The Brits have an expression for this situation: “When you’re in a hole, the first thing you do is stop digging.”
The National Highway Transportation Safety Administration (NHTSA) issued a statement today correcting inaccurate and misleading information put out by Toyota concerning a safety recall involving 3.8 million Toyota and Lexus vehicles:
A press release put out by Toyota earlier this week about their recall of 3.8 million Toyota and Lexus vehicles inaccurately stated NHTSA had reached a conclusion “that no defect exists in vehicles in which the driver’s floor mat is compatible with the vehicle and properly secured.” NHTSA has told Toyota and consumers that removing the recalled floor mats is the most immediate way to address the safety risk and avoid the possibility of the accelerator becoming stuck. But it is simply an interim measure. This remedy does not correct the underlying defect in the vehicles involving the potential for entrapment of the accelerator by floor mats, which is related to accelerator and floor pan design. Safety is the number one priority for NHTSA and this is why officials are working with Toyota to find the right way to fix this very dangerous problem. This matter is not closed until Toyota has effectively addressed the defect by providing a suitable vehicle based solution.
Chrysler’s financial plan is where the rubber hits the road for Sergio Marchionne’s turnaround. It starts with a break-even projection for 2010 on net revenue of about $42.5b, which is more than double the projections for 2009 of $17b net revenue. As the previous sales projection chart and product plan analysis indicates, a short-term turnaround of this magnitude seems highly unlikely. Unfortunately, because Chrysler plans to spend $23b on R&D and other capital expenditures (capex) between 2010 and 2013 without injecting any fresh capital, this sales turnaround absolutely has to happen in order for the rest of the plan to move forward. Though this plan is said to be stress-tested for a zero-SAAR growth by 2011 scenario, there’s no indication that these projections consider the possibility that Chrysler’s market share won’t grow. In this weak-market/strong share growth scenario, Chrysler believes that despite a $7b drop in revenue, $.4b operating profit could be rescued through cost interventions. But it’s not specified where those cost interventions would come, leading to the inevitable assumption that product development (the crucial factor in any market share growth) would be drastically reduced. It’s worth noting again that Fiat does not plan on contributing any new capital to Chrysler.
This graph is representative of a major assumption underlying the entire Chrysler Group turnaround plan: namely, that 2009 is a trough year and that (despite the lack of new mass-market product until 2012) 2010 will see Chrysler not only holding the line on plummeting sales, but actually increasing them dramatically. Where does this optimsim come from? In part, a projected rise in SAAR. Otherwise, the only rationale for this assumption is that the financial plan requires this kind of short-term growth to succeed. [Apologies for the giant images… like Chrysler, we’re doing what we can with what we have]
Are you seeing a pattern here? Although Olivier Francois is in charge of the most damaged brand in the Chrysler Group (and yes, that’s saying a lot), at least he’s been here before with Fiat’s problem brand Lancia. So it’s no surprise that Francois’s branding video for Chrysler is remarkably similar to a Lancia ad: it projects a kind of sophisticated sexyness, with lots of celebrities, architecture and passionate-sounding classical music. The only real difference is the copy that goes on and on about the good old days when Americans arrived in style. And unlike Ralph Gilles’ Dodge presentation, Francois’ vision of Chrysler’s brand actually works. But vision is only a tiny part of the battle for the Chrysler brand, and the rest is execution. On that front, things aren’t looking quite so good
Did we mention that China’s Brilliance hasn’t been doing so, well, brilliantly? The joint venture partner of BMW, and maker of supposedly homegrown Ersatz-BMWs (the sight of which makes any BMW engineer reach for a bottle of Jägermeister) had racked up losses to the tune of 9b Chinese Yuan ($1.3b) in the first half of the year. And now, its European importer went kaputt. HSO Imports, located in tax-friendly Luxemburg, declared insolvency. To the tune of silent, but audible “hipp-hipp, hurrah!” amongst Germany’s automakers. Break out the bubbly, another attempted Chinese invasion has been repelled. Read More >
Last but not least, it’s time to play CC Clue. Nothing like blogging to make the time fly by. Daniel J. Stern identified the Volvo 122 on the second guess of that round. Can he do it again? Do I need to make them harder?
Sergio Marchionne stunned the mainstream media—literally—with his revelation that Chrysler has improved its post-C11 cash position from $4 billion to $5.7 billion. “’Some of you have been surmising we’re burning through cash,’ he said in brief remarks opening the company’s presentation of its five-year plan. ‘This is not true.’” Uh, yes, it is. Can you say “accounts payable?” When Chrysler entered into bankruptcy, it stopped production. Remember the Chrysler Cash for Clunkers product drought? Like that. Since then, Chrysler’s been taking in [meager amounts of] cash without paying out anything much, as production more or less stopped during the interregnum. And now that production has resumed? Chrysler’s about to pay those 90-day payables. Look for Fiatsler’s cash pile to erode like a California beach during an El Niño storm.
Surprise! There’s some good news coming out of Chrysler’s five-year plan presentation. Okay, the really surprising part first: Sergio Marchionne has revealed that Chrysler has $5.7B in cash, up from $4B when it exited bankruptcy in June. The somewhat less surprising part: Jeep is bringing a stop-start-equipped, diesel-powered Wrangler. How niche-tastic is that?
The problem with branding exercises like Chrysler’s decision to split Ram from Dodge, is that they tend towards abstraction. Luckily, the back-from-the-dead Nitro is a good case study for how this split will play out. You might think that based on its aggressive styling and upright stance that it would make sense as a Ram-branded vehicle. But you’d be wrong. It will actually be positioned as a youth-market vehicle, within the Dodge brand. Hit the jump for an official concept of the Nitro’s possible repackaging. Read More >
Ram is brand. According to the new Ram CEO Frank Diaz, the Ram was “overshadowing” Dodge’s non-truck products… never mind that Dodge’s truck-cued car styling made that phenomenon unavoidable. There’s not much to say about the new Ram brand, except that it will include pickups, heavy-duty trucks and commercial vehicles (read: no SUVs), marketed with the usual John Wayne, hard-working, never quit attitude. Think of any truck ad you’ve ever seen, and you’ll understand everything there is to know about Ram’s branding. Read More >
I have an ’04 Chevy Silverado 2WD pickup with the 4.3 6cyl and auto tranny. Between 1100 @1300 rpms I get a strong vibration that you can feel in the floor of the truck. It happens mostly while coasting or decelerating. It feels like the vibration you get driving a manual transmission in a high gear at too low RPM, therefore “lugging” the engine.
The trans fluid looks fine and is at the proper level. The truck has 45000 miles and a fluid change is probably in order as I bought the truck used with 36000. Any ideas? The truck runs and shifts well otherwise.
Dodge brand boss Ralph Gilles has made his presentation on the future of the Ram-head brand. First up: it’s not the Ram-head brand anymore. Beginning next year, Dodge will be represented by the word “Dodge” in black with red accents. According to Gilles, the de-Ramification of Dodge was due to the fact that trucks were dominating brand perceptions. “Mojo” seems to be Dodge’s new buzzword du jour, along with the tagline cool × fun=Dodge. In addition, Dodge will be getting away from the “base, mid, high” trim level ladder to a “lifestyle-based” trim level system. In the future, Dodges will be available in the following trims: “sweet and simple,” “fun and practical,” “uptown luxury,” “thrill seeker,” and “cool extroverted.”
Edmunds, the site that’s so not going to be sleeping in Lincoln’s bedroom, has revealed their estimates for October sales incentives. Not surprisingly, the automaker that’s been hogging Honest Abe’s pallet and has been missing saying, “we’re number one [globally],” can claim this number one spot. GM spent $4,277 of somebody else’s dollars per unit to move the metal and help buy that 4% sales increase. Hey, don’t complain—they can afford it unlike those wimpy little guys at Honda, who could only cough up $508 per unit. What’s wrong with them anyway? Oh, they’re actually profitable. OK. Moving right along, let’s check in with the rest of the gang: Read More >
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