As a Jew with a pretty solid claim on owning a functional sense of humor, I have to say that Hadar Goldman, co-owner of the Zarmon Goldman advertising agency in Tel Aviv, is being disingenuous. His company's ad, depicting a wild-eyed Arab sheik wailing on a Nissan Tilda for its [theoretical] effect on his bank balance, is over-the-top, over-the-line and not-so-funny. What if an Arabian agency created an ad that portrayed Jews as money-grubbing shysters? "It's a humorous campaign that was loved by both the Jewish and Arab worlds," Nissan spinmeister Daniella Ribenbach told The Jerusalem Post. Uh, we'd like to see some data on that Danny. Meanwhile, "It's my opinion that Nissan made a huge error by igniting these [racist] instincts," official Hani al-Wafa told Saudi Arabian TV. "In order for Nissan to keep its interests in the region, it must apologize." And so it will.

Once again, The Wall Street Journal reports on the latest automotive meta-gossip as fact, citing anonymous sources. "The two companies agreed earlier this year to team up on pickup trucks and subcompact cars. Since then, they have been discussing an agreement under which Nissan would produce midsize sedans that Chrysler would sell in the U.S. under its own name, people familiar with the matter say." This is the K-Martization concept that TTAC floated in the Chrysler Suicide Watch. Although the WSJ is happy to conclude the partnership "could help bring the company back to profitability, even though its vehicle sales are declining," this will never work. As our Deep Throat points out, "It’s way more complicated than it appears. Imagine having different vendors sourcing entire cars… the logistics are impossible. There’s no commonality in interiors, exterior design (no matter how hard Chrysler tries to align the exteriors), the systems (including software), etc. etc. They’re all different among manufacturers. Imagine parts distribution – a nightmare – trying to source all of that and then supplying it. Simple things like part numbers go haywire. Then what about warranty items. Who pays what?" And then there's branding… A full CSW to follow.

July's temperatures may have been hotter than Hell, but U.S. new car sales were in Hell. Rising gas prices have thrown the entire American auto industry into turmoil, flooding the market with used SUVs and pickups, cratering residual values and trapping millions of consumers in light truck limbo. At the same time, automakers can't ramp-up production quickly enough on those fuel-sipping models that are leaving the lots. Incentives aren't moving the metal, but NOT increasing them would be worse. The downturn is widespread. And despite what the automakers say, it's going to get worse. Soon. For now, here's the damage report. 

Overall, U.S. light vehicle sales were down 13.2 percent from last July, down 10.5 percent overall from last year. That breaks down into a 0.3 percent drop in passenger cars and a 25.8 percent drop in truck sales. Year to date (YTD), car sales are down only 1.5 percent. But Detroit's still-truck-centric Big 2.8 are taking it on the chin, with truck sales off by 19.3 percent. 

Family Sedans

Chevy's Malibu* continues its strong showing against last year's lackluster model; up 78.6 percent in July and 37 percent YTD. Ford's Fusion also booked a healthy increase, up 13.5 percent for the month, 11.9 percent for the year. Chrysler's 300 continues its slide into the dumpster, dropping 57.6 percent below last July and 39.1 YTD. The Toyota Camry* leveled off, finishing July 1.5 percent; it's a wash YTD. Honda Accord sales continue to outpace last year, finishing the month 11.4 percent ahead and 12.6 percent better YTD.

Compacts

Compacts' popularity continue to soar. The Chevy Cobalt was up 3.5 percent, 16.4 percent YTD. The Focus is once again Ford's most popular car, racking up 15.6 percent more sales, up a full 26.2 percent YTD. The Dodge Caliber bucked the trend, dropping 9.4 percent for the month, down 1.2 percent YTD. The Toyota Corolla** increased sales by 15.9 percent, but fell down 1.3 percent YTD. The Honda Civic* was up 4.6 percent, 16.1 percent YTD. The Nissan Sentra finished the month up 16 percent, 5.3 percent YTD.

Subcompacts

The up-and-down Chevy Aveo was up 16.9 percent ahead of last July, but only 1.4 percent YTD. Toyota's Yaris showed a  6.1 percent increase for the month and a 34.1 percent jump YTD. The Honda Fit also experienced a meteoric rise. Sales were up a staggering 93.4 percent in July, 72.9 percent YTD. Nissan's Versa rose 14.4 percent above last July, up 19.6 percent YTD.

Prius

Toyota Prius ' demand continues to outstrip supply. Sales in July were down 8 percent from last July.  Annual sales are down 3.9 percent.

Pickup Trucks

And now the bad news… Chevy's Silverado* plunged 29.8 percent from last July, down 26.1 percent YTD. The Ford F-Series isn't doing quite as badly. Sales off 20.6 percent on the month, down 22.4 percent on the year. Even with dealers running half price sales, the Dodge Ram sank 27.2 percent, down 30.0 percent YTD. They're all doing better than the Tundra. ToMoCo's full-size pickup dropped 42.1 percent from last July. Sales are down 15.2 percent from last year.

Truck-Based SUVs

There's only one thing that can make pickup sales look good: SUV sales. Chevy's Tahoe* is down 35.1 percent for the month, off 27.8 percent YTD. The Ford Explorer has lost its way, finishing the month down 51.8 percent, minus 35.6 percent YTD. The biggest loser: the Durango. The Dodge Boys sold all of 384 units in July. Sales tumbled 84.5 percent, down 51.3 percent YTD. Toyota Sequoia sales continue growing, with an increase of 62.9 percent from last July, up 32.8 YTDr.

CUVs

The once and future Next Big Thing wasn't. Sales of the GMC Acadia, the best selling of the Lambdas triplets (soon to be quints), dropped  5.2 percent. Healthy sales from earlier in 2008 kept the model 6.6 percent ahead of last year. The Ford Edge continues edging down, dropping 6.5 percent. Again, it's a recent phenom; sales are up 13.8 percent YTD. Even with a hybrid model available, the Toyota Highlander* dropped to its lowest level in three years. July sales slid 23.7 percent, down 7.4 percent YTD. The Pilot made a strong "contribution" to Honda's 22 percent drop in truck sales; it was off 43 percent, down 21.1 percent YTD.

By Manufacturer

Deep breath. GM sales plunged 26.1 percent for the month, down 17.7 percent YTD. Ford had the best showing of the D3, dropping "only "17.1 percent. Year to date, they're off 14.8 percent. Chrysler didn't have a lot to start with, but they still managed to finish 28.8 percent below last July. For the year, ChryCo is down 22.8 percent. Toyota's starting to get used to the negative side of the sales ledger, falling 11.9 percent, down 7.6 percent below last year's mark. And, showing they're not invulnerable, Honda lost 1.6 percent from last July. They're still 3.2 percent ahead of last year.

Down the Road

Here come the "please God clear this lot of '08s" rebates and  incentives. While Toyota, Honda and others are selling all the small cars they can produce, GM, Ford and Chrysler can only respond to current demand with the promise of new, highly competitive small cars. They won't come on-stream in force until 2010. Meanwhile, August is going to be brutal and then… winter. What's beyond brutal?

*Include Hybrid models
** Includes Matrix

Nissan has decided that using Toyota powertrains in its Altima hybrid is a bit embarrassing. So they're working on one of their own. If CNet is to be believed, "Nissan's system is designed for a rear-wheel-drive car, and uses two clutches, doing away with a torque converter for more efficient power use." That's right sports fans, he said rear-wheel-drive. But before the hybrid Z-car rumors get out of control, consider that "Nissan hasn't released any details on performance yet, or when it might offer a car with this technology." Mes anwhile, they're charging ahead with Li-ion EVs, apparently. PC World reports that "Nissan has committed to launch its first all-electric car in the U.S. and Japan in 2010 and to mass market the vehicle globally by 2012." The latest prototype is a version of Nissan's Cube. PC World got to take the 80kw beast out on the track. The verdict? "On the test track it easily got up to a speed of 100 kilometers per hour." Breathtaking. But wait there's more! Nissan also has a new fuel cell stack that is smaller and lighter than previous models. And it uses half the platinum of previous fuel cells (a development that'll likely alienate literally hundreds of DUB readers from the green movement). While it's nice of Nissan to remind us that technology marches on, it's no substitute for a here-and-now hybrid system. Y'know, like the one they buy from Toyota.

Suppose you are British, work for an ad agency, and your client wants you to promote an inoffensive but generic soft-ute with a vegetably name, so that it (the Nissan Qashqai) seems interesting, even sexy. Why, you'd go for Viral Marketing, as one does, and maybe even poke some cheap fun at eastern Europeans, just like Borat did! This YouTube video is but one of several "quirky" attempts to make the car that Clarkson calls the Cumquat seem both competent (look how it scales walls!) and non-generic. Does it work? Maybe– the idea of a Polish Harry Houdini works better than it sounds. Does it hurt feelings? Probably. Note to Nissan: when your uncle tries to pull off some Polish jokes after three martoonies, you grin and bear it, because you love him. And SB Cohen is OK because he employs subversive humor to show the darker side of frat boys and antisemitic cowboys. But when a company portrays Poles as dumb hicks in an attempt to push more product, it's plain evil.

For the red-blooded enthusiast, it's the ultimate nightmare: a car that just doesn't want to be driven hard. For the under-frugal and over-cited drivers of the world, Nissan's ECO Pedal could be the mechanical conscience they need to adjust to our eco-friendly, speed-kills society. "Each time the driver steps on the accelarator (sic)," flubs Nissan's press release, "a counter push-back control mechanism is activated if the system detects excess pressure, helping to inform the driver that they could be using more fuel than required." Required for what exactly? An electronically-determined "optimal acceleration" based on transmission efficiency and fuel consumption rates. You know, like how polite people and Buick owners drive. Nissan claims that with the killjoy-graft "drivers can improve fuel efficiency by 5-10 percent, depending on driving conditions." Sadly, the intrusion is not limited to the gas-pedal recalcitrance. An "eco-driving indicator" on the dash stays green if your driving style does (get it?), but flashes and turns amber "to advise the driver of their driving behavior." Or remind the driver that they are merging onto an interstate. Luckily, you will still be able to eke whatever id-fodder is available to Nissan drivers who would consider this option by switching the nagging thing off. Nissan will "commercialize" the system in 2009, but they don't say what models it 'll be on. If it's cheap and it can be turned all the way off when the less-better angels of our natures need to have their way, it could be worth a look… if you're into that kind of thing.

Transplant firms pride themselves on running NA operations differently than the D2.8, but the body-on-frame tailspin has no interest in pride or strategy. Automotive News [sub] reports that Nissan, which has never laid off a North American worker, will buy out about 1200 employees from its Tennessee plants. Workers at Smyrna Assembly and the Decherd powertrain plant will be offered up to $125k to leave over the next three years, saving Nissan 18 percent of its TN payroll and shutting the night truck production shift. By Detroit standards, this measure is almost not worth reporting on. But for Nissan and its employees, the stakes are considerably higher. At least that's what the UAW wants us to think; they're playing the told-ya-so card to Nissan's worried Tennessee employees with more than a little schadenfreude. "As a union member, contractually, I know what my rights are," says Mike O'Rourke, whose UAW Local 1853 has twice failed to unionize Smyrna. "Unfortunately, at Nissan, they don't know what the bottom is. And they're afraid… In their employee meeting, one of the employees said, 'If we don't go, are you going to reduce our wages?' And management wouldn't answer," says the UAW honcho. "I think you and I both know the answer to that question." Except that, absent any actual examples of transplants screwing workers, the evidence points rather away from O'Rourke's scaremongering suggestion. For example, rather than abandon or otherwise its employees at Tundra/Sequoia plants, Toyota is keeping employees busy (and paid) by training them and improving operations. While UAW shops are cut and shut left and right. Funny how that works.

The crossover– crudely defined as a SUV-styled car– hasn't fared well in the Great Sales Meltdown of 2008. The Wall Street Journal reports that the segment slipped 11 percent from last year. Thanks to a combination of high gas prices, atrocious SUV trade-in/resale values and generally high CUV prices, SUV owners are trading down to cars, rather than across to CUVs. Uh-oh. Carmakers were counting on larger profit margins on those CUV's to keep them afloat in these lean times. Even sales of small and relatively fuel-efficient CUV's (a.k.a. "cute utes") are lackluster. The Toyota RAV4 (12,006) is down 20.7 percent [unadjusted for sales days is how we roll]. Honda's CR-V (17,419) tumbled 15.3 percent. There are a few bright spots in the CUV market: the Nissan Rogue (6,525) and Subaru Forester (5,559). But their combined sales generated about the same volume as the RAV4. The Dodge Journey, at 3,306 sales last month and 26,180 for the year, is already is selling for thousands below MSRP. [BTW, the brand new Ford Flex barely edged its outgoing platform-mate Taurus X, 2,204 vs. 2,034.] Even with gas prices dipping, the CUV genre seems stillborn. GM identified the fourth Lambda-platformed Chevy Traverse (post-Buick Enclave, GMC Acadia and Saturn Outlook) as the only key product launch in North America this fall. Not good on stilts.

If brevity be the sole of wit, Chrysler CEO Bob Nardelli's latest email to his troops is a particularly humorless e-missive. Although ours is to question why (whether they do or die), it's the weekend. So I'll leave the parsing to TTAC's Best and Brightest. Suffice it to say Bob's commemoration of Cerberus' Chrysler purchase is a curious blend of woo-hoo, uh-oh and hey ho, let's go! We'll be sure to update our Chrysler Suicide Watch soon. Meanwhile, here's the text in full…

"Dear Employees,

One year ago, we began to write a new chapter in Chrysler’s proud history as Cerberus acquired the majority stake in our company. In spite of the severe economic and industry challenges of the past 12 months, we have laid the groundwork for a successful turnaround and transformation of our business. Today, we are working together with a clear direction and with a sense of urgency to return Chrysler to profitability and its rightful place as an iconic American company. On behalf of the Office of the Chairman -– Tom LaSorda, Jim Press, Ron Kolka and me –- I want to thank you for your hard work, and pass along the personal appreciation of Steve Feinberg as well as our partners at Cerberus and Daimler. I’d also like to share some thoughts with you on the occasion of this anniversary.

As a privately held company, we operate with some real advantages. Being private helps us be agile and decisive, highly responsive to our customers and fast to act on market opportunities. We are re-establishing our own culture and identifying our own measures for success based on operating as a single team focused on the common goals of “customer first” and “quality … period.”

We also have a clear focus on achieving the key financial expectations of our owners, which include EBITDA (earnings before interest, taxes, depreciation and amortization) and cash flow performance. As a private company, we’re now able to generate cash more easily through the sale of non-earning assets. This enhances our ongoing operational improvement efforts, enabling us to continue to invest in new products as we work to reduce our fixed costs, inventory and working capital.

Working together with the UAW, we signed a landmark labor contract that provides a framework to improve our competitiveness. Over the past year, our leadership also made some difficult decisions to "right-size" our company in line with the realities of a tough economy and an auto industry caught in the rapid shift in consumer preferences driven in part by escalating fuel prices. I can assure you that these gut-wrenching decisions are not taken lightly by me or anyone on the leadership team. Going forward, we will do what’s necessary to remain competitive in the short term, while balancing the need for continued investment in support of our long-term strategy.

Our company strategy can be boiled down to what I call the three E’s:

Enhance our Core

Extend our Business

Expand our Markets

We’re making progress on all fronts.

Enhancing the Core includes an intense focus on customers and quality, our product line and our dealers. We hired the industry’s first Chief Customer Officer to help lead efforts to better define, measure and improve quality. Creating a new online Customer Advisory Board has enabled us to get fast feedback on important issues. The Let’s Refuel America program, for example, was a direct response to customer concerns over fuel prices.

In line with our customer focus, enhancing the quality of our current and future products is critical to our success. Launch performance results for the past year are encouraging: from our own teams and from our dealers, we’ve heard that our recent launches have been among our best. During the last year, we approved more than 400 product enhancements designed to improve interiors, upgrade materials, and reduce noise and vibration. To date, more than 250 of these changes have been implemented, and the remainder will be in production during the 2009 model year and the start of 2010.

Although we did not perform as well as we should have in the recent J.D. Power and Associates Initial Quality Study, our company did improve five points overall, our Chrysler and Dodge brands were up in the ratings, and the Durango and Dakota were first in their segment. A more significant gauge of our progress in quality is that, since last August, we’ve seen a 29 percent reduction in our warranty claims. In addition, we expect a 20 percent improvement for our 2009 models. While we’re early in our launches, the results we’re seeing –- like reduced NVH (noise, vibration and harshness) in the Challenger, the Ram truck interior quality — are greatly improved.

In the area of productivity, the recent Harbour Report showed that Chrysler equaled Toyota as the most productive auto manufacturer in North America. This is a remarkable turnaround from seven years ago, when Chrysler was dead last among major manufacturers. In addition to boosting our productivity, this achievement has the added benefit of increasing our capacity utilization significantly. It really shows what we can do when we work together with a commitment to continuous improvement.

We are continually re-evaluating our model lineup to ensure that we’re focusing our resources on the best opportunities in the market, and we made a decision during the year to drop four models from our portfolio. Many industry analysts continue to bemoan the “light truck” bias of our product mix. They miss a salient point: most customers do not consider our Compass, Patriot, PT Cruiser, Pacifica, Journey or minivans to be “trucks,” although they are classified as such. So, from the customer’s perspective, our current mix is 59 percent car, compact SUV and minivan, and 41 percent pickup, medium and large SUV.

Meanwhile, our product portfolio is becoming more balanced, and our newest models are right for the times. The Dodge Journey, which received a rave review from USA Today, is a “right-sized” crossover that offers class-leading 25 miles per gallon highway, starting at under $20,000 in the United States. The Dodge Challenger, a modern muscle car, will come with a fuel-efficient V-6 option and an aggressive entry-level price of $21,995 in the United States. Customers focused on fuel economy will find six vehicles that offer 28 mpg or better on the highway in our 2009 model lineup — the Compass, Patriot, Avenger, Sebring Sedan and Sebring Convertible — and the Caliber achieves 30 mpg highway fuel economy.

There will be a viable and sustainable light-truck market going forward. It’s just likely to look more similar to the truck market before the light-truck boom of the '90s, with the notable exception that we expect to capture a greater share of it. For example, the crew cab segment represents half of the truck market. With our new all-new 2009 Dodge Ram crew cab offering we’ll be able to compete in this segment for the first time. We think the current economic climate, in spite of its challenges, provides us a real opportunity to gain even more ground. Our new Ram full-size pickup will be a "game changer," thanks to its outstanding performance, technical innovations, breakthrough design and top quality. We elected not to delay this launch as our competitors have, therefore, we will be first to market with a better product, along with marketing, advertising and retail launch support that’s truly world class.

To develop future products with greater appeal to customers, we are in the midst of investing $3 billion into powertrains to create multiple driveline solutions that will increase our overall fuel efficiency, including new engines, axles and transmissions.

And we created a group called ENVI that will develop electric-drive vehicles that support the vision of our Chrysler, Dodge and Jeep brands. Derived from the word "environment," ENVI is a dedicated in-house organization charged with making Chrysler the leader in advanced-propulsion technologies. Our electric vehicle program will really send a shock through the industry — so stay tuned for more details.

Rebuilding strong relationships with dealers has been a major priority this past year. One example of how we’re listening to our dealers is that we have reduced inventory by 67,000 units compared with a year ago. We’ve changed our dealer incentive program and put dealers back in charge of our regional advertising associations because they know their local markets better than we ever will. We’re also working with our dealers to "right-size" our network. Fifty-eight percent of our dealers now carry all three of our brands under one roof, up from 53 percent just last year.

The latest J.D. Power Customer Satisfaction Index (CSI) shows progress in the way our company and dealers are serving our customers. Chrysler LLC scored 865, a 10-point improvement with Jeep and Chrysler brands among the most-improved brands in the industry, and the Chrysler brand (882) outperformed the non-premium average (879) in the 2008 study. We have implemented a number of efforts with our dealer partners that we believe will continue to improve customer satisfaction.

The second part of our strategy is Extending our Business, which means capitalizing on adjacent opportunities in a number of ways. For example, consumers tend to keep vehicles longer in a slow economy, which represents a significant opportunity for us to capture more of the growing service and parts business. And we’re extending our business by investing in new products that give us coverage in new segments. Last year, we extended into the class 4 and 5 medium-duty truck markets with entries that offer best-in-class fuel economy. This followed our return to the class 3 truck market in 2006 with the all-new Dodge Ram 3500 Chassis Cab, which quickly achieved a 29 percent market share.

We’re working diligently to fill gaps in our portfolio by adding small car programs both through internal development as well as partnering initiatives. Later this year we’ll launch our first hybrids, the Chrysler Aspen and Dodge Durango. Both deliver a 25 percent overall improvement in fuel economy without sacrificing performance or the towing capabilities our customers need and expect.

We’re also extending our business through innovative new technologies, including in-vehicle wireless Internet connectivity available from Mopar by the end of the year. Our next generation of innovations also includes a segment-first Blind Spot Monitoring system for our minivans and a Chrysler-first Rear Cross Path System that notifies the driver of any car crossing his or her path when backing up.

In June, we announced our new uconnect family of technologies that provides consumers with phone, GPS, music, video and Web connectivity. Uconnect phone provides voice-controlled wireless communication between the occupants’ mobile phones and the hands-free system that automatically downloads up to 1,000 phone book entries from supported phones. Uconnect tunes features a 30-gigabytes hard drive to store music, videos and photographs. Uconnect GPS offers navigation and real-time traffic reports combined with voice recognition and an easy to use touch screen. Uconnect web turns the vehicle into WiFi “hot spot," delivering Internet connectivity directly to the vehicle.

Expanding the Market is the third part of our strategy, and it involves increasing our participation in vehicle segments and international markets where there is significant growth. Our international sales continue to grow, and we’ve established Global Centers of Excellence to support design, engineering, sourcing, manufacturing and distribution activities for local and regional markets.

We are currently engaged in more than two dozen alliances and partnerships with other OEMs and suppliers around the world to help extend our product portfolio and better use our manufacturing capacity. In January, we struck a deal with Nissan to supply us with a version of its B-segment sedan, the Versa, for limited distribution in South American markets beginning in 2009. Then in April, we reached another agreement under which Nissan will manufacture an all-new, fuel-efficient small car based on a unique Chrysler concept and designed for sale in North America, Europe and other markets in 2010. In return, Chrysler will manufacture a full-size pickup for Nissan in 2011.

Enhance the Core, Extend the Business and Expand the Market. Still, there’s one more “E” -– it’s the need to Execute. Going into this second year as an independent, we need to flawlessly execute our strategy and commit to improving everything we touch. We must pull together to design, build, sell and service aspirational vehicles with true competitive advantages –- vehicles that can be proudly displayed in showrooms around the world. We will continue to face the realities of the economic environment and our global industry, see them for what they are, and do what’s necessary to return Chrysler to profitability and sustained growth. As we have for the past year, we will work to shape the future before it shapes us.

While I’m proud of how we’ve faced business challenges together this year, I’m also proud that we’ve never lost sight of our commitment to support the communities we’re privileged to be a part of. Our philanthropic fund changed its named to The Chrysler Foundation and continues its work around the world to strengthen the communities where our employees and customers live and work. One example of how the foundation is tying together our dealers, business centers and communities is our partnership with KaBOOM! to build playgrounds, helping ensure every child has a safe place to play. We’ve identified 25 new playground sites and many of them already have been completed.

Building on our proud American heritage of support for those who wear the uniform, we also inaugurated the “Honoring Those Who Serve” program and forged partnerships with groups like Operation Gratitude and the Freedom Calls Foundation. Our military support efforts won several awards, including the Secretary of Defense 2008 Employer Support Freedom Award. At our Military Appreciation Month celebration held in May, employees put together 500 packages for Operation Gratitude to send to service men and women on active duty abroad in addition to the 300,000 packages already sent and distributed. At the event, we also revived the wonderful military tradition of the service flag. We are prominently displaying a Blue Star flag for every employee on active duty. In addition, we unveiled a Gold Star flag to honor an employee whose life was taken while on active duty, and presented it to his loving family.

Our continuing efforts in diversity also were recognized during the year. Chrysler was named “Company of the Year” at the Urban Wheel Awards; we were named to Black Enterprise magazine’s list of “40 Best Companies for Diversity”; we received the top grade in the automotive sector in the annual NAACP Economic Reciprocity Report; and Chrysler was recognized as a “Top 50 Company for Supplier Diversity” by Hispanic Enterprise magazine.

Perhaps the highlight of the year for many of us came on June 26 with the long overdue return of Lee Iacocca to the building and to the company he so strongly influenced. If you were able to attend this event, you saw first hand some of the energy, spirit and passion that Lee brought to Chrysler. He took time to talk with the leadership team and was extremely impressed as he reviewed the next generation of Chrysler, Jeep and Dodge products in our styling dome. He was particularly moved by the warm reception he received from our employees, and as he departed from the Tech Plaza event, he stopped and shook hands with everyone he could. In my remarks that day, I quoted from the speech Lee gave in 1979, just about one year after he joined Chrysler. He spoke about the people of Chrysler, and his words are just as true today:

“If the old-fashioned American virtues of hard work and dedication still work in this country –- and I believe they do –- we will not fail. Our people are the hardest working, most dedicated individuals I have ever been associated with, and they believe in this company.”

Looking ahead, we face a sobering reality of an economy and an industry in North America that continues to contract. But we continue to meet the challenges head-on, never losing sight of our goals. For example, this week Chrysler Financial announced that they will discontinue offering new lease products in the United States. But we will also significantly enhance our incentive and financing options to make our vehicles available to customers at affordable payments. Here are a few more facts on this change to keep in mind: Current vehicle owners who lease through Chrysler Financial are not affected, and the terms of their contract will remain in force. Chrysler dealers are still able to offer lease financing arrangements with other financial institutions. Employee lease and Company Car Programs for current and retired salaried employees whose vehicles were obtained through the company are not affected, and we’re working to protect this program for the future.

Our July sales, which we will announce today, while disappointing, continue to reflect the downward trend of this market and economy. Our challenge is to return to profitability and to profitable growth, which begins with a focus on revenue generation and sales.

So, let’s meet this challenge together. As we mark this first anniversary, let’s all focus on revenue, put our sales hats on and talk up our products to everyone we know and make a sale. And to help get started, I’m pleased to announce that all employees and retirees will be given a CDI (Certain Designated Individuals) number. More details will be sent to you next week, but similar to the Employee Choice program, this number will enable anyone to purchase a new Chrysler, Jeep or Dodge vehicle at the employee price through Sept. 30.

In closing, I can tell you that I am very proud to be part of this great team, a team with the experience, the intellect and the passion to bring Chrysler back to its historic place. I thank you for your hard work and many accomplishments of the past 12 months, and ask each of you to bring the same dedication to the coming year. Chrysler may be down, but we’re a long way from out. It’s time for us to prove the naysayers wrong with another one of our patented comebacks!

Sincerely,

Bob" 

No excuses needed here. Nissan's sales are back from the dead. (Did someone say truck incentives?) Even with three fewer selling days for July 2008, Nissan division sales were up 9.9 percent (unadjusted) over last year. Versa and Sentra's double-digit percent sales increases led the pack, Altima sales were basically unchanged at an impressive 24,429, and the brand spanking new Maxima was up a few percentage points from last year. Truck/CUV sales were up, thanks to sales of the new Rogue as well big gains by the Frontier, Pathfinder, and Quest (all three vehicles were roadkill last month). On the other hand, Infiniti sales were down 2.9 percent; all cars save the G Coupe had declining sales. Rising sales of the new(ish) EX and FX CUV's were not enough to offset the drop in cars sales.

In a not-so-stunning piece of preemptive PR– before the July sales data hits the fan– Chrysler CEO Bob Nardelli has told his troops that more fuel-efficient vehicles are on their way. The Detroit News reports Nardelli's four-wheeled fuel-sipping cavalry could arrive as early as next year, "possibly including an unexpected model to debut next year." Less specifically, "You very well could see some new platforms, some new vehicles out next year," Nardelli told reporters at a dealership dedication. The aggressively conservative head of the ailing American automaker also took the opportunity to introduce a new euphemism. "We continue to reprioritize our capital," Boot 'Em Bob reassured. "To make sure we are responding to one of the most significant changes we see in consumer buying preferences to downsize and look for fuel efficiency." Will a previously-conjectured partnership with Italy's Fiat or India's Tata Motors or Japan's Nissan or France's Renault or the UK's Ultima [just kidding] deliver this much-needed Chrysler product or products? To quote a Disney movie I can't recall, Mmmmmmm. Could be. Or better yet, Bob himself: "Partnerships with other automakers could be part of those new product introductions." So now you know. Ish. 

Nothing in Chrysler's dated portfolio needs attention more than its Camcord-fighting D-segment offerings, the Avenger/Sebring. The March departure of the lead on the Avengbring replacement didn't bode well. Motor Trend now reports that Project D is heading for disaster, gobbling-up huge engineering and design resources. Chrysler's in crisis mode. Option one: an all-new platform. No money. No way. Option two: deploy an existing chassis (e.g.  Nissan's Altima) and wrap it in new sheetmetal. Option C: rip off another automaker's work wholesale, a la VW Routan. Needless to say, these cop-out options will do nothing to improve Chrysler's rep for mediocre products. Then again a badge-engineered Altima might be better than what Chrysler can cobble together on a shoestring. Either way, with Project D seemingly doomed to mediocrity, what else can keep Chrysler alive? Hybrid minivans? Cherys? Government bailouts? Not good. 

In the aftermath of Black Hole Tuesday (June ’08 sales numbers), a big story got lost in the vortex. Yes, The Big 2.8 tanked, Toyota and Nissan took hits to the jaw and Honda was proclaimed the new Messiah. But June’s unsung winner puts Honda’s accomplishments to shame. In the midst of a violently contracting U.S. new car market, Hyundai-Kia (“HK”) kicked ass. And that butt-whooping is a direct threat to Detroit’s survival.  

Forget Honda’s 1.1 percent June increase. HK sakes jumped 3.5 percent; its best month ever. Its 28 percent profit growth in the first quarter dwarf’s Honda’s eight percent increase. Even more significantly, HK knocked Honda out of the global number five spot. And ominously for GM and Ford, Hyundai’s dramatic growth has become a crucial obstacle to success with their belated shift to smaller cars.

For decades, Toyhondissan has represented the evil empire eroding the reign of the house of Detroit. But as the Johnny-come-lately party crasher, Hyundai-Kia’s damage has been swift, surgically-precise and (potentially) deadly. HK’s share of the US market is up to 6.6 percent, surpassing Chrysler’s passenger car share (5.2 percent) and closing in on Ford’s 10.2 percent.

Hyundai’s Sonata handily outsold GM and Ford’s great white hopes, Malibu and Fusion. Add in the similar Kia Optima, and the HK twins are right at Altima levels (24k/month). Yes, HK’s larger SUV/CUV’s were not immune to the market shift, but their smaller cars more than made up the difference: Accent up 70 percent, Elantra up 50 percent.

And it’s not just the bigger and older brother in the family that’s hitting on all its (Tau V8) cylinders: Kia also had its best month ever, selling 28k cars, up 7.6 percent.

But the really big show is on the global stage, and that’s where HK is kicking serious butt.

HK is by far the fastest growing major car manufacturer, period. Rising from the number eleven slot in 1999, HK passed Nissan in ’05. In ’07, it passed Honda to join the ranks of the G5: Toyota, GM, VW and Ford. Although the jump from HK’s 3.9 million global units to Ford’s 5.9 million is daunting, don’t assume HK are happy where they are.

What’s driving HK’s industry leading global growth? Sheer will-forces, it would seem. The rapid Korean industrialization literally created the term “Asian Tiger.” And while Korea Inc. has clearly had Japan Inc. in its visor, Hyundai has Toyota in its. It may be indulging in stereotypes, but Koreans are noted for their stubborn and tenacious aggressiveness. Does that not perfectly describe Hyundai?

Here’s a company that boldly plunged into the U.S. market just over twenty years ago, setting records for a new brand introduction– only to have their hats handed to them over quality and reliability issues with the Excel. But they tenaciously stuck with their program of continuous improvements (I’m looking at you GM) to shed their shoddy image.

And now HK have an enviously complete line-up of cars and CUV’s including the rather remarkable rear wheel-drive Genesis sedan and Coupe (2009). Yes, TTAC’s review of the Genesis gave it three stars for its vanilla flavor. But the Genesis program is another substantial step forward. Keep in mind, Hyundai aspires to be the next Toyota, not BMW. In that context, the Genesis sedan is a remarkable accomplishment.

The Genesis Coupe raises the bar even higher: a potential segment buster; something that Toyota can only look enviously upon. And there’re more goodies in the pipeline: the Kia Soul looks a potential gen1 xB successor, and the Kia Forte just looks…good.

While HK has carved out an enviable and solid position in the US, its global growth and reach is much more dramatic. The new i10 is the hot new developing-world mini, having taken India by storm, capturing the I(Indian)COTY award.

Huge new factories are coming on-line in China and India, and the rest of the world is booming for Hyundai. The i30 compact has been a substantial success in the difficult European market, with Golf-competitive looks and dynamic qualities. HK claims to have the most balanced global position of the Big Global 5. Their home market is still healthy, unlike the Japanese, US and increasingly, the European, markets.

Hyundai’s meteoric rise is another nail in the coffins of GM and Ford, both globally and domestically. HK is growing substantially faster in the developing world, blunting Detroit’s ambitions for profits abroad. Closer to home, Hyundai is part of Toyhondisshyunkia: a solid bloc controlling almost 50 percent of the U.S. passenger car market.

Ford’s coming Euro-global car line-up looks appealing. GM is… working on theirs. But will car buyers care enough to generate the market share, volumes and profits they desperately need? “Thanks” in part to Hyundai, I wouldn’t count on it.

Auto Motor und Sport reports on a cautionary study by Bain & Company on the Chinese automotive market. According to the report, automakers estimate that the Chinese market will demand 9.3m new cars in 2010. Nein! "Our study shows that automakers are overestimating the Chinese market and are calling for too much production," says analyst Jörg Gnamm. "We're talking about an overestimation of 1.5m vehicles. That's half of Germany's annual sales, and the production capacity of four to five car factories." In other words, they reckon the Chinese market will grow by "only" about 12 percent per year to 7.9m units. Did  Jörg mention increasing competition for those sales? Yes he did. Volume automakers like Toyota, VW and GM are the ones who will face the toughest pressures. The warning comes shortly after Renault-Nissan CEO Carlos Ghosn predicted that the Chinese market could cool off in the next few years. And it doesn't factor in any Chinese government move to favor home-grown automakers over mandatory joint-venture "foreign partners." On that score, it's only a matter of time…

Last week, I pointed out that there are a lot of brand new trucks sitting on U.S. dealer's lots gathering dust. I illustrated the fact with an ad from a Dodge dealer selling Ram Quad Cabs for 50 percent off manufacturer's suggested retail price (MSRP). As bad off as Dodge is with their 160-day supply of Dodge Ram full-size pickup trucks, they didn't hold a candle to Nissan's 489-day supply of Titans. An email from Cleek tells us that a Nissan dealer in Rock Hills, SC took matters into his own hands this past weekend. He's advertised 45 percent off MSRP sale of pickups, vans and SUVs.  It looks like massively discounted truck clearance sales may be the wave of the immediate future. So far, the biggest discount we've see is 50 percent. How low do you think they'll have to go to clear inventory as the model year winds down and inventory piles up? How long before we see brand new pickups for under $10k? (God help light truck residuals.) Have you seen any dealers in your area offering huge discounts like these on trucks, vans and/or SUVs?