First there was a "perception gap"– the alleged discrepancy between the quality of GM's products and public perception of the quality of GM's products. Now, for GM's import-fighter-turned-importer Saturn brand, we have an "awareness problem." GM NA Prez reached this conclusion based on some pretty solid evidence. As Automotive News [sub] helpfully points out, "Over the past 15 months, Saturn has launched a complete line of vehicles including the Aura sedan, which won 2006 North American Car of the Year. Yet Saturn sales are down 15.4 percent through April." So does Troy recognize the connection between Saturn products and the brand's disappearance off the consumer's radar? As South Africans say, ja nee. "In GM research of coastal markets, consumers who saw pictures of Saturn vehicles could not identify them," Clarke said, revealing that he regularly reads TTAC. On the other hand, “If you look at the purchase funnel, you ask, 'Do we have a consideration problem on Saturn or a conversion problem?' The fact of the matter is we have a basic awareness problem.” To sort this shit out [paraphrasing], Clarke says… lots. "Saturn's advertising must start over with something 'a little more basic' than the current 'Rethink' theme… Just as if you're introducing a new brand, we'll probably spend about the same amount of money, but we'll repurpose it so that it's more focused on awareness than consideration.” Sure; that'll do it.

The Wall Street Journal [WSJ] reveals the not-so-surprising fact that U.S. car buyers are trading down to smaller vehicles in the name of fuel economy– but they still want iPoditude, hands-free schmoozing and thermal butt management. Small car market share is climbing, from about 14 percent (2004) to over 19 percent (year to date). At the same time, the average small car price is heading upwards by some $2k – $3k. Ford Marketing Maven Jim Farley says around 30 percent of Foci are now top spec. Hang on. Does this mean that there's, you know, money in small cars? Yes! So "auto makers accustomed to building eight-cylinder cars loaded with options while sparsely equipping four-cylinder vehicles [not naming any names yet] have to adjust their production. GM President Fritz Henderson [there you go] said Wednesday that the company is trying to find more plant capacity to build more cars." Too bad GM can't convert all those truck factories to small car production. Who saw that one coming? To illustrate the premium compact trend, the WSJ brings us the ethnically-correct case study of Hugo Chau. Mr. Chau traded his 2005 Mercedes for a Sync-ed-up Ford Focus and said: "I really wanted a car that has the features and is nice to drive… The Mercedes was more like a toy, and this is something I can drive every day." What Merc was that, then? An SLR?  

Credit where credit's due: Ford was the first automaker to risk afflicting their customers with the blue screen of death and install the Microsoft SYNC system in their products. Not only did Microsoft's in-car multiple device Bluetooth-enabled voice-activation thingie not serve-up a code 10, but Ford put it in their entry-level models AND milked it with plenty o' marketing. But Bill Gate's mob let it be known from the start– as did responsible members of the media– that SYNC was heading into rival products after an 18-month "window of exclusivity." And so, at the end of the year, Ford's bragging right will be defenestrated by none other than Korean budget car maker Hyundai– a Ford wannabe if there ever was one. Yup, Hyundai is next to SYNC up. The New York Times reports "Windows Automotive will first appear in Hyundai vehicles in North America in 2010, said Martin Thall, general manager of Microsoft’s automotive business unit. Subsequent versions will give drivers voice control over navigation systems and video entertainment, in addition to cellphones and digital music players." There was a brouhaha recently when rumors circulated that Ford would allow Microsoft to use SYNC for advertising, which they vigorously denied. Or at least didn't confirm. Yet. What's the bet Kia/Hyundai show similar restraint? 

Desperate times lead to desperate measures, and Chrysler is about as desperate as they come. Or is that deceptive? First, the facts as we know then: ChryCo's just announced a new sales incentive program in "response to direct customer feedback citing the prospect of rising gas prices as a top concern." So now, anyone buying a "new and unused" Chrysler product in the U.S. can enroll in the "Let's Refuel America" promotion. They'll receive a gas card that lowers their price for gas to $2.99/gallon for three years. Participating customers will receive a card (with a PIN number) for deployment "at an eligible gas station." The card's good for regular gas, E85 or diesel fuel. After fueling is complete, the customer's personal credit card is billed at the rate of $2.99/gallon. The promotion runs until June 2, 2008. There's more fine print, but here's the big kahuna: Chrysler buyers get the card in lieu of "other incentives." Do the math, compare gas cash saved over three years vs. money not saved by discount, and, as the bard once said, "things are not always what they seem; milk can masquerade as cream." Anyone want to make any guesses on how much this deal will end-up costing Chryslerberus? Oh, and don't forget depreciation. Once ChryCo files for C11 the cards will be worthless. Of course, at that point, trade-in values won't be anything to write home about either…

As we reported last week, this is not a good time to be making pickups. At all. As we predicted ever since the new Toyota Tundra got into the game, the incentives wars on pickup trucks are getting bloody. Automotive News [sub] brings us the tale of a Folsom Lake Dodge store selling a Dodge Ram 1500 Quad Cab SLT 4×2 for $19,995. That's $12,800 off the $32,795 sticker price. At Swift Dodge, also in Sacramento, desperate dealers are offering $13k discounts on the same model. And still the trucks sit. Or, more precisely, pile-up. Dodge has a 109-day average supply of Rams. (The word on the street is that Chrysler has more Rams to ship and no one willing to take them.) Could it get any worse? You betcha. The pickup market cratered by 21 percent in April; well below the -16.6 percent year-to-date total. And now, the new Ram is set to appear, with the new Ford F-150 hot on its tailgate. To clear the deck, Chrysler will have to reach even deeper into its threadbare pockets for even greater discounts on the old trucks. Will they even sell then? One things for sure: there's precious little milk left in the Dodge Boys' cash cow. Without a plan B in the wings, Chrysler is headed straight for plan C11.

Business Week's ed forgot the "compare" side of the "compare and contrast" assignment to scribe Ian Rowley re: Japanese and American automakers' fortunes. Wander 'round TTAC for the U.S. side of the equation (hint: falling market share is rarely a good thing). For Japan, BW tells us that reduced targets for operating profits paint a bleak picture for Honda, Mazda and Mitsubishi (trimmed by 32, 29 and 45 percent, respectively). But it ain't all that bad, when you think about it. "All $3 billion of the projected decline in Honda's operating profitability is explained by the yen's sudden rise against the dollar and other currencies. Against the greenback, for example, Honda is projecting a dollar-yen rate of 100, compared to an average of 114 in the previous year. That alone is enough to wipe off $2.4 billion from profits when sales made in dollars are translated back into yen. Yet when it comes to selling vehicles Honda shows few signs of slowing down, despite weak market sales in the U.S. and Japan, its two biggest markets." All the Japanese majors are expanding production– and for good reason. "In markets including China, India, and the Middle East there is a major change in their trend toward higher ownership levels and the Japanese majors are well placed to benefit from this trend,' says Deutsche Bank's Sanger. After a tough 2008, look for an earnings recovery at Japan's carmakers." [NB: Toyota and Nissan have yet to sign-in with their numbers. We'll update you as and when.] 

For every cloud there's a silver lining, or so goes the expression. Well, we learned earlier that GM managed to lose itself $3.25 billion in the first three months of the year. Oops. One upside: they're used to it. The other: the born-again Chevrolet Malibu seems to be doing what no domestic sedan has been able to do since Robocop's Taurus. Yes, the new 'Bu's pilfer sales from the Japanese marques. J.D. Power reports [via the lads at Motor Authority] that (nearly) 20 percent of the cars traded-in for new Malibus are foreign nameplates. That's up from 12.5 percent. And the Bu buyers weren't just trading in their Kias and Hyundais, either. Toyondissans accounted for 9.7 percent of the cars used as partial down payments for the Americanized Opel. [NB: What they didn't say is that almost 60 percent of the trades were GM products.] End of the beginning? Beginning of the end? Regardless, more like the Malibu seems to be the only path worth taking.

The Detroit Free Press reports that Toyota has taken GM's position as the top seller of cars in the world. Toyota announced yesterday that it had sold 2.41m vehicles the first quarter of this year, compared to longtime volume champ GM, which sold 2.25m vehicles. Of course, Toyota beat GM in the first quarter of last year only to have the General pull out a narrow victory to hold on to its top spot for the 76th year running. Toyota has surpassed GM in production volume, and with global sales up 2.7 percent this quarter while GM's sales dropped less than one percent, this could well be the year they drive old Dixie down. So to speak. Not that the General would even stand a chance if it had to rely on the American market, where its sales are down ten percent. Curious why the fifth largest corporation in the world is having its lunch eaten? There are a few Deathwatches for that!

Not that you'd know it from reading Jamie Lareau's lead in Automotive News [sub]: "As General Motors works on its corporate turnaround, a smaller version is under way at its Saturn brand." To use a phrase popular back when Saturn was GM's import fighter (as opposed to its import provider), gag me with a spoon. So how does Lareau justify his faith in Saturn's future? Not very well. "Customers have yet to arrive in a huge numbers. Through March, Saturn's U.S. sales totaled 48,306 units, down 15.3 percent from 2007." Ain't that the truth. Apparently it's not the whole truth; Lareau feels obliged to dredge-up a two-month old quote from GM CEO Rick Wagoner re: Saturn's recovery: 'We knew what we were doing, which is to change the profile of the kinds of products that we sell at Saturn from basically low-priced cars to cars that compete on the basis of being great cars, European influence, et cetera. It's fair to say that's not an easy assignment.'" Et cetera? Anyway, is it also fair to say Saturn's failed, considering the brand's shot its proverbial new product wad and still managed to under-perform a declining U.S. new car market? Of course not. Lareau gives the last word to Saturn's recently-snubbed brand manager Jill Lajdziak. "There's no question we have to continue to build the awareness of our new products. That doesn't happen overnight. You don't just walk into a segment. You have to earn your way into the segment." 

When a Chrysler PR flack called to ask about the source for the leaky-roofed Dodge Journey tested by TTAC reviewer Michael Karesh, I asked him why his employer would re-launch itself as the "New Chrysler" before it eliminated a third to a half of its tri-branded lineup. Surely they should make the cuts and then tell the world  Chrysler's reborn; losing a bunch of models does nothing for a carmaker's rep (not to mention owners' residuals). A long silence followed. That was February. This is April. And we still don't know which models are going away. That said, ChryCo's executive vice president for North American sales is dropping hints. According to The Detroit Free Press, Steven Landry told students and alumni at a Northwood University event that "What we'll do in our business model is not build similar vehicles on the same platform that kind of look and act like they have the same DNA… To give you an example: Jeep Liberty and Dodge Nitro, basically a similar vehicle with different skin and a little bit of different interior; Chrysler Aspen and Dodge Durango, same platform; Sebring, Avenger, same platform. We're not going to have vehicles like that. We're not going to have twin vehicles, one for one brand and one for another." Does this mean the end for TTAC Ten Worst Autos winners Chrysler Aspen (9) and, more importantly, Jeep Compass (1)? Watch this space.   

While it seems perfectly natural to assume that clicks on cars reveal trends down at the showroom, I'm not entirely convinced. For example, Autoblog's post on GayWheels top ten researched vehicles would have you believe that a large number of Dodge Caliber buyers are that way inclined. So when the National Automobile Dealers Association (NADA) put out a press release claiming "interest in motorcycles increases as commuters seek two-wheel alternatives" based on their website's traffic, I was interested to see if they mentioned any "real world" impact. To their credit, they did, right from the git-go. "Motorcycle buying interest at NADAguides.com increased 48 percent in March 2008 compared to March 2007, even though sales of motorcycles were down over seven percent at the end of 2007, with NADAguides.com estimating sluggish sales so far this year." And yet, motorcycle ed Lenny Sims is ready to climb out on that limb. "We believe the current state of the economy, coupled with recent summer fuel price predictions, has caused consumer mindset about motorcycles to shift. In our opinion, motorcycles have become attractive options as primary vehicles for daily drivers — due to their fuel efficiency — and are no longer considered just a luxury, 'secondary-vehicle' purchase." Your take?

“We are satisfied with the judge’s decision,” Ford spokeswoman Kristen Kinley told Reuters. “We feel that although the case is without merit and we proved that in court, we also believe the settlement is right for our customers.” Well duh. Some 800k Ford owners and lessees file a class-action lawsuit against the Blue Oval Boyz for lost value– due to the whole Firestone/Explorer rollover deal– and FoMoCo gives them a discount towards the purchase of a new Ford. We’re talking certificates good for $500 off a new Explorer, or $300 off any other Ford, Mercury or Lincoln product. Oh, and the plaintiffs’ lawyers get $25m. Hang on. Say half of those people buy a new Ford. Excluding Ford’s own legal fees (which are probably part of their normal overhead) and the discount itself (as usual), the marketing cost for those “disgruntled customers'” sales will cost Ford just $62.50 each. Given the money to be made on trade-ins and re-financing… Call me crazy, but this class action lawsuit thing sounds a genuine business opportunity. [props to Cammy Corrigan for the link]

While talking heads like John McCain bob and wobble about the state of our economy, for the RV industry there is no doubt. It's recession time. Forest City, Iowa's famous Winnebego has seen their earnings fall by 67 percent this past quarter, after ten years of straight growth. The obvious reason not to buy a giant motor home: gas prices. As we saw yesterday, prices everywhere are up, up, up. Especially diesel. What kind of mileage does a typical RV get? Gas-powered homes-on-wheels manage about five mpg, whereas the diesel rigs average nine mpg. More troubling though, is the prospect that people aren't buying RVs because they can no longer afford big-ticket items. Especially as the typical RV owner is in the sweet-spot of the disposable income range: empty nest, soon to be retired boomers, aged 55 – 60. I mean, if not them, who? Cutting back on land yacht road trips because of a temporary spike in fuel prices is one thing. Not buying the behemoths in the first place is another. (As is buying your dream RV and then having a bank repossess it.) Bottom line: RVs might just be gigantic dead canaries in a very toxic coal mine.