the Azera’s living room so inviting are the real deal. The leather actually once said moo. The fabric over your head is real fabric. The gauges are real neon (I think). Why ruin this classy cabin by counterfeiting the one element that has no function whatsoever except to provide luxury?

It’s true: wood really has no business being in a car, save its historical connection and its aesthetic appeal. While other materials are longer lasting, more practical and cheaper, real wood takes us back to more elemental days, when these machines really were horseless carriages. It delights us with a sensuality that no man-made material can recreate. Fake wood? Fake boobs. Same pointless (no pun intended) thing.

Anyway, I admire VW for putting real timber in Passats and Jettas. I’m cheered to learn that Volvo has added a real-wood option as a replacement for the standard polymer lumber (until I learned it’s bundled with the accursed headroom-robbing sunroof). I even took one-and-a-half looks (I can’t sincerely say I got to the second-look stage) when Ford offered a hand-me-down of Lincoln’s real-wood wheel on the woebegone Taurus.

Do carmakers research this stuff, or do they just copy each other? Does the public really like fake wood better than no fake wood? Does the fake stuff come close enough, for enough of us, that the carmakers profit more by saving the cost of the real grows-on-trees stuff? Clearly, the wood thing has become a monster eating away the inside of my brain.

A sincere question, though, for my audience: does anyone out there know how much it costs to put real wood in a car interior? Is burnishing and fitting a bit of genuine elm so prohibitive that automakers must restrict its deployment to the tippy-top of their lines?

Acura steps up for the RL — but pulls the punch for everything beneath it. Infiniti boasts real wood on the G, but on the hidden edge of the ashtray/bin door the “wood grain” mysteriously disappears just as if it were made of ink. I, personally, would pay real money for the genuine article, excepting the painfully obvious sticky-back aftermarket add-ons (and yes, I’ve even looked hard at those). I would even almost sort of start liking a Lexus ES, just to have its shiny God-given veneers.

Some time back, I threw down a mental challenge to myself: If I were the poor soul who had to rescue Buick, what would I do? I ultimately decided I’d offer real leather and real wood on even the lowliest Buick in the showroom as standard equipment. It’s too late to win on technology, but they can still deliver the materials of real luxury.

Can’t they? 

Cell phones cooler than cars? No way! Way. CNW Marketing Research recently reported that thirty-two percent of today’s 16 to 29-year-olds view Apple’s new cell phone as the hot ticket to campus stardom. Only twenty percent made the same claim for a car. In fact, the survey found that any kid fortunate enough to lift an iPhone to his or her ear was guaranteed a seventy percent popularity rating. If we accept that the iPhone is the King of cool, what does Apple know that has the U.S. automobile industry doesn’t, that allows a nerdy little electronic device to trump the [formerly] ultimate symbol of adult independence?

Apple works to a relatively simple recipe: combine incredibly appealing form with reliable, user-friendly function. As Apple’s former vice president of advanced technology put it, “Attractive things work better. When you wash and wax your car, it drives better, doesn’t it? Or at least it feels like it does.” Warm fuzzies are high on Don Norman’s list of priorities, as he explained in his tome Emotional Design. “Positive emotions are critical to learning, curiosity and creative thought.”  

Reflecting this ethos, Apple sweats the small stuff. In 1983, the company adopted a design language with its own “coherent visual vocabulary” to insure continuity across its products. Today, Apple devotes at least 15 percent of its hardware development process to conceptualizing the look, shape, size and feel of a new product. Most companies– in most fields– do not.

The majority of the domestic automobile industry spends precious little time coordinating / obsessing about the look and feel of the entire product (not just the sheetmetal). And that’s just wrong. Although many enthusiasts dismiss mass market motors as “appliances,” all drivers and passengers interact intimately (now, now) with their transportation. And just like computerized gizmos, a car’s design has a huge impact on our mood.

When Toyota launched Lexus, auto aficionados heard tales of ToMoCo engineers sweating minute details, from the placement and feel of the switchgear; to the tone, pitch and volume of the exhaust note; to the suspension’s rebound rate. By contrast, most domestic interior during the late ’80’s were an afterthought– as were exteriors, exhaust systems and handling dynamics.

To a greater or lesser extent, Toyota, Honda, Nissan, Audi and VW have also created handsome, aesthetically coherent products for the mass market. With rare exceptions, Detroit still doesn’t get it. You need only look at the interior of the Chevrolet Corvette to wonder why Lord, why?

Norman also revealed that Apple’s product evaluation process requires a marketing plan, engineering specifications and a user experience document.  “Marketing is what people want,” Mark Rolston, senior vice president of creative at Frog Design, adds: “Engineering is what we can do; user experience is ‘Here’s how people like to do things.’”

A coherent evaluation procedure does not guarantee great products. Apple’s product development system was in place during those bleak years when Steve Jobs was in exile. Without Jobs’ presence to steer the ship, Apple’s design-by-committee free-for-all created severely compromised products. 

Jobs– whom Norman describes as a “dictator with taste”– restored discipline in the development cycle. Once the concept of the final product crystallized, no deviation was permitted. Period.

How many times have car manufacturers paraded around delicious cutting-edge design concepts at auto shows– only to deliver ridiculously compromised copies in production? Well exactly. Clearly, Detroit lacks the commanders and command structure needed to fully realize its designer’s visions.

“The hardest part of design,” writes Norman “is keeping features out.” Rolston underlines the point: “[Apple] is just as smart about what they don’t do. Great products can be made more beautiful by omitting things.” The iPod, for example, has fewer features than its competitors, but its minimalist elegance makes it a success.

In the automotive arena, feature overload is rampant. In Jay Shoemaker’s recent critique of the Porsche Cayenne Turbo, the TTAC scribe was dismayed by the 39 buttons crowding around the navigation screen on the center console. For the love of the fish, it’s an SUV, not the Space Shuttle!  Without a navigation officer, how’s a pilot supposed to operate the nav system while negotiating his way through traffic?

To recapture hearts and minds, automakers need to design elegant vehicles that don’t try to be all things to all people. They need to produce simple, well-engineered cars with tastefully uncomplicated driver interfaces, free from distracting superfluous accessories.

The alternative is unthinkable. Imagine a modern day American Graffiti.  Bad boy Bob Falfa (Harrison Ford) sends innocent young Carol (Mackenzie Phillips) into ecstatic delirium each time he whips out his iPhone. While intimidating rival John Milner, Falfa says, “Hey you're s'posed to be the fastest thing in the Valley man, but that can't be your iPhone. It must be your mama's iPhone! I'm sorta' embarrassed to be this close to ya!”

The Truth About Cars (TTAC) news blog started on Wednesday. By Friday, we were in trouble. That’s when I posted an item about illegal immigrants getting driver’s licenses in Maine that they could use to purchase a firearm. Some commentators cried flame bait! Others were dismayed that TTAC was wading into political waters. And a few wondered why TTAC was news blogging anyway. In response to the troll accusations, I changed the picture (from a firearm to a gun store) and toned down the text. As for the other questions, well, let’s talk.

As the Maine blog post indicates, I’m naturally drawn to news stories that raise wider social or industry issues. I especially like those stories where [I believe] the media got it wrong, or left out important facts, or presented material that provides a logical jumping-off point for spirited discussion. In case you hadn’t noticed, skewering sacred cows, challenging accepted wisdom and poking around in hidden corners is TTAC’s stock in trade.

There have been many times in the past when I’ve had to rein-in my messianic zeal. A rant about society’s defenseless in the face of car bombs didn’t make the grade. There have also been times when I’ve pulled posts off-line when the ensuing discussion dissolved into a blue state – red state brawl. My conscience, Managing Editor Frank Williams, often waggles his editorial finger. So I understand that there are– and should be– limits.

Of course, it’s simply not possible to run a website about cars with a comments section without triggering passionate socio-political not to mention moral and philosophical debate. How could we publish an editorial or news blog post on Ford’s hydrogen dreams, or CAFE standards, or GM’s union negotiations, without pissing off someone? Even if we restricted ourselves to cars, well, let’s just say the old “anti-domestic bias” issue is in no more danger of extinction than the cockroach.

So where should we draw the line? At the end of the cyber-day (which doesn’t really end), this isn’t my call to make. It’s yours. So tell me if you think the TTAC news blog should shy away from stories that raise political hackles. Keep in mind that we apply the same rigorous posting policy in all cases; so it should be “safe” to debate these issues on this site without personal attacks. Also remember that no one in these parts breakfasts on milquetoast.  

And while you’re pondering that one, what about the other end of the spectrum? I’m not sure whether or not the TTAC news blog should restrict itself to hard news. The fact that it’s called “latest news” represents my preference, but I put up a few softer pieces to see how they went down. The post on Slow Racing did no better or worse than the others, but Justin Berkowitz’ mini-rant on the new M3 stimulated the most number of views and comments.

That said, I’m not a comment whore; just because you CAN get people to post their thoughts doesn’t mean you SHOULD. Besides, I reckon Mr. Berkowitz’ post would have garnered even more attention as a full-fledged editorial or a review. Careful readers of this site will know that our authors have consistently argued that auto brands should be tightly focused and consistent. Do the softer news items violate this principle?

From a commercial perspective, we’re still aiming at picking-up some major traffic by splitting the difference between Autoblog and Jalopnik. Again, we’ve only been doing this for three days, but we’ve already gained 500 to 1000 new visitors, every day, over the entire week. That’s an encouraging sign, but another week ought to tell the tale.

But don’t let that stop you from weighing in on the broader issue of whether or not TTAC should even have a news blog. The bump could be false synchronicity, representing our Search Engine Optimization efforts. And anyway, raising site traffic is OUR problem, not yours. TTAC should be what YOU want it to be, regardless of our [necessary] commercial aspirations.

Meanwhile, an update: we’ve hit a stumbling block on the social networking side. The web guys tell me that switching TTAC onto a new platform would be an enormous, six month process. They’ve proposed an alternative: adding features to the existing WordPress platform. The first plug-in on (in?) my brain is live chat. This module can be placed globally (on the home page) and on each post. Your thoughts?

Once again, thanks for your feedback on these mission critical issues, your on-going support and continued patronage. I’m really swamped at the moment, on every level. But whenever I get disheartened, I look at the emails and comments where TTAC readers show that they understand this website’s mission and share its sardonic perspective on life. And then I get back to work.

Five years ago, on a whim, I rented an RV and we headed for the Sawtooth Mountains of Idaho, Yellowstone, and the Grand Tetons. The late October weather was exquisite; we didn’t see a single cloud for the whole two weeks. And the scenery was stunningly, drop-dead awesome. Once again, my wife and I (and now our youngest son) were hooked on the freedom of the open road and self-contained camping. But steep prices and free-fall depreciation of new RV’s was off-putting. But the answer was waiting just down the street… Read More >

Scared of car dealer scams? Detroit News writer John McCormick says chill. In an editorial entitled "Afraid of shopping for a car? Get over it;" McCormick chronicled his recent car buying experience. The automotive scribe claims it's no biggie; car dealers are populated by "courteous, knowledgeable and professional" sales staff. While we're all glad Mr. McCormick's had such a wonderful experience securing a new whip, the chances of anyone else emerging with similar satisfaction makes Powerball look like a safe bet.

As expressed here in numerous articles and comments, buying a new car ranks just above root canal surgery on most people's "Things I'd Rather Take a Stick in the Eye Than Do" list. (At least the root canal is endured under the influence of pain-numbing pharmaceuticals.) While I've yet to see a car dealership with a large banner proclaiming "Abandon All Hope Ye Who Enter Here," I'm sure you could buy a car in at least one of Dante's circles of Hell. 

Car dealer profiling? Hardly. A few months ago, the mailman delivered an envelope bearing the logos of several GM divisions along with the words "Urgent Recall Notice." Although I don't currently own a GM vehicle, I've stabled several in the past. From time to time, I receive a recall notice from GM with a check box to inform them I no longer own the vehicle. This one was different. It was from a dealer– Bill Heard Chevrolet– and said I should call the dealership for important information concerning my vehicle (without specifying which one). I threw it in the circular file.

On Monday, The Georgia Office of Consumer Affairs filed suit against Bill Heard Chevrolet Company for "false and deceptive advertisements." And no wonder: there was no recall. The mailings were a ruse to get recipients to call Heard, so sales staff could flog rubes another car or a service contract. Heard attorney J. Matthew Maguire Jr. admitted that the faux notices were "inappropriate," but insisted that an independent advertising firm mailed them without Billy Boy's approval.

Folks, this ain't no nickel and dime operation. Heard operates 15 stores in seven U.S. states, with a claimed annual turnover of $2.5b. And this is hardly the organization's first brush with the law; the Georgia lawsuit chronicles 16 years of consumer complaints. The website ripoffreport.com lists 193 complaints against the Heard chain, from overcharging to high pressure sales tactics to removing the federally-mandated window sticker.

Heard's scams are literally the tip of the iceberg. Underneath this obvious deception lies a world of dealer deceit: hidden last minute extras added to the finance contract, "yo-yo financing" (calling the customer back for a deal redo), falsified credit reports, raising payments after completion, over-charging for "etching" (extra security marking) getting customers to sign blank paperwork, sweetheart deals with local lenders (hidden kickbacks) and more.

Clearly, what McCormick (and gullible buyers) can't see CAN hurt them. And yes, John it's true: Detroit's equally prey to this capitalistic cancer. According to the non-profit public interest organization Public Citizen, "Evidence from recent litigation, industry insiders and consumer complaints show that these practices are not restricted to a few areas or dealerships. Further, it is very likely that deceitful trends are spreading as more and more dealerships become part of major conglomerates."

If Mr. McCormick somehow believes these unscrupulous dealers are the exception to the rule, perhaps he should listen to Nat Shulman. A couple of years ago, the former owner of Best Chevrolet in Hingham, MA and columnist for Ward's Dealer Business served-up a brutally frank assessment of automobile dealer dishonesty.

"If dealer new car profit margins keep getting squeezed by Detroit so that the majority of dealers are losing money in their new car departments, these types of consumer rip-offs will continue to appear. True, they will happen in dealerships with questionable ethical standards, but who among us is immune from desperate measures when we're losing our butts every time we sell a new vehicle?"

At least McCormick got one thing right: "Part of the art of having a relatively happy car buying experience is some knowledge of the process. Take the time to research the procedure — easily done through a variety of Web sites — and you will feel much more comfortable when you step through the doors."

If you want that "relatively happy" experience, we recommend that your pre-visit research should include a Google search of the term "car dealer rip-offs." As for "getting over your fear," forgeddaboutit. Given the shady schemes bilking millions of American car customers out of billions of bucks each and every year, anyone who isn't afraid of shopping for a car will eventually learn that ignorance is the most expensive kind of bliss.

Click here to read Mr. McCormick's article

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Back in the day, a discerning motorist rocking-up in a Mercedes Benz 300 SEL 6.3 was in no danger of encountering an equally-horsed "baby Benz." These days, the power-crazed pistonhead can purchase a 6.3-liter engine in any one of seven Mercedes body types. And while I'm sure an S-Class sedan has some fancy gizmos you can't buy in a C-Class, I'm not sure they're worth mentioning. But Mercedes' and its luxury competitors' slink downmarket IS worth examination. Are volume sales a form of luxury brand suicide? 

I reckon the whole thing started with "feature creep." And why not? Why shouldn't a reasonably-priced car offer dual-zone climate control, satellite navigation, leather seating and a fine engine? If customers are willing to pay extra for their pleasure, why not sell it to them? And it was only natural for luxury brands to see the trend as a golden opportunity to reach down, add a little "prestige" to the mid-market mix and bank some big bucks. And so they did.

While Mercedes and Lexus had the longest journey down from their mechanical Mount Olympus, Audi and BMW quickly joined the corporate colossi's mass market migration. All four brands found riches refashioning their upmarket cachet into more affordable packages. Today, Americans can buy a Mercedes-Benz for $31,975 (C300), an Audi for $25,340 (A3 2.0T), a BMW for $33,175 (328i, soon less for a 1-Series) and a Lexus for $30,790 (IS250).

There is, of course, a flipside to this "downward line extension." Call it the Groucho Marx effect. Just as the legendary comedian "wouldn't want to join any club that would have me as a member," consumers in search of brand cachet tend to shun products that are widely available. Examples of companies producing upmarket and/or trendy goods that bet their life on the mass market and lost, abound– especially in the automotive arena.

Today, you can buy a Cadillac for $32,500 (CTS), a Jaguar for $34,995 (X-Type 3.0), a Lincoln for $29,305 (MKZ) and a Saab for $26,995 (9-3). That's before discounts. Discounts that reflect the fact that these formerly upmarket brands have squandered their allure to the point where their dealers wish their inventory had ten foot pole marks on it. For these former luxury car playas, moving into the mass market signaled the beginning of the end.

So how have the luxury Gang of Four avoided the same fate? You could argue they haven't. Their current success may be sewing the seeds of their eventual destruction. Perhaps Audi, BMW, Mercedes and Lexus' sales embody former NBC Prez Bandon Tartikoff's "Least Objectionable Theory of Programming." In other words, their products are popular simply because they're less bad than the other guys'.

Alternatively, you could say these companies make damn fine automobiles. Suggesting that the average car buyer is savvy enough to recognize and appreciate a given model's adherence to its maker's brand values may be something of an intellectual leap, but there's no doubt that the lowest priced U.S. Mercedes still has a certain "Mercedes-ness" to it. The other marques are equally unmistakable. 

That said, these luxury brands' bean counters have severely stretched their products' DNA. Merc's bank vault gestalt took an enormous hit over the last twenty years. Bimmer's SMG gearbox, iDrive multi-media controller, run-flat tires, SUV and dumbed down steering are a worrying divergence from their Ultimate Driving machine ethos. The aforementioned Lexus IS' harsh driving dynamics bear scant resemblance to their magic carpet LS flagship. Only Audi creates a range of automobiles with brand-faithful consistency.

George Petersen of Autopacific consultants provides the bottom line: "Entry-level luxury cars need to demonstrate the capability of their brand–just as the more premium entries do." As the unforgivable Cadillac Cimarron and execrable Jaguar X-Type proved, a fancy badge can't compensate for product malfeasance. In fact, a lousy mass market line extension is the worst of all possible vehicles. It kills a brand's value for both financially-challenged aspirants and the well-heeled brand faithful.

All of which bring us to a piercing glimpse into the obvious. No matter where they're offered in the price spectrum, "luxury" automobiles that rigidly adhere to their manufacturer's core values bestow honor and longevity to their brand. Crap upmarket luxury cars are bad for business; but lousy mass market versions are lethal.  

By this logic, an affordable Cadillac is not a bad thing per se. But you know what? I still can't get my head around it. As GM Marketing Guru Mark LeNeve said, "A Cadillac is something a kid should aspire to. Not something he should be able to own." Call me a snob, but my gut says he's right.

“This is another important step to strengthen our liquidity and provide resources to support our heavy investments in new products and technology.” And so General Motors' CEO Rick Wagoner heralded the sale of GM's Allison Transmission unit for $5.6b. Odd that. Allison has provided General Motors with new products and technology for eight decades, and billions upon billions of dollars in revenue. So is this another case of GM throwing its furniture into the fire to heat the house? You betcha.

Allison Transmission began life as the Indianapolis Speedway Team Company in 1915, fabricating quality parts for America's burgeoning automotive industry. In the roaring 20’s, Allison successfully applied its engineering and manufacturing skills to military airplanes (e.g. high-speed reduction gears for aircraft motors and propellers and Roots-type blowers).

When the company’s founder died in 1929, General Motors added Allison to its corporate portfolio. Since then, Allison has been at the forefront of its field, from the 1947 V-drive transmission to the Vietnam-era M551 tank to its new “world transmission.”

The company still focuses its energies on designing and producing automatic transmissions for trucks, buses, off-highway equipment and military vehicles. Allison's excellence has earned the company an 80 percent market share for medium- and heavy-duty commercial transmissions. 

That expertise now belongs to The Carlyle Group and Onex Corp. The former is a private equity firm deeply involved in military contracts; the latter is a Canadian conglomerate with their mitts in everything from airplanes to makeup.

The new owners get Allison’s global sales and distribution network and seven (out of eight) manufacturing facilities. GM retains the Baltimore plant, which makes, amongst other things, hybrid drivetrains.

Allison’s two-mode hybrid system has been a huge commercial success. The system marries an internal combustion engine to a hybrid transmission: two electric motors/generators inside an infinitely variable transmission. With a nest of nickel metal hydride batteries, a vehicle using the Allison system can drive under electric power, combustive force or an adjustable combination thereof.   

Buses with Allison’s hybrid system schlep passengers in Seattle, Philadelphia, Minneapolis, Portland, Salt Lake City, Austin, Hartford, Houston and 38 more U.S. cities and parks (e.g. Yosemite). The hybrid-equipped vehicles achieve some 50 percent better fuel economy than diesel-only drivetrains.

The system also reduces emissions: nitrous oxides (50 percent), particulate matter(90 percent), carbon monoxide (90 percent), hydrocarbons (90 percent) and cardon dioxide (50 percent). Allison’s parallel hybrid electric system is quieter than its peers and faster off the line. And it's both scalable and adaptable; it can be fitted to nearly any size vehicle, front or rear wheel-drive.

Before The General off-loaded Allison, GM Powertrain’s group vice president proudly declared Allison’s handiwork “the most efficient hybrid architecture available in the world today.”

At the time, Tom Stephens also promised that “Our Allison Electric Drive System will help establish hybrid technologies as effective, practical and commercially viable beyond mass transit applications."

Hence GM’s retention of the Baltimore plant, where Allison is adapting their hybrid system to the automaker’s GMT-900-based SUVs. The Allison divestiture ought not interfere with the implementation of this program.

That said, the final decision on who gets what patents or rights to Allison’s hybrid technology is likely thousands of billable hours away. The future of GM's two-mode hybrid co-development partnership with Chrysler and BMW is also an open question.  

Meanwhile, GM is exchanging Allison’s enormous potential in a growing field– and a not inconsiderable $2b annual turnover– for an immediate $5b cash injection. You could say it’s the bird-in-the-hand thing. But putting down your leg up on hybrid know-how seems more like a biting-off-and-swallowing-the-hand-that-feeds-you kind of thing.

Some analysts have lauded the Allison sell-off, claiming it brings GM's management team "closer to their core business.” That sort of spin is almost believable when referencing The General's decision to sell off half of its GMAC finance unit to the ravenous three-headed dog. But when you’re talking transmissions, the spin stops here. What’s more at the heart of an automobile manufacturer than the greasy bits that make the vehicles, you know, motive? 

You don’t have to look too hard at the Allison sale to see that it reeks of desperation. There’s only one reason GM sold Allison: cash. There are only two possible motives. Either GM’s roasting in a cash conflagration or Rick Wagoner’s telling it like it is: the company is building-up a war chest to invest in the kind of new technology they just sold. Occam’s razor that.

Do ya have a hankerin’ for a cheap small car that can’t be satisfied by an offering from Korea, Japan, Europe or the good ‘ole US of A? Me neither. But Chrysler’s CEO thinks you– or someone– does. On July Fourth (no less), Tom LaSorda finally inked a deal with China’s Chery Automobile Company. As early as 2009, Chrysler could be offering Dodge-branded, Chery-manufactured subcompacts in the US and Europe. Target price: $7k. Too good to be true? You bet it is.

About a week before LaSorda was ordering Chinese, Brilliance submitted their would-be Autobahn cruiser to the Germany’s Automobile Association for 40mph head-on and side-impact tests. The sedan failed brilliantly, earning just a one star rating (five possible). The spectacular result for a Chinese-made sedan has raised new questions about Chery’s readiness to produce vehicles for the U.S. market.

You may recall that Chery, China’s eighth largest automaker, survived a brief association with the sterling silver tongued Malcolm Bricklin, whose numerous vehicular importation schemes include the shameful Yugo. The rupture of the Bricklin-Chery deal cleared the path for the Chrysler agreement. As Bricklin walked away from his abortive Chinese venture, his parting comments were prescient.

“The Chinese need to learn that you cannot develop cars for the Chinese market and then upgrade them for the North American Market,” the entrepreneur proclaimed. “You must build for the North American market and then de-option for other markets, never having two standards for quality since great quality is the only option.”  

That’s pretty rich for the man whose Canadian-built SV-1 (Safety Vehicle 1) was famous for its leaking gull wing doors. Anyway, assuming Bricklin learned his lesson, Chrysler didn't. The Sino-American partnership plans to upgrade the Chinese market Chery A1 for the U.S. market.

John Humphrey says Chery’s unlikely meet their ambitious 2009 target for U.S. export. In fact, J.D. Power and Associates’ General Manager for the Asia/Pacific region says that none of the Chinese auto manufacturers are prepared to meet U.S. environmental and safety standards.

Humphrey says Chery is closer to being ready than its fellow Chinese manufacturers, but a U.S.-legal Chery A1 is still “at least a product generation away.” If Humphrey’s correct, Chrysler’s re-branded subcompact is about five years out. 

In China, the Chery A1 sells for $7100 to $7900. Both LaSorda and Chery’s CEO have announced that the U.S. A1 will sell for $7k. Does this mean that the American market will get a stripped-down version? Not likely.

Industry analysts say that the A1’s $7k price point is highly unrealistic; they estimate that the Chinese export would have to sell for $10k to turn anything even remotely resembling a profit.

George Magliano, automotive research director for Global Insight is adamant. “I don’t think seven is going to work… In the U.S., this thing has got to be styled right, it’s got to perform right, it’s got to have quality, it’s got to have safety. You don’t get that for $7k.”

Erich Merkle, director of forecasting for IRN Inc., predicts that the Chery-Dodge could cost as much as $15k– once laden with features that U.S. consumers demand (e.g. power door locks and windows, and a high end stereo system).

Immediately after Chrysler and Chery signed their agreement, PRC Communist Party bureaucrats gave official approval to the Chrysler-Chery deal ('natch). At around the same time, the partnership garnered the attention of another government.

Reacting to the importation of tainted Chinese pet food and toothpaste into the American market, Congress plans to hold its first hearings on the safety of Chinese-manufactured goods this month.

The recent recall of 450k defective Chinese-made tires sourcing from the Hangzhou Zhongce Rubber Co. also caught the eye of the Senate’s Commerce Committee. Don’t expect any pity on Chinese manufacturers from the Democrats that now control both houses of congress, who’d love nothing more than to slow the tide of imported cars and Chinese car parts that “steal” union jobs.

The smallest car in Chrysler’s current arsenal is the linebacker-sized Caliber, whose base price is roughly twice that of the proposed sticker for Chery A1 import, whose quality and driving dynamics can’t hold a candle to the Honda Fit, Toyota Yaris or Nissan Versa.

While you don’t have to survey a dealer lot stuffed with unsold Aspangos to appreciate Chrysler’s need for a viable subcompact, summoning a federalized Chery A1 seems a distinctly enigmatic choice.

OK, dumb. If the Chinese import's two years too late and twice the targeted price, it’s going to hit the exact same wall as the Caliber. If the Chery A1 gets a one star government crash test rating… In this country, three strikes and you’re out.

The June auto industry’s sales results are in. The numbers have sent shock waves throughout Detroit— a town that’s become increasingly familiar with seismic events. Although sales tend to slip slightly as the model year winds down, these figures are stimulating some serious hand-wringing amongst The Big 2.8. When you factor in/out fleet sales, the future looks bleak.

Passenger Cars

Ford Fusion and Toyota Camry sales slid slightly from last month, but their mid-year report card’s looking good. For the first half of 2007, both Camry and Fusion sales are up 10 percent over the same period last year. Comparing June ’06 to June ‘07, Camry sales rose by 12.5 percent, while sales of Ford’s “hecho en Mexico” midsizer declined some nine percent. 

The Chevrolet Impala and Chrysler 300 both showed significant increases over last June. The Impala is up by almost 17 percent, while the 300 ascended by 29 percent. There’s a big mid-year divergence; during the last six months, Impala sales rose by almost 25 percent while 300 sales sank by 14 percent. 

Keep in mind that both models are fleet queens. In 2007, 46 percent of the 300’s and 44 percent of the Impala’s total sales sailed with the fleets. This does not bode well for either model’s long term prospects.

Pickup Trucks

As predicted, a weak housing market, high gas prices and the new Toyota Tundra’s debut have sparked an incentives war. The trend looks set to drive sales— and steal profit— all summer long.

The newcomer’s sales increased 4K from May, and jumped 146 percent compared to last June. ToMoCo’s rebates and special financing (average incentive: $5083) are working a treat. 

Incentives didn’t help Chevy’s Silverado (average incentives: $3064) . Sales of GM’s turnaround dream dropped 23.5 percent from last June. Year-to-date sales are down almost two percent. 

Thanks to huge incentives (averaging $6831), the Dodge Ram  is holding its own. Sales were down less than four percent from last June. So far this year sales are up a little over one percent. 

Sales of Ford’s F-Series (average incentive: $4272) were down less than one percent from last June. Over the past six months, sales sank over 11 percent compared to the previous year. 

Truck-Based SUVs

SUV sales are still taking it on the chin. The Dodge Durango showed a 900-unit increase over May, but slid over 28 percent from last June, and almost 26 percent year to date.

The Ford Explorer lost only about 100 sales from May, but sank 23 percent from last June, and 22 percent year to date.

Chevrolet Tahoe sales slid 14 percent from last June and 16 percent over the last six months. Toyota’s 4Runner is down almost 28 percent against last June and almost 20 percent year to date. 

CUVs

Once again, sales of older designs fell well below last year’s levels. The Chevrolet Equinox dropped 1.5K units from May, losing a whopping 53 percent from last June. So far, the Equinox is down 26 percent year to date versus last year. 

Chrysler Pacifica's June sales climbed 500 units from May, but sank 41 percent versus June ’06, and lost 24 percent in the six month comparison. (Some 52 percent of this year’s Pacifica total has gone to fleets .)

Ford Escape sales are 33 percent above last June’s, and three percent ahead of the first six months of last year. The Toyota RAV-4 showed an 11 percent growth, with a 16 percent increase over the first half of 2006.

The new-for-‘07 CUVs showed slight dips in June. Most notably, sales of the box-fresh GMC Acadia were almost 2K lower in May. The Ford Edge and Jeep Compass held fast, dropping by fewer than 300 units.

Total Sales and Fleet Sales

Overall, all four manufacturers detailed here (Ford, GM, Chrysler and Toyota ) lost sales from May. Comparing total sales in June ’06 to total sales in June ’07, all but one crapped out. GM was down 21 percent, Ford dropped 8 percent and Chrysler lost 1.4 percent. Toyota’s sales grew by 10 percent.  (Year-to-date cumulative: GM, Ford, Chrysler, Toyota.)

Over the six month period, GM is down seven percent, Ford is down 11 percent, and Chrysler is down 1.4 percent. Toyota is up 8.7 percent.  

Chrysler’s relative success may be Phyrric. During the last six months, fleet sales accounted for almost 45 percent of Chrysler's total passenger car sales. The artist formerly known as DCX also designated tens of thousands of leftover '06 models as loaners– for one day– and then moved them into their used car inventory. 

This is serious. GM’s June market share slumped to 22.17 percent. That’s the lowest level since the company passed that mark on their way UP to their '60's high water mark (48.3 percent share). If sales don’t pick up, The Big 2.8 will enter September (and the history books) with a combined U.S. market share of less than 50 percent.   

General Motors is a trash talker. The automaker brags about future show-stoppers, unveils concept vehicles with a sly wink (knowing full well they're stuck in development Hell) and offers press hacks "preview" drives of half-baked green machines. No GM brand has been more abused by these dishonest "you just wait" promises than Buick. The 2004 Velite was a glimpse of an alternate universe, where Buick made perfect sense. And as far back as 2003, board-certified spin specialist Bob Lutz was busy proclaiming that Buick will be "an American Lexus." As if.

That said, last year, with minimal fanfare, General Motors introduced a brand new model: the Buick Park Avenue. The badge-engineered Aussie (nee Holden Statesman) is a full-sized rear wheel-drive sedan boasting the kind of understated elegance– both inside and out– capable of resurrecting the ailing marque's appeal. In China. 

America didn't get it. (Literally.) Buick's U.S. aficionados couldn't understand why America's favorite military dictatorship received the brand's potential savior, while the States got a milquetoast sedan whose name means masturbation in Quebecois. Slapping the "Super" moniker on Buick's front wheel-drive sedans did nothing- as in zilch- to appease the faithful. Buick's beat-up bolsterers lit-up their corner of the Internet, venting their electronic ire at the missed opportunity. 

Understandably, John McElroy over at Autoline Detroit wanted to quiz Bob Lutz about Buick building better cars in The People's Republic. In May, GM's Car Czar agreed to tackle the issue– provided Autoline didn't air the relevant segment on TV. The news op could, however, put video of Maximum Bob's reply on their website. 

Hang on. Never mind the fact that "one of the deans of the Detroit automotive press corp" [sic] agreed to censor himself at GM's behest. Consider GM's logic. The automaker attempted to minimize the spread of Lutz's response to an internet-disseminated controversy by restricting it to the internet. 

Anyway, Lutz blamed that the Statesman misstep on Buick's beleaguered dealers. Back around the time Lutz had been playing the dozens with Lexus, his minions had previewed Lucerne and Holden Statesman prototypes to American Buick [Pontiac, GMC] dealers. According to Maximum Bob, the car floggers said they didn't need two models. They picked the Lucerne to grace their showrooms.

It's hard to understand why General Motors left the fate of the entire Buick brand in the hands of its dealers. Buick dealers don't really have customers. How does a car dealer grasp the desires of potential buyers that have never darkened their doorways?  

Answer: you don't. Buick's sharp-end sharpies opted for what was clearly the worse of the two cars: a front-wheel drive H-body sedan riding on a platform dating back to the year Geraldo Rivera opened Al Capone's secret vault (1986). Twenty-one years later, and these not-entirely-prescient Buick dealerships are selling, on average, six cars a month. Not six Lucernes. Six Buicks. 

Normally, GM in general and Bob Lutz in particular sweep these sorts of decisions under the red-ink stained rug (GTO?) and tout The Next Big Thing. For reasons known only to Maximum Bob and his handlers (i.e. his ego and super ego), Lutz felt compelled to address the question again, via a video on GM's Fastlane Blog. So, Bob's people asked Bob, why is China selling a better looking Buick luxury car than the U.S.?

"I don't think they are," Maximum Bob insisted, confusing prevarication with fact. "They simply are the first market to get the new Buick Park Avenue, which they will actually assemble in China. And that vehicle, or a variant of it, is always a possibility for Buick [USA] in the future." 

Translation: "The critics are wrong! And even if they are right, we were also right, just a bit… premature. Cautious. Sensible. You'll see! Maybe."  Bob's answer may not set new standards for this master of ill-informed, shoot-from-the-hip and sort it all out later (or just forget it) analysis, but it's not for lack of trying. Meanwhile, the Buick brand is spinning off into oblivion.

Or not. No discussion of Buick's Lexian aspirations would be complete without mentioning the new Enclave. The brand's sales may be down 30.4 percent from last June, but their crossover is gaining traction. May's aforementioned six cars per dealer per month average represents a two car per dealer improvement on their previous stat. As GM ramps-up Enclave production, Buick dealers may soon stagger into double digits.

But the broader question remains: is the vehicle pitched against the RX350 Bob Lutz' "American Lexus?"

Perhaps. But there is an important corporate disparity that overshadows any model vs. model comparison. Toyota doesn't compete with itself. GM does (Buick Enclave vs. GMC Acadia vs. Saturn Outlook vs. Chevrolet playertobenamedlater). As Buick's Chinese debacle proves, whenever you compete with yourself, you lose.

For over two years, we’ve been telling Detroit to wake-up and smell the homily: everything either grows or dies. We’ve admonished them to adapt and evolve. This they haven’t done. The Truth About Cars (TTAC) will continue to chronicle this slow motion train wreck until the last car derails, and beyond. Meanwhile, we’d be hypocritical if we didn’t follow our own advice. The truth is: we’re not growing. So we’re about to shake things up. Again.

TTAC currently welcomes some 14k unique visitors per day. Our readers hang around for an average of four minutes, viewing an average of 2.63 pages, generating 1m page views per month. Other than a 10 percent increase in the number of new vs. “old” visitors, we’ve been generating the same stats for the last six months. Not to put too fine a point on it, we’ve flat-lined.

Our existing strategy: cater to the Google searchers by emphasizing car reviews while maintaining our base (that’s you) with a side order of editorials and comments. The current layout reflects this two-tier tactic, and we’ve been working hard to make it work.

On the newbie Googlista side, we’ve added TrueDelta’s most excellent shopping data and “stars and snarks” mini-reviews for thesaurus-challenged scanners. We’re also finishing negotiations with a car broker. When complete, the fully-independent broker (gotta maintain those brand values) will kick us back some real money– as opposed to the dribs and drabs of income provided by Google Analytics and AdTags.

On the hard core readers’ side, we’ve been posting one car review and an editorial on Monday, Wednesday and Friday; and then two editorials per day otherwise (with some exceptions). In the next couple of weeks, we’re returning to regular podcasts and entering the news blogging arena. We’ll split the difference between Autoblog’s mild-mannered and Jalopnik’s limited slip differential (LSD) approaches, and add some TTAC ‘tude and international coverage. 

While I’m delighted to offer these improvements, I realize that they’re minor tweaks to the existing recipe— which, in relative terms, is proving about as popular as chopped liver at a Hawaiian luau. Like GM, small changes to the status quo ain’t gonna cut the mustard. To survive and thrive, TTAC needs a genuine game changer: something insanely great to lift us above the competition (or at least away from it).

Unlike GM, TTAC doesn’t have 421 levels of bureaucracy and the kind of union grievance procedure that makes changing a light bulb a federal offense. So, within the bonds of decency and dollars, we’re free to reinvent ourselves. Ah, but how? 

My light bulb moment arrived via an email from an editor/writer with an enormous and well-deserved reputation in the automotive press. After praising the site, he drilled down to what made it unique: you. TTAC’s commentators’ literacy, insight and expertise blew him away.

After nursing my bruised ego, I gave his analysis some serious thought. And of course he’s right. We’re not TTAC. You are. Sure our writers’ in-yer-face prose is stimulating stuff. And yes our Draconian posting policy creates a safe haven for vigorous yet respectful debate. But your comments are what set TTAC apart from all the other automotive websites. We would be an empty shell without you.

And that means YOU are our future. So here’s what we’re going to do…

My team and I are going to turn TTAC into a social networking site. In other words, we’re going to give you a HUGE canvas upon which to paint. An ENORMOUS theme park in which to play. And it will be YOUR intellectual playground to build and explore. TTAC’s writers will still provide reviews, editorials and news. With your help, Frank and I will continue to turf out the flamers and trolls without fear or favor. But YOU will be in charge of TTAC’s destiny.

The new site will have user groups, forums, user generated blogs, live chat, webinars and webcasts, podcasts, event calendars, picture sharing, video sharing and who knows what else. Well, actually, Frank and I do. But for competitive reasons, we’re not specifying the platform or listing all the features. And anyway, it will evolve.

We’re building the foundations now. When we get closer to launch, in a month or less, I’ll invite you, our faithful subscribers, to wander around in the Beta version and claim your own piece of turf. I’ll ask you to tell us what does and doesn’t work.

TTAC will do everything in its power to make the new site the best place for automotive enthusiasts to gather on the entire World Wide Web. And keep it that way. Meanwhile, if you can give me some feedback on social networking sites you use— or hate— I’d be most appreciative.

They say the truth shall set you free. What the Hell; let’s give it a try.

Instead of holding down a “real” job and paying other professionals to maintain my lifestyle, I stay at home and do it all myself: rebuild old houses, deliver the children, grow our organic berries and fix the cars. One day, back in ’99, this shade-tree mechanic finally grew tired of wrestling with the Gordian knot of hoses and wires nestling underneath our fifteen-year-old Cherokee. When the Jeep’s headliner let go and draped me in rancid mouse fur, I’d had enough.  Read More >

Earlier this week, the European Union rubber-stamped the DaimlerChrysler divorce. So that's it. Later this financial quarter, prefix and suffix will go their separate ways and Cerberus Capital Management will marry the battered bride. Overlooking the fact that Chryslerberus will soon be importing Chinese-built cars for their U.S. customers, the automaker plans a nationwide dealer party for the born-again "all-American company." With all that has– and hasn't– happened to Chrysler of late you have to wonder exactly what and why they're celebrating.

Other than Chrysler's liberation from spousal abuse, there's not a lot to commemorate in Auburn Hills. Despite Cerberus' deep pockets, Standard & Poor's and Moody's Investors Service have just dropped the American automaker's debt rating to "junk" status. Whether this will affect Chrysler management's ability to float loans to stay afloat remains to be seen, but it's not what you'd call a good omen.

And loans are the order of the day. Even as Chyslerberus' debt rating's tanked, Chrysler's new management's been busy looking for someone to loan them $12b for the automotive side AND $8b for Chrysler Financial. If going $20b deeper in debt isn't risky enough, the automaker is reportedly borrowing the big bucks at around 8.5 percent. The interest payments alone could keep Chrysler from profit for many years to come.

S&P analyst Gregg Lemos-Stein goes further. Lemos-Stein says if the U.S. car market remains on its current downward trajectory, Chrysler could be in default by 2010. In an interview with BusinessWeek, he said "One of our big concerns is that it doesn't take a dramatic reduction in sales to put Chrysler at risk." In plain terms, one good recession and Chrysler would join AMC and Studebaker at that big car lot in the sky.

Cerberus' top dog realizes his new acquisition's precarious position. After the House passed stringent new fuel economy rules, Stephen Feinberg made a rare personal appearance to schmooze senators into relaxing the standards. Chrysler's taskmaster's pegged the cost of meeting those standards at $7K per vehicle. The extra expense would, Feinberg argued, put Chrysler out of business.

Well, he would say that, wouldn't he? Gas-guzzling trucks and SUV's still account for some 70 percent of Chrysler's U.S. sales. And North American sales account for 92 percent of Chrysler's total turnover. Not to put too fine a point on it, the automaker is at the mercy of the U.S. economy. And, by extension, gas prices.  

As American gas prices climb and large vehicle sales plummet, Chrysler has nothing in their automotive arsenal to staunch the arterial spray. Their last two "Hail Mary passes," the Sebring and Avenger, are so bad that even CEO Tom LaSorda was reportedly "quite upset" with what his employees had wrought. Chrysler's smallest cars, the ancient PT Cruiser and the only slightly more technologically advanced Caliber clones, hardly have Toyota, Honda or even Chevy scurrying for cover.

Next up: the refreshed minivan twins, out this fall. While Chrysler has been the minivan sales leader since inventing the genre, and the new models' rear facing captain's chairs are a way cool unique selling point, it's unclear whether or not the minivans can reinvigorate a moribund market. And if they don't, what profit is there being King of a shrinking kingdom?

Even Chrysler's much-ballyhooed partnership with China's Chery carmaker offers no immediate prospect of financial relief. By the time the partnership designs a car to U.S. safety and environmental specs, ramps up the supply chain and assembly line, works out any production and quality problems, passes all EPA and NHTSA tests and puts the first cars on the boat, the entire market may have shifted, leaving the Sino-American venture flatfooted.  

None of this bodes well for the future of Chrysler as we know it. As we've pointed out time and time again, Cerberus is in the business of dissecting sick businesses. They rend asunder what the founders hath put together, make as much as they can from the salvageable parts, and then dump the rest.

The more time that passes before Cerberus takes control of Chrysler, the worse their immediate prospects and the higher the likelihood they'll do what they swore they would never, ever do: strip and flip. 

The Detroit News estimates that once the ink is dry and the dust settles on the financial dealings, DCX will have paid $673m to get rid of Chrysler. Given the problems facing Chrysler, and the way DCX stock has gone up since they started dropping hints they were selling it, it looks like money well spent.

No matter what Cerberus does or doesn't do to/with Chrysler, the forthcoming party in Auburn Hills will be nothing compared to the celebrating that will be break out in Stuttgart.

In June ’05, GM CEO Rick Wagoner unveiled his turnaround plan for the beleaguered automaker: accelerate new products, eliminate discounts, renegotiate union contracts, import parts from China and downsize to match diminished demand. The last of these five points captured the critics’ imagination. “You can’t cut your way to profits,” they warned. Wagoner reacted with characteristic bravado: “We aren't going out of business in the next six months.” One wonders how those words would sound today, two days after the world learned that GM’s June sales slid 21.3 percent.

By now GM has a lot of practice explaining operating losses, shrinking sales and lost market share. Still, Black Tuesday challenged veteran mouthpiece Paul Ballew’s exculpatory skills. Once again, Ballew was determined to convince GM’s camp followers that the automaker’s sagging fortunes actually represent good governance and bad luck. To that end, Ballew rounded up the usual suspects.

GM’s Spinmeister began by pointing out that the showroom massacre was “partly attributable to a planned reduction of an additional 13,487 daily rental sale vehicles.”  Although Ballew did his best to headline the fact, empirical analysis suggests additional emphasis on the word “partly.” In June, GM’s sales fell by 86,825 units (320,688 vehicles vs. 407,513). GM’s reduced fleet sales only account for 15.5 percent of the total tumble.

Ballew then trotted-out the old “soft industry” excuse. Only it turns out the U.S. automobile industry has an airtight alibi. According to Autodata, American automobile sales fell just three percent in June; from last year’s 1.5m to this year’s 1.46m. The numbers clearly indicate that the industry was tucked-up in bed at the time of GM’s bloodbath.

And anyway, how do you explain the fact that GM’s transplanted competition went nuts? Nissan posted a massive 22.7 percent sales increase. Toyota’s turnover rose by 10.2 percent. Honda’s sales ascended by 11.5 percent. Hyundai’s sales climbed 11 percent.

Surprisingly, Ballew says GM wasn’t surprised by their [continuing] shimmy down the sales charts. “We had very strong retail sales in June and July a year ago, so we knew we'd have a tough time on the retail side.”

Yes, well, that's what happens when you offer zero percent financing to anyone with a pulse for six days, and then don't. In any case, there's no getting around the fact that GM sold 50k units less in June than it did the previous month.

Ballew identified two legitimate conspirators: rising gas prices and slowing housing starts. The twin terrors tore into GM’s truck sales, scything 22.9 percent from the previous June's total. Sales of the relatively new GMC Sierra and Chevrolet Silverado pickup trucks fell 26.5 and 23.5 percent respectively.

Surprisingly, Ballew says GM was surprised by Toyota’s aggressive offers on their Texas Tundra: zero-percent financing for 60 months and $5k in dealer incentives. The fact that GM failed to realize that their deep-pocketed nemesis would slap cash on the dash to attain their 200k per annum Tundra target shows GM’s woeful lack of situational awareness.

It gets worse. Ballew hinted that his employer will react in kind, increasing incentives on its pickups to protect its turf. As predicted, Toyota’s entry into the market is gradually and inexorably taking its toll on the profitability of GM’s last remaining cash cow.

Meanwhile, GM's new product cadence has peaked, and its eight brands are in dire straits. Caddy (-28.4 percent), Chevrolet (-23.5 percent), Hummer (-10 percent), Pontiac (-18.1 percent), GMC (-16.1 percent), Buick (-30.4 percent) and Saturn (-8.8 percent) all sucked the joy out of June. Only Saab stayed above water, adding 1066 sales, topping out at 4361 vehicles.

In silver lining search mode, Paul Ballew and Marketing Maven Mark LeNeve pointed to the early success of the SUV-sales-stealing Lambda triplets (Acadia, Outlook and Enclave) — although admitting you can’t build a new model fast enough to meet demand is a curious sort of boast for a company that's boasted about reduced production. 

So, where does all this leave Rick Wagoner’s turnaround plan? Accelerate new products. Flop. Eliminate discounts. Nope. Renegotiate union contracts. Health care “giveback” swallowed by soaring costs. Import cheaper parts from China. Check. Trim excess capacity. Who cares? If you didn’t believe it then, believe it now: you can’t cut your way to prosperity.

To wit: GM’s U.S. market share fell 3.3 percent in June, down from last year's 25.4 percent to this year’s 22.1 percent. (Down 8.1 percent since '90.) Toyota’s U.S. market share now stands at 16.9 percent. When you consider the disparity in the two automakers' dealership count– 7715 vs. 1740– it's easy to see which company is headed for Chapter 11, and why.

In fact, since Rick Wagoner launched his turnaround plan, GM’s market share has shrunk by 5.2 percent. No matter what else GM's CEO may or may not have achieved in that time, the figure is an irrefutable condemnation of his administration. GM's Board of Bystanders granted Rick Wagoner a bankruptcy-proof pension. It's time they activate it.

According to the now-infamous Georgetown, Kentucky memo, ToMoCo’s brass are concerned that their workers’ wages are growing faster than the company's profits. To rectify this situation, Toyota’s newest plants will pay workers based on local manufacturing wages– not United Auto Workers (UAW) scale. Naturally, the UAW is using this as flamebait to organize Toyota’s stateside operations, starting with Georgetown. Toyota’s launched its next salvo in this ongoing war of wages: they’re contemplating pulling Tacoma production from NUMMI.

GM and Toyota formed NUMMI (New United Motor Manufacturing Inc.) in 1984. The Fremont, California facility was Toyota’s first foray into American manufacturing and GM’s chance to learn about Toyota’s take on lean manufacturing. The 380-acre NUMMI facility currently cranks-out approximately 250k cars (Toyota Corolla, Pontiac Vibe) and 170k trucks (Toyota Tacoma) per year.

The NUMMI plant employs around 5440 “team members.” Some 4550 of these employees also play for the UAW. This makes NUMMI the only Toyota plant using UAW labor and one of the highest-labor-cost manufacturing facilities in the entire American automotive industry.

Some NUMMI workers earn more than $32 per hour, plus benefits. Combine this compensation with the joint venture's location– a high-cost area away from Toyota’s major suppliers– and it’s no wonder the factory’s drawn negative attention from its Tokyo taskmasters. 

In a prepared statement, NUMMI officials recently declared that the plant must do more to improve its “competitiveness” and stated it would only stay in business “only if it is able to do so.” That’s management-speak for “if we can’t get labor costs under control we’re abandoning this turkey.” 

Moving Tacoma production from Freemont to a lower-cost production facility does not pose insurmountable difficulties. Toyota’s Tijuana plant already makes the beds for all Tacomas, along with small quantities of complete trucks (34K in ’06). For the money saved in labor costs, the world’s largest automobile manufacturer could expand their Mexican production facility to accommodate increased Tacoma production.

Toyota also has excess capacity at their new Tundra plant in San Antonio. As the automaker builds Tundras in both Texas and Indiana, they could shift production around to open up some spare capacity for the Tacoma, at either location. And Toyota could also modify plans for their new plant in Elvis' birthplace (Tupelo, Mississippi) to build Tacomas as well as Highlanders.

The UAW knows Toyota’s serious about walking away from NUMMI. Last week, leaders from Local 2244 and 890 told their members that they stand a good chance of losing Tacoma production and warned “we are now fighting to exist.”

There are still a couple of years before the axe falls; the current UAW contract at NUMMI expires in August 2009. In the meantime, a “no layoff” clause means Toyota can’t trim costs by jettisoning employees. So the union must devise other alternatives to entice Toyota to change their mind.

The UAW’s already started making nice with management, offering proposals for the increased use of temporary employees and other cost-cutting measures. These stopgap measures may or may not satisfy Toyota. The Wall Street Journal recently reported that high level Toyota executives are actively contemplating cutting back North American production.

According to the report, Toyota’s U.S. production capacity is growing faster than sales, and a cheap yen makes importing cars from Japan a cost-efficient proposition. Toyota’s pulling back on plans for new plants and revamping pay policies. They’re on a cost-cutting spree, and anything between the Pacific and the Atlantic is fair game. 

NUMMI's Toyota bosses will be watching the outcome of this summer’s UAW negotiations with The Big 2.8 with considerable interest. As Toyota products account for the vast majority of NUMMI production, when it comes to any decisions regarding the facility's operating costs or, indeed, its future, Toyota calls the shots.

Toyota is sure to use the upcoming negotiations as a barometer of the local UAW’s willingness to accept wage or benefits cuts and/or changes to work rules. These concessions will be the deciding factor when Toyota makes their final decision on whether or not to maintain California production.

But two years is a long time to wait if you’re trying to cut costs. And there’s just so much you can do with suppliers, utilities, work rules and other expenses. Short term, Toyota has two choices: coerce the UAW into giving back some of what they gained in the last contract or move production elsewhere. Look for the Japanese automaker to take the path of least resistance.

The uncertainty surrounding NUMMI reflects the fact that the union’s future isn’t looking too rosy right now. Delphi’s UAW workers just took a massive cut in potential earnings and other benefits. The upcoming negotiations with The Big 2.8 seem to have the deck stacked in Detroit’s favor. And in spite of the UAW’s attempts to gain ground in Toyota’s plants, Toyota still holds the trump card.