There is no greater symbol of GM’s branding woes than Cadillac. During its formative years, the marque’s products stood at the pinnacle of automotive excellence. As The Grateful Dead would say, what a long strange trip it’s been: from coachbuilder to maharajahs to supplier of Chevrolet clones to America’s mid-market motorists. In a world of $30k Rolex watches and $500 wine, Cadillac no longer deserves to be called a luxury brand. Its failure epitomizes all that went wrong with GM’s branding.

Cadillac was formed from the ashes of the first Ford Motor Company. When Henry’s early backers asked Engineer Henry Leyland to appraise the failed business’ assets, the Vermont native convinced them to resume operations using his 10hp one-cylinder engine. In 1902, Cadillac was born.

Leyland applied his experience as a gun maker to spectacular effect. The company’s fanatical attention to parts quality and interchangeability created an extraordinarily reliable vehicle. When three model K Cadillacs aced a series of English reliability tests (including scrambling key components from three cars and then rebuilding them), Cadillac earned its reputation as the “Standard of the World.”

GM bought the innovative automaker in 1909. From the start of the century into the roaring twenties, Cadillac pushed the engineering envelope. The automaker introduced the first electric starter, safety glass, V8 power, synchronized transmission and more.

When Alfred Sloan reorganized GM according to his principle “a car for every pocketbook,” Cadillac occupied the top berth, above Buick. Sloan then pushed the brand into the auto-stratosphere.

Caddy’s 1930 portfolio included the LaSalle, V8, V12 and the V16 (fully the equal of the Rolls Royce, Duesenberg, Packard and other coach-built cars of the Classic era). Prices ranged from $3295 to $9700– roughly $80k to $300k in today’s money.

The Depression killed the V16, and almost took the brand with it. In 1932, GM contemplated shuttering the division. Cadillac’s president Nicholas Dreystadt presented an alternative: sell the brand’s less stratospherically-priced products to America’s nascent African American upper class.

Opening its doors to this neglected market saved Cadillac from oblivion, but subjected the brand to a new threat. As Sloan’s once-sacred pricing structure eroded, Cadillac’s top-of-the-pile price premium shrank. In 1940, the cheapest Cadillac was 150 percent more expensive than the most expensive Chevy. By 1950, it was 65 percent. By 1960, it was just 30 percent.

The fifties and early sixties were Cadillac’s second golden era. America’s income distribution was the most compressed it had ever been; a brashly styled Caddy was a commonly-shared icon representing the American dream.

While Caddy’s prices continued to fall in this era, their models were still a fantasy for the typical working-class family. Factory workers were known to pool resources to buy a Cadillac on a time-share basis.

During the ‘60’s, America experienced an explosive growth of Median Household Income (MHI). Cadillac chased the booming mid-market, losing touch with its rapidly fading luxury remit. In 1960, a basic Cadillac cost 87 percent of MHI; by 1970, it was down to 64 percent. In 1971, the Calais cost only 25 percent more than a Caprice.

GM singularly failed to do the right thing: take Cadillac back up-market to cater to the rapidly growing ranks of wealthy and near-wealthy, and enhance Buick and Oldsmobile to take Cadillac’s place in the lower-premium market.

Product wasn’t the problem. In a 1965 Car & Driver luxury car comparo, Cadillac finished a close second (just behind the three-times more expensive Mercedes 600) and handily beat Roll-Royce, Lincoln, Imperial and Jaguar.

C&D hit the nail on the head: “Among enthusiasts, the Cadillac is probably the most underrated car in the world, although in some ways, it equals or excels the Mercedes 600. In our estimation, Cadillac’s great sales success is all that hurts its ‘image’ as a prestige luxury car.”

Cadillac’s fit, finish and build quality went downhill from there, as the high-volume, low price strategy meant cheaper materials and rushed assembly. In 1964, nobody would have confused an Impala for a DeVille. By 1971, the Caprice and DeVille were precariously similar in both style and build quality.

GM’s destruction transformation of a globally-respected, technologically-superior luxury brand into a tarted-up Chevrolet for middle class buyers was complete.

America’s upper-income classes abandoned Cadillac for Mercedes, whose sales began a long expansive period around 1970. In 1973, Cadillac sales enjoyed a brief explosion (stealing from Chevrolet?). Sales exceeded 300k in 1973, peaking at 350k in 1978. And then Cadillac began its near-terminal decline.

Today’s Cadillacs have established a precarious foothold where Buick once lived: at the top end of the ‘near luxury’ automotive market. Talk of a new V16 to reposition Cadillac higher up in the food chain has faded, leaving the brand with the prospect of more mediocrity. Badge-engineered SUV’s, price-conscious sedans and an uncompetitive roadster portend a bleak future for Cadillac, and GM.

Buick was the special child in the GM family: the beautiful and temperamental second-oldest daughter that somehow always got the most attention from Daddy. Sure, oldest daughter Caddy got to wear the family jewels and formal gowns, but Buick was lavished with style. Whether it was Harley Earl or Bill Mitchell, GM’s top stylists always blessed Buick with their best efforts. For decades, Buick was maintained in the style to which she had become accustomed, and remained America’s fashion-conscious upscale buyers’ wheels of choice. And then, not.

Scotsman David Dunbar Buick founded his eponymous automobile company in 1903. The following year, the inventor of the overhead valve engine sold the struggling concern to James Whiting, an ambitious wagon builder. Whiting turned to William Durant to help jump start Buick.

With an excellent product to sell (the Model C), Durant’s energy, affability and marketing genius ensured Buick’s ascension to profit and glory. Durant used Buick’s revenues to acquire dozens of other automakers and form General Motors.

Right from the get-go, Buick was GM’s anchor brand. Durant capitalized on the company’s engineering excellence and reputation to expand sales around the globe. In 1926, Buick sold a then-staggering 260k cars.

The Great Depression hit the brakes but good; annual Buick sales plummeted below 40k. GM President and future CEO Alfred Sloan used the downturn to rationalize GM’s brand portfolio. He slotted the consummate “doctor’s car” between affordable Oldsmobile and unapproachable Cadillac.

Priced at around $40k to $65k in today’s dollars, pre-war Buicks were the Lexi of their time: refined, smooth, powerful, elegant and built to last. They were the consummate “doctor’s car.”

By the late thirties, GM’s inter-brand demarcations had begun their inexorable erosion. Buick’s product line overlapped a significant portion of Olds’ and Pontiac’s price range. As internal competition intensified, Buick cultivated two selling points to stay ahead: performance and style.

Throughout the ‘30’s and into the ‘40’s, Buick espoused its General Manager’s “more speed for less money” maxim. In 1936, Buick had a brand-new 320-cid 120hp straight-eight, designed for the large and heavy Series 80/90. When the company shoehorned the big eight into the smaller and lighter Series 40, it was dubbed Century, for its readily attained top speed. Thus the first factory production “hot-rod” was born.

When Harley Earl joined GM in 1927, he created the Arts and Color Section: the car world’s prototype styling studio. Earl used the Buick brand to showcase his most significant creative output.

Earl’s Buick Y-Job of 1938 was the world’s first dream-car. Unlike the European salon specials sold to exclusive buyers, the Y-Job’s was created to build excitement for future GM products, and showcase their styling direction. The Y-Job succeeded brilliantly; it solidified GM’s global styling leadership. And Buick’s.

The 1951 Buick LeSabre and XP-300 dream cars initiated the GM Motorama era, a grand traveling carnival of GM-think. Until 1961, Motoramas showed Americans a tempting glimpse of the (ever better) good life to come, from cars to kitchen appliances. And GMAC would finance the dream.

The consumer era was now in high gear, and Buick style led the way.

Buick enjoyed its greatest market-share success in the mid-fifties. From 1954 through 1956, Buick was America’s third most popular automotive brand. During those heady days, models like the Century, Super, Roadmaster and Special defined affordable American automotive luxury, class and power.

In ’57, Plymouth’s radical models pushed Buick back to number four. But it was Buick’s horrendously overwrought ’58 models that really hurt. Renaming 1959’s Buick entire line-up (LeSabre, Invicta and Electra) didn’t help. By 1960, Buick’s market position had tumbled to ninth.

Buick desperately needed a new make-up artist, and found it in Bill Mitchell. The 1963 Riviera coupe was Mitchell’s tour-de-force: one of the most beautiful American cars of the post-war era. It had the class, cachet and authenticity of a Mercedes CL or Bentley Continental. The Riviera’s halo effect worked; by 1965, Buick was back to fifth place.

Fast forward a decade, and Buick’s hot new coupe is the execrable Skyhawk, a clone of Chevy’s Vega-based Monza. Alternatively, Buick intenders could contemplate the Skylark, a padded landau-roofed version of Chevy’s Nova.

The preceding and ensuing string of badge-engineered disasters were unleashed at the exact moment when Buick needed to strengthen its roots– style, performance and quality. Up-scale import competition from Mercedes, BMW, Audi and later, Lexus, stole traditional Buick customers by the tens of thousands.

Buick’s subsequent decline is too painful to describe in detail, especially during the mid to late eighties. After that, it was either too little too late, or another kick in the groin, like the Rendezvous.

No wonder Buick packed her bags and slipped away to China, where she’s once again adored and idolized. All she left behind moldering in American showrooms are ghosts, pale shadows of her former stylish self. And plenty of beautiful memories.

Was the Hummer brand really born four years ago? The Army-inspired H2 now occupies a fading mindspace. It’s a relic from a time when America’s foreign policy problems were out there, somewhere. When gasoline was like Gatorade: a cheap, endless commodity that hydrated the hopes and dreams of a nation. Post-911, post-Katrina, post-Iraq, the H2 somehow remains. But not for long. According to our spies, GM has slated the gas-gargling mondo-SUV for termination. What’s THAT all about?

Disappearing buyers. Since its debut in 2003, H2 sales have fallen faster than George W’s approval rating (if only just). The macho model’s popularity peaked in its first year, sinking not-so-slowly but entirely predictably thereafter.

In 2006, GM sold less than half as many H2’s as it did in 2003. If the trend from the first four months of this year carries through to its gruesome conclusion, the H2 will rack-up just 12K annual sales, down 65% from its debut. Unless the 2008 makeover– upgraded interior, six-speed gearbox, 6.2-liter V8– rekindles faded ardor, it will be the model's last hurrah. Or raspberry.

On a deeper level, the Hummer’s decline reflects the political temper of our times. While the H2 is no less fuel efficient than any other gi-normous SUV (e.g. the now discontinued Ford Excursion), its inherently impolite dimensions and unabashedly militaristic demeanor made it a lightning rod for environmentalists and anti-war protesters alike. For these left-leaning activists, the H2 was/is the automotive equivalent of the ugly American.

H2 owners know the drill. Even before the Iraq war lost momentum, driving an H2 in a blue state urban area meant running a gauntlet of middle finger-flashing anger. Like a crew cut on a Vietnam-era conservative, trip-wire liberals clock an H2 and immediately assume its owner possesses a right wing political perspective and supports America’s foreign military operations.

It’s an entirely understandable if simplistic assumption that puts H2 owners on the defensive from the git-go. The model’s decline is at least partially attributable to the fact that only so many SUV drivers are ready, willing and able to run an endless gauntlet of unabashed antipathy.

No question: the H2’s rugged military persona was the key its downfall. It provided detractors with plenty of ammunition (so to speak) for self-righteous feelings of revulsion and disgust.

For example, while anti-SUV campaigners could almost forgive the cataclysmic damage wrought by a full-size SUV on a smaller vehicle as an unintended consequence of its owner’s understandable (if selfish) desire to protect their progeny, they viewed the Hummer as a four-wheeled metaphor for unbridled arrogance:  “F.U. and the compact car you drove into me on.”

Contrary to popular belief, very few Hummer H2 buyers were motivated by a desire to make a political statement. While there’s no escaping the H2’s GI Joe fantasy factor, a large number of consumers chose the Hummer based on its off-road capabilities. And it’s true: plenty of H2 owners deploy their machine as government contractor AM General intended. While the 6400 lbs. SUV is a bit jumbo-sized for many off-road trails, in the main, she can “git ‘er done.”

Yet many Hummeristas remained oblivious to the fact that the H2’s exterior places the off-roader's terrain traversing chops into a distinctly sinister context. Most full-size SUV’s seem to say “One day, I may take my family off-road to commune with nature.” At best, the Hummer’s take-no-prisoner exterior proclaims “Survivalist on board.” At worst, worse. 

Now that the Hummer H2 is on its way out, environmentalists/peace campaigners will have a hard time finding an equally obvious and (let’s face it) easy target. This despite the fact that the Hummer isn’t really dead; the model was replaced by the smaller, more frugal, cheaper-to-produce and less aggressive-looking H3.

In its first year of production (2005), the H3 accounted for 58 percent of Hummer’s sales. By 2006, the figure rose to 74 percent. So far this year, GM has sold 13k H3’s— more than the entire anticipated annual run of H2’s.

Even so, the total number of Hummers due to be sold in ‘07 is significantly less than that of a single Chevy model– which hardly seems sufficient to sustain an entire GM brand. As the H2 leaves the battlefield, one wonders if there will still be a Hummer to kick around four years hence.

I reckon the Hummer brand’s survival depends on two factors. First, GM must avoid bankruptcy. Second, Hummer must develop products that sell military prowess without projecting military arrogance or aggression. Either that or America’s armed forces’ fortunes must change abroad, to the point where it’s once again OK to drive a vehicle that celebrates our troops’ mucho macho can-do spirit. None of these possibilities seem likely.

Meanwhile, the Smithsonian Institution should find an early H2 to place into their permanent collection. No other machine so perfectly captured and distilled the gestalt of its time as the H2. Loved or loathed, GM’s lumbering leviathan deserves to be remembered for what it was: a uniquely American icon.

Of all of GM’s domestic brands, Oldsmobile most accurately represents everything that went wrong with GM’s divisional structure. Historically the most innovative GM division, its twilight years were spent pathetically proclaiming “This is not your father’s Oldsmobile.” Olds rode a roller-coaster in the sales charts, hitting glorious peaks before its final, fatal free-fall. But the tragedy of Olds is that it could have been the instrument of GM’s redemption.

Ransom E. Olds founded his eponymous automobile company in 1897. In 1901, the Curved Dash Oldsmobile was the world’s first mass-produced automobile. Although expensive in absolute terms, it was the lowest priced machine of its day.

But Olds wasn’t Ford. By the time GM bought Olds in 1908, the brand had moved upmarket. Two years later, Oldsmobile unveiled The Limited, a stunning but expensive ($4600) achievement.

When a Limited won a famous race with the Twentieth Century Limited locomotive, Oldsmobile found its marketing niche. From then on, glamour, power and speed defined Oldsmobile’s appeal.

As part of his brand ladder strategy, GM boss Alfred Sloan knocked Olds down a couple of pegs, placing it right between Pontiac and big brother Buick. While Chevrolet and Ford fought for supremacy at the bottom of the market, GM’s Buick, Olds and Pontiac (BOP) line-up proved a formidable formula. It gave The General a seemingly unassailable stranglehold on America’s automotive mid-market.

When GM’s price structure began to compress in the forties and fifties, Olds embarked on a course of safe, predictable and increasingly boring GM fluff. Although the brand earned its keep with several popular products (e.g. the Rocket-powered 88), as the middle child, Oldsmobile felt the pricing squeeze most acutely.

It wasn’t long before Oldsmobile fielded essentially identical line-ups with both Pontiac and Buick. Style became one of the few distinguishing factors. Olds faired relatively poorly in GM’s inter-divisional beauty contests; the ’58 models are particularly loathsome examples of garish Detroit baroque.

As Pontiac and Buick expanded into Olds’ once happy hunting grounds, the division struggled to make a living in brand limbo. Oldsmobile had to find something substantive to sell, independent of pricing and fashion.

Technical innovation was the answer. Building on a reputation for mechanical creativity– sealed with the Hydramatic Drive of 1940– Oldsmobile became GM’s “experimental division.”

The Rocket V8 of 1949 was a perfect example; it was the first popularly-priced high-compression V8. The engine turned the light-weight Oldsmobile 88 into the first modern performance car, and ushered in the horsepower race. Olds went on to pioneer front wheel-drive (Toronado, 1966), turbo-charging (Turbo Jetfire, 1962) and air bags (1974).

In the ‘70’s, Oldsmobile finally hit its stride. The success of the Cutlass helped Olds leapfrog Pontiac and Plymouth to become America’s third most popular automotive brand.

In 1977, Oldsmobile ran afoul of GM’s increasing predilection for parts sharing. A shortage of Rocket V8’s led to the substitution of Chevy engines instead— on the down low. GM’s response to the uproar was to add the label “GM cars are equipped with engines produced by various GM divisions”. It was another milestone in the terminal decline of divisional brand identity.

With GM’s BOP price strategy in tatters, with the last vestiges of inter-brand mechanical differentiation cast aside, with Oldsmobile dealers demanding (and receiving) badge engineered copies of the genre of the moment (minivan, SUV, compact, etc.), Oldsmobile was on autopilot to oblivion.

In the mid-late eighties, Olds crashed and burned, as America’s mid-market tastes shifted towards imports. The inadequately-developed Olds diesel V8 spewed more fuel on the flames of GM’s quality woes. Between 1985 and 1990, Oldsmobile sales plummeted by 60 percent.

In 1985, GM desperately needed innovative design, engineering, production, quality control and customer service. Oldsmobile coulda/shoulda been the home of plastic panels, or hybrid propulsion, or flexible manufacturing, or any number of potentially liberating technologies.

Instead, GM Chairman Roger Smith spent billions creating an entirely new domestic brand: Saturn. The upstart start-up replaced Oldsmobile as GM’s innovative, experimental division, effectively sealing Olds’ fate.

On April 29, 2004, GM produced its last Oldsmobile: a cherry-red Alero GL. While the model has its defenders, the badge-engineered Pontiac Grand Am was still an ignominious end for a 110-year-old brand, whose powerful and charismatic eight cylinder engine inspired the world’s first rock and roll song.

Oldsmobile’s death taught GM an important lesson: it couldn’t afford to shutter its other moribund divisions, restore order to its brand portfolio and rationalize its business. Strict state-enforced automobile dealer franchise laws punished GM for pulling the plug– to the tune of over a billion dollars. Olds’ death also demonstrated that shuttering one amorphous GM division does nothing whatsoever to help the remaining brand’s sales.

And now Saturn is in the same boat as Olds was during the eighties: competing with its corporate siblings with platform-engineered cars and fighting for limited development and marketing dollars. What’s so innovative about that?

Grand Prix, GTO, Firebird, LeMans, Catalina 2+2, Bonneville. The names evoke automotive magic— provided you were an enthusiast between six and sixty during the ‘60’s. For today’s pistonheads, these storied names; indeed, the entire Pontiac brand has lost its adrenal association. Even the drop-dead gorgeous Solstice can’t rescue a marque now known for budget-priced, badge-engineered mediocrity. Pontiac’s fall from grace may not be the worst (best?) example of GM’s branding cataclysm, but it’s one of the most emotive. Read More >

During the American car industry’s formative years, entrepreneurs started car companies left and right, jostling for quick profits and market share. Flint Rock native William Durant had a meta vision: agglomerate the best of the new automakers to create an empire called General Motors. This he did, through endless charm and clever financing. But Durant gambled too much too often, and lost control of his brainchild. The Chevrolet brand was born out of wedlock, to fund Billy Durant’s comeback. Read More >

Imagine a different GM from today’s confused and embattled automaker. A General Motors where each division has a clear and coherent brand, universally known and recognized by automotive consumers. Where each division’s image and related price range is unique, without overlap. Where each division is the dominant brand– or at least highly competitive– in its respective market segment. Welcome to General Motors circa 1930. Read More >

My father is a car guy in his late fifties, One day, he decided to buy a sports car. Anyone who’s clocked the age of the men in the Viagra ads should realize this isn’t an unusual phenomenon. Men fifty-and-over are the heart and soul of the U.S. sports car market. And the Chevrolet Corvette occupies the bulls-eye center of that prime demographic. The ‘Vette is also one of GM’s few bright spots: the only world-class car in Chevrolet’s showroom of mediocrity. Anyway, my father tried to buy a Corvette– and failed.

My Dad’s shopping list included several German cars, a couple of Japanese roadsters and the C6 Corvette. There was only one problem with his domestic selection: he couldn't get a test drive. A little wheel time in a box-fresh Porsche Cayman? No problem. To Infiniti and beyond? Right this way. A quick cut and thrust in GM's halo car? Forgeddaboutit. Not one of the Chevy dealers in our suburban New York county would give my Dad five minutes of Corvette wheel time– unless he bought the car first.

Dealers had three explanations for this “no test pilots need apply” rule. First, “it’s not our policy to allow people to test drive a sixty thousand dollar car.” Second, “people who buy these cars don’t want any miles on them.” Third; hey, you gotta understand: we get a lot of joy riders.

Obviously, Chevy dealers have been scraping the bottom of the barrel so long they can't distinguish between "time wasters" and serious customers. Or perhaps they simply don't want to distract their highly professional sales force from far more important jobs like flogging Aveos, Cobalts and other marginally profitable machinery.

Or maybe they're just lazy, short-sighted, arrogant, amoral opportunists. Why work hard to sell a car you don't need to, or you ain't got?

How much effort would it take for Chevy dealers to create a proper 'Vetting procedure, so potential customers like my father could get behind the wheel, realize the dream of a lifetime and buy a damn Corvette? My Dad's experience– or lack thereof– highlights Chevy dealers' complete insensitivity to the over-arching importance of long-term customer relationships.

Of course, VIP ropes around hot new models are one thing. Price gouging is the next.

When the Solstice and Sky fell to Earth, Pontiac and Saturn dealers had a field day. “Market adjustments” and “demand pricing” were deployed to gouge both regular customers AND those who hadn't darkened a Pontiac or Saturn dealership in decades. Many dealers slapped a new price sheet next to the official window sticker, adding markups of three to five thousand dollars.

You’d think Pontiac dealers would have learned their lesson when the Aussie-built, suppository-shaped GTO went from hero to zero in less than year. (There are still untitled 2006 and 2005 GTO's sitting on Pontiac dealer lots.) In a sense they did: grab the cash while the grabbing's good, 'cause it'll be back to [no] business as usual in no time.

I don’t mean to pick on GM. Chrysler dealers jacked-up the prices on the first highly-horsed SRT8 variants (Charger, 300C, Magnum, and Grand Cherokee). Ford dealers added extra profit on the new Thunderbird, Mustang GT, Shelby ‘Stang and Ford GT.

And American manufacturers aren’t the only car companies hoarding hay when the sun shines. For almost a full year after production, the Mercedes SL55 AMG couldn't be had less than $60k over sticker. The short-lived BMW Z8 also commanded premiums so high you had to be high to pay them.

And yet there are some important differences between the domestics’ price gouging and that of their Euro-counterparts.

For one thing, Mercedes and BMW already have plenty of footfall for their entry level and mid-market products. For another, they tacked a premium onto premium products. Someone who can afford a $120k Benz can probably swing $160k. Try applying that logic to the Pontiac Solstice. A customer shopping for a $24k car can afford $29k? Maybe, maybe not.

In fact, it's highly likely that a dwindling number of fifty-something Ameribrand die-hards are the only customers willing to pay premiums on sexy low-end domestic models. Do they care that the extra money's destined to disappear at trade-in time? Who knows? Can the domestics afford to risk punishing their most enthusiastic customers? I think not.

From a buyer''s point-of-view, there's only one way to beat a dealer's narrow-minded "you can't touch this" refrain and price gouging. Tell them to piss off, and then send a few tell-all emails to the corporate mothership AND the dealer group HQ. Keep calling until you find a dealer willing to play ball, shop used, buy something else or just wait for reality to return to the marketplace (as it always does).  

As for my old man, he couldn't do it. He simply couldn't drop 60 large on a new sports car without a test drive. And GM wonders why it’s losing market share.

In a recent study of new vehicle owners, Ford products came second in "overall initial vehicle quality." According to Ford's PR release, Honda took the top slot, while Toyota and Nissan tied Ford for second (although Toyota actually beat Ford by three points). Yes, well, it turns out The Glass House Gang paid for the report, which mirrors the format of J.D. Power's Initial Quality Survey (IQS) without reproducing the results. Last year, JD's mob ranked Ford fifteenth in Initial Quality, one place beneath the industry average, nine places behind Honda and eleven places behind Toyota. Anyway, who cares?

Define quality. Is it design, durability, longevity, reliability, fit and finish, snob appeal, something else or a combination of these factors? How do you– or should I say "one"– calculate the relative importance of any particular attribute? Is reliability really the sine qua non of quality? Is longevity more important than fit and finish? Given the subjectivity of the term, it's virtually impossible to determine a vehicle's intrinsic "quality."

Back in the ‘70's, slipshod assembly, dubious dynamics and instant rust were the status quo. Any car good enough to win a quality award stood out from the crowd. Today's cars are the best-assembled, most defect-free, longest-lasting vehicles ever produced. Claiming a car rolling off one assembly line is higher quality than one coming off another assembly line is like claiming the Pacific Ocean will make you wetter than the Atlantic.

While pistonheads tend to fixate on minute differences between vehicles, the majority of the public are well aware that current mainstream motors offer roughly similar looks, performance, mileage, packaging, reliability and safety. Strictly speaking, Ford and other mass market automakers are selling mediocre products. To cut through the clutter and create a reason to buy one loaf of white bread over another, manufacturers use IQS studies to proclaim they're offering higher-quality mediocrity than the competition.

Quality is supposed to be a differentiator, something that shows that one item is superior to another in one or more aspects. The Ford-financed survey– and Detroit's continual harping about "the perception gap"– reflects the fact that many manufacturers don't get it. They're still stuck in the "Hey, give us a chance! We're just as good as the other guys now!" mentality. When the average person determines whether or not a vehicle is a quality product, they're not looking for "as good as." They're looking for "the best."

To achieve that, today's automakers must produce profound reliability AND sweat ALL the small stuff. Our reviewers have been continually criticized for continually criticizing the quality of a given car's plastic surfaces. Yet the look, feel, shape and smell of a vehicle's polymer's reveal a great deal about its overall quality. Just by prodding the dashboard, even a layman can tell if he or she's sitting in a beancounted beater or an upmarket luxobarge. Same goes for closing a door, or listening to the radio, or pressing the gas pedal.

Yes, it's a challenge to create the highest possible quality at a specific price point. But that's the challenge all automakers face. And in today's hyper-competitive automotive market, there's simply no margin for error. MINI's IQS scores took a beating when they introduced the car without cupholders. Many pundits asked, has it really come to this? Yes, it has.

Anyway, if automakers were truly interested in determining the quality of their products, they'd survey owners long after the new-car honeymoon had ended. They'd ask for feedback on reliability, fit and finish, repairs, out-of-pocket expenses, performance and how well the vehicle held up overall. If the buyer no longer owned the vehicle, they'd find out why their customer got rid of it.

After collecting several years' data, they'd know more about their vehicles' quality than any IQS would ever tell them. This information would be far more relevant to the consumer than knowing that car A averaged 0.043 fewer defects when new than car B. If a manufacturer came out on top of this kind of survey, they'd have something to brag about. And it would be interesting to see how their IQS ratings correlated to their "real world" results after a few years.

I have no idea why manufacturers haven't embarked on a project like this. The only reason I can think of: they don't want to take a beating from the reality stick. They'd rather go on blithely believing surveys that tell them their brand-new cars look, feel and act brand-new than watch their self-aggrandizement shrivel to nothing in the face of cold, hard data.

I know I'm tilting at windmills here. But it's high time the manufacturers stop hiding behind bogus quality ratings and start producing vehicles that are designed to be class leaders in every aspect. Then they wouldn't need contrived crutches like initial quality surveys. The product would sell itself and customers would be lining up for more.

Time and time again, automakers flush with cash decide to grow their business by expanding their model lineup. Which is a bit like trying to improve a gourmet meal by adding more menu choices. That’s not to say brand extensions can’t be done, and done well. Volvo’s XC SUV’s were a logical and successful addition to the company’s safety-themed vehicles. But a performance tuned Volvo station wagon or sedan? Uh, no. At long last, the company has reached the same conclusion— for all the wrong reasons.

Automotive News (AN) confirms that the 2007 R-Series Volvos will be the last of the breed; Volvo’s dropping performance variants from its roster. According to Volvo NA’s executive vice president of sales and retail ops, continuing to spend money on R model development, marketing and sales doesn’t make financial sense. “For the return we get,” Doug Speck told AN, “It just wasn't good enough."

Ya think? When Volvo launched the “R” sub-brand, the company estimated that 2500 examples would find buyers in the North American market on a yearly basis, helping to deliver 7k sales worldwide. Scanning AN's account of the R sub-brand's cancellation, it's clear Volvo’s been busy re-writing history downsizing their R-badged expectations. Volvo claimed it built the business case for the barking mad R-Series based on total annual sales of 3800 units. In any case, the automaker fell well short of the marque.

Last year, Ford’s Swedish subsidiary shifted just 1098 S60Rs and 538 V70Rs. As today’s V70R review indicates, there isn’t much wrong with the product itself. The problem is that “performance” and “Volvo” go together like “Porsche” and “towing capacity.” Oh wait, the Cayenne. Yes, well, the point remains the same: even great products can’t surmount a brand’s inherent limitations. At least not for long.

As Al Reis and Jack Trout wrote in their classic marketing tome “Positioning,” “the mind rejects new information that doesn’t ‘compute.’ It accepts only that new information which matches its current state of mind. It filters out everything else.” For a brand positioned in the consumer’s mind as “the ultimate driving machine,” an M-tuned 3-Series makes perfect sense. For a brand best known for protecting your family from death, a V70R is an anomaly, a cynical and forgettable joke.

While I’m delighted that there were 1098 perverted pistonheads who “got it,” it’s deeply worrying that it took Volvo’s marketing mavens 12 years– from the launch of the bright yellow T-5R wagon in 1995 to this week– to understand that building a high performance Volvo (not to mention racing it) was the branding equivalent of wearing a speedo to a PTA meeting.

Equally worrying: Ford’s hard-nosed beancounters– rather than Volvo’s executive stewards– killed the R division. In fact, Volvo CEO Redrik Arptold told AN that his employer isn’t abandoning the afterburner-oriented enthusiast market. They’re simply “deleting the moniker.” For evidence that Volvo is still interested in “fun-to-drive cars,” Arptold misdirected the reporter’s attention to the forthcoming C30 hatchback and S80 V8. "We are working on the next phase,” Arptold said, “but it will not be immediate."

Fans of the Volvo’s corporate mothership can only hope. Although Mazda’s Zoom-Zoom campaign and “fun-to-drive” products are successfully transforming the Japanese automaker’s economy car image, Volvo and Land Rover are Ford’s only truly coherent car brands. Ford is everything and nothing, Lincoln is everything and nothing with extra chrome, Mercury is nothing and Jaguar was something (and now isn’t). With environmental consciousness hemming in Land Rover, Volvo is the company’s best hope.  

While there will always be pistonheads up for accelerative and handling hotness, no one wants to die. Truth to tell, the only vehicle category that doesn’t jibe with Volvo’s built-in brand promise to preserve your genetics is… sports cars. Which means Volvo’s growth potential is virtually unlimited– provided they put this R business behind them and keep their eye on the Nerf ball. If Volvo continues to devote every possible resource, every last krona, to maintaining the company’s lead in passenger car safety, they will thrive.

So Redrik, where’s the Volvo minivan? When Ford ditched their Freestar (Windstar? Deathstar?), I felt sure they were clearing they way for a Volvo minivan, a machine that would easily conquer all before it. I mean, what Mom wouldn’t buy a Volvo minivan? Ford Flex? Yeah right. And yet Volvo’s boss is pleading with the world not to slip back into the “old” idea of boring Volvos. Because? Honestly, I don’t have a clue.

If Volvo plays its cards right, it could replace Ford. Seriously. When Ford and its amorphous product line goes belly-up, the conglomerate is free to sell– or not sell– anything they like. Which brand has more oomph in Ford’s portfolio (if not at the driven wheels) than Volvo? None.

Since 1969, Porsche has developed three vehicles with Volkswagen/Audi: the 914, 924 and Cayenne. While we can debate the contributions these vehicles have made to Porsche’s corporate survival, they’re not vehicles that have brought greater glory to Porsche's sports car cred. And yet Zuffenhausen's zealots want us to believe that their decision to take control of Volkswagen is a good thing for both automakers. How credible is that?

My go-to Porsche guy, salesman Kirk Stingle, is on board with the German automaker's justification for its "Maus That Roared” Vee Dub takeover. With the so-called Volkswagen law (guarding Lower Saxony’s controlling interest in VW) headed for the legal dumpster, Porsche had to move to protect its parts supply. “You like your air conditioning unit?” Kirk asked. “Without VW? Fuhgeddaboutit.” For its part, VW gets Porsche’s production expertise.

Uh-oh. That sounds an awful lot like a lopsided proactive synergy defense. Do the letters DCX mean anything to anyone? To me, Daimler-Benz’ failed hook-up with The Crisis Corporation reveals a truism: the Germans aren’t very good at playing with others. Of course, in this case, we have Germans playing with Germans.

In fact, the acquisition is a German version of “All in the Family,” with VW Boss and Porsche shareholder Ferdinand Piëch playing Archie to freshly minted CEO Martin Winterkorn’s Meathead. Imagine the hilarity when they discuss the workmanship produced by Porsche’s foreign plants! Alternatively, schwäbisch Sopranos.

As we’ve outlined here before, VW is in an echt Pökel. The automaker's obese brand portfolio is a disaster. VW, SEAT and Skoda battle each other at the low end (hemmed in by Audi), while Audi, Bentley, Lamborghini and Bugatti duke it out at the top. Meanwhile and in any case, the German labor unions have Volkswagen by the short and curlies. 

So here’s the theory: by minimizing the State of Lower Saxony’s ownership/control of VW, the takeover will loosen the union’s hold on the company, which will allow VW to bring some “sense” to their German labor contracts. At the same time, Porsche wunderkind Wendelin Wiedeking will teach VW how to make money through outsourcing, engineering, rationalization, platform sharing and generally kicking ass.  

Time for some unbequem Wahrheit.

Despite calls for his resignation, the CEO who got VW into this mess in the first place is still large and in charge. I wouldn’t call Ferry Porsche’s grandson a megalomaniac, but this is the same CEO who publicly declared VW’s intention to match Mercedes-Benz’ product line model for model, up to and including the S-Class (hence the ill-fated Phaeton). Look how well THAT strategy turned out.

By the same token, Piëch’s “grand” vision created VW’s bloated brand portfolio. By adding Porsche to Volkswagen’s stable (or vice versa), brand overlap is about to get worse, not better. We’re talking Porsche 911 vs. Audi R8; Porsche Boxster vs. Audi TT; Porsche Cayenne vs. Audi Q8; and Porsche Panamera vs. Audi S8, Bentley Continental GT and VW Phaeton.  

Although Piëch is reputed to rule his complicated kingdom with an iron fist, there’s still a GM-style bureaucratic bun fight to see who gets how much of what technology and marketing support, and when they get it. Can Porsche really work its cost-cutting magic on such a convoluted corporate culture? While Porsche knows a thing or two about building excellence on a budget, what makes them think they can convince thousands of managers and engineers that small is beautiful?

To my eye, this whole deal looks like a not-so-simple extension and consolidation of Piëch’s power. On the face of it, Porsche gets VW. In fact, Piëch gets Porsche AND ditches Lower Saxony. What he doesn’t get– and isn’t up for discussion– is a plan for extricating Volkswagen from its German labor woes and the branding Hell the former VW CEO and current Board member created.

Not that I care what happens to VW. As far as I’m concerned this deal should be called “Cry My Beloved Automaker.” Porsche, my favorite automaker on planet earth, the company that produces the best sports car money can buy, the poster child for this website’s “stay small, stay focused” mantra, is about to be subsumed by Volkswagen’s gi-normous bureaucracy.

Anyone who thinks this German merger of unequals won’t affect Porsche’s ability to keep their eye on the ball should carefully consider the 914, 924 and Cayenne. These vehicles stemmed from a partnership with VW, where Porsche could have (should have?) pulled the plug on any or all aspects of the various projects. Can you imagine a Porsche designed by a committee balancing its needs against those of VW, SEAT, Skoda, Audi, Lamborghini, Bentley and Bugatti?

In a world of compromise, Porsche stood apart. Not anymore.

There are some amongst us who hate auto shows in general and any given auto show in specific. They see the pistonhead conclaves as a soulless smorgasbord of automobiles in aspic, with side tables filled with deep fried hype. I don't share the antipathy. Where else can you go and see PR flacks spinning each other? It's like Paris after 911, when French café waiters were forced to be rude to each other. Oh yeah, and there are lots of cars for dissing, dismissing and, occasionally, drooling. Live, from New York! It's Here's What You Missed!

After years of W-THIST (Where the Hell is it?), Volkswagen is bringing a 50-state compliant diesel engine to the US, nestled into the snouts of the Rabbit and Jetta. Even better, VW has married the brawny diesel (140hp and 230 lb-ft of torque) with their world beating six speed DSG transmission. Best of all, the parsimonious granola eater's oil burner (40 mpg) is an ideal alternative to the thirsty AND anemic 2.5 liter buzz-box currently infesting the U.S. model range. So why not the Passat? 

Dodge has Demons. Rumor has it someone still employed by DCX green lighted this hideous roadster for production. Boil that dust speck! Bargain-basement pricing assures The Dodge Boys another generous helping of razor thin profit margins. If Dodge wants to sell a true Sunday car, they should build one that appeals to the 50-somethings who might actually buy one, rather than Teenage Mutant Ninja Turtles. Ralph Gilles, why has thou forsaken us, bro?

Mercedes unveiled the new C-Class, which is definitely not a German taxi (except when it is) and the 500hp-ish CLK63 AMG Black Series, which will elevate the model into the top ranks of catastrophic depreciation. The C-Class is, get this, sexy. If its dynamics match its demeanor, if it drives more like the brick C-Class of the early and mid 1990s and less like the flaccid, rolling logo of the current millennium, Mercedes salesman will soon be sailing on high C sales. By the seashore.

The CX-F is a drop-dead gorgeous concept car from a Ford subsidiary on the brink of dropping dead. This four-wheeled Hail Mary pass is a radical departure from Jaguar's recent design heritage; it's got about as much to do with the S-Type as American car buyers. Ian Callum was at the New York auto show to talk the talk about how his company's new look can pull it back from the brink. Again. Still. But the CX-F concept car wasn't there to walk the talk. This led to some talk: why does someone want the CX-F to disappear? Or has Jag's ballroom budget been busted?

Audi brought their S5 coupe into the Big Apple, complete with the Audi R8's front end. The side profile is… um… let me check the photos… it is. Taken as a hole, the S5 plugs the last remaining gap in Audi's lineup (the one that helped you understand the difference between the various model sizes). If German pricing is any indication, the A5/S5 will make the A4/S4 look like a Blue Light Special. We're talking $46,639.19 and $63,064.33, before tax, title, registration and floor mats.  

Lincoln's MKR concept revives the great American tradition of gaudy, sci-fi showcars. Luckily, only the Twin-Force (twin turbo six) powerplant is slated for production– despite rumors that the gargantuan grille may someday see service. The concept allegedly makes 415 horsepower, so we can bet on a final number closer to 315hp when all's said and done. If Ford pawns off Jaguar, Lincoln might actually be allowed to build its own cars again. If so, this engine– not the wacky sheetmetal– will help guide Lincoln's stewards towards what a luxury car should be.

Surprise! Kia didn't have the most exciting cars on display at the New York auto show. I wanted to ask a flackling a few questions, but their display was all about Pink Floyd. Is there anybody out there? out there? out there? Nope. The Kia Rondo taxi cab concept spoke for itself. As the Ford Crown Vic dies, the taxi fleet market is looking for the next cheap thing. With no upmarket retail image to sully, Kia would be happy to oblige.

Last but least, Toyota showed the ugliest car Toyota has built in recent memory. Whereas the new Camry and RAV4 sit somewhere between bland, sharp looking and modern, the new Highlander runs the gamut from vile to noxious to Nosferatu. Not to put too fine a point on it, it's a rolling emetic. 

Strange to say, Toyota's becoming more American every day. Think about it: too many overlapping products (Highlander, RAV4, 4Runner), expecting ugly cars to sell on their strong brand name (Highlander) and investing in new SUVs while gas prices ascend to the heavens (Highlander). See? Another great reason to go to the show: you can watch assimilation in action. Or is that inaction?

Fair disclosure: I love Buicks. More accurately, I love Buicks from the ’60's and earlier. For the last forty years or so, GM's “near luxury” brand has forsaken me at the altar without so much as a text message. Me and everyone else. The carmaker that cranked out overlapping, maligned, entirely functional automobiles like the Regal, Park Avenue, LeSabre and Century is in dire straits. This year, the average Buick dealer sold fewer than seven units per month. So when Buick brass invited ttac.com to check out their latest rescue plan at a Manhattan bank vault-cum-restaurant, I was good to go.

Going in, I knew what automotive delights would be sur la table: the face lifted Buick LaCrosse and the new “Super” LaCrosse and Lucerne. Entering the building which once catered to Buick’s doctor-lawyer-mid-management buyers, I harbored unreasonably optimistic expectations. After all, the Buick brand is clearly on the rebound– in China. 

Working with its mandatory “partner” in the military dictatorship known (without apparent irony) as The People’s Republic of China, Buick has resurrected and stabilized its protean image of fast with class. No, they haven't pawned off the Chinese with the same lameduckmobiles available in The Land of the Free. The Chinese Buick LaCrosse is priced to go, looks great and comes complete with an honest-to-God, I-can’t-believe-this-is-a-GM-product, top-shelf interior.

When Buick’s extremely tall U.S. Brand Manager Steve Shannon kicked off his spiel about the “new” Buick, giving heavy play to the company’s profitable inroads into the burgeoning Chinese market, I knew exactly what was coming. I nudged the hack next to me and told him we were about to see a striking facsimile of the sharp looking Chinese LaCrosse. Anyone got a bridge to sell?

The “refreshed” 2008 LaCrosse is a 2007 LaCrosse with a bigger chrome grille. I hate to say it, but I preferred the old schnoz. Steve then told us the new LaCrosse Super will earn its monniker with an Olde but Goode: The General's 5.3-liter small block V8.

Provided you believe that Buick’s geriatric audience want a tire smoking vehicle that gets mid-20’s mileage, or think semi-successful rappers will suddenly raise this milquetoast motor from obscurity, or feel there's a huge market of misguided pistonheads looking for an American luxobarge that sends 300 horses through the front wheels, the Super is a guaranteed hit.

To entice the latter demographic, GM marketeers assured me that handling, braking, and steering were all improved on the LaCrosse Super. I forgot to ask whether they were referring to an improvement over the standard LaCrosse or the torque steerific Impala SS and Grand Prix. No matter. Neither possibility holds forth much prospect of pistonhead passion.

The ”Super” Lucerne offers more warmed-over kisses, leftover love. Buick’s tuned the Lucerne’s Northstar V8 from 275hp to 292hp. Rivet counters rejoice! You’ve got a new factoid to flaunt to your friends. The Lucerne Super offers eight fewer horses than the LaCrosse Super, a car that sits below it in Buick’s product line. While I’m sure the pumped-up Northstar is a refined woofler, when it comes to marketing, numbers speak louder than mufflers. 

Still, driven with a careful right foot and a company gas card, I'm sure there’s nothing particularly wrong with either the LaCrosse or Lucerne Super. The problem– the eternal General Motors problem– is the competition.

Only shoppers like me (who fancy Buick in an entirely unnatural way) would think about dropping $35 large on a LaCrosse Super. Everyone else will [continue to] drive off in something cheaper and more sensible, or opt for luxury branded cars from Germany and Japan. The same goes for the Lucerne Super, which will sticker at around $40k. BMW 335i anyone? Exactly.   

There’s only way these cars could become the smash hits Buick needs to avoid tumbling into the grave next to Oldsmobile: price. If Buick offered the Buick Supers at the same price as the standard issue LaCrosse and Lucerne– around $27k and $32k respectively– you might see some serious movement on Buick's dust-covered showroom floors. Ad campaigns could proclaim “Every LaCrosse and Lucerne comes with a 300 horsepower V8. This isn’t your father's Oldsmobile Buick.”

Given Buick's razor thin margins there ain’t no way in Canada they can afford to adopt that strategy. This leaves Buick right where I found it before I sampled their fine food and less delectable spin. (Perhaps I should have eaten in the back of the bank, where the money men held their enclave.) If Buick’s aesthetically challenged crossover doesn’t pick up some serious slack for the Lucerne and LaCrosse, Buick will continue going nowhere fast. You can take THAT to the bank.

Germany’s IGM is the world’s largest labor union. What’s more, German law dictates that half of any German corporation’s supervisory board (minus one) must be “reserved” for its members. In Volkswagen’s case, even elected board members are subject to union influence; the politically malleable state government of Lower Saxony controls VW’s elected seats. As previously described, union control over “The People’s Car” has inflicted grievous harm on VW’s brand positioning. Yet in the last year, there have been signs of change.

Traditionally, Social Democrats have controlled the government of lower Saxony. In 2003, for the first time in thirteen years, the electorate voted the conservative-minded Christian Democrats into power. While not insensible to traditional politics, the new players are not quite as close to (i.e. owned by) the unions.

As an indirect result of the election, Volkswagen managed to convince the IGM to extend their working week from 28 to 33 hours– without compensation. While it’s still a ridiculous state of affairs, the concession would have been unlikely under a Social Democrat government. And it represents an important paradigm shift in VW’s labor relations.

The second change arrived courtesy the European Union (EU), who’re moving to throw out the so-called “Volkswagen Law” unconstitutional.

The Volkswagen Law was introduced in 1960, when the government of Lower Saxony raised cash by “semi-privatizing” VW (i.e. selling part of the company to investors without losing control of the supervisory board). The legislation stipulated that no VW shareholder could exercise more than 20 percent of voting rights, regardless of the size of their stake in VW. The set-up guaranteed the government's absolute power over VW— removing the incentive for a large institutional investor to buy a large block of VW’s stock.

When it became clear that the EU would entertain a challenge to the Volkswagen Law, Porsche AG saw a chance to finally gain control of the automaker spawned by its own founder and/or assure a supply of parts and technology. By the end of this year, when the law is officially overturned, Porsche will own at least 29.9% of Volkswagen: a controlling stake.

Of course, unlike any government (even if it isn’t Social Democrat), Porsche’s main objective is to make money. This Porsche knows how to do. As the world’s most profitable automobile manufacturer, as a long standing VW partner (e.g. the Touareg and Cayenne SUV's are platform partners), Porsche knows where to cut waste and inefficiency and how to maximize margins.

Things have already started moving at VW. Volkswagen is replacing its most important vehicle as early as 2008. The company has vowed to remove the production problems that make the Golf too expensive. It will have a less complex suspension, easier to manufacture doors and simplified electronics. VW is also likely to increase its reliance on more cost-effective outsourcing. Porsche currently produces about 20 percent of its own parts; Volkswagen still makes most of its own parts.

There will also be more economical cars. VW’s high-mileage diesels will soon share DaimlerChrysler’s BLUETEC filtering system, making them available to diesel-starved, California-compliant US states. VW recently unveiled their Polo Blue Motion, which is supposed to achieve a combined 60mpg. The emphasis indicates that VW understands the need to return to producing thrifty, reliable cars for the masses.

But even with Porsche’s help and without Detroit’s enormous legacy costs (thank you socialism), VW’s union contracts make building inexpensive German cars cheaply an uphill battle. Despite VW’s dubious track record for building “German quality” products abroad— the disastrous American Rabbit (Golf) factory and the hecho-en-Mexico Mark 3 Jetta spring to mind— the company understands the unavoidable need to build products well outside the Eurozone.

VW is certainly finding its feet in China. Working with its mandatory Chinese “partners,” Volkswagen is The People’s Republic most successful passenger car manufacturer. The company built and sold over 700k Chinese vehicles last year. Providing Germany’s unions can be appeased, it’s only a matter of time before Chinese-made VW’s start flooding into European and American markets.

If Chinese cars can embody “traditional” VW quality, if the Chinese government doesn’t suddenly nationalize their automobile industry, the German marque has a fighting chance to recapture its value-based brand promise.

It’s important to remember that VW’s brand portfolio got the company into this mess. While Bentley, Lamborghini, Bugatti and now Porsche occupy the high ground, Audi’s full-line ambitions still create embarrassing overlaps with its upmarket siblings AND the “core” brand. Model redundancies between Audi, VW and SEAT have left the Spanish brand in dire straits. At the bottom of the market, Škoda is extremely healthy, China continues apace and Malaysia’s Proton is set to join the family.

Clearly, Volkswagen, makers of the “people’s car,” still can’t quite bring itself to move the brand downmarket, back to its roots. It remains to be seen whether VW’s mid-market ambitions will ever be fully realized.

My first car was a 1989 Passat station wagon. The Passat fully embodied the literal translation of the company’s name: the people’s car. It was reasonably priced, cheap to maintain and mechanically robust. The interior was roomy and practical. Compare it to today’s expensive, unreliable and over-plush Passat and you’ll know why the German automaker is in trouble. Volkswagen has lost their natural place in the market, a spot originally staked-out by Adolph Hitler.

In January 1933, twelve days after Hitler became German Chancellor, Austria’s native son announced that the German people would get a car that could travel at 60mph, fit four people and cost less than 1000 Reichsmarks. The next year, Ferdinand Porsche designed a prototype.

Production of the KdF-Wagen (KdF for “Kraft durch Freude” or “Strength through Joy”) began in 1939, the same year Germany invaded Poland. Germany’s pressing and ongoing need for military vehicles brought manufacture of the “people’s car” to an abrupt halt.

After the war, occupying British forces initially moved to sell the Wolfsburg factory. (Ford and Humber were amongst the potential buyers.) Then the Brits decided to restart production of the Beetle (as the KdF-Wagen had been rechristened). When the key players bailed, the government of the federal state of Lower Saxony stepped in.

The Beetle turned out to be the most successful car design in human history, with over 21 million examples sold. VW began exporting the Beetle around the globe, from Thailand to Sri Lanka to Nigeria to the United States of America. By 1970, the car Henry Ford II called "a little shitbox" racked-up enough sales (569,696) to become America’s top selling foreign car.

Even at the height of its success, Volkswagen was in trouble. It had put most of its eggs in a Beetle shaped basket, which was rapidly losing ground to Japanese and American-financed competition. Facing floundering finances, Volkswagen flirted with a Daimler-Benz merger. Instead, in 1964, VW bought Auto Union (later renamed Audi) from Daimler-Benz, and saved itself from ruin.

Auto Union possessed mission critical state-of-the-art technology for new models, including front wheel-drive and water-cooled engines. Initially, VW found a measure of success by lightly re-engineering Audi vehicles. In 1974, the company broke the mold with the Golf, a stunning worldwide success. Despite the innovation, the company continued to see inter-brand platform and parts sharing as the key to corporate success.

VW Chairman Carl Hahn put the theory to the test. In the late 80’s, Volkswagen bought controlling interest in Spain’s SEAT and Eastern Europe’s Skoda brands, and began slipping Volkswagen Audi Group platforms underneath new sheetmetal. Unfortunately, at the same time, VW became a victim of sister Audi’s success. As Ingolstadt’s finest took on BMW and Mercedes, VW moved into Audi’s traditional middle market, leaving lower cost SEAT and Skoda to fight it out at the budget end of the business.

Although it’s easy to see how German labor unions’ stranglehold on Wolfsburg left VW management little choice, mid-market was the worst possible place to position “the people’s car.” VW faced threats from Asian economy brands reaching upwards and German luxury brands (including Audi) reaching downwards– not to mention American and other brands fighting for its [new] target demographic.

At the same time, over-expansion and bad management were destroying the brand’s core value: bulletproof build quality. As VW's market share evaporated, rigid labor agreements forced the company’s German operations to crank out cars that couldn’t generate life sustaining margins. In a desperate move to cut the glut, Volkswagen agreed to a 28-hour work week– without significant wage reductions.

All these decisions culminated in a single vehicle: The Golf Mk V. Although it’s a fine automobile, the Golf’s latest incarnation is simply too expensive– both in terms of labor costs and manufacturing complexity– to rescue the brand’s declining fortunes. Volkswagen sells plenty of the new, German-made Golfs, but it doesn’t make a single Euro on any of them.

On the positive side, VW’s management has finally realized that it can’t change its image OR charge more money than the competition (which includes Audi). Which still leaves Volkswagen tied-up in a Gordian knot.

If Volkswagen wants to resurrect its reputation for engineering excellence and driving satisfaction– at a price point below Audi– it must do so outside of Germany (i.e. The People’s Republic of China) or find a way to dramatically reduce its labor costs inside Germany. The unions’ political power makes both options largely untenable.

The company’s only hope: Porsche’s move to overthrow the local government’s lock on majority ownership of VW. But even if the unions’ stranglehold can be broken, it still looks like the future of the brand started by a fascist dictator lies outside Europe, in a country run by a military dictatorship.