Most auto industry observers have lauded President Obama’s decision to defenestrate GM CEO Rick Wagoner and his Board of Bystanders. Their logic is as simple as one, two, three. One: U.S. taxpayers have “loaned” The General billions of dollars. Two: GM’s management failed to provide a viable viability plan to return the money. Three: the presidential putsch protects America’s “investment” in General Motors. Yes, well, protect THIS. When GM files for bankruptcy 59 days hence, $17.4 to $19.5 billion worth of taxpayer money will disappear down a rathole, never to return. That’s a conservative estimate of the total amount of federal “loans” and grants and God-knows-what that will be wiped out the moment the judge signs GM’s C11 papers. Oh, and after we kiss that cash goodbye, U.S. taxpayers will provide the cratered car maker with debtor-in-possession financing. In other words, more money. And who’s to say that money will ever be repaid? What’s the end game? Is there one?

President Obama justified his intervention in the American automobile industry with a vision of a revitalized General Motors. (Chrysler not so much.) With Uncle Sam’s help, GM will one day rise again. It will produce the clean-running, high mileage vehicles of the future, built right here in the U.S. by yada yada yada. Seriously? Does anyone seriously believe that a post-Chapter 11 General Motors will build and sell products that will be the envy of the world?

Post-C11, GM will trim down to two brands: Chevrolet and Cadillac. Costs will be cut to the bone. The United Auto Workers’ power will be denuded. Legacy issues? Banished. Bloated dealer network? Decimated. GM may even emerge from C11 with a Mulally-like leader and a fiercely independent and intelligent Board of Directors; ready, willing and able to reinvent GM’s poisonous corporate culture. And then . . . GM will face a leaner, hungrier, larger Honda, Nissan, Toyota, Hyundai, VW and Ford.

Good luck with that.

Once upon a time, GM could have entered bankruptcy, cleaned its own clock and survived. The talent locked-up inside the artist formerly known as the world’s largest automaker could have been refocused, redeployed and redirected. But CEO Rick Wagoner couldn’t see the diem, never mind carpe it. His delay and denial made GM’s recovery both more expensive and less likely.

Amongst other Shiva-like maneuvers, Wagoner created four sales “channels” for GM’s eight stricken car brands, trading internecine warfare for outright paralysis. As resources diminished, the key question—who makes what for whom when, where, why and at what price point—became a Gordian knot. “Why” became “why not” became “whatever.” A Cadillac sports wagon? You betcha. GM’s last next big thing, the pedestal-dwelling plug-in hybrid Chevrolet Volt, is the poster boy for the company’s headless chickenism.

And now, nothing. GM Car Czar Bob Lutz has retreated into the shadows, counting the days until he collects his bankruptcy-proof pension, watching as the company’s creative process (such as it is) slips into chaos. Meanwhile, GM’s Best and Brightest have left the building. The Presidential Task Force on Automobiles (PTFOA) rightly ripped Red Ink Rick’s ridiculous rabble a new REDACTED, but their “restructuring fact sheet” makes one wonder about their ability steer a course into the future. What’s the plan, Stan?

“The new GM will have a significant focus on developing high fuel-efficiency cars that have broad consumer appeal because they are cost-effective, have good performance and are reliable, durable and safe.” PC it may be, but that hardly sounds like an ideal recipe for world-class Cadillacs. Which leaves Chevrolet. Trying to play catch-up with battle-hardened, technologically adept, customer retaining competition.

Again, good luck with that.

Fifty-nine days from today, GM will file for C11. Chevy and Cadillac will eventually emerge from the rubble. The chosen ones will survive until they come off the federal teat. They may even survive after that. But they will be damaged brands—welfare queens tainted by their association with the federal government. Even if Chevrolet and Cadillac create world-beating products with industry-leading customer service, they will have the stench of corruption. Their logos will be a malodorous reminder that they achieved their success off the backs of the American taxpayer, rather than honest labor.

OK, maybe that’s a bit much. Americans love a comeback kid. And what late 1940s industry expert could have predicted that his fellow countrymen would elevate Japanese brands to the top of the family and luxury car sales charts? But do we really have to pay twice for GM’s resurrection?

If General Motors had filed for Chapter 11 when they coulda shoulda, no tax money would have been harmed in the making of this [entirely theoretical] renaissance. As it currently stands, there is no end point. Sure, Chrysler repaid its loans way back when and . . . oh dear. Despite all that government help they’re in a bit of mess now aren’t they? You know, in a DOA sort of way. So maybe, just maybe, government assistance is a form of assisted suicide. Perish the thought.

Automakers are cutting second quarter production plans by double digit percentages, as the US auto market continues to contract. Automotive News [sub] cites CSM Global’s estimate that North American auto production will not top 2.07 million units, the lowest level since “at least” 1981. And though GM, Ford, Toyota, Nissan and Honda are expected to cut production in the 30-40 percent range, the worst news comes from Chrysler. The Cerburian dog is “selling the majority of their vehicles out of inventory,” says CSM’s Michael Robinet. “They are trying to get much more realistic about production levels.” How realistic? Expect a 60 percent cut in production for the second quarter, and under one million units of total North American production on the year, reckons CSM. That’s well below Chrysler’s 1.6m annual production plan from its original viability plan.

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The U.S. government (ostensibly representing “the taxpayers”) is right to insist on conditions to the second round of federal loans to Chrysler and GM. As always, the devil is in the details. As always, the government has put politically motivated strings onto every moving appendage in this latest example of federal largess. The fundamental question here is not whether or not these strings– from a shotgun marriage between Chrysler and Fiat to a GM bondholder haircut– will rescue either company from liquidation. It’s whether or not the federal government should be involved in bailing out any company in any industry. Period. Though others may disagree, I believe that only companies absolutely essential for national defense/security might qualify for direct taxpayer support. Might. Otherwise, NFW.

This is not a left/right debate. When President Bush approved $17.4b worth of bailout bucks for GM and Chrysler– against the wishes of Congress– the Republican administration lost any credible claim that they were friends of the free market. This brazen betrayal of stated principles paved the way for the Obama administration to go whole-hog into national industrial policy. Although the sitting president is selling his latest plans for Chrysler and GM on a rational economic bases, his intercession is, in fact, a purely political maneuver. Bailout II is not designed to “save” the American auto industry. It’s tailored to favor, through political policy, certain groups at the expense of others.

In this case, the second round of bailouts is meant to ensure that the United Auto Workers (UAW) survives intact and unscathed from a debacle that is, in part, a product of their own intransigence and short-sighted greed. (Although the union’s democratic support is a given, Obama didn’t ascend to the highest office in the land without remembering to secure and nurture his base.) As a secondary goal, the still undisclosed amount of federal money headed towards Chrysler and GM is aimed at “encouraging” Detroit to produce “green” cars. High mileage machines that conform to president Obama’s and the Democrat’s political priorities– the free market be damned.

Economics (the free market variety, anyway) is all about creating wealth and expanding “the pie.” Politics is about dividing wealth up in a zero sum game: someone wins, someone loses. This is why socialism ultimately fails every time it’s tried: it subordinates economics to politics; wealth making to wealth sharing. Profit incentives to create and expand are sacrificed to punitive political incentives to conform and obey. Ultimately, there is little wealth left to share. The same endgame applies whether you’re talking about an entire economy, or a single industry.

On Sunday, U.S. Treasury Secretary Geithner refused to be drawn out on a simple question: is GM too big too fail? Geithner claimed he didn’t want to preempt the president’s announcement. In truth, he didn’t want to even admit the possibility that doing nothing, simply letting GM and Chrysler fail, was a viable alternative. But if GM and Chrysler had been refused new funding, what would happen in the long run– aside from the inevitable short-term pain the companies, their employees and shareholders (and bondholders) would have to suffer? The same thing that happens when any business or industry goes bust. New opportunities arise.

Opportunity eventually finds its way to create new businesses and industries out of failed ones. Over time, sales lost by either company would have been absorbed by other automakers, helping to maintain their “viability.” To a certain extent, other auto companies would have picked-up the jobs lost by either Chrysler or GM. Other industries would eventually absorb “excess” jobs. Over time, Ford, Honda, Nissan, Hyundai, Toyota and others would assume GM’s and Chrysler’s “lost” production, at least to the extent the market demanded it. The concomitant industry supply chain would cater to the new source–and level– of demand.

In other words, if market forces for punishing failure were allowed to actually work in this case, far from being the end of the world, the auto industry would eventually emerge HEALTHIER, with far less excess capacity and more productivity. The result would be a much better, more profitable business overall. This would in turn actually ATTRACT capital into the auto industry, and set the stage for long-term growth.

But no, we can’t stomach losing jobs in the short run– especially union jobs. So instead of letting nature take its course, the federal government spare us the pain that comes from producing goods or services that the market doesn’t want. And in doing so, president Obama and bailout suporters guarantee the laws of unintended consequences will have their day. The Brits learned this lesson the hard way back in the ’70s. So why are we bent on repeating the British Leyland epic failure here? Are we really that weak, cowardly and naive?

I know, huh? Anyone who spent five minutes thinking about Motown’s $42.4 billion (and counting) feast at the federal bailout buffet would figure out that the beneficiaries are using tax money to discount their products—to support an unsustainable small market share. OK, that last bit’s a bit technical. But the bailout = discount = unfairness media meme is just gaining traction in the MSM. And it’s no small point. As I’ve pointed out here before, those federally-sponsored new car discounts effectively punish automakers who didn’t run their companies into the ground and threaten their products, profits and jobs. The Detroit News wakes-up to the story this morning. Chrysler, you are the weakest link.

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Our president recently hit the late-night talk show scene, giving all a taste of the “Washington Bubble.” He’s not alone: Judging by the comments around the Interweb, every red-blooded American automotive journalist totally hearts the 2010 Taurus SHO. But does the journos’ wish for a reincarnated SHO jibe with the harsh reality of Ford’s market demographics? Or to paraphrase Norm MacDonald, “while the SHO may not prove anything, it certainly does nothing to disprove the theory that Volvo-based Fords are a waste of money.” Yeah, it takes brass balls to knock a car you’ve touched, but haven’t driven. But the circumstances around the all-new Taurus give me pause . . .

First off, how often to you hear about the regular Taurus? One key to the SHO model’s original success: The bread-and-butter version stood on its own for three years before the SHO’s arrival. But the average 2010 Taurus is almost old hat: We’ve seen this story unfold the past five years and nobody (with an open checkbook) cares one way or the other. Just like its 2005 counterpart, the latest version of the Taurus will be a respectable car. But this does nothing to disprove my theory that Volvo-based Fords are a waste of money.

Second, what makes lightning strike twice? Styling. Much of the first model’s interpretation of the Euro-Sierra worked. The 2010’s “kinetic” energy comes from the Mondeo. Only not so much. In pictures and in person, the Taurus fails to inspire. It’s no flying jellybean: There’s a Subaru-ish nose and a host of sheetmetal adaptations of the badass Ford Interceptor concept on the dorky hard points of the D3 chassis. Yet Peter Horbury, Ford’s North American design director, proclaims, “like the 1986 original, the new 2010 Taurus differentiates by combining style with substance.”

Too bad about that. There’s an obvious difference between a clean-sheet creation and a quickie conversion of a (failed) platform. Even worse, the 2010 Taurus redesign loses the previous model’s quarter window for black C-pillar trim, giving the illusion of a sleeker profile from a longer DLO (daylight opening). Which almost works—if you ignore the fat-assed beltline and tacky faux ventiports. No surprise, cash is tight and the basic badness of the D3 must remain intact.

The first two generations weighed around 3,300 lbs.; the engine put out torque-steer-free 220 hp; and there was a readily available manual transmission. The Taurus SHO was stupid fun in any dynamic event. Plus, the previous 100 percent American chassis scored safety ratings on par with Volvo sedans of the time.

The latest SHO is the Fat Elvis of sport sedans. The engine stumps up 365 hp, there’s mandatory all-wheel drive and automatic transmission, and a curb weight around 4,300 lbs. (300 lbs. over the Pontiac G8). The safety is stellar (because it is a Volvo). Given the feature creep of the Ford Flex, the SHO could sticker north of $35 large. With options, maybe over $40 grand. How great is that? I’ve voiced these concerns to pistonheads around the web and one answer comes back: Nobody pays sticker for a Ford, just wait for the discounts. So maybe this is a Taurus after all.

And if taking the Ford Taurus up to a dee-luxe apartment in the sky was bad enough, Ford didn’t learn from others’ mistakes. The Toyota Cressida/Avalon and Nissan Maxima prove that unique platforms for poser luxury sedans are out of the question. Mulally loves the Taurus, but he forgot its intrinsic appeal. The four-door was the go-getter working late nights in a cubicle, not an endowed trust-fund baby overdressed in a tuxedo at a garden party.

Not to mention the critics were proved right when calling out Ford’s decision to split the original Taurus’s market with two nameplates on two foreign chassis. It was a colossal falure in 2005. And 2008.

Come 2010, it will be three strikes against Ford’s great experiment. And even with the SHO’s halo, the market for Volvo-Fords over $30K is not promising. Which spells doom for the company spending millions (billions?) supporting a unique platform that’s yet to justify its existence to a fully leveraged Blue Oval. And with Volvo on the chopping block, what exactly does Ford expect to gain from billions of dollars in sunk cost?

If this “cut and run” attitude sounds unpatriotic, consider what Dearborn’s finest could’ve done with the money spent on the Taurus’s three generations of continuous improvements. With Mulally’s blessings, the Blue Oval Boyz could have used the money to make a Camry-killing sedan by now. But the saving grace now belongs to the Ford Fusion and its Hybrid halo. The writing is on the wall: Nobody gets a free ride. If the 2010 Taurus fails to SHO up with some cheddar, this dead weight has gotta go.

Autocar has revealed Nissan’s luxury brand’s five-year plan: “a Mercedes S-class-sized limousine, a new all-wheel-drive seven-seat SUV and an all-electric entry-level model.” Guess which one is slated for 2012? Meanwhile, the new M has a no-V8s-please date with 2010. “This car will be engineered to accept Infiniti’s 3.7-litre V6 petrol engine, and its forthcoming 3.0-litre V6 turbodiesel—although both the EX and FX SUVs will get the V6 oil-burner before that.” [NB: Infiniti’s in Europe now, hence the oil burners. For them.] So far, so believable, Moving along the timeline, and across the credibility axis, next up: a 2011 “flagship.” No, not the S-Class thingie. A new QX SUV! Rescuing that turkey’s rep in the middle of the SUV downturn strikes me as a billion dollar windmill tilt, but, hey, show us what you’ve got. In 2012, an Infiniti Quattroporte killer. Huh? Just the sub-head. “The firm’s biggest four-door will be badged ‘Q’ and will take over from the Q45 saloon that Infiniti discontinued in 2006.” And for good reason on all counts. And finally, electric dreams. “Infiniti’s most distant plans currently include a battery-powered compact model, although building it is still very much an ambition for the company rather than a concrete part of the product schedule.” As good a definition of vaporware as I’ve ever read, excluding Tesla press releases.

Now that the Presidential Task Force on Automobiles (PTFOA) has pre-capitulated on re-upping Chrysler and GM’s bailout bucks, an obvious concern arises: now what? Chrysler offers a tri-branded line of non-competitive products whose sales have been propped-up by federally-funded discounts plus plus plus. GM is still in over-branded, over-dealered, over capacity hell. So, if both companies score big bailout bucks ($22B), what will they spend it on? Building cars? Inventories are already swelled and, here’s the kicker, sales are still declining. As we approach the end of the month, Automotive News [sub] is using the “T” word: “The sales numbers for March, due next week, are likely to reveal another tumultuous month. New-car sales could be down as much as 40 percent, according to J.D. Power and Associates. And the monthly sales rate will continue to flirt with lows not seen in 27 years.” Interesting choice of words; who’s about to get NSFWed here?

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boredlawstudent writes:

OK best and Brightest, I really need your help! My car was totaled last week by a DUI driver and I’m in need of a car. I’m trying to decide which car to buy. A NEW Altima Coupe or a 2007-2008 CPO [Certified Pre-Owned] G35. My top concerns are reliability and material quality (and comfort). I’ve see a number of 2007 CPO G35’s with low miles (17K) on dealer sites requesting $24-26K. I’ve seen some 2008 CPO’s for $25K, but they seem to be off rental which I obviously don’t want. Some questions…

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In 1979, Chrysler was staring down the barrel of bankruptcy. ChryCo’s charismatic CEO stepped forward, publicly lobbying for $1.5B worth of federal loan guarantees. Lee Iacocca captured the American taxpayer’s respect and trust—to the point where the automaker’s ad folk made Lee the company’s pitchman. “If you can find a better car, buy it!” he dared. They did and they didn’t. Either way, Iacocca’s communication skills were beyond reproach. Contrast that with today’s mumbling, bumbling Motown CEOs, who’ve managed to alienate well over half of the American public, who no longer want to buy Detroit’s cars OR provide them with a second (third) chance. And no wonder. The CEOs have demonstrated an abject inability to call a spade a spade, or sell the spadework that must be done (which is largely grave digging by now). Wagoner, Nardelli and Mulally’s failure is what it is. But what about the little guy in all this? Who speaks for them?

I’m not talking about Detroit’s unionized workers or their white collar counterparts. As much as I sympathize with their plight—caught-up as they are in a poisonous corporate culture not of their own making—they are hardly a downtrodden, voiceless minority. Their Motown overlords have Washington’s ear. The fact that Chrysler and GM have scored over $50 bn in federal handouts of one sort or another (loans, retooling loans, finance company bailouts, etc.), while Ford has arranged a $9 bn line of credit, speaks for itself. Detroit’s dealers, captive finance companies and suppliers are also well represented. But what of everybody else in the American automotive industry?

I refer to the foreign nameplate automakers and their workers. Other than some gentle murmurs of encouragement, we’ve heard nothing from Toyota, Honda, Nissan, Hyundai and the rest of America’s so-called transplants re: Chrysler and GM’s federal trough snuffling. The transplants should be a force to be reckoned with; they currently account for more than half of all automotive sales within our borders. They aren’t technically bankrupt, or facing bankruptcy. Yet their tax money (like ours) must now pay for Detroit’s chronic mismanagement.

The transplants’ productivity and success, their ability to create goods and services that American consumers want at a price that makes the company a profit (in accordance with all U.S. laws and regulations), is now subsidizing Detroit’s ongoing incompetence.

Of course, it’s worse than that. This is not a general taxpayer bitch and moan thing. It’s a government using tax money to distort the will of the American consumer by propping-up a dead competitor trading thing. In a severely contracting market, no less. I know: jobs! jobs! jobs! But what about the jobs! jobs! jobs! of all the productive, hard-working non-Detroit autoworkers laboring within U.S. borders?

The current economic meltdown has forced Toyondaissan to curtail American production, cancel scheduled factory openings and lay off thousands of workers. Would those curtailments have been as severe if Chrysler and GM had been “allowed” to go belly-up? Of course not. Common sense tells us the transplants would have scooped-up a [yet] larger share of the suddenly smaller pie, supporting American jobs and American communities. There’s no getting around it: the federal bailout is taking food of the tables of American workers.

There’s plenty of room to debate the advisability of encouraging foreign nameplates to manufacture cars in the U.S., relative to, say, Detroit-based automakers. (Who’ve shown no reluctance about importing vehicles into the U.S. market.) We’ve engaged in that discussion here on TTAC many times. But where is the voice of the transplants and their workers in this debate?

Again, there are thousands of workers and dozens of communities spread throughout the U.S. who build cars for Toyota, Honda, Nissan and Hyundai. Workers who manufacture a quality product for American consumers. Workers who pay their taxes. Workers who are NOT sucking off the federal teat, either directly or indirectly. Who speaks for them? Are they not outraged by their own government’s willingness to put their jobs at risk to support a business model that’s broken beyond repair?

If they’re not, they should be. Last year, they went to bed and woke-up in a world where free and fair competition, combined with the sweat of their own brow, assured their family’s future. Now, who knows? A cabal of corrupt financiers blew a hole through U.S. banking regulations designed to protect the average wage earner from economic ruin. These insiders opened the door; the feds have come traipsing in, paving Detroit’s road to hell, forcing American autoworkers to compete against their own government.

It’s time for them to tell Washington that these enormous, unrecoverable “loans” to Chrysler and GM are a cancer on their beliefs. I understand the transplants’ desire to keep a low profile and wait for the dust to settle. But America’s traditional values are at stake. Their workers must step up and say no to Bailout Nation.

TTAC spoke and Nissan listened. Or something like that. In any case, Pistonheads reports that the Japanese automaker has heard complaints that their 911-slayer is harder riding than a tea tray down a gravel ski trail. Nissan will offer a more comfortable version of their GT-R. “The GT-R Spec-V firm suspension will get replaced by a softer, more refined setup and will include ripple control shock absorbers to help iron out the bumps. There’ll also be a wider choice of interior trims to help entice a more upmarket clientele, with aluminium and wood grain finishes both options on the new Spec-M.” So the scream “OH, NO! GODZILLA!” will now become “I say, isn’t that the Japanese sports car that lapped the Nurburgring rather quickly?”

You know that advertisement for the Cadillac Escalade Hybrid where a douchey fellow suggests that “they should hybrid (sic) this thing”? I would post the video, but it seems that Cadillac has pulled all trace of the spot from the interwebs leaving only the marginally less insipid “cupholders” and “checkmate” ads on its website. And though it’s strange to plumb the Tubes of You for hours and not find this mythically inane third ad, it’s disappearance down the memory hole isn’t surprising at all. The spot suggested a troglodyte’s approach to hybrid technology that is only underscored by the reality of GM’s hybrid strategy: quick-n-dirty BAS, expensive and complex two-mode system, and moon-shot EREV. Hybrid this. Okay, now hybrid that. [ED: Zammy found it!] But Nissan’s announcement today that it will be bringing a hybrid version of its Infiniti M to the US market in 2010 has to put the Japanese firm in contention for worst hybrid strategy around.

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The Wall Street Journal reports that the concord between Italy’s Fiat and China’s Chery has fallen apart, a victim of the global auto industry meltdown. Chery spokesman Jin Yibo was not in a word-mincing mood. “The global situation is totally different from before. We have had to adjust our strategy accordingly . . . It definitely won’t happen this year.” Hey! Isn’t that the same Chery that had signed a highly-touted deal to produce a small car for Chrysler? (That was then going to be built by Nissan?) Yup. So, Chrysler can’t work with Chery to bring cars to the US. Fiat can’t work with Chery to build cars in China. But Chrysler can work with Fiat to build Fiats in the US. Makes sense. But then I’m pretending to be a Chrysler executive or a member of the Presidential Task Force on Autos (PTFOA). And while we’re on that subject, next week the PTFOA will begin floating trial balloons advertising the next seating at the multi-billion dollar bailout buffet. So a quick refresher on the bureaucrats that constitute the august body in whose hands Chrysler and GM’s fate rests. [NB: Steve Rattner joined Ron Bloom after the commission was formed.]

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On Thursday, Audi of America president, Johan de Nysschen, will meet with journalists to explore the question “how has the international recession impacted Audi and the luxury segment?” The obvious answer: sinking sales. The not-so-obvious conundrum: what next? How does a luxury brand position itself for survival when class war is breaking out all over? Of course, the professional pundocrats aren’t using “C” word just yet. The euphemism du jour for the “where’s MY bailout” anger that may or may not be sweeping the nation—as taxpayer-owned AIG execs collect their bonuses and Bernie Madoff’s wife shelters in a penthouse funded by her husband’s ill-gotten gains—is “vengeful populism.” Whatever you call it, Audi and its luxury competitors are sitting in the cross-hairs of growing anti-conspicuous consumption. The recession/depression is going to kick the NSFW out of them.

Audi, BMW, Cadillac, Lexus and Mercedes have all poorly positioned themselves for these belt-tightening times. All five brands spent the last decade or more stretching their model range down into near-luxury and even non-luxury pricing territory. Not so long ago, none of these brands were available to average buyers (save on used car lots, where maintenance costs kept them clean of ten-foot pole marks). All five luxury brands couldn’t resist picking the low-hanging fruit, convincing themselves that they could democratize an exclusive brand.

Of course it worked. What aspirational car buyer wouldn’t prefer an up-market marque to a Ford, Hyundai, Toyota, Nissan, etc.? Thanks to a combination of affordable models and cheap credit, the “Big Five” have all experienced sales growth that makes Jack’s beanstalk seem like a redwood. BMW’s inexpensive leasing deals, in particular, created ultimate profits. But the move down market has created a vast flock of prodigal, homeward-seeking chickens.

For one thing, profits at Audi, BMW, Cadillac, Lexus and Mercedes are now dependent on relatively high sales volumes. In 2007, Mercedes-Benz NA sold 253,433 vehicles. Audi’s US sales jumped 11 percent, to 93,506 vehicles. Cadillac’s sales rose 13 percent. BMW’s ascended by 14 percent. Lexus took a hit that year, but they still managed to shift 342,000 units in North America. Compared to the mainstream manufacturers it’s small beer; but it still requires many pubs to serve it. All five luxury brands expanded their dealer networks. Which are now, or soon will be, struggling for survival. Last month, Lexus sales took a 35.8 percent year-on-year dip. Audi lost 25.4 percent of its previous year’s monthly totals. And so on, right on down the line.

Brand equity has also taken a huge hit. Although you might think the luxury car brands’ democratization makes them less vulnerable to a class-related backlash, nope. Let’s face it: it’s not a great time to be seen “splurging” on a luxury car. The car brands’ upmarket cachet has suddenly turned into a liability. Real world employees worried about their paychecks—and that’s all of them—are not going to stunt and floss in the company parking lot behind the wheel of a brand new Audi, BMW, Cadillac, Lexus or Mercedes. They know that rolling phat in a luxury-branded whip would be tantamount to wearing a little button emblazoned “overpaid.” Fuhgeddaboutit.

Even worse, the customers with real money, where profits fall like rain, have already left the building. They’ve opted for more genuinely exclusive marques. Audi and Mercedes recognized this problem before the axe fell; buying (Lamborghini), creating (AMG, S-Line) or resurrecting (Maybach, Bugatti) über-luxury off-shoots. But even if Audi and Mercedes managed to skim the cream off their own coffee, they face the same danger as their less brand-savvy luxury competitors: stagnation. Now that upmarket brands offer a wide range of models, cash-strapped or cash-aversive buyers can either stand pat (i.e., not trade-up) or, worse, opt for less expensive alternatives within the brand family.

So why would Mercedes create the GLK, when it already offers a full-size SUV AND a smaller alternative? Why would Mercedes market the GLK as a vehicle containing the same technological excellence as its bigger brothers, only in a smaller (read: cheaper) package? The Bama-built German “cute ute” represents a failure to communicate luxury brand values—and price points—within Mercedes’ corporate culture. It’s the same hubris that led to the Audi A3, BMW 1-Series, Cadillac CTS (sorry guys), Lexus IS250 and Mercedes C-Class. Short term greed over careful, long-term brand husbandry.

I know TTAC’s Best and Brightest have hashed this out many times. Many of you don’t see a price point as a brand barrier. But it’s petard hoisting time folks, and you’re about to see the brands reap what I said they’d sowed. In this suddenly, violently downsized, flash-aversive sales environment, brand-extended luxury automotive marques must either redefine “luxury” (as reliability, longevity, etc.), move back up-market (a slow, painful process) or die. And the longer the downturn lasts, the greater the chances that one or more of these brands will never recover.

Imagine you’re looking for a $41k imported sports sedan. You want something fun to drive. Sayonara Lexus. You were traumatized by an orthodontist. Aloha to Acura’s tin grin TL. You appreciate the difference between having it and flaunting it. Auf wiedersehen BMW and Mercedes. That leaves the Audi A4 3.2 Audi and Infiniti G37 6MT. Oddly enough, I recently sampled those two exact cars. Funny how these things work out.

As you’d probably guess (if it was in the least bit important), I’ve set up a a fair few email alerts to keep my finger on the pulse of the autoblogosphere. “Nissan” usually renders unto me four or five stories on some electric vehicle they’ll never make and a review or two of a Z car. This is the first time I’ve seen a link called “more news from your region.” While Levittown isn’t exactly my region (off by 252 miles), I was happy to see that no item is too small for Google’s news spiders. And that, for once during these dark days for the auto biz, I linked to a story with a happy ending. Of course, one wonders who in their right mind would bother reporting that they were almost the victim of a crime. And whether or not the police asked the citizen involved whether or not they take Ambien CR.

Attempted theft from vehicle

500 block Old Street Rd., Trevose, 10:30 p.m. Mon-9 a.m. Tue, entered unlocked Nissan Altima in driveway, items thrown on floor, nothing of value removed.