As much as I enjoy vigorous debate, I abhor pseudo-science. From The Bermuda Triangle to past life regression, I just can’t deal. If the subject matter in question is faith-based like, say, a talking salamander's role in the development of Mormonism, I’m good. But the moment an aspiring conversationalist tries to deploy scientific explanations for a fundamentally irrational belief system– aliens sucking up Air Force planes from the Gulf Of Mexico for anal experimentation or Joan of Arc reborn as a 42-year-old housewife in Hackensack, New Jersey– I’m out. So when I read that insurance quote provider Lee Romanov says your star sign affects your chances of having an automobile accident, I just had to ring her up. Yes, it's been that kind of day.

You can hear my righteous indignation on the podcast below. Truth be told, I've got no truck with Ms. Romanov’s basic assertion that automobile insurance industry rates seem capricious (even if she seems particularly oblivious the existence of actuarial tables). Certainly, one can understand the rational basis for mandatory car insurance: ensuring that drivers can pay for their mistakes. But in practice, the business is rife with greed, fraud, inequity and counterintuitive logic.

Here in Rhode Island, a state only slightly less corrupt than Botswana, insurance fraud is as common as people who drink their java with five sugars. I remember the first time I took a bent motor to a local auto body shop. The “repair specialist” took one look at the damage and asked “How ‘bout we claim $500 and I’ll kick you back a hundred?” Talk about a trick question. I don’t think the idea that his customers might put a higher value on the quality of the actual repairs than their ability to make a quick buck ever occurred to him. Or, for that matter, most of his customers. 

According to a recent study, one out of every three Americans thinks it’s OK to pad their insurance claims. In dollar terms, insurance fraud costs the industry $30b a year. While health care and personal property fraud account for the lion's share of this thievery, the automotive part of the program racks-up some $8b (not including actual automotive theft). For example, on Saturday, the owner of Louis and Sons Auto Body in West New York was convicted of defrauding insurance companies out of $10k. Like tens of thousands of body shops across the nation, Louis Rivadeneira inflated claims and charged insurers for parts he never bought.

If you’re thinking “…and never installed” you’d be dead right. (Perhaps literally.) All those Americans happy to top-up their insurance claims might want to think about Louis’ “de-contenting” (i.e. leaving out parts or substituting inferior parts) the next time they drop off their car for repair. Never mind; the man received a fine, a slap on the wrists and promised never, ever to do it again. So policy holders and auto body shops can continue to commit fraud on an epic scale without fear of hard time. Of course, the insurance companies themselves complete this unholy trinity.

For example, all the safety equipment for which the major automotive insurers have lobbied so hard have added extra cost (not to mention weight and complexity) to the average automobile, without which your premium may be raised, with which you may not be any safer (e.g. ABS braking). Of course, all the safety-related bells and whistles don't lower drivers’ premiums that much because the cost of fixing them raises the cost of repair, which the insurer must then pay, which gives the auto body shop another chance to commit fraud, which raises premiums. 

To be fair, the insurance industry’s major players shell out big bucks to try to crack down on fraud and protect their assets. Meanwhile, they stand by while the government gives driving licenses to people who can’t read a warning sign or, in fact, drive. And there are plenty of independent agencies– many with big name insurance company stickers on their doors– that are ready, willing and able to pocket premiums and not provide insurance (a growing scam for new and illegal immigrants) or sell policies by the month (just long enough for drivers to get their cars registered or their licenses renewed). Clearly, car insurance is a racket for many people on many levels.

In fact, the situation's so nuts that charging people premiums according to their astrological sign makes about as much sense as the current set-up. And while I believe that astrological readings are simply a combination of observation, guesswork, playing the law of averages and picking-up on psychological “tells,” I’m not against using the practice to get people to drive like responsible adults. “The moon is in Uranus– and so is your head if you talk on the cell while driving. And your son… Lenny? Liberace? Leo? Leo is getting retrogrades; don’t let him drive without an adult on any day with an ‘a’ in it.” Works for me.

[A free copy of Ms. Romanov's book "Car Carma" for the first person who can identify the astrological car referred to in the song with the lyrics "WELL SHE ISN'T!"]

Whenever I show up at my weekly poker game, the boys (being boys) are always interested in what I'm driving. How much? How fast? Not this week. This week, all my friends piled into the driveway and laughed. Can you blame them? Ford's new Expedition EL is so large I had to park it diagonally to keep its butt off the street. The wheels come up to my thigh. One 6'5" friend couldn't see the roof. Remember King Kong Bundy? He now wears dubs.

A small bump in the road traversed at the slightest discernible angle on dry pavement at 50mph will send the Shelby GT500’s rear end sideways with enough violence to engage the traction control. If you don't care, God bless you. I fully understand and appreciate your perspective: muscle cars are about power, not finesse. Finesse is for people who aren’t willing to risk their childrens' future to experience a few moments of high horsepower hoonery. Fine. But include me out.

The sex industry has a motto: if you don't get it, it's not for you. Never mind all those activities involving non-reproductive bodily fluids, military fatigues and/or extra-legal restraining orders, I don't get hookers. I'm not saying I don't understand why other people employ prostitutes, and I'm not saying I've never paid for sex (and not in that "one way or another" sense). But if I had done so, I am saying I probably would have found it an incredibly unsatisfying experience. (Can you imagine the tortuous language OJ Simpson must use in his non-confessional confessional?) Same goes for rental cars.

I am fully aware that many pistonheads relish rentals, safe in the knowledge that there won't be any long-term consequences for any motorized misbehavior (provided they tick the right boxes). But I can't stand them (rental cars, not my beloved pistonheads). I suppose I might change my mind if I ever rented a car worth driving– as opposed to the asthmatic pre-beaters the rental companies foist on their suspecting customers. Ford Mustang V6? Chevrolet Impala? Toyota Vanilla? You gotta be kidding. Quite simply, I've never met a rental car I liked.

And while I will never compromise my commitment to calling it like I see it, I have just about enough tact left in me not to want to return someone else's car in pieces. That said, it happens. I've knocked the wing mirror off a Land Rover, watched an electric gate crease the side of a Civic and woken-up to an Infiniti sitting on milk crates (as opposed to tires). And I've seen journos crash press cars. In all cases, the PR flacks involved trotted out the "as long as no one was hurt" shibboleth. Which says a lot about PR flacks– one way or another.

When it comes to lunching a rental car, I reckon the paperwork must make it worth not crashing. Sure, you only pay the deductible, but insurance companies know all too well that traumatizing all parties involved with endless, excessive, obsessive bureaucracy is the best way to prevent future accidents. And, of course, you have to fill out a police report. "I was driving at a safe and reasonable speed when the car's front end suddenly and inexplicably began to understeer. The vehicle plowed nose-first into the curb, at approximately 25 miles per hour." Thankfully, I can only imagine the look the trooper must give drivers of recently creased automobiles when they hand over the rental car agreement. 

In short, I don't like breaking cars. It runs against my nature, imprinted into my subconscious mind during all those times I broke my own car with one stupid ass stunt or another. [Note to self: check road for leaves before testing tire adhesion.] And while I can appreciate the skills involved in driving a really horrible car really fast, I find that the really horrible cars that rental car companies provide are so horrible that driving them fast is, well, horrible. And for me, defying death is not half as satisfying as trying to find my way where I'm going without wandering into the middle of a 3am drag race in the wrong part of Philadelphia (no, really).

Anyway, JD Power reckons the rental car industry is getting better: faster, happier, shinier and more customer friendly. Well, good for them. And good for all the poor sad bastards who must take their laptops to places where people couldn't care less if they died in a horrible car wreck, never mind whether or not they made a compelling PowerPoint presentation. I’ve seen those haunted faces in the rental shuttles. I’ve heard their loud locker room talk with their cohorts, as they prepare their egos to drive a car that grinds them down with the mechanical equivalent of an endless loop of Pink Floyd’s The Wall.

I know there are exotic car rental companies that will loan you a Porsche, Ferrari or Merc. And the mainstream players are beginning to catch on that people are willing to pay extra for a car that doesn’t suck-out their soul. But until and unless Hertz et al rent out an Audi S4 for the price of a V6 Mustang, I’m always going to regard that walk to space H8 as a stroll down death row. They can wash them, clean them and de-cigarette smoke them, but rental cars will always be a kind of automotive purgatory, always endured rather than enjoyed. Which probably accounts for so many enthusiasts’ desire to punish their rentals. And that, my friends, is kinky.

I suppose it was only a matter of time before some video maven caught site of The Truth About Cars (TTAC) and thought, hmmm, that might make an interesting TV show. Obviously, any program along those lines would A) have about as much chance of landing a major sponsor as a Kansas fisherman pulling a swordfish from the Keith Seblius Resevoir and B) would boldly go where Top Gear has gone before. With pay-per-view channels and YouTube, the first objection is surmountable. The second is more problematic. Top Gear is a well-funded (via the UK's TV tax) program with all the best toys and… Jeremy Clarkson. Yes, even from that tiny, cold island in the North Sea, the semi-journalistic stylings of "Jezza" cast a long shadow over anyone who seeks to tell the truth about cars with rhetorical flourish. I think TTAC TV would have one main advantage over Top Gear: no Jeremy Clarkson. While I admire the man's wit, prose and telegenic charisma, he's a first class bully and a meglomaniac, with bells on. If Lieberman, Johnson, Farago and Spinelli ever get it together video-wise, more than half the fun would come from the "happy talk" interplay between the different personalities. Bottom line: we all respect each other enough to provide the open space for our natural creativity to emerge. That said, this podcast is a celebration of Jonny's virtuosity mit de RS4. Another Clarkson? Please God no.  

I like to drive fast. I don't think I'm breaking new rhetorical ground to suggest that anyone who likes to drive fast violates the speed limit from time to time. In fact, depending on your predilection for automotive velocity, "from time to time" easily becomes "all the time." There are plenty of ways to justify chronic speeding: posted speed limits are unrealistic (set low to reflect average vehicles' and drivers' capabilities), they're a guideline rather than an absolute indication of safe speed (which don't reflect variable conditions such as weather, road surface, traffic, etc.), they're relatively unimportant (compared to inattentive, reckless or drunk driving) and the vast majority of motorists exceed them anyway. Strangely, the last excuse is the most potent.

It's a bizarre concept for a democratic government: enact and enforce a law which the majority of people don't obey. It gets even stranger when you consider the fact that the majority of citizens support the law that they know they don't obey (hence its creation and continuation). Of course, the speed limit is not the first or best example of this hypocritical happenstance. From 1920 to 1933, America lived under the strictures of the Eighteenth Amendment to the US Constitution. Despite popular support for the "prohibition" against the sale and distribution of alcohol, Americans kept on drinking. In the same sense, American motorists kept driving above 55mph when Richard Nixon's administration used federal highway funds to force the states to adopt a “national” speed limit.

In both cases, arguments for the legislation were logical and coherent. There's no question that alcohol was/is America's most destructive drug, blighting the lives of millions, disrupting our economic efficiency and causing thousands of fatalities. There's also no question that driving 55mph was/is an excellent way to save billions of gallons of imported oil. (I might even spot you the national speed limit's positive effect on highway fatalities– if it were actually true.) But no matter how you slice it, neither law significantly curtailed the proscribed behavior. This made enforcement a horrendously expensive, Sisyphusian task.

One of the key differences between Prohibition and unobserved speed limits is that the latter is self-financing. One wonders if Prohibition might have lasted longer if the government agencies in charge of its enforcement had received the financial fruits of current RICO statutes, which provide for confiscation of criminal assets. In contrast, police who write speeding tickets can use the money to pay for police who write speeding tickets. This being America, it’s not quite that straight forward. Speeding tickets fall under local and state jurisdiction; the revenues generated are often subject to “land grabs” by money hungry local legislators.

In England, it is that simple. The national government has “ring fenced” the money generated by speeding tickets: mandating that local “safety camera partnerships” must spend the revenue from speed enforcement on speed enforcement. This supposedly virtuous circle has led to an explosion of speed cameras, a huge increase in speeding tickets and a very nasty unintended consequence. Just as Prohibition eroded the American public’s respect for law and law enforcement, the United Kingdom’s extremely effective anti-speeding jihad has undermined the public’s respect for the police.

At the risk of alienating road safety-minded readers, many of whom have suffered personal losses from traffic fatalities, the issue of the public’s faith in its police force is far more important than speed-related road safety. When a law criminalizes a behavior practiced by the majority of its citizens, it criminalizes its citizens. When the police rigorously enforce this law, hypocritically enough, the public comes to resent the police. Keep in mind that most people never encounter their police force; speeding tickets written “when I wasn’t really doing anything wrong” do nothing to engender a relationship of mutual respect.

Unlike Prohibition, there is no obvious answer to this state of affairs; you can’t simply “repeal” (i.e. abandon) speed limits. Or can you? If you ask the average Joe if they think police should write speeding tickets only in those situations where a motorist was driving “faster than was safe for the prevailing conditions” you’d have little to no disagreement. That kind of policy would require judicious human enforcement by officers prioritizing road safety, rather than revenue collection. It would be far more expensive that a passive device snapping off tickets to anyone and everyone violating an inflexible, predetermined speed limit.

In the US, the aggressiveness of speed enforcement varies widely. Certain states are now experimenting with speed cameras, blundering straight into the old axiom that those who do not learn from history are condemned to repeat it. Meanwhile, the situation in the UK seems to be reaching some sort of breaking point, with anti-speed camera campaigners gaining public sympathy and support. The country is learning that public policy based on moral posturing, rather than common sense and real world behavior, is doomed to failure.

[podcast is with Paul Smith, founder of the UK's Safe Speed ] 

It’s funny how some things stick in your head. I’ll never forget Hispanic actor Ricardo Montalban’s satisfaction with the 1976 Chrysler Cordoba: “I like what they’ve done to my car!” My mind also reserves a mental YouTube for the actor’s penchant for “soft Corinthian leather.” Of course, the fact that the term was invented by copy writers at Young & Rubicam, and that the hides in question were equestrian in origin, helped write the ROM. It’s not clear if the Cordoba campaign was the first time a car hooked into a post-modern ironic vibe, but it certainly set the tone for the company for years to follow. In fact, you could say that the 300 is the logical inheritor of this self-referential pomposity. Well, at least that’s what I thought this morning when I watched a beige 300 with arc eyes chrome wheels, a mesh front grill and a dark tan fake Landau roof (complete with matching trunk lid and, wait for it, gas door cover) roll into the local Amazing! porno store parking lot. Does that mean that Chrysler products aren’t just badge engineered, but somehow deeply forever faux? I know: let’s ask Jonny! 

Aside from the early, dainty-looking Mustangs and their Shelby siblings, I never really "got" the whole 'Stang cult. During my formative years, the mucho macho models cruising the mean streets of Providence were bloated Pony Car parodies; great honking beasts with about as much cornering prowess as a breeze block. The late '70's and '80's Mustangs were small, slow and stupid looking. In the '90's, the design started to come right and SVO made the model into a defensible choice for power mad pistonheads. But I still couldn't understand why anyone would lionize a car whose heyday lay almost forty years in the past. And then the "new" Mustang arrived. Now that I get: a Disney-style re-imagining of an idealized Mustang pulled from our collective unconscious. But the interior! And what's with the solid rear axle? Still, the GT sounds nice, goes OK and looks great. According to Jonny Lieberman, the Shelby GT-H sounds better, goes faster and looks like it sounds and goes. Listen to him preach the gospel to a former Mustang atheist turned agnostic.  

Was he pushed or did he jump? Either way, Billy Ford’s resignation as CEO of the family firm is yet more proof that The Blue Oval’s in big trouble. Not that he’s been trying to hide the fact. In his Newsweek interview, Billy telegraphed his intention to fall on his sword: “I've always said that titles are not important to me… What's important is getting this company headed in the right direction." And the new man is… Alan Mulally, Boeing’s now former Executive Vice President. Not to coin a phrase, one wonders if Billy told the board, “If it’s not Boeing, I’m not going.”

Billy’s press release hails FoMoCo’s new President and CEO and explains the choice: “Alan has deep experience in customer satisfaction, manufacturing, supplier relations and labor relations, all of which have applications to the challenges of Ford. He also has the personality and team-building skills that will help guide our Company in the right direction.” The aeronautical and astronautical engineer joined Boeing straight out of college in '69. Mulally's “customer experience” is limited to convincing airlines to buy jets. Not to put too fine a point on it, the Kansas native sure ain’t no car guy.

Still, point taken on the manufacturing and labor relations side of things. An assembly line is an assembly line, whether you're building lumbering behemoths that can or can not fly. And a good chunk of Mulally’s Boeing career was spent investigating jet crashes caused by weather– a situation not a million miles away from the effect of gas prices on Ford’s SUV business. And he’s certainly familiar with Ford-sized executive salaries. Forbes reports that Mulally drew down $9,961,985 last year, with $6,362,599 in stock options taxiing for takeoff.

One of the main reasons Billy Ford likes Mulally is that Mulally likes Ford. In his book “Working Together,” author James P. Lewis chronicled Mulally’s success at Boeing, from the depths of post-911 to the launch of the new 787. Lewis reports that Mulally was inspired by Ford’s last turnaround, starring… the Ford Taurus. In their statements to the press, both Billy and Alan referred to this appointment as karmic payback: “Just as I thought it was appropriate to apply lessons learned from Ford to Boeing,” Mulally said. “I believe the reverse is true as well.”

In case you were wondering how Mulally pulled Boeing out its nosedive to earn himself the top slot at America’s number three automaker, it’s all about the product, stupid. Despite the post-911 crash in airplane sales, Mulally’s team pushed forward on streamlining the company’s Byzantine production process and developing new planes. When the market eventually bounced back, Boeing was ready. You could argue that a rising tide lifts all Executive Veeps, and what else could Boeing have done anyway, but there’s no doubt that Mulally helped the Seattle-based company make better, faster and cheaper jets.

There’s also no question about Mulally’s leadership abilities. His “team-building skills” within and without Boeing are legendary. In a March ’06 article for Design News, Boeing’s Chief Engineer of the 777's interior design sang Mulally’s praises. "Alan exhibits every quality that you would want to see in a good leader–vision, trust, integrity, and, above all, an overwhelming enthusiasm.” George Brody also said, “He's just dynamic when it comes to getting people to pull together." Of course, a big part of Mulally’s confidence comes from his technical know-how. One wonders how long it will take Ford’s new CEO to get up to speed on the intricacies of car building.

Or if Mulally can readjust his internal clock to the car industry’s three year product cycles. For 37 years, the Boeing man was attuned to a two decade gap between a new product’s conception and customer deliveries. (You can count the number of planes he’s worked on with one hand.) And that’s on top of strategic thinking that extends out 40 years or more (a modern aircraft can stay in service 60 years). Ford has eight brands and dozens of models, each of which require some form of design, engineering and marketing right now– in addition to the models on the drawing boards or in development.

Again, Mulally ain’t no car guy. In fact, his appointment is reminiscent of John Sculley’s ascension to the top post at Apple Computer. The Pepsi Prez was also a hugely successful, gregarious outsider charged with turning around a failing multinational with a deeply entrenched corporate culture, that enjoyed tremendous customer loyalty. Sculley was also overseen by the same man who used to run the joint. Suffice it to say, Sculley’s tenure did nothing to help Apple, and plenty to hurt it. It remains to be seen if Mulally can win friends and influence people who are already clinging to their jobs by the skin of their teeth.

Mulally’s first test will be overseeing the deal or no deal happening or not happening at Aston, Land Rover and Jaguar. And then, it’s union time. Then we’ll see if Mullaly’s got what it takes to pull the yoke and save Ford from a death spiral into Chapter 11.

So, General Motors has pulled its sponsorship from Survivor. Flackmeister Ryndee S. Carney claimed GM came to its decision “months ago, before the show made its recent announcement." The announcement in question: Survivor will divide its competitors by race and ethnicity. Carney quashed the idea that GM pulled the plug in response to the controversial formatting in no certain terms: “I think it's just a coincidence.” Think? Carney’s comment brings into question GM’s ability to tell the truth and, thus, to survive its evaporating market share, bloated dealer network, distended brand portfolio, lackluster product lines and horrendous cost structure.

Not to belabor the point (much), GM claims they pulled their $14.7m plug on Survivor three months ago. Yet on May 12th, GM and CBS publicly revealed The General's intention to increase their Survivor ad spend. In any case, Carney played dumb, insisting that GM was simply shifting support to TV shows offering product placement. "There's a limited number of possibilities as to how you can integrate a car or truck in a show [when] people spend their whole time on an island." Despite (or because of) the fact that a Pontiac Aztek played a role in a Survivor episode, Carney’s stab at PR humor set exactly the wrong tone. Instead of addressing a serious issue head on, GM smiled and sang “It wazzunt me.”  

Not to belabor the point (again), is it too much to ask GM to tell the truth? OK, Survivor sponsorship isn’t a big deal– even if would be nice to see one of America’s largest companies declare its distaste for a TV program that engenders racial or ethnic divisiveness. What about the fact that GM is cutting production in the fourth quarter by 12 percent, or 150k vehicles?  Now that’s serious; the move will torpedo fourth quarter revenues. The company’s press release states that the cut "does not reflect a reduction in GM's sales outlook but is consistent with our strategy to reduce low-margin daily rentals, and takes into account the plan to shift production of pickups to the next-generation pickups during the fourth quarter." No shit?

I guess I’m the only one who remembers that GM originally planned to cut production by eight percent, and consider the fact that the axe is falling on GM’s new[ish] gas-guzzling SUV’s somehow related to the increased decrease. To wit: during a recent conference call with reporters and auto industry analysts, GM’s Supreme Spinmeister Paul Ballew declared that GM’s production cutbacks were not a response to “a sudden deterioration in conditions.” "It's new news to you," Ballew said, "but it's not new to us." In other words, we know what we’re doing and we sure as Hell don’t have to tell you about it.

The first proposition is highly suspect, the second highly inadvisable. As I’ve said here before, GM CEO Rabid Rick Wagoner’s failure to articulate a specific, honest, clear and coherent turnaround plan that includes all of GM’s “stakeholders” will be his undoing. Yes, Rabid Rick says he has one, and frequently tells the world that The General’s adherence to this unexpressed timeline proceeds apace. Is it inconceivable that Wagoner’s reluctance to publicly declare his comprehensive recovery strategy reflect his unwillingness to be held to its dictates?

Yes, it’s inconceivable. If I held GM stock, or worked for the company, or ran a GM store, I would be furious at The General’s lack of transparency and accountability. “Keep the faith” is all well and good when you’re minting money, but that and $1.45 won’t get you downtown when the buses are no longer running (so to speak). Clearly, GM adheres to America’s new de facto standard for corporate citizenship: spin, gloss, weasel and waffle.

Take GM’s latest sales results. What are we to make of August’s 3.8 percent retail sales jump? First, it’s a year-on-year result, compared to last August’s cataclysmic post “Employee Discount for Everyone” hangover, when GM’s sales fell off a cliff. Second, sales of GM’s low-profit plain Jane sedans account for much of the rise. And third, we hear tell that GM’s “Anyone with a Pulse” financing continues, a development that will eventually hoist GM by its own petard. According to GM Marketing Maven Mark LaNeve, “Customers clearly are responding to the quality, value, versatility and fuel efficiency of our cars and trucks.”

Maybe so. But GM’s failure to change its business model, the implementation of forthcoming production cuts, the resulting affect on its cash position and the ongoing threat of a strike at bankrupt parts supplier Delphi overshadow any August cheer. And now that Billy Ford has admitted The Blue Oval’s dire straits, it’s clear that GM’s execs continue to live on an island of their own making, facing stronger, smarter and better fed opposition. News flash: GM’s tribe will not survive.

Last Thursday, Mark LeNeve declared that General Motors has “turned a corner.” Obviously, GM’s Vice President of North American Sales and Marketing was unaware of the phrase’s historical baggage. To wit: General William Westmoreland’s famous announcement that the American war effort in Indochina had “turned a corner”– just before North Vietnam’s Tet Offensive returned the corner. Since ‘68, any US authority figure announcing an angle exceeded instantly reveals themselves as a master of unintended irony, and sets themselves up for an ignominious defeat.

Metaphorical misstep aside, LaNeve’s triumphalism seems to reflect normal corporate dishonestly. Surely LaNeve was simply lying when he claimed that “interest in new vehicle models such as the 2007 Chevrolet Tahoe SUV and a potential sales lift from upcoming products are helping put GM back in contention after excruciating declines in recent years.” After all, the statement is positively dizzy with spin. “Interest in new models” (as opposed to actual sales) is leading to a “potential sales lift” (as opposed to an actual sales increase) which is “helping to put GM in contention” (as opposed to putting GM back in the black) and reversing “declines in recent years” (as opposed to, say, declines during LaNeve’s tenure). But no, I honestly believe LaNeve honestly believes the unbelievable: that GM’s on the rebound.

You see, the thing is, the above statement about GM’s prospects isn’t a direct quote. It’s paraphrasing provided by automotive journalist Brett Clanton. In a Detroit News article on the GM Veep’s unbridled optimism, LaNeve’s surrogate spinmeister failed to provide any evidence for “growing signs that a massive turnaround effort at GM is gaining strength.” Sure, the article flags several ways GM could be derailed by “factors outside its control.” But its tone, tenor and existence all indicate that LaNeve’s comments reflect an accepted Detroit shibboleth: GM’s on the rebound!

By now, even casual observers know GM’s unofficial turnaround strategy: we’re gonna do what we’ve always done better than we’ve done it in “recent years.” Remember those intractable problems that brought us to the brink of bankruptcy: legacy and labor costs, bureaucracy, a bloated dealer network, badge engineering, ill-defined brands, etc.? Forgeddaboutit. We’ll just sell our best assets, close some factories, pay-off some workers, release a dozen or so new products (most of which look suspiciously like the old products) and everything will be allllllright.

My God, how wrong can you be? At last Wednesday’s press launch of GM’s new(ish) pickup trucks, GM Car Czar Bob Lutz once again explored the possibilities. “The effect [of high gas prices] will decrease over time as people adjust to the thought of $3 a gallon, just as they did when it was $2 a gallon and just as they did when it was $1 a gallon.” In other words, sooner or later, GM’s truck sales will return to “normal” and everything will be allllllright. And then GM CEO Rabid Rick Wagoner stepped up to the microphone and raised the stakes on Maximum Bob's bluff. GM’s new(ish) pickups are “the most important part of our North American turnaround plan.”

If that statement doesn’t send a shiver down Detroit’s collective spine, nothing will. Last month, GM’s pickup truck sales slumped thirty-two percent. While that’s a year-on-year comparison against last summer's Fire Sale For All program, it’s clear that GM’s second string cash cow is being gored by gas prices and, less obviously, a downturn in the housing industry. A SMALL company called BIGresearch says over 50% of pickup truck drivers planning on buying a new vehicle in the next six months are considering a more fuel efficient sedan or… wait for it… a hybrid.

Shrinking market? You betcha. Less profitable market? Uh-huh. Ford’s dropped the price on America’s best-selling pickup (the F150) by $1400. Toyota is about to enter the fray with its keenly priced, full-sized Tundra. Bottom line: the pickup truck market is contracting even as margins are being squeezed. At best, GM is about to make a great landing at the wrong airport. At worst, it’s missing the boat.

In today’s market, small cars are where it’s at. If GM thinks the Cobalt and Aveo can carry the corporation through another gas price escalation— even as Toyota, Nissan and Honda flood the market with their latest fuel-sipping econoboxes— they’ve got another thing coming. I reckon it starts with a “b.”

But even if you dismiss the possibility of Chapter 11, why do GM watchers grant the company turned around status when its leaders [continue to] refuse to provide a timeline or targets for a return to profitability? Mark LaNeve’s and his supporters may hide behind vague claims that they can see the light at the end of the tunnel, but they fail to understand that the beckoning light in the distance is… death.

According to GM, happy days are here again.  Profits are up, costs are down and the company’s turnaround plan is on track.  The automotive media have swallowed The General’s spiel hook, line and sinker.  The financial markets are ready, willing and able to view The General’s second quarter losses through the automaker’s prism of perpetual positivism, sending GM’s stock price to its highest level since last October.  Well folks, it ain’t necessarily so…

First, let’s not forget that a $3.2b dollar loss is a $3.2b dollar loss.  Sure, if GM hadn’t bought out 34,410 UAW workers’ contracts, it might’ve made a $1.2b profit.  And if my grandmother had wheels, she’d be one of those trolley cars that GM removed from city streets in the 40’s.  More to the point, GM’s US market share is still in decline, down 3.1% from last year, to 24%.  Until and unless that changes, the “one time charges” related to production downsizing won’t be enough.  Or, if you prefer, they signal the beginning of a trend, not the end.

So if things are so bad for GM, where did all the profit come from?  As TTAC’s Deep Throat has pointed out, GM’s public promise to wean itself off fleet sales, to boost residuals and transaction prices, isn’t being born out at the sharp end.  In the second financial quarter, GM sold at least 120k high content units to rental fleets.  The General also sold their new LWB GMT-900 SUV’s to dealers, which carry fat margins.  [NB: In this case, “sold” means shipped to dealers.]

And then there’s accounting. For the second financial quarter’s statement, GM made some pension calculation adjustments, reduced their warranty charge (lowering their warranty reserve fund on the supposition that their vehicles are getting better), booked some workers costs (which previously appeared as expenses) against previously charged restructuring costs and benefitted from a strengthening Canadian dollar. 

In fact, if not for the GMAC dividend of $900m, GM’s cash position wouldn’t have changed.  So while it looks like The General’s making earnings, cash generation from operations isn’t getting better.  GM still has an inventory problem at its dealers, which isn’t going to go away without massive incentives.  And thanks to hundreds of thousands of “zero percent financing for anyone with a pulse” deals, the loan rate buy down is probably on the order of several thousand dollars per vehicle. 

Pistonheads have a better grasp of the situation than the bean counters.  They know GM has failed to produce a runaway best seller (or sellers) to replace their [once] hugely profitable SUV’s.  They know that it’s business as usual down at their local Buick, Chevy, Cadillac, Saab, Saturn, GMC and Pontiac dealer— at least from a product point of view.  From a financial perspective, there’s been a huge change.  Again, GM’s dealers have been writing bad paper; lots and lots of bad paper. 

It’s Mitsubishi redux.  The Japanese manufacturer’s US fortunes foundered on the rocks of easy credit, when hundreds of thousands of borrowers defaulted on their loans.  There is every reason to believe GM’s bad paper will also spontaneously combust, leaving dealer lots stuffed with vehicles no one wants and a big old hole in their accounts receivable.  The practice may appear better than offering large discounts on slow selling GM products.  But if you think about the implications of writing bad loans in the medium to long term, it isn’t. 

There are other dark clouds on the horizon. GM watchers seem to have forgotten about bankrupt auto parts supplier Delphi.  While most industry wonks discount the possibility of a strike– now that GM’s paid thousands of Delphi’s UAW workers not to work– there’s still an August drop deadline for union – management agreement, and no agreement.  At the same time, we hear ominous rumblings that other GM suppliers may not make it out of Chapter 11. And while analysts have hip-hip-hoorayed GM’s job cuts and plants closures, they would do well to remember that reducing production in the third financial quarter will create a significant drop in revenue. 

Meanwhile, the list of assets GM put on the line for its new secured credit facility should give GM boosters pause for thought: “certain” North American accounts receivables, unspecified vehicle inventories, the entire Saturn brand, its Canadian operating unit (plants and property) and 65% of GM de Mexico.  In short, The General has wandered into the pawn shop with a large list of assets to secure credit it once enjoyed on the back of its income.  Add GM’s dicey cash position and the situation doesn’t fill me with $30 a share confidence in the company’s future.  But hey, that’s me.

The real bottom line is that GM is a car maker.  There’s only one way out of their current death spiral: produce enough vehicles that people want to buy at a price that makes the company enough profit to stay in business.  It still ain’t happening.   

According to BMW’s ad for its M products, “history and compromise cannot be made at the same time.”  Huh?  What about The Missouri Compromise, the Camp David accord and The SALT treaty?  The headline’s patent absurdity is capped by the copy’s intellectual inanity.  “Nothing about our M cars is a compromise.”  Anyone familiar with automaking knows it’s nothing but compromise: design vs. packaging vs. performance vs. technology vs. price vs. regulations vs. cost vs. time vs. internal and external resources.  To suggest otherwise isn’t just wrong, it’s nuts.  A very strange kind of nuts… 

Obviously, the German automaker fancies itself a company apart: the last great independent automobile manufacturer. Which is almost true and fair enough.  But it’s one thing to weave a less tangled corporate web than your conglomerated competitors, and quite another to advertise the fact.  It’s hard to imagine a potential Zephyr, 9-3 or LS430 buyer opting for an equivalent Bimmer simply because Lincoln, Saab and Toyota nestle within larger corporate structures.  On the sharp end, it’s “don’t know, don’t care.”

Of course, BMW’s latest ads are designed to make you care; to explain how the company’s independence ultimately produces ultimate driving machines.  Quite apart from the ads’ creepy subtext (Aryan purity produces purebred automobiles) and the strange non-sequiturs born of megalomania (“It is a high-performance vehicle that actually exists in the real world”), it’s simply not true.  The dreaded iDrive mouse-driven multi-media controller proves that BMW’s corporate independence doesn’t guarantee “the pursuit of great ideas.”  More to the point, BMW no longer produces “the ultimate driving machine.”

At the risk of being over-literal, which BMW model would that be?  Yes, the M3 is a truly magnificent motor, well worth a seat in the Driver’s Car Hall of Fame.  But anyone who’s driven a Porsche 911 or Ferrari knows the M3 doesn’t even play in the same league as these phenomenal foreigners.  You could argue the point on price– the M3 offers maximum pistonhead pleasure for a more accessible entry fee– if BMW let you.  Their M ad clearly states “We refuse to subject them [BMW’s M cars] to money-saving shortcuts or mass production.” 

In truth, enthusiasts have known for over a decade that BMW has lost the plot.  The company’s campaign to expand into every product niche extant has sacrificed their cars’ unique selling point on the altar of growth and profit.  How can an SUV– any SUV– be an ultimate driving machine?  Although you can credit the X5 for at least trying to satisfy the brand proposition, the X3’s execrable ride and handling demonstrate the company’s complete lack of commitment to their creed.  By the same token, the rest of BMW’s product line has become heavier in weight and lighter in steering.  The 6-Series is a travesty.

Look closely and the evidence of BMW’s ultimate brand betrayal is everywhere: the fitment of stiff run-flat tires (that tramline on smooth pavement), disastrous ergonomics (what happened to the driver-angled console?), compromised visibility, over-complicated driver interfaces (column-mounted shift knobs, starter buttons and the world’s worst gearbox); even Chris Bangles’ fussy exterior shapes reveal a distinct turn away from the company’s former focus on driver satisfaction.  The fact that BMW hasn’t built a convincing answer to Porsche's Boxster in ten years tells the tale.

And now BMW is putting Dr. Norbert Reithofer at the helm.  Dr. R is Bimmer’s production go-to guy, the man who ensured that the company’s factories in South Africa and Spartanburg, South Carolina created profitable products worthy of international export.  In his treatise “The Fascinating Power of Production – Worldwide Competence in Producing Premium Products,” Dr. R touted the fact that Bimmer’s production process meant that luxobarge customers could have it their way, choosing from variations that “amount to 10 to the power of 17- that is 100,000,000,000,000,000, which is an incredibly high number.”  Yes it is.  It’s also a very revealing one.  Instead of boasting that BMW makes one ultimate driving machine, Dr. R took pride in 100 quadrillion possible variations.

I suppose it only makes sense.  When a car company loses focus, it can either accept the fact that it’s lost its way and begin the long, painful and expensive process of returning to its roots (wither Cadillac), or it can widen its original remit to justify– if not celebrate– it’s more expansive agenda.  BMW's ad campaign and Dr. R’s appointment tell us which way BMW’s wind is blowing.  They formalize Bimmer’s hugely successful growth-oriented philosophy, and ensure its continuation.  Never mind that BMW no longer “sticks to the knitting.”  The company has never been so profitable.  

And yet, history will record that BMW’s decline began even as it entered its most vigorous period of growth.  Ironically enough, the automaker’s fate was sealed years ago, when the company compromised it core value in the pursuit of profit.     

Relax.  The news that GM stockholder Kirk Kerkorian has been playing footsie with Renault/Nissan doesn’t represent some kind of paradigm shift for GM or global capitalism.  When assessing Kirk’s secret plan— selling a minority share in GM to the Franco-Japanese automotive alliance— remember whose interests The Quiet Lion serves: his own.  This is not about GM.  It’s about Captain Kirk’s spectacularly bad investment in the world’s largest automaker.  But don’t take my word for it.  "Sometimes the news in itself is already the purpose," DaimlerChrysler's CEO announced upon hearing the news.  In other words, multinational automotive conglomerator Dieter Zetsche thinks Kerkorian is just talking up GM’s stock price.

Lest we forget, the octogenarian investor has lost about a billion dollars since he started buying up GM stock.  (I don’t care how many billions you’ve got stashed in Swiss bank accounts and offshore trusts, one less thousand million has GOT to hurt.)  Anyway, mission accomplished.  Despite the fact that GM-friendly Wall Street analysts have just celebrated GM getting smaller, the investment community is, let’s face it, a size queen.  The news that Captain Kirk has been busy whoring GM to dubious foreigner carmakers— I mean discussing the possibility of GM entering into a mutually beneficial strategic alliance– sent GM’s stock price soaring.  On Friday (always a good day to hit the market with a surprise), GM shares closed at $29.79 up $2.35.  

On the other hand, if Wall Street catches wind that Kerkorian is unloading a chunk of his 9.9% GM shareholding, the company’s stock price will swan dive.  So it’s not entirely impossible that Kirk’s play is what it seems: an attempt to save GM’s bacon.  And yet, on the face of it, a GM – Renault/Nissan hook-up makes no sense.  Even The Detroit News’ resident optimist sees no benefits to the deal.  “GM has spent the past 15 years pushing to achieve what the megadeal would purport to achieve," Daniel Howes wrote yesterday. "Economies of scale in purchasing, common manufacturing and product development processes, global leadership in developing world markets.  These megadeals seldom — if ever — deliver the ‘synergies’ their highly paid outside architects say they will.”  

Of course, there is one important benefit to Captain Kirk’s bold moves: cash.  If you take a close look at what’s been proposed, Kirk wants Nissan/Renault to partner up, then “seal the alliance” by buying 20% of GM’s common stock for $3b.  Three billion dollars doesn’t seem like a lot of money in the GM scheme of things.  It’s almost a billion less than GM CEO Rabid Rick Wagoner recently spent paying 37k union workers not to work.  But it’s not chump change either— especially when you consider the fact that GM is running on fumes.  Remember the extension of GM’s accounts payable and the new secured line of credit?  Cerberus does.  

The [fire] sale of The General’s GMAC finance unit to Cerberus Capital Management is the last bit of family silver The General has left to flog.  And it’s only two credit downgrades away from implosion.  Without GMAC cash, the show’s over.  In fact, it may already be too late.  GM’s vehicle sales are in the doldrums, there’s no Hail Mary in the pipeline, market share (dealer income) has gone south and a bunch of humongous downsizing bills are coming due.  Not to mention the possibility of an August strike at GM’s mission critical ex-subsidiary, bankrupt parts supplier Delphi (yes that).  Avoiding Delphi's cyanide pill may require another billion or so from GM’s threadbare corporate pockets.    

If you doubt that GM could be so cash-starved that The Quiet Lion would be allowed to sell the company’s soul to Renault/Nissan, consider this.  TTAC commentator Finance Guy recently alerted us that GM is offering its zero percent new car financing deal to anyone with a pulse.  More specifically, FG has resurrected 10 dead deals.  No wonder: GMAC will now buy down on credit tiers A to E (prime to non-prime buyers).  Cutoff is around a 590 FICO.  Typically people in that range can’t get a new car without a substantial down payment.  Obviously, GM is opening the floodgates.  There’s one word for that: Mitsubishi.  The Japanese carmaker’s US fortunes foundered on the rocks of easy credit, as hundreds of thousands of come-on-down loans blew up in their face. 

In short, the idea that GM would contemplate joining a Renault/Nissan “alliance” is a sign of the General’s desperation, not its ability to seize an international opportunity (whither Fuji, Fiat and Suzuki).  Viewed from another angle, depending on what the Franco-Japanese contingent want for their money, you might even say that GM’s breakup has already begun.  In any case, it’s yet another one of the bizarre episodes we’ve been predicting for some time: the end of days at GM.   

When the Chairman and Chief Executive Officer of the world’s largest automaker tells his shareholders to think long-term, there’s only one word for it: sell. Yes, I know. The General got itself into this death spiral by thinking short-term: investing its precious resources in a dead genre guzzling, buying brands instead of investing in existing ones, pushing pushrods, rebadging anything that wasn’t nailed down, and so on and so on stretching back forty years. But Wagoner’s no corporate visionary. What he’s really saying is hang on boys and girls, a bunch of bad shit is about to go down.

Those of you who haven’t had their memories erased by GM’s MIB will recall that The General placed all its bets on the success of its high-profit GMT900 SUV’s. Despite a nice little takeoff, sales are flying low. The trucks are starting to pile-up at dealer lots– as is just about everything else save the Hummer H3 and Pontiac Solstice (which can’t pile up because GM still can’t figure out how to make them). In short, even Wagoner knows that it’s going to be a long hot summer. “We’ll need to be patient,” Wagoner said. “There will be some challenging months in total sales… But it will pay off in the long term.”

Wagoner’s “steady on boys” message was a tacit admission that GM's journey around the toilet bowl is gaining momentum. In May, GM’s turnover dipped 12.4%. The General’s market share shrank (again) to 22.5%. Viewed in isolation, these “results” are catastrophic. Compared to Toyota (+17%), Honda (+16%) and VW (+35.6%), it’s the Four Horsemen of the Apocalypse watering their mounts. "It was certainly a challenging month for us," GM's chief market analyst Paul Ballew admitted on Friday, with characteristic understatement.

With escalating gas prices cooling the market, sucking-up discretionary income and raising interest rates; with a rising tide of unsold GM vehicles, with nary a blockbuster in sight, with management reaffirming its decision to forgo a repeat of the Fire Sale for Everyone discount campaign, there’s no reason to believe GM sales are set for a major improvement anytime soon. "As the industry shifts to cars from trucks, that works to our disadvantage," Bellew stated. As GM’s lineup is bereft of the small, efficient cars fuelling its competition’s gains, what WILL work to GM’s advantage during these dark days?

Rabid Rick would have you believe it’s cost cutting. At the shareholder pep rally, Wagoner proudly proclaimed that GM is on track to trim $7 billion in “structural costs.” Yes, well, most of Wagoner’s “cuts” are nothing more than deferred payments. Recent union buyouts may look better than paying workers a salary and benefits not to work, but the savings aren’t as “real” as not paying them anything not to work. All those lump sums– including health care deals, plant depreciation costs and other “incidentals” (e.g. a multi-billion dollar pay-off to Delphi’s intransigent union workers)– have to come from somewhere, sometime.

While Rabid Rick says he’s “positioning GM for sustained profitability, not just short-term profits,” the only thing that can save GM from sliding into bankruptcy is… short term profits. So what’s Wagoner’s specific plan to generate life-sustaining revenue? "All brands are not created equal," Wagoner said, ignoring decades of cross-brand badge engineering. "We can turn that to our advantage." In other words, brands rule! (Who knew?) Referring to Pontiac and Buick, Wagoner said “we'll probably have fewer models under each brand and make them more focused brands."

Did anyone else notice the word “probably” in that sentence? Are we to conclude that Wagoner’s plans for these failing brands are still under development? Beyond that, Wagoner’s remark illustrates one of the most frightening aspects of his tenure at GM: an abject failure to put forth a large-scale strategy for a GM turnaround. Plant closings here, job cuts there, re-badged Opel Saturns, “value pricing,” flex fuel vehicles– there’s no overarching vision of what GM needs to become to survive and thrive. Wagoner’s constant use of the word “turnaround” tells you that his ideal is nothing more than a return to what was. It’s not even back to the future; it’s back to the past.

Clearly, Wagoner doesn’t “get it.” He doesn’t understand that The General needs something more than money to withstand the current shitstorm– a crisis he won’t even recognize in public. GM needs an idea. A bright, bold vision of a profitable future. GM shareholders may be toothless, but its “stakeholders”– suppliers, workers, dealers and customers– need that vision thing to believe that GM is better off out of bankruptcy than in. Without it, quite simply there’s nothing to be done. Wagoner’s inability to stand in front of the faithful and inspire them to aspire to reinvention condemns them all to failure.